The impact of the relationship between government and pharmaceutical enterprises on social contribution during the public health emergency: an empirical study

TL;DR

This study examines how the relationship between the Chinese government and pharmaceutical companies affects their social contributions during public health emergencies like the COVID-19 pandemic.

Contribution

The study introduces a new government-enterprise alignment index and shows how government guidance influences pharmaceutical companies' social contributions during crises.

Findings

Pharmaceutical companies that were more responsive to government guidance made greater social contributions during the pandemic.

Good communication between government and enterprises mediated the positive impact on social contributions.

State ownership, embedded party organizations, and location in provincial capitals positively influenced government-enterprise alignment.

Abstract

During the COVID-19 pandemic, vaccines and specific drugs are seen as indispensable solutions to ending or responding to the pandemic, and pharmaceutical enterprises are in the spotlight. The Chinese government has made active efforts to guide pharmaceutical enterprises to make appropriate social contribution during the public health emergency. This study explores how government-enterprise relationship promotes this process.

Using the financial and textual data of China's listed pharmaceutical companies and policy data from the official website of the Chinese health-related government departments, this study drew the social contribution through text analysis, and established the response index of pharmaceutical companies to the government—the government-enterprise alignment index (GE_Ali) based on the formula of elasticity for reference. Then a series of regressions are used to do the empirical tests.

This study found the more responsive pharmaceutical companies were to government, the greater their contribution to society during the pandemic, mainly through increasing the intensity of drug R&D, production and promotion, and the good communication mechanism between the two formed a mediating effect.

The nature of state ownership, the presence of embedded party organizations, and the location in the provincial capital city had significant effects on the realization of a high level of government-enterprise alignment positively affecting the social contribution. This study confirms that the Chinese government has made enterprises a part of social governance, which is a global hotspot, through the embedding of party organizations. It also indicates that the government needs to re-recognize its key role in shaping social contribution, especially in distinguishing its responsibilities between normal and emergency situations.

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