Corporate philanthropy is an important dimension of corporate social responsibility (CSR) and an increasingly important part of a company's strategy. In this chapter, we review the antecedents of corporate philanthropy divided into internal and external antecedents. Next, we will review some consequences of corporate philanthropy as well as consider some important governance conditions that may affect the effective investment of philanthropic resources. We end our chapter with key takeaways for boards of directors, management, and shareholders.

This study aims to demonstrate that carbon emissions may increase analyst forecast errors because poor environmental performance obscures prospects for business operations. We further examine whether strong board governance moderates such a relationship. Using a sample of S&P 500 firms from the Carbon Disclosure Project (CDP), we employ Heckman's two-stage model to examine our research questions. We find a positive association between carbon intensity and forecast errors, but strong board governance, captured by board independence, board diligence, and committee size, may mitigate this positive relationship. However, the effect is amplified for firms engaged in controversial governance practices such as CEO duality and long CEO tenure. Our study provides insight for managers by raising concerns due to high levels of carbon emissions and demonstrating that different governance characteristics may alleviate the adverse effect of carbon emissions on forecast errors.

Drawing on springboard perspective, emerging multinational enterprises (EMNEs) may increase their innovation performance through outward foreign investments (OFDIs). Yet, the mechanism of how OFDIs promote innovation is underexplored. In this study, we propose and theorize how knowledge search plays a mediation role to stimulate the effect of OFDIs on innovation. We use a matching technique to control endogeneity arising from sample selection bias. Based on a sample of Chinese MNEs from 2009 to 2018, we find that the OFDIs of EMNEs are positively associated with the scope and the depth of their knowledge search. Furthermore, we find that OFDIs in developed markets have a more salient impact on the knowledge search scope (i.e., using new patent citations) than OFDIs in emerging markets. But OFDIs in emerging markets have a more salient impact on the depth of knowledge search (repeating old patent citations). Theoretical and managerial implications are provided for consideration.

We provide a comprehensive review of the growth of multinational enterprises (MNEs) based on a quarter-century (25 years) of scholarly international business publications. We synthesize research insights on the determinants of the growth of MNEs through the lens of Penrose's theory of firm growth, which is the most influential theoretical perspective on firm growth. The review takes stock of the research findings on the facilitators, constraints, and the trajectory of growth of MNEs, and elaborates on the commonalities and differences between research on the growth of MNEs that draws on Penrose's theory and research that does not. This comparison highlights the opportunity to build an internally coherent theory of the growth of MNEs, that is, a theory that connects 'what an MNE is' to 'what determines an MNE's growth.' It also indicates that past research placed a strong emphasis on exogenous factors (e.g., cross-country distances) as key constraints on growth even though the Penrosean lens suggests a close consideration of endogenous factors that drive international growth, as well as endogenizing the ostensibly exogenous growth determinants. The review highlights the importance of firm-specific managerial knowledge and learning, which shapes the direction of the growth of MNEs and ensures its administrative coherence.

Research question/issue. This study examines whether there is decoupling between how firms communicate about corporate social responsibility (CSR) and what firms do in terms of CSR. We argue that this CSR decoupling is driven by the CEOs' cognitive biases. Specifically, we propose that overconfident CEOs increase CSR decoupling. Research findings/insights. We tested our arguments in a sample of S&P 500 firms for the period of 2006–2014. We find that CEO overconfidence is positively related to the decoupling between the optimistic tone of CSR reporting and the firm's actual corporate social performance. However, the board of directors mitigates the effect of CEO overconfidence on CSR decoupling when outside directors have CSR expertise and ownership incentives. Theoretical/academic implications. Previous studies have suggested that CSR decoupling is a function of opportunistic management that can be constrained by external monitoring. We examine CSR decoupling as a function of cognitive biases (such as overconfidence) that can be constrained by internal monitoring. Practitioner/policy implications. This study provides insights into the conditions when CSR information released by the firm is symbolic. Practitioners may prevent such symbolic CSR reporting by imposing effective oversight by the board of directors.

Only recently have enough women joined senior leadership positions in high tech firms for research on senior management gender diversity in high tech industries to be possible. We propose that senior management gender diversity fosters strategic change in high tech firms, especially under conditions where alliance formation intensity and top management team (TMT) educational background diversity are high, because the breadth of opportunity and knowledge associated with these conditions facilitates implementation of new ideas. Results show that both inter-organizational strategic alliance formation intensity and TMT educational background diversity positively moderate the relationship between senior management gender diversity and strategic change. We also find support for a moderated mediation model whereby a gender-diverse senior management positively impacts strategic change, which ultimately improves firm performance when the firm exhibits high alliance formation intensity and has a TMT that is diverse across educational background.

