Proceedings of 10th Asia - Pacific Business and Humanities Conference
22 - 23 February 2016, Hotel Istana, Kuala Lumpur, Malaysia
ISBN: 978-1-925488-00-5
Corporate Philanthropic Behavior among Small and Medium
Enterprise (SME) Owners in Malaysia
Kishen Tulsidas Adnani*, Ng Siew Imm** and Gan Bee Ching***
SMEs are considered the backbone of a nation’s economy. In Malaysia, they account for
almost 90% of all business establishments. However, SMEs have never been at the forefront
in their philanthropic initiatives. This study attempts to examine the antecedents of
philanthropic behavior among SMEs in Malaysia by presenting a holistic framework using the
Theory of Planned Behavior as its underlying theoretical base. Using a mixed-methods
research design, semi-structured interviews will be conducted with SME owners, non-profit
organizations (NPOs) and government agencies. This will be followed by a survey among
SME owners. The findings of this study will assist NPOs in soliciting donations from SME
owners.
JEL Codes:
1. Introduction
Philanthropy is not a new phenomenon as it has been in existence since the 16th century
(Adam, 2004). The term originates from an ancient Greek word that means “love of
humanity” (Downey, 1955) whereby people helped others purely out of love and
compassion. In the business environment today, corporate philanthropy is the act of
sacrificing money, assets, time or effort to benefit others (Acs and Desai, 2007; Burlingame
and Young, 1996; Gautier and Pache, 2013). Unlike individual charitable acts, philanthropy
is more institutional in nature. There is no direct interaction between the donor and the actual
recipient (Woods, 2006; Bekkers and Wiepking, 2010). The beneficiaries of philanthropy are
mostly non-profit organizations (NPOs).
The term “corporate philanthropy” leads to the misconception that only large corporations
are involved in philanthropy. Instead, it is also widespread among SMEs (Gautier and
Pache, 2013). This comes as no surprise as SMEs account for more than half of the
employment and a substantial share of the GDP of most countries (Baumann-Pauly,
Wickert, Spence and Scherer, 2013). In Malaysia, SMEs account for 98.5% of all business
establishments, employing around 65% of the work force (Bank Negara Malaysia Report,
2013). They also contributed about 32% of the GDP in 2010 (SMECORP, 2012). However,
there is a mismatch between the philanthropic contributions made by SMEs and their overall
number of establishments. There are evidences of charitable giving in the context of the
United States to illustrate this mismatch.
According to the Giving USA Foundation 2014 Report (cited in Watson, 2014), individualgiving constitute around 72% of total contributions to NPOs. Another 15% is contributed by
privately-held foundations. Corporations constitute only 5% of total giving in the United
*Kishen Tulsidas Adnani, Faculty of Business, Economics and Accounting, HELP University, Malaysia.
Email : kishenta@help.edu.my
**Dr. Ng Siew Imm, Department of Management and Marketing, Universiti Putra Malaysia
Email: imm_ns@upm.edu.my
** Dr. Gan Bee Ching, ELM Graduate School, HELP University, Malaysia
Email: gan.beeching@help.edu.my
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Proceedings of 10th Asia - Pacific Business and Humanities Conference
22 - 23 February 2016, Hotel Istana, Kuala Lumpur, Malaysia
ISBN: 978-1-925488-00-5
States (Watson, 2014). A similar pattern is also observed in the United Kingdom, Australia
and Malaysia (Brammer and Pavelin, 2005; Smith and McSweeney, 2007, Top10Malaysia
Online). In Malaysia, owners of large corporations are the biggest philanthropists, but they
usually donate in their personal capacity (Top10Malaysia Online). Thus, philanthropy among
SMEs in Malaysia warrants a study to understand the causes of this mismatch.
Unlike large corporations, SMEs have a smaller scale of operations and face resource
constraints (Udayasankar, 2007). Therefore, the extant literature on corporate philanthropy
mainly examines the drivers among large corporations (Gautier and Pache, 2013; Bekkers
and Wiepking, 2010; Dennis, Buchholtz and Butts, 2007; Lahdesmaki and Takala, 2012). In
large corporations, the drivers for corporate philanthropy are mostly firm-level constructs.
