Moderating Effect of Political Embeddedness on the Relationship between Resources Base and Quality of CSR Disclosure in China
Round 1
Reviewer 1 Report
The work is very interesting because it tries to apply the Legitimacy Theory to the diffusion of CSR in Chinese companies, which otherwise have a differentiating characteristic in relation to Western companies: that part of their property is owned by the Government. The authors must make a revision of the text, as there are some flaws. For example in line 133 appears the author Li et al., 2008, in line 179 appears the author Lounsbury (2001), in line 386 appears the Yin and Zhang (2012), etc.
In line 269 the word independent is crossed out, in line 314 the word further is crossed out.
In line 323 he speaks of 6 models from table 5, but only voe 3, where are the other three?
At work it should be checked for better understanding. I suggest you consult the work Hernández-Perlines, F., & Rung-Hoch, N. (2017). Sustainable entrepreneurial orientation in family firms. Sustainability, 9(7), 1212, which can help you in such improvement. Best regards
Author Response
Response to Reviewer #1
We would like to thank you for your helpful comments and suggestions that have stimulated us in improving the quality of the paper. Your comments were pertinent and we are happy to be able to address all the revision points that you recommended. Below we list the changes that we made following the order in your comments.
We have checked and remedied the inconsistencies and all flaws pointed by you on different lines. We have improved the explanation on what PE is and further we have clarified and properly addressed PE in both Introduction section as well as in the Theoretical Framework (including section 2.1 as advised). For that purpose we have explored literature on political embeddedness, political strategy and political connections. Further, we have explained why PE should be studied with CSR disclosure in the context of China. To support our explanation and justify our choices we have added the source below:
Hernández-Perlines, F., & Rung-Hoch, N. (2017). Sustainable entrepreneurial orientation in family firms. Sustainability, 9(7), 1212.
Furthermore, firm size (measured as number of employees) have been included in the OLS model. The results can be seen in Table 2, 3 and 4 on pages: 11, 12 and 13 respectively. Nevertheless, results remained unchanged after controlling for firms size (employee number).
Next, the regression model now includes three variables at the same time as follows: CSR_Rating = a1*RB + a2*PE + a3*(RB*PE). All three variables are tested against CSR disclosure quality in order to test the moderating effect. Results are presented in Table 3 (on page 10). In addition, we have added Figure 1 which provides graphical explanations about the moderating effect of PE on the relationship between RB and CSR disclosure (thus visible in Figure 1).
We have also checked the language and edited the paper to improve flow of argumentation.
Once again thank you very much for your supportive feedback.
Reviewer 2 Report
This study examines the effect of resource base on CSR disclosure quality by considering the moderating role of political embeddedness in the Chinese context. China provides a relevant context in considering the engagement of the government on firms' decisions to what extent to disclose social information. This paper could be one of the intriguing literature on this topic. However, some concerns should be addressed as follows.
- Political embeddedness is not sufficiently addressed in the manuscript. PE is surely the main issue the authors would like to sell in the study. I recommend the authors to clarify what PE is, how PE has been addressed in the literature, and why PE should be addressed in the CSR disclosure literature in the Introduction section as well as in the Theoretical Background section (for instance 2.1 Political embeddedness)
- This study uses the cash flow ratio as a proxy for Resource Base (RB). This should be justified with a great level of explanation. In the literature, the cash flow ratio has been used as one of the control variables. If possible, other variables not a financial measure need to consider as a proxy for RB
- Firm size should be controlled in the regression model. Furthermore, the correlation between firm size and the cash flow ratio needs to be tested because the firm size could be considered a proxy for resource base (e.g., slack resources), and therefore firm size is usually controlled in the test
- To test the moderating effect of PE between RB and CSR disclosure, the regression model should include three variables at the same time as follows: CSR_Rating = a1*RB + a2*PE + a3*(RB*PE). Besides, I recommend the authors to provide graphical explanations about the moderating effect of PE on the relationship between RB and CSR disclosure.
Author Response
Response to Reviewer # 2
Thank you very much for your valuable and constructive way of guiding us to revise the paper. Your feedback was precise and constructive and this made us feel confident in addressing your suggestions which have stimulated us in improving the quality of the paper. We have managed to implement all your suggested changes and to address all your comments. Below we list the changes that we made following the order in your comments.
We have improved the explanation on what PE is and further we have clarified and properly addressed PE in both Introduction section as well as in the Theoretical Framework (including section 2.1 as advised). For that purpose we have explored literature on political embeddedness, political strategy and political connections. Further, we have explained why PE should be studied with CSR disclosure in the context of China. Thank you very much for this important comment and for the feedback offered on how to remedy this gap.
We have improved the explanation regarding the use of cash flow. According to Marquis et al. (2014) and Seifert et al. (2004), cash flow better captures the notion of available resources for discretionary purposes. Thus, we calculated slack resources as the sum of cash flow from a firm’s operating, financing, and investing activities. Furthermore, to control for firm size, we scaled slack resources by total assets (Carow et al. 2004). To support and justify our choices we have added the sources below:
Marquis, C. and C.J.O.s. Qian, Corporate social responsibility reporting in China: Symbol or substance? 2014. 25(1): p. 127-148.
Hernández-Perlines, F., & Rung-Hoch, N. (2017). Sustainable entrepreneurial orientation in family firms. Sustainability, 9(7), 1212.
Furthermore, we have redone the analysis and following your advice variable firm size (measured as number of employees) have been included in the OLS model. The results can be seen in Table 2, 3 and 4 on pages: 11, 12 and 13 respectively. Nevertheless, results remained unchanged after controlling for firms size (employee number).
Next, following your advice the regression model now includes three variables at the same time as follows: CSR_Rating = a1*RB + a2*PE + a3*(RB*PE). All three variables are tested against CSR disclosure quality in order to test the moderating effect. Results are presented in Table 3 (on page 10). In addition, at your request we have added Figure 1 which provides graphical explanations about the moderating effect of PE on the relationship between RB and CSR disclosure (thus visible in Figure 1).
Once again thank you for your great comments! Following your suggestions has helped us very much in our analysis development.
Round 2
Reviewer 2 Report
I believe that the authors have done a great job to revise the manuscript by considering and addressing my initial concerns and comments. This study provides a clue that how political embeddedness influences CSR information disclosure. Still, a number of issues regarding PE remain unclear in the CSR literature, so I hope the authors to go further to explore such issues in future research. Good luck.
