Draft. Not to be quoted without permission. To appear in: Alan R. Andreasen (ed.), Ethics in Social Marketing. Washington, DC: Georgetown University Press, 2000.
Alliances and Ethics in Social MarketingAlan R. Andreasen
Minette E. Drumwright
It has long been accepted that social marketing is significantly different from commercial marketing despite the fact that its hallmark is the borrowing of the latter's concepts and tools (Andreasen 1995; Bloom and Novelli 1981). One of these differences is that social marketing is charged with dramatic goals, getting all Americans to eat five fruits and vegetables a day, getting all gay men to practice safe sex, or getting 90% of all children in developing countries fully immunized by age two. Consider the following mission statements:
Share Our Strength works to alleviate and prevent hunger in the United States and around the world.
The Alzheimer's Association . . . creating a world without Alzheimer's disease while optimizing quality of life for individuals and their families.
Goodwill Industries will actively strive to achieve the full participation in society of people with disabilities and special needs by expanding their opportunities and occupational capabilities. . .
The Environmental Defense Fund is dedicated to protecting the environmental rights of all people, including future generations.
Project Inform is . . . working to end the AIDS epidemic.
Boys & Girls Clubs [aims]. . . to inspire and enable all young people, especially those from disadvantaged circumstances, to realize their full potential as productive, responsible, and caring individuals.
By contrast, commercial marketers' missions are more often concerned with achieving modest gains in market penetration or brand market share. A second difference is that social marketers typically have only limited resources for achieving such impressive objectives, whether these resources emanate from taxes, charitable donations, or the organization's own commercial activities. Commercial marketers often have millions of dollars to spend on annual campaigns or product launches such as the $300 million launch of Gillette's Mach 3 razor.
A significant and inevitable consequence of these differences is that, in order to have significant impact, social marketers must seek the help of other organizations and individuals to achieve their objectives (Austin, forthcoming). They need others to build and staff health centers, design and place advertisements, carry out field research, and so on. In many cases, this help emanates from government or quasi-government agencies, especially in developing countries. However, in developed economies, it is much more common for help to come from the commercial sector.
There are two primary reasons for this. First, the commercial sector very often has the skills and personnel that social marketing organizations lack. Commercial marketers know how to develop and test promotional programs. They know how to carry out cost-effective and timely marketing research. They know how to translate customer research into effective strategies. Thus, they have significant potential to help. And, because of a recent change in the way marketers view social enterprise, they now have the motivation to help.
As Craig Smith pointed out in 1994, a significant change has taken place in the relationship of the private sector to social issues and social organizations. Commercial organizations have realized that resources of personnel and dollars that they formerly gave away to non-profit charities as handouts from surplus profits could, with careful thought, be put to strategic use (Smith 1994). That is, instead of giving $100,000 to Harry's Homeless Shelter for Harry to do with pretty much as he wished, a major corporation might use the same funds to organize a fundraising event such as 10K run or a mini-fair at which there would be significant benefits to Harry but also there would be great publicity, TV and newspaper coverage, and product giveaways, all of which could increase brand sales. Such events would also improve staff morale and therefore hiring potential, and position the corporation as a caring community enterprise.
Further, corporations have seen the operating budgets that were formerly used for conventional advertising and promotion could, in part, be diverted to campaigns with social - as well as commercial - impacts and obtain greater effectiveness and efficiency than they would otherwise achieve. Finally, many of the more farsighted commercial organizations have seen that improvements in community infrastructure and welfare can have major payoffs for corporations and their commercial goals. Thus, a healthier, less worried workforce will perform better. A developing country with improved telecommunications infrastructure will be a better location for selling cell phones and business software. And so on.
This confluence of for-profit and non-profit needs has led to a dramatic growth in the number and scope of alliances between these organizations to achieve individual and mutual goals. As Weeden has noted, the relationship for social marketers has shifted from begging to partnering (Weeden 1998, p. 14). However, this shift is not without its perils for both sides. Businesses find that venturing into social enterprise can pose important risks to the firm's reputation when it is found to step over ethical bounds (Sarner and Anderson 1996). At the same time, non-profits have found themselves in new partnerships and networks where the norms of behavior are unclear and the non-profits are at risk of being exploited intentionally or unintentionally by more powerful and more sophisticated commercial partners.
In the present article, we outline -- with examples -- the motivations and character of what Drumwright, Cunningham and Berger (2000) have called "social alliances," partnerships between for-profit and non-profit organizations(1) and distinguish them from strategic alliances among purely for-profit organizations. We then discuss ways in which social alliances can present ethical challenges for one or both partners(2). Finally, we discuss the alternatives available to social marketers to both detect and resolve ethical dilemmas in social alliances.
At the outset, it is critical that we define what we mean by "marketing alliances." A marketing alliance is a formal or informal arrangement between organizations where each seeks through marketing activities gains that would not be available to either without such an alliance. In our view, the term alliances encompasses two of the three types of marketing exchange characterized by Gundlach and Murphy (1993). These authors distinguish among transactional, contractual and relational exchanges. A typical transactional exchange is a one-time event where, for example, A sells to B. A contractual exchange is where A and B agree to a joint undertaking for some fixed period of time, for example, where A and B agree to carry out a six-month promotion of complementary product lines. A relational exchange is one that theoretically has no limits, as when A and B conduct a joint venture to market Product Y in Country Z. The last two may be considered "alliances," differing mainly in their time frame and, by extension, the attitudes, intentions and behaviors of the parties. In the commercial sector, such alliances may involve equity investments by one or -- more typically --- all parties (cf. Varadarajan and Cunningham 1995; Bucklin and Sengupta 1993; Lei and Slocum 1992; Lorange, Roos and Bronn 1992; Milne, Iyer and Gooding-Williams 1996).
