article

Corporate Social Responsibility Reporting in China: Symbol or Substance?

Organization Science, Volume 25, Issue 1

Pages 127 - 148

https://doi.org/10.1287/orsc.2013.0837

Published: 01 February 2014 Publication History

Abstract

<P>This study focuses on how and why firms strategically respond to government signals on appropriate corporate activity. We integrate institutional theory with research on corporate political strategy to develop a political dependence model that explains (a) how different types of dependency on the government lead firms to issue corporate social responsibility (CSR) reports and (b) how the risk of governmental monitoring affects the extent to which CSR reports are symbolic or substantive. First, we examine how firm characteristics reflecting dependence on the government—including private versus state ownership, executives serving on political councils, political legacy, and financial resources—affect the likelihood of firms issuing CSR reports. Second, we focus on the symbolic nature of CSR reporting and how variance in the risk of government monitoring through channels such as bureaucratic embeddedness and regional government institutional development influences the extent to which CSR communications are symbolically decoupled from substantive CSR activities. Our database includes all CSR reports issued by the approximately 1,600 publicly listed Chinese firms between 2006 and 2009. Our hypotheses are generally supported. The political perspective we develop contributes to organizational theory by showing that (a) government signaling is an important mechanism of political influence, (b) different types of dependency on the government expose firms to different types of legitimacy pressure, and (c) firms face a decoupling risk that makes them more likely to enact substantive CSR actions in situations in which they are likely to be monitored.</P>

References

[1]

Aiken LS, West SG (1991) Multiple Regression: Testing and Interpreting Interactions (Sage, Newbury Park, CA).

[2]

Bai CE, Lu J, Tao Z (2006) Property rights protection and access to bank loans. Econom. Transition 14(4):611-628.

[3]

Barnett ML (2007) Stakeholder influence capacity and the variability of financial returns to corporate social responsibility. Acad. Management Rev. 32(3):794-816.

[4]

Baron DP (1995) Integrated strategy: Market and nonmarket components. Calif. Management Rev. 37(2):47-65.

[5]

Bonardi JP, Hillman AJ, Keim GD (2005) The attractiveness of political markets: Implications for firm strategy. Acad. Management Rev. 30(2):397-413.

[6]

Bonardi JP, Holburn GLF, Bergh RGV (2006) Nonmarket strategy performance: Evidence from U.S. electric utilities. Acad. Management J. 49(6):1209-1228.

[7]

Brandt L, Li H (2003) Bank discrimination in transition economies: Ideology, information, or incentives? J. Comparative Econom. 31(3):387-413.

[8]

Brown AD (1998) Narrative, politics and legitimacy in an IT implementation. J. Management Stud. 35(1):35-58.

[9]

Campbell JL (2007) Why would corporations behave in socially responsible ways? An institutional theory of corporate social responsibility. Acad. Management Rev. 32(3):946-967.

[10]

Carow K, Heron R, Saxton T (2004) Do early birds get the returns? An empirical investigation of early-mover advantages in acquisitions. Strategic Management J. 25(6):563-585.

[11]

Chen W (2007) Does the color of the cat matter? The red hat strategy in China's private enterprises. Management Organ. Rev. 3(1):55-80.

[12]

ChinaCSR.com (2009) How far can Chinese companies take corporate social responsibility? (February 23) http://www.chinacsr .com/en/2009/02/23/4572-how-far-can-chinese-companies-take-corporate-social-responsibility/.

[13]

China WTO Tribune (2009) Four discoveries of the research on CSR reports in China from 2001 to 2009. [In Chinese.] (December 2) http://www.wtoguide.net/Html/tbgz/06122515571068955091271 627382793311.html.

[14]

Deephouse D, Suchman MC (2008) Legitimacy in organizational Institutionalism. Greenwood R, Oliver C, Suddaby R, Sahlin-Andersson K, eds. The Sage Handbook of Organizational Institutionalism (Sage, London), 49-77.

[15]

Dickson BJ (2003) Red Capitalists in China: The Party, Private Entrepreneurs, and Prospects for Political Change (Cambridge University Press, Cambridge, UK).

