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Masters of Disasters? An Empirical Analysis of how Societies Benefit from Corporate Disaster Aid

Academy of Management Journal (Forthcoming)

The Wharton School Research Paper No. 84

52 Pages Posted: 2 Sep 2016 Last revised: 26 May 2017

Luis Ballesteros

The Wharton School

Michael Useem

University of Pennsylvania - Management Department

Tyler Wry

University of Pennsylvania - The Wharton School, Management Department

Date Written: December 13, 2017

Abstract

Corporations have become increasingly influential within societies around the world, while the relative capacity of national governments to meet large social needs has waned. Consequentially, firms are being asked to adopt responsibilities that have traditionally fallen to governments, aid agencies, and other types of organizations. There are questions, though, about whether or not this is beneficial for society. We study this in the context of disaster relief and recovery; an area where companies account for a growing share of aid as compared to traditional providers. Drawing on the dynamic capabilities literature, we argue that firms are better-equipped than other types of organizations to sense areas of need following a disaster, seize response opportunities, and reconfigure resources for fast, effective relief efforts. As such, we predict that — while traditional aid providers are important for disaster recovery — relief will arrive faster, and nations will recover more fully when locally active firms account for a larger share of disaster aid. We test our predictions with a proprietary dataset comprising information on every natural disaster and reported aid donation worldwide from 2003 to 2013. Our analysis uses a novel, quasi-experimental technique known as the synthetic control method and shows that nations benefit greatly from corporate involvement when disaster strikes.

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 and Wry, Tyler, Masters of Disasters? An Empirical Analysis of how Societies Benefit from Corporate Disaster Aid (December 13, 2017). Academy of Management Journal (Forthcoming); The Wharton School Research Paper No. 84. Available at SSRN: https://ssrn.com/abstract=2833698

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)

Tyler Wry

University of Pennsylvania - The Wharton School, Management Department ( email )

The Wharton School
Philadelphia, PA 19104-6370
United States

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