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Leaving a Legacy for my Children: The One-Child Policy Reform and Engagement in CSR Among Family Firms in China

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Abstract

The reform of China’s one-child policy allows families to have more children and thus may affect anticipation of intergenerational succession of family businesses and drive family firms to improve their corporate social responsibility (CSR). Using a difference-in-differences design, we find that the reform positively affects the CSR of family firms. We also find that the positive impact is more pronounced for family firms whose owners have fewer children, have no son, and have not yet surpassed reproductive age (older than 50), which confirms the theory that anticipation of intergenerational succession drives CSR in such firms. Moreover, we find that the positive impact is more pronounced for firms that operate in environments where CSR is more strategically important. We validate our findings by showing that the reform prompts investment in value-enhancing CSR and curtails short-termism. This study offers novel evidence that government policies conducive to intergenerational succession in family firms can lead to not only strategic CSR but also to truly ethical corporate behaviour.

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Notes

  1. Following Campbell et al. (2021), we calculate the economic magnitude of the impact of the one-child policy reform on CSR_Rating as follows: 8.58% = 0.032/0.373, where 0.032 is the coefficient of FamilyFirm × PostOCPR in column (3) of Table 3 and 0.373 is the mean CSR_Rating of the full sample reported in Panel A of Table 2.

  2. In this case, 19.74% = 0.015/0.076, where 0.015 is the coefficient of FamilyFirm × PostOCPR in column (6) of Table 3 and 0.076 is the mean CSR_Spending of the full sample reported in Panel A of Table 2.

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Acknowledgements

This work was supported by the National Natural Science Foundation of China (Grant Numbers 72362011, 71902050, 72062012).

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  1. College of Business, Florida Atlantic University, Boca Raton, USA

    Douglas Cumming

  2. Birmingham Business School, University of Birmingham, Birmingham, UK

    Douglas Cumming

  3. International Business School, Hainan University, No. 58, Renmin Road, Haikou, China

    Jun Hu

  4. School of Business, Western Sydney University, Penrith, Australia

    Huiying Wu

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Cumming, D., Hu, J. & Wu, H. Leaving a Legacy for my Children: The One-Child Policy Reform and Engagement in CSR Among Family Firms in China. J Bus Ethics (2024). https://doi.org/10.1007/s10551-023-05603-w

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