Cannot give you because of living on the top of a castle: CEOs, corporate philanthropy and firm age

Abstract

Purpose This study aims to investigate the role of firm age in the relationship between CEO characteristics (measured by founder status and civic engagement) and the level of corporate philanthropy which is one of the important components of corporate social responsibility (CSR) practices (Carroll, 1991). Design/methodology/approach Drawing from upper echelons theory, this study argues that firm age functions as a barrier that limits the relationship between CEO characteristics and the level of corporate philanthropy. Moderated regression analysis (MRA) was used to analyze data from 146 publicly traded US firms between 2010 and 2017. Findings This study verified that there is a significantly positive relationship between CEO civic engagement and the level of corporate philanthropy although the relationship between CEO founder status and the level of corporate philanthropy was not found to be significant. Specifically, the relationship between CEO characteristics and the level of corporate philanthropy was weaker as firms get older. Overall, the results indicate that the organizational inertia of older firms can restrict the effect of CEO characteristics on corporate philanthropy. Research limitations/implications This study provides new insight into the underlying mechanisms between CEOs and firm age. This study also suggests that CEOs interpret corporate philanthropy as an important part of their civic engagement which broadly supports business legitimacy for their firm. Practical implications This study provides lessons for executive selection and succession decisions toward CSR strategies. Specifically, this study provides a practical foundation of how executives’ civic engagement can be related to corporate philanthropy as an important dimension of CSR practices. Furthermore, this study suggests that shareholders pay more attention to the ultimate decision-maker, the CEO, in an organization as his or her background characteristics can reflect a firm’s social responsibility initiatives, including corporate philanthropy. Originality/value This study contributes to on-going scholarly work in the field of strategic leadership and corporate philanthropy literature. In addition, this study provides empirical evidence to the nature of scholarly conversations regarding the role of firm age in shaping the relationship between CEO characteristics and corporate philanthropy.