Outward Foreign Direct Investment as a Corporate Social Responsibility Challenge

Outward Foreign Direct Investment as a Corporate Social Responsibility Challenge

Krisztina Szegedi (University of Miskolc, Hungary), Gyula Fülöp (University of Miskolc, Hungary) and Ádám Bereczk (University of Miskolc, Hungary)
DOI: 10.4018/978-1-5225-2345-1.ch002
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Abstract

Corporate Social Responsibility has developed rapidly in the last decades, and its role has increased due to the new challenges of the global economy, as companies need a positive reputation in order to obtain a “social license to operate”. The aims of this study are: (1) to describe the concepts of corporate social responsibility and Outward Foreign Direct Investment (OFDI), focusing on the relationship between them, (2) to introduce the main CSR risks and opportunities of OFDI, and (3) to summarize the possible solutions for addressing CSR-related risks in OFDI activities. Our study indicates that zero tolerance of corruption is a strategic objective of investing companies. Prevention and mitigation of human rights violations are ethical obligations and in the business interest of corporations. Companies face significant social, environmental, and economic risks, as well as risks to their reputations, because of their supply chains.
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Background

The relations between Outward Foreign Direct Investment and Corporate Social Responsibility cannot be clear without knowing these two concepts; therefore, this section introduces different approaches to corporate social responsibility and their theoretical and practical aspects. Following this, the main points of foreign direct investment are briefly introduced, as well as corporate motivation and determining factors, through a micro-economic perspective (OFDI approach). The determining factors and characteristics of OFDI activities naturally depend greatly on the characteristics of the company and its operating conditions, leading to large variation. Here the focus is primarily on the features and factors influencing OFDI in companies in developing nations, briefly referring to features of companies of emerging economies appearing in foreign markets.

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