Subsidiary CEO Staffing and CSR in the Host Country: Focusing on Corporate Philanthropy

This paper views foreign subsidiaries’ CEO staffing policies and their CSR activities in host country as strategies to gain legitimacy. Using a sample of 5,469 observations from 576 foreign subsidiaries of MNCs during 2002 to 2016 in Korea, we examine the relationship between CEO staffing and CSR activities in host countries. We conducted a random-effect panel tobit regression with CEO localization as an independent variable and corporate philanthropy as a dependent variable. Our result shows that expatriate CEOs of foreign subsidiaries are more likely to engage in corporate philanthropic practices, suggesting that expatriate CEOs and host country national CEOs gain different degree of legitimacy. In other words, expatriate CEOs have to put more efforts on corporate philanthropy to achieve legitimacy. In addition, the paper finds that this relationship is weakened as CEO tenure increases. The result shows that the necessity of efforts for corporate social responsibility activities is reduced as the CEO tenure extended, thereby securing legitimacy. Our results shed light on the relationship between CEO staffing and CSR activities, the relationship which has yet to be examined, by conducting empirical analysis.