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Sponsorship and Organizational Reputation
Master Thesis Business Administration
Amsterdam Business School
MSc. Business Administration, Strategy Track Track Student: Kay Al, 10259678
First supervisor: Hesam Fasaei Date of submission: 23-6-2017
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Statement of originality
This document is written by Student Kay Al who declares to take full responsibility for the contents of this document. I declare that the text and the work presented in this document is original and that no sources other than those mentioned in the text and its references have been used in creating it. The Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents.
3 Table of contents Table of contents……….….…...…3 Abstract……….………….4 1.Introduction………5 2. Literature Review………..8 2.1 Definition of Reputation………...……….…8
2.2 The Importance of Organizational Reputation………..10
2.3 Managing Reputation……….………..12
2.4 Sponsorship Definition………..………..……..…….14
2.5 Objectives of Sponsoring………..………..………15
2.6 Sponsorship Effects………....16
2.7 Sponsorship and the RBV………...……17
3. Research Design………..….23
3.1 Sample……….…….23
3.2 Methods………...27
4. Results……….29
5. Discussion and conclusion……….…..43
5.1 Findings……….43
5.2 Conclusion………46
5.3 Theoretical Contributions………46
5.4 Managerial Contributions………47
5.5 Limitations and Directions for Future Research………..49
6. References………50
4 Abstract
Sponsorship expenses continue to rise. Every year sponsorship deals break records for being the biggest sponsorship deal ever. It’s therefore strange that companies that engage in sponsorship deals don’t research if the objectives of sponsorships are being met. One of the objectives of sponsorship is enhancing organizational reputation. This research compared over 1500 reputational scores and investigates if companies with sponsorship activities have a higher organizational reputation than companies without sponsorship activities. It also aims to find out if there is a statistical relationship between sponsorship budget and organizational reputation. The existing literature seems to agree that sponsorship leads to an enhancement of organizational reputation. However, this research finds that that’s only the case for big U.S. companies with high sponsorship budgets. This research also finds that there is no relationship between sponsorship budget and organizational reputation. This is an important theoretical contribution to the sponsorship and organizational reputation literature, because it shines another light on the link between sponsorship and organizational reputation. A more pessimistic light.
5 1. Introduction
On the 9th of April 2017 a United Airlines flight from Chicago to Louisville was overbooked and United Airlines employees asked passengers to voluntarily give up their seats, so the aircraft could take off. After no passenger was willing to give up their seat voluntarily United Airlines randomly chose four passengers who had to leave the aircraft. However, one of the passengers was not willing to cooperate with the removal procedure and therefore local law enforcement was called to remove the passenger from his seat. The officers violently dragged the passenger from his seat, leading to serious injuries for the passenger. Other passengers filmed the whole removal procedure and posted it on social media, where it was watched over 100 million times. This lead to an enormous reputational crisis, in which consumers spread messages on social media to boycott United Airlines because of its actions. Shares of United Airlines tumbled 4% after this crisis, leading to a 255 million dollar loss in market value (Shell, 2017).
This is an example of how a small incident can lead to a huge reputational crisis. If this incident happened a couple of years ago this would stay a small incident and everybody would continue with their lives. However the last couple of years the reputational landscape has been changing.
First of all the influence of outside stakeholders such as NGOs, community activists, and online networks—has grown enormously. The number of NGOs accredited by the United Nations, has grown to more than 4,000, from less than 1,000 in the early 1980s. These indirect stakeholders have put more and more pressure on businesses to be for example more socially and environmentally friendly. Also the fact that Internet has become so popular and widespread over the world has changed the reputation landscape. It becomes easier for individuals to get a large audience to target
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corporations what can easily lead to a reputational crisis, as the United Airlines examples shows.
What a couple of years ago would be a small operational risk, is in this time and age a huge reputational risk whose costs far exceed those of the original missteps. In this environment, companies must collect information about reputational threats across the organization, analyze that information in sophisticated ways, and address problems by taking action to mitigate them. Formal marketing and PR can play a large role in managing a company’s reputation. However, one of the ways of boosting its reputation more effectively are credible third parties. The public usually believes a popular and famous person or organization sooner than the PR department of a company. Therefore it might be useful for organizations to partner up with famous and popular organizations to enhance corporate reputation (Bonini, Court & Marchi, 2009). In the economy of today, where 70 to 80% of market value comes from hard to assess intangible assets, like reputation, managing reputation is more important than ever (Eccles, Newquist & Schatz,2007). One of the ways companies are trying to enhance organizational reputation is by sponsoring. Commercial sponsorship is "an investment, in cash or kind, in an activity in return for access to the exploitable commercial potential associated with that activity’’ (Meenaghan, 1991). The sponsorship market is growing rapidly, as sponsorship budgets almost doubled in the last ten years (Statista, 2017). Therefore it seems logical to suggest that companies reach their objectives by sponsoring. One of the objectives of sponsorship is enhancing organizational reputation (Hoek, Gendall, and West, 1990). Ideally sponsoring enhances the reputation of an organization, the question raises if it’s actually the case. Take for example the rivalry between the football clubs Ajax Amsterdam and Feyenoord Rotterdam. This rivalry is so fierce that supporters from Feyenoord Rotterdam don’t even speak about Amsterdam
7 when talking about the city Amsterdam. It could be possible that supporters from Feyenoord Rotterdam also have a feeling of hatred against Ajax’s corporate sponsors and vice versa, that supporters of Ajax Amsterdam have a more warm feeling about Ajax’s corporate sponsors. There is a gap in the literature in researching organizational reputation and sponsorship. Meenaghan (1991) researched the consumer effects of sponsorship and found that sponsorship ‘’ engages the consumer by bestowing benefit on an activity with which the consumer has an intensely emotional relationship.’’ However, this research is mostly theoretical in nature. There is no available research about the reputational effect of sponsoring. When it’s known what the reputational effects of sponsoring are, managers could make a more substantiated decision on sponsoring and decide if sponsoring is one of the ways of managing organizational reputation. Nowadays a substantiated decision on the sponsorship decision is becoming more important as companies are increasing their sponsorship budgets and sponsorship becomes a larger part of the advertisement strategy. (IEG, 2017).
