The Impact of Domestic CSR on the Internationalisation of Emerging-Market Multinational Enterprises: Evidence from India

The internationalisation of firms from emerging economies is gaining widespread academic attention, as these new types of multinationals are increasingly engaging in foreign direct investment (FDI) in both developed and developing countries (Awate et al., 2012; Buckley, 2018; Buckley et al., 2014, 2015; Friel, 2021; Hernandez & Guillén, 2018; Pattnaik et al., 2021). Emerging-market multinational enterprises (EMNEs) are catching up with their developed country counterparts by upgrading their technological capabilities via foreign acquisitions and alliances. However, they are also known to face additional barriers to internationalisation due to their weaker home institutions and due to their relative newness to international business, which consequently results in a negative perception of EMNEs among stakeholders in host countries (Marano et al., 2017).

In this context, we suggest that less is known about the extent to which EMNEs’ domestic corporate social responsibility (CSR) (i.e., CSR conducted in their home country) impacts their internationalisation prospects. Understanding this connection can be important for a variety of reasons. First, CSR activities are becoming important not only for gaining legitimacy but also for contributing to the government’s developmental initiatives within emerging economies (Caussat et al., 2019; Hadjikhani et al., 2019; Hah & Freeman, 2014; Zheng et al., 2015). The predominant notion of CSR among companies operating in emerging economies is that philanthropic activities generate a ‘social licence to operate’ and reduce the risk of being accused of unethical or irresponsible behaviour (Krichewsky, 2019; Rajak, 2011). The benefits accrued through CSR can become important firm-specific advantages for EMNEs in regard to improving their internationalisation prospects (Ramamurti, 2012). Specifically, we expect that the legitimisation and reputational advantages engendered through CSR can potentially reduce EMNEs’ ‘liabilities of origin’ during internationalisation (Attig et al., 2016; Marano & Tashman, 2012; Marano et al., 2017).

Second, despite the heterogeneity in the institutional characteristics of various emerging economies, governments in many emerging economies have been tightening regulations regarding CSR. Within developed countries, CSR reporting laws such as those in France and Denmark, the Swedish sustainability legislation, the Scottish Sustainable Procurement Action Plan and the Canadian Green Procurement Policy are well-known examples of CSR and sustainability-related regulations. Among the emerging economies, Mauritius was the first to implement mandatory CSR legislation in 2009, followed by India, who, in 2013, made it mandatory for firms to spend funds on CSR. In India, which forms the context of our study, CSR legislation requires medium-to-large companies to spend 2% of their average net profits gained over the previous three years on socioeconomic development activities, which fall under a broad set of themes specified under schedule VII of the Companies Act of 2013. While such regulations encourage firms to actively contribute to sustainable development, they also increase operational costs for firms. EMNEs, in particular, are technologically resource-constrained compared to their counterparts from developed countries (Ramamurti, 2012). Therefore, it is important to examine whether EMNEs indeed benefit from their domestic CSR insofar as their effects on internationalisation are concerned. Based on this, our key research question is as follows: To what extent does domestic CSR impact the internationalisation of EMNEs?

To answer this question, we rely on a sample of 686 firms from India, which includes a wide range of large and medium-sized firms operating in a variety of industries. We also test the moderating effects of EMNEs’ government ownership and the nature of the target market on the relationship between EMNEs’ domestic CSR and their scope of internationalisation. Government (or state) ownership forms an important feature of many EMNEs and is closely associated with their internationalisation prospects, as per past studies (Cui & Jiang, 2012; Zhou, 2018). Government ownership engenders EMNEs with ‘ascribed’ nonmarket advantages that can be used to facilitate internationalisation (Deng et al., 2018). Similarly, the target market of the EMNE can play an important moderating role in the effect of EMNEs’ domestic CSR on their scope of internationalisation. This is because the liabilities of origin that EMNEs face during internationalisation are likely to be more pronounced when EMNEs invest in developed countries or in institutionally stronger emerging economies (Marano et al., 2017). As such, EMNEs’ domestic CSR can be expected to create greater legitimisation advantages when they invest in such host countries.

