Skip to main content
SpringerLink
Log in

What’s the value in it? Corporate giving under uncertainty

  • Published:
Asia Pacific Journal of Management Aims and scope Submit manuscript

Abstract

This paper investigates whether and how corporate giving is affected by a firm’s perceived degree of environmental uncertainty in the context of a transition economy. Evidence from a nationwide survey of private firms across China suggests that both regulatory uncertainty and market uncertainty in a transition economy motivate firms to conduct corporate giving. Further, a firm’s political ties and financial performance alleviate its response to environment pressures. Specifically, both political ties and financial performance reduce the impact of regulatory uncertainty on both giving probability and amount, but neither affects market uncertainty’s impact. This study illustrates the role of environmental uncertainty in driving corporate social behavior among Chinese private firms, and provides valuable insights for corporate giving in other transition economies.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Fig. 1
Fig. 2

Similar content being viewed by others

Notes

  1. Private-owned enterprises in China are defined as enterprises in which assets are owned by individuals and have employed eight or more people. There are also some private firms (GeTiHu) that employ less than eight employees. Our sample includes both private enterprises and a few GeTiHu.

  2. The research team was formed by a joint force of the United Front Work Department (UFWD) of the Central Committee of the Communist Party of China (CPC), the All-China Federation of Industry and Commerce (ACFIC), the State Administration for Industry and Commerce of China (SAICC), and the China Private Economy Association (CPEA).

  3. The response rate of this survey is very high but we believe it should be natural given the high publicity and good reputation of this series of surveys among Chinese POEs, and the direct interview procedure also contributes to the high response rate.

  4. RMB is the abbreviation of Renminbi, the proper name for Chinese currency. According to the foreign exchange rate at the end of 2007, 1 US dollar equals approximately 7.3 RMB on average.

References

  • Acemoglu, D., & Robinson, J. 2012. Why nations fail: The origins of power, prosperity, and poverty. New York: Crown Business.

    Google Scholar 

  • Adams, M., & Hardwick, P. 1998. An analysis of corporate donations: United Kingdom evidence. Journal of Management Studies, 35: 641–654.

    Article  Google Scholar 

  • Aguilera, R. V., Williams, C., Conley, J., & Rupp, D. 2006. Corporate governance and corporate social responsibility: A comparative analysis of the UK and the US corporate governance. An International Review, 14: 147–157.

  • Aiken, L. S., & West, S. G. 1991. Multiple regression: Testing and interpreting interactions. Newbury Park: Sage.

  • Amato, L. H., & Amato, C. H. 2007. The effects of firm size and industry on corporate giving. Journal of Business Ethics, 72: 229–241.

    Article  Google Scholar 

  • Backhaus, K. B., Stone, B. A., & Heiner, K. 2002. Exploring the relationship between corporate social performance and employer attractiveness. Business and Society, 41: 292–318.

    Article  Google Scholar 

  • Backman, M. 1999. Asian eclipse: Exposing the dark side of business in Asia. Singapore: Wiley.

    Google Scholar 

  • Barnett, M. L., & Salomon, R. M. 2012. Does it pay to be really good? Addressing the shape of the relationship between social and financial performance. Strategic Management Journal, 33: 1304–1320.

    Article  Google Scholar 

  • Barringer, B. R., & Harrison, J. S. 2000. Walking a tightrope: Creating value through interorganizational relationships. Journal of Management, 26: 367–403.

    Article  Google Scholar 

  • Bartkus, B., Morris, S., & Seifert, B. 2002. Governance and corporate philanthropy. Business and Society, 41: 319–344.

    Article  Google Scholar 

  • Belsley, D. A., Kuh, E., & Welsch, R. E. 1980. Regression diagnostics: Identifying influential data and sources of collinearity. New York: John Wiley & Sons.

    Book  Google Scholar 

  • Bennett, R., & Gabriel, H. 2001. Reputation, trust and supplier commitment: The case of shipping company/seaport relations. Journal of Business & Industrial Marketing, 16: 424–438.

