Academy of Management Review

A Theory of Collective Empathy in Corporate Philanthropy Decisions

Journal: Academy of Management Review

Manuscript ID: AMR-2012-0031-Original.R3

Manuscript Type: Original Manuscript

Keyword: Emotions, Corporate Social Responsibility, Organizational Theory

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1 2 3 4 5 6 7 8 A THEORY OF COLLECTIVE EMPATHY IN CORPORATE PHILANTHROPY 9 10 11 DECISIONS 12 13 14 15 Alan R. Muller 16 University of Amsterdam 17 18 Plantage Muidergracht 12 19 1018 TV Amsterdam 20 [email protected] 21 22 Michael D. Pfarrer 23 24 University of Georgia 25 430 Brooks Hall 26 Athens, GA 30602-6264 27 [email protected] 28 29 Laura M. Little 30 31 University of Georgia 32 408 Brooks Hall 33 Athens, GA 30602-6264 34 [email protected] 35 36 37 38 Acknowledgements: 39 We would like to acknowledge the helpful comments of our associate editor, Neal Ashkanasy, 40 and three anonymous reviewers. We would also like to thank the following for fruitful 41 conversations about the ideas in this manuscript, or their insights on previous versions: Frank 42 Belschak, Flore Bridoux, Jon Bundy, Deanne den Hartog, Jane Dutton, Janaki Gooty, Ans Kolk, 43 44 Arno Kourula, Jacoba Lilius, Morela Hernandez, Jessica Rodell, John Paul Stephens, Gail 45 Whiteman, Nachoem Wijnberg, and participants in the University of Amsterdam Business 46 School’s ISM brown bag series. An earlier version of this paper was presented at the 2011 47 Academy of Management Annual Meeting. 48 49 50 51 52 53 54 55 56 57 58 59 60 1

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1 2 3 A THEORY OF COLLECTIVE EMPATHY IN CORPORATE PHILANTHROPY 4 5 6 DECISIONS 7 8 9 10 11 ABSTRACT 12 13 Prevailing perspectives of corporate philanthropy are predominantly rational and limit decision 14 15 making to the executive suite. Recently, however, recognition has grown that employees are also 16 17 18 important drivers of corporate philanthropy efforts and that their motives may be more empathic 19 20 in nature. Integrating arguments from affective events theory, intergroup emotions theory, and 21 22 affect infusion theory, we develop a framework in which organization members’ collective 23 24 25 empathy in response to the needs of unknown others infuses executives’ decisions, thereby 26 27 affecting the likelihood, scale, and form of corporate philanthropy. Our theory has implications 28 29 for research on emotions in organizations as well as for our understanding of the role of 30 31 32 organizations in society. 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 2

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1 2 3 A THEORY OF COLLECTIVE EMPATHY IN CORPORATE PHILANTHROPY 4 5 6 DECISIONS 7 8 Corporate philanthropy is a type of organizational social engagement that involves the 9 10 11 allocation of time, money, or goods aimed at addressing a social need (Foundation Center, 2009). 12 13 Scholars, however, continue to debate why organizations give as well as how these decisions 14 15 take shape. Prevailing views once considered philanthropy as a misappropriation of shareholder 16 17 18 wealth by the executive (Friedman, 1970) or as a self-interested managerial perquisite (Fry, 19 20 Meiner, & Keim, 1982; Barnard, 1997). Over time, calls to align corporate philanthropy with 21 22 broader business objectives (Porter & Kramer, 2006) have led to a widespread interpretation of 23 24 25 philanthropy as a tool that executives use to achieve strategic goals (Lee, 2008). For example, 26 27 corporate philanthropy has been described as a marketing instrument (Sen, Bhattacharya, & 28 29 Korschun, 2006), a reputation management mechanism (Brammer & Millington, 2005), and a 30 31 32 tool to manage financial flows (Lev, Petrovits, & Radhakrishnan, 2010). 33 34 In contrast to this primarily top-down, rational interpretation, researchers have 35 36 37 increasingly recognized that alongside the executive decision makers, other employees are also 38 39 important actors in corporate philanthropy (e.g., Kim, Lee, Lee, & Kim, 2010). Specifically, 40 41 recent work suggests that employees do not just passively await philanthropy decisions from the 42 43 44 executive suite but rather are important drivers of, and participants in, corporate philanthropy 45 46 initiatives from the “bottom up” (Aguilera, Rupp, Williams, & Ganapathi, 2007; Chong, 2009; 47 48 Maclagan, 1999). Additionally, employee involvement in corporate philanthropy appears to be 49 50 51 driven more by emotional mechanisms such as a collectively shared desire to help others in need 52 53 than by individual rational considerations such as job-skills enhancement or organizational 54 55 rewards (Comer & Cooper, 2002; Grant, Dutton, & Russo, 2008; Peterson, 2004). 56 57 58 59 60 3

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1 2 3 The disparity between the rational interpretation at the executive level and the emotional 4 5 6 interpretation at the employee level is particularly striking in light of research showing that 7 8 philanthropy outside the organizational context, as an “active effort to promote human welfare” 9 10 11 (Merriam-Webster Dictionary, 2011), is primarily motivated by feelings of empathy (Batson, 12 13 1998; Bekkers, 2005). Empathy is an other-oriented emotional response elicited by and 14 15 congruent with the perceived welfare of a person in need, and which forms a potent source of 16 17 18 motivation to help relieve the empathy-inducing need (Batson et al., 2007; Kanov, Maitlis, 19 20 Worline, Dutton, Frost, & Lilius, 2004). The other-directed, reparative action tendencies 21 22 associated with empathy stem from appraisals of how others are affected by their plight (Gault & 23 24 25 Sabini, 2000; Oveis, Horberg, & Keltner, 2010). Thus far, however, organizational research has 26 27 not explicitly considered empathy in relation to corporate philanthropy. 28 29 Given the contrast between the prevailing view of corporate philanthropy as a rational, 30 31 32 executive-level decision and the empathic nature of employees’ collective involvement, a closer 33 34 examination of the links between the empathy of organization members and executive-level 35 36 37 corporate philanthropy decision making is needed. To address this gap, we integrate arguments 38 39 from three theories of emotions in organizations to develop a multi-level theory of empathy in 40 41 corporate philanthropy decisions. Specifically, we draw on affective events theory (AET; 42 43 44 Ashkanasy & Humphrey, 2011; Weiss & Cropanzano, 1996) to illustrate how the needs of others 45 46 outside the organization arouse empathy in individuals inside the organization; intergroup 47 48 emotions theory (IET; Barsade, 2002; Mackie, Devos, & Smith, 2000) to explain how individual 49 50 51 empathic emotion then converges to become collective; and the affect infusion model (AIM; 52 53 Forgas, 1995; Lerner & Keltner, 2000) to explicate how the executive’s corporate philanthropy 54 55 decision making is infused with that collective empathic emotion. Drawing from these 56 57 58 59 60 4

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1 2 3 theoretical foundations, we also highlight individual, interpersonal, and organization-level 4 5 6 factors that moderate empathy arousal, convergence, and infusion. 7 8 Our theoretical framework complements existing approaches to both corporate 9 10 11 philanthropy and emotion in organizations in three primary ways. First, we offer a more 12 13 comprehensive and affective view to explain why some organizations are more likely to respond 14 15 to the needs of others, do so on a higher scale , and adopt for higher-involvement forms of giving, 16 17 18 despite the limited strategic benefit recipients provide to the organization (Haslam, Reicher, & 19 20 Levine, 2011). This more participative perspective of organizations’ social behaviors (Maclagan, 21 22 1999; Takala & Pallab, 2000) represents a major shift away from traditional models of the 23 24 25 philanthropic manager as a “lone actor” (Laroche, 1995: 64) making a rational, utilitarian 26 27 business decision (Porter & Kramer, 2006). Second, by explaining how external events can elicit 28 29 empathy among organization members that affects executives’ philanthropy decisions from the 30 31 32 bottom up, we integrate arguments from AET, IET and AIM in order to broaden our 33 34 understanding of the role of emotions in organizational decision-making processes, and thus the 35 36 37 emotional foundations of organizational action, across organizational levels (Ashton-James & 38 39 Ashkanasy, 2008; Barsade & Gibson, 2012; Etzioni, 1988; Forgas, 1995). Third, we offer a 40 41 model in which human need, as a specific type of affective event, triggers processes related to 42 43 44 empathy, a specific emotion. By explicating the effects of a specific emotion’s appraisal and 45 46 action tendencies, we provide a more nuanced understanding of the workings of discrete 47 48 emotions in organizations (Briner & Kiefer, 2005; Cropanzano, Weiss, Hale, & Reb, 2003; 49 50 51 Gooty, Gavin, & Ashkanasy, 2009). 52 53 In the pages that follow, we begin by discussing the limitations of the top-down rational 54 55 view of corporate philanthropy decisions, given how little is known about how such decisions 56 57 58 59 60 5

