From Corporate Community Engagement to Social Acceptance : Evidence from a Foreign Manufacturing Subsidiary Operating in an Emerging Economy

Sammanfattning

Corporate community engagement has increasingly emerged as a strategic mechanism for foreign manufacturing subsidiaries to build relationships with host communities and secure social acceptance. For subsidiaries with operations that are highly visible and closely tied to local communities, community perceptions play a critical role in operational continuity. However, the relational mechanism that translates community engagement into social acceptance remains empirically underspecified, particularly in non-extractive manufacturing contexts in emerging economies. This study examines how corporate community engagement initiatives influence the social acceptance of a foreign manufacturing subsidiary, with community trust investigated as the central mediating mechanism. A quantitative, deductive approach was adopted, employing a cross-sectional survey administered to 189 community members residing near a Swedish-owned activated carbon manufacturing subsidiary operating in Sri Lanka. Data were analyzed using reliability analysis, descriptive statistics, Pearson correlation, simple linear regression, and bootstrap mediation analysis via Hayes' PROCESS macro (Model 4, 5,000 bootstrap samples, 95% confidence interval) in SPSS. All four hypotheses were supported. Corporate community engagement strongly and positively predicted both community trust (β = 0.882, R² = 0.779) and social acceptance (β = 0.832, R² = 0.693). Community trust significantly predicted social acceptance (β = 0.833, R² = 0.694) and partially mediates the relationship between corporate community engagement and social acceptance (b = 0.337, 95% CI [0.210, 0.484]), accounting for 47.3% of the total effect. A significant direct effect also remained (β = 0.438, p < .001). These findings indicate that social acceptance is generated through two co-existing pathways. A relational pathway mediated by trust, and a direct pathway through which engagement leads to acceptance independently, confirming that social acceptance is shaped not only by corporate activities but also by how communities interpret those activities through trust-based relationships. This study contributes to the SLO, CSR, and international business literatures by providing empirical evidence on micro-level trust dynamics between foreign subsidiaries and host communities in an emerging economy. The study extends the SLO framework beyond its extractive industry and Western origins to a non-extractive manufacturing context, offering one of the first quantitative mediation tests of the engagement-trust-acceptance pathway at the subsidiary-community level. Practically, the findings suggest that foreign subsidiaries should treat community engagement as a long-term relational strategy rather than an isolated philanthropic activity, emphasizing transparency, consistency, responsiveness, and genuine community involvement to strengthen trust and sustain social acceptance.