IDEAS home Printed from https://ideas.repec.org/a/kap/jbuset/v169y2021i4d10.1007_s10551-020-04495-4.html
   My bibliography  Save this article

Looking Backward and Forward: Political Links and Environmental Corporate Social Responsibility in China

Author

Listed:
  • Peng Zhou

    (Wuhan University)

  • Felix Arndt

    (De Montfort University)

  • Kun Jiang

    (University of Nottingham)

  • Weiqi Dai

    (Zhejiang University of Finance & Economics)

Abstract

This study aims to enrich our understanding of the relationship between political connections and the adoption of environmental corporate socially responsible (ECSR) investments. In addition to the individual-level political connections, i.e., entrepreneurs’ personal ties to government officials, we propose in China the creation of Communist Party of China (CPC) branches in privately owned firms serve as organizational and institutionalized dimensions of political connection building. Drawing on the social exchange theory, this paper details how CPC branches function in privately owned firms and how entrepreneurs are motivated by the reciprocal logic to engage in ECSR. We also supplement this main effect by examining the boundary conditions of it at the firm and regional level. Using a dataset with 17,690 firm observations in China, we find that the existence of CPC branches gives rise to the ECSR investments and the firm-level contingencies such as centralized governance and financial constraints, and the regional-level contingencies such as the development of the market system, are important moderators that shape the association of political links and ECSR investments. These findings have ample implications to understand the ECSR activities and extend social exchange theory beyond the individual level on which it is typically applied.

