Corporate donation behavior during the covid-19 pandemic. A case-study approach in the multinational inditex

Abstract

The situation created by the COVID-19 pandemic, especially the confinement in many countries, has led to a global crisis, not only in health but also in economy and social issues. But it has also provoked a wave of solidarity and unprecedented donation behavior by many companies worldwide. Inditex, one of the main fashion multinationals, has become a referent for its reaction speed and has been ranked number one among the most significant companies for its Corporate Social Responsibility during the lockdown. Drawing from Stakeholder, Legitimacy, and Ethics of Care Theories, the aim of this paper is to analyze Inditex as a case study and reflect on the impact of its donation behavior on its corporate reputation. A desk research approach by using secondary data about the corporation, and a content analysis of press releases with ATLASti software during this time, let conclude that effective corporate donation impacts and improves the reputation of the corporation among its stakeholders.

Corporate donation behavior; Corporate reputation; Corporate social responsibility (CSR); COVID-19 pandemic; Ethics of Care Theory; Inditex, Legitimacy Theory; Stakeholder Theory.

1. Introduction

The situation created by the COVID-19 pandemic, especially during the lockdown in many countries, has led to a global crisis of not only health but also economic and social dimensions. The consequences of the measures taken to curb this pandemic have had a significant impact on the global economy (Priem, 2021) that is increasingly integrated (Ghorbel and Jeribi, 2021), interconnected and, at the same time, challenged. Following Morales et al. (2022), several challenges should be pointed out such as a severe global economic recession with serious implications for the global economic stability; an increase in unemployment and company shutdowns; a disruption in global supply chains; a decline in international trade, with a decrease in demand for imported products; a suspension of free mobility first (border closures), and a decrease in international tourism and business travel, later; higher volatility in financial markets (the financial sector required more flexibility in access to financial services, with dramatic increase in fraudulent operations. In addition, and according to Birtus and Lazaroiu (2021), it is remarkable the change in consumer behavior, related to purchases and storage of basic products. The reason was the availability of certain products, the reduced time spent in stores (supermarkets, in particular) and the need to buy unfamiliar brands and local products during the lockdown (Watson and Cug, 2021).

Thus, on the one hand, globalization has been considered the cause of the rapid spread and greater impact of the pandemic; but, on the other hand, it has also helped rapid information exchange between countries and a quick response to the pandemic (Zimmermann et al., 2020). Different developments from other countries than Spain have been recently published demonstrating that the pandemic situation has brought values around sustainability. For instance, Brydges et al. (2021) have studied the impact of COVID-19 on the Australian fashion industry, and Vătămănescu et al. (2021) paid the attention to consumersá demand for sustainable fashion products in Italy during the outbreak of COVID-19. The fact is that the pandemic has pushed the fashion industry to be more resilient than ever (DáAdamo et al., 2021) forcing companies to adapt their corporate social responsibility (CSR) policies to try to mitigate its consequences, resulting in a wave of solidarity and an unprecedented donation behavior by many companies worldwide (Albendea, 2020; Galan-Ladero and Rivera, 2021; Priem, 2021).

According to Kotler and Lee (2005), at the corporate level, donations are part of the traditional philanthropy and, in turn, part of CSR. It has been a long time since the concept of CSR is concerned with the generation of sustainable economic, environmental, and social value (McWilliams and Siegel, 2011) and it is considered a strong source of competitive advantages that improves its efficacy if it is efficiently communicated (Cuervo-Carabel et al., 2022). As a result, as defended by Priem (2021), engagement in CSR initiatives during the pandemic increased the return on the shares of the companies involved and attracted the stakeholders’ attention.

In the context described, Inditex, one of the main multinational clothing retail companies, has become an example for its reaction speed and has been ranked number one among the most significant companies for its CSR during the pandemic, and lockdown particularly (Davara, 2020; Merco, 2021). Given the impossibility of the Spanish Government to obtain personal protective equipment and medical supplies for hospitals and health care centers at the beginning of the pandemic – because international markets collapsed due to the over demand (Galan-Ladero and Rivera, 2021) – the company offered the Spanish authorities its entire transport and supply logistics system to bring sanitary and protection material to Spain (La Voz de Galicia, 2020; Inditex, 2021), besides reconverting their factories around the world to produce masks and protective gowns for hospitals. Despite the mandatory closure of its stores, caused by the state of alarm and the closure of all dispensable activity during the solitary confinement, this reputed multinational did not fire its employees or request any allowed Temporary Employment Regulation File (TERF) under Spanish labor law (called ERTE, in Spanish). Contrary, it continued to pay the salaries of its workers and maintain all jobs (Malagon, 2020). In addition, Inditex also guaranteed payment of all orders placed with suppliers, without changing the original conditions (Malagon, 2020; Inditex, 2021). In Spain, the company also made additional monetary and in-kind donations for other business markets affected by the pandemic (Inditex, 2021). Abroad, Inditex made donations to charities in the USA, Italy, Mexico, and the UK (Inditex, 2021). It also reformulated its collaboration programs with different Nonprofit Organizations (NPOs) worldwide. And, although for the first time in its history, Inditex made a loss in one quarter (coinciding with the months of lockdown) (Ugalde, 2020), but by the end of 2020 it had recovered and returned to profit (Inditex, 2021).

