Corporate Philanthropy to CSR

Has it Ceased To Be Philanthropy? A Case Study
of Corporate Philanthropy and its transition to
Corporate Social Responsibility

Niamh Maguire
M.A. International Relations
Dublin City University
Dr. Eileen Connolly
School of Law and Government
September 2015

i

Declaration
I hereby certify that this material, which I now submit for assessment on the
programme of study leading to the award of M.A International Relationsis entirely my
own work, and that I have exercised reasonable care to ensure that the work is
original, and does not to the best of my knowledge breach any law of copyright, and
has not been taken from the work of others save and to the extent that such work has
been cited and acknowledged within the text of my work.
Signed: ___________________
ID No.: ___________________
Date: _____________________

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Abstract

This research project was taken to understand the transition from corporate
philanthropy to corporate social responsibility. Chapter 1 provides a detailed
overview of corporate philanthropy predominantly in the late nineteenth and early
twentieth century as well as the emergence of corporate social responsibility in the
late twentieth and early twenty first century. Also, the reasons why corporate social
responsibility has replaced corporate philanthropy are also addressed. Following on
from Chapter 1, Chapter 2 and Chapter 3 applies a similar theoretical framework as
the previous chapter. Chapter 2 looks specifically at Guinness and its evolution from
corporate philanthropy to CSR in accordance with the firm’s transition from Guinness
to Diageo plc. The final chapter, Chapter 3 discusses the case of Cadbury, which
documents the story from corporate philanthropy to CSR and in alliance with
Cadbury’s merger with Mondelez International. The research shows that corporate
social responsibility has replaced corporate philanthropy due to the changing
environment of the world economy. However, it is evident that corporate philanthropy
is still in existence through the likes of Diageo plc. which plays a prime role in
maintaining the Guinness legacy.

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Table of Contents
Declaration......................................................................................................................i
Abstract......................................................................................................................... ii
Table of Contents......................................................................................................... iii
Acknowledgements.......................................................................................................iv
Introduction....................................................................................................................1
Chapter 1........................................................................................................................5
Chapter 2......................................................................................................................19
Chapter 3......................................................................................................................37
Conclusion ...................................................................................................................52
Bibliography ................................................................................................................54
Appendix A..................................................................................................................64
Appendix B ..................................................................................................................72
Appendix C:.................................................................................................................76

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Acknowledgements
I would like to take this opportunity to thank a number of people for their support
over the past year.
I would firstly like to express sincere thanks to my wonderful enthusiastic supervisor
Dr. Eileen Connolly. Without her help, assistance and encouragement this project
would not have been achievable. The process was made enjoyable by her inspiration
and on-going support.
I would also like to express my utmost thanks to my family and friends for their
constant support and encouragement, not only through this project but also throughout
the year. Without you this would not have been possible.

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Introduction
Corporate philanthropy and Corporate Social Responsibility (CSR) are defined as two
separate entities as corporate philanthropy is regarded as the voluntary giving of
business to give back to the community (Frumkin 2006). Moreover, CSR is deployed
through the firm’s commitment to society in align with the firms strategic objectives
(Paul 1993 as cited in Genest 2005). The evolution from corporate philanthropy to
CSR did not unfold until predominantly the mid twentieth century when organisations
became focused on addressing the needs of global society in return for better financial
results (Kurucz, Colbert and Wheeler 2008). Prior to this transition, firms recognised
the needs of society as an independent component of the firm’s core business
functions (Frumkin 2006). Subsequently, corporate philanthropy required the
motivations from wealthy individuals to obtain their philanthropic duty to society
(Rimel 2001). Nevertheless, the emergence of CSR altered this model of giving back
to the community. The logic for organisations behind CSR is characterised through
the changes in the business environment during the mid twentieth century. The first
reason is globalisation, which required organisations to obtain CSR to dominate a
position within the world economy (Cramer 2006). The second reason was corporate
strategy dominated by globalisation that adopted a strategic approach to CSR in
alliance with the firm’s missions and goals (Simon 1995). Therefore, organisations
obtain CSR to seek long-term investments for the firm in areas dealing with greater
financial returns and enhancing the overall image of the firm (Lin-Hi 2010). The third
was stakeholder expectations, which offered a wide variety of demands, expectations
and interests of how firms should act and respond to the demands of society (Bucholtz
and Carroll 2012). With these influences dominating the business environment, CSR
gained momentum and created ethical and legal responsibilities for organisations
(Moir 2001). Thus, providing accountability of the firm’s actions and conforming to
laws and regulations became a component in undertaking CSR (Bucholtz and Carroll
2012). At a global level CSR is adopted as a separate entity by each member state
however there are several frameworks devised such as the UN Global Compact to
assist in the promotion of CSR in the most efficient and effective manner (Garsten

2

and Jacobsson 2011). Predominantly, in Ireland there is a growing awareness for CSR
however as one of the most generous countries in the world, Ireland ‘can do more’.1
The outbreak of CSR from corporate philanthropy is particularly evident in the cases
of Guinness/Diageo and Cadbury’s/Mondelez International. Both these case studies
are rooted in corporate philanthropy during the industrial revolution in which is
consistent with Geary and Walsh’s (2015) statement of philanthropy being at its
height during the late nineteenth and early twentieth century. However, the changes
within the global economy required both Guinness and Cadbury to adopt. As a result,
the organisations acquired a merger to continue the success of the Guinness and
Cadbury brand. Thus Guinness became known as Diageo2
and Cadbury’s merged
with Mondelez International.3
Through the influences within society Diageo and
Mondelez apply CSR as a dependent component of the firms business strategy. This
framework enables Diageo and Mondelez to seek long-term investments but to also
demonstrate to their stakeholders their moral obligation to society.4 5
Chapter 1 examines how corporate philanthropy predominantly in the late nineteenth
and early twentieth century and its evolution to CSR. Additionally, Chapter 1
highlights five reasons why the evolution from corporate philanthropy to CSR
occurred. The five reasons are globalisation, corporate strategy, stakeholder
expectations, accountability and legitimacy. Each of these five reasons is also
discussed in Chapter 2 and Chapter 3. Thus, it is for this reason that Chapter 2 and
Chapter 3 follows a similar structure to Chapter 1. Chapter 2 investigates the case
study of Guinness/Diageo and its evolution from corporate philanthropy to CSR. The

1
Roche, T. Celebrating philanthropy, Irish style [Online]. Available from:
http://www.foundation.ie/2015/02/tinas-message-celebrating-philanthropy-irish-style/
[Accessed 13 July 2015].

2
Guinness Guinness [Online]. Available from: http://www.guinness.com/en-ie/home.html

3
Cadbury Ireland The story [Online]. Available from: http://www.cadbury.ie/the-
story#bournville-the-factory-in-a-garden-is-born [Accessed 7th August 2015].

4
Diageo. Diageo annual report 2014.2014.

5
Mondeléz International. The call for well being: 2014 progress report. 2014.

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chapter highlights how Diageo adopts CSR as parts of its core business function but
also incorporates corporate philanthropy into its CSR model. In Chapter 3 the author
discusses a similar study of Cadbury/Mondelez International and its transition from
corporate philanthropy to CSR. The analysis of both Diageo and Mondelez CSR are
efforts are particularly highlighted by academics, media and on internally by the
organisations themselves, through their published annual reports and online.

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Methodology
The research question for this thesis is to question why corporate social responsibility
has replaced corporate philanthropy. To answer this question the thesis will discuss
the reasons why this transitional process has occurred. The methodology in this
research involved the application of a theoretical framework, which was obtained
from the relevant literature. With the aim of gathering accurate and detailed
information the author used both primary and secondary data. Primary data was
acquired through the Guinness archives and the use of the Internet via websites,
online archives, online reports and newspaper archives such as The Irish Times to
analyse the case study of both Guinness/Diageo and Cadbury/Mondelez International.
Secondary data was obtained from the use of books, journal articles, reports and
newspaper articles via DCU Library, DCU databases, and Google Scholar. The author
also transcribed two in depth interviews from the public affairs and archives unit at
Diageo Ireland.

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Chapter 1
The transition from Corporate Philanthropy to
Introduction
The following chapter will discuss corporate philanthropy and its relationship to
Corporate Social Responsibility (CSR). Several international authors have identified
the shift from corporate philanthropy to CSR (Genest 2005, Frumkin 2006 and
Weiner and Solomon 2007).
The first section of this chapter will discuss the meaning of corporate philanthropy
this will include aspects of corporate philanthropy that were a feature of its
development in the late nineteenth and early twentieth century with a predominant
emphasis on religion as a motivation and philanthropy as a means of social
advancement. A discussion on the meaning of CSR will follow that will highlight
how and why CSR replaced corporate philanthropy. This transition will provide
insight into CSR in the global environment and its role within modern society and this
is discussed under five subheadings that highlight the reasons why CSR has replaced
corporate philanthropy: globalisation, corporate strategy, stakeholder expectations,
accountability and legitimacy.

