Received: 18 December 2015 | Revised: 26 February 2016 | Accepted: 19 December 2016

DOI 10.1111/beer.12144

ORIGINAL ARTICLE

Political dependence, social scrutiny, and corporate

philanthropy: Evidence from disaster relief

Yongqiang Gao1 | Taïeb Hafsi2

1
School of Management, Huazhong
University of Science & Technology, Wuhan
Abstract
430074, P. R. China This study explores why and how firms respond to social demands through philanthropic giving in
2
^te
HEC, University of Montreal, 3000 Co the context of a severe natural disaster. Drawing on Marquis and Qian’s organizational response
Ste-Catherine, Montreal, QC H3T 2A7, model to government signals, we integrate resource dependence theory and institutional theory to
Canada
build a two-step model of organizational response to social needs, in situations of disaster relief.
Correspondence
We argue that firms depending more on the government for support are more likely to donate in
Yongqiang Gao, School of Management,
Huazhong University of Science & disaster relief, while firms who receive more scrutiny from the government and the general public
Technology, Wuhan 430074, P. R. China. and firms having more slack resources are likely to donate more. Evidence from Chinese listed
Email: yqgao@hust.edu.cn companies’ donations to the 2008 Sichuan earthquake largely supports our predictions. This study
Funding information provides a more precise understanding of the corporate philanthropic decision process, decoupling
National Natural Science Foundation of
the drivers of philanthropic giving, and those determining the amount given. Theoretical and prac-
China (NSFC), Grant/Award Numbers
71372131 and 71531009 tical implications are suggested.

1 | INTRODUCTION
Corporate philanthropy (CP) is a dominant corporate response to social
needs. Giving money or gifts to social or charitable causes, such as edu-
cation, the arts, health care, and disaster relief (Godfrey, 2005; Wang &
Qian, 2011), has received much attention from business academia dur-
ing the past decades. Popular wisdom suggests that “doing good leads
to doing better” (e.g., Gardberg & Fombrun, 2006; Saiia, 2002; Sen &
Bhattacharya, 2001), but empirical investigations suggest that the rela-
tionship between CP and financial performance is less straightforward
(e.g., Griffin & Mahon, 1997; Peloza, 2009). Some scholars argue that
CP does not necessarily increase a firm’s financial performance, but
acts as a strategic response to institutional pressures or expectations
(e.g., Brammer, Millington, & Pavelin, 2006; Gao, 2011; Husted & Allen,
2006; Oliver, 1991; Sethi, 2003). As such, it is seen as a means to
increase the firm’s legitimacy and the likelihood of its long-term sur-
vival (DiMaggio & Powell, 1983; Scott, 1992).
If CP is a strategy for firms to demonstrate their concerns for social
expectations and legitimacy, an important question is: Which firms are
more likely to conduct CP? Further, among those firms giving, why do
some contribute little and thus conduct CP symbolically while others do
so substantially? Our reading of the CP literature suggests that these
questions have generally been overlooked, although there have been
attempts to discuss the moral and ethical justifications of corporate
social responsibility (see BEER 2011 special issue and, in particular, La
Cour & Kromann, 2011). Usually the decisions of whether to give or
not and how much to give are lumped together and treated as if they
were the same. There is very little attention to the process by which
giving decisions are made. The underlying assumption is thus that when
managers make the decision to give, they also make the decision about
the amount to give. We propose that it is more likely to see managers
make the decision of giving or not first, perhaps in relation to their need
for legitimacy. Then, other considerations developed later lead to decid-
ing about the amount to give. Factors affecting the decision to give are
different from those driving the decision about the amount to give.
In this study, following the lead of Marquis and Qian (2014), we
build a two-step decision model of firms’ response to social needs
through CP. We argue that facing social demands, firms will first make
the decision of whether to give or not. In particular, firms depending
more on the government for political legitimacy and support are more
likely to give. This is particularly the case in countries where the gov-
ernment plays a significant role in providing political legitimacy and
scarce resources (e.g., land grant, subsidies). Further we argue that,
contrary to a generalized implicit assumption that whether to give and
how much are the same decision, they are distinct. Whether firms
donate little, thus showing only basic symbolic compliance, or donate
substantially more, is related to the level of scrutiny they are under
from the public (Marquis & Qian, 2014; Oliver, 1991) and to the
resources that they have available for social goals. This two-step model
of CP decision is illustrated in Figure 1.

