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Indirect Reciprocity and Corporate Philanthropic Giving: How Visiting Officials Influence Investment in Privately Owned Chinese Firms

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  • Ming Jia
  • Yi Xiang
  • Zhe Zhang

Abstract

This study examines how privately owned firms that are listed on Chinese stock exchanges and often surrounded by Buddhist or Taoist temples use money to bind themselves to officials who can mitigate their underinvestment problems. Philanthropic giving is a traditional way of achieving this task. Based on social‐exchange theory, we consider the potential for indirect reciprocity, in which visiting officials do favours for local businesses that do favours for other social actors. We analyse whether China’s Buddhist and Taoist cultures influence how philanthropic giving induces visiting officials to do favors. We also examine temple locations and the behaviours of privately owned firms listed on Chinese stock exchanges from 2001 to 2012 in an empirical study that provides strong support for our arguments. Results show that philanthropic giving initiates and amplifies indirect reciprocity between visiting officials and local businesses, thereby increasing corporate investment. The magnitudes of these effects depend on the magnitude of religious norms. Our study thus illuminates the influence of visiting officials on corporate investment.

Suggested Citation

  • Ming Jia & Yi Xiang & Zhe Zhang, 2019. "Indirect Reciprocity and Corporate Philanthropic Giving: How Visiting Officials Influence Investment in Privately Owned Chinese Firms," Journal of Management Studies, Wiley Blackwell, vol. 56(2), pages 372-407, March.
    • Handle: RePEc:bla:jomstd:v:56:y:2019:i:2:p:372-407
    DOI: 10.1111/joms.12405
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    Cited by:

    1. Shujun Chao & Shanyong Wang & Haidong Li & Shu Yang, 2023. "The power of culture: Does Confucian culture contribute to corporate environmental information disclosure?," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 30(5), pages 2435-2456, September.
    2. Ying Zhang & Hongfei Ruan & Guiyao Tang & Li Tong, 2021. "Power of sustainable development: Does environmental management system certification affect a firm's access to finance?," Business Strategy and the Environment, Wiley Blackwell, vol. 30(8), pages 3772-3788, December.
    3. Verena Girschik, 2020. "Managing Legitimacy in Business‐Driven Social Change: The Role of Relational Work," Journal of Management Studies, Wiley Blackwell, vol. 57(4), pages 775-804, June.
    4. Wei Jiang & Kui Wang & Kevin Zheng Zhou, 2023. "How Political Ties and Green Innovation Co-evolve in China: Alignment with Institutional Development and Environmental Pollution," Journal of Business Ethics, Springer, vol. 186(4), pages 739-760, September.
    5. Yi Xiang & Ming Jia & Zhe Zhang, 2022. "Hiding in the Crowd: Government Dependence on Firms, Management Costs of Political Legitimacy, and Modest Imitation," Journal of Business Ethics, Springer, vol. 176(4), pages 629-646, April.
    6. Xi Zhong & Ge Ren & XiaoJie Wu, 2024. "Corporate philanthropy and bribery as distinctive responses to economic policy uncertainty: Do state-owned and private firms differ?," Asia Pacific Journal of Management, Springer, vol. 41(2), pages 641-677, June.
    7. Kumar, Satish & Sahoo, Saumyaranjan & Lim, Weng Marc & Dana, Léo-Paul, 2022. "Religion as a social shaping force in entrepreneurship and business: Insights from a technology-empowered systematic literature review," Technological Forecasting and Social Change, Elsevier, vol. 175(C).
    8. Xie, En & Li, Fanshu & Wu, Zhan & Kumar, Vikas, 2024. "State ownership and Chinese private firms’ OFDI in developed economies," Journal of World Business, Elsevier, vol. 59(3).
    9. Shisong Jiang & Yijie Min, 2023. "The Ability and Willingness of Family Firms to Bribe: A Socioemotional Wealth Perspective," Journal of Business Ethics, Springer, vol. 184(1), pages 237-254, April.
    10. Zhaohua Li & Xiaofei Pan, 2023. "Relationship investment and local corruption environment: Evidence from China," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 63(4), pages 4597-4628, December.
    11. Ruijie Jin & Helen Wei Hu, 2024. "Liability of Ownership Origin, Corporate Philanthropy, and Desire for Control in Chinese Family Firms," Entrepreneurship Theory and Practice, , vol. 48(3), pages 763-787, May.
    12. Isamu Okada, 2020. "A Review of Theoretical Studies on Indirect Reciprocity," Games, MDPI, vol. 11(3), pages 1-17, July.
    13. Kun Su & Heng Liu, 2021. "Financialization of manufacturing companies and corporate innovation: Lessons from an emerging economy," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 42(4), pages 863-875, June.
    14. Liu, Aiqing & Shu, Chengli & Xiao, Zhenxin, 2024. "Entrepreneurial Orientation, political Ties, and corporate Reputation: The moderating roles of institutional environments," Journal of Business Research, Elsevier, vol. 170(C).

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