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Corporate Philanthropy in the late nineteenth and early twentieth
century
Varadarajan and Menon (1988) have looked at the impact of CSR in modern society.
In particular, Varadarajan and Menon (1988) claim that CSR has replaced corporate
philanthropy. They maintain that corporate philanthropy has shifted from the
scientific model of donating to establish the root causes of social issues towards
adapting a CSR approach in gaining a return on their investment (Varadarajan and
Menon 1988). Alternatively it is also argued that although CSR is widely adopted by
organisations in modern society, corporate philanthropy is still in existence (Liket and
Simaens 2015).
Corporate philanthropy is derived from the concept of philanthropy. The word
philanthropy originates from the ancient Greek term the ‘love of mankind’ (Rimel
2001). This term is expressed through acts of generosity and charity in response to
those in need and in suffering (Weiner and Solomon 2007). Moreover, Rimel (2011)
states philanthropy is a local, national and international response that involves
working for the common good predominantly in areas such as health, education and
culture. It is through this concept that Frumkin (2006 pp. 228) identifies corporate
philanthropy as ‘the product of a growing sense that it is good business to give
something back to the communities in which a cooperation operates.’ Although,
Smith (1994) and Love and Higgins (2007) argue that corporate philanthropy is
evident since the seventeenth century it is predominantly, the late nineteenth and
twentieth century that corporate philanthropy gained significant recognition.
Developed as a concept in the early twentieth century in the United States (U.S.)
corporate philanthropy involved organisations in addressing the underlying causes of
social issues (Arrillaga and Hoyt 2004). Therefore, the modern definition of corporate
philanthropy concerns the ‘business voluntary giving of money, time or in kind
goods, without any direct commercial benefit, to one or more organisations whose
core purpose is to benefit the community’s welfare’ (Madden et al 2006 as cited in
Liket and Simaens 2015). Moreover, Love and Higgins (2007 pp.18) assert that
corporate philanthropy is one of the oldest forms of ‘social behaviour and is so well

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entrenched in both public and corporate psyche to be an almost taken-for-granted
activity within our culture.’ Therefore, corporate philanthropy is part of the history of
the development of business (Love and Higgins 2007).
The late nineteenth and early twentieth century
The late nineteenth and early twentieth century witnessed significant changes because
of the industrial revolution, which in turn created a dynamic shift in social
development (Rimel 2011). According to Geary and Walsh (2015) social
advancement defined the social class system and in return identified the needs
amongst the lower class. Therefore, it is the upper class that not only assisted in the
needs of the poor but gained satisfaction from adhering to their Christian duties and
progressing through the ranks of the upper class system (Geary and Walsh 2015).
Shapely’s (1998) thesis identifies a strong link between the two. Evidence suggests
that during these periods, Christian philanthropy was a means of acquiring a particular
status amongst the elite (Shapley 1998). It also assisted in the acquisition of wealth,
political dominance and success in business affairs so that these goals were also
motivational factors that assisted in undertaking philanthropy (Kidd 1996). The
exercise of corporate philanthropy provided the individual with a sense of leadership
and power. According to Geary and Walsh (2015 pp.13) “the nineteenth century may
truly be described as the century of philanthropy” as philanthropy gained prime
recognition amongst wealthily individuals motivated by religion and social
advancement to address the underlying causes of social problems (Rimel 2001).
Religion as a motivation
Moe (1961, pp.142) describes religion as the ‘mother of philanthropy.’ It is this
statement that identifies religion as one of the prime themes in the literature on this
topic. The linkage between philanthropy and religion is evident throughout the course
of history (Weiner and Solomon 2007). Religion has led numerous individuals to
follow their perceived philanthropic duty through an interpretation of the teachings
and parables from that of their religious faith. Moreover, these efforts act as a mutual
beneficiary arrangement between the giver and the receiver as it gives assistance to
those who are socially disadvantages but also promotes a ‘positive self-image’ for the
individual philanthropist (Frumkin 2006 p.260). The major religions all incorporate
philanthropy in their teachings and stories and as a result Jewish, Islamic, Muslim and

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Christian religious communities all promote philanthropy in some respect (Weiner
and Solomon 2007).
However, it is the motivations of Christian philanthropy that is of particular interest to
this study given the case studies chosen. Religion ‘provides a cognitive framework in
which to view mankind, pushing the boundaries of thought and identity beyond the
personal sphere’ (Brown and Ferris 2007 pp.91). This statement is evident through the
ethos defined within Christian Philanthropy. According to Weiner and Solomon
(2007) Christian Philanthropy is embedded through the work of Jesus and his duty in
fulfilling the needs of the sick and those socially disadvantaged. Furthermore, it not
only provides certain motivations but also, establishes a social network within a group
setting. These aspirations are particularly influential for some businesses in America
and Europe during the late nineteenth and early twentieth centuries.
Philanthropy as a means of Social advancement
Frumkin (2006 pp. 26) insists that philanthropy ‘includes small individual donors who
channel gifts to local charities and large individual donors who attempt to use their
wealth to leave a profound mark on society.’ Thus, as a result, social norms rely upon
philanthropy as a means of gaining recognition within a particular group or society.
Moreover, once established within a particular grouping, philanthropy is exploited as
a tool to seek further social advancement. Predominantly, amongst upper class
societies, the higher the charitable contribution is the higher ones position is
maintained. Moreover, the relationship between philanthropy and hierarchy is not
only a symbol of wealth but also an essential component in highlighting leadership
within the community (Kidd 1996). Thus, at this level philanthropy is not regarded as
an act of kindness but as a means of social advancement.
Koch (1981) maintains that corporate philanthropy in modern society relies upon the
same internal support as other components within the business organisation.
Moreover, corporate philanthropy in modern society is often exercised as means of
gaining a return on investment but also to promote a company’s business strategy
(Genest 2005). However, evidence suggests that this was not always the case and
Frumkin (2006) maintains that corporate philanthropy in the past was perceived as an

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independent component of the firm’s strategy, for example Andrew Carneige and
John D. Rockefeller in the United States (U.S.) during the late nineteenth and early
twentieth century who used their own wealth to engage in philanthropy (Arrillaga and
Hoyt 2004). Andrew Carneige attained his wealth from his coal and steel business
during the industrial revolution and his strong support for philanthropy is evident
through his establishment of the Andrew Carneige Institute where throughout his
lifelong contributed of $28 million in support of education and cultural facilities
(Arrillaga and Hoyt 2004). Rimel (2001 pp.590) emphasises Carneige’s strong
support for philanthropy by quoting his renowned motto ‘the man that dies rich, dies
disgraced.’ Similarly, John D. Rockefeller is a key philanthropist of the late
nineteenth and early twentieth century. Influential in the oil industry, John D
Rockefeller engaged in philanthropy bases on his strong Baptist religious faith
(Arrillaga and Hoyt 2004). John D. Rockefeller’s philanthropic efforts include
addressing the individual needs of society through his strong support in the
development of education facilities.
Corporate philanthropy has developed as a key characteristic amongst American
culture and also within the global society (Frumkin 2006). Frumkin (2006) states it is
a universal concept, the corporate philanthropic environment is diverse in nature. As,
corporate philanthropy supports various of causes including in the areas of health and
medical support, technological assistance, education and training and community
development (Genest 2005). Organisations who engage in corporate philanthropy
engage in a wide range of philanthropic practices dealing with health, education,
culture and community developments, environmental causes and ethical issues
(Genest 2005; Marx 1999). These philanthropic efforts can make a profound mark on
societal development (Love and Higgins 2007). The role played by business
organisations in promoting corporate philanthropy has been so central to charitable
endeavours that these organisations have left a profound mark on the philanthropic
environment (Genest 2005). In 1981, corporate philanthropy in the United States
(U.S.) exceeded donations by private philanthropic foundations for the first time in
history (Koch 1981). Similarly, in Western Europe, corporate philanthropy is more
popular than donations made to private foundations (Heinzel 2004). Moreover, this
dominant position of corporate philanthropy is set to increase in the future (Daly and
Howell 2002). In particular, the United Kingdom (UK) market alone corporate

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philanthropy in 2003 and 2004 combined exceeded a total of $1.6 billion from public
traded companies (Bruch and Walter 2005).
Despite the literature stating that corporate philanthropy still exists in modern society,
the ideology that surrounds corporate philanthropy is different than that of the late
nineteenth and early twentieth century (Bucholtz and Carroll 2012). The earlier period
of corporate philanthropy was based on personal motivation in addressing the needs
within the community (Rimel 2001). However, although this ideology of corporate
philanthropy still exists in modern society, corporate philanthropy is now less focused
on the personal motivations of the firm but in addressing the overall needs of the
firms stakeholder (Bucholtz and Carroll 2012). Moreover, corporate philanthropy in
modern society is integrated into the firm’s corporate strategy (Frumkin 2006).
It is argued that business organisations have increasingly adopted corporate social
responsibility (CSR) as a means of acquiring long-term competitiveness for the firm
(Simon 1995) and CSR is ‘strategically driven designed to be consistent with the
corporation’s missions and goals’ (Paul 1993 as cited in Genest 2005 pp.316). CSR is
also deployed as a marketing tool to enhance companies’ relationship with its
stakeholders and also to acquire a competitive advantage within the market place
(Bucholtz and Carroll 2012). CSR is considered to be dominated by the need for
compliance with the objectives of the organisations stakeholders (Lindgreen, Swaen
and Johnston 2009). Others argue that CSR also adopts an ethical approach to
meeting the needs of its employees, sustaining the environment, respecting human
rights, operating legitimate and supporting the needs within the community (Moir
2001). As a result Lindgreen Swaen and Johnston (2009 pp.303) argue that CSR has
moved from ‘ideology to reality and many consider it an absolute necessity that
organisations define their roles in society and apply social, ethical, legal, and
responsible standards to their business.’ Yet, not all organisations regard CSR as an
absolute necessity as certain organisations may not have the adequate resources to
obtain CSR activity (Bucholtz and Carroll 2012). Moreover, similar to the view of
classical economist Milton Friedman, certain organisations hold the view that CSR is
a role for the government and not that of the organisation (Bucholtz and Carroll

