The Swaying Power of Business: Inconsistent Social Actions and Mitigating Mechanisms in Corporate Foundations

Abstract

Corporate foundations (CFs) are increasingly prominent vehicles for channeling commercial resources toward social causes. However, their pursuit of social missions may be shaped by the strategic priorities of their corporate sponsors. Drawing on a longitudinal panel dataset of 214 Chinese corporate foundations from 2009 to 2022, we examine how changes in sponsor firms’ business portfolios are associated with inconsistency in CFs’ philanthropic engagement, and identify organizational conditions under which this association is attenuated. We find that as sponsor firms adjust their business portfolios, their CFs are more likely to alter their portfolios of philanthropic activities, indicating a destabilizing association. This association is weaker when CF executives have stronger nonprofit backgrounds and when foundations receive a greater proportion of funds from non-corporate donors. Furthermore, we document an asymmetric pattern consistent with activity compartmentalization: under these organizational conditions, changes in sponsor firms’ business portfolios are less strongly associated with changes in mission-related activities than with changes in mission-unrelated activities. These findings contribute to research on dependency management by identifying organizational conditions associated with reduced sensitivity to sponsor firms’ business changes, and by highlighting a form of buffering within prosocial activities under conditions of close oversight.