Does Political Uncertainty Affect Government-Initiated Corporate Social Responsibility? Evidence from China’s Poverty Alleviation Campaign

This study investigates whether political uncertainty (PU) motivates firms to voluntarily participate in the poverty alleviation campaign (PAC), a corporate social responsibility (CSR) initiative embedded with political natures, launched by the Chinese government. By leveraging a unique dataset of provincial officials’ turnover from 2016 to 2020 as a proxy for PU, we uncover that heightened uncertainty significantly boosts firms’ contributions to the PAC. This behavior suggests that firms strategically navigate political transitions by utilizing the PAC to strengthen their ties with government stakeholders. Notably, firms with a pronounced need for political connections exhibit an even greater propensity to engage in the PAC. Beyond the political dimension, our findings highlight substantial economic rewards for participating firms. Moreover, our results reveal that firms’ contributions to the PAC crowd out other forms of CSR, indicating that politically salient CSR becomes an important channel for maintaining government alignment under uncertainty. These findings provide novel evidence on politically embedded CSR by showing that PAC serves as a strategic and effective mechanism for firms to cultivate political legitimacy. This study also enriches the understanding of how business—government interactions unfold in the context of short cadre rotations.