CEOs of such corporations may be restricted by company policies on the type of social
issues and allocations (Hemingway and Maclagan, 2004). On the other hand, philanthropic
initiatives by SMEs that are owner-managed are influenced by the owners’ personal beliefs
and values.
Furthermore, most of the studies on philanthropy have been carried out in the United States
and Europe, leading to a dearth of literature on philanthropy from the Asian perspective.
Asian societies are characterized as collectivist, as opposed to the individualist societies
found in the West. In a collectivist society, the “ties between individuals are very tight”; and
members of a community are supposed to look after the interest of each other (Hofstede,
1983). Thus, a study on the various drivers of philanthropic behavior in the Asian context is
warranted. The main objective of this study is to develop a holistic framework that would be
able to explain philanthropic behavior among SMEs in the Malaysian context.
2. Literature Review
Philanthropy is the voluntary facet of corporate social responsibility (CSR) which spans over
and above an organization’s economic, legal and ethical responsibilities (Carroll, 1999, see
Figure 1 below). The idea of “social responsibility” was first mooted by Howard R. Bowen in
his seminal publication Social Responsibilities of the Businessman in 1953 (Bowen, 2013).
However, the concept of organizations being altruistic goes against the principles of
neoclassical economics theories. Adam Smith, the founder of the modern economics,
propagated that society is best served by individuals pursuing their self-interest (Smith in
Gabbard and Atkinson, 2007). Echoing his thoughts, economists such as Friedman (1970)
argued that philanthropy was redundant and illegitimate due to the unwarranted financial
burden it posed on corporations. Profit-seeking organizations had “no business dabbling in
social causes” (Friedman, 1970). However, most governments now are burdened with huge
deficits; and growing social issues (Gautier and Pache, 2013). CSR is the result of the lack
of regulation & government incapacity to champion all social issues (Benabou and Tirole,
2009). Since businesses do not exist in vacuum; business owners have responsibilities
towards the society.
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Proceedings of 10th Asia - Pacific Business and Humanities Conference
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ISBN: 978-1-925488-00-5
Figure 1 Corporate Social Responsibility Model (Source: Carroll, 1999)
Individual charitable giving and corporate philanthropy have been studied through several
distinct academic disciplines that include: management, sociology, psychology, economics,
marketing, and public policy (Gautier and Pache, 2013; Bekkers and Wiepking, 2010).
However, philanthropic acts are usually the result of multiple mechanisms working
simultaneously (Bekkers and Wiepking, 2010). As a result of studying philanthropy through
distinct fields, philanthropy lacks an integrative model. Daly (2012) argues that the lack of
an integrated framework has left the concept, scope and practice of corporate philanthropy
highly contested. For instance, Gautier and Pache (2013) argue that corporate philanthropy
can be placed on a continuum for three rationales: (i) genuine commitment for common good
(ii) long-term community investment, and (iii) marketing approach. It is not clear which of
these three motivators drive philanthropic behavior among SMEs. Despite their vast
economic contribution, research on the philanthropic behavior of SMEs has been sidelined.
Any attempt to examine philanthropy among SMEs must consider individual and firm drivers
as well, since most SMEs are owner-managed.
2.1 Non-Profit Organizations and Philanthropy in Malaysia
Apart from the private and public sectors, there is another sector which is known for its notfor-profit missions. This voluntary sector is also known as the Third Sector (Morris, 2000). It
consists of non-profit organizations (NPOs). In the United States, philanthropy is actively
indulged by both individuals and corporations. Corporations in the United States tend to
donate extensively as they are able to save millions in taxes because most NPOs are given
tax-exempt status (Top10Malaysia Online).
In Malaysia, it is the individual business leaders that stand out as the biggest philanthropists
(Top10Malaysia Online). This is because most of the wealthiest companies in Malaysia are
controlled by individuals or families. However, they prefer to make personal contributions
instead, to avoid shareholders’ displeasure (The Star Online, 2012).
