An Empirical Research On International Operation, Enterprises’ Corporate Social Responsibility Performance And Financial Performance

The development of information technology provides a favorable support to economic globalization. International trade is increasing rapidly and has become the main power to push the world economy forward. China as the world’s second largest economy, actively participate in international trade.In nearly a decade, the total amount of foreign direct investment and exports all showed increasing trend year by year. Although the development of globalization lead Chinese economic level to improve continually, there were a series of enterprises’ shortsighted behavior behind the high-speed growth, such as the exposure of melamine scandal, the suicide cases of employees in Foxconn and the killing express event of Yuantong Express. All these tragedies were due to the lack of corporate social responsibility. The lack of consciousness and action of corporate social responsibility will affect not only the enterprises’ core competitiveness and sustainable development but also the smooth and orderly operation of social economy.China had become NO.1of commodity trade in the world in2013. However, we mainly participate in international competition in the form of export sales and the share of foreign direct investment is still very small. So the internationalization of Chinese companies is still in its infancy. At the same time, the potential of overseas investment and cooperation is unlimited for Chinese companies.On March28,2013, President Xi visited Africa and meet with the leaders of African countries. He said that Chinese government will take active measures to encourage Chinese companies to expand investments in African countries and demand them to practice corporate social responsibility actively and continually.We do this research from the perspective of Chinese enterprises’international operation, try to explore the relationship between and among the degree of international operation, enterprises’CSR performance and financial performance, the effect of international operation on enterprise’ CSR performance and finance performance, the relationship between enterprise’CSR performance and finance performance and the role of enterprise’CSR performance in the effect of degree of international operation on finance performance. All in all, the purpose of this research is to lift the veil of degree of international operation, enterprises’CSR performance and finance performance and provide empirical evidence for Chinese enterprises to better carry out international competition.Specifically, this paper is divided into five parts.Chapter Ⅰ, Introduction. Based on the analysis of China’s foreign direct investment and export trade, we found that Chinese companies were participating in international competition actively. However, the mainly form of international operation indicated that internationalization of Chinese companies is still in its infancy. Combined with frequent outbreaks of affairs of lacking of CSR in recent years, all these facts impelled us whether the degree of international operation is related to enterprises’CSR performance and financial performance under the background of global economic integration. Thereby the research contents are the relationship between and among the degree of international operation, enterprises’ CSR performance and finance performance. This chapter also elaborated primary research method, framework, main contribution and shortage of the study.Chapter Ⅱ, Review of Literature. This chapter is divided into four parts. Existing research on the relationship between the degree of international operation and finance performance lay a theoretical foundation for Hypothesis1. Carding research on the relationship between the degree of international operation and enterprises’CSR and summarizing shortcomings of existing research provide a more rigorous and scientific idea for Hypothesis2. Summarizing existing research on the relationship between enterprises’ CSR performance and finance performance lay a solid foundation for Hypothesis3. Based on the research of the relationship between the three, we found the theoretical foundation and empirical testing were still blank, which indicated clear direction for Hypothesis4.Chapter Ⅲ, Design of the Research. In the context of Chinese enterprise actively participating in international operation, this paper tries to affirm whether the degree of international operation is related to enterprises’CSR performance and finance performance, so we build Hypothesis1and2. From the perspective of enterprises’stakeholders, this paper tries to confirm whether enterprises’CSR performance has positive influence on finance performance, so we build Hypothesis3. This paper tries to affirm the effect of degree of international operation on finance performance will change when enterprise assume more social responsibility, so we build Hypothesis4. Except that the degree of international operation (DOI) are collected from financial reports of sample companies, other data are from CSMAR database. The research covers A-share manufacturing companies listed on Shanghai and Shenzhen stock exchange from2010to2012. The total number of samples is1423. For the purpose of research, we add several control variables and build the model of multivariate linear regression equations for hypothesis testing.Chapter Ⅳ, Analysis of the Empirical Results. In this paper, we carry out the descriptive statistical analysis respectively by year and by sample and inspect the correlation relationship between each variable. Then we use STATA11.0for regression analysis in each equation model and carry out the robustness testing through replacing the degree of international operation. The empirical results demonstrate that the degree of international operation is related to finance performance and the higher