Institutional Ownership and Multinational Firms : Relationships to Social and Environmental Performance

A rare empirical test of the assertions of critics of multinational corporations (MNCs), who argue that firm-level social and environmental performance suffers as MNCs grow increasingly mobile.

This study represents a rare empirical test of the assertions of critics of multinational corporations (MNCs), who argue that firm-level social and environmental performance suffers as MNCs grow increasingly mobile and subject to the short-term financial demands of institutional investors. Such critics argue that ''footloose'' and ''stateless'' MNCs have not only divorced themselves from a particular sense of responsibility to their home countries, but have also fallen increasingly under the sway of the ''myopic'' demands of institutional investors.
Using multiple regression analysis, the study considered the impact of various levels of multinationality and institutional ownership on the social and environmental performance of US-based manufacturing companies. Based on this empirical analysis, the radical critique of MNCs was not supported. Rather, the level of multinationality of firms was positively associated with social and environmental performance in the home country. This is a far cry from the demonized view of MNCs proffered by the critics. These findings suggest the possibility that MNCs may even have a positive influence on the development of a global economy that is consistent with the values and intent of vision of sustainable development. Ultimately, the study suggest that at a minimum, more attention should be paid to utilizing talents and competencies of MNCs in support of furthering positive social and environmental agendas.

(Ph.D. dissertation, New York University, 1996; revised with new preface and index)