An Unintended Spillover: Political Social Movement and Corporate Social Responsiveness

Abstract

Drawing on social movement literature and network spillover effect, we theorize that social movement targeted on a particular political group with negative spillover to the politically connected firms, and empirically investigate how corporate philanthropic giving may be dressing to preempt these perceived spillover damages on corporate image. We test our theory by examining listed firms in Taiwan that responded to the Sunflower Student Movement against the ruling party Kuomintang (KMT). Our difference-in-differences estimates provide evidence that pre-event linkages to the protested party KMT exhibited significantly higher levels of philanthropic giving following the accident. Furthermore, Taipei location and B2C market type, by escalating the perceived spillover threats, reinforced prior KMT-connected firms’ philanthropic amount after the event. These findings give new insights on the spillover effect of political social movement on the commercial field and the insurance effect of corporate social activities in counterbalancing the corporate political missteps.