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Proceedings of 10th Asia - Pacific Business and Humanities Conference
22 - 23 February 2016, Hotel Istana, Kuala Lumpur, Malaysia
ISBN: 978-1-925488-00-5
The philanthropic landscape in Asia differs from Western countries in several ways (Ton,
2014). Firstly, philanthropy in Asia tends to focus on short-term results. This can be a
challenge for NPOs that require long-term funding. Secondly, there are minimal
collaborations between businesses and NPOs in Asia. This is partly because many business
owners still expect the government to take full responsibility of the people’s welfare. Finally,
on a positive note, the desire to give back to society is the main reasons for philanthropy.
This is an indicator that individuals and businesses want to take charge in building their
communities (Ton, 2014).
Most CSR studies in Malaysia focused on its CSR disclosure; giving less prominence to its
awareness and perception. Furthermore, the emphasis has been on public-listed companies
and subsidiaries of foreign-owned companies (Nasir et al, 2015). Ismail and Alias (2013)
presented a conceptual framework that attempts to explain Islamic philanthropy (zakat) that
is compulsory for all Muslims. Several other studies were carried out to examine CSR
motivations among SMEs (Nejati and Amran, 2009), CSR initiatives (Amran and Nejati,
2012), ethical practices among entrepreneurial ventures (Ahmad and Ramayah, 2012), CSR
practices among telecommunications companies and their enlightened self-interest in CSR
(Mohamed and Sawandi, 2007), and the roles and attitudes of CSR-compliant companies
(Ismail et al, n.d.).
Through a series of preliminary reviews, Cogswell (2002) made several observations about
philanthropy in Malaysia. Firstly, it is difficult to judge its full extent and impact, as the
relevant governmental bodies do not gather sufficient data. Secondly, despite being a multicultural society, most philanthropic initiatives are ethnic specific, and they are meant for the
donor’s cultural or religious preservation. According to Amran et al (2013), the Malaysian
government needs to help empower local communities into legitimate and powerful
stakeholders. This is because CSR is still in its infancy stage in Malaysia. Singh, Islam and
Ariffin (2015) proposed a conceptual framework comprising several drivers of philanthropic
CSR among SMEs. These include: intra-organizational factors, competitive dynamics,
institutional investors, customers, government regulators, and the role of NGOs.
2.2 Philanthropic Behavior and its Relevance in the SME Context
SMEs are considered the backbone of every nation’s economy as they provide more than
half of employment and a significant share of the country’s GDP (Baumann-Pauly et al,
2011). In Malaysia, SMEs in the manufacturing sector have less than 200 employees or an
annual sales turnover not exceeding RM50 million. As for the service sector, SMEs are
enterprises with 75 or less full-time employees or annual sales turnover not exceeding RM20
million (SMECORP, 2012). In 2013, Malaysian SMEs accounted for around 98.5% of all
business establishments, employing 5.6 million (around 65%) of the national work force
(Bank Negara Malaysia Website). SMEs also contributed about 32% of the GDP in 2010
(SMECORP, 2012).
Despite the sizable work force and economic contribution of SMEs, CSR research has
always been focused on large multinational corporations MNCs (Lepoutre and Heene,
2006). According to Gautier and Pache (2013), philanthropy is not only widespread among
MNCs but it is also dominant among SMEs across the globe. For instance, in a qualitative
research carried out among Swiss MNCs and SMEs, Baumann-Pauly et al (2011) found that
the SMEs were at par with the MNCs in their CSR commitment. They also concluded that
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Proceedings of 10th Asia - Pacific Business and Humanities Conference
22 - 23 February 2016, Hotel Istana, Kuala Lumpur, Malaysia
ISBN: 978-1-925488-00-5
SMEs were better off than MNCs in implementing CSR initiatives. However, MNCs have
better formal reporting mechanisms than SMEs; and this has often led to the misconception
that SMEs are not committed their CSR endeavor (Baumann-Pauly et al, 2011).
Furthermore, large corporations have been at the forefront to tackle global issues. These
include: labor standards, climate change, and human rights issues (Rasche and Kell, 2010).
Such CSR initiatives are commonly carried out by large corporations as they have the
necessary human and financial resources. On the other hand, smaller firms are more
influenced by the general value system within the communities they operate (Lepoutre and
Heene, 2006).
