Public Relations Review 32 (2006) 144–150

Conditioning effect of prior reputation on perception

of corporate giving
Jiyang Bae ∗ , Glen T. Cameron
School of Journalism, University of Missouri-Columbia, 15 Broadway Village Drive #G, Columbia, MO 65201, USA
Received 25 September 2005; received in revised form 3 February 2006; accepted 22 February 2006

Abstract
Prior corporate reputation, one responsibility of a public relations department, affects public perceptions toward corporate phil-
anthropic messages and ultimately affects public attitudes toward the company. Using an experiment that emulates the sort of
news consumption individuals normally undertake, participants inferred corporate charitable giving as a mutually beneficial activity
when a company had a good reputation (H1a). Participants inferred corporate charitable giving as a self-interested activity when the
company had a bad reputation (H1b). Also, public inference (suspicion) successfully mediated corporate prior reputation on public
attitude toward the company (H2). Participants showed positive attitude toward the company when they inferred the company had
an altruistic motive for charitable giving (H3a). However, participants showed negative attitude toward the company when they
inferred the company had a self-interested motive for charitable giving (H3b).
© 2006 Elsevier Inc. All rights reserved.

Keywords: Philanthropic activity; Corporate reputation; Attitude; Suspicion

1. Introduction

Public relations professionals argue that corporate reputation is important to the viability of an organization and that
public relations plays a main role in the safeguarding of reputation. In spite of the putative importance of corporate
reputation, little empirical research has been undertaken in attempting to quantify corporate reputation (Lyon &
Cameron, 2004). This untested claim may be even more true of a particular strategy employed in corporate reputation
building such as charitable giving.
Since the late 1990s, corporations have made a concerted effort to donate money to valuable social causes. The
purpose of such socially responsible activity is mainly related to increasing positive public perceptions of contributor
corporations. However, some researchers questioned whether philanthropy always leads to better business because
publics often perceive it as self-interested behavior. Such skepticism by publics can diminish future corporate reputation.
It is important to study what kinds of antecedent factors affect the public’s response toward corporate philanthropic
messages. Several scholars have revealed that a good reputation can be a buffer for minimizing negative reactions
toward corporations. For example, in times of crisis, a company has a wider array of response strategies if it has a
good reputation prior to the crisis because publics are apt to believe the corporation’s responses are more honest than

∗ Corresponding author. Tel.: +1 573 356 7610

E-mail address: jbvb4@mizzou.edu (J. Bae).

0363-8111/$ – see front matter © 2006 Elsevier Inc. All rights reserved.
doi:10.1016/j.pubrev.2006.02.007
 J. Bae, G.T. Cameron / Public Relations Review 32 (2006) 144–150 145

others (Lyon & Cameron, 2004). Furthermore, depending on prior corporate reputation, publics may view corporate
philanthropic messages differently. If a company has a good prior reputation, its philanthropic messages are interpreted
as a mutually beneficial activity rather than being perceived as a self-interested activity. This mechanism will affect
public attitudes toward the company.
The research question posed in this study attempts to verify whether prior corporate reputation affects public
perceptions toward corporate philanthropic messages and ultimately affects public attitudes toward the company.
If this study substantiates that prior corporate reputation positively affects public perception and attitude toward
corporate philanthropic activity, the importance of the corporate public relations function will be increased, corporate
philanthropic managers will learn to be more sophisticated concerning public reactions toward prosocial messages,
and finally, they will be able to utilize the knowledge to plan more strategic prosocial messages.

