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Gift-giving and gift-taking in industrial companies
Gift-Giving and GiftTaking in Industrial Companies Monroe Murphy Bird Practicing
purchasing
managers
representing
344 manu-
facturing$rms were asked about theirjrms’ policies on buyers accepting gifts from vendors. These questions were asked in face-to-face group meetings held throughout the United States. The purchasing managers were also quizzed on their attitudes about gtft-giving and gift-taking in the industrial setting. The results from this study clearly indicate that most manufacturing firms with over 200 employees have made a formal attempt to address the vexing problems of gift-giving. However, evidence was found that company-wide enforcement of gift policies is a strong irritant to purchasing managers.
THE PROBLEMS What policies do industrial firms set on accepting gifts from vendors? How many actually have a formal policy concerning the acceptance of such gifts? Do these firms have differing policies on giving gifts to their customers and receiving gifts from their vendors? What views do industrial buyers have on this subject? These are the questions addressed in this study. During 1987, 344 industrial Address correspondence to Prof. Monroe Murphy Bird, The R.B. Pamplin College of Business, Virginia Polytechnic Institute and State University, Northern Virginia Graduate Center, 2990 Telestar Court, Falls Church, VA 22042-1287. Industrial Marketing Management 18, 9 I-94 ( 1989) 0 Elsevier Science Publishing Co., Inc., 1989 655 Avenue of the Americas, New York, NY 10010
buyers were questioned about these issues in face-to-face group interviews. The findings are presented here.
THE LITERATURE Over the past ten years, a number of articles about gift giving in the industrial sector have appeared in the academic and trade literature. Browning and Zabriski [2], Dubinski and Gwin [4], and Rudelius and Buchholz [ 10, 1 l] all touched on the subject while writing on the broader topic of business ethics. Many articles have been written on international gift giving, including the works by Reardon [7, 81. However, international gift-giving seems to be a “special case” situation within the broad area of business gift-giving. Some articles have dealt more specifically with the domestic gift issue [I, 3, 5, 6, 91. For example, Kiechel stated, “Perhaps 50 million business gifts changed hands last year (1984). They can be a problem for both the giver and the getter” [5, p. 1231. Cummings [3] points out the conflicting views on the ethics of accepting gifts in the industrial sector. The editors of Incentive Marketing [ 121 and Public Relations Journal [ 131, as one might expect, have presented the less-oftenheard arguments in favor of industrial gift giving. Cummings [3, p. 231 was one of the few authors to 91 0019-8501/89/$3.50
Half of the firms have a no gifts policy. point out that industrial firms may well have a policy restricting their buyers in accepting gifts, but ask their own sales representatives to give expensive gifts to their customers’ buyers. Cummings called this a “do as I say and not as I do policy” [3, p. 231. Bird also dealt with this problem, and offered a possible explanation as to why a firm would have one set of rules on gift taking for its buyers and a different set of rules on gift giving to its customers [ 1, pp. 30-321. Several sources asked industrial buyers about their attitudes on accepting gifts. Rudelius and Buchholz found that the vast majority of the buyers in their survey wanted their firms to provide them with a stated policy on accepting gifts, lunches, and free trips from vendors [ 11, p. 41. In the survey of its own readers conducted by Purchasing, Rogers found that “79% of the respondents’ firms warn their employees, either in writing or verbally, that gift-taking is discouraged or prohibited” [9, p. 241. Most of the research on industrial gift policies and attitudes toward these policies was based on impersonal mail surveys. Few if any of the studies were based on face-to-face, in-depth interviews with buyers. Therefore, after a review of this body of literature, and the methods used to obtain the data it reports, it seemed time to go to a large group of industrial buyers in face-to-face group interviews to record their attitudes. A clear statement of attitudes on gifts and gift policies, free from the ambiguity of mail surveys, was needed from industrial buyers. Such a statement could help researcher and practitioner alike to cope better with the vexing problems caused by industrial business gift-giving.
