MNEs’ sustainability challenges and corporate social responsibility in emerging markets
Multinational enterprises (MNEs) face a liability of foreignness (LOF) when they operate in foreign markets. We argue that corporate social responsibility (CSR) facilitates the process of overcoming LOF, especially in emerging markets, since CSR may enhance a business’s legitimacy in the eyes of local stakeholders. In this chapter, we provide a case study on Amway, a U.S. multi-level marketing (MLM) company. In particular, due to confusion over differences between its MLM business model and an illegal pyramid scheme, Amway has experienced controversies, especially in emerging markets such as India and China. The company’s CSR engagement leads it to build a reputation and legitimacy, which helps it reduce its LOF. This study shows how a company uses CSR initiatives in its international expansion as a strategy to improve its sustainability as a good corporate citizen. As such, we aim to provide MNEs with valuable insights into how to invest in CSR to gain local stakeholders’ support and legitimacy in emerging markets.