Research On The Influence Of Negative Performance Feedback On Corporate Philanthropy

Under the development of ’Third Distributions’ and ’Common Prosperity’,modern enterprises should not only "do their own thing well" but also " benefit the country and the people".External stakeholders have further raised the requirements for enterprises to balance profits and social responsibilities,which means that enterprises need to bear responsibilities to other stakeholders while creating economic profits for shareholders,and corporate philanthropy has gradually become a common way for them to fulfill their social responsibilities.However,the main goal of modern enterprises is still to pursue the maximization of economic profits and shareholders’interests,and philanthropy is regarded as a "Good Thing" rather than a "Must-do".When the business is in good condition,it is understandable for enterprises with redundant resources to assume social responsibilities by means of donations,while in difficult times,enterprises pursuing economic benefits should not actively allocate enterprise resources to solve social problems.However,the reality shows that a considerable number of enterprises with poor performance or even negative performance still perform well in corporate philanthropy.Why do companies with negative performance feedback invest limited resources in donations?How do such enterprises facing negative performance respond to the demands of the outside world for their social responsibility?In order to explore the motivation for donating of enterprises with negative performance,this paper introduces the performance feedback mechanism.On the basis of "Behavior Theory Of Firm’ and ’Theory of Threat-rigidity’,this paper holds that when negative feedback occurs in enterprises,managers make judgments on whether to donate according to different repairable levels they perceive.However,the repairable level is not static,and both the embedded environment and the key assets owned by the enterprise will affect its moving direction and extent,which urges this paper to pay attention to the influence of political connection and managerial ownership on the donation decision of enterprises.This study empirically analyzes the influence of negative performance feedback on corporate philanthropy,and the moderating effect of political connection and managerial ownership,taking the listed companies in China from 2010 to 2020 as samples.The results of this paper show that:(1)There is an inverted U-shaped relationship between the negative performance feedback and corporate philanthropy.The reason is that in different negative performance feedback,the change of the firm’s perceived repairable level leads to the dynamic change of risk tolerance.On the one hand,when the negative performance feedback of enterprises is between the aspiration level and the survival point,managers’ strong motivation to avoid failure makes them willing to take greater risks than when they are in a successful situation.When donation opportunities arise,they are more likely to gain the recognition and response of stakeholders through charitable acts("facing difficulties").On the other hand,when the negative performance feedback is between the repairable level and the survival point,resource constraints and survival threats reduce the risk-taking level of decision makers,and enterprises tend to reduce donation expenses to reduce operating costs("retreat from difficulties").(2)Faced with the same negative performance feedback,enterprises with political connections perceive higher repair ability,which promotes the repair level to move to the survival point.Political connections strengthens the inverted U-shaped relationship between the performance expectation gap and corporate philanthropy.(3)Managerial ownership are more sensitive to the threat of loss than to the perception of profit.When faced with negative performance feedback,they feel higher risk,which weakens the judgment of the repairable level and the strategic intention of donation.Managerial ownership weakens the inverted U-shaped relationship between negative performance feedback and corporate philanthropy.Based on the local context,this paper enriches the research of the influencing factors of corporate philanthropy,introduces negative performance feedback into the antecedent research of corporate donation behavior,broadens the relevant research of the main subject,pays attention to the non-market response behavior such as donation caused by performance feedback mechanism,and expands the research on performance feedback and organizational strategic response.In addition,this study also provides enlightenment for top executive to look at the relationship between performance problems and social responsibilities.Adjusting the donation strategy may bring new opportunities for enterprises,government can also subsidize and support related enterprises in an appropriate way to reduce the possibility of reducing social donations.