Corporate philanthropy has become an increasingly important subject of academic literature in recent years. Regarding the output of corporate philanthropy, scholars originally focused on corporate financial sustainability (e.g., stakeholder management or, financial performance), and gradually shifted their focus to environmental issues as philanthropic studies developed and environmental awareness increased in wider society [1
]. Study of corporate philanthropy and environmental studies have developed in interaction with one another and the notion of “corporate environmental responsibility” is becoming an indispensable part of corporate research. Corporate environmental responsibility focuses on firm-specific activities taken by firms to limit the harmful impact they have on the environment and to strengthen sustainable development beyond compliance with legal requirements [5
A growing body of literature has studied several aspects of the outcomes of corporate environmental responsibility. Based on the significant relationship between corporate philanthropy and corporate financial performance, corporate environmental responsibility was expected to be related to financial performance [8
]. Ambec and Lanoie, Dollinger, King and Lenox examined the relationship between corporate environmental responsibility and financial performance from different perspectives and at different points in time [9
]. Moreover, corporate environmental responsibility has been proven to play an important role in corporate sustainable development from the perspectives of stakeholder management, organizational size and investor willingness [3
]. However, compared with the large number of studies on the outcome of corporate environmental responsibility, the relationship between corporate environmental responsibility and corporate philanthropy has been paid relatively little attention. Du focused on corporate environmental misconduct and found a positive relationship between corporate environmental misconduct and corporate philanthropy [14
]. Because corporate philanthropy can alleviate negative perceptions of a firm, environmental wrongdoers often use this as a corporate philanthropic strategy to overshadow and draw attention away from their wrongdoing. To fill the existing research gap, it should be made clear how corporate philanthropic strategy is affected for firms doing good work for the environment. Resource dependence theory has well noted the role that dependence on resources has on corporate survival and development [15
]. As a focus on environmental responsibility causes firms to consume excess resources, they select specific strategies in order to obtain the resources necessary for their development. In the institutional environment of China, critical resources are controlled by the government (both central and local), which also controls how these are dispensed and provided [18
]. Thus, firms need to meet the government’s expectations and gain political capital to exchange for critical resources. This may affect corporate philanthropic strategies.
Based on these reviews and the research gap above, the brief research questions in this study are clear: How corporate behavior on eco-friendly events affects corporate philanthropic strategy and how this relationship to be confirmed is affected by the institutional environment? According to these research questions, using a panel dataset of 2516 Chinese listed firms, we aim to address this issue by examining corporate environmental responsibility and the way such environmental responsibility affects the extent to which firms engage in corporate philanthropic strategy. Previous literature has suggested that firms with a higher-level intensity of eco-harmful events are more motivated to participate in corporate philanthropy in order to alleviate the negative influence these eco-harmful events have on the way they are perceived [14
]. We go step further and argue that firms with a high-level intensity of eco-friendly events have a positive correlation to corporate philanthropy. Furthermore, this study offers a more precise description of the relationship between corporate eco-friendly events and corporate philanthropy by considering the moderating roles of government intervention and government corruption. Thus, this study introduces new evidence for why firms with higher level of environmental responsibility engage in corporate philanthropy and why the institutional environment significantly impacts such corporate strategies.
This study contributes several perspectives to the existing literature. Firstly, to the best of our knowledge and the literature in hand, this study is one of the few to study the relationship between corporate environmental responsibility and corporate philanthropy, or to put it more specifically, the relationship between corporate eco-friendly events and corporate philanthropy, from an empirical perspective. Thus, this study can provide a new angle of view in the analysis of corporate philanthropy, and broaden the study scope of the relationship between corporate environmental responsibility and corporate philanthropy. Secondly, we found that the Chinese institutional environment, including government intervention and government corruption, plays an important role in the study of corporate philanthropy. Finally, regarding our research methods, our study brings the hierarchical structures of firms and governmental institutions into corporate philanthropic studies to better reveal institutional effects on corporate responsibility.
The remainder of this study is organized as follows: the next section provides a development of our hypotheses and provides the details of our theoretical arguments. The third section describes our data and the methodology of multilevel analysis. The empirical results are then presented, and our discussions and conclusions are outlined in the final section.
The purpose of this study is to examine the relationship between corporate environmental responsibility and corporate philanthropy as well as the moderating effect of institutional environmental variables, including government intervention and government corruption. After the empirical test using Chinese listed firms in the period from 2008 to 2013, we find that corporate environmental responsibility significantly affects corporate philanthropy; specifically, corporate eco-friendly events enhance corporate philanthropy. This result supports our assumptions regarding environmental events held by firms and what motivates corporate philanthropic strategy. Based on the theory of resource dependence, firms that engage in eco-friendly events expend a larger quantity of resources for instance through investment in environmental protection facilities and capacity constraints [59
]. Thus, firms that spend more resources on environmental responsibility are more motivated to engage in philanthropic activities in order to obtain the necessary resources controlled by the local government.