2. Background and literature review

Active engagement of prosocial activity and the well-packed presentation of their activity through several com-
munication vehicles is a new communication strategy among American companies. American corporations donated
charitable gifts of more than US$ 13.48 billion to valuable social causes in 2003 (AAFRC, 2004). In addition to the
active engagement of prosocial activity, corporations work to provide information about their prosocial activities to
important publics. More than 80% of Fortune 500 corporations actively present their engagement of corporate social
responsibility issues through web pages (Esrock & Leighty, 1998).
The primary purpose for active engagement in prosocial activity is to increase corporate reputation as a function of
good citizenship. However, several researchers have raised a critical question: Does doing good always lead to doing
better? (Sen & Bhattacharya, 2001). Some researchers have found that corporate prosocial activity increased positive
attitude toward the company (Rodgers, 2003) while other researchers found negative impacts (Dean, 2003/2004).
Minimal research has been executed in the attempt to reveal why some prosocial activities produce positive effects and
others do not.
It is necessary to identify which factors mediate the production of inconsistent results. Identifying these factors
will help corporations make appropriate decisions about prosocial activity and provide researchers with important
guidelines for building a research framework. Therefore, the purpose of this study is to reveal important factors, which
affect the results of corporate prosocial activity.

2.1. Prior corporate reputation as the leverage of prosocial activity

Corporate reputation can be defined as “a cognitive representation of a company’s actions and results that crystallizes
the firm’s ability to deliver valued outcomes to its stakeholders” (Fombrun, Gardberg, & Barnett, 2000, p. 87). Good
corporate reputation brings several tangible and intangible benefits to corporate business environments such as favorable
media coverage (Fombrun et al., 2000). Managing the corporate opportunity platform and safety nets that originate
with the external eye of beholders should be the main role of public relations practitioners.
Public relations practitioners have strived to build long-term and mutually beneficial reputations through several
public relations campaigns. However, a comprehensive understanding about how good public reputations plays a critical
role in benefiting corporations is lacking among public relations practitioners because few researchers have empirically
revealed the effectiveness of good reputation management. Thus, it is necessary to determine the mediating variables
that can fill the gap between good reputation and corporate benefits because such information helps practitioners plan
better calculated strategies for corporate viability and to avoid boomerang effects from well-intended behavior.
Lyon and Cameron (2004) successfully showed that participant responses toward bad publicity could vary, depend-
ing on prior corporate reputation. With manipulation of corporate reputation, the results showed that in times of
crisis, a company can have more broad response strategies if it has a good reputation prior to a crisis, because con-
sumers are apt to believe the corporation’s responses are more honest than others. So, if a company has a good prior
reputation, its prosocial messages are interpreted as a mutually beneficial activity (low suspicion level) rather than
being perceived as a self-interested activity (high suspicion level). Based on this logic, the following hypotheses are
derived:

H1a. Publics will infer corporate charitable giving as a mutually beneficial activity if a company has a good reputation.
146 J. Bae, G.T. Cameron / Public Relations Review 32 (2006) 144–150

H1b. Publics will infer corporate charitable giving as a self-interested activity if a company has a bad
reputation.

In this study, only charitable giving (no tax deduction) is the research interest because other kinds of prosocial
activities such as cause-related marketing (CRM) and sponsorships are relatively conditional, short-term, and their
primary purpose is significantly related to marketing activities aimed at influencing consumers, they are somewhat
closed to the marketing-related research domain. Clarifying that this study confines the nature of prosocial activity to
corporate charitable giving can reduce confusion about the difference of effectiveness for various prosocial activities.

