When does Medici hurt DaVinci? Mitigating the signaling effect of extraneous stakeholder relationships in the field of cultural production

Abstract

Does corporate philanthropy have an indiscriminately positive effect on recipients? Our baseline argument asserts that relationships with stakeholders outside the field, such as corporate donors, can be perceived as a deviation from the dominant logic at the industry level, and thus as a negative signal by peers. How can recipients mitigate this adverse effect on social evaluations? To answer this question, we study how corporate benefaction affects the process of peer recognition in the context of Russian theaters from 2004 to 2011. First, we engage in a qualitative exploration of our setting to contextualize our hypotheses and understand how relationships with corporate donors, depending on their characteristics, affect peer recognition. We then quantitatively test our hypotheses and confirm that the salience of the relationship with extraneous stakeholders—operationalized as the number of corporate donors—has a negative effect on peer recognition. However, we find that this effect can be mitigated if theaters choose to limit the breadth, depth, and negative valence of the relationship. We contribute to both the institutional logics and stakeholder literatures by bringing in a signaling perspective: we show that peer recognition, upon which themaintenance of a dominant logic lies, is directly impacted by the nature of relationships with extraneous stakeholders.