Study on the influencing factors and performance effects of donation behavior of Chinese small and medium-sized enterprises

• Main Author: ZHOU, Ling
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2024
• Subjects: small and medium-sized enterprises (SMEs); corporate social donation; influencing factor; performance effect; Accounting
• Online Access: https://ink.library.smu.edu.sg/etd_coll/604; https://ink.library.smu.edu.sg/context/etd_coll/article/1602/viewcontent/GPBF_AY2024_PhD_Ling_ZHOU.pdf
• Institution: Singapore Management University

Since the implementation of the reform and opening-up policy, in tandem with the continuous evolution of the Chinese economy and society, there has been a mounting demand for enterprises to shoulder and fulfill social responsibilities. Corporate social donations have emerged as a crucial avenue for enterprises to discharge their societal duties. These donations support public welfare in education and healthcare, enhance enterprise image and brand value, foster consumer trust, and drive sustainable development and innovation. Introduced in the 1990s in China, corporate social responsibility rapidly advanced, yet research on SMEs’ social donations remains scarce. Despite their economic significance, SMEs face challenges such as weaker risk resistance and resource constraints, impacting their participation in social donations. This paper investigates the determinants of donation behaviors among Chinese SMEs and their financial performance effects. The theoretical framework defines SMEs and corporate social donation per China’s standards and examines external stakeholder and legitimacy theories. A literature review synthesizes findings on corporate donation behaviors, influencing factors, and financial impacts, leading to hypotheses on customer and industry donations influencing SME behaviors and financial performance. Empirical research, using data from 2010 to 2022 from the CSMAR database, employs regression models. Key findings include: Customer donation behavior promotes SME donations. Customer concentration and operating profit margin positively moderate this effect. Industry donation behavior also promotes SME donations. Industry competition and positive performance deviation from peers positively moderate this impact. Negative performance deviation from peers negatively moderates this effect. SME donations positively influence financial performance. Case studies involving interviews with four SMEs and six large enterprises reveal significant founder influence on donation behaviors. Both groups recognize that customer donations positively influence their own donations, enhancing corporate culture. SMEs focus on partner and employee relations, while large enterprises emphasize branding, local influence, and government relations, participating more in random donations. Based on these findings, policy recommendations are provided from both corporate and governmental perspectives. This paper deepens understanding of SME social donations, examining customer and industry dynamics, and comparing SME and large enterprise practices.