Aligning the Walk with the Talk: Exploring the Impact of Institutions on EMNCs’ CSR Decoupling

Amid the rising legitimacy of corporate social responsibility (CSR), firms are increasingly adopting CSR decoupling by symbolically reporting their commitment despite a lack of substantive action. This study addresses a gap in understanding the antecedents of CSR decoupling among emerging multinational corporations (EMNCs) by exploring the role of formal institutional distance between home and host countries. Based on an institutional-based view, we posit that formal institutional distance exerts an asymmetric effect on EMNCs’ CSR decoupling, depending on the direction of the distance (i.e., whether EMNCs enter countries with stronger or weaker institutions than their home country). Specifically, we argue that the positive institutional distance mitigates, while a negative institutional distance exacerbates, EMNCs’ CSR decoupling. We further investigate the moderating roles of Confucian culture and state ownership as informal institutions at subnational and firm levels, respectively. Using a sample of Chinese EMNCs from 2010 to 2019, we find our hypotheses are mostly supported. The findings highlight the complex interplay between external regulatory pressures and internal cultural values in shaping EMNCs’ CSR decoupling.