[16]

Dobbin F, Sutton FR (1998) The strength of a weak state: The rights revolution and the rise of human resources management divisions. Amer. J. Sociol. 104(2):441-476.

[17]

Dobbin F, Schrage D, Kalev A (2009) Someone to watch over me: Coupling, decoupling, and unintended consequences in corporate equal opportunity. Working paper, Harvard University, Cambridge, MA.

[18]

Dobbin F, Sutton J, Meyer J, Scott WR (1993) Equal opportunity law and the construction of internal labor markets. Amer. J. Sociol. 99:396-427.

[19]

Eccles RG, Krzus MP (2010) One Report: Integrated Reporting for a Sustainable Strategy (John Wiley & Sons, Hoboken, N.J).

[20]

Edelman LB (1990) Legal environments and organizational governance: The expansion of due process in the American workplace. Amer. J. Sociol. 95:1401-1440.

[21]

Edelman LB (1992) Legal ambiguity and symbolic structures: Organizational mediation of civil rights law. Amer. J. Sociol. 97:1531-1576.

[22]

Edelman LB, Suchman MC (1997) The legal environments of organizations. Annual Rev. Sociol. 23:479-515.

[23]

Elsbach KD, Sutton RI (1992) Acquiring organizational legitimacy through illegitimate actions: A marriage of institutional and impression management theories. Acad. Management J. 35(4):699-738.

[24]

Faccio M (2006) Politically connected firms. Amer. Econom. Rev. 96(1):369-386.

[25]

Faccio M, Lang LHP (2002) The ultimate ownership of Western European corporations. J. Financial Econom. 65(3):365-395.

[26]

Faccio M, Masulis RW, McConnell JJ (2006) Political connections and corporate bailouts. J. Finance 61(6):2597-2635.

[27]

Fan JPH, Wong TJ, Zhang T (2007) Politically connected CEOs, corporate governance, and post-IPO performance of China's newly partially privatized firms. J. Financial Econom. 84(2):330-357.

[28]

Farashahi M, Hafsi T (2009) Strategy of firms in unstable institutional environments. Asia Pacific J. Management 26(4):643-666.

[29]

Goldstein SM (1995) China in transition: The political foundations of incremental reform. China Quart. 144:1105-1131.

[30]

Greene W (2010) Testing hypotheses about interaction terms in nonlinear models. Econom. Lett. 107(2):291-296.

[31]

Guthrie D (2009) China and Globalization: The Social, Economic and Political Transformation of Chinese Society, revised ed. (Routledge, New York).

[32]

He Y, Tian Z (2008) Government-oriented corporate public relation strategies in transitional China. Management Organ. Rev. 4(3):367-391.

[33]

Heckman JJ (1979) Sample selection bias as a specification error. Econometrica 47(1):153-161.

[34]

Hiatt S, Park S (2013) Lords of the harvest: Third-party influence and regulatory approval of genetically modified organisms. Acad. Management J. 56(4):923-944.

[35]

Hillman AJ (2003) Determinants of political strategies in U.S. multinationals. Bus. Soc. 42(4):455-484.

[36]

Hillman AJ (2005) Politicians on the board of directors: Do connections affect the bottom line? J. Management 31(3):464-481.

[37]

Hillman AJ, Keim GD, Schuler D (2004) Corporate political activity: A review and research agenda. J. Management 30(6):837-857.

[38]

Hillman AJ, Zardkoohi A, Bierman L (1999) Corporate political strategies and firm performance: Indications of firm-specific benefits from personal service in the U.S. government. Strategic Management J. 20(1):67-81.

[39]

Hitt MA, Hoskisson RE, Kim H (1997) International diversification: Effects on innovation and firm performance in product-diversified firms. Acad. Management J. 40(4):767-798.

[40]

Hoetker G (2007) The use of logit and probit models in strategic management research: Critical issues. Strategic Management J. 28(4):331-343.

[41]

Hong Z (2004) Mapping the evolution and transformation of the new private entrepreneurs in China. J. Chinese Political Sci. 9(1):23-42.

[42]

Huang Y (2008) Capitalism with Chinese Characteristics: Entrepreneurship and the State (Cambridge University Press, Cambridge, New York).

