2012 PROCEEDINGS - Public Relations Society of America

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A Time-Series Analysis of International Public Relations Expenditure and Economic Return: A Study of Japan, Liberia, Belgium, and Philippines Suman Lee, Ph.D. Iowa State University smlee@iastate.edu Byung Wook Kim Iowa State University byungkim98@gmail.com Abstract The purpose of this study is to examine the causal relationship between economic return and international public relations expenditure by other countries in the U.S. Based on time-series data analysis, this study found a sustainable lagged effect for Japan, a delayed lagged effect for Belgium, early lagged effect for Liberia, and no lagged effect for Philippines between their public relations expenditure in the US and the US imports from those countries. Introduction According to the Foreign Agent Registration Act (FARA, 22 U.S.C. §611) enacted by the U.S. Congress in 1938, public relations firms serving for foreign clients are required to file their contract information (e.g., content of agreement, income, and expenditures) to the US Department of Justice and to update these details every six month. The FARA report is a reliable source of information about public relations activities of other countries in the US for more than sixty years (FARA, 2005). In 2010, there were 378 active public relations contracts with 557 foreign clients from 137 countries. From 1997 to 2003, 661 foreign clients from 150 countries spent 4.2 million US dollars on average for public relations in the US (Lee, 2006; Lee & Yoon, 2010). Foreign clients enter into these contracts to attract American tourists, to encourage US consumers to buy their products, and to draw American investments into their home countries (Lee & Yoon, 2010; Wang, 2006). Then, the question is whether these investments in international public relations in a target country (e.g., the US) can generate tangible economic outcomes as desired. Public relations scholars have been interested in the bottom line effect of public relations, but the outcomes of such efforts are, by nature, intangible and difficult to measure in dollar terms. The demand for concrete contribution of public relations to organizations becomes especially high during economic downturn when organizations are in search of all means to reduce cost. Mainly due to methodological challenges, only a few studies have offered empirical evidences of the economic outcomes of public relations efforts (Ehling, 1992). Kim (2000) tested several models from advertising and found a positive relationship between an organization‘s reputation and its revenue. Similarly, Kim (2001) found a positive association between public relations expenditures and revenue mediated by company reputation. Lee and Yoon (2010) tested the bottom line effect of international public relations at the country level and found that the number of PR contracts in the US is positively related to US direct investments to a client‘s home country, the number of US tourists, and the volume of US imports. However, those studies have a fundamental limitation to detect a causal relationship between public relations expenditure and economic returns because they used cross-sectional data sets without considering time order in causality (Lee & Yoon, 2010). Time is a critical factor in ascertaining causal relationship. Public relations scholars have assumed that public 106
elations effects are generally long-term rather than short-term (Dozier & Ehling, 1992; Grunig et al., 1992; Signitzer & Coombs, 1992). Despite such recognition, few have attempted to test the economic outcome of public relations over time. This study aims to fill this research gap by applying a time-series analysis in examining economic returns of public relations expenditure at international level. Literature Review Return on investment of international public relations Scholars have argued that public relations contributes to organization‘s bottom line by building and maintaining positive relationships with its publics (Broom, Casey & Ritchey, 1997; Campbell, 1993; Grunig et al., 1992; Grunig et al., 2006; Haywood, 2005; Hon, 1997; Kim, 2000 & 2001). Building good relationships helps an organization attain its goals (Broom et al., 1997; Grunig et al., 1992; Grunig et al., 2006). Public relations helps organizations make money by establishing positive attitudes among investors, shareholders, and customers (Dozier & Ehling, 1992; Grunig et al., 1992; Grunig et al., 2006; Haywood, 2005). Public relations also helps organizations save money by deflecting pressure from activist groups, government regulations, litigation, and consumer boycotts and other negative reactions (Grunig et al., 1992; Grunig et al., 2006; Hon, 1997). There have been growing evidences to support the bottom line effect of public relations. David, Kline and Dai (2005) found a positive relationship between corporate social responsibility and purchase intention. Because purchase intention often determines actual purchase, the authors claim that organizational reputation bolstered by corporate social responsibility activities increased sales. Hauss (1993) observes that public relations affected media coverage of products and services, generated inquiries from customers and improved actual sales. Kim (2000; 2001) found a positive relationship between public relations expenditure and revenue change mediated by corporate reputation. Hon (1997) says that the impact of public relations may be observed in four levels: (1) individual, (2) program, (3) organizational, and (4) societal. Individual level refers to how individual attributes (e.g., gender and education) of public relations practitioner affect public relations performance. Program level refers to whether the public relations program is relevant to the attainment of corporate goals and whether the program does so in a cost-efficient manner. Organizational level effectiveness looks at public relations contribution to overall organizational goals. Societal level covers the role of public relations in the broader society, such as the degree to which PR fosters democratic decision-making. Most studies of public relations‘ bottom line effect, however, focused on corporation as a unit of analysis with an exception. Lee and Yoon (2010) extended their inquiry beyond corporate setting and investigated return on investment of international public relations level. They suggested international context as a new level of public relations effectiveness. The growing attention paid to international public relations can be attributed to the increasing recognition of its contribution to ―the building of coalitions and alliances, the achievement of international political objectives, the need to influence perceptions and purchase decisions, and attract foreign investment or in-bound tourism‖ (Wang, 2006, p. 92). Scholars have asserted a positive relationship between international public relations investments and national reputation (Kunczik, 1997, 2002 & 2003; Manheim & Albritton, 1984; Sriramesh & Vercic, 2003; Taylor & Kent, 2006; Wang, 2006; Wang & Chang, 2004). Lee and Yoon (2010) are among the few who empirically tested economic returns of international public relations at 107
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2 0 1 2 P R O C E E D I N G S S A N
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Table of Contents Research Papers A
