The Context-Focused Approach of Corporate Philanthropy; a case study of Dutch MNCs

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The Context-Focused Approach of Corporate

Philanthropy; a case study of Dutch MNCs

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The Context-Focused Approach of Corporate

Philanthropy; a case study of Dutch MNCs

Amsterdam, April 24

th

, 2008

Master Thesis

International Business and Management

Author:

Anthony van den Berg

Supervisors University of Groningen:

1st Rudi de Vries

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Preface

This is the final thesis for the completion of my MSc International Business and Management at the University of Groningen. During the past 12 months I had the opportunity to conduct a study to philanthropic behavior of Dutch MNCs.

During my studies in Hull (United Kingdom) I became interested in the social role of corporations within society. Of course corporations pay many salaries and taxes that meet society’s needs, but corporations also give resources away voluntarily. This thesis gave me the opportunity to study this interesting phenomenon.

I hereby thank Rudi de Vries and Ilir Haxhi from the University of Groningen for their supervision and their feedback. Of course I would like to thank my parents for their support during my entire life as a student. They have always given me everything needed to fully enjoy my life as a student and to pursue my ambitions.

Finally, I would like to thank everyone who was kind enough to make time for the interviews.

Anthony van den Berg

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Executive Summary

Corporate philanthropy is defined as “the action when a corporation donates a portion of its resources to a third party to contribute to a social cause” (Ricks and Williams, 2005, 151), and has become more strategic last years (Siegfried et al, 1983; Navarro, 1988; Galaskiewicz, 1997; Saiia et al, 2003; Brammer et al, 2006; Gan, 2006) in reaction to stakeholders’ increased pressure for short-term profits and, on the other hand, greater social responsibilities (Werbel and Wortman, 2000; Saiia et al, 2003). It is argued that corporations’ current philanthropic portfolios are not strategic and an alternative, more “truly” strategic approach towards philanthropy has been proposed; context-focused philanthropy (Porter and Kramer, 2002). Corporations that use their philanthropic resources to enhance their local business environment do not only improve their competitive context, but also leverage their capabilities and relationships in support of charitable causes (Griffiths, 1992, Porter and Kramer, 2002; Meijer et al., 2006), which makes this a promising approach for both corporations and society. Porter and Kramer (2002) argue that only a few corporations have begun to use context-focused philanthropy. However, no attempt has been made to explain why so little corporations apply this new approach (Crane and Matten, 2004; Ricks and Williams, 2005; Godfrey, 2005; Leisinger 2007; Sasse and Trahan, 2007), which objects the further development and expansion of this promising new approach. In addition, Porter and Kramer’s context-focused approach has not been studied in a different national business system setting than the Anglo-American business system (Seifert, Morris and Bartkus, 2003). A case study on context-focused philanthropy, initiated in the hope of a better understanding of context-focused philanthropy in an international setting, is reported here.

Qualitative results showed that the primary motive of Dutch MNCs is to obtain and maintain license to operate. The restraints for Dutch MNCs to apply a context-focused approach is that Dutch MNCs do not have the philanthropic resources to apply the ‘expensive’ context-focused approach, since philanthropy accounts for a relatively small part of overall CSR policy budget. Besides, context-focused philanthropy has an insincere primary intention, namely to increase potential productivity. The Dutch MNCs notice that motivations to undertake social activities should be sincere, otherwise society will reject them.

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1. Introduction

Last decades corporations are expected by people in modern societies to assume greater social, ecological, and political responsibilities (Leisinger, 2007). Globalization has given rise to concerns about power, responsibility, and the role of governments and companies (Payne, 2006). Political boundaries have become less clear and large corporations have been asked to shoulder responsibilities once left to governments (Matten and Crane, 2005; Post et al, 2002; Sasse and Trahan, 2007). The term which has been created to frame these social expectations of corporations within society is corporate social responsibility (Schouten and Remmé, 2006). Many scholars approach corporate philanthropy as a category of corporations’ social responsibilities (e.g., Caroll, 1979, 1991; Carroll and Buchholtz, 2000). Corporate philanthropy is “the action when a corporation donates a portion of its resources to a third party to contribute to a social cause” (Ricks and Williams, 2005, 151). Corporate philanthropy is a worldwide phenomenon (e.g., Galaskiewicz, 1997; Hsieh, 2004; Tchepournyhk, 2004) and is seen as a legitimate corporate activity, even by scholars and managers that question the social role of corporations in society (Shaw and Post, 1993; Seifert et al, 2003).

Last years, corporations have become more strategic in their philanthropy (Siegfried et al, 1983; Navarro, 1988; Galaskiewicz, 1997; Saiia et al, 2003; Brammer et al, 2006; Gan, 2006). Stakeholders’ increased pressure for short-term profits and, on the other hand, greater social responsibilities (Werbel and Wortman, 2000; Saiia et al, 2003) make corporations to tie corporate giving to strategic objectives (Ricks and Williams, 2005; Marx, 1994; Smith, 1996). Strategic corporate philanthropy is “giving corporate resources to address business community issues that also benefit the firm’s strategic position and, ultimately, it’s bottom-line” (Saiia et al., 2003, 170).

Porter and Kramer (2002) claim that corporations’ current philanthropic portfolios are not strategic. They argue that the desired benefits of what most corporations presently call strategic philanthropy are enhanced goodwill and employee engagement, instead an improvement in long-term economic prospects. They propose an alternative approach towards philanthropy; context-focused philanthropy that aims to improve corporations’ long-term competitive potential. Corporations that apply context-focused philanthropy spend their philanthropic resources to tackle social problems that have a negative impact on their competitive context in strategic important locations (Porter and Kramer, 2002).

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philanthropy improves corporations’ competitive context and society benefits because the approach produces social benefits far exceeding those provided by individual donors, foundations, or even governments (Griffiths, 1992, Porter and Kramer, 2002; HBS, 2003; Meijer et al., 2006).

Porter and Kramer (2002) argue that despite this promising new approach towards philanthropy, only a few corporations have begun to use context-focused philanthropy. However, no attempt has been made to explain why so little corporations apply this approach (Crane and Matten, 2004; Ricks and Williams, 2005; Godfrey, 2005; Leisinger 2007; Sasse and Trahan, 2007). The causes of the limited number of corporations that apply context-focused philanthropy should be studied since this further develops and might expand the use of this promising new approach towards philanthropy, so that corporations can improve their long-term economic prospects and, simultaneously, make an extensive commitment to bettering society (Porter and Kramer, 2002).

