Skip to main content
SpringerLink
Log in

Finding the Ethics of “Red Capitalists”: Political Connection and Philanthropy of Chinese Private Entrepreneurs

  • Original Paper
  • Published:
Journal of Business Ethics Aims and scope Submit manuscript

Abstract

In China, many private entrepreneurs have obtained political offices in the government. In this study, we argue that Chinese private entrepreneurs who are formally connected with government institutions, compared to other Chinese private entrepreneurs, tend to contribute more to philanthropic causes not only for instrumental concerns but also out of altruistic values. We submit this argument to an empirical test through a secondary data analysis of a representative sample of Chinese entrepreneurs collected by a coalition of government and industry groups. The results of this analysis show that politically connected entrepreneurs are more likely to make major philanthropic donations and, at the same time, hold a stronger sense of the responsibility for doing so. The most important contribution of this research is that it reveals the ethical basis of the philanthropic activities of Chinese private entrepreneurs, especially those with political connections, that has been unappreciated by extant literature.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Fig. 1
Fig. 2
Fig. 3

Similar content being viewed by others

Abbreviations

PC:

People’s Congress

PPCC:

People’s Political Consultative Conference

CCP:

China’s Communist Party

RMB:

Chinese currency abbreviation (Renminbi)

References

  • Bar-Tal, D. (1976). Prosocial behavior: Theory and research. New York: Halsted Press.

    Google Scholar 

  • Basil, D. Z., Runte, M. S., Easwaramoorthy, M., & Barr, C. (2009). Company support for employee volunteering: A national survey of companies in Canada. Journal of Business Ethics, 85, 387–398.

    Article  Google Scholar 

  • Benjamin, D., Brandt, L., Giles, J., & Wang, S. (2008). Income inequality during China’s economic transition. In L. Brandt & T. G. Rawski (Eds.), China’s great transformation (pp. 729–775). Cambridge: Cambridge university press.

    Chapter  Google Scholar 

  • Brown, W. O., Helland, E., & Smith, J. K. (2006). Corporate philanthropic practices. Journal of Corporate Finance, 12, 855–877.

    Article  Google Scholar 

  • Buchholtz, A. K., Amason, A. C., & Rutherford, M. A. (1999). Beyond resources: The mediating effect of top management discretion and values on corporate philanthropy. Business & Society, 38(2), 167–187.

    Article  Google Scholar 

  • Campbell, L., Gulas, C. S., & Gruca, T. S. (1999). Corporate giving behavior and decision-maker social consciousness. Journal of Business Ethics, 19(4), 375–383.

    Article  Google Scholar 

  • Carroll, R., & Joulfaian, D. (2005). Taxes and corporate giving to charity. Public Finance Review, 33(3), 300–317.

    Article  Google Scholar 

  • Chen, A. (2002). Capitalist development, entrepreneurial class, and democratization in China. Political Science Quarterly, 117, 401–422.

    Article  Google Scholar 

  • Chen, J., & Dickson, B. J. (2008). Allies of the state: Democratic support and regime support among China’s private entrepreneurs. China Quarterly, 196(1), 780–804.

    Article  Google Scholar 

  • Choi, J., & Wang, H. (2007). The promise of a managerial values approach to corporate philanthropy. Journal of Business Ethics, 75(4), 345–359.

    Article  Google Scholar 

  • Cohen, B., & Dunlap, A. (1998). Is corporate philanthropy fair to shareholders? CQ Researcher, 8(18), 185.

    Google Scholar 

  • Cumming, D., Rui, O., & Wu, Y. (2016). Political instability, access to private debt, and innovation investment in China. Emerging Markets Review, 29, 68–81.

    Article  Google Scholar 

  • Dennis, B. S., Buchholtz, A. K., & Butts, M. M. (2009). The nature of giving a theory of planned behavior examination of corporate philanthropy. Business and Society, 48(3), 360–384.

    Article  Google Scholar 

  • Dickson, B. J. (2000). Cooptation and corporatism in China: The logic of party adaptation. Political Science Quarterly, 115(4), 517–540.

    Article  Google Scholar 

  • Dickson, B. J. (2007). Integrating wealth and power in China: The communist party’s embrace of the private sector. China Quarterly, 192(4), 827–854.

    Article  Google Scholar 

  • Du, X., Weng, J., Zeng, Q., & Pei, H. (2017). Culture, marketization, and owner-manager agency costs: A case of merchant guild culture in China. Journal of Business Ethics, 143(2), 353–386.

    Article  Google Scholar 

  • Feng, X., Johansson, A. C., & Zhang, T. (2014). Political participation and entrepreneurial initial public offerings in China. Journal of Comparative Economics, 42, 269–285.

