Does the nature of political connection matter for corporate social responsibility engagement? Evidence from China

Vinh Q. T. Dang, Isaac Otchere, Erin P. K. So*

*Corresponding author for this work

Research output: Contribution to journalJournal articlepeer-review

8 Citations (Scopus)

Abstract

We examine whether firms' political connection affects their corporate social responsibility (CSR) engagements and how the effects vary with different political ties, namely symbolic and material connections. These ties reflect different degrees of political embeddedness, interest alignment, network size, and monitoring with the government, and therefore impart divergent effects on managerial incentives for CSR practices. Our analysis indicates that CSR in firms with symbolic connection is much more associated with agency cost than CSR in firms with material connection. We also find that large firms with symbolic connection exhibit lower CSR performance than those with material connection, probably because the former group tends to substitute the prestige of their political capital for the goodwill associated with CSR engagement. These results show that accounting for the effects of different types of political connection on managerial incentives contributes some clarity to the debate about the compatibility of CSR with primary corporate mandates.

Original languageEnglish
Article number100907
Number of pages18
JournalEmerging Markets Review
Volume52
Early online date22 Apr 2022
DOIs
Publication statusPublished - Sept 2022

Scopus Subject Areas

  • Business and International Management
  • Economics and Econometrics

User-Defined Keywords

  • Corporate social responsibility
  • Agency cost
  • Governance
  • Firm reputation
  • Political connection

Fingerprint

Dive into the research topics of 'Does the nature of political connection matter for corporate social responsibility engagement? Evidence from China'. Together they form a unique fingerprint.

Cite this