Do Stakeholders Modulate Philanthropic Strategy? Corporate Philanthropy as Stakeholders' Engagement

Corporate philanthropy, as an expression of commitment to the common good, can contribute to the creation of social value in companies. This corporate philanthropy can be managed in various ways. The choice of how to channel corporate philanthropy could be, in accordance with stakeholder theory, the result of companies' interactions with key stakeholders and, in accordance with the theory of signaling, a signal that companies use to respond to their demands. This approach contributes to the literature on bottom-up initiatives (stakeholder-managers) as opposed to top-down strategies (board-stakeholders) in relation to corporate social responsibility, which is becoming increasingly important in a society where networks of communication, cooperation and interaction are established. To this end, a study was conducted on 221 European companies indexed in the Dow Jones Sustainability Indices in the year 2018. The findings have several practical implications: The management of corporate philanthropy should take into account the stakeholders' requirements, and stakeholders show greater affinity and trust with the company when philanthropy is channeled through foundations. By contrast, donations are not associated with stakeholder attitudes. As a theoretical implication, this paper supports the theories of stakeholders and signaling by explaining the role of philanthropy in the relationship with stakeholders.