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

The existing literature on corporate social responsibility (CSR) drivers focuses on firm- and institution-level factors and rarely on the role of political incentives. Public officials control enormous resources in China, and their political incentives substantially shape certain firm behaviors. As CSR is one of the critical measures that the central government uses to evaluate the performance of local government, local officials have the incentive to channel firms into accomplishing their political goals. Correspondingly, local firms may strategically implement CSR to build a good relationship with local governments. This study investigates the impact of local officials' political incentives (measured by tenure) on firms' CSR. Using a panel of publicly listed Chinese firms covering 2009-2019, it documents a U-shaped effect of government officials' tenure on the CSR performance of firms within their jurisdiction. To wit, the firm's CSR decreases first and then increases with the growth of tenure. Moreover, this U-shaped effect will be strengthened in regions with a high priority of gross domestic product (GDP) growth and will be weakened in regions with good market development. In addition, there is no significant evidence that party officials' tenure affects firms' CSR. Overall, this study advances our understanding of the political determinants of CSR in emerging markets.

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Copyright: © 2023 Yunyu Wu. This is an open access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.

Déclaration de conflit d'intérêts

The authors have declared that no competing interests exist.