    Article  Google Scholar 

  • Berger, C. R., & Calabrese, R. J. 1975. Some exploration in initial interaction and beyond: Toward a developmental theory of communication. Human Communication Research, 1: 99–112.

    Article  Google Scholar 

  • Blackman, C. 2000. China business: The Rules of the game. St. Leonards: Allen & Unwin.

  • Brammer, S., & Millington, A. 2006. Firm size, organizational visibility and corporate philanthropy: An empirical analysis. Business Ethics: A European Review, 15: 6–18.

    Article  Google Scholar 

  • Brammer, S., Millington, A., & Pavelin, S. 2006. Is philanthropy strategic? An analysis of the management of charitable giving in large UK companies. Business Ethics: A European Review, 15: 234–245.

    Article  Google Scholar 

  • Brown, W. O., Helland, E., & Smith, J. K. 2006. Corporate philanthropic practices. Journal of Corporate Finance, 12: 855–877.

  • Buchholtz, A. K., Amason, A. C., & Rutherford, M. A. 1999. Beyond resources: The mediating effects of top management discretion and values on corporate philanthropy. Business & Society, 38: 167–187.

    Article  Google Scholar 

  • Burbano, V. 2014. The effect of corporate social responsibility on employee salary requirements and performance. Academy of Management Annual Meeting Proceedings, 1: 11251.

  • Campbell, D. J., & Slack, R. 2006. Public visibility as a determinant of the rate of corporate charitable donations. Business Ethics: A European Review, 15: 19–28.

    Article  Google Scholar 

  • Canepa, A., & Stoneman, P. 2008. Financial constraints to innovation in the UK: Evidence from CIS2 and CIS3. Oxford Economic Papers, 60: 711–730.

    Article  Google Scholar 

  • Cochran, P. L., & Wood, R. A. 1984. Corporate social responsibility and financial performance. Academy of Management Journal, 27: 42–56.

    Article  Google Scholar 

  • Coffey, B. S., & Wang, J. 1998. Board diversity and managerial control as predictors of corporate social performance. Journal of Business Ethics, 17: 1595–1603.

    Article  Google Scholar 

  • Creyer, E., & Ross, W. 1997. The influence of firm behavior on purchase intention: Do consumers really care about business ethics?. Journal of Consumer Marketing, 14(6): 421–433.

    Article  Google Scholar 

  • Cuieford, J. P. 1965. Fundamental statistics in psychology and education, 4th ed. New York: McGraw-Hill.

  • Davis, G. F., & Powell, W. W. 1992. Organization-environment relations. In M. D. Dunnette & L. M. Hough (Eds.). Handbook of industrial and organizational psychology, 2nd ed., Vol. 3: 315–375. Palo Alto: Consulting Psychologists Press.

  • Dawes, R. M. 1988. Rational choice in an uncertain world. New York: Harcourt Brace Jovanovich.

  • Dennis, B. S., Buchholtz, A. K., & Butts, M. M. 2009. The nature of giving: A theory of planned behavior examination of corporate philanthropy. Business and Society, 48: 360–384.

    Article  Google Scholar 

  • Dickson, B. J. 2003. Red capitalists in China: The party, private entrepreneurs, and prospects for political change. New York: Cambridge University Press.

    Google Scholar 

  • Dixit, A. K. 2004. Lawlessness and economics: Alternative modes of governance. Princeton: Princeton University Press.

    Google Scholar 

  • Faccio, M. 2006. Politically connected firms. American Economic Review, 96: 369–386.

    Article  Google Scholar 

  • Faccio, M., Masulis, R. W., & McConnell, J. J. 2006. Political connections and corporate bailouts. Journal of Finance, 6: 2597–2635.

    Article  Google Scholar 

  • Ferreira, D. A., Avila, M. G., & de Faria, M. D. 2010. Corporate social responsibility and consumers’ perception of price. Social Responsibility Journal, 6(2): 208–221.

    Article  Google Scholar 

  • Fombrun, C. J. 1996. Reputation: realizing value from the corporate image. Boston: Harvard Business School Press.

