29 Jul 2011  Working Papers

Who Is Governing Whom? Senior Managers, Governance and the Structure of Generosity in Large U.S. Firms

Executive Summary — Analyzing several Fortune 500 firms over the period of 10 years, Christopher Marquis and Matthew Lee discuss the factors that influence corporate philanthropy, using the subject to theorize about and test how structural features of organizations help senior leaders to shape firm strategy. Key concepts include:

  • Many practitioners today view corporate philanthropy as a strategic activity that addresses both social and economic goals.
  • Corporate philanthropy is highest in corporations with new CEOs, and decreases with the length of CEO tenure.
  • The greater the proportion of female senior managers in a company, the greater the corporate philanthropic contributions will be.
  • Companies with larger boards tend to have higher philanthropic contributions.

 

Author Abstract

We examine how organizational structure influences strategies over which corporate leaders have significant discretion. Corporate philanthropy is our setting to study how a differentiated structural element, the corporate foundation, constrains the influence of individual senior managers and directors on corporate strategy. Our analysis of Fortune 500 firms from 1996 to 2006 shows that leader characteristics at both the senior management and director levels affect corporate philanthropic contributions. We also find that organizational structure constrains the philanthropic influence of board members, but not senior managers, a result that is contrary to what existing theory would predict. We discuss how these findings advance understanding of how organizational structure and corporate leadership interact, and how organizations can more effectively realize the strategic value of corporate social responsibility activities.

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