The Impact of Corporate Philanthropy on Reputation for Corporate Social Performance

Abstract

This study seeks to examine the mechanisms by which a corporation’s use of philanthropy affects its reputation for corporate social performance (CSP), which the authors conceive of as consisting of two dimensions: CSP awareness and CSP perception. Using signal detection theory (SDT), the authors model signal amplitude (the amount contributed), dispersion (number of areas supported), and consistency (presence of a corporate foundation) on CSP awareness and perception. Overall, this study finds that characteristics of firms’ portfolio of philanthropic activities are a greater predictor of CSP awareness than of CSP perception. Awareness increases with signal amplitude, dispersion, and consistency. CSP perception is driven by awareness and corporate reputation. The authors’ contention that corporate philanthropy is a complex variable is upheld, as we find that CSP signal characteristics influence CSP awareness and perception independently and asymmetrically. The authors conclude by proposing avenues for future research.

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Article
The Impact of Corporate
Philanthropy on
Reputation for Corporate
Social Performance
Naomi A. Gardberg1, Stelios C. Zyglidopoulos2,
Pavlos C. Symeou3, and Donald H. Schepers1
Abstract
This study seeks to examine the mechanisms by which a corporation’s
use of philanthropy affects its reputation for corporate social performance
(CSP), which the authors conceive of as consisting of two dimensions: CSP
awareness and CSP perception. Using signal detection theory (SDT), the
authors model signal amplitude (the amount contributed), dispersion (number
of areas supported), and consistency (presence of a corporate foundation) on
CSP awareness and perception. Overall, this study finds that characteristics
of firms’ portfolio of philanthropic activities are a greater predictor of CSP
awareness than of CSP perception. Awareness increases with signal amplitude,
dispersion, and consistency. CSP perception is driven by awareness and
corporate reputation. The authors’ contention that corporate philanthropy
is a complex variable is upheld, as we find that CSP signal characteristics
influence CSP awareness and perception independently and asymmetrically.
The authors conclude by proposing avenues for future research.
Keywords
corporate philanthropy, corporate reputation, corporate social performance,
signal detection theory
1City University of New York, New York City, USA
2University of Glasgow, Scotland
3Cyprus University of Technology, Limassol, Cyprus
Corresponding Author:
Naomi A. Gardberg, Zicklin School of Business, Baruch College, City University of New York,
One Bernard Baruch Way, Box B9-240, New York, NY 10010, USA.
Email: naomi.gardberg@baruch.cuny.edu
694856BASXXX10.1177/0007650317694856Business & SocietyGardberg et al.
research-article2017

2 Business & Society
Corporate giving is becoming big business and a major strategic issue for
firms as they increasingly position themselves as socially responsible organi-
zations. In 2014, Walmart and its foundation distributed over US$1.4 billion
in in-kind donations and grants around the world. Whether corporations can
benefit from philanthropic activities has consequently received increasing
attention from managers and researchers (Saiia, Carroll, & Buchholtz, 2003).
A 2008 Conference Board survey found that the principal management issue
for most respondents was measurement of the outcomes of their firm’s phil-
anthropic activities (Cavicchio & Torok, 2008). The sensitivity to corporate
giving’s outcomes is also reported in Maas and Liket (2011) who found that
between 62% and 76% of firms listed in the Dow Jones Sustainability Index
(DJSI) measured the effectiveness of their philanthropic activities. To aid
both firm managers and scholars in their quest to identify how corporations
can benefit from philanthropic activities, we propose that it is essential to
understand corporate philanthropy’s influence on the firm’s reputation for
social performance.
Understanding corporate philanthropy’s effect on the firm’s reputation for
corporate social performance (CSP) is important for many reasons. Studies
have long contended that a reputation for CSP is a significant determinant of
many positive organizational outcomes, such as overall reputation (Brammer
& Millington, 2005; Fombrun & Shanley, 1990), organizational attractive-
ness to potential employees (Greening & Turban, 2000; Lin, Tsai, Joe, &
Chiu, 2012; Turban & Greening, 1997), favorable corporate evaluations and
product impressions from consumers (Brown & Dacin, 1997; Lii & Lee,
2012), and partial buffering from scandal revelations (Janney & Gove, 2011).
Moreover, in the extensive literature investigating the effect of CSP on finan-
cial performance (Griffin & Mahon, 1997; Margolis & Walsh, 2003; Orlitzky,
Schmidt, & Rynes, 2003; Roman, Hayibor, & Agle, 1999), a firm’s reputation
for CSP is often seen as a mediating variable between CSP and financial per-
formance.1 Of course philanthropy is one of many aspects of CSP (Waddock
& Graves, 1997), but philanthropy is particularly important as it is character-
ized by a great degree of discretion (Hadani & Coombes, 2015). Understanding
the effect of corporate philanthropy, which can be seen as a voluntary, non-
obligatory, and nonreciprocal transfer of wealth from the corporation to its
external stakeholders (Godfrey, 2005; Hadani & Coombes, 2015; Seifert,
Morris, & Bartkus, 2004), on the firm’s reputation for CSP is also critical as
increasing resource scarcity is making firms increasingly strategic in their
philanthropic donations (Liket & Maas, 2016; Saiia et al., 2003).
In this study, we use signal detection theory (SDT; Green & Swets, 1966;
Peterson, Birdsall, & Fox, 1954) to examine the relationship between corpo-
rate philanthropic contributions and the firm’s reputation for CSP. Drawing

Gardberg et al. 3
on prior literature (Gardberg & Schepers, 2008; Rindova, Williamson,
Petkova, & Sever, 2005), we conceive reputation for CSP as consisting of
two dimensions: CSP awareness and CSP perception. CSP awareness refers
to the “collective awareness and recognition” (Rindova et al., 2005) of stake-
holders regarding the firm’s CSP, whereas CSP perception refers to the stake-
holder evaluations of the firm’s CSP, their positive or negative evaluation of
the firm’s CSP. According to SDT theory, firms send various signals about
themselves via their corporate philanthropy. Firms’ stakeholders, who receive
these signals under uncertain conditions, are not always able to discriminate
the signal from the noise, and thus cannot decide whether the corporation is
socially responsible or not. It is therefore important to distinguish between
stakeholder recognition of the firm’s CSP (CSP awareness) and stakeholders’
appraisal of the firm’s CSP (CSP perception), because they reflect two dis-
tinct but still interconnected signaling processes: signal receipt and evalua-
tion. We expect that firms influence stakeholders’ CSP awareness and
perception via signals constructed by corporate philanthropy. Moreover,
higher CSP awareness is expected to affect CSP perception. In this way, CSP
awareness will partially mediate the relationship between corporate philan-
thropy and CSP perception.
Drawing on multiple data sources, including a database of 33,562 individual
evaluations of 60 companies collected by the Reputation Institute (RI) and
Harris Interactive (HI) as part of their Reputation Quotient (RQ) Annual 2001
study, we analyze the effect that different aspects of corporate philanthropy
have on the firm’s reputation for CSP. Overall, we find that characteristics of
firms’ portfolio of philanthropic activities are important predictors of CSP
awareness but not CSP perception. CSP awareness increases with signal ampli-
tude (dollars contributed), signal dispersion (number of areas supported), and
signal consistency (presence of a corporate foundation). CSP awareness medi-
ates the relationship of the signal characteristics with CSP perception. In addi-
tion, respondents used corporate reputation as a substitute for CSP characteristics
when awareness was low. Foreign firms suffer from lower awareness and lower
perception of their activities even after controlling for age in the United States,
size, and profitability. In addition, our control variables demonstrate that both
CSP awareness and CSP perception vary across sex, race, and age.
We organize the rest of this article as follows. We briefly discuss our under-
standing of the reputation for CSP and identify its two constituent dimensions:
awareness and perception. We then introduce SDT as a platform to link corpo-
rate philanthropy with reputation for CSP. Following that introduction of SDT,
we describe our data and methodology, and provide the results of our analysis.
We discuss our findings and conclude with implications for academics and
managers as well as recommendations for further research.