Suggested Citation

  • Peng Zhou & Felix Arndt & Kun Jiang & Weiqi Dai, 2021. "Looking Backward and Forward: Political Links and Environmental Corporate Social Responsibility in China," Journal of Business Ethics, Springer, vol. 169(4), pages 631-649, April.
    • Handle: RePEc:kap:jbuset:v:169:y:2021:i:4:d:10.1007_s10551-020-04495-4
    DOI: 10.1007/s10551-020-04495-4
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s10551-020-04495-4
    File Function: Abstract
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s10551-020-04495-4?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Campello, Murillo & Graham, John R. & Harvey, Campbell R., 2010. "The real effects of financial constraints: Evidence from a financial crisis," Journal of Financial Economics, Elsevier, vol. 97(3), pages 470-487, September.
    2. Yongqiang Gao & Taïeb Hafsi, 2015. "Government Intervention, Peers’ Giving and Corporate Philanthropy: Evidence from Chinese Private SMEs," Journal of Business Ethics, Springer, vol. 132(2), pages 433-447, December.
    3. Mario Kafouros & Murod Aliyev, 2016. "Institutions and Foreign Subsidiary Growth in Transition Economies: The Role of Intangible Assets and Capabilities," Journal of Management Studies, Wiley Blackwell, vol. 53(4), pages 580-607, June.
    4. Lin, Karen Jingrong & Tan, Jinsong & Zhao, Liming & Karim, Khondkar, 2015. "In the name of charity: Political connections and strategic corporate social responsibility in a transition economy," Journal of Corporate Finance, Elsevier, vol. 32(C), pages 327-346.
    5. Jerry Hausman & Gregory Leonard & J. Douglas Zona, 1994. "Competitive Analysis with Differentiated Products," Annals of Economics and Statistics, GENES, issue 34, pages 143-157.
    6. Jan Lepoutre & Aimé Heene, 2006. "Investigating the Impact of Firm Size on Small Business Social Responsibility: A Critical Review," Journal of Business Ethics, Springer, vol. 67(3), pages 257-273, September.
    7. repec:adr:anecst:y:1994:i:34:p:06 is not listed on IDEAS
    8. Dong, Zhiqiang & Luo, Zijun & Wei, Xiahai, 2016. "Social insurance with Chinese characteristics: The role of communist party in private firms," China Economic Review, Elsevier, vol. 37(C), pages 40-51.
    9. Douglas Cumming & Wenxuan Hou & Edward Lee, 2016. "Business Ethics and Finance in Greater China: Synthesis and Future Directions in Sustainability, CSR, and Fraud," Journal of Business Ethics, Springer, vol. 138(4), pages 601-626, November.
    10. Sihai Li & Xianzhong Song & Huiying Wu, 2015. "Political Connection, Ownership Structure, and Corporate Philanthropy in China: A Strategic-Political Perspective," Journal of Business Ethics, Springer, vol. 129(2), pages 399-411, June.
    11. Li, Hongbin & Meng, Lingsheng & Wang, Qian & Zhou, Li-An, 2008. "Political connections, financing and firm performance: Evidence from Chinese private firms," Journal of Development Economics, Elsevier, vol. 87(2), pages 283-299, October.
    12. Kevin Zheng Zhou & Laura Poppo, 2010. "Exchange hazards, relational reliability, and contracts in China: The contingent role of legal enforceability," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 41(5), pages 861-881, June.
    13. Graham, John R. & Harvey, Campbell R. & Rajgopal, Shiva, 2005. "The economic implications of corporate financial reporting," Journal of Accounting and Economics, Elsevier, vol. 40(1-3), pages 3-73, December.
    14. Steven M. Fazzari & R. Glenn Hubbard & Bruce C. Petersen, 1988. "Financing Constraints and Corporate Investment," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 19(1), pages 141-206.
    15. Kathy Babiak & Sylvia Trendafilova, 2011. "CSR and environmental responsibility: motives and pressures to adopt green management practices," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 18(1), pages 11-24, January.
    16. Alexander Dahlsrud, 2008. "How corporate social responsibility is defined: an analysis of 37 definitions," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 15(1), pages 1-13, January.
    17. Carroll, Archie B., 1991. "The pyramid of corporate social responsibility: Toward the moral management of organizational stakeholders," Business Horizons, Elsevier, vol. 34(4), pages 39-48.
    18. Tang, Zhi & Tang, Jintong, 2012. "Stakeholder–firm power difference, stakeholders' CSR orientation, and SMEs' environmental performance in China," Journal of Business Venturing, Elsevier, vol. 27(4), pages 436-455.
    19. Shi, Xinzheng & Xu, Zhufeng, 2018. "Environmental regulation and firm exports: Evidence from the eleventh Five-Year Plan in China," Journal of Environmental Economics and Management, Elsevier, vol. 89(C), pages 187-200.
    20. Yuan Xu, 2011. "The use of a goal for SO2 mitigation planning and management in China's 11th Five-Year Plan," Journal of Environmental Planning and Management, Taylor & Francis Journals, vol. 54(6), pages 769-783.
    21. Weiqi Dai & Mingqing Liao, 2019. "Entrepreneurial attention to deregulations and reinvestments by private firms: Evidence from China," Asia Pacific Journal of Management, Springer, vol. 36(4), pages 1221-1250, December.
    22. Jakob Arnoldi & Yulia Muratova, 2019. "Unrelated acquisitions in China: The role of political ownership and political connections," Asia Pacific Journal of Management, Springer, vol. 36(1), pages 113-134, March.
    23. Zhao, Hongxin & Lu, Jiangyong, 2016. "Contingent value of political capital in bank loan acquisition: Evidence from founder-controlled private enterprises in China," Journal of Business Venturing, Elsevier, vol. 31(2), pages 153-174.
    24. Zelong Wei & Hao Shen & Kevin Zheng Zhou & Julie Juan Li, 2017. "How Does Environmental Corporate Social Responsibility Matter in a Dysfunctional Institutional Environment? Evidence from China," Journal of Business Ethics, Springer, vol. 140(2), pages 209-223, January.
    25. Jin-hui Luo & Zeyue Huang & Xue Li & Xiaojing Lin, 2018. "Are Women CEOs Valuable in Terms of Bank Loan Costs? Evidence from China," Journal of Business Ethics, Springer, vol. 153(2), pages 337-355, December.
    26. Guo, Di & Jiang, Kun & Kim, Byung-Yeon & Xu, Chenggang, 2014. "Political economy of private firms in China," Journal of Comparative Economics, Elsevier, vol. 42(2), pages 286-303.
    27. Sunny Sun & Xiaoming Yang & Weiwen Li, 2014. "Variance-enhancing corporate entrepreneurship under deregulation: An option portfolio approach," Asia Pacific Journal of Management, Springer, vol. 31(3), pages 733-761, September.
