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To be more philanthropic when joining the government-controlled business association? Evidence from Chinese private firms

Youliang Yan (School of Economics and Business Administration, Chongqing University, Chongqing, China)
Xixiong Xu (School of Economics and Business Administration, Chongqing University, Chongqing, China)

Chinese Management Studies

ISSN: 1750-614X

Article publication date: 25 January 2021

Issue publication date: 31 March 2021

267

Abstract

Purpose

The purpose of this paper is to investigate whether and how affiliation with the government-controlled business association, namely, China Federation of Industry and Commerce (CFIC), affects corporate philanthropy in an emerging market.

Design/methodology/approach

Through an analysis of survey data gathered from Chinese private firms, this paper conducts multiple regressions to examine the impact of the CFIC membership on corporate philanthropy.

Findings

Empirical results show that the CFIC membership of private entrepreneurs is significantly positively associated with corporate philanthropy. Moreover, this study finds that the provincial marketization level and the firm Communist Party branch attenuate the positive association between CFIC membership and corporate philanthropy, indicating that the effect of CFIC on corporate philanthropy is more pronounced in regions with lower marketization level and firms without Communist Party branch. The findings are robust to various alternate measures of corporate philanthropy and remain valid after controlling for potential endogeneity.

Practical implications

Firms will be more active in corporate philanthropy to respond to the government’s governance appeal when they join the CFIC. This highlights the implications of political connections and in particular on the value of government-controlled business associations in the Chinese business world.

Originality/value

This study extends the literature on the determinants of corporate philanthropy and deepens the theoretical understanding of the governance role of business association with Chinese characteristics.

Keywords

Acknowledgements

This work was supported by the National Natural Science Foundation of China [71972017, 71802169], the Philosophy and Social Sciences Research of Ministry of Education of China [18JHQ079], the Key Project of Philosophy and Social Sciences Research of Chongqing Municipal Education Commission [19SKZDZX11], the Fundamental Research Funds for the Central Universities [2019CDJSK02XK11] and the Graduate Scientific Research and Innovation Foundation of Chongqing (CYB20049).

Citation

Yan, Y. and Xu, X. (2021), "To be more philanthropic when joining the government-controlled business association? Evidence from Chinese private firms", Chinese Management Studies, Vol. 15 No. 2, pp. 456-482. https://doi.org/10.1108/CMS-06-2020-0237

Publisher

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Emerald Publishing Limited

Copyright © 2021, Emerald Publishing Limited

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