Corporate Social Responsibility, Corporate Philanthropy and Economic Performance

René Bekkers

Corporate Social Responsibility, Corporate Philanthropy

and Economic Performance

10 July 2012

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ISTR Conference, Siena

Individuals and corporations

10 July 2012

• My research thus far has concentrated on

philanthropy and volunteering by individuals

and households.

• It is an old prejudice of mine that

corporations are more rational than

individuals.

• This belief has eroded in the past years.

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The story today

Is an application of theories developed for

individual philanthropy to the behavior of

corporations.

Let’s name the animals, get things organized.

Comments are very welcome.

No tables today.

10 July 2012ISTR Conference, Siena

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What’s the deal?

10 July 2012

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Why do corporations act prosocially?

10 July 2012

• The merchant banker acts according to

Friedman’s principle that “The business of

business is business”.

• How many corporations act like the merchant

banker?

• In the Netherlands, few corporations actually have

a CSR/CP policy, let alone a ‘rational’ one.

• CP is usually reactive rather than pro-active.

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Philanthropy by corporations and households


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Volunteering by individuals and employees


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Corporate or individual philanthropy?


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Definitions

CSR: direct contributions of corporations that

help produce public goods or avoid public

bads.

CP: indirect contributions of corporations that

help produce public goods or avoid public

bads through an intermediary organization –

usually a nonprofit organization.


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Concepts


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Elements


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Mechanisms driving CSR/CP activities

Perhaps the mechanisms that drive individual

philanthropy are not so different from the

mechanisms that drive CSR and CP activities.

85% of donation acts by individuals occurs in

response to direct solicitations.

83% of corporations has no systematic policy

with respect to philanthropy.


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Eight Mechanisms

1. Awareness of need2. Solicitation3. Costs/benefits4. Altruism5. Reputation6. Psychological

benefits7. Values8. Efficacy


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Bekkers, R. & Wiepking, P. (2011). A Literature Review of Empirical Studies of Philanthropy: Eight Mechanisms That Drive Charitable Giving. Nonprofit & Voluntary Sector Quarterly, 40 (5): 924-973.

Hypothesis construction

Syllogisms:

L: General lawC: Conditions

H: Hypothesis


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Explanans

Explanandum

Awareness of need

General law: Actors that are more aware of societal needs

are more strongly engaged in philanthropy.Condition:

Firms with a larger workforce are more aware of societal needs.

Hypothesis: Firms with a larger workforce are more

strongly engaged in philanthropy.


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Awareness of need

The same general law: Actors that are more aware of societal needs

will be more strongly engaged in philanthropy.Another condition:

Firms with a more diverse workforce are more aware of societal needs.

Another hypothesis: Firms with a more diverse workforce are more strongly engaged in philanthropy.


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Information through networks

Awareness of need is information about societal

needs channeled and modified from potential

recipients through social networks to potential

helpers.

Nonprofit organizations intermediate between

recipients and potential donors, giving recipients a

voice, or advocating a cause when there are no

recipients or victims who can speak for themselves.


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Organizational networks


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Organizations are connected to Each other,

At the organizational level through:Formal ties: joint ventures, alliances,

memberships in branch organizations At the individual level through:

Formal ties: memberships in unions and professional organizations

Informal ties: the ‘old boys network’ of CEOs and management executives, the networks of lower level employees

Networks of organizations


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Organizations are connected to Recipients,

At the organizational level, Formally through ties with nonprofit

organizations and with clients (being recipients) At the individual level,

Formally through employees’ participation in nonprofit organizations as volunteers or donors

Informally through employees’ ties to individual recipients

Choice of recipients

To understand how and explain why

corporations choose certain recipients for their

CSR/CP activities, we need to know the

composition of corporate networks.

Networks not only generate awareness of need

by channeling information, but also generate

solicitations and reputational advantage.


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Costs and benefits

L: The lower the costs of CSR/CP activities, the more strongly corporations are engaged in them.

C: Tax incentives lower the costs of CSR/CP activities.

H: The stronger the tax incentives for CSR/CP activities, the more strongly corporations are engaged in them.

C: Sponsoring yields more benefits than donating.H. Corporations are more likely to sponsor than to

donate.


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Reputation

The reputation mechanism refers to the social rewards of CSR and CP activities.

L: The higher the social rewards for CSR/CP activities, the more strongly corporations are engaged in them.

C: CSR/CP activities that are publicized to clients and employees yield more social rewards.

H: Corporations that publicize CSR/CP activities are more strongly engaged in CSR/CP.


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Reputation as a strategic advantage


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Questions about reputation

In which conditions and for which corporations

does publication of CSR/CP activities generate

higher reputational advantages?

When the costs are higher and benefits are smaller.

For firms in more competitive markets for clients

and employees.

For firms that produce credence goods posing a

trust problem to clients.


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Testing, testing?

The literature on CSR/CP is enormous: ‘Corporate

Philanthropy’ yields 11,000 hits on Google Scholar;

‘Corporate Social Responsibility’ yields 117,000 hits.

Meta question: To what extent are the findings of

previous research consistent with the hypotheses

about the mechanisms driving CSR/CP activities?

Another literature review is required to answer this.


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Tools for a meta-analysis

Standardize effect sizes

Data about sources: journal impact scores, peer-

reviewed, year of publication

Data about data: country, sector, sample size,

measures, experimental, cross-sectional,

longitudinal

Data about models: covariates, censoring, fixed

effects


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Stringent testing, please

Corporations that expect higher benefits from

CSR/CP activities will be more strongly engaged.

These expectations depend in part on previous

economic performance.

Longitudinal panel data and appropriate statistical

models are required to detect potential feedback

loops (e.g., EP CSR EP).


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Even if…

Most of the literature on CSR/CP is correlational.

Causality or even the timing of events cannot be

inferred.

Correlational data include an EPCSR/CP effect in

the CSR/CP effect estimate.

Hypothesis: the more stringent the statistical

model applied to the data, the weaker the

estimated effect of CSR/CP on EP.


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Thanks, says

René BekkersHead of Research

Center for Philanthropic StudiesVU University Amsterdam

[email protected]: @renebekkers

http://renebekkers.wordpress.com


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Documents

Corporate Social Responsibility, Corporate Philanthropy and Economic Performance