Porter and Kramer’ study, like many other studies about corporate giving, is situated in the United States (Navarro, 1988; Campbell et al., 2002) and Porter and Kramer’s context-focused approach has not been studied in a different national business system setting (Seifert, Morris and Bartkus, 2003). National business systems vary as the result of differences in financial systems, role of the government, national cultural and other key institutional features (Whitley, 1992), and many authors have pointed to the influence national business systems have on the structure and behavior of multinationals (e.g., Harzing, 1996; Ferner, 1997; Ferner and Quintanilla, 1998). Anglo-American business systems such as the United States differ to those existing in other capitalist systems such as the Netherlands (Whitley, 1994; Ferner and Quintanilla, 1998; Lundvall, 1999). The Netherlands is the country of origin of leading MNCs and one of the two professional philanthropic research institutions that exist worldwide is located in this country (Schuyt, 2005; Brammer et al, 2006; Meijer et al, 2006). However, only one academic article has focused on philanthropic activities of Dutch corporations (Meijer et al, 2006). Together, these statements lead to the following research question:

Do Dutch MNCs apply context-focused philanthropy and what are the stimuli and restraints for Dutch MNCs to apply context-focused philanthropy?

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applies a case study research strategy that includes four large Dutch manufacturing MNCs (Heineken, Shell, Unilever and DSM) of two different industries to control for an industry bias. A one hour in-depth interview has been held with the manager responsible for the philanthropic activities. Besides, the study relies on evidence from CSR reports and Annual Reports. To test if Dutch MNCs apply context-focused philanthropy, propositions are developed around the three components of context-focused philanthropy: 1) the motives, 2) the management and 3) the research of philanthropic related activities.

The study found that the Dutch MNCs do not apply context-focused philanthropy as proposed by Porter and Kramer (2002) and that that enhancing license to operate is the primary commercial motive to give. The MNCs have two restraints for applying the approach. 1) They do not have the philanthropic resources to apply the ‘expensive’ context-focused approach, since philanthropy accounts for a relatively small part of overall CSR policy budget. 2) Context-focused philanthropy has an insincere primary intention, namely to increase potential productivity. The Dutch MNCs notice that motivations to undertake social activities should be sincere, otherwise society will reject them.

This last restraint is related to differences within the national business system. Dutch managers and society, with their dedication towards sincerity and altruism within philanthropic motives (Meijer et al., 2006), see context-focused philanthropy as

over-commercialized and too self-serving that they no longer morally legitimize as an approach towards philanthropy. Compared to the United States, the Dutch national business includes a national culture that has a weak orientation towards philanthropy and a tradition of large governmental intervention within society needs. These national business system differences explain the Dutch dedication towards sincerity and altruism and consequently explain why Dutch managers and society do not morally legitimize context-focused philanthropy as an approach towards philanthropy. Finally, the study proposes to adapt license to operate to the competitive model of Porter and Kramer (2002) with the result that scholars and Dutch managers should, when making further contributions to the promising approach, especially focus on the context-focused philanthropy components related to management and research, instead of components related to the commercial motives.

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2. Literature Review and Research Questions

The chapter provides a detailed description of corporate philanthropy and its theoretical development. Further, the chapter provides a review of the literature with an explicit focus on

strategic corporate philanthropy. Then, the alternative approach towards philanthropy is discussed: context-focused Philanthropy. Finally, the main and the sub-research questions are described.

2.1 Corporate Philanthropy

2.1.1 What is corporate philanthropy?

Philanthropy is commonly associated with individuals or households giving money to charities. The term is a composition of the Greek words ‘philien’, meaning to love, and ‘anthropos’, meaning mankind (Raiborn et al, 2003). Prior to the 1950s, only individuals could make philanthropic contributions, since legal restrictions restricted corporations to interfere in social affairs (Smith, 1994). In the 1960s, most of these restrictions were removed and a new term arose; corporate philanthropy (Ricks and Williams, 2005). Many definitions of corporate philanthropy have been presented in the literature (see Appendix 1 for a discussion on the common dominator of these definitions). Corporate philanthropy is “the action when a corporation donates a portion of its resources to a third party to contribute to a social cause” (Ricks and Williams, 2005, 151). It is not an explicit exchange of value between two parties such as cause-related marketing or sponsoring but, rather, a transfer of wealth from one party to another (Godfrey, 2005). In the case of corporate sponsorship, the recipient organization is expected to do something in return, such as displaying the sponsor’s name.

Examples of Corporate philanthropy

• KPMG gave 20,000 employees from 130 offices around the world one day off with pay to volunteer in schools, hospitals, nursing homes, parks and youth centers.

• TNT created a partnership with the UN World Food Program. By defining world hunger as one of the most persistent logistic problems, TNT uses its knowledge of logistics to aid the hungry in the world. • Avon Products recently mobilized its 400,000 independent sales representatives in a high-profile

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2.1.2 A worldwide phenomenon

There are two research institutions that professionally study philanthropy on a continuous basis. These are the Center on Philanthropy (United States), and the Werkgroep Filantropie (the Netherlands). The Center on Philanthropy is an academic subdivision of the University of Indiana and aims to increase the understanding of philanthropy in the United States. The center publishes data and trends about philanthropy through its annual publication; Giving

USA (Giving USA Foundation, 2006). The second research centre that professionally studies philanthropy and provides philanthropic data on a regular basis is established in Amsterdam.

Werkgroep Filantropie, a subdivision of the Vrije Universiteit Amsterdam, studies gifts by individuals, house keepings, funds, and corporations. The center publishes its results in the semiannual publication Geven in Nederland (Schuyt, 2005).

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2.2 Theoretical Development of Corporate Philanthropy

2.2.1 Advocates of the social role of corporations

Corporate social responsibility. CSR has emerged last decades and is fed by the changing

role of businesses within society, and the increasing expectations of society from organizations (Post et al, 2002; Sasse and Trahan, 2007). The continuing globalization process has been of great influence on the emerging of CSR. Globalization has given rise to concerns about power, responsibility, and the role of governments and corporations (Payne, 2006). Political boundaries have become less clear and large corporations have been asked to shoulder responsibilities once left to governments (Matten and Crane, 2005; Post et al, 2002; Sasse and Trahan, 2007). Nowadays, corporations are expected by people in modern societies to assume greater social, ecological, and political responsibilities than 40 years ago. Traditionally, governments were assumed sole responsibility for the improvement of populations’ social circumstances (Leisinger, 2007). However, the new structure of the business environment obliges corporations to take certain responsibilities within society (Jamali and Mirshak, 2006). The term which has been created to frame these social expectations of corporations within society is corporate social responsibility (Schouten and Remmé, 2006).