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C 2017 John Wiley & Sons Ltd | 189
190 | GAO
FIGURE 1 General model of firm response to social demand with application to disaster relief giving
We conduct this study in the context of firms’ responses to a
severe natural disaster, the 2008 Sichuan earthquake. In relation to
some highly visible catastrophic events across the world, such as the
New York City 9/11 terrorist attacks in 2001, the South Asia Tsunami
in 2004, the 2005 Hurricane Katrina in New Orleans, the 2008 China
Sichuan Earthquake, and the Northwestern Japan Earthquake and Tsu-
nami in 2011, corporate philanthropic giving to disaster relief has
attracted much attention (e.g., Gao, 2011; Muller & Whiteman, 2009;
Patten, 2008; Zhang, Rezaee, & Zhu, 2009; Zhang, Zhu, Yue, & Zhu,
2010). Disaster relief giving is a good context for us to examine the
model and proposals we presented in Figure 1. First, when a severe
natural disaster happens, it creates a need for social and financial sup-
port from both individuals and organizations. Also, disaster relief is gen-
erally seen as primarily a government responsibility, and CP is sought
and encouraged by governments to reduce their burden, and enhance
their ability to respond satisfactorily. In return, firms’ contributions are
recognized and generally lead to greater acceptance and social-political
legitimacy, and could open the door to government-controlled benefits.
Second, in the case of the 2008 Sichuan earthquake relief, there was a
wide heterogeneity in firms’ responses. Some firms did not donate,
others donated small amounts, and still others donated large amounts
in the form of both money and in-kind help. These differences in firms’
responses provide an interesting opportunity to answer our research
questions.
2 | THEORIES AND HYPOTHESES
Corporate response to social needs in the form of philanthropic giving
has received attention from scholars, governments, firms, and the pub-
lic. Much research has been done to better understand what social or
charitable causes firms are more likely to support and why. Empirical
studies have generally identified firm size (e.g., Amato & Amato, 2007;
Brammer & Millington, 2006), financial performance (e.g., Preston &
O’Bannon, 1997; Waddock & Graves, 1997), leverage (e.g., Adams &
Hardwick, 1998), slack resources (e.g., Seifert, Morris, & Bartkus, 2004;
AND HAFSI
Sen, 2011), advertising intensity (Zhang et al. 2010), ownership struc-
ture (e.g., Marquis & Lee, 2013), and institutional pressures (Gao, 2011;
Useem, 1988) as important determinants of CP.
However, generally these studies treat CP as a “one-shot deal,”
failing to differentiate the decision to give from the decision of how
much to give. Thus, we cannot answer why some firms conduct philan-
thropic giving, while others do not; some donate a little, while others
donate much more. To provide a better understanding, in this study we
divide the CP decision-making process into two steps. The first step is
the decision of whether to give or not, and the second is the decision
about the amount to give. The resource dependence and institutional
theories help us provide the important rationales driving these two
steps.
2.1 | Political dependence and corporate giving
probability
Institutional theory scholars have suggested that symbolic actions in
response to external claims are usually effective and sufficient for firms
to gain legitimacy (Meyer & Rowan, 1977). In her study of strategic
responses to institutional pressures, Oliver (1991) expressed even that
“the appearance rather than the fact of conformity is often presumed
to be sufficient for the attainment of legitimacy” (p. 155). Thus, where
possible, economically minded firms may favor symbolic rather than
substantive practices (Suchman, 1995). In their work in Lebanon, Jamali
and her colleagues (Jamali, 2010; Jamali & Mirshak, 2007; Jamali &
Neville, 2011) have also shown the legitimacy tensions, especially for
the subsidiaries of multinational corporations, when navigating
between the requirements of local institutions and global ones. In this
study, we argue that firms often depend on government for political
legitimacy, seen as an acknowledged perceived congruence with
broader norms and values (Vergne, 2011). Political legitimacy is a stra-
tegic resource for firms and could translate into a greater access to
government resources (Hillman, 2005; Li & Zhang, 2007; Peng & Luo,
2000; Pfeffer & Salancik, 1978).
GAO AND HAFSI
Political legitimacy should be even more important in emerging
economies where the government not only dominates perceptions of
legitimacy, but can also act consistently with these perceptions,
rewarding or punishing, while making commercial rules, or allocating
critical resources such as land, credit, subsidies, and tax breaks needed
by firms (Faccio, 2006; Khwaja & Mian, 2005). To enhance political
legitimacy and get related government benefits, firms could take sym-
bolic actions (Westphal & Zajac, 1994), and ceremonial adoption of
norms, in conforming to government’s and other stakeholders’ pres-
sures (Jamali, 2010; Oliver, 1991). But symbolic compliance is unlikely
to have a positive effect if committed stakeholders monitor firms’
actual behavior, especially where these firms are highly visible (Boiral,
2007). This is generally the case in situations of disaster. We can
expect ceremonial behavior to be affected by the level of dependence
on government for legitimacy and the acquisition of resources. More
specifically, firms’ political ties, headquarters location, and age are asso-
ciated with a firm’s historical path, and could help assess their different
levels of dependence on the government.
2.1.1 | Political ties
The literature on business-government relations has widely recognized
the value of political ties (e.g., Faccio, 2006; Li & Zhang, 2007; Sheng,
Zhou, & Li, 2011). Political or government ties could improve a firm’s
political legitimacy (Suchman, 1995), helping it receive exclusive gov-
ernment endorsements and favorable treatment (Peng, Tan, & Tong,
2004). This may result in getting access to policies and valuable indus-
trial information (Hillman, Zardkoohi, & Bierman, 1999), and to scarce
resources such as land, credit, and tax breaks that are usually controlled
by the government (Khwaja & Mian, 2005; Siegel, 2007).
Political ties also expose firms to hard-to-control government pres-
sures to comply with directions and provide assistance, when needed.
CP is one such assistance sought by the government, especially in sit-
uations of disaster. In transition economies such as China, the govern-
ment bears a heavy burden in providing public social support, for lack
of a generalized social welfare system (Dickson, 2003; Wang & Qian,
2011). This situation is particularly salient in such a severe natural dis-
aster as the 2008 Sichuan earthquake. Disaster relief requires the joint
contributions of all actors, individuals, firms, and other institutions,
coordinated by the government. Since political ties help firms to get
support from the government, according to resource dependency rea-
soning (Pfeffer & Salancik, 1977), these firms are in return bound to
satisfy the government’s needs, at least symbolically. Thus, we propose
the following hypothesis.
Hypothesis 1: Firms with political ties are more likely to donate
to disaster relief than firms without such ties.
2.1.2 | Community embeddedness
Legitimacy is an indication of how organizational congruence with
broader social norms and values is perceived (Vergne, 2011). The first
test of such congruence takes place at the local level, underlining the
importance of community in CP (Marquis, Glynn, & Davis, 2007). Also,
the community’s well-being is a concern for all firms, as it affects the
| 191
quality of education and health care services, and by extension the
quality of the workforce. In addition, community perceptions can trans-
late into important effects on sales within the community (Card, Hal-
lock, & Moretti, 2010), and on how government would look at the firm
(Marquis & Qian, 2014). Community environment is thus important for
any firm. It has a direct effect on how politically dependent a firm is.
Institutional theory literature has well recognized the role of com-
munity norms in shaping corporate behavior, including CP (Marquis
et al., 2007). Davis and Greve (1997) and Boiral (2007), for example,
have suggested that the local immediate institutional environment is
more salient than the broader one when a practice is contentious. Simi-
larly, Useem (1988) has also suggested that community-based norms
and attitudes may act as the most significant factor in shaping CP. Prior
empirical studies have well demonstrated the role of community norms
in CP. For instance, Galaskiewicz (1997), Kanter (1997), and Guthrie
(2003), like some others, have found that firms donate mostly to the
community where they are headquartered.
When a community is suffering from a disaster, firms headquar-
tered within the community cannot relent, for fear of dramatic effects
on community perceptions and thus on their legitimacy. They should
be more likely to give a hand and show solidarity. Thus, we propose
the following hypothesis.
Hypothesis 2: Firms headquartered in the disaster area are more
likely to donate to disaster relief than firms headquartered
elsewhere.
2.1.3 | Political legacy
Scholars have argued that stakeholder relationships tend to be path-
dependent (Barnett, 2007, Jamali, 2008) and a firm’s founding era leads
it to build internal institutions and connections that result in permanent