4 Business & Society
Reputation for CSP
Following extensive work in the reputation literature (Fombrun, Gardberg, &
Barnett, 2000; Fombrun & Riel, 1997; Gardberg & Fombrun, 2002; Rindova
et al., 2005), we conceive a firm’s reputation for CSP as the estimation in
which the firm’s various stakeholders hold its CSP. A firm’s reputation for
CSP results from the accumulation of various positive and negative CSP sig-
nals, which enhance and diminish reputation, respectively (Cornelissen,
Haslam, & Balmer, 2007; Janney & Gove, 2011; Rao, 1994). It can shape
overall corporate reputation, as stakeholders use the firm’s CSP activities as
signals that allow them to evaluate the firm and its activities under conditions
of incomplete information (Fombrun & Shanley, 1990). Moreover, reputation
for CSP has been found to enhance several positive organizational outcomes
such as attractiveness to labor markets and favorable product impressions by
consumers, inter alia (Brammer & Millington, 2005; Brown & Dacin, 1997;
Greening & Turban, 2000; Janney & Gove, 2011; Lii & Lee, 2012; Lin et al.,
2012; Turban & Greening, 1997).
Overall, corporate reputation has been mainly viewed from an economics
and an institutional perspective. These perspectives jointly propose that repu-
tation is a bidimensional concept consisting of stakeholders’ awareness and
perception. For our purposes, we draw on prior literature on CSP reputation
(Gardberg & Schepers, 2008; Rindova et al., 2005) to propose that reputation
for CSP consists of two dimensions: CSP awareness and CSP perception. As
per the study of reputation from an institutional perspective (Rindova et al.,
2005), CSP awareness refers to stakeholders’ “collective awareness and rec-
ognition” regarding the firm’s CSP. CSP perception refers to the stakeholder
evaluations of the firm’s CSP as good or bad. As per the study of firm reputa-
tion from an economics perspective (Rindova et al., 2005), CSP perception
can be seen as reducing the uncertainty caused by information asymmetries
that stakeholders face in dealing with firms (Fombrun & Shanley, 1990;
Lopatta, Buchholz, & Kaspereit, 2016). For example, Siegel and Vitaliano
(2007) found that firms which sell credence or experience goods whose qual-
ity cannot be verified prepurchase, use their CSP to signal that they are reli-
able with trustworthy products.
Conceiving reputation for CSP as a bidimensional concept allows us to
refine the understanding of signaling processes occurring at different levels.
For example, stakeholders might be very aware of a firm’s CSP but perceive
that the firm is performing very poorly. This combination is quite a common
phenomenon when a firm becomes instantly known due to its involvement in
a crisis, but is also blamed for it due to its CSP lapses. The BP Gulf of Mexico
explosion is a good example.

Gardberg et al. 5
This approach complements prior research by adding a multilevel process.
In building our theory, we use awareness as the level of specific knowledge
of a firm’s philanthropic activities, and evaluation to indicate the degree to
which perception of a firm is positive or negative. In this approach, we draw
on signaling theory that enables us to identify corporate philanthropy’s under-
lying attributes that hold signaling capacity to affect firms’ CSP awareness
and perception. The next section offers pairs of hypotheses.
SDT and Corporate Philanthropy
SDT (Connelly, Certo, Ireland, & Reutzel, 2011; Green & Swets, 1966;
Peterson et al., 1954; Swets, Tanner, & Birdsall, 1961; Weigelt & Camerer,
1988) is an information economics theory that discusses the process by which
corporations and other parties try to relay positive information about them-
selves under conditions of information asymmetry and uncertainty. According
to these theories, corporate behaviors, such as philanthropy in our research
setting, signal information about a company’s products, current CSP and
policies as well as future intent to various current and potential stakeholders.
Due to uncertainty, the perceiver (in our case, the relevant stakeholder) is
attempting to discriminate signal from noise, and determine when the signal
is present and credible: in this case, to determine whether the corporation is a
socially responsible corporation or not. This approach implies that the more
pronounced the signal is, the greater the difference between the mean value
of the signal and the mean value of the noise; the greater its breadth, its
spread over different activities; and the greater the signal’s clarity, its consis-
tency over time, the greater the likelihood that a signal receiver (stakeholder)
will interpret it correctly (Swets, 1961; Weigelt & Camerer, 1988). A stake-
holder will correctly perceive a firm to be socially responsible when it actu-
ally is, or will correctly perceive a firm not to be socially responsible when it
is indeed not responsible. In other words, the stakeholder will avoid both
kinds of errors: perceiving the firm to be what it is not or perceiving it not to
be what it is.
Though initially focused on the perception of sensory data, SDT applica-
tions have broadened to include other forms of perceptual data (Martin,
1975). Ye and Van Raaij (2004) examined the construction of brand equity in
the mind of consumers using SDT. Robertson, Eliashberg, and Rymon (1995)
investigated firm interactions with respect to new product signals, looking at
hostility and signal credibility of the sending firm, and also the receiver char-
acteristics of the competitor firms. It has been widely used in management,
marketing, and finance contexts, including research studies on CSP (Lin
et al., 2012; Riordan, Gatewood, & Bill, 1997; Robinson, Kleffner, & Bertels,

6 Business & Society
2011; Turban & Greening, 1997), labor markets (Spence, 1973), organiza-
tional reputation (Behrend, Baker, & Thompson, 2009), new product intro-
duction (Akerlof, 1970), and price (Milgrom & Roberts, 1986). Basdeo,
Smith, Grimm, Rindova, and Derfus (2006) used SDT to investigate the rela-
tionship between market actions and the construction of firm reputation. Heil
and Robertson (1991) used SDT to examine competitive market actions
between firms. Germane to this research, they modeled corporate philan-
thropy as one mechanism to assert competitive advantage. Prabhu and
Stewart (2001) explored how managers interpret competitors’ signals over
time and across market contexts. They found that the focus and strength of
the incumbent’s signals influenced entrants’ perception of aggressiveness.
They also explored the efficacy of bluffs. Cohen and Dean (2005) explored
how top management team composition and legitimacy signals information
during an initial public offering. Zhang and Wiersema (2009) examined how
CEO background signaled credibility during CEOs’ certification of corporate
financial statements. Lin et al. (2012) found that firms’ corporate citizenship
attracted job seekers. In summary, SDT explains how organizations and
stakeholders manage the asymmetric information and the uncertainty that
underlies much of strategic decision making.
We propose that SDT provides a strong theoretical background for under-
standing corporate philanthropy, offering insights into firm-consumer signaling
and interfirm (or competitive) signaling. Corporate philanthropy, which Carroll
(2004) places at the top of his corporate social responsibility (CSR) pyramid to
illustrate its discretionary nature, is one means by which firms stake out com-
petitive advantage over other firms (Basdeo et al., 2006; Heil & Robertson,
1991; Weigelt & Camerer, 1988), signal that the firm stands out from its com-
petition (Werner, 2011), and influence the institutional impression of the firm
(Godfrey, 2005). In particular, SDT enables us to gauge the signaling power of
corporate philanthropy and its likely impact on firms’ reputation for CSP.
We distinguish three signal elements that allow a firm to better position
itself among its stakeholders, via its philanthropy. One element is the ampli-
tude of the signal, for example, the amount of money given by the firm to
charity. Signal amplitude is analogous to the volume of a sound; a stronger
amplitude signal is more likely to be distinguished from the background
noise. The second element is signal dispersion. Signal dispersion’s effect var-
ies in the same way as a floodlight sheds light over a large area but with low
intensity per area, versus the dispersion effects of a spotlight or the focused
beam of a laser. The greater the dispersion of the signal, in this case the
spread of the firm’s philanthropic activities in many areas, the greater the
chance that a cause dear to a particular stakeholder will be included; but for a
given level of donations this spread also means that the less noticeable will be