We contribute to prior research on EMNEs’ internationalisation in a number of ways. First, we explain the association between domestic CSR and internationalisation by focusing on EMNEs. EMNEs are distinctively known to engage in internationalisation to (1) escape home-institutional ‘constraints’ and (2) leverage their home-based nonmarket ‘advantages’ to facilitate internationalisation (Cuervo-Cazurra, 2008; Marano et al., 2017; Nuruzzaman et al., 2020). Prior studies have examined the role of EMNEs’ ‘domestic’ nonmarket advantages on their internationalisation scope; however, most of these studies have focused on the role of EMNEs’ political connections (Deng et al., 2018; Du & Luo, 2016). We argue that domestic CSR provides EMNEs with similar nonmarket advantages to improve their internationalisation prospects and that EMNEs’ ownership structures (private vs. government owned) and the target market where they seek to internationalise moderate this relationship. Second, we contribute to the recent set of studies, which suggest that EMNEs’ CSR can reduce their liabilities of origin when investing overseas (Marano et al., 2017; Tashman et al., 2019). Prior studies in this context have focused on EMNEs’ CSR communication, and we contribute by examining CSR expenditures, which potentially provide a more realistic account of CSR. Third, we focus on EMNEs’ internationalisation based on their ability to create a foreign subsidiary versus a domestic subsidiary. Prior research on EMNEs’ internationalisation has largely focused on their exporting behaviour. However, this trend has increasingly changed in recent years, and EMNEs are committing more to international markets through foreign direct investment (FDI). As such, we contribute to this new range of studies that focus on EMNEs’ outward FDI (Witt & Lewin, 2007; Xia et al., 2014; Yan et al., 2018). Finally, we make an important contribution by focusing on the context of India, where regulations concerning CSR have recently developed in a distinctive way (by making CSR spending mandatory); however, thus far, few studies have focused on this issue (Aswani et al., 2020; Subramaniam et al., 2017). Past research on the internationalisation of EMNEs has largely focused on China. By focusing on India, the second-largest emerging economy, we also try to fill the focus gap by looking at a different yet relevant context.

In the following sections, we first provide a background to theory, followed by developing our hypotheses on the relationship between domestic CSR and internationalisation and on the moderating effects of government ownership and the target market of internationalisation. This is followed by the description of our methods. We then present our results from our empirical analysis, which is finally followed by discussion and conclusions.

Most prior research on the firm-specific advantages (FSAs) driving the internationalisation of firms has focused on firms’ possession of ‘market-based’ assets, such as innovative products, superior management capabilities and managers’ international experience, which enable them to seek rents from a variety of international markets (Buckley & Casson, 1998; Dunning, 2000; Erramilli et al., 1997; Kotha et al., 2001; Rugman & Verbeke, 1992; Scott-Kennel & Giroud, 2015). However, recent research on the factors motivating EMNEs’ internationalisation suggests that the development of such market-based FSAs does not fully explain their internationalisation behaviour. EMNEs’ ‘nonmarket’ advantages generated through their embedding within both home- and host-country institutions significantly complement their market-based FSAs in internationalisation (Bhaumik et al., 2016; Wei & Nguyen, 2017).

Institutions comprise both formal (regulatory) and informal (normative, cultural) forces that define the ‘rules of the game’ (North, 1996). In most emerging economies, formal institutions are weak and are characterised by institutional ‘voids’, which are manifested through, for instance, information asymmetries, ambiguities in regulations, and ineffective control-enforcing mechanisms (Khanna & Palepu, 2000). Institutional weaknesses can also be manifested via lower levels of political stability, corruption control, voice and accountability, governmental effectiveness, and the enforcement of the rule of law (Kaufmann et al., 2010). Weak formal institutions increase the level of uncertainties for firms and compel them to rely on informal relationships (with suppliers, customers, and other firms), connections (to the government and to other regulatory officials) and other types of affiliations (e.g., with influential business groups) to safeguard access to critical resources (Khanna & Palepu, 2000).

