Dashi ZHANG RMIT University 201 2

1. BUSINESS AND SOCIETY: AN INTEGRATED STUDY OF CORPORATE PHILANTHROPY AND ORGANIZATIONAL-PUBLIC RELATIONSHIPS IN CHINA Dashi ZHANG RMIT University 2012

2. Purpose of Study This study intends to find out the current development of corporate philanthropy in China (the reasons, forms, underlying principles), to help the people in both academic and professional areas have a more clear idea of how to manage relationships with its publics in China and give suggestions for their future corporate philanthropic process from a communication (public relations) perspective. Fills the gap of communication-based research on corporate philanthropy in China. This study wants to suggests a balanced way on how to achieve a sustainable development that is beneficial for corporate and society.

3. Significance of the Study Although there are many studies of organizational-public relationships (OPR) and corporate philanthropy individually, few studies combine them;fewer using China as an example. Little to none studies are known fulfilling all of above while considering all the stakeholders/mutiple publics at large; contribute to the advancement the theory of relationship management. Corporate philanthropy in China is still lag behind(Annual report on enterprise citizenship , 2009)--a direction and rational system is needed. This study might be useful for both the public relations scholars and professionals, especially who work or interest in China with philanthropic activities. This study could help the companies become more confident when conducting philanthropic activities (as a part of competitive strategy) by considering managing relations with stakeholders, which also move forwards the qualitative academic study of relationship management by adding empiricalknowledge in China.

4. Literature Review Corporate Philanthropy Organizational-Public Relations

5. Corporate Philanthropy TheDevelopment of Corporate Philanthropy (History, Models, Forms, & Motivations of Corporate Philanthropy) Corporate Philanthropy in China

6. The Developmentof Corporate Philanthropy Charity (慈善) “the love for others” Philanthropy (公益) "love for mankind"involves "any act of benevolence and good will" (Yang, 2009) Corporate Philanthropy（as a new arrival term in 1952） "a discretionary responsibility of a firm that involves choosing how it will voluntarily allocate its slack resources to charitable or social service activities for which there are no clear social expectations as to how the firm should perform" (Joe, 2002) Strategic Corporate Philanthropy,“the synergistic use of an organization's core competencies and resources to address key stakeholders' interests and to achieve both organizational and social benefits”. (Throne, T. Ferrell, & O. Ferrell, 2008)

7. The evolution of corporate philanthropy The Altruistic Model Doing better by doing good Mandated corporate social responsibility (Varadarjan & Menon,1988)

8. Forms of Coporate Philanthropy Charitable Donations In-kinds Contributions Volunteer Services (Cause-related maketing;non-comercial sponsorship;corporate social marketing;cause promotion; socially responsible business practices; pro bono.) (Lawrence & Weber,2008; Bennett,1998)see Table 2 RQ1: What are the forms of corporate philanthropy in China?

9. Motivations of Coporate Philanthropy Societal vs. Business Profit-maximizing Decision vs Managerial Decision (Trost,1996) (1) No Corporation could exit when the society as a whole does not prosper; (2) Fufill the public expectations; (3) provide alternatives to government program when supporting NGOs (Himmlstein, 1997) Models of Corporate Philanthropy 1The neo-classical/corporate productivity;2The political; 3The stakeholder; 4 The ethical/ altruistic model (Burling and Young,1996)

10. Continuum of Philanthropy Positions Stewardship Enlightened Self-Interest Charitable Investment Altruism Shared Benefit (Burlingame & Frishkoff, 1996)

11. Benefits of Corporate Philanthropy • Advancing financial performance • Enhancing corporate image and reputation • Boosting employee motivation • Reducing investor/executive conflicts • Increasing customer loyaty • Improving stakeholders relationship(Hopkins, 2006) • winning favor among politicians; community improvement (could attract potential employees)Trost (2006). • RQ2: What are the motivations of corporate philanthropy in China?

12. Corporate Philanthropy in China Philanthropy has a long history in China, while corporate philanthropy has only begun in the recent 30 years(focus on deucation, earthquake relief, helping proverty, etc. and lack the professional experience and methods (Li, 2008) Chinese special commercial and political enviroment: market economy with socialist characteristics; after the "reform and openning up"; state-owned enterprise (SOE), collectives,foreign funded enterprises; private enterprises. Polarization of Chinese society.

13. NPO (nonprofit)/NGO (nongovernment) in China: NGOs can be profit or non-profit, whichare “social organizations” like foundations, associations, centers, and groups that work outside; affiliated with the government.NPOs include schools, research institutions, hospitals, and social welfare organizations.Could not be understood as equivalent of those in the western country; distinction between NPO and NGO is blurred (Zhang, 1999). 1911, receive legal protection from the government The Minstry of Civil Affairs is responsible for the management of NGOs in China. 2005, the Minstry of Civil Affairs issued an order of philanthropy commendation and released outline for the Development of China Charity. 2007, The National People's Congress of PRC passed Enterprise Income Tax Law (detucted the tax) (Yang, 2009)

14. RQ3 • Influenced by Chinese commercial and political environments to build relationships (OPRs), what are the characteristics of undertaking corporate philanthropy in China?

