Journal of Cultural Economics 24: 205224, 2000. 2000 Kluwer Academic Publishers. Printed in the Netherlands.

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Why Do Companies Sponsor Arts Events? Some Evidence and a Proposed Classication
JOHN OHAGAN and DENICE HARVEY
Department of Economics, Trinity College Dublin, Ireland Abstract. Corporate philanthropy towards the arts is of long standing in the United States. There is no such tradition in Europe, but corporate sponsorship of the arts has been in place since the 1960s (see Frmion, 1994). This paper will discuss the differences and similarities between these two forms of business support to the arts and then concentrate primarily on corporate sponsorship. The motivations for companies to sponsor arts events are examined in the context both of the literature relating to the motivations for corporate philanthropy and corporate promotional/marketing expenditure. Results from a survey of 69 companies that had sponsored 129 arts events in Ireland are presented and compared to the limited results from similar surveys elsewhere. It is suggested that the motivations for such sponsorship can usefully be reduced to four: promotion of image/name, supply-chain cohesion, rent-seeking and non-monetary benet to managers/owners. The evidence for this from the survey, either directly available or implicit in the responses to some other questions, is signicant. Key words: arts sponsorship and promotion, rent-seeking, supply-chain cohesion, corporate philanthropy, special events

1. Introduction Sponsorship is a two-way commercial exchange between a company and an organisation whereby the company gives resources (primarily money but also donations in kind) to the sponsored event. In return, the company receives promotional or other benets of having its name associated with the event. Sponsorship is seen by some as essentially part of a companys promotional toolkit (see Colbert et al., 1994). The four main tools used in promotion are advertising, personal selling, public relations, and sales promotion, with sponsorship linking most closely to public relations. While there is clearly a public relations function to sponsorship, it will be argued in this paper that there may be other motivations that help us understand why such sponsorship takes place. The starting point for a consideration of the reasons for corporate sponsorship is the literature on corporate philanthropy. As Schuster (1996, pp. 153154) states, researchers must confront the difcult analytical problem of distinguishing between corporate philanthropy and corporate sponsorship. This distinction is important both because the motivations and decisions are so different in the two modes of support and because there is an important legal distinction drawn

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between the two in many countries. Section 2 of this paper will address this issue and, in the light of this discussion but using a more economics-oriented focus, will outline a proposed taxonomy of motivations for corporate sponsorship. Section 3 will outline the methodology underlying a survey carried out to test the validity of various factors that have been suggested as motivations for sponsorship in the marketing/public relations literature, Section 4 will present and comment on the main relevant ndings from this survey in the light of the discussion in Section 3 and of similar studies elsewhere, and Section 5 will conclude the paper. 2. Motivations for Corporate Philanthropy and Corporate Sponsorship 2.1.
CORPORATE PHILANTHROPY

A number of authors have attempted to classify the motivations for corporate philanthropy, i.e. the giving of money by businesses to nonprot, charitable organisations, often with no direct connection between the contribution and any activity of the company. Corporate sponsorship, as will be seen, is much different in this regard, as explicit promotion of the company or its products is usually a quid pro quo of sponsorship. Nonetheless, some of the motivations for corporate philanthropy are very similar to those for sponsorship, and some of the reasons for sponsorship are linked more to philanthropy than marketing/promotion. Young and Burlingame (1996) provide a very useful summary of what they see as the four main conceptual frameworks for thinking about why businesses engage in corporate giving (whether in terms of cash, donations in kind, or volunteer labour) (see also Useem (1987) and Kushner (1996) for useful overviews on this issue). The rst they call the neoclassical/corporate productivity model, whereby the basic purpose of, and motivation for, corporate philanthropy is seen as contributing to the ability of the rm to make prots. The provision free of charge of the products of the company (e.g. computers to schools) is a very clear example of this type of philanthropy, but other more indirect and long-term processes may be involved. Improving employee morale or community relations or improving public image through cause-related marketing are given as examples. In this scenario corporate philanthropy must prove itself in the same way as any other business function, and this leads the authors to suggest that the use of the word philanthropy in this context creates something of an oxymoron. Mescon and Tilson (1987) provide some striking examples of where this motivation for corporate philanthropy applies in the United States. As Kushner (1996) suggests, this type of philanthropy is best seen as sponsorship, as it is promotional in nature and some specic marketing benets are anticipated. The second model suggested by Young and Burlingame (1996) is what they call the ethical/altruistic model. This is based on a concept and culture of social responsibility and ethical behaviour that comes with the power over resources granted to corporations in American society. It is based on an understanding that corporations and the societies they operate within are extremely interdependent