    28. Charles J. Hadlock & Joshua R. Pierce, 2010. "New Evidence on Measuring Financial Constraints: Moving Beyond the KZ Index," The Review of Financial Studies, Society for Financial Studies, vol. 23(5), pages 1909-1940.
    29. Du, Julan & Lu, Yi & Tao, Zhigang, 2015. "Government expropriation and Chinese-style firm diversification," Journal of Comparative Economics, Elsevier, vol. 43(1), pages 155-169.
    30. MARA FACCIO & RONALD W. MASULIS & JOHN J. McCONNELL, 2006. "Political Connections and Corporate Bailouts," Journal of Finance, American Finance Association, vol. 61(6), pages 2597-2635, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Xuhua Wei & Min Wang & Jianzu Wu, 2023. "Ethnic minority status, political capital, and executive turnover in China: The moderating role of ethnic autonomous regions," Asia Pacific Journal of Management, Springer, vol. 40(3), pages 995-1020, September.
    2. Feng Xiong & Yaxin Shao & Haotian Fan & Yi Xie, 2023. "Analysis of the Motivation behind Corporate Social Responsibility Based on the csQCA Approach," Sustainability, MDPI, vol. 15(13), pages 1-29, July.
    3. Wei Jiang & Kui Wang & Kevin Zheng Zhou, 2023. "How Political Ties and Green Innovation Co-evolve in China: Alignment with Institutional Development and Environmental Pollution," Journal of Business Ethics, Springer, vol. 186(4), pages 739-760, September.
    4. Hasan, Mostafa Monzur & Jiang, Haiyan, 2023. "Political sentiment and corporate social responsibility," The British Accounting Review, Elsevier, vol. 55(1).
    5. Yi, Yuyang & Zhang, Zongyi & Xiang, Cheng, 2022. "The value of CSR during the COVID-19 crisis: Evidence from Chinese firms," Pacific-Basin Finance Journal, Elsevier, vol. 74(C).
    6. Cheng, Zhiming, 2022. "Communist Party branch and labour rights: Evidence from Chinese entrepreneurs," China Economic Review, Elsevier, vol. 71(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Weiqi Dai & Mingqing Liao, 2019. "Entrepreneurial attention to deregulations and reinvestments by private firms: Evidence from China," Asia Pacific Journal of Management, Springer, vol. 36(4), pages 1221-1250, December.
    2. Andrea Fracasso & Kun Jiang, 2022. "The performance of private companies in China before and during the global financial crisis: firms’ characteristics and entrepreneurs’ attributes," Economic Change and Restructuring, Springer, vol. 55(2), pages 803-836, May.
    3. Zhang, Dongyang & Guo, Yumei, 2019. "Financing R&D in Chinese private firms: Business associations or political connection?," Economic Modelling, Elsevier, vol. 79(C), pages 247-261.
    4. To, Thomas Y. & Navone, Marco & Wu, Eliza, 2018. "Analyst coverage and the quality of corporate investment decisions," Journal of Corporate Finance, Elsevier, vol. 51(C), pages 164-181.
    5. Shuxia Zhang & Liping Xu & Ning Liu, 2022. "Crowding‐in and crowding‐out effects of corporate philanthropy on R&D investment," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(6), pages 1835-1849, September.
    6. Wu, Guiying Laura, 2018. "Capital misallocation in China: Financial frictions or policy distortions?," Journal of Development Economics, Elsevier, vol. 130(C), pages 203-223.
    7. Dongmin Kong & Lu Shi, 2023. "Financial constraints and political catering disclosures of non‐state‐owned firms: Evidence from textual analysis," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 63(4), pages 4533-4563, December.
    8. Ek, Chanbora & Wu, Guiying Laura, 2018. "Investment-cash flow sensitivities and capital misallocation," Journal of Development Economics, Elsevier, vol. 133(C), pages 220-230.
    9. Lin Zhang & Yuehua Xu & Honghui Chen, 2022. "Do Returnee Executives Value Corporate Philanthropy? Evidence from China," Journal of Business Ethics, Springer, vol. 179(2), pages 411-430, August.
    10. Feng Liu & Hui Lin & Huiying Wu, 2018. "Political Connections and Firm Value in China: An Event Study," Journal of Business Ethics, Springer, vol. 152(2), pages 551-571, October.
    11. Cull, Robert & Li, Wei & Sun, Bo & Xu, Lixin Colin, 2015. "Government connections and financial constraints: Evidence from a large representative sample of Chinese firms," Journal of Corporate Finance, Elsevier, vol. 32(C), pages 271-294.
    12. Yang Liu & Weiqi Dai & Mingqing Liao & Jiang Wei, 2021. "Social Status and Corporate Social Responsibility: Evidence from Chinese Privately Owned Firms," Journal of Business Ethics, Springer, vol. 169(4), pages 651-672, April.
    13. Leon Guillén & Afcha Sergio & Chu Manuel, 2022. "Research on social responsibility of small and medium enterprises: a bibliometric analysis," Management Review Quarterly, Springer, vol. 72(3), pages 857-909, September.
    14. Park, SeHyun, 2023. "Profitability of politically corrupt firms: Evidence from Romania," Emerging Markets Review, Elsevier, vol. 54(C).
    15. Hu, Conghui & Liu, Yu-Jane, 2015. "Valuing diversity: CEOs' career experiences and corporate investment," Journal of Corporate Finance, Elsevier, vol. 30(C), pages 11-31.
    16. Nianhang Xu & Xinzhong Xu & Qingbo Yuan, 2013. "Political Connections, Financing Friction, and Corporate Investment: Evidence from Chinese Listed Family Firms," European Financial Management, European Financial Management Association, vol. 19(4), pages 675-702, September.
    17. Deng, Lu & Jiang, Ping & Li, Sifei & Liao, Mingqing, 2020. "Government intervention and firm investment," Journal of Corporate Finance, Elsevier, vol. 63(C).
    18. Zhang, Yi & Liu, Chun & Wang, Ting, 2020. "Direct or indirect? The impact of political connections on export mode of Chinese private enterprises," China Economic Review, Elsevier, vol. 61(C).
    19. Claudia Patricia Maldonado-Erazo & José Álvarez-García & María de la Cruz del Río-Rama & Ronny Correa-Quezada, 2020. "Corporate Social Responsibility and Performance in SMEs: Scientific Coverage," Sustainability, MDPI, vol. 12(6), pages 1-26, March.
    20. Berkowitz, Daniel & Lin, Chen & Ma, Yue, 2015. "Do property rights matter? Evidence from a property law enactment," Journal of Financial Economics, Elsevier, vol. 116(3), pages 583-593.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:jbuset:v:169:y:2021:i:4:d:10.1007_s10551-020-04495-4. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.