Each participant was given a copy of the questionnaire. The researcher read each question to the buyers and answered all their inquiries about it. After all the participants’ questions were answered and all agreed on the exact meaning of the question, each buyer wrote an individual answer to that question. This method of gathering empirical data is believed to greatly reduce the margin of error caused by ambiguity in the real meaning of each question. The cost of this very expensive method of gathering empirical data was covered by several universities and a number of different purchasing management associations. The manufacturers represented in this study ranged in size from the smallest (with 57 total employees) to some of the largest firms in the Fortune 500. This was a convenience sample and not a randomly selected sample. Nevertheless, the data obtained from this study expands our knowledge of industrial gift-giving in the United States. FINDINGS The first question dealt with company policy on receiving gifts. The answers given are shown below. All but 19% of these 344 buyers reported that their firms had set a policy on accepting gifts. Only 5 of the 66 firms that reported no gift policy employed more than 200 people. The remaining 61 firms were small manufacturers. Small firms typically do not have policy and procedures manuals, much less specialized manuals for each department. Therefore, unlike Rogers who stated that, “Astonishingly, almost one-quarter of respondents do not have an existing gift-taking policy,” [9, p. 251 this study found
THE STUDY A series of 19 face-to-face group interviews with practicing industrial buyers was conducted over a ten month period during 1987. These interviews were conducted in all parts of the country with a broad cross-section of American industrial firms.
92
Dr. MONROE MURPHY BIRD is the Purchasing Management Association of Carolinas-Virginia Professor of Purchasing in The FL B. Pamplin College of Business, Virginia Polytechnic Institute and State University.
QUESTION
ONE
QUESTION
What is your firm’s policy for purchasing accepting gifts from vendors?
personnel
Answers
to follow on NumberPercentage
TWO
Does your firm establish one set of rules on “gift-taking” for Its purchasing personnel and establish or allow different sets of rules to exist for executives in other departments (such as sales)? Number
Answers No gifts of any kind
47
14
125
36
83
24
6
2
The firm’s policy is that each buyer is allowed to make his/her own decision
17
5
Firm has no policy, thus each buyer makes his/her own decision TOTALS
- 66 344
Pens and pads but nothing of real value Gifts up to $50 in value if not given often Gifts from $5 l-200
in value if not given often
Yes No No rules
set (written or implied)
TOTALS
Percentage
120 158 66
35 46 19
344
100%
- 19 100% QUESTION
that all but five of the firms with over 200 employees did indeed have a stated policy on gift-taking. It seems that most manufacturers are at least attempting to deal with this problem in a formal way. Exactly half of the 344 participants (172 or 50%) reported that their firm’s policy was either no gifts or nothing of real value. Only 50% of the respondents were free to accept gifts of any real value. Please keep in mind that of the 50% that did allow gifts of value to be accepted by buyers, 61 (18% of the total respondents) were firms with less than 200 employees. This response does not mean that gift-taking is not a real problem in manufacturing, but it does indicate that most (261, or 76%) of the firms have either said no gifts or have set a definite dollar limit on gifts. Of the remaining 83 firms (24%), 61 (18%) have fewer than 200 employees. It is quite likely that if these firms grow larger, a high percentage of them will establish gift policies. Each industrial buyer was then asked if his/her firm established one set of rules for buyers and a different set of rules for professionals and executives in other departments within the firm. When asked if the same rule on gifts should apply to all personnel in their firms, the participants answered a resounding yes. The written comments of the respondents clearly show
THREE
Do you feel the same rule should apply equally to all departments the firm on giving and accepting gifts? Number
Percentage
Yes No
304 40
88 12
TOTALS
344
100%
Answers
in
that this issue is a major irritant to buyers. It does not appear that buyers envy other executives or want to take gifts themselves, but it does appear that buyers resent being singled out and restricted while others are not. Several buyers wrote that this uneven policy indicates that their firms trust buyers less than their other employees. Bird has indicated that the uneven policies for sales gift-giving and buyers’ gift-taking should be expected [ 1, p. 321. However, there is little if any reason to justify different sets of rules on gift-taking from vendors for members of the engineering, production, manufacturing, and purchasing departments. Executive management should act to relieve this major source of irritation to buyers. The next question asked was do sales people want to give gifts to buyers? Respondents were virtually equally divided on this point. Practicing industrial sales repre-
Uneven policies exist for gift giving and gift taking. 93
QUESTION
FOUR
Do you believe sales people want to give purchasing gifts? Answers Yes
NO
Number 183 161
personnel
sales or marketing. This seems a vital item of information if industrial managers are to ever solve the problems caused by industrial gift-giving.
Percentage 53 47
REFERENCES TOTALS
344
100% I.
sentatives from across the country were asked this question. Even though the pilot study was unscientific in nature, it revealed that many successful industrial sales representatives do not enjoy giving gifts. As one of them stated; It takes large egos for sales reps to call on buyers. We must travel to buyers’ offices and ask them to spend their firms’ budgets. The very idea that sales reps cannot sell without giving customers gifts is repulsive to sales reps.
