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Public Relations Contribution To Company'S Effectiveness: Electronic Copy Available At: - Com/abstract 2238970
Public Relations Contribution To Company'S Effectiveness: Electronic Copy Available At: - Com/abstract 2238970
Public Relations Contribution To Company'S Effectiveness: Electronic Copy Available At: - Com/abstract 2238970
ABSTRACT
With the increasing call for accountability of public relations spending, measuring the
contribution of public relations to company’s effectiveness is a requirement for business
success. Many companies have taken a limited view of the impact that public relations can
have on overall company’s effectiveness. This paper deals with the value or more
specifically, the contribution of public relations to overall company's effectiveness and
hypothesizes that public relations impact on company’s effectiveness. The paper consists of
two parts: the theoretical framework for the role of public relations for the overall
effectiveness of the company and the empirical analysis, based on the primary data
collected. An analysis of the data in the sample of Slovenian companies is used to address
the research question regarding the relationship between two concepts. This research
confirms positive relationship between dependent variable public relations and the
independent variable company’s effectiveness.
JEL classification: M3
1. INTRODUCTION
This article deals with one of the problems for public relations practice – its value, or
more specifically, the contribution of public relations to overall company's
effectiveness. Companies invest significant expenditure in public relations.
Specifically, spending on public relations in America has been growing and reached
$3.7 billion in 2005 (Economist, 2005; quoted in Kim, 2007). Little attention has been
paid to research of public relations effectiveness, particularly as compared with
advertising effectiveness research. There are many theories and empirical research
about how advertising works and how advertising has been effective for its consumers
and corporate (Barry and Howard, 1990; Barry, 2002; Colley, 1961, quoted in De
Pelsmacker et al. 2004; Lavidge and Steiner, 1961; Belch and Belch, 2003, Bendixen,
1993; Beerli and Santana, 1999; Benkahla, 2006). Often public relations professionals
want to prove how much value public relations has to an organization, for example
how much public relations increases profits, contribute to market share, and support
Many authors similarly define public relations. Public relations can be defined as a
management function that conducts research about an organization and its publics to
establish mutually beneficial relationship trough communication (Lindenmann et. al.,
1997). Hunt and Grunig (1995: 6) define “public relations as the management of
communication between an organization and it publics. Public relations encompass the
overall planning, execution, and evaluation of an organization’s communication with
both external and internal publics”. The focus of public relations theory has recently
shifted from communication to relationship management (Grunig, 2001; Ledingham,
2003; quoted in Hayes, 2008) linking communication ethics, collaboration,
concurrence, culture and community. Common to all the above concepts is the notion
of relationships as being central to the public relations function.
The need for measuring and evaluating public relations effectiveness has grown in the past
20 years. A 1992 survey by the Counselors Academy of the Public Relations Society of
America indicated that most people identified »demand for measured accountability« as
one of the leading industry challenges (IPRA, 1994). In 1997, there was a first academic
attempt to find a uniform standard for measuring and evaluating public relations
effectiveness. Since the first attempt, the attention on measurement of public relations
effectiveness has been increased (e.g., Guidelines for Setting Measurable PR Objectives
and Guidelines for Measuring Relationships in Public Relations). Furthermore, as many
public relations practitioners and scholars have agreed public relations a management role,
many researchers have come to recognize the need for evaluation and measurement of
public relations effectiveness (Lindenmann et. al. 1997). During the past few years, the
general practice of public relations has experienced repeated calls for the development of
methods of measuring evaluation. Hon (quoted in Henderson, 2005) has written several
journal articles on developing and
Cutlip, Centre and Broom’s model is most generally accepted by practitioners to show
the different levels of evaluation of public relations (IPRA, 1994). The three levels are
Preparation, Evaluation, Implementation Evaluation, and Impact Evaluation
(Henderson, 2005). Others have developed similar models. Macnamara (1997)
developed a Macro Model of Public Relation Evaluation. This model was first
outlined in a paper published in IPRA Review in 1992. A key feature of this model is
that it breaks public relations activity into three stages: inputs, outputs, and outcomes.
Individual public relations program is constructed from a serious of inputs, outputs are
then produced, and finally outcomes are achieved.
