A selection of interesting research and articles we found recently.

Corporate responsibility affects high financial performance
The growing literature on corporate responsibility (CR) has drawn attention to how different CR practices complement each other and interact in the form of configurations. This study investigated CR patterns associated with high financial performance for 466 firms in Mainland China, Hong Kong, and Taiwan. Na Ni and colleagues identified similarities and differences across these three societies in CR practices relating to customer, employee, investor, community, and environmental stakeholder groups. The extent to which the financial benefits of various configurations of CR practices are attributable to institutional factors is examined.

Read more at: Na Ni, Carolyn Egri,  Carlos Lo and Carol Yeh-Yun Lin. 2015. Patterns of Corporate Responsibility Practices for High Financial Performance: Evidence from Three Chinese Societies.
Journal of Business Ethics, 126(2), 169-183.

 

Evolving Corporate Social Responsibility in China
With a unique cultural background and fast economic development, China’s adoption of corporate social responsibility (CSR) has become the center of discussion worldwide, and its successful implementation will have great significance for global sustainability. This paper aims to explore how CSR has given way to economic growth in China since the start of economic transition and its cultural, historical and political background, and how this has affected or been affected by the economic performance of firms. Thus, the recent calls for China to adopt CSR in its industries follow a period where the country arguably had one of the strongest implementations of CSR approaches in the world. This transition is considered in the context of a case study of a Chinese state-owned enterprise (SOE) and a group of small private firms in the same industrial sector in Zhengzhou City, Henan Province over a time span of eight years.

While the CSR of the SOE has been steadily decreasing along with the change of ownership structure, its economic performance did not improve as expected. On the other hand, with a steady improvement in economic performance, the small private firms are showing a great reluctance to engage in CSR. The results indicate that implementation of CSR in China needs both the manager’s ethical awareness and the change of institutional framework. The results also raise the question as to whether CSR is a universal concept with a desired means of implementation across the developed and developing world.

Read the full text article (Open Access): Zhang, D., Morse, S., Kambhamptati, U. and Li, B. 2014. Evolving Corporate Social Responsibility in China.
Sustainability, 6(11), 7646-7665.

 

Does the stock market value Corporate Social Performance in China?
Ming Jia and Zhe Zhang examined how the reference-point effect and sunk-cost fallacy interact with stakeholder theory and influence how investors evaluate corporate social performance. The authors propose that ex-ante (pre-IPO) corporate social performance influences ex-post (post-IPO) perceived riskiness and that this relationship is U-shaped.  They also evaluate how CEO duality and company age moderate this U-shaped relationship. Using young and newly public entrepreneurial firms in China, and focusing on stock returns in the secondary market, empirical results and robustness tests provide strong support for their hypotheses.

For more information, see: Ming Jia and Zhe Zhang. 2014. How Does the Stock Market Value Corporate Social Performance? When Behavioral Theories Interact with Stakeholder Theory.
Journal of Business Ethics, 125(3), 433-465.

 

Challenges in implementing CSR in China
Johan Graafland and Lei Zhang investigated the implementation of CSR instruments relevant for the Chinese context and the challenges that Chinese companies face. Based on a survey among 109 Chinese companies, the reported that formal instruments to implement CSR are rather common. Companies spend most effort in improving the economic aspects of CSR, such as competitiveness, product innovation and process innovation. However, only a small minority of firms set concrete targets and report the realization of these targets for social and environmental goals.

The authors conclude that this indicates a rather loose attention to social and environmental aspects of CSR in China. The most important challenges for improving CSR are strong competitive pressure, insufficient support from the government and/or nongovernmental organizations and high costs of CSR implementation. Multiple regression analysis shows that the use of instruments is positively related to company size and foreign ownership and negatively related to lack of resources and support for CSR by investors and consumers.

Find out more in: Johan Graafland and Lei Zhang. 2014. Corporate Social Responsibility in China: Implementation and Challenges.
Business Ethics: A European Review, 23(1), 34–49.