Abstract
This paper examines whether private entrepreneurs with communist party member status affect corporate social responsibility (CSR) performance of private enterprises. Our empirical result reveals that firms led by private entrepreneurs of communist party members are significantly associated with higher CSR score. The result is robust to confronting several sources of endogeneity, e.g., re-examining the result using propensity score matching (PSM), entropy balancing (EB) and Heckman two-stage estimation, removing the influence of local religious culture. Further, the observed positive relation is particularly sharper for firms with party organization embedding and a good external legal environment. Our findings highlight entrepreneur political affiliation as an important driver of socially responsible corporate decision making.
Highlights
Corporate social responsibility (CSR) reflects the extent to which a firm actively engages in responsible business activities and has been considered to be important determinant of firm’s sustainability
This paper examines whether private entrepreneurs with communist party member status affect corporate social responsibility (CSR) performance of private enterprises
Our empirical result reveals that firms led by private entrepreneurs of communist party members are significantly associated with higher CSR score
Summary
Corporate social responsibility (CSR) reflects the extent to which a firm actively engages in responsible business activities and has been considered to be important determinant of firm’s sustainability. Some scholars have identified factors that stimulate private enterprises to be involved in CSR activities, including political participant of entrepreneurs (Liang et al, 2010), business owners’ social status (Gao et al, 2011), family involvement (Chen and Chen, 2014; Zhu, 2015), industrial associations (Chen et al, 2017) and party organization embedding (Xu et al, 2019). We will focus on the question of whether private entrepreneurs of communist party members carrying communist culture have an effect on CSR of private enterprises. We find a positive and significant association between private entrepreneurs of communist party members and CSR. This result is robust to control for firm-level heterogeneity, entrepreneur-level.
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