Importance of Corporate Philanthropy to Nonprofits in the United States

This literature review focuses on the declining corporate philanthropic activities of the USA corporate organizations and its effect on non-profit organizations. It describes the concept of corporate philanthropy, its impact on corporate organizations, debates around corporate social responsibility (CSR) and corporate philanthropic activities, and the declining rate of corporate philanthropic activities of USA corporations.

Running head: DISSERTATION PROPOSAL
Importance of Corporate Philanthropy to Nonprofits in the United States
Dissertation Proposal
Submitted to Northcentral University
School of Business and Technology
in Partial Fulfillment of the
Requirements for the Degree of
DOCTOR OFBUSINESS ADMINISTRATION
by
ORLAND MORTON
San Diego, California
March2018

1DISSERTATION PROPOSAL
Table of Contents
Chapter 2: Literature view...............................................................................................................1
Introduction......................................................................................................................................1
Purpose of Statement.......................................................................................................................2
Scope of Literature..........................................................................................................................2
Conceptual framework.....................................................................................................................3
Concept of Corporate Philanthropy.................................................................................................3
Legitimacy of Corporate Philanthropy............................................................................................4
Corporate Social Responsibility and Philanthropy Debate.............................................................6
Types of corporate philanthropy......................................................................................................9
a. Employee Matching Gifts......................................................................................................9
b. Volunteer Grants:...................................................................................................................9
c. Challenge Grants:.................................................................................................................10
d. Automatic Payroll Deductions.............................................................................................11
e. Fundraise matches................................................................................................................12
Theories and Models Related to Corporate Philanthropy..............................................................13
Carrols CSR Model..................................................................................................................13
Ackerman’s Model..................................................................................................................15
Intersecting Circles Model of CSR..........................................................................................16
Philanthropy and Financial Performance.......................................................................................18
Understanding conglomerates.......................................................................................................19
Importance of Corporate Philanthropy on Corporate Organization..............................................20
Strategies of conglomerate companies in business diversification................................................22

2DISSERTATION PROPOSAL
Making a local brand global....................................................................................................23
Redirecting local engineering skills.........................................................................................24
Global leadership in contracted product category...................................................................24
Usage of natural resources.......................................................................................................24
Application of specific business model...................................................................................25
Competitive nature of conglomerate companies in the emerging market.....................................25
Declining Corporate Philanthropy in the Corporate Organizations of USA.................................27
Effect of Declining Corporate Philanthropy on Non-Profit Organizations...................................28
Political Theories Linked with Social Power................................................................................30
Corporate Constitutionalism....................................................................................................30
Corporate Citizenship..............................................................................................................32
Needs of social demands and social values in Business Growth...................................................33
Ethical Theories for Relationship between Society and Business.................................................36
Utilitarianism...........................................................................................................................37
Virtue Ethical Theory..............................................................................................................38
Strategic Philanthropy: Practice and Rationale.............................................................................38
Conclusion.....................................................................................................................................40
References......................................................................................................................................42
Appendices....................................................................................................................................51
Appendix A: XXX.........................................................................................................................52
Appendix B: XXX.........................................................................................................................53

3DISSERTATION PROPOSAL
List of Tables
Table 1: Factors constructing Corporate Philanthropy

4DISSERTATION PROPOSAL
List of Figures
Figure 1: Factors constructing Corporate Philanthropy
Figure 2: Conceptual Framework

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Chapter 2: Literature view
Introduction
Literature review is the collection previous research information from different scholars.
The authentic information collected from different research scholars helps in enhancing the
quality of overall research study. This literature review will be focusing on the declining
corporate philanthropic activities of the USA corporate organizations. The focus of the literature
review will also be on the effect of declining corporate philanthropy of corporate organization on
the non-profit organizations. The previous researchers have indicated that USA corporate
organization has drastically reduced their overall corporate philanthropic activities. However, the
impact of such declined corporate philanthropic activities of corporate organizations high
affected the non-profit organization in terms of getting any charitable donations.
In order to conduct the literature review, various secondary resources will be researched for
collecting authentic research information. Moreover, in this literature review, authentic journals,
books, websites, magazines will be accessed for collecting accurate and authentic research
information. The whole literature review will be based on the information collected from the
secondary sources. Moreover, the in-depth information associated with the secondary sources
will definitely enhance the quality of the overall research paper. The literature review will use
Google scholar and other library database for accessing authentic journals and books. Apart from
that, the literature review will also use Google, Bing and other search engine for collecting in
depth information regarding the research topic.

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Purpose of Statement
This section would take into account the declining factor of philanthropic involvement by
leaders of U.S. corporations in the year 2016 or 2017 along with the adverse impact the decline
will have on non-profits. The purpose of this qualitative case study research is to explore the
reasons for declining philanthropic contribution to nonprofit organizations by the U.S.
Corporations. The study will also explore the resulting impact on nonprofit organizations.The
year 2016 witnessed a drop off of 50%of the portion of companyprofits slated for corporate
philanthropy (Phaholyothin 2017). Corporate philanthropy has been influential to the survival of
the non-profit organization along with the competitive positioning of the companies. USA has
been measured in being the top country related to corporate philanthropy.
The literature review is entirely dependent on the declining rate of corporate
philanthropic activities of the USA corporate organizations. Moreover, the study is also
concerned about the effect of declining corporate philanthropic activities on the non-profit
organizations. The literature review will describe the concept of the corporate philanthropic
activities and their impact of the corporate organizations. Apart from that, the literature review
will assess the debates around corporate social responsibility (CSR) and corporate philanthropic
activities related to the corporate organizations. Apart from that, the declining rate of corporate
philanthropic activities of USA corporations will be described in this literature review along with
its affect on nonprofit organizations.
Scope of Literature
From the literature information, it has been cleared that previous scholars have very
narrowed down literature information on the topic of the researches. However, the recent
scholars have emphasized more on the topic of the research. Apart from that, the authentic

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journal articles and books provided lot of authentic literature on the topic of the research. Such
in-depth and detailed research study can as effective secondary sources for further research
studies. Apart from that, the authentic websites and magazines have provided detailed and
evidence based information for enhancing the quality of the overall research results. In this way,
the literature reviews has huge scope in enhancing the quality of the research and providing
secondary information to the further research studies.
Conceptual framework
Figure 1. Factors
constructing Corporate Philanthropy
Source: created by author
Concept of Corporate Philanthropy
Corporate philanthropy is the act of donating to a foundation or charity, whose mission is
to fight against the social issues and deliver social impact (Szőcs et al., 2016). It generally
consisted of cash donations, but it can also be the form of providing volunteer time and other
facilities offered by the organizations towards for the social benefits (Hungerford, 2016). On the
other hand, Gautier and Pache (2015) opined that corporate philanthropy is the most significant
part of overall corporate social responsibility and such activities is primarily concerned with