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Scholars weight philanthropy as the lowest in importance among the four categories of corporate social responsibility (Caroll, 1979, 1991; Wood, 1994; Carroll and Buchholtz, 2000; Choi and Wang, 2007). Corporations should first put their “corporate house” in order by minimizing or avoiding negative externalities of a social, ecological, political, or other kind. If this is done and is part of corporate mind-set, corporate philanthropy gains importance (Leisinger, 2007).

FIGURE 1

The Pyramid of Corporate Social Responsibility

Social responsibilities of corporations. Scholars see corporate philanthropy as a category of corporations’ social responsibility, but why do corporations have social responsibilities beyond making profit? CSR advocates provide arguments for the social role of corporations in society that have their roots in moral and business literature. The debate of moral arguments is long and complex, but there is a general support for some degree of moral social responsibility to be accredited to corporations (Crane and Matten, 2004) (see Appendix 3). The business arguments are better known in the literature as arguments in the context of

enlightened self-interest. Enlightened self-interest describes the awareness of corporations that if they take their social role seriously, they may also increase their financial performance (Crane and Matten, 2004) (see Appendix 3).

Economic Responsibilities Philanthropic Responsibilities Ethical Responsibilities Legal Responsibilities ‘True’ Social Responsibility

Source: Carroll (1991) and Leisinger (2007) ‘can’

‘ought to’

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2.2.2 Opponents of the social role of corporations

Another group that has been influencing the development of corporate philanthropy literature is the group that questions the social role of corporations and sees philanthropy as wasting shareholders money (Friedman, 1970; Shaw and Post, 1993). In 1970 economist Milton Friedman published an article under the provocative title “The social responsibility of

business is to increase its profits” and has since become a classic among those who question

the social role of corporations (Crane and Matten, 2004). Friedman (1970) argues that corporations have a primary responsibility to satisfy the interests of its owners, the shareholders. The primary concern of managers is to make as much money for their shareholders as possible, within the limits of the law and ethical custom (Shaw and Post, 1993). This point of view has become classic in the form the business of business is business, and has developed towards the well-known agency theory (Shaw and Post, 1993). The theory claims that corporations exist to maximize the wealth of their owners, and explains the opposing views of principles (in the case of corporate philanthropy, shareholders) and agents (in the case of corporate philanthropy, executives in charge of philanthropic decisions) (Shaw and Post, 1993). Friedman (1970) argues that corporate philanthropy as a category of CSR is roughly the equivalent of theft. At the very least it amounts to spending someone else’s money to solve social problems; problems that the corporation did not cause and problems that are normally understood to be in the legislative or political domain (Friedman, 1970).

Nevertheless, opponents of the social role of corporations do not dispute the validity of all corporate social actions. Social spending is an appropriate activity as long as it is used as an instrument for maximizing shareholder wealth(Seifert et al, 2003):

Friedman endorses corporate spending on community amenities such as parks and playgrounds that contributes to employee morale or enhances employee loyalty to the firm with the consequence of greater corporate pride, cohesion, and quality of workmanship. In other words, if, within the rational business judgment, the commitment of corporate resources to community projects reflects favorably on the bottom

line, or has the potential to do so, it escapes the condemnation of wastefulness and disloyalty (Shaw and Post, 1993, 747).

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corporations’ bottom line do not fit within the concept of philanthropy, since they are to a large extent synonymous with good management practices (Leisinger, 2007). If corporations recognize that certain social activities contribute to their bottom-line, they are morally obliged to undertake these activities, since this is a task of the management (Clement-Jones, 2005; Murrau, 2005; Leisinger, 2007). CSR opponents accept philanthropic activities that ultimately favor corporations’ bottom-line, but they do not see these activities as a category of corporate social responsibility, but as a business responsibility (Clement-Jones, 2005; Murrau, 2005; Shaw and Post, 1993). At the end, CSR advocates and opponents do not have such a different view towards corporate philanthropy. Only, CSR opponents prefer to call these activities good

management practices instead of corporate philanthropy (Clement-Jones, 2005; Murrau,

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2.3 Strategic Corporate Philanthropy

Corporate philanthropic activities that also benefit corporations’ bottom-line are called

strategic corporate philanthropy (Gan, 2006). After an extensive review of the literature on strategic corporate philanthropy, context-focused philanthropy is introduced as an alternative and further commercialized approach towards corporate philanthropy.

2.3.1 Studies concerning strategic corporate philanthropy

Definition of strategic corporate philanthropy. The literature presents several definitions of strategic corporate philanthropy. The most recognized definition is originally proposed by Saiia et al. (2003). They define strategic corporate philanthropy as the practice of “giving corporate resources to address business community issues that also benefit the firm’s strategic position and, ultimately, it’s bottom-line” (Saiia et al., 2003, 170).

Literature on commercial motives. Strategic philanthropy benefits corporations’ bottom-line, and therefore has one or more commercial motives (Ricks and Williams, 2005). Varadarajan and Menon (1988) suggest that strategic corporate philanthropy can increase sales, enhance corporate image, thwart negative publicity, enhance customer participation, facilitate market entry, and increase trade merchandising activity. Smith (1994) indicates that the practice could increase name recognition among consumers, increase employee productivity, reduce R&D costs, and foster synergy among business units. Ricks and Williams (2005), furthermore, see important commercial motives with regards to attracting frontline talent. Godfrey (2005) summarizes the intangible strategic assets which strategic philanthropy could generate like reputational capital (Fombrun et al, 2000), trust (Frank, 1996; Zucker, 1986), positive action (Neihesiel, 1994) or acquiescence (Jenson, 2002; Jenson and Murphy, 1990) among key regulatory institutions or legislative bodies.

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(Seifert et al., 2003). The results of these studies are mixed. Galaskiewicz (1997) finds a strong positive correlation between firm contributions and corporate financial performance. In this study, financial performance was measured as return on sales, return on assets, and return on equity relative to the firm’s industry averages (Seifert et al. 2003). On the other hand, Griffin and Mahon (1997), who focus on the possible correlation between the size of donations and financial returns, find no correlation between philanthropic generosity and financial performance. Seifert et al. (2003) conduct a study of matched pairs of generous corporations within the same industry and did not find a significant relationship between corporate philanthropy and financial performance (Gan, 2006).

Siegfried et al. (1983) focus on the corporate location where philanthropic decisions are made. They claim that if corporate philanthropy is strategic, philanthropic related decisions will be taken in corporations’ top management. Their results indicate that the corporations recognize the strategic importance of corporate philanthropy, since it was shown that management of company giving is typically carried out in the corporate office. The studies of Navarro (1988) and Boatsman & Gupta (1996) are based on the argument that if corporate philanthropy is strategic, tax rates will not affect the level of giving. Navarro (1988) finds a weak relation between tax rates and the giving rate, but Boatsman and Gupta (1996), find a strong negative relation between corporations’ marginal federal tax rate and absolute giving.

