IDEAS home Printed from https://ideas.repec.org/a/inm/ormnsc/v61y2015i8p1795-1811.html
   My bibliography  Save this article

Corporate Philanthropy and Productivity: Evidence from an Online Real Effort Experiment

Author

Listed:
  • Mirco Tonin

    () (Department of Economics, School of Social Sciences, University of Southampton, Southampton SO17 1BJ, United Kingdom; CESifo Group, 81679 Munich, Germany; Central European University, 1051 Budapest, Hungary; and IZA–Institute for the Study of Labor, 53113 Bonn, Germany)

  • Michael Vlassopoulos

    () (Department of Economics, School of Social Sciences, University of Southampton, Southampton SO17 1BJ, United Kingdom; and IZA–Institute for the Study of Labor, 53113 Bonn, Germany)

Abstract

Contributing to a social cause can be an important driver for workers in the public and nonprofit sectors as well as in firms that engage in corporate philanthropy or other corporate social responsibility policies. This paper compares the effectiveness of a social incentive that takes the form of a donation received by a charity of the subject’s choice to a financial incentive. We find that social incentives lead to a 13% rise in productivity, regardless of their form (lump sum or related to performance) or strength. The response is strong for subjects with low initial productivity (30%), whereas high-productivity subjects do not respond. When subjects can choose the mix of incentives, half sacrifice some of their private compensation to increase social compensation, with women more likely to do so than men. Furthermore, offering subjects some discretion in choosing their own payment schemes leads to a substantial improvement in performance. Comparing social incentives to equally costly increases in private compensation for low-productivity subjects reveals that the former are less effective in increasing productivity, but the difference is small and not statistically significant.Data, as supplemental material, are available at http://dx.doi.org/10.1287/mnsc.2014.1985 . This paper was accepted by Uri Gneezy, behavioral economics .

Suggested Citation

  • Mirco Tonin & Michael Vlassopoulos, 2015. "Corporate Philanthropy and Productivity: Evidence from an Online Real Effort Experiment," Management Science, INFORMS, vol. 61(8), pages 1795-1811, August.
  • Handle: RePEc:inm:ormnsc:v:61:y:2015:i:8:p:1795-1811
    DOI: 10.1287/mnsc.2014.1985
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1287/mnsc.2014.1985
    Download Restriction: no

