Integrating personality, behavioral, and cognitive theories of change, the author examines the operations, measurement, and evolution of behavioral and ethical standards that distinguish capitalism from other ideologies.

In a departure from the traditional studies of corporate philanthropy that focus on board composition, advertising, and social networks, the authors investigate the financial correlates of corporate philanthropy. The research design controls for firm size and industry while observing firms from a variety of industries. The sample contains matched pairs of generous and less generous corporate givers. The authors find, as hypothesized, a positive relationship between a firm''s cash resources available and cash donations, but no significant relationship between corporate philanthropy (...) and firm financial performance, regardless of whether corporate philanthropy is measured as cash payouts or the aggregate contributions that charities actually receive, and regardless of whether financial performance is gauged using accounting measures or market measures. Whereas the link between available resources and corporate philanthropy is well accepted in the literature on corporate social responsibility, it has been rarely tested and never so definitively found as in this research. (shrink)

We develop a model of ideals-based accountability which we have witnessed at work in several long-thriving family businesses. The owners and managers of these firms eschew individualism and materiality in the pursuit of ethical ideals such as supporting democracy and bettering the human condition. Although accountability is to these ideals, not for outcomes such as profitability or even reputation, IBA has resulted in outstanding reputations for some firms. We characterize IBA according to its missions, leadership, culture, and stakeholder relationships. We (...) also contrast it with traditional forms of accountability and differentiate IBA from related stakeholder, stewardship, and CSR perspectives. Finally, we examine its manifestations within five long-lived family enterprises, in the process generating propositions to advance the concept. (shrink)

Ethical behavior among businesses has gained significant prominence in recent years. Survey evidence shows that Asian consumers demand for greater social responsibility among businesses. Thus, a deeper understanding of the factors that contribute to such a demand is useful. This study examines the influence of religiosity and values on corporate social responsibility (CSR) support among consumers in Hong Kong and Singapore. Primary data collected among consumers in these cities point to a significant direct relationship between religiosity and CSR support. In (...) Hong Kong, this attitude is due both to altruistic as well as for egotistical (or face saving) reasons. In Singapore, this is mainly due to the latter. The results imply that different motivations should guide CSR strategies in these two cities. (shrink)

ABSTRACT:This manuscript develops the concept of organizational virtue orientation (OVO) and examines differences between family and non-family firms on the six organizational virtue dimensions of Integrity, Empathy, Warmth, Courage, Conscientiousness, and Zeal. Using content analysis of shareholder letters fromS&P 500companies, our analyses find that there are significant differences between family and non-family firms in their espoused OVO, with family firms generally being higher. Specifically, family firms were significantly higher on the dimensions of Empathy, Warmth, and Zeal, but lower on Courage. (...) Based on these findings we further develop the OVO concept through the discussion of implications and areas for future research. (shrink)

ABSTRACT:This manuscript develops the concept of organizational virtue orientation (OVO) and examines differences between family and non-family firms on the six organizational virtue dimensions of Integrity, Empathy, Warmth, Courage, Conscientiousness, and Zeal. Using content analysis of shareholder letters fromS&P 500companies, our analyses find that there are significant differences between family and non-family firms in their espoused OVO, with family firms generally being higher. Specifically, family firms were significantly higher on the dimensions of Empathy, Warmth, and Zeal, but lower on Courage. (...) Based on these findings we further develop the OVO concept through the discussion of implications and areas for future research. (shrink)

This study investigates the effects of internal and external corporate governance and monitoring mechanisms on the choice of corporate social responsibility (CSR) engagement and the value of firms engaging in CSR activities. The study finds the CSR choice is positively associated with the internal and external corporate governance and monitoring mechanisms, including board leadership, board independence, institutional ownership, analyst following, and anti- takeover provisions, after controlling for various firm characteristics. After correcting for endogeneity and simultaneity issues, the results show that (...) CSR engagement positively influences firm value measured by industry-adjusted Tobin’s q. We find that the impact of analyst following for firms that engage in CSR on firm value is strongly positive, while the board leadership, board independence, blockholders’ ownership, and institutional ownership play a relatively weaker role in enhancing firm value. Furthermore, we find that CSR activities that address internal social enhancement within the firm, such as employees diversity, firm relationship with its employees, and product quality, enhance the value of firm more than other CSR subcategories for broader external social enhancement such as community relation and environmental concerns. (shrink)

