The Social Value of Corporate Giving and the Economic Costs of Disasters

Academy of Management Journal (Revise and Resubmit), Forthcoming

The Wharton School Research Paper No. 84

66 Pages Posted: 27 Jul 2015 Last revised: 20 Jan 2017

Luis Ballesteros

The Wharton School

Michael Useem

University of Pennsylvania - Management Department

Date Written: March 21, 2016

Abstract

Almost 85 percent of the deaths from natural disasters have occurred in low-income countries, yet more than 85 percent of relief coming from firms has gone to medium- and high-income economies. Does this mean a socially suboptimal allocation of economic resources? To assess this question, we study donations by corporations from 65 countries to the relief and reconstruction fund of all major disasters that affected the world from 2003 to 2013. Using a novel quasi-experimental method, we provide evidence that corporate giving efficiently specializes in disasters where the gap between the economic cost and the available sources for financing relief and recovery is the greatest. In such contexts, the competences and routines of the firm economically connected to the affected country generate a comparative advantage for the supply of relief and recovery vis-à-vis traditional public and multilateral donors. Because of these mechanisms, corporate disaster giving increases the speed of relief and recovery and mitigates the loss of social welfare by complementing public and multilateral funding in nations that have been historically outside the focus of attention of foreign aid institutions.

Keywords: corporate disaster giving, corporate philanthropic disaster response, corporate social responsibility, disaster recovery, disaster risk management, business responses to natural disasters, humanitarian aid

Suggested Citation

Ballesteros, Luis and Useem, Michael, The Social Value of Corporate Giving and the Economic Costs of Disasters (March 21, 2016). Academy of Management Journal (Revise and Resubmit), Forthcoming; The Wharton School Research Paper No. 84. Available at SSRN: https://ssrn.com/abstract=2635556 or http://dx.doi.org/10.2139/ssrn.2635556

Luis Ballesteros (Contact Author)

The Wharton School ( email )

3641 Locust Walk
Philadelphia, PA 19104-6365
United States

Michael Useem

University of Pennsylvania - Management Department ( email )

The Wharton School
Philadelphia, PA 19104-6370
United States
215-898-7722 (Phone)
215-898-0401 (Fax)

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