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 Philanthropy, Criminal Activity, and Firm Reputation: Is There a Link?

This study examined the influence of corporate giving programs on the link between certain categories of corporate crime and corporate reputation. Specifically, firms that violate EPA and OSHA regulations should, to some extent, experience a decline in their reputations, while firms that contribute to charitable causes should see their reputations enhanced. The results of this study support both of these contentions. Further, the results suggest that corporate giving significantly moderates the link between the number of EPA and OSHA violations committed by a firm and its reputation. Thus, while a firm's reputation can be diminished through its violation of various government regulations, the extent of the decline in reputation may be significantly reduced through charitable giving.     

A comparative study of quality awards: evolving criteria and research

The purpose of this study is to compare several prominent quality awards based on their common criteria. Six best-known quality awards were used and analyzed to identify common quality award criteria. Trends of research on Malcolm Baldrige National Quality Award (MBNQA) and European Foundation for Quality Management (EFQM) Excellence Award were examined along with award recipients. The results of the study showed that the portion of manufacturing MBNQA winners has decreased steadily during recent years, while the portion of manufacturing firms in EFQM award winners remained steady for the time period studied. Also, health care and education related studies have increased steadily for both quality awards and now become most commonly studied quality award areas. Quality awards criteria appear to change continuously, reflecting the new demands of the changing market environment.     

Social Responsiveness,Profitability and Catastrophic Events: Evidence on the Corporate Philanthropic Response to 9/11

In this study we seek to determine whether catastrophic events lead to corporate charitable giving unrelated to levels of firm profitability. We examine the issue relative to the corporate philanthropic response to the 9/11 terrorist attacks of 2001. Based on a sample of 489 Fortune 500 companies, we find that differences in the extent of corporate contributions following 9/11 are positively and significantly associated with differences in firms' profitability. Further, while the degree of connection to the catastrophic event led to higher levels of giving in comparison to the contributions of less connected firms, differences in the extent of philanthropy are still␣related to short-term profitability for the more connected firms. The study thus provides evidence suggesting that even in the wake of catastrophic events, corporate philanthropic giving is constrained by economic concerns.     

Corporate Charitable Contributions: A Corporate Social Performance or Legitimacy Strategy?

This study examines the relation between firms’ corporate philanthropic giving and their performance in three other social domains – employee relations, environmental issues, and product safety. Based on a sample of 384 U.S. companies and using data pooled from 1998 through 2000, we find that worse performers in the other social areas are both more likely to make charitable contributions and that the extent of their giving is larger than for better performers. Analyses of each separate area of social performance, however, indicate that the relation between giving and negative social performance (cited concerns) only holds for the environmental issues and product safety areas. We find no significant association between corporate philanthropy and employee relations concerns. In general, these findings suggest that corporate philanthropy may be more a tool of legitimization than a measure of corporate social responsibility.     

The determinants of foreign giving: An exploratory empirical investigation of US manufacturing firms

To date, there is ample evidence on the determinants of domestic charitable contributions made by US firms. However, to the best of our knowledge, no one has investigated the determinants of foreign charitable contributions made by US firms. Using the Socrates KLD database and the US M&A data for the 2004–2010 period, we find evidence that foreign giving by US manufacturing firms is linked to certain key variables. Specifically, we find evidence that variables found significant in the domestic giving literature (pre entry return on assets, size, debt to asset ratio, market to book ratio, and research and development expense as a function of sales) are also found significant for foreign giving. However, and notably, cultural distance and foreign sales percentage have been found to be important discriminators between manufacturing firms who give abroad and those who do not. It appears that high international business experience (proxied by the foreign sales ratio) and operations in culturally distant countries motivate foreign giving. Finally, subsample analysis involving developed and developing countries suggests that cultural distance matters for developing countries, but does not for the developed country subsample. Firm level profitability matters for developed countries, but not for developing countries. Future research may be expanded to include the dollar amounts of giving and a bigger sample size. Differences in foreign giving patterns between manufacturing and non-manufacturing firms, and by firms in countries other than the US, may also be explored.     

