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Opportunity Platforms and Safety Nets: Corporate Citizenship and Reputational Risk

Opportunity Platforms and Safety Nets: Corporate Citizenship and Reputational Risk CHARLES J. FOMBRUN, NAOMI A. GARDBERG, AND MICHAEL L. BARNETT hy do managers regularly allocate corporate resources to ‘doing good’? Doing good is costly, and the expenditures of public companies come under extensive scrutiny from investors and analysts. What justifies managers in allocating a company’s scarce resources to these elective activities? Recent discussions of ‘corporate citizenship’ propose a fusion of two arguments.1 On one hand, a citizenship portfolio helps to integrate companies into the social fabric of local communities by strengthening the social bonds between the company, its employees, and the local community.2 On the other hand, a citizenship portfolio helps a company build reputational capital, and so enhances its ability to negotiate more attractive contracts with suppliers and governments, to charge premium prices for its products, and to reduce its cost of capital.3 Both of these benefits are consistent with a view of corporate citizenship as a strategic tool that managers can use to cope with the bi-directional risk that companies face. By doing good, managers generate reputational gains that improve a company’s ability to attract resources, enhance its performance, and build competitive advantage. 4 Citizenship programs also mitigate the risk of reputational losses that can result http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Business and Society Review Wiley

Opportunity Platforms and Safety Nets: Corporate Citizenship and Reputational Risk

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References (46)

Publisher
Wiley
Copyright
2000 Center for Business Ethics at Bentley College
ISSN
0045-3609
eISSN
1467-8594
DOI
10.1111/0045-3609.00066
Publisher site
See Article on Publisher Site

Abstract

CHARLES J. FOMBRUN, NAOMI A. GARDBERG, AND MICHAEL L. BARNETT hy do managers regularly allocate corporate resources to ‘doing good’? Doing good is costly, and the expenditures of public companies come under extensive scrutiny from investors and analysts. What justifies managers in allocating a company’s scarce resources to these elective activities? Recent discussions of ‘corporate citizenship’ propose a fusion of two arguments.1 On one hand, a citizenship portfolio helps to integrate companies into the social fabric of local communities by strengthening the social bonds between the company, its employees, and the local community.2 On the other hand, a citizenship portfolio helps a company build reputational capital, and so enhances its ability to negotiate more attractive contracts with suppliers and governments, to charge premium prices for its products, and to reduce its cost of capital.3 Both of these benefits are consistent with a view of corporate citizenship as a strategic tool that managers can use to cope with the bi-directional risk that companies face. By doing good, managers generate reputational gains that improve a company’s ability to attract resources, enhance its performance, and build competitive advantage. 4 Citizenship programs also mitigate the risk of reputational losses that can result

Journal

Business and Society ReviewWiley

Published: Jan 1, 2000

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