2.3 Theories Explaining Philanthropic Behavior
Corporations may be motivated to engage in philanthropic behavior for two distinct reasons:
self-interest or pure altruism (Garriga and Mele, 2004). Burlingame and Young (1996) were
some of the first scholars to examine the drivers behind corporate philanthropy. They
categorized philanthropy into four distinct groups of models:
(i)
The neoclassical productivity model – philanthropy is part of the main objective of
profit maximization;
(ii)
The altruistic model – corporations who genuinely contribute towards social causes;
(iii)
The political model – philanthropic involvements are means to obstruct government
interference in private businesses; and
(iv)
The stakeholder model – corporations try to work out a compromise between
divergent stakeholder interests.
The stakeholder theory warrants that every action which an organization takes, it must put
into consideration the legitimate interests of its stakeholders (Donaldson and Preston, 1995).
The central tenet of this theory is that corporations are expected to satisfy a number of
stakeholder groups; and not its shareholders alone. These groups include: employees,
customers, suppliers, competitors, and communities in which the corporation operates
(Campbell, 2007).
Therefore, corporations need to reassess their achievement of traditional objectives such as
profitability and growth alone (Donaldson and Preston, 1995). This close link between
stakeholder theory and CSR is supported through a study on 400 firms in the United States
and Europe to identify the factors that motivate CSR initiatives (Maignan and Ralston, 2002).
They found that the top three motivations for behaving in socially responsible manner were:
(1) The managers valued such behavior (normative); (2) The managers believed that it
enhanced the financial performance of their firms (instrumental); and finally, (3) the
stakeholders expected them to behave like this.
The prosocial behavior theory is defined as any behavior meant to benefit others. Such
behaviors include: volunteering time, helping strangers, giving to charitable organizations,
donating blood, and even risking one’s life for strangers (Benabou and Tirole, 2005).
According to Carlo and Randall (2002), helping behavior is usually intrinsically motivated by
altruism or empathic feelings. However, it can also be driven by external factors such as
gaining recognition or approval from others. Hence, they identified six drivers of prosocial
behaviors: altruistic, compliant, emotional, dire, public, and anonymous.
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Proceedings of 10th Asia - Pacific Business and Humanities Conference
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The altruistic prosocial behavior refers to actions carried out primarily by the concern and
welfare of others; such that individuals may be demotivated if offered external rewards.
Compliant prosocial behaviors are defined as helping others only when solicited; whilst
public prosocial behaviors are those that are conducted in front of others to meet self-serving
purposes as well. Anonymous prosocial behaviors are helping actions that are performed
without the knowledge of the person that is helped (Carlo and Randall, 2002). NPOs make
ample use of donors’ desire for publicity by rewarding them with “perks” such as media
coverage, awards or certificates. Such prosocial behavior becomes instrumental for
enhanced social esteem.
The social capital theory also helps explain philanthropic behavior. Social capital is the
networks and common norms of reciprocity that members of a community or society share.
As a form of capital, members find some value by being part of these social networks
(Putnam, 2001; Lin, 1999). Examples of social capital include: a formal trade association,
clubs, regular churchgoers, labor union, or an informal bowling group. Members of such
groups develop a sense of reciprocity among themselves. Members of communities that
were close-knit looked into the well-being of one another (Putnam, 2001). For instance,
through such networks, wealthy members of a community donate towards other needy
members. This is usually common among collectivist communities with strong cultural
identities (Lin, 1999).
2.4 Empirical Studies and Models of Philanthropic Behavior
The Theory of Reasoned Action (TRA) and its extension, Theory of Planned Behavior (TPB)
are two of the most influential conceptual frameworks for the study of human behavior.
These theories focus on theoretical constructs concerned with individual motivational factors
as antecedents of performing a specific behavior (Montano et al, 2008). Both TRA and TPB
assume the best predictor of a behavior is behavioral intention. According to the TRA,
intention itself is the result of two predictors: one’s attitude to engage in the behavior and
the subjective norms surrounding the behavior (Ajzen and Fishbein (1980). The TRA is
grounded in the assumption that a closer association between attitude and behavior is likely
to be found if intention is used as a mediator.
