Relative-to-rival corporate philanthropy,product market competitiveness,and stakeholders |
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Authors: | Jun Hu Huiying Wu Sammy Xiaoyan Ying Wenbin Long |
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Affiliation: | 1. School of Management, Hainan University, Haikou, Hainan 570228, People’s Republic of China;2. Hainan Institute of Corporate Governance, Haikou, Hainan 570228, People’s Republic of China;3. School of Business, Western Sydney University, Parramatta, NSW 2150, Australia;4. Newcastle Business School, The University of Newcastle, 55 Elizabeth Street, Sydney, NSW 2000, Australia;5. School of Accounting, Guangdong University of Foreign Studies, Guangzhou, Guangdong 510006, People’s Republic of China |
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Abstract: | Unlike most of the literature that examines the relationship between corporate philanthropy and financial performance, this study investigates the mechanisms through which corporate socially responsible behaviors produce financial outcomes. We propose that corporate philanthropy improves corporate competitiveness by eliciting positive responses from stakeholders, who assess a firm’s philanthropic contribution in relation to its rivals to determine what level of support they wish to provide to the firm. We predict that a firm’s philanthropy relative to its rivals has a positive effect on its product market competitiveness, and that this positive effect is moderated by three conditions that influence stakeholder response: stakeholder attention to philanthropy, its perceived legitimacy, and expectations of corporate giving. Our predictions are generally supported by our analyses. Overall, this paper shows that strategic philanthropy has a quantitative dimension, and firms obtain the market competitiveness associated with corporate philanthropy by integrating their rivals’ positions into their decision making. |
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Keywords: | Corporate social responsibility Strategic philanthropy Corporate competitiveness Stakeholder response |
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