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social and community development by the organizations. Well established and strategically
executed corporate philanthropic activities have high level of impact on the corporate
organizations from perspective of public standpoint. It can also be helpful for the corporate
organizations towards establishing good corporate image in the market. Corporate philanthropic
activities go beyond the profit level of the organization, where the corporate organizations do not
much think of their profitability, but they think of the social development surrounding them.
However, strategically executed philanthropic activities help the corporate organization towards
overcoming the stiff competitive pressure in the market through increased competitive
advantages (Blowfield & Murray 2014). In this way, the effect of philanthropic activities may
not be seen in the directly on the short term profit level of the corporate organizations, but the
effect will surely be seen in long term profit level of the organizations.
Charitable contributions in USA by corporate organizations have been declined by 14.5%
in real dollars in the last year. Furthermore, over 15 years, corporate giving has been declined by
50% as a percentage of profit of the corporate organizations (Muller et al., 2014). Moreover,
most of the corporate organizations are seeing no such profit from such philanthropic activities
and started to be unwilling to invest in such activities (Szőcs et al., 2016). In this way, the overall
charity and donations in the non-profits of USA has been declined drastically with less
philanthropic activities of the corporate organizations.
Legitimacy of Corporate Philanthropy
The issue of whether the companies need to engage in the factor of charitable giving has
over the years been the subject of heated discussion. During the 19th century, various rulings of
the court delivered the usage of the corporate funds for the purposes of charity effectively illegal
(Szőcs et al., 2016). The Proprietors of the Charles River ridge v. Proprietors of the Warren

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Bridge case proscribed the exercise of corporate funds for the activities incongruent to the
employed aims of the association that facilitated stockholders in suing their organization for such
act of ‘ultra vires’.
Nevertheless, leaders of corporations have made an attempt in justifying their
contributions towards libraries, schools, YMCA amenities in company towns as a strategy of
recruiting employees. During the times of economic downturns towards the end of the nineteenth
century, associations more gradually began contributing funds to the purposes of charity and
were competent in defending themselves against the ultra vires claims of the stockholders in
courtroom by arguing that these were legitimately related to business, as they were directly
benefiting the employees (Hungerford, 2016).
Debates have been there, both within the courtrooms as well as in the general dialogue,
about the legitimacy of such corporate philanthropic initiatives that has continued into the
twentieth century (Jones et al., 2014). These were moreover fashioned by various conflicting
forces: a sentiment of anti-business within some contexts that rejected the donations of the
corporations as being tainted, the pervasiveness of laissez-faire arguments asserting that it is
immoral for the associations in giving away the money of the stakeholders. Adding to that will
be the increased examination of the corporate activities as ultra virus.
Most of the court cases still continued to assess the corporate philanthropic activities as
ultra viruses. In such cases, the philanthropic activities are set as the precedent for the norms of
the profit maximization for the shareholders (El Ghoul et al. 2017). This rule insists that a
corporate organization is highly organized and it is basically carried for increasing the profit
level of the shareholders. The inexcusable fact is that non-distribution of profits among the
shareholders for devoting them to other purpose. By the year of 1920, there was a sentiment of

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the public towards the corporate philanthropy of the corporate organizations (Friedman &
Heinle, 2016). From then, it becomes the belief of the people that corporate organizations are in
duty of doing something for the goods of community development that is beyond the legal
responsibilities. Apart from that, such ruling reflects as the growing perception of the people for
the corporate organizations to have positive role in the overall development of the society. The
notion of corporate philanthropy becomes highly significant with attempt of different scholars
towards clarifying and explaining the concepts of this topic. Furthermore, the proliferations of
several books have emphasized on the importance of corporate philanthropy on the overall good
of the community and society.
Corporate Social Responsibility and Philanthropy Debate
It has been argued by some that corporate philanthropy has essentially been an ‘agency
cost’ that has the ability in bringing advantages to the individual executives along with the
managers through development of their personal reputations or prospects for encroachment,
however this generally comes at the cost of the wealth of the stakeholders. Several responses
materialized, sharing the assurance about the possibility of justifying the corporate social
responsibility notion.
In mapping out of the landscape of the literature, El Ghoul et al. (2017), recognized four
main advancements to the subject, each of which has been pertinent to the topic of ‘corporate
philanthropy’: a. Instrumental theories where the activities of CSR (Corporate Social
Responsibility) are being observed as influential to creation of wealth which is strategic
philanthropy; b. Political theories emphasizing the social power along with related corporation
duty; c. Integrative theories arguing the needs of the business for incorporating the social

7
demands along with social values for the sake of growth and endurance and d. Ethical theories
focusing on the normative questions of the relationship between society and business.
However, conflicting notions are being defined clearly in the literature. For instance,
some equate the corporate nationality with strategic philanthropy with others considering the
strategic CSR as being dissimilar from the CSR uses (Grant, 2016). It highlights the ‘competitive
advantage’ of CSR, disagreeing on the instrumental advancements like the cause-related
marketing that they sustain needs to be assessed as marketing and not as philanthropy.
Likewise, another concept that cuts across these segments is the apprehension with
looking beyond the financial accountability to the shareholders and mulling over the relationship
of the company with several stakeholders, inclusive of the employees, local communities, media,
customers along with the government (Blowfield & Murray 2014). The stakeholder theory takes
into account the extent of corporate responsibility in emphasizing the significance of satisfying
the multiple stakeholders group. Scholars who have been working along this vein have been
insisting on the needs of the corporation for assuming the responsibility for all the varied
constituents and being committed towards society’s well-being. However, not all the scholars are
sold on this substance. Some have been content with the fact that despite its connection with
corporate philanthropy and social responsibility, in reality, the stakeholder theory offers little
regulation to the decisions of CSR beyond the maximization of the shareholders; however, it has
no recommendation for ways of balancing the competing liabilities (Cheng et al., 2016).
According to Drucker, for converting its social responsibilities into responsibilities of the
business, corporations need to seek to roll a social issue into economic prospect along with the
economic benefit into the capacity of productivity and well-paid jobs.

8
Even Friedman and Heinle (2016), despite being critiques of the doctrine of social
responsibility as being harmful to the society that is free, admitted the fact that companies need
to invest resources within the local community for attracting better employees (Friedman &
Heinle, 2016). Institutional pressures generally play a significant role with the corporate
executives finding themselves progressively more under the hammer from several stakeholders
like the activists, governments, media consumers and certain other corporations.
Institutional pressures play a significant factor in the story and debate of corporate social
responsibility and corporate philanthropy. Moreover, Muller et al. (2014) opined that the
corporate executives face extreme pressure from the stakeholders like government, non-
government monitoring, activists, media, consumers and other corporate organizations towards
assessing their social impact through their philanthropic practices. However, such views reflect
on simultaneous attention to organizations’ economic, legal, ethical and philanthropic activities.
On the other hand, Marquis and Tilcsik (2016) opined that corporate philanthropy is only
concerned with the discretionary activities and corporate giving for the overall development of
the society. Moreover, this responsibility is concerned with distributing cash or kind to the
society for solving social problems and leading society development. Financial performance
remain non negotiable for growth and survival of corporate organizations. In this way, the
professional have decided to insist CSR activities including corporate giving as the most
essential part for aligning with core competencies of the organizations. In this way, the corporate
organizations can make sustainable and efficient contributions to the society and simultaneously
fulfill the economic objectives. Apart from that, while CSR activities are assessed as the
competitive advantage factor, it is more emphasized as the marketing of the corporate

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organization and not as the corporate philanthropy through just corporate giving (Friedman &
Heinle 2016).
Types of corporate philanthropy
a. Employee Matching Gifts
Matching gifts are stated to be an easy thing to acquire, though it has been a shame that
most of the non-profits do not seek them. A program of matching gift is an outline of corporate
giving that has been letting the employees decide on the ways their employer facilitates funds
related to corporate philanthropic (Jones et al., 2014). With such kind of programs, an employer
will be able to match the donation of the employees to the suitable organizations.
An employer always matches the contributed amounts of the employees to the eligible
organization for making effective charitable donations to the society. Over 65% of Fortune 500
companies match the donations made by the employees for getting lot of money available for the
charitable donations (Masulis & Reza, 2014). However, Szőcs et al. (2016) opined that the
awareness among the employees of many organizations is quite low leading to the issue of
corporate philanthropy. IBM provides 1:1 cash matches for the employees towards donating in
the society (Jones et al., 2014). Apart from that, Coca Cola makes triple of the donations made
by the employees towards effective development of the society.
b. Volunteer Grants:
Employers are in the habit of rewarding their employees for their part of volunteerism via
the volunteer grants. It is also known as the dollars for doers; these programs of corporate
philanthropy let the associations donate to the organizations where the employees volunteer time.
Companies generally distribute a specified amount of funding based on the amount of hours that
that employees spend on volunteering.