[43]

Kogut B, Zander U (2000) Did socialism fail to innovate? A natural experiment of the two Zeiss companies. Amer. Sociol. Rev. 65(2):169-190.

[44]

KPMG (2008) KPMG international survey of corporate responsibility reporting 2008. Report, KPMG International, Amsterdam. http://www.kpmg.com/EU/en/Documents/KPMG_International_survey_Corporate_responsibility_Survey_Reporting_2008.pdf.

[45]

Kriauciunas A, Kale P (2006) The impact of socialist imprinting and search on resource change: A study of firms in Lithuania. Strategic Management J. 27(7):659-679.

[46]

La Porta R, Lopez-de-Silanes F, Shleifer A (1999) Corporate ownership around the world. J. Finance 54(2):471-518.

[47]

La Porta R, Lopez-de-Silanes F, Shleifer A, Vishny R (1998) Law and finance. J. Political Econom. 106:1113-1155.

[48]

Li J, Qian C (2013) Principal-principal conflicts under weak institutions: A study of corporate takeovers in China. Strategic Management J. 34(4):498-508.

[49]

Li H, Zhang Y (2007) The role of managers' political networking and functional experience in new venture performance: Evidence from China's transition economy. Strategic Management J. 28(8):791-804.

[50]

Li H, Meng L, Zhang J (2006) Why do entrepreneurs enter politics? Evidence from China. Econom. Inquiry 44(3):559-578.

[51]

Li H, Meng L, Wang Q, Zhou LA (2008) Political connections, financing and firm performance: Evidence from Chinese private firms. J. Development Econom. 87(2):283-299.

[52]

Lin LW (2010) Corporate social responsibility in China: Window dressing or structural change? Berkeley J. Internat. Law 28(1):64-100.

[53]

Lord MD (2000) Corporate political strategy and legislative decision making: The impact of corporate legislative influence activities. Bus. Soc. 39(1):76-93.

[54]

Luo Y (2003) Industrial dynamics and managerial networking in an emerging market: The case of China. Strategic Management J. 24(13):1315-1327.

[55]

Lyon TP, Maxwell JW (2011) Greenwash: Environmental disclosure under threat of audit. J. Econom. Management Strategy 20(1):3-41.

[56]

Ma D, Parish WL (2006) Tocquevillian moments: Charitable contributions by Chinese private entrepreneurs. Soc. Forces 85(2):943-964.

[57]

Marquis C, Huang Z (2010) Acquisitions as exaptation: The legacy of founding institutions in the U.S. commercial banking industry. Acad. Management J. 53(6):1441-1473.

[58]

Marquis C, Tilcsik A (2013) Imprinting: Toward a multi-level theory. Acad. Management Ann. 7(1):193-243.

[59]

Marquis C, Yin L, Yang D (2011) COSCO: Implementing sustainability HBS Case 412081, Harvard Business School, Boston.

[60]

Marquis C, Zhang J, Zhou Y (2011) Regulatory uncertainty and corporate responses to environmental protection in China. Calif. Management Rev. 54(1):39-63.

[61]

Marquis C, Dai N, Yang D, Wu H (2010) State grid: Corporate social responsibility HBS Case 410141, Harvard Business School, Boston.

[62]

Meyer JW, Rowan B (1977) Institutionalized organizations: Formal structure as myth and ceremony. Amer. J. Sociol. 83(2):340-363.

[63]

Meyer MW, Rowan B (1978) The structure of educational organizations. Meyer MW et al., eds. Environments and Organizations, 1st ed. (Jossey-Bass, San Francisco), 78-109.

[64]

Mizruchi MS (1992) The Structure of Corporate Political Action: Interfirm Relations and Their Consequences (Harvard University Press, Cambridge, MA).

[65]

Naughton B (2007) The Chinese Economy: Transitions and Growth (MIT Press, Cambridge, MA).

[66]

Nee V (1992) Organizational dynamics of market transition: Hybrid forms, property rights, and mixed economy in China. Admin. Sci. Quart. 37(1):1-27.

