Skip to main content
SpringerLink
Log in

Corporate Charitable Contributions: A Corporate Social Performance or Legitimacy Strategy?

  • Published:
Journal of Business Ethics Aims and scope Submit manuscript

Abstract

This study examines the relation between firms’ corporate philanthropic giving and their performance in three other social domains – employee relations, environmental issues, and product safety. Based on a sample of 384 U.S. companies and using data pooled from 1998 through 2000, we find that worse performers in the other social areas are both more likely to make charitable contributions and that the extent of their giving is larger than for better performers. Analyses of each separate area of social performance, however, indicate that the relation between giving and negative social performance (cited concerns) only holds for the environmental issues and product safety areas. We find no significant association between corporate philanthropy and employee relations concerns. In general, these findings suggest that corporate philanthropy may be more a tool of legitimization than a measure of corporate social responsibility.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

References

  • Agle B. R., Mitchell R. K., Sonnenfeld J. A. (1999) Who Matters to CEO? An Investigation of Stakeholder Attributes and Salience, Corporate Performance, and CEO Values. Academy of Management Journal, 42(3), 507–525

    Article  Google Scholar 

  • Ashford B. E., Gibbs D. W. (1990) The Double-Edge of Organizational Legitimation. Organization Science, 1(2), 177–194

    Article  Google Scholar 

  • Aupperle K. E., Carroll A. B., Hatfield J. D. (1985) An Empirical Investigation of the Relationship Between Corporate Social Responsibility and Profitability. Academy of Management Journal, 28, 446–461

    Article  Google Scholar 

  • Bakan J. (2004) The Corporation: The Pathological Pursuit of Profit and Power. New York: Free Press

    Google Scholar 

  • Berman S. L., Wicks A. C., Kotha S., Jones T. M. (1999) Does Stakeholder Orientation Matter? The Relationship Between Stakeholder Management Models and Firm Financial Performance. Academy of Management Journal, 42, 488–506

    Article  Google Scholar 

  • Burt R. S. (1983) Corporate Profits and Co-Optation: Networks of Market Constraints and Directorate Ties in the American Economy. New York: Academic Press

    Google Scholar 

  • Carroll A. B. (1979) A Three-Dimensional Conceptual Model of Corporate Performance. Academy of Management Review, 4(4), 497–505

    Article  Google Scholar 

  • Carroll A. B. (1991) Corporate Social Performance Measurement: A Commentary on Methods for Evaluating an Elusive Construct. Research in corporate social performance and policy, 12(42), 385–401

    Google Scholar 

  • Cascio W. F., Young C. E., Morris J. R. (1997) Financial Consequences of Employment Change Decisions in Major US Corporations. Academy of Management Journal, 40(5), 1175–1189

    Article  Google Scholar 

  • Cho, C. H. and D. M. Patten: 2007, ‹Environmental Disclosures as Tools of Legitimacy: A Research Note. Accounting, Organizations and Society 32(7/8), 639–647

  • Cho C. H., Patten D. M., Roberts R. W. (2006) Corporate Political Strategy: An Examination of the Relation Between Political Expenditures, Environmental Performance, and Environmental Disclosure. The Journal of Business Ethics, 67(2), 139–154

    Article  Google Scholar 

  • Clotfelter C. T. (1985) Federal Tax Policy and Charitable Giving. Chicago: University of Chicago Press

    Google Scholar 

  • Corporate Giving Directory: 2003, Taft Group, Rockville, MD

  • Deegan C., Rankin M., Voght P. (2000) Firms’ Disclosure Reactions to Major Social Incidents: Australian Evidence. Accounting Forum, 24(1), 101–130

    Article  Google Scholar 

  • DiMaggio P. J., Powell W. W. (1983) The Iron Cage Revisited: Institutional Isomorphism and Collective Rationality in Organizational Fields. American Sociological Review, 48(2), 147–160

    Article  Google Scholar 

  • Directory of Corporate and Foundation Givers: 2000, Taft Group, Rockville, MD

  • Dowling J., Pfeffer J. (1975) Organizational Legitimacy: Social Values and Organizational Behavior. Pacific Sociological Review, 18(1), 122–136

    Google Scholar 

  • Ernst and Ernst: 1976 et seq., Social Responsibility Disclosure (Ernst & Ersnt, Cleveland, OH)

  • Erusalimsky A., Gray R., Spence C. (2006) Towards a More Systematic Study of Stand-Alone Corporate Social and Environmental Reporting: An Exploratory Pilot Study of UK Reporting. Social and Environmental Accounting Journal, 26(1), 12–19

