Contributions and Implications

We believe that the current paper produces important insights for multiple literatures. The CSR literature, rich as it is on discussion on the antecedents, nature of CSR and its performance impact, has hitherto not considered CSR outcomes under different ownership and location choices. Our focus on offshoring and outsourcing highlights that a simple organisational level model, even one that additionally includes the role of individual managers (McWilliams et al., 2006), does not sufficiently explain what shapes CSR outcomes in an age of modular and global supply chains.

Further novelty emerges from the emphasis we place on failure in CSR, rather than CSR performance more broadly. We formally defined CSR failure as a firm conduct that does not meet stakeholders’ expectations. In our view, existing literature places too much emphasis on discussing how firms try to optimize their CSR performance, when most are satisfied with merely preventing CSR failure. Notwithstanding this observation, the framework proposed here may offer some explanatory value for CSR performance as an outcome variable.

From an offshoring and outsourcing perspective, we add to the literature by looking at a very different kind of outcome from customary financial, activity level or innovation outcomes. This helps to better understand the trade-offs firms face when undertaking offshore outsourcing: offshore outsourcing may improve costs (Javalgi et

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al., 2009) and perhaps even innovation levels for the buyer firm (Bertrand & Mol, 2013), but it also poses complications with CSR. These should be interpreted as one form of hidden costs of outsourcing and offshoring (Larsen et al., 2013). Furthermore the focus of our work shifts attention away from what happens during initial offshoring and outsourcing decisions towards the dynamics of ongoing offshoring and outsourcing relationships, in line with calls for a greater focus on the nature and impact of organisational processes in the offshoring and outsourcing literature (Bidwell, 2012; Jensen, 2012).

Finally, our work serves to illustrate the important interactions between country level institutions and inter-organisational relations. Relations with foreign subsidiaries indeed affect CSR and legitimacy (e.g. Kostova & Zaheer, 1999), but we propose there is now a need to increase understanding of these issues across organisational boundaries. Given that our framework is relatively complex, we hope it can serve as an exemplar of theorizing efforts and empirical testing on this intersection between countries and inter-organisational relations.

Although the nature of the phenomenon and our framework may complicate efforts to test all propositions forwarded here we believe there are several empirical research designs that could produce fruitful insights. One way to test formally the propositions would be through undertaking a large-scale data collection effort in a single industry where all ownership and location choices are present, for instance the garments industry. Any effort to look at CSR failure empirically will have to account for the fact that some minimal gap between CSR expectations and practices will be acceptable, i.e. such studies will have to apply a threshold level for determining when gaps become failures. A cross-firm survey could be one way to measure CSR failure but there are also existing measures of ‘CSR success’ (e.g. Marano & Kostova, 2015). An alternative CSR failure measure could be found in (social) media mentions with negative CSR connotations. Firm level stakeholder expectations can be measured through survey methods (Fombrun, Gardberg, & Sever, 1999) or by constructing proxies (based on firm size, visibility and so on). Inter-organisational dependence and cooperation measures can only properly be obtained through survey measures, interviews or participant observation. By contrast measures of institutional distance are widely available from secondary sources (e.g., Berry et al., 2010). A case study of

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a single firm which undertakes concurrent sourcing (Parmigiani, 2007), i.e. it makes and buys the same product, as well as using both onshore and offshore sourcing, could offer unique insights into how such a firm approaches CSR practices differently, depending on the ownership and location choices, and how this then translates into CSR failure. Such cases may be relatively rare, but less so if the constraint about all modes occurring simultaneously is relaxed. Furthermore, those additional cases, of firms that have switched choices over time, offer interesting natural experiments in their own right.

From a practitioner point of view, although this is a paper about CSR failure, our message is mostly an optimistic one. We started by arguing that most organisations get CSR right most of the time. Furthermore, our paper sketched a number of mechanisms that organisations avail of to try and minimize CSR failure. In particular, they can choose to develop cooperative relationships with suppliers, which helps to lessen the negative effects of inter-organisational and cross-national differences on CSR failure.

Under outsourcing firms can also decide to engage in lopsided relationships, where the other party is highly dependent on the firm, or increase dependency in existing relationships. But as we noted this is a double-edged sword; while dependence may make the other firm run harder to try and comply, it also increases the odds that the other party will engage in window dressing rather than actually complying when inter-organisational or institutional differences are large that compliance becomes too costly. Managing this trade-off well is one of the hardest challenges in CSR. We suggest that firms must restrain themselves from exploiting the dependence other firms have on them.