Abstract: In this paper, we develop a theoretical framework explaining when and under what conditions firm-community governance arrangements are comparatively efficient in addressing grand challenges compared to alternative governance forms. While existing research has examined how communities affect firm performance and how firms create financial value through community engagement, there is a nascent theoretical understanding of when firm-driven community or collective governance arrangements are more effective in addressing complex societal issues. This paper identifies three key mechanisms through which firm-community governance creates social value: translation mechanisms (knowledge integration for bridging global goals with local implementation), stewardship mechanisms (establishing shared responsibility with differentiated roles while preserving community autonomy), and value allocation mechanisms (dual-efficiency orchestration by balancing allocative efficiency and distributive equity considerations). The framework proposes and theorizes the conditions under which the firm-community governance is likely to be comparatively efficient in creating and distributing societal value. This paper contributes to the literature on comparative governance efficiency, extending research on private action for public interest. It contributes by identifying specific conditions under which firm-community governance has a comparative advantage, explicating mechanisms linking this form to effective responses to grand challenges, and discussing boundary conditions for successful implementation. These insights advance theoretical understanding and managerial knowledge relevant to how firms can play an active role in addressing complex societal challenges through governance arrangements with communities.