However, despite having a strong attitude, and favorable subjective norms, the ability to
engage in that behavior may be inhibited by additional personal and situational factors
(Ajzen, 2002). This led to the development of the TPB which had a third predictor: perceived
behavioral control (PBC); which was meant to improve the predicting power of the TRA. In
short, the TPB encompasses five specific constructs: attitudes, subjective norms, PBC,
behavioral intention and the actual behavior itself. This is illustrated in Figure 2 below.
However, TPB models are open to further expansion as and when additional predictors are
identified (Ajzen, 1991).
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Proceedings of 10th Asia - Pacific Business and Humanities Conference
22 - 23 February 2016, Hotel Istana, Kuala Lumpur, Malaysia
ISBN: 978-1-925488-00-5
Figure 2.2 Theory of Planned Behavior (Source: Ajzen, 2002)
Numerous studies have been carried out using TPB to explain many types of behavioral
intentions and behaviors. These include quitting to smoke, drinking, health services
utilization, exercising, HIV/STD-prevention behaviors and use of safety helmets, and
seatbelts (e.g. Montano et al, 2008; Astrom & Rise, 2001; Conner, Norman, & Bell, 2002;
McMillan & Conner, 2003). Behavioral intention is defined as a disposition to act (Ajzen,
1999). It is a composition of many motivational factors that influence behavior. Behavioral
intention is considered the key psychological factor that differentiates reasoned from nonreasoned behavior (Bagozzi and Yi, 1989). Behavioral intention is an indicator of an
individual’s readiness to perform a given behavior, and therefore, it is an immediate
antecedent of behavior. The antecedents of intention are attitude, subjective norms and
PBC.
Ajzen and Fishbein (1980) define attitude as an individual’s psychological evaluation of an
element or object. An attitude is formed when individuals associate certain positive or
negative value or belief of the said behavior. Subjective norms (SN) are the perceived social
pressure and the normative expectations that people have on an individual (Ajzen, 2002).
This internally-controlled perception pressures individuals to behave in a certain way as they
try to seek the approval from their referent groups. Finally, PBC is an individual’s perceptions
of the ease or difficulty of performing a certain behavior (Ajzen, 2002). According to Fini et
al (2012), PBC is developed from the internal beliefs that an individual holds about the
presence of resources and opportunities for a particular behavior.
In an attempt to study the determinants of philanthropic behavior, Dennis et al (2007) used
TPB as its underlying theoretical foundation. This study was conducted among 84 CEOs of
large corporations in the United States. Their model was built by incorporating two distinct
perspectives of philanthropy: strategic philanthropy and altruistic philanthropy. It empirically
examined the effects of the following antecedents: economic attitude, PBC, political
pressure, moral obligation, and self-identity. Slack (excess funds) was examined as a
moderator between these drivers and the actual philanthropic behavior. However, this model
poorly explained the variance in the determinants for corporate philanthropy. Only the role
of CEO self-identity was found to positively explain the philanthropy initiatives carried by
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Proceedings of 10th Asia - Pacific Business and Humanities Conference
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ISBN: 978-1-925488-00-5
these corporations (Dennis et al, 2007). However, it concluded that there were many other
drivers that could explain philanthropy.
Similarly, Smith and McSweeney (2007) used a revised TPB model to investigate the
patterns of charitable giving among Australians. They believed that attitude, social norm
(SN) and PBC alone cannot adequately explain charitable giving. Therefore, several other
socio-physiological predictors were added to their model. These include: injunctive norms
(what people expect you to do), descriptive norms (what others actually did), and personal
injunctive moral norms (what you must do based on your personal feelings). Past behavior
was also added as an antecedent. This longitudinal study found that attitude, PBC, injunctive
norms, moral norms, and past behavior were strong predictors of charitable giving intentions
among Australians. However, descriptive norms and past behavior were not able to explain
donating intentions (Smith and McSweeney, 2007). The donating intention was a very strong
predictor of the actual donating behavior.