We build on institutional theory and utilise the existing literature on EMNEs’ internationalisation to develop our hypotheses on the relationship between EMNEs’ domestic CSR and their internationalisation scope. When MNEs enter foreign markets, their FSAs developed at home form important sources of their competitive advantages in the host country (Lee & Rugman, 2012). Earlier studies have noted that despite these FSAs, MNEs suffer from ‘liabilities of foreignness’, which are defined as the additional costs incurred due to the lack of knowledge of host institutions (Mezias, 2002). When EMNEs (in particular) create foreign subsidiaries, in addition to these liabilities of foreignness, they also suffer from additional ‘liabilities of home’ (or liabilities of origin), which are defined as ‘the disadvantages borne by a firm investing in a foreign country due to the friction caused by the attributes of its home country institutions’ (Stevens & Shenkar, 2012, p. 128). These additional liabilities arise because EMNEs are embedded in weaker home institutions (as described above), which leads to the perception among host country stakeholders that EMNEs are characterised by poorer governance structures and business ethics (Agnihotri & Bhattacharya, 2019b; Fiaschi et al., 2017; Marano et al., 2017; Tashman et al., 2019). At the same time, such liabilities of origin could also stem from EMNEs’ relative newness to international business, thereby resulting in the lack of reliable information about EMNEs that causes stakeholders in host countries to develop stereotypical judgements about EMNEs’ products (e.g., of being of low quality) and business practices (e.g., of being corrupt) (Marano et al., 2017; Tashman et al., 2019). Volchek et al. (2013), for instance, find that greater levels of political instability and corruption (among other institutional characteristics) in Russia often create barriers for the internationalisation of Russian enterprises.

Due to these extra liabilities, EMNEs face additional barriers to internationalisation; therefore, EMNEs must engage in greater legitimisation processes to reduce these liabilities in both their home and host countries. It is noted that an organisation’s legitimacy is evaluated by a broad set of social groups and stakeholders in addition to the government, including interest groups, competitors, the media, non-government organisations (NGOs), financial institutions, employees, customers, elite members of society, and other members of civil society. These actors can also provide or withhold organisations’ ‘social licence to operate’, depending on the degree to which they perceive the organisation as a legitimate and an accepted part of the community (Stevens et al., 2016). MNEs are known to engage in various legitimisation processes to reduce their liabilities of foreignness in a host country, such as by adapting their products and services, hiring local employees, developing local supply chains and engaging in community development (Newenham-Kahindi & Stevens, 2018).

CSR forms an important means by which to achieve and maintain legitimacy in a global context (Drahos & Braithwaite, 2001). This is because all firms (including MNEs) have an impact on society. These include both positive impacts, such as the creation of employment opportunities, taxation revenue (to fund vital public services) and the spillover of knowledge and technology to other firms in the local environment, and negative impacts, such as downward pressure on wages, job insecurities, pollution and mismanagement of waste. Therefore, MNEs are pressurised by a variety of institutional actors to undertake business activities in a more responsible manner. While much is known about how MNEs engage in CSR in host countries (especially in developing countries) to secure and maintain their legitimacy (Hah & Freeman, 2014; Li et al., 2010; Marano & Tashman, 2012; Shirodkar et al., 2018), surprisingly, little is known about whether EMNEs’ domestic CSR can have an impact on their scope of internationalisation.

