How Companies Perpetuate and Resist Chinese Government Censorship ∗ Jennifer Pany Tongtong Zhangz February 11, 2020 Please click here for the most up-to-date version of this paper Abstract Given China’s growing market power, can firms operating in China resist govern- ment pressures to censor political dissent? Firms were once regarded as a potential catalyst for authoritarian breakdown, but recent research suggests they can bolster authoritarian rule. We theorize that the material incentives of firms can lead them to perpetuate government censorship but also to resist pressures to penalize dissent. We test this theory with two large-scale experiments that measure how diverse firms operating in China penalize job candidates for dissent. We find that despite the lure of the Chinese market, firms operating in China do not converge in their behavior. Although candidates who express dissent are less likely to receive a callback than those who express political loyalty, the largest proportion of employers do not penal- ize dissent, and some employers favor candidates who express dissent because they believe dissenters have valuable characteristics and knowledge. Keywords: censorship, dissent, firms, experiment, China Word Count: 9,078 ∗Our thanks to Haotian Bu, Luchi He, Shixian Li, Lin Liu, Yongbo Liu, Beibei Tan, Xuewei Tian, Tianyi Wang, Yue Wang, Qiushi Yin, Ni Zeng, Kan Zhang, and many others for superb research assistance; David Broockman, Daniel Butler, Alex Coppock, Charles Crabtree, Ana De La O, Donald Green, Jens Hainmeuller, Gregory Huber, Shanto Iyengar, Holger Kern, Gary King, Peter Lorentzen, Eddy Malesky, Neil Malhotra, Kristin Michelitch, Brendan Nyhan, Jean Oi, Elizabeth Perry, Jonathan Rodden, Weiyi Shi, David Szakonyi, Georg Vanberg, Andrew Walder, Chenggang Xu, Yiqing Xu, Boliang Zhu for many helpful comments and suggestions; and to the Freeman Spogli Institute China Fund and Asia-Pacific Scholars Fund for research support. yAssistant Professor, Department of Communication, Building 120, Room 110 450 Serra Mall, Stanford University, Stanford CA 94305-2050; jenpan.com, (650) 725-7326. zPh.D. Candidate, Department of Political Science, Stanford University, Stanford CA 94305. 1 Introduction China is the world’s fastest growing consumer market, the world’s second-largest importer of goods, and the world’s second largest economy by nominal GDP.1 China’s growing wealth and market power has raised questions of whether companies operating in China are beholden to the Chinese Communist Party (CCP) and perpetuate the political aims of this authoritarian regime. In October, 2019, the Actionvision Blizzard video game com- pany issued a one-year suspension to a professional esports player for voicing support for protesters in Hong Kong in a post-match interview.2 In August 2019, the Hong Kong- based airline Cathay Pacific fired employees for supporting Hong Kong protests.3 In March 2018, the Marriott hotel chain fired a social media employee after he accidentally liked a tweet from a Tibetan group that praised Marriott for listing Tibet as a country inde- pendent from China.4 In all of these cases, private, for-profit firms are helping the Chinese government perpetuate censorship by penalizing employees who express opinions or who take actions that the Chinese regime deems objectionable. The role of firms in authoritarian survival and breakdown has been a long standing object of political science research. In an early wave of research on democratization, cap- ital and firms were seen as crucial to the democratic development of industrializers such as Britain, France, and the United States (Deutsch 1961; Huntington and Moore 1970; Moore 1966). In the 1990s and 2000s, research focused on late industrializing countries showed that firms operating in authoritarian contexts will only press for regime change if their material interests are threatened by authoritarian rule (Bellin 2000; Dickson 2003; Payne 1994; Pearson 2000; Tsai 2007). More recent research on authoritarian politics and media censorship suggest that firms not only will avoid pressing for regime change but may help perpetuate authoritarian rule when access to a market under an authoritarian regime’s control is crucial to firms’ material interests (Crabtree et al. 2015; King et al. 1Consumer data based the World Bank Households and NPISHs consumption expenditures (https://bit.ly/2JqOFWC), import data from The World Factbook of the CIA (https://bit.ly/1k3Y7zu), and GDP data from the IMF (https://bit.ly/2MRXElp), all accessed Oct 18, 2019. 2See company announcement at https://playhearthstone.com/en-us/blog/23179289/; more detailed cov- erage at https://bit.ly/2oZjz1M and https://bit.ly/2Voh5pG (accessed Cot. 8, 2019). 3See https://bit.ly/2MQycMY (accessed Oct 18. 2019). 