Giving a Little to Many or a Lot to a Few? The Returns to Variety in Corporate Philanthropy

52 Pages Posted: 3 Nov 2018 Last revised: 23 Apr 2021

See all articles by Haram Seo

Haram Seo

University of Minnesota - Twin Cities - Carlson School of Management

Jiao Luo

University of Minnesota - Twin Cities - Carlson School of Management

Aseem Kaul

University of Minnesota - Minneapolis

Date Written: April 21, 2021

Abstract

We examine the returns to specialization versus variety in corporate philanthropy. Acknowledging the theoretical rationale for both a specialist and a generalist approach to philanthropy, we took a question-driven, abductive approach and found a robust positive association between philanthropic variety and firm profitability for donations by large US public corporations from 2003 to 2011. This association held for variety across causes but not within causes, for non-local giving and for giving by diversified firms, and was weaker for firms whose donations faced greater scrutiny. These findings are consistent with a moral hazard explanation whereby firms take advantage of the relatively inelastic support for philanthropy within a cause area by strategically spreading their donations across a wide range of supporter interests, thus maximizing profits.

Keywords: Corporate philanthropy, moral hazard, market for social goods, strategic CSR, abductive approach

JEL Classification: M14, L25, D64

Suggested Citation

Seo, Haram and Luo, Jiao and Kaul, Aseem, Giving a Little to Many or a Lot to a Few? The Returns to Variety in Corporate Philanthropy (April 21, 2021). Available at SSRN: https://ssrn.com/abstract=3264902 or http://dx.doi.org/10.2139/ssrn.3264902

Haram Seo (Contact Author)

University of Minnesota - Twin Cities - Carlson School of Management ( email )

19th Avenue South
Minneapolis, MN 55455
United States

Jiao Luo

University of Minnesota - Twin Cities - Carlson School of Management ( email )

321 19th Ave. S
CSOM 3-360
Minneapolis, MN 55455
United States
1-612-626-1907 (Phone)

Aseem Kaul

University of Minnesota - Minneapolis ( email )

321, 19th Avenue S
3-412 Carlson School of Management
Minneapolis, MN 55455
United States

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