How international strategy influences the relationship between resource slacks and CSR?: a perspective of transaction costs theory

Abstract

The current research of slack-performance relationship pays attention mainly to a set of overlapping slack natures, such as being sticky or liquid, without sufficient consideration of variables related to the internal structure of a given organization. I posit that this weakness may prevent us from further understanding how different slack resources (the slacks) influence firm performance. Moreover, the research on slack-performance relationship has pay insufficient attention to firm's performance in terms of corporate social responsibilities or CSR. Combining the transaction cost theory of the firm with a perspective of international strategy (Taylor, Beechler, & Napier, 1996), I propose a new model explaining how organizational-structure-related variables may interact with the slacks and influence firms' corporate social responsibility. In the study, I propose that with the international strategy, the positive relationship between liquid slack of a given MNE and its corporate social performance will become stronger. Meanwhile, with the international strategy, the negative relationship between the sticky slack of a given MNE and its corporate social performance will become weaker. After analyzing data from publicly listed US firms (2000-2012), I obtain evidence supporting the importance of organizational integration structure for understanding slack-performance relationship. The results show that the international strategy has negative effects to moderate the relationship between the slacks and corporate social responsibilities. Keywords: Sticky slack, Liquid slack, Corporate social performance, Corporate social irresponsible, International strategy