Guanxi, Economic Policy Uncertainty and Corporate Social Responsibility

Abstract

Informal systems can have a significant impact on corporate behavior, and 'Guanxi' is part of the informal system that can have a significant impact on corporate social responsibility. Based on the data of A-share listed companies in China, we take the relationship between local officials and corporate executives as an entry point to study the impact of Guanxi on Corporate Social Responsibility in the context of China's Economic Policy Uncertainty. It is found that Guanxi has a positive effect on CSR, and this effect is more significant when Economic Policy Uncertainty is low. Further research finds that there is a benefit swap effect between local officials and corporate executives, which is more pronounced when Economic Policy Uncertainty is high, while the heterogeneity study also finds that state-owned enterprises have stronger incentives to exploit hometown relationships compared to non-state-owned enterprises, especially when Economic Policy Uncertainty is low. The research in this paper facilitates the understanding of the mechanism of the influence of Guanxi on corporate behavior in the informal system and provides a new perspective for the study of corporate social responsibility.