Photo of Luis Ballesteros

Luis Ballesteros

Doctoral Student

Research Interests: systemic risk and market strategy, disaster risk management, private provision of collective goods, institutional development and non-market activity, corporate philanthropic disaster response, collective action

 

Markets as Club-Goods Systems: A Study of the Role of Economic Reliance in Corporate Pro-Social  (2014, submitted for publication)

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 strategic relevance of such goods for their own market operation. The bigger the stake of the firm in a given market, the greater its reliance on the market’s collective goods (e.g., communication networks, transportation infrastructure). Therefore, a market’s relative importance for a firm should be a significant predictor of corporate pro-social behavior. I test this argument by constructing a measure of corporate economic reliance on market systems based on the literature on club goods and analyzing data on corporations’ philanthropic responses to 3,115 natural disasters between 2003 and 2013, inclusive. I show that accounting for variation in economic reliance leads to a more accurate prediction of the frequency and magnitude of corporate pro-social behavior than widely invoked arguments rooted in the strategic considerations and social preferences literatures, which neglect such firm-market connection.

 

The Twitter Effect: How Social Networks affects Private Philanthropy (2014, Project in collaboration with UPENN Department of Computer and Information Science)

We believe that the increase in the participation of private individuals and organizations in disaster response in the last five years may be associated with disaster tweeting. That is, the number of tweets reporting a disaster has a direct relationship with the frequency and magnitude of philanthropic response. We call this the Twitter effect. There is a cardinal difference between the Twitter and the CNN effects. Twitter facilitates a multiple-loop communication—a conversation between the original message sender and the receiver. First, Twitter users communicate on-going emergencies whose systemic condition fosters a multiplier effect, not only through disaster victims, but also through the victims’ social networks. Conversely to disaster reporting initiated by large news corporations, the point when international attention to a disaster is likely—the tipping point—can be reached independently of political and economic agendas or intermediaries between the disaster victim and the public. Second, victims and their networks are able to report on the evolution of the emergency and relief. Therefore, through disaster tweeting, the accountability of disaster-response schemes may increase. The Twitter effect may help align the interest of disaster response with the needs of the victims, and mitigate the risk of corporations trying to benefit by setting up fictional scenarios out of the disaster and local authorities providing inaccurate accounts of the emergency.

By analyzing the relationship between the characteristics of disaster tweeting and international disaster response, we aim to answer the following specific questions:

1.      How frequency and magnitude of private organizations’ philanthropic response is affected by sender characteristics (e.g., individual vis-à-vis organizational users, geographical location, social standing—e.g., number of followers), and tweet characteristics?

2.      What are the characteristics of tipping points marking the spectrum where international disaster response is relatively likely? How tipping points do vary across industries, countries, and disasters?

3.      How do the ratios of citizen-originated (i.e., victims) to organization-originated (e.g., Oxfam) and to government-originated (e.g., FEMA) tweeting affects frequency and amount of donation? And how is disaster tweeting associated with accountability (e.g., the reception of goods needed by the victims)? 

 

4.      Finally, what are some of the associated impacts of the philanthropic response? E.g., does disaster donation increase firms’ visibility (e.g., number of tweets mentioning the firm)? 

 

The drivers of corporate philanthropic disaster response (2013, Working Paper. Supported by the Russell Ackoff Fellowship, Wharton Risk Center, and Penn Lauder Ciber)

As a percentage of total international aid, disaster relief coming from the business community has been increasing over the last decade and, for some events, it has been greater than the total donation from any other source, including national governments and multinational agencies together. At the same time, corporate philanthropic disaster response remains a greatly variable phenomenon across firms and across disasters. I investigate the factors explaining the variance of firms helping communities in the aftermath of natural catastrophes with a theoretical model comprising firm-, community-, and event-specific factors. In this model, corporate decision makers follow a mix of social preferences and strategic considerations. I use unique data of corporate donations to the relief fund of natural catastrophes that affected different countries in the period of 2002-2012 and a panel of 2011 multinational enterprises from 61 countries. The preliminary results show that firm’s visibility and economic connection with the affected community, and the relative development of the community exert a nontrivial influence in the magnitude and frequency of corporate donation. Additionally, I find that the salience of the event is significantly more influential in the corporate decision than the associated human loss.