Within emerging economies, the concept of CSR has been advancing from passive philanthropy to firms’ active engagement in socio-developmental activities (Zhao, 2012). Hence, the legitimisation of CSR activities in emerging economies is often associated with firms’ engagement in the government’s developmental agenda, such as poverty alleviation, corruption control, pollution reduction, and infrastructure development (Zheng et al., 2015). Due to the ‘governance gaps’ in many emerging economies (Child & Tsai, 2005; Detomasi, 2007; Zhao, 2012), i.e., failures to protect the rights of citizens and to enforce regulations, CSR in emerging economies is seen, not only as a means of contributing to development but also of taking on government-type responsibilities and providing ‘public goods’ (Caussat et al., 2019). Overall, in emerging economies, there is a greater need for firms to take on a ‘political’ role and engage in wider governance processes through CSR activities (Krichewsky, 2019; Shirodkar et al., 2018). Subsequently, a greater level of engagement in CSR in emerging economies inadvertently causes firms to interact with a wider variety of stakeholders and to benefit from institutional linkages, which can be leveraged for internationalisation. Therefore, the extent to which EMNEs’ domestic CSR facilitates their scope of internationalisation becomes important to study.

Our descriptive statistics and correlations are presented in Table 3. As we do not see any high correlations between the independent and control variables, we expect that there were no multicollinearity problems at this point; however, we also verified this by checking for the variable inflation factor (VIF) in our regressions (Schroeder et al., 1990).

The OLS regression results are presented in Table 4. In Model 1, we added our main independent variable, namely, CSR intensity. In Model 2, we tested for the moderating effect of government ownership by using the interaction term CSR intensity × Government owned. Furthermore, in Models 3, 4 and 5, we changed the dependent variable to RFDSTS, RFESTS and RFSBITSE, respectively, to test for the effect of CSR intensity on internationalisation into developed versus emerging economies and into emerging economies with better institutions.

In hypothesis 1, we argued for a positive relationship between domestic CSR intensity and EMNEs’ scope of internationalisation. The results from the OLS estimator (Table 4, Model 1) show a positive and statistically significant effect of CSR intensity on RFSTS (β = 0.105, p = 0.007), thereby strongly supporting hypothesis 1. In hypothesis 2, we expected that the effect of domestic CSR intensity on EMNEs’ scope of internationalisation would be reduced if the firm is government owned (fully or by majority). The results from the OLS estimator (Table 4, Model 2) show a negative and statistically significant coefficient of CSR intensity × Government owned on RFSTS (β = − 0.106, p = 0.018). This outcome is indicative that hypothesis 2 has been supported. In hypothesis 3a, we argued that the effect of domestic CSR on EMNEs’ scope of internationalisation would be more pronounced when these firms internationalise into developed countries versus when they internationalise into emerging economies. The results from the OLS estimator (Table 4, Model 3) show a positive and statistically significant coefficient of CSR intensity on RFDSTS (β = 0.072, p = 0.067); however, this coefficient is significant at the 10% level. At the same time, the OLS estimator (Table 4, Model 4) shows that the effect of CSR intensity on RFESTS is insignificant. Overall, this renders weak support for hypothesis 3a. Finally, in hypothesis 3b, we argued that domestic CSR would increase the scope of internationalisation to other emerging economies with relatively better institutions. The OLS estimator (Table 4, Model 5) shows that the effect of CSR intensity on RFSBITSE is insignificant, thereby rejecting hypothesis 3b. To test this hypothesis further, we carried out a post hoc analysis in which we calculated RFSBITSE using each of the six dimensions of the world governance indicators and reran the regressions. However, the effect of CSR intensity on RFSBITSE remained insignificant,¹ which is consistent with the effect using the composite score of institutional quality.

Some of our control variables also present some interesting results. We can see that firm age is negatively associated with internationalisation. This shows that newer Indian firms show a much greater propensity to invest overseas, whereas older and well-established firms are more likely to invest domestically. Likewise, firm leverage and top management team size are also consistently negatively associated with the scope of internationalisation. We also see that group-affiliated Indian firms are positively associated with internationalisation into developed countries. Finally, we see that Indian firms in the manufacturing and high-tech services sectors have a greater propensity to invest in foreign markets. We also see that among firms in the manufacturing and low-tech services sectors, there is a greater propensity to invest in other emerging economies vis-à-vis developed countries.

