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Understanding value from arts sponsorship: A social exchange theory

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DOI: 10.1108/AM-10-2012-0018

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Arts sponsorship
Understanding value from arts
sponsorship: a social exchange
theory perspective
Anna Tyrie and Shelagh Ferguson 131
Department of Marketing, University of Otago, Dunedin, New Zealand
Received 30 October 2012
Revised 7 June 2013
Abstract Accepted 4 August 2013
Purpose – Social exchange theory literature posits that a relationship is dependent on the strength
of its social interactions and is clear upon the role of trust, power and commitment within that
relationship as a means of value creation. However, an understanding of the nature of experiences,
expectations, motivations and perceptions as components of the value derivation process are
missing. SET literature does not identify these components as antecedents to value creation but central
to value derived. This research builds upon that premise to give understanding into how value is
derived from arts sponsorships.
Design/methodology/approach – A qualitative exploratory approach is used to research arts
sponsorships in New Zealand of differing size, duration and profile.
Findings – This research gives understanding into the nature of experiences, expectations,
motivations and perceptions as components parts of value derivation and their interactions resulting
in the creation of an iterative value derivation model of the life cycle of an arts sponsorship
relationship from a business perspective.
Originality/value – This research has relevance for both academics and marketing managers
involved in arts sponsorship. The findings from this research can be used as an analytical tool to help
businesses when evaluating their arts sponsorship.
Keywords Arts marketing, Exploratory research, Social exchange theory, Sponsorship,
Value derivation model
Paper type Research paper

Introduction
Sponsorship is often considered part of integrated marketing communications (IMC)
strategy. A successful and long-term sponsorship can increase and enhance awareness,
heighten sales volumes and create positive attitudes towards the associated business
(Belch and Belch, 2009). When successful, sponsorships can be extremely good value
for a business, this research seeks to explore the components of the value derived
for the sponsor using the context of art sponsorship. Value derived from business
sponsorship is well recognised in the corporate world, however, the nature of the
constituent parts of this value and how these parts inter-relate to derive value is still
somewhat vague (Beverland and Farrelly, 2004; Fahy et al., 2004; Farrelly et al., 2006;
Urriolagoitia and Planellas, 2007).