“commitment to the political system of that era” (Marquis & Qian,
2014). In exploring the impact of socialist political environment on a
firm’s subsequent strategies, scholars have described a process of
“socialist imprinting” whereby firm-specific resources or capabilities
tend to be year-specific (Kogut & Zander, 2000; Kriauciunas & Kale,
2006). Marquis and Qian (2014), following Peng (2004), argue that old
firms in China, especially state-related ones, are less likely to conduct
corporate social responsibility (CSR) reports because they have greater
“socialist imprint,” feel more legitimate, and thus have more difficulty
adopting the newer practices of CP and CSR reporting.
For the same reasons, a firm’s age is regarded as being highly
related to political legitimacy. Firms with longer history are more likely
to build strong exchange relationships with other organizations in the
market and to be endorsed by powerful social actors such as the gov-
ernment (Hannan & Freeman, 1984; Singh, Tucker, & House, 1986).
Therefore, we can propose that older firms would have a higher level
of political legitimacy than younger ones (Shane & Foo, 1999; Such-
man, 1995). Firms which have built a strong political legitimacy should
be less sensitive to such new practices to build legitimacy as CP, than
firms which have not built as much legitimacy. Thus, we expect that a
firm’s age will reduce its willingness to contribute to disaster relief
giving.
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Hypothesis 3: Older firms are less likely to donate to disaster
relief than younger firms.
2.2 | Social scrutiny and amount of corporate giving
Firms who need to do more for political legitimacy and government
support are more likely to donate in a disaster relief process. However,
to obtain political legitimacy they do not necessarily need to conduct
substantial giving. Thus, pursuing from Campbell and Slack’s (2006)
work, and going beyond, we argue that among the firms that have con-
ducted CP, those who receive more scrutiny from the government and
the general public are more likely to donate more. A firm’s visibility and
its market level of development create internal and external conditions
for a firm to be scrutinized by the public and thus can be regarded to
affect its giving amount. In situations of more intense monitoring and
scrutiny, simple symbolic compliance is out of the question (Oliver,
1991), and substantial giving is both sought and likely. But at the same
time, it puts a firm’s slack resources to the test. The conflict between
legitimacy and economic viability could be debilitating. As a result, the
level of slack resources should also play a significant role in affecting
how much a willing firm would give in situations of disaster.
2.2.1 | Firm visibility
Firm visibility is highly associated with social scrutiny (Marquis & Toffel,
2012). High visibility, resulting mainly from a firm’s intensive advertis-
ing and other active marketing activities, attract more attention from a
variety of external sources (Bansal & Roth, 2000; Campbell & Slack,
2006; King, 2008; King & Soule, 2007; Rehbein, Waddock, & Graves,
2004), especially from committed stakeholders (Boiral, 2007). Scholars
have found that firms with higher visibility are more likely to comply
with institutional pressures to disclose information about their real
environmental imprint, rather than offer only selective disclosure (e.g.,
Marquis & Toffel, 2012; Short & Toffel, 2008). In a recent study, Yoo
and Pae (2016) have shown that firms that win awards make more phi-
lanthropic contributions as a result of their enhanced visibility. Interest-
ingly, award-winners tend to have a long-term outlook and perhaps a
less instrumental behavior.
In general, we can expect existing or prospective customers and
potential employees to be particularly sensitive to firms’ giving behav-
ior in situations of disaster relief (Brammer & Millington, 2005). Highly
visible firms would then feel more pressure and scrutiny from the pub-
lic to take substantial action and meet social needs (Campbell & Slack,
2006). When a severe natural disaster strikes, all of society’s members
would actively join in relief actions. Visible firms are under great pres-
sure to contribute to relief through giving. In such a situation, symbolic
giving is unacceptable and, because of scrutiny, would surely and
severely damage the firm's reputation (Boiral, 2007; Lyon & Maxwell,
2011). Thus, we expect that firm visibility increases public scrutiny
which further enhances a firm’s substantial compliance to institutional
pressures.
Hypothesis 4: Firms with higher visibility are likely to donate
more to disaster relief than firms with lower visibility.
AND HAFSI
2.2.2 | Market level of development
The literature has suggested that firms located in more developed mar-
kets are more transparent to, and receive more scrutiny from, the pub-
lic and stakeholders (e.g., Marquis & Qian, 2014; Wang & Qian, 2011).
In developed markets, telecommunication infrastructures, media expo-
sure, and capital markets tend to be more advanced, facilitating the
information flow from firms to the public (Wang & Qian, 2011). Some-
times, historical evolution, and past political choices may have the
same effect, as shown by Fifka (2013). Fifka's comparison of firms
headquartered in Germany and the United States has shown that U.S.
firms have a stronger citizenship behavior than more government-
dominated German firms.
In the case of China, the high-speed flow of information in more
developed regions puts firms under high pressure to meet social needs.
In addition, governments in developed regions may also use more
financial resources and have the necessary expertise to monitor corpo-
rate activities (Brandt & Li, 2003; Goldstein, 1995). Better monitoring
and scrutiny from the government and from the general public leads
firms to take substantial rather than symbolic relief actions to meet the
government’s and the public’s expectations. Thus, when the govern-
ment and the general public expect firms to conduct disaster relief
under a situation of severe natural disaster, firms located in developed
markets are more likely to conduct substantial giving than firms located
in less developed markets.
Although variations in the level of market development and
sophistication are frequently found across countries, in some large
economies such as China such variations could be observed across dif-
ferent provinces within the same country (e.g., Fan, Wang, & Zhu,
2010; Wang & Qian, 2011). In the process of economic reform and
openness, some regional governments in China have seized the oppor-
tunity to speed economic growth, increase fiscal revenue, and enhance
the development of government institutions (Hu & Hafsi, 2010; Mar-
quis & Qian, 2014). As a result, Eastern regions in China are relatively
developed while the Central and Western regions remain largely
underdeveloped (Fan et al., 2010). This has been shown to have an
effect on firm strategy (Hu & Hafsi, 2010). Therefore, we expect the
following hypothesis to hold:
Hypothesis 5: Firms headquartered in more developed markets
are likely to donate more to disaster relief than firms headquar-
tered in less developed markets.
2.2.3 | Slack resources
Slack resources are resources that exceed what is required to maintain
the organization and thus could be diverted or redeployed so as to
achieve new organizational goals or make “side-payments” (Cyert &
March, 1963). Although slack is not necessarily related to social or
political scrutiny, it is very important when a firm makes the decision of
substantial giving. In the extant literature, scholars argue for, or find a
positive effect of slack resources on CP (e.g., Seifert et al., 2004; Wad-
dock & Graves, 1997). This is easy to understand because firms with
more slack may find giving more affordable.
GAO AND HAFSI
Although prior studies have not differentiated the roles played by
slack resources in the decision of whether to give or not, and in the
decision of how much to give, we argue that slack resources should
play a less important role when firms make the decision of giving or
not than when they make the decision of giving amount. Symbolic giv-
ing only needs firms to devote a little money, while substantial giving
needs them to spend much more. Thus, we propose the following
hypothesis.
Hypothesis 6: Firms with more slack resources are likely to
donate more to disaster relief than firms with fewer slack
resources.
3 | METHODOLOGY
3.1 | Sample and data collection
In this study, we use a sample covering Chinese listed companies’
response to the 2008 Sichuan Earthquake.1 The 2008 Sichuan Earth-
quake caused 69,227 deaths, 374,643 persons were injured, and
17,923 disappeared. The direct property loss was estimated at more
than RMB 840 billion (Legal Evening News, 2008). After the earth-
quake, most listed firms, along with individuals and other organizations,
contributed to the disaster relief immediately and voluntarily. More
specifically, the sample covers listed firms, which had initial public
offerings (IPO) in 2007 or before, and conducted organization-level dis-
aster relief giving by the end of 2008. This design helped ensure the
availability of the required organizational information.
Although all of society devoted considerable resources to the
earthquake relief, no official report has been issued about the contribu-
tions of listed firms. To identify firms with donations and the amounts
donated, we first searched through public announcements and corpo-
