Understanding the Link between Philanthropy and Performance: the Role of International Strategies

Purpose

Corporate philanthropy as a strategic marketing practice has become increasingly common in emerging markets, yet its impact on firm performance remains ambiguous. While some studies suggest a positive relationship, others report neutral or adverse effects. To disentangle the inconsistent findings, we examine how firms’ international strategies — international earnings, foreign investors, and entry mode choices — influence the relationship between corporate philanthropy and firm performance.

Design/methodology/approach

We draw on resource dependence theory and the notion that the internationalization of a firm is associated with three dependencies – interorganizational, intraorganizational, and locational. We develop why these dependencies may conflict with philanthropy’s effectiveness and test hypotheses using a longitudinal dataset of 232 Chinese firms between 2010 and 2019, sourced from CSMAR databases. We employ a system generalized method of moments approach to analyze this panel dataset.

Findings

We find a positive effect of corporate philanthropy on firm performance. The presence of foreign investors enhances this positive impact, but international earnings and a high proportion of Greenfield investment diminish it.

Originality/value

Despite the mixed findings for the main effect of corporate philanthropy on firm performance, research has ignored the potential moderating effects of international marketing strategies that can support or hinder the effectiveness of corporate philanthropy. Our findings have important implications for both theoretical understanding and managerial practice.