2.2. Public suspicion toward corporate charitable giving

A possible reason why the nature of corporate prosocial messages produces different effectiveness can be derived
from the degree of public suspicion toward corporate prosocial activity. Corporate prosocial activities can be dif-
ferentiated by how conditional the activity is. CRM has been considered as the most conditional prosocial activity,
and is subsequently enough to cause public suspicion about a company having a hidden motive behind any prosocial
activity (Dean, 2003/2004). Sponsorships have also been considered a contaminated prosocial activity in terms of pure
corporate philanthropy because sponsors have exclusive rights to promote their brand name in the sponsored event
or activity, which increases the possibility for exploitation of valuable social causes (see Rodgers, Cameron, & Brill,
2005).
Corporate philanthropic giving can be considered as the most effective prosocial activity for minimizing public
suspicion because of its unconditional nature. Creyer and Ross (1997) showed that CRM was the least effective way to
minimize the effect of unethical corporate behavior. However, even unconditional charitable giving was shown to cause
significant public suspicion. If this is true, it means publics also have some level of suspicion toward the unconditional
charitable giving.
Suspicion has a very strong impact on minimizing people’s fundamental attribution errors. Researches showed that
people have a stable and strong tendency to erroneously attribute target behavior, forced by external situations, to the
target’s internal disposition (Fein, 1996). Jones and Harris’s (1967) study clearly demonstrates this element of people’s
fundamental attribution error.
In the study, participants answered that the person who wrote the pro-speech would have a positive attitude toward
Castro, although they were informed that the author did not have any choice in selecting whether to write a pro- or
anti-Castro speech. A great amount of research has shown that “eliminating the correspondence bias in the inferences
drawn by participants in Western cultures has proven to be unexpectedly difficult, even in studies designed to make
the situational constraints surrounding an actor’s behavior seem extremely strong and obvious” (Fein, 1996, p. 1166).
Suspicion refers to “a dynamic state in which the individual actively entertains multiple, plausibly rival hypotheses
about the motives or genuineness of a person’s behavior” (Fein, 1996, p. 1165). That is, perceivers become suspicious of
the target when they have difficulty in clearly inferring the target’s motive, or they encounter multiple or incompatible
motives (Szykman, Bloom, & Blazing, 2004). When applying psychological suspicion to corporate philanthropic
activity, it is clear that publics (perceivers) become suspicious of a for-profit company’s motives when the company
donates money to social causes because a for-profit company’s main objective is to maximize corporate profits while
the objective in the unconditional donation of money to valuable social causes is to enhance social welfare.
These two motives (objectives) are quite incompatible in the consumer’s mind, making it difficult for consumers
to infer the real intentions or motivations of corporations. Ultimately, consumers become suspicious of the motivation
for corporate philanthropic activity.
Strikingly, however, people trigger a very sophisticated and active attribution process when they become suspicious of
something, causing them to reduce their fundamental attribution errors and accurately judge the target’s real motivation.
Fein (1996) clearly demonstrated how suspicion is effective in reducing people’s stable bias. When the researcher
presented the situation with ulterior information about the target, it made participants become suspicious of the target’s
motive and participants minimized their correspondence bias and tried to judge the target’s motive with an active and
thoughtful attributional process. So, we can assume that publics do not interpret corporate philanthropic activity as an
internally motivated activity because two incompatible motivations cause publics to become suspicious of a company’s
real intention, minimize correspondence bias, and accurately judge why the company did make unconditional corporate
philanthropic giving.
 J. Bae, G.T. Cameron / Public Relations Review 32 (2006) 144–150 147

If the company has had a bad reputation, they will search for the real intention behind a company’s pure charitable
giving. Corporate reputation has served as a signal about the company’s former, current, and future performance (see
Brown & Dacin, 1997). Therefore, publics will engage in a common surveillance function to search reputation infor-
mation as a means of minimizing fundamental attribution errors. That is, people will perceive corporate philanthropic
giving as a function of the company’s prior reputation. Furthermore, this sophisticated attributional process tends to
affect people’s attitude formation.
Jones and Harris (1967) found that participants negatively evaluated the speechwriters who wrote pro-Castro essays,
although participants were informed that the writer was forced to do so. Participants saw the ulterior motive of the
writer, became suspicious of the motive, and finally evaluated the writer negatively (also see Fein et al., 1990). That is,
corporate prior reputation can trigger audiences’ suspicion toward the real intentions of corporate prosocial activity;
and triggered suspicion can influence audiences’ attitude toward the company. Here, audiences’ suspicion mediates
between prior corporate reputation and audiences’ attitude. Mediation effect occurs when an independent variable (X)
causes an intervening variable (I), and the intervening variable in turn causes the dependent variable (Y) (Baron &
Kenny, 1986). Based on this logic, the following hypothesis is made:

H2. Publics’ suspicion will mediate corporate prior reputation on publics’ attitude toward the company.

Brown and Dacin (1997) and Sen and Bhattacharya (2001) revealed that CSR initiatives triggered consumers to
perceive the company positively and to form positive attitudes toward the company. Therefore, the following hypotheses
are derived:

H3a. Publics’ positive inference (low suspicion) about corporate charitable giving will affect publics’ attitude toward
the company positively.