    Google Scholar 

  • Fornell, C., & Larcker, D. F. 1981. Evaluating structural equation models with unobservable variables and measurement error. Journal of Marketing Research, 18: 39–50.

    Article  Google Scholar 

  • Friedman, M. 1970. The social responsibility of business is to increase its profits. New York Times Magazine, Sep. 13: 122–126.

  • Gao, Y. 2007. Zhongguo zhuanxing shehui de zhengshang guanxi yanjiu [The government-business relations in transitional China]. Beijing: Guangming Daily Press (in Chinese).

  • Gao, Y. 2011. Philanthropic disaster relief giving as a response to institutional pressure: Evidence from China. Journal Business Research, 64: 1377–1382.

  • Gardberg, N. A., & Fombrun, C. J. 2006. Corporate citizenship: Creating intangible assets across institutional environments. Academy of Management Review, 34: 329–346.

    Article  Google Scholar 

  • Godfrey, P. C. 2005. The relationship between corporate philanthropy and shareholder wealth: A risk management perspective. Academy of Management Review, 30: 777–798.

    Article  Google Scholar 

  • Griffin, E. 2012. A first look at communication theory. New York: McGraw-Hill.

    Google Scholar 

  • Hair, J. F., Jr., Black, W. C., Babin, B. J., Anderson, R. E., & Tatham, R. L. 2006. Multivariate data analysis, 6th ed. New Jersey: Prentice Hall.

  • Hall, P. A., & Soskice, D. 2001. Varieties of capitalism: The institutional foundations of comparative advantage. Oxford: Oxford University Press.

    Book  Google Scholar 

  • Hamel, G., & Prahalad, C. K. 1994. Competing for the future. Boston: Harvard Business School Press.

  • Hannan, M. T., & Freeman, J. H. 1977. The population ecology of organizations. American Journal of Sociology, 82: 929–964.

    Article  Google Scholar 

  • Hillman, A. J., Keim, G. D., & Schuler, D. 2004. Corporate political activity: A review and research agenda. Journal of Management, 30: 837–857.

    Article  Google Scholar 

  • Hillman, A. J., Zardkoohi, A., & Bierman, L. 1999. Corporate political strategies and firm performance: Indications of firm-specific benefits from personal service in the US government. Strategic Management Journal, 20: 67–81.

    Article  Google Scholar 

  • Holtbrugge, D., & Berg, N. 2004. How multinational corporations deal with their socio-political stakeholders: An empirical study in Asia, Europe, and the US. Asian Business & Management, 3: 299–313.

    Article  Google Scholar 

  • Hu, X. 2012. Zhengfu de “wei” yu “bu wei” [​The “do” and “not” do of the government]. ZheShang Magazine, Oct. 24 (in Chinese).

  • Jia, N. 2014. Are collective and private political actions substitutes or complements? Empirical evidence from China’s private sector. Strategic Management Journal, 35: 292–315.

    Article  Google Scholar 

  • Johnson, G., & Scholes, K. 1999. Exploring corporate strategy, 5th ed. Harlow/Essex: Pearson Education.

  • Jones, D. A., Willness, C. R., & Madey, S. 2014. Why are job seekers attracted by corporate social performance? Experimental and field tests of three signal-based mechanisms. Academy of Management Journal, 57: 383–404.

    Article  Google Scholar 

  • Kaiser, H. F. 1960. The application of electronic computers to factor analysis. Educational and Psychological Measurement, 20: 141–151.

    Article  Google Scholar 

  • Khwaja, A. I., & Mian, A. 2005. Do lenders favor politically connected firms? Rent provision in an emerging financial market. Quarterly Journal of Economics, 120: 1371–1411.

    Article  Google Scholar 

  • Kotter, J. P. 1996. Leading change. Boston: Harvard Business School Press.

  • Lenway, S. A., & Rehbein, K. 1991. Leaders, followers, and free riders: An empirical test of the variation in corporate political involvement. Academy of Management Journal, 34: 893–905.

