Diffusion of Corporate Philanthropy in Social and Political Network Environments: Evidence from China

Wenqing Wu,Hong Xu,Chien-Chi Chu,Sang-Bing Tsai,Jie Zhou,Kexin Yu

doi:10.3390/su10061897

Abstract

Based on the strong influence social networks have on managerial decision-making, as an important aspect of the strategic decision of the company, it is necessary to study how corporate social responsibility (CSR) actions could be affected by social networks. An analysis of 1725 Chinese listed firms and 40,484 executives from 2010 to 2014 showed that corporate philanthropy behavior will diffuse in social networks; more concretely, the higher the degree of social network centrality, the higher the enterprise’s donation level. Furthermore, the results also show that the role of social network centrality on corporate donation levels can be moderated by political connections. This study offers empirical evidence for developing a theoretical framework of CSR interaction and communication relevant to social networks, and offers insights into corporate philanthropy behavior based on social networks.

Highlights

Over the past several decades, an increasing amount of literature has focused on the influence of networks on corporate operations
We have discovered that some political connections can reduce the effects of social network centrality on corporate donations
It is worth mentioning that this study cannot draw the direction of network impact on the donation level; the purpose of the analysis is to prove the impact of the network on corporate donations

Summary

Introduction

Over the past several decades, an increasing amount of literature has focused on the influence of networks on corporate operations. Many scholars have studied the role of corporate philanthropy, an important aspect of a company’s strategic decisions, on the enterprise itself and on society. From the perspective of the political relations, some scholars believe that corporate donations enhance a company’s political connection with the government, thereby enhancing that company’s competitiveness. Hadani and Coombes [13] suggested that corporate donations may allow some firms to stand out from others when faced with political uncertainty. Some scholars doubt the positive relationship between nonmarket strategy such as corporate political activity and corporate performance. Within the political and social network environment, corporate philanthropy is an important issue that needs further study. Few of them observe the influence on corporate philanthropy from a network perspective, especially in developing countries

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