Recent downward trends in corporate giving have renewed interest in the factors that shape corporate philanthropy. This paper examines the relationships between charitable contributions, firm size and industry. Improvements over previous studies include an IRS data base that covers a much broader range of firm sizes and industries as compared to previous studies and estimation using an instrumental variable technique that explicitly addresses potential simultaneity between charitable contributions and profitability. Important findings provide evidence of a cubic relationship between charitable giving (...) and firm size and evidence of strong industry effects. The plus-minus-plus regression coefficient sign pattern for the cubic firm size model suggests that small and large firms give more relative to total receipts with lower giving ratios among medium size firms. One interpretation for this finding is that small firms are close to the communities they serve while high visibility creates a need for large firm philanthropy. Strong industry effects provide evidence of inter-industry differences in giving culture and/or different public relations requirements across industries. (shrink)

In this study we seek to determine whether catastrophic events lead to corporate charitable giving unrelated to levels of firm profitability. We examine the issue relative to the corporate philanthropic response to the 9/11 terrorist attacks of 2001. Based on a sample of 489 Fortune 500 companies, we find that differences in the extent of corporate contributions following 9/11 are positively and significantly associated with differences in firms' profitability. Further, while the degree of connection to the catastrophic event led to (...) higher levels of giving in comparison to the contributions of less connected firms, differences in the extent of philanthropy are still␣related to short-term profitability for the more connected firms. The study thus provides evidence suggesting that even in the wake of catastrophic events, corporate philanthropic giving is constrained by economic concerns. (shrink)

While downsizing has been widely studied, its connection to firm ownership status and the reasons behind it are missing from extant research. We explore the relationship between downsizing and family ownership status among Fortune 500 firms. We␣propose that family firms downsize less than non-family firms, irrespective of performance, because their relationship with employees is based on normative commitments rather than financial performance alone. We suggest that their actions are related to employee- and community-friendly policies. We find that family businesses do (...) downsize less irrespective of financial performance considerations. However, their actions are not related to their employee- or community-friendly practices. The results raise issues related to the motivations of large multinationals to␣downsize and the drivers of their stakeholder management practices. (shrink)

This study investigates the market reaction to corporate press releases announcing donations to the relief effort following the December, 2004 tsunami in Southeast Asia. Based on a sample of 79 U.S. companies, results indicate a statistically significant positive 5-day cumulative abnormal return. While differences in the timing of the press releases do not appear to have influenced market reactions, the amount of the donations did. Overall, the results appear to support Godfrey’s (Academy of Management Review 30, 777–798; 2005) assertion that (...) philanthropic giving must be perceived as being a genuine manifestation of the firm’s underlying social responsiveness in order to increase firm value. (shrink)

Interest in corporate social responsibility (CSR) is gaining momentum in academic and managerial circles. However, prior work in the area has paid little attention to how CSR initiatives should be implemented inside the organization. Against this backdrop, this study examines the impact of CSR initiatives on an important stakeholder group—employees. We build and test a comprehensive multilevel framework that focuses on whether employees derive job satisfaction from CSR programs. The proposed model predicts that a manager’s charismatic leadership influences employees’ interpretations (...) about the motives underlying their companies’ engagement in CSR initiatives (intrinsic and extrinsic CSR-induced attributions) which, in turn, influence employee job satisfaction. Hierarchical linear modeling of data from 47 organizational units comprising 438 employees from three world-leading manufacturing organizations shows that when employees think that their manager possesses charismatic leadership qualities, they tend to attribute the organization’s motives for engaging in CSR activities to intrinsic values, which, in turn, are positively associated with job satisfaction. Also, the extent to which managers are perceived as charismatic leaders relates positively to job satisfaction. Interestingly, CSR-induced extrinsic attributions are neither explained by charismatic leadership nor do they predict job satisfaction. Implications for both theory and practice are discussed. (shrink)

