A Case Study on Corporate Social Responsibility Crisis, Legitimacy Repairs and Corporate Governance

Takeing the donation behavior of Chinese listed company during the Wenchuan earthquake as an example, the authors analyze the processes of corporate social responsibility crisis and response strategies of legitimacy repairs, which is under the logical frame of institutional theory and the social responsibility theory. The internal and external governance mechanism is also discussed. The results of the study show that those companies with high reputation are expected to undertake more social responsibility when disaster comes. Moreover, the industry status and profitability of a company has become the indicator of donation amount because of the expectation from people. The Vanke Group failed to performed as well as expected by people, even though it had a quick response to the disaster based on the proper internal structure of corporate governance. Therefore, the corporate social responsibility crisis erupted immediately. Meanwhile, the institutional theory believes that legitimacy is the foundation of existence and development for organization. The Vanke Group took several steps promptly to repair legitimacy when the crisis came. It is important for companies to focus on the construct of the internal and external governance mechanism in order to develop steadily.