H3b. Publics’ negative inference (high suspicion) about corporate charitable giving will affect publics’ attitude toward
the company negatively.

3. Method

3.1. Participants

In this study, 72 undergraduate students at a Midwestern University voluntarily participated. Undergraduate students
represent one important public that can impact a company’s public relations activity because they are active agenda
builders via online media. Also, Basil (1996) suggested that college students are an appropriate sample when researching
a hypothesized relationship among variables. Furthermore, design of this particular experiment is intended to examine
the more universal processes in judgments of the credibility of an organization in light of its past record. These universal
processes for dealing with information are robust, withstanding sampling criteria. Subjects were recruited from the
basic journalism course and received extra credit for their participation. The ages of the participants ranged from 19
to 23 years (mode = 20). Participants were treated in accordance with University guidelines involving human subjects.

3.2. Design

This study employed the between-subject experiment method, so participants were randomly assigned to two groups.
Two fictitious news stories describing a company’s reputation were created based on real news stories. Companies’
and people’s names were changed to irrelevant names and some paragraphs were modified for removing participants’
recognition and minimizing preexisting attitude toward companies. One story described a pharmaceutical company’s
good reputation and the other described the same company’s bad reputation. As stimulus material, another fictitious
news story was also developed based on a real news story, describing the company’s recent charitable giving to one
nonprofit health organization. The same procedure was used to minimize participants’ recognition and preexisting
attitude toward the company.
148 J. Bae, G.T. Cameron / Public Relations Review 32 (2006) 144–150

3.3. Procedure

The two groups were asked to read different news stories: either a company’s good or bad reputation article. Then,
the two groups were asked to rate the level of the company’s reputation. After rating the company’s reputation, the two
groups received a news story that described the company’s recent charitable giving and were again asked to rate the
company’s motive behind the philanthropic activity and their attitude toward the company.

3.4. Variable measures

Corporate reputation, a conditional variable in the study operationalized through favorability of initial news story
about a company, was measured on two dimensions: trustworthiness and expertise. Trustworthiness was measured
with two items using seven-point bipolar adjective scales: sincere/insincere and trustworthy/untrustworthy. Expertise
was also measured with two items using seven-point bipolar adjective scales: expert/not an expert and experi-
enced/inexperienced (α = .85–.92) (Newell & Goldsmith, 2001). Public suspicion, a mediating variable, was measured
on two dimensions: altruism and profit. Altruism (mutually beneficial motive) was measured with three items, using
five-point Likert scale (1 = strongly disagree, 5 = strongly agree) while profit (self-interested motive) was measured with
two items, using five-point Likert scale (Rifon, Choi, Trimble, & Li, 2004). Attitude toward the company, a dependent
variable, was measured with three items, using seven-point bipolar adjective scales; good/bad, pleasant/unpleasant,
and favorable/unfavorable (α = .90) (MacKenzie & Lutz, 1989).

4. Results

4.1. Manipulation check

An independent samples t-test confirmed that the perceived prior corporate reputation level between the two groups
was significantly different (Good M = 4.90, S.D. = .95; Bad M = 3.71, S.D. = .85) (t [70] = −5.61, p < .0001).