When the outcome of this research shows that sponsoring companies don’t have a higher organizational reputation, managers would think twice before investing so much money in sponsorship deals. And on the other side, when the outcome of this research shows that sponsoring companies do have a higher organizational reputation the least what managers can gain from this research is that they can make a more substantiated decision on sponsoring. Overall, this research will provide important contributions to the literature about sponsorship and organizational reputation, an area of research that hasn’t been researched extensively as of today, because there is a clear gap in the literature in linking sponsorship and organizational reputation. McDonald (1991) wrote that companies don’t make the effort to research the effect of sponsorships, because sponsorship costs may often not seem substantial enough to be worth researching or
8 because sponsorship effects are subtle and difficult to observe. It is suggested that this is the case, because it’s difficult to disentangle sponsorship from other promotions. He agreed that more researchers should dive in the gap of researching the sponsorship effects. This is the first research that investigates if sponsorship activities lead to a higher organizational reputation.
2. Literature Review
The next chapter of this research is a literature review about organizational reputation and sponsorship and the method of research. The research continues with the results of the study and will conclude with a discussion, which covers the findings, managerial implications, limitations of research and future research directions.
The following section discusses the main insights of existing literature about organizational reputation and sponsorship. After having explained those two variables the research gap will be presented, along with the research question. Next, I will present hypotheses on how sponsorship has an effect on the reputation of an organization. Subsequently I will formulate in which way this research will be conducted and I will justify the statistical methods.
2.1Definition of Reputation
Organizations are embedded in a social community; in this social community organizations play a major role in influencing the informational context within which reputational judgements are made. Organizations are involved in a competitive market for reputational status, this means that some firms have a higher reputation than others in a particular industry and all organizations are striving for the highest organizational reputation. Usually the financial performance of organizations with a higher reputation
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is superior (Roberts & Dowling, 2002). Jones, Jones & Little (2000) examined if companies with better reputation suffered les declines in market value during economic distress than other companies. They found that good reputations provide a reservoir of goodwill which buffers companies from market decline in times of uncertainty and economic turmoil . Fombrun and Shanley (1990) wrote that organizational reputation is a highly important intangible asset, because ‘’judgements of publics collectively create reputations that stratify industries, with potentially significant competitive advantages accruing to firms with higher perceived reputational status’’.
Although the term reputation is clearly defined by Webster’s Revised Unabridged Dictionary (1913) as: ``the estimation in which one is held; character in public opinion; the character to attribute to a person, thing or action; repute'’, writers in the field of organizational reputation have adopted different conceptualizations of organizational reputation. Lange, Lee and Dai (2011) identified three dominant conceptualizations of organizational reputation in the management research field. Organizational reputation
in the literature consists of three dimensions, namely familiarity with the organization,
beliefs about what to expect from the organization in the future, and impressions about the organizations’ favorability (Lange, Lee & Dai,2011).
Reputation can consist of simply being well known. The reputation of an organization is stronger if awareness is broader and the organization is widely recognizable, irrespective of peoples’ judgement or evaluation. Because organizational reputation is linked with familiarity or knowledge of the firm by outside stakeholders, regardless their judgement, organizational reputation can be enhanced using branding campaigns or marketing activities (Fombrun, 2001).
The second conceptualization of organizational reputation is the perception that an organization has a particular interest to the perceiver. Organizations are ‘’being known
10 for something’’, like for example Unilever and their sustainable programs. Organizational reputation is ‘’tightly coupled to consequences and tangible organizational outputs’’ (Love and Kraatz, 2009). Rindova, Williamson, Petkova & Sever (2005) conceptualize organizational reputation as: ‘’degree to which stakeholders evaluate an organization positively on a specific attribute, such as the ability to produce quality products’’. The difference between the dimension of organizational reputation as ‘being known’ is that judgement is the central feature of organizational reputation. The third dimension of organizational reputation is generalized favorability. In contrast of being known for something, generalized favorability is coupled with judgement about the company that is based on multiple organizational attributes, rather than solely on outsiders expectations for specific organizational outcomes (Fischer & Reuber, 2007). All these three dimensions are in line with the thinking that organizational reputation is an objective reality for the organization, although outside observers form reputation. (Lange et al., 2011).
2.2 The importance of organizational reputation
There are several reasons why organizational reputation is important. According to the RBV-literature companies with assets that are valuable, rare, inimitable and non-substitutable have a sustainable competitive advantage. Therefore, intangible assets, like organizational reputation is critical, because organizational reputation is valuable, rare, inimitable and non-substitutable. Especially because organizational reputation is intangible, makes it hard for competing companies to replicate. Reputation is hard or maybe impossible to replicate, because reputation is complex and the creation of reputation is embedded inside the organization. Therefore it’s likely associated with
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causal ambiguity, which makes it harder for competitors to replicate (Wright, 1994). From a theoretical standpoint of view organizational reputation is an asset that leads to sustainable competitive advantage. Wright wrote the following: "The more tacit and intangible a resource, the longer its probable duration as a source of advantage. Resources that are not articulable, not observable in use, and not apprehensible are the longer term sources of advantage" (Wright, 1994). Because organizational reputation deteriorate slowly it’s one of the most important intangible resources (Grant, 1991; Hall, 1992). This theoretical argumentation is backed up by empirical research. (Fombrun and Shanley, 1990; Herremans, Akathaporn, and McInnes, 1993; Landon and Smith, 1997, McGuire, Schneeweis, and Branch, 1990; Podolny, 1993).
Roberts and Dowling (2002) researched if the financial benefits of having a superior organizational reputation also persist over time. They found that companies with high organizational reputations are more likely to sustain superior financial performance over time. They conclude that organizational reputation is an important strategic asset that contributes to sustained superior financial performance.
Organization reputation also has other benefits for the company. Organizations with superior reputations are able to charge premium pricing, they are able to attract better applicants, they are more accessible to capital markets and are more able to attract investors. Companies with a superior reputation also have costs advantages, because employees prefer to work for high reputation companies. Therefore employees will work harder or for a lower salary for high reputation organizations. At the same time suppliers are less worried about negative contractual implications, leading to lower contracting and monitoring costs (Fombrun & Shanley,1990).
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All these examples show that having a good organizational reputation has numerous benefits for organizations and therefore organizations should strive for the highest reputation.
A reputation is built over a long period of time. Rindova et al. (2010) found that reputation not only is constructed by outside observers, but also that reputation refers to social cognitions, such as knowledge, impressions, perceptions and beliefs. The fact that reputation consists of two different conceptual points means that there is a distinction between the antecedents of reputation, for example investments and actions in how to develop reputation and the social cognitions that constitute organizational reputation. The value of reputation can be determined through interactions and interrelationships among multiple attributes, internal and external to the organization (Barney,1991), but reputation can’t be equated with the internal and external attributes that lead to its development. (Rindova et al.,2010).