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1 2 3 are made and on what criteria they are based. Next, we discuss how the philanthropy decision is 4 5 6 clouded in uncertainty and ambiguity, circumstances that allow for emotion in general and 7 8 empathy more specifically to affect decision making. We then link this empathic view with 9 10 11 research on emotions in organizations to develop a bottom-up theory of collective empathy in 12 13 corporate philanthropy decisions. In subsequent sections, we explain the roles of emotion- 14 15 specific factors and more general organizational structures that in concert enable the process. We 16 17 18 conclude with a discussion of the theoretical and practical implications of our theory. 19 20 CORPORATE PHILANTHROPY DECISIONS AND EMPATHY 21 22 Evidence suggests that organizations are increasingly important contributors in times of 23 24 25 human need (Fritz Institute, 2005; U.S. Chamber of Commerce, 2010). Data shows that the scale 26 27 of corporate giving has increased in recent years even as charity from other sources has stagnated 28 29 (GivingUSA, 2011). Corporate giving is directed at a wide range of social issues, from donating 30 31 32 medicines to fight AIDS (Dunfee, 2006) and river blindness in Africa (Dunfee & Hess, 2000) to 33 34 allocating resources to disaster relief in the wake of catastrophic events (Crampton & Patten, 35 36 37 2008; Muller & Whiteman, 2009; Zhang, Rezaee, & Zhu, 2009). Corporate philanthropy also 38 39 takes various forms , limited not only to cash and in-kind donations but increasingly including 40 41 employee matching programs and employee time in the form of corporate volunteering (Fry et 42 43 44 al., 1982; Grant, 2012; Marquis, Glynn, & Davis, 2007). 45 46 Yet organizational scholars primarily study corporate philanthropy as a business tool 47 48 embedded in the broader domain of strategic, business-related decisions (Lee, 2008; Porter & 49 50 51 Kramer, 2002; Saiia, Carroll, & Buchholtz, 2003; Sen et al., 2006). This strategic perspective 52 53 proposes that managers should think purposefully about how addressing social causes may 54 55 generate fiscal and financial benefits (Lev et al., 2011; Navarro, 1998; Useem, 1988) or 56 57 58 59 60 6

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1 2 3 marketing and reputational value (Bhattacharya et al., 2008; Brammer & Millington, 2005). By 4 5 6 aligning philanthropy decision making with the strategic goals of the organization (Marquis & 7 8 Lee, 2012), an organization is supposed to avoid the ineffective “hodgepodge of uncoordinated 9 10 11 CSR and philanthropic activities disconnected from the company’s strategy” (Porter & Kramer, 12 13 2006: 4) and be able to enhance its “competitive context” (Porter & Kramer, 2002: 3). Thus, the 14 15 prevailing paradigm depicts corporate philanthropy as a rational business decision made in the 16 17 18 executive suite, based on clear strategic criteria (Figure 1). Once aware of a given human need, 19 20 be it illiteracy, health, or the environment, the executive assesses whether the need helps the 21 22 organization achieve overall strategic, reputational, or financial goals. When such considerations 23 24 25 are assessed positively, the executive will allocate organizational resources towards alleviating 26 27 that need on the expectation that doing so will generate tangible benefits for the organization. 28 29 ------30 31 32 Insert Figure 1 about here 33 34 ------35 36 37 However, research on how likely companies are to donate, the scale of resources they 38 39 allocate, and the form in which they donate is highly fragmented, and thus little is known about 40 41 how corporate philanthropy decisions are made. For instance, research suggests that companies 42 43 44 are more likely to give, and to give more, when the human need in question is related to business 45 46 considerations (Dunfee & Hess, 2006; Hess, 2000) or is geographically proximate to the 47 48 organization (Crampton & Patten, 2007; Muller & Whiteman, 2009), but the underlying motives 49 50 51 are only inferred and the decision itself remains a black box. Other research has theorized about 52 53 conformity across firms when it comes to forms of corporate philanthropy (e.g., cash or 54 55 volunteering; [cf. Marquis et al., 2007]) but not the circumstances under which organizations opt 56 57 58 59 60 7

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1 2 3 for one form over another. Similarly, while research links volunteering to “bottom-up grassroots 4 5 6 efforts of employees” (Grant, 2012: 590), no known research has addressed the mechanisms and 7 8 processes associated with executives’ decisions to allocate employee time to charity. 9 10 11 Thus, the reality of corporate philanthropy decisions appears to be more complex, and 12 13 our conceptual understanding less developed, than the prevailing paradigm in Figure 1 would 14 15 suggest. In spite of their strategic prescriptions, for instance, Porter and Kramer (2002: 6) 16 17 18 observe that corporate philanthropy decisions are typically made in a much more ad hoc fashion, 19 20 often based on “beliefs and values.” Instead of systematically assessing the degree to which 21 22 philanthropy will “enhance the competitive context” (Porter & Kramer, 2002: 3) or generate 23 24 25 quantifiable “moral reputational capital” (Godfrey, 2005: 783), executives seem to make gut- 26 27 level decisions influenced by an underspecified set of considerations. Thus even though a 28 29 majority of executives report considering business goals when making philanthropy decisions 30 31 32 (Galaskiewicz, 1997), such goals do not appear to be the overriding evaluation element when 33 34 they are deciding whether to respond to a given need with charity (likelihood), at which level 35 36 37 (scale), and with which resources (form). 38 39 One key reason the philanthropy decision is unlikely to be based on purely rational 40 41 considerations stems from the mixed signals managers receive from the external environment 42 43 44 regarding philanthropy’s potential value to the organization. As mixed empirical evidence on the 45 46 relationship between corporate philanthropy and financial performance shows, it is unclear if or 47 48 how philanthropy serves strategic business objectives (Brammer & Millington, 2008; Dean, 2003; 49 50 51 Godfrey, 2005). Charity recipients are often unknown or “unidentifiable” others (Small, 52 53 Loewenstein, & Slovic, 2007: 144), faceless “statistical populations” (Trout, 2009: 53) whose 54 55 ability to deliver future benefits to the firm is far from clear. Thus the potentially business- 56 57 58 59 60 8

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1 2 3 strategic information upon which corporate philanthropy decisions might be based is often either 4 5 6 absent or ambiguous. For these reasons, some scholars see corporate philanthropy as unrelated to 7 8 business, subject instead to executive discretion (Carroll, 2004). However, while research has 9 10 11 sought to explain variance in the amount of discretion executives enjoy (Galaskiewicz, 1997), 12 13 the criteria that inform an executive’s discretionary decision remain unclear. In conclusion, there 14 15 appear to be few clear-cut decision rules in terms of when to engage in corporate philanthropy, at 16 17 18 what scale, and in what form. If the information driving decision-making is ambiguous and the 19 20 potential benefit for the organization uncertain, the prevailing view of corporate philanthropy as 21 22 a calculative, rational decision appears limited (Barnard, 1997). 23 24 25 Corporate Philanthropy as the Outcome of an Affect-Infused Decision 26 27 Highlighting the limitations of the rational perspective, a growing body of research based 28 29 on the affect infusion model (AIM) shows that when the criteria for corporate decisions are 30 31 32 ambiguous and their impact on an organization’s bottom line is uncertain, emotions play a key 33 34 role in decisions making (Forgas, 1995; Huy, 2012). Emotions are “activities of 35 36 37 perceptual/motivational/affective systems” (Gault & Sabini, 2000: 497) that, when triggered, 38 39 lead to specific appraisal tendencies and action tendencies that affect decision making. Appraisal 40 41 tendencies are emotion-specific perceptual processes that interrupt ongoing cognitive processes 42 43 44 and direct attention, memory, and judgment, thereby coloring the interpretation of stimuli 45 46 (Lerner & Keltner, 2000). Action tendencies are “prewired action patterns” (Frijda, Kuipers & 47 48 ter Schure, 2009: 213) or “states of readiness to execute a given kind of action” (Frijda, 1986: 49 50 51 70) associated with specific appraisal patterns. Anger, for example, is an individual-focused 52 53 emotion triggered by events perceived as personally offensive. Anger leads to appraisals that 54 55 others are responsible for subsequent events and leads to retaliatory, punitive action tendencies 56 57 58 59 60 9