Bird, Monroe Purchaser
3
Rules About Gifts,
The Sourhern
Cummings.
Gary F., Are Purchasing ( 1979).
Ethics Being Put to the Teat?, Chil-
tons Iron Age 222, 2 l-4
4. Dubinsky, Alan J., and Gwin. Sellers, Journal of Purchasing (1981). 5. Kiechel III, Walter, 6. Radwell,
John M., Business Ethics: Buyers and and Moreriuls Mancr~rmc~nt 17, 9- 16
Business Gift-Giving,
Steven, Give Inexpensive
Motel Mana,qemmt
Fortune
Kathleen
Re\?ew 62, 136-41
111, 123-4 (1985).
Gifts that Reflect Image, Hofel and
195, 5, 34.
7. Reardon, Kathleen K., International Gift Giving: Done. Public Relations Journal 38, 16-20 (1982).
FURTHERRESEARCHNEEDED
94
Gifts-And
(1987).
2. Browning, John, and Zabriskie. Noel B., How Ethical Are Industrial Buyers‘?, Indusrrial Marketing Management 12, 2 19-24 ( 1983).
8. Reardon,
Several studies are needed to help all interested parties better understand the area of industrial gift-giving. A new study is also needed to determine the title or titles of the executives in the vendor firms that actually initiate giftgiving. Some evidence from this author’s pilot study of industrial sales representatives indicate that the instigator of industrial gift-giving may be in departments other than
Murphy,
30-32
K., It’s the Thought (1984).
Why and How It Is
that Counts, Harvard
Business
9. Rogers. Amy J., How Purchasing Execs View Taking Gifts from Suppliers, Purchasing 98, 24-5, 28 (1985). IO. Rudelius, William. and Buchholz, Rogene A., Ethical Problems of Purchasing Managers, Harvard Business Review’ 57, 8, 12, 14 (1979). II.
Rudelius, William, and Buchholz, Rogene A., What Industrial Purchasers See as Key Ethical Dilemmas, Journal of Purchasing and Materials Management 2-10
(1979).
12. Business Gifts Wrap-Up,
Incenrive
13. Corporate Gifts: Giving Guidelines,
Markefing
158, 21-8
(1984).
Public Relations Journal
8-9 (1985).
purchasing
managers
representing
344 manu-
facturing$rms were asked about theirjrms’ policies on buyers accepting gifts from vendors. These questions were asked in face-to-face group meetings held throughout the United States. The purchasing managers were also quizzed on their attitudes about gtft-giving and gift-taking in the industrial setting. The results from this study clearly indicate that most manufacturing firms with over 200 employees have made a formal attempt to address the vexing problems of gift-giving. However, evidence was found that company-wide enforcement of gift policies is a strong irritant to purchasing managers.
THE PROBLEMS What policies do industrial firms set on accepting gifts from vendors? How many actually have a formal policy concerning the acceptance of such gifts? Do these firms have differing policies on giving gifts to their customers and receiving gifts from their vendors? What views do industrial buyers have on this subject? These are the questions addressed in this study. During 1987, 344 industrial Address correspondence to Prof. Monroe Murphy Bird, The R.B. Pamplin College of Business, Virginia Polytechnic Institute and State University, Northern Virginia Graduate Center, 2990 Telestar Court, Falls Church, VA 22042-1287. Industrial Marketing Management 18, 9 I-94 ( 1989) 0 Elsevier Science Publishing Co., Inc., 1989 655 Avenue of the Americas, New York, NY 10010
buyers were questioned about these issues in face-to-face group interviews. The findings are presented here.