11

2012). As a result, Cramer (2006) states that not every organisation shares the same
support for CSR, which can create tension between the organisation and its
stakeholders (Cramer 2006). Nevertheless, organisations who are strong supporters of
CSR adopt a wide range of CSR activity at an external level dealing with
volunteering, the environment, community development, corporate giving,
sponsorship and CSR reporting (Filho et al 2010; Lin-Hi 2010). However, there is a
lack of evidence in support for organisations that actually care for CSR (Bejou 2011).
Furthermore, Bejou (2001 pp.2) argues that CSR ‘is often used to enhance corporate
image through occasional charity and thus to counter critiques of unfettered profit
seeking’. Despite the use of CSR obtained by organisations for promotional reasons,
there are organisations such as Marks and Spencers and Ben and Jerry’s who really
support the ideology that surrounds CSR (Yuan, Bao and Verbeke 2011). According
to Yuan, Bao and Verbeke (2011) Marks and Spencers withdrew overfished produce
from their supermarket shelves because of their strong link in sustain the
environment. Likewise, Ben and Jerry highlight their commitment to sustaining the
environment through acquiring nuts from the Amazon rainforest to assist in the
rainforests perseverance (Yuan, Bao and Verbeke 2011).
Freeman and Hasnaoui (2011) accept that there is no universal definition to CSR, as it
is perceived differently amongst society. Furthermore, the CSR definitions available
are unclear and lack a definite guide as to how and why CSR is obtained (Freeman
and Hasnaoui 2011). According to McGuire (1963) as cited in Bucholtz and Carroll
(2012) maintain that CSR is ‘the idea of social responsibility supposes that the
corporation has not only economic and legal obligations but also certain
responsibilities to society which extend beyond these legal obligations.’ However,
although this assumption recognises its economic and legal responsibilities to society
it fails to extend its meaning of the certain responsibilities to society (Bucholtz and
Carroll 2012). Moreover, Donaldson and Preston (1995) as cited in in Caulfield
(2013) argue that CSR is defined as the duties of the organisation which seek to
pursue ‘management of stakeholder relations and the achievement of various
corporate performance goals.’ Similar, to McGuire (1963) Donaldson and Preston
(1995) refrain from defining the particular goals organisations wish to achieve in
response to their CSR efforts. Additionally, Donaldson and Preston (1995) fail to
address why organisations undertaking CSR must obtain the support from its

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stakeholders. Furthermore, these definitions (McGuire 2013; Donaldson and Preston
1995) contradict each other as McGuire (2013) states CSR is a legal obligation yet
Donaldson and Preston (1995) maintain that CSR is to address stakeholder
expectations. Nevertheless, for the purpose of this thesis The World Business Council
for Sustainable Development as cited in Moir (2001 pp.18) provide a clear well
defined meaning of CSR, in which they state CSR as the ‘continuing commitment by
business to behave ethically and contribute to economic development while
improving the quality of life for the workforce and their families as well as of the
local community and society at large’.
The establishment of the UN Global Compact framework in 1999 acts an
international CSR initiative. The UN Global Compact is supported by more than
7,300 organisations across 130 countries worldwide. However, due to the nature of
the UN body this initiative is voluntary CSR response undertaken by organisations
(Garsten and Jacobsson 2011). Furthermore, the UN Global Compact is criticised of
its ineffectiveness towards the adaption of CSR activities undertaken by organisations
(Ziegler 2007). According to the article (Ziegler 2007) numerous organisations such
as Nestle, Nike and Kraft foods adopt the UN Global Framework yet, fail to actually
respond to CSR issues especially within the area of human rights. Instead, these
multinational corporations are there as a marketing tool to enhance their profitability
(Ziegler 2007). In Europe, CSR is applied through numerous perspectives. Several
actors within the Europeans economy including corporations, Non-governmental
organisations (NGO’s) and governments fail to apply a common European standard
for CSR. Specifically, some organisations acquire CSR as a social response while
others apply it as a means of profitability (Kinderman 2013). In France it is required
under French law for organisations to annually report their CSR activities as apposed
to the U.K where CSR reporting is not mandatory. Moreover, the U.S model asserts
that CSR is perceived as a initiative undertaken by organisations in areas such as
community involvement, employee relationships and sustaining the environment.
(Freeman and Hasnaoui 2011) Under U.S. law CSR reporting is not a legal
requirement however organisations are expected to provide an account of their
actions. Freeman and Hasnaoui (2011) highlight that Canada CSR ideology is heavily
rooted in supporting stakeholder expectations. Moreover, the Canadian Government
fully supports CSR activity and liaises with organisations to consistently implement

13

CSR activities (Freeman and Hasnaoui 2011). Thus, although CSR is widely adopted
across the globe there is no international concept that defines CSR (Freeman and
Hasnaoui 2011).
Nevertheless, transparency, sustainability and engaging in stakeholder expectations
are prime motivational CSR factors of the twenty first century (Southwest Interactive
Conference 2012 as cited in Tactics 2012). Primarily, in response to the stakeholders
the organisation, employees and potential staff pay particular attention to a firms CSR
activity. 88% of recent graduates or professionals seek that organisations obtain CSR
activity when considering a particular job position. Moreover, 86% of employees
would consider leaving their job if CSR is not maintained in an effective and efficient
manner by the firm (PriceWaterhouseCoopers 2012 as cited in Tactics 2012).
How CSR differentiates from Corporate Philanthropy
CSR and corporate philanthropy are mostly regarded as two separate forms of activity
(Bucholtz and Carroll 2012). Corporate philanthropy in the late nineteenth and early
twentieth century and CSR in the twenty first century are key distinctive periods for
comparison. The world economy of the twenty first century increases numerous
challenges for organisations (Yuan Bao and Verbeke 2011). The increasing
momentum of CSR poses certain challenges for firms to respond ethically and legally
to stakeholder expectations (Moir 2011). Organisations are under increasing pressure
to not only manage stakeholder expectations but to also employ CSR as a as
marketing tool to enhance the overall image and reputation of the company (Jones
Hiller and Comfort 2013). Unlike CSR, corporate philanthropy in the late nineteenth
and early twentieth century was motivated by factors such as a religion and social
advancement (Rimel 2011). These motivational factors assisted in wealthy individuals
primarily the owners of the firm in contributing to the underlying causes of social
problems (Rimel 2011). Thus, corporate philanthropy was deployed as an
independent component of the firm’s strategy (Frumkin 2006).

14

Has CSR replaced corporate philanthropy?
Corporate Strategy
From the mid 1970’s, governments from the countries of the developed world decided
to enable free trade amongst markets creating a globalised market (Cramer 2006).
This also involved the privatisation and deregulation of a proportion of the economy
mainly in the telecommunication, transportation and financial sectors (Frieden 2006).
Corporations (MNC’S) became a symbolism of the rise in globalisation and Cramer
(2006) argues that organisations operating in a global competitive market cannot
afford to ignore CSR in modern society.
Corporate Philanthropy has undergone significant changes since the late nineteenth
and the early twentieth century. In particular the emergence of global market
economies has acquired corporate philanthropy to adopt a more strategic approach
(Genest 2005). It is through this process that Bucholtz and Carroll (2012) maintain
that CSR is fully integrated into the organisations mission and goals. Thus,
organisations are adapting CSR to not only add long-term competiveness for the firm
but also to enhance the firms overall performance (Dias Angelo et al 2012).
Furthermore, Frumkin (2006 pp.229) insists that demonstrating these efforts creates
‘real returns’ for the organisation in the form of adding value within the community.
Strategic CSR is recognised through Porter and Kramer’s (2006) study of the linkage
between CSR and completive advantage (Bucholtz and Carroll 2012). Several authors
including Bucholtz and Carroll (2012) and Dias Angelo et al (2012) identify with this
analysis. According to Bucholtz and Carroll (2012) Porter and Kramer’s (2006) study
identifies itself with five main steps to strategically promote CSR. They include the
following:
1. Identifying the points of intersection.
2. Choosing which social issues to address.
3. Creating a corporate social agenda.
4. Integrating inside-out and outside-in practices.
5. Creating a social dimension to the value chain proposition (Bucholtz and
Carroll 2012 pp.159).