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1 2 3 aimed at preserving or enhancing self-esteem (Gault & Sabini, 2000; Lerner & Keltner, 2000; 4 5 6 Oveis, Horberg, & Keltner, 2010). 7 8 Through appraisal and action tendencies, emotions guide information processing, 9 10 11 influencing what information is attended to, what is likely to be recalled and acted upon, and 12 13 what is ignored (Nabi, 2003). This selective information processing, or “infusion” (Forgas, 1995), 14 15 allows emotions to affect the considerations that are used in the decision-making process and 16 17 18 how those considerations are evaluated (Etzioni, 1988). Thus, emotion infusion leads to an 19 20 affective re-ranking of available options and, ultimately, a different decision outcome than would 21 22 occur under rational criteria alone (Gaudine & Thorne, 2001). If emotion infusion is particularly 23 24 25 relevant for decisions made under uncertainty and ambiguity (Elfenbein, 2007; Forgas, 1995; 26 27 Huy, 2012), then the uncertainty and ambiguity associated with corporate philanthropy decisions 28 29 means that emotion is likely to be an important but understudied element in those decisions. 30 31 32 Employees’ Collective Empathy as a Source of Affect Infusion 33 34 In particular, corporate philanthropy decision-making processes are likely to be infused 35 36 37 with empathy . Empathy, associated with feelings like compassion, sympathy, tenderness, and 38 39 softheartedness, refers to other-directed emotion aroused in response to the needs of others that 40 41 elicits care-taking behavior (Batson et al., 2007). The appraisal tendencies of empathy are 42 43 44 societally focused, creating perceptions of similarity with those in need and leading to action 45 46 tendencies aimed at reparative behaviors such as altruism and helping (Gault & Sabini, 2000; 47 48 Lazarus, 1991). While empathy is increasingly recognized as an important emotion in the 49 50 51 organizational context (Batson, Batson, Todd, Brummet, Shaw, & Aldeguer, 1995; Kellett, 52 53 Humphrey, & Sleeth, 2002; 2006; Sadri, Weber, & Gentry, 2011), most research thus far has 54 55 focused on the role of empathy in addressing the needs of others inside the organization (Grant, 56 57 58 59 60 10

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1 2 3 Dutton, & Russo, 2008). For example, when an organization member experiences the loss of a 4 5 6 loved one or takes ill, his or her colleagues may be moved to help by providing emotional 7 8 support, organizing a rotating schedule to cover missed shifts, or helping out with household 9 10 11 tasks (Lilius, Kanov, Dutton, Worline, & Maitlis, 2011a). 12 13 Yet affective events theory (AET) suggests that events outside the organization can also 14 15 evoke emotions inside the organization (Ashton-James & Ashkanasy, 2008). In the context of 16 17 18 our theorizing, evidence indicates that the empathic desire to enhance the well-being of others 19 20 outside the organization is a key factor underlying organizational responsiveness to human needs. 21 22 In a release following the 2010 Haiti earthquake, for instance, Sanofi-Aventis (2010) spoke of its 23 24 25 donation as an expression of its employees’ “sincere compassion” in the face of victims’ “dire 26 27 need.” In this fashion, the role of organizational leadership is geared more towards facilitating, 28 29 rather than directing, employees’ desire to respond. At LeasePlan, employees note, “[We] come 30 31 32 up with ideas and our management not only lets us run with them, but they also embrace and 33 34 participate in our ideas” (Tierney, 2011: 8G). Recent work also suggests that employees’ urges to 35 36 37 help lead to forms of corporate philanthropy that engage employees more actively, such as 38 39 volunteering and employee matching programs. For example, instead of simply writing a check 40 41 in the wake of the 2004 South Asian tsunami, DHL facilitated its employees’ desires to help by 42 43 44 flying scores of volunteers in to Sri Lanka, India, Indonesia, and the Maldives (Chong, 2009). In 45 46 response to that same disaster, Cisco employees donated more than $460,000, which the 47 48 company pledged to match dollar-for-dollar (Cisco, 2004). Thus empathy, particularly among 49 50 51 employees, seems to be a factor in when and how organizations respond to the needs of others. 52 53 Moreover, intergroup emotions theory (IET; Smith, Seger, & Mackie, 2007), suggests 54 55 that empathy, as an inherently other-directed and social emotion, can become collective , i.e., a 56 57 58 59 60 11

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1 2 3 palpable attribute of a group that defines the group as more than just an aggregation of 4 5 6 individuals (Ashkanasy & Humphrey, 2011; Barsade, 2002; Huy, 2011). By strengthening the 7 8 bonds of group membership, collective emotions carry more powerful action tendencies than 9 10 11 individual emotions (Barsade & Gibson, 2012; Mackie et al., 2007). Given that executive 12 13 decisions can be subject to infusion by collective emotions (Huy, 1999; Parkinson & Simons, 14 15 2009; Sanchez-Burks & Huy, 2009; van Kleef, de Dreu, & Manstead, 2010), collective empathy 16 17 18 can influence executives to make philanthropy decisions that reflect the empathic action 19 20 tendencies of the group (LeBon, 1896; Smith et al., 2007). Thus, anecdotal and scholarly 21 22 evidence suggests that corporate philanthropy decisions are not exclusively calculative decisions 23 24 25 made in isolation by rationally-minded “corporate leaders” (Grant, 2012; Marquis & Lee, 2012) 26 27 as Figure 1 depicts, but rather can be linked to the collectively shared empathic desire of 28 29 employees to respond to the needs of others outside the organization. 30 31 32 What is needed, therefore, is a more comprehensive model of corporate philanthropy 33 34 decisions in order to more fully understand the relationships we advance in Proposition 1. Figure 35 36 37 2 illustrates such a model. Specifically, by integrating arguments from AET, IET, and AIM, we 38 39 explicate how and when feelings of empathy are aroused among employees in response to the 40 41 needs of others outside the organization; how and when they converge and become collective; 42 43 44 and how and when they infuse executives’ corporate philanthropy decisions such that they affect 45 46 the likelihood of donating, the scale of the donation, and the form chosen. 47 48 ------49 50 51 Insert Figure 2 about here 52 53 ------54 55 56 57 58 59 60 12

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1 2 3 By highlighting processes of empathy arousal, convergence, and infusion, our model 4 5 6 extends the rational perspective presented previously in Figure 1, in which decision-making is 7 8 restricted to the executive suite alone. In line with research demonstrating the importance of 9 10 11 empathy for the likelihood, scale, and form of charitable behavior outside the organization 12 13 (Batson, 1998; Batson, Fultz, & Schoenrade, 1987; Bekkers, 2005; Frey & Meier, 2004) and for 14 15 other-directed helping behavior inside the organization (Dutton et al., 2006; Kanov et al., 2004), 16 17 18 our model explicates how empathy affects these decision outcomes from the bottom up. In doing 19 20 so, our model exposes the rational paradigm’s neglect of these fundamental emotional processes 21 22 related to corporate philanthropy. 23 24 25 Additionally, just as individuals and organizations do not always respond 26 27 philanthropically to a given need, processes of empathic arousal, convergence, and infusion do 28 29 not always unfold in response to a human need outside the organization. AET establishes how 30 31 32 individual emotion is subject to variation based on dispositional features and perceptions of the 33 34 affective event (Ashton-James & Ashkanasy, 2008; Weiss & Cropanzano, 1996); we therefore 35 36 37 consider individual-level factors that affect the degree to which a human need arouses feelings of 38 39 empathy. IET research shows that emotion convergence hinges on the intensity and nature of 40 41 interpersonal interaction (Kelly & Barsade, 2001; Smith et al., 2007); we therefore consider 42 43 44 factors that enable interpersonal-level processes of empathy convergence. Further, as our model 45 46 unfolds in the organization as a whole (Figure 2) as opposed to the executive suite alone (Figure 47 48 1), we consider the role of organizational features that propagate and legitimate empathy, 49 50 51 enabling affect infusion from the bottom up (Dutton, Worline, Frost, & Lilius, 2006; Kanov et al., 52 53 2004). Thus our model is built on the interplay between emotion-specific factors and more 54 55 general organizational structures, which in concert facilitate empathic arousal, convergence, and 56 57 58 59 60 13

