Journal
SUSTAINABILITY
Volume 13, Issue 4, Pages -Publisher
MDPI
DOI: 10.3390/su13042110
Keywords
business groups; CSR; internal capital market; rent-seeking; corporate reputation
Funding
- project of Beijing Philosophy and Social Science Foundation [16YJC045]
- National Social Science Foundation [19BJL059]
- project of Beijing Union University in 2020 [SK30202004]
- Beijing Union College [XP202012]
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Business groups play a crucial role in the development of emerging markets, affecting affiliated firms' CSR performance through resource allocation, rent-seeking initiatives, and corporate reputation. Group affiliation benefits a firm's CSR performance in terms of employee's responsibilities, consumer's responsibilities, and environmental responsibilities, but has a lower impact on shareholder's responsibilities.
Business groups have played a vital role in the development of emerging markets. However, we share very limited understanding in the role of business group that act on affiliated firms' CSR performance. Using manually sorted data on A-share listed companies and business groups in China from 2010-2017, we examine whether a company's business group-affiliation affects its corporate social responsibility (CSR) performance and the mediating mechanisms of this association. Our empirical models show that group companies bear a higher level of social responsibility compared to independent companies. This positive relationship between group-affiliation and social responsibility relies on resource allocation through internal capital markets, rent-seeking initiatives, and consideration of corporate reputation. Moreover, group affiliation benefits the firm's CSR performance in employee's responsibilities, consumers' responsibilities and environmental responsibilities, while significantly lower the shareholders' responsibilities. Our empirical valuation of group companies' CSR levels can serve as a benchmark for emerging market companies implementing social responsibility policies.
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