EFFECTS OF CORPORATE POLITICAL ACTIVITY
ON ORGANIZATIONAL REPUTATION: AN
EMPIRICAL STUDY
Master’s Thesis
Graduate School of Communication
Master’s programme Communication Science Corporate Communication
Giulia Lucrezia Bianchi Student number: 11994789
Supervisor: Dhr. Dr. P.H.J. Schafraad Academic year of 2018-2019
Abstract
Corporate Political Activity (CPA) is a non-market strategy used by organization’s in order to better their performance by communicating in different ways their political stance. This study focused on one particular type of CPA, namely advocacy advertising, whereby corporations can promote their position in regards to a particular public policy issue through their
advertising campaigns.
The aim of the present study was to get a better understanding of CPA and examine its effect on an organization’s reputation. Also, it investigated whether the source of the information had a moderating role in the relationship. Finally, it studied whether the fit of the subjects political stance explained the relationship between CPA and organizational reputation.
The hypotheses were tested through a 3x2 between-subjects factorial design (N=196). Specifically, an online survey embedded experiment was chosen.
The results of the statistical analysis showed a direct and positive effect of corporate political activity on organizational reputation and a significant mediating role of fit of political
stances. Hence, consumers tend to evaluate an organization’s reputation higher when CPA is being implemented than when not. Also, organizational reputation is higher when the brand’s position is aligned with the consumer’s stance.
Finally, the study found there is no interaction effect of information source. Thus, people do not tend to attribute higher organizational reputation rates when the information comes from the firm’s website rather than news media.
The study was able to find valuable information regarding the implementation of corporate political activity in relation to an organization’s reputation and has given possible future practical implications for corporations and their stakeholders.
Introduction
The aim of the study will be to get a better understanding of corporate political activity, also known as CPA. Specifically, it wishes to examine whether and how an organization’s reputation can be affected by it.
The study has its roots in the concept of Corporate Political Activity (CPA), a non-market strategy used by organizations whereby they decide to invest money and effort in communicating their political stance, in order to better their economic performance (Lux, Crook & Woehr, 2010).
Furthermore, when an organization opts for said strategy there are different ways of implementing CPA and past research has found three different types of strategies, namely information, financial incentive and constituency building, which correspond to the three goods of exchange in political markets (information, money, and votes, respectively) and each contains a number of individual tactics (Hillman, Keim & Schuler, 2004).
In particular, Hillman, Keim, & Schuler (2004) examine five constituents: campaign contributions, professional lobbying, lobbying by senior executives, constituency building and advocacy advertising.
This specific research will focus on an example of advocacy advertising, to be understood as “a form of communication by which corporations promote positions on public policy issues that will, in some way, benefit their market position or enhance their profile” (Tinic, 1997, p. 11).
Expressly, it will examine a fictitious organization’s statement regarding their position on a political issue of international scale. Specifically, the study will tackle the current and relevant problem of the refugee crisis in Europe and the open borders policy.
Reputation is to be understood as “an external overall evaluation of firms’ actions and past performance in creating stakeholder value” (Den Hond, Rehbein, de Bakker & Lankveld, 2013, p. 793).
While CPA and its effect on an organization’s performance has already been tackled in previous studies, the impact of CPA on organizational reputation has been understudied (Den Hond, Rehbein, de Bakker & Lankveld, 2013).
Although the research on CPA and reputation is scarce, there is evidence of an
interaction between the two variables, as it is mentioned in Den Hond, Rehbein, de Bakker & Lankveld’ s study.
Moreover, reputation is based on the information that is shared about the organization. Therefore, news media play a critical role, as most of the information received by
stakeholders comes from these outlets. As information can also derive from the organization itself, for example trough press releases, it is worth underlining how source can be an
important asset of reputation management.
In fact, past research in the field of organizational communication and public relations “has suggested that in times of crises, messages generated by the organization are most likely to positively influence stakeholder perceptions, whereas those generated by the press may have negative ramifications” (Spence et al., 2014, p. 124). It would be interesting to determine if these findings can be applied to the current study regarding corporate political activity.
It is clear that future research around this field is needed and that this study will be able to advance present theoretical understanding of the subject.