rate social responsibility reports (CSRRs) of listed firms using informa-
tion and data provided by the cninfo2 network. The sample covered
more than 500 relevant listed firms. Second, since some listed firms did
neither make a public announcement nor a CSRR, we searched two
online special forums or platforms that reported disaster relief efforts.
These two special forums or platforms were opened by Baidu and Sina,
respectively, two leading network companies in China.3 In so doing, we
collected 295 additional listed firms. Excluding those that were in both
subsamples, we had a total sample of 759 firms. We excluded those
that did not segregate their organizational-level giving from employees
or leading shareholders’ giving. Our final sample consists of 1,485
4 was measured as a province’s gross domestic product (GDP) per capita
listed firms among which 541 firms made contributions to the disaster
relief effort.
Information about political ties was generally found in firms’ annual
report or, where not reported, through Google.com and Baidu.com.
Data about market development come from the Chinese Statistics
Bureau. Other data come from firms’ annual reports and CSMAR—a
leading database in China. CSMAR, the China Stock Market Accounting
Research, is a database created by GTA—a leading global provider of
China financial market data. The CSMAR database uses the same
standards as international databases such as CRSP and COMPUSTAT.
| 193
3.2 | Measurement of variables
In this study, the variables are measured as follows.
3.2.1 | Corporate philanthropy
CP here refers to the corporate philanthropic disaster relief giving. It
includes two variables: giving behavior (giving probability) and giving
amount. Giving probability is a dummy variable, and firms which had
donated to the 2008 Sichuan Earthquake relief were coded as 1 and 0
otherwise. Giving amount was a firm’s total value in RenMinBi (RMB
hereafter) of organizational level giving, both in cash and in-kind, to the
2008 Sichuan Earthquake relief effort. However, firms may vary signifi-
cantly in size, and larger firms tend to have more resources to support
social causes. To capture this variance, we followed Du, Jian, Du, Feng,
and Zeng (2014) and others to scale giving value by total assets.
3.2.2 | Political ties
Following Fan, Wong, and Zhang (2007) and Gao (2011), political ties
were measured by the political membership of a firm’s board Chairper-
son or CEO. Firms with their Chairperson or CEO acting as a public
official, or a member of People’s Congress, or a member of Chinese
People’s Political Consultative Conference at the end of 2007 were
coded as 1, and 0 otherwise.
3.2.3 | Community embeddedness
Community embeddedness is a dummy variable. Firms headquartered
in the Sichuan province (the location of the earthquake) were coded as
1 and 0 otherwise.
3.2.4 | Firm age
Firm age was measured by the number of years since a firm’s founda-
tion to the end of 2007.
3.2.5 | Firm visibility
Following Zhang et al. (2010) and Wang and Qian (2011), firm visibility
was measured by a firm’s selling, general and administrative expenses
(SG&A) scaled by total assets at the end of 2007.
3.2.6 | Market development
Following Marquis and Qian (2014), market development in this study
(i.e., the province’s GDP divided by its population), expressed in 10,000
RMB. The score of the province where a firm had its headquarters was
used as the level of market development for the firm (Wang & Qian,
2011).
3.2.7 | Slack resources
Following Seifert et al. (2004) and Marquis and Qian (2014), slack
resources was measured as a particular firm’s net cash flow scaled by
total assets in 2007. Net cash flow is the cash inflow minus cash out-
flow in 2007.
194 | GAO
3.2.8 | Control variables
Following prior studies, this study controls for firm size, financial per-
formance, leverage, ownership type, and industry type, all shown usu-
ally to be related to CP (Adams & Hardwick, 1998; Brammer &
Millington, 2006; McGuire, Sundgren, & Schneeweis, 1988; Muller &
Whiteman, 2009; Seifert et al., 2004; Useem, 1988; Zhang et al., 2009,
2010). These control variables were measured as follows. Firm size, as
in Lenway and Rehbein (1991), was measured as the total value of
assets in RMB at the end of 2007. We computed its natural logarithm.
Financial performance was measured by the return on assets (ROA) for
the year 2007. Leverage was measured as the percentage of total debts
to total assets at the end of 2007. Ownership type was measured by
coding state-owned enterprises (SOEs) as 1, and 0 otherwise. Finally,
we introduced 12 industry dummies representing the 13 different
industry categories identified by the China Securities Regulatory Com-
mission (CSRC).5
3.3 | Model specifications
In this study, we took two steps to test our arguments. The first step
was to test the relationship between political dependence and the
probability of corporate giving. We conducted logit regression analyses
by using the entire sample of 1,485 firms as sample. Prior studies have
suggested that firm visibility and slack resources may also affect giving
probability (e.g., Wang & Qian, 2011; Zhang et al., 2009). Thus, firm
visibility and slack resources are controlled for additionally in the logit
regression analyses. The regression model could be specified as
follows:
Giving probability 5 b0 1 b1 Political ties 1 b2 Community embeddedness
1b3 Firm age 1 b4 Controls 1 E
where Controls are the variables controlled for. The E is an error term.
The second step is to test the relationship between social scrutiny
or slack resources, and corporate giving amount. We conducted ordi-
nary least squares (OLS) regression analyses on a sample covering only
the sampled firms with donations (N 5 541). In these analyses, we con-
trolled dependence variables of political ties, community embedded-
ness and firm age, for the possibility that they may have an effect on
the decision of giving amount. The OLS regression model could be
specified as follows.
Giving amount 5 b0 1 b1 Firm visibility 1 b2 Market development
1 b3 Slack resources 1 b4 Controls 1 E
where Controls are the variables controlled for. The E is an error term.
4 | ANALYSIS AND RESULTS
4.1 | Characteristics of sampled firms
Table 1 reports the characteristics of sampled firms. Among the total
1,485 sampled firms, 541 firms had donated to Sichuan earthquake
relief, while 944 did not donate. Giving amount scaled by total assets
ranges from zero to 3.83%, with a mean of 0.06%.
AND HAFSI
A total of 509 firms have political ties, which accounts for 34.3%
of the total sample. Sixty-one firms were headquartered in Sichuan
province, which accounts for 4.1% of the total sample. Firm age ranges
from 0 to 25, with a mean of 11.16. Firm visibility ranges from 0.54 to
54.95%, with a mean of 8.1%. Market development ranges from 0.73
to 6.56, with a mean of 3.05. Slack resources range from 222.33 to
38%, with a mean of 5.07%.
The largest company has a total value of assets RMB 8,680 billion,
while the smallest one has only RMB 125 million. The most profitable
firm has an ROA of 28.49%, while the least shows losses at 251.04%.
The highest leverage is 262.7%, while the lowest is 7.04%. Eight hun-
dred and seventy firms are SOEs. Sampled firms are active in 13 differ-
ent industries, but most of them were located in manufacturing
(N 5 820).
4.2 | Descriptive statistics
Table 2 shows the variables’ means, standard deviations, and Pearson
correlations. Panels A and B are the descriptive statistics and Pearson
correlations of variables for predicting giving probability and for pre-
dicting giving amount, respectively. From Panel A we can see that polit-
ical ties and firm age are significantly correlated with giving probability,
while the correlation between community embeddedness and giving
probability is not significant. From Panel B, we can see that firm visibil-
ity and slack resources are significantly correlated with giving amount,
but the correlation between market development and giving amount is
not significant.
Significant correlations could be found among independent varia-
bles. To check for multicollinearity problems among independent varia-
bles, we followed the “coldiag” program suggested by Belsley, Kuh, and
Welsch (1980) in STATA 12.0. For the entire sample (N 5 1485), the
largest condition number is 12.47; while for the sampled firms with
donations (N 5 541), the largest condition number is 18.54. Both num-
bers are well below the threshold of 30 (Belsley et al., 1980), suggest-
ing multicollinearity is not a serious problem in this study.
4.3 | Results of logit regression analyses
In this study, giving probability is a dummy variable. Thus, as is normal
practice, we conducted logistic regression analyses to test the predic-
tors of giving probability. The results are reported in Table 3. In Table
3, as is customary, Model 1 includes only the control variables. From
Model 2 to 4, we test the main effect of political ties, community
embeddedness and firm age, respectively. Model 5 is the full model,
including all control and explanatory variables.
Hypothesis 1 predicts that firms with political ties are more likely
to donate to disaster relief. In Model 2 of Table 3, the coefficient of
political ties is marginally significant and positive (b 5 .246, p < .1).
Thus, Hypothesis 1 is marginally supported.
Hypothesis 2 predicts that firms headquartered in the disaster
area are more likely to donate to disaster relief. In Model 3 of Table 3,
the coefficient of community embeddedness is significant and positive
(b 5 .655, p < .05). Thus, Hypothesis 2 is supported.
GAO AND HAFSI | 195

