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COLLEGE OF BUSINESS, ARTS AND SOCIAL SCIENCES DISSERTATION / FINAL YEAR PROJECT SUBMISSION COVERSHEET Dissertations / Final Year Projects MUST be submitted online via Blackboard Learn under the relevant modular block course page and by TWO bound hard copies to the Taught Programmes Office.

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An Investigation into Corporate Philanthropy Decision-Making Processes. The Perspective of UK Executives.

Name: Student Number: 1

Degree Course: BSc International Business Department: Brunel Business School Supervisor Name: Date Submitted: 8th March 2017 Word Count: 8,000

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ABSTRACT

In recent years CSR has been a concept extensively discussed in the literature and applied in business. However, corporate philanthropy amongst the various forms of CSR has not attracted much academic attention. The purpose of this research is to fill this gap by specifically exploring the considerations of UK executives during the corporate philanthropy decision-making stage. A qualitative method was applied to this research, including in depth semi-structured interviews with six executives from three different industries. Through thematic data analysis the research identified three main themes: Corporate philanthropy decisions are based on a combination of strategic and altruistic considerations. Corporate philanthropy initiatives create a synergistic relationship between the supporter and the recipient. Many corporate philanthropy activities are not externally publicised. The main contribution of this research is enhancing the corporate philanthropy literature with an insight into the full considerations of UK executives at the corporate philanthropy decision-making stage, which has not yet been explored comprehensively in the literature. The research also provides an empirical suggestion to illustrate the process of corporate philanthropy decision-making. In light of these research findings, recommendations are provided to UK executives who may need some direction on philanthropic decision-making. The study will also provide recommendations for future research on this subject area.

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ACKNOWLEDGEMENTS

I would like to sincerely thank my supervisor for all of his support and guidance throughout this research journey and for always being prompt in answering all of the questions that I had. I would also like to thank my Mum, Grandad and Edgaras for always believing in my academic abilities and always supporting me along the way. Lastly, I would like to thank all of the Executives who gave up their valuable time to take part in my research.

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TABLE OF CONTENTS Abstract........................................................................................................................3 Acknowledgements..................................................................................................... 4 Chapter 1: Introduction...............................................................................................9 1.1 Background.......................................................................................................... 9 1.2 Research Justification..........................................................................................9 1.3 Project Aims and Objectives...............................................................................10 1.3.1 Research Aim..............................................................................................10 1.3.2 Research Objectives....................................................................................10 1.4 Chapter Synopsis............................................................................................... 11 Chapter 2: Literature Review.....................................................................................11 2.1 Introduction.........................................................................................................11 2.2 Corporate Philanthropy.......................................................................................11 2.2.1 Carroll’s (1991) Pyramid of CSR..................................................................12 2.3 Business Strategy.............................................................................................. 13 2.4 Strategic Philanthropy........................................................................................13 2.4.1 Better Reputation.........................................................................................13 2.4.2 Better Political Relationships........................................................................14 2.4.3 Better Employee Measures..........................................................................14 2.5 The Responsive Motive......................................................................................15 2.6 The Rational View of Corporate Philanthropy Decisions.....................................16 2.7 Executive Enlightened Self-Interest....................................................................16 2.8 Altruism..............................................................................................................17 2.9 Research Gap.................................................................................................... 18 2.10 Summary..........................................................................................................20 Chapter 3: Research Methodology...........................................................................20 5

3.1 Introduction.........................................................................................................20 3.2 Philosophy..........................................................................................................20 3.3 Approach............................................................................................................ 21 3.3.1 Inductive vs Deductive.................................................................................21 3.3.2 Epistemology vs Ontology............................................................................21 3.4 Methodological Choice.......................................................................................21 3.4.1 Primary vs Secondary Data.........................................................................21 3.4.2 Quantitative vs Qualitative...........................................................................22 3.5 Strategy..............................................................................................................22 3.5.1 Interview Choice.......................................................................................... 23 3.5.2 Pilot Study.................................................................................................... 23 3.5.3 Sampling......................................................................................................23 3.6 Time Horizon...................................................................................................... 24 3.7 Techniques and Procedures...............................................................................24 3.7.1 Data Collection.............................................................................................24 3.7.2 Data Analysis............................................................................................... 25 3.8 Ethical Considerations........................................................................................25 3.9 Problems and Limitations...................................................................................26 3.10 Summary..........................................................................................................26 Chapter 4: Results and Analysis..............................................................................27 4.1 Introduction.........................................................................................................27 4.2 Theme 1: CP Decisions are based on a Combination of Strategic and Altruistic Considerations.........................................................................................................27 4.3 Theme 2: CP Initiatives Create a Synergistic Relationship between the Supporter and the Recipient..................................................................................................... 29 4.4 Theme 3: Many CP Activities Are Not Externally Publicised...............................31 4.5 Empirical Suggestion..........................................................................................33 4.6 Summary............................................................................................................ 34 Chapter 5: Conclusions and Recommendations.....................................................34 6