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and it presumes a certain level of discretion on the part of corporate giving ofcials and a certain aloofness from the operational pressures of making prots in the marketplace so that, within certain limits, managers can pursue a set of charitable goals not directly related to corporate interests (p. 160). This may link to the motivation factor termed management culture by Useem (1987) and Useem and Kutner (1986), whereby the attitudes and actions of senior management make the crucial difference, which in turn may be inuenced by their personal belief in the ethical/altruistic model of the world. The third model is the political model of corporate philanthropy. The basic motivation here is to preserve corporate power and autonomy by building private initiatives as an alternative to the growth of governmental authority and limiting government interference in the free enterprise system (Young and Burlingame, 1996, p. 161). This factor is given considerable emphasis by Useem (1987). The goal here is to alter, or maintain, the general social and political environment of business. In this case there are joint benets that may be shared by all rms, particularly large rms, without necessarily any specic benets to the individual company: contributions improve the climate in which all major rms can prosper, with little private capture of benets by the giving corporation (Useem, 1987, p. 354). The free-rider problem of course arises here but the evidence in relation to peer-company comparisons and pressure suggests that these factors reduce signicantly the incidence of such free-riding (Useem, 1987; Useem and Kutner, 1986). A further dimension to the political model is that corporations engage in philanthropy in order to protect their economic power in a narrower sense, namely to project the image that this particular company is a good company, in the sense that it behaves responsibly as a public citizen. This is closer to the neoclassical model of corporate philanthropy, as in this case the objective is to improve protability directly by protecting the companys position vis--vis policymakers: for example, a tobacco company may stave off decisions on banning advertising of its products or some other company may do likewise in relation to the proposed removal of subsidies (see later discussion on rent-seeking). The last model posited is the stakeholder model of corporate philanthropy. This school of thought posits that the corporation is a complex entity that inuences, and is inuenced by, various groups, such as workers, managers, customers, suppliers, community groups and policymakers and that corporate philanthropy should be viewed as steering a clear path through these competing stakeholders. This is a somewhat amorphous conceptual framework, as Young and Burlingame (1996) concede, encompassing as it does various aspects of the three previous frameworks. In its present state of development, the stakeholder model does not make clear exactly how the various stakeholders interact to determine corporate policy (p. 162).

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Under the neoclassical model, corporate philanthropy is effectively seen as corporate sponsorship. Thus whether it is called philanthropy or sponsorship does not make much difference (see Mescon and Tilson, 1987, for a good illustration of this). Sponsorship though is not conned to charitable organisations, and it is probably the case that much more explicit marketing/promotion can be linked to this type of business giving to the arts: indeed some of the most blatant advertising can be associated with sponsorship, such as the painting of company logos on the actual eld of play at many sports events. As stated in the introduction, sponsorship is essentially a part of a companys promotion/marketing toolkit and the question to which we now turn is why companies use a part of their budget for promotion/marketing on sponsorship. The discussion that follows is based on the limited literature in marketing/promotion, as there is little if any relevant literature available in economics. The reasons for the range of factors to include are rarely analysed at any length in the marketing/promotion literature and appear to be based on what marketing/promotion personnel at the coal face state are the reasons for promotion and what opportunities sponsorship offers in this regard. This was conrmed in discussions we had with people working in the area. Meenaghan and Flood (1983) list ve motivations for sponsorship: corporate, product-related, guest hospitality, personal, and sales. Under corporate they list a further twelve rather diverse sub-objectives, such as to increase public awareness of the company, to change public perception of the company, to suggest a particular public image, to build goodwill among opinion-formers and decisionmakers, to assist staff relations, to aid staff recruitment and so on. Tate (1987) talks about the objectives of sponsorship as being to promote corporate image, either to the general public or to a smaller group of people such as local residents, the workforce or potential customers. Promotion of a specic product with the aim of increasing sales may be another objective. Abratt, Clayton and Pitt (1987) talk about sponsorship having no one corporate objective but being used to satisfy product-related, sales and personal objectives, together with the achievement of media coverage and the provision of an opportunity for guest hospitality. Turgeon and Colbert (1992) analysed how the sponsorship market works by doing a content analysis of nine sponsored events in Canada. They found that the most important reason for undertaking sponsorship was to alter public perception of the company, followed by contributing to society and aiding staff relations. Waters (1989) argues that companies sponsor in order to improve public image, advertise their product and provide client and/or employee entertainment. Colbert et al. (1994) report on a 1990 study of 34 companies which indicated that better corporate image was ranked by 34 per cent of companies as the main benet sought from sponsorship, with 22 per cent ranking an increase in sales as most important, 15 per cent greater visibility, 15 per cent social role, with the remaining 11

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per cent ranking three different other objectives. Finally, Kotler and Scheff (1997) talk about why sponsorship will be the single fastest-growing area of marketing into the next millennium, which in turn gives some insight as to what they see as the main benets of sponsorship to a company. First, they argue that sponsorship promotions reach people in an environment that matches their lifestyle, rather than intruding on it, like with most product advertising on TV and elsewhere. Thus, they see it simply as a substitute for direct advertising at a time when people are less susceptible to mass advertising. Second, they state that sponsorship responds to the consumer demand that companies give something back to their communities. Thus, sponsorships provide the potential for creating an emotional bond with the consumer by tying the product or company to something bigger and more meaningful (p. 176). Third, they argue that people will increasingly crave live contact and shared social experiences; sponsorship provides companies with the opportunity to open up more direct and involving lines of access to customer groups, they argue, and thereby enhance sales opportunities. It is this background literature, and interviews with key personnel, that shaped the design of Question 1 of the survey that provided our data. Part 1 of the question (see later) concentrates on promotion, be it of corporate name/image, or product name/image and local image (i.e. perception in the local community). Local image is simply a subset of corporate image, where the main intention in this case is to project a certain corporate image at a local level. Promoting company image, be it at local or national level, may have as its primary aim the enhancement of the prole of the company and thereby eventually sales, but another more subtle motive might be to change the structure of the market within which the company operates (see later). Part 2 of the question focused on the opportunities that sponsorship provides to pursue promotion or other objectives: the opportunity, for example, to provide corporate hospitality, improve employee motivation, provide media coverage and increase sales. Thus one would expect that the opportunity provided by increased media coverage would link to the promotion of corporate/brand image and name. However, the opportunity to provide corporate hospitality relates to much more than promotion, and the opportunity to improve employee motivation relates also to non-promotional objectives. Thus, it could be argued that the reasons for sponsorship go well beyond image promotion to include the encouragement of supply-chain cohesion, rent-seeking and the provision of a form of benet in kind to managers/owners of the companies concerned. All of these factors are alluded to, as seen earlier, in the corporate philanthropy literature, although perhaps not using the same language. The rst three would t into the neoclassical model discussed there, but the fourth needs further consideration. While the survey did not directly address the last three reasons posited here for sponsorship, there is none the less considerable evidence from other aspects of the survey to suggest support for such an hypothesis. The various reasons for sponsorship though are not independent but often operate together;