[67]

Norton EC, Wang H, Ai C (2004) Computing interaction effects and standard errors in logit and probit models. Stata J. 4(2):154-167.

[68]

O'Brien KJ (1990) Reform Without Liberalization: China's National People's Congress and the Politics of Institutional Change (Cambridge University Press, New York).

[69]

Okhmatovskiy I, David RJ (2012) Setting your own standards: Internal corporate governance codes as a response to institutional pressure. Organ. Sci. 23(1):155-176.

Digital Library

[70]

Oliver C (1991) Strategic responses to institutional processes. Acad. Management Rev. 16(1):145-179.

[71]

Oliver C, Holzinger I (2008) The effectiveness of strategic political management: A dynamic capabilities framework. Acad. Management Rev. 33(2):496-520.

[72]

Park S, Sine WD, Tolbert PS (2011) Professions, organizations, and institutions: Tenure systems in colleges and universities. Work Occupations 38(3):340-371.

[73]

Pearce JL, De Castro JO, Guillen MF (2008) Influencing politics and political systems: Political systems and corporate strategies (introduction to special topic forum). Acad. Management Rev. 33(2):493-495.

[74]

Peng MW, Heath PS (1996) The growth of the firm in planned economies in transition: Institutions, organizations, and strategic choice. Acad. Management Rev. 21(2):492-528.

[75]

Peng MW, Luo Y (2000) Managerial ties and firm performance in a transition economy: The nature of a micro-macro link. Acad. Management J. 43(3):486-501.

[76]

Peng Y (2004) Kinship networks and entrepreneurs in China's transitional economy. Amer. J. Sociol. 109(5):1045-1074.

[77]

Pfeffer J, Salancik G (1978) The External Control of Organizations (Harper & Row, New York).

[78]

Quasney TJ (2003) Competitive interaction: A study of market, nonmarket and integrated competitive behavior. Unpublished doctoral dissertation, University of Maryland, College Park.

[79]

Ryan TP (1997) Modern Regression Methods (John Wiley & Sons, New York).

[80]

Saich T (2001) Governance and Politics of China (Palgrave, New York).

[81]

Schuler DA, Rehbein K (1997) The filtering role of the firm in corporate political involvement. Bus. Soc. 36(2):116-139.

[82]

Schuler DA, Rehbein K, Cramer RD (2002) Pursuing strategic advantage through political means: A multivariate approach. Acad. Management J. 45(4):659-672.

[83]

Scott WR (2001) Institutions and Organizations, 2nd ed. (Sage, Thousand Oaks, CA).

[84]

Scott WR (2008) Institutions and Organizations: Ideas and Interests, 3rd ed. (Sage, Los Angeles).

[85]

See G (2009) Harmonious society and Chinese CSR: Is there really a link? J. Bus. Ethics 89:1-22.

[86]

Seifert B, Morris SA, Bartkus BR (2004) Having, giving, and getting: Slack resources, corporate philanthropy, and firm financial performance. Bus. Soc. 43(2):135-161.

[87]

Short JL, Toffel MW (2010) Making self-regulation more than merely symbolic: The critical role of the legal environment. Admin. Sci. Quart. 55(3):361-396.

[88]

Siegel J (2007) Contingent political capital and international alliances: Evidence from South Korea. Admin. Sci. Quart. 52(4):621-666.

[89]

Sino-Swedish CSR Cooperation (2009) Interpreting CSR policy for large Chinese SOEs. Press release (May 14), http://csr2.mofcom .gov.cn/article/laws/200905/20090506246453.shtml.

[90]

Stinchcombe AL (1965) Social structure and organizations. March JG, ed. Handbook of Organizations (Rand McNally & Co., Chicago), 142-193.

[91]

Tian Z, Hafsi T, Wu W (2009) Institutional determinism and political strategies. Bus. Soc. 48(3):284-325.

[92]

Tilcsik A (2010) From ritual to reality: Demography, ideology, and decoupling in a post-Communist government agency. Acad. Management J. 53(6):1474-1498.

[93]

Tsui AS (2007) From homogenization to pluralism: International management research in the academy and beyond. Acad. Management J. 50(6):1353-1364.

