Confucian merchants culture, social movement and entrepreneurs' political participation: evidence from China

Using hand-collected data on Confucian merchants culture, this study investigates whether and how Confucian merchants culture affects entrepreneurs' political participation and the moderating effect of an influential social movement-the Cultural Revolution-in China. We document that the likelihood of political participation is significantly higher for entrepreneurs in the regions with intense Confucian merchants culture, implying that Confucian merchants culture enhances the social motives of political participation and advocates entrepreneurs to participate in political activities for the greater good. In addition, the positive relation between Confucian merchants culture and political participation is more pronounced for entrepreneurs without the Cultural Revolution experience. Above results are robust to a set of sensitivity tests and still stand after controlling for the potential endogeneity. Further analyses reveal that:(1) Entrepreneurs' political participation is positively (negatively) related with tax preference and government subsidy (the costs of equity and debt capital); (2) The positive effect of Confucian merchants culture on entrepreneurs' political participation for financially constrained firms, heavily regulated industries, and in poor regions; (3) Confucian merchants culture enhances corporate social responsibilities.