15

Moreover, similar to Bucholtz and Carroll (2012) Dias Angelo et al (2012) extended
Porter and Kramer’s (2006) study to identifying the key variables to this five-step
process. The findings suggest that strategic CSR relies upon the resource management
(HRM), technology support and development, financial support, marketing, and
employee morale of the firm. Moreover, CSR is vital to the promotion of the firm’s
corporate strategy through promoting CSR as a marketing tool (Jones Hiller Comfort
2013). According to Jones, Hillier and Comfort (2013) CSR enhances the overall
long-term image of the brand. On the contrary marketing assists in the promotion of
CSR and on the firms reputation (Jones, Hillier and Comfort 2013). Additionally,
CSR is vital to strategic element of the firm especially involving human resources as
CSR, requires vital communication skills to address social issues (Koch 1981).
Therefore, organisations must have the appropriate human resources in the areas of
communication, social skills and functional expertise to manage CSR functions
(Bucholtz and Carroll 2012).
Stakeholder Expectations
Society offers a wide variety of expectations, demands, and interests of how
organisations should act and respond. These actions are promoted through the firm’s
players within the world stage (Bucholtz and Carroll 2012). Unlike, Frumkin’s (2006)
ideology of corporate philanthropy and the relationship within the community, CSR
encompasses a wide variety of sources known as its stakeholders. The stakeholders
within the world economy relate to ‘an individual or a group that has one or more of
the various kinds of stakes in the organisation’ (Bucholtz and Carroll 2012 pp.63).
Primarily, organisations, Governments, communities, suppliers, employees, investors,
shareholders, Trade Unions, and so forth are regarded as stakeholders. Thus,
depending on the nature of the CSR objective, organisations advocate with their
stakeholders to perform CSR is the best manner (Dias Angelo et al 2012). Within the
global business environment organisations must continuously enhance their
relationship with their stakeholders (Moir 2001). Moir (2001) states that maintaining
this relationship between the organisations and its stakeholders enables organisations
to understand its obligations towards society.
Therefore, the concept of stakeholder theory is an increasing momentum (Friedman
and Miles 2002). Stakeholder theory relies upon the actions of the firm’s executives

16

to incorporate stakeholder expectations into their business strategy. Despite
organisations serving the best interests of their stakeholders deciding which
stakeholders are the most significant is problematic (Mullins 2007). Thus,
organisations construct a certain typology that enhances the decision making process.
According to Bucholtz and Carroll (2012) legitimacy, power and urgency are the
three attributes obtained in constructing this process. As a result, organisations form
the basis of who their most valuable relationships are with their stakeholders, which
stakeholder group possesses the most power that could potentially impact the firm and
what stakeholder group requires organisations to act immediately (Bucholtz and
Carroll 2012). However, Magness (2008) argues that this is a dynamic model as none
of the three attributes are consistently responsive. The model requires organisations to
consistently expose themselves to stakeholder expectations due to the nature of the
business environment.
Accountability
The world economy of the twenty first century is associated with several corporate
governance scandals. In particular, numerous literatures portray Enron and
WorldCom as the most notorious (Holme 2008). Certain findings associate these
scandals with their lack of credibility in response to their CSR efforts. Neverthess,
despite the effect of these scandals both internally and externally, there is no legal
framework that requires organisations to provide an account of their actions (Bucholtz
and Carroll 2012). Moreover, Bucholtz and Carroll (2012) indicate that accountability
enables competitors to gain insight into the firms overall business strategy.
CSR reporting is the process, which companies demonstrate their commitment to their
CSR activity (Maughan 2010). Pérez (2015 pp. 11) defines CSR reporting as ‘the
disclosure of company initiatives that demonstrate the inclusion of social and
environmental concerns in business operations an in interactions with stakeholders.
Similarly, Bucholtz and Carroll (2012) include stating the organisations overall
missions and goals, assisting in the firms competitive position and annually
monitoring and measuring their efforts, and using CSR as a marketing and
communications tool as additional driving forces behind CSR reporting. Thus, as
result CSR reporting enables the organisations stakeholders to gain and insight into
the firms CSR activities (Pérez 2015). Therefore, as the business environment is

17

constantly changing these factors remain predominant themes especially in
conjunction to Moir’s (2001) concept on stakeholder expectations. However, despite
organisations responsive to their stakeholder expectations, the literature asserts that
accountability is still problematic.
Legitimacy
In response to CSR Bucholtz and Carroll (2012) argue that there is a lack of support
for organisations on how to implement their CSR efforts in the most efficient and
effective manner. Although, as mentioned previously the UN Global Compact
framework, Garsten and Jacobsson (2011) argue that it is a voluntary response
towards organisations adapting the framework. Therefore, organisations are not
legally obliged to internationally promote their CSR efforts (Garsten and Jacobsson
2011). Moreover, the notorious corporate scandals of the twenty first century as
mentioned above and the global financial crisis have left a lack of trust in the
relationship between organisations and their stakeholders (Bucholtz and Carroll
2012). Maughan (2010) states that legitimacy theory is implemented to ensure that
organisations achieve consistency between their activities and that of their
stakeholder’s expectations. As a result CSR reporting extends its efforts to providing
international CSR reporting guidelines. The Global Reporting Initiative is the most
notorious international guideline in support of CSR reporting (Bucholtz and Carroll
2012). According, to GRI (2015) its overall aim in conjunction with the UN Global
Compact and other international guidelines is to provide a standard framework for
organisations and governments on environmental, social and economic.6
Moreover,
the findings state that it is widely supported as thousands of actors within the
international community adopt this initiative.

6
GRI 2015 Global reporting initiative [Online]. Available from:
https://www.globalreporting.org/trademarks-and-copyright/Pages/default.aspx [Accessed 21
July 2015]

18

Conclusion
Nevertheless, although corporate philanthropy and CSR are two different concepts,
Liket and Simaens (2015) highlight that the two are interlinked. Predominantly, this
relationship is formed through the idea of strategic philanthropy, which applies the
same framework as corporate philanthropy yet adds stakeholder expectations and
effectiveness to its model. As a result, an organisation meets its obligation to the
community but also its obligation in achieving the overall aims and objectives of the
firm. (Bruch and Walter 2005) This balance according to a survey on corporate giving
states that 47% of giving officers link their corporate philanthropic efforts with those
needs associated with the overall objectives of the firm (Bucholtz and Carroll 2012).
Moreover, similar studies suggest that corporate philanthropy is a sub component of
CSR’s core competencies that is driven in contribute to a wide variety of concerns
from the environment to ethical resourcing.
This thesis uses case studies of Guinness/Diageo in Chapter 2 and Cadbury/Mondelez
International in Chapter 3 to ask ‘Has it ceased to be philanthropy?’ To answer this
question the author obtained primary sources from the Guinness archives and the
Internet via websites, online archives, online reports and digital newspapers. Chapter
2 analyses the case study of Guinness/Diageo and its evolution from corporate
philanthropy to CSR in conjunction with the formation of Guinness into Diageo plc.
The chapter highlights how Diageo adopts CSR as parts of its core business function
but also incorporates corporate philanthropy into this model. In Chapter 3 the author
discusses Cadbury’s and it's transition from corporate philanthropy to CSR in
conjunction with the firms merger with Mondelez International. Similarly, the chapter
highlights how Cadbury adopts CSR into its core objectives.

19

Chapter 2
The transition from Corporate Philanthropy to CSR: A
Guinness/Diageo Case Study
Introduction
The culture of Corporate Philanthropy is characterised through the history of the
Guinness Family. This chapter will provide a detailed overview of the Guinness
family’s philanthropic efforts. The study will focus in depth on two specific time
periods as both are heavily embedded in corporate philanthropy and corporate social
responsibility (CSR). The late nineteenth century to the early twentieth century will
highlight the work of Edward Guinness the late descendant of founding member
Arthur Guinness that achieved significant recognition within the philanthropic field
not just in Ireland but also in the UK until his death in 1927 (Bielenberg 2003, pp.15).
It will then deal with the alteration in the Guinness model with the amalgamation with
Grand Metropolitan in 1997 to become known as Diageo plc.7
It will discuss the
transition of Guinness/Diageo from corporate philanthropy to CSR by considering
Guinness’s philanthropic efforts during the late nineteenth and early twentieth century
with a particular focus on the relevant themes such as religion and by the means of
social advancement and Diageo’s role in promoting CSR in the twenty first century. It
will conclude by analysing the reasons why Guinness/Diageo has replaced corporate
philanthropy with CSR.

7
Diageo CSR in Ireland [Online]. Available from: http://www.diageo.com/en-
ie/csr/pages/csr-in-ireland.aspx [Accessed 26 June 2015].

