Employer Attractiveness of EMNEs: The Role of CSR in Overcoming Country-of-Origin Image Constraints in Developed Host Countries.
| Verfasser | Le, Bich Ngoc |
| Posten | Emerging market multinational enterprises, corporate social responsibility |
1 Introduction
Emerging market multinational enterprises (EMNEs) have increasingly expanded their operations worldwide, not only in other emerging markets but also in developed countries (Hennart, 2012; Shirodkar & Shete, 2022). Nevertheless, these EMNEs often lack firm-specific assets like internalized knowledge (Meyer & Xin, 2018). Thus, they need to attract local talent with the right know-how to develop the firm-specific advantages that they have so far lacked in competition with more advanced competitors from Western countries (Held & Bader, 2018; Law et al., 2009).
Acquiring qualified workforce is crucial for all MNEs in the ever-intensifying competition for scarce highly skilled employees, called "war for talent." Indeed, companies are struggling more than ever to fill open positions - nearly 7 in 10 employers worldwide cannot find the right skills they need, which is the highest value in the last 15 years, according to Manpower Group's annual Talent Shortage Survey (ManpowerGroup, 2022). This issue is more relevant and challenging for EMNEs since they suffer from double disadvantages of liabilities of foreignness plus liabilities of emergingness (Zhang et al., 2020a). Therefore, the question arises as how EMNEs can compete with developed market multinational enterprises (DMNEs) in the labour markets of developed countries and become more attractive to prospective applicants. So far, researchers have closely looked into applicant attraction of DMNEs. However, little attention is devoted to how EMNEs can attract and acquire local potential employees in developed countries (Held & Bader, 2018; Meyer & Xin, 2018). Addressing this question is vital to the continuing international growth of EMNEs. Based on a report of UNCTAD (2019), outward investment of developing economies was $418 billion, accounting for 41% of the global outflows. The number of EMNEs in Fortune Global 500 also increased more than twofold, from 69 in 2007 to 164 in 2017 (Luo & Tung, 2018). In Forbes Global 2000, China has grown from only 43 companies in 2003 to 351 in 2022 (Forbes, 2022).
To overcome country-of-origin image constraints on hiring local talent in developed markets, EMNEs have been recommended to send out signals about otherwise unobservable characteristics of the firms, such as good human resource (HR) practices (Holtbriigge & Kreppel, 2015) or corporate social responsibility (CSR) (Jones et al., 2014). In particular, previous research has shown that elementary HR practices, like career opportunities or pay, have become less useful to attract talents in developed countries due to the interchangeability of jobs and company profiles within the same industry. Consequently, CSR is becoming more important for firms to differentiate themselves from their competitors and to attract qualified employees (Greening & Turban, 2000; Jones et al., 2014; Zhang et al., 2020b). Therefore, we suggest that CSR is an instrument worth considering for EMNEs to close the attractiveness gap to DMNEs in developed countries. Furthermore, although literature has examined the impact of firms' CSR on job applicants, drawing upon signaling theory, little is known about the underlying mechanisms and contingency factors. For example, some applicants (the receivers of the signal) may interpret the same CSR signal differently from other receivers stemming from distrust of the firm's motives. Indeed, Gond et al. (2017) conclude their study by calling for further research that provides "integrative analyses of the drivers of CSR and the boundary conditions and mechanisms underlying individual reactions to CSR."
Responding to this call, we use an experimental approach and adopt a multi-level perspective to investigate the effect of macro-level country-of-origin, firm-level CSR engagement and micro-level individual skepticism on job-pursuit intention to find out how CSR helps mitigate the negative effect of being an emerging market firm on hiring talent in developed markets. Particularly, we create different hypothetical corporation career webpages based on career pages of real multinational companies and observe applicants' behaviors on these sites. We chose websites as the communicating means because websites have become an increasingly prevalent source of recruitment information. Prior research, e.g., Behrend et al. (2009); Jones et al. (2014), used website printouts in their studies. Nevertheless, only real, interactive websites allow to track respondents' behaviors.