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With volunteer grants, the corporate organizations can get benefits of active and engaged
volunteers and security of funding towards effective corporate philanthropic activities. In this
program, the corporate organizations provide monetary donations to the eligible non profits as
the way of recognizing the employees, who volunteer the philanthropic activities. As per Masulis
and Reza (2014), employee volunteer programs can be performed through two types of
volunteering namely team volunteering and individual volunteering. In team volunteering,
corporate organizations make charitable donations to the non-profits, where the employees
volunteer as a team. On the other hand, in individual volunteering, the individual employees earn
money for donating to the non-profits after meeting some volunteering thresholds.
c. Challenge Grants:
Challenge grants are stated to be a challenge constituent. For receiving of a challenge
grant, a non-profit organization needs to grant making party for earning the funds upon
achievement of a formerly precise task (Cheng, Lin & Wong, 2016). In practical sense, this
signifies the fact that organizations need to agree in reaching certain goals for raising of funds
within a certain specified amount before it is being received as it has been promised but most of
the businesses analyze challenge grants as ways of encouraging the non-profits in going out and
raising the extra funds for going along with the contribution of the corporation.
According to Qian et al. (2015), challenge grants are the funds disbursed usually by the
foundations to the nonprofit organizations based on their completion of challenging
requirements. The challenge indicates the actions or results, which must be met by the nonprofits
before getting the money. It can also involve some substantial efforts for ensuring that the
recipients are actually helping themselves through their own sacrifice and hard work. On the
other hand, Hadani and Coombes (2015) opined that challenge grants always suppress the

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potentiality of the non-profits towards getting donations from the corporate organizations.
Moreover, they must have to list their predetermined list requirements for getting the donations
from the corporate organizations.
d. Automatic Payroll Deductions
Automatic Payroll Deductions can be an effective ways of fundraising bonuses, if it is set
up properly. However, at times it appears to be difficult than some other options to keep it secure
(El Ghoul, Guedhami & Kim, 2017). There are various business organizations who offer their
workforces to donate a specified or already set amount of their salary as a form of charity. In
most cases, these types of deductions are automatic and thus the employees and the non-profit
organizations would not have to think regarding the procedure. It can be said that if the
management of the business organizations encourage the workforce or the donors to spend a
small parentage of their salary for charity, it can significantly increase the efforts of the
organization to raise funds. To find out, the business corporations can check the deductions in
payrolls as an effective screening of the loyal depositor or donors and continuously updating the
information of the employees (Jones, Willness,&Madey, 2014). The key would be to find out
how many organizations are there that have a workforce who support such initiatives and do
those organizations have such deduction system. This might be a good option to initiate such
activities as some business organizations can make a list of the employees who are willing to
participate in such programs.
Payroll deduction plans can offer the employees an effective and convenient way of
contributing their income towards an ongoing investment and expense for charitable donations.
According to Cuypers et al. (2015), in payroll deduction plan, the employees permit their
corporate organizations towards deducting a certain percentage of their salary towards

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contributing to the social security of the society. Through enrolling to the Automatic Payroll
Deduction (APD), the employees can authorize the System Payroll Office towards deducting a
portion of their money from their weekly or monthly pay checks. In this way, the employees can
automatically donate their money towards the overall development of the society.
e. Fundraise matches
It is widely accepted that the participatory medals that the employees or the business
organizations receive for initiating and carrying out such charitable programs are one of the most
important and exciting awards to receive. Though it can be said that there is such a trophy or
award named fundraising match and this can boost the mentality of the individuals to take part in
such programs. The majority of business organizations carry out fundraising matches in two
possible ways. According to Bereskin, Campbell and Hsu (2016), some of the organizations
offer a grant amount for each activity of the employees in such programs. On the other hand,
other business organization’s managements sometimes donate equal or greater value of on fund
raised by the workforce of that particular company.
In today’s world, almost 5% of the United States based money as charity comes from the
business corporations. Such business organizations have the needed resources and financial
stability to help the organizations (Grant, 2016). There are some business organizations who
arrange specific programs to make a significant difference nationally, locally and globally and
such behaviors project their wish to help the society (El Ghoul, Guedhami& Kim, 2017). If an
individual considers his or her organization to become focused on growth, they should utilize all
the necessary tools to raise more funds where the initiatives regarding corporate philanthropy in
involved. The non-profit organizations need to grab the opportunities that this big business
corporations provide in order to increase the amount of 5%.

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Fund raising programs are actually the processes involved in gathering voluntary
contributions of money and even other resources through requesting the individuals, businesses
and Government agencies. Liket and Simaens (2015) pointed out that the corporations can also
arrange the fund raising programs for gathering adequate donations to contributing in the societal
development programs. Furthermore, the corporate organizations must have to be efficient
enough towards promoting the fund raising programs among the employees, who actually
support the corporate philanthropic activities. It can make double the monetary donations made
by the employees to the non-profits. It can also be the best practice of informing the donors
towards donation money for charitable purpose.
Theories and Models Related to Corporate Philanthropy
Carrols CSR Model
Carrols CSR model incorporates the conducts of business activities in an organization
that leads to sustainable businesses over long period of time. Corporate philanthropy is the most
essential part of this model. As per this model, social responsibility and legal obedience are the
prime duties for the corporate organizations towards leading long term profitable business. The
followings are responsibilities of the corporate organizations towards leading social responsible
businesses:
Economic Responsibility
Economic responsibility is the most significant responsibility of the organizations, where
the corporate organizations have to perform in a consistent manner towards maximizing the
overall profit level of businesses. Li et al. (2015) pointed out that economic responsibility
ensures that the organization is responsible and profitable enough to provide adequate return on
in investment to the shareholders within the stipulated time period. Hence, the corporate

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organizations must have to achieve high level of operational efficiencies and maintain strong
competitive position. It is extremely important for the organizations to be consistently profitable
for ensuring proper economic responsibilities.
Legal Responsibility
Legal responsibilities of corporate organizations require them to operate their businesses
as per the laws of Government and rules of business. As per Iatridis (2015), legal responsibility
ensures that the corporate organizations comply with various national and supra-national laws
and regulations. Moreover, as per this responsibility, the corporate organizations should offer
products and services, which meet at least some legal requirements framed by government. On
the other hand, Tan and Tang (2016) opined that compliance with all the legal requirements help
the business organizations towards avoiding any kind of legal complication associated with
businesses. In this way, the corporate business organizations can become law abiding corporate
citizens and establish respectful image in the society.
Ethical Responsibility
Ethical responsibilities are associated with the responsibilities for which the corporate
organizations have to act morally and ethically. Moreover, Lee et al. (2014) stated that ethical
responsibilities are beyond the legal responsibilities, where the businesses organizations have to
be operated as per the social and ethical norms. Good corporate citizenship is always expected to
be morally and ethically responsible. In this way, the corporate organizations will be responsible
enough for showing enough responsibility to the society through maintaining all the social and
ethical norms.