15. Organizational-Public Relationships Defintion: subjective reality, objective reality, and combination of both. “Organization-public relationships arise when organizations and their strategic publics are interdependent and this interdependence results in consequences to each other that organizations need to manage” (Hung, 2006, pp.444-445).

16. (Hung, 2002)

17. Types of organization-public relationships Continuum of philanthropy positions(Hung, 2002)

18. Types of organization-public relationships Exchange relationship: people exchange the economic benefits that involve both monetary and non-monetary values Exploitive relationship arises when one takes advantage of the other A manipulative relationship happens when one organization controls another and they do not have symmetrical communication. A symbiotic relationship appears when different independent organizations interact to survive. (Hung, 2002; Mills & Clark, 1982)

19. Types of organization-public relationships A contractual relationship happens when a contract is signed first. A covenantal relationship suggests two parties commit to a common good by open exchange and reciprocity, which are focused on the exchange of information. Communal relationship: people give benefit to the other and do not expect something in return. Mutual communal relationships , “both parties provide benefits to the other because they are concerned for the welfare of the other-even when they get nothing in return” . A one-sided communal relationship is the communal relationship in while only one party gives benefit to the other and no returns. (Hung, 2002)

20. RQ4: • What type of relationships did corporations develop with their publics (e.g., NGOs, customers, employees, government, and community members) in the corporate philanthropic process in China?

21. Organization-Public Relationships Cultivation Strategies Symmetrical Access Positivity Openness Assurances of Legitimacy Networking Sharing of Tasks Cooperating Being unconditionally constructive Saying win-win or no deal Promise-keeping Some dual-concern strategies • Conteding • Avoiding • Accomodating • Compromosing • Distributive • Some dual-concern strategies • (pay more attention of • the org's interest) (Hung, 2002, 2003; 2007; Plowman, 2007) Asymmetrical

22. Organization-Public Relationships Outcomes Trust (three dimension: integrity,dependability, and competence) Control Mutuality ("to which partners agree about which of them should decide relational goals and behavioral rountines“) Relational Satisfaction Relational Commitement (Exchange Relationships, Communal Relationships) (Huang, 1997; Hung, 2006; J.Grunig & Hung, 2000; Jo, 2006; Ki, Hon, 2007; Hon & Grunig,1999)

23. Research on Corporate Philanthropy and Relationship Management Community Relations (Himmelstein, 1997; Hall, 2006) Employee Relations Customer Relations NGO/NPO Relations

24. Customer & Employee Relations and Corporate Philanthropy Hall (2006) demanstrated employees have a stronger relationship with the customers who aware their corporate philanthropic programs. Throne (2008) linked philanthropy efforts with customer interest as well. Smith and Sypher (2010) identified strategies to advocate workplace giving. Although companies want to achieve "a better image…and improved community relations. The last thing they want to do is get people angry by being beneficent" (Himmelstein, 1997).

25. Nonoprofit Organization Relations and Corporate Philanthropy One way of clarifying the relationship between corporate donors and nonprofit recipients is to see donations as gifts (Himelstein, 1997).CP sustain deeper relationships. Some companies establish nonprofit foundations to handle charitable programs instead of give directly (Lawrence & Weber, 2006). Corporations should build strategic philanthropic programs into their business plan and work NPOs to alleviate social problems (Himmelstein, 1997)

26. Research Questions RQ5: Which relationship-cultivation strategies did the companies use during the corporate philanthropic program with their publics? RQ6: What relationship outcomes resulted from these strategies of corporate philanthropy?

27. Qualitative Interviewing The appropriateness: Interviews are particularly useful for getting the story behind a participant’s experiences. Little information is known about the research questions; The deep reasoning and meaning for corporate philanthropy and OPRs are needed to explore; There are not too many (elite) interviewees and they are high level mangers of the corporation which are hard to rearch; The contact between interviewee and participants are needed, to clarify and ask for the details.

28. Method Qualitative in-depth (Legard, Keegan, & Ward, 2003), long (empahsize the duration, McCraken, 1999), active (interaction, Holsten & Gubrium, 1995), elite inteviews (Interviewees are not subjected to standardized questioning. Dexter, 1970) Choice of the method depends on the nature of research questions, time cost, and preference and expertise of the researcher (L. A. Grunig, 2008).Semini-structured and open-ended questions About 60 minutes (longer interviews may provide more data than shorter interview,; depending on the nature of the study to conduct a larger number of shorter interviews or a smaller number of longer interviews. Wilmot, 2000) Evaluation of the research method: credibility (checked again), transferability ( asked same questions to the interviewees in different industries), dependability (interview protocol)

29. Sampling Sampling techinique Theory-based techinique Purposeful Sampling Time constraint; manageable Sample size 19 "2010 Ranking List of Corporate Philanthropy in China (2010中国企业慈善排行榜) Reflect characteristics Sampling criteria (Wilmont, 2010; McCracken, 1988)