5.1 Conclusion and Research Contribution..............................................................34 5.2 Recommendations.............................................................................................35 5.2 Limitations.......................................................................................................... 35 5.3 Further Research............................................................................................... 35 References.................................................................................................................37 Appendixes................................................................................................................42 Appendix A: Interview Guide and Sample Interview Transcript.................................42 Appendix B: Participant Information Sheet...............................................................48 Appendix C: Letter of Approval.................................................................................50

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LIST OF FIGURES Figure 1: Carroll’s (1991) Pyramid of CSR..................................................................12 Figure 2: The Rational View of Corporate Philanthropy Decisions..............................16 Figure 3: Reasons Given by Executives for Giving Time to Charity............................18 Figure 4: The Research ‘Onion’..................................................................................20 Figure 5: Research Stakeholders................................................................................25 Figure 6: The Rational View of Corporate Philanthropy Decisions..............................33 Figure 7: Proposed Framework: ‘The Comprehensive CP Decision-Making Process’ 34

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CHAPTER 1: INTRODUCTION 1.1 BACKGROUND The 21st century has pushed companies to transform how they do business with substantial pressure to focus on CSR and societal welfare. 86% of global customers expect business to consider societal interests at least equal to business interests (Edelman, 2010, cited in Lee, Lancendorfer, and Reck, 2011). Subsequently, efforts to grow and strengthen the culture of CSR in the UK have been proven positive, with statistics showing that over 85% of UK firms take part explicitly in philanthropic initiatives in one way or another (Body and Breeze, 2016). Despite this, supplementary statistics into philanthropy are contradictory given that the subject area is subjective - it can be hard to quantify and measure it, particularly given that some firms do not account for it at all (Maas and Liket, 2010). Business philanthropic activities are not obligatory and are not controlled by law. Despite this, many businesses, particularly large businesses, involve themselves in extensive philanthropic projects (Diggs, 2016). In some business cases, philanthropy is at the core of their business operations. This has given rise to the question: Why? Why are corporations giving their time and resources if there is no written requirement to do so? 1.2 RESEARCH JUSTIFICATION Among various activities of CSR, corporate philanthropy has not attracted much academic effort to date (Kim et al., 2011). It is particularly important to examine the concept of corporate philanthropy as it is a constituent of a healthy business-society relationship (Bergman et al., 2015). Our study niche will try to fill the gap of specifically decision-making processes behind philanthropic behaviours; particularly given that no attention has been paid to this element of the wider philanthropic process (Dennis, Buchholtz, and Butts, 2007). This unfilled research gap has meant that there is a lot of scepticism about philanthropic decision-making (Rampal and Bawa, 2008), which is arguably given that researchers have had no means to collect insightful qualitative data first-hand with executives themselves. This has led to negative consumer and manager speculation on the motives and values of company executives (Lee, Lancendorfer, and Reck, 2011). Similarly, it has generated debates for the need to initiate philanthropic regulation 9

policies (Jensen, 2013). This research should hence uncover the true elements that UK executives consider at the corporate philanthropy decision-making stage, using firsthand, face-to-face interviews. Additionally the study aims to find out if there is a balance between strategic and altruistic motives for engaging in corporate philanthropy; which is likewise absent from the current literature. 1.3 PROJECT AIMS AND OBJECTIVES

1.3.1 RESEARCH AIM To investigate the concept of corporate philanthropy, and, to determine the considerations of UK executives during the corporate philanthropy decision-making stage. 1.3.2 RESEARCH OBJECTIVES 1. To review and evaluate the existing literature surrounding corporate philanthropy. 2. To understand if there is a balance between strategic and altruistic motives behind philanthropic decision-making. 3. To uncover if there are any other motives behind philanthropic initiatives, other than those discussed in the literature. 4. To review and reconceptualise Muller, Pfarrer, and Little’s (2013) framework concerning philanthropic decision-making.