    References listed on IDEAS

    as
    1. Fehrler, Sebastian & Kosfeld, Michael, 2014. "Pro-social missions and worker motivation: An experimental study," Journal of Economic Behavior & Organization, Elsevier, vol. 100(C), pages 99-110.
    2. Gregg, Paul & Grout, Paul A. & Ratcliffe, Anita & Smith, Sarah & Windmeijer, Frank, 2011. "How important is pro-social behaviour in the delivery of public services?," Journal of Public Economics, Elsevier, vol. 95(7-8), pages 758-766, August.
    3. Gary Charness & Ramon Cobo-Reyes & Natalia Jimenez & Juan A. Lacomba & Francisco Lagos, 2012. "The Hidden Advantage of Delegation: Pareto Improvements in a Gift Exchange Game," American Economic Review, American Economic Association, vol. 102(5), pages 2358-2379, August.
    4. Oriana Bandiera & Iwan Barankay & Imran Rasul, 2005. "Social Preferences and the Response to Incentives: Evidence from Personnel Data," The Quarterly Journal of Economics, Oxford University Press, vol. 120(3), pages 917-962.
    5. Johannes Abeler & Armin Falk & Lorenz Goette & David Huffman, 2011. "Reference Points and Effort Provision," American Economic Review, American Economic Association, vol. 101(2), pages 470-492, April.
    6. Francois, Patrick, 2000. "'Public service motivation' as an argument for government provision," Journal of Public Economics, Elsevier, vol. 78(3), pages 275-299, November.
    7. Armin Falk & James J. Heckman, 2009. "Lab Experiments are a Major Source of Knowledge in the Social Sciences," Working Papers 200935, Geary Institute, University College Dublin.
    8. Timothy Besley & Maitreesh Ghatak, 2005. "Competition and Incentives with Motivated Agents," American Economic Review, American Economic Association, vol. 95(3), pages 616-636, June.
    9. Dan Ariely & Anat Bracha & Stephan Meier, 2009. "Doing Good or Doing Well? Image Motivation and Monetary Incentives in Behaving Prosocially," American Economic Review, American Economic Association, vol. 99(1), pages 544-555, March.
    10. Andreas Fuster & Stephan Meier, 2010. "Another Hidden Cost of Incentives: The Detrimental Effect on Norm Enforcement," Management Science, INFORMS, vol. 56(1), pages 57-70, January.
    11. Uri Gneezy & Pedro Rey-Biel, 2014. "On The Relative Efficiency Of Performance Pay And Noncontingent Incentives," Journal of the European Economic Association, European Economic Association, vol. 12(1), pages 62-72, February.
    12. Roland Bénabou & Jean Tirole, 2010. "Individual and Corporate Social Responsibility," Economica, London School of Economics and Political Science, vol. 77(305), pages 1-19, January.
    13. Delfgaauw, Josse & Dur, Robert, 2007. "Signaling and screening of workers' motivation," Journal of Economic Behavior & Organization, Elsevier, vol. 62(4), pages 605-624, April.
    14. Dean Karlan & John A. List, 2007. "Does Price Matter in Charitable Giving? Evidence from a Large-Scale Natural Field Experiment," American Economic Review, American Economic Association, vol. 97(5), pages 1774-1793, December.
    15. Tonin, Mirco & Vlassopoulos, Michael, 2010. "Disentangling the sources of pro-socially motivated effort: A field experiment," Journal of Public Economics, Elsevier, vol. 94(11-12), pages 1086-1092, December.
    16. George A. Akerlof & Rachel E. Kranton, 2005. "Identity and the Economics of Organizations," Journal of Economic Perspectives, American Economic Association, vol. 19(1), pages 9-32, Winter.
    17. Alexander W. Cappelen & Knut Nygaard & Erik Ø. Sørensen & Bertil Tungodden, 2015. "Social Preferences in the Lab: A Comparison of Students and a Representative Population," Scandinavian Journal of Economics, Wiley Blackwell, vol. 117(4), pages 1306-1326, October.
    18. Edward P. Lazear, 2000. "Performance Pay and Productivity," American Economic Review, American Economic Association, vol. 90(5), pages 1346-1361, December.
    19. Huck, Steffen & Rasul, Imran, 2011. "Matched fundraising: Evidence from a natural field experiment," Journal of Public Economics, Elsevier, vol. 95(5-6), pages 351-362, June.
    20. Steffen Altmann & Armin Falk & Matthias Wibral, 2012. "Promotions and Incentives: The Case of Multistage Elimination Tournaments," Journal of Labor Economics, University of Chicago Press, vol. 30(1), pages 149-174.