Leveraging Research and Development: Assessing the Impact of the U.S. Advanced Technology Program

This paper examines the factors that affect a firm's chances of winning an award from the Advanced Technology Program (ATP) and the subsequent impact of the award on a firm's success in raising additional funds for its research and development (R&D) activities. Analysis of data from a survey of 1998 ATP applicants shows that proposals with higher ratings by technical and business/economic experts have a greater chance of winning an award. Further, the projects and firms selected by ATP are more willing to share their research findings with other firms, and tend to be those that open up new pathways for innovation through combining technical areas or by forming new R&D partnerships. Most of the non-winners have not proceeded with any aspect of the R&D project proposed to ATP and, of those that have, most did so at a smaller scale. Furthermore, the ATP award has prestige value for the winning firms; the halo effect from the award increases the success of these firms in attracting additional funding from other sources. Our conclusion is that the ATP is leveraging activities that have a strong potential for broad-based economic benefit.     

The Effects of Firm Size and Industry on Corporate Giving

Recent downward trends in corporate giving have renewed interest in the factors that shape corporate philanthropy. This paper examines the relationships between charitable contributions, firm size and industry. Improvements over previous studies include an IRS data base that covers a much broader range of firm sizes and industries as compared to previous studies and estimation using an instrumental variable technique that explicitly addresses potential simultaneity between charitable contributions and profitability. Important findings provide evidence of a cubic relationship between charitable giving and firm size and evidence of strong industry effects. The plus-minus-plus regression coefficient sign pattern for the cubic firm size model suggests that small and large firms give more relative to total receipts with lower giving ratios among medium size firms. One interpretation for this finding is that small firms are close to the communities they serve while high visibility creates a need for large firm philanthropy. Strong industry effects provide evidence of inter-industry differences in giving culture and/or different public relations requirements across industries. Christie H. Amato (Ph.D., University of Alabama) is professor of marketing at the Belk College of Business Administration, University of North Carolina, Charlotte. Dr. Amato's research interests lie in the area of strategic marketing, productivity, quality of life and ethics. She has published articles in top marketing journals including: Journal of Marketing Research, Journal of the Academy of Marketing Science, Journal of Retailing, Journal of Advertising and Journal of Business Research. Louis H. Amato (Ph.D., University of South Carolina) is professor of economics at the Belk College of Business Administration, University of North Carolina-Charlotte. Dr.␣Amato's research interests lie in the areas of market structure and profitability, productivity, quality of life and ethics. He has published articles in top journals including Southern Economic Journal, Review of Industrial Organization, and Quarterly Journal of Business and Economics.     

Retail Philanthropy: Firm Size,Industry, and Business Cycle

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.     

How to give and receive: An exploratory study of charitable hybrids

Most charitable organizations can only rely on appeals to purely philanthropic motivations in attempting to solicit donor contributions. The decision processes exhibited by the targets of charitable solicitations are very different from those the same individuals use in making daily purchase decisions. Although both charitable giving and purchase contexts have been studied extensively, there are numerous organizations that require targeted customers to use a decision process that merges elements of both domains. Charitable hybrids, such as museums and universities, are such organizations, supplementing traditional revenue streams by soliciting charitable contributions, thus evoking a complex consumer decision process. For these firms, giving good service may yield an added benefit of maximizing charitable contributions received. Drawing on both the services and charitable giving literatures, a model of the consumer decision process is developed in this hybrid situation. In an exploratory test of the model, initial evidence is found that both classes of effects have significant influence on donors' intentions to give. However, in charitable giving contexts, organizational identification appears to fill a central role in influencing decision outcomes, which diminishes the role of satisfaction. The findings provide provocative evidence that further research in this setting is warranted. © 2002 Wiley Periodicals, Inc.     