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1 2 3 infusion in organizations. We begin by exploring how human needs are affective events that 4 5 6 arouse empathy inside organizations, as depicted in Figure 2. 7 8 A MODEL OF COLLECTIVE EMPATHY IN CORPORATE PHILANTHROPY 9 10 11 DECISIONS 12 13 Human Needs as Empathy-Arousing Affective Events 14 15 AET holds that discrete events give rise to specific emotions in individuals in the work 16 17 18 environment depending on whether the event has relevance for the individual’s personal goals or 19 20 objectives (Weiss & Cropanzano, 1996). Although AET was initially aimed at explaining how 21 22 events inside the organization can affect individual-level attitudes and behaviors, Ashton-James 23 24 25 and Ashkanasy (2005) extended this perspective to include extra-organizational events that have 26 27 relevance for the organization as a whole. For instance, research has shown how “environmental 28 29 jolts” (Meyer, 1982) that impact organizations, such as changes in the regulatory environment, 30 31 32 also have affective consequences for organization members (Venkataraman & van de Ven, 1998). 33 34 For any given organization, some external events will be more relevant than others, and thus 35 36 37 some external events will be more likely than others to arouse emotions among the members of 38 39 that organization. 40 41 As noted previously, human needs arouse empathy, an other-directed emotion that elicits 42 43 44 reparative behaviors such as altruism and helping (Batson et al., 2007; Gault & Sabini, 2000; 45 46 Lazarus, 1991). Given the wide span of human needs, organization members are not likely to 47 48 perceive all human needs as equally relevant for their organization. Rather, human needs are 49 50 51 more likely to be perceived as relevant—and thus arouse empathy among organization 52 53 members—when there is alignment between the pursuit of organization members’ work-related 54 55 objectives and alleviating a particular need. Alignment means that organization members possess 56 57 58 59 60 14

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1 2 3 the adaptive resources required to cope with the stimulus. In the case of corporate philanthropy, 4 5 6 this alignment manifests itself in the ability to contribute to the alleviation of a given human need 7 8 (Ashton-James & Ashkanasy, 2005). From this perspective, it is no coincidence that Intel aims 9 10 11 philanthropy at science education among elementary and high school students in developing 12 13 countries, DHL provides logistics for the delivery of humanitarian aid, and Merck donates 14 15 medication in sub-Saharan Africa (Chong, 2009; Dunfee & Hess, 2000). Whereas the strategic 16 17 18 paradigm would argue that these patterns reflect rational choices driven by the prospect of 19 20 financial gain, conclusive empirical support for such a link remains elusive (Bhattacharya, 21 22 Korschun, & Sen, 2009) and thus utilitarian gain cannot be the primary rationale driving these 23 24 25 philanthropy outcomes. In contrast, AET suggests that those human needs which members of the 26 27 organization are best “equipped to deal with” (Ashton-James & Ashkanasy, 2005: 36) are most 28 29 likely to spill over the organizational boundary (cf. Rothbard, 2001) and arouse empathy in 30 31 32 organization members. We therefore propose the following: 33 34 Proposition 1: The more organization members perceive an organization-external human 35 36 37 need to be relevant to their organization, the more likely they are to experience empathic 38 39 arousal in response to that need. 40 41 42 However, research based on AET suggests that events do not arouse empathy in 43 44 individuals in organizations to the same degree (Huy, 2002; Sanchez-Burks & Huy, 2009). 45 46 47 Rather, the affective significance of an event is contingent upon characteristics of the observer 48 49 (Ashton-James & Ashkanasy, 2008). In line with these assumptions, we examine two factors that 50 51 52 affect individual organization members’ experiences of empathy in response to human needs 53 54 outside the organization. 55 56 57 58 59 60 15

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1 2 3 Vividness of human need. Vividness is a quality characterizing the perception of stimuli 4 5 6 as emotionally interesting and temporally, sensorially, or spatially proximate and speaks to the 7 8 relevance of the event in the eyes of the observer. Vivid imagery of human beings in need can 9 10 11 trigger the visceral responses and physiological arousal in observers that are the precursors to the 12 13 empathic urge to help (Arnold, 1960; Hendriks & Vingerhoets, 2006; Loewenstein, 1996; Maitlis 14 15 & Sonenshein, 2010; Marsh & Ambady, 2007), as demonstrated in research on donations in 16 17 18 response to the 2004 South Asian tsunami (Smith & McSweeny, 2007) and the 2001 “9/11” 19 20 attacks (Piferi et al., 2006). In the context of our theorizing, we propose that by altering 21 22 perceptions of proximity to those in need, vividness affects whether the empathy-evoking 23 24 25 properties of that need arouse empathy in the workplace irrespective of the human need’s 26 27 relevance for the organization or workplace functioning (Dutton et al., 2006; Judge & Ilies, 2004; 28 29 Mennino, Rubin, & Brayfield, 2005; Rothbard, 2001). Based on these arguments, we propose: 30 31 32 Proposition 2a: The more vivid an organization member’s perception of a human need 33 34 outside the organization, the more intense the arousal of empathy. 35 36 37 Centrality of moral identity. In addition to the perceived features of the need itself, 38 39 40 individual dispositional characteristics also influence the intensity of empathic arousal. Cognitive 41 42 appraisals of need acuity and others’ deservingness form an individual-level regulative 43 44 mechanism that can either amplify or attenuate empathic arousal (Fong, 2007; Goetz, Keltner, & 45 46 47 Simon-Thomas, 2010). Such appraisals are contingent upon the extent to which the observer 48 49 identifies with those in need. That is, those in need must be “easily imaginable individuals rather 50 51 52 than statistical populations” (Trout, 2009: 53). The degree of identification with those in need 53 54 affects appraisals of self-other similarity which, by blurring the self-other boundary, drives 55 56 57 58 59 60 16

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1 2 3 empathic arousal in the observer (Batson, Sager, Garst, Kang, Rubchinsky, & Dawson, 1997; 4 5 6 Davis, 2004; Oveis et al., 2010). 7 8 The appraisal of self-other similarity is evident when others in need are familiar, such as 9 10 11 family, friends, or colleagues (Goetz et al., 2010). Human needs outside the organization, 12 13 however, are typically associated with unknown others. In that case, the appraisal of self-other 14 15 similarity will be linked to the centrality of organization members’ moral identity . Moral identity 16 17 18 is a facet of individual identity that governs whether an individual considers others to be objects 19 20 of his or her concern (Frijda, 1988; Reed, Aquino, & Levy, 2007). Since moral identity varies in 21 22 its centrality to the self-concept (Aquino & Reed, 2002; Treviño, Weaver, & Reynolds, 2006), 23 24 25 individuals with greater centrality of moral identity have a more extensive “circle of moral 26 27 regard” (Reed & Aquino, 2003: 1271) in which a larger pool of others are considered objects of 28 29 the observer’s concern (Frijda, 1988). Thus individuals with greater centrality of moral identity 30 31 32 are more likely to experience other-regarding emotions like empathy in response to the needs of 33 34 others, even if those others are unknown or hard to identify with (Small et al., 2007; Trout, 2009). 35 36 37 We therefore propose: 38 39 Proposition 2b: The greater the centrality of an organization member’s moral identity, the 40 41 more intense the arousal of empathy. 42 43 44 45 Intergroup Emotions and Empathy Convergence 46 47 Research based on IET suggests that interactions between individual organization 48 49 members experiencing feelings of empathy can lead to convergence of members’ empathic states 50 51 52 through both implicit and explicit sharing processes (Barsade, 2002; Kelly & Barsade, 2001; 53 54 Smith et al., 2007). Implicit sharing processes occur when individuals unconsciously spread 55 56 empathy through the organization by expressing their own feelings. For example, facial 57 58 59 60 17

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1 2 3 expressions or physiological manifestations of empathic arousal trigger similar emotional 4 5 6 experiences for organization members (Sanchez-Burks & Huy, 2009). Alternatively, individuals 7 8 may vicariously place themselves in another person’s circumstance (Lazarus, 1991). Explicit 9 10 11 emotional sharing processes occur when individuals consciously adopt or actively attempt to 12 13 influence others’ emotions. For instance, one organization member’s expressed empathy may be 14 15 openly evaluated by others as a signal of how they should appropriately feel (Barsade, 2002), or 16 17 18 one organization member may intentionally induce empathy in others by vividly describing those 19 20 in need. Research also suggests that the more intense the emotion aroused in individual members, 21 22 the more intensely emotions are shared and the greater the degree to which they converge 23 24 25 (Barsade, 2002; Rimé, 2007). Empathy, as an inherently social emotion, lends itself particularly 26 27 well to sharing and convergence (Smith et al., 2007). 28 29 As organization members’ empathic emotions converge, that empathy takes on properties 30 31 32 of a collective phenomenon, becoming a palpable attribute of a group (Ashkanasy & Humphrey, 33 34 2011; Barsade & Gibson, 1998). Collective empathy is qualitatively different from the sum of 35 36 37 individual empathy for a number of reasons. First, individuals can experience collective 38 39 emotions such as empathy even when they are not personally involved in or exposed to the 40 41 empathy-arousing event through processes known as secondary or tertiary sharing (Rimé, 2007). 42 43 44 Second, the group sharing processes underlying convergence are typically recurrent, such that 45 46 collective empathy is continually reactivated and thus sustained at higher intensity levels than 47 48 any one individual’s empathy alone (Rimé, 2007). Third, as a function of group membership, 49 50 51 collective empathy carries more powerful action tendencies than individual empathy (Barsade & 52 53 Gibson, 2012). Specifically, by bringing group members closer together (Barsade & Gibson, 54 55 1998; Rimé, 2007), collective empathy creates a heightened sense of cooperation and galvanizes 56 57 58 59 60 18

