The Importance of Marketing and Corporate Social Responsibility in Sport: Creating and Maintaining the Perfect Balance

Introduction

Corporate social responsibility (CSR) is a form of self-regulation incorporated into organizations which functions as an instrument by which the corporation examines and ensures its active conformity with the provisions of the law, ethical norms, and global practices (Seguin and Parent, 2010). The main role of social initiatives is to uphold responsibility and promote a positive impact through its conduct towards the environment, customers, staff, the immediate community, and all members of the public domain.

In addition, CSR actively promotes the community’s growth and development and eradicates norms that harm the public, irrespective of legality. Although there is no single universally accepted definition of CSR, it can be summarized as the intentional inclusion of public interest into corporate or organizational decision-making processes, and the honoring of the three corporate pillars: people, planet, profit.

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CSR ensures that a corporation goes beyond its legal requirements so as to handle staff with dignity, operate with integrity and ethics, respect human rights, sustain the environment for future generations, create strong positive relations with the surrounding communities, being responsible in the community, and a good ‘corporate citizen’ (Inoue, Kent, and Lee, 2011).

For a long time, stakeholders have recognized the potential of sports venues and sporting activities to form a platform for undertaking CSR activities. This has resulted into most corporations engaging in some form of CSR activity in sporting events. However, companies have recently shifted their focus driven by profit motivations, and are beginning to move away from CSR related activities to focus more on increasing their profit margins through such undertakings (Inoue et al, 2011).

Although both sponsorship and corporate social responsibility offer sources of funds, resources, and in-kind services to organizations, they differ in the nature of what they expect in exchange. Indeed, some scholars have suggested that marketing and corporate philanthropy sit at opposite ends of a donation continuum.

While CSR involves noble donations that are made based on personal values and not on personal gain, corporate decisions to sponsor sport properties are normally driven by business objectives although they may include intention to generate public goodwill regarding the organization and hence lead either to publicity of the whole company or of some of its products (Seguin and Parent, 2010).

However, one thing is clear: both CSR and sponsorships help a company in its marketing initiatives. In fact, sponsorships can wholly be regarded as a marketing initiative.

Corporate social responsibility is becoming increasingly important to organizations, governments, and service providers as they strive to meet the challenges of social and economic problems while altering welfare environments and this can be attributed to a number of factors, economic, social, cultural, legal and technological and so on.

However, according to Seguin and Parent (2010), progress in this area is often hampered by the fact that the field is under researched even as corporations face new demands to improve their accountability, transparency, integrity, and ethical behavior while observing the interests of its staff and that of the general public.

Indeed, a study by Ludwig and Karabetsos (1999) reported that few researchers have focused on how corporations and organizations can create an equilibrium between corporate social responsibility and marketing or sponsorship roles. The objective of this study is to identify the primary factors that influence a corporation’s involvement in CSR, and make recommendations on how a balance between marketing and corporate social responsibility can be achieved

Methodology

A mixed-methods approach was employed to analyze the motivation and level of involvement of corporations in CSR. A case study of teams participating in the NBA league in the United States was conducted to investigate the use of CSR in a major sporting event.

Analysis looked at individual corporations’ contributions, sponsorship activities and the motivation for engaging in these activities. Both quantitative and qualitative measures were helpful in examining the research objective and drawing conclusions. The research incorporates the following:

Data gathered from IRS Form 990, 990-PF, and 990-EZ
Statistical F-tests
Related polls and surveys
Additional information from articles and other studies

This research study examines sports foundations in the three major leagues across three quantitative measures: revenues, grants distributed, and net assets. Analyzing annual revenue gives incite into a foundation’s potential for generating income through contributions, gifts, or from charging fees for services.

Grants distributed indicate the organization’s current involvement in CSR and net assets indicate their ability to support activities in the future. Assessing these three variables is essential in understanding a sports’ foundations level of CSR and its ability to engage in CSR in the future.

The qualitative statistical methods used include One-Way ANOVA F-tests and Chi-Square/Contingency Table tests. These tests will determine the statistical significance of the relationships between CSR and different variable factors (including marketing and CSR roles). The ANOVA-test reveals if there is a significant difference between the level of contributions, profitability, and levels of CSR activities.

Qualitative analysis focuses on the NBA and its recent spike in CSR activities. Conclusions are drawn from polls and surveys conducted by ESPN, and analysis of articles on the topic. Organizations normally fill Form 990, 990-PF, or 990-EZ with the IRS. The form details information on the corporation’s mission, programs, and finances. The goal of the qualitative methods is to determine the extent of CSR in the NBA, their impact on the league and players, and the factors that influence a franchise’s CSR decisions.

Results and Discussion

This study used a mixed-methods approach to develop an understanding of the involvement of professional sports franchises in CSR. The underlying research question looked to identify the extent to which sports franchises engage in CSR and factors that influence this involvement. Quantitatively, this study proved that the league a corporation is involved in does impact its CSR activities.

ANOVA tests showed that performance impacts the level of CSR. In the NBA, there is a relationship between winning and charitable grants distributed. Teams with a winning season attract a larger level of sponsors and donations from corporations than losing teams. Qualitatively, a case study of the NBA revealed that player perception and league image is a motivating factor in determining the league’s level of CSR. Hence, CSR activities impacted positively on player performance on the pitch.