    Google Scholar 

  • Friedman, M.: 1962, The Social Responsibility of Business is to Increase its Profits. New York Times Magazine, September 13, pp.122–126

  • Global Reporting Initiative: 2006, Sustainability Reporting Guidelines v3.0. (GRI, Amsterdam)

  • Gray, R. and J. Bebbington: 2007, ‹Corporate Sustainability: Accountability and the Pursuit of the Impossible Dream’, in G. Atkinson, S. Dietz and E. Neumayer (eds.), Handbook of Sustainable Development (Edward Elgar Publishing, Chletenham, UK), pp. 376–394

  • Greening D. W., Turban D. B. (2000) Corporate Social Performance as a Competitive Advantage in Attracting a Quality Workforce. Business and Society, 39(3), 254–280

    Article  Google Scholar 

  • Griffin J. J., Mahon J. F. (1997) The Corporate Social Performance and Corporate Financial Performance Debate: Twenty-Five Years of Incomparable Research. Business and Society, 36(1), 5–31

    Article  Google Scholar 

  • Hempel J. and L. Gard: 2004, The Corporate Givers. Business Week (November 29), pp. 100–104

  • Hillman A. J, Keim G. D. (2001) Shareholder Value, Stakeholder Management, and Social Issues: What’s the Bottom Line? Strategic Management Journal, 22, 125–139

    Article  Google Scholar 

  • KLD Research & Analytics, Inc.: 2003, KLD Rating Data: Inclusive Social Rating Criteria. Cambridge, MA

  • Lindblom, C. K.: 1994, The Implications of Organizational Legitimacy for Corporate Social Performance and Disclosure. Presented at the Critical Perspectives on Accounting Conference, New York, NY

  • Meyer J. W., Rowan B. (1977) Institutional Organizations: Formal Structure as Myth and Ceremony. American Journal of Sociology 83(2), 340–363

    Article  Google Scholar 

  • McElroy K. M., Siegfried J. J. (1985) The Effect of Firm Size on Corporate Philanthropy. Quarterly Review of Economics and Business, 25, 18–24

    Google Scholar 

  • McElroy K. M., Siegfried J. J. (1986) The Community Influence on Corporate Contributions. Public Finance Quarterly, 14, 394–414

    Google Scholar 

  • Miles R. H. (1987) Managing the Corporate Social Environment: A Grounded Theory. Englewood Cliffs, NJ: Prentice-Hall

    Google Scholar 

  • Navarro P. (1988) Why Do Corporations Give to Charity? Journal of Business, 61, 65–93

    Article  Google Scholar 

  • Neu D., Warsame H., Pedwell K. (1998) Managing Public Impressions: Environmental Disclosures in Annual Reports. Accounting, Organizations and Society, 23(3), 265–282

    Article  Google Scholar 

  • Patten D. M. (1992) Intra-Industry Environmental Disclosures in Response to the Alaskan Oil Spill: A Note on Legitimacy Theory. Accounting, Organizations and Society, 17, 471–475

    Article  Google Scholar 

  • Patten D. M. (2002) The Relation Between Environmental Performance and Environmental Disclosure: A Research Note. Accounting, Organizations and Society, 27(8), 763–773

    Article  Google Scholar 

  • Rehbein K., Waddock S., Graves S. (2004) Understanding Shareholder Activism: Which Corporations are Targeted? Business & Society, 43(3), 239–267

    Article  Google Scholar 

  • Roberts R. W. (1992) Determinants of Corporate Social Responsibility Disclosure: An Application of Stakeholder Theory. Accounting, Organizations and Society, 17(6), 595–612

    Article  Google Scholar 

  • Ruf, B. M., K. Muralidhar and K. Paul: 1993, Eight Dimensions of Corporate and Social Performance: Determination of Relative Importance Using the Analytic Hierarchy Process. Academy of Management Best Paper Proceedings, Atlanta, GA, pp. 326–330

  • Ruf B. M., Muralidhar K., Brown R. M., Janney J. J., Paul K. (2001) An Empirical Investigation of the Relationship Between Change in Corporate Social Performance and Financial Performance: A Stakeholder Theory Perspective. Journal of Business Ethics, 32(2), 143–156

    Article  Google Scholar 

  • Sayrs L. W. (1989) Pooled Time Series Analysis. Newbury Park, CA: Sage Publications

