Firms’ harm-inflicting decisions/actions can make firm leaders feel guilt toward those who are harmed, which then motivates them to make restitution through corporate philanthropy. Our primary setting for investigating this proposition is the privatization of Chinese firms. We argue that massive layoffs resulting from privatization triggered guilt among firm leaders to drive corporate philanthropy. The analysis of a national survey of Chinese private firms shows that on average privatized firms made approximately 26% more charitable contributions than firms founded as private. This was particularly the case when (a) privatization resulted in layoffs (vs. no layoffs), (b) the firms’ provinces experienced greater unemployment at the time of privatization, (c) the firms’ leaders were directly involved in privatization, (d) the influence of Confucianism was stronger in their provinces, and (e) firm leaders had stronger ties with laid-off workers. An interview-based field study of 25 firm leaders involved in privatization provides qualitative evidence of the influence of guilt on privatized firms’ philanthropy. Finally, a vignette experiment conducted on EMBA students shows the mediation of guilt between privatization and firms’ philanthropic intention. These findings establish guilt as a potent emotional driver of corporate philanthropy, helping redirect the attention of corporate philanthropy research toward nonfinancial drivers.
|Number of pages||27|
|Journal||Academy of Management Journal|
|State||Published - Dec 2021|
Bibliographical noteFunding Information:
We are grateful to our two editors, Sucheta Nadkarni and Gokhan Ertug, and three anonymous reviewers for their valuable comments. We especially want to thank Chris Marquis for rounds of comments. We also thank Steve Borgatti, Dan Halgin, Xiaobin He, Jianfeng Jia, Jiatao Li, Huiwen Lian, Heli Wang, Qian Wang, Wei Xie, and Eric Zhao for their help along the way. Junkang Ji appreciates the support from the National Natural Science Foundation of China (grant numbers: 72091314, 71632002, and 71572003). Please direct all correspondence to Zhi Huang.
Copyright of the Academy of Management, all rights reserved.
ASJC Scopus subject areas
- Business and International Management
- Business, Management and Accounting (all)
- Strategy and Management
- Management of Technology and Innovation