    Article  Google Scholar 

  • Li, H., & Zhang, Y. 2007. The role of managers’ political networking and functional experience in new venture performance: Evidence from China’s transition economy. Strategic Management Journal, 28: 791–804.

    Article  Google Scholar 

  • Li, J. J., Poppo, L., & Zhou, K. Z. 2008. Do managerial ties in China always produce value? Competition, uncertainty, and domestic vs. foreign firms. Strategic Management Journal, 29: 383–400.

  • Liang, J., Chen, S., & Gai, T. 2010. Minying qiye de zhengzhi canyu, zhili jiegou yu cishan juanzeng [Political participation, governance structure, and philanthropic giving in private firms]. Management World, 7: 109–118 (in Chinese).

  • Lily Family School of Philanthropy. 2013. Giving USA 2013: The annual report on philanthropy for the year 2012. Chicago: Giving USA Foundation.

  • Lipshitz, R., & Strauss, O. 1997. Coping with uncertainty: A naturalistic decision-making analysis. Organizational Behavior and Human Decision Processes, 69: 149–163.

    Article  Google Scholar 

  • Livdan, D., Sapriza, H., & Zhang, L. 2009. Financially constrained stock returns. Journal of Finance, 64: 1827–1862.

  • Mao, Z. 2009. Analects of Confucius (Lunyu). Chongqing: Chongqing Press (in Chinese).

  • Marquis, C., & Lee, M. 2013. Who is governing whom? Executives, governance, and the structure of generosity in large US firms. Strategic Management Journal, 34: 483–497.

    Article  Google Scholar 

  • McGuire, J. B., Sundgren, A., & Schneeweis, T. 1988. Corporate social responsibility and firm financial performance. Academy of Management Journal, 31: 854–872.

    Article  Google Scholar 

  • Millington, A., Eberhardt, M., & Wilkinson, B. 2005. Gift giving, guanxi and illicit payments in buyer-supplier relations in China: Analyzing the experience of UK companies. Journal of Business Ethics, 57: 255–268.

  • Mintzberg, H. 1994. The rise and fall of strategic planning. New York: Free Press and Prentice Hall International.

  • Montgomery, D. B., & Ramus, C. A. 2011. Calibrating MBA job preferences for the twenty-first century. Academy of Management Review, 22(1): 117–127.

    Google Scholar 

  • Nunnally, J. 1976. Psychometric theory. New York: John Wiley & Sons.

  • Oliver, C. 2003. The influence of institutional and task environment relationships on organizational performance: The Canadian construction industry. Journal of Management Studies, 34: 99–124.

  • Peloza, J. 2009. The challenge of measuring financial impacts from investments in corporate social performance. Journal of Management, 35: 1518–1541.

    Article  Google Scholar 

  • Peng, M. W. 1997. Firm growth in transitional economies: Three longitudinal studies from China, 1989–1996. Organization Studies, 18: 385–413.

    Article  Google Scholar 

  • Peterson, R. A. 2000. A meta-analysis of variance accounted for and factor loadings in exploratory factor analysis. Marketing Letters, 11: 261–275.

    Article  Google Scholar 

  • Pfeffer, J., & Salancik, G. 1978. The external control of organizations: A resource-dependence perspective. New York: Harper & Row.

  • Podsakoff, P. M., MacKenzie, S. B., & Podsakoff, N. P. 2012. Sources of method bias in social science research and recommendations on how to control it. Annual Review of Psychology, 63: 539–569.

    Article  Google Scholar 

  • Podsakoff, P. M., MacKenzie, S. B., Lee, J. Y., & Podsakoff, N. P. 2003. Common method biases in behavioral research: A critical review of the literature and recommended remedies. Journal of Applied Psychology, 88: 879–903.

    Article  Google Scholar 

  • Porter, M. E. 1980. Competitive strategy. New York: Free Press.

  • Porter, M. E. 1985. Competitive advantage. New York: Free Press.

    Google Scholar 

  • Porter, M. E., & Kramer, M. R. 2002. The competitive advantage of corporate philanthropy. Harvard Business Review, 80: 56–68.