The forms that marketing alliances in the private sector take are diverse:
a. Vertical distribution alliances: e.g. where Giorgio Armani and Neiman Marcus contract for the latter to carry the products of the former on an exclusive basis and perhaps feature these items in certain ways;
b. Franchise arrangements: e.g. where Domino's allies with an investor in Bangkok to develop and open Domino's outlets throughout central Thailand (cf. Dunning 1993);
c. Joint ventures: e.g. where America Online and Sun Microsystems work together to develop new e-commerce tools and internet services using Sun's Java technology.
d. Co-branding alliances: e.g. where Keebler, Hershey and Kraft Foods jointly create and sponsor advertising for S'Mores (a confection combining Kraft marshmallows, Keebler graham crackers and Hershey chocolate);
e. Horizontal alliances among competitors: e.g. where Lufthansa, United and several other airlines agree to combine routes, reservation codes and frequent flyer programs in the "Star Alliance."
Many scholars divide the objectives of alliances into two categories, operational and strategic (Spekman et al 1996). Operational alliances involve partnerships designed to make marketing transactions more efficient. Thus, Procter & Gamble and Wal-Mart may form distribution partnerships that involve sharing data electronically in order to speed deliveries, minimize stock-outs and so on. However, both P&G and Wal-Mart have such arrangements with other firms that do not offer unique strategic advantages. Strategic alliances on the other hand, such as that between AOL and Sun, offer partners potential competitive advantages unavailable to rivals. And, of course, some alliances may have both operational and strategic objectives.
Other explanations offered in the literature as to why firms first engage in such alliances (Osborn and Hagedoorn 1997; Smith, Carroll and Ashford, 1995: Hymer 1960) include:
1. Increasing a firm's access to assets, both financial and personnel, often to allow expansion of the enterprise into new countries or new markets (Dunning 1993);
2. Reducing monitoring costs of carrying out business, e.g. spending less time and money on administering a distribution alliance between partners with shared interests and a level of trust than in arm's length transactions between non-partners (Buckley and Casson 1989; Dunning 1993)
3. Providing access to new markets. The legal and social structure of many countries and some markets within countries (e.g. some U. S. government contracts) requires partnering with firms with specific characteristics (e.g. that they be local nationals or members of minority groups) (Mowery 1988).
4. Acquiring new knowledge (Ordover and Willig 1985; Tirole 1988; Lei and Slocum 1990) as when GM creates an alliance with Toyota in part to learn more about Japanese manufacturing techniques.
Lorange and Roos (1993) divide such motivations for alliances into those that are offensive (e.g. gaining access to markets) and those that are defensive (e.g. sharing risks of a new, expensive technology). Haspeslagh and Jemison (1991) note that alliances (especially relational exchanges) can also be the first, lower-risk steps toward formal mergers.
For present purposes, we define social alliances as any formal or informal agreement between a non-profit organization and one or more for-profit organizations to carry out a marketing program or activity over a significant period of time where:
a. both parties expect the outcome to advance their organization's mission;
b. the corporation is not fully compensated for its participation; and
c. there is a general social benefit expected.
These alliances may be either contractual or relational, i.e. having or not having a fixed termination point. If one considers the first cause-related marketing venture by American Express in 1981 as the starting point of the recent intense interest in social marketing partnerships, it seems fair to conclude that most reported social alliances to date have been contractual alliances. The early American Express project to contribute to the restoration of the Statute of Liberty was a contractual arrangement with a fixed closing date. The dominance of the contractual form may be changing as commercial organizations see the strategic potential of social alliances and so develop longer term, more open-ended relationships. One example of a longer term alliance is the agreement recently signed between Coca-Cola and the Boys & Girls Clubs of America (BGC) through which Coca-Cola will invest $60 million and significant staff time over ten years to help BCG increase the number of young people participating in its programs. Such a relationship meets our criteria in that:
a. Coca-Cola will significantly increase its exposure to a prime market target -- young people --, improve staff morale in local community activities, and improve its corporate image;
b. BGC will receive significant investment capital and volunteer assistance, and new promotional opportunities;
c. BGC does not pay Coca-Cola for the services it renders to BCG; and
d. The result should be a significant increase in the number of at-risk young people involved in positive after-school activities.
It should be noted that our definition of social alliances excludes contractual agreements between non-profit and commercial organizations where the former merely hires the latter (sometimes at below-market rates) to perform specific services. Such arrangements are increasingly common for such service areas as advertising, public relations, research, and distribution.
