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The new government–business relationship and corporate philanthropy: An analysis based on political motivation

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Abstract

There has long been debate about whether the motives for corporate philanthropy are selfish or altruistic in nature. This study takes A-share listed companies on the Shanghai and Shenzhen stock exchanges in China from 2016 to 2019 as the research object and analyzes China’s new government–business relationship based on institutional theory. The results show that the new government–business relationship, which is characterized by being close and unsullied, has a significant inhibitory effect on corporate philanthropy. To be specific, the closer and more unsullied the government–business relationship in the region where the firm is located, the lower its level of corporate philanthropy, thus supporting the hypothesis of selfish—and especially political—motivation. A heterogeneity analysis shows that compared with private enterprises and enterprises in areas with high levels of marketization, the new government–business relationship has a less inhibitory effect on the philanthropic efforts of state-owned enterprises and enterprises in areas with lower levels of marketization. Conditional testing shows that the purpose of corporate philanthropy is to obtain more economic resources such as bank loans, government subsidies, and tax incentives. Finally, the improvement in the government–business relationship reduces the economic resources that enterprises obtain from the government, thus indicating that the political motivation for corporate philanthropy will be mitigated after the change in that relationship. The results of this study clarify the actual motives underlying corporate philanthropy and provide empirical evidence for the government to reference when establishing and adjusting the government–business relationship.

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Data availability

The data on the new government-business relationship are from the China Ranking of Political-Business Relationships published by the National Academy of Development and Strategy, Renmin University of China; the data on corporate philanthropy are from the profit and loss items in the notes of the financial statements of Chinese listed companies in the CSMAR database after manual collation; other data are from the company research series and Wind database in the CSMAR database.

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Funding

This research was supported by: National Natural Science Foundation Major project [72091310]; National Natural Science Foundation Youth Project [72002052]; Guangdong Province Philosophy and Social Science Planning General Project [GD21CGL27]; Start-up funding from Guangdong Polytechnic Normal University [2021SDKYB019]; School-level Cultivation Program of Young Interdisciplinary Innovation Team for Humanities and Social Sciences Research at Shanghai Normal University [310AWO20323005411].

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Authors and Affiliations

  1. Management School, Guangdong Polytechnic Normal University, Guangzhou, China

    Lin Zhou

  2. Business and Management School, Jilin University, Changchun, China

    Lin Zhou

  3. Shanghai Institute of Tourism, Shanghai Normal University, Shanghai, China

    Xiao Liu

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  1. Lin Zhou
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  2. Xiao Liu
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Lin Zhou: Institutional background and hypotheses development,Empirical analysis, Software, Writing-Original Draft

Xiao Liu: Data Curation, Formal analysis, Writing-Review & Editing

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Correspondence to Xiao Liu.

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Zhou, L., Liu, X. The new government–business relationship and corporate philanthropy: An analysis based on political motivation. Eurasian Bus Rev (2024). https://doi.org/10.1007/s40821-024-00269-4

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