    Google Scholar 

  • Preston, L. E., & O’Bannon, D. P. 1997. The corporate social-financial relationship: Typology and analysis. Business & Society, 36: 419–429.

    Article  Google Scholar 

  • Primo, D. M., Jacobsmeier, M. L., & Milyo, J. 2007. Estimating the impact of state policies and institutions with mixed-level data. State Politics & Policy Quarterly, 7: 446–459.

    Article  Google Scholar 

  • Ramasamy, B., & Yeung, M. 2009. Chinese consumers’ perception of corporate social responsibility (CSR). Journal of Business Ethics, 88: 119–132.

    Article  Google Scholar 

  • Roberts, R. 1992. Antecedents of corporate social responsibility disclosure: An application of stakeholder theory. Accounting, Organizations and Society, 17: 595–612.

    Article  Google Scholar 

  • Saiia, D. H. 2002. Philanthropy and corporate citizenship: Strategic philanthropy is good corporate citizenship. Journal of Corporate Citizenship, 1: 57–74.

    Google Scholar 

  • Saiia, D. H., Carroll, A. B., & Buchholtz, A. K. 2003. Philanthropy as strategy. Business & Society, 42: 169–201.

    Article  Google Scholar 

  • Sánchez, C. M. 2000. Motives for corporate philanthropy in El Salvador: Altruism and political legitimacy. Journal of Business Ethics, 27: 363–375.

    Article  Google Scholar 

  • Schuler, D. A., Rehbein, K., & Cramer, R. D. 2002. Pursuing strategic advantage through political means: A multivariate approach. Academy of Management Journal, 45: 659–672.

    Article  Google Scholar 

  • Seifert, B., Morris, S. A., & Bartkus, B. R. 2003. Comparing big givers and small givers: Financial correlates of corporate philanthropy. Journal of Business Ethics, 45: 195–211.

    Article  Google Scholar 

  • Sen, S. 2011. Corporate social responsibility in small and medium enterprises: Application of stakeholder theory and social capital theory. DBA Thesis, Southern Cross University, Lismore.

  • Sen, S., & Bhattacharya, C. B. 2001. Does doing good always lead to doing better? Consumer reactions to corporate social responsibility. Journal of Marketing Research, 38(2): 225–243.

    Article  Google Scholar 

  • Sheng, S., Zhou, K. Z., & Li, J. J. 2011. The effects of business and political ties on firm performance: Evidence from China. Journal of Marketing, 75: 1–15.

    Article  Google Scholar 

  • Siegel, J. I. 2007. Contingent political capital and international alliances: Evidence from South Korea. Administrative Science Quarterly, 52: 621–666.

    Article  Google Scholar 

  • Siemsen, E., Roth, A., & Oliveira, P. 2010. Common method bias in regression models with linear, quadratic, and interaction effects. Organizational Research Methods, 13: 456–476.

    Article  Google Scholar 

  • Slotegraaf, R., Moorman, C., & Inman, J. 2003. The role of firm resources in returns to market deployment. Journal of Marketing Research, 40: 295–309.

    Article  Google Scholar 

  • Smircich, L., & Stubbart, C. 1985. Strategic management in an enacted world. Academy of Management Review, 10: 724–736.

    Google Scholar 

  • Smith, C. 1994. The new corporate philanthropy. Harvard Business Review, 72: 105–116.

    Google Scholar 

  • Smithson, M. 1989. Ignorance and uncertainty: Emerging paradigms. New York: Springer Verlag.

    Book  Google Scholar 

  • Steidlmeier, P. 1999. Gift giving, bribery and corruption: Ethical management of business relationships in China. Journal of Business Ethics, 20: 121–132.

    Article  Google Scholar 

  • Stuebs, M., & Sun, L. 2010. Business reputation and employee efficiency, productivity and cost. Journal of Business Ethics, 96: 265–283.