Finally, studies have found that political orientation influences a number of consumer’s behaviors and cognitive processes (Matos, Vinuales & Sheinin, 2017), which suggests that when brands are linked with positions that are misaligned with a consumer’s
political affiliation, the personal connection with the brand could be threatened, as this could be perceived as a violation of trust by part of the brand (Matos, Vinuales & Sheinin, 2017).
Furthermore, Hoewe and Hatemi (2016) determined that political ideology does influence purchase intentions, which can have consequences on the effectiveness of advocacy advertisements.
Therefore, the current study will also take into account the mediating role that the fit between brand and consumer’s attitude towards the political issue has on the relationship within CPA and organizational reputation.
Hence, the research question that this study is based on is the following:
To what extent does corporate political activity have an effect on organizational reputation and does its effect vary by information source and through the fit between the
brand and consumers political position?
In other words, the study will examine how the public perceives an organization’s reputation when adopting, or not, Corporate Political Activity. Moreover, it will put special emphasis on the moderating role of the source the information comes from and the mediating role of the fit of the subjects political stance.
It is also worth observing that the study will control for several variables as these could influence the participants’ responses. Specifically, the participants’ gender, nationality and age will be controlled for during the data analysis.
Theoretical Background
According to Shepherd, Chartrand and Fitzsimons (2015) “brands are increasingly aligning themselves with various beliefs and issues” and, as reported by an American poll, 72% of consumers believe corporations “should take a stand and address important social issues” (pp. 76-77).
In the past, organizations have mostly refrained from publicly associating themselves with political positions, however recently companies have become increasingly politically active (Matos, Vinuales & Sheinin, 2017). Matos, Vinuales and Sheinin (2017) illustrate the recent example of Chevrolet, Guinness and Honey Maid being linked with marriage equality, in contrast to Barilla, Chick-Fil-A and The Salvation Army being associated with traditional marriage and explain how the issue became a marketing tool thanks to its popularity.
Furthermore, it has been observed that organizations’ political participation is quite widespread and exits among an array of countries, that vary in levels of corruption, market and economic development and government type (Kumar, Thakur & Kumar Pani, 2015).
Subsequently, scholars have started considering organizations as “anticipatory and proactive actors in the political market” and recognizing their influence in the public policy process as a tool to shape the competitive environment of the company (Lamberg, Skippari, Eloranta & McKinen, 2004, p. 337). Today, corporations may have become the only social actor with a significant influence in the cultural and political field (Kumar, Thakur & Kumar Pani, 2015).
The first studies on business political action date back to the 1960s when social science researchers started devoting attention to the subject in order to get a better
understanding of the relationship between business and public policy (Lamberg, Skippari, Eloranta & McKinen, 2004). It follows that with the growth of political action in the 1970s, also the devotion to the issue increased (Lamberg, Skippari, Eloranta & McKinen, 2004) and nowadays literature and research in management, economics, finance, political science and sociology is disseminated with empirical analysis regarding CPA.
Lamberg, Skippari, Eloranta and McKinen (2004) define Corporate Political Activity as “any deliberate firm action intended to influence governmental policy or process, not including any normative assessment” (p. 338). Actions are explained as “specific, concrete
and detectable actions that firms undertake when competing in the (political) marketplace (Lamberg, Skippari, Eloranta & McKinen, 2004, p. 341).
Among past research regarding CPA it is worth mentioning the Hillman et al. (2004) study, which aimed at identifying the antecedents of CPA, the different types of CPA, the implementation of CPA and its outcomes (Lawton, McGuire & Rajwani, 2012).
Research by Lux, Crook & Woehr (2010) indicated that a significant and positive relationship exists between CPA and antecedents at the institutional level (namely ideology, government regulation and sales and dependent politicians), at the market and industry level (namely industry concentration) and at the firm level (namely firm size and competitive strategy).
Also, Hillman, Keim and Schuler (2004) identified two fundamental behaviors of CPA, specifically buffering and bridging, which respectively represent a reactive and a proactive practice.
Pinkham (1998) understands CPA as a function of corporate communications and public relations, which means it focuses on creating and maintaining relationships with external stakeholders and policy outcomes. As a result, CPA represents a main process for achieving organizational aims (Lawton, McGuire, & Rajwani, 2012).