Saiia et al. (2003) apply a research approach that focuses on corporate exposure to media coverage. They claim that if corporate philanthropy is strategic, the amount of philanthropic resources given will fluctuate according to the level of the corporation’s exposure to media coverage. The results present that the amount of philanthropic resources spent is positively associated with corporate exposure to media coverage. In addition, the study finds that corporate giving managers think that their corporations are becoming increasingly strategic in their philanthropic activities (Saiia et al, 2003; Brammer et al, 2006).

Brammer et al. (2006) focus, like Siegfried et al. (1983), on corporations’ organizational structure and the level of the corporations’ philanthropic expenditures. They find that philanthropy is motivated by both strategic and altruistic aspects1. Besides, the study finds, like Saiia et al (2003), that corporate philanthropy is being an increasingly strategic activity (Brammer et al, 2006). Gan (2006) focuses on eternal pressures on corporations such as media attention and lawsuits, and concludes that corporations are both strategic and altruistic in their giving.

1_{Strategic philanthropy can be described as being the opposite of altruistic philanthropy, which means giving}

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Why is corporate philanthropy becoming more strategic? Many scholars indicate that philanthropy is been used strategically by corporations (Siegfried et al, 1983; Navarro, 1988; Galaskiewicz, 1997; Saiia et al, 2003; Brammer et al, 2006; Gan, 2006) and find that corporate philanthropy is an increasingly strategic activity (Saiia et al, 2003; Brammer et al, 2006). However, why is corporate philanthropy becoming more strategic? A well-known explanation described in the literature is that corporations experience increased pressure for short-term profits on the one hand, and for taking more social responsibility on the other hand. This dilemma has led many companies to seek to be more strategic in their philanthropy; and the ability to tie corporate giving to strategic objectives has grown in importance (Ricks and Williams, 2005; Himmelstein, 1997; Buchholtz et al., 1999; Corcoran, 1987; Logdon et al, 1990; Marx, 1994; Smith, 1996; Werbel and Wortman, 2000; Saiia et al, 2003).The increased short-term focus of investors is a result of changing environmental conditions, such as downsizing, decreased domestic profit margins, and Wall Street’s short-term focus (Mescon and Tilson, 1987; Stendardi, 1992). This increased short-term focus has created an evolutionary shift from traditional corporate philanthropy to a more strategic form of philanthropy (Ricks and Williams, 2005).

2.3.2 Current strategic philanthropy is not strategic at all

In 2002 Porter and Kramer published an article, The Competitive Advantage of Corporate

Philanthropy, in which they provoke scholars’ and managers’ undoubted assumption that philanthropic activities have become more strategic. Porter and Kramer (2002) do agree that stakeholder pressures enforce corporations to adopt a more strategically vision towards philanthropy. However, what most organizations describe as strategic philanthropy is not strategic at all (Porter and Kramer, 2002). The desired benefits of what most corporations presently call strategic philanthropy are enhanced goodwill and employee engagement, instead of an improvement in long-term economic prospects:

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Porter and Kramer (2002) emphasize that corporations may gain goodwill and enhance employee engagement through philanthropy, but these motivations “alone are not sufficient” (Porter and Kramer, 2002, 67). They propose an alternative approach towards philanthropy;

context-focused philanthropy. This approach is “a more truly strategic way to think about philanthropy” (58) since it aims to improve corporations’ long-term competitive potential and, therefore, long-term business prospects (Porter and Kramer, 2002).

2.3.3 Context-focused philanthropy

Corporations that apply context-focused philanthropy spend their philanthropic resources to tackle social problems that have a negative impact on their competitive context in strategic important locations (Porter and Kramer, 2002). A corporation’s competitive context is the quality of the business environment in the locations where it operates. “Competitiveness today depends on the productivity with which companies can use labor, capital, and natural resources to produce high-quality goods and services” (Porter and Kramer, 2002, 59). The quality of the local business environment influences corporations’ potential productivity that determines their ability to compete. The educational level of the local workforce, for example, substantially affects a company’s potential productivity and, thus, its competitiveness (Porter and Kramer, 2002).

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In The Competitive Advantage of Nations Porter refers to business environment of entire nations, but in The Competitive Advantage of Corporate Philanthropy he redefines his model by referring to corporations’ local business environment. Weakness in any part of the four interrelated2 elements of the local business environment can erode the competitiveness of a region as a business location (Porter and Kramer, 2002). By carefully analyzing the elements of the local business environment, a company can identify the areas of overlap between social and economic value that will most enhance its own competitiveness (Porter and Kramer, 2002).

Corporations benefit because their charitable efforts improve their competitive context (the quality of the long-term business environment in the locations where they operate). Society benefits because the corporation's assets and expertise are used to address important social problems. Social and economic goals are integrally connected, not in conflict, so that corporate philanthropy and stakeholder interests converge (HBS, 2003,1).

Context-focused philanthropy is promising for corporations and society (Porter and Kramer, 2002; HBS, 2003; Crane and Matten, 2004;Leisinger, 2007). “Corporations benefit because their charitable efforts improve their competitive context” (HBS, 2003, 1). Besides, they are more confident about the value of their philanthropy and more committed to it (Porter and Kramer, 2002). They are able to communicate their philanthropic strategies more effectively to the communities in which they operate (Porter and Kramer, 2002). Their choices of areas to support are clearly understandable and do not seem unpredictable and idiosyncratic (Porter and Kramer, 2002). Society benefits because addressing context enables corporations not only to give money but also to leverage its capabilities and relationships in support of charitable causes. That produces social benefits far exceeding those provided by individual donors, foundations, or even governments (Griffiths, 1992, Porter and Kramer, 2002; Meijer et al., 2006).

Cisco, like several other American MNCs analyzed by Porter and Kramer (2002), applies focused philanthropy (see Sidebar). Although this example shows how the context-focused approach can be put into practice, Porter and Kramer (2002) do not clearly describe when corporations do or do not apply context-focused philanthropy. Nevertheless, their article relinquishes components of context-focused philanthropy corporations should meet to facilitate a context-focused approach towards philanthropy. These components are; motives,

2_{These elements are interrelated because the effect of one determinant is contingent on the state of others}

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management and research of philanthropic related activities, and are discussed into detail in paragraph 3.33.

3_{In paragraph 3.3 these components of context-focused philanthropy are used to develop propositions that}

answer the second sub-research questions. The research questions are introduced next paragraph.

