Philanthropy And Innovation Investment Of Private Enterprises

Innovation is the powerful source to maintain and improve the core competitiveness of an enterprise,but it has the characteristics of long investment cycle,high risk,serious lag in returns,and difficulty in transforming results,which determines that enterprises need sufficient and continuous R&D investment.However,during the development process,an enterprise,as a social organization,not only need to consider the update of its own technology,but also has to pay attention to the fulfillment of social responsibility Corporate philanthropy is not only the highest-level manifestation of CSR,but also the preferred method of corporate social responsibility,and it has attracted more and more attention from academia.Through philanthropy,enterprises can send a positive signal to the outside world to show that they are not self-interested organizations,which is helpful to establish good corporate images and improve their reputations,hence enhancing resource acquisition capabilities and indirectly increasing corporate values.Nevertheless,charitable donations will occupy part of the company's resources,causing the company to bear certain costs,increase the company's operating costs,and may also induce serious agency problems.Will these actions encroach on the resources needed by the company's R&D activities,thereby causing "crowding out”effect on the company's R&D activities?It deserves further discussion.Focusing on the possible relationships between influencing factors of corporate philanthropy and innovation investment,this study aims to answer the following for questions:(1)Will corporate philanthropy have a "crowding out" effect on innovation investments?(2)How do donation motivations affect the relationships between corporate philanthropy and innovation investments?(3)What is the influencing path of corporate philanthropy on innovation investment?(4)If corporate philanthropy promotes innovation investment,then what impact will it have on innovation outcom es?To answer these questions,this study constructs a theoretical model of "corporate philanthropy-financing constraints-R&D investment" based on the signal transmission theory,the strategic philanthropy theory,the stakeholder theory,and the reputation theory.Additionally,the moderating effect of the enterprise heterogeneity is taken into consideration.For the empirical research,panel data during the period of 2009 to 2018 are utilized.All data are collected from non-financial private listed companies in China.The present study chooses private companies as research objects for the following three reasons:first,private economies have been important supplements to national economy,accounting for an increasing proportion of total national economy.Second,according to the"Charity Blue Book:China Philanthropy Development Report(2020)",private enterprises take actively part in charitable donations and have been the main force of Chinese philanthropy.Their donations account for a higher percentage of total donations Finally,voluntary instead of compulsory is the main feature of charitable donations,comparing with state-owned enterprises,private enterprises have greater autonomy,which can better reflect their own decision-making motives and their consequences.Through the empirical study,the author finds that:(1)There is a significant positive correlation between private enterprises' charitable donations and innovation investment.Namely,private enterprises'charitable donations can promote their innovation investment.Taking social responsibilities will not squeeze the resources needed by R&D activities,instead,beneficial to self-innovation.(2)The enhancing-effect of private enterprises'charitable donations on innovation investment differs under different conditions.Compared with occasional donations,the positive effects of charitable donations on innovation are stronger in continuous donations,while high agency costs and serious agency problems will weaken this positive effect since enterprises with these problems are more self-interested.In addition,charitable donations made by companies that disclose irregularities are more politically motivated,which will also inhibit the positive relationship between corporate philanthropy and innovation investment.(3)Charitable donations promote innovation investment through easing financial constraints,enriching the theoretical research on the relationship between the donation and innovation.(4)From the perspective of innovation output,charitable donations will encourage private enterprises to carry on exploratory innovation,which really improve the quality of innovation and better the situation of enterprises keen to exploitative innovation.This study has certain theoretical and practical significance.Theoretically,first,this research tests the effects of private enterprises' charitable donations on innovation investments,extending the research on the economic outcomes of charitable donations.Second,based on the heterogeneity of donation motivation,this study explores the effects of strategical motivation,self-interested motivation and political motivation on the relationship between donation and innovation respectively,put forward the applicable conditions to apply the empirical results and extends the research on donation motivations.Third,this study investigates the influencing path of donation on innovation from the perspective of financing constraints,clarifying that charitable donations can promote innovation investment by alleviating financing constraints,which is a powerful supplement to existing research.Finally,this study examines the impact of charitable donations on the final innovation output of private enterprises,and enriches the contributing factors of dual innovation.Practically,first,while private companies are still facing the dilemma of "financing difficulties",corporate philanthropy can effectively alleviate their financing constraints.In order to prevent private enterprises from distorting the public welfare nature of charitable donations and using it as a tool to improve the ability of external financing,and in order to create a greater space for their development,the government are expected to build a better business environment.Second,external stakeholders need to objectively analyze companies' donation motivations to distinguish the hidden bad motives under their charitable donation behaviors.Finally,the motivation of private enterprises to make charitable donations needs to be correctly guided to prevent the bad motives of donations.