The practice of corporate social performance in minority- versus nonminority-owned small businesses

This study compares corporate social performance in terms of charitable contributions of minority-owned and nonminority-owned small businesses. In this sample, minority-owned small businesses are younger, have less full-time employees, and lower annual sales. Minority-owned small businesses donate more funds to religious organizations than nonminority-owned small businesses. When annual sales are accounted for, minority-owned businesses contribute more total dollars to all charitable organizations than nonminority-owned firms. Suggestions for future research in this area are delineated.Judith Kenner Thompson is an Assistant Professor of Business and Society at the University of New Mexico. Her work has appeared inResearch in Corporate Social Performance and Policy, Business Forum, and theJournal of Small Business Management.Jacqueline N. Hood is an Assistant Professor of Organizational Behavior at the University of New Mexico. Her current research interests include gender issues in business, small business and entrepreneurship, and corporate social performance.     

Do Suppliers Applaud Corporate Social Performance?

The influence of corporate social performance (CSP) on stakeholders is one of the focal issues in corporate social responsibility (CSR) research. Using data of listed companies in China, this paper examines whether CSR behavior in the form of charitable donations garners a positive reaction from suppliers. Results derived from both level and change model regressions show that superior CSP makes it easier for a firm to obtain trade credit from suppliers, although the effect is significant only in non-state-owned enterprises (non-SOEs). The results are robust to various measures of CSP and endogeneity tests. The results support the strategic philanthropy view and apply stakeholder theory in supply chain, that strategic CSR can help firms to attract suppliers and consolidate cooperative relationships with them, which in turn benefits the firms in terms of more trade credit financing from suppliers. This paper also shows that state-owned enterprises and non-SOEs have different CSR intentions and use CSR to achieve strategic goals in different ways. The conclusions drawn from this study provide practical guidance on CSR strategy, suggesting that CSR activities can help a firm in transition economies to enhance its corporate image, establish and consolidate the good relationship with suppliers, and obtain economic benefits or achieve long-term business objectives.     

Public companies as social institutions

Many UK public companies invest considerable resources in charitable donations and community involvement. Using semi‐structured interviews with public company officers, the author sought to investigate the motivations behind this activity. Was it undertaken because of an expectation of commercial benefit, out of a sense of obligation, or for other reasons? It appeared that public companies were increasingly anxious to make connections between corporate activity in the community and business activities. Public companies linked with local communities clearly felt a sense of connection with them. Corporate officers were constantly dealing with the management of reputation, which was seen as a valuable business asset, and community links made this task easier.     

Corporate Philanthropy in the U.K. 1985–2000 Some Empirical Findings

This paper briefly reviews the theories that seek to explain the phenomenon of corporate charitable donations and then provides a review of the empirical issues that have arisen in previous studies in this area. The findings of an analysis of charitable donations data from the entire U.K. FTSE index for the years 1985–2000 are then reported. These findings include the observation of a time-related increase in charitable donations, which is compared with an earlier study to give a 24 year history of charitable donations in the U.K. The findings note little responsiveness of the monetary value of charitable donations to the economic performance of firms. An international comparison over time against U.S. trends is also reported and shows how U.S. corporations have traditionally been more generous than U.K. firms, but that the trend in the U.S. is downwards. Membership of a U.K.-based "tithing" club (the PerCent Club) is shown to be associated with higher profit performance against non-members. Members' charitable contributions against profit are shown to be higher than the FTSE mean although short of the 0.5% target figure in "cash" terms. The paper concludes with a brief discussion of these findings in relation to the theoretical positions advanced for corporate philanthropy.     

Asset or constraint: Corporate reputation and MNCs’ involvement in the least developed countries

This study investigates the relationship between corporate reputation and a firm's involvement in the least developed countries (LDCs), where the most impoverished base of the pyramid markets are located. We draw upon extant literature in corporate reputation and international business to develop competing hypotheses regarding the foreign investment of the highly reputable firms in the LDCs. Corporate reputation can be a double-edged sword: while it can be a valuable asset to be leveraged in the LDCs, it demands monitoring and protection which might be challenged by a firm's LDC presence, thereby constraining the involvement in LDCs. Our results show that corporate reputation has a negative effect on a firm's foreign direct investment involvement in LDCs, supporting the view that reputation could constrain firm action in uncertain environments. We contribute to a more nuanced understanding of the relationship between reputation and international action than that of existing literature.     