Researchers have identified the different CPA strategies or tactics that can be implemented by organizations in relation to external and internal conditions.
In particular, Hillman, Keim, & Schuler (2004) examine five constituents: campaign contributions, professional lobbying, lobbying by senior executives, constituency building and advocacy advertising. The current study focuses primarily on this last one.
In fact, advocacy advertising “is a form of communication by which corporations promote positions on public policy issues that will, in some way, benefit their market position
lobbying for economic or political policies, but also to the concept of benevolent sponsorship, in which “issues of interest to the sponsor are presented within the framework of overall social problems” (Tinic, 1997, p. 11).
A major example of advocacy advertising is represented by Benetton United Colors campaign, which was one of the first companies to associate their products with progressive social movements. Benetton was able to re-conceptualize the role of advertising into a political arena, that is also able to contribute to society (Tinic, 1997).
This is the result of customers becoming more aware and socially active. In fact, it has been demonstrated that “consumers are as concerned by what a company stands for as they are about the price/value relationship of that company’s products” (Tinic, 1997, p. 21).
In addition, CPA is described as “attempts by corporations to influence government policy to make it favorable for firms” and is a constituent of organizations’ non-market strategies (Kumar, Thakur & Kumar Pani, 2015, p. 128). A firm’s non-market strategy is to be understood as the company’s “efforts to manage the institutional or societal context of economic competition”, thus making the application of CPA an investment decision, with the final aim of generating better returns (Lux, Crook & Woehr, 2010, p. 225).
In fact, CPA has become a tool for many companies in order to better their firm performance and influence government regulations (Lin,2019).
Many studies have examined the effects of CPA on firm performance outcomes (Marsh, 1998; Hillman, Zardkoohi and Bierman, 1999), providing empirical evidence which suggests a direct relationship between CPA and performance exists.
Lux, Crook and Woehr (2010) also find that CPA is positively related to firm performance and suggest that companies could obtain economic advantages through this strategy. However, the results have been mixed and there are a few studies that show that
CPA can have a negligible effect on firm performance, like Boddewyn (2003) and Mahon & McGowan (1996).
Furthermore, past studies have shown that many organizations engage in CPA to create legitimacy, to influence policy and to create value (Kumar, Thakur & Kumar Pani, 2015).
Nevertheless, although much attention has been dedicated to the effects of CPA on performance, the effects of CPA on organizational reputation are less examined.
Corporate reputation is a concept strongly related to legitimacy, corporate image and corporate identity and is often understood as an evaluation of the organization by internal and external stakeholders (Den Hond, Rehbein, de Bakker & Lankveld, 2013). However, while legitimacy is linked to an organization’s compliance with a social category and is
fundamental for the long-term survival of the firm, reputation is associated with competitive advantage and is more easily tarnished.
Reputation thus involves a stakeholder’s overall evaluation of a firm over time. The valuation is the result of stakeholder’s direct encounters with the firm (Lin, 2019). It is the aggregation of a stakeholder’s perception of how well an organization is meeting demands and expectations of the stakeholders (Den Hond, Rehbein, de Bakker & Lankveld, 2013).
Consequently, a good reputation entails numerous benefits, including increase in customer and investment interests, good financial performance and an increase in the return on assets (Coombs, 2007).
Lin (2019) examined the role of corporate reputation as a moderating parameter between CPA and firm performance, while Den Hond, Rehbein, de Bakker & Lankveld (2013) suggest that CSR and CPA, both non-market strategies, have an interacting effect on an organization’s reputation. They conclude that both CSR and CPA affect a firm’s
reputation “since they influence how stakeholders evaluate the firm as being good [...] or held in high esteem” (p. 797).
It is in light of these considerations that this study would like to further elaborate on the relationship between the use of Corporate Political Activity, specifically in the form of advocacy advertising, and organizational reputation and hypothesizes that:
H1: An organization’s reputation is higher when employing corporate political activity, than in the case of not employing corporate political activity.