2.3 Managing Reputation
Because reputation consists of two different conceptual points means that companies do not own or directly control their reputations. The stakeholders of the company do. Therefore managing corporate reputation is a continuous process that starts from the founding of the company. Managing reputation usually consists of three phases. First a company develops a public profile, then a company explains its function to stakeholders via strategic communications and lastly it demonstrates its competence of functioning in the marketplace. The actions companies take and the information companies provide do have an important influence on corporate reputation, but it is just as important how information is communicated. The process of how information is being communicated
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has a big influence on how stakeholders evaluate a company. Some companies are able to build trust with their stakeholders by symbolic actions, like their manner of speaking and their dress, where other companies breed distrust. An example of building trust is the smooth transition of leadership from Steve Jobs and Tim Cook at Apple. Because the reputation of Apple by stakeholders is very positive, stakeholders were positive that after the death of Steve Jobs and the succession of the CEO job of Tim Cook Apple would still continue its successful business. The smoothness with which Tim Cook succeeded Steve Jobs after his death, compared with the amateurism of the transition from Mark Hurd to Meg Whitman at Hewlett-Packard provides stark contrasts in how communication can build and reinforce organizational reputation (Barnett & Pollock, 2014).
According to a research from McKinsey (Bonini, Court & Marchi, 2009) there are two ways how reputation can be managed. Reputation is not only about communicating, but also about action: transparency is really important. Stakeholders can see through formal PR-announcements that is not supported by business activities. Transparent companies not only say they are going in the right direction, but it’s also backed by their actions. Look for example at Astrazeneca, a Swiss pharmaceutical company. Astrazeneca was being criticized by the director of the US Food and Drug Administration for not disclosing side effects of their cholesterol medicine. Besides placing ads in national newspapers responding to these allegations, Astrazeneca also placed clinical-trial data on their website about their medicine, so everybody could form their own opinion. While this was a really risky move, thanks to this action public trust was reestablished. The reputation of Astrazeneca was saved. A similar example can be found in the cycling sport. Year after year cyclists fall under suspicion of using dope. Cyclist squad Sky was fed up with these allegations and started a transparency movement. Journalists were
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welcome to join the team during races and biological passports were being published to show that the racers of Sky did not use any doping. This transparency tactic worked, as Sky’s reputation is that it’s one of the most trustworthy and integer organizations in cycling. Being transparent is not the only way of managing corporate reputation. Using formal PR-announcement can play an important role in managing corporate reputation, but using credible third party spreading positive messages usually is more effective. Consumers do believe high standing persons most of the time faster than businesses and therefore it’s a smart way of managing corporate reputation. That’s why Nike for example pays basketball player LeBron James more than 30 million dollar per year. LeBron James is globally recognized as the best basketball player in the world and when consumers see LeBron James wearing Nike shoes and apparel they connect the greatness of LeBron James with Nike and starting to want to buy these products too. Consumers think they can reach the greatness of LeBron James with these clothes. Nike could also have chosen the path of formally announcing that their shoes are of the best quality using their PR-department, but instead Nike chose to let the accolades of LeBron James do the talking. Using a third party ambassador for a company is therefore a great way of managing corporate reputation.
2.4 Sponsorship definition
The definition of sponsorship has been changing in the sponsorship literature. The sports council of the UK described sponsorship in 1978 as: ‘’ a gift or payment in return for some facility or privilege which aims to provide publicity for the donor." (Chadwick & Thwaites, 2004), whereas Meenaghan (1991) described sponsorship as: "an investment, in cash or kind, in an activity in return for access to the exploitable commercial potential associated with that activity". Sponsorship has been changing
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from a philanthropic activity, where the sponsoring is mainly beneficial for society, sport organizations and athletes to a more commercial activity, where ‘’access to the exploitable commercial potential’’ is highly important. Sponsorship involves two main activities. On the first hand sponsorship is an exchange between the sponsor and the ‘sponsee’ (the organization, like a league, team or athlete that is being sponsored), where the sponsor pays a fee to the sponsee in exchange for the right to associate the sponsor with the sponsee. The second activity is the marketing of the association by the sponsor. The marketing of the sponsor is also highly important in order to become a successful sponsorship investment (Cornwell & Maignan, 1998). Sponsorship is different from other promotional activities, because it presents benefits on an activity with which the consumer has an emotional connection.
2.5 Sponsorship Objectives
Sponsorship objectives vary between companies, as desires and resources of companies differ. Some of the objectives of sponsorship are forging of links with local business and political communities (Gardner & Shuman, 1988); the entertaining of corporate customers (Simkins, 1986); the personal objectives of decision-makers, such as an interest in a particular sport (Meenaghan, 1983); improving employee relations (Berrett, 1993); or the testing of potential products under "real-life" conditions (Abratt, Clayton, & Pitt, 1987). The two most cited reasons for entering a sponsorship agreement are increasing awareness of the organization or brand, and changing or enhancing the organization’s brand image (Witcher, Craigen, Culligan, & Harvey, 1991; Meenaghan, 1991; Mintel, 1994). Hoek, Gendall and West (1990) also researched sponsorship objectives by surveying 19 companies in New Zealand and found similar results. The interviewed companies stated that they engaged in sponsorship for the
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following reasons, from most to least important: improving goodwill, enhancing image, increasing awareness, improving profitability, management interest, and staff recruitment. Sponsorship usually is a part of the marketing communications mix and therefore sponsorship objectives are the same as other marketing investments, like advertisements.
2.6 Sponsorship effects
Meenaghan (2001) found that there are four sponsorship effects on consumers. These four sponsorship effects on consumers are; goodwill in sponsorship, image in sponsorship, the concept of fan involvement and consumer response to sponsorship. In order to maximize the goodwill effects organizations have to be careful. Consumers are really sensitive about sponsor exploitation. Consumers applaud positive actions, which lead to higher goodwill, whereas excessive exploitation leads to hostility from the consumer to the organization (Meenaghan, 2001). This goodwill also has sales effects. Meenaghan (2001) found that persons who are highly involved with an activity and to whom the benefit of the sponsorship is most apparent, the level of goodwill was such that respondents expressed a strong preference for the sponsor’s product. Alexander (2009) tested how sponsorship influenced the sponsor image, purchase intentions and word of mouth. This study found that it’s more likely that highly involved fans develop a positive image about their the sponsor and also express positive intentions to say good things about the sponsor and even are more likely to buy the sponsor’s products. Therefore Alexander (2009) concluded that sponsors should work on fan involvement and the creation of positive sponsor image in order to increase sponsorship effects. This could be achieved by increasing the involvement by social events and activities and by communicating and promoting their sponsorship via for example indoor and outdoor
17 advertisement, Internet, announcements in stadiums and public relations actions. In this way the corporate image could be enhanced.