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Philanthropic Responsibility
Philanthropic responsibilities remain at the top of this pyramid model. According to
Valor and Zasuwa (2017), corporate philanthropic activities focus more on luxurious activities,
where the corporate organizations have to be inclined towards improving the quality of life of the
citizens, local communities and ultimately overall society. Corporate philanthropy is the act of
giving back to the society for the overall good of the society. On the other hand, Raub (2017)
opined that corporate responsibility is highly discretionary, but it is actually highly significant for
the overall sustainability of the corporate organizations. This responsibility is actually related to
the activities like charitable donations, time and staffs on projects, kinds and others. The prime
purpose of the corporate philanthropy activities of the corporate organizations is actually
intended towards overall development and advancement of the community surrounding them.
Figure 1: Carroll’s CSR Model Related to Corporate Philanthropy
(Source: Tonin & Vlassopoulos 2014)
Ackerman’s Model
According to the priorities, liabilities and responsibilities of the corporate social
responsibility initiatives, Ackerman has proposed an effective model related to the social

16
responsibilities associated with the corporate organizations. Ackerman suggested three phases of
CSR initiatives as per the priorities of those initiatives. This model of CSR activity is much more
concentrated on guiding the implementation of CSR initiatives rather than the formulation of the
CSR initiatives. Proper prioritization of the CSR initiatives can facilitate the corporate
organizations towards implementing the most important initiatives on priority basis. In this way,
such prioritization can result in high level of success for the initiatives associated with corporate
philanthropic activities.
The first phase of this model is associated with recognition of social problems by the top
managers of the corporate organizations. Tonin and Vlassopoulos (2014) pointed out that proper
identification of social problems can help the top managers to direct their CSR initiatives and
formulate right CSR initiatives related to the actual and accurate social problems. The second
phase of the CSR initiatives are associated with intensive study of the recognized social
problems and hiring special expert for finding effective solutions in mitigating the social
problems. Moreover, Du et al. (2016) opined that the intensive study of the social problem helps
in better recognizing the facts linked with the problem and thereby help the experts in providing
best solution. The last phase of the model is linked with actual implementation the proposed
solution to meet the recognized social issues.
Intersecting Circles Model of CSR
Unlike the Carroll’s CSR model, Intersecting Circles Model of CSR refutes to prioritize
the CSR activities based on hierarchical structure. Moreover, this model related to corporate
philanthropy is actually intended towards proper integration among the three aspects namely
economic, legal and moral responsibilities. This model has proposed that while considering the
CSR activities, none of the CSR initiatives are more important than others.

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According to Jia and Zhang (2014), Intersecting Circles Model rejects the fact that economic
responsibility should get priority over the others. Moreover, as per this model, based on the law
of business, although the businesses are initiated for profit making, still it is actually a social
creation and the corporate organization must get the support of society for their long term
survival. The corporate business organizations can survive and thrive in the market for longer
period only through getting the social support from the community surrounding them. Hence, the
corporate business organizations can only get such support from the society through fulfilling the
social responsibilities and obligations. On the other hand, Chen and Huang (2016) opined that
social control of the corporate business organization is actually intended towards protecting and
enhancing the public welfare as well as private interest associated with the businesses. As per
this model, the corporate business organizations must be concerned about proper integration
among the all three responsibilities like economic, legal and moral responsibility. In this way,
this model seems to be descriptive in nature, but not normative in nature. This model is
advantageous enough for its flexibility of interpreting it as per the necessity of business
organizations.
Figure 2: Intersecting Circles Model of CSR

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(Source: Bereskin et al., 2016)
Philanthropy and Financial Performance
Over the years, extensive researches have been conducted on the association between
corporate philanthropy and financial performance of the organizations. Most of the scholars have
stated that corporate philanthropy is positively associated with the financial performance of the
organizations because of the positive reputation and image of the organizations in the market
through charitable donations. In many societies, Governments are in favor of corporate
philanthropy activities, as it reduced the burden of government towards social development. In
such extent, the corporate organizations often the support and funding of Government that can
have major impact on the financial performance of the organization. On the other hand, Cha and
Abebe (2016) opined that corporate organizations can build positive image in the market and
build positive relationship with the stakeholders of the organizations. Hence, the primary
shareholders become highly unwilling to invest in such socially responsible corporate
organizations. In this way, corporate philanthropic activities are directly associated with their
financial performance making the financial performance sound enough for the organizations.
Charitable initiatives can assist the corporate organizations towards gaining political
legitimacy. It can help the organizations to gain highly valuable political resources, which can be
highly critical for them towards long term financial success and survival. Tonina and
Vlassopoulos (2014) pointed out that corporate philanthropic activities also help in establishing
positive perception in the mind of the customers regarding the particular organizations
responsible for the society. In this way, the customers become highly loyal to such organizations
and become more likely to repeat their purchase over time. In this way, the overall sales volume
of the organization is increased with the repeated purchase rate of the customers, which

19
ultimately increases their financial performance level. Apart from that, strategically executed
corporate philanthropy is also enhance the effectiveness of word-of-mouth for the organization
that reduce the overall advertising cost, which can indirectly contribute to the financial
performance level.
Understanding conglomerates
The conglomerates actually represent the business organizations that are engaged in
various businesses. It is widely accepted that these organizations are multi-industry
organizations. In short, it can be said that the assets of the conglomerate are used to venture in
various types of businesses that have no connection with each other (Grant, 2016). The
fundamental concept of conglomerate is to supply adequate income from all types of businesses
that can secure the operations of the newly started businesses. The idea of multi-industrial
business organizations is not relatively new as in the year of 1960 these types of initiatives
became popular. According to Bereskin, Campbell and Hsu (2016), the advantages of doing
conglomerate business are naturally long term and at times it may be important to redefine the
strategy of business utilizing new technologies. In some specific situations, the conglomerate
organizations have the possibility of survival in the traditional market until an opportunity
emerges for the presence in the developed markets (Blowfield and Murray 2014). It is a matter of
fact that the conglomerate organizations are multi-industry companies that have diversified
operations and are generally owned by the investors and the founder member. These
organizations receive huge support from the government and are enriched by using the network
organizations under their conglomerate and enjoy easy access to the knowledge and the market
of capitol. In this regard, it can be said that Arcelik is a major Turkish manufacturing business
organization that manufactures household appliances and they are under a major conglomerate

20
KOC group operating in Turkey. This organization is a publicly owned organization and they
have the right to issue or sell bonds and shares of the organization in the stock market (Robertson
& Upton, 2017). Usually the securities of the business organization which are traded are
certainly the property of the various investors.
Importance of Corporate Philanthropy on Corporate Organization
The prime advantage that the corporate business organizations gain from their corporate
philanthropic activities is support or community and its surrounding market. Moreover, in
corporate philanthropy, the corporate business organizations benefits the community with the
earnings earned from the same community. In this way, the organizations gain increasing
prospects of future revenue flow. Moreover, Bereskin et al. (2016) opined that corporate business
organizations most establish positive image in the community through their corporate giving and
social responsibilities. In this way, the existing customers become highly loyal to such
organization. Furthermore, such loyal customers become highly willing to repeat their purchase
from the socially responsible business organization. In this way, the sales and profit volumes of
the socially responsible organizations are increasing to larger extent leading with sound financial
performance.
On the other hand, Cuypers et al. (2015) opined that corporate philanthropy can facilitate
the corporate business organizations towards improving the market reputation and market
development. Moreover, the corporate giving practices lead to high level of goodwill for the
corporate organizations leading to increasing corporate image in the market. On the other hand,
Masulis and Reza (2014) stated that corporate business organization can generate increasing
consumers’ interest for the products and services and lead to favorable opinions for the
organizations. In this way, the corporate philanthropic activities lead to increasing willingness of

