This research addresses the growing expectations for multinational enterprises (MNEs) to contribute to sustainability at a global level by examining how MNEs develop firm-specific advantages (FSAs) through local stakeholder engagement. Using a case study of foreign offshore wind developers entering the U.S. market, we employ a social contracting perspective to analyze MNEs’ interactions with local business and non-business stakeholders. Our findings identify the components and mechanisms of the social contract essential to fulfilling stakeholder expectations. We demonstrate how social contracting between MNEs and their stakeholders facilitates the development of FSAs, enabling MNEs to recombine resources and build competencies while meeting the needs of stakeholders in the host market. This study advances our understanding of how MNEs contribute to the global diffusion of sustainable practices in the global value chain, highlighting its implications for enhancing MNE' competitiveness.
