The Inverted U‐Shaped Relationship between Corporate Philanthropy and Spending on Research and Development: A Case of Complementarity and Competition Moderated by Firm Size and Visibility

Yongqiang Gao, Jian Wu and Taieb Hafsi

Corporate Social Responsibility and Environmental Management, 2017, vol. 24, issue 6, 465-477

Abstract: Prior studies on corporate social responsibility (CSR) and innovation suggest either a competing or a complementary relationship between CSR and spending on research and development (R&D) activities. In this study, we unravel this puzzle by theorizing an inverted U‐shaped relationship between CSR in general and corporate philanthropy (CP) in particular, and R&D spending. Drawing mainly on stakeholder theory, we suggest that CP, by securing stakeholders’ support differently at different levels of spending, would first increase and then reduce R&D spending. Evidence from Chinese publicly traded companies during 2006–2015 well supports our arguments. In addition, we find this inverse U‐shaped non‐linear relationship between CP and R&D spending to be strengthened by firm visibility and weakened by firm size. This study has important theoretical and practical implications. Copyright © 2017 John Wiley & Sons, Ltd and ERP Environment

Date: 2017
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https://doi.org/10.1002/csr.1420

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Persistent link: https://EconPapers.repec.org/RePEc:wly:corsem:v:24:y:2017:i:6:p:465-477

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