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nonetheless for purposes of analysis it is useful to consider each reason/rationale separately. 2.2.1. Promotion of Image/Name Promotion of image/name is the reason for sponsorship that ts closest with the reasons, outlined above, in some of the non-economics literature. An interesting issue here is the distinction between promotion that occurs when a company funds an event with an explicit link to a product it produces and when no such link exists. It is the latter that is of most relevance to the arts. Examples of the former would include a tyre manufacturer funding a motor race or a company promoting a brand of running shoe by donating funds to a marathon. With this type of sponsorship, the event provides an opportunity to promote the brand directly and such opportunities arise much more frequently in relation to sports than arts events. It could be argued that such expenditure is more akin to advertising than sponsorship, and that pure sponsorship might be seen as the funding or promotion of an event that is not intrinsically linked to the sponsoring companys core products. Thus, for example, using this distinction, a banks sponsorship of a theatre festival constitutes sponsorship rather than product promotion. Such sponsorship may enhance the demand for the product of the sponsoring company, but this occurs via the promotion of the image of the sponsoring company rather than by the explicit branding of one of its products. A beer company sponsoring an art event would be doing so in order to improve the recognition of its name generally or to promote goodwill towards the company amongst consumers, which might in turn increase its sales. As mentioned, it is this type of sponsorship that is of most relevance to the arts. A particular attraction of both types of sponsorship in enhancing company or product image is that such sponsorship may enable the company to obtain publicity that is not sold in the marketplace, such as access to media coverage. A company may buy media coverage in the form of advertising, but this is not the same as having articles or news time devoted to the event. The latter product cannot be bought (unless corruptly). Such media coverage is a more subtle form of advertising than direct advertising, and may be more credible for the company. On the other hand, a company cannot control media coverage in the same way that it can control the content of an advertising campaign. The media coverage of the doping scandal surrounding the 1998 Tour de France is a good case in point. The identication of a demand-enhancing rationale for sponsoring an arts event suggests that attendance (the nature of attendance being particularly important in this regard) at the arts event should be broadly correlated with the demand for the rms products. A rm selling on a national market would wish to sponsor a national event or an event of national signicance whereas a rm selling only on a local market might prefer to sponsor a local or community event (or some national network thereof). We would also expect to nd that such events have to be capable of attracting considerable media attention, so that they would tend to be high prole or prestigious events at the relevant level.

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2.2.2. Supply-Chain Cohesion The sponsorship of an arts event might also assist in making production more efcient. This can occur internally if the event is focused on the employees of the rm or externally if the sponsorship is used to improve or consolidate links with key suppliers. This type of motivation might be termed supply-chain cohesion to capture the idea that the company wishes to improve the goodwill of its own employees or its suppliers toward the company. As such, its rationale is one of reducing costs by avoiding industrial relations tensions and/or by enhancing synergies in the supply chain. An example that illustrates this motivation is the sponsorship by a company of an arts festival in the town in which it is located, a central focus of which might be the participation of the employees of the company. Where a company engages in sponsorship for supply-cohesion reasons, the arts event is likely to be correlated with the employees or suppliers of the company (i.e. supply markets) rather than with its consumers. Thus, for example, one would look for evidence of supply-chain cohesion if a company that is competing on international markets chooses to sponsor a local arts event in the country in which it is located. However, where markets in which a company buys its inputs and sells its outputs are geographically similar, it will be difcult, without further information, to identify whether the rationale is to enhance demand or supply-chain cohesion. Even if the supply and demand markets differ, overlap can exist. For example, a company promoting its image with consumers might also take advantage of the event to engage in corporate entertainment that might come under the heading of supply-chain cohesion. 2.2.3. Rent Seeking Sponsorship of an arts event may also be used as a means of rent-seeking so as to enhance demand (e.g. by restrictions on competition) or to reduce costs (e.g. by subsidies). This is a term that is not used in the non-economics literature, although several people allude to a similar motivation. It is mentioned in the corporate philanthropy literature, as seen earlier. We distinguish here between direct or narrow rent-seeking and indirect or broad rent-seeking. Direct rent-seeking involves using sponsorship of the arts event directly to lobby decision-makers. It would thus include corporate entertainment of politicians, civil servants or other decision-makers or inuential individuals. In such cases, this might be a relatively crude and observable means of rent-seeking. If, in contrast, the company sponsored an event that is close to a key decision-makers private preferences for the arts, the motivation might be completely undetectable even with detailed information on the decision-making within the sponsoring company. A rm may also have the possibility of indirect rent-seeking, by which we mean altering the environment in which decisions affecting the rm are made. Direct lobbying for a particular decision or treatment might be more effective if the general public image of the company were good: in this way, the public

