Table of Contents
Corporate firms in China are rooted in traditions and family firms are one of the most common business forms. In both developing and developed economies, family firms are a common business form with over 90% of business in the USA forming such firms, and in India, almost 65% of all private sector assets are owned by family businesses (Kenyon-Rouvinez and Ward, 2005). In China, family businesses represent over 90% of the total Non-Public-Owned Enterprises and the contribution of these firms to the annual GDP of China is about 60% (Lv, 2007). An increasing number of researchers have looked at family firms to stand homogenously as family firms tend to engage in more social responsibilities (Harrison, Bose and Phillips, 2010), in contrast to nonfamily firms which are focused on profit maximization (Chrisman, Chua, Pearson, and Barnett, 2012). Moreover, family firms in China are known to engage in charitable donations as it forms a part of their social and corporate responsibilities.
Philanthropic donations are a discretionary responsibility, which means that firms may make their own decisions about how much they want to donate and when they want to donate (Carroll, 1979). Participation in philanthropic donations affects the cash flow of the firm and affects their short-term profits due to such engagements (Barnett & Salomon, 2006). However, despite such shortcomings, firms are engaging in corporate social responsibilities as it creates a positive impact on their multiple stakeholders by enhancing the firm’s reputation and public image (Cennamo, Berrone, Cruz and Gomez-Mejia, 2012).
Rationale of the Study
As the number of family firms in emerging economies such as China and India continue to rise, there is an immediate need for a closer look at the philanthropic engagement of such firms and their motivations for donations. Based on the gaps in the current literature about why family firms are engaging in philanthropic donations in China, this research utilizes an empirical study to find out the various motivations behind family firms’ philanthropic donations in China. However, more importantly, this research aims to close the literature gap on the philanthropic contributions for family firms in China. It is critical to understand how different theoretical approaches towards motivations for philanthropy can be applied towards family firms in China. All such theoretical approaches will be discussed and compared to the data findings to elaborate on the family firm motivations for philanthropic donations.
This research aims to find the motivations behind philanthropic donations for corporate firms in China. Based on existing literature, this research study finds out the different stages of growth of a family firm in China, and how the different stages impact their philanthropic donations. As family businesses form about 90% of the privately-owned organizations in China, the political affiliations also play a major role in their philanthropic donations (Dou, Zhang and Su, 2014). The study takes a quantitative approach with survey questionnaire to find out the different motivations for family firm philanthropic donations in China, as well as the impact of internal changes within such organization on their contributions. Family-oriented motives for philanthropic contributions as well as business-oriented motives are analysed for the family firms in China to find out which factors contribute more towards their donations. This study also aims to find out the different stages of growth of family firms in China, political affiliations of the family firms, and the overall nature of such firms contributing towards philanthropic donations.
The following are the core research objectives:
- To examine the motivations for family firms in China to engage in philanthropic donations
- To examine the role of political affiliations for family firms to engage in philanthropic donations
- To examine the different stages of growth for the family firms in China, and their impact on philanthropic donations
This research study seeks to answer the following questions that will be crucial for understanding how family firms engage in philanthropic donations in China:
- What are the motivations for family firms to engage in philanthropic donations? (family-oriented motives, business-oriented motives, dual motives)
- Is membership or affiliation of the family firm to political connections positively related to philanthropic donations of the family firm?
- How different stages of growth for the family firms affect their engagement in philanthropic donations?
- Does unwillingness of next generation to take over family businesses negatively impact philanthropic donations?
The following chapters of this dissertation are focused on theoretical analysis of the existing research on family firms in China and their philanthropic motivations. The structure of the dissertation research methodology, research design, research plan with quantitative data analysis and findings leading up to the conclusion of this research will also be discussed in brief.
Today, organizations across the globe are engaging in philanthropic contributions as it creates a positive impact on the multiple stakeholders of the firm (Du, Zhang and Su, 2014). For businesses, philanthropy showcases the long-term commitment of the firm to contribute towards the social upliftment of the society within which the firm operates (Campopiano, De Massis, and Chirico, 2014).
Past research by Dou, Zhang and Su (2014) showcases that family ownership and the duration of family control positively affect charitable donations and during times of transition in family businesses, there is a definite alteration in the charitable donations. Family firms in China engage in philanthropic donations due to various family-related as well as business objectives. However, there is a gap in literature about the different motivational factors and empirical studies about which motivational factors are significantly contributing towards family firm donations.
Based on theory, philanthropy contributions are due to commitment to common good (Campopiano, De Massis, and Chirico, 2014; Litz and Stewart, 2000), or due to the community involvement approach (Atkinson and Galaskiewicz, 1988), or due to blended approaches of commitment to common good and community approach (Rey-Garcia and Puig-Raposo, 2013; Dou, Zhang and Su, 2014).