Consequently, the business model of the Inditex Group has been considered as a reference for the fast fashion ecosystem (and even for other industries) in the time of COVID-19 pandemic. For instance, several authors, such as Bilińska-Reformat and Dewalska-Opitek (2021), have paid attention to how Inditex has adapted and changed its business strategy and how retailers have followed its example identifying multichannel and omnichannel e-commerce solutions (Fortuna et al., 2021; Ng et al., 2021). Other authors have studied different aspects of the always questioned sustainability of Inditex (Barbeito-Caamaño and Chalmeta, 2020), such as the successful integrated supply chain (Aftab et al., 2018), the disclosure of working conditions in the global supply (Antonini et al., 2020), or the commitment of the company to circular economy (Esbeih et al., 2021).

Although Inditex has a holistic strategy for CSR and sustainability, this study is mainly focused on a specific aspect of this strategy: its donation pattern. Drawing from Legitimacy Theory, Stakeholder Theory, and Ethics of Care Theory, the motivation and main objective of this paper is to analyze Inditex as a case study and evaluate its behavior of corporate donations during the COVID-19 pandemic in order to understand a little studied part of how the firm, a benchmark for other companies, builds its corporate reputation.

To achieve this aim, this study is organized as follows: Section 2 provides the theoretical background related to corporate donations behavior and reputation, approached from different theories simultaneously; Section 3 introduces the context of the case study; Section 4 presents research methodology; Section 5 offers the results of the Inditex case-study; and finally, Section 6 outlines the main conclusions and contributions and implications (for the theory and practice) on this topic; additionally considering some limitations and further research.

2. Theoretical background

The environment for corporations is increasingly complex and dynamic, with greater demands from different stakeholders (employees, customers, shareholders, etc.) and greater interest in the social and environmental impacts of the corporation on society, higher expectations from civil society, greater scrutiny from the media and social networks, etc., which exert great pressure and influence the evaluation of organizations by stakeholders. In this regard, corporate reputation emerges as a powerful intangible for competitiveness (Flatt and Kowalczyk, 2008).

Three theories are taken as the basis for the theoretical grounding of this paper: (1) Stakeholder Theory, which focuses on the interconnected relationships between a firm and different parties or groups - its customers, suppliers, employees, investors, communities, and others who have a stake in the organization (who affect or are affected by, in the organization) (Alvarez and Sachs, 2021)-. The theory argues that a firm should create value for all stakeholders, not just shareholders (Busch et al., 2018); (2) Legitimacy Theory, which focuses on the firm's interactions with society. The theory states that organizations continuously try to ensure that they carry out activities in accordance with societal boundaries and norms (Deegan et al., 2002); and (3) Ethics of Care Theory, which focuses on the particularity of relations: at least, two parts (a one-caring and a cared-for), who commit each other's well-being. This theory uses a relational and context-bound approach toward morality and decision making (Burton, 2022).

In this section, the fundamentals of the relationship between corporate donations behavior, and reputation are presented. First, both constructs are conceptualized. Later, donation behavior from the stakeholder point of view and the legitimacy-based perspective, is approached. Finally, some new insights emerge from the ethics of care.

2.1. Corporate donations behavior and reputation

Within CSR, there is a field of research that investigate the effect of corporate donations on the reputation of the firm making the donation, as part of the social performance of the company (Dean, 2003; Brammer and Pavelin, 2006; Nan and Heo, 2007), although they are sometimes considered greenwashing, hypocrite, and mercenary backfire practices of firms (Cherry, 2013).

Corporate donation behavior has received the attention of specialized academic literature. Long time ago, Campbell et al. (1999) realized that corporations with a history of donations, instead of economic reasons, gave altruistic motives for their social behavior. Yaolung (2004) found that the most important motives for corporate donations were top management influences and external appeals. By contrast, donations did not result in importance for corporations that wanted to improve their image, to promote their offer, or increase their products (goods or services) sales. In addition, corporate donations did not reduce competitive pressure. Yaolung (2004) also highlighted reasons for not making donations. The lack of human capital and the lack of funds were the most important. Meanwhile, Morris et al. (2013) found that consumers distrust corporations that give based on purchases, and rather prefer those that give based on profits. Recently, Ananzeh et al. (2022) have highlighted as key a factor on corporate donations the quality of corporate governance, concretely board size, board gender diversity, and the establishment of a CSR committee. Also, a latter literature review about motivations for corporate donor behavior, carried out by Van Steenburg et al. (2022), have pointed out that consumer-oriented corporations and those with better reputation give more than other lesser-known corporations.