21
the consumers towards purchasing the products and services of a particular company.
Furthermore, Qian et al. (2015) stated that favorable opinions of the consumers regarding the
socially responsible organizations lead to their effective advertising. Moreover, the community
people and consumers satisfied with the corporate giving initiatives of the organizations are more
likely to recommend these organizations to the other people. Hence, such organizations do not
have to invest much on creating more numbers of advertisements, as those organizations are
already popular to the customers through increasing word-of-mouth. In this way, corporate
organizations can reduce their advertising expenses leading to reduction of overall business cost.
As per the previous researchers, customers are more likely purchase from the organizations,
which support the serious social issues and the charities that they feel high valuable for overall
social development. According to Masulis and Reza (2014), corporate philanthropic activities
differentiate the corporate business organizations from the other rivals in the market. Moreover,
it leads to increasing corporate image and unique value in the market resulting in high level of
competitive advantages.
On the other hand, Hadani and Coombes (2015) opined that philanthropic activities build
greater opportunities for the organizations to lead innovative business solution. Moreover, the
corporate business organizations can gain access to innovative business ideas, highly talented
technical expertise and valuable researches through partnering with different types of
foundations, non-profits and universities. In this way, such socially responsible business
organizations can lead to innovative and unique business solution that can have huge
contribution in the level of competitive edge for the organizations. However, Zunz (2014)
pointed out that corporate philanthropic activities may divert the corporate organizations towards
different direction from its main direction. In this way, the organizations may not be able to

22
concentrate on their core business purpose. Furthermore, the philanthropic activities that are
purely related to money can lead increasing business cost.
Strategies of conglomerate companies in business diversification
The unrelated diversification of the business organizations is considered in accordance
with the destruction of values in the developed markets along with the conventional way of
thought process. According to Benn, Dunphy and Griffiths (2014), it can be said that the similar
strategy has been used for years and has produced effective results in the markets that are
emerging. According to Blowfield and Murray (2014), in the markets that are emerging with the
presence of institutional void, the conglomerate organizations can definitely take the advantage
of the market imperfections. Thus, the diversification of the process can be looked at as a good
strategy to take up in the market that is emerging. This strategy is linked with various issues that
are mentioned below;
 What are the institutional factors that can positively influence the growth of the
conglomerate in the market that is emerging?
 Possible alternative strategic response of adjustment of the conglomerates that have
highly diversified business ventures as a response to the institutional changes.
 Recommendations for the top managers and the shareholders of the organizations.
 The extent to which the institutional context changes because of the economic reforms in
the nations with emerging market and is higher level of diversification in those situation
are sustainable?
In this regard, it can be said that the concentration of the power is restrained to a few
companies that have experienced reduced market development institutions in the nations
that are developing. According to Bereskin, Campbell and Hsu (2016) this facilitated

23
some more benefits to the conglomerate organizations with efficient investments in order
to strengthen the internal capacity that can get replaced with the market failures
(Robertson & Upton, 2017). The conglomerates hailing from the emerging markets have
identified the changes which are important to change the scope of the diversification if
they want to adapt that. For this the managements of those conglomerates can apply three
strategies and those are;
 To focus on the narrow portfolio of the organizations that has international or
regional potential.
 Accumulating large portfolio for businesses that are home related.
 Building a portfolio of the conglomerates operating in countries that are
developing.
As per The Boston Consulting Group, the conglomerates also use five more strategies
and those are mentioned in this section of the literature review;
Making a local brand global
For an example, it can be said that Hisense is a Chinese company that owns 15% share in
the television industry in the domestic market. The business organization has modified the
strategy and concentrated on the world market with a range of consumer products such as
computers, tools used for telecommunication and air conditioners (Jones, Willness&Madey,
2014). There are manufacturing units in the market of South Africa, Hungary, Iran and Algeria.
The domestic market of China allows the organization to manufacture in cheaper price and
provides additional advantages like R&D centers and designs.

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Redirecting local engineering skills
This strategy basically is redirecting to the local engineering skills. As an example, it can
be said that a renowned Brazilian organization Embraer is backed up by the government of
Brazil and eventually became the largest manufacturer of aircrafts in the world replacing a
Canadian company Bombardier (Grant, 2016). Embraer utilized the local skills of producing
aircrafts and manufactured a jet plane. The subsequent merger with a Chinese organization
China Aviation Industry Corporation II took place with vision of transforming the Brazilian
organization into a global brand and to become largest exporter world-wide.
Global leadership in contracted product category
To explain this strategy, examples of two business organizations that have been
successfully using this strategy is mentioned in this section. BYD is a reputed organization that
produces batteries and the company has a production that is labor-intensive relative to the
organizations operating in the Japanese market and utilizes the lower labor costs. On the other
hand, Johnson Electric is another business organization that produces electric motors for small
products like camera or some specific parts of a car (El Ghoul, Guedhami& Kim, 2017). For an
example, in a BMW car, there are almost 100 small engines whose capacity is lesser than mere 1
horsepower. These motors are generally used in the sunroof, adjusting the seats or the window
shield and in many other purposes. In this way the management of this organization has been
able to monopolize the business of manufacturing small motors in the market of United States.
Usage of natural resources
If the business organizations get inclined towards using natural resources as first class
marketing and at home. In this regard, it can be said that a renowned Brazilian organization

25
Sadia and Perdigao have erected numerous sales offices across the world in order to sell
necessary raw materials to run pork and poultry industry.
Application of specific business model
This strategy is all about applying a model of business that can work in various markets.
As an example, it can be said that Cemex is a successful Mexican business organization who is
currently the largest producer of concrete cement world-wide. The industry of cement and other
building materials is often looked at as territorial producers. This means that the manufactured
goods are difficult to transport at the areas that are remote. According to Blowfield and Murray
(2014), the management of the organization understood the fact that investment and know-how
can go without an issue in the direction of any market when the transportation of the products
would not permit that. In recent years the organization CEMEX has bought various organizations
and has built necessary facilities in the market of Thailand, Colombia, USA and in many other
countries. The secret underneath the success of this business organization is their unique style of
managing the acquisition that is widely known as ‘Cemex Way’ (Robertson & Upton, 2017).
Competitive nature of conglomerate companies in the emerging market
In the developed nations, the global business organizations enjoy a benefit compared to
the companies that are operating in the markets of the developing nations. Institutional
infrastructure is the primary benefit that these organizations receive in the developed nations, and
apart from that, these organizations have a better approach towards the finance market while
acquiring funding sources that are cheaper. According to Bereskin, Campbell and Hsu (2016),
these organizations use superior technologies. The conglomerates in the developing nations do
not have these opportunities and because of numerous reasons these organizations neutralize
specific shortcomings and understand the advantages in accordance with the global organization

26
(El Ghoul, Guedhami& Kim, 2017). The conglomerates have a benefit in their domestic markets
as in that way the managements can manage to continue the operations while dealing with the
lack of necessary infrastructure, legislative gaps and many other issues.
Emerging markets can be associated with high growth potential and represent both
prospective risks and opportunities for the western countries. The market potentiality of the
emerging markets is changing gradually. In such situation, the conglomerate business
organizations can gain high level of profitable business opportunities with the growing economic
conditions of the developing nations. According to Marquis and Tilcsik (2016), the conglomerate
business organizations can also avail high talented, educated and skilled at lower cost in the
emerging countries as compared with the developed countries. In this way, the conglomerate
business organizations can reduce the overall business cost of the business operation in emerging
countries that leads to competitive nature for the organizations. On the other hand, Szőcs et al.
(2016) opined that with the development in the economic conditions of the emerging nations, the
earnings of the consumers of those countries are also increasing gradually. In this way, the
conglomerate business organizations can avail wide access to the consumers, who have enough
affordability of purchasing the products and services. Furthermore, the lifestyles of the
consumers in the developing nations are also changing with the development in their earnings.
Hence, they are now highly attracted towards purchasing the products and services of the
conglomerates leading to greater business scope of these companies. In this way, the emerging or
developing nations are gradually becoming the profitable markets of the conglomerate business
organizations.