Gardberg et al. 7
the effect to a particular cause. The third signal element is signal consistency.
Consistency in this particular case means that the signal is consistent and
unambiguous about what it means in spite of the background noise around it.
In our particular case, we take the presence of a corporate foundation as an
indicator that the firm intends to consistently contribute to its philanthropic
causes. We assert that each of these three signal elements plays an important
role in how stakeholders understand what a firm signals through its philan-
thropy and therefore all three should impact the firm’s reputation for CSP.
As noted earlier, SDT is grounded on the premise that signals direct the
attention of firm stakeholders under information asymmetry and uncertainty
conditions. However, in order for a signal to relieve uncertainty, it needs to be
not only strong (amplitude) but also clear and unambiguous. While a firm’s
overall size of donations, or the signal amplitude, may indicate commitment
to CSP, stakeholders may interpret the signal inaccurately for several reasons,
including transmission noise or appropriateness (Gardberg & Fombrun,
2006). In terms of individual awareness, corporations that send volatile sig-
nals (of varying frequency and/or amplitude) will have a greater chance to be
discounted or disregarded by individuals, as the signal is likely to be inter-
preted as noise. However, corporations that send consistent signals will have
a clearer signal, and individuals will have a greater likelihood of attentive-
ness to such signals.
We develop our theory first by considering an example of effective corpo-
rate philanthropy. One of the most ubiquitous charities from one of the most
ubiquitous firms, McDonald’s Ronald McDonald House, is a charity serving
families whose children are hospitalized with cancer (narrow signal disper-
sion). McDonald’s targets the family market with its “Happy Meals” and
playgrounds at many of its restaurants, serving at lower prices relative to
competitors. In this case, price does not necessarily convey high quality
(Milgrom & Roberts, 1986). Yet, McDonald’s has established a niche philan-
thropy, which strongly identifies it with its target market. And by establishing
a philanthropic market leader position, McDonald’s has effectively warded
off all challenges to this space.2
Whereas consumers might see this philanthropy as a friendly gesture, the
philanthropy is very potent in terms of its competitors. McDonald’s has pro-
actively established its footprint via dominant levels of contribution and mar-
keting in this space (signal amplitude), and no new entrants are able to gain
footing. Though such signaling does not threaten the immediate future of
other competitors in terms of their overall product (Heil & Robertson, 1991),
it does serve as a barrier to entry for them to move into this philanthropic
branding space. Further, McDonald’s has been very consistent in branding
this presence, and has contributed successively over the years to continue its

8 Business & Society
presence (signal consistency). Such consistency renders the signal
McDonald’s sends to customers and competitors as highly credible. Robertson
et al. (1995) identified these two signal characteristics (hostility and credibil-
ity) as important in new product announcements, and we consider them
equally important here in terms of defending the philanthropic space. Had
McDonald’s not been assertive or consistent in terms of establishing its phil-
anthropic space, others might have considered entering this market. As it is,
no challenges have been made due to these attributes, and McDonald’s has a
very strong branding presence with its charity.
The cosmetics industry and its cause-related marketing efforts with breast
cancer philanthropies are analogous, though more than one cosmetics firm
has used such cause-related marketing efforts. In these instances, no single
firm has adopted an overly aggressive stance that would preclude others from
entering the marketing space, in an instance of what Nalebuff and
Brandenburger (1997) might consider as co-opetition. In this case, all firms
are made better off by no single firm claiming the space as its own, though
this type of behavior does also open the door to industry free riders.
Signal Amplitude
Signal amplitude refers to the magnitude or strength of a signal, which is
analogous to the volume of a sound. With stronger amplitude, a signal is more
likely to be distinguished from the background noise. By extension, the
greater a firm’s philanthropic contribution, the greater its influence on the
firm’s reputation for CSP.
Greater philanthropic contributions increase the signal strength to receiv-
ers and thereby increase CSP awareness. Philanthropic signals can only be
effective if the public receives and is aware of them. A primary tenet of the
attention literature is that actions of organizational stakeholders depend on
their attention focus (Ocasio, 1997). The concept of relative attention con-
tends that there is competition for attention (Bouquet & Birkinshaw, 2008),
in our case, between firms. Accordingly, firms whose message is stronger are
more likely to receive attention. Following this logic, we propose that the
amount of company philanthropic donations will increase what individuals
know about a firm’s activities. Thus, we propose,
Hypothesis 1 (H1): Signal amplitude will be positively associated with a
firm’s CSP awareness.
As we note earlier, the majority of scholars have proposed a positive rela-
tionship between the amount of philanthropic contributions and corporate

Gardberg et al. 9
financial performance or other positive stakeholder outcomes. For example,
Lev, Petrovits, and Radhakrishnan (2010, p. 182) found that “charitable con-
tributions are significantly associated with future revenue, whereas the asso-
ciation between revenue and future contributions is marginally significant.”
Based on their findings, they argue that consumer perception plays an impor-
tant role in charitable contributions’ influence on future sales. These findings
contribute to the extant literature, which has identified firm’s reputation for
CSP as a mediating variable between its various forms of CSP and financial
performance (Griffin & Mahon, 1997; Margolis & Walsh, 2003; Orlitzky
et al., 2003; Roman et al., 1999; Ullmann, 1985). Therefore, it is reasonable to
expect that signal amplitude will enhance CSP perception. Thus, we propose,
Hypothesis 2 (H2): Signal amplitude will be positively associated with a
firm’s CSP perception.
Signal Dispersion
A firm’s dispersion, or breadth, of philanthropic activity is our second attri-
bute of interest. Firms can manipulate dispersion by varying the number of
causes to which they contribute. In other words, the content breadth of a
firm’s philanthropic behavior, signal dispersion, can be defined as number of
charitable arenas to which the firm contributes, such as education, medical,
or housing. The [Taft] Directory of Corporate Giving separates causes into 10
categories. A firm could choose to focus its contributions on a single category
such as education, or use a multitargeted approach to address the needs of a
more diverse group of stakeholders. As firms rarely contribute to a single
cause, most have a portfolio of citizenship or philanthropic activities
(Gardberg & Fombrun, 2006). Thus, the content of this portfolio, rather than
or in addition to the amount contributed, may shape awareness and percep-
tion by altering signal detection. Our premise is that, for any given year, firms
or their foundations have a fixed amount of monies to distribute. Firms that
opt for the multitargeted approach may vary both the number of charitable
categories and the number of grants, giving more dollars to fewer categories
or charities, or fewer dollars to more categories or charities. In other words,
given fixed amounts of monies, firms face a trade-off between their signal
amplitude per category and their signal dispersion.
Yet, some firms’ philanthropy budget may not be a fixed amount of money.
These firms would have the opportunity to select categories, and then allo-
cate budgets accordingly. In this instance, the firms avoid a trade-off and the
relationship between signal amplitude and signal dispersion would be
positive.

