The Impact of Internationalization on Home Country Charitable Donation: Evidence from Chinese Firms
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Does internationalization promote or inhibit home country charitable donation for firms from developing countries? This is an important question that remains poorly studied. This paper aims to address this question by focusing on Chinese internationalizing firms. We maintain that while broadening overseas markets brings financial returns to Chinese firms, their domestic charitable donation may decrease with the level of internationalization. Drawing on the resource dependence theory, we argue that the more Chinese firms depend on overseas sales, the less important domestic stakeholders are for their survival, and therefore they are less likely to make charitable donations within China. Further, we maintain that this negative relationship between internationalization and home country charitable donation is attenuated by Chinese firms’ state-ownership. This is because state-ownership provides the firms with alternative sources of critical resources that alleviate their dependence on the international markets. We tested and supported our theory using data collected from all public firms in China between 2008 and 2012. Theoretical and policy implications are provided.
KeywordsInternationalization Charitable donation Developing countries China Resource dependence theory
We would like to thank valuable comments and suggestions from two anonymous reviewers, as well as participants at the 2015 AOM annual meeting and the AIB 2017 Dubai conference. We acknowledge financial support from the Chinese National Science Funds (Grant No. 71572160 and 71672197) and the Key Research Project of Guangdong Province (Grant No. 2016WZDXM001). All remaining errors are our own.
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