Contractual and strategic alliances are becoming more and more common and have proved to be very successful. For example, consider the ongoing Avon Breast Cancer Awareness Crusade, which was initiated in 1993 and is based on a partnership between Avon Products, Inc., and the National Alliance of Breast Cancer Organizations (NABCO).(3) Through the Crusade, Avon sales representatives have raised $37 million for breast cancer education and increased access to early detection by selling special merchandise (e.g., pins with the insignia of the pink breast cancer ribbon). NABCO distributes the funds to community programs throughout the U.S. that promote education and access to screening services for underserved women. In addition, Avon's 480,000 U.S. salespeople have been trained to talk about breast cancer and the importance of early detection. They have distributed more than 80 million flyers on breast cancer detection. Some of them volunteer through local breast cancer-related organizations or through special events such as one of the Avon Breast Cancer Walks. The Crusade has generated more than one billion media impressions.
Since the Crusade began, NABCO has been transformed. Prior to its involvement with Avon, NABCO was an information and education resource with an annual budget of less than $2 million. In addition to augmenting NABCO's education and information efforts, the Crusade has enabled NABCO to expand its mission, its clientele, and its annual budget. According to Amy Langer, NABCO executive director:
Before the Crusade, we were busy empowering those patients who are information seekers, which meant that we were serving educated, white women--"the haves." I had begun to feel an ethical imperative about who we weren't serving--the "have nots"--the medically underserved women. Through Avon, NABCO was allowed to direct money and focus on an unsexy area--underserved women.
Share Our Strength (SOS), the anti-hunger non-profit, more than doubled its grant-making capacity through its collaboration with American Express for the "Charge Against Hunger" campaign during the fourth quarters of 1993-1995. City Year, the national corps of young adults involved in community service, has expanded from a single city operation to a 10-city operation in nine states since its partnership with Timberland began. With Timberland's help, it has initiated two revenue-generating ventures--a line of clothing, "City Gear," and a team building and training service for managers (Austin forthcoming).
Similarities and Differences Between Social and Purely Commercial Alliances
Social alliances have important similarities -- and some differences -- with commercial alliances. First of all, social alliances are different in that they are almost always strategic rather than operational and almost always non-equity rather than equity. On the other hand, they are similar in that both parties see advantages that they would not achieve without the partnership. For corporations, four advantages for engaging in social alliances are typically cited (Alperson 1994):
1. Enhanced corporate image;
2. Increased employee involvement;
3. Improved customer ties; and
4. Increased efficiency in giving programs.
From the social marketer's perspective, a wide range of benefits is possible:
1. Increased input resources addressing the organization's mission, including investment capital and volunteer help;
2. Increased promotional exposure primarily through advertising, public relations, special events;
3. Increased knowledge and growing sophistication in management;
Social and commercial alliances are also similar in that, as with any "marriage," differences between the organizations require adjustment and tolerance for the partnership to work effectively.
However, there are some important differences that affect both outcomes and the potential for ethical problems to arise. Consider again the social alliance between Avon and NABCO at its beginning in 1993. Though both organizations were headquartered in New York City, Avon's offices sprawled through a contemporary high rise building near Central Park close to the Park Plaza Hotel, while NABCO's office was nestled in a modest building on East 34th Street. The differences in the office locations and styles only hint at differences that must have existed in organizational cultures and circumstances. Avon had worldwide revenues of more than $5.2 billion and employed more than 2.8 million representatives worldwide, while NABCO had an annual budget of less than $2 million and employed only a handful of people. Avon's expertise was in the direct marketing of cosmetics and gifts, while NABCO's expertise was in providing information regarding breast cancer detection, treatment, and research. One of Avon's prime performance measures would be sales, while one of NABCO's would be the number of individuals provided with information.
In social marketing alliances, the parties will often have significant differences in:
c. Objectives and performance measures
Differences in size and expertise can lead to important differences in power in the relationship, and thereby the potential for the abuse of that power. Differences in objectives and culture can lead to differences in propensity for opportunism on the one hand and wariness on the other. Among the differences in culture between social and commercial marketers that have been noted are those cited in Table 1.
Differences Between Social and Commercial Marketers
There is some dispute in the management literature as to whether cultural differences across organizations affect the success of alliances. In a study of 98 commercial partnerships, Saxton recently concluded that "alliances are economic actions embedded in a social structure" which can affect outcomes (cf. Granovetter 1985; Hill 1990; and Nooteboom 1992). However, his quantitative analysis found that "similarities between partners with respect to specific organizational characteristics, including culture and human resources, were negatively related to alliance outcomes" (Saxton 1998, p. 456). Saxton did find that alliance performance was positively related to:
- reputation of the partner
- shared decision-making
- similarities between partners in strategy and organizational processes.
As with other researchers, Saxton indicates that trust is a very important factor affecting alliance outcomes. However, Osborn and Hagedoorn (1998, p. 268) suggest that "there is growing recognition that sponsors may have incompatible expectations for a given alliance." This can have important effects on trust and thus sabotage a potentially satisfactory arrangement.
A final difference between social and commercial alliances is that, in the former, much more often there is an imbalance in the emotional and organizational stake in the alliance. For the corporation, the alliance is often just one of a great many corporate marketing activities whereas the non-profit partner may have much more invested in the venture. Among other things, such an imbalance can lead to differences in the perceived magnitude of ethical lapses or conflicts and, for the non-profit, possibly raise the "heat" of the reaction.