Different researchers studied sponsorships and found that the image of the sponsee can be transferred to the sponsor. This was for example the case with the company Meenaghan and Shipley (1991) followed. They studied the sponsorship of Memphis cigarettes and an Austrian football club. They found that the image of Memphis Cigarettes was enhanced through the association with football. Memphis Cigarettes was found to be more masculine, dynamic and young in results of its association with football.
2.7 Sponsorship and the RBV
According to the RBV literature resources that lead to sustainable competitive advantage are resources that are heterogeneously distributed through the industry, imperfectly imitable, imperfectly mobile and associated with ex-ante limits to competition (Peteraf, 1993). According to a paper from Amis, Pant and Slack (1997) sponsorships are capable of leading to sustainable competitive advantage. Sponsorships can lead to sustainable competitive advantage in representing a heterogeneous distribution of resources. A successful sponsorship deal can lead to a sustainable competitive advantage that can’t be replicated by other companies. This is for example the case with basketball and Nike. Nike decided to sponsor basketball player Michael Jordan, universally deemed as the best basketball player ever. Nike started producing ‘Air Jordan’ basketball apparel, becoming the most sold basketball apparel brand. Other athletic companies tried to emulate this success by also signing big basketball players, as for example Reebok with Shaquille O’Neal. However, because of the lower stature of the player Shaquille O’Neal Reebok was never able to successfully
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exploit the sponsorship agreement as Nike did with Michael Jordan. In 2016 Nike’s Air Jordan brand added 2.8 billion dollar in revenue for Nike, while Reebok’s sponsorship agreement with Reebok doesn’t even exist anymore. Amis, Pant and Slack (1997) researched two sponsorship agreements in Canada and found that those sponsorship agreements led to sustainable competitive advantage according to the resource based approach. According to another paper of Amis, Slack and Berret (1999) sport sponsorships can also be a valuable resource that leads to sustainable competitive advantage. This can be achieved as a company approaches its sponsorship agreement as a potentially valuable resource that’s worth spending time and worth spending money on. If this commitment is made sponsorship deals can be developed in a distinctive competence, as described by Prahalad and Hamel(1994). The customer value of a sponsorship agreement will temporarily achieve benefits if a firm is associated with a famous entity, as for example an athlete, team or event. However, in order to have a longer term successful sponsorship agreement companies need to integrate the sponsorship in the total marketing mix to produce a powerful image of the firm.
A sponsorship agreement can also be a distinctive competence if the sponsorship is extendable. The more often the sponsorship is used, the more the sponsorship develops, leading to an increased advantage for the sponsor. This is the case, because the two parties evolve together (Prahalad andHamel, 1994). A sponsorship that is used in different ways across the organization is deemed much more successful than sponsorships that are simply forwarded as an advertisement. If companies want the sponsorship to be a distinctive competence companies should invest resources, time and effort in to it. When companies do this, sponsorship agreements can potentially be a valuable tool of contributing to sustainable competitive advantage(Amis, Slack and Berret, 1999).
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The sponsorship agreement of AIB and the AIB GAA Club Championships illustrates how a sponsorship agreement is developed and how the sponsorship agreement became a distinctive competence.
In 2008, during the financial crisis- a crisis in which home values in Ireland decreased by 70%, unemployment was above 10%, the greatest decline in output for a western country since World War II and a subsequent corporate bailout- Allied Irish Bank posted the lowest score ever recorded on the Edelman Trust Barometer. The Edelman Trust Barometers surveys the general population in 28 countries about corporate credibility. Above 90 percent of media and social media sentiment was negative. It went so far that employees of the company denied working for Allied Irish Bank (AIB). As part of the terms of the governmental bailout AIB had to slash its sponsorship budget. Therefore AIB eliminated all sponsorship deals, except for one: the AIB GAA Club Championships. AIB had a sponsored the GAA Club Championship for over 20 years and therefore it was decided to only continue with this sponsorship. Gaelic Football is the most popular sport in Ireland, however the sponsorship of the GAA Club Championship was not viewed as a popular sponsorship. Instead of walking away AIB decided to re-examine the sponsorship property. What AIB found was that it was the game that players wanted to win the most out of all the GAA competitions. The reason why the Club Championship was the most popular GAA competition to win is because this game is played with the people the players are born with. Players represent their village or city and transfers are not possible.
AIB started to transfer the image of the Club Championship to the AIB brand by creating buzz around the Championship and signing top Gaelic Football player, Colm Cooper, who is the most recognizable athlete in Ireland. After twelve months the reputation of the company was restored. AIB could talk to customers about their products again. AIB
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could have stopped there, but instead they continued to broaden the scope of the sponsorship. AIB sent top Gaelic Football players all over the world to let them try new sports, documenting their every move. Soon this show was picked up by one of the biggest broadcasters in Ireland, creating lots of media time.
With the sponsorship of the GAA Club Championship AIB became the biggest sport sponsor of Ireland, climbing from number 22. The trust rating of Edelmans Barometer of Trust increased from 6% to 57%, the video content of AIB went from 30,000 to 19.5 million views and nowadays 62% of the Irish people talk about AIB in a positive way, instead of shouting obscenities and being angered as was the case a couple of years ago (IEG, 2017). This example of AIB and the GAA Club Championships show that sponsorship can truly have a huge impact and that the image of the GAA Club Championship can be transferred to the corporate brand.
The examples showed in the papers by Amis, Pant & Slack (1997), Amis, Slack and Berret (1999) and of AIB and the GAA Club Championship show that sponsorship agreements can lead to a better organizational reputation.
Concluding, the expectation is that the reputation of an organization that sponsor sports is higher than non-sponsoring organizations. The reputational score of organizations that sponsor will be higher than the reputational score of organizations that don’t sponsor.
Hypothesis 1: Organizations with sponsorship activities have a higher organizational
21 3.7 Sponsorship expenditures
One of the first articles about sponsorship was written by Meenaghan (1991). In his introduction he wrote that growth in sport expenditure in the UK has risen significantly from 4 million pounds in 1970 to 35 million pounds in 1980 and an estimation of 288 million pounds in 1990.
IEG, the global authority on sponsorship and the leading provider of sponsorship consulting, analytics, measurement, valuation, research and publications forecasts that global sponsorship spending in 2017 will rise to 62.8 billion dollars from 60.1 billion dollar spent in 2016.
The U.S. sponsorship market is the biggest in the world, with expected expenses in 2017 of 23.2 billion dollar.
Figure 1: Sport sponsorship expenses in the U.S. (IEG,2017).
