The Torch Stops Here: Olympic Sponsorship and Corporate Reputation
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Volume 1 Number 4
The Torch Stops Here: Olympic Sponsorship and Corporate Reputation Stefan Wally and Amy E. Hurley Chapman University
ABSTRACT This study examines how corporate involvement in the Olympic Games enhances corporate reputation. We investigate the impact on companies of sponsoring the Olympics, the magnitude of sponsorship, and the duration of sponsorship on corporate reputation. After controlling for financial performance, our results indicate that Olympic sponsorship greatly impacts and positively improves corporate reputation. Length of sponsorship and monetary level of sponsorship do not appear to have a significant effect on our measure of corporate reputation. INTRODUCTION The Olympic Games embody the ideals of cosmopolitanism, peace, sportsmanship and meritocracy. Little wonder that corporations seek to associate their name and image with that of the increasingly publicized effort to promote world harmony through national sporting that is the Olympic Games. In his pathbreaking work on corporate reputation, Fombrun effectively compares the corporate quest for enhanced organizational reputation with Olympic competition for gold medals.1 He suggests that, like the Olympic athletes, corporations attain reputational greatness by pursuing and achieving uniqueness. The sponsorship of special events, perhaps most notably the Olympic Games, serves as one vehicle for the pursuit of corporate image differentiation and enhancement.2,3,4 In this paper, we empirically explore how a corporation’s sponsorship of the Olympic Games can influence that corporation’s reputation.
BACKGROUND The modern Olympic Games were first held in 1896. Over the years, the games have occupied a unique place not only in the sporting world, but in the global political arena as well. Political regimes have sought to legitimize themselves through association with Olympic prestige, most notably perhaps, Nazi Germany in the 1936 Berlin games. Other locales have sought to signal their readiness to occupy a place in the global political and economic arena; for example, Korea in 1988. Now, the Winter and Summer Olympic Games have begun to be held on a rotating basis every two years. In recent years, as the games have continued to attract notice and accumulated a beneficial halo of prestige, hosting governments and the games organizers have offered corporations the opportunity to benefit from the positive halo of the Olympics.4 In return, corporations have been called upon to assist in defraying the considerable cost of the investments and expenses associated with the staging of the games. The 1984 Los Angeles Olympic Games were the first in which corporate sponsorship and licensee fees became the dominant financing vehicle for the staging of the games.5 The fee to be a top-level sponsor at these 1984 Games was US $4m.6 By 1996, the fee for top-level sponsors was $40m. At the recent Atlanta Olympics, corporate sponsorship and licensing fees accounted for more than $270m of the $419m United States Olympics Committee (USOC) budget.7
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