And finally it is important to link public relations results to the ultimate goals,
objectives, and results of the organization as a whole. In other words, it is important to
relate public relations outcomes to such desired business and organizational outcomes
as increasing market penetration, market share, sales and increasing an organization’s
profitability (Lindenmann, 1993: 7-8). Also, Grunig et al. (2002) proposed that
“Public relations contribute to organizational effectiveness when it helps reconcile the
organization’s goals with the expectations of its strategic constituencies. This
contribution has monetary value to the organization. Public relations contribute to
effectiveness by building quality, long-term relationships with strategic
constituencies”. Other public relations performance measures can derive from how is
public relations managed. Senior public relations professionals participate in the
strategic decision processes of an organization and counsel other managers
participating in that process about the consequences of potential decisions on publics
(Grunig and Grunig, 2002).
The main thrust of the paper concerns public relations factors affecting the company's
effectiveness, which can be viewed as a factors related to managing and implementing
public relations.
3.2. Hypothesis
The dominant proposition of this paper is that public relations may be playing a greater role
in terms of emphasis at corporate performance and effectiveness. Empirical
3.3. Variables
For the purposes of our research, the following measures for constructs were
developed, drawing from the conceptual work in the public relations and company's
effectiveness context.
The main research instrument for empirical investigation, e.g. a questionnaire, was
developed on the derived theoretical basis. The covering letters with questionnaires
were mailed to the corporate directors, marketing directors or director of 1000 the
Slovenian enterprises. We choose the convenience sample. The survey was conducted
in January, 2007. A total of 200 useful responses were received and that gave the
response rate of 20,0 %. The results present in this paper are related to the sample of
200 respondents. The collected empirical data were processed with Statistical Package
The relevant data of the companies were provided mainly by marketing directors (28,3
% of cases), followed by company's directors with 26,3 %, members of top managers
(18,7 %), business consultants (9,6 %) and head executives (6,1 %). Members of the
managing boards, heads of public relations offices and counseling specialists answered
in 2,5 %. Other respondents appeared in 3,5 % of cases.
Company size was determined regarding the number of employees. The sample
consists of 45,2 % small companies, 23,8 % middle sized companies and 31,0 % of
large companies. The companies included in the sample are distributed according to
industries as follows. 41,0 % of respondents belong to production oriented companies,
30 % of respondents belong to service oriented companies and 24,5 % were trade
oriented companies. The sample consists of 1,5 % of institutions, 0,5 % of government
organizations and 2,5% of companies chose the answer »other«.
Both the constructs, e.g. public relations factors and company's effectiveness were
measured on the Likert scale. The respondents had to indicate their agreement with the
statements on the 7-point Likert (1 strongly disagree to 7 strongly agree) scales.
Despite the fact that the Likert-type measure does not claim to be more than an ordinal
scale, it has, nevertheless, been accepted as a means of achieving interval
measurement quality, and there are several arguments favoring a variety of positions
on this issue (Avlonitis and Papastathopoulou, 2000).
4. RESULTS
One of the goals of our research was to explore if companies has developed its own
public relations function. Data show that 42,3 % of companies are using the outside
public relations agencies, and the remaining 57,7 % of companies have its own in-
house public relations office.
When asked how many employees in your company deal with public relations, we
received the following answers. In the most companies (46,4 %) activities of public
relations are performed by 1 employee, followed by 25 % of companies which have 2
employees dealing with public relations, in the 14,8 % of cases 3 employees work in
the field of public relations and in the remaining 6,6 % of companies 4 employees
performed public relations activities. Data presented in the research are confirming
that public relations activities are performed in the companies nevertheless the public
relations function is organized as the separate department or when it is organized in
the marketing or sales department.
Respondents also indicated that in 61,2 % of the total communications budget go for
marketing communications and the remaining 38,8 % go for public relations.
For each statement of public relations, the average value and the standard deviation
have been calculated. Results in Table 1 show that achieved mean scores regarding
public relations statements are 4, 5 and more, so we can conclude that the respondents
agree with statements regarding public relations. Standard deviation results shows, that
many scores are on the interval between 1, 30 and 2, 12 about mean.
Results from the Table 2 shows that the mean scores regarding different types of
companies effectiveness are in the interval between 4,50 to 5,04. And also standard
deviation results shows, that many standard deviation scores are achieved on the
interval between 1,22 and 1,50 about mean.
One of the objectives of the paper is concerned about the correlation between different
statement of public relations and company's effectiveness exists. Accordingly, we
make the hypothesis as follows:
Null hypothesis H0: There is no correlation between public relations and company's
effectiveness.
