The impact of tourism firm’s philanthropy decision on its business objective

Abstract

This study explains the impact of tourism firm’s corporate philanthropy (CP) decision on its business objective in a competition environment from a strategic management perspective. Key results are summarized as follows. First, tourism firms can use CP as an effective strategy to compete for higher sales revenue and achieve their organizational objective of higher profit if CP generates market competitiveness. Second, if only one of the two competing tourism firms gives to charity and CP generates market competitiveness, the tourism firm’s giving will deteriorate its competitor’s performance. Third, if CP induces no competitive advantage, neither competing tourism firm has an incentive to engage in CP.

Does Corporate Charitable Giving Help Sustain Corporate Performance in China?

“…Wang et al [43] tested the link between CCG and CP (measured by sale growth, ROA, ROE, and TQ) in the Chinese hospitality industry; however, they did not find the same conclusion. The Chinese study pointed to an inverted U-shape relationship between CCG and SG, ROA, and ROE in the hotel industry, which suggests CCG can enhance ROA and ROE by increasing SG before CCG reaches the optimal level.…”

“…Given that the impact that CCG has on CP is different according to geographic location [1,37], Wang et al [43] studied the link between CCG and CP in the Chinese hospitality industry and found, for hotel firms, the relationship between CCG and SG, ROA, and ROE is an inverted U-shape. Both Chen and Lin [24] and Wang et al [43] studied the impact of CCG on the CP of the hospitality industry, but the empirical results were inconsistent.…”

“…Given that the impact that CCG has on CP is different according to geographic location [1,37], Wang et al [43] studied the link between CCG and CP in the Chinese hospitality industry and found, for hotel firms, the relationship between CCG and SG, ROA, and ROE is an inverted U-shape. Both Chen and Lin [24] and Wang et al [43] studied the impact of CCG on the CP of the hospitality industry, but the empirical results were inconsistent. With the majority of previous studies on CCG being conducted by researchers from the United States (U.S.) (74%) and the United Kingdom (U.K.) (13%) [45], Wang et al [43] noted that there is limited research available to address the relationship between CCG and CP in China.…”

“…Both Chen and Lin [24] and Wang et al [43] studied the impact of CCG on the CP of the hospitality industry, but the empirical results were inconsistent. With the majority of previous studies on CCG being conducted by researchers from the United States (U.S.) (74%) and the United Kingdom (U.K.) (13%) [45], Wang et al [43] noted that there is limited research available to address the relationship between CCG and CP in China.…”

“…Wang and Qian [11] further tested the relationship between CCG and CP measured by ROA and market-to-book ratio and concluded CCG is positively related to ROA but showed no significant connection between CCG and market-to-book ratio. Based on the premise that Previous empirical studies offer mixed findings [3,4,[6][7][8]24,36,43,44] about the relationship between CCG and CP, especially when using ROA, ROE, and return on sales (ROS) as the means of measurement. For example, Griffin and Mahon [7] found that CCG is not correlated with CP when measured by ROE, ROS, or ROA.…”