Moreover, according to Den Hond, Rehbein, de Bakker, & Lankveld (2013) organizations are not always transparent about their political activities and fail to disclose them to stakeholders. Also, it has been already mentioned that reputation is the result of the information the stakeholder receives about the organization and the means by which the information is shared. In fact, past research in the field of corporate communication and public relations has found that during a crisis, messages generated by the organization have a more positive influence on stakeholder perception than messages generated by news media outlets (Spence et al., 2014).
Finally, literature regarding responsible lobbying has shown that the lack of
transparency about a company’s political activities significantly lead to negative perceptions of CPA (Den Hond, Rehbein, de Bakker, & Lankveld, 2013).
Therefore, the hypothesis that emerges from said ideas is as follows:
H2: An organization’s reputation when employing corporate political activity is higher when the information is disclosed by the organization itself than when the information is disclosed by a news media outlet.
Finally, studies researching lifestyle politics have found that political orientation influences a number of consumer’s behaviors and cognitive processes, meaning that several
factors influence political consumerism, namely the concept “of purchasing only from companies with shared values” (Matos, Vinuales & Sheinin, 2017, p. 125).
This suggests that when brands are linked with positions that are misaligned with a consumer’s political affiliation, the personal connection with the brand could be threatened, as this could be perceived as a violation of trust by part of the brand (Matos, Vinuales & Sheinin, 2017).
The results of Matos, Vinuales and Sheinin’s (2017) study show that the fit between brand/consumer positions and affiliations mediate the effect on attitude and purchase intention.
Furthermore, Hoewe and Hatemi (2016) explained how individuals tend to align themselves with brands that reflect their values, including the ones derived from political ideology. In agreement with this, their study found previous evidence which determined that political ideology does influence purchase intentions, which can have consequences on the effectiveness of advocacy advertisements.
In fact, political ideologies are described as an individual’s “attitudes motivated by the desire to perceive the world in ways that satisfy the individual’s needs [and] values” (Hoewe & Hatemi, 2016, p.431).
The study revealed that the activation of political values influenced the consumer’s perception of the brand.
It is for these reasons that the final hypothesis of the study is accordingly:
H3: The effect of corporate political activity on an organization's reputation is explained by the fit of brand/consumer positions.
Figure 1: Conceptual model of the study
Methods Selection of research units
For this study, a convenience sample has been employed, as there were financial and time limits which hindered the possibility of adopting a random sample.
Therefore, the participants (N=196) were invited through social media platforms and emails to participate in the online experiment and were recruited among the researcher’s family members, friends and other fellow students of the University of Amsterdam. The sample resulted in a quite heterogeneous and international group of respondents, increasing the population validity and external validity of the experiment.
The resulting number of participants (N=196) was randomly divided into six groups formed by approximately 30 respondents each.
It is worth noting that the initial number of participants was larger (N= 239) but the respondents who failed to complete the survey or to fill it in correctly were eliminated prior to the statistical analysis.
The mean age of the respondents was M= 35.16 (SD= 16.60), which indicates that the majority (34%) of the participants fell into the age group ranging from 25 to 34. Also, 62.2% were female and 37.8% were male (M=1.62, SD= 0.49).
Finally, of the participants 85.4% came from Europe and 46.4% had a Graduate’s Degree as their highest level of education (M=3.51, SD=0.86).
Furthermore, the respondents were required to have knowledge of the English language in order to participate in the experiment, as all of the online survey was in English.
Research design
For the current study an experiment was considered to be an adequate research method. Infact, it was possible to create stimuli and expose them to the participants and later measure the perceived reputation.
Specifically, the study chose a survey-embedded experiment, in which participants are randomly assigned to one of six conditions.
These conditions were arranged in a three by two between-subjects factorial design, with Factor X as “Corporate Political Activity” variable (3 levels, namely: neutral vs. in favor vs. opposed) and Factor Y as “Information Source” variable (2 levels, namely: organization vs. news media).
An online survey was chosen as it is cost efficient, it takes the respondents a short time to complete and data gathering is not too time consuming.
Table 1
Design diagram of the experimental design
CPA:
NEUTRAL
CPA: IN
FAVOR
CPA: OPPOSED
INFO SOURCE:
NEWS MEDIA
G1
N=30
G3
N=30
G5
N=30
INFO SOURCE:
ORGANIZATION
G2
N=30
G4
N=30
G6
N=30
Operationalisation and Measures
Six stimuli were created by the Master’s student conducting the study and were designed to look as real as possible, seeing as the organization and the situation are fictitious.