When do marketing -- and social -- alliances become problematic? A first question is: problematic for whom? In this volume, William Smith proposes that, in social marketing, we need to be concerned about the impacts of social marketers' actions on two parties, those directly affected by the social marketing program (e.g. the target audience or audiences) and those who are indirectly affected by the program. We propose here that the latter category be partitioned to include:
a. The social marketer (what Smith refers to as "the Actor");
b. Any ally, corporate, non-profit or government that is in some sense also "an Actor"
c. The stakeholders of the latter, including stockholders, employees, other suppliers, their customers, etc.;
d. Other members of society; and
e. The social marketing "profession"
Again, following Smith's framework, we are here concerned with an "act" or "acts' that comprise the formation and operation of the social alliance, per se. We do not consider problematic tactical decisions such as advertising that is deceptive for audiences since these are ethically questionable no matter who undertakes them. On the other hand, Smith would argue that the existence of the alliance is germane because whether an action is unethical may depend on the character of the actor and the context of the action. Others in this volume take up the latter issue (e.g. Kirby).
We consider ethical issues at the macro and micro levels.
Macro Ethical Issues
We begin from the perspective of the society in general and ask whether social alliances are unethical in and of themselves. Writers who have considered how we take care of social problems have distinguished among three sectors, government, the private sector and the non-profit sector. Clearly, social alliances blur this distinction. Moreover, the creation and sustenance of the non-profit third sector is seen by many as a reaction to a combination of market failure and inattention by government (Hansmann 1980). Milton Friedman (1970) and Herbert Stein (198X) have been consistent advocates of the position that the social responsibility of corporations is simply and only to generate profits for its stockholders and jobs for its workers. Any attempt to use corporate resources for social ends, in their view, would represent both a misappropriation of stockholder assets and a meddling of corporations in areas where they have no skills or standing.
The opposite side of this argument is the position advocated by Donaldson and Dunfee (1995) and Quinn and Jones (1995) that corporations are responsible to multiple stakeholders, a prominent one of which is society. Further, the fact that society allows corporations to exist implies a social contract imposing obligations on the corporation to consider society's interests in its actions. Others take a different, more empirical tact. Weeden (1997) among others has asserted that social alliances are just good business -- i.e. systematic social investing can have direct, positive payoffs for the corporation's bottom line. Drumwright, Cunningham and Berger (2000) found that social alliances can result in increases in financial, human, and social capital. However, one can question whether the activities of non-profits merit societal support such as freedom from taxes if their activities in part benefit profit-making corporations.
A second issue of importance to society is whether the involvement of corporations in social marketing has the effect of distorting the allocation of the non-profit sector's attention to the range of problems it has undertaken to address. Popular, attractive causes often are selected by corporations, while the less popular, less attractive or less acceptable causes are neglected - a practice often described as "cherry-picking." For example, more than 70 companies have become affiliated with some aspect of breast cancer. Breast cancer as a cause is attractive for a variety of reasons. Many affluent women are concerned about it, and it is currently on the nation's agenda, which creates fertile ground for favorable publicity. Its incidence is fairly high, and it is not associated with any "sins" or with disreputable socioeconomic classes. Many people with no family history contract it, and it is difficult to predict who will be affected. And it need not be fatal: with early diagnosis and treatment, the survival rate is high. Cherry picking can even occur within a single cause. With breast cancer, many companies prefer to be involved with the more glamorous aspects of the cause, such as funding high profile research efforts. Fewer are willing to fund less glamorous endeavors such as transportation to and from mammography clinics.
Unfortunately, the importance of a cause is not necessarily correlated with popularity or attractiveness. Early on, this was true for AIDS which was a potential major epidemic but was associated with populations looked upon unfavorably by many segments of the general population, male homosexuals and intravenous drug users. Similarly, issues such as domestic violence and date rape are important, but not particularly attractive. Some men, both consumers and employees, have reacted negatively to cause-related marketing efforts related to causes such as these.
In a sense, a "market mentality" is imposed on the universe of social alliances. That is, the most appealing and least objectionable causes receive support rather than the neediest causes. Does this market mentality substantiate Friedman's argument that companies have no business using their resources for social ends because this will only result in social distortions? Are they indeed meddling in areas in which they have no expertise nor the appropriate motives, and in the process, creating macro level problems for society? Is society then better off if companies see their social responsibility merely as creating jobs and generating profits for shareholders? In response to these concerns, Bloom, Hussein, and Szykman (1995, p. 11) propose that corporate social marketing programs be put to the following two-question test: (1) "Is society better off because of this program?" and (2) "Has corporate involvement allowed this program to perform better than it would if it were managed by only a nonprofit or government agency?" Drumwright and Murphy (forthcoming) argue that social alliances and other forms of corporate societal marketing can result in compelling benefits not only for companies but also for nonprofits, consumers, and society--a "win/win/win/win." James Austin (2000) provides several vivid examples of social alliances where the participants believe that the result is greater than could be accomplished without the alliance, but the participants, of course, cannot be the sole judges from a societal perspective.
Another macro level concern involves the aggregate effect of social alliances on the total amount of charitable giving. For example, if individuals perceive that they have contributed to charity through buying a product promoted by cause-related marketing, will they reduce their personal charitable giving? Likewise, if companies are contributing to non-profits through their marketing initiatives, will they give less through philanthropy? Could the net effect of social alliances be a lower level of charitable giving? There are not data on these tradeoffs at present. Further, one might argue that individuals and corporations have no ethical obligation to contribute at a particular level. On the other hand, should it be discovered that some corporations were, in effect, hiding behind well publicized alliances to reduce their charitable giving, this would raise ethical concerns.
