In addition to facing the known competitors in the formal economy, entrepreneurs must also be concerned with rivalry emanating from the informal economy. The informal economy is characterized by actions outside the normal scope of commerce, such as unsanctioned payments and gift-giving, as means of influencing competition. Scholars and policy makers alike have an interest in mitigating the impacts of such informal activity in that it might present an obstacle for legitimate commerce. Received theory suggests that country institutions can enable (...) and constrain productive activity, and, in doing so, influence competitive obstacles in a country. Leveraging 13,670 responses from entrepreneurs distributed across 59 countries, we provide evidence that two particular types of enabling institutions, countries’ property rights regulations and cooperative actions, are useful for lowering the obstacles presented by informal activity. We also find evidence that two constraining institutions, economic and financial regulations lead to more obstacles presented by informal activity. We describe implications for entrepreneurs, policy makers, and future researchers stemming from these findings. (shrink)

Drawing on stakeholder theory and the evolutionary approach to institutions, this paper investigates the channels through which corporate social responsibility (CSR) is developed in post-communist economies by focusing on the employee background factors that shape the employees' expectations with regard to corporate socially responsible behaviour. We identify three channels through which exogenous and endogenous CSR are developed: employees with work experience in multinational enterprises (MNEs) (leading to exogenous CSR), employees with CSR knowledge (leading to exogenous CSR) and employees with experience (...) of the socialist system (leading to endogenous CSR). Furthermore, we argue that the interactions between these channels lead to hybrid CSR in transition economies. We use a questionnaire-based survey with employees of domestic and MNEs in Romania and we conduct regression analysis. We find that employees with work experience in MNEs act as channels for exogenous CSR, while employees with experience of the socialist system act as channels for endogenous CSR. Furthermore, employees with experience of the socialist system and CSR knowledge or work experience in an MNE act as channels for hybrid CSR in transition economies. Based on our results, we put forward implications for theory, managers and policy makers. (shrink)

With the expansion of multinational corporations (MNCs), the alarming upsurge in widely publicized and notable corporate scandals involving MNCs in emerging markets has begun to draw both academic and managerial attention to look beyond home market practices to the pressing concern of CSR in emerging markets. Previous studies on CSR have focused primarily on Western markets, reserving limited discussions in addressing the issue of MNC attitudes and CSR practices in their emerging host markets abroad. Despite this incongruity in academic response (...) to CSR in emerging markets, managers of multinational companies continue to face mounting and most often conflicting pressures to weigh among multiple strategic CSR responses in emerging markets. Such a task is often further complicated by the complexity of varying business norms and standards, regulatory environments, and stakeholder demands for CSR across national boundaries. With such a challenge in mind, I attempt to examine the explanatory factors in leading MNCs, otherwise recognized for accountability and integrity in their home markets, to employ inconsistent or negligent practices under CSR pressure in Chinese emerging economy. Preliminary findings reveal that discrepancies exist in how MNCs perform in CSR in home countries versus in host countries. While MNCs do have much to improve, the institutional environment in the emerging market, including the legal framework and the ethical culture, also needs to be improved by the host country governments, the industry associations, and local firms. Meanwhile, media interest and journalists, NGOs, third party monitors, industry stakeholders as well as consumer advocacy groups can raise the visibility of MNC's contradictory practices between their origin nations and countries with emerging economies and offer the pressures and incentives for MNCs to amend their ethical short-comings. This article also suggests implications for both theory and practice. (shrink)

Cross cultural ethical conflicts are a major challenge for managers of multinational corporations (MNEs) when an MNE''s business practices and a host country''s practices differ. We develop a set of decision principles to help MNE managers deal with these conflicts and illustrate with examples of ethical conflicts faced by MNEs doing business in contemporary Russia (DeGeorge, 1994). We discuss the generalizability of the principles by comparing them to the Donaldson (1989) and Buller and Kohls (1997) decision models. Finally we discuss (...) changes in the cross cultural ethical problems facing MNE managers and offer suggestions for future corporate and academic work on these problems. (shrink)

