Global diversification, host-country environments, and corporate philanthropic giving: Evidence from Chinese multinational corporations

Abstract

Previous studies suggest that multinational corporations (MNCs) are likely to participate in more philanthropic activities because these activities could facilitate their operation in host countries. Focusing on a sample of Chinese MNCs between 2006 and 2019, this study investigates whether more diversified firms have higher corporate philanthropic giving (CPG), and the moderating effect of host-country environments. The results indicate that there is not a significant relationship between firm's global diversification and CPG. Nonetheless, we find that a host country's cultural distance, institutional quality and country risk negatively moderate the global diversification–CPG relationship, while a host country's economic growth positively moderates this relationship. Our findings suggest that although global diversification increases the incentives for Chinese firms to engage in philanthropy, it also constrains on their involvement in such activities. Furthermore, the precise effect of global diversification on a firm's CPG is conditional on the environment of its host country, and the host country that has large cultural difference to home country, good institutional quality, high risk and bad economic prospect leads to decrease in MNCs' CPG. Our study provides new evidences for the determinants of CPG in MNCs from emerging markets.