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image of the company and direct lobbying are complements. Thus, a company that promotes a benevolent and worthy image among the general public may obtain a higher return to its other direct lobbying activities than one that has a poor public image. Consider, for example, the case of a monopoly lobbying for protection from competition. By choosing to sponsor high-prole national arts events, the monopolist appears to have some positive benets for society: monopoly rent is not being totally appropriated by the company or its employees but owing back to the community. The unquantiable benets from the sponsorship would at least confuse the public as to the overall welfare effect from more competition. It might even convince them that the welfare effect of the monopoly could be positive when in fact it is negative. Identifying a direct or indirect rent-seeking motive for sponsorship of arts events might be difcult. Companies are unlikely to want to disclose such information, especially in a written questionnaire. Besides, a company might be more concerned with local planning regulations than with national policy variables, so that the geographical scope of the event would not be useful in determining the extent of any rent-seeking. On the other hand, the presence of direct lobbying would provide some indication that political goodwill (as opposed to product goodwill) might be the motivation. 2.2.4. Non-Monetary Benet to Managers or Owners The nal motivation category for corporate sponsorship that we suggest concerns the private consumption by managers or owners of the rm, a factor which may be particularly important in relation to arts sponsorship. A rm might sponsor an arts event, not because it increases prot in any form, direct or indirect, but rather as a form of philanthropy that provides a non-monetary benet for its managers or owners. This motivation is quite similar to that discussed by Useem (1987). In a competitive market, post-tax prots due to risk-taking could be taken directly as income for the owner(s) of the rm who bear the risk. An owner though might nd it preferable to sponsor an event via the company rather than personally if the tax position favours giving by companies over that by individuals (see OHagan, 1998, Chapter 5). The owner might, alternatively, not wish to declare fully his or her income, either to avoid attention or for reasons of modesty, and instead take some of it as a benet-in-kind payment, in terms of having the personal non-monetary benets that ow from being directly associated with the companys patronage of the arts. This type of sponsorship lacks a purely commercial or protincreasing motivation, and thus it qualies as philanthropy, albeit individual and not corporate philanthropy in this case. A possibility also exists for a manager to take part of his or her compensation in the form of discretionary control over a sponsorship budget for identical reasons to those of the owner as just outlined. However, for a manager there is an additional possible explanation for sponsorship in the form of a failure in the mechanism of corporate control. If owners cannot easily identify discretionary control over sponsorship as compensation for the manager, sponsorship of an event might present

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a means for a manager to enhance his or her actual compensation relative to that perceived by the owners. While there is an element of philanthropy in such sponsorship, it is a debatable point whether donating someone elses money, unbeknownst to them, should be termed philanthropy. Several factors may help in identifying an individual philanthropic motive in business sponsorship. The rst is that an individual within the organisation has discretionary control of the sponsorship budget. The second is that there is no clear internal corporate rationale for the event sponsored and that the evaluation procedure to assess the benets of the policy is either scant or non-existent. The third might be a close personal involvement of the individual in the organisation of the event. All or some of these may apply simultaneously as they are not discrete factors. 3. Details of Survey Method and Main Results 3.1.
SURVEY METHOD

One hundred and nine companies were surveyed about their involvement in sponsorship of the arts in Ireland. A Coth list of companies nominated for an Arts Sponsor of the Year award provided seventy of these names and the remaining names were assembled from various patron lists, business magazine listings and newspaper information.1 Eighty one companies responded, a 74 per cent response rate. Of these, ten companies said that they did not get involved directly in arts sponsorship and two companies were not able to complete the questionnaire due to lack of information. The remaining sixty-nine companies (63 per cent) completed the survey questionnaire on 129 events (due to multiple events sponsorship), and this forms the data set on which the results are based. A pilot survey was issued to ten companies in July 1996, with follow-up telephone calls. After some renements the nal survey was issued in September 1996. Companies that were known to be major arts sponsors, such as some banking and computer companies, were interviewed individually, and a survey questionnaire was posted to the other companies. The nal data set contains three potential sources of bias. First, the survey itself is biased in that it only seeks to obtain information from companies that do sponsor arts events. This reects the focus of the study on the behaviour of companies that do sponsor arts events, but a more complete understanding could be obtained by also sampling companies that are not involved in arts sponsorship. This bias also has the effect that the survey comprises a disproportionate share of large companies, these being the most obvious sources of sponsorship. The second possible bias is self-selection in the responses. It is possible that those companies that respond represent, for example, those with the most favourable experience of sponsorship and that those with a negative experience would be less inclined to reply. Given the response rate of 74 per cent, the likelihood of this bias seriously affecting the results is small. Third, there is individual incentive bias in that the