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Declining Corporate Philanthropy in the Corporate Organizations of USA
Over the past 30 years, corporate contributions to charities in USA have fallen
drastically. There is year on year variability in the measures of corporate giving of the U.S
corporate organizations. However, drastic evidence can be found between the years 2016 to
2017, where the corporate philanthropic activities of the USA corporate organizations have been
fallen by 14.5%. Moreover, Liket and Simaens (2015) opined that most corporate organization of
USA are realizing that contribution percentages in corporate philanthropy are actually leading to
rise in periods of poor corporate earnings. The long term curves for the organization are
consistently down.
Over the past 10 years, the corporate organizations have faced violent economic cycles
through various ups and downs, where the corporate contribution led to drop of pretax earnings
by half. On the other hand, Iatridis (2015) opined that not every corporate organization think that
they should contribute high volume of money in corporate giving. Such organizations are giving
unwilling to investment huge amount of money to the charities because of their potential
decrease in profit volume. In this extent, Apple Inc. has been seen as being notoriously
abstinence from the corporate philanthropy. Moreover, this organization has started to restrict its
corporate philanthropic activities contributing to overall declination of USA charities.
The decline in corporate donations is roughly coincident with the extraordinary rise in the
executive pay. Moreover, Liket and Simaens (2015) stated that the corporate organizations must
have to pay extra money to the executives to making them involved in the corporate
philanthropic activities. In this way, the overall compensation structures of the corporate
organization get increased leading to overall increase in the business cost. Hence, most of the
corporate organizations are being unwilling to being involved in corporate philanthropy.

28
While considering the evidence from Starbucks, the organization has lost $6 million in
sales for its community development through the program of racial training in the society. In this
way, the organization has realized that corporate philanthropic activities actually hamper the
overall sales and profit volume (Hadani & Coombes, 2015). Hence, the organization has become
less willing recently to spend much time and money in philanthropic activities. Furthermore,
Masulis and Reza (2014) pointed out that the tone that the largest companies of America have
set, is not generous enough in regards to corporate philanthropic activities. As per the research
conducted on the charities of the USA, it has been found that largest companies of USA have
given donations less than average and not even by small amounts.
The Fortune 100 companies have given charity some 40% less than the average expected
charity. Exxon Mobil was one of the top companies in USA in 2017 with worldwide profit level
of almost $45 billion. However, in this year, the organization contributed only $213 million in
charitable donations. In this way, the overall contribution in USA charities from the corporate
organizations has declined drastically. However, there are also some organizations, which have
given significant amount in the charitable donations. Moreover, Wal-Mart has given away more
than $1 billion donating $311 million in cash and $755 million in product, which is consisted of
4.5% of their total profit.
Effect of Declining Corporate Philanthropy on Non-Profit Organizations
In the earlier discussion it has been found that most of the non-profit organizations are
not getting adequate funds from the business organizations and the notion of corporate
philanthropy is being ignored by most of the companies. The impact of such declining corporate
philanthropy has resulted in sustainable challenges for the non-profit organizations. Since such
organizations are completely dependent on the donations and charitable actions from profit

29
organizations, hence once the flow of fund has started to get ceased, the non-profit organizations
are facing challenges in managing their daily operation, starting from staff management to debt
management.
According to the viewpoint of Li et al. (2015), due to the reduced corporate philanthropy,
non-profit organizations are trying to cut their day to day cost of operation. They have also
started to expand their fundraising efforts through some innovative campaigns. Moreover, such
organizations are also utilizing their reserved funds in order to cover up shortfalls. On the other
hand, Cuypers et al. (2015) highlighted that the non-profit organizations have started to
announce staff cutbacks so that resource can be consumed at less rate. However, majority of such
organizations are trying to reduce cost of operation through alternative ways other than staff
cutoffs.
Iatridis (2015) pointed out that non-profit organizations are nowadays failing to achieve
competitive edge because their sole purpose of serving the society is getting hampered. The
companies are not getting enough fund and donations due to which at the time of serving society
they are not able to justify their position. On the other hand, Li et al. (2015) pointed out that
through the fund-raising campaigns the non-profit organizations are trying to collect capital,
however the potential attendees from top corporate sectors are missing. This has resulted in
setting back the corporate image on the society. Publicity has reduced a lot from the last decade
and this has resulted extremely poor interest from the society as well in terms of fund
accumulation.
While considering the viewpoint of Hadani and Coombes (2015), it can be said that non-
profit organizations in the human service sector in USA at present comprises of 35.5%, however
only top 7 companies are able to hold their success, which are United Way Worldwide, Task

30
Force for Global Health, Feeding America, Salvation Army, YMCA of the USA, St. Jude
Children's Research Hospital, Food for the Poor and Boys & Girls Club of America. Only these
non-profit organizations are financially strong enough as they receive donations from only top
organizations such as IBM, Exxon Mobil and Chevron. Furthermore, Liket and Simaens (2015)
pointed out that the non-profit organizations are failing to provide adequate support to the society
at the time of natural calamities. They are not able to fight a social cause due to reduced amount
of resource availability from business organizations. Finally, as a result such organizations are
losing their scope of existence. Neither are they neither getting support from business sectors nor
getting support from the entrepreneurs. These organizations are tremendously facing the
challenges to cost cutting, staff management, resource management and infrastructure
development.
Political Theories Linked with Social Power
There are few approaches and theories that tend to focus on the connections and
interactions between the society and business along with the position and power of the business
and their inherent responsibility. These theories also involve both the political analysis and
political considerations in the related corporation duty debate. There may be a bunch of theories
in this arena, but the two most significant theories are: Corporate Citizenship and Corporate
Constitutionalism.
Corporate Constitutionalism
Many scholars have explored the role and responsibility of power which the business
organizations have in the society and the major social impact of that power. In this connection, a
new element has been introduced that stated that the business organizations are social institutions
and they should utilize their power in a responsible way. In addition to that, it has also been

31
noted that the reasons which generate the social power of these business organizations are not
entirely internal of the organization; rather there are some external ones too. According to
Blowfield and Murray (2014), the focus is mostly unstable and it is observed to shift constantly
from the economic forum to the political one and also vice versa. This theory also attacks the
hypothesis of the classic economic theory which prevents the involvement of the business
organization within the society along with their wealth creation. This theory also formulates two
fundamental principles which states the management of the social power, those are: ‘the iron law
of responsibility and social power equation’. The former one refers to the harmful consequences
of the absence of the power usage, whereas the latter one refers to the social role and
responsibilities of the business organizations which comes from the entire amount of power they
have within the society.
According to Bereskin, Campbell and Hsu (2016), the social equation of power and
responsibility needs to be understood through the fundamental practical role of the business
organization and it rejects the essential free market ideologies which state that the businesses
have no responsibility within the society (Robertson & Upton, 2017). Later, scholars have
extended this theoretical approach and proposed the ‘Integrative Social Contract Theory’ for
taking the social and cultural contexts into account along with integrating the normative and
empirical aspects of the business management.
Corporate constitutionalism is the concept of development of the organizations as
business as well as social entities, which keep balances between both public as well as private
interests. The application of corporate philanthropy should be able to accommodate the interest
of public, while there is a balance between public as private interest associated with the
businesses. On the other hand, Raub (2017) opined that companies are usually controlled by the

