Research On The Social Responsibility And Financial Performance Of Multinational Oil Companies

Global foreign direct investment (FDI) flows reached1,508.6billion dollars, among which, China had attracted FDI flows of116billion dollars, and invested over60.1billion dollars.2The international trade and the world economy which dominated by the multinational companies is accelerating the recovery, the world and China will not forget the tremendous contribution which the multinational companies have done, but will also not ignore the social responsibility issues which multinational companies have caused. In April and June2011, multinational oil companies had caused major accident of oil spill in the Gulf of Mexico U.S., and Bohai Sea China, the multinational oil companies have been pushed to the teeth of social responsible storm.We first determined the research questions of social responsibility and financial performances of the multinational oil companies, designed the research train, further clarified which on the basis of the theoretical review and literature, and then made the multi-angle and multi-level research through theoretical research, indicator selection, the empirical test, the game research and case studie. Finally, we made conclusions and proposed suggestions on the basis of the study above.The main conclusions include:First, the conclusions of literatural study:the viewpoints of multinational companies on social responsibility had already developed from "should or not do" to "how to do", their practice is more and more detailed and specific. To the he theoretical system being realized in practice, the key factor is the responsiblity standard,"quality assurance" can be used as the advertise by the business, the faith of companies, also can be viewd as dead letters by the public. But if the standard is established, it can be used as the rule which companies comply with, the law of administrative enforcement, and the mark of public supervision. Therefore, the maturity of social responsibility standard is the key factor for execution of theory, also is the key link between theoretical and empirical research of our study.Second, the conclusions of theoretical study:under the condition of scale economy, the increase of responsibility capital gives the product responsible element, improves the product’s difference, reduces the rate of rent levels of responsibility cost, is beneficial to improve the substitutal elasticity of responsible products to other similar ones and consumers’ preference; under the condition of international trade, international trade can prompt the scale of responsibility capital and the substitutal elasticity of responsible products, and then result into the increase of responsible products variety and expansion of market.scale. Beyond which, expansion of responsibility capital is helpful for companies to establish and maintain comparative advantage in the international trade, which derived from the production of new different responsible product mix, not from the production of existing product mix.Third, the conclusions of empirical study:(1) the relevance of social responsibility and financial performance is significant. But the relevance between different levels of social responsibility and financial performance, the relevance between different indicators of the same level and financial performance is different;(2) for the short term, among33variable coefficients of three regression equations-formula (5-3) to (5-5),9ones are positive,11negative,13not significant. In orther words, the positive and negative effects of social responsibility to financial performance both exist, but the negtive effects are more obvious; for the long term, among33variable coefficients of three regression equations-formula (5-6) to (5-8),18ones are positive,8negative,7not significant. In orther words, the positive and negative effects of social responsibility to financial performance both exist, but the positive effects are more obvious;(3) under the condition of higher level of social responsibility, the positive effects which lag2phrases of social responsibility on financial performance are more obvious, social responsibility is "reason"; while under the condition of lower level of social responsibility, the positive effects which lag2phrases of financial performance on social responsibility are more obvious, social responsibility is "result". In other words, there is interaction between social responsibility and financial performance for the multinational oil companies, the causal relationship between which can transform into each other under the above conditions.Fourth, the conclusions of game study:(1) Under the conditions of short-term repeated game, as long as one game player is non-rational for certain probability, that is, giving up maximizing short-term interests in the game, the cooperative strategy will be the refining Bayesian equilibrium for the game. The number of non-cooperative game is always fixed at2, the rest are cooperative game. At this point, company can get greater benefit paid and improve financial performance by choosing to fulfill their social responsibilities. If this condition was satisfied, the social responsibility of multinational oil companies can play a positive role in the financial performance;(2) Under the conditions of infinitely repeated games of complete information, as long as the discount rate δ is large enough, that is, the investment rate of return γ is small enough, ruthless strategy will be the refining Nash equilibrium for the game. At this point, every deviation from the equilibrium speculation will be adverse to one, and it will suffer opponent’s severe punishment. In other words, company will get less benefit paid and lower financial performance by choosing not to fulfill their social responsibilities. If this condition was satisfied, the social responsibility of multinational oil companies can play a positive role in the financial performance;(3) Under the conditions of infinitely repeated games of incomplete information, if the game players are both non-rational, as long as the the number of repetitions is large enough (no need to be infinite), the outcome of game will still reach cooperative equilibrium. In other words, At this point, company can get greater benefit paid and improve financial performance by choosing to fulfill their social responsibilities. If this condition was satisfied, the social responsibility of multinational oil companies can play a positive role in the financial performanceThe main innovations include:First is the approach of empirical test. Regression testing alone can not answer the causal relationship between variables, that is, what social responsibility affect financial performance or financial performance affects social responsibility. In order to explain this problem, the empirical test made a bold try of Structrual Equation Model and achieved the desired goals.Second is the base of indicators selection. The selection of social responsibility indicators was based on the indicators classification of United Nations’World Investment Report2011. Combined with years of much social responsibility indicators’ collection, we made the final choice after integratedly considering the practice of social responsibility of multinational oil companies.Third is the angle of game research. Previous related game research of this question is mostly theoretical research; our game research is based on the actual problem found in the empirical test, that is, the double effect of social responsibility on financial performances. According to the problem, we built model and then pursuited solving. The purpose is to analyze the mechanism and conditions of those double effects, and propose the suggestions to the companies and government to develop the positive effects and avoid negtive effects in the practice.