Political Connection,Ownership Structure,and Corporate Philanthropy in China: A Strategic-Political Perspective

This paper investigates whether philanthropic giving decisions and amount of charitable giving are related to firms’ political connections and ownership type. To this end, Chinese firms listed on either the Shenzhen or Shanghai stock exchange between 2004 and 2011 are examined, where government interference in the business sector is prevalent, state ownership structure is dominant, and corporate political connections prevail. Our analyses show (1) a significant and positive relationship between political connections and the likelihood and extent of firm contributions; (2) a significant and negative relationship between state ownership and extent of firm contributions; and (3) a stronger relationship between political connections and corporate philanthropy in non-state-owned firms. These findings with regard to the relationship between corporate giving, political connections, and ownership type have important implications for understanding corporate giving behavior in China and in emerging markets in general.     

Corporate Reputation and Philanthropy: An Empirical Analysis

This paper analyzes the determinants of corporate reputation within a sample of large UK companies drawn from a diverse range of industries. We pay particular attention to the role that philanthropic expenditures and policies may play in shaping the perceptions of companies among their stakeholders. Our findings highlight that companies which make higher levels of philanthropic expenditures have better reputations and that this effect varies significantly across industries. Given that reputational indices tend to reflect the financial performance of organizations above other factors (Fryxell, G. E. and J. Wang: 1994, Journal of Management 20, 1–14) and that elements of the literature emphasise that discretionary aspects of social responsibility, including corporate donations, may not be in the financial interests of organizations (e.g. Friedman, M.: 1970, “The Social Responsibility of Business is to Increase its Profits”, New York Times Magazine, September 13), this is a significant finding. It suggests that philanthropic expenditures may play a significant role in stakeholder management and may, in particular, lead to stakeholders holding more positive impressions of philanthropic corporations.     

Corporate Sponsorships in Schools: Altruism and Ethical Judgments

Over the last several years corporate sponsorships have become prevalent within the U.S. K–12 school system. For corporations, sponsorships can be an effective method for targeting young consumers. For schools, corporate sponsorships are an opportunity to replace state funding that has been lost since the 2007 financial crisis. However, many people have voiced concerns about the ethicality of corporate involvement in schools. Accordingly, the purpose of this quasi-experimental study was to examine parents’ views of corporate-school sponsorships. Results indicate that altruism is a key factor; that is, sponsorships that provide direct benefits to students are viewed more favorably, and that parents who are critical of children's advertising tend to view corporate-school sponsorships less favorably.     

Imperfect Duties and Corporate Philanthropy: A Kantian Approach

Nonprofit organizations play a crucial role in society. Unfortunately, many such organizations are chronically underfunded and struggle to meet their objectives. These facts have significant implications for corporate philanthropy and Kant’s notion of imperfect duties. Under the concept of imperfect duties, businesses would have wide discretion regarding which charities receive donations, how much money to give, and when such donations take place. A perceived problem with imperfect duties is that they can lead to moral laxity; that is, a failure on the part of businesses to fulfill their financial obligations to nonprofit organizations. This article argues the problem of moral laxity rests on a misinterpretation of Kantian ethics and, therefore, is really not a problem at all. As such, we argue corporate philanthropy while an imperfect duty should be interpreted more akin to perfect duties and, as a consequence, moral laxity does not arise for those corporations committed to acting on the basis of the moral law. More specifically, firms have duty-based obligations on the basis of benevolence, and as good corporate citizens, to help fund non-profit organizations.     