TA BL E 1 Characteristics of sampled firms

Characteristics Maximum Minimum Mean Number of firms % of N

Giving probability
Have giving 1 1 1 541 36.4
No giving 0 0 0 944 63.6

Giving amount (scaled by total assets) 3.83 0 0.06 1485 100

Political ties
Have (yes) 1 1 1 509 34.3
Do not have (no) 0 0 0 976 65.7

Community embeddedness
Headquartered in Sichuan 1 1 1 61 4.1
Headquartered elsewhere 0 0 0 1424 95.9

Firm age (Number of years from IPO to the end of 2007) 25 0 11.16 1485 100

Firm visibility (%) 54.95 0.54 8.10 1485 100

Market development (10,000 RMB*) 6.56 0.73 3.05 1485 100

Slack resources (%) 38 222.33 5.07 1485 100

Firm size (Total assets, 1 million RMB) 8,680,000 1.41 27911 1485 100

ROA (%) 28.49 251.04 4.27 1485 100

Leverage (%) 262.70 7.04 54.79 1485 100

Ownership type
SOEs 1 1 1 870 58.6
Non SOEs 0 0 0 615 41.4

Industry type
Agriculture, forestry, livestock rearing, and fishing – – – 31 2.1
Mining – – – 39 2.6
Manufacturing – – – 820 55.2
Electric power, gas, and water production supply – – – 63 4.2
Construction – – – 29 2.0
Transport and storage – – – 60 4.0
Information technology – – – 91 6.1
Wholesale and retail trade – – – 94 6.3
Finance and insurance – – – 30 2.0
Real estate – – – 99 6.7
Social service – – – 49 3.3
Communication and cultural industries – – – 16 1.1
Comprehensive – – – 64 4.3

Note. N 5 1,485. *Renminbi (RMB) or Yuan, is the name of Chinese currency. According to the foreign exchange rate at the end of 2007, 1 U.S. dollar
equals approximately 7.3 RMB on average.

Hypothesis 3 predicts that firms founded earlier are less likely to
donate to disaster relief. In Model 4 of Table 3, the coefficient of firm
age is significant and negative (b 5 2.037, p < .05). Thus, Hypothesis 3
is supported.
All these results do not change when we include all the control
variables and explanatory variables in the model (see Model 4 of
Table 3).
4.4 | Results of OLS regression analyses
We conducted OLS regression analyses to test the predictions of giving
amount by using only firms with donations as the sample. The results
are reported in Table 4. Similarly, Model 1 includes only the control
variables. From Model 2 to 4, we test the main effect of firm visibility,
market development and slack resources, respectively. Model 5 is the
full model, including all control and explanatory variables.
Hypothesis 4 predicts that firms with a higher visibility tend to
donate more in disaster relief. In Model 2 of Table 4, the coefficient of
firm visibility is significant and positive (b 5 .006, p < .01). Thus,
Hypothesis 4 is supported.
Hypothesis 5 predicts that firms located in more developed mar-
kets tend to donate more in disaster relief. In Model 3 of Table 4, the
coefficient of market development is significant and positive (b 5 .026,
p < .01). Thus, Hypothesis 5 is supported.
Hypothesis 6 predicts that firms with more slack resources tend to
donate more in disaster relief. In Model 4 of Table 4, the coefficient of
slack resources is significant and positive (b 5 .004, p < .05). Thus,
Hypothesis 6 is supported.
196 | GAO AND HAFSI

TA BL E 2 Descriptive statistics and Pearson correlation matrix

Panel A Descriptive statistics and Pearson correlation matrix of variables for predicting giving probabilitya
Dependent variable Mean SD 1 2 3 4 5 6 7 8 9

1 Giving probability (yes51) 0.36 0.48

Independent variable

2 Political ties (Yes 5 1) 0.34 0.47 .164

3 Community embeddedness (Yes 5 1) 0.04 0.20 .027 .001

4 Firm age 11.16 4.11 2.066 2.102 .121

5 Firm size (Ln) 21.50 1.42 .293 .204 2.052 2.030

6 ROA 4.27 7.92 .143 .133 .005 2.085 .096

7 Leverage 54.79 31.89 2.050 2.086 .023 .234 2.058 2.225

8 SOEs (Yes 5 1) 0.59 0.49 2.042 2.032 2.033 2.007 .325 2.033 2.089

9 Firm visibility 8.09 7.08 .108 .065 2.016 .025 2.228 .018 .045 2.078

10 Slack resources 5.07 9.10 .073 .038 .054 .030 .115 .273 2.094 .059 .075
Panel B Descriptive statistics and Pearson correlation matrix of variables for predicting giving amountb
Dependent variable Mean SD 1 2 3 4 5 6 7 8 9 10

