Charitable Donation, Market Expansion and Market Presence : The Case of Walmart

Walmart stores often bring some negative consequences to their neighborhoods. As a result, Walmart frequently faces strong opposition when they plan to launch new stores. Charitable donations could be a way to compensate the local communities and alleviate the opposition. By leveraging our newly collected data set, we document how Walmart's charitable donations at the city level are associated with its market expansion and presence. Our dataset details every Walmart charitable donation from 2011 to 2015, along with store locations, opening dates, and city characteristics. We document four empirical patterns. First, Walmart makes a higher number of donation instances in the year prior to launching a new store, and the year opening a new store. Second, the donations tend to be more concentrated in the vicinity of a new store. These two findings suggest some donations are strategically motivated. Third, the average store sales are positively associated with the number of donation instances. Fourth, the number of donations is positively associated with Walmart's presence in a city. The last finding is consistent with both altruistic and strategic motives. Our results suggest that regardless of its motives, the negative externalities generated by Walmart stores could be partially mitigated by Walmart's charitable giving