In addition to the above analyses, we also conducted robustness tests. First, since our main measure of CSR is calculated based on the CSR expenditure reported by firms and because this expenditure is driven by the Indian CSR mandate that requires firms to invest 2% of their average net income over the past three years into CSR, we checked for the possibility of whether the mandate itself could have an impact on CSR and hence on the internationalisation of Indian firms. To address this issue, we calculated each firm’s discretionary CSR expenditure, which takes the value of zero if the firm spent less than or equal to the expected CSR amount as per the mandate; otherwise, it takes the difference between the actual (i.e., reported) and expected CSR expenditure. We then calculated discretionary CSR intensity by dividing discretionary CSR expenditure by total assets. This process, however, resulted in a large number of firms having a zero value; thus, we reran the regressions using only the subset of firms (N = 112) that had a positive value of discretionary CSR intensity. The results are presented in Table 5. We found that this variable has a positive and significant effect on RFSTS and RFDSTS, thus reconfirming hypotheses 1 and 3a. In fact, Model 8 shows that hypothesis 3a is strongly supported (at the 1% significance level) in this test. However, we did not find support for our moderating effect of government ownership (hypothesis 2) using this variable.

Second, the effect of CSR on internationalisation can be endogenous. We addressed this endogeneity issue by using the instrumental variable approach and by using the two-stage least squares (2SLS) procedure. It is difficult to find good instrumental variables, as most of the factors that affect CSR are also likely to impact internationalisation. Therefore, as our instrumental variable, we used each firm’s previous year’s CSR intensity (i.e., for 2017 in our case), as indicated by the variable CSR intensity_(t−1). Firms with greater levels of CSR intensity in the past would also be likely to spend proportionately more on CSR in the next year. By using this variable, however, our sample was reduced to half (N = 343) due to missing values in the CSR reporting data for the previous year. The results from the 2SLS procedure are shown in Table 6. Our results remained largely consistent with the previous models, thereby suggesting that the positive association between domestic CSR and internationalisation is not driven by endogeneity issues. In fact, compared to the main analysis, hypotheses 3a and 3b are better supported (p < 0.05) in the 2SLS model.

Our study was inspired by ongoing research on the relationship between CSR and internationalisation (Attig et al., 2016; Bondy & Starkey, 2014; Cheung et al., 2015), and our aim was to examine the extent to which EMNEs’ domestic CSR impacts their prospects of internationalisation. Engaging in CSR activities is widely known to improve organisational legitimacy (Zhao, 2012; Zheng et al., 2015), and this is even more important for EMNEs, as they face greater liabilities of origin during internationalisation (Marano et al., 2017; Stevens & Shenkar, 2012; Tashman et al., 2019).

Our findings provide support for three out of four of our hypotheses. First and foremost, with regard to our first hypothesis, we had argued that domestic CSR intensity will improve the scope of internationalisation for EMNEs. This is because greater levels of domestic CSR improve EMNEs’ nonmarket firm-specific advantages that can then be leveraged across borders. Domestic CSR also reduces EMNEs’ liabilities of origin (Marano et al., 2017) and imparts EMNEs with greater legitimacy and reputation when they engage in internationalisation. Our results support this, and we find that for Indian MNEs, for every unit increase in CSR intensity, the scope of internationalisation (i.e., foreign investment) increases by 10.5% (Table 4, Model 1). The size of the effect is small in our case, but we suggest that this may depend on the size of the home country in which EMNEs are based. As India is a large emerging economy, there is a relatively greater scope of expansion within the home market than overseas. Our findings are in line with some past studies, which argued that greater spending on CSR is symbolic of the fact that the firm cares about the welfare of its domestic stakeholders and that this enhances organisational legitimacy and reputation among international stakeholders (Godos-Díez et al., 2018).

