Contents lists available at ScienceDirect Journal of Hospitality and Tourism Management journal homepage: www.elsevier.com/locate/jhtm Corporate philanthropy effect on hospitality consumer benefit Keling Wang a , Ming-Hsiang Chen b,c , Chien-Pang Lin d , Deng-Feng Hu e,∗ a School of Business and Tourism Management, Yunnan University, Kunming, 650091, China b School of Hospitality Business Management, Carson College of Business, Washington State University, Pullman, WA 99164-4742, USA c Tourism and Social Administration College, Nanjing Xiaozhuang University, Nanjing, 211171 China d Department of Finance, Chang Jung Christian University, Tainan, Taiwan, ROC e School of Business Administration, Anhui University of Finance and Economics, Bengbu, 233030 China ARTICLE INFO Keywords: Hospitality sector Corporate philanthropy Hospitality consumer benefit Theoretical innovation ABSTRACT Although hospitality researchers have examined the effect of corporate philanthropy on the supply side of the hospitality sector, research on the influences of corporate philanthropy on the hospitality industry remains incomplete. The theoretical innovation of this study fills an important gap by proposing a theoretical model of corporate philanthropy. The model uses game theory to explain the impact of corporate philanthropy on hos- pitality consumer benefit and to shed light on the effect of corporate philanthropy on the demand side of the hospitality sector. The analysis, based on equilibrium market outcomes, reveals that the impact of corporate philanthropy on hospitality consumer benefit depends on the cost reduction effect and the induced cost of corporate philanthropy. Model solutions offer theoretical support for the hypothesis, popular in the literature, that corporate philanthropy is expected to have a beneficial effect on consumer benefit, and also show that corporate philanthropy may have no impact on hospitality consumer benefit. 1. Introduction There is a substantial body of literature on corporate philanthropy, whereby corporations donate a portion of their profits to non-profit orga- nizations. Two popular research streams have studied the financial impact and the determinants of corporate philanthropy. Numerous business studies have examined whether corporate philanthropy affects firm performance (for example, Brammer & Millington, 2008; Chen, Lin, Tian, & Yang, 2017; Lev, Petrovits, & Radhakrishnan, 2010; Seifert, Morris, & Bartkus, 2004; Wang, Choi, & Li, 2008) and the factors that affect corporate philanthropy (Brammer & Millington, 2005; Navarro, 1988; Wang et al., 2008). In contrast, less research has been done on corporate philanthropy in the hospitality field. Lee, Choi, Moon, and Babin (2014) examined whether codes of ethics and corporate philanthropy affected the Korean hotel industry. They revealed that a code of ethics had a direct impact on both corporate philanthropy and organizational engagement, and that corporate philanthropy was positively related to employee en- gagement and turnover intention. Chen and Lin (2015b) investigated the discretionary behavior of corporate philanthropy in Taiwan's hos- pitality industry. They showed that labor intensity, profitability, board size and the ratio of independent directors to total directors were sig- nificant determinants of hospitality firms' corporate philanthropy. Chen and Lin (2015a) and Wang, Miao, Chen, and Hu (2018) analyzed the effects of corporate philanthropy on the performance of hospitality firms in Taiwan and China, respectively. Chen and Lin (2015a) found that corporate philanthropy was significant in explaining the profitability (re- turn on assets and return on equity) and future growth opportunity (To- bin's Q) of hospitality firms in Taiwan. Wang et al. (2018) revealed that corporate philanthropy could significantly impact hotel firm performance in terms of sales growth, return on asset and return on equity. However, while Chen and Lin (2015a) and Wang et al. (2018) em- pirically scrutinized the effects of corporate philanthropy on hospitality firm performance, no researchers have yet examined the impact of corporate philanthropy on hospitality consumer benefit. Thus it is ar- gued that the literature on the influences of corporate philanthropy on the hospitality industry remains incomplete. Indeed, consumer surplus is an economic measure of consumer benefit according to the economic theory. Thus hospitality consumer benefit can be measured by consumer surplus, the net gain or benefit obtained by hospitality consumers because they can purchase a hospi- tality product or service for less than the highest price that they are willing to pay. In their study of the financial impact of corporate phi- lanthropy on hospitality firms, Chen and Lin (2015a) tested the influ- ence of corporate philanthropy on the supply side (hospitality firm) of https://doi.org/10.1016/j.jhtm.2018.12.003 Received 7 June 2018; Received in revised form 10 October 2018; Accepted 12 December 2018 ∗ Corresponding author. E-mail addresses: kelingw@ynu.edu.cn (K. Wang), ming-hsiang.chen@wsu.edu (M.-H. Chen), cplin@mail.cjcu.edu.tw (C.-P. Lin), hdengfeng0212@sohu.com (D.-F. Hu). Journal of Hospitality and Tourism Management xxx (xxxx) xxx–xxx 1447-6770/ © 2019 Published by Elsevier Ltd on behalf of CAUTHE - COUNCIL FOR AUSTRALASIAN TOURISM AND HOSPITALITY EDUCATION Please cite this article as: Wang, K., Journal of Hospitality and Tourism Management, https://doi.org/10.1016/j.jhtm.2018.12.003