Literature
As an important part of an IMC strategy, understanding the value derived from such
sponsorships has significance from both an academic and managerial perspective.
This research seeks to address this need by using social exchange theory (SET) as Arts Marketing: An International
a lens to examine the value derived through art sponsorship, by concentrating on the Journal
Vol. 3 No. 2, 2013
relationship between partners. Social exchange literature suggests that a relationship pp. 131-153
r Emerald Group Publishing Limited
and specifically the social exchanges which occur during the relationship, determine 2044-2084
the amount of value derived (Blau, 1964). Blau (1964) argued that “only social exchange DOI 10.1108/AM-10-2012-0018
AM tends to engender feelings of personal obligations, gratitude, and trust; purely
3,2 economic exchange as such does not” and that “the benefits involved in social
exchange do not have an exact price in terms of a single quantitative medium of
exchange” (p. 94), implying that social exchanges create enduring social patterns.
The process of exchange is inherent in the sponsorship concept, as exchange
relationships are characterised by interrelated conditions (Molm, 1990). First, at least
132 two entities exchange assets. These assets are usually physical, financial or intangible
(such as status, approval or expertise). Second, the assets offered by each entity
must be valued by the reciprocating partner (McCarville and Copeland, 1994). Within
this context, sponsorship represents an exchange relationship, in that the relationship
itself is perceived by both the business and the sponsor as being just as important
as the assets which are traded (Daellenbach et al., 2006). Blau (1964) also outlined
social exchange relations as causally related, although the direction of the causal arrow
is somewhat ambiguous.
SET can be used to understand and give insight into the processes that creates
value within a sponsorship relationship; as SET focuses on value creation not just from
the producer or consumer perspective but on how the actual relationship and
interactions create value. SET has been used to understand sponsorship relationships
(Olkkonen et al., 2000; Lund, 2010) and these studies give valuable insight into the
processes inherent in creation and maintenance of sponsorship relationships; however,
an understanding of the nature of the component parts of the value creation process,
and how these components interact are not addressed in these studies. Blau’s (1964)
recognition of the value of social rewards such as commitment, power and trust, and
how they are often valued more than economic factors in exchanges has been applied
to business relationships, particularly loyal and enduring ones (Frazier, 1983; Anderson
and Weitz, 1989; Bensaou and Venkatraman, 1996). These three components are
continually explored in conjunction with relationship longevity in SET. Thus, when
these factors are present and positive within the relationship (i.e. there is high trust
and continual power and commitment), the relationship is more likely to succeed and
endure. This notion is particularly relevant when seeking to understand sponsorship
business relationships.
Several studies have identified that the three central tenets of SET (trust, commitment
and power) are influenced by other components/interactions (expectations, experiences
motivations and perceptions); these are often discussed with specific reference to the
relationship and value derived (Kwon and Suh, 2004; Sierra and McQuitty, 2005;
Daellenbach et al., 2006; Lund, 2010). However, these studies identify the four
components but do not explore them in depth. Thus there is agreement in the SET
literature on the role of trust, power and commitment in value creation but a clear
understanding of the nature of experiences, expectations, motivations and perceptions
as components of the value derivation process are missing (Blau, 1994; Molm, 1990;
Emerson, 1969; Adams, 1966).
We conceptualise these four components as being central to the exchange
relationship between parties and, as such, important components in the constant
evaluation process undertaken by participants to assess satisfaction with the
relationship (Molm, 1990; Cook, 1990; Emerson, 1969; Adams, 1966). Blau (1994)
notes that the basic assumption of exchange theory, and particularly that of social
exchange, is that individuals establish and continue exchange relations on the basis
of their “expectations” and whether these have been met; thus implicating that that
expectations have both a formative and evaluative role in social exchange. Likewise,
an individual will be motivated to begin a relationship, if they believe that it will be Arts sponsorship
advantageous to do so. Moreover, they will also continue this relationship based
on whether this advantage is still perceived to be present, again the implication
of both formative and evaluative elements of the relationship. The expectation of
gaining advantage through this pairing can be understood as a motivation to
collaborate (Blau, 1994). The satisfaction derived is based upon the “perception”
of the relationship which is constantly evaluated. Adams (1966) explaining that in 133
order for one party to recognise the importance or benefits from the pairing, they
will need to reflect upon the tangible and intangible outputs which have resulted and
thus form a “perception” of the relationship. We fully recognise that this may be a
conscious or subconscious process, and many methods of evaluation may be used.
Hence the perceptions which one holds in relation to the other, will continually
be formed and reformed based upon the “experience” of the relationship (Molm
et al., 2003).
We conclude that SET literature does not identify them as antecedents to value
creation; in fact there is not a clear understanding of how these four components
interact within the process beyond being central to the constant evaluation process
undertaken by participants to assess satisfaction. This research will focus on
achieving greater understanding of both the nature of these components and their
relationship to each other and thus seek to offer insight for academics and businesses
operating in this area. We also offer that there is an implicit presumption of logical
and rational behaviour which seeks rewards and avoids punishment which would be
commensurate with good business practice. Actors participating in a social exchange
make “choices in regard to other interactants or alternative courses of action, while
guided by cost-benefit considerations” (Molm, 1990, pp. 115-116).
Sponsorship has a long tradition within the marketing environment and is
experiencing growth; particularly in sponsorship of the arts (Angus and Associates,
2010; IEG, 2011). Although corporate supporters have, and continue to realise the value
which the arts sector can bring to business success, there is remarkably limited
academic research in this context. Conversely, the value that sport, as a sponsorship
form, can bring to an organisation has been well mapped out by previous scholars
globally and within New Zealand (Copeland, 1991; Walliser, 1994; McCarville and
Copeland, 1994; Musante et al., 1999; Olkkonen et al., 2000; Farrelly and Quester, 2005;
Farrelly and Quester, 2003, 2006).
Globally, the arts sector is continuing to market itself as attractive to business
sponsorship and consequently businesses are recognising the value that an arts
relationship can bring to an organisation. However, the arts sector enjoys a
significantly lower public profile and a smaller share of the sponsorship dollar than the
sport sector, as it is perceived as less lucrative, deemed “exclusivist” and “inaccessible”
by some corporates, and thought to preclude mass participation (Farrelly and Quester,
1997; Witcher, 1991). Art generally caters to niche markets (unlike sport), however,
blockbuster exhibitions such as film festivals encourage larger audiences, suggesting
that corporate sponsorship can be worthwhile at many levels. Nonetheless, there is
increasing interest in cultural contexts, and is therefore an important area for empirical
investigation.
According to Farrelly and Quester (1997) arts sponsorship relies heavily upon
relationships in order to survive, far more than comparable sport sponsorships.
Scholars argue that arts sponsorships pursue image goals, whereas sport
sponsorships have market objectives (Witcher, 1991; Thwaites, 1995; Thomas et al., 2009).
AM Objectives relating to image perception concur with the importance of the relationship
3,2 constructed between the stakeholders involved in the sponsorship, as image goals often
require shared understanding. Moreover, arts sponsorships are evaulated more regularly,
compared to sport, further suggesting that the relationship is an important componant
in the exchange (Farrelly and Quester, 1997). This provides a clear rationale for the
use of SET as a theroretical lens to provide insight in this underresearched area of
134 arts sponsorship (Farrelly and Quester, 1997).
There are two recent studies that use SET as a framework to provide some
insight into art sponsorship relationships (Daellenbach et al., 2006; Lund, 2010) and
are relevant to this discussion, Lund (2010) explored the co-creation of value in art
sponsorship through inter-organisational learning over a period of three years and
Daellenbach et al. (2006) mapped a sponsorship lifecycle for a male dance company in
New Zealand. Both studies pose interesting ideas of how value can be understood
from the joining and partnering of business and the arts. However, neither identifies
how the component parts of value creation inter-relate to create overall value within
a sposnorship relationship, or how these inter-relations can affect the value derived and
consequently the sponsorship duration. These studies recognise the concepts of
expectations, motivations, experiences and perceptions, yet neither explore these
components further. The business perspective is addressed but not explored in depth.
It would be very valuable to understand how businesses view the concepts of
experiences, motivations, expectations and perceptions and how their interactions
create value for businesses engaged in arts sponsorship. Previous research has
explored the reasons why businesses may elect sponsorship as a promotional activity,
but little is known about how the relationship is viewed and managed. Thus, there
is a need to understand how businesses percieve their sponsorship relationship(s) in
order to offer insight into why relationships continue or why they perish. In addition it
would be beneficial to explore the perspective for a range of companies in both size
and industry, who are involved in art sponsorship to gauge the different perspectives
which exist.
Arts sponsorship is becoming recognised as a commerical activity within
New Zealand (Ministry of Culture and Heritage, 2008). The relatively small size of
the New Zealand business sphere gives an enclosed nature to New Zealand arts
sponsorship market and thus the New Zealand context utilised in this research allows
a limited sample in global terms to represent a wide range of arts sponsorship
relationships within a single country. New Zealand’s economy had been growing
2.4 per cent every year until Septembter 2008 (New Zealand Debt Management
Office, 2009) when it slowed due to the global economic downturn. Consequently,
in 2008 marketing spending diminshed as profitability was reduced and the
viability and effectiveness of marketing tools was intensively scrutinised. However,
sponsorship has continued to be utilised as a marketing tool for many New Zealand
businesses despite more difficult economic times (Keall, 2009). This may be
attributed to a generally high consumer engagement with the Arts in New Zealand,
as it is seen to be an “essential part of everyday life” with a very high engagement
level amongst young people (Creative New Zealand, 2009). In fact New Zealand
appears to be weathering the economic storm better than many other countries
who are widely reported to be experiencing a greater degree of austerity
(Netprophet, 2010). Hence findings from this research into art sponsorships
within New Zealand would have up to date global applicability for researchers and
managers alike.
Methodology Arts sponsorship
The goal of this research is to explore the nature of the component parts of the process
by which businesses derive value from their arts sponsorship relationships, namely
experiences, motivations, expectations and perceptions, and how these component
parts interact and relate to each other. The context of this research is New Zealand
and the relationships are explored over a period of time to support the resultant theory.
The findings of this research have an academic contribution to our understanding 135
of the compenent parts of the value derivation process in the context of arts
sponsorship and a practioner contribution, based on the business perspective adopted
which can assist businesses to understand why certain sponsorship relationships
derive more value than other.
Using the lens of SET, value derived from a relationship is dependent on the
strength of its social interactions and how the constituant parts of the value derivation
process interact with each other. This presents an overarching research question
which is set to guide the primary research:
How do businesses understand the nature of the component parts of the value derivation
process and their interactions from their arts sponsorship relationship(s)?
The framework this research will use to understand the component parts of the value
derivation process and their interactions are as discussed in the literature review.
The following secondary research questions were derived from the SET literature.
This research aims:
. to elucidate the motivations that drive businesses to enter into or opt out of arts
sponsorship;
. to investigate how businesses form expectations of their arts sponsorship(s);
. to examine how business reflect on and understand their sponsorship
experiences; and
. to understand how businesses’ form perceptions of their arts sponsorships.
As the aims of this research relate to gaining understanding, an interpretive approach
was adopted which was undertaken through the application of a qualitative mode of
inquiry. This qualitative mode stems from the lack of knowledge about the nature
of the identified components and their inter-relations, thus additional understanding is
required. The research will also utilise descriptive research, as there is not a clear and
detailed assessment of the nature of these components within sponsorship.
According to Patton’s (1987, 2002) criteria, a qualitative mode of inquiry is most
appropriate for this research. The existing literature identifies the components
(motivations, expectations, experiences and perceptions) but their nature and
interactions are unclear and this method allows for understanding to emerge.
In addition perceptions cannot be fully understood or uncovered through a
quantitative means (Guba and Lincoln, 1994). A qualitative approach is
commensurate with the stated aims of understanding a phenomenon in greater
detail to ascertain meaning and depth (Sullivan, 2001).
Informants were selected through a process of identifying businesses engaged in
arts sponsorship over a period of time. These businesses were approached by letters
addressed to the staff member responsible for the management of the sponsorship
function. A purposive sample was selected for several key reasons. First, this sampling
technique allows for the inclusion of those companies who are or have been involved in
AM arts sponsorship. Second, it allows for a diverse range of companies to be included (size
3,2 and business sector). Finally, it is the most appropriate method in choosing
participants particularly when the instrument of analysis is human (Guba and Lincoln,
1981). Fifteen letters were sent and eight businesses agreed to an interview.
Semi-structured interviews, orchestrated through the long interview protocol (as
demonstrated by McCracken, 1988) were carried out on seven key informants
136 (two separate businesses shared a sponsorship management function). Each interview
lasted approximately an hour and a half and represented several sponsorships
experiences. An open-ended questioning technique was used to probe views on arts
sponsorship starting from general questions such as “If you were to look into your
past art sponsorships, can you think of a reason why each ended? Was there
something missing?” and “What happens when a better opportunity comes along?”
Discussion then probed these topics more deeply to reveal more insight into the
topic. Care was taken not to use the four components derived from SET literature
(motivations, expectations, experiences and perceptions) as prompts but to allow
them to emerge naturally during discussion as and when the participant felt it was
relevant to their responses. The sample size may seem low at eight but each interview
included a detailed examination of several sponsorship experiences that each business
entered into, hence over 20 discreet sponsorship experiences were investigated.
A detailed account of each business and its sponsorship relationships is contained
in Appendix.
The sample also represented a redundancy of themes, in the sense that after the
completion of the seventh interview, no new data was uncovered. It has been
widely reported that sponsorship has reduced in the wake of the Global Financial
Crisis (Ministry of Economic Development, 2009). This sample represents businesses
within New Zealand who are continuing with art sponsorship despite the global
trend. These findings will provide a current picture of arts sponsorship in financially
unstable times and will hopefully give managers insight that will have value for
current practice.
Thematic analysis is an appropriate analysis tool for this research, as it is a method
used to systematically evaluate the symbolic content of all forms of recorded
communications (including interviews). Braun and Clarke’s (2006) process of
performing a thematic analysis was applied to the interview transcripts, through
analysis of whole texts. The method of emergent coding was appropriate given the
exploratory nature of the research problem. The themes are produced inductively
and not restricted to pre-determined codes (Creswell, 2003), hence providing a more
accurate interpretation of the data.
The coding protocol used was a combination of Thomas’ (2006) general inductive
coding approach, which is well regarded for similar social science research, and
Mayring’s (2000) six-step model of category development. Following the coding,
a thorough reading of the text with the research direction in mind was undertaken
(Mayring, 2000; Thomas, 2006). Through this process, more than one level of category
emerged from the different interviews. Parallel with Mayring’s (2000) suggestion that
the initial coding of themes is likely to relate very generally to how informants view the
value derived from their art sponsorship relationships. However, as the transcripts
were re-read and categories developed, the number of codes was reduced and more
specific and defined themes emerged. In addition, the codes and themes were applied
consistently throughout the different documents (transcripts, field notes, etc.), in order
to create congruency of themes and codes. Peer coding was also utilised to ensure
trustworthiness of the themes emerging from analysis. Through these processes a deep Arts sponsorship
understanding of the four components identified in the literature emerged, these are
outlined and explained in the following section.