Cisco

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FIGURE 2

The Four Elements of Competitive Context

Context for Strategy and Rivalry Factor Conditions Demand Conditions Related and Supporting Industries

• Presence of local policies and incentives, such as intellectual property protection, that encourage investment and sustained upgrading

• Presence of open and vigorous local competition

• Presence of capable, locally based suppliers and companies in related fields

• Presence of clusters instead of isolated industries • Presence of sophisticated and demanding local customers • Presence of local demand in specialized segments that can be served nationally and globally • Presence of customer needs that anticipate those elsewhere • Availability of high quality, specialized inputs: - human resources - capital resources - physical infrastructure - administrative infrastructure - information infrastructure - scientific and technological infrastructure - natural resources

Source: Porter and Kramer (2002)

Factor Conditions. Achieving high levels of productivity depends on the presence of trained workers, high-quality scientific and technological institutions, adequate physical infrastructure, transparent and efficient administrative processes (such as company registration or permit requirements), and available natural resources (Porter and Kramer, 2002, 61).

Demand Conditions. Demand conditions in a nation or region include the size of the local market, the appropriateness of product standards, and the sophistication of local customers. Sophisticated local customers enhance the region’s competitiveness by providing companies with insight into emerging customer needs and applying pressure for innovation. (…). Apple Computers has long donated computers to schools to introduce its products to young people. This provides a clear social benefit to the schools while expanding Apple’s potential market and turning students and teachers into more sophisticated purchasers (Porter and Kramer, 2002, 61).

Context for Strategy and Rivalry. The rules, incentives, and norms governing competition in a nation or region have a fundamental influence on productivity. Policies that encourage investment, protect intellectual property, open local markets to trade, break up or prevent the formation of cartels and monopolies, and reduce corruption make a location a more attractive place to do business. Philanthropy can have a strong influence on creating a more productive and transparent environment for competition (Porter and Kramer, 2002, 62).

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2.4 Main Research Question and Sub-Research Questions

2.4.1 Main research question

Porter and Kramer (2002) argue that despite this promising new approach towards philanthropy, only a few corporations have begun to use context-focused philanthropy. “While it is true that a growing number of companies aim to make their giving strategic, few have connected giving to areas that improve their long-term competitive potential” (Porter and Kramer, 2002, 67). This statement is not grounded by Porter and Kramer (2002) or other academics. Of the limited number of scholars that refer to Porter and Kramer’s article, none of them commented on the competitive context model and no attempt has been made to explain why so little corporations apply this new approach (Crane and Matten, 2004; Ricks and Williams, 2005; Godfrey, 2005; Leisinger 2007; Sasse and Trahan, 2007). The causes of the limited number of corporations that apply context-focused philanthropy should be studied since this further develops and might expand the use of this promising new approach towards philanthropy, so that corporations can improve their long-term economic prospects and, simultaneously, make an extensive commitment to bettering society (Porter and Kramer, 2002).

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focused on philanthropic activities of Dutch corporations (Meijer et al, 2006). Together, the prior statements lead to the following main research question:

Do Dutch MNCs apply context-focused philanthropy and what are the stimuli and restraints for Dutch MNCs to apply context-focused philanthropy?

2.4.2 Sub-research questions

The main research question consists of two sub-research questions. To answer these questions the MNCs’ current philanthropic activities need to be studied in depth. These activities are found in corporations’ CSR reports. However, corporations do not necessarily use the term ‘philanthropy’ or ‘strategic philanthropy’ when discussing philanthropic related activities in their CSR reports. Besides, no study describes where philanthropic activities are positioned within corporations’ CSR policies (Saiia et al, 2003; Brammer et al, 2006). Subsequently, sub-research question 1 analyzes where philanthropic related activities are concentrated within MNCs’ CSR policies.

Sub-research question 2 examines Porter and Kramer’s statement that only a limited number of corporations have begun to use context-focused philanthropy (Porter and Kramer, 2002), by studying if Dutch MNCs apply this approach.

Sub-research question 3 studies the causes of the potential limited number of corporations that apply context-focused philanthropy and the opportunities to further expand the approach, by analyzing the stimuli and restraints for Dutch MNCs to apply the approach. These findings will be related to national business system characteristics to analyze the context-focused approach in a international setting.

Sub-research questions:

1. Where are philanthropic related activities positioned within Dutch MNCs’ CSR

policies?

2. Do Dutch MNCs apply context-focused philanthropy?

3. What are the stimuli or restraints for Dutch MNCs to apply context-focused

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3. Methodology

This chapter describes how the study finds answers to the questions proposed, and justifies methodological choices made. First, the chapter provides information on the chosen research strategy. Then, the data collection methods and analyzing methods are described.

3.1 Research Method

3.1.1 Case study

The researcher has chosen the most appropriate research strategy to answer the research questions, looking at specific characteristics of the phenomenon and at advantages and disadvantages of the available research strategies (Yin, 2003). The case study research strategy has been chosen since: 1) Many unexpected results might be found. A case study is especially useful when not much is known concerning the phenomenon under study, since case studies provide the opportunity to modify the research design when important influences on the phenomenon are discovered during the data collection (Yin, 2003). 2) A case study is the preferred research strategy in examining events (Yin, 2003). Philanthropy is an event since it is a continual process; starting with research and decision-making, and ending with executing and monitoring (Seifert et al. 2003). 3) The case study’s unique strength is its ability to deal with a large variety of evidence like documents, artifacts, interviews, and observations (Yin, 2003). This study relies on multiple sources of evidence (see Paragraph 3.2).

3.1.2 Number of cases

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multiple-case study is also preferred since single-multiple-case studies are usually criticized because of uniqueness or artifactual conditions surrounding the case, like special access to a key informant (Yin, 2003).

Research methods literature outline the logic that the more cases the more robust the studies conclusions. However, in real-life the actual choice for the amount of cases is often determined by the researcher’ financial and time resources (e.g., Swanborn, 1996). Taking this into account, this study selects four cases.

3.1.3 Case selection

When analyzing the definitions of corporate philanthropy, Dutch MNCs, and context-focused philanthropy, many cases qualify for potential selection. Fortunately, the literature on research methods describes helpful case selection criteria (e.g., Yin, 2003; Swanborn, 1996). It is common that researchers select cases on simple criteria, like closeness to the university, interest and complicity, and accidental contacts and relations of the researcher. This kind of selection is known as ‘convenience selection’ (Swanborn, 1996). Concerning this study the author does not have accidental contacts or relations within Dutch MNCs, and the geographical location within the Netherlands is irrelevant for the case selection. Next to ‘convenience selection’, researchers select cases on the characteristics of the cases (content selection) (Swanborn, 1996). This study applies two ‘content selection’ criteria. First, the four elements of the business environment that determine potential productivity could, according to Porter and Kramer (2002), exclusively be used for manufacturing companies. Consequently, this study selects Dutch manufacturing MNCs. Second, corporations witness external pressures from stakeholders to apply strategic philanthropy. The intensity of these pressures may differ along industry types (Brammer and Millington, 2006; Seifert et al., 2003). Therefore, in an effort to make the study more representative the thesis controls for this industry bias. When analyzing the AEX index4, 11 corporations are manufacturing funds. The greater part (eight) of these corporations belongs to either the food and stimulants industry, the chemical industry, or the electronics industry.