THE LITERATURE Over the past ten years, a number of articles about gift giving in the industrial sector have appeared in the academic and trade literature. Browning and Zabriski [2], Dubinski and Gwin [4], and Rudelius and Buchholz [ 10, 1 l] all touched on the subject while writing on the broader topic of business ethics. Many articles have been written on international gift giving, including the works by Reardon [7, 81. However, international gift-giving seems to be a “special case” situation within the broad area of business gift-giving. Some articles have dealt more specifically with the domestic gift issue [I, 3, 5, 6, 91. For example, Kiechel stated, “Perhaps 50 million business gifts changed hands last year (1984). They can be a problem for both the giver and the getter” [5, p. 1231. Cummings [3] points out the conflicting views on the ethics of accepting gifts in the industrial sector. The editors of Incentive Marketing [ 121 and Public Relations Journal [ 131, as one might expect, have presented the less-oftenheard arguments in favor of industrial gift giving. Cummings [3, p. 231 was one of the few authors to 91 0019-8501/89/$3.50
Half of the firms have a no gifts policy. point out that industrial firms may well have a policy restricting their buyers in accepting gifts, but ask their own sales representatives to give expensive gifts to their customers’ buyers. Cummings called this a “do as I say and not as I do policy” [3, p. 231. Bird also dealt with this problem, and offered a possible explanation as to why a firm would have one set of rules on gift taking for its buyers and a different set of rules on gift giving to its customers [ 1, pp. 30-321. Several sources asked industrial buyers about their attitudes on accepting gifts. Rudelius and Buchholz found that the vast majority of the buyers in their survey wanted their firms to provide them with a stated policy on accepting gifts, lunches, and free trips from vendors [ 11, p. 41. In the survey of its own readers conducted by Purchasing, Rogers found that “79% of the respondents’ firms warn their employees, either in writing or verbally, that gift-taking is discouraged or prohibited” [9, p. 241. Most of the research on industrial gift policies and attitudes toward these policies was based on impersonal mail surveys. Few if any of the studies were based on face-to-face, in-depth interviews with buyers. Therefore, after a review of this body of literature, and the methods used to obtain the data it reports, it seemed time to go to a large group of industrial buyers in face-to-face group interviews to record their attitudes. A clear statement of attitudes on gifts and gift policies, free from the ambiguity of mail surveys, was needed from industrial buyers. Such a statement could help researcher and practitioner alike to cope better with the vexing problems caused by industrial business gift-giving.
Each participant was given a copy of the questionnaire. The researcher read each question to the buyers and answered all their inquiries about it. After all the participants’ questions were answered and all agreed on the exact meaning of the question, each buyer wrote an individual answer to that question. This method of gathering empirical data is believed to greatly reduce the margin of error caused by ambiguity in the real meaning of each question. The cost of this very expensive method of gathering empirical data was covered by several universities and a number of different purchasing management associations. The manufacturers represented in this study ranged in size from the smallest (with 57 total employees) to some of the largest firms in the Fortune 500. This was a convenience sample and not a randomly selected sample. Nevertheless, the data obtained from this study expands our knowledge of industrial gift-giving in the United States. FINDINGS The first question dealt with company policy on receiving gifts. The answers given are shown below. All but 19% of these 344 buyers reported that their firms had set a policy on accepting gifts. Only 5 of the 66 firms that reported no gift policy employed more than 200 people. The remaining 61 firms were small manufacturers. Small firms typically do not have policy and procedures manuals, much less specialized manuals for each department. Therefore, unlike Rogers who stated that, “Astonishingly, almost one-quarter of respondents do not have an existing gift-taking policy,” [9, p. 251 this study found
THE STUDY A series of 19 face-to-face group interviews with practicing industrial buyers was conducted over a ten month period during 1987. These interviews were conducted in all parts of the country with a broad cross-section of American industrial firms.
92
Dr. MONROE MURPHY BIRD is the Purchasing Management Association of Carolinas-Virginia Professor of Purchasing in The FL B. Pamplin College of Business, Virginia Polytechnic Institute and State University.
QUESTION
ONE
QUESTION
What is your firm’s policy for purchasing accepting gifts from vendors?
