Relative-to-rival corporate philanthropy, product market competitiveness, and stakeholders

Jun Hu, Huiying Wu, Sammy Xiaoyan Ying and Wenbin Long

Journal of Contemporary Accounting and Economics, 2021, vol. 17, issue 1

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.

Keywords: Corporate social responsibility; Strategic philanthropy; Corporate competitiveness; Stakeholder response (search for similar items in EconPapers)
JEL-codes: M14 M41 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jocaae:v:17:y:2021:i:1:s1815566920300515

DOI: 10.1016/j.jcae.2020.100237

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