1000/1000
Hot
Most Recent
Corporate charitable giving refers to the unconditional provision of funds or materials by companies to governments or related institutions in a voluntary and non-reciprocal manner to solve social problems such as poverty, education, natural disasters and public health. Corporate charitable giving not only brings strategic resources and information channels needed for enterprise innovation, but also helps companies enhance their moral capital, improve their brand image and increase their political legitimacy.
The altruistic model of corporate philanthropy (Sharfman, 1994; Useem, 1988) [9][10] is considered to be a non-strategic interpretation of corporate giving. According to this theory, companies use social standards as the basis for correct, good and just social action. Firms engage in altruistic philanthropy with the single goal of helping others, so philanthropy is considered independent of the operational pressures that generate profits. As previous researchers have pointed out (Shaw and Post, 1993) [12], there is an ethical element to the decision to engage in corporate philanthropy that cannot be ignored. Previous research has found that corporate philanthropy can be driven by factors such as the sense of aesthetic pleasure (File and Prince, 1998) [14] or altruism (Campbell et al., 1999) [15]. Firms have an obligation to engage in corporate philanthropy, rather than out of any self-interested financial considerations (Shaw and Post, 1993) [12]. In sum, there is a substantial body of literature that reveals the decision to engage in philanthropy is driven by moral obligation.
As Sharfman (1994) [10] has pointed out in the altruistic model, the essence of philanthropy is ethical. Thus, managers have an ethical responsibility to allocate the firm’s resources in a way that promotes the overall welfare of society, regardless of whether these actions lead to specific results, such as increased profits or an enhanced image. Choi and Wang (2007) [17] asserted that corporate philanthropy may be the result of top management’s values of benevolence and integrity. In addition to economic reasons, pro-social behavior theorists claim that managers’ behavior is also motivated by ethical norms, which is a strong reason for corporate giving (Valor, 2006) [16]. From this perspective, the motivation for corporate charitable giving can be categorized as altruistic. Despite its noble goals, the altruistic model itself is often not a strong explanation for corporate philanthropy, even in the most diverse societies, because it ignores the profit-maximization goals and other strategic objectives of corporations (Neiheisel, 1994) [13].
At the level of strategic nature, corporate philanthropy is strategically motivated by the intent to contribute to direct monetary benefits, in the same way as any other corporate function. From a strategic perspective, corporate philanthropy can be further divided into economic or political dimensions (Neiheisel, 1994; Young and Burlingame, 1996) [13][21]. The economics of strategic philanthropy suggests that firms engage in philanthropic activities as a means of improving the financial performance of their organizations (Sanchez, 2000) [23], while the political view is that firms engage in corporate philanthropy because of the political and institutional pressure exerted on them by key environmental actors (Neiheisel, 1994) [13].
Based on the previous research, the strategic motivation of corporate philanthropy can be explained from the following two perspectives. Firstly, increased global competition requires firms to build a competitive advantage through various channels. Corporate philanthropy can help firms gain brand recognition and loyalty, promoting themselves as “socially responsible” firms. Secondly, the elimination of government agencies and cuts to state budgets that previously supported the arts and social services have stimulated the growth of voluntary agencies and private foundations. As government support dwindles, a growing number of private voluntary organizations are trying to raise money from private firms. In turn, these firms set up foundations to pass on these requests.
In the research on corporate charitable giving, a number of studies have focused on the impact of charitable giving on corporate value, financial performance, and other factors as a means of enhancing corporate value. When charitable giving is taken as part of marketing related to firms, it is usually directly related to the improvement of corporate performance. Some scholars argue that corporate philanthropy has a positive impact on corporate financial performance because decisions about charitable giving can strategically enhance a firm’s image and reputation (Godfrey, 2005; Porter and Kramer, 2002) [5][7]. At the same time, corporate charitable giving often serves as a means for firms to reduce the risks associated with resource acquisition from the perspective of resource dependence (Haley, 1991) [20].
Furthermore, firms also try to create a positive social image through charitable giving to mitigate or offset negative social impact in other areas. For instance, Williams and Barrett (2000) [24] examined the impact of corporate-charitable-giving programs on the association between the number of corporate violations of EPA (Environmental Protection Agency) and OSHA (Occupational Safety and Health Administration) regulations and their public image, and found that while corporate violations of environmental and labor regulations can reduce their public image, charitable giving can reduce the extent of the decline. Therefore, contrary to the CSR perspective (Carroll, 1991) [32], firms may increase charitable giving to maintain their positive social image, rather than devote resources to correcting negative social impact in other areas.