Doing extreme by doing good
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Firms adopting deviant strategies are generally subject to impaired legitimacy and heightened risk. Based on the legitimacy literature, we hypothesize that strategically deviant firms are motivated to engage in corporate social responsibility activities as protection from a potential legitimacy loss. Using a sample of Chinese-listed firms during the 2003–2011 period, we find that firms with deviant strategies are more likely to engage in charitable donations. In addition, the positive effect of strategic deviance on donations is alleviated when firms communicate effectively with financial analysts, and when block holders largely own these firms.
KeywordsStrategy Deviance Corporate Social Responsibility Shareholder Primacy Support Financial Analyst
We thank Shengping Tang (CEO of Morefood.com), Roberto Santos, and two anonymous reviewers of this journal for their helpful comments. We also thank the editor Vikas Kumar for excellent guidance.
This study is supported by the National Natural Science Foundation of China (No. 71790602, 71132004, and 71302157), China Ministry of Finance (No. 2015KJA009), the Fundamental Research Funds for the Central Universities, the Research Funds of Renmin University of China (No.16XNF020), and the Doctoral Research Start-Up Foundation of Henan Normal University (No.5101089171146). All errors are our own.
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