The reason why the sponsorship market in the U.S. is much larger than other markets in the world is because sport leagues in the U.S. are the biggest in the world (NFL,NBA,MLB,NHL). For example the biggest sports league in Europe, The English Premier League, saw their combined revenues increasing by 3% to 3.6 billion pound
22 (Wilson,2017). The NFL, the biggest sports league in the world by revenue had revenues of 13 billion dollar (Belzer,2016).That’s almost four times more.
Every year Forbes publishes a list of the 50 most valuable sport teams. In 2016 42 of 50 teams on the list were U.S. sport teams. Therefore it’s not so strange that the U.S. is the biggest sponsorship market in the world.
The differences between now and 1970 are astonishing and sponsorship expenditures are expected to continue to rise the forthcoming years. That means that companies that already sponsor are enhancing their sponsorship budget and that new companies are starting to see that sponsoring is a clever way of investing in reputation enhancement. It seems that sponsoring meets the objectives of the companies. These objectives are from most to least important: improving goodwill, enhancing image, increasing awareness, improving profit- ability, management interest, and staff recruitment (Abratt, Clayton & Pitt, 2015). It’s therefore interesting to see if companies that have higher sponsorship expenses also have a higher reputation. When spending more money on sponsorship deals the company is more visible and will becoming better known among the public. Therefore the organizational reputation will be better as well (Lange, Lee and Dai, 2011).
Hypothesis 2: Organizations with high sponsorship budgets have a higher
organizational reputation than companies with a lower sponsorship budget and therefore also than non-sponsoring companies
Hypothesis 3: There is a positive relationship between expenses and organizational
23 3. Research design
For this research is chosen for a cross sectional study. The reason behind this is, because when using a cross sectional study the effect of sponsoring on organizational reputation can be found during one point of time.
3.1 Sample
The overall sample of the study is based on organizations that sponsor sport leagues in the United States. For this study we looked at all corporate sponsors of sports in the US. We chose for this sample, because the organizations that sponsor in these sports leagues are large U.S. or European corporations. Therefore we can insure that we can test the reputational effect of sponsorships, using the Fortune 500 Most Admired Companies list.
In every year of this study 318 companies were identified to be useful for this research. This means that the total amount of reputation scores that are being analysed is an amount of 1590 companies. Of these 1590 reputation scores 400 reputational scores were identified with sponsorship deals in U.S. sports and were found usable to investigate the influence of sponsoring on organizational reputation. Companies could only be used for this study when these companies were present in the Fortune list of most admired companies. Because of the fact that was chosen for Fortune’s list of most admired companies for the variable reputation the sample shrunk by a lot. For the companies that are not present in Fortune’s list of Most Admired Companies there is no data on organizational reputation and therefore it’s not possible to include these companies (Wally & Hurley,1998). This is the case, because Fortune only looks at the reputations of organizations when these organizations are either among the 1000
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largest U.S. companies or have revenues of 10 billion a year. From this list only the companies with the highest revenue were rated. This research also looks at the sponsorship expenses and how these expenses might have an effect on organizational reputation. Therefore the yearly expenses of these 80 companies were analysed. Unfortunately the data of some companies were not publicly available and therefore these companies could not be used to research the influence of sponsorship expenses on organizational reputation. Only the sponsorship expenses of 44 companies were available. This means that 220 reputational scores of companies with high sponsorship budgets were analysed. The sponsorship expenses of these companies were extracted from IEG, the global authority on sponsorship and the leading provider of sponsorship consulting, analytics, measurement, valuation, research and publications. (IEG,2017)
Dependent variable: Reputation
Information on corporate reputation was extracted from Fortune list of Most Admired Companies. The Fortune list of Most Admired Companies provides an aggregated reputation score of every company. Based on this score a ranking is published. The rating is based on a survey filled in by executives, directors and analysts. They rate companies in their own industry based on nine criteria, from investment value and quality of management and products to social responsibility and ability to attract talent. The methodology of creating the list of Most Admired companies is as follows: Fortune starts with a list of 1,500 companies: the 1,000 largest U.S. companies ranked by revenue, along with non-U.S. companies in Fortune’s Global 500 database that have revenues of $10 billion or more. Fortune then winnowed the assortment to the highest-revenue companies in each industry. The total amount of reputational scores is 1590 (Every year of research 315 companies were analyzed). The explication of the ratings
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can also be found in Fombrun & Shanley (1990), Fombrun (1996) and Mcguire et al. (1988).
Independent variable: Sponsorship
Data about sponsorship, like the name of the title sponsor and the amount of the sponsorship expenses, will be found from publicly available sources (official club websites & official news sources) and from IEG. IEG is the global authority on sponsorship and the leading provider of sponsorship consulting, analytics, measurement, valuation, research and publications. The information about sponsorship is findable on their website: www.sponsorship.com (IEG,2017).
Based on the data found from different sources on organization reputation and sponsorship deals the following research question will be answered: Does the strategic
decision to start sponsoring have an effect on organizational reputation?
Control variables
Size
According to Lange, Lee and Dai (2011) reputation consists of three dimensions, namely familiarity with the organization, beliefs about what to expect from the organization in the future, and impressions about the organizations’ favorability. The size of a company is therefore a variable that should be included in this research. The familiarity of a big company is likely to be higher than for a smaller company. The McDonalds logo for example was more recognizable than the holy cross, according to the book Fast Food Nation, The Dark Side of the All-American Meal (2001). This means that McDonalds is highly recognizable and stakeholders know what to expect from the company and this seems the case for other big companies as well. It’s likely that big companies have a
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higher organizational reputation than small companies, because of their recognizability and therefore the size of the company is also included in this research.
Size is measured using Fortune’s 500 Global list. Fortune’s 500 Global list is a list that constitutes the 500 biggest companies in the world measured by total revenue. This list was used to investigate if the company is big or small (relatively). All the companies in the dataset were scored with a Yes, if the company was present in the list or a No, if the company wasn’t present in the list. This variable was used to investigate if the size of a company matters for organizational reputation.
Location
The country of origin effect is one of the most researched phenomena in international business. Elliot and Cameron (1994) for example found that a personal computer that is built in the United States is deemed as the personal computer with the highest quality, irrespective of the actual quality of the product. This shows that some countries have higher reputations than other. It seems plausible that location also is a factor in determining a company’s reputation. It could be the case that the Nike has a higher reputation, because Nike is from the U.S., than Li-Ning, a sports apparel company from China. The location is likely to be a factor in sponsorship deals in the U.S. and organizational reputation as well. Therefore location will also be included as a control variable in this research.
