The Relationship between Corporate Philanthropy and Corporate Reputation: Examining the Consumer-Company-Cause Triad

Ilona Szöcs

Publication: ThesisDoctoral thesis

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Although studies in scholarly journals suggest that corporate philanthropic activities may enhance corporate reputation, little systematic research on this effect exists. In fact, our knowledge of consumer responses to corporate philanthropic initiatives is limited. While corporate success relies on the support of customers, business benefits from corporate generosity - such as improved corporate reputation - are lacking. This dissertation investigates consumer perceptions of corporate philanthropy. Specifically, it explores the congruence among consumer perceptions of different philanthropic cause types, their geographical deployment, and the company-cause fit. Moreover, it aims to provide an understanding of the link between corporate philanthropy and corporate reputation by highlighting the role of ethnocentrism in shaping this relationship. The empirical research draws on balance theory, the sociological concept of ethnocentrism, and cultural dimensions to provide a framework and model for the relationship between consumer Attitudes toward Corporate Philanthropy and Customer-based Corporate Reputation. I employ three methodological approaches (interpretive, experimental, and survey-based) to investigate three sets of research questions. Firstly, an exploratory design is employed to uncover consumer and corporate perceptions of corporate philanthropy. Secondly, an experimental design is used to shed light on consumer evaluations of different corporate philanthropic causes and their dimensions by testing three propositions. Finally, a survey design is applied to test six hypotheses, and consequently to provide an understanding of the link between corporate philanthropy and corporate reputation in two distinct cultural contexts. The latter consists of two large-scale surveys in which two leading telecommunication companies, one in Austria and one in Egypt, are examined. Data is analyzed by applying qualitative computing, nonparametric tests, regression analyses, and structural equation modeling.
Three consumer views emerge from the interviews: egoistic, altruistic, and pragmatic. The corporate view, in contrast, is largely of strategic nature (i.e. gaining sustainable competitive advantage by means of responsible management). Some weak ethnocentric tendencies appear in terms of consumer preferences for domestic philanthropic support as opposed to distant support. Furthermore, findings point toward congruence in the perceived importance of social causes by consumers, with health-related causes favored most and art-related causes least. The geographical focus of corporate philanthropy (i.e. domestic versus distant) is perceived differently for the education-related cause across all seven industries examined in the experiment. For other causes, however, such as health- or environment-related causes, a significant difference is found in the oil and consulting industries, respectively. This indicates that consumers' evaluation of corporate philanthropic activities is partially dependent on the geographical focus. Additionally, results confirm the existence of weak industry-specific preferences. The support of causes with a close fit to the core business is favored by consumers unless another cause type (less industry-related) is perceived as more worthy of support. In terms of corporate reputation, corporate philanthropy has a small to medium impact on perceptions of the corporation in Egypt and Austria, respectively, varying by respondent subgroup. Consumer Ethnocentrism impacts upon Attitude toward Corporate Philanthropy negatively in Egypt, while in Austria, the absence of Consumer Ethnocentrism moderates the relationship between Attitude toward Corporate Philanthropy and Customer-based Corporate Reputation positively and more strongly than moderate Consumer Ethnocentrism.
The research presented in this dissertation advances the extant literature in three important ways. First, it focuses on a relatively neglected area of corporate social responsibility, namely corporate philanthropy - an unconditional contribution by a corporation to a social cause. Second, it embraces corporate reputation as a multidimensional construct (as opposed to a unidimensional construct) and thus contributes to the relatively few studies within reputation measurement that exclusively address the consumer stakeholder group (e.g. Walsh et al. 2009). Furthermore, to best of my knowledge, no scholarly research has examined the relationship between corporate philanthropy and Customer-based Corporate Reputation to date. Third, by examining real customers and real-life companies, this work aims to overcome the limitations of the laboratory settings that have traditionally been preferred in this area of research. For managers, the findings offer valuable consumer insights into corporate philanthropy and indicate strategies to improve business outcomes from philanthropic activities. Suggestions for how corporate philanthropic activities should best be communicated through various channels are provided. In this context, the role of word-of-mouth and social media in disseminating philanthropic information is discussed.
Original languageEnglish
Awarding Institution
  • WU Vienna
Publication statusPublished - Jun 2013

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