    Google Scholar 

  • Seifert B., Morris S. A., Bartkus B. R. (2003) Comparing Big Givers and Small Givers: Financial Correlates of Corporate Philanthropy. Journal of Business Ethics, 45(3), 195–211

    Article  Google Scholar 

  • Sethi S. P. (1979) A Conceptual Framework for Environmental Analysis of Social Issues and Evaluation of Business Response Patterns. Academy of Management Review, 4, 63–74

    Article  Google Scholar 

  • Sharfman M. (1996) A Construct Validity Study of the KLD Social Performance Ratings Data. Journal of Business Ethics, 15(3), 287–297

    Article  Google Scholar 

  • Shocker A. D., Sethi S. P. (1974) An Approach to Incorporating Social Preferences in Developing Corporate Action Strategies. In: Sethi S. P. (ed.), The Unstable Ground: Corporate Social Policy in a Dynamic Society (pp. 67–80). Los Angeles: Melville Publishing Company

    Google Scholar 

  • Suchman M. C. (1995) Managing Legitimacy: Strategic and Institutional Approaches. Academy of Management Review, 20(3), 571–610

    Article  Google Scholar 

  • Swanson D. L. (1995) Addressing a Theoretical Problem by Reorienting the Corporate Social Performance Model. Academy of Management Review 20(1), 43–64

    Article  Google Scholar 

  • Szwajkowski E., Figlewicz R. E. (1999) Evaluating Corporate Performance: A Comparison of the Fortune Reputation Survey and the Socrates Social Rating Database. Journal of Management Issues, 11(2), 137–154

    Google Scholar 

  • Useem M. (1988). Market and Institutional Factors in Corporate Charitable Contributions. California Management Review, 30(2), 77–88

    Google Scholar 

  • Waddock S. A. (2003) Myths and Realities of Social Investing. Organization & Environment, 16(3), 369–380

    Article  Google Scholar 

  • Waddock S. A., Graves S. B. (1997a) The Corporate Social Performance-Financial Performance Link. Strategic Management Journal, 18(4), 303–319

    Article  Google Scholar 

  • Waddock S. A., Graves S. B. (1997b) Quality of Management and Quality of Stakeholder Relations: Are They Synonymous? Business & Society, 36(3), 250–279

    Article  Google Scholar 

  • Wartick S. L., Cochran P. (1985) The Evolution of the Corporate Social Performance Model. Academy of Management Review 10(4), 758–769

    Article  Google Scholar 

  • Wartick S. L., Mahon J. F. (1994) Toward a Substantive Definition of the Corporate Issue Construct: A Review and Synthesis of the Literature. Business and Society, 33, 293–311

    Article  Google Scholar 

  • Watts R., Zimmerman J. (1986) Positive Accounting Theory. Englewood Cliffs, NJ: Prentice-Hall

    Google Scholar 

  • Webb, N. J.: 1992, Company Foundations and the Economics of Corporate Giving. Ph. D. Dissertation, Duke University

  • Webb, N. J. (1994) Tax and Government Policy Implications for Corporate Foundation Giving. Nonprofit and Voluntary Sector Quarterly, 23, 41–67

    Article  Google Scholar 

  • Werbel J. D., Carter S. M. (2002) The CEO’s Influence on Corporate Foundation Giving. Journal of Business Ethics, 40, 47–60

    Article  Google Scholar 

  • Williams R. J., Barrett J. D. (2000) Corporate Philanthropy, Criminal Activity, and Firm Reputation: Is There a Link? Journal of Business Ethics, 26, 341–350

    Article  Google Scholar 

  • Wood D. J. (1991) Corporate Social Performance Revisited. Academy of Management Review, 16(4), 691–718

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

  1. School of Business, Brigham Young University Hawaii, 55-220 Kulanui Street, Laie, HI, 96762, U.S.A.

    Jennifer C. Chen, Dennis M. Patten & Robin W. Roberts

Authors
  1. Jennifer C. Chen
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Dennis M. Patten
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Robin W. Roberts
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Robin W. Roberts.

Rights and permissions

Reprints and permissions

About this article

Cite this article

C. Chen, J., Patten, D. & Roberts, R.W. Corporate Charitable Contributions: A Corporate Social Performance or Legitimacy Strategy?. J Bus Ethics 82, 131–144 (2008). https://doi.org/10.1007/s10551-007-9567-1

Download citation

  • Received:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s10551-007-9567-1

Keywords

Search

Navigation