Second, in hypothesis 2, we had argued that the positive effect of domestic CSR on internationalisation is reduced for government-owned EMNEs. This is because government-owned EMNEs have ‘ascribed’ nonmarket advantages (Deng et al., 2018) and play a distinct role in contributing to socioeconomic development in their home country (Cheung et al., 2015). Therefore, although government-owned EMNEs also have to report their CSR, they do not face the same stakeholder pressures as private firms and may have opportunity costs in investing in CSR to the same degree as private firms. Therefore, the utility of their domestic CSR in undertaking internationalisation would be reduced. This is also supported by our findings. Table 4 (Model 2) shows that while the effect of Indian MNEs’ CSR on internationalisation is positive and significant, the effect of the interaction term (CSR intensity × Government owned) is negative and significant, although the significance is weak (at the 10% level). Past research on the effect of EMNEs’ state ownership on their internationalisation has emphasised upon the direct advantages of government ownership, such as easier access to funding and state support when investing in risky host environments (Cui & Jiang, 2012; Duanmu, 2014; Ramasamy et al., 2012; Yin & Zhang, 2012). There has also been an ongoing discussion in the literature about the value of CSR by SOEs in emerging economies (Khalid et al., 2021; Shahab et al., 2019; Wang et al., 2018; Zhu et al., 2016). Our finding implies that state ownership enables EMNEs to reduce their domestic CSR intensity insofar as the effect on internationalisation is concerned. Comparatively, privately owned EMNEs suffer from greater levels of liabilities of origin when investing overseas (Fiaschi et al., 2017; Marano et al., 2017) and benefit from domestic CSR to a greater extent when undertaking internationalisation.

Finally, in our third set of hypotheses, we had argued that the positive effect of domestic CSR on internationalisation is greater when EMNEs are internationalising into developed countries than in other emerging economies (hypothesis 3a). Regulations concerning firms’ social and environmental impacts are more stringent in developed countries (Blowfield & Frynas, 2005), and firms in such countries face greater pressure on mandatory CSR reporting (Gugler & Shi, 2009). The amount of civil society pressure is also greater in developed countries (Fiaschi et al., 2017), where CSR is largely driven by the societal concerns of investors, NGOs, campaign groups and consumers (Gugler & Shi, 2009). EMNEs that increase their domestic CSR are therefore able to match international expectations concerning CSR in developed countries (Gugler & Shi, 2009). Our findings provide support for these arguments. As seen in our Table 4 (Models 3 and 4), the effect of domestic CSR intensity is positive and significant when Indian firms’ internationalisation is directed to developed countries (i.e., RFDSTS), while the effect is not significant when the internationalisation is directed to other emerging economies (i.e., RFESTS). We had also expected that when EMNEs invest in other emerging economies, the effect of domestic CSR on their scope of internationalisation would be greater in emerging economies with relatively better (or stronger) institutions (hypothesis 3b). However, this was not fully supported by our data; specifically, it was supported using 2SLS but not in the OLS regression. An explanation of this outcome could be that a marginal increase in the strength of host institutions may not engender the same liabilities of origin as compared to when host institutions are much stronger and distant (as in developed countries). However, this suggestion warrants further research.

Overall, our paper makes several contributions to the literature. We mainly contribute to studies that focus on the domestic nonmarket capabilities of firms that are useful in their internationalisation (Cui & Jiang, 2012; Fernández-Méndez et al., 2018; Frynas et al., 2006; Holburn & Zelner, 2010). In emerging economies, especially China, it has been found that firms’ domestic political connections enable them to directly gain preferential access to state-controlled resources, financial aid and special incentives that may facilitate their international expansion (Cui & Jiang, 2012). We extend this by suggesting that domestic CSR is also an important nonmarket factor for EMNEs in expanding internationally, given the greater levels of institutional constraints faced by them during internationalisation. We thus also contribute to prior studies on the internationalisation of EMNEs by focusing on their CSR as an important firm-specific advantage (Buckley et al., 2014; Chittoor et al., 2015; Volchek et al., 2013; Zheng et al., 2015).