personnel
Answers
to follow on NumberPercentage
TWO
Does your firm establish one set of rules on “gift-taking” for Its purchasing personnel and establish or allow different sets of rules to exist for executives in other departments (such as sales)? Number
Answers No gifts of any kind
47
14
125
36
83
24
6
2
The firm’s policy is that each buyer is allowed to make his/her own decision
17
5
Firm has no policy, thus each buyer makes his/her own decision TOTALS
- 66 344
Pens and pads but nothing of real value Gifts up to $50 in value if not given often Gifts from $5 l-200
in value if not given often
Yes No No rules
set (written or implied)
TOTALS
Percentage
120 158 66
35 46 19
344
100%
- 19 100% QUESTION
that all but five of the firms with over 200 employees did indeed have a stated policy on gift-taking. It seems that most manufacturers are at least attempting to deal with this problem in a formal way. Exactly half of the 344 participants (172 or 50%) reported that their firm’s policy was either no gifts or nothing of real value. Only 50% of the respondents were free to accept gifts of any real value. Please keep in mind that of the 50% that did allow gifts of value to be accepted by buyers, 61 (18% of the total respondents) were firms with less than 200 employees. This response does not mean that gift-taking is not a real problem in manufacturing, but it does indicate that most (261, or 76%) of the firms have either said no gifts or have set a definite dollar limit on gifts. Of the remaining 83 firms (24%), 61 (18%) have fewer than 200 employees. It is quite likely that if these firms grow larger, a high percentage of them will establish gift policies. Each industrial buyer was then asked if his/her firm established one set of rules for buyers and a different set of rules for professionals and executives in other departments within the firm. When asked if the same rule on gifts should apply to all personnel in their firms, the participants answered a resounding yes. The written comments of the respondents clearly show
THREE
Do you feel the same rule should apply equally to all departments the firm on giving and accepting gifts? Number
Percentage
Yes No
304 40
88 12
TOTALS
344
100%
Answers
in
that this issue is a major irritant to buyers. It does not appear that buyers envy other executives or want to take gifts themselves, but it does appear that buyers resent being singled out and restricted while others are not. Several buyers wrote that this uneven policy indicates that their firms trust buyers less than their other employees. Bird has indicated that the uneven policies for sales gift-giving and buyers’ gift-taking should be expected [ 1, p. 321. However, there is little if any reason to justify different sets of rules on gift-taking from vendors for members of the engineering, production, manufacturing, and purchasing departments. Executive management should act to relieve this major source of irritation to buyers. The next question asked was do sales people want to give gifts to buyers? Respondents were virtually equally divided on this point. Practicing industrial sales repre-
Uneven policies exist for gift giving and gift taking. 93
QUESTION
FOUR
Do you believe sales people want to give purchasing gifts? Answers Yes
NO
Number 183 161
personnel
sales or marketing. This seems a vital item of information if industrial managers are to ever solve the problems caused by industrial gift-giving.
Percentage 53 47
REFERENCES TOTALS
344
100% I.
sentatives from across the country were asked this question. Even though the pilot study was unscientific in nature, it revealed that many successful industrial sales representatives do not enjoy giving gifts. As one of them stated; It takes large egos for sales reps to call on buyers. We must travel to buyers’ offices and ask them to spend their firms’ budgets. The very idea that sales reps cannot sell without giving customers gifts is repulsive to sales reps.
Bird, Monroe Purchaser
3
Rules About Gifts,
The Sourhern
Cummings.
Gary F., Are Purchasing ( 1979).
Ethics Being Put to the Teat?, Chil-
tons Iron Age 222, 2 l-4
4. Dubinsky, Alan J., and Gwin. Sellers, Journal of Purchasing (1981). 5. Kiechel III, Walter, 6. Radwell,
John M., Business Ethics: Buyers and and Moreriuls Mancr~rmc~nt 17, 9- 16
Business Gift-Giving,
Steven, Give Inexpensive
Motel Mana,qemmt
Fortune
Kathleen
Re\?ew 62, 136-41
111, 123-4 (1985).
Gifts that Reflect Image, Hofel and
195, 5, 34.
7. Reardon, Kathleen K., International Gift Giving: Done. Public Relations Journal 38, 16-20 (1982).
FURTHERRESEARCHNEEDED
94
Gifts-And
(1987).
2. Browning, John, and Zabriskie. Noel B., How Ethical Are Industrial Buyers‘?, Indusrrial Marketing Management 12, 2 19-24 ( 1983).
8. Reardon,
Several studies are needed to help all interested parties better understand the area of industrial gift-giving. A new study is also needed to determine the title or titles of the executives in the vendor firms that actually initiate giftgiving. Some evidence from this author’s pilot study of industrial sales representatives indicate that the instigator of industrial gift-giving may be in departments other than
Murphy,
30-32
K., It’s the Thought (1984).
Why and How It Is
that Counts, Harvard
Business
9. Rogers. Amy J., How Purchasing Execs View Taking Gifts from Suppliers, Purchasing 98, 24-5, 28 (1985). IO. Rudelius, William. and Buchholz, Rogene A., Ethical Problems of Purchasing Managers, Harvard Business Review’ 57, 8, 12, 14 (1979). II.
Rudelius, William, and Buchholz, Rogene A., What Industrial Purchasers See as Key Ethical Dilemmas, Journal of Purchasing and Materials Management 2-10
(1979).
12. Business Gifts Wrap-Up,
Incenrive
13. Corporate Gifts: Giving Guidelines,
Markefing
158, 21-8
(1984).
Public Relations Journal
8-9 (1985).