The Impact of Internationalization on Home Country Charitable Donation: Evidence from Chinese Firms
- 329 Downloads
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.
- Aguilera-Caracuel, J., Guerrero-Villegas, J., Vidal-Salazar, M. D., & Delgado-Marquez, B. L. (2015). International cultural diversification and corporate social performance in multinational enterprises: The role of slack financial resources. Management International Review, 55(3), 323–353.CrossRefGoogle Scholar
- Aiken, L. S., & West, S. G. (1991). Multiple regression: Testing and interpreting interactions. Newbury Park, CA: Sage.Google Scholar
- Carroll, A. B. (1979). A three-dimensional conceptual model of corporate performance. Academy of Management Review, 4(4), 497–505.Google Scholar
- Curran, E. (2015). State companies: Back on China’s to-do list. Bloomberg Businessweek. http://www.bloomberg.com/news/articles/2015-07-30/china-s-state-ownedcompanies-may-face-reform. Accessed 29 April 2016.
- Fan, G., Wang, X., & Zhu, H. (2011). NERI index of marketization of China’s provinces. Beijing: Economic Science Press. (in Chinese).Google Scholar
- Hurtado, S., & Agudelo, J. (2013). The continuity and stability of corporate philanthropy donation: Evidence from Chinese Firms’ Response to Disaster Relief. International Journal of Business and Management, 8(2), 10–18.Google Scholar
- Kolk, A., Hong, P., & Van Dolen, W. (2010). Corporate social responsibility in China: An analysis of domestic and foreign retailers’ sustainability dimensions. Business Strategy and the Environment, 19(5), 289–303.Google Scholar
- Mizruchi, M., & Yoo, M. (2017). Interorganizational power and dependence. In J. A. C. Baum (Ed.), The Blackwell companion to organizations (pp. 599–620). Oxford: Blackwell Publishing Ltd.Google Scholar
- Pfeffer, J. (1987). A resource dependence perspective on inter-corporate relations. Cambridge: Cambridge University Press.Google Scholar
- Pfeffer, J., & Salancik, G. R. (1978). The external control of organizations: A resource dependence perspective. New York: Harper and Row.Google Scholar
- Porter, M. E., & Kramer, M. R. (2002). The competitive advantage of corporate philanthropy. Harvard Business Review, 80(1), 5–16.Google Scholar
- Ryan, T. P. (1997). Modern regression methods. New York: Wiley.Google Scholar
- Simerly, R. L., & Li, M. (2000). Corporate social performance and multinationality, a longitudinal study. Working paper: http://www.westga.edu/~bquest/2000/corporate.html.
- Tan, W., Peng, M. W., & Sun, S. L. (2008). Competing on scale or scope? Evidence from Chinese firms’ internationalization. Management World, 2, 126–135. (in Chinese).Google Scholar
- Wood, D. J. (1991). Corporate social performance revisited. Academy of Management Review, 16(4), 691–718.Google Scholar
- Wooldridge, J. M. (2009). Introductory econometrics: A modern approach (4th ed.). Cincinnati: South-Western College Pub.Google Scholar