    Article  Google Scholar 

  • Su, J., & He, J. 2010. Does giving lead to getting—Evidence from Chinese private enterprises. Journal of Business Ethics, 93: 73–90.

  • Tabachnick, B. G., & Fidell, L. S. 2001. Using multivariate statistics, 4th ed. Needham Heights: Allyn & Bacon.

  • Tan, J., & Peng, M. W. 2003. Organizational slack and firm performance during economic transitions: Two studies from an emerging economy. Strategic Management Journal, 24: 1249–1263.

  • Thompson, J. 1967. Organizations in action. New York: McGraw-Hill.

  • Tinsley, H. E. A., & Tinsley, D. J. 1987. Uses of factor analysis in counseling psychology research. Journal of Counseling Psychology, 34: 414–424.

    Article  Google Scholar 

  • Tobin, J. 1958. Estimation of relationships for limited dependent variables. Econometrica, 26: 24–36.

    Article  Google Scholar 

  • Useem, M. 1988. Market and institutional factors in corporate contributions. California Management Review, Winter: 77–88.

  • Wang, H., & Qian, C. 2011. Corporate philanthropy and corporate financial performance: The roles of stakeholder response and political access. Academy of Management Journal, 54: 1159–1181.

  • Werbel, J. D., & Carter, S. M. 2002. The CEO’s influence on corporate foundation giving. Journal of Business Ethics, 40: 47–60.

    Article  Google Scholar 

  • Wernerfelt, B., & Karnani, A. 1987. Competitive strategy under uncertainty. Strategic Management Journal, 8: 187–194.

    Article  Google Scholar 

  • Williams, R. J. 2003. Women on corporate boards of directors and their influence on corporate philanthropy. Journal of Business Ethics, 42: 1–10.

    Article  Google Scholar 

  • Xin, K., & Pearce, J. L. 1996. Guanxi: Connections as substitutes for formal institutional support. Academy of Management Journal, 39: 1641–1658.

  • Zhang, Q., & Fung, H. G. 2006. China’s social capital and financial performance of private enterprises. Journal of Small Business and Enterprise Development, 13: 198–207.

    Article  Google Scholar 

  • Zhang, R., Rezaee, Z., & Zhu, J. 2009. Corporate philanthropic disaster response and ownership type: Evidence from Chinese firms’ response to the Sichuan earthquake. Journal of Business Ethics, 91: 51–63.

  • Zhang, R., Zhu, J., Yue, H., & Zhu, C. 2010. Corporate philanthropic giving, advertising intensity, and industry competition level. Journal of Business Ethics, 94: 39–52.

    Article  Google Scholar 

  • Zhang, W. 2010. Shichang de luoji [​Logic of the market]. Shanghai: Shanghai People’s Press (in Chinese).

  • Zhou, W. 2009. Bank financing in China’s private sector: The payoffs of political capital. World Development, 37: 787–799.

  • Zhou, X., Han, Y., & Wang, R. 2013. An empirical investigation on firms’ proactive and passive motivation for bribery in China. Journal of Business Ethics, 118: 461–472.

    Article  Google Scholar 

Download references

Acknowledgments

This research was supported by research grants at the National Natural Science Foundation of China (NSFC) (No. 71372131, No 71428005, No 71531009, No 71232012).

Author information

Authors and Affiliations

  1. School of Management, Huazhong University of Science and Technology, Wuhan City, Hubei Province, People’s Republic of China

    Yongqiang Gao

  2. Department of Management, Hong Kong Baptist University, Kowloon, Hong Kong

    Ya Lisa Lin

  3. College of Business, City University of Hong Kong, Kowloon, Hong Kong

    Haibin Yang

Authors
  1. Yongqiang Gao
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Ya Lisa Lin
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Haibin Yang
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Haibin Yang.

Rights and permissions

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Gao, Y., Lin, Y.L. & Yang, H. What’s the value in it? Corporate giving under uncertainty. Asia Pac J Manag 34, 215–240 (2017). https://doi.org/10.1007/s10490-016-9478-8

Download citation

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s10490-016-9478-8

Keywords

Search

Navigation