The selection process of the cases is based on ‘content selection’ criteria that ask for the selection of corporations from different manufacturing industries. The selected Dutch MNCs are Unilever, Heineken, and Numico (food and stimulant industry); Shell, DSM, and Akzo Nobel (chemical industry); Philips and TomTom (electronics industry). The manager that holds responsibility for the philanthropic related activities was contacted by telephone to ask

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to cooperate with an in depth interview of one hour. Then the study was introduced by sending a letter by email (Appendix 4). At the end, only Unilever, Heineken, Shell and DSM wanted to cooperate with the study. Since none of the pre-selected MNCs out of the electronics industry wanted to cooperate, the study only partly controls for a potential industry bias.

3.1.4 Description of cases and interviewees

Unilever. Unilever, formed of Anglo-Dutch parentage, owns many of the world’s

consumer product brands in foods, beverages, cleaning agents and personal care products. Unilever employs around 189 thousand people and had revenue of almost €40 billion in 2006. Over half of its sales are generated by its twelve €1 billion brands: Knorr, Flora/Becel, Hellmann's, Lipton, Omo, Surf, Lux, Dove, Blue Band/Rama, Sunsilk, Rexona and Cornetto. Unilever has two parent companies: Unilever NV in Rotterdam, and Unilever PLC in London. Unilever was created in 1930 by the merger of British soap maker Lever Brothers and Dutch margarine producer Margarine Unie. A logical merger as palm oil was a major raw material for both margarines and soaps and could be imported more efficiently in larger quantities. Unilever’s shares are listed on Euronext Amsterdam, the London Stock Exchange, and the New York Stock Exchange. Currently, the corporation has 317 manufacturing sites across six continents. Three regional teams are responsible for managing Unilever’s business in the regions, and for market operations; the Europe region, the Americas region, and the Asia Africa region. Table 1 (Appendix 5) presents the company’s key figures concerning size and financial performance. To make sure the figures are understood in the right context, it has been decided to provide an overview for the last three years. The interviewee on behalf of Unilever is X - X.

Heineken. Heineken is a Dutch brewing company that owns over 115 breweries in more

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listed at Euronext Amsterdam. Geographically, Heineken organizes the company into five territories which are then divided into regional operations. Most of its brands are well established in profitable, mature markets, while the popularity of its beers is growing strongly in emerging beer markets such, as Russia, China and Latin America. Table 2 (Appendix 5) presents the company’s key figures concerning size and financial performance. The interviewee on behalf of Heineken is X, who holds the function of X.

Shell. Royal Dutch Shell is an oil company of British and Dutch origins. It is one of the

largest private sector energy corporations in the world. Shell's revenues of $318.8 billion in 2006 made it the third-largest corporation in the world by revenues behind Exxon Mobil and Wal-Mart, employs 108,000 people worldwide, and operates in 140 countries. The company's main business is the exploration, production, processing, transportation and marketing of hydrocarbons (oil and gas). Shell also has a significant petrochemicals business (Shell Chemicals), and an embryonic renewable energy sector developing wind, hydrogen and solar power opportunities. Its five core businesses are divided into upstream and downstream activities. Shell’s upstream businesses consist of the business units Exploration and Production, and Gas and Power. Shell’s downstream businesses consist of the business units Oil Products and Chemicals. Its fifth business unit is Other Industry Segments and Corporate. The Royal Dutch/Shell Group was created in 1907 when the Royal Dutch Petroleum Company (legal name in Dutch, N.V. Koninklijke Nederlandsche Petroleum Maatschappij) and the ‘Shell’ Transport and Trading Company Ltd of the United Kingdom merged their operations. This move was largely driven by the need to compete globally with the then monopolistic American oil company, Standard Oil. Nowadays, Shell is the fourth largest oil company, and its shares are listed on Euronext Amsterdam and the London Stock Exchange. Table 3 (Appendix 5) presents the company’s key figures concerning size and financial performance. The interviewee on behalf of Shell is X, who holds the function of X.

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company focused not only on mining, but also on the chemical sector. Due to the closure of all the mines and the unemployment that followed, the Dutch government stimulated the chemical plants, to provide jobs for the miners. In 1989, DSM was privatized and today its shares are listed on Euronext Amsterdam. The company holds plants in Europe, Asia, the Americas, Africa and Australia. Table 4 (Appendix 5) presents the company’s key figures concerning size and financial performance. The interviewee on behalf of DSM is X, who holds the function of X.

3.2 Data Collection Methods

A major strength of a case study is the fact that it provides the opportunity to use many different sources of evidence. “Any finding or conclusion in a case study is likely to be much more convincing and accurate if it is based on several different sources of information, following a corroboratory mode” (Yin, 2003, 98). In this study, the data collection methods interviewing and analyzing documents are applied.

3.2.1 Interviews

Interviews are described by Yin (2003) as one of the most important sources of case study information. The interviews in case studies are guided conversations rather than structured queries. Although it is expected that the researcher will be pursuing a consistent line inquiry, the “…actual stream of questions in a case study interview is likely to be fluid rather than rigid” (Yin, 2003, 89). Yin (2003) state that during the interview process the researcher has two jobs. First, the researcher has to follow the line of inquiry, as reflected by the studies propositions and research questions. Second, the researcher has to ask its actual (conversational) questions in an unbiased manner:

Thus, case study interviews require the researcher to operate on two levels at the same time: satisfying the needs of the line of inquiry while simultaneously putting forth ‘friendly’ and ‘non-threatening’ questions in the open-ended interviews. (…). Most commonly, case study interviews are of an open-ended nature, in which you can ask key respondents about the facts of a matter, as well as, their opinions about events (Yin, 2003, 90).

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the knowledge of the researcher about the topic is limited, questions can only be prepared until a certain limit. In addition, the interviewees may also help to identify other relevant sources of evidence. “However, the interviews should always be considered verbal reports only. As such, they are subject to the common problems of bias, poor recall, and poor or inaccurate articulation. Therefore, a reasonable approach is to corroborate interview data with information from other sources” (Yin, 2003, 92). Appendix 6 includes the interview scheme that lists the guiding interview questions used.