Findings – part 1
Motivations, experiences, expectations and perceptions have been identified within
the SET literature as core components of the value derivation process. As detailed 137
above, participants were not primed, a framework of open-ended questions relating
to the value derived from sponsorship based on SET literature was used to probe
participants and the four components emerged naturalistically from the data. Each
was identified and discussed in great depth by all participants. Thus this research
confirms that within arts sponsorships in New Zealand, businesses do recognise
each of the four components as being part of the value derivation process in agreement
with SET theory. Given the exploratory aim of understanding the nature of these
components and their interactions, confirmation of their presence is not a research
outcome but must be confirmed in order to address the research question.
Insight is gained into the nature of each component by the discussion of themes
arising from analysis. Each component was related to a specific research aim designed
to gain understanding into how each component functioned. The second section of the
findings relates to the interactions between all four components.
Given the theoretical lens of SET that is being used and the emphasis placed on the
interaction between motivations, experiences, expectations and perceptions as part of
the relationship evaluation, our first contribution is to offer a definitions of each
component as a means to clarify how each is conceptualised within this research based
upon its naturalistic emergence during analysis rather than a definition derived from
the literature. It is also important to note that each could be considered as a super-
ordinate or global theme, and could be considered to be the principal metaphors in the
text as a whole (Attride-Stirling, 2001). Table I shows each component, the range of
themes arising from analysis and the definitions used within this research based upon
the research aim. These are defined below.