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individual completing the survey is, in almost all cases, closely involved with or responsible for the sponsorship decision. This means that they would be unlikely to respond negatively about their own decisions, but this dimension of the survey is not one of the issues of relevance to this paper (see Harvey, 1999, for further details on this). The survey was designed to reveal the motivations, returns and future direction of arts sponsorship. Questions were restricted to those necessary to elicit information that was not available publicly about each of the companies (a copy of the survey questionnaire is available on request from the authors). The rst question was designed to reveal the motivations underlying arts sponsorship. Individuals were asked to rank their answers so as to indicate the order of importance of their motivations. Several questions asked how successful the sponsorship was in achieving these objectives, whether or not an arts event was specically sought out to achieve the objectives, what an arts event offered over and above sports or other sponsorships, and whether or not a specic age or socioeconomic audience was targeted. Other questions investigated how the event was selected, who approved the decision and the extent of company involvement in staging the event. The questions then explored the level of expenditure on sponsorship in general, and on arts sponsorship in particular, and the source of accountability of such expenditure within a company. Respondents were asked about the future direction of arts sponsorship both in terms of the existing event and other arts events, as well as about the company itself in terms of the number of employees, and the procedures in place for evaluating the returns from sponsorship and assessing sponsorship applications. The nal section provided the respondents with the opportunity to add additional comments, which a great number did. The focus of this paper will be on the responses to the question on motivations, but data resulting from several of the other questions will be used where relevant. The events sponsored vary greatly both in terms of the size of the event and in the funding received. Many of the companies questioned are involved in sponsoring several arts events. This presents three possible weights for the responses to the survey. Weight by company regardless of number of events or expenditure. By ignoring the number of events and expenditure, this biases the results towards the responses of companies sponsoring small single events. Weight by event regardless of expenditure, so that a company that sponsors two events gets twice the weight of one that sponsors one event. Weight by the sponsorship expenditure of each company. This biases the results towards the top ve companies that account for 63 per cent of total expenditure. Most of the companies revealed their expenditure on a condential basis. For those companies that did not divulge this information, the information received from other companies in the same industry was used to estimate levels of expenditure solely for the purposes of weighting the results

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for data analysis. In reporting results all three weights will be used, but the results based on expenditure weights should be treated with caution as they are dominated by a small number of large companies. The survey covered all companies in our nal list, large and small, that sponsor arts events and thus covered the full range of sponsoring companies. Clearly though, in terms of total expenditure, the large companies tend to dominate, a nding that is consistent with the pattern found elsewhere (see, for example, Useem (1987), and Burlingame and Frishkoff (1996)). There were many small/medium sized companies in the survey though, and as will be seen they tend to sponsor local rather than national events. The vast majority of companies sponsoring are Irish owned; in the case of the small number of international companies (only 5 per cent of the total) involved, decisions are made locally, but in general terms many multinational companies operating in Ireland are restricted by overall corporate policy as to what they may or may not sponsor. The main outlet for sponsorship by international companies in Ireland tends to be for sport. The type of arts event that companies sponsored broke down as follows: 29 per cent of companies sponsored arts-related festivals, 28 per cent the visual arts, 19 per cent drama/dance, 16 per cent concerts and 16 per cent literature (writing, poetry, etc.). The sponsoring companies tend to come from specic sectors, with the food and drink sectors (dominated by two brewing companies) and nancial services (dominated by the two largest domestic banks in the country) accounting for 50 per cent of all expenditure; information technology companies and the motor trade combined accounted for a further 29 per cent of the total. 3.2.
KEY RESULTS

The rst question was designed to answer the central question in this paper: why do companies sponsor arts events? Respondents were invited to rank their answers in order of importance, with 1 being most important and 5 least important.2 They were asked to do this in relation to two matters, rst the promotional objectives of sponsorship and second the opportunities offered by sponsorship to do certain things with these promotional, and other, objectives in mind. Many respondents gave a 1 ranking to more than one category, most important and hence the number of 1 ratings recorded exceeded the number of questionnaires completed (note therefore that the numbers in the rows in Table I do not sum to 100, but the numbers in the columns do, when summed by company, event or expenditure). Many companies did not rank some of the factors. The basis for the questions was the existing sponsorship literature (see earlier) and suggestions on earlier drafts of the questionnaire from key personnel involved with sponsorship in Ireland. Table I provides the main results from the rst part of the rst question.3 As may be seen, the promotion of corporate image is by far the most important reason cited for sponsoring an arts event, with 43 per cent of companies stating this to

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Table I. Ranking of the promotional elements offered by sponsorship of arts events (percentage of companies, arts events, total sponsorship expenditure)
Ranking 1 Company Event Expenditure Company Event Expenditure Company Event Expenditure Company Event Expenditure Company Event Expenditure Company Event Expenditure Company Event Expenditure Corp. name 27 23 22 19 20 23 22 22 23 3 2 1 7 9 7 22 24 24 3.1 3.3 3.2 Corp. image 43 60 75 25 22 16 9 5 2 9 5 2 3 1 0 11 7 5 2.4 1.9 1.5 Brand name 22 32 36 6 3 1 3 2 0 16 10 9 10 8 7 43 45 47 4.2 3.9 3.9 Brand image 15 28 35 9 5 1 9 5 2 7 4 3 14 12 13 46 46 46 4.3 4.1 4.0 Local image 23 34 37 17 14 17 19 28 34 6 3 0 9 5 1 26 16 11 3.4 2.8 2.4