[94]

Waddock SA, Graves SB (1997) The corporate social performance-financial performance link. Strategic Management J. 18(4):303-319.

[95]

Walder AG (1995) Local governments as industrial firms: An organizational analysis of China's transitional economy. Amer. J. Sociol. 101(2):263-301.

[96]

Walder AG (2000) China's transitional economy. Li JT, Tsui AS, Weldon E, eds. Management and Organizations in the Chinese Context (St. Martin's Press, New York), 63-83.

[97]

Wang H, Qian C (2011) Corporate philanthropy and corporate financial performance: The roles of stakeholder response and political access. Acad. Management J. 54(6):1159-1181.

[98]

Wang H, Choi J, Li J (2008) Too little or too much? Untangling the relationship between corporate philanthropy and firm financial performance. Organ. Sci. 19(1):143-159.

Digital Library

[99]

Wang Q, Wong TJ, Xia L (2008) State ownership, the institutional environment, and auditor choice: Evidence from China. J. Accounting Econom. 46(1):112-134.

[100]

Westphal JD, Zajac EJ (1994) Substance and symbolism in CEOs' long-term incentive plans. Admin. Sci. Quart. 39(3):367-390.

[101]

Westphal JD, Zajac EJ (1995) Who shall govern? CEO/Board power, demographic similarity, and new director selection. Admin. Sci. Quart. 40(1):60-83.

[102]

Westphal JD, Zajac EJ (2001) Decoupling policy from practice: The case of stock repurchase programs. Admin. Sci. Quart. 46(2):202-228.

[103]

Xinhuanet.com (2011) Chinese ministry vows more transparency for charitable organizations. (July 15) http://news.xinhuanet.com/english2010/china/2011-07/15/c_13988257.htm.

[104]

Yin G, Li W, Yu Z, Zheng R, Li W (2008) How to Write a CSR Report, Chinese ed. (Golden Bee Development Center for Chinese CSR/China WTO Tribune, Beijing).

[105]

Young MN, Peng MW, Ahlstrom D, Bruton GD, Jiang Y (2008) Corporate governance in emerging economies: A review of the principal-principal perspective. J. Management Stud. 45(1):196-220.

[106]

Zajac EJ, Westphal JD (2004) The social construction of market value: Institutionalization and learning perspectives on stock market reactions. Amer. Sociol. Rev. 69(3):433-457.

[107]

Zhong HW (2009) Guidelines of Chinese Firms' Social Reporting (CASS-CSR 1.0) (Economy and Management Publishing, Beijing).

Cited By

Fan YLiu RZhang BHe TLi S(2024)State Ownership and Green InnovationJournal of Global Information Management10.4018/JGIM.34750232:1(1-19)Online publication date: 7-Aug-2024
https://dl.acm.org/doi/10.4018/JGIM.347502
Cuervo-Cazurra APurkayastha SRamaswamy K(2023)Variations in the Corporate Social Responsibility-Performance Relationship in Emerging Market FirmsOrganization Science10.1287/orsc.2022.163934:4(1626-1650)Online publication date: 1-Jul-2023
https://dl.acm.org/doi/10.1287/orsc.2022.1639
Jung HLee S(2023)The Impact of Bribery Relationships on Firm Growth in Transition EconomiesOrganization Science10.1287/orsc.2022.157534:1(303-328)Online publication date: 1-Jan-2023
https://dl.acm.org/doi/10.1287/orsc.2022.1575
Show More Cited By

Corporate Social Responsibility Reporting in China: Symbol or Substance?
1. Applied computing

Recommendations

Corporate Social Responsibility: Case Study in UAE Organizations

Corporate social responsibility CSR is a western concept that is penetrating Middle Eastern countries, and the UAE is the most appropriate region to offer insights into CSR because other Middle Eastern countries are not adopting the concept quite as ...
Manu Militari: The Institutional Contingencies of Stakeholder Relationships on Entrepreneurial Performance

This study examines how ventures can leverage relationships with heterogeneous government stakeholders to enhance survival in different institutional environments. We consider how the distinct resources provided from venture ties to military and ...
An institutional theory perspective on e-HRM's strategic potential in MNC subsidiaries

This paper extends the application of institutional theory to electronic human resource management (e-HRM), and strategic information systems (IS) more generally, in a multinational corporation (MNC) subsidiary setting. By adopting Scott's (2001) ...