Past research on the relationship between CSR and internationalisation suggests that when firms internationalise, they are more likely to engage in CSR (Attig et al., 2016; Cheung et al., 2015). That is, the internationalisation of firms has been argued to normally occur first, followed by an interest in generating a ‘social licence to operate’ in specific host countries, which subsequently causes firms to initiate greater CSR development (Godos-Díez et al., 2018; Mithani, 2017; Pant & Ramachandran, 2017). Highly internationalised firms may wish to perform more CSR activities not only because they attract more visibility and scrutiny from international media and other non-governmental organisations (NGOs) (Hah & Freeman, 2014) but also due to the greater amount of slack resources that may be available to them (Dahan et al., 2006) and the larger amount of risk they face if industrial accidents were to occur (Laudal, 2011). Thus, while much of the prior research in this area has focused on how internationalisation impacts CSR (Attig et al., 2016; Bondy & Starkey, 2014), ours is one of the few studies that have recently focused on the extent to which domestic CSR impacts internationalisation, especially for EMNEs (Agnihotri & Bhattacharya, 2019a; Fiaschi et al., 2017). In this context, we theoretically contribute to the institutional and strategic perspectives on CSR by suggesting that the legitimisation benefits of CSR hold not only in their domestic environments but also in expanding to foreign markets.

Our study also provides some important practical implications for managers of EMNEs interested in internationalisation. As internationalisation is relatively riskier and costlier for EMNEs (compared to their developed country counterparts) due to EMNEs’ relatively weaker technological advantages and greater liabilities of origin, we highlight that domestic CSR can reduce these disadvantages and liabilities via the development of trust and legitimacy among global stakeholders. Such advantages of domestic CSR are even greater when EMNEs intend to create foreign subsidiaries in developed countries and when they do not have other nonmarket advantages. Marano et al. (2017) suggest that EMNEs must move beyond ‘ceremonial’ CSR reporting (or making ambiguous CSR claims), as this approach is being increasingly scrutinised by global stakeholders and may cause further damage to trust when EMNEs’ CSR reports contradict their actual CSR activities. Our study reinforces this by examining the extent of EMNEs’ CSR expenditures, which provide a better indication of their realistic commitment to CSR, to positively impact their internationalisation prospects.

Like most academic studies, however, our study also has a number of limitations that provide worthwhile avenues for future research. First, our data are limited to the internationalisation of firms from a single emerging market (i.e., India) and for a single year (i.e., 2018). Although our sample includes a good number of firms (i.e., 686), including more years (i.e., using a panel dataset) would have added more robustness to our research; however Orbis reports the internationalisation information (i.e., subsidiary formation) for the most recent year only. On that note, we also include only one measure (i.e., scope) of internationalisation based on the ratio of foreign subsidiaries to total subsidiaries, whereas several other measures exist, such as export intensity and the ratio of foreign sales to total sales. Thus, future research could benefit from a greater number of home countries, years and internationalisation measures. Second, we also include only CSR expenditures as reported by firms as a measure of CSR. Again, CSR is a broad concept; firms may engage in socially responsible activities in a variety of ways that we are unable to capture herein. Thus, future research could take this into account and capture the breadth of different CSR activities. It is also important to consider that while domestic CSR is important in gaining legitimacy and reputation for firm internationalisation, corporate-level CSR policies that stretch beyond borders and across countries could become more important for MNEs with time. Unfortunately, at this point, we do not have these data about corporate-level or international CSR, and future research can account for this. Finally, although we examine the moderating effect of government ownership (as an ascribed nonmarket advantage) on the relationship between the domestic CSR of EMNEs and their internationalisation, there could be other ways through which firms acquire nonmarket advantages (such as via political connections and other political activities). Future research could examine the complementarity of CSR with other nonmarket strategies.

In conclusion, our study addresses the growing contemporary issue of whether domestic nonmarket capabilities impact the internationalisation of EMNEs. It emphasises the importance of the ways through which domestic CSR can reduce the liabilities of origin faced by EMNEs in internationalisation through improved legitimacy and reputation among international stakeholders.