4See reporting at https://bit.ly/2AXsEvh and https://bit.ly/2Ov8Wyh (accessed Oct. 8, 2019). 1 2013; Miller 2018; Pan 2017). In this paper, we theorize that firms’ material incentives—to hire and retain produc- tive workers—can lead firms to perpetuate and to resist the political goals of authoritarian regimes. The crucial implication of this theory is that we do not expect the behavior of firms with regard to political censorship to converge in authoritarian regimes, even if the markets under authoritarian control are highly attractive. Firms can take three actions with respect to censorship of employees’ speech and behavior. First, companies can perpetuate government censorship, avoiding employees who express dissenting views and rewarding employees who express politically loyal views.5 Second, companies can actively resist censorship, prioritizing and rewarding employees who express dissent over those who are politically conformist. Third, companies can passively resist the impulse to perpetuate government censorship by not penalizing expression of dissent and treating employees who express dissenting and conformist political views in similar ways. The material in- centive of firms to hire and retain the most productive workers can lead to all three actions. We expect these incentives to be specific to the firm or even the individuals making hiring decisions rather than be based on general characteristics such as the ownership structure or industry of the firm. We test the observable implications of this theory by conducting two large-scale ex- periments that measure the extent to which firms operating in China—including foreign firms, private firms, state-owned enterprises, and public institutions6—penalize job can- didates for expressing politically dissenting views. In 2016, we measured employer call- backs to 19,221 resumes we submitted containing speech signaling political dissent, polit- ical conformity, and an apolitical orientation to job openings in cities throughout China. In 2018, we asked 506 hiring managers to evaluate these same resumes in a conjoint survey experiment in order to capture the rationale behind their evaluations of job seekers. We find that despite the lure of the Chinese market, firms operating in China do not converge in their behavior to perpetuate government censorship. On average, job can- didates who express dissent are less likely to receive a callback from employers than 5We use political “loyalty” and “conformity” interchangeably. 6Public institutions refer to organizations with government-appointed personnel and/or government funding such as public hospital and public schools. 2 candidates who express conformity and are evaluated more critically by hiring managers. However, the largest proportion of employers (41%) passively resist the political pref- erences of the CCP, calling back candidates who express politically dissenting views as well as those who express politically conformist views. Slightly over one third of firms (32%) perpetuated government censorship by rejecting candidates expressing dissent in favor of candidates who proclaimed their loyalty to the Communist regime. Slightly less than one third of firms (27%) actively resisted government censorship, calling back can- didates who expressed political dissent and rejecting political loyalists. This pattern holds for firms with different ownership structures, including foreign firms operating in China, private Chinese firms, Chinese state-owned enterprises, as well as public Chinese institu- tions. Our conjoint experiment among hiring managers shows how firms’ material interests generate incentives to resist and cave to government pressures to censor. Hiring managers who reject job seekers expressing political dissent do so because they believe such em- ployees’ grievances against the government would prevent them from focusing on their work, demoralize their coworkers, and decrease the effectiveness of these employees in a context where government relations are crucial for business success. Hiring managers who prioritize job seekers expressing political dissent do so because they believe these individuals will be more innovative, and because they believe these applicants will have valuable knowledge about the West. Hiring managers who call back candidates who ex- press dissent and those who express political conformity regard other candidate charac- teristics such as academic performance and work experience as more relevant to hiring and believe political views to be irrelevant to worker productivity. Based on an exploratory analysis of heterogeneous effects by firm, job vacancy, and hiring manager characteristics, we do not in general see systematic difference in behavior among sub-groups. The only statistically significant