The Community and the Corporation

2. Chapter 17 The Community and the Corporation The Business-Community Relationship Community Relations Corporate Giving Corporate Giving in a Strategic Context Building Collaborative Partnerships

3. Introduction • Community • Refers to a company’s area of local business influence. • Traditionally, the term community refers to a geographical area but today, it is also used to refer to a range of groups that are affected by the organization’s action.

4. Figure 17.1 The firm and its communities Site community Geographic location of a company’s operations, offices, or assets Fence-line community Immediate neighbours Cyber communities People who use the Internet to learn about the company Communities of interest Groups that share a common interest with the company Employee community People who work near the company’s facilities

5. Civic Engagement • Refers to the active involvement of businesses in changing and improving communities. • It is a major way in which companies carry out their corporate citizenship mission. • Corporate citizenship refers to businesses acting as citizens of the society by behaving responsibly toward all their stakeholders.

6. Civic Engagement • Reasons for community involvement: • To act in a socially responsible way. By doing so, the company can: a. Enhance its reputation & ability to act quickly to changing stakeholder demands; b. Avoid or correct problems cause by their operations (basic duty that comes with their power and influence); c. Win the loyalty of their employees and customers; and d. Avoid government regulations.

7. Civic Engagement • 2. To win local support for business activity (license to operate). • Communities do not have to accept a business. • They can reject a business if the presence of the company will create too much traffic, pollution or negative activities. • Communities can exercise their voice in determining whether a company will or will not be welcomed (e.g. through political power). • Businesses must earn its license to operate (or the right to do business) from society. 3

8. Civic Engagement 3. Helps to build social capital i.e. the norms and networks that enable collective action. - Some other definitions of social capital are: Social capital refers to connections among individuals – social networks and the norms of reciprocity and trustworthiness that arise from them. (Putnam 2000: 19) Social capital consists of the stock of active connections among people: the trust, mutual understanding, and shared values and behaviors that bind the members of human networks and communities and make cooperative action possible. (Cohen and Prusak 2001: 4) - The concept of social capital contends that building or rebuilding community and trust requires face-to-face encounters. (Beem 1999: 20)

9. Civic Engagement 3. Helps to build social capital i.e. the norms and networks that enable collective action. • When companies work to address community problems, their actions help to build social capital. • High social capital can enhance a community’s quality of life.

10. Corporate involvement in the community • Economic development • Business leaders and their companies can be involved in local or regional economic development when they bring new businesses into an area. • Crime abatement • Business has an interest in reducing crime, because it hurts their ability to attract workers and customers and threatens property security.

11. Corporate involvement in the community • Housing - e.g: Gamuda through its subsidiaries initiated a resettlement project that provided housing to the Orang Asli. • Welfare-to-work job training • Welfare is a form of public assistance to those who are unable to work and live an independent and self-sufficient life. • E.g: TV3 and Amanah Raya Berhad • Some businesses provide training and skills to the disadvantaged. - E.g: BATM which supports the Shelter Home for Abused Women and Children in Negeri Sembilan provides skills to abused women

12. Corporate involvement in the community • Aid to minority enterprises - Some minority-owned small businesses operate at a great economic disadvantage: they do businesses in locations with poor transportation, low-quality public services and low-income clientele which all contribute to a high rate of business failure. - Large corporations provide financial and technical advice and training to minority entrepreneurs. - E.g: Shell has set up a Shell Foundation to help disadvantaged communities improve their livelihoods.

13. Corporate involvement in the community • Disaster, terrorism, and war relief • A common form of corporate involvement in the community is disaster relief. • Companies provide assistance to citizens and communities when disaster strikes. • When floods, fires, earthquakes or typhoons devastate communities, companies will provide funds to the affected communities. • E.g: Johnson & Johnson provided free medical care to the tsunami victims • Tabung Bantuan Banjir TV3 to help the flood victims in Johor and Malacca affected by the December floods.

14. Three kinds of corporate philanthropy • Philanthropy “business giving” • Three kinds of corporate philanthropy by organizations: 1. Cash 2. Volunteer time (menawarkan masa secara sukarela) • Involves the efforts of people to assist others in the community through unpaid work. 3. In-kind contributions • contributions of equipment, supplies, or other property rather than money. • For example, a donor might give a new toy, book or game to the hospital for the patients.

15. Strategic philanthropy Strategic philanthropy Corporate giving that is linked directly or indirectly to business goals and objectives. In this approach, both the company and society benefit from the gift. • It is an approach by which corporate giving and other philanthropic activities of a firm are designed to fit its mission, goals and objectives. • As the main goal of all firms is profitability, one of the requirement of SP is for it to make a direct contribution as possible to the financial goals of the firm.

16. Strategic contributions Areas in which corporate contributions are most likely to enhance a company’s competitiveness (Harvard Business Review study): • Factor conditions—such as the supply of trained workers, physical infrastructure, and natural resources. • Demand conditions—that affect demand for a product or service. • Context for strategy and rivalry. Company donations sometimes can be designed to support policies that create a more productive environment for competition. • Related and supporting industries. Charitable contributions that strengthen related sectors of the economy may also help companies.

17. Strategies to help companies get the most benefit from their contributions • Draw on the unique assets and competencies of the business. • Companies have special skills that enable them to make a contributions that others could not. • Align priorities with employee interests. • Let employees have a say on who will receive the contributions. • This will strengthen ties between company and workers. • Align priorities with core values of the firm. • Use hard-nosed business methods to assess the impact of gifts. • If a company may establish goals for a particular charitable gift, check to see if those goals have been met. • Use standard business tools to assess investments to ensure that goals have been met.