20

Philanthropy in the nineteenth and early twentieth century: A Case
Study of Guinness
The Guinness Saga is heavily rooted in its founder Arthur Guinness. Arthur Guinness
was born in 1725, to parents Richard Guinness and Elizabeth Read. The eldest in his
family, Arthur assisted his father in brewing table beer for Arthur’s godfather, the
Archbishop of Cashel, Dr. Arthur Price. The death of the Archbishop in 1752 saw
Arthur inherit a sum of £100 which ‘in those days a nice round sum’ (Moore 1960
pp.52). With his savings Arthur had sufficient capital to move his brewing business in
Lexlip Co. Kildare to Ireland’s capital city Dublin. In 1759, Arthur Guinness signed a
9,000-year lease on a vacant brewery at St. James Gate, Dublin. The property
consisted of four acres of land that included stables, loft, two malt houses, a mill, a
copper and a kieve.8
Furthermore, this new industry brought a sense of hope and
expectations to the city of Dublin but also internally, sought a vision for planning
improvements and the future of its employees. Arthur’s personal life was also
flourishing, on the 14th June 1761, he married Olivia Whitmore and they went onto to
bear ten children (Moore 1960). However, 1775 its first major problem occurred.
Guinness were prompt to acknowledge these trends and in 1799, the corporation
decided to alter its focus from manufacturing ale to porter, which was predominantly
its core product.9
In 1803, Arthur Guinness died. Nevertheless, he left behind him a
world-class legacy but also initiated the Guinness families’ philanthropic efforts that
are also linked with the Guinness name. Although, there is substantial literature on
philanthropy regarding Arthur’s descendent Edward Guinness, a review of the
Guinness archives reveals that Arthur Guinness also obtained philanthropy.
According to the Guinness Archives Family Fact Sheet (2015)10
on the Guinness
family achievements, Arthur Guinness was appointed to several boards including the
Elected Warden of the Dublin Corporation of Brewers in 1763. Furthermore, in the
late 1770’s he became Governor of the Meath Hospital Board. However, one of the

8
9

10
Guinness Archives. Archive fact sheet: Guinness family achievements. 2015.

21

most prominent findings is the longstanding relationship with St. Patrick’s Cathedral
and the Guinness Family. It is Arthur who commenced this relationship by giving 250
guineas to the Chapel of Schools. It is through Arthur Guinness strong relationship
with the Church of Ireland that motivated his philanthropic efforts.
Arthurs three sons; Arthur, Benjamin and William succeeded him in running the
brewery. However, Benjamin and William both died and full ownership of the
company was given to Arthur II. Similar to his father Arthur II was a master of his
trade. Despite the brewing industry going into decline during the late eighteenth
century with many small breweries withdrawing from the brewing market, the
Guinness brewery survived (Moore 1960). As a result in 1833, Guinness became the
largest brewery in Ireland. Furthermore, Guinness saw an increase in its exports to
various locations across the globe from Barbados, Sierra Leone, Lisbon and New
York to name but a few. By 1870, 10% of Guinness was exported abroad.11
N Arthur
II also gained success through his philanthropic activities. Similar to his father’s
ideology of philanthropy Moore (1960 pp. 56) portrays Arthur as an individual that
‘was of charitable disposition and liberal outlook.’ This is evident through his
establishment of the Society for Improving the Conditions of Children Employed as
Chimney Sweepers. Additionally, his business success was acknowledged through
acquiring the Presidency of the Dublin Chamber of Commerce.12
Benjamin Lee Guinness received ownership of Guinness in 1855 after the death of his
father Arthur II. Moreover, through Benjamin’s political affairs he obtained the title
of Baronet and Lord Mayor of Dublin city in 1851. In 1865 Benjamin exceeded his
position as Lord Mayor if Dublin when he became Minister for Parliament for Dublin
city. As a result, Benjamin’s wealth enabled him to donate £150,000 to the restoration
of St. Patrick’s Cathedral.13

11
12
Guinness Archives. Archive fact sheet: Iveagh play center. 2015.

13

22

Moreover, he assisted in the reconstruction of Archbishop’s Marsh’s library. The
philanthropic projects undertaken by Benjamin Lee Guinness enabled the link of
philanthropy and Guinness to continue.
By the late nineteenth and early twentieth century the Guinness legacy was well and
truly established.14
With its increasing success, the organisation had the ability to
expand its resources under its new owner, Edward Cecil Guinness. Similarly, to his
descendants before him, Edward gained sole ownership of the firm after the death of
his father Benjamin Less Guinness in 1868. Therefore, with the assistance of the
growth of the firm and the industrial evolution, Guinness expanded its efforts to
accommodate an internal railway system, a storehouse, a cooperage, a racking shed, a
malting’s and a new vathouse. Furthermore, the brewery welcomed additional
success, as in 1886 the Guinness Corporation listed as a public limited company (plc.)
on the London Stock Exchange. As a result, the Guinness organisation became not
only the largest brewery in the world but also one of the largest companies in the
world of this era (Bielenberg 2003). As according to the Guinness historical section
on the organisations website Guinness15
the brewery produced 1.2million barrels
annually.
However, in contrast to Edward’s success within the firm, Bielenberg (2003) argues
that in fact Edward Cecil Guinness is instead renowned for his philanthropic efforts.
Certainly, during this period he was a key philanthropist in Ireland but also in the
United Kingdom (U.K.). Although, philanthropy is rooted in the Guinness family tree,
the literature suggests that in fact religion and social status were prominent
motivational factors for undertaking philanthropic responsibilities. These claims are
embedded in the work of Edward Guinness philanthropic activities.

14

15

23

With regards to religion as a theme, Edward Guinness’ work of the restoration of St.
Patrick’s Cathedral, and the contribution of £125,000 to the Church of Ireland divided
amongst St. Patrick’s Cathedral and King Edward VII in London. Therefore, this
evidence poses a clear obligation to the Guinness Family’s link with the church but
also their promotion of their Protestant faith and their ‘sense of Christian Duty’
(Bielenberg 2003, pp.152). Furthermore, Kim (1977) states that this sense of duty is
identifiable through Weber’s thesis, which argues that the protestant faith promotes
itself through the work of their every day life with that of the work of god. Moreover,
by the early twentieth century, the Catholic religion was growing momentum with a
rising sufficing predominantly within the capital but also a national plea. The unionist
connection of the Guinness family ignored these happenings and instead focused their
efforts within the London social scene (Fanning 2009). Moreover, acquiring hierarchy
within the social scene was of significant interest to the Guinness Family through
their land ownership and politics. As discussed previously, his grandfather Arthur
Guinness II was of certain nobility, as so was his father Benjamin who was a
prominent political figure in Ireland and the UK. Furthermore, during Edward’s
childhood years, the Guinness family acquired a great deal of land, in particular his
father purchased a townhouse known as Iveagh house located in St.Stephen’s Green
(Bielenberg 2003 pp.134). Established in 1736, Iveagh House was acquired by Arthur
Guinness II in May 1856, which was subsequently owned by Arthur’s son Edward
Cecil Guinness.16
According to the Mullally (1981 pp. 9) this provides ‘the visible
expression of the brewery’s civic pre-eminence.’17
Nevertheless, by the time Edward
gained ownership of the brewery he had a somewhat different perspective of
maintaining the Guinness family name amongst high society.

16
Guinness Archives. Archive fact sheet: St. Stephen’s green, Iveagh house, Iveagh gardens.
2015.
17
The Irish Times, 17 October 1981. The Guinness Story - 2. Mullally, F. [Accessed from
The Irish Times]

24

Philanthropy as a means of Social Advancement
Mullally (1981) denotes that Edward’s proclaimed social status was obtained through
the success of the Guinness brewery but also through his philanthropic efforts.18
Bielenberg (2003) asserts that the increasing growth of the brewery and his
philanthropic giving was a response to elevate the Guinness family’s social status.
Yet, Colgan (2015)19
states that Edward Guinness philanthropic activities were
actually motivated through his belief system of the Guinness legacy in that it is the
right thing to do. There is literature on the relationship between philanthropy and
Edward Guinness. Edward’s corporate philanthropic activities include The Guinness
Trust later known as the Iveagh Trust. The Iveagh Trust was a corporate philanthropic
response to the housing crisis in London and in Dublin in particular Bull Alley, Kevin
Street and Crumlin to name but a few.20
According to the Guinness Archives (2015)21
Edward donated £200,000 to its London branch and a further £50,000 for activities in
Dublin. With regards to Bull Alley, in 1899 Edward acquired this land of his own
expense to erect houses. Its completion saw a total of 250 developments with a further
substantial amount invested in providing social activities for its residences. The
opening of The Iveagh Play Centre in 1915 is just one example. Evidence suggests
that this development was a well designed building with a purpose of teaching skills
such as gymnastics and baking to children between the ages of three and fourteen.
Additionally, the building also catered for food and parties mainly during the
Christmas Season. As a result Bielenberg (2003 pp.140) asserts that he envisioned
this belief of system of ‘better living conditions improved his profits.’
Moreover, Edwards philanthropic efforts didn’t just acknowledge the needs of the
lower class in Dublin and London but also his employee’s. Under the Iveagh Trust,
Edward extended his efforts to provide housing for his workers. According to
Bielenberg (2003) Edward’s philanthropic activities awarded him with a sense of
power and influence within the community. Therefore, this concept motivated

18

The Irish Times, 24 October 1981. The Guinness Story – 1. Mulally, F. [Accessed from
The Irish Times]

