Working Paper: NBER ID: w17282
Authors: Bruce Blonigen; Cheyney O'Fallon
Abstract: The literature on the effects of foreign direct investment (FDI) and activities of multinational enterprises (MNEs) on host-countries has been almost exclusively focused on issues of productivity, growth and wages. We argue that this leaves quite a bit of important unexplored areas of inquiry, particularly those connected with the interactions of local communities and governments with MNEs. As an example, we provide a novel analysis of local corporate philanthropy, which shows significant differences between local- and foreign-owned corporations. We find that foreign-owned enterprises are less likely to give, but that when they do give, it is substantially more in magnitude than domestic firms, everything else equal. This evidence is consistent with the hypothesis that foreign-owned firms would prefer to use corporate social responsibility (CSR) activities on a more international scale, but will strategically use CSR activities for public relation motives when the MNE faces greater local scrutiny and/or bias.
Keywords: Foreign Direct Investment; Corporate Philanthropy; Multinational Enterprises; Local Communities
JEL Codes: F23; M14
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Foreign ownership + Establishment size (F23) | Local corporate giving (D64) |
| Establishment size (L25) | Local corporate giving probability (D64) |
| Foreign ownership (F23) | Local corporate giving amount (D64) |
| Foreign ownership (F23) | Local corporate giving probability (D64) |