3.2.2 Documentations

As mentioned in the former, interview evidence should be combined with evidence from other data collection methods, and documentation appears to be an appropriate method for this. The most important use of documents, in case studies, is to corroborate and augment evidence from other sources (Yin, 2003). “Because of their overall value, documents play an explicit role in any data collection in doing case studies. However, at the same time, many people have been critical of the potential over-reliance on documents in case study research” (Yin, 2003, 87). It is important that the researcher follows certain rules when using evidence from documentation. The researcher, for example, should always keep the background of the documents’ author in mind, since this might create bias. In this study, documents have been used to prepare for the interviews and to compare them with information from the interviewees(CSR reports and Annual Reports).

3.3 Analyzing Case Study Evidence

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Sub-research question 1. The study analyzes the CSR reports of the MNCs to understand in which CSR policy items philanthropic related activities concentrate. Then, the in-depth interviews further position philanthropy within the MNCs’ CSR concept.

Sub-research question 2. It has been chosen not to ask the interviewees straight if their corporations apply context-focused philanthropy, in an effort to ask the conversational questions in an unbiased manner (Yin, 2003). If the term ‘context-focused philanthropy’ is mentioned, the interviewees might think that this is the preferred approach of the interviewer. Besides, mentioning the term can put the interviewees to shame if the approach is unfamiliar to them.

Porter and Kramer (2002) do not clearly describe when corporations do or do not apply context-focused philanthropy,5 but they include components of the approach corporations have to meet to facilitate a context-focused approach: 1) the motives, 2) the management and 3) the research of philanthropic related activities. To answer the second sub-research question the study relies on propositions that are developed around these three themes. Propositions help to stay focused on certain data, to ignore irrelevant data, and to further structure the case study (Yin, 2003).

1) Motivations of philanthropic related activities. The desired benefits of what most corporations presently call strategic philanthropy are enhanced goodwill and employee

engagement (Porter and Kramer, 2002). Corporations may gain goodwill and enhance

employee engagement through philanthropy, however “…these motivations alone are not sufficient” (Porter and Kramer, 2002, 67). Consequently, to apply context-focused philanthropy, corporate philanthropy should, at least partly, be motivated to enhance potential productivity by positively influencing one or more of the four interrelated elements of their competitive context (Porter and Kramer, 2002):

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Proposition 1. If Dutch MNCs apply context-focused philanthropy, their philanthropic related activities are, at least partly, motivated to enhance potential productivity by positively influencing one or more of the four interrelated elements of their business environment.

2) Management of philanthropic related activities.

Rather than delegating philanthropy entirely to a public relations department or the staff of a corporate foundation, the CEO must lead the entire management team through a disciplined process to identify and implement a corporate giving strategy focused on improving context. Business units, in particular, must play central roles in identifying areas for contextual investments (Porter and Kramer, 2002, 67).

Strategy formulation is pre-eminently a task of the CEO (Porter and Kramer, 2002; Mintzberg, 1990; Grayson, 1987; Noorderhaven, 1995) and activities that are central to corporate strategy tend to be subject to the direct management of the CEO (Milgrom and Roberts, 1992; Donaldson, 2001). Since context-focused philanthropy is a ‘truly’ strategic corporate activity (Porter and Kramer, 2002), the development process and implementation process of philanthropic strategy should be led by the CEO. Indeed, the CEO can impossibly be involved in all decisions concerning philanthropy, since he or she would get ‘snowed under’ (Noorderhaven, 1995, 64). Therefore, decentralization of more operational related issues concerning philanthropy to lower management is expected. MNCs consist of several local business units that are located within society where philanthropic resources are spent (Werbel and Wortman, 2000). These local business units are the best party to detect local social problems and local business opportunities, and are the preferred source of information to identify areas for contextual investments within in a context-focused philanthropy approach (Porter and Kramer, 2002):

Proposition 2. In Dutch MNCs where the management facilitates context-focused

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3) Research of philanthropic related activities. Corporations have to undertake extensive and disciplined research to apply a context-focused approach (Porter and Kramer, 2002). Managers have to decide on the corporation’s important strategic locations. Besides, managers have to analyze the elements of competitive context in these locations to identify the areas of overlap between social and economic value that will most enhance the corporation’s competitiveness (Porter and Kramer, 2002). In addition, managers have to rigorously track and evaluate results (Choi and Wang, 2007). “Monitoring achievements is essential to continually improving the philanthropic strategy and its implementations” (Porter and Kramer, 2002, 68):

Proposition 3. If Dutch MNCs apply context-focused philanthropy, they undertake research to identify important strategic locations, to analyze the elements of competitive context, and to monitor their philanthropic achievements.

Sub-research question 3. Case study research is especially useful when not much is known concerning the phenomenon under study, since case studies provide the opportunity to modify the research design when important influences on the phenomenon are discovered during the data collection (Yin, 2003). Especially this sub-research question relies on the opinions and experience of the interviewees. Propositions are not used since they would limit the outcomes of this sub-research question (Yin, 2003).

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4. Results

4.1 Where are philanthropic related activities positioned within Dutch

MNCs’ CSR policies?

4.1.1 Business principles and CSR policy

When analyzing the position of philanthropy in corporations’ CSR policy, one needs first to understand what CSR involves for MNCs (Crane and Matten, 2003). A good starting point to understand the importance MNCs assign to CSR is to analyze their business principles. Business principles are operational standards and are seen as the most important set of internal rules and regulations. They describe the values of the corporation and guides behavior in all aspects of doing business (Crane and Matten, 2003). All four MNCs include CSR related values in their business principles. This implies that CSR is interwoven through the MNCs’ whole corporate strategy (national and international):

Because CSR values are interwoven through DSM’s whole corporate strategy, it is difficult to analyze it separately from other corporate issues. (…). Everything we do is social responsible. (…). And philanthropy is a consequence of the corporate strategy decided on (X, DSM).6

To translate these CSR related business principles into feasible instructions, MNCs create a CSR policy. This policy is published annually in reports like Sustainable Development

Report (Unilever) or Sustainability Report (Shell, DSM, and Heineken). CSR policies differ

along corporations and consist of different items that depend on the points of interest of the corporation involved. Corporations could give interpretation to these CSR policy items in several ways of which one is philanthropy:

Shell has business principles that describe what we do, why we do it, and what our responsibilities are towards our stakeholders, like our customers, employees, in fact everybody in society. One of our principles is sustainable development, so we always try to be as sustainable as possible. (…). Sustainable development includes many activities of which one is to do something for local communities. One of the means Shell uses

6_{Bij DSM zit maatschappelijk verantwoord ondernemen dus zo verweven in de bedrijfsstrategie dat het heel}

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to give interpretation to sustainable development is philanthropy, which we call ‘social investments’ (X, Shell).7

To further clarify that CSR policy items differ along corporations and that philanthropy is just one way corporations may apply to give interpretation to their CSR policy items, the study includes two examples. 1) One of Unilever’s CSR policy items is to contribute to the structural weight gain problem in Western societies. Therefore, it undertakes research to reduce levels of trans fat, saturated fat, salt, and sugar in its products. In this case Unilever contributes to a social cause not by making use of philanthropy, since no corporate resources are transferred to third parties (Unilever Sustainable Development Report, 2006). 2) One of Heineken’s CSR policy items is to reduce irresponsible drinking since it recognizes the harm this may have on the individual and to society. In this context, it developed the Enjoy

Heineken Responsibly Program in which Heineken’s employees inform and educate

consumers about the effects of alcohol. In this case, the corporation contributes to a social cause by means of philanthropy (donating corporate man-hours to society) (Heineken Sustainability Report, 2006).