A final macro issue is the use of social alliances by corporations to cover over or excuse anti-competitive or anti-social activities in the corporations' core businesses. Many have argued that the flurry of alliances between the tobacco industry and arts organizations and government projects is really a smokescreen intended to divert attention from the danger of their products.
Micro Ethical Issues for Alliance Participants
Within a specific social alliance, ethical issues arise out of three kinds of dissatisfaction--(a) dissatisfaction with outcomes or results, (b) dissatisfaction with procedures or processes, and (c) dissatisfaction with a partner's behavior (including its actions regarding matters that may be unrelated to the alliance). Of course, many alliances in both the for-profit and non-profit worlds are unsuccessful. Partners are disappointed and sometimes angry because outcomes are not as expected in kind or amount. Procedures can be neglected or botched. Partners have partings of the way. These are expected and, while disappointing and sometimes the focus of much name-calling, they do not necessarily raise ethical concerns. Where dissatisfaction suggests an ethical problem is when there is an element of hurt felt by one or both of the parties.
Parties may feel hurt if they believe the other party failed to meet one or more of the following ethical standards (cf. Gundlach and Murphy 1993):
Failures of an alliance to meet these standards in some cases can be redressed legally. Indeed, as Gundlach and Murphy (1993) point out, much of contract law that guides such alliances is based on moral principles. However, our concern here is with cases where the standard is ethical, not legal.
a. Outcomes and Issues of Fairness and Equity
Social alliances, in the main, seek one or both of two kinds of outcomes. Many, particularly those under the label of cause-related marketing (Varadarajan and Menon 1986; Andreasen 1996), are designed to provide new sources of funding for the social marketer - while achieving marketing, public relations, and/or human relations objectives for the partnering corporation. Others are designed to increase the impact of some particular program, as when soap makers in South America promote handwashing (BASICS 1997).
Frustrations about the success of fundraising can come from many sources. For example, ethical concerns can arise over how a company specifies exactly how it will determine what its donation will be. If the company commits to passing on to the social marketer a percentage of profits, companies can abuse their discretion in the allocation of costs to minimize or even eliminate the pass-along. On the other hand, should a corporation be ethically bound to turn over an agreed upon share of profits if the corporation's basic financial circumstances change. Should a company keep its commitment if its own employees are suffering income loss and layoffs?
A company's donation to a non-profit often is based on a cause-related marketing initiative in which the company commits to make a donation based on sales. For example, Avon contributes profits from the sales of pink-ribbon merchandise to promote breast cancer access and screening. Each time its private label candy bar is purchased, Wild Oats Markets makes a donation to charity. Sears donates all proceeds from sales of a specific CD of Christmas music to Gilda's Club. The commitment to donate can be structured and stated in a variety of ways, some of which can be problematic.
One source of problems is if either the non-profit partner -- or consumers more generally -- are misled to think that the donation will be much larger than it is in actuality. Intentional deception would be the most egregious form such miscommunication could take, but absence of rigorous efforts to assure that there is no deception could also be viewed as an ethical breach as well. In this context, neither caveat emptor nor "caveat non-profit" is wise or ethical. For example, managers at a company with a chain of retail stores had been advertising that 100% of profits on a given day each month was being donated to charity. The company was acquired by another company that had been donating 5% of its revenues on a given day each month. An internal audit revealed that the acquired company's 100% of profits was substantially less than the other company's 5% of revenues because of the manner in which costs, particularly indirect costs, were allocated.
In contrast, Avon specifically chose to have its cause-related contributions tied to specialty products (e.g., ink pens or jewelry pins with the pink breast cancer ribbon) and to make the accounting highly transparent. Salespeople receive no commission on the products, and the company covers only its direct costs. All proceeds over and above the direct costs go to fund the grants made by its non-profit partner, NABCO. While one could argue that contributing a percentage of the sales or profits from one of its existing products, say a lipstick, during a specified period might provide more money, Avon executives have said that doing so would not preserve the integrity of the program.
Problems differ depending on whether the company makes its donation commitment as fixed or variable. Examples of fixed commitments were Timberland's pledge to donate $5 million to City Year over a five-year period, and Avon's pledge of $5 million to the Statue of Liberty Renovation Fund, which was to be raised through a cause-related marketing effort. After making these commitments, each company experienced disappointing financial performance. Timberland reported its first loss since becoming a public company and underwent painful restructuring and the accompanying plant closings and layoffs (Austin and Elias 1996). Likewise, Avon's cause-related marketing program commemorating both the 100th birthday of the Statue of Liberty and the 100th birthday of Avon failed to capture the imaginations of Avon's sales representatives or consumers outside of New York City, and the results were disappointing. Simultaneously, the company was experiencing financial difficulty. Both companies faced difficult ethical dilemmas regarding their pledges. One can easily imagine that a laid-off employee (or a stockholder suffering a loss) would see it as unethical for the company to keep the commitment to the non-profit. Likewise, a non-profit that has entered into a partnership in good faith with the promise of specified funds would see it as unethical for the company not to keep its commitment. After all, the non-profit delivered on its part of the partnership. Both organizations honored their commitments.
