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Corporate philanthropy, political connections, and external corporate venturing: Evidence from a transitional economy

Author

Listed:
  • Weiqi Dai

    (Zhejiang University of Finance & Economics)

  • Juelin Yin

    (Sun Yat-Sen University, Haizhu District)

  • Mingqing Liao

    (Guangdong University of Finance & Economics)

  • Felix Arndt

    (University of Guelph)

Abstract

Academic interest in corporate venturing (CV) has grown considerably over the past decade, given its importance to corporate transformation and improvement. Prior research emphasized the effect of the external market environment on CV, neglecting the role of nonmarket arenas in supplying resources and opportunities to incumbent firms as a potentially vital antecedent to CV activities. This paper brings attention to the important but ignored role of corporate philanthropy, which has been employed by private firms to build their political legitimacy and garner the resources and opportunities needed in their external corporate venturing (ECV) activities. Drawing on institutional theory, in particular the notion of political legitimacy, this paper first tests the relationship between corporate philanthropy and ECV. It then unveils the varying moderating roles of three types of political connections (i.e., exploiting entrepreneurs’ prior governmental working experience, being political council members and affiliating with the All-China Federation of Industry and Commerce) that influence the proposed relationship. Research findings from 1,574 entrepreneurial private firms in China support our theoretical predictions. This paper advances the CV literature by introducing a nonmarket strategy explanation to the antecedent of ECV and specifying the simultaneous effect of corporate philanthropy and political connections on ECV.

Suggested Citation

  • Weiqi Dai & Juelin Yin & Mingqing Liao & Felix Arndt, 2023. "Corporate philanthropy, political connections, and external corporate venturing: Evidence from a transitional economy," Asia Pacific Journal of Management, Springer, vol. 40(3), pages 1253-1287, September.
    • Handle: RePEc:kap:asiapa:v:40:y:2023:i:3:d:10.1007_s10490-022-09812-1
    DOI: 10.1007/s10490-022-09812-1
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