Not ranked

Weighted mean

Note: Where an event was not ranked, it was given a rank of 6 in the calculation of the means.

be the case and these companies accounting for 60 per cent of all events and 75 per cent of total arts sponsorship expenditure. Only 11 per cent of companies gave it no ranking, and these accounted for as little as 5 per cent of total sponsorship expenditure. The distinction between corporate name and image is important; many companies whose names are well known to the public would be primarily involved in promoting company image (e.g. Carlsberg in Denmark, or BMW in Germany) whereas other companies might use sponsorship of an arts event to promote the name of the company. For 27 per cent of companies this was the case, but these accounted for only 22 per cent of total sponsorship expenditure, indicating that they were the smaller companies involved in the survey. In the case of promoting brand image and brand name, the position is quite different. 43 and 46 per cent of companies respectively did not rank these factors at all (a further 10 and 14 per cent of companies gave these factors the lowest ranking) but for a minority of companies (22 and 15 per cent respectively) the promotion of brand name and brand image is considered to be most important. The promotion of the image of the company at a local level comes out somewhere between the

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promotion of the image of the company (at a national level) and the promotion of brand name/image. Only 26 per cent of companies gave it no ranking and 23 per cent ranked it as most important. All of the above is summarised quite succinctly in the means for each of the promotional factors, outlined in Table I. The mean for corporate image is as low as 1.5 when expenditure is used, compared to gures of 2.4 for local image, 3.2 for corporate name and 3.9 and 4.0 for brand name and image respectively. A similar differential is evident when the gures by company or event are examined, conrming the dominant position of company image as the promotional factor of most importance. Table II examines the results in relation to the second part of this question. The picture here is less clear-cut. Though most companies see media coverage as the main opportunity offered by sponsorship, with 41 per cent giving it the most important ranking and only 22 per cent not ranking it at all, it is also clear that few companies see sponsorship as providing an opportunity for testing new products (through sampling) or for directly increasing sales. 21 per cent of companies see it as an opportunity for corporate hospitality, and these companies account for 45 per cent of all sponsorship expenditure; thus, for the large companies, the opportunity for corporate hospitality is next in importance after media coverage. There is some evidence that the larger companies see sponsorship as an important opportunity to improve employee motivation, with 17 per cent of companies (accounting for 43 per cent of expenditure) ranking it as second most important; 46 per cent of companies though do not rank it at all. Once again the data on weighted means provided in Table II summarise well these ndings.

4. Analysis of Results In this survey, promotion of corporate image dominated as the main promotional reason for sponsorship, with companies accounting for 75 per cent of all expenditure listing it as most important. This perhaps is the most striking result to come out of the responses. Related to this is the nding that companies accounting for 39 per cent of total sponsorship expenditure see media coverage as the main opportunity offered by sponsorship of an arts event; 45 per cent of them see the opportunity for corporate hospitality as most important. Media coverage, as mentioned, links directly to the image-promotion objective: while the opportunity for the provision of corporate hospitality may also link to image promotion, it may in fact provide evidence of other factors at work. These ndings hold no matter which of the ve main art forms is considered: 85 per cent of those companies who sponsored arts festivals ranked corporate image as 1 or 2 in terms of motivation for sponsorship, the corresponding gures for visual arts, drama/dance, literature and music being 79 per cent, 77 per cent, 82 per cent and 100 per cent.

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Table II. Ranking of the opportunities offered by sponsorship of arts events (percentage of companies, arts events, total sponsorship expenditure) Ranking Corporate hospitality Company Event Expenditure Company Event Expenditure Company Event Expenditure Company Event Expenditure Company Event Expenditure Company Event Expenditure Company Event Expenditure 21 31 45 10 17 18 10 13 18 7 4 0 10 11 8 42 24 10 4.0 3.2 2.4 Sampling Employee motivation 9 8 5 17 36 43 17 7 11 10 3 1 12 9 7 46 37 33 4.7 3.8 3.6 Media coverage 41 42 39 20 26 28 20 12 15 10 2 3 4 5 4 22 13 10 3.3 2.4 2.3 Increased sales 9 5 2 13 8 6 13 5 1 9 5 9 13 46 66 49 31 16 4.7 4.7 4.8

3 2 2 6 14 20 6 4 2 10 14 13 10 9 14 65 57 49 5.2 4.9 4.6

Not ranked

Weighted mean

Note: Where an event was not ranked, it was given a rank of 6 in the calculation of the means.