Beyond Philanthropy: Community Enterprise as a Basis for Corporate Citizenship

In this article we argue that the emergence of a new form of organization – community enterprise – provides an alternative mechanism for corporations to behave in socially responsible ways. Community enterprises are distinguished from other third sector organisations by their generation of income through trading, rather than philanthropy and/or government subsidy, to finance their social goals. They also include democratic governance structures which allow members of the community or constituency they serve to participate in the management of the organisation. Partnerships between corporations and community enterprises therefore raise the possibility of corporations moving beyond philanthropic donations toward a more sustainable form of intervention involving long-term commitments to communities. At the same time they change substantively the nature of any collaboration by allowing relationships to proceed on the basis of mutual advantage, thereby broadening their appeal and scope. In doing so, partnerships build capacity and enfranchise communities in a way that avoids the paternalism that has traditionally characterised relationships between corporations and voluntary sector organisations. Power relations are transformed because partners are seen as sources of valuable assets, knowledge and expertise, rather than recipients of patronage or charity.     

Mood and Ethical Decision Making: Positive Affect and Corporate Philanthropy

Journal of Business Ethics - This study examines the influence of mood (‘affect’) on corporate philanthropic giving. Drawing on group emotions theory and affect-infused decision theory,...     

Intragroup Transactions,Corporate Governance,and Corporate Philanthropy in Korean Business Groups

This study examines how the corporate philanthropy decisions of group-affiliated firms in Korea (Chaebol firms) are made. Based on the attention-based view, we argue that when corporate decision makers at group-affiliated firms focus their attention more (less) on internal markets than external stakeholders because of the firm’s high (low) reliance on intragroup transactions, the firm will decrease (increase) its level of corporate philanthropy. We further argue that the relationship will be stronger when governance mechanisms focus on the instrumental value of corporate philanthropy. Using a panel sample of group-affiliated firms in Korea from 2011 to 2015, we find that as intragroup sales increase, the level of corporate philanthropy decreases, and such a negative relationship is stronger when outside director representation and foreign investor ownership are high. Our study suggests that internal dependence and corporate governance mechanisms jointly affect the level of corporate philanthropy at firms in a business group. Thus, this study contributes to the literature on corporate philanthropy, business group, and corporate governance.     

Women on Corporate Boards of Directors and their Influence on Corporate Philanthropy

This study examined the relationship between the proportion of women serving on firms' boards of directors and the extent to which these same firms engaged in charitable giving activities. Using a sample of 185 Fortune500 firms for the 1991–1994 time period, the results provide strong support for the notion that firms having a higher proportion of women serving on their boards do engage in charitable giving to a greater extent than firms having a lower proportion of women serving on their boards. Further, the results suggest a link between the percentage of women on boards and firm philanthropy in the areas of community service and the arts, but found no link between women boardmembers and firm giving to support education or public policy issues. The implications of the findings and some areas for future research are discussed.     

Corporate Philanthropy and Stock Price Crash Risk: Evidence from China

How to mitigate stock price crash risk has become a focus in the theoretical and practical fields. Building on the work of Kim et al. (J Bank Finance, 43:1–13, 2014b), this paper investigates the relation between corporate philanthropy and crash risk under the unique Chinese institutional background. The results show that both state ownership and the 2005 split share reform attenuate the mitigating effect of corporate philanthropy on crash risk. Specifically, the negative relation between corporate philanthropy and crash risk is less pronounced for state-owned enterprises than for non-state-owned enterprises, and it is also less pronounced after firms accomplish the split share reform. Further, this effect is more pronounced for firms with greater financial risks and poorer performance. Our paper contributes to the growing literature on the determinants of stock price crash risk and the economic consequences of corporate philanthropy. It also offers useful guidance to firms that are seeking to reduce stock price crash risk in emerging markets.     

