When Firms Provide: The Political Consequences of the Corporate Provision of Public Services Open Access

Sumner, Jane Lawrence (2016)

Permanent URL: https://etd.library.emory.edu/concern/etds/3r074v22g?locale=en


In this dissertation, I develop a new theoretical framework for corporate public service provision, also known as corporate social responsibility or corporate community involvement. Rather than considering it as an independent corporate action, I embed corporations into a government service provision structure with central governments and subnational governments. This allows me to answer the question: what are the political and economic effects of corporate public service provision? While many have noted that corporations often provide public services when there are gaps in provision, I argue that those gaps are the result of strategic choices on the part of central governments. Central governments strategically withhold funding, creating the potential for service gaps, in order to encourage subnational governments to use the companies in their jurisdiction as a resource for service provision, whether by asking them to provide directly or by taxing them. This model has implications for a variety of important political phenomenon and in my dissertation I focus on three dependent variables: intergovernmental transfers, within-country foreign direct investment flows, and overall levels of public service provision. Using a new data set of highly-disaggregated subnational data in China, India, and Indonesia and a variety of statistical models, I find the evidence generally supports the theory. My broad conclusions are that corporate public service provision influences governments and development in ways that are not immediately obvious, which begs further inquiry as the phenomenon becomes more popular.

Table of Contents

Introduction. 1

The Obsolescing Bargain, Political Risk, and Foreign Direct Investment. 3

Public Services, Private Actors. 6

Theory Overview. 12

Career Incentives. 13

Capacity. 14

Empirical Chapters. 14

Career Incentives and Fiscal Transfers. 15

Capacity and Within-Country FDI Allocation. 16

Anticipatory Compensation and Human Development. 17

Outline of Dissertation. 18

Conclusion. 19

Appendices 20 A Interview excerpt: cost of relocating factory. 21

A Theory of Corporate Public Service Provision in Multilevel Governing Structures. 22

Introduction. 22

A Model of Private Provision. 24

Formalization. 28

Analysis. 32

Comparative Statics. 39

Conclusion. 43

Appendices. 45

Theoretical Proof. 46

Career Incentives and Fiscal Transfers. 55

Introduction. 55

Background. 57

Theory. 60

Sample. 66

Data Challenges and Solutions. 67

Data. 69

Model Specication. 80

Results and Discussion. 83

Conclusion. 90

Appendices 93 C Empirical Testing of Complicated Implications. 94

Hand-Sorting Robustness Checks: Sorted at Random. 100

Hand-Sorting Robustness Checks: Assigning Only the Denite Lower- Assignees to the Lower Group. 102

Full Model Results. 104

Capacity and Political Risk 105 Introduction. 105

Political Risk and Corporate Public Service Provision. 107

The Case of China. 111

Measuring Subnational Public Service Provision Capacity. 114

Research Design and Data. 121

Results. 123

Discussion. 126

Conclusion. 129

Anticipation and Access to Public Services. 132

Introduction. 132

Human Development and Levels of Service Provision. 135

Theory. 137

Background. 143

Data. 144

Research Design. 147

Analysis. 148

Conclusion. 156

Appendices. 158

Activities That Do Not Count as CSR Under Section 135. 159

Activities That Count as CSR Under Article 135. 160

Conclusion. 162

Future Research. 167

Policy Implications. 170

Conclusion. 173

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