32
shareholders and not by every stakeholder. Hence, it is the prime responsibility of the corporate
organizations towards making profits for leading adequate return of investments for the
shareholders. In this way, the corporate business organizations are always liable to make balance
between the public interest and private interests for their long term survival. On the other hand,
Chen and Huang (2016) opined that corporate constitutionalism makes more emphasize on the
principles towards achieving the legitimacy of the organizational decision making. In this way,
the corporate business organizations should be highly concerned about the corporate giving for
social development, but simultaneously they should be able to make enough profit for meeting
the return on investments of the shareholders for long term survival. In this way, corporate
constitutionalism builds the base of effective CSR initiatives in the corporate organizations.
Corporate Citizenship
This is comparatively a new idea among the scholars even though the concept of the
business organization as a part of the society is not new. The scholars have stated that there are
few factors which have a certain impact of the relationship between society and business (Cheng,
Lin & Wong, 2016). Amongst those factors, the globalization and crisis of state welfare are
significant. Both these factors along with the reducing cost due to the technological
advancements and deregulation procedure have stated that the larger conglomerates have greater
social and economic power than the government organizations. According to Blowfield and
Murray (2014), this theory has been introduced into the society and business relationship based
on the social contract theory. It has also extended the concern for the closer community to the
global one. To sum up, it can be said that this theory is mostly focused on the responsibilities,
rights and the potential partnership of the society and business.

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Corporate Citizenship is always associated with the social responsibility of the
businesses. It also demonstrates the extent to which the corporate organizations are capable of
meeting the legal, ethical and economic responsibilities. Moreover, the prime purpose of the
corporate citizenship is to produce high standard of living and quality of life of the communities
surrounding the corporate organization. At the same time, the corporate organizations must also
be to maintain the profitability of the stakeholders. Furthermore, Jia and Zhang (2014) opined
that corporate citizenship also ensures that they treat their stakeholders ethically and with
adequate respects, where the organizations demonstrate great commitment to the ethical
behaviors through balancing the needs of the stakeholders and environment. Apart from that,
Bereskin et al. (2016) opined that corporate citizenship leads to improved customer relations
through treating the customers ethically and listening properly to the needs, wants and other
feedbacks. Corporate citizenship leads to enhanced marketing, as the customers are highly
receptive to the ethical companies and their associated products and services. Furthermore, the
demand of socially responsible organization is generally continued to grow with encouraging the
shareholders, consumers and employees. Hence, successful corporate business organizations
have strong belief on the power of corporate citizenship towards leading long term profitable
business condition.
Needs of social demands and social values in Business Growth
Several factors contribute to incorporate the social values and social demands in the
business activities. One major question that stays at the heart of this issue is whether the
unambiguous social missions are necessary for creating the social value and whether the
businesses can equally and simultaneously pursue economic and social goals through this policy.

34
As argued by Foss and Klein (2018), the value created by for-profit companies was essential to
pro-social behavior (Foss & Klein, 2018).
According to Benn, Dunphy and Griffiths (2014), there are several large conglomerates
all over the world that put stress on the private businesses playing important role in progressing
with the social agendas. On the other hand, according to Calabrese et al. (2013), there are other
literatures that indicate that even though the commercial organizations can have the
transformative influence on the society, incorporating the social values along with the social
demands is more commonly seen in the social organizations than the commercial ones. This
implies that the businesses that are emphasizing on the social values in place of their material
gains are facing some degree of conflict of interest between the social and commercial
dimensions of their business activities.
According to Benn, Dunphy and Griffiths (2014), however, it is necessary for the large
business organizations to craft their business model in a way that it reflects their values, morals
along with addressing the environmental and social challenges. There may be several factors
and motivations within the organization that contribute to incorporate the social values and
demands in the business strategy but bringing a definite structure and discipline to these
fragments is necessary. Funding the community service enterprises or the non-profit
organizations directly may indicate the environmental or social priorities of the businesses.
There may be different priorities of every company on the basis of its core values. As stated by
Calabrese et al. (2013), it may be challenging for the businesses to make these funding activities
a part of its business strategy, but these can provide a degree of insulation from any kind of
unanticipated risks along with enhancing the reputation of the organization. However, it should

35
be noted that, in terms of larger conglomerates incorporating the social values and demands can
be an extension of their business interest as well.
According to Calabrese et al. (2013), the businesses can also increase their profitability
and opportunities while creating environmental and social benefits and improving the
functioning efficiency throughout the existing value chain. Most US corporations tend to
identify the business value of innovation of the new technology solutions which may also reduce
the existing operational costs and mitigate the social impacts (Robertson & Upton, 2017).
However, the businesses should prioritize finding a definite solution of any kind of social issue
as it may lead them to lesser financial return on the long run (Charity Navigator 2016). The
organizations need to make attempts for creating social values by addressing the significant
social needs within its reach. However, it may not give them immediate profits, but it can
change the business model of any organization fundamentally and help developing new
strategies and skills.
Besides being a profitable business entity, the corporate organizations are also the social
entity. Hence, it becomes the responsibility for the corporate organizations towards looking into
the matters of social issues surrounding them. Moreover, identification of proper social values
can help the organizations towards assessing the actual social perspective associated with their
businesses. Apart from that, the organizations can also gain the support of the community and
social people through mitigating the social issues and improving the social values for community
people. Such social support can help the organizations towards mitigating the complexities
around the businesses. On the other hand, Jia and Zhang (2014) opined that the corporate
entrepreneurs can operate their businesses with the intension of benefiting the society through
being a social entrepreneur. Moreover, the corporate organizations can also build emotional

36
bonding with the consumers and other community people through dealing with several
humanitarian issues. In this way, the consumers become highly willing towards purchasing the
products and services of these organizations repeatedly. Apart from that, mitigation of social
issues towards leading high social values gives an impression of sound business profitability for
the corporate organizations. Hence, the shareholders become highly willing to invest in such
socially responsible corporate business organizations.
Ethical Theories for Relationship between Society and Business
The ethical theories can be defined as the well thought, self-consistent and rational
theoretical background for a wide range of problems (Bereskin, Campbell & Hsu, 2016). There
are mostly two fundamental theories that focus on the normative questions of the relationship
between the society and business; those are: the ethics of rights and Utilitarianism.
Ethics of rights:
This is an umbrella term for a set of theories. In general, this theory proposes that the
sense of morality tends to consist of much more than promoting the good. There may be several
wrong actions that can promote the all over goodness, at the same time; there are several
righteous acts that do not really promote the good. This theory indicates that the companies with
the specific policies for the betterment of the society can flaunt the rights openly. According to
Benn, Dunphy and Griffiths (2014), however, a policy incorporated with social demands and
values and well-informed by the ethics of rights will focus on the moral dignity and the rights of
all the stakeholders who are somehow affected by the operational activities of the business. This
theory also emphasizes the respect for all the stakeholders in virtue of their stand as the right-
bearers.

