In the name of charity: Political connections and strategic corporate social responsibility in a transition economy

In recent years, Chinese private companies have improved a lot in corporate social responsibility (CSR) performance, especially in the philanthropic area. However, private companies' awareness and performance of social responsibility still have a big disparity with SOEs. And private companies' policy of social responsibility is subjective and preferential. To explain this contradiction, this paper tries to introduce political connection and, based on stakeholder salience theory, to test how political connection changes managers' perception of stakeholders' relative importance and cause changes in stakeholders' satisfaction level of social responsibility requirement. The result shows that (1) political connection has positive influence on private companies' CSR; (2) companies with political connection are significantly better than the ones without political connection in society-oriented and customers-oriented responsibility; (3) two kinds of companies have no significant difference in investors-oriented responsibility; (4) as for government-oriented and employee-oriented responsibility, companies with political connection are worse than ones without political connection. These findings are significant for China's future construction of competition system and private companies' choice of stakeholders and future investment.

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“…To solve endogenous of political connection, company scale, financial efficiency and CSR, I use the first-lagged method (Lin et al 2014). H1:…”

Section: Model Designmentioning

confidence: 99%

The influence of political connection on corporate social responsibility——evidence from Listed private companies in China

Huang

Zhao

2016

Int J Corporate Soc Responsibility

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“…We examine whether a political-networking motivation underlies foreign investment (Du and Girma, 2010;Liu et al, 2014a;Lin et al, 2015;and Jiang and Kim, 2015). We argue that qualified foreign institutional investors (QFIIs) deploy socialengagement in non-SOEs to build competitive advantage.…”

Section: Introductionmentioning

confidence: 99%

“…Investigations emphasizing the philanthropic component of Chinese CSR-engagement include Williams (2003), Wang and Qian (2011), Jia and Zhang (2012, Chen at al. (2015), Lin et al (2015) and Cheng et al (2016).…”

Section: Introductionmentioning

confidence: 99%

The role of board gender and foreign ownership in the CSR performance of Chinese listed firms

McGuinness

Vieito

Wang

2017

Journal of Corporate Finance

691

473

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China's recent promotion of Corporate Social Responsibility (CSR) has coincided with a marked increase in the number of Chinese listed firms attracting female board members and foreign equity investors. Using Rankins' (RKS) ratings over the 2009 to 2013 period, we show that greater gender balance in top-management supports stronger CSR performance. This finding broadens gender-based accounts emphasizing social networks (Westphal and Milton, 2000), Critical Mass Theory (Kramer et al., 2006;Bear et al., 2010;and Soares et al., 2011) and team dynamics (Woolley et al., 2010;and Hoogendoorn et al., 2013). Findings also reveal stronger CSR performance in firms with a female CEO. Female leadership thus appears to be just as important as gender mix in driving CSR change.CSR ratings are also increasing in foreign ownership levels. We examine whether a political-networking motivation underlies foreign investment (Du and Girma, 2010;Liu et al., 2014a;Lin et al., 2015;and Jiang and Kim, 2015). We argue that qualified foreign institutional investors (QFIIs) deploy socialengagement in non-SOEs to build competitive advantage. But in SOEs, where strong political networks already exist, QFIIs have less incentive to boost CSR ratings. However, results indicate little difference in the social ratings of QFII-invested SOEs and non-SOEs.Additionally, we confirm the Barnea and Rubin (2010) contention of an inversion in social ratings at entrenched managerial ownership levels. Non-linear rating effects also emerge in relation to state ownership (Li et al., 2013). Finally, CSR performance exhibits positive (negative) relation with a listed entity's size and age (leverage and lagged return-on-equity) but virtually no connection with independent board representation.

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“…For example, if most papers attempt to investigate the impacts of being politically connected firms, White et al (2017) take differently in which they also investigate the antecedents of corporate political ties by focusing on the business environment. Some articles also study the link between political connections of firms and their social responsibility performance (Gu et al, 2013;Lin et al, 2015). Another interesting issue is a paper by Song et al (2016) which study the effect of corporate political connections on employee wage.…”

Section: Other Issuesmentioning

confidence: 99%

A Recent Literature Review on Corporate Political Connections

Trinugroho

2017

JDM

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It has always been an interesting issue deliberating the connectedness between corporation and political power. There have been a substantial number of papers in the academic literature empirically studying what so call "corporate political connections" over the last 17 years. Using 81 papers published in 2010-2017 in finance, economics, accounting, management and other journals, in this present paper, I provide a recent literature review on firm political connections particularly with respect to the empirical studies discussing the impact of being politically connected firms. A number of issues related to the effect of political connections on corporate strategy, behaviors and outcomes have been addressed. Few other papers provide different perspective by looking at the antecedents of corporate political connections and the contingency role of such connections. Little is found on the development of new measures of corporate political connections. Finally, it could be suggested that the interaction between political connections and the technological-based business innovation would be an interesting issue to study.

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In the name of charity: Political connections and strategic corporate social responsibility in a transition economy

Cited by 318 publications

References 66 publications

The influence of political connection on corporate social responsibility——evidence from Listed private companies in China

The influence of political connection on corporate social responsibility——evidence from Listed private companies in China

The role of board gender and foreign ownership in the CSR performance of Chinese listed firms

A Recent Literature Review on Corporate Political Connections

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