4.2. Hypothesis tests

Hypothesis 1a predicted that publics would infer corporate charitable giving as a mutually beneficial activity (low
suspicion level) if a company had a good reputation. Hypothesis 1b predicted that publics would infer corporate
charitable giving as a self-interested activity (high suspicion level) if a company had a bad reputation. With ANOVA,
results showed that participants who read the good reputation news story had a low score of suspicion (M = 2.528,
S.D. = .539, N = 36) while participants who read the bad reputation news story had a high level of suspicion (M = 3.033,
S.D. = .763, N = 36). Thus, Hypothesis 1a and 1b are supported.
The procedures used by Baron and Kenny (1986) were adopted to test the mediation effect for Hypothesis 2.
Hypothesis 2 predicted that public suspicion would mediate corporate prior reputation on public attitude toward the
company. To test this relationship, public suspicion was regressed on corporate prior reputation in Eq. (1) (reputation
β = −.292, p < .05, R2 = .086).
Public attitude toward the company was regressed on corporate prior reputation in Eq. (2) (reputation β = .571,
p < .01, R2 = .326). Finally, public attitude toward the company was regressed on corporate prior reputation and pub-
lic suspicion in Eq. (3) (reputation β = .421, p < .01; suspicion β = −.516, p < .01, R2 = .570). The results indicate
that corporate prior reputation serves as a significant predictor of public suspicion, and public suspicion partially
mediated the effect of corporate prior reputation on publics’ attitude toward the company. Thus, Hypothesis 2 is
supported.
Hypothesis 3a predicted that the public’s altruistic inference about a corporate charitable giving would result
in a positive public attitude toward the company. Hypothesis 3b predicted that the public’s self-interested infer-
ence about a corporate charitable giving would negatively affect public attitude toward the company. With sim-
ple linear regression, the results showed that public suspicion level and attitude toward the company had a
negative relationship (β = −.639, p < .001, F (1,70) = 48.21, p < .001, R2 = .408). In effect, the negative attitude
toward the company increased as the suspicion level of the public went up. Thus, Hypotheses 3a and 3b are
supported.
 J. Bae, G.T. Cameron / Public Relations Review 32 (2006) 144–150 149

5. Discussion

5.1. Implications

The study’s five hypotheses were all supported. The results of this study provide important theoretical implication.
First, usefulness of the attribution theory, suspicion and persuasion knowledge model in the corporate prosocial research
field was supported. In this study, symmetrical behavior was not always perceived in a favorable light, regardless of
the intentions of the company. Understanding of this invisible mechanism in the publics’ mind helps scholars build a
theoretical frame in the CSR field. Another theoretical implication might reside in the consideration of the priming
effects of recent news. News articles which convey the corporate reputation significantly influenced the suspicion level
and attitude formation of participants in this study.
This study suggests that an agenda setting effect or even a second-level agenda setting effect may be at play regarding
prior reputation. Further, symmetrical behavior in the form of charitable giving is not always perceived in a favorable
light, regardless of the intentions of the company. This limitation for accommodative behavior merits consideration as
evidence in support of the contingency theory of public relations developed by Cameron and colleagues. Evidence here
would suggest that accommodative behavior is contingent upon the precondition that corporate reputation is sound.
These results also provide practical implications. The results show that companies do not ineluctably enjoy effective
outcomes from corporate prosocial activity, even if the company makes significant monetary donations to valuable
social causes, when publics perceive that the company has a bad reputation. This indicates the importance of managing
corporate reputation and the possible futility of trying to restore reputation through charitable giving.
The study results suggest that public relations practitioners should focus on re-establishing and maintaining a good
corporate reputation before executing a public relations campaign includes prosocial activities. Practitioners probably
need to call for a reputation audit as a means to empirically confirm the corporate status prior to engaging in major
corporate giving with the serious backlash threat that may occur for poor reputation companies. Specifically, the results
show that corporate prosocial activity can be an effective communication strategy for accumulating positive attitudes
from publics as a corporate asset if the company has a good prior reputation.
Bearing this in mind, public relations managers can design corporate prosocial activity more confidently and
contribute to the corporate bottom-line. However, they should be very careful in designing prosocial activity when
their company has a bad reputation because such activity triggers severe public suspicion toward the company’s overall
strategy. Rather than try to indirectly affect public attitudes with prosocial messages, it would be better for public
relations practitioners to commit to enhancing intrinsic trustworthiness with corporate internal identity innovations.
Such commitment will finally enhance the effectiveness of prosocial messages by increasing corporate reputation assets
in the future.

5.2. Future research

The attribution process of participants with regards to corporate motives for CSR was influenced by newspaper
stories. Therefore, the consideration of the media agenda setting and second-level agenda setting effects in explaining
the public inference process found in the current study offers valuable new directions for future research. Also,
research on the interplay of corporate giving activity and media agenda building in public relations also merits further
development.

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