    21. Hannes Koppel & Tobias Regner, 2011. "Corporate Social Responsibility in the work place - Experimental evidence on CSR from a gift-exchange game," Jena Economic Research Papers 2011-030, Friedrich-Schiller-University Jena.
    22. Canice Prendergast, 2007. "The Motivation and Bias of Bureaucrats," American Economic Review, American Economic Association, vol. 97(1), pages 180-196, March.
    23. Blair Cleave & Nikos Nikiforakis & Robert Slonim, 2013. "Is there selection bias in laboratory experiments? The case of social and risk preferences," Experimental Economics, Springer;Economic Science Association, vol. 16(3), pages 372-382, September.
    24. Brekke, Kjell Arne & Nyborg, Karine, 2008. "Attracting responsible employees: Green production as labor market screening," Resource and Energy Economics, Elsevier, vol. 30(4), pages 509-526, December.
    25. Josse Delfgaauw & Robert Dur, 2008. "Incentives and Workers' Motivation in the Public Sector," Economic Journal, Royal Economic Society, vol. 118(525), pages 171-191, January.
    26. Linardi, Sera & McConnell, Margaret A., 2011. "No excuses for good behavior: Volunteering and the social environment," Journal of Public Economics, Elsevier, vol. 95(5-6), pages 445-454, June.
    27. Slonim, Robert & Wang, Carmen & Garbarino, Ellen & Merrett, Danielle, 2012. "Opting-In: Participation Biases in the Lab," IZA Discussion Papers 6865, Institute of Labor Economics (IZA).
    28. Markus Kitzmueller & Jay Shimshack, 2012. "Economic Perspectives on Corporate Social Responsibility," Journal of Economic Literature, American Economic Association, vol. 50(1), pages 51-84, March.
    29. Michèle Belot & Raymond Duch & Luis Miller, 2010. "Who should be called to the lab? A comprehensive comparison of students and non-students in classic experimental games," Discussion Papers 2010001, University of Oxford, Nuffield College.
    30. Bruce Shearer, 2004. "Piece Rates, Fixed Wages and Incentives: Evidence from a Field Experiment," Review of Economic Studies, Oxford University Press, vol. 71(2), pages 513-534.
    31. Ramon Casadesus-Masanell & Michael Crooke & Forest Reinhardt & Vishal Vasishth, 2009. "Households' Willingness to Pay for "Green" Goods: Evidence from Patagonia's Introduction of Organic Cotton Sportswear," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 18(1), pages 203-233, March.
    32. Imas, Alex, 2014. "Working for the “warm glow”: On the benefits and limits of prosocial incentives," Journal of Public Economics, Elsevier, vol. 114(C), pages 14-18.
    33. Armin Falk & Stephan Meier & Christian Zehnder, 2013. "Do Lab Experiments Misrepresent Social Preferences? The Case Of Self-Selected Student Samples," Journal of the European Economic Association, European Economic Association, vol. 11(4), pages 839-852, August.
    34. Daniel W. Elfenbein & Brian McManus, 2010. "A Greater Price for a Greater Good? Evidence That Consumers Pay More for Charity-Linked Products," American Economic Journal: Economic Policy, American Economic Association, vol. 2(2), pages 28-60, May.
    35. Rachel Croson & Uri Gneezy, 2009. "Gender Differences in Preferences," Journal of Economic Literature, American Economic Association, vol. 47(2), pages 448-474, June.
    36. Slonim, Robert & Wang, Carmen & Garbarino, Ellen & Merrett, Danielle, 2013. "Opting-in: Participation bias in economic experiments," Journal of Economic Behavior & Organization, Elsevier, vol. 90(C), pages 43-70.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. John A. List & Fatemeh Momeni, 2017. "When Corporate Social Responsibility Backfires: Theory and Evidence from a Natural Field Experiment," NBER Working Papers 24169, National Bureau of Economic Research, Inc.
    2. Jeworrek, Sabrina & Mertins, Vanessa, 2019. "Mission, motivation, and the active decision to work for a social cause," IWH Discussion Papers 10/2019, Halle Institute for Economic Research (IWH).
    3. Zahra Murad & Charitini Stavropoulou & Graham Cookson, 2019. "Incentives and gender in a multi-task setting: An experimental study with real-effort tasks," PLOS ONE, Public Library of Science, vol. 14(3), pages 1-18, March.