The CEO's Influence on Corporate Foundation Giving

Some scholars have argued that CEOs may have excessive influence on their foundation's trustees to give away a portion of company profits to charitable causes in order to gain access to elite circles or support the CEO's personal causes. This may result in charitable contributions that ultimately serve the personal interests of the CEOs without regard to corporate interests or social needs. We examine the extent that CEOs appear to direct charitable giving to be compatible with their own personal interests, and if CEO participation on the foundation board affects the relationship between CEO personal interests and charitable giving. Using a sample of 160 corporate foundations, our results showed that CEOs' interests, as measured by membership in different non-profit organizations, was associated with foundation charitable giving. This association decreased, but was not eliminated, when CEOs were absent from the foundation board. Implications of these findings for researchers and managers are discussed in regards to both agency theory and stewardship theory.     

Corporate Philanthropic Disaster Response and Ownership Type: Evidence from Chinese Firms’ Response to the Sichuan Earthquake

This article examines whether the charitable giving amount and likelihood of firm response to catastrophic events relate to firms’ ownership type using a unique dataset of listed firms in China, where state ownership is still prevalent. Based on the data of Chinese firms’ response to the 2008 Sichuan earthquake, we find that the extent of corporate contributions for state-owned firms following this disaster is less than that for private firms. State-owned firms are also less likely to respond in␣this disaster compared to private firms. The results also␣reveal that firm size, profitability, geography, cash resource available, and leverage affect firms’ philanthropic disaster response behavior in China.     

Corporate Philanthropic Giving,Advertising Intensity,and Industry Competition Level

This article examines whether the likelihood and amount of firm charitable giving in response to catastrophic events are related to firm advertising intensity, and whether industry competition level moderates this relationship. Using data on Chinese firms’ philanthropic response to the 2008 Sichuan earthquake, we find that firm advertising intensity is positively associated with both the probability and the amount of corporate giving. The results also indicate that this positive advertising intensity-philanthropic giving relationship is stronger in competitive industries, and firms in competitive industries are more likely to donate. This study thus provides evidence suggesting that even in the wake of catastrophic events, corporate philanthropic giving is strategic.     

Do ESG Controversies Matter for Firm Value? Evidence from International Data

The aim of this paper is to investigate the relationship between environmental, social, and governance (ESG) controversies and firm market value. We use a unique dataset of more than 4000 firms from 58 countries during 2002–2011. Primary analysis surprisingly shows that ESG controversies are associated with greater firm value. However, when interacted with the corporate social performance (CSP) score, ESG controversies are found to have no direct effect on firm value while the interaction appears to be highly and significantly positive. Building on this evidence, we attempt to explore the channels through which CSP may enhance market value. Conducting sample split analysis indicates that higher CSP score has an impact on market value only for high-attention firms, those firms which are larger, perform better, located in countries with greater press freedom, more searched on the Internet, more followed by analysts, and have an improved corporate social reputation. Thus, our findings provide new insights on the role of firm visibility through which firms can profit from their CSP.     

The Impact of Operational Diversity on Corporate Philanthropy: An Empirical Study of U.S. Companies

This paper investigates the impact of diversity on corporate philanthropy. Compared to previous studies that have considered the influence of board diversity and CEO gender on corporate philanthropy, this study introduces the concept of operational diversity, which is the implementation of diversity programs at management, employee, and supply chain levels, and further, it explains why operational diversity influences corporate philanthropy, by using the premises of resource dependence theory. Second, this study also investigates the influence of board diversity on corporate philanthropy. Third, this study uses a large sample of U.S. firms over the period of 1991–2009 and tries to mitigate possible omitted variables and endogeneity problems that are often overlooked in previous research. We demonstrate that firms with operational diversity programs are likely more dependent on a broad variety of resources and give more to community as a strategic maneuver; hence, operational diversity is a better indicator for predicting future corporate giving than board diversity alone. However, having a woman or a member of a minority as a company’s chief executive officer is not sufficient to impact its charitable giving. A battery of robustness tests support our conclusion and confirm that our results are not driven by a firm’s general corporate social responsibility (CSR) score, gender or independence of board members, or firm ownership. This paper will assist researchers, practitioners, and other stakeholders in deepening their understanding of the predictors of corporate giving.