The influence of political connection on corporate social responsibility——evidence from Listed private companies in China

Abstract

In recent years, Chinese private companies have improved a lot in corporate social responsibility (CSR) performance, especially in the philanthropic area. However, private companies' awareness and performance of social responsibility still have a big disparity with SOEs. And private companies' policy of social responsibility is subjective and preferential. To explain this contradiction, this paper tries to introduce political connection and, based on stakeholder salience theory, to test how political connection changes managers' perception of stakeholders' relative importance and cause changes in stakeholders' satisfaction level of social responsibility requirement. The result shows that (1) political connection has positive influence on private companies' CSR; (2) companies with political connection are significantly better than the ones without political connection in society-oriented and customers-oriented responsibility; (3) two kinds of companies have no significant difference in investors-oriented responsibility; (4) as for government-oriented and employee-oriented responsibility, companies with political connection are worse than ones without political connection. These findings are significant for China's future construction of competition system and private companies' choice of stakeholders and future investment.

Corporate social responsibility and international business: examining the nexus and gaps from a developing economy perspective

“…Tuokuu and Amponsah-Tawiah (2016) are more emphatic, arguing that "CSR takes its roots from the stakeholder theory". They further subdivide stakeholders into internal and external and posit that "CSR programmes cannot be executed" if organisations fail to receive stakeholders' cooperation, a view held by other scholars (Huang & Zhao, 2016). Hinson et al (2015) who share similar disposition expand the argument further by suggesting that organisations are pressured to report on their sustainability activities due to institutional and stakeholder influence.…”

Environmental policy, environmental performance, and financial distress in China: Do top management team characteristics matter?

“…Gu et al (2013) also found a positive association between the firm's "political connectedness" and willingness to pursue socially responsible activities in particular areas of ecological and charitable actions. Huang and Zhao (2016) found that political connection has a positive impact on the social performance of Chinese private firms (non-state-owned firms), and such politically connected firms are noticeably healthier than the ones with no political connections. (2014) connection is linked with "greater symbolic benefit," whereas the second type is associated with "greater material benefit" (Li & Zhang, 2007;O'Brien, 2008).…”

“…Finally, our results (from Hypothesis 2c) are in line with the arguments of previous studies (Faccio et al, 2006;Hillman, 2005) that politically connected firms are more able to enjoy privileged benefits in the form of information and resource access, government funding to avoid the uncertain adverse situations. Also, politically connected firms are more inclined to pursue environmental policies (Berrone & Gomez-Mejia, 2009;Gu et al, 2013;Huang & Zhao, 2016;Marquis & Qian, 2014) and consequently bring positive impact on the firm's financial outcomes (Lin et al, 2015). Similarly, Li and Zhang (2007) and Peng and Luo (2000) argued that politically connected corporate executives result in greater "material benefit."…”

Corporate social responsibility reporting of banks operating in Ghana

“…Some scholars (Tuokuu & Amponsah-Tawiah, 2016) have contended that "CSR takes its roots from the stakeholder theory", and if organisations fail to receive stakeholders' cooperation, "CSR programmes cannot be executed" (Huang & Zhao, 2016). The stakeholder theory, according to Maignan and Farrell (2004), seeks to advocate that firms consider other goals in addition to profit maximisation and irrespective of the nature, size and type of business; companies that invest in CSR will achieve positive benefits.…”