Corporate Social Responsibility and Corporate Financial Performance in China: The Moderating Effect of Globalization

CSR in China is not a new concept. Chinese corporations always performed good works to benefit society. State-owned enterprises (SOEs) provided wider employee benefits, such as primary and secondary education for the children of its employees. Moreover, Chinese companies have begun to view CSR as a necessary challenge in competing. With the rapid globalization of Chinese firms, this paper empirically investigated the relationship between corporate social responsibility (CSR) and corporate financial performance (CFP). Furthermore, this paper explored the moderating effect of globalization on the relationship between CSR and CFP. By utilizing the data from 1,789 listed Chinese firms from 2007 to 2012, this paper found that CSR have a positive influence on Chinese firms’ financial performance, but currently only significantly for globalized firms (proxy by dual listed abroad). Moreover, although the globalization of Chinese firms may bring some pressure to improve its performance, globalization is indeed helpful in making the CSR efforts acceptable to the market and investors, thus leading to better performance.