Political Connections and Charitable giving of Chinese Private Enterprises: Analysis Based on the Nested Structure Model

Abstract

This study examines the impact of political connections on charitable giving by private enterprises in China in the business environment context. The study constructs a nested structure model and empirically analyzes 1,426 sample enterprises from the 13th China Private Enterprise Survey (2018) data using stata15.1 software. The findings indicate that the business environment influences political connections, charitable giving, and their interaction. Political connections at the individual level of enterprise owners and core managers partly have a positive impact on the charitable giving of Chinese private enterprises. At the enterprise level, the formation of political connections, including the establishment of party organizations, cost-sharing, and receiving government subsidies, also enhances charitable giving. Additionally, certain attributes of private enterprises and entrepreneurs, such as age, year-on-year growth in net profit, and total bank loans, positively influence their charitable giving. However, a high debt-to-asset ratio may adversely affect a company’s charitable giving. These insights are invaluable for local entrepreneurs, authorities, and policymakers in understanding how to effectively conduct charitable giving within specific business and political environments. Academically, this study contributes to the corporate sociology literature by offering new perspectives and data support for future research.