Family-oriented motives for philanthropic donations of family firms have shown that there are multiple reasons behind such contributions, such as family unity (Feliu and Botero, 2016), family cohesion (Schwartz and Caroll, 2003), family harmony (Zellweger and Nason, 2008), family values (Dou, Zhang and Su, 2014; Hoy and Rosplock, 2014), and building effective family processes that will last the test of time (Gersick, 2006).
Despite the past research, there is a gaping hole in understanding what motivational factors contribute more towards philanthropic contributions of family firms, especially in China. There is a need to also understand such philanthropic donations in perspective of their growth stage and internal succession processes.
The underlying concepts that form the backbone of the current study relate to philanthropy, family businesses, growth stages of family businesses, political affiliations for businesses, corporate philanthropy by Chinese family firms. Traditionally, family firms have been at the forefront of philanthropic activities and researchers have engaged in finding the theoretical underpinning for their philanthropic donations (Feliu and Botero, 2016). The concept of philanthropic contributions and the different stages of growth of a family firm needs further analysis to find the correlation between the two.
Research design and the encompassing research philosophy are important aspects of the research study as it helps in explaining the relationship between theory and the outcome from this research (Bryman and Bell, 2011). The research design for this study is based on empirical analysis that sets out the tone for this research.
Empirical research study collects data through questionnaires or experiments that can be analyzed with the use of the SPSS or other data analysis software for regression analysis that will find correlation (Cooper and Schindler, 2001) between the different motivations for family firm philanthropic donations. Empirical studies, such as this, can confirm whether some theories about the motivations behind philanthropic donations for family firms and the research questions are correct or whether new theories through research is required in the field of philanthropic studies.
The primary data for the quantitative analysis will be obtained from the survey questionnaires that will be sent to University students who have families in China running family business. Literature review sourced from journal articles and published reports will also be analyzed to find the theoretical basis for philanthropic contributions of family firms in China. Any form of research requires primary data which can be analyzed by either quantitative or qualitative analysis (Neuman, 2008). While qualitative data looks at words and sentences and finds textual meaning in them, quantitative data analysis looks at numbers and statistics to find correlations between different factors (Neuman, 2008), that is significantly important for this research study as it is differentiating between different motivations for philanthropic contributions. The primary data collected will be analyzed mathematically with statistical tools such as the software SPSS for the most part of the research to find correlations between data (Lewis, 2015).
The data collection encapsulates itself as the backbone of this empirical research study. The research survey questionnaire will be designed with the Likert scale to enable participants to clearly respond to each question. All participants to the questionnaire will be informed about the aim of this research study and how their responses will impact the findings of this study. All ethical considerations will be adhered to during the data collection and data analysis stages to protect the identities of the participants.
Data Analysis Techniques
The primary data collected from the questionnaire will be statistically analyzed with the SPSS software to find out correlations between different motivations that contribute towards philanthropic donations of family firms in China. Regression analysis will also be utilized to find the different factors and their contribution towards motivating family firms to engage in donations. The diverse stages of growth for the family firms and their impact on family firm donations will also be analyzed in this study with the help of SPSS correlation and regression.
For this research, quantitative approach with survey questionnaire is utilized to understand the importance of various motivations for philanthropic donations. Quantitative research includes primary data analysis with a positivism research philosophy that has no feelings of the researcher involved in the process (Churchill and Down, 2007). According to Saunders, Lewis and Thornhill (2012), interpretivism is contrary to positivism but empirical studies need positivism to ensure that the research questions and objectives of the research are supported with empirical evidence. Empirical studies such as the present research, emphasizes on the realistic support for the research questions by enabling the data findings to speak for itself without requiring any qualitative study for support (Bryman and Bell, 2011). For this research, participants will be recruited from a Chinese University to gain access to student participants who will be willing to respond to the questionnaire. The research plan will focus on findings students who have knowledge about family firms in China or those who have families running such businesses in China. The survey questionnaires will be sent to the participants electronically after their contact emails are acquired. Special incentives will also be provided in the form of a lucky draw to provide gift vouchers to the participants. This will ensure responses to the questionnaire.
In addition to the questions related to motivations behind philanthropic donations by family firms in China, this research will also ask about the individual’s basic information, such as gender, age, education level, monthly income level and social background. The research questions will focus on ensuring that the correct information is gathered and analyzed to prevent any biases in the research study. The sample size and distribution of the questionnaires is also an important aspect of the research plan (Bryman and Bell, 2011), and this study will ensure that the sample size is appropriate for the nature of this study.
The above research is important to find out the different motivations for family firms to engage in philanthropic donations in China. Looking at the different political, social, economic as well as family-oriented motivations, this study aims to find empirical evidence about which factors contribute significantly towards the donations. Corporate philanthropy is an important aspect for most businesses, national as well as international, in todays climate of multiple stakeholders. Under such circumstances, family firms significantly engage in philanthropic donations as it can contribute towards their reputation and social image.
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