Firstly, in order to manipulate the variable of information source, participants were either exposed to an article from the CNN news website or a press release written by Ambrosia, the fictitious organization, on its website. CNN was chosen as it is a reliable and well-known news medium. In order to increase external validity, the news media article was formatted to the actual CNN website and a format of what the Ambrosia website would be like were created in order to situate the press release.
In all the articles a new advertising campaign for Ambrosia, a Greek soft-drink organization, is announced regarding a new flavor for their product. Additionally, the
organization’s position in the current debate of the open-borders policy in Europe during the recent refugee crisis is also mentioned.
Secondly, to manipulate the independent variable of corporate political activity, the actual text of the articles was modified creating three other stimuli. In fact, for Group 1 and Group 2 both articles announced the decision by part of Ambrosia to position themselves as a non-aligned party, which doesn’t agree with expressing opinions on this topic, and whose
campaign in which it is clear the organization is advocating for the issue, while articles for Group 5 and 6 announce a campaign which clearly shows the organization’s opposition towards the issue. Furthermore, the slogan for each position has been modified and recalls the position of the organization. Specifically, for the non-aligned campaign, the slogan was as follows: “Softest Drink”; for the opposing campaign: “Truly Greek” and for the supporting campaign: “Open for Everyone”.
All stimuli materials have been created in order to gather results that show only the effects of the independent variable on the dependent variable of organizational reputation, thus eliminating other possible explanations and increasing the internal validity of the experiment.
Actual examples of the six stimuli can be found in the Appendices (Appendix A, Appendix B, Appendix C, Appendix D, Appendix E, Appendix F).
The dependent variable of organizational reputation was measured after the respondent received the stimuli. In the questionnaire, respondents had to indicate their level of agreement with ten statements on a seven-point Likert scale (1= strongly disagree; 7= strongly agree), taken from a study by Chun (2005) (α=0.88, M=4.09, SD=1.06). List of all the items can be found in Appendix G.
Finally, respondents were asked to state their position regarding the open-borders policy in Europe in the context of the recent refugee crisis, in order to subsequently measure the fit of the participant’s and the organization’s positions on the matter.
Procedure
The respondents were invited through social media platforms, namely Facebook, Instagram and Linkedin posts and Whatsapp messages, and emails to participate in a survey-embedded experiment. If they were interested they could click on the link that forward them to the online questionnaire.
First, an introduction page informed the participant of the goal of the study, namely to get a better understanding of corporate political activity. It emphasized how the study was interested in the personal opinion of the respondent. Furthermore, it informed about the duration of the survey and asked the participants to pay close attention to the information before answering the questions.
Each participant was then asked to agree to an informed consent in order to proceed with the questionnaire. The consent form indicated that the participation was voluntary and that the respondent was free to withdraw from the study at any time during the experiment. Finally, it reminded that the results of the study would be kept anonymous and that the participant’s privacy would be safeguarded.
The survey, then, began with each participant being randomly assigned to one of six stimuli conditions, containing information regarding a fictitious organization, and asked to carefully read the article or the press release appointed to them.
Organizational reputation was then assessed by using ten items with a seven-point Likert scale.
Lastly, a question regarding their position on the issue was asked and the respondent could choose between three options, namely “non-aligned”, “opposed” or “supportive”.
Finally, a manipulation check was carried out and a demographics page concerning gender, age, country of residence and educational level of the participant was shown.
Participants were then thanked and debriefed. It was explained that the organization and the facts described in the experiment were fictitious and were created solely for the aim of the study. The necessary information and contact details in the case of complaints were given out.
It is worth noting that a pre-test was necessary in order to determine the effectiveness of the stimuli and was conducted on a smaller sample (N=21), representing 10% of the actual number of respondents, whose answers will not be used during the official experiment.
Results of the pre-test showed that 80% of the respondents identified correctly the Ambrosia website and 90.5% recognized the CNN website correctly.
Furthermore, all respondents were able to determine the positions of the organization. Small changes were made to the original stimuli, in order to emphasize the information outlet and to make the political issue clearer for the audience.
