Do political incentives promote or inhibit corporate social responsibility? The role of local officials' tenure

The existing literature on corporate social responsibility (CSR) drivers focuses on firm- and institution-level factors and rarely on the role of political incentives. Public officials control enormous resources in China, and their political incentives substantially shape certain firm behaviors. As...

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Bibliographic Details
Published in:PloS one 2023-03, Vol.18 (3), p.e0283183-e0283183
Main Author: Wu, Yunyu
Format: Article
Language:English
Subjects:
Biology and Life Sciences
Careers
Central government
China
Companies
Corporate social responsibility
Economic aspects
Economic growth
Economic incentives
Emerging markets
Environmental regulations
Evaluation
Federal Government
GDP
Governors
Gross Domestic Product
Incentives
Jurisdiction
Local Government
Motivation
People and Places
Performance evaluation
Physical Sciences
Political aspects
Politics
Public officials
Regions
Research and Analysis Methods
Services
Social aspects
Social Responsibility
Social Sciences
Stock exchanges
Strategic planning (Business)
Subsidies
Tenure
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Summary:The existing literature on corporate social responsibility (CSR) drivers focuses on firm- and institution-level factors and rarely on the role of political incentives. Public officials control enormous resources in China, and their political incentives substantially shape certain firm behaviors. As CSR is one of the critical measures that the central government uses to evaluate the performance of local government, local officials have the incentive to channel firms into accomplishing their political goals. Correspondingly, local firms may strategically implement CSR to build a good relationship with local governments. This study investigates the impact of local officials' political incentives (measured by tenure) on firms' CSR. Using a panel of publicly listed Chinese firms covering 2009-2019, it documents a U-shaped effect of government officials' tenure on the CSR performance of firms within their jurisdiction. To wit, the firm's CSR decreases first and then increases with the growth of tenure. Moreover, this U-shaped effect will be strengthened in regions with a high priority of gross domestic product (GDP) growth and will be weakened in regions with good market development. In addition, there is no significant evidence that party officials' tenure affects firms' CSR. Overall, this study advances our understanding of the political determinants of CSR in emerging markets.
ISSN:1932-6203
1932-6203
DOI:10.1371/journal.pone.0283183