Alternative hypothesis H1: There is a correlation between public relations and
company’s effectiveness.
Because the pair wise correlation is found to be significant the relationship between
the variables will be investigated by producing a regression model in the form of a
linear equation. The independent variables (public relations statements) have been
constructed on the basis of questionnaire items, detecting the distinct potential impact
on company's effectiveness. It is important to note that all the variables have been
measured on a seven-level Likert scale. For each independent variable, the average
value and the standard deviation have been calculated.
We would like to test if is the regression model with one predictor variable (e.g. public
relations) significantly related to the criterion variable Y (e.g. company's
effectiveness)? We test the equivalent null hypothesis that there is no relationship in
the sample between dependent variable and independent variable, but we found
significance level at impact of public relations on company’s effectiveness.
Accordingly to this, the null hypotheses, which we tried to reject by means of
regression analysis, could be formulated as follows:
Null hypothesis H0: There is no relationship between the dependent and independent
variables, e.g. The correlation coefficient between the dependent and independent
variables equals 0 (H0: Rxy = 0).
Alternative hypothesis H2: There is a positive relationship between the dependent and
independent variables, e.g. The correlation coefficient between the dependent and
independent variables is significantly higher than 0 (H2: Rxy > 0).
For the tested relationship, we selected the regression model with the highest
significance, i.e. the model with the significance closest to the significance level of
5%. To investigate the hypothesis, entering all variables in a single block, we found
that the proposed model explains a significant percentage of variance in the company's
effectiveness. Table 4 shows that 17,4 per cent of the observed variability in
company’s effectiveness is explained by the one independent variable i.e. public
relations (R2=0,170; adjusted R2=0,174).
Independent Dependent R 2
Adjusted Model (Sign.) α
variable (x) variable (y) R2
Public Company’s 0,174 0,170 Lin: 0,000
relations effectiveness y = 3,340 + 0,331x
Unstandardized Standardized
Coefficients Coefficients t Sig.
Model B Std. Beta
Error
(Constant) 3,340 0,273 12,222 0,000
Public relations 0,331 0,051 0,417 6,455 0,000 a
a
Dependent variable: Company's effectiveness
Results from Table 5 indicate that we can reject the null hypotheses that the
coefficients for public relations (Beta = 0,417, t =6,455, p =0,000) are 0. The beta
weight (Beta = 0,417) shows that the public relations has a significant influence on
company's effectiveness.
We argued and documented empirically that the public relations had a significant
impact on company's effectiveness in the sample of Slovenian companies.
Additionally, each company may choose to have a unique public relations strategy but
it should consider its unique characteristics when developing successful public
relations programs. We identified these characteristics as public relations factors
which can affect the company's effectiveness. Knowing these characteristics in
developing public relations programs can provide competitive advantages over
competitors. This article examines the important contribution that public relations
practice provides to company’s overall effectiveness. And finally with public relations
we are able to improve company's productivity, reach a high quality of services and
products, and consequently these will lead to overall company's effectiveness.
There may be a concern that used measures for public relations will not represent the
whole spectrum of public relations activity. The absence of validity and reliability of
tested concept in the literature, we have been viewed and measured public relations
concept as the management function that establishes and maintains a mutually
beneficial relationship between an organization and its publics (Hunt and Grunig,
1995). A qualitative research with public relations professionals and academicians
would be helpful to develop a theoretical framework for finding the most effective
measure for public relations concept.
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In the theoretical part of this paper models of public relations evaluation were
discussed. We concluded that is impossible to impose a single measure of research
concepts. Individual organizations have different constituencies, different objectives,
different culture, and their communications practitioners will need to develop a unique
product to measure public relations.
This paper also presents the results of a study that examines factors of public relations
affecting the company’s effectiveness in the sample of Slovenian companies. The
study confirms that there is a positive association between all statements of public
relations and company’s effectiveness. One regression model was established for
testing hypothesis: 1) a model for public relations – company’s effectiveness
relationship. For this relationship the major finding of this research is that public
relations have positive and significant effect on company’s effectiveness and we can
suggest that public relations influence the company’s effectiveness.
A paper provides a perspective of how to analyze the factors affecting the overall
company’s effectiveness. The guidelines that emerge from this approach should be
particularly relevant for public relations managers in industry.
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