Integrating responsible conduct in multinational enterprise strategy: an institutional framework

Multinational enterprises (MNEs) are increasingly exposed to different institutional pressures to contribute to the solution of grand societal challenges. Formal institutions such as inter-governmental organizations and national governments have multiplied their regulatory initiatives aimed at promoting sustainable business models over the years. Informal institutions, such as civil society and international non-governmental organizations, have promoted normative actions demanding large corporations to adopt business conduct that conforms to universal ethical norms. Despite these institutional pressures, managerial action is often disconnected from the grand challenge discussion, with corporate responsibility initiatives remaining an “add-on” to company strategy. The question left open is: when do institutions make a difference in helping MNEs integrate responsible conduct into their strategy? I combine institutional theory with research on international relations and law, and integrative social contracts theory, to answer this question. I develop a framework that considers supra-national and national institutions in relation to their formal regulatory and informal normative roles in promoting the integration of responsible conduct in MNE strategy.