Component 1: motivations
Essentially, why a firm may become involved with or detached from an arts sponsorship.
In this sense it represents the underlying rationale which governs how a company
acts in regard to their sponsorships i.e. the reasons why they act the way they do.

Component Range of related themes Definition of component

Motivations Sponsee characteristics policy/ The reasons how and why a company
strategy competition partnership enters into/opts out of art sponsorship
Expectations Value antecedents leveragability What a company requires or anticipates to
be present within a particular art
sponsorship relationship
Experiences Fit/congruency strategy relationship The experiences a company has during
their art sponsorship relationship(s), both
positive and negative Table I.
Perceptions People interactions A company’s perception(s) of their art Component definition
sponsorship and description
AM Table II exhibits key quotes which exemplify the idea and rationale underpinning
3,2 this component.
Themes arising from the data that elucidate the nature of motivations include
sponsee characteristics, policy, competition and partnership. The sparse literature
suggest that SET recognises the advantage of entering a relationship as a motivation
and being motivated to remain in the relationship if the advantage continues to be
138 beneficial. Our findings give far greater depth.

Theme 1: sponsee characteristics

A sponsees’ (or art property’s) characteristics were identified by all participants, as a
leading motivation behind their decision to remain with or leave an arts sponsorship.
Many participants discussed their own experiences and requirements in order to
demonstrate their motivations; for example “We like dealing with partners that are
easy to deal with [y] doing everything on the paper and then being open to kind
of new ideas [y] you give your best efforts and we’ll give ours [y] need to be [y]
flexible and responsive” (participant 6). The sponsee’s ability to be “flexible” and
“easy” were cited as major reasons why a business became involved with an
arts property.

Theme 2: policy
Theme 2 represented the policy or strategic change(s) which influenced current and
future endeavours, between a business and those whom they are sponsoring.
Participants identified policy as a leading reason for entering into or exiting a
partnership. Many businesses had undergone serious restructuring within their
sponsorship/marketing departments, which led to a change in direction (in regard
to sponsorship partners).

Theme 3: competition
The theme of competition continually arose, as a significant factor in company’s
decision to enter into or opt out of an arts sponsorship. Participants indicated what
others were doing in relation to sponsorship, effected and influenced their own
practices. For example participant 7 stated that “we can’t play with the big boys we
can’t give two hundred k (thousand) we work really hard doing everything we can on a
smaller level”.

Theme 4: partnership
The final theme of partnership, under the category of motivation, represented
a business’s motivation to work alongside its art sponsee’s, and be partners rather than
donators. This idea was mentioned by all participants, as it was viewed as one of the
most important motivations why a business enters into or exits out of a partnership.

Component Key quotes

Motivations “We really want our staff to get involved” (in sponsorship) (participant 6)
“We pulled out [y] because we weren’t really happy how our relationship was
Table II. managed” (participant 7)
Component one – key “We want to have a diversified portfolio, so some art, sport [y] we are trying to
participant quotes appeal to a cross section of New Zealanders” (participant 5)
Businesses were only interested in sponsoring those companies who were prepared to Arts sponsorship
work together, for example participant 5 stated “It is has evolved into how do we work
together as a partnership”.

Component 2: expectations
Expectations in the relationship sense, refers to what a company requires or
anticipates being present within a particular sponsorship relationship. It is important 139
to note that expectations represent a business’s view of future interactions and
proceedings. It is what they imagine or anticipate occurring, during the course of the
relationship. SET is predicated upon the dynamic nature of both the formative and
evaluative aspects of expectations on both sides of the relationship. Table III exhibits
key quotes which exemplify the idea and rationale behind expectations.
Themes arising that elucidate the nature of expectations include value antecedents
and leveragability.

Theme 1: value antecedents

All participants discussed precursors to value, which were expected within the
relationship. These precursors included mutual objectives and goals, open
communication, close working conditions, congruency and contractual agreements.
There was an expectation on the part of the business that the sponsees should make
an effort to understand the expectations of their sponsor. For example participant
two expected “to be able to work with them (partner) in a collaborative manner [y] we
expect them to understand what a corporate wants out of the sponsorship”.
This expectation was based upon successful past sponsorship experiences where this
expectation was met and unsuccessful ones where it was not.
The discussion on value antecedents required a starting point to enable participants
to “frame” a sponsorship experience and hence discussion was retrospective and
reflective in nature. This theme shows how expectations are formed as part of an
iterative process, participants actively reflect on past experiences to form expectations
of future value creation and discussion of value antecedents was integrated into their
understanding of the holistic process. Expectations such as “the ability to work
collaboratively” were related to and put in context by past experiences. This theme
highlighted the importance of knowledge derived from past experience required to
form realistic expectations of the value to be derived from future sponsorships.

