Beyond profits: The linkages between local embeddedness, social legitimacy, and corporate philanthropy in the mining industry

Abstract

Despite the growing body of research on corporate philanthropy, there remains a lack of understanding regarding how local embeddedness impacts the philanthropic activities of firms. Our study addresses this gap in the philanthropy literature by proposing and testing a model that elucidates this mechanism. Drawing on data from 166 firms operating in the mining industry, our findings indicate that local embeddedness has a positive effect on a firm's social legitimacy. However, we also discovered that this relationship is amplified when there is greater legal inefficiency. Additionally, our results demonstrate that a firm's social legitimacy serves as a mediator in the relationship between local embeddedness and corporate philanthropy. The theoretical and practical implications of these findings are discussed in detail.