2.5 Drivers of Philanthropic Behavior
Despite being clearly defined as unconditional and non-reciprocal; the motives underpinning
corporate philanthropy remains debatable (Gautier and Pache, 2013). In numerous large
corporations, philanthropy has been carefully designed to fit its long-term goals. This notion
of using philanthropy for self-serving purposes has become so widespread that the term
“strategic philanthropy” was coined to gauge its effectiveness (Sanchez, 2000; Valor, 2006).
This concept is commonly assumed in large corporations that are answerable to
shareholders and board of directors. Varadarajan and Menon (1998) found evidence of
organizations that use philanthropy as a marketing tool. This gave rise to the concept of
"enlightened self-interest" which examines philanthropy from an investment point of view.
However, this does not mean that all corporations have some form of self-interest in their
philanthropic pursuits. Valor (2006) researched the patterns of giving among corporations
and concluded that pure altruistic intention is one of the main drivers of philanthropy.
Bekkers and Wiepking (2011) identified eight mechanisms that drive charitable giving:
awareness of need, solicitation, costs and benefits, altruism, reputation, psychological
benefits, values, and efficacy. However, Bekkers and Wiepking (2011) also concluded that
there could be “numerous systematic patterns in the mix of these mechanisms and the
interactions among them”. Drivers of philanthropy are always examined at the three distinct
levels: individual, organizational (firm), and national (Rupp, Williams and Aguilera, 2011).
Most research on philanthropy has been carried out on large corporations. This is because
SMEs have not been at the forefront in their philanthropic initiatives. For smaller businesses,
philanthropic initiatives may be based on a variety of other potential motives (Sanchez,
2000). These motivations are more personal in nature, and much more diverse when
compared with large businesses (Sanchez, 2000). The following drivers have been
highlighted in the extant literature as significant predictors. Individual SME owners in the
Asian and Western cultural context may share similar values.
Findings from the Western context reported altruism, moral obligation, and religiosity
influence philanthropic behavior (Batson and Shaw, 1991; Wulfson, 2001; Park and Smith,
2000). Altruism is defined as the empathic feelings and concern that an individual has over
another person which evokes actions that benefit the other person (Lahdesmaki and Takala,
2012, Batson and Shaw, 1991). In the case of corporate philanthropy, Sanchez (2000)
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ISBN: 978-1-925488-00-5
points out that altruism is independent of any strategic pressure of generating profits or
creating goodwill. Moral obligation is defined as the personal feelings of responsibility to
carry or not carry out certain acts (Ajzen, 1991). It strongly correlates with intentions to
behave within ethical dimensions, which is guided by ethics and its rational determination to
do what the actor thinks is right (Wulfson, 2001).
Religiosity is a belief in a higher spiritual being (Park and Smith, 2000); and it has a positive
impact on prosocial behavior. Regardless of which religion an individual believes in, the
religiosity aspect of all religions is consistent (Granger et al, 2014); and it consists of the
following core aspects: a strong belief in some form of Supreme Being, God or supernatural
forces, a set of common doctrines, and the attendance at formalized worships. Trust is the
belief that the trustee will act cooperatively to fulfill the trustor’s expectations without
exploiting its vulnerabilities (Luhmann in Pavlou and Fygenson, 2006). Most donors would
want to study the NPO and the social causes it champions. Over and above that, potential
donors would like to assess its performance, the transparency of its management, and the
benefits it provides to society (Sargeant et al, 2006). This is because there is a tendency for
misappropriation of funds and exploitation in the voluntary sector (Jones, Wilikens, Morris,
and Masera, 2000).
At the firm-level, philanthropic decisions are influenced by two other drivers: tax relief and
strategic philanthropy. Tax relief refers to the discounts given by the government to
individuals and corporations for donations (Lyons and Passey, 2006). Tax exemptions are
awarded to NPOs that champion social causes deemed worthwhile by the government
(Blumkin and Sadka, 2007). For a very long time, many Western countries have permitted
tax relief for gifts to certain NPOs that champion social causes deemed worthwhile. Tax
incentives for philanthropy are part of the fiscal policy measures that cannot be easily
removed by their respective government (Lyons and Passey, 2006).