Setting up affiliated companies in tax havens is a legitimate, but ethically dubious, business practice. This study examines the conditions under which emerging business groups tend to use such a business practice. Business groups in emerging economies have been operating in weak institutional environments with substantial government intervention and ineffective market-supporting institutions. Having offshore companies in tax havens enables the groups to bypass some market transaction costs and institutional constraints, and it also provides them the opportunity to evade taxes and hide illegal conduct, such as bribery. Empirical evidence based on a sample of Taiwanese business groups showed that business groups with a higher level of prosocial orientation established fewer offshore companies in tax havens, as manifested by their commitment of resources to establishing nonprofit organizations. In contrast, groups that have higher levels of product and international diversification tend to use this ethically dubious business practice. However, highly internationalized groups are less likely to do so when they have committed substantial resources to prosocial activities.

The ongoing corporate governance transformation in Japan initiated by foreign institutional investors provides an interesting setting for studying how the stakeholder and the shareholder logics of corporate governance would affect the occurrence of corporate misconduct. In this study, we examine the effect of foreign ownership on the likelihood of corporate misconduct committed by managers based on a sample of 3,826 Japanese firms during the period of 2009-2013. Our results show that managerial ownership (under stakeholder logic) decreases whereas foreign ownership (under shareholder logic) increases the likelihood of misconduct. The adoption of stock options brings in strong shareholder logic and weakens the relationship between managerial ownership and misconduct.

What signals do firms in emerging economies send to stakeholders when they adopt corporate social responsibility (CSR) practices? We argue that in emerging economies, firms that adopt CSR practices positively signal investors that their firms have superior capabilities for filling institutional voids. From an institution-based view, we hypothesize that the institutional environment moderates the signaling effect of CSR on a firm's financial performance. Based on a sample of firms from ten Asian emerging economies, we find a positive relationship between CSR practices and financial performance. This positive relationship is stronger in the less developed capital market than in the more developed one. The financial benefits of CSR practices are also more salient in the low information diffusion market than in the high one. We emphasize that signaling theory and the institution-based view can jointly contribute to the CSR literature.

This study examines whether corporate social responsibility (CSR) reporting is influenced by the cognitive characteristics of the CEO. Grounded in the impression management literature, we propose that overconfident CEOs use a more positive tone in their CSR reporting because this reflects their perceived “above average” abilities to manage their firm’s CSR practices and performance. We also advance corporate governance research by showing that this positive relationship is more salient when CEOs are large shareholders because CEOs become more powerful and confident to impose their biased impressions on the firm. Finally, we show that the board of directors may mitigate overconfident CEOs’ usage of positive tone in CSR reporting when directors have more CSR experiences or have incentives to monitor CSR reporting. We find empirical support for our arguments in a sample of S&P 500 firms for the period 2006-2013.

Prior literature has provided evidence that corporate social responsibility (CSR) reporting is an outcome for firms to responds to external institutional demands in order to exchange resources from stakeholders. In this study, we further argue that CSR reporting reflects corporate strategies so that firms may diplomatically adjust the quality of the reporting in order to prevent critical information from hostile stakeholders such as competitors. We investigate our arguments based on a sample of 100 business groups in Taiwan during 2012-2013. We find that product diversification of a business group is positively related to its CSR reporting quality. But this positive relation is less salient for domestic marketed oriented business groups than those international oriented. Furthermore, the link between product scope and CSR reporting quality is prominent for business groups with a focus on developing country markets than for those with a focus on developed country markets. Our findings suggest that CSR reporting is an information strategy in an emerging economy beyond prevailing explanations drawn from institutional theory and stakeholder management.

Based on the resource-based view, we propose that external diversity practices such as supplier diversity may affect firm performance. We find that the relationship between supplier diversity and short-term performance (i.e. productivity) is moderated by context such that firms in declining industries experience positive productivity effects while firms in munificent industries witness negative effects. For longer-term profitability (i.e. Tobin's q), we do not find support for a positive relationship between supplier diversity and long-term performance. However, positive supplier diversity effects emerge in munificent environments. Overall, in support of the strategic human resource management approach, we conclude that the effect of external supplier diversity on firm performance is contingent upon environmental munificence, which documented the necessity to include supplier diversity as a relevant component of a comprehensive diversity and equality management system.