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RESEARCH PAPERS 5
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campus public relations agency. Wor
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involves researchers reviewing the
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showed generalizibility. Therefore,
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References Allen, M. J. (2004). Ass
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Table 2 Small sample of the evoluti
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Table 4 Instrument Refinement Data
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Table 5 Instrument Refinement Data
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Appendix Firm‟s Logo Client Satis
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This section addresses how you feel
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Communication Tools/Tactics Created
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Communication Skills of the Student
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Additional Comments This section al
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Hope for the Future: Millennial PR
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difference with their work, and the
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with participants lacking discretio
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advise on the best strategy, not to
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opportunities.‖ She also added th
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answering all of these questions th
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2011). The lack of control some Mil
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References Berger, B. K., & Reber,
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Looking Back, Looking Forward: A Th
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Internet and Web would help democra
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In 2010, Smith (2010b) used Twitter
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ecently reported implications of Wi
Page 55 and 56: Internet, as well as the role of cu
Page 57 and 58: In 2011, Freberg, Graham, McGaughey
Page 59 and 60: Conclusion Figure 1 on the followin
Page 61 and 62: How can new media be used to increa
Page 63 and 64: DiStaso, M.W. (2012). Measuring pub
Page 65 and 66: Johnson, M.A. (1997). Public relati
Page 67 and 68: McKeown, C.A., & Plowman, K.D. (199
Page 69 and 70: Sweetser, K.D. (2007). Blog bias: R
Page 71 and 72: Yang, A., & Taylor, M. (2010). Rela
Page 73 and 74: effective public relations practiti
Page 75 and 76: Additionally, many public relations
Page 77 and 78: evidence has suggested that public
Page 79 and 80: As indicated in the literature revi
Page 81 and 82: This study shows several areas in w
Page 83 and 84: Table 4: Distribution Across Employ
Page 85 and 86: Table 7: Frequency of Engagement in
Page 87 and 88: Table 8: Frequency of Use of KSAs b
Page 89 and 90: In the context of the public relati
Page 91 and 92: Lazarus and Folkman (1984) proposed
Page 93 and 94: identified as educators, and who sk
Page 95 and 96: practitioners were confronted with
Page 97 and 98: Organizational factors are importan
Page 99 and 100: extend one‘s social capital; in c
Page 101 and 102: Duhachek, A. (2005). Coping: A mult
Page 103 and 104: 5. Instrumental Support I tried to
Page 105: Table 2 Hierarchical Regressions Pr
Page 109 and 110: includes the effects of distributed
Page 111 and 112: [INSERT TABLE 3 ABOUT HERE] The Gra
Page 113 and 114: David, P., Kline, S., & Dai, Y. (20
Page 115 and 116: Table 2 Augmented Dickey-Fuller uni
Page 117 and 118: Table 6 The result of the Toda and
Page 119 and 120: Communication Excellence and Public
Page 121 and 122: organize and integrate a group of p
Page 123 and 124: agencies in the southwestern United
Page 125 and 126: One participant expressed her perce
Page 127 and 128: Dozier, D. M., Grunig, L. A., & Gru
Page 129 and 130: programs, [...] and the delineation
Page 131 and 132: Freidson, 2001; Krause, 1996). Moll
Page 133 and 134: and larger public relations departm
Page 135 and 136: Table 1 Professionalism Dimensions:
Page 137 and 138: Estimation for the initial measurem
Page 139 and 140: Figure 3: Coefficients are unstanda
Page 141 and 142: Bowen, S.A. (2007). Ethics and publ
Page 143 and 144: Krause, E. A. (1996). Death of the
Page 145 and 146: Weis, D., & Schank, M.J. (1997). To
Page 147 and 148: environments: inclusive and transfo
Page 149 and 150: Purpose How do PRSSA faculty advise
Page 151 and 152: Findings The descriptive data indic
Page 153 and 154: advisers were ethical values and or
Page 155 and 156: The recognition for long-term facul
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PEDAGOGICAL POSTERS 157
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Professional Development Assignment
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shadow a professional opened my eye
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Building Student Networking Skills:
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incentive for demonstrating great i
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Populating the E- Portfolio: Reflec
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Table 1: Management, Message Design
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Students were assigned 25 minute bl
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Some basic Google Analytics reports
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4. Some keywords generate more clic
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Do this Click on “Content,” the
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Preparing Backgrounders and Proposa
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going out to eat. But what does tha
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Teaching and Mentoring Through Soci
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prevalent in journalism students wh
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normalization was utilized as the r
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But what about the students in grou
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“How a Graduate Practicum Class H
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O How did the client feel about the
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students practice skills and educat
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References Bagglione, S. (2006) Rol
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etween client preferences, practice
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References Austin, L.L., & Toth, E.
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webinars that will be used in one o
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Assessing the State of Public Relat
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adequately prepares students for la
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eviewed articles; the other two may
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The remaining points possible were
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2012 PROCEEDINGS - Public Relations Society of America

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