10 Business & Society
Firms using the multitargeted approach will be concerned with affecting an
optimal number of relevant stakeholder groups. Firms may even be more stra-
tegic. For example, both Boeing and Intel give to science education specifi-
cally. The number of causes to which a firm donates will influence awareness
of firm CSP through the diversity of stakeholder groups affected. Different
stakeholders will not be aware of or pay attention to all the philanthropic activ-
ities of the firm. Stakeholders will tend to pay more attention to categories that
are important/closer to them and less attention to categories that are less
important/further away from them. A firm that donates only to education, for
example, will primarily affect and be recognized by families with children,
whereas another firm that donates to both education and hospitals would be
recognized by families with children and also families with members needing
hospitalization, such as elderly relatives. Hence, the second firm would poten-
tially create a greater awareness of its CSP in the community than the first.
Basdeo et al. (2006) found that the greater the number of corporate strategic
actions, the more effective the signaling. Thus we propose,
Hypothesis 3 (H3): Signal dispersion will be positively associated with a
firm’s CSP awareness, ceteris paribus.
On the other hand, given that firms have a fixed amount of monies from
which they make their donations, increasing the number of categories (signal
dispersion) of donations will reduce the amount of contributions for a given
charitable category. Therefore, we expect that the greater the dispersion of a
firm’s charitable donations, the less the signal amplitude per category that a
firm will be transmitting. Further, we expect that the relationship between
signal dispersion on CSP perception will be positive but decreasing, for the
following reasons. As we mentioned earlier, given that firms face a trade-off
between their signal amplitude per philanthropic category and their signal
dispersion, we expect that the more stakeholders a firm reaches, the less
impact it will have on them. Recall that stakeholders will most likely not be
aware of the overall CSP of the firm, but only the CSP activities of the phil-
anthropic categories that matter for them the most. Thus we propose,
Hypothesis 4 (H4): Signal dispersion will have a positive and decreasing
relationship with a firm’s CSP perception, ceteris paribus.
Signal Consistency
The third consideration is signal consistency. In order for a signal to relieve
uncertainty, it must be consistent and unambiguous. While a firm’s overall

Gardberg et al. 11
size of donations, or the signal amplitude, may indicate commitment to CSP,
the firm’s stakeholders may interpret a signal inaccurately for several reasons
including transmission noise or appropriateness (Gardberg & Fombrun, 2006).
In terms of individual awareness, corporations that send volatile signals (such
as inconsistent signals) have a greater chance to be discounted or disregarded
by individuals, as the signal may likely be interpreted as noise. However, cor-
porations that send consistent signals will have a clearer signal, and individu-
als will have a greater likelihood of attentiveness to such signals.
For society to be aware of a firm as a socially responsible corporation, the
firm must consider strategic reputation building. Signal perception is hin-
dered when the signal varies over time, making it difficult for receivers to
discriminate between signal and noise. In the case of philanthropy, a game-
theoretic approach to such reputation building indicates that the firm would
need to establish a reputation as a “giving” firm by signaling the willingness
to give (Weigelt & Camerer, 1988). A firm that gives a great deal one year
and, ceteris paribus, gives little or nothing the next, will not establish reputa-
tional consistency. Consistent contributions provide clarity and enhance
readability by reducing transmission noise. Thus, one motive for corpora-
tions to create foundations is to buffer social performance initiatives from
annual financial performance and to provide consistent funding for their phil-
anthropic initiatives.
Firms also vary in their commitment to corporate philanthropy. Companies
establish and endow charitable foundations to buffer contributions from annual
financial performance, to allow autonomy to pursue activities that may not cor-
respond with those of the firm and/or to shelter the firm itself from business
cycle fluctuations (Brown, Helland, & Smith, 2006; Petrovits, 2006). For
instance, some firms, such as American Airlines, funnel contributions through
their corporate foundations. Others, such as Home Depot, prefer to make direct
contributions. A third group performs both. Brown et al. (2006) found no dif-
ference between firms with foundations and those without in terms of total
giving, giving per employee, giving per dollar assets, or giving per dollar sales.
However, those with foundations have larger boards, lower debt ratios, lower
institutional holdings, and lower block holdings than those without.
In summary, the function of the signal in SDT is to reduce uncertainty on
the part of the receiver (Swets et al., 1961; Weigelt & Camerer, 1988). For
those who are attentive to corporate philanthropic endeavors, we theorize that
uncertainty would be heightened to the extent that corporations are volatile in
their contributions. Such volatility could be noted through donation intermit-
tence or amount of corporate contribution. On the other hand, corporations
that are consistent in their contribution level over time will send clear signals
to their constituents regarding their philanthropic position. Thus, we propose,

12 Business & Society
Hypothesis 5 (H5): Signal consistency will be positively associated with
a firm’s CSP awareness.
Hypothesis 6 (H6): Signal consistency will be positively associated with
a firm’s CSP perception.
Partial Mediation
Finally, we hypothesize that CSP awareness of social performance will
directly affect CSP perception, thereby partially mediating the relationship
between the signal amplitude, dispersion, and consistency of company phil-
anthropic donations and CSP perception. In order for stakeholders to evaluate
social responsibility signals, they must detect these signals. Moreover, as
Janney and Gove (2011) argue, unknown firms, which have not emitted suf-
ficient signals for stakeholders to observe and therefore evaluate them, are
assumed to be of low quality. However, the relationship between CSP aware-
ness and CSP perception may not be perfectly correlated because awareness
of social responsibility can lead to both positive and negative CSP percep-
tion, depending on the appropriateness of the activities. Greater awareness of
inappropriate activities will hurt perception. Specifically,
Hypothesis 7 (H7): CSP awareness will be positively associated with
CSP perception.
Hypothesis 8 (H8): CSP awareness will partially mediate the effects of
signal amplitude, dispersion, and consistency on CSP perception.
Methodology and Data
We used a database of 33,562 individual evaluations of 60 firms collected by
the RI and HI as part of their RQ Annual 2001 study. Prior scholars have used
the publicly available RQ scores for corporate reputation (Kiousis, Popescu,
& Mitrook, 2007). Although the U.S. online population is approaching parity
with the general population, some groups are underrepresented online (such
as people above the age of 65). Thus, the data were propensity weighted to be
representative of the U.S. adult population. The Wall Street Journal reported
additional results on January 16, 2002 (Alsop, 2002). Individual-level data,
such as CSP awareness and CSP perception as well as self-reported demo-
graphic data, were drawn from this database.
We collected firm-level variables from various secondary sources such as
the (formerly Taft) Directory of Corporate Giving (Fombrun & Shanley,
1990; Hadani & Coombes, 2015; Lev et al., 2010; Saiia et al., 2003; Seifert
et al., 2004), Internal Revenue Service (IRS) Form 990s for foundation tax

Gardberg et al. 13
filings (Hadani & Coombes, 2015), the Foundation Directory, and Compustat.
We collected secondary data for 2000, the year prior to the RQ study, to better
ascertain causality.
Measures
Dependent variables: CSP awareness and CSP perception. For CSP perception,
we used the Social Responsibility dimension of the RQ as our dependent vari-
able (Fombrun, Gardberg, & Sever, 2000). The three items were as follows:
This company supports good causes; this company is an environmentally
friendly company; and this company behaves responsibly toward the people
in the communities in which operates. Each item is rated with a 7-point Lik-
ert-scale. The three items loaded on one factor with a Cronbach’s alpha of .91
and factor loadings of 0.90, 0.93, and 0.93, respectively, explaining 84% of
variance.3 We calculated the latent variable CSP perception by weighting the
three variables by their respective factor loadings.
CSP awareness (H7) was operationalized as the response to the following
item: “How much do you feel you know about [firm name] when it comes to
its . . . Social Responsibility?” using a 3-point scale, with 1 = a lot, 2 = some,
and 3 = little/nothing. We reverse coded the responses to facilitate
interpretation.
Independent variables. Signal amplitude (H1/H2) was operationalized as the
log of the total amount of money a firm donated to philanthropic activities
(Brammer & Millington, 2005; Waddock & Graves, 1997). If information
was missing from the Directory of Corporate Giving, we searched for corpo-
rate foundation 990 tax forms. If information was missing from these sources,
we treated the amount as $0, to be consistent with SDT.
Signal dispersion (H3/H4) was operationalized as the number of causes a
firm supported based on the number of categories from the Directory of
Corporate Giving to which a firm donated. This directory lists 10 categories:
Arts and Humanities, Civic and Public Affairs, Education, Environment,
Health, International, Religion, Science, Social Services, and Other. We used
only eight of the categories because the coding of International and Other
appeared to be inconsistent. We took the square of signal dispersion to test H4.
Signal Consistency (H5/H6) was operationalized as a dichotomous vari-
able, 1 if the firm had a corporate foundation; otherwise 0 (Fombrun &
Shanley, 1990).
Control variables. We include both firm-level and individual-level control
variables. Consistent with prior research on social performance, we control