The question on the factors that influence corporations to engage in CSR was observed as an intervening, or confounding variable, as it featured strongly in both the ANOVA and quantitative analyses.

Corporations that invested more in CSR activities experienced a steady increase in profitability and product awareness. Surveys conducted showed that persons who supported a particular team were more likely to purchase products from the sponsors. When faced with two options of purchasing two similar products, a person was more likely to purchase the sponsor’s product.

Hence, it was concluded that marketing and profitability were major factors in corporations’ engagement in CSR activities. However, it was postulated that corporations’ engagement in sports is purely from a corporate social responsibility perspective and that the numerous benefits come automatically in virtue of the corporations’ CSR activities. Further research should be undertaken on this topic.

Future of CSR in Professional Sports

Several theories have been put forward to explain why corporations engage in sporting activities. Some of these theories point to a corporation’s objective of increasing its involvement with the local community, to increase general public awareness of the company, to enhance the corporation’s image, to alter or influence public perception of the company, to block competition, to increase sales and/or market share, to increase product awareness, and to reach a target market (Mullin, Hardy, and Sutton, 2000).

Either way, corporations need to establishing a perfect balance between CSR and marketing so that both the company and the public can benefit the corporation’s involvement in the event, rather than the current situation where corporations are the predominant winners in many sporting activities(Mullin et al., 2000). This balance can be achieved through the following strategies.

Responsibility

Corporations can create a balance between marketing and CSR by engaging in responsible advertising and in the dissemination of information. While the sponsors are accorded the rights to air advertisement of their products and engage in product awareness campaigns during sports events, corporations must refrain from running programs or commercials that may harm participants, the audience, and viewers in any way.

This observation mainly applies to corporations that produce alcoholic products such as Heineken and Anheuser-Busch (Polonsky and Speed, 2001). Corporations should run responsible drinking programs at their own will and not just due to coercion or pressure. Similar policies should be adopted by tobacco manufacturers. This would create a balance between marketing and CSR.

Life, Health, and Safety of all

While signing sponsorship agreements, corporations should bear that every party within the particular sporting scene is important towards the successful staging of the event, be it the spectators, participants, or persons watching at home. Consequently, the corporations’ sponsorship package must include programs aimed at enhancing the lives, health, and safety of all parties involves whenever they can (Walker & Kent, 2009).

The activities could include programs to prohibit any doping practices; preventing accidents (or improving safety); providing medical care to the participants; workers and people involved in the organization of the games; prohibition of exploitation of Child Labour and forced Labour; and realization of buildings, equipment, and facilities in compliance with national and international laws and ILO Conventions (Polonsky and Speed, 2001).

Environment Sustainability

Sponsors must understand the effect of sports activities on nature as well as the flexibility of the natural area being used to withstand the various activities being undertaken during the sporting activities. Consequently, they must guarantee the highest level of safeguard of the territory and pursue the objectives of environmental improvement, taking into account the principles of sustainable development (Mullin et al., 2000).

Environmental sustainability is spelt out in many policies pertaining to particular sports, for instance, in the Olympic Games, the Olympic Movement Agenda 21 focuses on the reinforcement of environmental education of youth during the games. Environmental sustainability is a very important subject and each sponsor must strive to play a role in enhancing environmental protection and conservation.

Integrity and transparency

Integrity, transparency, and participation should be viewed not as constraints, but rather as conditions of efficacy and efficiency, because they enhance the credibility and authority of the complex action of “governance” on which the success of the sports events hinges (Walker & Kent, 2009). The corporation must embrace integrity and transparency in all of its activities in relation to the sponsorship deal.

Conclusion

A recent shift in CSR activities has seen activities transform their corporate goodwill to a profit-motivated venture while sponsoring sporting activities. This shift has seen companies pay less attention to societal needs but engage in aggressive marketing techniques in total disregard to the well-being of the rest of the society.

Consequently, there is an urgent need for companies to realign their sponsorship activities so that a balance is created between marketing and CSR. Elements such as responsibility, taking the matter of all stakeholders at heart, environmental sustainability, and integrity and transparency can significantly help in bringing back the balance between CSR and sponsorship of sporting activities among corporations.

References

Inoue, Y., Kent, A., and Lee, S. (2011). CSR and the Bottom Line: Analyzing the Link between CSR and Financial Performance for Professional Teams. Journal of Sport Management. In press, uncorrected proof. .

Ludwig, S. and Karabetsos, J.D. (1999). Objectives and evaluation processes utilized by sponsors of the 1996 Olympic Games. Sport Marketing Quarterly, 8(1), 11–19.

Mullin, B., Hardy, S. and Sutton, W. (2000). Sport Marketing (2nd ed.). Champaign, IL: Human Kinesics

Polonsky, M.J. and Speed, R. (2001). Linking sponsorship and cause related marketing. European Journal of Marketing, 35(11/12), 1361–1385

Seguin, B., and Parent, M. M. (2010). Corporate support: a corporate social responsibility alternative to traditional event sponsorship. Int. J. Sport Management and Marketing, 7(3/4), 522-30.

Walker, M., & Kent, A. (2009). Do fans care? Assessing the influence of corporate social responsibility on consumer attitudes in the sport industry. Journal of Sport Management, 23, 717-742.

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