Theme 2: leveragability
Leveragability or the extent, to which a company expects to work alongside their arts
organisation, was continually discussed in regards to their sponsorship expectations.

Category Key quotes

Expectations “We want to dial it back to a few major partners so we can actually work closely
and get involved” (participant 5)
“We expect [y] to be able to work with them in a collaborative manner [y] we
expect them to understand what a corporate wants out of the sponsorship”
(participant 2)
“I expect them to adapt with us and they have to understand that [y] otherwise Table III.
[y] if you can’t adapt and here’s our objectives [y] if you can’t meet them we Component two – key
need to talk about it”(participant 4) participant quotes
AM For example participant two asserted that “If we work together we get ten more times
3,2 the visibility of the event than we would if we were on our own”. Leveragability was
understood by many participants, as a tool which would ensure greater success, both
in terms of publicity generated measured against monetary investment and in the
relationship. Businesses believed that leveragability was essential, because it allowed
them input and influence over the sponsee’s activities in relation to the sponsorship.
140 Without that input, many firms believed that they would not extract as much value
from the sponsorship. In addition, leveragability was believed by many participants as
an important means to forge relations. As through the constant contact and interaction,
the two businesses would inevitably come to know each other better.

Component 3: experiences
Experiences were understood by participants, as reflections they make on their current
or previous art sponsorship relationships both bad or unfortunate encounters as well
as those of a positive nature, as exemplified below (Table IV).
Three themes emerged from the data that informed the nature of experiences, fit or
congruency, strategy, and the relationship itself.

Theme one: fit/congruency

Fit or congruency was discussed by participants as a reason for a relationship’s
success or failure, for example participant seven stated, “So the festival for us [y] kind
of ticks all the boxes and they are Wellington based which is real important for us [y]
you know they are just round the corner from us and they have a good relationship
with us”. The theme of fit occurred often throughout all participants’ accounts;
however, the form it took varied. For example, fit between businesses, strategies, goals,
objectives and people involved.

Theme two: strategy

Strategy also appeared throughout participant transcripts; all informants developed
some form of organised plan in regard to their arts sponsorship management.
Businesses could be placed on a continuum with regard to strategy, highly strategic to
more relaxed. Position on the continuum seemed related to firm size; larger firms
followed a more strategic approach than smaller firms. For example participant four
(larger company) commented that “(we) can determine if that is aligning with what the

Component Key quotes

Experiences “We weren’t really happy how our relationship was managed we gave them [y]
a lot of cash a lot of products we also had like three white board sessions with
them we gave them so many ideas for leveraging [y] we would fill white boards
and nothing was followed up on” (participant 7)
“We have got one partnership at the moment where there is huge potential but the
people behind it just don’t see the potential [y] we are saying you need to do this
you need to do that we could help you with that we’ll do that [y] they can’t even
come back to emails and phone calls [y] it’s just so hard we will go somewhere
else” (participant 4)
Table IV. “Another thing with that event is that I have worked on it for such a long time
Component three – key and we all know each other and we all know and trust what each other is doing”
participant quotes (participant 2)
objectives (are) for those partnerships and in some cases it’s just that they are not Arts sponsorship
meeting their own objectives of what we established between ourselves and in some
cases it’s because we have got this change in direction”.
Theme three: relationship
Relationships represented the interactions between businesses and their art
sponsorships. Relationships were discussed by participants, as either being positive
or negative. Larger businesses within this sample, tended to discuss more negative
141
relationship experiences. Often a single incident defined the sponsorship experience as
positive or negative, despite the myriad of micro experiences that comprised the whole.
Critical factors in the creation of a negative relationship were identified as refusals of
help or assistance and basic courtesy such as returning phone calls. Participants felt
that whatever the potential resultant value might be if a sponsee could not manage
basic business etiquette required to maintain a relationship between them then the
relationship was failing and the experience was negative.

Component four: perceptions

The perception of the sponsorship held by the participant was a result of reflection and
evaluation and often used to inform their future decisions; perceptions are formed and
reformed during the experience. Perceptions play a critical role in the business’s
opinion of the value derived from the sponsorship and were seen as either positive or
negative. Table V exhibits key quotes which exemplify the idea and rationale.
Evaluations of perceptions seemed to be based on two key criteria; the impact of
human interactions (people) and the impact of business interactions (interactions). The
following outlines each theme.

Theme one: people

The theme of people, was discussed by all participants. Human contact was a major
contributing factor to how businesses formed their perceptions towards their
sponsorship relationships and thus the resultant action. Many even based future
partnering on the people which they would have to deal with, for example, “the current
ones greaty she’s been there through the festival and I hope she is staying on for next
year” (participant 7). The opposite also applies, if key people are difficult to deal with
many businesses will exit the relationship based on the negative perception of the
individual concerned.

Theme two: interactions

The business interactions between a business and their arts sponsorship property
were recognised by participants as being important in forming a perception of the

Category Key quotes

Perceptions “Something happened with the arts festival this year and we will never ever do
that again it’s just a waste of time and resources” (participant 7)
“We have done really well with the xxx festival over ten-twelve years [y] I think
that has been a really good partnership” (participant 4)
“We are offering to put in a hundred thousand in behind it [y] but they can’t even
come back with the thinking going round how can we use it [y] but we Table V.
have given them the thinking so just forget it we will go somewhere else” Component four – key
(participant 4) participant quotes
AM sponsorship relationship and the resultant value. That is, those business interactions
3,2 within the relationship (organisation, goals, meetings, etc.) which impacted upon
how the arts property was viewed by its business sponsor. It is important to note,
that perception through interaction is a process that is based on experience and formed
over a period of time. Hence the perception represents many individual business
interactions (such as how meetings are conducted) which are viewed collectively
142 and often cited as being important when reviewing whether to remain in or to exit
a sponsorship relationship. This is the point where businesses would decide whether to
stay with or separate from their art sponsorship, for example, “we had issues with the
way they conducted themselves during it (the event) [y] we just felt like it was a waste
of our money and time so we pulled out of that” (participant 7).