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1 2 3 group members to act together in ways that reflect the collective (Barsade & Gibson, 2012; 4 5 6 Mackie et al., 2007; McDougall, 1923). Thus we propose the following: 7 8 P3: The more intense the arousal of empathy in organization members, the more those 9 10 11 feelings of empathy converge to become collective. 12 13 14 Additionally, IET suggests that both affective and non-affective factors of the group 15 16 impact the convergence of emotion. Among the most important of these are the level of group 17 18 identification among organization members, the organization’s emotion norms, and the 19 20 21 organization’s communication channels (Kelly & Barsade, 2001; Smith et al., 2007). Thus, we 22 23 examine how these factors affect the degree to which individual organization members’ empathy 24 25 26 in response to human needs outside the organization converges to become collective. 27 28 Group identification. Group identification refers to the degree to which organization 29 30 members identify with and define themselves by the same attributes they believe define the 31 32 33 organization (Dutton, Dukerich, & Harquail, 1994). Group identification forms an emotional 34 35 attachment to the organization that shapes individuals’ experiences of emotion in the 36 37 organizational setting (Foreman & Whetten, 2002). In the context of our theorizing, group 38 39 40 identification relates to the extent to which organization members will feel, express, and adopt 41 42 empathic emotion in the organization. First, greater group identification implies a higher level of 43 44 “permeability” between private and work-related role identities, increasing the likelihood of 45 46 47 sharing non-work related emotions in the workplace (Ashforth, Kreiner, & Fugate, 2000; Kreiner 48 49 et al., 2006; Lilius, Worline, Dutton, Kanov, & Maitlis, 2011b). Second, group identification 50 51 52 affects the degree to which empathy converges (Dutton et al., 2006). That is, individuals who 53 54 identify themselves as members of the same group are more likely to adopt each other’s 55 56 empathic emotions in a given situation than are individuals who do not (de Waal, 2009; Haslam 57 58 59 60 19

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1 2 3 et al., 2011; Huy, 1999) because their appraisals of the need will be a function of both individual 4 5 6 concerns and of group membership (Smith, 1993; 1999). Thus, by bringing the collective 7 8 emotional bond formed by group membership to the fore (Elfenbein, 2007; Smith et al, 2007), a 9 10 11 stronger sense of group identification means that empathic emotions of group members will still 12 13 converge even when some group members are less concerned than others with those in need 14 15 outside the organization (Barsade, 2002; Rimé, 2007). Based on these arguments, we posit the 16 17 18 following: 19 20 Proposition 4a: The stronger the sense of group identification among organization members, 21 22 the more their feelings of empathy will converge and become collective. 23 24 25 26 Emotion norms. An organization’s emotion norms form an important feature of the 27 28 organization’s social architecture that moderates the processes by which empathic emotion 29 30 converges (Lilius et al., 2011a). Emotion norms are an organization-level set of feeling rules (cf., 31 32 33 e.g., Hochschild, 1983) governing the display of and sensitivity to others’ emotions (Barsade & 34 35 Gibson, 2007; Elfenbein, 2007; Huy, 1999). In some organizations, emotional expressions may 36 37 be discouraged out of fear that they would be considered inappropriate (Dutton, Spreitzer, 38 39 40 Heaphy, & Stephens, 2010). However, other organizations’ emotion norms legitimate and 41 42 propagate feelings and expressions of empathy (Dutton et al., 2006; Kelly & Barsade, 2001). In 43 44 such settings, the sharing and convergence of empathy becomes a fundamentally social process 45 46 47 by which organization members collectively cope with each other’s empathic emotions and do so 48 49 as an expression of other-directed concern (Grant, Dutton, & Rosso, 2008; Lilius et al., 2011a). 50 51 52 This leads to the following proposition: 53 54 55 56 57 58 59 60 20

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1 2 3 Proposition 4b: The more an organization’s emotion norms facilitate the legitimation and 4 5 6 propagation of empathy, the more organization members’ feelings of empathy will converge 7 8 and become collective. 9 10 11 Communication channels. Empathy, as an inherently social emotion, requires 12 13 14 interpersonal interactions in order to converge among organization members. Given that the 15 16 operations of many organizations are internationally dispersed, convergence will depend on 17 18 structural organizational characteristics that affect the ability of organization members to interact 19 20 21 across significant distances. Research in international management, for instance, has 22 23 demonstrated the negative effects of cultural differences and geographic distance on knowledge 24 25 26 and information flows within multinational enterprises (Pedersen, Petersen, & Sharma, 2003). 27 28 Similarly, research describes the effects of cultural differences within organizations as a factor in 29 30 the accurate perception of colleague’s emotions (Sanchez-Burks & Huy, 2009). Other scholars 31 32 33 have looked at the effects of geographic distance on sharing processes and the development of a 34 35 collectively shared emotional climate or tone (Fehr & Gelfand, 2012). Thus, communication 36 37 channels that help overcome the effects of geographic and cultural distance within the 38 39 40 organization are likely to be key factors in the processes by which group members’ empathic 41 42 emotions converge. 43 44 Communication channels that facilitate the convergence of members’ emotions over 45 46 47 greater distances include the same internet technologies, such as email and videoconferencing, 48 49 that enable common organizational practices like telework and virtual teams (Fehr & Gelfand, 50 51 52 2012). For instance, Dutton and colleagues (2006) describe the use of e-mail in drawing attention 53 54 to colleagues’ pain in times of need and in coordinating response. In the context of our own 55 56 theorizing, UPS (2010) set up a web-based blog following the Haiti earthquake with an 57 58 59 60 21

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1 2 3 interactive platform that allowed employees to comment and communicate with one another 4 5 6 about the disaster and UPS’s response, sharing their feelings about the event. Similarly, 7 8 videoconferencing can reduce the effects of cultural distance in organizations by allowing non- 9 10 11 verbal communication to play a greater role in interpersonal interaction. Such channels thus 12 13 facilitate the sharing processes that lead to convergence even across geographic and cultural 14 15 distances. Hence we propose the following: 16 17 18 Proposition 4c: The more an organization’s communication channels facilitate the 19 20 legitimation and propagation of empathy, the more organization members’ feelings of 21 22 empathy will converge and become collective. 23 24 25 26 The Infusion of Executives’ Philanthropy Decision Making with Collective Empathy 27 28 In the final stage of our model, we draw on AIM (Forgas, 1995) to explain how 29 30 executives’ philanthropy decision-making processes are infused with the empathy that exists 31 32 33 among organization members, affecting “the extent to which decision making takes place, the 34 35 information gathered, the ways it is processed, the inferences that are drawn, the options that are 36 37 being considered, and those that are finally chosen” (Etzioni, 1988: 127). In particular, collective 38 39 40 empathy will have a strong impact on top-level decision making processes given that the action 41 42 tendencies associated with collective empathy are more powerful than those associated with 43 44 individual empathy (Barsade & Gibson, 1998). This is because the representative nature of 45 46 47 collective emotions makes them appear less biased, whereas individual emotions can seem 48 49 idiosyncratic. Also, collective emotions reflect group solidarity as well as a sense of shared 50 51 52 values and action readiness (Smith et al., 2007). Finally, as more convergent collective emotion 53 54 is associated with a more palpable collective action readiness, it follows that greater empathic 55 56 emotion convergence will lead to greater infusion effects on executives’ decision making 57 58 59 60 22

