Do the rich give more? The effects of family wealth and entrepreneurial effort on firm philanthropy and growth.

Abstract

Past research has offered conflicting evidence concerning the effect of family wealth on philanthropy. Equality of Opportunity (EOP) theory has received wide scholarly attention to explain an individual’s philanthropic engagement through the simultaneous consideration of both family wealth and personal effort. Drawing on the insights of EOP, we extend EOP toward entrepreneurial theory and practice by examining how entrepreneurs’ family endowment and entrepreneurial effort impact their charity donation and business growth. Utilizing a large, national dataset with 2503 Chinese entrepreneurs, our findings suggest that entrepreneurs with higher level of entrepreneurial effort are more likely to donate to charity and achieve greater firm growth in the process. In addition, higher level of entrepreneurial effort attenuates the contribution of philanthropy to firm growth. Conversely, no significant effect with respect to family wealth was found.