This study aims to investigate organizational characteristics and develop a framework relating to corporate social responsibility (CSR) practices of international joint ventures (IJVs) established in the South Korean market. Based on institutional and stakeholder theories, regression analyses produced a framework facilitating a better understanding and identification of factors that drive CSR in local markets. Consumers, competitors, and non-governmental organizations (NGOs) were discovered to be primary determinants of responsible behaviors. Additionally, some significant differences were found with respect to CSR related to IJV’s formative characteristics. This study contributes to furthering knowledge of IJVs and CSR, as well by providing some practical implications for organizations pursuing international markets.

Introduction

International joint ventures (IJVs) have been pursued as an essential strategic option for multinational enterprises (MNEs) in terms of effectively entering foreign markets through a more collaborative strategy and to partially confront the liabilities of foreignness encountered in an unknown environment (Chang, Bai, & Li, 2015; Huang, Hsiung, & Lu, 2015). IJVs, generally, are regarded as crucial in the internationalization aspect of organizations and are a dominant option in pursuit of market expansion strategies (Park, Giroud, Mirza, & Whitelock, 2008). Oftentimes, by virtue of establishing a new entity with a local firm, IJVs are cited as the most viable option in terms of acquiring local knowledge and mitigating potential market uncertainties (Mohr, Wang, & Fastoso, 2016; Triki & Mayrhofer, 2016; Yeniyurt & Carnovale, 2017). The integration of both host and home stakeholders, in an attempt to reduce uncertainties and liabilities of foreignness, also entails a focus on an MNEs local operations due to reports of corruption, unethical practices and other negative aspects, thus leading to a more involved and vocal response to organizational practices at home and abroad. As a result, corporate social responsibility (CSR) has become a rallying point for stakeholders and researchers alike in determining the ethical actions and responsibilities of organizations that operate abroad (Ambec, Cohen, Elgie, & Lanoie, 2013; Egri & Ralston, 2008). Academic interest and literature related to CSR has also developed and grown over time, from a simple examination of how to act ethically within a foreign environment, to an analysis of how to provide positive impacts locally. This ultimately contributes to local economic development by simultaneously improving the quality of life of the workforce, the local community, society at large, considerations that have become an integral part of the strategic vision characterizing many firms worldwide (Lockett, Moon, & Visser, 2006; Russo & Perrini, 2010). CSR and IJVs have both been proposed as means by which organizations can become embedded in local communities or alleviate negative attitudes towards foreign organizations as a response to stakeholder concerns (Galbreath, 2009). With the rise of CSR awareness and the demand for companies both foreign and domestic to pursue CSR initiatives, the focus for foreign members of IJVs should be upon what triggers the implementation of local CSR practices. However, specifically for IJVs, it is unclear which of its stakeholders play prominent roles in determining the enactment and incentives leading to the managerial choices to pursue CSR activities in local markets. To reiterate, as IJVs represent an interaction between the foreign and local firms, it remains uncertain if it is the foreign parent that brings CSR initiatives into the IJV or if local pressure forces the adoption of CSR measures. Research on this question, outside of a few studies that have mentioned the need for further analysis in the understanding of the manipulation and development of CSR strategies in host countries, is currently very sparse (Galbreath, 2009; Qu, 2007; Tokoro, 2007).