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Corporate social responsibility and financial performance: The roles of government intervention and market competition

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  • Wenbin Long
  • Sihai Li
  • Huiying Wu
  • Xianzhong Song

Abstract

Incorporating instrumental and political views of corporate social responsibility (CSR), this study examines the relationship between CSR and corporate financial performance in China's unique institutional context, which is featured by the coexistence of a strong government and a transitional market economy. Our results show that (a) CSR positively affects financial performance, (b) state ownership weakens the relationship between CSR and financial performance, and (c) industry competition strengthens the relationship between CSR and financial performance for both state‐owned and non‐state‐owned firms. This study reveals that, although both an instrumental view and a political view of CSR are applicable in China, the motivation to create economic benefits for firms dominates, and market competition increases the strategic use of CSR.

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  • Wenbin Long & Sihai Li & Huiying Wu & Xianzhong Song, 2020. "Corporate social responsibility and financial performance: The roles of government intervention and market competition," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 27(2), pages 525-541, March.
  • Handle: RePEc:wly:corsem:v:27:y:2020:i:2:p:525-541
    DOI: 10.1002/csr.1817
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    2. Michael Greiner & Jing Sun, 2021. "How corporate social responsibility can incentivize top managers: A commitment to sustainability as an agency intervention," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 28(4), pages 1360-1375, July.
    3. Kraus, Sascha & Rehman, Shafique Ur & García, F. Javier Sendra, 2020. "Corporate social responsibility and environmental performance: The mediating role of environmental strategy and green innovation," Technological Forecasting and Social Change, Elsevier, vol. 160(C).

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