14 Business & Society
for firm size with the log of net sales, profitability with return on assets
(ROA), and industry with two-digit Standard Industrial Classification (SIC)
codes using 2000 data from Compustat (Hadani & Coombes, 2015; Seifert
et al., 2004). We also control for foreignness because scholars have suggested
that foreign firms would be at a disadvantage compared with local firms in
choosing appropriate social performance activities (Gardberg & Fombrun,
2006). We obtained the location of corporate headquarters from Compustat to
construct foreign, where 1 equals foreign; and otherwise 0 (Zaheer, 1995).
Due to its mutual status, we were unable to find comparable financial data for
State Farm Insurance and eliminated it from our sample. Company age in the
United States was drawn from corporate websites and the Gale Group’s Busi-
ness and Company Resource Guide. We also control for a firm’s overall cor-
porate reputation as it appears to condition perception of corporate giving
(Bae & Cameron, 2006; Lii & Lee, 2012) using an item from the survey. As
signal interpretation can vary across contexts and individuals (Prabhu &
Stewart, 2001), we control for respondent sex, race, and age at the individual
level using self-reported data. Missing demographic data reduced our sample
to 27,166 individual evaluations of 59 firms.
Analysis
We tested hypotheses predicting CSP awareness (H1, H3, and H5) using an
ordered logit model because the item is a limited dependent variable. We
used a negative log-log setting for the logit model because the distribution of
responses revealed a greater likelihood of low awareness of social responsi-
bility. We tested hypotheses predicting CSP perception (H2, H4, H6, and H7)
using ordinary least squares (OLS). All models were estimated using SPSS
version 23.
Results
Table 1 contains descriptive statistics and correlations for our study variables.
The largest and smallest firms in our sample are Exxon-Mobil and Yahoo!,
respectively. The most profitable and least profitable are Intel and Amazon.
com, respectively. Of the sample firms, 83% had foundations.
The mean level of CSP awareness was low, but the standard deviation
indicates that a good number of respondents did have high awareness of cor-
porate philanthropy. More than half the sample responded that they knew “a
little” about the firm’s social responsibility. The eight foreign firms in our
sample are headquartered in Germany, Japan, the Netherlands, and the United
Kingdom. All have assets, employees, and distribution in the United States.

15
Table 1. Descriptive Statistics and Correlations.
M SD 123456789
1. CSP perception 4.38 1.40
2. CSP awareness 1.60 0.66 .13**
3. Signal amplitudea6.10 2.62 −.02** .05**
4. Signal dispersion 4.00 2.40 −.04** .07** .69**
5. Signal consistency 0.83 0.37 −.04** .07** .76** .66**
6. Corporate reputation 5.56 1.42 .61** .00 −.04** −.06** −.06**
7. Sizea 4.52 0.46 −.04** .04** .49** .30** .35** −.06**
8. Profitability 0.06 0.10 .04** .03** .37** .26** .27** .03** .18**
9. Foreign 0.08 0.28 −.09** −.02** .07** .17** .14** −.09** .21** −.06**
10. Firm age 78.77 43.57 −.01* .03** .21** .17** .30** −.02** .23** .17** −.15**
Note. n = 27,166. CSP = corporate social performance.
aLogarithmic transformation.
*p < .05. **p < .01 (two-tailed tests).

16 Business & Society
CSP perception is highly correlated with corporate reputation; however,
CSP awareness is not correlated with corporate reputation. Signal amplitude
is highly correlated with both signal dispersion and signal consistency. Firms
with foundations tend to contribute more money overall to more causes.
Surprisingly, signal amplitude is negative and weakly correlated with corpo-
rate reputation. In addition, large, older, and more profitable firms tend to
contribute more money. Due to our large sample size, many variables appear
statistically significantly correlated even though with very low coefficients.
Although some correlations in Table 1 are quite high, most of our esti-
mated variance inflation factors (VIFs) were well within tolerances. The
highest VIF score was 4.86 for one of the industry dummy variables, which
was within the threshold of 10 (Hair, Anderson, Tatham, William, & Black,
1998) suggesting that our model estimates do not suffer from multicollinear-
ity. Table 2 contains the results of our ordered logit analysis. Model 1 con-
tains our control variables for predicting CSP awareness. Model 2 adds the
direct effects, testing H1, H3, and H5 that improve the explanatory power of
the model observed in an increase in the chi-statistic2. We also converted the
estimates (logits) of Model 2 to odds ratios to facilitate interpretation. The
odds ratio measures effect size based upon the ratio of the odds of one event
Table 2. Ordered Logit Analysis Predicting Corporate Social Performance
Awareness.
Model 1 Model 2 (logits) Model 2 (ORs)
Signal amplitudea (H1) −.05 (.010)*** 0.95
Signal dispersion (H3) .06 (.01)*** 1.06
Signal consistency (H5) .43 (.04)*** 1.54
Corporate reputation .01 (.01) .01 (.01)* 1.01
Sizea.16 (.02)*** .12 (.02)** 1.13
Profitability .65 (.11)*** .40 (.12)** 1.48
Foreign −.06 (.04)†−.16 (.04)*** 0.86
Firm age .002 (.00)*** .001 (.00)* 1.00
Industryb
Demographic variablesb
−2 log likelihood 34,737.93 344,363.72
χ2414.50*** 715.71***
Note. n = 27,166. Standard errors in parentheses. Model 2 estimates and exponentiated logit
value. OR = odds ratio.
aLogarithmic transformation.
bIndustry and demographic control variable results available upon request.
†p < .10. *p < .05. **p < .01. ***p < .001.

Gardberg et al. 17
versus another occurring. An odds ratio of 1 denotes that the probabilities of
two events happening are each 50%. An odds ratio greater than 1 denotes the
degree to which social responsibility awareness is more probable than lower
awareness. An odds ratio less than 1 denotes the degree to which low aware-
ness is more likely than high awareness.
Model 1 tests our control variables. Size and profitability were positively
and significantly (p < .001) related to CSP awareness. However, foreignness
is negatively and marginally significantly (p < .10) related to CSP awareness.
Age has a neutral effect on CSP awareness. Model 2 tests H1, H3, and H5.
Counter to our expectations, greater investments in philanthropy were nega-
tively associated with CSP awareness, thus rejecting H1. Broad content dis-
persion was positively associated with CSP awareness (p < .001), as predicted
(H3). Signal consistency was positively associated with CSP awareness (p <
.001) supporting H5. The control variables remain statistically significant,
while corporate reputation’s positive relationship with CSP awareness gains
statistical significance.
Table 3 presents the OLS analysis predicting CSP perception. Model 3
includes only the control variables. The effects of corporate reputation and
profitability are positive and statistically significant (p < .001) and the effect
of foreignness is negative and statistically significant (p < .01). In Model 4,
we add the three independent variables to test H2, H4, and H6. The effects of
the control variables are robust across models. H2 proposes that greater sig-
nal amplitude leads to greater CSP perception. Counter to expectations, the
coefficient of signal amplitude is negative. H4 proposes that greater signal
dispersion increases CSP perception at a decreasing rate. Contrary to H4, we
find that signal dispersion is positively associated with CSP perception (p <
.01) and the squared term is not statistically significant in Model 5. H6 pro-
poses that greater signal consistency enhances CSP perception. Counter to
our expectations, signal consistency is not related to perception of CSP.
In Model 6, we add the hypothesized mediating variable, CSP awareness,
to the analysis. Consistent with H7, we find that CSP awareness is positively
and statistically associated with CSP perception (p < .001). Moreover, signal
amplitude and dispersion lose statistical significance. Conversely, the model
estimates for consistency reject H6. Notably, the addition of the main inde-
pendent variables increases the explanatory power of our models as seen in
increases in adjusted R2.
We utilize information from three models (Models 2, 4, and 5) to test for
the mediating role of awareness of CSP in the relationships of signal ampli-
tude, dispersion, and consistency with perception of CSP (H8). According to
Baron and Kenny (1986), certain conditions apply for the presence of a medi-
ating effect. First, the effects of the signal characteristics in Model 2 and