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1 2 3 processes (LeBon, 1896; Mackie et al., 2007; Smith et al., 2007). This leads to the following 4 5 6 proposition: 7 8 Proposition 5: The more empathic emotion in the organization converges and becomes 9 10 11 collective, the greater the degree to which it will infuse executives’ corporate philanthropy 12 13 decision-making processes. 14 15 16 Additionally, we present two organization-level factors affecting the degree to which 17 18 collective empathy in response to human needs outside the organization infuses executives’ 19 20 21 corporate philanthropy decisions: emotion selling , a key meso-level mechanism that enables the 22 23 micro-macro linkages in our model (Dasborough, Ashkanasy, Tee, & Tse, 2009); and 24 25 26 managerial discretion , a key factor that determines the degree of flexibility present in 27 28 organizational decision-making frameworks (Kidder & Buchholtz, 2002). 29 30 Emotion selling. Our framework emphasizes the organization as a multi-level context in 31 32 33 which empathy develops at the individual level, proceeds upwards through groups, and ends up 34 35 at the macro-organizational level (Ashkanasy & Humphrey, 2011). Interactions between leaders 36 37 and members have been identified as a key meso-level organizational factor establishing the 38 39 40 “micro-macro nexus” (Dasborough et al., 2009: 572). Yet as Huy (2002) points out, executive 41 42 decision makers are often removed from their employees, such that the direct contagion 43 44 mechanisms that might otherwise lead to an emotional “upward spiral” (Hareli & Rafaeli, 2008: 45 46 47 41) in the organization may be insufficient. In recognition of this organizational reality, we 48 49 introduce emotion selling as a meso-level mechanism that facilitates the flow of empathic 50 51 52 emotion from the bottom up to the executive decision maker. Emotion selling refers to actions 53 54 through which middle managers convey the collective empathy among organization membership 55 56 up to the executive suite. Emotion selling can thus be understood as a form of “issue selling,” 57 58 59 60 23

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1 2 3 which refers to middle managers’ direction of senior management’s limited attention to and 4 5 6 perception of certain issues (Dutton, Ashford, O’Neill, Hayes, & Wierba, 1997: 408). 7 8 Middle managers are in a unique position to sell emotions because they form the linchpin 9 10 11 between senior management and their subordinates. By interacting directly and frequently with 12 13 their subordinates, middle managers are most likely to “recognize, monitor, discriminate and 14 15 attend to [their] members’ emotions” (Huy, 1999: 325). At the same time, when communication 16 17 18 between senior executives and middle managers is based on exchange and reciprocity, middle 19 20 managers have many opportunities for communicating directly with senior executives (Treviño 21 22 et al., 2006). Through open and reciprocal interactions with senior management, middle 23 24 25 managers transmit the emotionally charged, collective urge to act, aroused in response to the 26 27 suffering of unknown others, to the decision making of senior management. Emotion selling is 28 29 therefore a function of organization-level abilities by which middle managers bring patterns of 30 31 32 shared emotion into focus and convey their content and significance to senior management 33 34 (Sanchez-Burks & Huy, 2009). This leads to the following proposition: 35 36 37 Proposition 6a: The more emotion selling, the greater the degree to which collective empathy 38 39 will infuse executives’ corporate philanthropy decisions-making processes. 40 41 42 Managerial discretion. Additionally, the affect infusion model stipulates that the level of 43 44 uncertainty and degree of ambiguity inherent in a decision impact the emotion infusion process 45 46 47 (Forgas, 1995). As stated previously, uncertainty and ambiguity are both inherent in corporate 48 49 philanthropy decisions. However, Forgas (1995) also suggests that the flexibility of existing 50 51 52 decision making frameworks impacts the degree of affect infusion. Thus, the degree to which 53 54 collective empathy in the organization can infuse senior executives’ decision-making processes 55 56 also depends on the degree of managerial discretion executives enjoy in their decision making; 57 58 59 60 24

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1 2 3 i.e., the “latitude to decide” (Buchholtz, Amason, & Rutherford, 1999: 172). Managerial 4 5 6 discretion is therefore also a function of executives’ ability to recognize and act upon the 7 8 discretion they receive, and structural organizational characteristics that enable or constrain the 9 10 11 executive’s latitude of action (Kidder & Buchholtz, 2002). The concept of managerial discretion 12 13 is premised on the one hand on the notion that managers’ decision environments are full of 14 15 choices and, on the other hand, the notion that managers’ actions can never be completely 16 17 18 “prescribed by corporate procedures, formal job definitions, resource availabilities, or 19 20 technologies” (Wood, 1991: 699). 21 22 The role of managerial discretion has been linked previously to corporate philanthropy in 23 24 25 that philanthropy reflects a category of decisions that fall under the purview of the executive, but 26 27 for which society does not provide “clear-cut” expectations (Carroll, 1999: 283). Under these 28 29 circumstances, such decisions are left to individual executives’ judgments and choices. However, 30 31 32 while establishing that some executives will experience greater freedom to make a decision than 33 34 others, this perspective does not explain circumstances under which greater discretion is more or 35 36 37 less likely to lead to one outcome over another. With respect to empathy infusion, we provide 38 39 such a mechanism by proposing that variance in executives’ “latitude to decide” enables greater 40 41 infusion of the decision because corporate philanthropy decision making in the organization is 42 43 44 less scripted. We therefore posit: 45 46 Proposition 6b: The more managerial discretion, the greater the degree to which collective 47 48 empathy will infuse executives’ corporate philanthropy decision-making processes. 49 50 51 52 Infusion of Executive Decision Making and Corporate Philanthropy 53 54 Thus far research has not explicitly addressed affect infusion in relation to the outcomes 55 56 of corporate philanthropy decisions. Yet a wealth of prior research outside the organizational 57 58 59 60 25

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1 2 3 context has established that more intense feelings of empathy are linked to a greater likelihood of 4 5 6 giving as well as to giving at a greater scale (Batson, 1990; Batson et al., 1997; Sargeant, 1999). 7 8 Additionally, research has highlighted the role of empathy in the choice between different forms 9 10 11 of philanthropy. For instance, empathy predicts individuals’ increased willingness to donate their 12 13 time (i.e., volunteer) for the benefit of others (Griffin, Babbin, Attaway, & Darden, 1993). 14 15 Similarly, people have a greater preference to donate time instead of money to charities when 16 17 18 they are more emotionally invested in the cause (Reed et al., 2007). Theorizing in the 19 20 organizational context, we argue that the infusion effects of empathy inside the organization will 21 22 lead to similar patterns in executives’ organization-level philanthropy decision outcomes. When 23 24 25 executives feel collective empathy, empathic appraisal and action tendencies may override 26 27 rational arguments against donating (i.e., an anticipation of insufficient strategic, financial, or 28 29 reputational benefits); alternately, if rational arguments favor donating, they will be reinforced 30 31 32 through collective empathy infusion. Thus, the infusion of executive decision making with 33 34 collective empathy increases the likelihood that decision makers will make choices that reflect 35 36 37 the emotions of their social group, aimed at group solidarity and harnessing the energy of the 38 39 collective. 40 41 Additionally, in social settings where group bonds are strong, a collectively shared urge 42 43 44 to behave altruistically leads to a greater likelihood of collective action. Thus, with respect to 45 46 corporate philanthropy, the greater propensity to act collectively leads to forms of philanthropy 47 48 that capitalize on that collective action readiness. Specifically, this occurs through the adoption 49 50 51 of higher-involvement forms of philanthropy that engage employees directly in the philanthropic 52 53 response, as opposed to lower-involvement forms such as cash donations or the provision of in- 54 55 kind goods. One high-involvement form of corporate philanthropy is corporate volunteering. 56 57 58 59 60 26

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1 2 3 Corporate volunteering, the formal sponsoring and subsidization of employees’ community 4 5 6 service and outreach activities on company time, represents a significant philanthropic resource 7 8 commitment on the part of the organization (Grant, 2012). With respect to group ties and 9 10 11 empathy, corporate volunteering is known to be higher when employee attachment to the 12 13 organization is high and when employees feel a strong affinity with the cause in question 14 15 (Turban & Greening, 1997). In the same way that collective emotions like empathy are recursive 16 17 18 and self-sustaining (Rimé, 2007), high involvement philanthropy efforts, such as volunteering, 19 20 depend on positive reinforcement in the organizational context (Bekkers & Wiepking, 2010; 21 22 Peloza, Hudson, & Hassay, 2009). 23 24 25 Another higher employee engagement form of philanthropy is the establishment of a 26 27 matching program. Employee donation matching is a form of philanthropy by which the 28 29 organization pledges to match employee donations, usually dollar-for-dollar. Matching programs 30 31 32 legitimate and facilitate employees’ urge to respond, giving the collective a specific outlet for its 33 34 feelings of empathy (Bekkers, 2005). For example, American Family Insurance (2010) stated in 35 36 37 response to the 2010 Haiti earthquake that “American Family employees and agents demonstrate 38 39 their compassion and generosity time and again, and many of them are choosing to help the 40 41 victims of this colossal tragedy. By matching their individual contributions, we’re enabling our 42 43 44 employees and agents to have an even greater impact on the recovery efforts.” Matching 45 46 programs also facilitate the collective element by enhancing “crowding in,” or an increased 47 48 willingness of individuals to participate in the collective response and reducing “crowding out,” 49 50 51 by which some members free ride on the donations of others (Bekkers & Wiepking, 2010; Frey 52 53 & Meier, 2004; Shang & Croson, 2009). In sum, the appraisal and action tendencies associated 54 55 with collective empathy infuse the executive’s corporate philanthropy decision, such that the re- 56 57 58 59 60 27