Summary part one

The primary research question seeks to comprehend how businesses understand the
nature of the component parts of the value derivation process and their interactions,
the first part of the research question (the nature of the components) has been
addressed by the discussion above but it does not address how these components
interact. The findings are discussed in the order that the informants used to describe
the value derivation process; the next section builds upon these insights. It is important
to understand how these components operate in relation to one another as this
will aid in understanding how value is formed and perceived (from all areas) by an
arts sponsor.

Findings – part two: component interconnection

Motivations, expectations, experiences and perceptions each offer a unique perspective
and insight into how value can be understood within the art sponsorship relationship.
Through analysis, it became clear that value does not stem from a solitary component.
Rather, value is contributed to by each component as they occur within the
relationship. In this sense, value is a result of firms’ motivations, expectations,
experiences and perceptions, as all of these factors inform and influence one’s
overall perception of value within their art sponsorship relationship(s). Initial
conceptualisation saw the value derivation process as being linear in form supported
by Blau (1964) seeing social exchange as causally related, although the direction of
the causality was unclear. Thematic analysis revealed not only the nature of the
components of value derivation but also the order that the components occurred; a
business is motivated to become involved in an arts sponsorship, this has a bearing on
their expectations about the partnership. Various experiences arbitrate the firms’
perception of their sponsorship relationship. Which in turn, influences value derived
(the value which a firm perceives they have received from the relationship). Value
derived can be either positive or negative for the firm. If elements within the
relationship, do not meet expectations or the firm has developed adverse perceptions
from their experiences, these will ultimately affect the amount of value which they feel
they have received. The reverse is also applicable, if a firm’s expectations have been
met and they have had positive experiences, then the amount of value derived will also
reflect this.
Value is not created by one component, but the culmination of everything which
takes places during the course of the relationship. All of these aspects affect how a firm
views the relationship and thus whether they feel they have received sufficient value.
This is the basic premise of how value is created and perceived within the art Arts sponsorship
sponsorship relationship.

Value derivation model

This model accounts for all of the 20 sponsorship relationships investigated within this
research. A linear system could be used to explain some cases, particularly those where
there were either, highly positive or highly negative relationships (extreme ends). 143
However, it does not explain the cases which have a combination of positive and
negative interactions, which occur during the relationship. Most participants discussed
relationships, which pertained to this “middle ground”. Whereby, the value derived
acts in an iterative sense, one that changes in conjunction with the relationship.
Figure 1 illustrates this iterative idea.
Figure 1 illustrates value creation through the process of the relationship. Value
derivation is seen as cyclic, paralleling the relationship. A firm will go through each
phase in the cycle (at times they will back track – as shown), and the success or failure
of each phase, will determine the subsequent phase. For example a business continues
with sponsorship perceiving they have received sufficient value.
The component “motivation” can be confusing in this sense, if a business exits, then
the entire process will be negated. The process maps out the lifecycle of a relationship;
motivation in this sense can be understood as a starting point and an ending point
of the iterative cycle. The starting point is the initial realisation or desire to become
involved with a partner. The exit/ending point (in terms of motivation), can
be recognised as the cycle of the relationship, whereby a firm will start again at square
one (motivation) with the information and knowledge they have acquired (after

MOTIVATIONS Exit

TOTAL VALUE EXPECTATIONS

DERIVED

EXPERIENCES
PERCEPTIONS
Figure 1.
Model of how value is
derived during the course
of a firms sponsorship
relationship
AM completing one cycle), they will decide whether or not they will choose to continue the
3,2 relationship, and if they do not they will exit (i.e. no motivation).
For the most part sponsorship partnerships follow a circular mode (the outside
ring). A relationship would start at motivation (square one) and continue through each
phase, until it reached total value derived which acts as an evaluation and exit point to
the relationship if required. This model builds and extends our understanding of
144 motivations, expectations, experiences and perceptions by demonstrating their
relationship to each other in terms of order and how the iterative process works that all
research participants discussed as central to their relationships. A negative interaction
with any component causes the business to re-evaluate subsequent components and
hence the amount of value derived. For example, participant seven commented on their
positive initial perceptions about an arts event; after experience with that arts event
they found that their expectations were not met, which in turn altered their perceptions
and the amount of value derived. In this example a participant jumps from perceptions
to expectations to experiences and finally back to perceptions. This was the case for
several other participants, where perceptions were formed and reformed throughout
the course of the relationship.
The model has been constructed in order to account for many different scenarios,
which can occur within the sponsorship relationship. The following section discusses
how these dimensions influence the model.

Emotional context of the model

Through analysis of the results, it became clear that the relationship can (at times)
follow an unpredictable and confusing path. Occasionally there appeared to be
incongruency between what participants said and what would be a reasonable
business decision. For example several participants who measured their sponsorship
relationship(s), did not find desirable results and recognised this. However, they still
continued to remain partners with the arts property, simply because it was a
relationship they have always had. In this instance emotional factors were favoured
over logical empirical measurement. The relationship was viewed as more important
than the expectations and experiences which they had had. Table VI outlines key
quotes which substantiate the emotional context.
The emotional aspect of the relationship can negate the entire process (model),
where the outcomes (value derived) do not match the expectations or perceptions.
Several interesting cases demonstrated this caveat. This highlights a problem
experienced by many businesses. They seek to be logical and to justify business