Corporate Legitimacy as Deliberation: A Communicative Framework

Modern society is challenged by a loss of efficiency in national governance systems values, and lifestyles. Corporate social responsibility (CSR) discourse builds upon a conception of organizational legitimacy that does not appropriately reflect these changes. The problems arise from the a-political role of the corporation in the concepts of cognitive and pragmatic legitimacy, which are based on compliance to national law and on relatively homogeneous and stable societal expectations on the one hand and widely accepted rhetoric assuming that all members of society benefit from capitalist production on the other. We therefore propose a fundamental shift to moral legitimacy, from an output and power oriented approach to an input related and discursive concept of legitimacy. This shift creates a new basis of legitimacy and involves organizations in processes of active justification vis-à-vis society rather than simply responding to the demands of powerful groups. We consider this a step towards the politicization of the corporation and attempt to re-embed the debate on corporate legitimacy into its broader context of political theory, while reflecting the recent turn from a liberal to a deliberative concept of democracy.Prof. Dr. Guido Palazzo is Assistant Professor for Business Ethics at the University of Lausanne (Switzerland). He graduated in Business Administration at the University of Bamberg (Germany) and earned his PhD in Political Philosophy (1999) from the University of Marburg (Germany). His research interests are in Corporate Social Responsibility, Corporate Branding, Democratic Theory and Organizational Ethics.Prof. Dr. Andreas Georg Scherer is director of the Institute for Organization and Administrative Science (IOU) and holds the Chair for Foundations of Business Administration and Theories of the Firm at the University of Zurich (Switzerland). He has published six books. His work has appeared in Academy of Management Review, Advances in Strategic Management, Business Ethics Quarterly, Journal of Business Ethics, M@n@gement, Management International Review, Organization, organization Studies, and in numerous volumes and German journals. Dr. Scherer is member of the editorial boards of Business Ethics Quarterly, Organization, and Organization Studies.     

Comparing Big Givers and Small Givers: Financial Correlates of Corporate Philanthropy

In a departure from the traditional studies of corporate philanthropy that focus on board composition, advertising, and social networks, the authors investigate the financial correlates of corporate philanthropy. The research design controls for firm size and industry while observing firms from a variety of industries. The sample contains matched pairs of generous and less generous corporate givers. The authors find, as hypothesized, a positive relationship between a firm's cash resources available and cash donations, but no significant relationship between corporate philanthropy and firm financial performance, regardless of whether corporate philanthropy is measured as cash payouts or the aggregate contributions that charities actually receive, and regardless of whether financial performance is gauged using accounting measures or market measures. Whereas the link between available resources and corporate philanthropy is well accepted in the literature on corporate social responsibility, it has been rarely tested and never so definitively found as in this research.     

Corporate Ethical Values and Altruism: The Mediating Role of Career Satisfaction

This study explores the ability of career satisfaction to mediate the relationship between corporate ethical values and altruism. Using a sample of individuals employed in a four-campus, regional health science center, it was determined that individual career satisfaction fully mediated the positive relationship between perceptions of corporate ethical values and self-reported altruism. The findings imply that companies dedicating attention to positive corporate ethical values can enhance employee attitudes and altruistic behaviors, especially when individuals experience a high degree of career satisfaction.     

Striving for Legitimacy Through Corporate Social Responsibility: Insights from Oil Companies

Being a controversial industry, oil companies turn to corporate social responsibility (CSR) as a means to obtain legitimacy. Adopting a case study methodology, this research examines the characteristics of CSR strategies and CSR communication tactics of six oil companies by analyzing their 2011–2012 web site content. We found that all six companies engaged in CSR activities addressing the needs of various stakeholders and had cross-sector partnerships. CSR information on these companies’ web sites was easily accessible, often involving the use of multimedia technologies and sometimes social media platforms. Furthermore, to boost the credibility of their CSR messages, these companies utilized a variety of tactics, such as factual arguments and two-sided messages. In sum, this research unveils the interconnectedness among business strategy, CSR practices, and CSR communication in oil companies’ attempt to gain legitimacy in an environment of controversy. The article ends with a discussion of the theoretical and practical implications of the research findings.     