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1 2 3 ranking of available options affects the outcome in terms of philanthropy’s likelihood, scale, and 4 5 6 form. Based on these arguments, we propose the following: 7 8 Proposition 7: The more executives’ corporate philanthropy decision-making processes are 9 10 11 infused with collective empathic emotion, the greater the likelihood of engaging in corporate 12 13 philanthropy; the greater the scale of resources allocated; and the greater the likelihood the 14 15 response will involve higher-engagement forms of philanthropy. 16 17 18 DISCUSSION 19 20 21 In our paper, we integrated arguments from AET, IET and AIM to develop a framework 22 23 in which feelings of empathy among organization members, triggered by a human need outside 24 25 26 the organization, affect the likelihood , scale , and form of organization-level philanthropic 27 28 responses directed at the alleviation of that need. Additionally, acknowledging that our process 29 30 relies on individual agency as well as contextual structures, we highlighted dispositional and 31 32 33 organizational factors that enable the bottom-up process to unfold across its three levels. With 34 35 respect to human needs as affective events, we emphasized the role of vividness and centrality of 36 37 moral identity in empathy arousal at the individual level. With respect to intergroup emotions, 38 39 40 we explained how group identification, interpersonal norms, and communication channels affect 41 42 processes of empathy convergence. With respect to affect infusion, we explicated the roles of 43 44 emotion selling and managerial discretion in processes of empathy infusion in corporate 45 46 47 philanthropic decisions. Together, our theory contributes to a better understanding of corporate 48 49 philanthropy as a collective, empathy-infused organizational behavior and a greater 50 51 52 understanding of the linkages between AET, IET and AIM. As such, it better encompasses the 53 54 variance in giving among corporations and adds depth to existing multi-level research on 55 56 emotions in organizations. We expand on our contributions below. 57 58 59 60 28

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1 2 3 Theoretical Contributions 4 5 6 First, our theoretical framework complements existing approaches to corporate 7 8 philanthropy. Including the bottom-up, emotional perspective of why organizations respond to 9 10 11 the needs of others offers an extension to the top-down and rational view that predominates in 12 13 extant research. By showing how collective empathy affects the considerations used in the 14 15 decision-making process and how those considerations are evaluated, our model helps explain 16 17 18 the apparently “ad hoc” nature of corporate philanthropy (Porter & Kramer, 2002: 6). Instead of 19 20 being based on clear, strategic criteria and unambiguous information, corporate philanthropy 21 22 decisions are inherently uncertain, both in terms of how a decision is to be made and on what 23 24 25 criteria it should be based, as well as in terms of possible benefits to the firm. While the potential 26 27 strategic, reputational, or financial gains derived from philanthropy remain important elements of 28 29 consideration (Galaskiewicz, 1997), empathy infusion affects the way those considerations are 30 31 32 evaluated, even though the executive may not be consciously aware of empathy’s effects on his 33 34 or her decision making (Bargh & Williams, 2006; Berridge & Winkielman, 2003). 35 36 37 Second, by drawing from/integrating arguments from AET, IET and AIM to explain how 38 39 collective empathic emotion ultimately infuses executives’ philanthropic resource allocation 40 41 decisions, we heed the call to shed more light on the role of emotions in organizational decision- 42 43 44 making processes (Ashkanasy & Humphrey, 2011; Ashton-James & Ashkanasy, 2008; Etzioni, 45 46 1988; Forgas, 1995). Our bottom-up perspective complements existing research that has 47 48 primarily examined the top-down role of emotions in organizations (such as leaders’ emotions 49 50 51 and their impact on employees [e.g., Dasborough & Ashkanasy, 2002]). Moreover, the top-down 52 53 and bottom-up aspects of emotions in organizations are likely to be intertwined and mutually 54 55 reinforcing. For instance, by harnessing and acting on employees’ collective emotions, 56 57 58 59 60 29

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1 2 3 executives will make their subordinates feel understood and valued while simultaneously 4 5 6 reinforcing their leadership position (Kellett et al., 2006; cf. also Tierney, 2011). 7 8 Third, we shed light on the specific mechanisms that explain how a discrete emotion, 9 10 11 empathy, is aroused in individuals, becomes collective, and ultimately affects the likelihood, 12 13 scale, and form of corporate philanthropy in response to human needs. Despite the differences in 14 15 the action tendencies associated with various emotions, emotions research thus far has focused 16 17 18 primarily on investigating broad categories of positive and negative emotions (Briner & Kiefer, 19 20 2005; Gooty et al., 2009). As a result, many emotions have been unnecessarily assigned valence 21 22 despite having both positive and negative features (Lazarus & Cohen-Charash, 2001), which has 23 24 25 limited our understanding of their effects (Barsade & Gibson, 2012; Cropanzano et al., 2003). 26 27 Additionally, emotions of similar valence can have very different appraisal and action tendencies 28 29 (Lerner & Keltner, 2000). Empathy involves feeling badly for others in need but, at the same 30 31 32 time, carries positive action tendencies that involve helping those in need (Batson et al., 2007). 33 34 Studying the specific appraisal and action tendencies associated with specific emotions such as 35 36 37 empathy advances our understanding beyond broader categorizations based on valence alone 38 39 (van Kleef et al., 2010). 40 41 Practical Implications 42 43 44 Our model also has practical value for managers, organizations, and their stakeholders. 45 46 First, it can contribute to a reduction in the cynicism about the role organizations play in society 47 48 that stems from the predominantly rational interpretation of corporate philanthropy. A 49 50 51 consequence of the cynical view is that corporate philanthropy can negatively affect 52 53 organizations’ reputations if societal actors assume philanthropy is used simply for impression 54 55 management. In contrast, recognition of the bottom-up and empathic elements of corporate 56 57 58 59 60 30

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1 2 3 philanthropy is likely to engender a more positive societal response (Godfrey, 2005). It also 4 5 6 allows for a less stringent interpretation of managerial discretion with regards to corporate 7 8 philanthropy, by acknowledging that while rational, strategic considerations matter, they are not 9 10 11 likely to be the overriding element in the decision. Moreover, repeatedly acknowledging and 12 13 legitimating the role of empathy in corporate philanthropy over time may even affect the 14 15 ordering of rational considerations and how they are evaluated in subsequent situations, leading 16 17 18 to a more empathic and philanthropic culture in the organization. At the same time, however, the 19 20 potential for convergence between empathic motives and rational considerations over time 21 22 means that by directing employees’ attention to some needs and not others, executives may try to 23 24 25 steer their employees’ empathic desire to help others to be better aligned with the organization’s 26 27 business objectives. 28 29 Second, by explicating the infusion of a collective, emotionally driven urge to act into the 30 31 32 executive decision process, our model allows not only for a more nuanced understanding of the 33 34 potential motives behind corporate philanthropy, but also a broader perspective on its 35 36 37 manifestation. Whereas a considerable body of research has explained some of the variance in 38 39 the scale of corporate philanthropy, only a small number of studies have addressed the likelihood 40 41 of giving, and no known research has tried to explain variance in the form of giving. As scholarly 42 43 44 research and anecdotes about corporate giving suggest, the legitimation of employees’ desire to 45 46 alleviate the needs of others leads to philanthropy decisions in which employees have the 47 48 opportunity to contribute their own time and money as part of the donation effort, making it a 49 50 51 truly collective endeavor (cf. Chong, 2009). Thus bottom-up, empathy-infused corporate 52 53 philanthropy is likely to be associated with positive repercussions in the future, such as increased 54 55 56 57 58 59 60 31

