The effect of firm strategic orientation on corporate philanthropic engagement

Abstract

Purpose

This study explores corporate strategic orientations as important drivers of firms’ philanthropic engagement. Specifically, the purpose of this paper is to empirically examine the relationship between two broad corporate strategic orientations – domain offense (DO) and domain abandonment (DA) strategies – and the level of philanthropic engagement.

Design/methodology/approach

The authors propose that firms pursuing aggressive DO strategies are more likely to invest in corporate philanthropy as part of their market expansion efforts. On the contrary, firms pursuing DA strategies are less likely to invest in corporate philanthropy because of decreased slack resources, rather conservative external stakeholder expectations as well as a firm’s conscious decision to disengage with external stakeholders. Hierarchical multiple regression analysis was conducted using data from 122 publicly traded US corporations from 2008 to 2013.

Findings

The findings provided empirical support for a significant positive relationship between DO strategies (acquisition and strategic alliance intensity) and firms’ philanthropic engagement. However, the relationship between DA strategies (divestiture and plant/facility closing) and firms’ philanthropic engagement was not found to be significant. Overall, the findings indicated that philanthropic engagements along with carefully crafted DO strategies help firms expand their market presence.

Practical implications

Organizational leaders that systematically target philanthropic causes that effectively converge with important corporate strategies do benefit in the long run by achieving better brand equity and overall enhanced corporate reputation.

Originality/value

By empirically investigating the relationship between corporate strategic orientations and philanthropic engagement, this study contributes to the on-going scholarly discussion on the link between corporate strategies and philanthropic engagements.

Citation

Abebe, M. and Cha, W. (2018), "The effect of firm strategic orientation on corporate philanthropic engagement", Management Decision, Vol. 56 No. 3, pp. 515-533. https://doi.org/10.1108/MD-09-2016-0625