British multinationals in politically controversial countries give more to charity

Howard Lake | 2 April 2009 | News

British multinationals that operate in countries that lack basic human rights give around 70% more money to charity than firms that do not have a presence in such politically controversial nations, a new study has revealed.
The findings are reported in the Journal of Management Studies. In ‘Corporate charitable giving, multinational companies and countries of concern’, Stephen Pavelin, Stephen J. Brammer, and Lynda A. Porter report that a corporate presence in one or more countries in which political rights and civil liberties are curtailed pushed up the average level of a company’s donations from £1.148m to £1.977m.
The study looked at the charitable donations of 305 UK plcs, comprising around half of FTSE All-Share Index companies.
The researchers suggest that this increased philanthropy could be seen as an attempt to “offset” negative connotations related to the companies’ operations in controversial countries such as China, Burma, Sudan and the Democratic Republic of Congo.
The study drew information from the companies’ annual reports from 2002 and looked at presence in ‘countries of concern’, as defined by criteria established by the FTSE4Good Index – which aims to identify environmentally and socially responsible companies.
Unable to separate out corporate giving by country, the team could not determine whether the higher levels of charitable donations were directed towards projects in the UK or in the host countries themselves.
While political and civil rights issues were shown to stimulate charitable donations, the level of corruption in a country did not have a similar effect. “It appears that the salient feature of a country in this connection is a lack of political rights and/or civil liberties, rather than a presence of high levels of corruption,” said Dr Pavelin.
www.interscience.wiley.com/journal/joms

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