Foreign competition and corporate social responsibility: the role of the firm–government relationships

Abstract

Purpose This study aims to investigate how and why corporate social responsibility (CSR) among domestic firms in emerging countries is affected by foreign competition. Design/methodology/approach The paper combines the resource-based view with the institution-based view to explain how different levels of firm–government relationships prompt firms to enact CSR when facing foreign competition. First, this paper examines how domestic firms engage in CSR in the presence of foreign competition, followed by the consideration of how different firm–government relationships affect CSR strategies for firms faced with foreign competition. Using a database of 1,665 publicly listed Chinese firms between 2011 and 2017, this paper tests four hypotheses regarding CSR behaviors, foreign competition and firm–government relationships, and the findings of this paper generally support all four hypotheses. Findings This study contributes to the literature by demonstrating that domestic firms in China respond to foreign competition by increased engagement in CSR, and this positive relationship is heterogeneous among different firm–government relationships. CSR is attenuated by state ownership but enhanced by high industry competition and high regional marketization. Practical implications The findings of this research have implications for managers regarding the integration of internal and external resources to enhance CSR as a nonmarket strategy to help maintain firms’ competitive advantages. For the government, policymakers should establish and maintain a fair and market-oriented environment that encourages firms to increase CSR engagement. Originality/value The paper contributes to the literature exploring the mechanisms that motivate firms’ pursuit of CSR as a nonmarket strategy under the impact of intensified foreign competition.

Digital Transformation and Corporate Social Performance: How Do Board Independence and Institutional Ownership Matter?

“…First, we build an alternative proxy for CSP using the China Corporate Social Responsibility database published by the CNRDS, which has collected Chinese-listed firms’ CSP data since 2006 ( Jin et al, 2021 ; Meng and Sima, 2022 ). The index covers six dimensions of CSR, namely employee relations, corporate governance, diversity, environment, product, and community, similar to the globally used CSR database KLD.…”

“…Reverse causality may exist between digital transformation and CSP. Therefore, we use the 2SLS approach to address this problem ( Hossnofsky and Junge, 2019 ; Meng and Sima, 2022 ). Following previous studies ( Gupta et al, 2018 ; Hossnofsky and Junge, 2019 ), we use the average digital transformation per industry as the instrument, ensuring that it is highly correlated with the firms’ digital transformation and is exogenous to the CSP.…”

“…We have obtained the data from the China Stock Market and Accounting Research Database (CSMAR) and Chinese Research Data Service Platform (CNRDS), which publish reliable information on listed firms’ financial and economic performance, shareholder backgrounds, details of the top management teams, and other related statistics. These data sources are widely used in research focusing on Chinese-listed firms (e.g., Jin et al, 2021 ; Meng and Sima, 2022 ; Zhu et al, 2022 ). We have obtained CSR data from Hexun, which publishes a CSR index for each listed firm every year.…”

“…Following previous research ( Jin et al, 2021 ; Meng and Sima, 2022 ; Zhu et al, 2022 ), we control for various variables that may affect firms’ CSP. Firm size may influence CSP because larger firms have more resources to engage in CSR; we measure it as the natural logarithm of total assets.…”

Going Abroad and Going Green: The Effects of Top Management Teams’ Overseas Experience on Green Innovation in the Digital Era

“…Secondly, since green innovation is treated as a balance between economic interests and environmental sustainability, strategic decision-making necessitates moral courage from decision-makers. Previous literature has documented the impacts of corporate social responsibility and environmental protection on green innovation in both developed [ 59 ] and developing countries [ 26 , 27 ]. Compared with local executives, TMT members with overseas experience may regard environmental and social responsibility issues as fundamental to the firm; thus, they may prefer to make the firm engage in green innovation activities.…”