The opportunity that sponsorship provides for improved employee relations and more corporate hospitality was considered, and it was clear there that more corporate hospitality was a very important consideration for some companies, especially the larger companies: improved employee relations was the main factor for 9 per cent of companies, and these were mainly the smaller companies. Evidence for the existence of a supply-cohesion motivation also comes when one looks at the geographic scope of the arts events. Corporate hospitality can be targeted at one or all of suppliers, employees, existing or potential customers and legislators. Over 90 per cent of the companies surveyed have national/international customer bases, yet 48 per cent of companies (accounting for 82 per cent of all events) sponsor arts events that have a local audience, suggesting that for many companies promotion of the image of the company or its products in order to increase sales is not the main

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motive for sponsorship. Instead it points, as argued above, to a supply-cohesion and/or possibly a rent-seeking motive. What does the survey tell us about the rent-seeking motivation for sponsorship? As seen, corporate hospitality ranked high for many of the larger companies, and this can be linked to a rent-seeking motivation. Further evidence can be gleaned from the answers to the other questions and the further comments section of the questionnaire, and from responses to personal interviews with representatives of 21 of the larger companies. In the case of the latter, 16 of the companies, on closer questioning and off the record, admitted to a rent-seeking motive for sponsorship, whereas the other 5 did not indicate any rent-seeking motivation. A further six companies, through their unsolicited responses to the questionnaire, indicated a rent-seeking motivation. This factor then is clearly an important consideration in the sponsorship decision, at least in relation to the companies surveyed, and yet it is a factor that has been given little attention in the arts-sponsorship literature. Further evidence to support this can be gleaned from the fact than many of the main sponsors of arts events appear to operate in markets where a few companies dominate and into which new companies typically nd it difcult to enter. Moreover, price competition, at least until before the advent of the single currency in the eurozone, tended to be weak. All of these factors provide a strong incentive for these companies to engage in rent-seeking. Does the survey provide any evidence on the individual philanthropic motivation for sponsorship? As seen, it was not addressed directly in the key question (it probably would have been difcult to elicit accurate information anyway), but other aspects of the survey can throw light on this factor. The approval of the sponsorship decision within the company varies considerably (Table III). Those companies that are the largest sponsors of the arts (7 per cent of companies that account for 63 per cent of all expenditure) tend to have the most systematic decision-making process, including a special committee. While most of the expenditure decisions devoted to arts sponsorship are taken collectively within the company, a sizeable proportion is at the discretion of a single individual, although this affects a lower amount of all sponsorship, as measured by events and expenditure. One question of the survey asked whether or not the company had a system for assessing sponsorship applications in place; 41 per cent of companies indicated that they had no system in place (the percentage could be a lot higher for arts sponsorship applications), and it could therefore be argued that some of this is the result of personal consumption by managers/owners. Finally, there is evidence to suggest close personal involvement of some individuals in the organisation of arts events. While almost all companies in the survey provided funding, 26 per cent of them were involved in running the event and 39 per cent in planning it. Another interesting statistic is that personal contact is an important factor in selecting an arts event for sponsorship. All of these bits of evidence, it could be argued, are suggestive of the fact that personal consumption by managers/owners may be a signicant factor in explaining some forms of arts sponsorship.

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Table III. Decision-making within the company (percentage of companies, arts events, total sponsorship expenditure) Companies Group: Group: Individual Individual Individual Other Total Special committee Board Chief executive Marketing/PR director: Chairman 20 16 23 28 4 9 100 Events 51 12 14 16 2 5 100 Expenditure 66 14 8 7 4 1 100

Source: Company replies to survey. Note: The Sponsorship Committee or the Board may include any or all of the chief executive, the marketing/PR director or the chairman.

An interesting question to ask might be to what extent different types of decision structures affect motivations/opportunities, as listed in Tables I and II. In relation to motivations, when decisions are taken by a group, the promotion of company image is even more dominant as the main motivating factor than that shown overall in Table I, but it is less so when decisions are made by individuals. This is where there is the most striking difference between the two, although promotion of company image still ranks very highly even when decisions are made by individuals. In relation to opportunities offered by sponsorship, the only major difference between companies in which decisions are made by groups and those made by individuals relates to media coverage; as one would expect from the above, where decisions are made by a group, media coverage comes out even more dominant than was the case overall, as outlined in Table II. How do the ndings above compare to the results from similar surveys on corporate sponsorship? The most directly comparable study is one done in New Zealand by Hoek et al. (1990). Their survey covered only 19 companies, but these were the major sponsors of specic sporting, cultural or community groups; only seven of the companies sponsored cultural groups. Six sponsorship objectives were given and companies had to use a ve-point scale to rank the importance of these, with the highest score (5) being awarded to the most important. The six objectives used were: improving goodwill, enhancing image, increasing awareness, improving protability, management interest and staff recruitment. For sponsorship of cultural industries extraordinarily high mean scores were given for the rst two of these. It is difcult to know how to interpret improving goodwill in the context of the discussion above, except perhaps that it may relate to rent seeking and supply-chain cohesion. It must also be remembered that sample size was only seven. Kirchberg (1996) examined the motivations for corporate giving to the arts, including both sponsorship and philanthropic giving, in Potsdam in Eastern Ger-

