Many corporations actively engage in political activities to enhance their relationships with politicians, facilitating access to scarce resources and creating competitive advantages. We investigate corporate donations to explore how they initiate interactions between firms and new local leaders in China. Specifically, we propose that political turnover creates unique opportunities for firms to win over new officials via corporate donations, especially in competitive markets. Moreover, we find that firms that make generous donations at the beginning of a new city secretary’s tenure (...) receive more attention from representatives of new local leaders, especially firms that were politically disadvantaged under a predecessor’s governance. Empirical studies on the turnover of city secretaries between 2001 and 2012 in China strongly support our hypotheses. Consequently, this study improves our understanding of how corporate donations initiate social exchanges between firms and politicians. (shrink)

This paper examines the association between corporate philanthropy and tunneling by controlling shareholders. Using a unique dataset from China, the paper finds evidence that firms donating more are less likely to tunnel. The negative association between philanthropy and tunneling is stronger when firms are faced with more severe agency conflicts, as indicated by lower largest shareholding, fewer growth opportunities, lower state ownership, and weaker product market competition. The results suggest that companies engaging in philanthropy have incentives to enhance their reputations (...) and improve their relationships with stakeholders. (shrink)

This article examines whether the likelihood and amount of firm charitable giving in response to catastrophic events are related to firm advertising intensity, and whether industry competition level moderates this relationship. Using data on Chinese firms’ philanthropic response to the 2008 Sichuan earthquake, we find that firm advertising intensity is positively associated with both the probability and the amount of corporate giving. The results also indicate that this positive advertising intensity-philanthropic giving relationship is stronger in competitive industries, and firms in (...) competitive industries are more likely to donate. This study thus provides evidence suggesting that even in the wake of catastrophic events, corporate philanthropic giving is strategic. (shrink)

The growing popularization of stakeholder theory among management scholars has offered a useful framework for understanding the multiple and interdependent roles of government and business in an increasingly challenging political and regulatory environment. Despite this trend, attention to the role and responsibility of government to protect citizen rights has been limited. To the two traditional stakeholder theory views of government where the focal organization remains the firm, we propose to add two views by pivoting the government’s place and making it (...) the focal organization. We thus describe governments as serving four roles in the business–government–society nexus. For each role, we analyze typical governmental activities/behaviors, relationships with firms’ stakeholders, as well as the challenges and limits to these roles. We also focus on the central notion of salience amplification, as a means of checks and balances across stakeholders in order to safeguard citizen rights and reveal the greater good. (shrink)

In this study, I examine the hidden connection between corporate philanthropic giving and corporate environmental misconduct. Using survey data from Chinese family-owned firms, I provide strong and consistent evidence to show that corporate environmental misconduct is significantly positively associated with corporate philanthropic giving, suggesting that some Chinese family-owned firms act philanthropically to divert public attention from their environmentally unfriendly behavior. Moreover, the positive association between corporate environmental misconduct and corporate philanthropic giving is less pronounced for politically connected family-owned firms than (...) for their counterparts. The above results are robust to various sensitivity tests. My findings suggest that environmental misconduct dressing may be an additional motivation for corporate philanthropic giving and that different dimensions of corporate social responsibility may be inherently inconsistent in the given institutional setting. (shrink)

Using a sample of Chinese listed firms for the period of 2004–2010, this study examines the impact of religion on corporate philanthropic giving. Based on hand-collected data of religion and corporate philanthropic giving, we provide strong and robust evidence that religion is significantly positively associated with Chinese listed firms’ philanthropic giving. This finding is consistent with the view that religiosity has remarkable effects on individual thinking and behavior, and can serve as social norms to influence corporate philanthropy. Moreover, religion and (...) corporate philanthropic giving have a significantly weaker (less pronounced) positive association for state-owned enterprises than for non-state-owned enterprises. The results are robust to a variety of sensitivity tests. Our results highlight religious influence on corporate philanthropic giving in contemporary China, an old traditional country with a typical communist economy. (shrink)

This article investigates the effects of firm size, profitability, industry affiliation, and the business cycle on retailer philanthropy. The importance of industry and firm effects on giving was analyzed with regression models using industry-fixed effects as well as firm strategy variables. The analysis included instrumental variables methodology to account for simultaneity in the charitable giving–profits relationship. Data were gathered from the IRS Corporate Statistics of Income Sourcebook, data that provide firm size class measures covering the entire firm size distribution ranging (...) from small retailers up to large multi-national retail firms. Retailer philanthropy was measured as the ratio of charitable contributions to total receipts. Important findings include a cubic relationship between retailer philanthropy and firm size; industry effects stronger than those observed for retail profit; and the absence of business cycle effects. The empirical research relating retail charitable giving to firm attributes including firm size and advertising, industry and business cycle factors are unique in the business ethics literature. Prior studies regarding the importance of industry on charitable giving utilized data across broad sectors of the economy. Firms from different sectors could be expected to differ in philanthropic approach due to differences in public contact as well as differences in public relations exposure. The strong industry effects reported for this sample of exclusively retail firms, with similar public contact, provide strong evidence for the importance of industry in determining firms’ charitable strategies. (shrink)

Economic openness, both in terms of increased international trade exposure and enhanced inter-firm networking, has been a key element of China’s economic emergence since the implementation of market reforms and the “opening-up policy” over 30 years ago. Unfortunately, these changes have also coincided with the increased incidence of bribery and corruption. Both in general, and in the specific context of China, research on the relationship between a firm’s tendency toward openness and its propensity to engage in bribery is scarce. This (...) study seeks to fill this gap based on empirical evidence provided by a large sample of Chinese firms. The findings of the study reveal that firms’ increased networking and openness tend to occur contemporaneously with greater bribery and corruption. We suggest that this may be due to the misuse of guanxi-based networks that coincide with the presence of firms’ open network strategies, heightened by the potential loss of resource and capability heterogeneity (and hence reduced competitive advantages) in the context of openness. We further find that firms paying bribes do so as an attempt to overcome unnecessary bureaucratic processes and ineffective institutional support that might tend to hinder their development. (shrink)