Reputation Offsets

Corporate altruism has always blended with PR, especially when the company doing the giving has a less-than-angelic reputation. Now, British researchers have found that international firms may also use philanthropy to offset their presence in notoriously oppressive nations.

In the latest Journal of Management Studies, Stephen Brammer of the University of Bath and his colleagues analyzed the charitable giving of more than 300 top uk firms. They found that companies with operations in the world's most freedom-starved countries, including China, Burma and Sudan, donate over 70 percent more to charity than firms with no presence in such states.

The countries were evaluated using data from the ftse4Good Index, a creator and manager of equity, bond and alternative asset class indices, as well as watchdog groups like Freedom House and Amnesty International. Although the overall extent of a company's globalization had no impact on its charitable giving, a toehold in just one of the worst human-rights offenders was enough to make a big difference.

The study can't track how much money actually benefits the citizens of the countries in question, but it may not matter: Coauthor Stephen Pavelin of the University of Reading notes that there's "good evidence elsewhere" that philanthropy can improve a firm's overall reputation, so companies may benefit by simply countering bad press with good. And while increasing media scrutiny and global social awareness may make this kind of giving more common, Pavelin says, "if one believes in a long-term trend towards open democracy and universal human rights, then one might also expect that, in the future, corporations will face less reputational risk of this kind."

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