the degree of international operation, the worse the finance performance; The degree of international operation can improve the enterprises’ CSR performance and the higher the degree of international operation, the higher the enterprises’CSR performance; From separate analysis of the various stakeholders, we find that the degree of international operation can improve enterprises’ social responsibility assumed for customers and suppliers, but will reduce enterprises’social responsibility assumed for government. The degree of international operation has nothing to do with enterprises’ social responsibility assumed for shareholders, creditors and employees; Enterprises’ positive social responsibility will significantly improve the financial performance; The negative effects of enterprises’ degree of international operation on financial performance will reduced when enterprises’ CSR performance increases. So enterprises’CSR performance plays a regulatory role in the process of degree of international operation having influence on financial performance.Chapter Ⅴ, Research Conclusion, Suggestions and Future Research Prospects. In this paper, the four research hypotheses are all verified, which has real-world meaning. Combined with the conclusion of empirical research and the reality of Chinese enterprises, this paper put forward two suggestions. The first suggestion is that enterprises should accelerate transformation of the mode of international operation and second is that enterprises should fulfill corporate social responsibility actively. Finally, based on the existing research conclusion, this paper puts forward the future research direction in this field.In this paper, the main innovation points are as follows.First of all, nowadays the trend of economic globalization is so obvious and more and more Chinese enterprises begin the road of international operation. However, whether enterprises’international operation can improve CSR performance and financial performance and what the relationship is between these three, which were all topics concerned by government and enterprise operators. This paper is to explore the relationship between and among the degree of international operation, enterprises’CSR performance and financial performance under the background of global economic integration. The purpose is to strive to provide some empirical evidence for Chinese enterprises about how to better carry out international competition. The view of this research is relatively new and the research perspective is unique. The intention of this paper is to provide some reference and guidance for Chinese enterprises’international operation through the research of relationship between these three.Secondly, this research utilizes an innovative method. It is not only confined to theoretical analysis, but also puts forward a research design based on current situation of our enterprises’international operation. The research is added several control variables and established related multivariate linear regression equation model to verify the hypotheses proposed in this paper. This paper is also added the degree of international operation and enterprises’CSR performance to verify the regulating effect of enterprises’CSR performance. In order to make the research conclusion more reliable, this paper also replaces the variable of degree of international operation to conduct the robustness testing, which provides some empirical evidence for enterprises’international operation.And lastly, the research results indicates that the degree of international operation has negative effects on financial performance and positive effects on enterprises’CSR performance. The higher the degree of international operation, the higher the enterprises’CSR performance. The negative effects of enterprises’ degree of international operation on financial performance will reduced when enterprises’CSR performance increases. So enterprises’CSR performance plays a regulatory role in the process of degree of international operation having influence on financial performance. The relationship and influence mechanism between the three provide some practical evidence for government and enterprises to make policy and international strategy.The limitations of the research are as follows.The limitations of the research are mainly reflected in research object and variable measurement. The research object of this paper includes only A-share manufacturing companies, so the industrial structure is relatively simple. The manufacturing may not represent the real degree and level of Chinese enterprises’ international operation. In this paper, the degree of international operation is measured by the proportion of export sales and the measurement is relatively simple. In past researches, some scholars will establish Transnational Index to measure enterprises’degree of international operation. In addition, the number of samples is limited and the goodness-of-fit of the multiple linear regression remains to be improved.The prospects of the research are as follows.First of all, the development stage and characteristics of different industries are different. So we can explore whether enterprises’ degree of international operation is related to financial performance and CSR performance of different industries from the perspective of industry in order to find different industrial characteristics of international operation. We also can sort the industries and explore what industrial characteristics will support the degree of international operation to improve enterprises’financial performance and CSR performance.Secondly, we can explore other index to better measure enterprises’degree of international operation and financial performance, which can truly reflect the level of enterprises’international operation and financial performance. Based on these improvements of this research we can verify the proposed hypotheses.