    Article  Google Scholar 

  • Feng, X., Johansson, A. C., & Zhang, T. (2015). Mixing business with politics: Political participation by entrepreneurs in China. Journal of Banking & Finance, 59, 220–235.

    Article  Google Scholar 

  • Fry, L. W., Keim, G. D., & Meiners, R. E. (1982). Corporate contributions: Altruistic or for-profit? The Academy of Management Journal, 25(1), 94–106.

    Article  Google Scholar 

  • Galaskiewicz, J. (1985). Professional networks and the institutionalization of a single mind set. American Sociological Review, 50(5), 639–658.

    Article  Google Scholar 

  • Gao, Y., Hafsi, T., & He, X. (2017a). Business owners’ achieved social status and corporate philanthropy: Evidence from Chinese private small- and medium-sized enterprises. Journal of Management and Organization, 23(2), 277–296.

    Article  Google Scholar 

  • Gao, Y., Lin, Y. L., & Yang, H. (2017a). What’s the value in it? Corporate giving under uncertainty. Asia Pacific Management, 34(1), 215–240.

    Article  Google Scholar 

  • Gautier, A., & Pache, A.-C. (2015). Research on corporate philanthropy: A review and assessment. Journal of Business Ethics, 126(3), 343–369.

    Article  Google Scholar 

  • Godfrey, P. C. (2005). The relationship between corporate philanthropy and shareholder wealth: A risk management perspective. The Academy of Management Review, 30(4), 777–798.

    Article  Google Scholar 

  • Godfrey, P. C., Hatch, N. W., & Hansen, J. M. (2010). Toward a general theory of CSRs: The roles of beneficence, profitability, insurance, and industry heterogeneity. Business & Society, 49(2), 316–344.

    Article  Google Scholar 

  • Godfrey, P. C., Merrill, C. B., & Hansen, J. M. (2009). The relationship between corporate social responsibility and shareholder value: An empirical test of the risk management hypothesis. Strategic Management Journal, 30(4), 425–445.

    Article  Google Scholar 

  • Goodman, D. (2008). The new rich in China: Future rulers, present lives. London: Routledge.

    Book  Google Scholar 

  • Han, Y., & Altman, Y. (2010). Confucian moral roots of citizenship behaviour in China. Asia Pacific Journal of Public Administration, 2(1), 35–52.

    Article  Google Scholar 

  • Jia, M., & Zhang, Z. (2011). Agency costs and corporate philanthropic disaster response: The moderating role of women on two-tier boards—evidence from People’s Republic of China. The International Journal of Human Resource Management, 22(9), 2011–2031.

    Article  Google Scholar 

  • Laulusa, L. (2008). Confucianism and its implications for industrial relations in China. Journal of Management, Spirituality & Religion, 5(4), 385–402.

    Google Scholar 

  • Lewin, D., & Sabater, J. M. (1996). Corporate philanthropy and firm performance. In D. F. Burlingame & D. R. Young (Eds.), Corporate philanthropy at the crossroads (pp. 105–126). Bloomington, IN: Indiana University Press.

    Google Scholar 

  • Li, H., Meng, L., & Zhang, J. (2006). Why do entrepreneurs enter politics? Evidence from China. Economic Inquiry, 44, 559–578.

    Article  Google Scholar 

  • 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 Journal, 28, 791–804.

    Article  Google Scholar 

  • Li, S., Song, X., & Wu, H. (2015). Political connection, ownership structure, and corporate philanthropy in China: A strategic-political perspective. Journal of Business Ethics, 129(2), 399–411.

    Article  Google Scholar 

  • Li, X., & Liang, X. (2015). A Confucian social model of political appointments among Chinese private-firm entrepreneurs. Academy of Management Journal, 58(2), 592–617.

    Article  Google Scholar 

  • Liang, Q. (2013). The governance of charitable organization in Late-Qing and Early Republic era. Paper presented at the Strategic Philanthropy Summit, Shenzhen, China.

  • Liu, J., Wang, Y., & Wu, L. (2011). The effect of Guanxi on audit quality in China. Journal of Business Ethics, 103, 621–638.

    Article  Google Scholar 

  • Lv, P. (2013). Examining the factors that explain why private enterprise owners would become CPC delegates or CPPCC members. Sociological Research (in Chinese)4, 154–178.

    Google Scholar 

  • Moir, L., & Taffler, R. (2004). Does corporate philanthropy exist? Business giving to the arts in the U.K. Journal of Business Ethics, 54(2), 149–161.

    Article  Google Scholar 

  • Nathan, A. J. (2003). Authoritarian resilience. Journal of Democracy, 14(1), 6–17.

    Article  Google Scholar 

  • Naughton, B. (2007). The Chinese economy: Transitions and growth. Cambridge, MA: MIT Press.

