Does strategic corporate philanthropy achieve its profitability ...

When talking about corporate giving, a strong ideological and theoretical debate inevitably comes into play. The conflict between Friedman?s stockholder view and Freeman?s stakeholder view has been widely discussed in the literature (Bird, Hall et al. 2007). The first theory (Friedman, M. (1970). The Social Responsibility of Business is to Increase its Profits. The New York Times Magazine), which pertains to a traditional economic perspective, states that the only aim of a firm is to increase its shareholders? wealth, regards corporate assets as belonging to stockholders, and the disposal of corporate assets in favour of charities as a theft of the stockholders. The second theory (Freeman, E. R. (1984). Strategic management: a stakeholder approach. Boston, Pitman) places the business in its social and natural environment, and considers it is, at least partly, responsible for the nuisances its activity generates. As a consequence, this business must limit its nuisances, operate fairly, demonstrate citizenship and be socially responsible.

Although these two theories do not have the same position about the role of the firm within the community, an apparent compromise seems to have been found, as corporate donations are today called by many, ?strategic corporate philanthropy? (Saiia, D. H., A. B. Caroll, et al. (2003). ?Philanthropy as Strategy: When Corporate Charity Begins at Home.? Business & Society 42(2): 169).

Many authors argue that companies miss both their ?doing good? and their ?doing well? objectives in corporate philanthropy. For example:

- Brammer, Millington et al. (p.242) find that ?strategic motives appear to play little or no role in determining the level of philanthropic contributions, which instead appear to be driven by resource availability, the presence of previous commitments and relationships, and senior managerial discretion.? (Brammer, S., A. Millington, et al. (2006). ?Is philanthropy strategic? An analysis of the management of charitable giving in large UK companies.? Business Ethics: A European Review 15(3): 234-245)

- Porter and Kramer (p.58) explain that ?the way corporate philanthropy is practised today, Friedman is right. The majority of corporate contribution programs are diffuse and unfocused? (Porter, M. E. and M. R. Kramer (2002). ?The Competitive Advantage of Corporate Philanthropy.? Harvard Business Review 80(12): 56-69)

- Bruch and Walter observe (p.49) that it is often due to ineffectiveness of management: ?Although the relevance of corporate philanthropy is widely accepted, few companies achieve significant, lasting societal impact because most lack a cohesive strategy. Effective philanthropy must be run no less professionally than the core business? (Bruch, H. and F. Walter (2005). ?The Keys to Rethinking Corporate Philanthropy.? MIT Sloan Management Review 47(1): 49-55)

Source: http://mundumnostrum.org/2012/does-strategic-corporate-philanthropy-achieve-its-profitability-objectives/

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