Academic journal article Journal of International Business Ethics

Review and Revision: Theory and Practice of Corporate Philanthropy in China

Academic journal article Journal of International Business Ethics

Review and Revision: Theory and Practice of Corporate Philanthropy in China

Article excerpt

Abstract:

Corporate philanthropy has played an indispensable role in public welfare areas in China since its emergence in the 1990s. As an "emerging philanthropic market" (Michon & Tandon, 2012) where entrepreneurship or corporate citizenship is still to be entrenched in the society, the progress of corporate philanthropy in China is crucial for cultivating the philanthropic spirit of society and fostering the growth of civil society. Therefore, it is worthwhile to pay more attention and make more investigation into the theory and practice of corporate philanthropy in China (Lu, 2002; Ge, 2007). The present paper aims to make a general review of the state of this particular area and to discuss potential ways to optimize current frameworks.

Keywords: corporate philanthropy, civil society, institutional constrains, resources

(ProQuest: ... denotes non-USASCII text omitted.)

The Emergence of the Theory and Practice of Corporate Philanthropy in China

The spirit of benevolence has been practiced by the merchant elite in China since the late 17th century (Tsu, 1912; Yang, 1963; Smith, 1987, 1998; Shue, 1998; Shah & Chen, 2010). Budding capitalism and emergent merchant gentry in the late Ming and the early Qing periods fostered merchant philanthropy, foundling homes, and benevolent societies, and other welfare sponsoring institutions grew large and abundant. In the early 20th century, there appeared nascent entrepreneurship which promoted a retrieval of charitable enterprise in China (Tsu, 1912; Xin & Zhang, 1999). Charitable spirit and practice seem to rise concurrently with societal transitions in China. This may explain some of the characteristics of the beneficent tradition in China, such as liable to society, economic constraints of the transitional society, apt to be retarded by social instability and disintegration, as well as fugitive political agendas, and the tradition has kept being reconstructed in the changing context.

Corporate philanthropy has become a new version of the tradition. Corporate charitable activities started to increase in the early 1990s in China. In 1993, the first symposium on "corporation and commonwealth" was held in Beijing 2 representing the primary collaboration among the government, corporations, academia, and the media and aiming to promote benevolent enterprises and to make favorable policies available to corporate charitable donations. In 1994, Provisional Regulations on Enterprises Income Tax was promulgated by the State Counci l3. It stipulated for the first time fiscal incentives for corporate charitable giving. The severe flood in 1998 in China gave rise to a surge of corporate philanthropy to disaster relief 4, which led to the adoption of the Public Welfare Donations Law in 19995, further authorized tax breaks, and prescribed rules on the management and protection of donated assets.

The burgeoning corporate philanthropy reflected drastic changes of the social and economic landscape in China in the 1990s. Due to economic reforms and the open-door policy launched in 1978, the economic structure had undergone decentralization and diversification via the surging private business and foreign investment. As a result, the government's share of fiscal revenue dropped from one third of national income in 1978 to about one tenth in late 1990s (Xin & Zhang, 1999, p. 89)6, and the non-public sector's 7 contribution to the gross domestic production (GDP) increased from less than 1% in 1978 to 55% in 1999 8 with the accommodation of the employment up to 90% of the labor market (Zhang, 1998; Gu et. al., 2006). With the erosion of the government's capacity to deal with social needs, it had to transform its role from monopolizing the conduct of affairs to turning to more market-oriented modes. Corporate philanthropy thus turned to be a resource applicable for the public welfare enterprises.

Along with the process of reconstructing the social-economic resources, civil society emerged as public agenda in China since the late 1980s (Shen, 1986, 1990; Huang, 1988; Liu & Wang, 1988; Wakeman, 1993; Ma, 1994). …

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