Localizing corporate social responsibility in China: The role of geographic proximity to political and financial centers

Abstract

Early studies on corporate social responsibility (CSR) in China focused on political factors, but recent research highlights the increasing role of markets and finance. This study aims to investigate whether politics remains the primary driver of CSR as the Chinese CSR market evolves. Specifically, it examines the influence of geographic proximity, particularly political and financial centers, on CSR performance in China. Analyzing political and financial attributes of various cities, the study identifies key drivers of CSR engagement. Using 24,399 annual observations of listed company headquarters' locations and distances from political and financial centers, the research reveals that the economy has replaced politics as the main driver of CSR in China. Firms closer to administrative and financial centers demonstrate stronger CSR performance. Additionally, the study emphasizes the significance of shared prosperity demonstration zones initiated by the Chinese government, which drive CSR activities. These findings highlight the impact of geographic location on CSR performance and the alignment between common prosperity and CSR in China. By contributing to literature on geographic location and CSR, this study provides insights into institutional factors influencing firms' CSR engagement.