Bang for the Buck?: Investigation of Local Environmental Factors that Limit or Strengthen the Impact of Corporate Philanthropy on Foreign Subsidiary Performance
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Does engaging in corporate philanthropy (i.e., charitable donations) in foreign markets invariably enhance firm performance? While prevailing studies assert that corporate philanthropy fosters legitimacy of the firm in the local market and thereby contributes to improving firm performance, potential factors that may diminish this impact have received scant attention. This study broadens the academic discourse on this topic by empirically examining how local industry factors may either weaken or strengthen the effects of corporate philanthropy on firm performance. Using a sample of 544 foreign subsidiaries in South Korea, our analysis indicates that the impact of corporate philanthropy is contingent upon the local industry's munificence and complexity: it is more impactful in munificent industries but less so in complex ones. This study enriches the dialogue surrounding the evolution of corporate philanthropy as a strategic tool within the Corporate Social Responsibility literature stream. Our findings indicate that corporate philanthropy can be a strategic tool for enhancing performance when correctly aligned with local market conditions. We suggest that foreign subsidiaries need to adapt their philanthropic initiatives according to the specific conditions of the local industry to fully realize the benefits of corporate philanthropy.
Abstract
Does engaging in corporate philanthropy (i.e., charitable donations) in foreign markets invariably enhance firm performance? While prevailing studies assert that corporate philanthropy fosters legitimacy of the firm in the local market and thereby contributes to improving firm performance, potential factors that may diminish this impact have received scant attention. This study broadens the academic discourse on this topic by empirically examining how local industry factors may either weaken or strengthen the effects of corporate philanthropy on firm performance. Using a sample of 544 foreign subsidiaries in South Korea, our analysis indicates that the impact of corporate philanthropy is contingent upon the local industry's munificence and complexity: it is more impactful in munificent industries but less so in complex ones. This study enriches the dialogue surrounding the evolution of corporate philanthropy as a strategic tool within the Corporate Social Responsibility literature stream. Our findings indicate that corporate philanthropy can be a strategic tool for enhancing performance when correctly aligned with local market conditions. We suggest that foreign subsidiaries need to adapt their philanthropic initiatives according to the specific conditions of the local industry to fully realize the benefits of corporate philanthropy.
참고문헌 (87)
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