19
Interview with E Colgan [Archives Manager Guinness Storehouse] 31 July 2015.

20
Guinness Archives. Archive fact sheet: Iveagh trust housing. 2015.

21
Guinness Archives. Archive fact sheet: Iveagh trust housing. 2015.

25

Edward in 1872 to provide an estimated total of three hundred houses for the
employees of the Guinness Corporation. Additionally, in 1884 a ‘Lady Visitor' was
appointed as a communications officer between the brewery and its staff members.22
By 1906, the findings highlight a total of 3,240 employees and a further 10,000
individuals depending on The Iveagh Trust.23
Furthermore, Bielenberg (2003) states
that employee wages were considerably low yet Colgan (2015)24
argues that in fact
the Guinness wage was 10-20% higher than then industrial wage. Moreover, the
phrase ‘ From the womb to the tomb’ as noted by Colgan (2015)25
states that this was
a common phrase amongst the Guinness employees as a result of the kind generosity
given by the Guinness brewery towards housing, health, pensions, food offerings and
education to name but a few. As a result of these offerings, Moore (1960 pp.56)
argues that ‘these are the principle public beneficiaries of a man who, if he were
remarkably wealthy was also immensely charitable.’ Thus, the establishment of
Edward’s philanthropic work in Dublin enabled him to demonstrate these efforts in
London. Mullally (1981) highlights that the houses designed under the Iveagh Trust in
London were regarded as basic subsequently in later years, yet during its initial years
these properties were regarded as sufficient working class accommodation. 26
Nevertheless, in 1895 it accommodated a remarkable total of 5,135 individuals with
significant increases throughout the twentieth century. Mullally (1981) states that in
the 1980’s this was regarded as one of the largest housing associations within
London.27
Therefore, this poses the statement of the predominate focus of Edward’s
philanthropic work. As according to Moore (1960) the author argues that his time in
London was where he spent a large proportion of the trust that enabled him to

22
Guinness Archives. Archive fact sheet: Employee welfare at Guinness. 2015.

23
24

25

26
The Irish Times]
27
The Irish Times]

26

associate amongst Britain’s elite. Moreover, Bielenberg (2003) indicates that his
philanthropic efforts were more noticeable than that of Dublin particularly amongst
the Royal Family. As a result, of his political affairs and philanthropic efforts Edward
Guinness acquired numerous nobility titles including Lord, Viscount and Earl of
Iveagh but also left behind him a legacy of generosity (Moore 1960). Moreover, a
vast fortune that provided the Guinness generation with influential means amongst
British and Irish Society (Fanning 2009).
The philanthropic recognition gained by Edward, his brother Arthur also had a keen
interest in philanthropy. However, this is overshadowed in the literature by his brother
Edward. Nevertheless, similar to his father Arthur obtained particular interest in
Marsh’s Library and assisted in the completion of its restoration. Moreover, his
attention to St. Stephen’s Green is widely acknowledged throughout the literature.
According to the Guinness Archives28
St. Stephen’s Green was developed in the
seventeenth century, however during the nineteenth century it was privatised on
behalf of the residences of the Green. However, the late nineteenth century St
Stephen’s Green re opened to highlight Dublin city’s prominence during the industrial
revolution. Moreover, it was Arthur who provided assistance by personally
overseeing the remodelling of St. Stephens Green guided this development. These
efforts were acknowledged with the erection of a statute in his honour in 1892.29
Therefore, it is the association of wealth and social status endured by the Guinness
family particularly during the period of 1868 to the death of Edward Cecil Guinness
in 1927 that is a prominent theme throughout the literature. Nevertheless, the
influence of Rupert Edward Guinness son of Edward Cecil had a different
perspective. Mullally (1981) maintains that the second Earl of Iveagh was an
unpretentious individual that had a tendency towards precision and accuracy.30
These

28
2015.

29
2015.

30
The Irish Times]

27

personality traits were projected through his work within the organisation. Appointed
as Chairman in 1927, one of his most famous achievements within the organisation
was gaining access to the British Market with the ‘Guinness Is Good For You’
advertisement.31
The aftermath affect that this slogan had on Guinness profits was
used in many of its advertisements throughout the years.32
However, the outbreak of
World War II had a negative affect on sales as a total ban on exports was introduced
in 1944, which wasn’t raised until the aftermath of the War in July 1947. However,
although the War had a negative impact on Guinness’ financial results, it still sufficed
its philanthropic duty towards society. According to Guinness33
the Guinness brewery
exported beer at Christmas to British Soldiers serving in France. Moreover, the
actions of the War entrusted Rupert to donate his inheritance of Iveagh House in St.
Stephen’s Green to the Irish Governments, which subsequently became the Irish
Department for Foreign Affairs and Trade. Additionally, his inheritance appointed
him the trustee of The Iveagh Trust and The Guinness Trust in England (Wilson
2006). It was Edward’s interest in agriculture and scientific research that encouraged
him towards philanthropic giving in these areas. According to Wilson (2006 pp. 1)
Rupert received the first ‘landowners gold medal at the Royal Agricultural Society in
1958’ for his philanthropic efforts in the areas of veterinary research, landownership
and dairy. Additionally, the literature indicates that Rupert had a keen interest in
medicine and supported medical research to assist in achieving results. Likewise, the
Guinness Archives34
highlight his philanthropic achievements and state that in 1927
he was welcomed as the Chancellor of Trinity College Dublin. His time in this role
saw him contribute substantially to several moderations of the University including a
new library, schools of Botany and Physics and the furnishing of Purser house.
Therefore, these findings pose a strong link with Rupert’s philanthropic duty and
education where he studied at Trinity College during his early life (Wilson 2006).

31
[Accessed 21st July 2015].

32
The Irish Times, 17 October 1981. The Guinness Story - 2. Mullally, F. [Accessed from
The Irish Times]
33

34

28

Nevertheless, his keen philanthropic ‘awarded him insignia of a Knight Companion of
the Most Noble Order of the Garter’ in 1948. 35
It is achievements like these that
identify a strong link with philanthropy and Guinness but also his determination in
adhering to his philanthropic projects. As according to Wilson (2006) Rupert, at the
age of eighty-eight was still influential both in his business affairs and his
philanthropic work.
Thus, the Guinness Family’s philanthropic activities are evident through the religion
as a motivation and by means of social advancement (Bielenberg 2003, Mullally
1981). Additionally, it is clear that the generations of the Guinness family took a
prime role in preserving the Guinness legacy in both the success of the brewery but
also the family’s connection with philanthropy derived from its founder Arthur
Guinness.36
CSR – The evolution from Guinness to Diageo plc.
Diageo’s CSR efforts are obtained as a means of promoting the Diageo brand but also
to engage stakeholders attracted the Diageo plc (Muzellec and Lambkin 2008).
Therefore, it is evident that Diageo incorporates CSR as a dependent variable of the
firm’s business strategy as a means of increasing brand awareness (Muzellec and
Lambkin 2008). Through Diageo’s on going relationship with its stakeholders the
organisation views itself in supporting a wide variety of CSR activities predominantly
within the areas of sustaining the environment, responsible alcohol consumption,
community support and development, corporate sponsorship and recognising the
needs of its people.37
However, Knox and Maklan (2004) argue that the promotion of
Diageo’s responsible drinking campaigns is central to the firms CSR efforts (Knox
and Maklan 2004).

36

Interview with S Kelly [Public Relations Manager Diageo Ireland] 27 July 2015

37
Diageo. Diageo Ireland Annual Report. 2014.

29

The reasons why CSR has replaced corporate philanthropy:
Globalisation
The mid twentieth century saw the birth of globalisation with mergers and
acquisitions becoming a popular business strategy. As a result, large family firms
struggled to maintain their influence under these developments (Wilson 2006).
Despite the success of the Guinness organisation it struggled to compete with these
new large multinational corporations. In 1960 Arthur Guinness was appointed
managing director of the Guinness firm (Wilson 2006). Yet, the developments in the
business environment struggled for him to maintain its success. As a result Wilson
(2006) states that an ‘outsider’ was appointed to reinvent the Guinness brand.
According to the findings, Edward Saunders retransformed the Guinness brand
predominantly in the early nineties. With regards to Benjamin, evidence suggests that
he distracted himself from the Guinness brand through his involvement in both Irish
and British politics, philanthropy work and an active social life. Nevertheless, three
weeks prior to his death in 1992, Benjamin resigned from the Guinness Board. Thus,
creating an end to succession of the family owned Guinness brewery (Wilson 2006).
Moreover, by the late twentieth century, Guinness was a global brand with
subsidiaries in numerous locations worldwide. In 1985 it is reported that Guinness
had breweries in twenty-five locations across the globe with a further one hundred
and twenty countries consuming Guinness.38
Despite its global impact, Guinness once
again decided to embark on a new journey as a corporate plea to rebrand and enhance
the financial structure of the firm. As a result, this witnessed the merger between
Guinness plc. and Grand Metropolitan. With this new business strategy, Muzellec and
Lambkin (2008) assert that a new name was necessary and so Diageo plc. meaning
the combination of the Latin word for day and the Greek word for earth became its
new entity. Despite this new entity the Guinness brand itself continued to soar. In
2001, an average of two billion pints are sold worldwide with a further one million of
that sold in the UK. Moreover, in 2007 figures were released that stated one million
pints of Guinness were consumed on a daily basis. By 2009 the Guinness brand
celebrated two hundred and fifty years of supplying premium beer across the world
but also supporting a legacy that was created in 1759.39
However, despite the