    4. Non, Arjan & Rohde, Ingrid & de Grip, Andries & Dohmen, Thomas, 2019. "Mission of the company, prosocial attitudes and job preferences: A discrete choice experiment," ROA Research Memorandum 006, Maastricht University, Research Centre for Education and the Labour Market (ROA).
    5. Fehrler, Sebastian & Przepiorka, Wojtek, 2016. "Choosing a partner for social exchange: Charitable giving as a signal of trustworthiness," Journal of Economic Behavior & Organization, Elsevier, vol. 129(C), pages 157-171.
    6. Stein, Caroline & Untertrifaller, Anna, 2020. "The effect of ethical responsibility on performance," MPRA Paper 99176, University Library of Munich, Germany.
    7. Mirco Tonin, 2020. "Are workers motivated by the greater good?," IZA World of Labor, Institute of Labor Economics (IZA), pages 138-138, July.
    8. Tonin, Mirco & Vlassopoulos, Michael, 2017. "Sharing one’s fortune? An experimental study on earned income and giving," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 66(C), pages 112-118.
    9. Banuri, Sheheryar & Keefer, Philip, 2016. "Pro-social motivation, effort and the call to public service," European Economic Review, Elsevier, vol. 83(C), pages 139-164.
    10. Vanessa C. Burbano, 2016. "Social Responsibility Messages and Worker Wage Requirements: Field Experimental Evidence from Online Labor Marketplaces," Organization Science, INFORMS, vol. 27(4), pages 1010-1028, August.
    11. Charness, Gary & Cobo-Reyes, Ramón & Sánchez, Ángela, 2016. "The effect of charitable giving on workers’ performance: Experimental evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 131(PA), pages 61-74.
    12. Reggiani, Tommaso G. & Rilke, Rainer Michael, 2020. "When Too Good Is Too Much: Social Incentives and Job Selection," IZA Discussion Papers 12905, Institute of Labor Economics (IZA).
    13. Daniel Jones & Mirco Tonin & Michael Vlassopoulos, 2018. "Paying for what kind of performance? Performance pay and multitasking in mission-oriented jobs," BEMPS - Bozen Economics & Management Paper Series BEMPS51, Faculty of Economics and Management at the Free University of Bozen.
    14. Lagarde, Mylène & Blaauw, Duane, 2017. "Physicians’ responses to financial and social incentives: A medically framed real effort experiment," Social Science & Medicine, Elsevier, vol. 179(C), pages 147-159.
    15. Yan Chen & Peter Cramton & John A. List & Axel Ockenfels, 2020. "Market Design, Human Behavior, and Management," NBER Working Papers 26873, National Bureau of Economic Research, Inc.
    16. Vanessa C. Burbano & John Mamer & Jason Snyder, 2018. "Pro bono as a human capital learning and screening mechanism: Evidence from law firms," Strategic Management Journal, Wiley Blackwell, vol. 39(11), pages 2899-2920, November.
    17. Vanessa, Mertins & Jeworrek, Sabrina & Vlassopoulos, Michael, 2018. ""The Good News about Bad News": Feedback about Past Organisational Failure Bad ist Impact in Worker Productivity," Annual Conference 2018 (Freiburg, Breisgau): Digital Economy 181644, Verein für Socialpolitik / German Economic Association.
    18. Kajackaite, Agne & Sliwka, Dirk, 2018. "Prosocial Managers, Employee Motivation, and the Creation of Shareholder Value," IZA Discussion Papers 11789, Institute of Labor Economics (IZA).
    19. Simone Haeckl & Rupert Sausgruber & Jean-Robert Tyran, 2018. "Work Motivation and Teams," Discussion Papers 18-08, University of Copenhagen. Department of Economics.
    20. Kajackaite, Agne & Sliwka, Dirk, 2017. "Social responsibility and incentives in the lab: Why do agents exert more effort when principals donate?," Journal of Economic Behavior & Organization, Elsevier, vol. 142(C), pages 482-493.
    21. Daniel Schwartz & Elizabeth A. Keenan & Alex Imas & Ayelet Gneezy, 2017. "Opting-in to Prosocial Incentives," CESifo Working Paper Series 6840, CESifo.
    22. Jeworrek, Sabrina & Mertins, Vanessa & Vlassopoulos, Michael, 2018. ""The good news about bad news": Feedback about past organisational failure and its impact on worker productivity," IWH Discussion Papers 1/2018, Halle Institute for Economic Research (IWH).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:inm:ormnsc:v:61:y:2015:i:8:p:1795-1811. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Matthew Walls). General contact details of provider: http://edirc.repec.org/data/inforea.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.