1 Giving amount 0.15 0.36

Independent variable

2 Firm visibility 9.11 8.75 .177

3 Market development 3.05 1.65 2.052 2.019

4 Slack resources 5.94 9.39 .101 .116 .007

5 Firm size (Ln) 22.05 1.64 2.248 2.233 .301 .118

6 ROA 5.77 6.22 .132 .079 2.037 .328 .054

7 Leverage 52.68 18.46 2.134 2.178 .084 2.071 .418 2.443

8 SOEs (Yes 5 1) 0.56 0.50 2.151 2.064 .033 .034 .284 2.061 .151

9 Political ties (Yes 5 1) 0.45 0.50 .075 .128 2.034 .039 .216 .141 2.039 2.056

10 Community embeddedness (Yes 5 1) 0.05 0.21 .212 2.018 2.239 .068 2.097 .037 2.054 2.044 2.045

11 Firm age 10.80 4.18 .088 2.005 2.071 .041 .052 2.116 .203 .050 2.079 .178

N 5 1,485, correlations |.052| are significant at the .05 level (two-tailed).

a

N 5 541, correlations |.084| are significant at the .05 level (two-tailed).

b

None of these results change significantly when we included all
control and explanatory variables in the regression model.
5 | DISCUSSION AND CONCLUSION
By taking Chinese listed firms’ responses to the 2008 Sichuan earth-
quake as sample, this study investigated the drivers of corporate giving
probability and giving amount using a two-step strategy. The strategy
proposes that the decision to give is distinct from the decision about
the amount to give. In the first step, we find that firms depending more
on the government for support and legitimacy are more likely to
donate in disaster relief, and in the second step, firms under more
social scrutiny and having more slack resources tend to donate more.
More specifically, we find that: (a) firms with political ties are more
likely to donate; (b) firms headquartered in the disaster area are more
likely to donate; (c) firms founded earlier are less likely to donate; and
among firms donating, those giving more are: (d) firms with a higher
visibility; (e) firms located in more developed markets; and (f) firms with
more slack resources. We also find that firms depending more on the
government for support, such as firms with political ties and headquar-
tered in the disaster relief area, also donate more to disaster relief.
From the ethical perspective, context has to be brought to bear on
interpretation and discussion. Jamali and Neville (2011) have discussed
in the Lebanese context the convergence-divergence theory, and sug-
gested that the Lebanese characteristics had a clear bending effect, at
least to take into account the religious influence, even though the con-
vergence hypothesis is also justified. The Chinese behavior is, however,
different. There is in China a lot of convergence for obvious economic
reasons, but also for philosophical reason, even though the
GAO AND HAFSI | 197

TA BL E 3 Results of logistic regression (DV 5 giving probability)

Model 1 Model 2 Model 3 Model 4 Model 5

Constant 215.201** 214.779** 215.374** 214.785** 214.546**

(1.306) (1.323) (1.314) (1.321) (1.345)

Firm size (Ln) .667** .644** .675** .669** .659**

(.060) (.061) (.060) (.060) (.062)

ROA .037** .035** .037** .036** .034**

(.010) (.010) (.010) (.010) (.010)

Leverage 2.005† 2.005† 2.006* 2.004 2.004

(.003) (.003) (.003) (.003) (.003)

Ownership type (SOE 5 1) 2.654** 2.628** 2.648** 2.645** 2.614**

(.133) (.134) (.133) (0.133) (0.134)

Firm visibility .057** .056** .058** .058** .057**

(.010) (.010) (.010) (.010) (.010)

Slack resources 2.002 2.002 2.003 2.000 2.001

(.007) (.007) (.007) (.007) (.007)

Political ties (Yes 5 1) .246† .228†

(0.128) (.129)

Community embeddedness (Yes 51) .655* .769*

(0.302) (.307)

Firm age 2.037* 2.041*

(.016) (.017)

Number of observations 1,485 1,485 1,485 1,485 1,485

Log likelihood 2830.501 2828.673 2828.211 2827.968 2823.315

LR v2 286.90** 290.55** 291.48** 291.96** 301.27**

2
Pseudo R .1473 .1492 .1496 .1499 .1547
†
Note. < .1, * < .05, ** < .01 (two-tailed). Figures in parentheses are the values of standard errors. Industry dummies are controlled in each model.

philosophical link is hard to pinpoint. In their historical study, Yan and
Hafsi (2015) argued that instrumental and value-based motives are
often mixed in actual behavior. Confucianism has been one of the domi-
nant philosophical schools in China. Confucian values alone would be
consistent with both the willingness to give and with the importance of
the gift. However, some of these values emphasize organizational or
communitarian issues, such as submission to hierarchy and authority,
and others insist on the humanistic ideal. The ideals are generally widely
shared and part of national norms, and are hard to measure. The
organizational-communitarian side has a practical manifestation, which
is easier to measure. It is captured by such variables as political ties, visi-
bility, and others, as seen earlier. These provide more variance and can
therefore lead to better assessments of both giving probability and giv-
ing amount. This explains why in China most ethical behavior would
probably come dressed in organizational and political clothes. Moreover,
the Chinese political philosophy and the power of the state point to the
important factors, especially in situations of natural disaster.
Yan and Hafsi’s (2015) historical account is consistent with several
scholars’ suggestion of Chinese relativism (Gift, Gift, & Zheng, 2013;
Hofstede, 2001). They argue that the Chinese often show their instru-
mental side before their idealistic, altruistic and emotional side. Keeping
this in mind, we can see in this research that a practical sensitivity to
social and political pressures seems to drive most Chinese corporations’
philanthropic behavior. In a sense, one can say that institutions rather
than agency, in particular ethical agency or discretionary social behav-
ior (Carroll, 1991), dominates corporate decisions to donate.
In his study of the behavior of Sichuan Electric Power Corporation
(SEPC), Yan (2010) has argued that the hard figures may be misleading.
For example, SEPC did not specifically contribute much giving, but it
was highly involved in the relief, and the discourse of SEPC employees
was more attuned to traditional values than to the instrumental ones
highlighted here.
Still, the above findings, combined with the effects of control varia-
bles, provide an interesting indication of the proposed two-step model
value. In the first step of the analysis, the logistic regression shows that all
independent variables are significant, except slack resources. In the sec-
ond step, all independent variables except leverage, ownership types, and
firm age (when firm visibility is controlled) are significant. First, the control
variables’ significance shows that the model is generally consistent with
previous findings. Second, it is interesting that firm age is better at
198 | GAO AND HAFSI