38

30

consumption of the Guinness product still intact, the corporation’s brand identity
required restructuring. According to Muzellec and Lambkin (2008) the authors assert
that its Irish shareholders where prominent in acknowledging the longstanding legacy
Guinness and so its Irish division became known as Diageo Ireland. Furthermore,
Diageo Ireland regards itself as the custodian of the Guinness brand and has a role in
maintaining that responsibility Primarily, Diageo Ireland proactively engages with
members of the Guinness family to preserve that Guinness legacy.40
Corporate Strategy
Diageo deploys CSR through its Sustainability and Responsibility Initiatives as a
dependent component of the firm’s business strategy. Alongside Diageo’s
performance drivers incorporating CSR into the firm’s business strategy is a response
to acquire long-term investment for the firm through engaging with its stakeholders.41
Additionally, Diageo promotes its Sustainability and Responsibility efforts as a
marketing tool to increase brand awareness of the Diageo brand (Muzellec and
Lambkin 2008). Despite Diageo’s main role in alcohol production the organisation
visions itself in support of responsible drinking campaigns. However, this assumption
has received criticism from its stakeholders as youth campaigners have criticised
Diageo’s drink responsible campaigns stating that they are ineffective due to the
nature of the industry promoting them.42
Nevertheless, the majority of the CSR
initiatives are done on a much quieter scale however, these initiatives still require a
substantial amount of the firms human resources to ensure their efforts are
implemented efficiently and effectively.43
The Water for Life initiative in Africa is
one CSR initiative that is conducted in this manner. Notably, in Kenya the Nairobi

39
40
Interview with S Kelly [Public Relations Manager Diageo Ireland] 27 July 2015.

41

42
Breakingnews.ie, 12 February 2015. Criticism of new alcohol awareness campaign funded
by industry. [Accessed from http://www.breakingnews.ie/ireland/criticism-of-new-alcohol-
awareness-campaign-funded-by-industry-662005.html]
43
Interview with S Kelly [Public Relations Manager Diageo Ireland] 27 July 2015

31

Water Routable group is comprised of Diageo and Kenya Breweries Ltd to provide
assistance and guidance to local authorities on the best practices of improving water
within this region.44
Stakeholder Expectations
Diageo Ireland was now a company that acknowledged the needs not just its
consumers but also various others stakeholders including the media, investors,
suppliers, employees and partnerships to name but a few (Muzellec and Lambkin
2008). Under this new notion of CSR, Diageo Ireland went one step further in
addressing the needs of its stakeholders through providing an account of its actions
but also asserting its law biding decisions. Therefore, it is notwithstanding the reason
why Diageo Ireland was awarded Corporate Philanthropist of the Year in 2014.45
Diageo’s CSR activities are promoted around the concept of stakeholder theory.
According to Muzellec and Lambkin (2008) Diageo applies a strategic approach to
monitoring its stakeholder expectations internally through ‘Diageo Ireland
Stakeholder Tracker’ and externally by listing on the Irish Stock Exchange (ISE). For
that reason Muzellec and Lambkin (2008) assert that Diageo’s response to their
stakeholder activity is remarkable.
Additionally, Diageo’s stakeholder expectations take prime interest in linking back to
its heritage to that of the Guinness family and their philanthropic efforts. The
Guinness storehouse located on the original premises of St. James Gate in Dublin is
one approach that enables society to gain an insight into the Guinness legacy. This
insightful initiative is widely supported as according the Guinness website (2015) in
2004 it welcomed 2million visitors to its doors since it’s opening in 2000.46
Furthermore, Diageo is also smart in incorporating the iconic Guinness brand into its
CSR initiatives which is highlighted throughout their website and the Guinness

44
. Diageo. Diageo Ireland Annual Report. 2014.
45
Roche, T. Celebrating philanthropy, Irish style [Online]. Available from:
http://www.foundation.ie/2015/02/tinas-message-celebrating-philanthropy-irish-style/
[Accessed 13th July 2015].

46

32

website. According to Kelly (2015) 47
Diageo still engages with the Guinness family
proactively to ensure they are aware of their continued support of the Guinness
legacy. Hence, the creation of The Arthur Guinness Trust Fun launched in 2009 in
which enables individuals to showcase their talents and ideas and become social
entrepreneurs.48
Similarly, Guinness Amplify enables amateur musicians to perform
in numerous events across Ireland.49
Moreover, Diageo recognises the need to
continue the Guinness legacy of giving back and supporting the people to primarily
within the Dublin 8 community. According to Kelly (2015) 50
‘there is not just a
physical connection because we are based here but there is an emotional connection to
the people of Dublin.’ The Learning for Life programme is one initiative. The
Learning for Life programme liaises with the Department of Social Welfare to
identify people within the local community that are unemployed or were brought up
socially disadvantaged.51
Thus, the aim of this programme in working with the
partners of the Diageo Ireland is to provide a training programme within the
hospitality sector that enables them to gain the necessary life skills. Additionally,
these individuals complete a six week training programme within a particular
organisation and if successful gain employment.52
However, there are limitations to
the success of this initiative as it was only launched in 2014. These initiatives are just
a snapshot of Diageo Ireland’s response to its stakeholders. Furthermore, Corporate
philanthropy are not necessarily the same but in fact part of a continuum around how
Diageo Ireland sees itself and the role it plays within the community.53
It is these
initiatives that not only enhance Diageo’s relationship with its stakeholders but also

47
48

49

50

51

52
Diageo. Diageo our code: Code of business conduct. 2015.
53

33

Pérez (2015) maintains the overall reputation and financial success of the firm.
Additionally, Bayoud and Kavanagh (2012) as cited in Pérez (2015) state that these
benefits gain customer satisfaction, employee loyalty and attract foreign investment.
Accountability
Diageo plc views itself in taking its CSR activities seriously in which it outlines
through its CSR reporting. The Diageo Ireland Annual Report 54
and the Code of
Conduct Report 55
promotes Diageo as a prime advocate in the support of moral CSR
activity. Moreover, Jones, Hillier and Comfort (2013) assert that Diageo practices
good corporate governance with its relationship with their suppliers to ensure
responsible sourcing. However, large multinational corporations like Diageo feel a
certain pressure to adhere to social norms and respond to sensitive issues.56
Diageo is
aware of these expectancies, as the organisation has received numerous criticisms
over its marketing and responsible drinking campaigns as mentioned previously.
Alongside 13 additional alcohol producers, Diageo adopts the ‘Global, Beer, Wine
and Spirits Producers commitment to the reduction of alcohol misuse across a wide
spectrum of campaigns in reducing underage drinking and strengthening and
enhancing marketing legislation.57
However, Diageo Ireland has increasingly sought
criticism for the creation of Arthur’s Day to enable the organisations stakeholders to
promote and celebrate their assistance in the success of the Guinness brand.
According to Pope58
Arthur’s Day is a ‘crass exploitation of a nations weakness for
alcohol by a multinational corporation profiting handsomely from products linked to
some of our society’s greatest ills.’ Moreover, the Irish Times59
maintain that Arthur’s

54

55

56Interview with S Kelly [Public Relations Manager Diageo Ireland] 27 July 2015.

57

58
The Irish Times, 24 September 2013. Diageo may prefer to call it a day on its marketing
ploy as backlash gathers force. Pope, C. [Accessed from the Irish Times]

59
The Irish Times 2015, 20 February 2015. A Faustian pact?: Drinking responsibly.
[Accessed from The Irish Times]

34

Day is a marketing plea by Diageo to enhance the organisations profits. 60
Subsequently, Arthur’s Day was disregarded as a result of the bad reputation this CSR
initiative had on the overall Diageo brand.61
At a local level, Diageo’s CSR reporting is neglected. However, Jones, Hillier and
Comfort (2013 pp.258) assure that due to the nature of Diageo’s global, complex and
dynamic system their CSR activity at a community level is difficult to ‘measure,
collect and assure’. Moreover, Kelly (2015) Public Relations Manager at Diageo plc
feels that unstreaking CSR activity anonymously at a local level is more respectful to
the Guinness legacy.62
Primarily, this CSR activity obtained at a local level is the
longstanding legacy between Guinness and its connection with the Dublin 8
community.
Legitimacy
Diageo plc adopts several guidelines in response to its relationship with its
stakeholders, values and international and national laws to name but a few (Jones,
Hillier and Comfort 2013). Primarily, in response to CSR at an international level
Diageo adopts the UN Global Compact Framework yet the Diageo Annual Report
201463
fails to state its efforts in adopting the UN Global Compact framework.
Particularly in response to its stakeholders and the relationship with its CSR activities,
one of its many compliances is the notion of charitable giving. The Diageo Report64
outlines Diageo’s compliance to ensuring that all their donations are transparent and
applicable with the law. Additionally, the report ensures that Diageo only supports

60
The Irish Times 2015, 20 February 2015. A Faustian pact?: Drinking responsibly.
61
I The Irish Times 2015, 20 February 2015. A Faustian pact?: Drinking responsibly.

