Give, and it shall be given unto you? The effects of corporate philanthropy on reputation following natural disasters

Abstract

Conventional logic suggests that businesses should look inwards following natural disasters to ensure employee welfare, and minimise disruptions to operations. However, disasters afford the opportunity to administer corporate philanthropy to affected communities, providing a non- reciprocal gift of money or in-kind services. Philanthropic aid results in commercial benefits for firms, including strengthened financial performance, employee motivation, and reputation. While businesses are increasingly cognisant of their moral responsibilities, few studies examine consumer reactions to corporate philanthropy during a disaster. This research aims to address gaps in extant knowledge, examining the impact of non-reciprocal giving on consumer perceptions of corporate reputation. Further, it seeks to better understand the effect of consumer scepticism and ethnocentrism on evaluations of giving. Three studies were employed to satisfy the research objectives, utilising a between-subjects experimental design.

Study 1A manipulates types of corporate responses after the 2016 Kaikōura 7.8-magnitude earthquake (monetary, voluntary time, forgoing giving to recover internally), and measures consumer scepticism. The results demonstrate that monetary and employee time donations have an equivalent positive impact on perceptions of reputation. Forgoing philanthropy is viewed significantly worse, leading to negative evaluations of reputation. Low scepticism consumers assess reputation more positively than those suspicious of the corporate motives for giving. Focusing on employee voluntary time, Study 1B shows that philanthropy administered by companies suffering adverse impacts to operations garner more positive evaluations of reputation than uninterrupted organisations. Study 2 compares domestic (2016 Kaikōura earthquake) and overseas relief (2018 New Caledonia earthquake), measuring the impact of ethnocentrism on preferences for giving. Interestingly, there are no differences in evaluations between high and low ethnocentrism consumers in each geographic context.

The overall findings suggest that companies should look beyond their own interests following disasters, administering non-reciprocal giving to generate reputational benefits. Moreover, firms suffering direct adverse impacts are uniquely positioned to generate the strongest reputation gains from giving, fostering moral capital through selfless offerings. Although, sceptical consumer predispositions dilute such benefits, suggesting that businesses cannot simply rely on giving as a panacea to reputational concerns. A natural disaster context also suspends the influence of ethnocentrism on geographic preferences for philanthropy, meaning managers should assess the perceived needs of benefactors when determining where to give.