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Government Intervention, Peers’ Giving and Corporate Philanthropy: Evidence from Chinese Private SMEs

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Abstract

Institutional and resource dependence theories point at the roles of government and peers’ behavior as determinants of firms’ social behavior. This is tested in this research, with important implications for both theory and practice. Using data from a national survey of Chinese private small- and medium-sized enterprises (SMEs) in 2008, this paper examines the role of government intervention in corporate philanthropy (CP), as well as the moderation effect of peers’ giving (both industry and community peers’ giving). Results show that government intervention, when using a Marketization Index as a measure, increases CP (both giving probability and amount). In addition, the community peers’ giving enhances the positive effect of government intervention on SMEs’ giving. But the moderation effect of industry peers’ giving is generally not supported except when CP is measured as giving-to-sales. In general, community peers appear to be a clear reference for SMEs and, in relation to government intervention, exert a dominant isomorphic influence. The findings provide strong support to the neo-institutional theory perspective on philanthropy. Important theoretical and practical implications are suggested.

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Notes

  1. As an example, a Shanghai’s local firm does not care much about the actions of a Beijing’s local firm; even if they are in the same industry. But, as suggested by a reviewer, clustering could change that. For example in some industries, like textile, a large number of firms are clustered in the same geographical area and in such a case industry peers merge with community peers. This could affect our hypotheses presented later.

  2. A reviewer suggested that in China SMEs are somewhat discriminated against, and do not have access to many of government-controlled resources.

  3. In China, in addition to provinces, four municipalities/regions have an autonomous status. These are Beijing, Tianjin, Chongqing, and Shanghai.

  4. The distinction between large firms and SMEs is based on the “Interim Provisions on Criteria of Small and Medium-sized Enterprises” issued by a joint task force of the National Economic and Trade Committee, the National Development and Planning Committee, the Ministry of Finance, and the National Statistics Bureau in 2003. The criteria were used till 2013.

  5. Among the 18 industries this survey investigated, the samples from 5 industries including public facilities, education, health care, culture and sports, and financial service are too small (for each industry, the samples are less than 1 % of the total sample), we combined them into a group of “remaining industries.” This treatment follows the industry categorization of China Securities Regulatory Commission (CSRC) for publicly traded companies. CSRC only divides firms into 13 industries, among which the social services industry includes a wide range of business sectors. The five industries we integrated here, as well as some other industries not integrated in this research, all belong to the social services industry.

  6. Because we have only hypothesized the strength of the moderation effect without considering the moderation directions, we conduct F test to the absolute coefficients.

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Acknowledgments

We acknowledge the financial support of the “National Natural Science Foundation of China (NSFC)” (No. 71372131) and the “Fundamental Research Funds for the Central Universities: HUST” (No. 2014QN199).

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Correspondence to Yongqiang Gao.

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Gao, Y., Hafsi, T. Government Intervention, Peers’ Giving and Corporate Philanthropy: Evidence from Chinese Private SMEs. J Bus Ethics 132, 433–447 (2015). https://doi.org/10.1007/s10551-014-2329-y

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