Introduction 

In our recent study published in the Journal of Management Studies, we explore the intriguing question of how government officials interpret Corporate Social Responisbility (CSR) activities, which represent a crucial form of corporate political activities (CPA) in various contexts, particularly undertaken by firms with damaged political reputations. We focus on the incentives and decision-making dynamics of officials and develop three dimensions of their stigma anxiety, capturing their concerns about associating with reputationally compromised firms. Overall, our paper advances the literature on CPA effectiveness by shifting the perspective from firms’ CPA efforts (the demand side) to government officials’ receptivity (the supply side), thereby highlighting the nuanced interplay among political reputation, CPA, and political access. 

Why Does This Matter? 

In the political market, CPA are critical for firms to gain political access from officials. However, there are mixed findings on when CPA can be effective. Recent studies have highlighted the incentives for officials to accept CPA from firms with clean reputations, such as seeking promotions, financial gains, career opportunities, or political ideologies. However, these studies also suggest that associations with negatively reputed firms can harm officials, leading them to distance themselves. As a result, firms are motivated to use CPA to repair relationships with officials. However, it remains unclear when officials will accept CPA from firms with damaged reputations. Addressing this gap is critical, as officials are increasingly cautious about their interactions with evolving businesses. Our study addresses this gap by exploring how officials’ stigma anxiety shapes their receptivity to CPA from such firms. 

Our approach 

The anticorruption campaign launched in China in December 2012 provides an ideal context for examining how officials respond to firms with damaged political reputations and their CPA. This campaign exposed numerous bribery cases, led to the dismissal of corrupt officials, and tarnished the political reputations of firms previously associated with these individuals. Consequently, firms with damaged political reputations may turn to CPA, such as engaging in socially responsible activities, to rebuild relationships with incumbent officials. Furthermore, the unique characteristics of corruption cases allow us to analyze how the different dimensions of stigma anxiety of officials influence their responses to the CPA of politically tarnished firms. 

Key findings 

Our findings reveal that when a firm’s political reputation is damaged due to its connections with corrupt officials, incumbent officials are less likely to grant political access—measured by government subsidies or personal visits—to such firms. However, CSR activities can help mitigate these adverse effects. The effectiveness of these activities in restoring political access is further influenced by officials’ stigma anxiety, which is shaped by three key factors: controllability (the extent to which corrupt officials are perceived as principal offenders rather than subordinates implicated by their superiors), disruptiveness (the severity of corruption, indicated by the number of charges and the length of prison sentences), and visibility (the level of public attention garnered by the corruption cases). 

Implications for Scholars 

Our study makes significant contributions to the CPA literature by identifying officials’ stigma anxiety as a critical factor influencing the effectiveness of CPA, particularly for firms with damaged political reputations. Earlier research on CPA has primarily focused on demand-side characteristics that determine when firms are inclined to engage in CPA and whether CPA leads to political access, but these studies have yielded mixed findings. Our study suggests that one reason for this inconsistency is the underemphasis on the supply side of the political market, specifically officials’ receptivity to firms’ CPA. 

Moreover, we extend the stigma literature by examining the dynamic interplay between stigma characteristics and stigmatization processes. This highlights the importance of understanding stigma characteristics as pivotal factors in the transfer and removal of stigma, enriching the discourse on how stigma operates within social contexts. Our findings provide a nuanced framework for future research on stigmatization dynamics. 

Relevance to Practitioners 

Our findings suggest that political reputation is crucial for a firm’s survival and success, yet it is vulnerable to adverse events, such as corruption scandals involving connected officials. Therefore, the first implication for managers is the potential risks to political reputation, particularly when building personal connections with officials. 

Another implication of our study is that firms with damaged political reputations should pay closer attention to officials’ incentives to enhance the effectiveness of their reputation-repair efforts within their CPA. Our results show that repairing a damaged political reputation is challenging, and the effectiveness of CPA depends on officials’ stigma anxiety. This insight is crucial because it suggests that reputation-repair strategies may be ineffective, highlighting the need for managers to carefully assess officials’ perceptions, especially when a firm’s reputation has already been damaged in the political sphere.