Corporate social responsibility, political connections, and barrier industry diversification: Evidence from China

Abstract

In this paper, using the data of private sector enterprises listed in China from 2009 to 2014, we study the relationships between corporate social responsibility, political connections, and barrier industry diversification among Chinese public-listed private-sector enterprises. The empirical test results reveal that establishing political connections can contribute to diversification of these firms, while engaging in corporate social responsibility helps to promote their barrier industry diversification. More engagement in corporate social responsibility makes it easier for them to establish political connections and strengthen the association between political connections and barrier industry diversification. This study provides new empirical evidence for not only understanding the relationship between political connections of these firms and access to economic resources but also a new perspective regarding their conduct related to corporate social responsibility (CSR).