As a result of this experience, Avon decided to avoid fixed commitments that might be awkward to fulfill and structured the Breast Cancer Awareness Crusade so that donations vary with sales. Joanne Mazurki, director of the Crusade, said that this aspect, the absence of a fixed commitment by Avon to turn over a set amount, was a big "turn-off" and "deal breaker" to many of the non-profits that Avon approached as potential partners. However, Avon felt that the variable approach was more responsible because it communicated the uncertainty from year to year. Many non-profits that demurred undoubtedly were uncomfortable operating without the kind of certainty afforded by the foundation grants that are a more common form of nonprofit transfers.
Companies may be criticized for taking an unfair portion of the money raised as well as for their means of raising it. Consider the case of Pallotta Teamworks, a for-profit corporation that organizes walks and rides to benefit charity. Pallotta Teamworks has organized both a series of bicycle rides benefiting AIDS organizations and the Avon Breast Cancer Crusade Walks. The company has been harshly criticized for the relatively small percentages of the proceeds actually provided for charity. On average, 62 to 50 per cent of the amount raised goes to charity, and at times the percentage has been as low as 6.5 per cent (Christian 1999, Franklin 1999). Pallotta Teamwork's expenses, which include its fees, have been criticized as excessive and greedy (Wise 1997). The defense offered by Dan Pallotta, the president and founder of the company, is that these events are expensive to run, and without the events, the vast amounts of money that they produce would not be raised. As an example, the Avon Breast Cancer Walk in California in October 1998 netted $5 million for the Crusade. The rationale is that any percentage is better than nothing.
b. Procedures and Issues of Fairness and Equity
A concern for many social marketers is whether the extent and character of the efforts of both parties are appropriate and equitable. Because marketing communications in general and advertising in particular are central to most social alliances, procedural ethical issues are often embedded in decisions about them. One issue involves the ratio of the money spent promoting the alliance to the money contributed to the cause. American Express has been subject to criticism for both "Charge Against Hunger" and the "Statue of Liberty" campaigns because far more was spent advertising the campaigns than was contributed to the causes (Ratnesar 1997; Smith and Stodghill 1994). For example, American Express's annual contribution to Share Our Strength was capped at $5 million, while the amount spent on advertising was surely at least two to three times greater. One could argue that a 2:1 or 3:1 advertising-to-donation ratio represents an irresponsible lack of equity. On the other hand, one could argue that the $10-15 million was going to be spent by American Express on advertising during the fourth quarter anyway, irrespective of whether "Charge" and Share Our Strength were part of the campaign. The question then becomes, in one sense, not whether the split in resources between advertising and the cause was equitable, but whether the cause will be a part of the "normal" advertising budget at all. On the other hand, if it is agreed that the cause will be part of the ad budget, is it less equitable if the ratio of ad budget to donations is 10 to 1 than if it is 2 to 1?
Part of the source of friction here is the difference in organizational cultures and experience. Nonprofits often have little experience with promotional budgets - especially large ones - often relying on donated time and promotional services. Further, they have little experience with brand building which - the company feels - may require inordinate amounts of near-term spending. Thus, there may be legitimate corporate reasons for a high ratio. On the other hand, many alliances involve corporate promotional expenditures that seem less inequitable. For example, Avon's Breast Cancer Awareness Campaign has raised $37 million dollars to date on an annual budget of less than $500,000. It is primarily a direct selling effort with minimal advertising expense.
Another ethical issue related to marketing communications involves co-branding or the licensing of a non-profit's name or logo to a company for use in marketing its products. In 1998, companies paid non-profits more than a half billion dollars for the use of their names (Abelson 1999). Such arrangements can be very problematic.
Perhaps the most publicized example of co-branding gone wrong is the 1997 agreement between the American Medical Association (AMA) and Sunbeam, which permitted Sunbeam to put AMA's name on products ranging from blood pressure monitors to heating pads (Collins 1997; Johnson 1999). This was an exclusive agreement whereby the American Medical Association name could not be used with rival products. AMA members raised a storm of protest over this agreement, fearing that the AMA name on these products would imply an endorsement and/or that signify that the products were superior to competitive products. The AMA paid Sunbeam $10 million to settle a breach-of-contract lawsuit.
On the other hand, despite the Sunbeam example, licensing agreements between companies and social marketers have abounded. For example, Bristol-Myers Squibb Co. has run full page advertisements for Pravachol, a cholesterol-lowering drug, that featured the name and logo of the American Heart Association. Electrolux LLC negotiated an exclusive arrangement with the Asthma and Allergy Foundation to use its name and logo on the cartons in which its vacuum cleaners are packaged and in product literature. SmithKline Beecham PLC runs television ads for NicoDerm, its nicotine patch, in which the company and the American Cancer Society were described as "partners in helping you quit."
Such co-branding may not be problematic in and of itself, but it becomes a potential ethical problem if consumers are misled regarding the non-profit's endorsement of the product and its degree of involvement with the product. Unlike companies, non-profits typically assert that they endorse no commercial products, even when their names and logos are used. Thus, a number of state attorneys general have become concerned that advertisements using non-profit names and logos are misleading (Ableson 1999). As one example, SmithKlineBeecham settled with a dozen attorneys general who were concerned that the NicoDerm ads were misleading by agreeing to pay $2.5 million and to spell out in its ads that it "makes an annual grant to the American Cancer Society for cancer research and education and for the use of its seal." Further, the State Attorneys General have proposed a possible code of conduct for such co-branding alliances. This code is discussed further below.
