Retail Philanthropy: Firm Size,Industry, and Business Cycle |
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Authors: | Louis H Amato Christie H Amato |
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Institution: | (1) Economics Department, University of North Carolina at Charlotte, Charlotte, NC 28223, USA;(2) Marketing Department, University of North Carolina at Charlotte, Charlotte, NC 28223, USA |
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Abstract: | This article investigates the effects of firm size, profitability, industry affiliation, and the business cycle on retailer
philanthropy. The importance of industry and firm effects on giving was analyzed with regression models using industry-fixed
effects as well as firm strategy variables. The analysis included instrumental variables methodology to account for simultaneity
in the charitable giving–profits relationship. Data were gathered from the IRS Corporate Statistics of Income Sourcebook,
data that provide firm size class measures covering the entire firm size distribution ranging from small retailers up to large
multi-national retail firms. Retailer philanthropy was measured as the ratio of charitable contributions to total receipts.
Important findings include a cubic relationship between retailer philanthropy and firm size; industry effects stronger than
those observed for retail profit; and the absence of business cycle effects. The empirical research relating retail charitable
giving to firm attributes including firm size and advertising, industry and business cycle factors are unique in the business
ethics literature. Prior studies regarding the importance of industry on charitable giving utilized data across broad sectors
of the economy. Firms from different sectors could be expected to differ in philanthropic approach due to differences in public
contact as well as differences in public relations exposure. The strong industry effects reported for this sample of exclusively
retail firms, with similar public contact, provide strong evidence for the importance of industry in determining firms’ charitable
strategies. |
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Keywords: | |
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