Enhancing corporate reputation through corporate philanthropy

Abstract

PurposeThe purpose of this paper is to examine factors affecting the relationship between annual changes in the amount of corporate foundation giving and changes in corporate reputation. The factors investigated included the existing corporate reputation and the economic conditions.Design/methodology/approachPublished data were obtained for 77 US corporations during both an upward and downward economic trend. Data for corporate foundation giving were obtained from IRS tax records while data on corporate reputation were obtained from the Reputation Institute’s RepTrak scores.FindingsLinear mixed model analyses demonstrated that a firm’s prior reputation moderates the relationship between corporate philanthropy and changes in corporate reputation during a downward trend. That is, changes in corporate charitable giving and corporate reputation covaried positively for firms with an existing favorable reputation. However, for firms with an unfavorable reputation, there was an inverse relationship between changes in corporate giving and corporate reputation. The interaction between the variables was prevalent only during an economic downturn.Practical implicationsThe findings provide firms with relevant information on conditions that affect how changes in charitable giving are likely to impact corporate reputation.Originality/valueThis study is the first to look at the effects of annual changes in corporate charitable giving on corporate reputation and adds to the research literature by demonstrating the complexity of the relationship by identifying two key factors that should be taken into considerations when developing annual budgets for charitable giving.