Location of a company is the country were a company conducts its businesses. Apple for example conducts its business in Cupertino, California. Therefore the location of Apple is the U.S.. Companies in the dataset were divided in two groups, American or non-American. Reputational scores were either labelled an A, when from American origin or an O, when the company is from another country than the U.S. This variable is included
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to show if the location has an effect on the reputational score of companies that sponsor in the U.S. The variable is extracted from the website of Fortune (2017).
3.2 Methods
For finding an answer on the first hypothesis this research will conduct an independent
sample t-test in SPSS. The independent sample t-test compares two means. It assumes a
model where the variables in the analysis are split into independent and dependent variables. The model assumes that a difference in the mean score of the dependent variable is found because of the influence of the independent variable. The total sample of 1590 reputational scores of companies from 2008 till 2012 was divided in a group with on the one hand organization that sponsor in the U.S. and on the other hand organizations that don’t sponsor in the U.S. The independent t-test will be performed on all the reputational scores that were extracted from Fortune’s Most Admired Companies lists from 2008 till 2012. In this way there will be found an answer on the question if organizations with sponsorship activities have a significantly higher aggregated reputation score than organization without sponsorship activities.
For finding an answer on hypothesis 2 this research will use a correlation analysis.
Correlation analysis is a statistical technique that can show whether and how strongly pairs of variables are related. The pairs of variable that are being researched are the variables corporate reputation and sponsorship expenses. Additionally, when the research finds that there is correlation between corporate reputation and sponsorship expenses a linear regression analysis will be performed. A linear regression will be conducted for modeling the relationship between reputational score and sponsorship expenses. This analysis will be performed using all reputational scores of companies with the highest sponsorship budgets in the U.S.
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4. Results
An independent samples t-test was conducted to test if organizations with sponsorship activities in the United States during 2006-2011 have a higher reputational score than organizations without sponsorship activities. This test was conducted on 1590 reputational scores of companies that were present in Fortune 500’s list of most admired companies.
Reputational scores sponsors and non-sponsors
For this test 1590 reputational scores of companies were analyzed to show if there was a significant difference between the reputational scores of companies with sponsorship activities in the U.S. and companies without sponsorship activities in the U.S. The total amount of reputational scores was divided in two groups; 400 reputational scores of companies with sponsorship deals in the U.S. and 1190 reputational scores of companies without sponsorship deals in the U.S.
Table 1: Average Reputational Scores of all companies
Scores N Mean Std. Deviation Std. Error Mean Reputation Sponsors 400 6.4282 1.01404 .05070 Non-Sponsors 1190 6.0809 .97569 .02828
An independent samples t-test was conducted to show if the difference in mean scores of these two samples is significantly different. This test was found to be statistically significant, t(1588)= 6.098, p< .05. The assumption of homogeneity of variances was not violated as Levene's Test of Equality of Variances, F=.826, p=.364 showed there was homogeneity of variances for both groups. This result indicates that companies with
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sponsorship activities in the U.S. have a higher reputational score than companies without sponsorship activities in the U.S.
Size and Location
However, based on this independent samples t-test it’s not known if this difference between average reputational score solely is due to the fact that the companies in one group are companies with sponsoring activities and the other group without sponsoring activities. Therefore two control variables are included in this research; size and location.
Conducting an independent samples t-test for big and small companies showed that big companies (M=6.6266, SD=84953) have a significantly higher reputational score than small companies (M=5.8388, SD=0.96418).
American companies (M=6.1897, SD=.98974) also have a significantly higher score than companies from another country (M=5.9891, SD=1.03818).
Reputational scores of American Sponsors and American non-sponsors
For this test 1430 reputational scores of companies were analyzed to show if there was a significant difference between the reputational scores of U.S. companies with sponsorship activities in the U.S. and U.S. companies without sponsorship activities in the U.S. The total amount of reputational scores was divided in two groups; 315 reputational scores of U.S. companies with sponsorship deals in the U.S. and 1105 reputational scores of companies without sponsorship deals in the U.S.
30 Table 2: Average Reputational Scores of U.S. companies
Scores N Mean Std. Deviation Std. Error Mean Reputation U.S. Sponsors 315 6.5028 1.00456 .05660 U.S. Non-sponsors 1105 6.0988 .96737 .02910
An independent samples t-test was conducted to show if the difference in mean scores of these two samples is significantly different. This test was found to be statistically significant, t(1418)= 6.483, p< .05. The assumption of homogeneity of variances was not violated as Levene's Test of Equality of Variances, F=.397, p=.529 showed there was homogeneity of variances for both groups. This result indicates that U.S. companies with sponsorship activities in the U.S. have a higher reputational score than U.S. companies without sponsorship activities in the U.S.
Non-U.S. companies
For this test 170 reputational scores of companies were analyzed to show if there was a significant difference between the reputational scores of non-U.S. companies with sponsorship activities and non-U.S. companies without sponsorship activities in the U.S. The total amount of reputational scores was divided in two groups; 85 reputational scores with sponsorship activities in the U.S. and 85 reputational scores of companies without sponsorship deals in the U.S.
31 Table 3: Average Reputational Scores of non-U.S. companies
Scores N Mean Std. Deviation
Std. Error Mean Reputation Non-U.S. sponsors 85 6.1298 1.00575 .10909 Other countries non-sponsors 85 5.8484 1.05682 .11463
An independent samples t-test was conducted to show if the difference in mean scores of these two samples is significantly different. This test was found to be not statistically significant, t(168)= 1.778, p> .05. The assumption of homogeneity of variances was not violated as Levene's Test of Equality of Variances, F=.512, p=.475 showed there was homogeneity of variances for both groups. This result indicates that non-U.S. companies from with sponsorship activities in the U.S. don’t have a higher reputational score than non-U.S. companies without sponsorship activities in the U.S.
Size
Reputational scores of big sponsors and big non-sponsors
For this test 665 reputational scores of companies were analyzed to show if there was a significant difference between the reputational scores of big companies with sponsorship activities in the U.S. and companies without sponsorship activities in the U.S. The total amount of reputational scores was divided in two groups; 280 reputational scores of big companies with sponsorship deals in the U.S. and 385 reputational scores of big companies without sponsorship deals in the U.S.
32 Table 4: Average Reputational Scores of big companies
Scores N Mean Std. Deviation Std. Error Mean Reputation Big Sponsors 280 6.6583 .92389 .05521 Big non-sponsors 385 6.5986 .79402 .04047
An independent samples t-test was conducted to show if the difference in mean scores of these two samples is significantly different. This test was found not to be statistically significant, t(554.991)= .872, p>.05. The assumption of homogeneity of variances was violated as Levene's Test of Equality of Variances, F=6.897, p=.009 showed there was no homogeneity of variances for both groups. This result indicates that big companies with sponsorship activities in the U.S. do not have a higher reputational score than companies without sponsorship activities in the U.S.
