Coming Back & Giving Back: Returnee Directors and Corporate Donations

Abstract

Literature on institutional change has studied such drivers for change as distributional conflicts, exogenous shocks, and external influences exerted by governments and firms. In this paper, we explore the role of mobile individuals as carriers and transmitters of initial impetus for change. We argue that these individuals return ingrained with new ideas from the outside and are sufficiently embedded in the original context to make change happen from the inside. We focus on one such type of individual, returnees, i.e., expatriates who have gained their education or early-career work experience abroad, who then return to their home countries, and we examine the thesis that returnees transmit the idea of corporate social responsibility (CSR) from abroad and then spark change at home. Using data on publicly listed Chinese companies from 2000 to 2012, and exploiting the introduction of provincial policies toward attracting returnees as an instrumental variable for firms’ returnee levels, we find that having returnees on the corporate board significantly boosts firms’ donations. This effect is robust to a battery of robustness tests. We further show that returnee directors donate more, not in pursuit of tax benefits or political access, but as a result of their imprinted state-of-mind on the institutional idea of CSR. We discuss implications for the literature on institutional change, return migration, and corporate social responsibility.