18 Business & Society
Model 4 must be statistically significant. Second, in Model 6, the effect of
awareness of CSP must be statistically significant and the absolute values of
the effects of the signal characteristics must be smaller than the ones in Model
4. These conditions apply only in the case of signal amplitude and dispersion
lending partial support to H8. In other words, awareness of CSP partially
mediates the effect of signal dispersion on perception of CSP.
Sensitivity Analysis
The complex interaction between the signal characteristics may confound
their distinct relationships with awareness and perception of CSP. For exam-
ple, the funds a firm donates to philanthropic activities may determine the
spectrum of activities—beyond average monies per activity—and duration
and repetition of philanthropic engagement. These concerns led us to examine
the sensitivity of our initial results by also testing the individual relationships
Table 3. Ordinary Least Squares Analysis Predicting Corporate Social
Performance Perception.
Model 3 Model 4 Model 5 Model 6
Signal amplitudea,b (H2) −.02 (.01)* −.02 (.01)* −.01 (.01)
Signal dispersion (H4) .03 (.01)*** .03 (.01)*** −.02 (.00)
Signal dispersion2 (H4) .01 (.00) −.02 (.00)
Signal consistency (H6) .01 (03) .01 (.03) −.00 (.03)
CSP awareness (H7, H8) .13 (.01)***
Corporate reputation .60 (.01)*** .60 (.01)*** .60 (.01)*** .60 (.01)***
Sizea.02 (.01) .00 (.02) .00 (.02) −.00 (.02)
Profitability .04 (.08)*** .04 (.08)*** .04 (.08)*** .03 (.08)***
Foreign −.01 (.03)* −.02 (.03)* −.02 (.03)** −.01 (.03)*
Firm age .01 (.00) .00 (.00) −.00 (.00) .00 (.00)
Industryc
Demographic variablesc
R2.376 .376 .376 .394
Adjusted R2.375 .376 .376 .393
ΔR2.376*** .001*** .000 .016***
F1,020.73*** 861.36*** 818.31*** 834.69***
Note. n = 27,166. CSP = corporate social performance.
aLogarithmic transformation.
bStandardized coefficients. Standard errors in parentheses.
cIndustry and demographic control variable results available upon request.
†p < .10. *p < .05. **p < .01. ***p < .001.

Gardberg et al. 19
of the independent variables with CSP awareness and CSP perception. The
new results appear in Tables 4 and 5.
Table 4 pertains to the individual relationships of signal characteristics
with CSP awareness. All three signal characteristics are positive and statisti-
cally significantly related to CSP awareness. With regard to the individual
relationships of signal characteristics with CSP perception (Table 5), the new
estimations suggest that all individual signal characteristics and awareness of
CSP are conducive to CSP perception (coefficients are positive and statisti-
cally significant at conventional levels). These findings are in congruence
with H2, H6, and H7, according to which signal amplitude, signal consis-
tency, and awareness of CSP are positively associated with CSP perception,
respectively, and in conflict with H4, which proposed that signal dispersion
affects CSP perception in a decreasingly positive fashion. In Model 12, signal
Table 4. Sensitivity Analysis of Separate Effects Ordered Logit Analysis Predicting
Corporate Social Performance Awareness.
Model 7 Model 8 Model 9
(Logits) (ORs) (Logits) (ORs) (Logits) (ORs)
Signal amplitudea,b
(H1)
.03 (.00)*** 1.03
Signal dispersion
(H3)
.06 (.00)*** 1.06
Signal consistency
(H5)
.38 (.03)*** 1.46
Corporate
reputation
.01 (.01) 1.01 .01 (.01)†1.01 .01 (.01)†1.01
Sizea.10 (.02)*** 1.11 .07 (.02)** 1.07 .09 (.02)*** 1.09
Profitability .41 (.11)*** 1.51 .31 (.11)** 1.36 .31 (.11)** 1.36
Foreign −.05 (.04) 0.95 −.10 (.07)** 0.91 −.10 (.04)** 0.91
Firm age .002 (.00)*** 1.00 .001 (.00)*** 1.00 .001 (.00)*** 1.00
Industryc
Demographic
variablesc
−2 log likelihood 34,695.38 34,549.78 34,557.31
χ2457.05*** 602.65*** 595.12***
Note. n = 27,166. OR = odds ratio.
aLogarithmic transformation.
bStandardized coefficients. Standard errors in parentheses.
cIndustry and demographic control variable results available upon request.
†p < .10. *p < .05. **p < .01. ***p < .001.

20 Business & Society
dispersion remains positively associated with CSP perception when signal
dispersion squared is entered into the equation. However, signal dispersion
squared is negative but not statistically significant. Moreover, the control
variables are qualitatively similar to the initial analysis, supporting our intu-
ition about the possible implications that the underlying interactions between
signal characteristics may have on our results.
Similar to the main analysis, we utilize information from multiple models
to examine the mediation effects. With regard to the individual partial media-
tion, we find support for all hypotheses. For signal amplitude, signal disper-
sion, and signal consistency, the coefficient declines and level of statistical
significance declines when CSP awareness is entered into the regression.
Lastly, we ran several analyses to check for the sensitivity of our results to
alternative operationalizations of our measures. For example, we calculated
CSP perception as the mean of responses on the three items and reran the
analysis. Given the similar factor loadings across the three items, it was not
surprising that the results were consistent. We substituted foundation contri-
butions for total contributions with similar results. We substituted the number
of grants the foundation distributed for the number of funding areas, with
similar results. We also ran analyses omitting Wal-Mart, which served as an
outlier, distributing over US$82 million through over 70,000 grants in 2001;
overall, results were robust. We are confident that CSP awareness and CSP
perception are distinct but related components of CSP reputation.
Discussion and Conclusion
Using signaling theory, we tested a model to examine the effect of philan-
thropic donations on reputation for CSP. In this section, we summarize our
results and our contributions to the signaling theory and signal detection lit-
erature as well as the CSP literature.
Overall we find support for the supposition that CSP reputation is com-
posed of two distinct but related dimensions—CSP awareness and CSP per-
ception. In addition, we find that signal amplitude (signal strength based on
the amount of contributions) does not adequately explain CSP awareness.
Rather, signal dispersion (number of philanthropic areas) and signal consis-
tency (presence of a corporate foundation) were critical determinants of CSP
awareness.
We also observe that the determinants of CSP awareness and CSP percep-
tion differ. In contrast to CSP awareness, signal amplitude, signal dispersion,
and signal consistency individually contribute little to explain CSP percep-
tion. In fact, CSP awareness and corporate reputation are the strongest predic-
tors of CSP perception.