30. Data analysis Three stages of data analysisi by Miles and Huberman’s (1994): Data reduction (conceptual reduction to sort and categorize data into the different conceptual themes) Data display Data drawing and verification (relationships)

31. Results RQ1: What are the forms of corporate philanthropy in China? All the major forms of corporate philanthropy in the literature review have been found: (Loans of employees/equipments and advertising in philanthropic activity have not been mentioned). Charitable donations (direct donations, establishing scholarship programs, and buying things first then donating them); Strategic philanthropy (in-kind contributions and volunteer services); community contributions; Corporate sponsorship; Internal and external communication of corporate philanthropy

32. RQ2: What are the motivations of corporate philanthropy in China? Most companies have societal reasons, including all the small companies and most of the big companies. MNCs cited business reasons or long-term benefits for the companies

33. RQ3: Influenced by Chinese commercial and political environments to build relationships (OPRs), what are the characteristics of doing corporate philanthropy in China? Different kinds of companies in China have different characteristics of corporate philanthropy (e.g., state-owned enterprises (SOE), private companies; multinational companies (MNC), and companies that are wholly owned by the people). Lack of laws, regulations, and statutes on corporate philanthropy. MNC has decentralized management Communist Party members’ committee and the Communist Youth League of China within a company.Sensitive political issues: A Taiwanese company. Corporate philanthropy focuses on crisis and disaster relief, farmers and migrant workers’ well-being, and education.The Chinese government plays an advocacy role in corporate philanthropy.social enterprises

34. RQ4: What type of relationships did corporations develop with their publics (e.g., NGOs, customers, employees, government, and community members) in the corporate philanthropic process in China? Communal relationship (one-sided): donate money or products Exchange relationship: Volunteer relationship; media relations; scholarships (exchange donations with companies’ reputation and good image, funding research areas of products, or helping companies’ employees or future employees). Contractual relationship: have contracts with NGOs and government Covenantal relationship: social enterprise employees

35. RQ5: Which relationship-cultivation strategies do companies use during the corporate philanthropic program with their publics? Symmetrical strategies: Access: to NGO and government; Positivity: makes the public feel contented with the philanthropy; Openness and disclosure: to NGO, media, employee (newsletter and Web site), suppliers (have meetings with them), other companies (conduct seminars to talk about volunteer programs), and government; Assurance of legitimacy: MNCs; Networking: connect with governments through experts in the NGOs; Sharing of tasks: with NGOs; Some dual concern strategies: consider the recipients’ interests; Cooperative: with NGOs;

36. RQ5: Which relationship-cultivation strategies do companies use during the corporate philanthropic program with their publics? (cont’d) Promise keeping: NGOs have to keep their promise to persuade companies to continue donating to them. Companies in turn will keep their promise as long as they do not experience any significant financial crisis; Stewardship: reciprocity and responsibility (almost all the philanthropic programs reflect the responsive strategy); Responsiveness: with NGOs; Continued dialogue/patience: with employees; Listening: employees’ perspectives; Respect: with the government officers; Organizational credibility: social enterprise; Personal relationships; Face-to-face communication; Educational communication

37. RQ6: What relationship outcomes resulted from these strategies of corporate philanthropy? Most companies do not have a formal program to evaluate their relationship outcomes; only a few MNCs evaluate their short-term programs cooperated with NGOs Trust: competence, ability, and dependability (a company donated a Beichuan Hope school which did not collapse during the Sichuan earthquake) If an NGO and a company have a good cooperation experience on undertaking corporate philanthropy together, they will trust each other more. Social enterprise: employees trust the company.

38. RQ6: What relationship outcomes resulted from these strategies of corporate philanthropy? (cont’d) • Relational commitment: affective commitment and continuance commitment. Employees/customers feel more committed to their companies after learning of the philanthropic programs; MNC Taiwan (CPC) Hong Kong • Control mutuality: What the public feel would influence the decisions of the companies. company and NGO (which sides have more power in the decision-making); listening employees and government officials.

39. RQ6: What relationship outcomes resulted from these strategies of corporate philanthropy? (cont’d) Relational satisfaction: Most of the participants were satisfied with the relationships after CP (school scholarship NGOs). However, one participant from a manufacturing company said that they did not do well. Some of the participants stressed that no matter how well you did, there would still be a few people who would think otherwise. Some would feel unsatisfied; one participant said some NGOs might think the companies are atoning their sins by CP. Other employees would feel that their employer thinks more of the well-being of others than of theirs. MNC would not satisfy what they have done; they always want to do better.

40. Discussions Strategies for cultivating relationship outcomes. This study extends the relationship management theory by applying it in corporate philanthropy in China (communal, exchange, contractual relations). Doorley and Garcia (2011) pointed out that stakeholders would expect corporate philanthropy (resposibility) as to be an integral part of business strategy Enterprise strategy (social-role strategy) vs Corporate Strategy(Steyn, 2003) Positive outcomes: trust and satisfied after CP, reputation, community and employees MNCs have more CP; Most companies donated directly to earthquakes etc., do not know how to conduct long term SCP. With publics who are future employees, employ’s hometown, employees’ relatives

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