New CBDS Working Paper by Peter Wad

State-driven Corporate Social Responsibility? Mediating Offshore Outsourcing and CSR in Malaysia

Peter Wad, Associate Professor, CBDS, Copenhagen Business School

&

Sabrina Chong, PhD student, University of Malaya

Abstract

Offshore outsourcing of business activities from the Global North to the Global South does not only relocate investments and jobs, but has also brought about new business demands on suppliers activities and their social and environmental impact. The article explores whether, how and why offshore outsourcing transactions between foreign firms and Malaysian firms affect the upgrading of the CSR activities of Malaysia incorporated firms, taking the particular institutional context of Malaysia into consideration. The focus is on recipient country vendors, contract manufacturers or subcontractors and their reception of and strategising about corporate social responsibility. The findings of the study indicate, firstly, that the amount of foreign (sub)contracting influences the CSR strategising of domestic firms while the global value chain position is only conditioning the offshore outsourcing portfolio. Secondly, both the corporate governance of Malaysian affiliate and the Malaysian government play an important role shaping the perception, rhetoric and organisation of CSR activities by firms in Malaysia with a domestic value chain position. Hence, firms in Malaysia are squeezed by international business linkages and the local institutional context.

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