The concept of “strategic philanthropy” (Porter and Kramer, 2006), allows business owners
to choose philanthropic initiatives that suit long-term objectives of their businesses.The
notion of using corporate philanthropy for self-interest sharply contrasts with its original idea
of altruism. Nevertheless, corporations do look out for value added charitable giving with
creative strategies that are able to produce maximum benefits (Mullen, 1997).
Recognition is associated with public prosocial behavior. Such actions are carried out in the
presence of others; and they are meant to meet self-serving purposes (Carlo and Randall,
2002). Most individuals are motivated by some form of recognition. In many cases,
donations are pledged only when donors are promised with some associated benefits
(Grace and Griffin, 2006). Solicitation is a request for donations or volunteerism from an
individual or corporation, made by any NPO directly or through its members. In a study on
philanthropic behavior among large corporations, Werbel and Carter (2002) found a strong
link between CEOs’ personal affiliations with an NPO and the charitable programs they
supported. This is because NPOs would find it easier to solicit donations if they knew
someone in that organization.
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3. Conceptual Model
The conceptual framework for this study is presented in Figure 3 below. It draws on the TPB
as its underlying theoretical foundation. As a collectivistic society, some of the antecedents
that explain philanthropic behavior among SMEs in Malaysia may differ from the Western
context. The variables, as discussed above, emerged from the extant literature. The
moderating effect of recognition and solicitation on the relationship between philanthropic
intention and philanthropic behavior will also be tested in this study. In the Malaysian
context, recognition and solicitation are likely to moderate the relationship between
philanthropic intention and philanthropic behavior. Since Malaysian culture emphasizes
face-saving (Abdullah, 1996), recognition may enhance the possibility of converting
intentions to philanthropic behavior. The Malaysian culture also has a strong sense of social
sensitivity along with feeling of guilt and shame. It emphasizes harmonious relationships
with significant others in their lives (Abdullah, 1996). As a result, individuals are more willing
to sacrifice personal interests for the sake of collectivistic wellbeing. Therefore, solicitations
by close acquaintances would lead to philanthropic behavior among individuals with prior
philanthropic intentions.
The present study will also incorporate two more variables that have not been previously
examined. These predictors are causation and communality. Causation is defined as the
belief that an individual has on the future effects of his or her present actions. Therefore,
this principle of cause and effect drives individuals to carry out prosocial acts (Mulla and
Venkat, 2006). This belief is consistent with Potter’s (1964) prescriptive theory of causation
which is meant to compel or restrain people from acting in certain ways. Drawn from social
capital theory (Putnam, 2001), communality is the feeling of kinship that members of closeknit communities share among themselves. The benefits that SMEs derive from the local
community may be reciprocated through philanthropic initiatives back to the community. The
hypotheses drawn up for this study are presented in Table 1 below.
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Table 1 Hypotheses Developed for this Study
H1: There is a positive relationship between Attitude towards philanthropy and
Philanthropic Intention.
H2: There is a positive relationship between Subjective Norms on Philanthropy and
Philanthropic Intention.
H3: There is a positive relationship between Perceived Behavioral Control on
philanthropy and Philanthropic Intention.
H4: There is a positive relationship between Tax Relief offered by the government
and Philanthropic Intention.
H5: There is a positive relationship between Strategic Philanthropy and
Philanthropic Intention.
H6a: There is a positive relationship between Altruism and Attitudes towards
Philanthropy.
H6b: There is a positive relationship between Moral Obligation towards
surrounding communities and Attitudes towards Philanthropy.
H6c: There is a positive relationship between Causation beliefs and Attitudes
towards Philanthropy.
H6d: There is a positive relationship between Religiosity and Attitudes towards
Philanthropy.
H6e: There is a positive relationship between Trust in NPOs and Attitudes
towards Philanthropy.
H7: There is a positive relationship between feelings of Communality and
Subjective Norms on Philanthropy.
H8: There is a positive relationship between Philanthropic Intention and
Philanthropic Behavior.
H9: The relationship between Philanthropic Intention and Philanthropic Behavior will be
moderated by Recognition, such that this relationship will be stronger when SME
owner-managers receive recognition for their contributions.