We also find that government intervention and government corruption negatively moderate the relationship between corporate eco-friendly events and corporate philanthropy, supporting our assumptions regarding the moderating effect of the Chinese institutional environment on corporate strategy. Government intervention is sensitive to the firms participating in eco-friendly events and firms can obtain more resources from the government by using corporate philanthropic strategy based on the sensitive connections between local government and firms. Government corruption, considered as direct mutually beneficial ties between firms and government, can help firms gain key resources from the government. Firms seek for more direct strategy of corruption rather than indirect corporate philanthropic strategies when there are conditions of high government corruption.
5.1. Contributions and Implications
This study contributes to the existing literature in several ways. Firstly, to the best of our knowledge and literature in hand, this study is one of the few to examine the relationship between corporate environmental responsibility and corporate philanthropy from an empirical perspective. More precisely, this study is the first to look at the direct relationship between corporate eco-friendly events (i.e., doing good) and corporate philanthropy. Previous literature (e.g., Du) has studied the positive association between corporate environmental misconduct and corporate philanthropy, where the motivation for corporate philanthropic strategy is to overshadow environmental wrongdoing [2
]. In our study, we expand the focus of corporate environmental responsibility from only misconduct (or eco-harmful events) to include eco-friendly events and argue that firms that help the environment (i.e., by holding eco-friendly events) have a positive effect on the strategy of corporate philanthropy. Considering the fact that dependence on resources plays an important role in this relationship, the theory of resource dependence is addressed in the context of environmental responsibility studies. Therefore, this study broadens the study scope of the relationship between corporate environmental responsibility and corporate philanthropy.
Secondly, following some of the previous literature (e.g., Gao and Hafsi; Li, Song and Wu; Li and Zhang), we find that Chinese institutional environment plays an important role in corporate philanthropy and that it negatively moderates the positive association between corporate environmental responsibility and corporate philanthropy [20
]. Institutional theory has previously noted the role of local government in shaping corporate strategy and behavior [20
]. Previous literature has discussed the role of institutional variables such as political ties between corporate managers and the government, industry peers’ giving and industry-level discretion [20
]. In this study, we expand on this and establish that government intervention and government are proven to have a moderating effect on the relationship between corporate environmental responsibility and corporate philanthropy.
Finally, regarding our research methods, few studies have previously brought the hierarchical structures found at the levels of firms and governmental institutions into corporate philanthropic studies. Focusing on the role of regional government, corporate strategies and behaviors such as environmental responsibility and philanthropic giving are one-to-one matched with their local institutional conditions in each region. Thus, it is necessary to investigate how institutional-level environment affects firm-level corporate strategies and behaviors, especially in the context of emerging markets [62
]. Accordingly, using the context of China, our findings China can better reveal institutional effects on corporate responsibility.
5.2. Limitations and Future Study Directions
Our research has a few limitations which suggest directions for future research. Firstly, although we have clearly elaborated the motivations for firms that engage in eco-friendly events to participate in corporate philanthropic strategy from the theoretical perspectives of resource dependence and institutional environment, these strategies still rely on political motivations. Some scholars have made the point that, rather than political concerns, other motivations for corporate philanthropic strategy (e.g., firm reputation) may affect corporate choices on philanthropic strategy [63
]. Future studies are needed to examine whether political concerns are indeed the main motivation for corporate philanthropic strategy.
Secondly, our study uses the number of corporate eco-friendly events per year as the measurement of the intensity of corporate environmental responsibility. This measurement can reflect the positive effects of corporate participation on environmental responsibility but not the amount of corporate resources used. Because we study this issue from the perspective of resource dependence, it does not well illustrate the changes in resource flow. Future studies may find a better method to measure the amount of resources that firms expend on environmental responsibility.
Thirdly, we have tested the positive relationship between corporate environmental responsibility and corporate philanthropy from a perspective of resource dependence, assuming that firms can gain key resources from the government by participating in philanthropic strategy. Previous research has proved that firms that engage in corporate philanthropic strategy can more easily gain resources from the government, but what kinds of resources and in what quantities are unclear [19
]. An examination of these issues may provide deeper insights into how much political benefit is influenced by corporate philanthropy. Thus, procurement of resources from the government via the strategy of corporate philanthropy is an important question for future research to address.