21
Table 5. Sensitivity Analysis of Separate Effects: Ordinary Least Squares Analysis Predicting Corporate Social Performance
Perception.
Model 10 Model 11 Model 12 Model 13 Model 14 Model 15 Model 16
Signal amplitudea,b (H2) .02 (.00)** .00 (.00)
Signal dispersion (H4) .03 (.00)*** .03 (.00)*** .01 (.00)*
Signal dispersion (H4) .01 (.00) .00 (.00)
Signal Consistency (H6) .01 (.02)* .00 (.02)
CSP awareness (H7/H8) .13 (.01)*** .13 (.01)*** .13 (.01)***
Corporate reputation .60 (.01)*** .60 (.01)*** .60 (.01)*** .60 (.01)*** .60 (.01)*** .60 (.01)*** .60 (.01)***
Sizea.00 (.02) −.00 (.02) −.00 (.02) −.00 (.02) .00 (.02) .00 (.02) .00 (.02)
Profitability .04 (.08)*** .03 (.08)*** .03 (.08)*** .03 (.08)*** .03 (.08)*** .04 (.08)*** .03 (.08)***
Foreign −.01 (.03)* −.01 (.03)* −.01 (.03)* −.01 (.03)** −.01 (.03)* −.01 (.03)* −.01 (.03)*
Firm age .01 (.00) .00 (.00) .00 (.00) .00 (.00) .00 (.00) .00 (.00) .00 (.00)
Industryc
Demographic variablesc
R2.376 .392 .376 .376 .392 .376 .392
Adjusted R2.375 .392 .376 .376 .392 .375 .392
ΔR2.00* .017*** .001*** .000 .016*** .00* .017***
F960.79*** 973.30*** 962.30*** 908.99*** 922.44*** 961.14*** 973.30***
Note. n = 27,166.
aLogarithmic transformation.
bStandardized coefficients. Standard errors in parentheses.
cIndustry and demographic control variable results available upon request.
†p < .10. *p < .05. **p < .01. ***p < .001.

22 Business & Society
For firms, the funds allocated to philanthropy can be quite large. Thus, we
need to address the economic significance as well as statistical significance of
our analysis. It is difficult to define economic consequences when predicting
a Likert-type scale. However, we have compelling evidence that despite the
fact that firms are spending millions on CSP, the U.S. public is fundamentally
ill-informed about these activities. We first discuss CSP awareness using the
odds ratios reported in Table 4. A firm that has donated an average annual
contribution of US$44.6 million can increase its CSP awareness by 0.23 points
on a 3-point scale with a US$1 million increase in amplitude, ceteris paribus.
A firm that has contributed to four areas can increase its CSP awareness by
0.24 points by increasing its dispersion by one area. Firms with corporate
foundations had 1.48 the CSP awareness of firms without foundations.
CSP perception was measured with a continuous variable, so the results in
Table 5 are easier to interpret than those of CSP awareness. We calculate the
marginal effect of an increase in a signal characteristic for the firms’ mean
level using the unstandardized coefficients. When a firm contributes an addi-
tional $1 million, it can increase its CSP perception by 0.05 points on a 7-point
scale, ceteris paribus. A firm that increases its dispersion to an extra area
increases its CSP perception by 0.02. Firms with corporate foundations had
0.05 points higher CSP perception than firms without foundations. A 1-point
increase in awareness increases CSP perception by 0.28 points. A 1-point
increase in corporate reputation increases CSP perception by 0.59 points.
When we revisit these data, we observe that over half the sample reported
knowing little or nothing about a company’s CSP even when they were familiar
with the company. In addition, almost 20% of the sample responded “not sure”
to all three variables used to construct CSP perception. Our results suggest that
stakeholders rely on overall corporate reputation to evaluate CSP when their
awareness is low. This finding is consistent with extant research that shows a
conditioning effect of corporate reputation on CSP evaluations. In sum, large
investments in corporate philanthropy can only pay off if they are consistent
over time, reach a variety of stakeholders, and the firm has a good reputation.
We refine the signaling literatures by identifying three features of sig-
nals—amplitude, dispersion, and consistency—that resonate with conceptu-
alizations of sound and light signals. These signal features can be applied to
other strategic actions. In addition, we hope that we inspire other scholars to
consider signal features from the physical sciences.
Via this theoretical contribution to signaling research, we make three main
contributions to the philanthropy literature. First, within the “strategic philan-
thropy” literature (Gautier & Pache, 2015; Liket & Maas, 2016; Porter &
Kramer, 2002; Saiia et al., 2003; Wang & Qian, 2011), our research reveals
causal mechanisms that link philanthropy to the firm’s reputation for CSP

Gardberg et al. 23
and, subsequently, financial performance. Consistency and corporate reputa-
tion, itself, are clearly elements of stakeholder influence capacity (Barnett,
2007). Second, while extensive scholarship has investigated corporate phi-
lanthropy’s effect on different stakeholders (Barone, Norman, & Miyazaki,
2007; Luo, 2005; Wang & Qian, 2011), there is very little research that
explores the signaling aspect of philanthropy, a research gap we partially
rectified by investigating the effect that three distinct components of philan-
thropic signals (amplitude, dispersion and consistency) have on the overall
CSP reputation of the firm. Third, by distinguishing among these three dis-
tinct signal components of philanthropy, we contribute to an existing gap in
the literature that does not clearly identify an array of possible philanthropic
strategies (Frumkin, 2010; Gautier & Pache, 2015) and conceptualizations of
corporate philanthropy and CSP as portfolios of activities (Gardberg &
Fombrun, 2006).
Our results suggest that the relationships of corporate philanthropy and
CSP awareness with CSP perception are more complex than indicated by
most academic studies. Consistent with Gardberg and Fombrun (2006), repu-
tation for CSP is better formulated as a multidimensional phenomenon con-
sisting of amplitude (financial commitment), dispersion (causes), and
consistency (formal structures and routines). Regarding CSP awareness, our
findings indicate that, in addition to the size of the firm’s donations, its dis-
persion in many charitable activities and consequently many stakeholder
groups, with corresponding interests for those activities, does matter. In short,
we find that by increasing the breadth of their charitable donations, firms can
reach a greater number of stakeholder groups and therefore achieve greater
levels of CSP awareness. Moreover, our finding that the existence of a corpo-
rate foundation has a positive impact on CSP awareness indicates that stake-
holders become more aware of firms which show consistency in their
charitable donations through having a foundation. Firms can give money to
their foundations in years when organizational slack allows them to be more
generous (Buchholtz, Amason, & Rutherford, 1999) and refrain from giving
money to their foundations in more lean years, whereas their foundation
maintains a consistent, yearly presence in various charitable activities in all
years (Seifert et al., 2004). Generally, this interpretation of our findings
regarding signal consistency agrees with the notion of “time compression
diseconomies,” introduced by Dierickx and Cool (1989), who argued that
firms cannot develop certain intangible resources by spending large sums of
money in short periods of time, but by being consistent in their spending over
the years.
Concerning our findings regarding CSP perception, there are a few points
to be made. First, as expected and in accordance with other empirical results