    Google Scholar 

  • Noble, G., Cantrell, J., Kyriazis, E., & Algie, J. (2008). Motivations and forms of corporate giving behaviour: Insights from Australia. International Journal of Nonprofit and Voluntary Sector Marketing, 13, 315–325.

    Article  Google Scholar 

  • Pearson, M. M. (1997). China’s new business elite: The political consequences of economic reform. Berkeley, CA: University of California Press.

    Google Scholar 

  • Porter, M., & Kramer, M. (2002). The competitive advantage of corporate philanthropy. Harvard Business Review, 80(9), 56–69.

    Google Scholar 

  • Riskin, C. (1987). China’s political economy: The quest for development since 1949. New York: Oxford University Press.

    Google Scholar 

  • Roberts, J. A. G. (1999). Modern China: An Illustrated History. Gloucestershire: Sutton Publishing.

    Book  Google Scholar 

  • Sánchez, C. M. (2000). Motives for corporate philanthropy in El Salvador: Altruism and political legitimacy. Journal of Business Ethics, 27, 363–375.

    Article  Google Scholar 

  • Sharfman, M. (1994). Changing institutional rules: The evolution of corporate philanthropy, 1883–1953. Business and Society, 33(3), 236–269.

    Article  Google Scholar 

  • Shaw, B., & Post, F. R. (1993). A moral basis for corporate philanthropy. Journal of Business Ethics, 12, 745–751.

    Article  Google Scholar 

  • Smith, C. (1994). The new corporate philanthropy. Harvard Business Review, 72, 105–116.

    Google Scholar 

  • Smith, J. H. (2009). The art of doing good: Charity in late Ming China. Berkeley and Los Angeles, CA: University of California Press.

    Google Scholar 

  • Stroup, M. A., & Neubert, R. L. (1987). The evolution of social responsibility. Business Horizons, 30(2), 22–24.

    Article  Google Scholar 

  • Su, J., & He, J. (2010). Does giving lead to getting - Evidence from Chinese private enterprises. Journal of Business Ethics, 93(1), 73–90.

    Article  Google Scholar 

  • Sun, X., Zhu, J., & Wu, Y. (2014). Organizational clientelism: An analysis of private entrepreneurs in Chinese local legislatures. Journal of East Asian Studies, 14(1), 1–29.

    Article  Google Scholar 

  • Sun, Y. (2014). Municipal People’s Congress elections in the PRC: A process of co-option. Journal of Contemporary China, 23(85), 183–195.

    Article  Google Scholar 

  • Zhang, J., Yang, B., Wang, F., & Wang, P. (2012). Corporate philanthropic giving: Active responsibility or passive ingratiation? Evidence from Chinese family-controlled listed companies. Journal of Applied Business Research, 28(3), 427–439.

    Article  Google Scholar 

  • Zhang, M., Xie, L., & Xu, H. (2016). Corporate philanthropy and stock price crash risk: Evidence from China. Journal of Business Ethics, 139(3), 595–617.

    Article  Google Scholar 

  • Zhang, R., Rezaee, Z., & Zhu, J. (2010). Corporate philanthropic disaster response and ownership type: Evidence from Chinese firms’ response to the Sichuan earthquake. Journal of Business Ethics, 91(1), 51–63.

    Article  Google Scholar 

  • Zhao, D. (2009). The mandate of heaven and performance legitimation in historical and contemporary China. American Behavioral Scientist, 53(3), 416–433.

    Article  Google Scholar 

Download references

Funding

This study is funded by National Natural Science Foundation of China (Grant No. 71402122) Granted to Yuan Yang, National Natural Science Foundation of China (Grant No. 71774106) granted to Min Tang, IRTSHUFE (Grant No. 2014110344) Granted to Min Tang, and Major Project of the National Social Science Foundation of China (Grant No. 16ZDA065).

Author information

Authors and Affiliations

  1. Department of Business Administration, School of Economics and Management, Tongji University, 1239 Siping Rd., Shanghai, 200433, People’s Republic of China

    Yuan Yang

  2. School of Public Economics and Administration, Shanghai University of Finance and Economics 627, 511 Wuchuan Rd, Shanghai, 200434, People’s Republic of China

    Min Tang

Authors
  1. Yuan Yang
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Min Tang
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Min Tang.

Ethics declarations

Conflict of interest

All authors declare that they have no conflict of interest.

Ethical Approval

This article does not contain any studies with human participants or animals performed by any of the authors.

Appendix

Appendix

See Tables 3 and 4.

Rights and permissions

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Yang, Y., Tang, M. Finding the Ethics of “Red Capitalists”: Political Connection and Philanthropy of Chinese Private Entrepreneurs. J Bus Ethics 161, 133–147 (2020). https://doi.org/10.1007/s10551-018-3934-y

Download citation

  • Received:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s10551-018-3934-y

Keywords

Search

Navigation