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1.4 CHAPTER SYNOPSIS A summary of the subsequent chapters to follow is provided below.

Chapter 2: Literature Review

This chapter explores the current literature surrounding corporate philanthropy, including the concept of strategic philanthropy and altruism.

This chapter justifies the chosen research methods using the research Chapter 3: onion and reviews alternatative methods. Research Methodology

Chapter 4: Results & Analysis

This chapter analyses the findings from the research in the form of 3 themes. It concludes with an empirical suggestion to adapt the framework discussed in chapter 2.

This chapter provides a conclusion to the research project and identifies Chapter 5: it's limitations. It also offers suggestions for future research. Conclusion & Recommend ations

CHAPTER 2: LITERATURE REVIEW 2.1 INTRODUCTION This chapter examines the literature surrounding corporate philanthropy in business, including the development towards strategic philanthropy and the arguments for altruism. The chapter will also introduce Carroll’s (1991) pyramid of Corporate Social Responsibility (CSR) and ‘The Rational View of Corporate Philanthropy Decisions’ framework. Through criticising the various literature, it will end by explaining our research motive and research gap. 2.2 CORPORATE PHILANTHROPY Past and recent literature has many varied definitions of ‘corporate philanthropy’ (CP). Some scholars specifically define CP as a transfer, of a charitable nature, of corporate resources to recipients at below market prices (Ireland and Johnson, 1970, cited in Fry,

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Keim, and Meiners, 1982). Whereas other authors use the terms corporate social responsibility, corporate citizenship and CP indistinctly to mean the same thing (deMiguel-Molina, Chirivella-González, and García-Ortega, 2015). Muller, Pfarrer, and Little (2013) explain that CP can take various forms, limited not only to cash and in-kind donations but increasingly including employee matching programs and employee time in the form of corporate volunteering. Similarly, Crane and Matten (2010) argue that the building of recreation facilities for employees and their families, support for local schools, or sponsoring of art and sports events are also a strong example of philanthropic activities undertaken by firms. 2.2.1 CARROLL’S (1991) PYRAMID OF CSR In figure 1, Carroll (1991) illustrates philanthropy, or, in other words, discretionary responsibilities, as being at the top of the CSR pyramid. The illustration depicts the steps an organisation has to achieve, i.e. economic, legal and ethical responsibilities, before it is willing and able to participate in philanthropic endeavours. This model is underpinning this research and is the foundation of our understanding of where philanthropy is positioned in terms of the broad concept of CSR. Figure 1: Carroll’s (1991) Pyramid of CSR (Jayson, 2016)

Despite this model being strongly biased towards the US context, there is evidence that CP is becoming an important activity of firms outside of the US (Sánchez, 2000). Moreover, given that the use of any resource has a real opportunity cost to a business

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(Keim, 1978), it is essential to investigate the deliberate decision to allocate business resources to CP. 2.3 BUSINESS STRATEGY The choice to take part in CP, like many other business decisions, arises from the development of an overall business strategy. Grant and Jordan (2015) explain that in its broadest sense, a strategy is the means by which individuals or organisations achieve their objectives. Furthermore, Dobbins and Pettman (1997) state that the development of a strategy comes from the top and in large organisations the chief executive must be involved, together with his senior executives. It is therefore appropriate to conduct this type of research with executives themselves and ask the question how and why CP is a part of the overall business strategy, especially given that in large organisations, CP strategy design involves extensive planning and assessment (Mickiewicz, Sauka, and Stephan, 2016). 2.4 STRATEGIC PHILANTHROPY Contemporary strategy literature argues that corporations are now using their charitable efforts to improve their competitive context (Porter and Kramer, 2002). Correspondingly, authors often now disregard the historical view of CP as a type of organisational engagement aimed at solely addressing a social need (Muller, Pfarrer, and Little, 20...