H10: The relationship between Philanthropic Intention and Philanthropic Behavior will
be moderated by Solicitation, such that this relationship will be stronger when SME
owner-managers receive solicitation from acquaintances.
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ISBN: 978-1-925488-00-5
Figure 3 Proposed Conceptual Framework of Drivers of Corporate Philanthropic Behavior among
SMEs in Malaysia
Altruism
Moral
Obligation
Causation
Attitudes
towards
Philanthropy
Religiosity
Recognition
Trust
Communality
Subjective
Norm
Perceived
Behavioral
Control
Philanthropic
Intention
Philanthropic
Behavior
Solicitation
Taxation
Strategic
Philanthropy
4. Methodology
This study will adopt a mixed-methods research design, using both qualitative and
quantitative methodologies in order to achieve the objectives of this study. This study relies
on the triangulation of qualitative methods (i.e. semi-structured interviews) with quantitative
methods (i.e. survey questionnaire). Hence, the initial qualitative phase involves semistructured interviews with NPOs, government agencies and SMEs. These interviews are
meant to determine the level of philanthropic involvement and the social causes championed
by SMEs in Malaysia. Most importantly, its purpose is to derive the main themes that can
adequately explain the philanthropic behavior among SMEs in Malaysia.
The subsequent quantitative method is employed to test the empirical model, and
hypotheses developed above. For this purpose, a questionnaire survey will be personally
administered among SME owner-managers. This questionnaire will also be translated from
English to Bahasa Melayu and Mandarin to cater for respondents that were educated in
national or Chinese schools. The unit of analysis for this study is the SME owner-manager.
According to the SMECORP Guideline (2012), organizations in Malaysia are categorized
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Proceedings of 10th Asia - Pacific Business and Humanities Conference
22 - 23 February 2016, Hotel Istana, Kuala Lumpur, Malaysia
ISBN: 978-1-925488-00-5
according to their number of employees and annual sales. In Malaysia, SMEs in the
manufacturing sector have less than 200 employees or an annual sales turnover not
exceeding RM50 million. For organizations in the service sector, SMEs have 75 or less fulltime employees or annual sales turnover not exceeding RM20 million (SMECORP
Guideline, 2012). In 2013, Malaysian SMEs accounted for around 98.5% of all business
establishments (Bank Negara Malaysia Website).
Since the target population for this study is the SMEs in Malaysia, this study will use the
SMECORP directory. Almost one-third of the SMEs are based in Selangor (19.5%) and
Kuala Lumpur (13.1%). Using the cluster sampling technique, this study will randomly pick
establishments from these two physically close clusters. Sekaran (2003) recommends a
sample size of 384 for studies with a population between 75,000 and 1,000,000 units.
Hence, a total of 384 SME owners is the desired sample size for this study.
5. Discussion and Conclusion
The main objective of this study is to articulate a holistic model that would be able to explain
philanthropic behavior among SMEs in the Malaysian context. It is an attempt to answer the
calls by Bekkers and Wiepking (2011) for more research on the drivers of philanthropy at
the individual and firm levels. Since most SMEs are owner-managed, the drivers of
philanthropy have to be a combination of firm and individual level variables. SME owner‐
managers are able to bring their personal attitudes and values to influence their business
decisions, unlike managers in large corporations. Various drivers from the Western and
Asian context have been identified from the extant literature.
This study hopes to make several theoretical contributions. Firstly, it will expand the
explanatory capability of the TPB in the area of philanthropy. The proposed framework
extends the original TPB model by incorporating several antecedents and moderating
variables that may better explain philanthropic behavior. Secondly, it will present a holistic
framework to explain philanthropic behavior among SMEs in Malaysia. Finally, this study will
fill the gap on the dearth of literature on philanthropy in the Asian context, by examining the
explanation power of two predictors: causation and communality.
As for its practical contribution, NPOs in Malaysia will be able to increase their success rate
of soliciting donations from SME owners. As such, NPOs must have an insight of the
philanthropic behavior of SME owner-managers. This study will be able to uncover the type
of social causes championed by SMEs and their underlying motives for supporting them.
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