TA BL E 4 Results of OLS regression (DV 5 giving amount)

Model 1 Model 2 Model 3 Model 4 Model 5

Constant 1.224** 1.074** 1.321** 1.169** 1.138**

(0.348) (0.349) (0.348) (0.348) (0.349)

Firm size (Ln) 2.068** 2.062** 2.079** 2.067** 2.072**

(.012) (.012) (.013) (.012) (.013)

ROA .009** .009** .010** .007* .008**

(.003) (.003) (.003) (.003) (.003)

Leverage .001 .001 .001 .000 .001

(.001) (.001) (.001) (.001) (.001)

Ownership type (SOE 5 1) 2.026 2.027 2.019 2.025 2.020

(.032) (.031) (.031) (.031) (.031)

Political ties (Yes 5 1) .098** .084** .107** .099** .095**

(.031) (.031) (.031) (.031) (.031)

Community embeddedness .308** .320** .346** .301** .347**

(.070) (.069) (.071) (.070) (.070)

Firm age .007† .006 .008* .006 .006

(.004) (.003) (.004) (.004) (.004)

Firm visibility .006** .005**

(.002) (.002)

Market development .026** .023*

(.010) (.010)

Slack resources .004* .003†

(.002) (.002)

Number of observations 541 541 541 541 541

F value 5.64** 5.93** 5.77** 5.64** 5.87**
R2 .1706 .1857 .1816 .1782 .1996

Adjusted R2 .1403 .1544 .1501 .1466 .1656

Note. † < .1, * < .05, ** < .01 (two-tailed). Figures in parentheses are the values of standard errors. Industry dummies are controlled in each model.