Model caveat key quotes

“Two properties [y] were very much emotional decisions rather than necessarily a dollars decision
[y] so dollars don’t always win” (participant 3)
“I assessed it this year and said the amount of money that we put in and the amount of resources we
get and the amount of value in terms of awareness and dollars from it [y] it’s not worth it and I made
a recommendation to the leadership team to exit it [y] I was overruled [y] that’s a long association
and there are a lot of emotions attached” (participant 3)
“I think that relationship in particular is one where we have kind of gone oh look we have always done
Table VI. it so let’s just keep doing it” (participant 6)
Emotional context – key “(They) have a good relationship with us [y] so apart from their problems they tick all the boxes”
participant quotes (participant 7)
decisions but an emotional reason that is neither logical nor justifiable in a business Arts sponsorship
sense can cause the whole process to be overruled. So we may conclude that the model
demonstrates the process that a business follows to perceive value within their
relationship with their arts sponsorships but the whole model exists within an
emotional context which can act as a barrier to exiting the relationship. For example,
a business may use certain metrics to assess the value generated from a sponsorship
which results in a negative perception, yet the CEO can instruct another measure to be 145
applied which makes the evaluation of the business’ perception of the value derived
from the sponsorship more positive. Evaluation in this sense is more for the benefit of
the business than the actual sponsorship partnership; thus functioning as justification
rather than insight or verification. Another participant had a similar experience; as a
business they evaluated the sponsorship negatively, but “public perception” was found
to be strong (as measured by the arts property), therefore this business negated their
findings and stayed with the partner. Thus demonstrating how perceptions can be
out of synch with experiences but exiting the sponsorship is not an action taken
by the business.
Several studies have discussed the implications of emotional decisions in business
(Cornwell and Maignan, 1998; Mintel, 2000; Chadwick and Thwaites, 2005). These
studies identified that a failure to professionally manage sponsorships, due to highly
emotional or questionable management decisions, pose a threat to sponsorship
effectiveness. A study conducted by Chadwick and Thwaites (2005) found that
sponsorship decisions are often irrational and emotional, rather than business minded.
Due to this, companies impinge on their ability to leverage, incur brand and sponsee
salience, and can nullify the sponsorship all together, through lack of perceived fit.
These studies recommend that sponsorship managers should concentrate on dollars
and return on investment (ROI), rather than feelings (Chadwick and Thwaites, 2005;
Becker - Olsen and Hill, 2006) and we concur. We also add to the body of knowledge
surrounding the application of SET to business interactions by concluding that SET is
premised on logical and rational behaviour which seeks rewards and avoids
punishment, which would be commensurate with good business practice, applies
theoretically rather than in practice. There was evidence of emotional decision making
at many levels.

Implications of this research

In conclusion, the research goal was to comprehend how businesses understand the
nature of the component parts of the value derivation process and their interactions
from their arts sponsorship relationship(s)? This goal was based on SET literature which
concluded that experiences, expectations, motivations and perceptions were components
of the value derivation process but a clear understanding of their nature and interactions
was missing. This research gives insight into the nature of these components and the
resultant model (Figure 1) identifies how they interact to create value for businesses
from their art sponsorship.
Our contribution moves current knowledge beyond the recognition of social
rewards such as commitment, power and trust, and how they are often valued
more than economic factors in exchanges, to offer insight into the actual social
exchange processes that occur in these sponsorship relationships. This focus on the
mundane and everyday interactions allows a clearer picture to develop of how
the exchange relationship develops and how value is perceived upon reflection. We
postulate that our model has value for academics when considering both loyal and
AM enduring sponsorship relationships but also assisting with the recognition of the
3,2 dimensions of poor value in sponsorship relationships. By examining the nature
of these components, we identify the dimensions of the art sponsorship experience
in practice, rather than at a theoretical level. Our analysis shows how these
components interact synergically in our proposed model to generate value based upon
the aspects of the sponsorship relationship rather than just the physical, financial and
146 tangible ones.
It is anticipated that the managerial focus of this research will assist businesses to
use the resultant model as a tool to gain a greater understanding into the process of
art sponsorship. There are two domains within which this model may be useful. First
as an analytical tool to help businesses formalise the process that they follow when
evaluating their arts sponsorship and thus give them a more structured approach to
the process. Second, a model such as this can help businesses to refute claims of
emotional evaluation and decision making as detailed in earlier literature (Chadwick
and Thwaites, 2005; Becker-Olsen et al., 2006).
By examining the process of value derivation from the business perspective, this
research has been able to understand how the component parts interact to reach a
perception of value. The assessment of this value derived pre-empts the decision to
remain with the sponsorship or to exit. A caveat of emotional and illogical decision
making has been identified as having an influence upon the decision to exit, otherwise
the model reflects the business perspective of all 20 sponsorship experiences
investigated within this research, comprehensively covering a range of positive to
negative relationships.
There are several considerations which need to be taken into account when
interpreting and understanding the model in a larger sense. The model was
constructed through the analysis of results generated from this primary research.
These results did not specifically seek insight from participants by asking them about
motivations, expectations, experiences and perceptions (components found in SET
literature) but allowed them to emerge naturalistically from discussion. Therefore the
model directly pertains to the data collected from this research, where it represents
the people (participants and those businesses) and the situations discussed directly.
It is hoped that this model will have wide applicability but does not claim any
generalisability. Second, the model represents business perceptions of value and how
value is derived, in the art sponsorship relationship. Again we hope that this model can
offer insight in other areas but does not claim representation beyond that. The timing
of the research (data were gathered in August 2010) reflects a period of global economic
downturn and thus the value derived from art sponsorship was a topic under rigorous
review for all participants. It is hoped this context gives the research applicability to
any process of sponsorship review from a business perspective.
These research’s findings are of particular importance to businesses involved,
particularly for those seeking a better understanding how their perceptions of
value are formed, in relation to their art sponsorships. Thus allowing organisations
to critically reflect upon their current practices and what they deem valuable. This
research concludes that a business’s understanding of value derived from their
art sponsorship can be complex. A business may have metrics that it uses to
measure value but a discussion on the perception of value often shows a much
richer understanding. It is important for managers to recognise and understand
what they value and what is important in the partnership, and let this guide the
relationship.
 This study has been successful in filling a number of gaps in art sponsorship Arts sponsorship
literature. However, as reiterated, through the course of this research, SET and art
sponsorship is still in the fundamental stages of development thus, there is a need to
generate further understanding. Further research should be undertaken in other
geographical contexts, in order to gather the model’s applicability in other cultural
contexts. Cultural differences, can impact upon business in different global centres (how
business is undertaken; Bhagat et al., 2002), it is hoped that these findings have 147
applicability outside the New Zealand context but not presumed. Likewise further research
into other areas of sponsorship would be beneficial to test the rigour of this model.

