The Effects of Political Ties on the Corporate Social Responsibility (CSR) Performance in China
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This study introduces the history and characteristics of China’s corporate social responsibility (CSR) policy. Historical review focuses on the governmental drive since it has led the firms to the benevolent behaviors, based on which we regard CSR as a state-led institutionalization and thus have drawn the political tie for the core construct to affect the CSR performance. We empirically investigate the effect of political tie on the CSR performance in China, using the dataset for political ties at the top executive level in 246 Chinese listed firms. We hypothesize that the CSR performance has an inverted U-shaped relationship with political ties, and that the relationship is weakened by foreign ownership and regional marketization. The statistical findings support all hypotheses. The findings suggest that the market mechanism replaces the policy directive in making the benevolent behaviors although the government still exercises influences on the firms’ action. The study contributes to the literature by theorizing that firms’ government mandatory CSR performance changes with the variations of public pressure. Especially, examining China- specific phenomenon enables a new perspective when studying the institutional context of a transition economy.
Abstract
This study introduces the history and characteristics of China’s corporate social responsibility (CSR) policy. Historical review focuses on the governmental drive since it has led the firms to the benevolent behaviors, based on which we regard CSR as a state-led institutionalization and thus have drawn the political tie for the core construct to affect the CSR performance. We empirically investigate the effect of political tie on the CSR performance in China, using the dataset for political ties at the top executive level in 246 Chinese listed firms. We hypothesize that the CSR performance has an inverted U-shaped relationship with political ties, and that the relationship is weakened by foreign ownership and regional marketization. The statistical findings support all hypotheses. The findings suggest that the market mechanism replaces the policy directive in making the benevolent behaviors although the government still exercises influences on the firms’ action. The study contributes to the literature by theorizing that firms’ government mandatory CSR performance changes with the variations of public pressure. Especially, examining China- specific phenomenon enables a new perspective when studying the institutional context of a transition economy.
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