State ownership, institutional development, and corporate philanthropic giving: an integrated view of legitimacy-efficiency trade-offs

We explore the trade-offs between social legitimacy and economic efficiency in the context of corporate philanthropic giving (C.P.G.). C.P.G. is viewed as a cost to seek legitimacy, which also serves as a resource to seek efficiency. Using a longitudinal panel data set of Chinese publicly listed firms, we examine how state ownership and institutional development shape firms' response to C.P.G., and the contingent role of firm visibility and political ties. State ownership enables firms to prioritise legitimacy over efficiency, whereas institutional development enables firms to emphasise efficiency over legitimacy. We also suggest that the positive effect of state ownership on C.P.G. increases for visible firms, and the negative effect of institutional development on C.P.G. increases for visible firms but decreases for politically connected firms. We discuss the theoretical and practical implications of these findings.