As noted above, one of the differences between non-profits and for-profits is a difference in size and sophistication. This can lead to another area of procedural unfairness where the corporate partner imposes unfair restrictions on the actions of the social marketer. Is it ethical for companies to require the kinds of exclusivity agreements noted above, ensuring that the non-profit will not enter into collaborative initiatives with competitors? Is it right for a company to require an exclusive agreement from a non-profit, while it continues to accord itself the right to work freely with multiple non-profits? Drumwright, Cunningham, and Berger (forthcoming) have observed that exclusivity agreements often are not mutual. That is, the company assumes that it is free to work with multiple non-profits related to the same cause while making it clear that the non-profit is not to work with companies in similar industries. This appears to be a reflection of the relative power of the players. Could it also be exploitative? On the other hand, if the company helps the social marketer make contact with noncompeting companies, does this mitigate the "unfair" restrictions of an exclusivity agreement? For example, during the "Charge Against Hunger Campaign," American Express, although requiring exclusivity among credit card companies, provided Share Our Strength entree to retailers and encouraged the latter to match the American Express contribution for the charges made in their store.
Should a company - after an agreement is signed - be able to object to a social marketer's actions, e.g. lobbying for some controversial social change or partnering with some other non-profit that the corporations finds objectionable. Companies may want to place requirements on grant making. For example, companies may require non-profits to make grants within certain geographical areas, such as the regions in which company operates. Or the company might request that the non-profit not make grants to organizations that the company finds troublesome on some dimension, such as the political persuasion or sexual orientation of their clienteles. The ethical issue arises when the corporation appears to be exerting unconscionable power.
Imbalances in power or asymmetries have been shown to be a major source of difficulty for alliances (Bucklin and Sengupta 1993; Varadarajan and Cunningham 1995).Drumwright, Cunningham, and Berger (forthcoming) observed that companies tend to perceive that they "own" the collaborative initiative; after all it is funded through their marketing budgets, and they may expect to call the shots. This perspective is often reflected in the program names. For example, "Avon's Breast Cancer Awareness Campaign" makes no mention of the its non-profit partner. The "Charge Against Hunger" ads prominently displayed the American Express logo, but the Share Our Strength logo was not included. Are the non-profit interests receiving short shrift? Does the corporation have an ethical obligation to give their partner equally billing and visibility?
A related problem is the tendency of companies to micromanage the non-profit's part of the collaboration. This can come about because of the company's feelings of ownership of the collaboration or perhaps because they question the non-profit's competence. Non-profit managers can perceive this micromanagement as intrusive, highly inappropriate, and arrogant; they often complain that the company is moving beyond its own expertise and is not respecting the non-profit's special skills. Again, the ethical issue comes down to whether the corporate partner is using its power to force the social marketing partner to take actions that the latter believes are not in its own interests.
Another source of potential problems identified by Drumwright, Cunningham, and Berger (forthcoming) is how or when a social alliance will end. This is difficulty typically stems from neglect in the negotiation and planning stages. Where it can become problematic is when the social marketer is relying heavily on the partner for funds and assistance and the corporation decides to sever the relationship, often for little good reason and/or with little warning. Among equal corporations, such shifts in alliances are presumably common and offer little long-term damage. In a social marketing context with unequal partners and a tendency among non-profits to avoid contingency planning, the responsibilities on the corporate partner would seem to be much greater.
A final process-oriented problem may develop when there is disagreement regarding what is "right" in some strategic or tactical decision. Such arguments often stem from the differences in culture and values outlined in Table 1. They can poison the partnership culture to the extent that non-profit staffers feel that either their organization and/or the commercial partner is unethical and to the point that the corporate partner becomes completely frustrated. Because the rightness of an action is an ethical issue, this potential for conflict argues forcefully for early agreement on partnership ethical standards.
c. Behavior and Issues of Trust and Responsibility
An alliance partner's behavior outside the relationship may be problematic if it appears that this partner is behaving unethically. The other "innocent" partner may feel that its own reputation is tainted by the questionable actions. Nike engages in many social marketing ventures and their non-profit partners have been troubled by charges that Nike products may, in some cases, have been produced by child labor.
Non-profit leaders sometimes must take stands and speak out on controversial or highly polarized subjects such as welfare, healthcare, or prison reform, not to mention abortion, gay rights and other topics corporate leaders typically avoid. Companies involved in social alliances could create pressure, even if subtle, on non-profit leaders to hold their tongues or refrain from governmental coalition building. At what point does such pressure become an ethical issue? On the other hand, could the non-profit's stand on a controversial issue with which the company has a conflict of interest create an ethical dilemma for the company?
Finally, there is the question of requests that a partner makes that are formally beyond the terms of the partnership. Is it ethical for a corporation to try to coerce a social marketer into using the company's products or services? Suppose the corporation asks its nonprofit partner to intervene with someone else on the corporation's behalf? The latter may be relatively common where at least one objective of the partnership is to associate a firm with reputation problems with a squeaky-clean non-profit. Is it acceptable for the corporation to ask the social marketer to speak out in praise of the company should the press or activist groups challenge it? What if the corporation wants the non-profit to use its relationship with government agencies to get favorable treatment for corporate actions? When does help for a partner become chilling for a partner?
