Abstract
Purpose - The purpose of this paper is to address firms' decisions on corporate social responsibility (CSR) as a function of the economic environment. The paper focuses on corporate giving, a CSR dimension that is especially important in an economic downturn such as the one experienced by many European economies since 2007-2008.
Design/methodology/approach - A theoretical framework comprising product differentiation and market competition is proposed. The paper investigates whether adverse economic conditions refrain corporate giving or, alternatively, stimulate it as a differentiation and demand enhancing instrument. Econometric empirical testing on the business cycle properties of giving at an aggregate level is also conducted.
Findings - According to theoretical results, firms seem to refrain giving under adverse economic conditions in the short run. Empirically, the paper concludes for a pro cyclical contemporaneous relation of corporate giving with real gross domestic product, supporting the theoretical finding. In a dynamic perspective, however, giving causes revenues and firms tend to donate more than a few years after the downturn.
Originality/value - The paper examines the behaviour of an under researched component of corporate social responsibility, which is especially important in economic downturns - giving. It considers continuous degrees of market competition and differentiation.
Design/methodology/approach - A theoretical framework comprising product differentiation and market competition is proposed. The paper investigates whether adverse economic conditions refrain corporate giving or, alternatively, stimulate it as a differentiation and demand enhancing instrument. Econometric empirical testing on the business cycle properties of giving at an aggregate level is also conducted.
Findings - According to theoretical results, firms seem to refrain giving under adverse economic conditions in the short run. Empirically, the paper concludes for a pro cyclical contemporaneous relation of corporate giving with real gross domestic product, supporting the theoretical finding. In a dynamic perspective, however, giving causes revenues and firms tend to donate more than a few years after the downturn.
Originality/value - The paper examines the behaviour of an under researched component of corporate social responsibility, which is especially important in economic downturns - giving. It considers continuous degrees of market competition and differentiation.
Original language | English |
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Pages (from-to) | 2294-2309 |
Number of pages | 16 |
Journal | Management Decision |
Volume | 54 |
Issue number | 9 |
DOIs | |
Publication status | Published - 2016 |
Keywords
- NUMERICAL DISTRIBUTION-FUNCTIONS
- FINANCIAL PERFORMANCE
- COINTEGRATION
- MARKET
- PHILANTHROPY
- COMPETITION
- CRISIS
- FIRMS
- TESTS