Comments

Please enable JavaScript to view thecomments powered by Disqus.

Information & Contributors

Information

Published In

cover image Organization Science

Organization Science Volume 25, Issue 1

February 2014

319 pages

ISSN:1526-5455

Issue’s Table of Contents

Publisher

INFORMS

Linthicum, MD, United States

Publication History

Published: 01 February 2014

Author Tags

Qualifiers

Article

Contributors

Other Metrics

View Article Metrics

Bibliometrics & Citations

Bibliometrics

Article Metrics

23
Total Citations
View Citations
0
Total Downloads

Downloads (Last 12 months)0
Downloads (Last 6 weeks)0

Reflects downloads up to 26 Sep 2024

Other Metrics

View Author Metrics

Citations

Cited By

Fan YLiu RZhang BHe TLi S(2024)State Ownership and Green InnovationJournal of Global Information Management10.4018/JGIM.34750232:1(1-19)Online publication date: 7-Aug-2024
https://dl.acm.org/doi/10.4018/JGIM.347502
Cuervo-Cazurra APurkayastha SRamaswamy K(2023)Variations in the Corporate Social Responsibility-Performance Relationship in Emerging Market FirmsOrganization Science10.1287/orsc.2022.163934:4(1626-1650)Online publication date: 1-Jul-2023
https://dl.acm.org/doi/10.1287/orsc.2022.1639
Jung HLee S(2023)The Impact of Bribery Relationships on Firm Growth in Transition EconomiesOrganization Science10.1287/orsc.2022.157534:1(303-328)Online publication date: 1-Jan-2023
https://dl.acm.org/doi/10.1287/orsc.2022.1575
Liu WXu YZhou JWong LYue X(2022)Does the Agenda-Setting Effect Always Work?Journal of Organizational and End User Computing10.4018/JOEUC.31563834:8(1-14)Online publication date: 23-Dec-2022
https://dl.acm.org/doi/10.4018/JOEUC.315638
Sine WCordero AColes R(2022)Entrepreneurship Through a Unified Sociological Neoinstitutional LensOrganization Science10.1287/orsc.2022.158633:4(1675-1699)Online publication date: 1-Jul-2022
https://dl.acm.org/doi/10.1287/orsc.2022.1586
Distelhorst GMcGahan A(2022)Socially Irresponsible Employment in Emerging-Market ManufacturersOrganization Science10.1287/orsc.2021.152633:6(2135-2158)Online publication date: 1-Nov-2022
https://dl.acm.org/doi/10.1287/orsc.2021.1526
Aguilera RWaldman DSiegel D(2022)Responsibility and Organization ScienceOrganization Science10.1287/orsc.2021.151833:1(483-494)Online publication date: 1-Jan-2022
https://dl.acm.org/doi/10.1287/orsc.2021.1518
Ballesteros LMagelssen C(2022)Institutional Disruptions and the Philanthropy of Multinational FirmsOrganization Science10.1287/orsc.2021.149133:4(1501-1522)Online publication date: 1-Jul-2022
https://dl.acm.org/doi/10.1287/orsc.2021.1491
Abraham MBurbano V(2022)Congruence Between Leadership Gender and Organizational Claims Affects the Gender Composition of the Applicant PoolOrganization Science10.1287/orsc.2021.144233:1(393-413)Online publication date: 1-Jan-2022
https://dl.acm.org/doi/10.1287/orsc.2021.1442
Odziemkowska KDorobantu S(2021)Contracting Beyond the MarketOrganization Science10.1287/orsc.2020.138832:3(776-803)Online publication date: 1-May-2021
https://dl.acm.org/doi/10.1287/orsc.2020.1388
Show More Cited By

View Options

View options

Get Access

Login options

Check if you have access through your login credentials or your institution to get full access on this article.

Full Access

Get this Publication

Media

Figures

Other

Tables

View Issue’s Table of Contents