The challenges firms face increase with their product diversification levels because different product markets possess different sociopolitical issues. We argue that secondary stakeholders, as represented by various nonprofit or non-governmental organizations, serve as agents mitigating the external constraints embedded within sociopolitical environments. Firms should therefore maintain relationships with different secondary-stakeholder scopes commensurate with their product diversification levels in order to enhance financial performance. Analyzing a sample of U.S. Fortune 500 firms during the period from 1996 to 2003, we found that secondary stakeholders play a positive moderating role in the relationship between product diversification and financial performance. Furthermore, this moderating effect was stronger in the case of unrelated diversification than in related diversification.

The link between corporate philanthropy and firm value has been controversial. On one hand, corporate philanthropy is often criticized as an agency cost because it may serve narrow managerial self-interests. On the other hand, corporate philanthropy may enhance firm value because it improves the relationships between firms and their stakeholders. In this study, we argue that this controversy is contingent upon whether corporate governance mechanisms can stimulate the financial benefit of corporate philanthropy. Based on a sample of U.S. firms from 1996 to 2003, we find that CEO long-term pay positively moderates the relationship between corporate philanthropy and firm value while multiboard outside directors negatively moderate this relationship. Contrary to our expectations, we find that the relationship between corporate philanthropy and firm value enhances as CEO tenure increases. Our findings show that corporate governance plays an important moderating role in the relationship between corporate philanthropy and firm value.

“What determines the scope of the firm?” is one of the most fundamental questions in strategic management and international business. Yet no previous research has investigated the relationship between the scope of the firm and cross-listing—a firm listing its stock on overseas exchanges. We leverage the resource-based and institution-based views with a focus on cross-listed firms from emerging economies. We predict that cross-listing may result in a narrower product scope in the short run, a wider product scope in the long run, an expanded geographic scope overall, and a higher propensity to engage in mergers and acquisitions in the host country.

Based on the resource-based view, we propose that external diversity practices such as supplier diversity may affect firm performance. We find that the relationship between supplier diversity and short-term performance (i.e. productivity) is moderated by context such that firms in declining industries experience positive productivity effects while firms in munificent industries witness negative effects. For longer-term profitability (i.e. Tobin's q), we do not find support for a positive relationship between supplier diversity and long-term performance. However, positive supplier diversity effects emerge in munificent environments. Overall, in support of the strategic human resource management approach, we conclude that the effect of external supplier diversity on firm performance is contingent upon environmental munificence, which documented the necessity to include supplier diversity as a relevant component of a comprehensive diversity and equality management system.

Scholars who advocate resource-based logics typically argue that corporate philanthropy enhances firm value while scholars who subscribe to agency theory logics criticize philanthropy as agency cost that decreases firm value. In this study, we argue that this controversy is contingent upon whether corporate governance mechanisms can stimulate the strategic nature of corporate philanthropy. Based on a sample of U.S. firms during 1996-2003, we find that long-term pay positively moderates the relationship between corporate philanthropy and firm value while the ratio of busy directors in the boardroom negatively moderates this relationship. Contrary to agency theory predictions, we find that the relationship between philanthropy and firm value is positively moderated by CEO tenure. Implications for future corporate philanthropy research are discussed in the end.

Can internal corporate governance mechanisms (such as boards of directors) and external corporate governance mechanisms (such as institutional reform) promote risk-taking behavior in family firms? This paper argues that conflicts between majority and minority owners, known as principal–principal conflicts, and cronyism in the board of directors affect firm risk taking. Moreover, institutional corporate governance reform to appoint outside directors may not have an immediate effect on reducing these problems. Based on a sample of family firms in Taiwan, we find that outside directors reduce the negative relationship between family ownership/involvement and risk taking. However, when their influence is examined further, it is found that in those sample firms that went public after institutional reform, outside directors did not improve the relationship between family ownership/involvement and risk taking.

What determines corporate philanthropy? In this study, I combine two perspectives to examine the current phenomenon that firms sometimes reluctantly but somewhat voluntarily engage in philanthropy. On the one hand, network status creates social pressure that compels firms to engage in philanthropy. On the other hand, when firms perceive that their reputation may be sensitive to criticism by stakeholders, firms may proactively engage in philanthropy to create insurance-like protection to control financial fluctuation. Samples from software companies in the United States during 2000–2007 empirically support above theoretical argument.