Business Owners' Social Status and Firm Philanthropy

Abstract

This study builds and tests a model linking business owners’ economic and socio-political achievements, their perceived social status and their firms’ donation amount. Results from a national survey of Chinese private firms suggest that business owners’ equity in their own firms and political titles have significant positive effects on their firms’ donation amount. Business owners’ perceived social status, which has been little examined in the existing firm philanthropy literature, partially mediates the relationship between their equity and their firms’ donation amount, as well as the relationship between their political titles and their firms’ donation amount. Our study also suggests that business owners’ achievements in economic and political arena lead them to donate more to social causes because they tend to have more resources and face high pressures from the stakeholders to do that. Besides, their economic and political achievements also lead them to highly evaluate their social status, which in turn forces or motivates them to allocate more resources to charity.