Chinese Private Corporate Philanthropy: Social Responsibility, Legitimacy Strategy, and the Role of Political Capital

Abstract

We integrate theories in the corporate social responsibility (CSR) literature and research on China’s post-socialist transition to examine charitable giving by Chinese private enterprises. Empirical analysis of data from a 2006 survey shows that private enterprise involvement in philanthropy is positively associated with their economic and ethical performances, and that it is also positively associated with the reception of government sanctions for poor environmental performance. These results support our arguments based on a synthesis of Carroll’s CSR model and the strategic legitimacy approach to corporate philanthropy. We also find that whereas private enterprises whose owners hold seats in political councils are more likely to donate to charity, those headed by former cadres do not appear to behave any differently. These findings shed new light on how political capital shapes corporate action. Finally, our analysis reveals remarkable differences between factors influencing firms’ decisions to contribute to charity and those influencing the amount of the charitable contribution. As such, our study advances the theoretical understanding of corporate philanthropy and enriches the empirical knowledge of firm behavior in post-socialist China.