Drawing on stakeholder theory and the evolutionary approach to institutions, this paper investigates the channels through which corporate social responsibility (CSR) is developed in post‐communist economies by focusing on the employee background factors that shape the employees' expectations with regard to corporate socially responsible behaviour. We identify three channels through which exogenous and endogenous CSR are developed: employees with work experience in multinational enterprises (MNEs) (leading to exogenous CSR), employees with CSR knowledge (leading to exogenous CSR) and employees with experience (...) of the socialist system (leading to endogenous CSR). Furthermore, we argue that the interactions between these channels lead to hybrid CSR in transition economies. We use a questionnaire‐based survey with employees of domestic and MNEs in Romania and we conduct regression analysis. We find that employees with work experience in MNEs act as channels for exogenous CSR, while employees with experience of the socialist system act as channels for endogenous CSR. Furthermore, employees with experience of the socialist system and CSR knowledge or work experience in an MNE act as channels for hybrid CSR in transition economies. Based on our results, we put forward implications for theory, managers and policy makers. (shrink)

Cross cultural ethical conflicts are a major challenge for managers of multinational corporations (MNEs) when an MNE's business practices and a host country's practices differ. We develop a set of decision principles to help MNE managers deal with these conflicts and illustrate with examples of ethical conflicts faced by MNEs doing business in contemporary Russia (DeGeorge, 1994). We discuss the generalizability of the principles by comparing them to the Donaldson (1989) and Buller and Kohls (1997) decision models. Finally we discuss (...) changes in the cross cultural ethical problems facing MNE managers and offer suggestions for future corporate and academic work on these problems. (shrink)

This article theoretically proposes and empirically verifies an understudied issue in the business ethics and corporate social responsibility literature—how moral degradation in a society influences the relationship between BE or CSR and firm performance. Building on strategic choice theory, we propose that both BE and CSR become more important in enhancing business success when the perceived MD is heightened. Our analysis of 300 firms operating in China statistically confirms our hypotheses: first, under high MD, firms’ engagement in CSR results in (...) higher corporate legitimacy and competitive advantage, and second, their adherence to ethical business codes leads to higher corporate legitimacy. We conclude the article by outlining the implications for both theory and practice. (shrink)

This paper builds on a debate between Velasquez and Fleming: Do multinational enterprises (MNEs) have ethical obligations to their host countries? Velasquez applies Thomas Hobbes' realism approach in arguing that MNEs have no special moral obligations to host countries: (a) obligations do not exist independently in a "state of nature," (b) MNEs exist in a "state of nature" independent of any sovereign authority or power, (c) therefore, MNEs cannot be compelled toward moral or ethical behavior. Fleming counters that the lack (...) of an international authority to compel morality from MNEs is irrelevant. MNEs are for-profit entities making rational economic decisions based on their perceived self-interest. Since they operate in "the goldfish bowl of international media," MNEs are very aware of the stakeholder model. First, the paper supports Fleming's position: Even if a philosophical case cannot be established for MNEs to act ethically - they still should. Being unethical in any arena, but especially in the international arena, is both bad-for-business and bad business. Applying stakeholder theory, if stakeholders perceive the MNE as unethical (which may or may not be true), the firm will ultimately lose business. (shrink)

Drawing on stakeholder theory and the evolutionary approach to institutions, this paper investigates the channels through which corporate social responsibility (CSR) is developed in post‐communist economies by focusing on the employee background factors that shape the employees' expectations with regard to corporate socially responsible behaviour. We identify three channels through which exogenous and endogenous CSR are developed: employees with work experience in multinational enterprises (MNEs) (leading to exogenous CSR), employees with CSR knowledge (leading to exogenous CSR) and employees with experience (...) of the socialist system (leading to endogenous CSR). Furthermore, we argue that the interactions between these channels lead to hybrid CSR in transition economies. We use a questionnaire‐based survey with employees of domestic and MNEs in Romania and we conduct regression analysis. We find that employees with work experience in MNEs act as channels for exogenous CSR, while employees with experience of the socialist system act as channels for endogenous CSR. Furthermore, employees with experience of the socialist system and CSR knowledge or work experience in an MNE act as channels for hybrid CSR in transition economies. Based on our results, we put forward implications for theory, managers and policy makers. (shrink)