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Is doing good good for you? how corporate charitable contributions enhance revenue growth
Author(s) -
Lev Baruch,
Petrovits Christine,
Radhakrishnan Suresh
Publication year - 2010
Publication title -
strategic management journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 11.035
H-Index - 286
eISSN - 1097-0266
pISSN - 0143-2095
DOI - 10.1002/smj.810
Subject(s) - revenue , marketing , sample (material) , granger causality , causality (physics) , perception , business , economics , microeconomics , accounting , econometrics , chemistry , physics , chromatography , quantum mechanics , neuroscience , biology
This study examines the impact of corporate philanthropy growth on sales growth using a large sample of charitable contributions made by U.S. public companies from 1989 through 2000. Applying Granger causality tests, we find that charitable contributions are significantly associated with future revenue, whereas the association between revenue and future contributions is marginally significant at best. We then identify the mechanism underlying our findings. Our results are particularly pronounced for firms that are highly sensitive to consumer perception, where individual consumers are the predominant customers. In addition, we document a positive relationship between contributions and customer satisfaction. Overall, our evidence suggests that corporate philanthropy, under certain circumstances, furthers firms' economic objectives. Copyright © 2009 John Wiley & Sons, Ltd.