Manipulation check
In order to check the manipulation of the information source and of the corporate political activity of the organization, three items were used at the end of the questionnaire. The first item served as a manipulation check for the source of the information. Respondents were asked to indicate where the information came from; the choices were as follows: “the CNN website”, “the Ambrosia website” or “I do not know”.
The second and third items served as manipulation check for the corporate political activity of the organization. Respondents were first asked to recall the slogan shown in the stimuli (the answers were: Softest Drink, Truly Greek, Open for Everyone) and then asked to indicate the position of the organization towards the open-borders policy (the answers were: Non-aligned, Supportive, Opposed or Do not know).
The results of the three chi-square tests show that both the manipulation of the
information source (χ2=79.05, p<.001) and of the corporate political activity were successful (χ2=257.60, p<.001 and χ2=194.89, p<.001).
Randomization check
There was a significant difference between conditions on gender, χ2(5)=13.58, p= .019. Randomization of gender, thus, was not successful but can be explained by the high number of female participants in the experiment. In fact, as the majority of the sample was female, it can be expected that the randomization between conditions will not be even.
Then, between conditions and age, χ2(25)=22.30, p= .619. Randomization of age, thus, was successful. In other words, the sample was evenly assigned to the different conditions in correspondence to their age group.
Finally, a chi-square between conditions and the level of education of the participants was conducted, χ2(20)=20.61, p= .420. Randomization, thus, was successful.
During the future statistical analysis, these variables will be controlled for in order to cancel out any other explanation of the effect.
Results
Firstly, it was hypothesized that the reputation of an organization will be higher when the organization uses CPA than when it does not.
Furthermore, the study also hypothesized the moderating role of the source of
information on the main effect of the independent variable of CPA on the dependent variable of organizational reputation. Specifically, in the case of the information coming directly from the organization, organizational reputation would be higher than in the case of the source being a news media outlet, namely CNN.
Before conducting the analysis, a new variable for organizational reputation had to be computed, representing the sum of all items scores for each participant. To start, there were two negative items in the scale which were reversed coded in order to obtain a more reliable factor analysis. The KMO (=0.88) and Bartlett’s test of sphericity (p<.001) indicated that the sample
The latter showed that the 10 items loaded onto two factors (Eigenvalue1= 4.96, Eigenvalue2=1.37) and together explained 63.31% of the variance.
A direct Oblivion rotation was selected, as it was expected that the underlying factors would be correlated. Later, a reliability test was conducted and the Cronbach’s alpha = 0.88 proved it to be a good and reliable scale. Finally, the new variable of “Organizational Reputation” was computed (M=4.09, SD= 1.06).
In order to examine whether the main effect and the interaction effect exist Hayes’s PROCESS Macro for SPSS (Hayes, 2013) was used for data analysis.
In the main PROCESS Macro dialogue box, first the scale item of organizational reputation was entered into the outcome variable (Y) box. Next, the categorical independent variable of CPA was entered into the independent variable (X) box. Finally, the dummy variable for information source was entered into the moderator variables (M) box and the variable for Fit was controlled for. The model selected for the analysis was Model number 1 (the moderated regression model). The moderated regression model was significant, F (4, 191) = 18.20, p < .001 and 28% of the variation in organizational reputation can be predicted on the basis of the corporate political activity and information source (R2 = .28).
Results showed a significant main effect of CPA (B = -0.38, t (196) = -0.38, p < .001, 95% CI [-0.61, -0.15]) and a non-significant interaction effect between CPA and information source (B = 0.13, t (196) = 0.79, p = .431, 95% CI [-0.19, 0.44]).
For every one unit increase of corporate political activity, the predicted value of organizational reputation decreases of 0.38 in its scale. It follows that, when the organization chooses to not use corporate political activity and remain non-aligned, their reputation is lower
However, Hypothesis 2 is rejected, as no significant interaction effect was found between corporate political activity and information source.
For all these effects, the variables for Fit and for gender were controlled for. Table 2 shows the output of the PROCESS Macro Model 1.
