Enhance or inhibit? Unveiling the influence of chairman’s hometown attachment on the corporate philanthropy–Corporate financial performance relationship

Abstract

Although there have been numerous studies on the relationship between corporate philanthropy and corporate financial performance (CFP), theoretical analysis focusing on the legitimacy-based mechanism and the moderating role of key executives’ psychological characteristics is scarce. Hometown attachment is a special form of place attachment in environmental psychology, which reflects people’s psychological attachment to their hometown and the state of maintaining an intimate emotional connection with it. Based on Scott’s three-pillar institutional perspective, this study traces its origins from the Chinese cultural context, and discusses the legitimacy basis of donations in the Chinese cultural context and why donations can improve CFP. On this basis, the moderating effect of the chairman’s hometown attachment on the corporate donation–performance relationship is empirically tested. Through logical deduction, hometown attachment may form legitimacy pressure to weaken the above relationship or leverage more legitimacy resources to strengthen such a relationship. Which effect dominates? The empirical results in this study of A-share listed firms from 2009 to 2018 show that the moderating role of hometown attachment is more in line with the resource theory than the former pressure theory. Further research shows that the government and consumers are important providers of these legitimacy resources. This study reveals the mechanism for legitimacy acquisition through corporate donations in the Chinese context and answers the question of what the chairman’s hometown attachment brings about to their donation performance, providing some inspiration for practice.

Sentimentally attached to hometown: CEO hometown identity and corporate environmental violations

“…The word "hometown" also has multiple connotations, such as humanity, the environment, and social psychology (Turner et al, 1987). In the process of individual life and growth, individuals gradually develop a solid emotional dependence on their hometown, which often affects individual judgments and decisions (Chen and Bu, 2022;Scannell and Gifford, 2017). In essence, people's attachment to their hometown involves multi-dimensional emotions.…”

“…The saying 'the tree is a thousand feet tall, and the leaves fall back to their roots' is the best manifestation of the strong sense of hometown identity of the Chinese people. This rooted emotion can not only shape an individual's cognition and values, but also have a profound impact on their personality and behavior (Chen and Bu, 2022;Scannell and Gifford, 2017). Unfortunately, there is little literature on the role of the informal institutional factor of executive (especially CEO) traits in corporate environmental violations.…”