Venture capital and corporate social responsibility behavior: the mediating role of managerial short-termism

This study examines the relationship between venture capital (VC) and corporate social responsibility (CSR) in an emerging economy, using a sample of Chinese A-share IPO firms from 2010 to 2019. Using a multi-method design that combines mixed least squares, generalized method of moments (GMM), and propensity score matching (PSM), we find that VC participation is generally associated with lower CSR engagement. This negative association is stronger for firms with higher institutional ownership, lower managerial ownership, and more concentrated ownership. We further show that the effect is contingent on two firm conditions – innovation capability and financing constraints. Firms with stronger innovation capability exhibit a weaker (and in some cases positive) VC–CSR relationship, whereas firms facing tighter financing constraints experience a stronger negative effect. Additional analyses suggest that the adverse impact of VC on CSR is primarily driven by increased managerial short-termism. Overall, the study extends resource-based and corporate governance perspectives and offers implications for managers, VC investors, and policymakers seeking to promote CSR in emerging markets.