Table 2
Moderated Regression Output
B b* t p 95% LLCI 95% ULCI
Constant 4.35 0.25 17.07 .000 3.84 4.85
Org. Rep. -0.38 0.12 -3.28 .001 -0.61 -0.15
Info. Source 0.12 0.34 0.37 .714 -0.54 0.79
Interaction 0.13 0.16 0.79 .431 -0.19 0.44
Finally, it was hypothesized that a mediating role existed between the fit of the brand and consumer’s position and the relationship within CPA and organizational reputation. More
specifically the effect of the independent variable on the dependent one was to be explained when the positions were aligned.
As the mediating variable for Fit was dichotomous, it was not possible to use Hayes’s PROCESS Model. Alternatively, an independent samples t-test was conducted to compare the means of two different and separate groups and determine whether the independent variable had an effect on the dependent one. In this case, the categorical independent variable was the fit
between the organization’s position and the respondent’s one. A dummy variable was created for fit (0= no fit; 1= fit). The continuous dependent variable was organizational reputation.
In order to determine whether a correlation exists between the two categorical variables of corporate political activity and fit, a chi-square test was carried out. The results showed that a significant correlation between the two variables exists, χ2=28.65, p<.001.
Subsequently, an independent samples t-test was then conducted to examine whether the organizational reputation is higher when the organization’s and the participant’s position on the political debate match, than when they are misaligned. Levene’s test for equality of variances was not significant (F=3.27, p=.072), therefore equal variances can be assumed.
Results showed a significant difference between fit (M=4.73, SD= 0.81) and no fit (M=3.76, SD=1.02), t(194)= -6.74, p< .001, 95% CI [-1.25, -0.68]. Since the relationship is significant Cohen’s d was calculated, d= 1.05, and revealed a large effect size. The mean score for fit resulted being higher than for no fit, indicating that when the positions matched the organizational reputation was higher than when they didn’t match. Hypothesis 3 is therefore accepted. An overview of the results is reported in Figure 2.
Figure 2: Conceptual model of the study with significance values
Conclusion & Discussion
The aim of this study was to get a better insight into Corporate Political Activity, which Kumar, Thakur and Kumar Pani (2015) and Lux, Crook and Woehr (2010) defined as a major ingredient of organizations’ non-market strategies, and to focus the attention on the affect it could have on an organization’s reputation. Furthermore, it focused on whether the source of the political activity information and the fit of the political stance of the brand and the consumer had a role in the perception of organizational reputation.
Finally, the research tried to provide several implications for future research and for the current corporate field, along with different stakeholders.
The results showed that, consistent with the current study’s hypothesis, consumers tend to evaluate an organization’s reputation higher when corporate political activity is being
implemented than when it is not.
This is consistent with previous research, which demonstrated how CPA can be a means to achieve organizational aims (Lawton, McGuire, & Rajwani, 2012) and ultimately be a good investment decision (Lux, Crook & Woehr, 2010). In line with the findings by Den Hond, Rehbein, de Bakker & Lankveld (2013), which investigated the interacting effect of both CPA and CSR on organizational reputation, also CPA alone can have a positive effect since it influences how a stakeholder evaluates the organization.
Although not much research has been done around organizational reputation and CPA and results have been contrasting (Lin, 2019; Den Hond, Rehbein, de Bakker & Lankveld, 2013), the results of the current study suggest that there is evidence of a positive effect of CPA,
specifically advocacy advertising, on corporate reputation.
Vinuales & Sheinin, 2017; Hoewe & Hatemi, 2016)). The findings imply that when brands are linked with positions that are aligned with the consumer’s view, the perception of the
organization’s reputation will be higher (Matos, Vinuales & Sheinin, 2017). Consequently, brands should take into account the risk that comes from taking a political stance, as there will always be a part of the population in disagreement. However, the agreeing side of the consumers will end up perceiving the firm in a high manner.
Nevertheless, contrary to expectations, the present study found that people do not tend to attribute higher organizational reputation rates when the information comes from the firm’s website rather than news media. Negating the current study’s predictions, it follows that information source does not have a moderating role in the relationship between CPA and organizational reputation.
Ultimately, based on the results of this quantitative study, corporations should take into account the potential benefits of implementing a non-market strategy such as CPA, while keeping in mind the general values of its consumers. Good brand loyalty in fact is based on common interests. Furthermore, as the source of the information does not seem to influence the positive relation between CPA and corporate reputation, brands have the chance to use multiple channels for communicating their CPA.
