Local poverty and corporate community involvement

Abstract

What is the role of corporations in addressing community-related challenges such as social inequality? This question is of high importance among scholars and practitioners since the rising global attention toward sustainable development agenda. Yet, up to date, it is not clear if various corporate philanthropic activities are organized on an ad-hoc and random basis or possess a certain strategic nature. Thus, this paper aims to add new knowledge to the area of corporate-community relations by examining an explanatory power of local poverty in understanding corporate giving behavior. Consistent with institutional and stakeholder theories, our study reveals that there is a positive association between measures of poverty and corporate community endeavors. Moreover, that association increases with gender diversity of board members. Research findings signal about the changing trend of corporate contributions from one-time, sporadic nature toward more systematic and strategic form, providing new opportunities for improvement of economic conditions of local communities and alleviating inequality gap.