Chinese Private Corporate Philanthropy: Charitable Giving as a Response to Legitimacy Crisis

• In Event: 256 - Section on Organizations, Occupations and Work Roundtables (one-hour)
  In Refereed Roundtable: Table 16. Social Responsibility

Abstract

We draw on two competing theoretical perspectives to examine charitable giving by Chinese private enterprises. On the one hand, the Corporate Social Responsibility (CSR) model developed by Carroll suggests that, as a form of discretionary CSR, involvement in philanthropy should be higher among exemplar corporate citizens. On the other hand, the strategic legitimacy approach views charitable giving as a strategy to rebuild legitimacy and expects it to be more common among firms that suffer legitimacy loss due to poor performance in other CSR areas. Our analysis of data from a 2006 national survey of private enterprises in China shows that firms that were fined for environmental violations were more likely to contribute to charitable causes. In addition, we find that the effect of poor environmental performance on the likelihood of charitable giving was stronger for larger firms than for smaller ones and that this effect was weaker in industries where environmental fines were more common. Overall these findings are consistent with the strategic legitimacy approach’s argument, but they also reveal interesting nuances with respect to how various factors influence the decision to contribute vis-à-vis that on the amount of contribution.

Authors

• Zongshi Chen, Zhejiang University

• Yang Cao, Zhejiang University