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many. The ndings were based on interviews with 11 corporate leaders, and social responsibility and corporate image emerged as the dominant motivations for corporate giving. It is likely that the former relates to philanthropic giving and the latter to expenditure on sponsorship, the latter in line with the ndings of this study and others. Personal interest was also listed as an important factor, although it is not clear whether or not this applied to both philanthropic giving and sponsorship. Burlingame and Frishkoff (1996) contains some very interesting results on how rm size affects corporate philanthropy in the United States. The studies reported on, though, relate to corporate philanthropy only and have limited direct comparison with the study reported here. Hitters (1996) perhaps has conducted the most extensive survey in this area, interviewing by telephone 154 companies in the Rotterdam metropolitan area (six of the largest companies were interviewed by a personal visit). Forty-two per cent of the companies were sponsors in the cultural eld and among these companies an additional extensive survey was conducted (covering 60 companies) including questions about their backgrounds, motives, extent of their support, and the organisation of contributions and sponsorship. All companies were asked to interpret nine statements about the role and responsibility of business toward society, the community and the arts. In addition, all companies were asked to give certain company characteristics. The ndings are of interest and really provide the best direct comparison with this study, in the sense that it was only sponsorship to the arts sector that was examined and a large sample of companies was involved. The list of motivations provided, though, differs from those used here, and companies do not appear to have been asked to rank motivations where more than one motivation was provided by a company. Nonetheless, it is noteworthy that 55 per cent of the 60 companies involved listed marketing/public relations as the main motivation; the next highest stated motivations were enhance relations (33 per cent), community relations (25 per cent), corporate responsibility (15 per cent), personal commitment and enhance brand recognition (13 per cent each), employee benets (8 per cent) and tax deduction (0 per cent). The author states that enhance relations means enhancement of business contacts, customer relations or connection to a commission. This would link to the supply-chain cohesion mentioned earlier and also to the marketing/public relations motivation.

5. Conclusion Sponsorship of the arts makes up a tiny proportion of total expenditure on sponsorship by companies. In the United States in 1995, only 6 per cent went to the arts; 65 per cent went to sports and 10 per cent to pop music/entertainment (see Kotler and Scheff, 1997, p. 176). It is predicted though by Kotler and Scheff that expenditure on sponsorship will grow signicantly and that whether or not the arts assumes an increasing share of this expenditure is largely up the to the arts institutions

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themselves. The rst step in exploiting this opportunity is for arts organisations to understand why it is that companies engage in sponsorship. This paper has suggested that a useful classication system of why companies sponsor arts events might be to place the reasons into four groupings: promotion of image/name, enhanced supply-chain cohesion, rent-seeking opportunity, and the provision of non-monetary benets for managers/owners. The survey, unfortunately, was carried out before this classication became evident; it was in fact as a result of examining the survey results that such a classication suggested itself. Nonetheless, useful bits of evidence could be gleaned from the survey to suggest considerable support for each of these motivations. The study suggests that the dominant motivation by far for sponsorship is related to promotion purposes, chiey promotion of company image or name. This is conrmed by a major survey of business sponsorship of the arts (Hitters, 1996); the ndings of a smaller study for New Zealand (Hoek et al., 1990) also support this. While the term supply-chain cohesion is not used in these studies, there is evidence in both that this is a motivating factor in sponsorship of the arts; this is also the case in relation to the motivating factor of a personal interest/psychic gain relating to the owners/managers, with both studies listing this, at least indirectly, as a factor. Neither study alluded to rent-seeking motivations, but it could be that enhancing goodwill, which ranked top in the New Zealand study has strong elements of rent-seeking involved, and likewise for the factors corporate responsibility and community relations in the Hitters study. The most explicit reference to a rent-seeking type motivation in fact appears, as discussed, in the motivations for philanthropic-giving literature. Which brings us back to the Schuster (1997) quotation used at the beginning of this article: are the motivations for corporate philanthropic giving and corporate sponsorship different, if so in what respects, and if not, what are the similarities? The discussion in this paper has suggested that while the neoclassical model for philanthropic giving equates such giving very closely to sponsorship, there are other very important reasons for philanthropic giving that really do not apply at all to sponsorship, namely the political model rationale discussed earlier. Besides, even where the neoclassical model of philanthropic giving applies, such giving cannot be so explicitly tied to promotion/marketing as can sponsorship. Moreover, philanthropic giving can only be set against tax when it goes to charities, whereas no such restriction applies to sponsorship expenditure. Finally, while the paper has argued that the dominant motivation for sponsorship is promotion of company image/name, other factors also apply. Supply-chain cohesion and rent-seeking t clearly into the neoclassical model and are directly related to bottom-line considerations. There is also though a philanthropic element, no matter how small, to sponsorship, and this applies in particular where an individual is concerned, usually in small companies.

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Acknowledgements The authors wish to thank two anonymous referees and the co-editor, Mark Schuster, for some very helpful comments on earlier drafts of this paper, John Fingleton, Trinity College Dublin, for comments and suggestions, and Roddy Guiney, Wilson Hartnell, Dublin, Paddy Hayes, Corporate Image, Dublin, and Gerry Watson, Coth, Dublin, for helpful advice and information at an early stage of this project. They would also like to thank Anna Gaio, City University, London, Brenda Gainer, York University, Toronto, and Hein Leemans, Tilburg University, for providing useful references/contacts. Finally they would like to thank Showerings (Ireland) Limited for funding a graduate scholarship for the second listed author, as this paper draws partly on the thesis undertaken for her graduate work.

Notes
1. Coth is the Business Council for the Arts. 2. Likert scales such as this are commonly used when attempting to give numerical values to attitudes. Five choices ranging from to strongly in favour to strongly disagree are offered, the alternatives being scored from 1 to 5. Normally, the more positive statements are ranked with the highest score: the reverse applies in this study, but we have no reason to believe that this impacts on the ndings. 3. Means are provided for each column by company, event and expenditure. These provide a useful summary measure of the central tendency of the responses. The data though were not consistent enough to permit expression of the means in the lowest-to-highest ranking terms.

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