How and When Does Corporate Giving Lead to Getting? An Investigation of the Relationship Between Corporate Philanthropy and Relative Competitive Performance from a Micro-process Perspective

Abstract

The corporate ethics literature has considerably focused on whether giving (corporate philanthropy) results in getting (firm performance). However, the relationship between corporate philanthropy and performance and the underlying mechanisms remain unclear. Drawing on signaling and cue consistency theories, we develop and test a model that specifies whether, how, and when corporate philanthropy benefits relative competitive performance from a micro-process perspective. Using a Chinese sample of 1623 employees, 145 CEOs, and 145 human resources managers, we found that corporate philanthropy could positively influence relative competitive performance through the internal processes-organization-level citizenship behaviors of employees. Moreover, work-life balance practices strengthen the aforementioned mediation. In particular, when a firm performs high levels of work-life balance practices, corporate philanthropy tends to promote more citizenship behaviors in the entire organization, thereby enhancing the relative competitive performance of the firm. By contrast, when organizations perform low levels of work-life balance practices, the aforementioned mediation becomes nonsignificant. The theoretical and practical implications of these findings are discussed.

The business of philanthropy: Challenges in measuring the value of cultural giving

“…Furthermore, they argue that, since their workforce attends activities organised by the festival, their giving would have a positive impact on the well-being and productivity of their workforce (Gond et al, 2010;Guiso et al, 2015;Zhao & Zhang, 2019). According to Gordon et al (2016), such a positive impact would lead to an improvement in the performance of a company.…”

“…Raiborn et al (2003) suggest that philanthropic activities increasingly support the overall performance of the organisation by improving the internal environment. Additionally, corporate philanthropy influences external communication as well as employees' perceptions of the organisation (Gond et al, 2010;Zhao & Zhang, 2019). On the one hand, employees can be expected to be more productive when they have a stronger belief in the organisation's strategy (Guiso et al 2015;Zhao & Zhang, 2019).…”

“…Additionally, corporate philanthropy influences external communication as well as employees' perceptions of the organisation (Gond et al, 2010;Zhao & Zhang, 2019). On the one hand, employees can be expected to be more productive when they have a stronger belief in the organisation's strategy (Guiso et al 2015;Zhao & Zhang, 2019).…”

“…Moreover, some businesses highlight that their support of the cultural festival indirectly benefits the welfare of their employees who attend the festival events, which can lead to an improvement in the latter's productivity (see, e.g., Guiso et al, 2015;Zhao & Zhang, 2019;Gond et al, 2010). Taken together, our results suggest that the act of corporate giving is a multi-layered, complex act.…”

“…While the main driver behind their decision to donate is to ‘give back’ to the society, which is consistent with prior literature (Phillips & Jung, 2016a; Schervish, 2014), they expect that their support of the festival will also enhance their visibility and improve their reputation (Hogarth et al., 2018). Moreover, some businesses highlight that their support of the cultural festival indirectly benefits the welfare of their employees who attend the festival events, which can lead to an improvement in the latter's productivity (see, e.g., Guiso et al., 2015; Zhao & Zhang, 2019; Gond et al., 2010). Taken together, our results suggest that the act of corporate giving is a multi‐layered, complex act.…”