Doing good for political gain: the instrumental use of the SDGs as nonmarket strategies

Abstract

The United Nations Sustainable Development Goals (SDGs) are changing the way multinational enterprises (MNEs) engage with host governments. The SDGs offer MNEs a unique opportunity to build political influence by assisting governments in attaining a host country’s social needs. However, international business scholars have largely remained silent on how MNEs strategize to repurpose ‘doing good’ into political influence. Based on a multiple case study of four Western European MNE subsidiaries in Indonesia, we uncover the strategies that MNEs use to turn their SDG initiatives into political access and influence. Our study reveals three nonmarket strategies – SDG-directed cross-sector partnership, SDG-directed conflict management, and SDG-directed constituency building. These actionable strategies help MNEs manage the tensions arising from misaligned government priorities, high levels of perceived corruption, and skepticism toward foreign firms. Our findings advance the literature on international nonmarket strategy by explaining how MNE subsidiaries resolve these tensions and convert SDG-directed investments into political access and influence without succumbing to locally institutionalized norms of corruption. Finally, our study suggests that emerging-market governments may benefit from rewarding MNEs for their investments that contribute to the SDGs, as long as they provide clear guidance and multi-stakeholder platforms that foster effective collaborations with MNEs.