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Retail Philanthropy: Firm Size, Industry, and Business Cycle

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Abstract

This article investigates the effects of firm size, profitability, industry affiliation, and the business cycle on retailer philanthropy. The importance of industry and firm effects on giving was analyzed with regression models using industry-fixed effects as well as firm strategy variables. The analysis included instrumental variables methodology to account for simultaneity in the charitable giving–profits relationship. Data were gathered from the IRS Corporate Statistics of Income Sourcebook, data that provide firm size class measures covering the entire firm size distribution ranging from small retailers up to large multi-national retail firms. Retailer philanthropy was measured as the ratio of charitable contributions to total receipts. Important findings include a cubic relationship between retailer philanthropy and firm size; industry effects stronger than those observed for retail profit; and the absence of business cycle effects. The empirical research relating retail charitable giving to firm attributes including firm size and advertising, industry and business cycle factors are unique in the business ethics literature. Prior studies regarding the importance of industry on charitable giving utilized data across broad sectors of the economy. Firms from different sectors could be expected to differ in philanthropic approach due to differences in public contact as well as differences in public relations exposure. The strong industry effects reported for this sample of exclusively retail firms, with similar public contact, provide strong evidence for the importance of industry in determining firms’ charitable strategies.

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Notes

  1. We also estimated models employing total charitable contributions and charitable contributions relative to business receipts as the dependent variable. The essential findings of a plus, minus, plus sign pattern for the linear, squared and cubed terms in the cubic model as well as strong industry effects were confirmed for both of these alternate specifications. The evidence provided by these additional models suggests that our results are robust to variations in the specification of the dependent variable.

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Authors and Affiliations

  1. Economics Department, University of North Carolina at Charlotte, Charlotte, NC, 28223, USA

    Louis H. Amato

  2. Marketing Department, University of North Carolina at Charlotte, Charlotte, NC, 28223, USA

    Christie H. Amato

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  1. Louis H. Amato
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  2. Christie H. Amato
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Correspondence to Christie H. Amato.

Appendices

Appendix A

See Table 3.

Table 3 Retail industries included in the sample
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Appendix B

See Table 4.

Table 4 Firm size classes (thousands of dollars)
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Amato, L.H., Amato, C.H. Retail Philanthropy: Firm Size, Industry, and Business Cycle. J Bus Ethics 107, 435–448 (2012). https://doi.org/10.1007/s10551-011-1048-x

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