Ballesteros, L., M. Useem., T. Wry, (2017). Masters of disasters? An empirical analysis of how societies benefit from corporate disaster aid. Academy of Management Journal
Corporations have become increasingly influential within societies around the world, while the relative capacity of national governments to meet large social needs has waned. Consequentially, firms are being asked to adopt responsibilities that have traditionally fallen to governments, aid agencies, and other types of organizations. There are questions, though, about whether this is beneficial for society. We study this in the context of disaster relief and recovery; an area where companies account for a growing share of aid as compared to traditional providers. Drawing on the dynamic capabilities literature, we argue that firms are better-equipped than other types of organizations to sense areas of need following a disaster, seize response opportunities, and reconfigure resources for fast, effective relief efforts. As such, we predict that—while traditional aid providers are important for disaster recovery—relief will arrive faster, and nations will recover more fully when locally active firms account for a larger share of disaster aid. We test our predictions with a proprietary database comprising information on every natural disaster and reported aid donation worldwide from 2003 to 2013. Our analysis uses a novel, quasi-experimental technique known as the synthetic control method and shows that nations benefit greatly from corporate involvement when disaster strikes.
The Effect of Giving from Locally Active Firms on Post-Disaster Recovery (15 years pre-disaster; 10 years post-disaster)
- Strategy+Business: Corporate First Responders, Strategy+Business
- UNOCHA & DHL: “Leveraging Formal and Informal Business Partnerships for Disaster Relief”, How Public Private Partnerships are Making a Difference in Humanitarian Action
 Ballesteros, L., 2017. Markets as Clubs: Explaining the Corporate Provision of Public Goods with Economic Reliance. Available at: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2586580 (Under Review)
When firms decide to engage in the provision of collective goods that benefit social welfare (i.e., to behave pro-socially), they may consider the economic relevance of such goods for their own market operation. The bigger the stake of the firm in a market is, the greater its reliance on the market’s collective goods, such as communication infrastructure. Therefore, a market’s relative importance for a firm is a major predictor of corporate pro-social behavior. I show that accounting for variation in economic reliance leads to a more accurate prediction of corporate pro-social behavior than widely invoked arguments rooted in the extant literature.
- The Washington Post: It’s bad business not to donate to Nepal
- Early versions:
- The Wharton School Research Series, 2015 (1), p.56.
- Academy of Management Best Paper Proceedins 2015:1 19077; doi:10.5465
- Best PhD Paper, SMS 2015
 Ballesteros, L., 2018. Follow the Leader? The Costs of Solving Uncertainty and Ambiguity with the Wrong Cognitive Referent (Under Review)
This paper brings attention to the institutional factors affecting the association between the timing of firm non-market choices and firm performance. In contexts of high uncertainty and urgency to respond, such as when firms donate in the aftermath of disasters, firms and the stakeholders often follow different and inversely correlated signals, or cognitive referents, to form beliefs of a firm’s capacity and willingness to meet stakeholder expectations. Firms overestimate the role of financial performance when deciding to donate first, imitate, or deviate from the first donation and underestimate the importance that firm reputation has for stakeholders. The reputation of the first mover overrides the reputation of the follower, which obtains a spillover benefit or loss. Thus, the imitation of high-performing donors often results in a performance loss because firms with bad reputations tend to move early. The findings illuminate the conditions under which rents may be socially constructed and not strongly associated with the physical characteristics of the firm or its choices, which contradicts research suggesting that moving fast with a large and substantive action is more likely to accrue rents than a late, small, and symbolic choice.
- Best Conference Paper, SMS 2016 (Nominated)
 Ballesteros, L., A. Gatignon, (2018). Institutional Development and the Value of Cross-Sector Collaborations (Second Revision)
Can firms give more aid in the aftermath of a natural disaster by channeling resources through non-profit organizations (NPOs) or by implementing them on their own? We develop hypotheses on when the distinct experience of NPOs and firms yields greater aid and test them across 4,396 disasters affecting the world from 2003 to 2015. Our findings suggest that firms could donate more by implementing their aid directly when donating to countries with high institutional development where they have operations—but they more often use an NPO channel. Conversely, corporate aid would increase dramatically when channeled through an NPO in countries with low institutional development where firms lack operations—but firms often implement aid on their own.
- Best PhD Paper, SMS 2017 (Nominated)
 Ballesteros, L., & A. Kaul, (2017). Is Altruistic Philanthropy more Socially Valuable than Strategic Philanthropy? (Working)
This study connects the antecedents of corporate philanthropy and its consequences. We tackled the question of whether corporate philanthropy that is driven by altruism generates greater value for its beneficiary than corporate philanthropy than is driven by strategic considerations. The findings of a quasi-experimental design suggest that disaster-affected countries received greater average donations from firms whose behavior had, arguably, comparatively strong strategic implications (i.e., these firms have operations in the affected country, their headquarters-country is economically proximate and culturally distant to the affected country, and their donation was top-management driven) than from counterfactual firms whose behavior is, arguably, comparatively altruistic (i.e., these firms do not have operations in the affected country, their headquarters-country is economically distant and culturally proximate to the affected country, and their donation is employee-driven). This suggests that stressing altruism or, more broadly, the social preferences behind corporate pro-social behavior, as opposed to its strategic value, may result in an economic loss from the perspective of the beneficiary of firm action.
 Ballesteros, L, & H. Kunreuther, (2017). Understanding Organizational Decision-Making under Systemic Risks (Under Revision)
The ability to manage systemic risk, the probability of an exogenous shock affecting several entities in a community, region, or country, is an important source of competitive advantage and variance in organization sustainability. Natural disasters, terrorist attacks, technological accidents, and other systemic shocks are associated with driving 70% of affected organizations out of business within two years after their occurrence. We offer an interdisciplinary framework that combines insights from the Neo-Carnegie and cognitive psychology literatures to explain why some organizations are comparatively able to manage and learn from systemic risks. According to our framework, organizational structure and strategy interact with individual biases and simplified decision rules to form the binding constraint of an organizational ability to decide properly in the context of systemic risks and transform experience into learning. We discuss current research themes related to our framework components and identify promising research avenues on organizational decision making and learning from systemic risks.