Abstract

Several studies have confirmed that the implementation of corporate social responsibility (CSR) initiatives and activities of multinational companies (MNCs) differed across locations. Subsidiaries of MNCs must both respond to internal pressures coming from global headquarters and expectations of local stakeholders. The major research questions of the study are the following: What are the major drivers of their CSR activities and how do they balance between the global pressure of MNC headquarters and the expectations of the local stakeholders? What coping mechanisms do they implement in order to tackle the CSR challenges? As a result of conducting 10 semi-structured research interviews at Hungarian subsidiaries, 3 key CSR challenges, and 7 coping mechanisms were identified. The 3 major challenges include the lack of financial and human resources dedicated to CSR activities, the lack of legal or cultural support of the headquarters’ initiatives in the host country, and the difficulty to form an effective CSR strategy to respond to the various needs of local stakeholders. The subsidiaries use different coping mechanisms to tackle the challenges. They usually pursue continuous bargaining with MNC HQs in order to have sufficient financial resources for local CSR actions and to get freedom for creating their own CSR approaches reacting to genuine local needs. If they are not able to accumulate plentiful resources, they may implement a low key or minimalistic CSR strategy that usually means solely philanthropy or charity. When host country social values do not meet global MNC norms, subsidiaries often choose to turn inward, i.e. promoting global values only inside the company in daily operations, and not propagating these values to the wider public. Nevertheless, the most prevalent strategy may be more careful balancing between global MNC norms and local values. Subsidiaries use various mechanisms to detect the needs of their key stakeholders and to create those actions that can be the most vital elements of their local CSR strategies. They often co-operate with NGOs and/or the local government to reach their CSR objectives. Numerous subsidiaries do business integrated CSR to serve local stakeholders’ needs in the most effective way. Finally, most subsidiaries are constantly scanning MNC units in the region to find out how they confront their local CSR challenges. This mechanism seems to work well due to similarities among host country cultures in the CEE region.

Keywords: coping mechanisms, corporate social responsibility, local vs. global CSR, multinational companies, subsidiaries.

JEL Classification: F23, M14.

Cite as: Szanto, R. (2019). CSR dilemmas at multinational companies: global pressures vs. local expectations in the lights of the Hungarian evidence. Marketing and Management of Innovations, 2, 217-227. https://doi.org/10.21272/mmi.2019.2-19

This work is licensed under a Creative Commons Attribution 4.0 International License

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