It follows that brands can use advocacy advertising to their favor by getting a good knowledge of the audiences of different channels and platforms. Finally, if the audience’s values agree with the brand, it would be possible for the firm to strategically communicate their CPA on specific channels in order to get even better results.
Nonetheless, some potential limitations of the study must be addressed, as the outcome could have been affected by them.
participants was reduced a little bit, as a number of respondents failed to fill in the survey correctly or complete it. The final sample size, although acceptable, could have been bigger and decreased the population validity of the study.
Also, although the sample resulted being quite heterogeneous for some characteristics, the large majority of the population was female, limiting the generalizability of the results. This is definitely an interesting path for future research to follow. In fact, it would definitely be advisable to get a bigger and more diverse sample for other studies in order to get more reliable results.
Moreover, the use of a fictitious scenario may have affected the outcome, as the participants were not familiar with the organization. Consequently, further research should be conducted with real scenarios in order to better understand the different aspects of corporate political activity strategies.
The use of a fictitious scenario also implies other issues. Firstly, as the stimuli had to be created, it is possible that a certain authenticity may have been lost during the development of the stimuli. By adopting real life articles or press releases and actual brands, it is possible that the effect on the participant’s perception may be different.
Secondly, while using a fictitious brand may increase the internal validity of the study, in the corporate world there is almost always a preconceived attitude towards organizations.
Furthermore, the popularity and size of a firm most certainly have an impact on the attitude of the population. The quantitative study has opened up new opportunities for future research to investigate these aspects. For example, researchers could investigate the effect of CPA on
organizational reputation using well known multinational brands and smaller, more local brands. These limitations notwithstanding, the present study investigated new features of a very relevant and modern topic. In addition, it opened new paths and gave way for new and
Going forward, researchers can use various kinds of techniques to enrich the literature on the subject. For instance, a qualitative research could also be carried out in order to determine the relationship between CPA and organizational reputation through case studies. Furthermore, it would be interesting to get insight in the view of multiple stakeholders, not limiting the population to just consumers. Interviews to internal stakeholders could be one way of investigating this.
Moreover, it is important to dwell on the fact that the current study focused solely on one type of CPA, namely advocacy advertising, limiting the results to one specific approach.
Nevertheless, although it is not possible to predict with certainty that similar results would occur when taking into account other forms of CPA, future research is possible and should focus on getting a more thorough understanding of the relationship between corporate reputation and CPA, in all its aspects. This could be achieved by testing or even comparing different types of CPA and their effect on organizational reputation.
Finally, it would be interesting to see whether an individual’s political participation level, which Verba and Nie (1987) define as behavior designed to affect the choice of governmental personnel and/or policies (Conge et al., 1988), could have a moderating role when evaluating an organization’s reputation.
All in all, the study was able to find valuable information regarding the implementation of corporate political activity in relation to an organization’s reputation, a fundamental pillar for a successful firm. Also, it took into account the shared values and attitudes towards an issue that can bring a brand and a consumer closer together but that so easily could be hindered. It has given possible future practical implications for corporations and their stakeholders.
Finally, it has cleared the way for future scholars to investigate in order to be able to get a clearer view of this now very popular non-market strategy.
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Appendices
Appendix B: Stimulus Group 2 (CNN website and supportive position)
Appendix D: Stimulus Group 4 (Ambrosia website and supportive position)
Appendix G: Organizational Reputation Scale
Please rate how much you agree or disagree with the following statements.
1. I have a bad feeling about the company; 2. I admire and respect the company; 3. I trust this company;
4. The company stands behind its products and services; 5. The company has a clear vision for its future;
6. The company recognizes and takes advantage of market opportunities; 7. It looks like a bad company to work for;
8. Looks like a company that would have good employees; 9. The company supports good causes;
10. The company maintains a high standard in the way it treats people.
Answer Scale: (1) Strongly disagree; (2) Disagree; (3)Somewhat disagree; (4) Neither agree nor disagree; (5) Somewhat agree; (6) Agree; (7) Strongly agree.