Preventing Ethical Lapses
How, then, can ethical lapses be prevented or, barring this, detected and resolved? These issues are dealt with elsewhere in this volume. In our view, solutions may be divided roughly into four categories: symbolic, contractual, educational, and procedural. We consider each briefly in turn.
a. Symbolic Solutions
A first, perhaps necessary, step is the formulation of a set of ethical standards governing social marketing as a whole and, specifically, social marketing alliances. The American Marketing Association Code of Ethics (cf. Kirby, this volume) could be a useful starting point as it has among its provisions the following standards that would apply to social marketing alliances:
While the American Marketing Association Code is a good starting point, alliance partners must still consider whether the threshold for unethical behavior should be higher where a major objective of the partnership is the promotion of some social good. Is "upholding the integrity, honor, and dignity" of social marketing different from upholding that of the commercial marketing profession? If so, what additional obligations or responsibilities should be included? Does a company have a greater responsibility in dealing with a non-profit partner than it would have with a commercial partner? Does it have an obligation to protect the non-profit's best interests? On the other hand, is such an approach condescending and patronizing?
It is the authors' view that (a) corporations that enter into social alliances are implicitly accepting some responsibility for what might be called "social stewardship;" (b) social marketing organizations are agencies that society has charter to advance society's welfare; (c) therefore, corporations' social stewardship should extend to society's designated agents. This means that corporations should have a special obligation to advance - or at least not harm -- the social marketer - just as they have undertaken an implicit obligation to advance the welfare of society.
b. Contractual Solutions
In the absence of a code by which the alliance partners agree to abide, standards can be set out in their contractual relationship about what each partner will or will not do as part of the relationship. Bucklin and Sengupta's research suggests that the negative effects of managerial imbalance in alliances can be countered by increases in the formality of the relationship, exit barriers and exclusivity among the partners (Bucklin and Sengupta 1993). Contractual agreements will give each organization a basis for precluding unethical pressures as well providing a basis for legal action in the case of serious organizational injury. Exhibit 1 outlines the terms that the Health Promotion Directorate of HealthCanada (albeit a government agency) includes in any agreement it makes with the private sector. Exhibit 2 outlines "Guidelines and Principles for Strategic Alliances" prepared by the Boys & Girls Clubs of America.
While fair and equitable standards of ethical conduct can protect both sides, there still remains a question of whether the process of writing such terms is itself fair and equitable. The authors would again argue that, even though corporations typically have greater experience in negotiating contracts and more power in the social marketing alliance, their social stewardship imposes a special obligation to negotiate a fair and equitable arrangement.
c. Educational Solutions
Codes of ethics and contractual agreements only set out the standards for ethical conduct, they do not insure that such conduct will follow. Individuals commit ethical lapses and they may do so out of ignorance that an ethical challenge exists, misinterpretation of the standards that ought to apply or, in the worst case, a willingness to ignore the applicable standards. This implies clearly that formal ethical standards must be accompanied by ethical training of those who must apply them. This is a topic dealt with extensively by Michael Basil elsewhere in this volume.
d. Procedural Solutions
Of course, the presence of codes, contractual terms and ethically trained managers is seldom sufficient to prevent the emergence of potential ethical conflicts. For social marketing alliances to remain healthy and effective, procedures must be established for discussing and resolving ethical issues. Such discussions may not be free of controversy since alliance partners come from very different cultures and may have different views of what is ethical or unethical. Some possible subjects of debate are:
Social alliances appear to be here to stay, and thus it is incumbent upon both companies and non-profits to give considerable attention to developing ethical standards and procedures for addressing ethical issues when they arise. A combination of four approaches outlined above appear essential to creating ethically sound social alliances in which there is a minimum of opportunistic behavior and little or no hurt feelings. A wide range of research consulted for this paper makes clear that: (a) the longer the relationship the more that unexpected considerations will become part of the partnership dynamic and (b) flexibility and survival can be enhanced if there is both trust and commitment in the relationship (Zaltman and Moorman 1988; Morgan and Hunt 1994; Bonomo 1976; Heide and John1988; Moorman, Zaltman and Deshpande 1992; John 1984; Heide 1994). Careful attention to ethics and potential ethical conflict will go far to establish these necessary conditions.
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1. Note that this article focuses on alliances between non-profits and corporations. However, alliances between government and quasi-government organizations are becoming increasingly common. For example, the Health Promotion Programs Branch of HealthCanada lists over 200 partnerships between 1990 and 1996 contributing an estimated $60,000,000 (Canadian) in new resources.
2. For simplicity, we consider only bilateral partnerships. We recognize that many social alliances may involve multiple parties from public and private sectors.
3. Information regarding the Avon Breast Cancer Awareness
Crusade was taken from presentations that Amy Langer, executive director
of the National Alliance of Breast Cancer Organizations, and Joanne Mazurki,
director of the Avon Breast Cancer Awareness Crusade, made at the annual
national conference of Business for Social Responsibility in Boston on
Nov. 19, 1998 and from public lectures that Ms. Mazurki gave at The University
of Texas at Austin on Nov. 10-12, 1997.
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