Finance, Business & Investing Articles

A Model for Giving The Effect of Corporate Charity on Employees

Part 2

Ashforth and Mael (1989) discuss how significant the prestige of a group can be to
an employee’s social identification to that group. They argue that social identification
(perceptions of oneness with group) depends on categorisation of individuals, the distinctiveness
and prestige of the group, and on the salience of out-groups. Further, they
argue that social identification leads to activities that support this identity through support
for the institutions that embody the identity and activities that are in keeping with
it.

These two factors can be combined to lend support to the ideas that: (i) an organisation
can adjust its identity through non-core charitable activities; and (ii) there is reason
to believe that a more charitable organisational identity tends to lead to both higher
employee identification with that organisation and also to employee actions that reinforce
the organisation and one’s status within it. These findings lend support for H1.
People will tend to identify with an organisation that makes them look positive and
charitable, and a firm that supports an attractive charity is linked to that positive cause.
Identity theory strongly supports the idea that people tend to form ‘in-groups’ and ‘outgroups’
based at least partly on social benefit calculations. Thus the more positive the
identity of the firm, the more likely that employees will choose to identify with it and
subsequently will choose to support the institution.

Importantly, Moorman and Blakely (1995) have found that collectivistic values and
norms serve as important contributors to the performance of citizenship behaviours.
Thus, individuals who see their actions as upholding the good of the group are more
likely to contribute in extra role helping behaviour. People who identify with a firm are
more likely to promote the firm’s collective self-interest. They are also more likely to
undertake actions that are in keeping with this identity, according to Ashforth and Mael
(1989). In this case, actions in keeping with a charitable identity would be pro-social or
OCB behaviour. These findings combined with Moorman and Blakely’s findings that collective
efforts promote OCB lend support for H2.

Individuals who identify with an organisation as a whole and see the organisation as
upholding positive principles are very likely to also see themselves, through helping to
promote organisational efficiency and well-being, to be indirectly upholding these principles.
Therefore, employee identification with a firm tends to increase employee OCB,
as seen in Figure 1. Lastly, in Hornstein et al.’s (1975; Holloway et al. 1977) study, when
subjects read a newscast that described positive human actions or ‘good’ aspects about
human nature, they were more likely to co-operate than when they read about ‘bad’
aspects of human nature.

Figure 1 a partial model; arrows are intended to show that one factor significantly
‘affects’ the next

The firm/cause fit

As I have already indicated, not all charities are created equal for any given firm. There
is a moderator between firm charity and firm identity in the model above in the form
of a firm/cause fit criterion. Above we have discussed how a firm’s giving helps affect
their identity. While giving to a charity not perceived to be related to the company’s core
mission or product may have some positive effect on the identity of the firm, perhaps
making it look generous or kind, nevertheless it will have little to do with clarifying the
firm’s mission or giving the firm’s product a positive gloss. A firm would, there is reason
to believe, maximise the above-discussed internal instrumental effect of charitable
giving on employees if it were to align the giving to the product of the firm.
A large US margarine company, for example, has recently launched a public service
campaign about healthy living, including heart attacks (these ads bear the corporate
logo). Not only does this have positive external effects, reminding customers that its
margarine has less cholesterol than butter, but it also has the internal effect of defining
the firm’s mission and aligning the firm’s product behind the health cause. The company
was saying clearly that it believed in and stood behind healthy living, both in its
giving and in its product.

Coca-Cola often places itself behind patriotically ‘American’ events and causes, imbuing
the company with an all-American aura. This alignment need not be about image
or profit. Netscape might similarly align itself with ‘free flows of information’ or donate
money to free-speech causes in order to define what its sees as its role in the economy—
facilitating free information flows and an anti-establishment (Microsoft’s alleged hegemony)
attitude. Thus, when the giving is aligned to the purpose or product of the firm
(firm fit), any positive effects of giving on employees are fully realised. The exception to
this fit criterion is if the cause is seen as self-serving or non-genuine (say Microsoft giving
to antitrust causes) since this is not perceived as charity, or, worse, as antisocial or
false charity.

Given that a company has appropriately chosen a charity that links to its product or
its role in the economy, that choice may affect employees differently depending on the degree to
which they see themselves having an impact on the product. On the one hand
this may mean that those closest to the product and customer will be especially affected;
on the other hand it may mean that those higher up who have a sense of control will be
affected. Both of these groups have a highly intense sense of impact on the product and
its effects and so should be most affected by a defining of the product mission and place
in the world. This role-type differentiation is a mediator between firm identity and firm
identification, as seen in Figure 2. Thus:
H4: The impact of a firm’s charitable behaviour on the firm identity will be moderated
by how close the perceived firm/cause fit is in terms of either firm role or
firm product.

Figure 2 a partial model: firm/cause fit is a moderator between firm charity and firm
identity

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