Research On The Antecedents And Consequences Of Private Enterprises’ Philanthropic Donation In Transitional China

In China, a series of social problems have emerged with the economic transformation and the industrial structure upgrading. Corporate Philanthropy, though not a new phenomenon, has widely attracted research attention in the progress of globalization and emerging economies development. This study explores the philanthropic donation of private enterprises in transitional China by examining the two core research questions:(1) why do rational and opportunistic private enterprises generously contribute with donations? And(2) do these private enterprises have achieved ―getting by giving‖? To answer the two questions, this study integrates the strategic perspective and the institutional perspective based on neo-institutional theory to explore the antecedents and consequences of philanthropic donation with an integrative framework.With data from The Tenth Large Scale Survey on Private Enterprises in China in 2012, three key conclusions are drawn from the empirical studies.First, the philanthropic donation of Chinese private enterprises is context-dependent. In transitional China, private enterprises’ donation is constrained by the specific market and institutional environment with local governments as the principal influential factor. Moreover, as the non-market governance becomes one of the basic characteristics of the transitional economy, both industrial organizations and organizational strategies exert a significant positive influence on corporate philanthropy. The philanthropic donation of a private enterprise is suited to its own conditions and development stage, as well as the economic, social and environmental relationships it faces.Second, philanthropic donation of Chinese private enterprises is driven by the legitimacy mechanism, competition mechanism, and interactions between the two. It is an effective channel to obtain political legitimacy. Among all the institutional determinants, regulatory stringency, social norms and peer pressures play critical roles in propelling private firms to undertake philanthropic activities. Among all the strategic determinants, owners’ commitment to donation, market competition, and environmental strategy have strong positive impact on corporate philanthropy. Moreover, both the regulatory stringency and social norms exert a negative moderating influence on the mechanism of competition.Third, findings from the study verify that corporate philanthropic donation significately promotes private enterprises’ performance. This study finds that the donation is positively and significantly related to private firms’ profitability and organizational growth, and that relationship is moderated by environmental factors including firm visibility, market development and political connection. In addition, the consequential mechanisms of philanthropy on organizational performance vary among firms at different growth stages.This study has important implications for both corporate philanthropy research and strategic management studies in four aspects.First, this study summarizes the development of the philanthropic donation of private enterprises based on China’s realities and private enterprise’s history, and then describes its characteristics and demensions. Such efforts contribute to the development of enterprises theory, philanthropy and CSR research.Second, this study provides an integrative ―environment- conduct- performance‖ model to explore the antecedents and consequences of philanthropic donation. In particular, this study further investigates the underlying connection between the antecedents and consequences from the neo-institutional perspective, which is underdeveloped in extant literature.Third, this study identifies the influential mechanisms of both institutional and competitive determinants that coexist and shape private enterprises’ donation. We empirically examine the moderating effect of institutional determinants on the relationship between strategic orientation and corporate donation, which contributes to reveal the ―black box‖ between environmental/organizational constraints and philanthropic donation. Such findings enrich our understanding of the ―fit‖ of organizational behaviors and external environment in transitional economies.Fourth, this study clarifies the consequential mechanism of philanthropy in transitional China by exploring boundary conditions and contingencies. Set in the transitional economy of China, this study demonstrates that the evolving environment in China interacts with private firms’ strategic decisions. The coevolution of firm strategy and environment is further confirmed in the transforming context.This study also has valuable practical implications for developing and maintaining a healthy donation environment in China. First, such findings enlighten governments and related authorities to consider more factors besides social needs, such as market environment and characteristics of private firms, in their decsision-making, and try to create a ―win-win-win‖ situation for firms, society and political governance. Second, improved policy-making will not only make it easier for the governments to balance social problems and economic development, but also promote the sustainability of corporate donation. Third, pirvate firms are expected to improve their information disclosure system, and it would make a big difference if media and third-party organizations are given the right to monitor the private firms’ behavior as well as government governance.