24 Business & Society
in the literature (Lev et al., 2010) we found that signal amplitude, signal dis-
persion, and signal consistency are positively associated with CSP percep-
tion; however, once we account for CSP awareness, their direct effect on
perception declines. Further, the conditioning effect of corporate reputation
(Bae & Cameron, 2006; Lii & Lee, 2012) stems from an overall lack of
awareness about firms’ CSP.
We believe that our research more closely resembles the ways in which
managers and their agents, such as public relations (PR) firms, design and
implement CSP rather than the ways in which academics perform research.
From conversations with practitioners, we have a sense that they tend to iden-
tify the trade-offs between the number of areas targeted versus the amount per
area. However, consistency in targeting areas may not be as salient. Our find-
ings can help practitioners develop a portfolio of activities (Gardberg &
Fombrun, 2006) that reduces noise and enhances credibility and authenticity.
Limitations and Further Research
While we are pleased with our extension of previous work, we recognize
some limitations to this study. In contrast to McWilliams and Siegel (2000),
we do not control for research and development (R&D). In our sample, many
firms had R&D expenses and advertising expenses that did not reach the
level reported in Compustat. However, corporate reputation should capture
the secondary effects of these expenses. An additional limitation is the threat
of common method variance from the use of questionnaire-based measures.
However, several elements of our research design reduce this possibility.
First, the three independent variables and firm-level control variables were
collected from several different archival data sources. Second, although the
hypothesized mediating variable and dependent variables originated from the
same questionnaire administration, these two variables were separated from
each other in the questionnaire, minimizing causal connections by respon-
dents completing the items (Chang, van Witteloostuijn, & Eden, 2010). Third,
the individual-level control variables are fact-based demographic character-
istics (such as gender and sex), which also reduces the possibility that ques-
tionnaire administration affected responses (Chang et al., 2010; Podsakoff,
MacKenzie, Lee, & Podsakoff, 2003). Fourth, a factor analysis of the ques-
tionnaire items satisfied Harman’s one factor test, as a single factor did not
emerge from the factor analysis and one general factor did not account for the
majority of the covariance among the variables (Podsakoff et al., 2003).
Endogeneity is a possible limitation for most model testing. We included
corporate reputation as a control variable to capture omitted variables from
the regressions models that could be correlated with any of the independent

Gardberg et al. 25
variables and in the special case of a relationship of simultaneous determina-
tion between the dependent variable and any of the independent variables
(simultaneity). Driven by pertinent theory, we do not consider any of our
independent variables to be codetermined with the dependent variables. In
particular, our main independent variables represent firm-level behavior,
whereas the dependent variables represent individual subjects’ responses.
Additionally, driven by both theory as well as prior empirical work, we have
expended extra effort to include in the models all pertinent controls related to
the survey subjects and sample firms to alleviate the potential that omitted
variables could give rise to endogeneity.
An additional potential limitation is the age of our data set, which the RI
and HI collected in 2001. However, recent independent research by these
organizations reinforces the role of CSP. For example, in its 2015 Media
Release Report for the RQ (p. 4), HI (now part of Nielsen) states,
Of all reputation dimensions, Social Responsibility remains a high bar, with
only five companies achieving excellent rankings on this dimension and 24
companies rated Poor or Very Poor. Companies continue to struggle to be
viewed as a good member of the community.
Given the currency of the issue and the richness of the individual-level data
set, we believe the insight into the reputation process remains a useful
contribution.
While supporting the notion that corporate philanthropy research has been
oversimplified, our research opens several opportunities for future research,
such as more qualitative analysis of corporate activities and the use of addi-
tional statistical techniques, such as hierarchical linear modeling, to tease out
these relationships. Rather than count the number of causes, we could use the
percentage of foundation funds focused on each cause. It would also be inter-
esting to examine the relationships of the causes to each firm’s line of busi-
nesses, as well as within different institutional environments (Gardberg &
Fombrun, 2006).
In conclusion, we hypothesized and found that the characteristics of cor-
porate philanthropy affect perception of social performance. We find that
research on corporate citizenship activities and their consequences requires a
more fine-grained conceptualization of activities. Using expenditures alone
is not an adequate conceptualization of the activities. In our theoretical devel-
opment, we distinguish three elements of signal strength. Signal amplitude,
signal dispersion, and signal consistency operate together to shape CSP
awareness and CSP perception. We assert that each plays an important role in
understanding the relationships among actual CSP and reputation for CSP.

26 Business & Society
Acknowledgments
The authors would like to thank Duane Windsor and the editors of this special issue—
Antonio Argandoña, Christine Choirat, Rosa Chun, and Donald Siegel—as well as
the anonymous reviewers, whose feedback enhanced our article and its contribution.
The authors also would like to acknowledge the Reputation Institute, Harris
Interactive, Charles Fombrun, and Joy Sever for access to data as well as the research
assistantships of Jenny Rea and Afzaal Mohammed. We also greatly appreciate feed-
back on earlier versions of this paper from reviewers and audiences during an
International Association for Business and Society (IABS) conference and an
Academy of Management conference where it appeared in the Best Paper Proceedings.
Declaration of Conflicting Interests
The authors declared no potential conflicts of interest with respect to the research,
authorship, and/or publication of this article.
Funding
The authors disclosed receipt of the following financial support for the research,
authorship, and/or publication of this article: Support for this project was provided by
a PSC-CUNY Award, jointly funded by The Professional Staff Congress and The
City University of New York.
Notes
1. Of course, as Dennis, Buchholtz, and Butts (2009) discuss, there is a long-
standing debate between those who see corporate philanthropy as strategic
(Sánchez, 2000; Siegel & Vitaliano, 2007) and those who see it as altruistic
(Shaw & Post, 1993). However, for our purposes here, this debate is not imme-
diately relevant, as we examine the consequences of corporate philanthropy
and not its motives.
2. One U.S. college sorority, Alpha Delta Pi, adopted the Ronald McDonald House
as its national philanthropy in 1979.
3. Cronbach’s alpha is a measure of internal consistency or reliability of items in an
index. Cronbach’s alpha ranges from 0 to 1. A Cronbach’s alpha greater than .70
suggests that the items in the index are measuring the same construct.
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Author Biographies
Naomi A. Gardberg (PhD, Stern School of Business, New York University) is asso-
ciate professor of management, Zicklin School of Business, Baruch College, City
University of New York (CUNY). Her research interests focus on nonmarket compe-
tition, intangibles, and foreign direct investment. Her work has appeared in such jour-
nals as Academy of Management Review, Business & Society, Corporate Reputation
Review, Journal of Business Ethics, and Journal of International Business Studies.
She was a 2009 winner of a Zicklin School of Business Teaching Excellence Award.
Stelios C. Zyglidopoulos (PhD, McGill University) is a reader in management at the
Adam Smith Business School of the University of Glasgow and a visiting professor at
IE, Madrid, Spain. Prior to his current position, he has held academic positions at the
Cambridge Judge Business School, Rochester Institute of Technology, Rochester,
USA, and Erasmus University, the Netherlands. His research interests include the

32 Business & Society
relationship between ancient Greek philosophy and management studies, corruption
in organizations, and the study of corporate social responsibility. His work has
appeared in such journals as Business Ethics Quarterly, Journal of Business Ethics,
Journal of Business Review, and Organization. He has extensive executive education
experience and has taught executive programs for many multinational corporations
and public sector organizations.
Pavlos C. Symeou (PhD, Judge Business School, University of Cambridge) is lec-
turer in marketing at the Faculty of Management and Economics of Cyprus University
of Technology. His research interests include, inter alia, the role of technological
convergence in corporate strategy, the marketing strategies of cultural organizations,
and the interactions of firm performance with aspects of corporate social responsibil-
ity. His work has appeared in Business Ethics Quarterly, Communication Research,
and Journal of Communication.
Donald H. Schepers (PhD, University of Arizona) is professor of management and
senior associate dean at the Zicklin School of Business, Baruch College/CUNY. His
research spans corporate codes of conduct, corporate governance, socially responsible
investing, and nongovernmental organizations. His work has appeared in journals
such as Business & Society, Business and Society Review, Corporate Governance:
The International Journal of Business and Society, Journal of Business Ethics, and
Organizational Behavior and Human Decision Processes.