“Good Deeds Done in Silence: Legitimacy Management, Stakeholder Conflict, and Quiet Giving by Chinese Firms” by Professor Heli Wang
Management and Strategy Seminar
Professor Heli Wang
Professor of Strategic Management
Lee Kong Chian School of Business
Singapore Management University
Corporate philanthropy generally has a positive effect on firm image and reputation. Building on and extending the stakeholder-management and legitimacy literature, we argue that concerns about stakeholder backlash may cause firms to keep quiet about their philanthropic acts. In particular, we argue that negative reactions to a firm’s philanthropy are likely attributable to primary stakeholders that feel the firm is not meeting their legitimate claims. Conversely, community stakeholders are likely to have positive perceptions of philanthropy that helps mitigate their existing concerns. Using data from listed Chinese firms, we show that firms are more likely to give quietly when they underpay employees and investors. On the other hand, firms that mistreat community stakeholders are less likely to keep quiet about their donations.