University of Vaasa - Vaasan yliopisto

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critical resources controlled by the stakeholders. In Brown et al (2006) study, the
conclusion was that charitable giving may be a way for firms to enhance their public
reputations and to create goodwill with customers, employees and regulators. The
benefits accrued to the profit-oriented commercial organization are obvious. The
most apparent link to overall performance is the reputation effect (Bronn & Vrioni
2001). While there have been doubts about the real effect of this (Azlan et al. 2007),
there is sufficient empirical evidence to suggest that the greater an organization’s
philanthropy, the better its reputation or corporate image (Bronn & Vrioni 2001;
Kelly 1991; Mullen 1997).This favorable reputation can ultimately benefit an
organization in many ways. It could allow organizations to charge premium prices;
change attitudes of customers; attract and retain talent; maintain good ties with the
community and publics; and enhance their access to capital markets and attract
investments.
The other motive is that corporate philanthropy can be used as a marketing tool to
enhance an organization’s image through strategic public relations, extensive media
coverage and publicity and supported through advertising and promotional
campaigns. This aspect is further discussed later in the next section of the paper.
Last but not least, there is the “internal effect” of corporate philanthropy that
organizations may take into consideration and which is related to the other motives
mentioned above (Collins 1993). It is about the future investment in the workforce
of the organization, where a good corporate image would attract high quality recruits.
In a service-oriented organization, this becomes the competitive edge an organization
has over its competitors.
Link Between Corporate Phylathropy and Societal
Marketing
Corporate philanthropy according to Bennet (1998) as cited in Azlan et al. (2007) is a
product and like any product it can be marketed to the public. Collins (1993) also
alluded to corporate philanthropy being a “potentially valuable marketing tool”. It is
therefore not surprising that corporate philanthropy initiatives are often handled by
the corporate communications or public relations department in an organization. Is
there a link between corporate philanthropy and societal marketing?
The origins of societal marketing date back to the 1960s (Collins 1993), when
marketing scholars realized that the matching of consumer needs and wants at a
profit alone does not imply protection of their interests. Hence, societal marketing
grew from this concern that products or services needed to be marketed in a socially
responsible manner and also takes into consideration the ethical, environmental, legal
and social context of marketing. Hence societal marketing is often referred to as
social responsibility marketing. As defined by Kotler, et al. (2006), “the
organization’s task is to determine the needs, wants and interests of target markets
and to deliver the desired satisfactions more effectively and efficiently than
competitors in a way that preserves or enhances the consumer’s and society’s wellbeing”.