Corporate Social Responsibility & Public Relations - is philanthropy beneficial for companies.

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INTRODUCTION

In recent years, the corporate philanthropic contributions have become prevalent. The contributions in 2010 are recorded as US$15.5 billion which rises by 27% comparing with 2007 (Committee Encouraging Corporate Contribution, 2011). In spite of that, whether company should undertake philanthropy is still arguable. Friedman (1970) supports that primary responsibility of management is to operate the business in the best interest of shareholders. Thus, corporate philanthropy should be minimized because it is detrimental to the interest of company as well as shareholders. In contrast, this is challenged by Buchholz (1990) that management should go beyond the maximization of profit and should be responsible to protect and improve social’s welfare.

These two extreme lights are coordinated by a new concept that philanthropic contributions are significantly proportional to future revenues (Lev, Petrovits and Radhakrishnan, 2010). Thus, corporate social responsibility (CSR) is able to concurrently benefit both the company and society. This link between CSR and corporate financial performance (CFP) implies an innovative view that CSR seems comparable with public relations (PR). Actually, their linkage has ever been explored by some scholars. Grunig and Hunt (1984) propose that public or social responsibility is the reason for firms to have PR. Bernays (1995) also believes that PR is a practice of CSR. Regardless of the causation, the similarities on their execution procedures have been examined by Clark (2000).

Nevertheless, by considering their functions, it is questionable and challenging that PR is derived from CSR. As a result, this paper is to investigate the relationship between CSR and PR by examining their most dominant effect, and explore whether CSR could be a way of maintaining public relations. This discovery could shift company’s behavior to devote in socially responsible activities (SRA) instead of public relations activities (PRA) because SRA can simultaneously fulfill the goals of CSR and PR whereas PRA can only satisfy its own objectives.

First of all, although CSR is increasingly common, it is still abstract and ambiguous. Therefore, the concept of CSR and SRA will be explained. Similarly, the implications of PR will also be introduced. Thereafter, the connection of CSR and PR through their main effect, enhancement of revenues, are discussed and evidenced. Besides, a factor moderating their connection is also illustrated by referring to Maslow’s Hierarchy of Needs. As there are two categories of SRA, in the following discussion we assume that the way to achieve CSR is via corporate philanthropy only.

DEFINITIONS INTERPRETATION

Corporate Social Responsibility (CSR)

The definition of CSR was first set forth in 1950s (Carroll, 1999) and thereafter was further expanded by numerous scholars. Bowen (1953) is the first scholar constructing an initial definition of social responsibilities of businessmen: “It refers to the obligations of businessmen to pursue those policies, to make those decisions, or to follow those lines of action which are desirable in terms of the objectives and values of our society”. Despite a several decades of evolution in its definition, the prime concept of CSR remains unchanged. More recently, Buchholz (1990) adds that it is a business’s intention, beyond its legal and economic obligations, to operate in a manner that good for society’s welfare. In the other words, any measure beneficial to the society and implemented voluntarily is considered as socially responsible activities (SRA).

Furthermore, Margolis, Elfenbein and Walsh (2007) note that there are five dimensions of measuring corporate social performance. These dimensions can be summarized into two components including interior “Green” management and exterior corporate philanthropy (Figure 1). “Green” management refers to that management will consider the impacts on the natural environment for decisions made in the operation of business. Externally, corporate philanthropy which means the essential contributions to the society can be subdivided into two kinds embracing corporate contributions and employee volunteerism.

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Public Relations (PR)

Integrated marketing communications represents the component of “Promotion” of marketing mix. It encompasses a variety of communication disciplines including advertising, personal selling, sales promotion, public relations, direct marketing and online marketing (Grewal and Levy, 2012). This is where PR comes from. It has two functions containing increase of sales and protection form unpopularity which could lead to detrimental governmental or regulatory agency activities (Tedlow, 1979). This is rather unambiguous for realizing the meaning of PR. Grewal and Levy (2012) make it explicitly that “public relations is the organizational function that manages the firm’s communication to achieve a ...

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