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

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  • 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
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    References listed on IDEAS

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    Cited by:

    1. Gosnell, Greer & Metcalfe, Robert & List, John A, 2016. "A new approach to an age-old problem: solving externalities by incenting workers directly," LSE Research Online Documents on Economics 84331, London School of Economics and Political Science, LSE Library.
    2. 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.
    3. 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.
    4. 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.
    5. Lea Cassar, 2014. "Job mission as a substitute for monetary incentives: experimental evidence," ECON - Working Papers 177, Department of Economics - University of Zurich.
    6. 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.
    7. 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.
    8. repec:bla:stratm:v:38:y:2017:i:11:p:2310-2329 is not listed on IDEAS
    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. Xiaoyang Li & Yue Maggie Zhou, 2016. "Offshoring Pollution While Offshoring Production," Working Papers 16-09r, Center for Economic Studies, U.S. Census Bureau.
    11. Xiaoyang Li & Yue M. Zhou, 2016. "Offshoring Production while Offshoring Pollution?," Working Papers 16-09, Center for Economic Studies, U.S. Census Bureau.
    12. repec:eee:jeborg:v:142:y:2017:i:c:p:482-493 is not listed on IDEAS
    13. Daniel Schwartz & Elizabeth A. Keenan & Alex Imas & Ayelet Gneezy, 2017. "Opting-in to Prosocial Incentives," CESifo Working Paper Series 6840, CESifo Group Munich.
    14. 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).

    More about this item

    Keywords

    financial incentives; social incentives; prosocial behavior; real effort experiment; corporate philanthropy; corporate social responsibility; gender;

    JEL classification:

    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions
    • L30 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - General
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects

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