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 3,2
AM

150

Table AI.
Company profile’s
Overall sponsorship Number and level of Type of sponsorship
Respondent Business category Size budget (annual) art sponsorshipsa relationship Sponsorship duration
Appendix

1 Hotel/ Over 8 hotels o$20,000 þ Two high investment Described as a close but No contract or set duration
accommodation operating services/ arts sponsorships “casual” relationship The two high investment
provider nationwide accommodation One lower investment No metrics applied or value sponsorships have been in
provided arts sponsorship- facility evaluated existence 5 þ years
and accommodation given
2 Banking and Employs over 4$8m Three high investment Heavily involved with The high investment
finance 5,000 people art sponsorships sponsored bodies (sponsees) sponsorships are all long-
Over 150 retail One medium investment Collaborates throughout term relationships (all
stores arts sponsorship process (from planning to 10 þ )
nationwide execution) All are contract based.
Strong emphasis on staff/team This determines dollars
involvement invested, and branding/
Staff involvement and advertising rights for
branding during the event company. No emphasis on
(has naming rights) is duration (no plan to cease
valued over metrics assessed sponsorships)
3 and 4 Banking and Employs over 4$5m Three high investment The three high-investment The high investment art
finance 5,000 people art sponsorships sponsorship relationships sponsorships are all long-
Over 180 retail Sponsors a range of are strong and collaborative term relationships (from 3
stores smaller community groups Applies metrics to assess to 10 þ years)
nationwide and projects involved in success and value derived Community groups/
the arts (lower financial from event/collaboration projects tend to have a
contribution) Emphasis on staff shorter duration (2 years
involvement or less)
Community/group
sponsorships are not as strong
(usually a one off financial
contribution).
No metrics applied

(continued)
 Overall sponsorship Number and level of Type of sponsorship
Respondent Business category Size budget (annual) art sponsorshipsa relationship Sponsorship duration

5 Logistics and Employs over 4$3m Two high investment art The two high investment Three sponsorships have
finance 16,000 people sponsorships sponsorships are extremely been long term (10 þ
Sponsors smaller groups collaborative (partnership) years). The remainder is
and community projects Metric/numbers driven between 1 to 5 years
within the arts Major sponsorships need to
prove ROI.
The smaller art sponsorships
are typically a one-off
donation (product or small
donation)
6 Energy One of the 4$3m Two high investment art Both high investment art One of the art
provider largest energy sponsorships sponsorships are very sponsorships is long term
providers in Contributes to smaller collaborative (10 þ years)
New Zealand projects/community The company is included The second art
groups within the arts throughout (planning to sponsorship is a project
execution), in order to help the (3 year contract)
sponsored body, and to The remainder (project
promote for its own interests and community financial
Metrics applied to high aid) are typically between
investment art sponsorships 1 and 2 years
Contact with the smaller
projects/groups is minimal
(at the outset of the agreement
and its completion)

(continued)
Arts sponsorship

151

Table AI.
 3,2
AM

152

Table AI.
Overall sponsorship Number and level of Type of sponsorship
Respondent Business category Size budget (annual) art sponsorshipsa relationship Sponsorship duration

7 Online auction site
8 Coffee/Café Chain
Employs over 4$200,000 Two high investment art The two high investment art
200 people sponsorships sponsorships are extremely
One medium investment concerted. Both are considered
art sponsorship strong relationships
One low investment art The mid-level sponsorship is
sponsorship still strong, yet has a lot less
contact/input and financial
backing
The community and group
financial aid is usually a one-
off financial contribution
Employs over 4$200,000 Two high investment art All sponsorships are viewed
250 people sponsorships as “two-way”. The company
Over 22 cafes Sponsors a variety of offers help in terms of strategy
nationwide smaller projects based and branding event/project
around the arts Applies metrics to test event/
project success
The company expects a
certain return (branding/
awareness of involvement)
for time and funds given
The two high investment
sponsorships are both
long term (5 þ years).
These relationships are
expected to continue for an
indefinite duration
(contract keeps extending)
The low and medium art
sponsorships have both
been in existence for 3 þ
years
Two of the major
sponsorships are long
term (8 þ years)
Events and smaller
projects tend to be
between 1 to 3 years

Note: aInvestment level (high, medium, low) refers to the sponsor’s perception of their investment (financial/time/resources) into the sponsored body (sponsee)
About the authors Arts sponsorship
Anna Tyrie is a Former Postgraduate Student and a Researcher in the Department of Marketing
at the University of Otago. Her research interests include arts and not for profit marketing and
marketing communication particularly sponsorship.
Dr Shelagh Ferguson is a Lecturer in Marketing Management and Consumer Behaviour at the
University of Otago, New Zealand. Her research interests include adventure tourism, consumer
theory and culture, consumption communities within society and exploratory, interpretive 153
and ethnographic research methods. She has published in Advances in Consumer Research (Asia
Pacific and European), International Journal of Culture, Tourism and Hospitality and Young
Consumers. Dr Shelagh Ferguson is the corresponding author and can be contacted at:
shelagh.ferguson@otago.ac.nz

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