Small
For this test 925 reputational scores of companies were analyzed to show if there was a significant difference between the reputational scores of small companies with sponsorship activities in the U.S. and small companies without sponsorship activities in the U.S. The total amount of reputational scores was divided in two groups; 120 reputational scores of small companies with sponsorship deals in the U.S. and 805 reputational scores of small companies without sponsorship deals in the U.S.
33 Table 5: Average Reputational Scores of small companies
Scores N Mean Std. Deviation
Std. Error Mean Reputation Small sponsors 120 5.8758 1.01073 .09227 Small non-sponsors 805 5.8333 .95757 .03375
An independent samples t-test was conducted to show if the difference in mean scores of these two samples is significantly different. This test was found to be not statistically significant, t(923)= .450, p> .05. The assumption of homogeneity of variances was not violated as Levene's Test of Equality of Variances, F=1.283, p=.258 showed there was homogeneity of variances for both groups. This result indicates that small companies with sponsorship activities in the U.S. don’t have a higher reputational score than small companies without sponsorship activities in the U.S.
Combining location and size
For this test 530 reputational scores of companies were analyzed to show if there was a significant difference between the reputational scores of big companies that sponsor in the U.S. and companies that don’t sponsor in the U.S. The total amount of reputational scores was divided in two groups; 210 reputational scores of big U.S. companies with sponsorship deals in the U.S. and 320 reputational scores of big U.S. companies without sponsorship deals in the U.S.
34 Table 6: Average Reputational Scores of big U.S. companies
Scores N Mean Std. Deviation
Std. Error Mean Reputation Big U.S.
sponsors 210 6.8168 .82366 .05684 Big U.S. non-sponsors 320 6.6843 .74980 .04192
An independent samples t-test was conducted to show if the difference in mean scores of these two samples is significantly different. This test was found not to be statistically significant, t(528)= 1.914, p>.05. The assumption of homogeneity of variances was not violated as Levene's Test of Equality of Variances, F=2.342, p=.127 showed there was homogeneity of variances for both groups. This result indicates that big U.S. companies with sponsorship activities in the U.S. do not have a higher reputational score than big U.S. companies without sponsorship activities in the U.S.
Companies with the highest sponsorship budgets
There also was a significant difference in reputational scores between sponsors with the highest sponsorship budgets and other sponsors. (M= 6.5972, SD=1.08629 for companies with high sponsorship budgets and M=6.2112, SD=.87796 for sponsor with low sponsorship budgets).
Therefore independent t-tests were also run exclusively with sponsors with the highest sponsorship budgets. Because the difference between companies with high sponsorship budgets and low sponsorship budgets was significant, we can conclude that the
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difference between companies with high sponsorship budgets and non-sponsors is also significant.
Location
For this test 1270 reputational scores of companies were analyzed to show if there was a significant difference between the reputational scores of U.S. companies with high sponsorship budgets and companies without sponsorship activities in the U.S. The total amount of reputational scores were divided in two groups; 165 reputational scores of U.S. companies with high sponsorship budgets in the U.S. and 1105 reputational scores of big U.S. companies without sponsorship deals in the U.S.
Table 7: Average Reputational scores of U.S. companies with high sponsorship budgets
Scores N Mean Std. Deviation
Std. Error Mean Reputation U.S. sponsors budget 165 6.6961 1.07101 .08338 U.S. companies 1105 6.0988 .96737 .02910
An independent samples t-test was conducted to show if the difference in mean scores of these two samples is significantly different. This test was found to be statistically significant, t(1268)= 7.293, p<.05. The assumption of homogeneity of variances was not violated as Levene's Test of Equality of Variances, F=.738, p=.390 showed there was homogeneity of variances for both groups. This result indicates that U.S. companies with
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high sponsorship budgets in the U.S. have a higher reputational score than U.S. companies without sponsorship activities in the U.S.
Non-U.S. companies
For this test 140 reputational scores of companies were analyzed to show if there was a significant difference between the reputational scores of non-U.S. companies with high sponsorship budgets with sponsorship activities in the U.S. and non-U.S. companies without sponsorship activities in the U.S. The total amount of reputational scores was divided in two groups; 55 reputational scores of companies with high sponsorship budgets in the U.S. and 85 reputational scores of companies without sponsorship deals in the U.S.
Table 8: Average Reputational scores of companies from other countries with high sponsorship budgets
Scores N Mean Std. Deviation
Std. Error Mean Reputation Other countries sponsors 55 6.3005 1.08742 .14663 Other countries non-sponsors 85 5.8484 1.05682 .11463
An independent samples t-test was conducted to show if the difference in mean scores of these two samples is significantly different. This test was found to be statistically significant, t(138)= 2.445, p<.05. The assumption of homogeneity of variances was not violated as Levene's Test of Equality of Variances, F=.172, p=.679 showed there was homogeneity of variances for both groups. This result indicates that non-U.S. companies with high sponsorship budgets with sponsorship deals in the U.S. have a higher reputational score than non-U.S. companies without sponsorship deals in the U.S.
37 Size
For this test 570 reputational scores of companies were analyzed to show if there was a significant difference between the reputational scores of big companies with high sponsorship budgets that sponsor in the U.S. and big companies that don’t sponsor in the U.S. The total amount of reputational scores was divided in two groups; 185 reputational scores of big companies with high sponsorship budgets in the U.S. and 385 reputational scores of big companies without sponsorship deals in the U.S.
Table 9: Average Reputational scores of big companies with high sponsorship budgets
Scores N Mean Std. Deviation
Std. Error Mean Reputation Big sponsors 185 6.8137 .94863 .06974 Big non-sponsors 385 6.5986 .79402 .04047
An independent samples t-test was conducted to show if the difference in mean scores of these two samples is significantly different. This test was found to be statistically significant, t(311.808)= 2.667, p<.05. The assumption of homogeneity of variances was violated as Levene's Test of Equality of Variances, F=4.541, p=.0.34 showed there was no homogeneity of variances for both groups. This result indicates that big companies with high sponsorship budgets with sponsorship activities in the U.S. have a higher reputational score than big companies without sponsorship activities in the U.S.
38 Small
For this test 840 reputational scores of companies were analyzed to show if there was a significant difference between the reputational scores of small companies with high sponsorship budgets in the U.S. and small companies without sponsorship activities in the U.S. The total amount of reputational scores was divided in two groups; 35 reputational scores of big companies with high sponsorship budgets in the U.S. and 805 reputational scores of small companies without sponsorship deals in the U.S.