explaining the giving decision than the giving amount, while slack resour-
ces do not explain the giving decision but explain the amount given. Both
findings are consistent with our claim that these are two different deci-
sions. That ownership type and leverage are not related to the amount
given is probably specific to disaster situations, where pressures to con-
tribute overcome the relationship with financial stakeholders.
This study contributes to the CP literature in the following ways.
First, it provides a rationale for the proposed two-step model and clari-
fies the measurable drivers of corporate giving probability and giving
amount, especially in situations of disaster. Prior studies tend to treat a
firm’s decisions about whether or not to donate and the amount of
donation as a one-shot decision, and thus fail to distinguish between
the drivers of giving probability and those of giving amount. In this
study, following the lead of Marquis and Qian (2014), we treat giving
or not and giving amount as two different but related decisions. Evi-
dence from Chinese listed firms’ responses to 2008 Sichuan earth-
quake generally supports our propositions.
Second, the findings suggest that dependency and institutional
pressures are real determinants of giving behavior in situations of
emergency. It is reasonable to expect the normative and cognitive-
cultural aspect of Chinese philosophy to dominate behavior. These
are the basic pressures behind corporate philanthropic behavior.
However, we provide some specifics. Although it has generally been
suggested that the institutional environment plays an important role
in affecting CP (e.g., Marquis et al., 2007; Oliver, 1991; Wang &
Qian, 2011), little specific attention has been paid to the role of the
government. We find in this study that firms depending more on the
government for legitimacy and support are more likely to donate
because they face added government pressure to do so. Firms facing
more scrutiny from the government and the average public, like
those with a high visibility or operating in a more developed market,
are willing to give more than others. So, this study clarifies further
the important role of government in driving CP and perhaps explain-
ing ethical behavior in general. Prior studies have widely docu-
mented a positive effect of political ties, suggesting that political ties
allow firms to get access to government-controlled resources which
in turn improves their financial performance (Li & Zhang, 2007; Li,
Poppo, & Zhou, 2008; Sheng et al., 2011). One could argue that
GAO AND HAFSI
there is also a negative side to political ties, with added scrutiny and
pressures to meet government needs.
Third, this study documents the value of legitimacy for firms and
its role in affecting corporate social behavior. In line with resource
dependency and neo-institutional theory, we have argued earlier that
firms tend to respond to social calls only when they cannot do other-
wise, for example preferring symbolic actions to actual commitment of
resources (Meyer & Rowan, 1977; Oliver, 1991). In their study, La
Cour and Kromann (2011) suggested that “euphemism” is used to rec-
oncile economic and ethical behavior, and to avoid being perceived as
hypocritical. In the case of disasters, especially in a country such as
China, this is not the case. Visibility is high and the community’s sensi-
tivity is high. Thus, there is no place to hide, and firms with political
ties, or whose headquarters are in the affected community actually do
contribute. Also, community’s sensitivity enhances scrutiny, and the
possibility of enforcement, through punishing those who evade infor-
mal rules and norms of behavior. Ethical behavior is ensured by social
and governmental scrutiny. The only exception is related to firms’ age
and we have argued earlier that imprinting explains such an effect
(Marquis, 2003; Stinchcombe, 1965). Path-dependency leads older
firms and managers to believe that they are legitimate enough to do
without a strong and visible support to the community. So, in general,
legitimacy is valuable and it has a real cost (Suchman, 1995). The need
for legitimacy increases the commitment to be responsible and stand
by the community in case of disaster.
But legitimacy is multifaceted. Our findings highlight also the
essence of legitimacy in China, and its effect on firms’ social behav-
ior. Suchman (1995) suggests that there are three types of legiti-
macy: pragmatic, cognitive, and moral. Pragmatic legitimacy rests on
the premise that self-interest is the primary motive and therefore
legitimacy is the result of an exchange, whereby stakeholders see
the firm as legitimate when they benefit from its activities, including
through receiving some side payments (Cyert & March, 1963). These
payments could take the form of some general benefits to society,
for example in the form of economic development or innovation.
Our findings seem to relate mostly to this utilitarian attempt on the
part of Chinese firms to get more legitimacy in return for contribu-
tions to a disaster relief effort. The institutional approach (Di Maggio
& Powell, 1983; Meyer & Rowan, 1977; Powell and Di Maggio,
1991; Zucker, 1986), which supports that, looks mostly at how
organizations build legitimacy, in particular by sticking with norma-
tively sanctioned rules of behavior. Oliver (1991), for example, has
shown how organizations use their relationships to institutionalized
structures and practices to show “the organization worthiness and
acceptability” (p. 158). It is interesting to see, however, that, accord-
ing to our findings, where there is less development and ability to
monitor or scrutinize firms (e.g., less developed areas), there is less
giving. This reveals the influence of a more strategic approach,
whereby firms struggle to enhance their interests, in particular to
deal with their resource dependence.
Cognitive legitimacy is the situation where behavior is culture-
based. The firm is then seen by most stakeholders, consciously or not,
| 199
as a natural participant to collective action (Hannan & Carroll, 1992).
This makes it difficult to manipulate perceptions (Castello & Lozano,
2011) as suggested by Oliver (1991). With the exception of Hypothesis
6, which relates to the means available, our findings could all be inter-
preted as being the result of normative behavior. Ties to government,
headquarters in the community affected and in more/less developed
markets, and even age, expose the firm to social dynamics, and to
deep-seated norms of behavior. Legitimacy is thus the result also of
natural adoption of these norms. Cognitive legitimacy does not exclude
self-interested symbolic behavior (e.g., giving but not much), except
perhaps where the firm’s visibility is high or where norms are super-
seded by explicit rules as could be the case in more developed markets.
Both pragmatic and cognitive legitimacies reinforce the strategic
approach to giving. Suchman (1995) argued that an organization could
“deploy evocative symbols in order to gain societal support” (p. 572).
This could be compatible with selfish calculations in the search for
stakeholder support (Castello & Lozano, 2011).
Moral legitimacy is judged not on whether the firm’s activity bene-
fits stakeholders, but whether it is “the right thing to do” (Suchman,
1995, p. 585). Castello and Lozano (2011) echo Palazzo and Scherer
(2006) to state that corporations can gain moral legitimacy through
persuasion and public rational discussion (p. 13). Moral legitimacy is
about authentic behavior and implies moving away from the strategic
or institutional rhetoric to a more dialectic one, “rooted in the practice
of dialog between corporations and their stakeholders” (Castello & Loz-
ano, 2011, p. 20). In our research, there is also evidence of efforts at
being authentic. Hesitation to give casts a doubt about intentions and
motives. So firms with political ties, headquartered in the affected com-
munity, and perhaps younger firms, found to be more likely to give
would probably benefit from a higher level of moral legitimacy. Emer-
gency seem to bring back scrutiny in relation to basic values. Giving
more, in relation to visibility and/or scrutiny-based enforcement could
be perceived more as a strategic move.
This study also has significant practical implications. First, busi-
ness executives need to know that firms face strong pressures from
the government and general public to support social causes.
Through CP, firms could secure their political legitimacy. However,
for firms only concerned about political legitimacy, symbolic compli-
ance could be sufficient. But firms looking for more support from
the government and those receiving more scrutiny from the govern-
ment and general public need to donate more to social causes such
as disaster relief drives. In addition, firms need to know that CP,
especially symbolic CP, does not increase financial performance at
least in the short run. This is even more the case in situations of dis-
aster relief where a lot of firms compete with each other in showing
solidarity. Finally, firms also need to realize the negative side of
political ties. Getting support from the government through building
ties with the government is not cost free. Political ties lead to more
government pressures, especially to contribute significantly to disas-
ter relief and in general to CP.
This study has some limitations. First, it was conducted in the
context of China. As the largest transition economy in the world,
200 | GAO
China has an institutional environment which differs from those of
Western developed economies. In particular, the role of government
in economic activities is more intrusive. But recent studies have
shown that the issues discussed here are relevant. For example,
Jamali (2010), Jamali and Mirshak (2007), and Jamali and Neville
(2011) have shown the idiosyncrasies of CSR in Lebanon. Similarly,
Fifka (2013) has documented the differences in perceptions and
practices between U.S. and German corporations, suggesting that
the national governance regime is a context that always has to be
taken into account to explain behavior. Moreover, Gift et al. (2013),
studying Chinese and U.S. firms, provided some evidence that there
is some convergence in business ethics norms. It is, however, possi-
ble that developing countries or emerging economies present a spe-
cial case. In most of these countries, the government dominates all
other stakeholders and provides both the formal and informal rules
that shape corporate strategic and ethical behavior. Still more stud-
ies in the context of developing economies are needed to under-
stand the delicate nuances which explain corporations’ moral and
ethical behavior (Jamali, 2010). Second, this study focuses on firms’
responses to disaster relief causes. Although our logic could be
applied to ongoing causes, more studies are needed to confirm this.
Finally, we have used political ties, community embeddedness and
firm age to reflect a firm’s political dependence on the government
for legitimacy and support, and used firm visibility and market devel-
opment to capture social scrutiny. Although reasonable and theoret-
ically justified, as argued previously, these variables do not capture
completely legitimacy and the effect of scrutiny. More studies intro-
ducing variables to represent the various types of legitimacy and
scrutiny are needed.
AC KNOWLEDG EME NT
We are grateful for the financial support of the National Natural
Science Foundation of China (NSFC) (Nos. 71372131, 71531009).
NOTES
1
Chinese listed companies here refer to the firms that have publicly-traded
A shares on either the Shanghai Stock Exchange or the Shenzhen Stock
Exchange.
2
The network of cninfo (www.cninfo.com.cn) is the assigned website for
listed firms to publish their public announcements and other information
by the China Securities Regulatory Commission (CSRC), the regulatory
body of stock exchange markets in China.
3
After the earthquake, the media have done their best to report the disas-
ter relief behaviors of firms, individuals, and other institutions. Two lead-
ing network companies in China, Baidu, and Sina, opened their respective
online special forums to report this disaster relief endeavor. Baidu's forum
is available at: http://finance.baidu.com/hongguan/guonei/2008-05-19/
100237.html, while Sina's forum is available at: http://finance.sina.com.
cn/stock/blank/wcjiuzai.shtml. Adding the online sources of disaster relief
giving made our sample slightly different from the one collected by Zhang
et al. (2009, 2010).
4
The donations of leading shareholders are excluded here because all the
leading shareholders of listed companies have more than one subsidiary.
It is not reasonable to take the leading shareholder’s donations as that of
a particular listed firm.
AND HAFSI
5
The 13 industry categories are agriculture, forestry, livestock rearing, and
fishing; mining; manufacturing; electric power, gas, and water production
supply; construction; transport and storage; information technology;
wholesale and retail trade; finance and insurance; real estate; social serv-
ice; communication and cultural industries; and a comprehensive residual
category.
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AUTHOR BIOGRAPHIES
YONGQIANG GAO (corresponding author) is professor of management at
the School of Management, Huazhong University of Science and Tech-
nology (HUST). His research interests include corporate social strategy,
GAO AND HAFSI | 203

corporate social responsibility, and individual pro-social behavior. His Management Review, Journal of Business Ethics, British Journal of Man-
publications appear in academic journals such as Journal of Business agement, Long Range Planning, and Business & Society.
Ethics, Management and Organization Review, Journal of Business
Research, Asia Pacific Journal of Management, Australian Journal of Man-
How to cite this article: Gao Y, Hafsi T. Political dependence,
agement, and Management Decision.
social scrutiny, and corporate philanthropy: Evidence from dis-
TAïEB HAFSI is professor of management at HEC Montreal. His research
aster relief. Business Ethics: A Eur Rev. 2017;26:189–203.
interests include corporate strategic management, corporate social
https://doi.org/10.1111/beer.12144
responsibility, and international business. His publications appear in
academic journals such as Administrative Science Quarterly, Academy of