Criteria for Evaluating the Legitimacy of Corporate Social Responsibility

The goal of this paper is to provide a general discussion about the legitimacy of corporate social responsibility. Given that social responsibility projects entail costs, it is not always obvious under what precise conditions managers will have a responsibility to engage in activities primarily designed to promote societal goals.In this paper we discuss four distinct criteria for evaluating the legitimacy of corporate projects for institutionalizing social responsibility:(1) local knowledge(2) level of responsibility(3) shared consensus, and(4) relationship to financial performance.We conclude our discussion by noting that in those cases where the firm possesses knowledge about a specific problem and its solution, is directly responsible for causing harm, where a shared consensus among all relevant stakeholders exists, and financial performance will be enhanced, social responsibility projects are ideal. Obviously, no program will meet all of the criteria. In fact, our model specifically suggests that there is often a trade-off between the first three criteria and the last. For example, in those situations where the corporation directly imposes harm on third parties, and where a high degree of consensus exists among all stakeholders, there is little need to link the social responsibility program to financial performance. By contrast, as the corporation seeks proactive solutions to problems which are only incidental to the corporation, and where little consensus exists, the predicted relationship to financial performance becomes more crucial. By formally examining the trade-offs among these four criteria we more fully understand the complex relationship between social responsibility and financial impacts.     

Cause Related Marketing and Corporate Philanthropy in the Privately Held Enterprise

Owners of businesses represent an interesting case in the study of the intersection of personal and corporate philanthropic values. Because individuals who own businesses have the means and the ability to act on philanthropic motivations through the medium of their businesses, it is interesting to explore the extent to which their corporate contributions to nonprofits are philanthropic in nature or instrumentally motivated, as in the instance of cause related marketing. The trade-offs between cause related marketing and corporate support of nonprofits are complex. Although larger firms are increasing their investments in cause related marketing, the extent of and motivations for adoption of cause related marketing among privately held businesses is less well understood. This study of 478 businesses which are supporters of arts organizations shows that privately held businesses of medium size (300 to 500 employees) are participating in cause related marketing to a significant degree. The adoption rate of cause related marketing is about 40%, and the primary benefits sought are company image enhancement and product marketing support. Adoption of cause related marketing among privately held and smaller enterprises will grow as CEOs exhibit satisfaction with the results of their program, intend to engage in positive word of mouth about it, and plan to allocate more resources to it.     

Strategic and Moral Dilemmas of Corporate Philanthropy in Developing Countries: Heineken in Sub-Saharan Africa

This case study illustrates the dilemmas facing multinational companies in meeting social challenges in Sub-Saharan Africa (especially health-related ones). It also discusses the purpose, responsibilities and limitations of business involvement in social development. From a business standpoint, social challenges in developing countries differ greatly from those in nations where governments or markets effectively provide for the population’s health needs. The case illustrates what led a multinational to set up a corporate foundation and focuses on three strategic and operational dilemmas it ran up against. The case discussion shows that the ethical issues intertwined with these dilemmas are best understood using a variety of ethical approaches. We also show that Ethics of Care are just as relevant to analysing corporate social responsibility and corporate philanthropy as the Deontological and Utilitarianism theories commonly used in business ethics.     

Searching for New Forms of Legitimacy Through Corporate Responsibility Rhetoric

This article looks into the process of searching for new forms of legitimacy among firms through corporate discourse. Through the analysis of annual sustainability reports, we have determined the existence of three types of rhetoric: (1) strategic (embedded in the scientific-economic paradigm); (2) institutional (based on the fundamental constructs of Corporate Social Responsibility theories); and (3) dialectic (which aims at improving the discursive quality between the corporations and their stakeholders). Each one of these refers to a different form of legitimacy and is based on distinct theories of the firm analyzed in this article. We claim that dialectic rhetoric seems to signal a new understanding of the firm’s role in society and a search for moral legitimation. However, this new form of rhetoric is still fairly uncommon although its use is growing. Combining theory and business examples, this article may help managers and researchers in the conceptualization of how firms make sense of their role in society and what forms of differentiation they strive for through their rhetoric strategies.