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

64 Pages Posted: 3 Nov 2018 Last revised: 3 Aug 2019

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: July 29, 2019

Abstract

We examine the returns to specialization versus variety in corporate philanthropy. While specialization — donating a lot to a few causes — may allow for greater effectiveness in giving, variety — donating a little to many causes — enables firms to serve a wider range of supporter preferences. We argue that the separation between the recipients and supporters of corporate philanthropy, combined with multiplicity of supporter interests, means that the benefits of variety will dominate. Consistent with our theory, results from uniquely detailed data on 725 US firms’ donation from 2003 to 2011 show a positive association between philanthropic variety and firm profitability that is weaker when donations are more observable and firms are under greater scrutiny, and stronger for more distinctive giving and giving by diversified firms.

Keywords: Corporate philanthropy, moral hazard, market for social goods, intra-industry product variety, strategic CSR

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 (July 29, 2019). 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

Register to save articles to
your library

Register

Paper statistics

Downloads
76
Abstract Views
515
rank
317,459
PlumX Metrics