This study contributes to the literature in the following ways. First, the study extends the CSR research on employee recruitment by adding a country-level factor, namely country-of-origin. Although companies' CSR engagement has long been suggested to help attract talent in the literature, previous studies were mainly conducted in the domestic context, particularly in Western countries (Maon et al., 2019), leaving country-level factors an under-researched area. One exception is the study of Hong and Kim (2017), which is set in the international recruiting context. Specifically, they investigated Korean applicants' job-pursuit intentions to US and Chinese MNE. These findings, however, could be subjected to limited generalizability due to using only two countries of origin, US as developed and China as emerging markets. To fill this gap, we investigate these underlying issues on MNEs from ten countries, five developed and five emerging markets, operating in Switzerland, Germany, and Austria. These three host countries are highly developed German-speaking countries, all in the top 25 most attractive destinations for FDI for 5 years in a row, according to Kearney (2019)'s FDI Confidence Index, representing an appropriate study context.
Second, the study brings the concept of country-of-origin image from marketing into international recruitment research. To date, most conceptualization focuses primarily on the relationship between country images and consumer's product perception despite the fact that country-of-origin image has a broad effect not only on consumers but also on foreign investors or employees (Buhmann & Ingenhoff, 2015).
Third, we take into account applicants' skepticism, a key challenge of CSR communication (Du et al., 2010). There are two different forms of skepticism: situational skepticism, "which is a momentary state of distrust of an actor's motivations," and skepticism as a trait of individuals, "which is an individual's on-going tendency to be suspicious of other people's motives" (Forehand & Grier, 2003). In this study, we focus on the former and control for the later. This will contribute to the advancement of knowledge of individual-level outcomes of CSR. According to a review of Aguinis and Glavas (2012), while differential outcomes of CSR have long been studied, only 4% of the empirical work examined these outcomes at the individual level.
Fourth, we explore the potential of using behavioral experiments to complement the survey-based methods in international business (IB) research. The extant literature has called for the use of experiments as they are mostly absent from the IB research (Zellmer-Bruhn et al., 2016). Thus, we believe that the methodological innovation proposed in this study will make a contribution to the IB literature.
Last but not least, this study addresses applicants' willingness to search for CSR information of a firm, which is a determinant of their awareness of the firm's CSR activities. Researchers find that the general public's awareness of companies' CSR activities is typically low, representing a serious impediment in firms' attempts to maximize benefits from CSR engagement (Bhattacharya et al., 2008; Du et al., 2010). The reason is that the general public rarely proactively seeks information about CSR, even for the issues important to them (Dawkins, 2005). Despite its importance, no prior studies addressed willingness to search for CSR information in international recruitment context. Particularly, in previous studies, the authors manipulate CSR by directly giving out information on the company's CSR activities. However, in reality it is not that straightforward. Therefore, in our study, potential applicants have to actively look for CSR information on companies' websites to explore their motivation to look for information, especially on CSR.
The study is organized as follows: in the next section, we introduce the theoretical background leading to our hypotheses. We then describe the used methodology. Finally, we present our findings and theoretical as well as practical implications.
2 Theoretical Background and Hypotheses
The study is based on signaling theory and on attribution theory. Signaling theory is typically concerned with the use of signals to address information asymmetries between two parties (Rynes, 1989; Spence, 1973). With regard to recruitment context, prospective applicants usually have limited information on a company in the beginning phase of job-choice decision and consequently tend to use the information on hand as signals to reduce initial information asymmetries between the recruiting firms and themselves (Baum & Kabst, 2013). Thus, being the sender of signals, companies often use signals of their interest to convey positive attributes in an effort to influence applicants' attraction. However, applicants might also be driven by signals which companies can hardly influence. Country-of-origin characteristics, for instance, are not controlled by companies and may serve as signals to shape an individual's country image, leading to a rather poor job characteristics of companies from emerging markets (Froese et al., 2010; Held & Bader, 2018). For that reason, EMNEs should send out information about their CSR serving as signals in order to be associated with better corporate characteristics.
It is noteworthy, however, that not all applicants (the signal receivers) will interpret the same CSR signal the same way...
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