Table 10: Average Reputational scores of small companies with high sponsorship budgets
Scores N Mean Std. Deviation
Std. Error Mean Reputation Small Sponsors 35 5.4531 1.06226 .17955 Small non-sponsors 805 5.8333 .95757 .03375
An independent samples t-test was conducted to show if the difference in mean scores of these two samples is significantly different. This test was found to be statistically significant, t(838)= -2.288, p<.05. The assumption of homogeneity of variances was violated as Levene's Test of Equality of Variances, F=.812, p=.368 showed there was no homogeneity of variances for both groups. This result indicates that small companies with high sponsorship budgets in the U.S. have a lower reputational score than small companies without sponsorship deals in the U.S.
39 Combining location and size
For this test 460 reputational scores of companies were analyzed to show if there was a significant difference between the reputational scores of big U.S. companies with high sponsorship budgets and big U.S. companies without sponsorship activities in the U.S. The total amount of reputational scores was divided in two groups; 140 reputational scores of big U.S. companies with high sponsorship budgets in the U.S. and 320 reputational scores of big U.S. companies without sponsorship deals in the U.S.
Table 11: Average Reputational scores of big U.S. companies with high sponsorship budgets
Scores N Mean Std. Deviation
Std. Error Mean Reputation Big U.S.
sponsors 140 6.9373 .86751 .07332 Big U.S. non-sponsors 320 6.6843 .74980 .04192
An independent samples t-test was conducted to show if the difference in mean scores of these two samples is significantly different. This test was found to be statistically significant, t(458)= 3.171, p<.05. The assumption of homogeneity of variances was violated as Levene's Test of Equality of Variances, F=1.856, p=.174 showed there was homogeneity of variances for both groups. This result indicates that big U.S. companies with high sponsorship budgets in the U.S. have a higher reputational score than big U.S. companies without sponsorship activities in the U.S.
40 Big non-U.S. Companies
For this test 110 reputational scores of companies were analyzed to show if there was a significant difference between the reputational scores of big non-U.S. companies with high sponsorship budgets that sponsor in the U.S. and big non-U.S. companies without sponsorship activities in the U.S. The total amount of reputational scores was divided in two groups; 45 reputational scores of big companies with high sponsorship budgets in the U.S. and 65 reputational scores of big U.S. companies without sponsorship deals in the U.S.
Table 12: Average Reputational scores big non-U.S. companies with high sponsorship budgets
Scores N Mean Std. Deviation
Std. Error Mean Reputation Big sponsors other countries 45 6.4291 1.08900 .16234 Big non-sponsors other countries 65 6.1769 .87366 .10836
An independent samples t-test was conducted to show if the difference in mean scores of these two samples is significantly different. This test was found to be not statistically significant, t(108)= 1.345, p>.05. The assumption of homogeneity of variances was violated as Levene's Test of Equality of Variances, F=2.065, p=.154 showed there was homogeneity of variances for both groups. This result indicates that big non-U.S. companies from with high sponsorship budgets in the U.S. don’t have a higher reputational score than big non-U.S. companies without sponsorship activities in the U.S.
41 Correlation
The reputational score of companies with high sponsorship budgets is higher than the reputational score of companies with low sponsorship budgets. In this part of the analysis there will be looked if there is also a statistical relationship between sponsorship budget and reputational score. This could only be done with companies of which information was available about the sponsorship budget. 220 reputational scores were analyzed to show if there was any statistical relationship between organizational reputation and sponsorship budget within the group of companies with the highest sponsorship budget.
Table 13: Correlation sponsorship budget and reputational score VAR00023 VAR00024 VAR00023 Pearson Correlation 1 -.044 Sig. (2-tailed) .515 N 220 220 VAR00024 Pearson Correlation -.044 1 Sig. (2-tailed) .515 N 220 220
This correlation test showed that there was a small negative correlation between sponsorship budget and organizational reputation. However this relationship is statistically non-significant (r = -.044, n= 220, p= .515).
42 5. Discussion and conclusion
The aim of this research was to investigate the reputational scores of companies with sponsorship activities and the reputational scores of companies without sponsorship activities. In some cases companies with sponsorship activities have higher reputational scores than companies without sponsorship activities. This chapter will discuss the overall findings of this research, the limitations and suggestions for future research. 5.1 Findings
The first part of the research aimed to investigate the reputational scores of companies that have sponsorship activities in the U.S. and the reputational scores of companies without sponsorship activities in the U.S. The reputational scores were extracted from Fortune Most Admired Companies list from over 5 years, from 2008 till 2012.
All reputational scores of these years were collected and subsequently divided into two groups, companies with sponsorship activities in the U.S. and organizations without sponsorship activities in the U.S. From a total amount of reputational scores of 1590 this research looked if there was a significant difference between the reputational scores using an independent samples t-test. The independent samples t-test conducted showed that the reputational score of companies with sponsorship activities in the U.S. was significantly higher than of organizations without sponsorship activities in the U.S. However, without using any control variables it could be plausible that sponsorship was not the source of these differences. The analyses show that there is a significant difference in reputational scores between U.S companies and non-U.S. companies and between big companies and small companies. Therefore two control variables were included in the research, namely location and size of the company.
43 When conducting the independent samples t-test with location as a control variable the test showed that only U.S. companies with sponsorship activities have a higher organizational reputation than U.S. companies without sponsorship activities. The difference in reputational score for non-U.S. companies from is not significantly higher than non-U.S. companies without sponsorship activities. Therefore we can conclude that sponsorships for non-U.S. companies do not lead to a higher organizational reputation. When the independent samples t-test is conducted with only big and small companies, the results show that the reputational score for big and small sponsoring companies is not significantly higher than of big and small companies without sponsorship activities. When inserting the two control variables the independent t-test showed that there is no statistical significant difference between companies with sponsorship activities and companies without sponsoring activities. Therefore it’s likely that companies with sponsorship activities don’t have a higher reputational score, but that this difference in reputational score between these two groups is being caused by the size and the location of the companies. This is in line with the definition of reputation as described by Lange et al. (2005). Two of the three dimensions of reputation are ‘being known’ and ‘being known for something’. It’s clear that companies that are big in size (present in Fortune’s Global 500 list) are being known and being known for something by the public and that therefore has influence on the reputational score of companies. Also it seems that the country of origin effect takes place as described in a paper by Elliott and Cameron (1994). Companies from the U.S. have a higher organizational reputation than non-U.S. companies. It seems that these companies have a higher organizational reputation than non-U.S. companies just because they are from the U.S.
The second part of the research only looked at the group of companies that sponsor organizations in the U.S. with high sponsorship budgets. 185 reputational scores were
