Curvilinear effects of corporate philanthropy on stakeholders and financial performance

PurposeThe purpose of this study is to analyze the nonlinear effects of corporate philanthropy on the responses of both internal and external stakeholders as well as its impact on corporate financial performance.Design/methodology/approachBased on the stakeholder theory, the authors developed a conceptual model to examine the nonlinear effects of corporate philanthropy on company performance. For the empirical analysis, data from 397 company-years was analyzed using a using a Heckman two-stage model. The robustness of the findings was also confirmed through panel regression analysis.FindingsThe study revealed a linear relationship between corporate reputation and corporate philanthropy, whereas job satisfaction exhibited a nonlinear relationship with corporate philanthropy.Originality/valueThis research bridges the gap in extant literature by scrutinizing the nonlinear associations between corporate philanthropy and financial performance. Additionally, it addresses an emerging scholarly demand to uncover the "dark side" of corporate philanthropy through an investigation into its adverse impacts on employee satisfaction. Moreover, the study augments existing understandings of stakeholder theory and corporate philanthropy, positing that the influence of corporate philanthropy, as conceptualized through stakeholder theory, hinges on perceived fairness in multilateral relationships.