4.1.2 Position of philanthropic related activities and a comprehensive summary

DSM

Position of philanthropic related activities. DSM undertakes activities that can be described as philanthropic related, but that DSM does not use the terms ‘philanthropy’ and ‘strategic philanthropy’. The term ‘philanthropy’ indicates that the corporation gives resources away with no strings attached, which DSM does not do. DSM only contributes to social causes that bring along economical benefits as well. Although DSM undertakes activities that can be described as philanthropic related, DSM does not use an alternative term to refer to these activities. In addition, philanthropic related activities are concentrated in the CSR policy item Community Programs (X, DSM).

Comprehensive summary of philanthropic related activities. In 2006, DSM spent

approximately €1.5 million on these activities, equivalent to 0.2 percent of its pre-tax profit.

7_{Shell heeft business principles waarin staat wat we doen, waarom we het doen, en wat onze verplichtingen en}

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The activities that principally target local societies fall under the umbrella project The Torch.

The Torch initiates and carries local based community programs, and organizes yearly 30 projects at different plants that benefits local communities. One example is the Horse Therapy

for Children Program that provides a therapeutic alternative to mentally ill children living near DSM’s production plant in Spain. Other philanthropic related activities have a more multi-domestic focus, such as DSM’s partnership with the UN World Food Program and the

Sight and Life Program. The UN World Food Program is the largest provider of food aid in

the world feeding and nourishing an average of 100 million people in over 80 countries each year. DSM provides this program with expertise, high nutrient products, as well as, financial assistance. The Sight and Life Program focuses on the elimination of malnutrition.8 Malnutrition reduces people ability to achieve their full intellectual and physical potential. In 2006, the program donated micronutrient premix to the UN World Food Program to produce over 5,000 metric tons of fortified biscuits (X, DSM; DSM Sustainability Report, 2006).

Heineken

Position of philanthropic related activities. Heineken does not use the term ‘philanthropy’. Nevertheless, Heineken undertakes activities that could be described as philanthropic related. Philanthropy implies giving away resources without self-interest, which is in contrast with the responsibility corporations have towards their investors. Investors entrust financial resources to Heineken with the expectation to earn a certain interest. If shareholders would have preferred to gain ‘good’ feelings they should have made donations to the World Wildlife Fund or War Child (X, Heineken). Therefore, Heineken has to spend money in this context, making donations that contribute to its self-interest:

We see philanthropic activities as a mean to support community projects that, in general, do not relate to our core business, like a local hospital or school. (…). However, there are always certain business interests to undertake these activities (X, Heineken).9

Although this vision towards philanthropy strongly correspondent with the definition of ‘strategic philanthropy’, Heineken prefers to call these activities ‘non-commercial

8_{Having sufficient caloric intake, but lacking certain key nutrients.}

9_{Filantropie zien wij echt als het ondersteunen van bepaalde gemeenschapsprojecten. Die doorgaans ook buiten}

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sponsorships’ that are concentrated in its CSR policy item Corporate Citizenship (X, Heineken; Heineken Sustainability Report, 2006).

Comprehensive summary of philanthropic related activities. In 2006, Heineken spent approximately €6 million on these activities, equivalent to 0.4 percent of pre-tax profit. All Heineken’s philanthropic related contributions have a local society focus. Besides, Heineken does not maintain partnerships with international operating NGOs. The greatest part of its donations is related to health issues, since Heineken believes that all its employees and their dependants should have access to basic medical care. In regions where the system is not able to provide adequate health care systems, Heineken operates its own clinics. In 2006, it operated clinics in 15 different locations providing access to adequate basic healthcare to approximately 30,000 beneficiaries. In addition, Heineken provide free HIV/AIDS tests for all its employees and their dependants.10 Another example of Heineken’s philanthropic activities is its Selling Beer Safely Program, which improves health and safety conditions of female beer promoters in Cambodia. The program provides three-day training workshops and one-day refresher courses, during which female beer promoters discuss reproductive health issues, the difficulties of dealing with customers, how resist pressure to drink alcohol, and other health and safety topics (X, Heineken; Heineken Sustainability Report, 2006). A final example of Heineken’s social contributions is its initiative to build a sidewalk along a dangerous road:

Heineken owns a brewery in Suriname that is situated near a road where also a few schools are located. Our trucks use this road to transport goods. However, in the mornings and afternoons many children use this road as well. These children had to walk on the road since there was no sidewalk, which caused dangerous situations. This Surinam brewery decided to give money to a local contractor to build 400 meters of sidewalk for these children’s’ safety (X, Heineken).11

10_{At present, 9,888 people are voluntarily tested for HIV/AIDS, with 365 testing seropositive. Of these, 230 are}

currently receiving HIV therapy paid by Heineken, while the remaining 135 are not yet in a phase of the decease during which treatment would improve their well-being.

11_{Heineken heeft een brouwerij in Suriname en die ligt aan een weg waar inmiddels ook een paar scholen liggen.}

The Context-Focused Approach of Corporate Philanthropy; a case study of Dutch MNCs

The Context-Focused Approach of Corporate

Philanthropy; a case study of Dutch MNCs

The Context-Focused Approach of Corporate

Philanthropy; a case study of Dutch MNCs

Amsterdam, April 24

, 2008

Master Thesis

International Business and Management

Author:

Supervisors University of Groningen:

Preface

Executive Summary

Table of Contents

1. Introduction

2. Literature Review and Research Questions

2.1 Corporate Philanthropy

2.2 Theoretical Development of Corporate Philanthropy

2.3 Strategic Corporate Philanthropy

2.4 Main Research Question and Sub-Research Questions

3. Methodology

3.1 Research Method

3.2 Data Collection Methods

3.3 Analyzing Case Study Evidence

4. Results

4.1 Where are philanthropic related activities positioned within Dutch

MNCs’ CSR policies?