37
Utilitarianism
This theory indicates to the concept that the idea of morality is concerned with doing
more good and stopping the bad as much as possible. If said specifically, this theory says that
the moral agents should make the most of the well-beings of the society. There are few
characteristics of this theory. Firstly, as it is concerned with the entire well-beings of all the
moral agents or the stakeholders and maximizing it, the wellbeing of the entire society should be
taken into account. According to Calabrese et al. (2013), secondly, this theory is also recognized
to a demanding moral theory as it does not approve the idea that sometimes the stakeholders may
have the options of acting in different ways which may not increase the entire wellbeing.
Thirdly, this theory also rejects the idea of including the constraints against the harmful activities
such as discrimination or any forced labors. This states that the harmful activities are only
wrong morally when they are not maximizing the entire wellbeing. Fourthly, the main focus on
the consequences of the theory does not really distinguish between the harmful omissions and the
harmful actions (Bereskin, Campbell & Hsu, 2016).
Fifthly, this theory only focuses on the wellbeing and rarely focuses on the pragmatic
implications such as bribery, child labor or discrimination. This theory is applicable on the CSR
practices of the organization as this would not recommend that the organizations should stop
concerning the negative human rights. The utilitarian approach would primarily imply that the
companies should take all the interest of the society into account not only the closely related
communities. According to Benn, Dunphy and Griffiths (2014), this will emphasize that
everyone’s interest should be treated in an equal way which will eventually maximize the overall
well-being. However, it should also be noted that while promoting the wellbeing, this theory

38
mostly involves reforming the existing practices. The utilitarian approach may also demand that
the organizations should focus more on the distant interests that they are doing currently.
Virtue Ethical Theory
Virtue ethical theory is emphasized on the virtue of mind and character for assessing the
rightness and wrongness of the business operation. The virtue defines the positive traits
associated with the businesses person for doing good activities for the wellbeing of others. The
corporate business people having the virtue like honesty and generosity are more likely to
perform honest and good things for the well being of the community people. According to Cha
and Abebe (2016), socially responsible business organization always associated with positive
and honest mind for performing in favor of social development. In this way, the corporate
organizations can establish positive perception in the mind of the community people. It
ultimately helps the organizations in getting adequate community support for the business
operations. On the other hand, Chen and Huang (2016) opined that the moral and intellectual
virtue associated with the corporate organization direct them adhere with the moral and ethical
principles for the betterment of the community good. Moreover, all these moral and ethical
principle are actually intended towards improving the quality of the lives of the community
people. It also facilitates the corporate business organizations towards avoiding the unethical and
immoral business practices, which helps them to avoid any kind of legal risks.
Strategic Philanthropy: Practice and Rationale
While considering the viewpoint of Tan and Tang (2016), it can be said that strategic
philanthropy can be strengthened by focusing on the CSR choices. The philanthropic notions
must not be scattered but must be channelized in such a way through which brand image can be
directly enhanced. Such initiative can be achieved through three ways, which are concentrating

39
on CSR efforts, building deep understanding of the philanthropy benefits and finding the right
partners. Therefore, by focusing on the most important social causes, an organization can start
funding to the right non-profit business partner. In this way, the business will be able to limit its
philanthropy activity and channelize the donations for most vital social cause.
Valor and Zasuwa (2017) pointed out that the rationale for strategic philanthropy is best
actualized through building right business case. One organization needs to identify the long-term
objectives and quantify those in terms of measurable factors. Based on the potential outcome and
benefits, it needs to choose the right non-profit business partner through which it will be able to
share its corporate value in the society. The organization needs to create a balance between
revenue and charitable purposes so that both the society and business objectives are met.
According to the viewpoint of Raub (2017), strategic philanthropy might be thought as worthless
initiative unless the exact partner and awareness procedure is selected. Supporting such social
causes which are extremely important to the society will definitely attract media attention within
short time period. For example, Audi is absorbing enough classiness by sponsoring art events
through which local artists are able to establish their career. Moreover, Tonin and Vlassopoulos
(2014) pointed out that through strategic philanthropy, an organization will be able to strengthen
customer trustworthiness if it is able to create the public pledge to support a charity over a short
time period.
Jia and Zhang (2014) highlighted a similar viewpoint to that of the earlier authors that by
supporting the community through funding some campaigns raised by non-profit organizations
will create an emotional touch with the target market, which will further help in customer
loyalty. Such initiative acts as the short-term activity, which supports both community and funds
non-profit organizations. On the other hand, Chen and Huang (2016) argued that the rationale for

40
strategic philanthropy must be for long term. Consistency and determination are the two main
factors that will definitely help in earning better corporate image in the society.
After considering all the above ways of strategic philanthropy, a final procedure must be
followed by any business organization. The procedure will be composed of five steps Masulis
and Reza (2014), which are:
 Communication: A robust CSR strategy has to be created by consulting with the lowest
level employees and explaining them the importance of charity.
 Volunteers: Volunteering opportunities must be given to any skilled or general staff so
that charitable purposes are achieved with the progress of time.
 Fundraise: Fund raising initiatives must be taken through campaigns so that the collected
amount in support of social cause can be donated to non-profit organizations.
 Sustainable Purchasing: One of the most common and best ways to support corporate
philanthropy is by having suppliers who support sustainable packaging.
 Accountability: The business leader must stand accountable for strengthening the
philanthropic functions by holding periodic meetings and keeping the balance between
revenue and community development.
Conclusion
To conclude, it can be said that the donations in charitable accounts by the conglomerates
of United States have reduced by more than 13% in the last financial year (Robertson & Upton,
2017). The latest tax laws are considered to be responsible for this. The reduction in charitable
donations can be influenced by the tax proposals to the taxes imposed on estates. Nearly over 20
million US dollars under the Senate plan and not many individuals would have thought to give
away parts of their estates to tackle a big bill of tax. Under the new tax laws, the economists are

41
predicting that if the conglomerates are unable to donate in each year, they will be able to donate
in charitable funds once in a few years at least. It has also been predicted that the fiscal quarter
from the month of July to the end of October various new accounts were increased by 50% and
various grants and contributions can increase up to 30% (Bereskin, Campbell & Hsu, 2016). The
CEO of national Philanthropic Trust that is one of the reputed donors advised funds have stated
that there is a chance that in the coming financial year the situation will get improved and there
will be a significant growth in the donations for charity by the conglomerates operating in United
States.

42
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Appendices
Questions for Leaders of Corporation who practice corporate philanthropy:
1. How long have your organization have been providing corporate philanthropy to nonprofits?
2. What are the key factors that impact how much total corporate philanthropy dollars is
provided annually?
3. As a total dollar amount has that increased or decreased from the prior year?
4. Is there a reason for this increase or decrease?
5. Has corporate philanthropy increased or decreased year over year as a percentage of
revenue?
6. Has corporate philanthropy increased or decreased year over year as a percentage of
company profits?
7. Why is corporate philanthropy important to nonprofits?
Questions for leaders of nonprofits:
1. How important is corporate philanthropy to the organization’s long-term survival?
2. What percent of revenue is comprised of corporate philanthropy dollars?
3. Have corporate philanthropy dollars increased or decreased over the last year?
4.

52
Appendix A: XXX
List of Search Terms and Combination of Search Terms
 Corporate Philanthropy
 Corporate Social Responsibility
 Corporate Organizations
 Business growth
 Business profitability
 Non-profit organizations
 Social wellbeing
 Social issues
 Corporate citizen

53
Appendix B: XXX
Insert/type Appendix n content here…