Family Involvement,Institutional Environment And Corporate Charitable Comtributions

With the deepening development of reform and opening up, the gap between the rich and the poor, environmental pollution and social inequality problems in China caused widespread concern, The Third Plenary Session of the18th Communist Party of China "Decision of the CCCPC on Some Major Issues Concerning Comprehensively Deepening the Reform" proposed that enterprises should be socially responsible, so we can see that corporate social responsibility has been risen to the level of national strategy. Corporate charitable donations as an important part of corporate social responsibility, is hailed as the highest manifestation of corporate social responsibility, and is at the top of the pyramid model of corporate social responsibility, it plays an important role in the regulation of the wealth gap, promoting social equity, maintaining social stability and other aspects of society, and attracting a great attention from academics and businesses.In the past, private enterprises were usually considered to be "rich without benevolence", however, more and more statistics show that, private enterprises have become an important force in promoting the development of Chinese philanthropy at the current time. The majority of Chinese private enterprises are owned and directly managed by business owners and their families, some are preparing to hand over to the second generation gradually, and these companies belong to the family business category. In this paper, we focus on the charitable donation behavior of family business, investigating the affecting factors and motives of corporate charitable donation behavior from the perspective of family involvement. Attempt to explore the direct impact of family involvement on the behavior of corporate charitable donations, as well as indirect effects on the charitable donation through corporate socio-emotional wealth mediation mechanism, and explore the moderation effect of different institutional environments have on the above mediation mechanism based on institutional theory. Specifically, the paper focuses on the following issues in-depth study:(1) what role does family involvement plays in the decision-making of corporate charitable donations, whether it helps to promote corporate charitable donations?(2) If the answer of first question is yes, then what is the motivation driving family enterprises to fulfill their philanthropic responsibilities, whether socio-emotional wealth (a measure of succession willingness) have mediation effect on the relationship between family involvement and corporate charitable donations, namely, does family involvement indirectly influence corporate charitable donations through the mediating effect of socio-emotional wealth?(3) Whether the institutional environments play moderation effect on the mediation process between "family involvement socioemotional wealth-corporate charitable donations"?This research begins by combining the characteristics of Chinese family businesses; analyzing the impact of family involvement has on corporate charitable donations, and uses the national private sector survey data, Probit and Tobit regression analysis methods to empirically test the theoretical hypotheses. The empirical results show that family involvement plays a direct impact on corporate charitable donations, the higher the proportion of family ownership, family board presence, and the longer the duration of family control, the more emphasis enterprises place on contribution to the society, and make more charitable donations. Secondly, based on perspective of socio-emotional wealth theory, on the premise of the significant main effect, we further build the model of family involvement affect corporate charitable donation through the transmission mechanism of socio-emotional wealth. According to Baron and Kenny (partially) mediation process definition, using national survey data on private enterprises, we test the mediation process by Sobel test, the empirical results show that the children’s willingness to take over the family business plays a part mediation effect on the relationship between family involvement and corporate charitable donations, but business owners’s willingness to hand over doesn’t play a mediating effect on the relationship between family involvement and corporate charitable donations. Compared to business owners’s willingness to hand over, the children’s willingness to take over have a greater impact on corporate charitable donations. Finally, the institutional environment is introduced as a mediation variable for the mediation process of "family involvement-socioemotional wealth-corporate philanthropy", constructing a moderated mediation model on the basis of the mediation effect, empirical results support most of our hypotheses, specifically indicated that, compared to a higher level institutional environment the enterprise located in, when the enterprises are located in a lower level institutional environment, the positive correlation between the duration of family control and business owners’s willingness to hand over and the children’s willingness to take over weakened, similarly, the positive correlation between family member board presence and the children’s willingness to take over. Compared to a lower level institutional environment the enterprise located in, when the enterprises are located at a higher level of institutional environment, the positive correlation between the children’s willingness to take over and corporate charitable contribution.The results indicate that the ability of family involvement and the motivation to preserve socio-emotional wealth are important determinants of charitable donations by family enterprises. And the positive role in promoting is more effective in a better institutional environment.Theoretical contributions of this study are as follows:Firstly, expand the research of enterprise charitable donation’s influential factors, the existing literatures on the interpretation of charitable donations mainly reveal the impact of firm-level influential factors on charitable donations, our study also found that family-level factors have a significant impact on corporate philanthropy, noting that when study corporate charitable donations, this important factor-family owners should not be ignored. Secondly, we reveal the impact mechanism of family involvement have on charitable donations, proposed that family involvement does not only directly affect the behavior of charitable donations, but also have indirect impact on corporate charitable donation through the mediation effect of socio-emotional wealth (succession willingness), and this mediation process is affected by institutional environment the enterprises located in. Comprehensively considering the common mechanism of action of both family internal motivation and the external institutional environment, which helps to more clearly understand the relationship between family involvement and corporate charitable donation. Finally, our study has enriched the literature of family business, extremely limited research of family business literatures are focused on family business ethical society, these few studies on this topic using dichotomy method to compare family and non-family business in terms of CSR performance differences, while we are more concerned about the heterogeneity of the family business, reveal the resource allocation decision factors that family business can fulfill their social responsibilities.