In this paper, we examine the relationship between Christian religiosity, attitudes towards corporate social responsibility, and CSR behavior of executives. We distinguish four types of CSR attitudes and five types of CSR behavior. Based on empirical research conducted among 473 Dutch executives, we find that CSR attitudes mediate the influence of religiosity on CSR behavior. Intrinsic religiosity positively affects the ethical CSR attitude and negatively affects the financial CSR attitude, whereas extrinsic religiosity stimulates the philanthropic CSR attitude. Financial, ethical, and (...) philanthropic CSR attitudes significantly affect some types of CSR behaviors. However, because religiosity has opposing effects on the three attitudes, the joint mediation effect of the three attitudes is negligible. Furthermore, we find a direct negative influence of intrinsic religiosity on diversity and a direct positive influence on charity. (shrink)

Drawing on risk mitigation theory, this article examines whether the improvement of firms’ social performance reduces debt financing costs (CDFs) in China, the world’s largest emerging market. Employing both the ordinary least square (OLS) and the two-stage instrumental variable regression methods, we find that improved corporate social responsibility (CSR) reduces the CDF when firms’ CSR investment is lower than an optimal level; however, this relationship is reversed after the CSR investment exceeds the optimal level. Firms with extremely low or extremely (...) high CSR are subject to a higher CDF. The results also suggest that the optimal CSR level for small firms is higher than that for large firms. This study is the first to document a U-shaped relationship between CSR and CDF and also the first to investigate this relationship within an emerging market context. (shrink)

There is a need of further research to understand how social capital in the organization can be fostered. Existing literature focuses on the design of reciprocity norms, procedures and stability employment practices as the main levers of social capital in the workplace. Complementary to these mechanisms, this paper explores the impact of ethical managerial behaviour on the development of social capital. We argue that a managerial behaviour based on the true concern for the well-being of employees, as well as their (...) motivational and ethical development, can be particularly important for the generation of social capital in the organization. It is suggested that manager's behaviour should be based on three principles: following examplary behaviour, helping the employees to value the consequences of their actions in other persons, and not betraying employee's trust. When the manager conforms to those principles, he can ease the process through which employees develop associability and identification-based trust with the firm, the two main components of 'Organizational Social Capital'. Bringing ethics into the debate of social capital creation seems to us fundamental, as social capital in the firm is likely to be influenced by the ethical and motivational development of its members. (shrink)

This article examines the empirical association between analyst coverage and corporate social responsibility (CSR) by investigating their simultaneous and causal effects, and its joint effects of CSR engagement and analyst coverage on firm risk. We find a positive association between the level and change of CSR engagement and the level and change of analyst coverage after considering simultaneity and causality. Based on the first-difference approach, we further find that the change in analyst following from the previous year affects the change (...) in CSR in the current period, whereas the change in CSR from the previous period does not influence the change in analyst following in the current period. Furthermore, we find that the change in CSR engagement as well as the interaction effect of changes in CSR and analyst coverage reduces the change of firm risk. When we examine the CSR strengths and concerns separately, analyst following does not significantly influence firms’ CSR strength but CSR concern activities decreases significantly as firms have more analyst followings. We further find the mediating role of financial analysts between CSR concerns (but not CSR strengths) and firm risk. We maintain that analysts provide indirect but additional social pressure to the firms to eventually reduce their irresponsible activities. Taken together, we interpret these results to support the stakeholder theory-based conflict-resolution explanation that considers CSR engagement as a vehicle to reduce conflicts of interest between managers and noninvesting stakeholders but not the overinvestment hypothesis that views CSR as a waste of valuable resources at the cost of shareholders. (shrink)