Foreign competition and corporate social responsibility: the role of the firm–government relationships
ISSN: 1750-614X
Article publication date: 24 January 2022
Issue publication date: 2 January 2023
Abstract
Purpose
This study aims to investigate how and why corporate social responsibility (CSR) among domestic firms in emerging countries is affected by foreign competition.
Design/methodology/approach
The paper combines the resource-based view with the institution-based view to explain how different levels of firm–government relationships prompt firms to enact CSR when facing foreign competition. First, this paper examines how domestic firms engage in CSR in the presence of foreign competition, followed by the consideration of how different firm–government relationships affect CSR strategies for firms faced with foreign competition. Using a database of 1,665 publicly listed Chinese firms between 2011 and 2017, this paper tests four hypotheses regarding CSR behaviors, foreign competition and firm–government relationships, and the findings of this paper generally support all four hypotheses.
Findings
This study contributes to the literature by demonstrating that domestic firms in China respond to foreign competition by increased engagement in CSR, and this positive relationship is heterogeneous among different firm–government relationships. CSR is attenuated by state ownership but enhanced by high industry competition and high regional marketization.
Practical implications
The findings of this research have implications for managers regarding the integration of internal and external resources to enhance CSR as a nonmarket strategy to help maintain firms’ competitive advantages. For the government, policymakers should establish and maintain a fair and market-oriented environment that encourages firms to increase CSR engagement.
Originality/value
The paper contributes to the literature exploring the mechanisms that motivate firms’ pursuit of CSR as a nonmarket strategy under the impact of intensified foreign competition.
Keywords
Acknowledgements
The authors would like to thank Professor Cherrie Jiuhua Zhu (Editor-in-Chief), Dr Yi Li (Editor) and two anonymous reviewers for their excellent guidance and constructive comments during the review process.
Authors are in alphabetical order and contribute equally to the paper.
The authors would like to thank the Ministry of Education of Humanities and Social Science project of China (Grant No. 20YJC790099) for the support of this research.
Citation
Meng, S. and Sima, Y. (2023), "Foreign competition and corporate social responsibility: the role of the firm–government relationships", Chinese Management Studies, Vol. 17 No. 1, pp. 89-111. https://doi.org/10.1108/CMS-07-2021-0302
Publisher
:Emerald Publishing Limited
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