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1 2 3 volunteering levels, greater employee contributions, and management-level legitimation through, 4 5 6 for example, the structural development of employee donation matching programs. 7 8 Third, our model implies that by addressing collective empathic emotion and reinforcing 9 10 11 social bonds within the group (Mackie et al., 2007), empathy-infused corporate philanthropy 12 13 decisions generate positive feedback loops at multiple levels in the organization. For example, 14 15 executive decisions influenced by collective empathic emotion will feed back into individuals’ 16 17 18 level of organizational identification and will reinforce the organization’s empathy-legitimating 19 20 and empathy-propagating emotion norms (Tierney, 2011). Moreover, the actions leaders take in 21 22 response to emotion have a profound impact on followers’ emotional reactions (Walter, Cole, & 23 24 25 Humphrey, 2011); adeptly addressing followers’ feelings and concerns can help leaders generate 26 27 and maintain follower trust and cooperation (George, 2000). Thus, the infusion of executive 28 29 decisions with collective emotion can be important for the management of emotions in the 30 31 32 organization (Ashkanasy & Daus, 2002) with longer-term benefits for employees, the 33 34 organization, and the executive’s position as a leader (Kellett et al., 2006). 35 36 37 Limitations and Future Directions 38 39 In our theory, we acknowledge that rational arguments can work in tandem with other- 40 41 directed objectives, and that such seemingly contradictory motives can exist simultaneously (cf. 42 43 44 Muller & Kräussl, 2011). In doing so, we expand current thinking that limits the philanthropy 45 46 decision to the executive suite and overemphasizes the role of business objectives by offering a 47 48 more collective, inclusive, and empathic process. However, corporate philanthropy, no matter 49 50 51 how well-intended, may not alleviate the needs it aims to alleviate. The potentially limitless 52 53 human need in society may lead to empathy “fatigue” or “burnout” in the organization (cf. Elliot, 54 55 2008; Frost et al., 2006). Both could lead to emotional distress among organization members and 56 57 58 59 60 32

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1 2 3 ultimately have a negative effect on the organization’s emotional climate (Ashkanasy, 2003). 4 5 6 However, the primary focus of our theorizing was on the empathic motives underlying corporate 7 8 philanthropy. Future research therefore should explore both the organization-internal and 9 10 11 organization-external outcomes related to this process, including the impact on factors such as 12 13 organizational reputation, employee engagement, and beneficiaries’ wellbeing. 14 15 Also, we acknowledge that our more “participative” model of corporate social 16 17 18 engagement (Aguilera et al., 2007; Anthony, 1978; Takala & Pallab, 2000) may still imply that 19 20 corporate philanthropy decisions can be contested within the organization and that empathy- 21 22 driven actions cannot become the sole objective of organizational activity. Empathy-driven 23 24 25 decisions, especially those given little strategic thought, can be ineffectual or even detrimental if 26 27 such decisions lead to conflicts between management and shareholders. Negotiating competing 28 29 demands for short-term concerns associated with day-to-day business operations and long-term 30 31 32 efforts to “enhance the collective goodness of the organization” can subject organizations and 33 34 their managers to the strains associated with “role conflict” (Heugens, Kaptein, & van 35 36 37 Oosterhout, 2008: 113). Alternately, empathy could be co-opted by executives for instrumental 38 39 purposes (Frost et al., 2006). Our model opens up avenues for future research to explore the 40 41 results of bottom-up empathy-driven actions versus top-down processes, considering a variety of 42 43 44 outcomes including societal goals, organizational engagement, and business objectives (cf. 45 46 Tierney, 2011). 47 48 With respect to emotions research, we focused on a discrete emotion, empathy, which 49 50 51 develops as a result of observing others in need and manifests itself in a desire to alleviate that 52 53 need. We acknowledge that the bottom-up process we describe may also be influenced by other 54 55 emotions such as enthusiasm, excitement, and cheerfulness. However, the action tendencies 56 57 58 59 60 33

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1 2 3 associated with these emotions are related to strong self-agency and approach-related behavior 4 5 6 rather than a specific desire to help those in need (Frijda et al., 1989). Thus, these emotions may 7 8 likely serve as antecedents to the bottom-up process we have described above: when individuals 9 10 11 feel excited and enthusiastic, their self-agency may drive them to feel that they can make a 12 13 difference and proactively seek out individuals who are in need. Additionally, the bottom-up 14 15 empathic infusion of corporate philanthropy decisions may elicit other discrete emotions in 16 17 18 employees, such as enthusiasm or pride, which, in turn, may lead to more proactive, empathy- 19 20 driven corporate philanthropy in the future. Future research should investigate the specific 21 22 effects of other discrete collective emotions on the bottom-up empathic infusion of corporate 23 24 25 philanthropy decisions as well as on other executive decisions. 26 27 Finally, our model includes moderators at the individual and organizational level that 28 29 facilitate empathy arousal, convergence, and infusion. Some of our moderators are empathy- 30 31 32 specific, such as the perceived vividness of human need, centrality of moral identity, and 33 34 empathy-legitimating emotion norms, whereas others capture more structural organizational 35 36 37 features, such as communication channels, emotion selling, and managerial discretion. While our 38 39 model includes moderators that, in concert, uniquely support empathy from the bottom up, the 40 41 mix of emotion-specific and more general, structural features may serve as a template for 42 43 44 exploring the dynamics of other discrete emotions in organizations. At the same time, our model 45 46 may exclude other potentially important factors, such as perceptions of deservingness (Fong, 47 48 2007) or symbolic actions by organization members (Dutton et al., 2006). In addition, other 49 50 51 emotion-related variables may play a role in this model. Emotional intelligence, for example, is 52 53 related to the ability to experience empathy, factors into the processes involved in sharing 54 55 emotions, and has been shown to be an important factor in decision making (Caruso, Mayer, & 56 57 58 59 60 34

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1 2 3 Salovey, 2002; Mayer, Roberts, & Barsade, 2008). Future research could expand on our model to 4 5 6 elucidate the workings of additional moderators or to develop a more general multi-level model 7 8 of emotions in organizations. 9 10 11 Conclusion 12 13 In the preceding pages, we have taken several important steps toward understanding how 14 15 and why organizations’ philanthropy decisions need not be seen as purely calculative decisions 16 17 18 but may also stem from empathy. While our perspective is not intended to explain all pathways 19 20 by which human needs elicit philanthropic responses, we suggest our model paints a more 21 22 complete picture of organizations’ charitable giving. By including emotional elements that have 23 24 25 been largely ignored in research on corporate philanthropy, we further an empathy-based 26 27 perspective of organizational decision making and behavior (Aguilera et al., 2007; Swanson, 28 29 1999) that helps “breathe life” into organizational studies (Dutton, 2003: 6). 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 35

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1 2 3 FIGURE 1 4 5 6 7 THE RATIONAL VIEW OF CORPORATE PHILANTHROPY DECISIONS 8 9 10 11 The executive suite 12 13 Strategic, Financial, & 14 Reputational considerations 15 16 17 18 Likelihood, Executive scale and form 19 Human need 20 decision making of corporate 21 philanthropy 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 54

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1 2 3 FIGURE 2 4 5 6 7 A MODEL OF COLLECTIVE EMPATHY IN CORPORATE PHILANTHROPY 8 9 DECISIONS 10 11 12 Strategic, Financial, & 13 The organization Reputational considerations 14 15 16 17 AIM Likelihood, scale, and Executive P7 18 form of corporate decision making 19 philanthropy 20 21 P6a & b Management 22 P5 • Emotion selling 23

Infusion • Managerial discretion 24 25 IET 26 Collective 27 empathy 28 29 30 Interpersonal 31 P4a-c • Group identification 32 P3 • Emotion norms 33 • Communication channels

34 Convergence 35 AET 36 Individual 37 empathy 38 39 40 Individual 41 P2a & b P1 • Perceived vividness 42 • Centrality of moral identity 43 Arousal 44 45 Human need 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 55

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1 2 3 Alan R. Muller ([email protected]) is an associate professor at the University of Amsterdam 4 5 6 Business School. He received his Ph.D. in management from RSM Erasmus University. His 7 8 research centers on intrinsic and extrinsic drivers of corporate social behaviors, as well as the 9 10 11 firm-level consequences of such behaviors. 12 13 14 15 Michael D. Pfarrer ([email protected]) is an assistant professor in the Terry College of 16 17 18 Business at the University of Georgia. He received his Ph.D. in strategic management from the 19 20 University of Maryland. His research focuses on firm reputation and celebrity, impression and 21 22 crisis management, media accounts, and the role of business in society. 23 24 25 26 27 Laura M. Little ([email protected]) is an assistant professor in the Terry College of Business at 28 29 the University of Georgia. She received her Ph.D. in organizational behavior from Oklahoma 30 31 32 State University. Her research focuses on emotions in organizations and the performance impacts 33 34 of emotion regulation. 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 56