62

63

64

35

sincere charities and in 2014 Diageo Ireland contributed 10.6 million of its operation
profits to charities.65
Diageo also adopts several marketing corporate governance codes such as the
Brewer’s Marketing Code in the United States. However, Diageo has received
criticisms from its stakeholders for violating this code for promoting Guinness
alongside children in a St Patricks Day adverting campaign (Macarthur 2004).
However, according to Diageo as cited in Macarthur (2004) the organisation claims
that they are moral to society and self-regulatory. Yet Macarthur (2004) argues that
Diageo failed to respond quickly to this issue violation due to the slow nature in self-
regulating and as a result the advertisement was marketed without any effect.
Globalisation, corporate strategy, stakeholder expectations, accountability and
legitimacy are five reasons why Guinness replaced corporate philanthropy with CSR
in alliance with the firm’s transition to Diageo plc. It is clear that through Diageo’s
wide range of CSR activity and adoption of several international standards and
guidelines that Diageo is an advocate for CSR activity but also in promoting corporate
philanthropy through their CSR initiatives.66
However, Diageo is a large complex
organisation and trying to find a dynamic to promote itself as a leading drinks
producer but also show support for responsible drinking has proven difficult for the
firm.

65
Diageo. Diageo Ireland Annual Report. 2014

66
Diageo. Diageo Ireland Annual Report. 2014

36

Conclusion
Guinness is highly successful in both promoting the brand and their corporate
philanthropic efforts that enabled the legacy to live within the Guinness family for
over seven generations.67
Yet, the changing times of the world economy placed strong
emphasis on globalisation, corporate strategy, stakeholder theory, accountability and
legitimacy. Subsequently, organisations like Guinness required a call for action to
maintain the success of the firm. Thus, the formation of Diageo plc devised a new
corporate strategy that incorporated CSR as a dependent component of the firm’s core
objectives to achieve long-term success (Muzellec and Lambkin 2008). As a result,
Diageo constantly engages with their stakeholders. Yet, it is apparent that Diageo fails
to find a balance in promoting themselves as a global brand leader within the drinks
industry and encouraging individuals to drink responsibility.68
Nevertheless, Diageo
exerts its CSR efforts in maintaining a strong commitment to the Dublin 8 community
that is heavily rooted in the Guinness legacy.69
Yet, it is clear that Diageo’s CSR
motivations in the development of the Dublin 8 community is less significant than
that of the corporate philanthropic efforts of the Guinness family.70
From the analysis it is evident that corporate philanthropy practiced by the Guinness
family was unable to survive during the changing of the world economy especially
during the period of mergers and acquisitions by large multi national corporations.
Subsequently, the ideology that surrounds corporate philanthropy in modern times is
very different than that of corporate philanthropy practiced during the late nineteenth
and early twentieth century. It is apparent that corporate philanthropy in modern times
is deployed by Diageo as a sub component of the firms CSR activity as apposed to
corporate philanthropy during the late nineteenth and early twentieth century, which
was rooted in the personal motivations of the Guinness family.

67

68
Breakingnews.ie, 12 February 2015. Criticism of new alcohol awareness campaign funded
by industry. [Accessed from http://www.breakingnews.ie/ireland/criticism-of-new-alcohol-
awareness-campaign-funded-by-industry-662005.html]

69
70

37

Chapter 3
The transition from Corporate Philanthropy to CSR:
Cadbury/Mondelez International Case Study
Introduction
Similarly, to Guinness family the Cadbury family is well known for it’s philanthropic
giving. It is suggested that the Cadbury family’s motivation for philanthropy is rooted
in their Quaker faith particularly within the nineteenth and early twentieth century
(Preston 1996). As according to Preston (1996) Quakers in the nineteenth century
believed their financial wealth was a contribution from God is assisting those in need.
Their beliefs distinguished them from other Christian Faiths, which Dellheim (1987)
denotes the term ‘outsider’ to identify with this statement. However, it is through this
belief system that the term corporate philanthropy developed during the late
nineteenth century through their support for innovation and entrepreneurship but also
in promoting employee relations (Dellheim 1987). As a result, many organisations
since its creation have studied the Cadbury culture. Moreover, Guinness was in fact
one of these organisations as Guinness sought the similar ideology towards Cadbury
and its relationship with their employees.71
Furthermore, similarities are evident in
modern society as Cadbury was also subject to a merger with Schweppes in 1969 and
Kraft in 2010. Thus, resulting in the formation of Mondelez International in 2010.72
Therefore these events are prime influences to story of Cadbury’s and its
philanthropic journey towards CSR with Mondelez International. As a result, these
events will be explored further in depth later in the case study.
This chapter will look at Cadbury’s philanthropic efforts during the late nineteenth
and early twentieth century with a particular focus on the relevant themes such as
religion and by the means of social advancement. It will then discuss Mondelez

71
Interview with E Colgan (Archives Manager at the Guinness Storehouse) 31 July 2015
72
story#bournville-the-factory-in-a-garden-is-born [Accessed 7 August 2015].

38

International’s adoption of corporate social reasonability in the twenty first century.
The latter section will analyse the way in which Cadbury/Mondelez International has
replaced corporate philanthropy with CSR.
Philanthropy in the late nineteenth and early twentieth century: A
Case Study of Cadbury’s
The story of the Cadbury brand is at the beginning with its founder John Cadbury. In
1801, John Cadbury was born into a large middle-class family in Birmingham UK.
His parents Richard and Elizabeth Cadbury came from a long succession of Quakers
and this faith was heavily influential during his schooling, and in his personal life. In
1824, after his apprenticeship in retailing, John acquired enough savings to establish
his own grocer’s shop, where he sold his own coca and drinking chocolate (Davies
2004). According to Cadbury73
this influence in creating his own chocolate was
inspired through substituting alcohol for an alternative such as chocolate as alcohol
consumption was prohibited within the Quaker faith. By 1842, John Cadbury’s
company had expanded into a manufacturing firm in Crooked Lane, Birmingham
where he developed several varieties of coca and drinking chocolate.74
Moreover, as
the company continued to expand so did its workforce, in 1847, Benjamin Cadbury,
John’s brother joined Benjamin in the firm to become Cadbury Brothers (Davies
2004). Within the Cadbury household, John Cadbury ran a strict order and luxury was
by no means evident despite their wealth (Dellheim 1987). John Cadbury used his
fortune to promote his philanthropic efforts in Birmingham through his influential
role on the current issues within society during the late nineteenth century particularly
the chimney sweep movement and the socially disadvantaged (Davies 2004). It is the
connection between philanthropy and Quakerism that Smith (2011 pp.125) maintains
‘became a form of witness to their religious faith, a physical legacy of their lives
serving god’.

73
74

39

During the latter years of John Cadbury life he became ill, which as a result had an
affect on the management of the firm. After his death in 1889, his sons Richard and
George had the task of reinventing the firm (Davies 2004). Nevertheless, the Cadbury
brothers survived this challenge through their management style and culture rooted in
their Quaker belief system. According to Dellheim (1987 pp.14) it is this ideology
that ‘shaped the ethic of the firm.’ The brothers decided to focus their attention on
producing quality good products in which they studied Dutch model that removed the
cocoa butter out of the cocoa (Dellheim 1987).
The new management style adopted by Cadbury witnessed prominent success from
1879 to 1931 this small enterprise grew to become largest manufacturing firm in the
UK worth an estimated £10.3million pounds (Dellheim 1987). The end of the
nineteenth century, the success of the firm enabled them to expand its resources and
relocate to a site four miles outside Bourneville, Birmingham (Williams 2013).
Moreover, it was an unusual occurrence during this period due accessibility being the
main factor. Nevertheless, Cadbury ignored these concerns and instead focused their
efforts on the social issues of the city. During the late nineteenth century, individual
well-being and mortality was exceptionally poor with the life expectancy rate
estimated at forty years of age.75
In 1895, the Cadbury brothers purchased 140 acres
of land to develop housing for their employees. Designed by architect William
Alexander Harvey these efforts were a reaction to the working class housing crisis of
the city but also for Cadbury to provide their employees with a better quality of life.
Likewise, this was reflected in Cadbury’s design of Bourneville with an additional
visionary of their Quaker Faith (Bailey and Bryson 2007). As according to Cadbury76
the houses were built for the purpose of ‘honest, sober, thrifty workmen, rather than
the destitute or very poor.’ Moreover no pub was built on site and the horticultural
was created in an attempt to sway employees from the consumption of alcohol.
Subsequently, the developments maintained an environmental feel to encourage ten,
with houses created in pairs each with gardens, vegetable patches and fruit trees.

75
Bournville Village Trust Bournville village trust timeline [Online]. Available from:
https://www.bvt.org.uk/our-business/bvt-timeline/ [Accessed 4 August 2015].

76 Cadbury Ireland The story [Online]. Available from: http://www.cadbury.ie/the-

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