The Impact of Operational Diversity on Corporate Philanthropy: An Empirical Study of U.S. Companies

Abstract:     
This paper investigates the impact of operational diversity on corporate philanthropy. Compared to previous studies that have considered the influence of board diversity and CEO gender on corporate philanthropy, this study introduces the concept of operational diversity, which is the implementation of a diversity program at management, employee, and supply chain levels, and further, it explains why operational diversity influences corporate philanthropy, by applying both the stakeholder theory and a resource-based view of a firm. Second, this study also investigates the influence of board diversity on corporate philanthropy. Third, this study uses a large sample of US firms and tries to mitigate possible omitted variables and endogeneity problems that are often overlooked in previous corporate social responsibility research. We demonstrate that operational diversity is a better indicator for predicting future corporate giving than board diversity alone. However, having a woman or a member of a minority as a company’s chief executive officer is not sufficient to impact its charitable giving. This paper will assist researchers, practitioners, and other stakeholders in deepening their understanding of the predictors of corporate giving.

Number of Pages in PDF File: 41

Keywords: corporate philanthropy, operational diversity, board of directors, corporate social responsibility

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