In recent decades, studies on corporate reputation have multiplied (Ferruz-González, 2020). Corporate reputation is a very vast and multidimensional concept (Cabral, 2016), an interdisciplinary (Dowling, 2016) and a multilevel (Kelley et al., 2019) construct, which has gained widespread recognition. In general, reputation refers to the opinion, regard, prestige, or esteem in which someone or something is held. In the business context, corporate reputation has been defined as “a belief or an impression that is held about an organization, and bears both psychological and social connotations” (Chowdhury, 2019: 485). It is reflected in the internal practices of the corporation, its culture, overall competitiveness (Resnick, 2004) and constitutes the opinion that the public has about the firm (Cabral, 2016).

A good reputation must be earned, and the implementation of CSR activities can help to achieve this (Papasolomou, 2005). In line with previous studies (Morris et al., 2013; Szőcs et al., 2016; Peterson, 2018), Kelley et al. (2019) conducted a literature review demonstrating that corporations with higher philanthropic expenditures had better reputation. It is remarkable that the social responsiveness of corporations has been conceptualized as corporate charitable donations with the social purpose of improving the quality of life of people in need. In the same line, recent empirical research by Peterson et al. (2021) confirms this relationship for companies with a favorable reputation. In sum, corporations are encouraged to engage in CSR activities aimed at improving the life quality and well-being of communities to build and enhance their positive reputation (Hasan and Yun, 2017). All these reviewed studies point to the Inditex corporation as a company likely to have good donor behavior. There are also specific theories that support it, as shown in the following sections.

2.2. The stakeholder approach and the legitimacy perspective

Stakeholder theory is a pluralistic approach that conceives the legitimacy of the company from the perspective of creating wealth for society as a whole and wellbeing for the various stakeholders (Friedman and Miles, 2006). From stakeholder theory's view, the relationship with stakeholders is the basis of CSR (Puerta, 2006) as CSR tries to improve the relationships with them (Galan-Ladero, 2012). Furthermore, CSR and Stakeholder Theory are two interrelated key concepts in business ethics (Freeman and Dmytriyev, 2017).

Additionally, in the business context, legitimacy is the stakeholdersá assumption that the actions of the corporation are proper within a specific culture. Legitimacy theory, applied to the organizational field, states that the companies, as part of their communities, care about carrying out activities in accordance with the culture (values, beliefs and norms) of the communities in which they operate (Deegan et al., 2002). According to Dewiyanti (2021), this theory emphasized the social contract between the corporation and the community. Following Suchman (1995), there are three main ways to gain legitimacy that a multinational corporation such as Inditex puts into practice. First, pragmatic legitimacy, which is based on the corporationás capacity to persuade its target audience, or key stakeholders. Second, moral legitimacy, related to normative approval. And third, cognitive legitimacy, based on what is taken for granted within a culture. This means that corporations try to respond to what society expects of them to gain legitimacy. Thus, CSR helps to create and strengthen this legitimacy. In other words, in order to be perceived as a legitimate entity to operate, the corporation gives back to society part of what it has obtained from it. The economic benefits it obtains must be combined with offering social and environmental benefits.

Nowadays, gaining community legitimacy is critical, not only to the long-term success of any organization, but even to its survival (Dewiyanti, 2021). Corporate reputation management can guide and help organizations to anticipate, prepare and respond to the new context (Chowdhury, 2019). However, it will depend on the organization's ability to identify and meet the expectations of its stakeholders (Hasan and Yun, 2017). In line with Ewan (2022), both stakeholder and legitimacy theories, have been considered as complementary frameworks, although there is an important difference between them: while stakeholder theory focuses on the different interest groups within society and how best to deal with them, legitimacy theory considers society as a whole. Given the diversity of stakeholders, it is relevant to point out the most relevant for corporations to adopt an effective multi-stakeholder perspective, especially in the global fast-fashion industry (Liu et al., 2020).

2.2.1. People in the organization

The first stakeholder for many authors is the group of employees, which are also called internal customer (Sánchez-Hernández et al., 2021). It has been largely recognized that the integration of CSR values into the corporate culture has an impact on human resource management (Arenas, 2006; Gimeno-Arias et al., 2021) because it improves the working environment, strengthens the commitment of the employees (Ruano and Rojas, 2006). As a result, corporations experience lower stress among their workers, less absenteeism and turnover, and higher motivation, productivity and performance (Loor-Zambrano et al., 2022), labor conflict reduces, especially in medium-large organizations (Santos et al., 2018), sense of belonging and corporate pride rises (Sánchez-Hernández and Grayson, 2012), and there is talent retention by attracting, capturing, and retaining the best, and most loyal employees (Lizcano, 2007).

2.2.2. Customers

There is no doubt that customers are very important as stakeholders, mostly for retailers’ companies. Consumers are particularly susceptible to the corporation's CSR initiatives (Bhattacharya and Sen, 2004). CSR fosters greater proximity and connectedness with consumers, generating a convenient context of trust, which promotes their attraction and loyalty (Arenas, 2006) and the positive attitude towards the company. Several studies demonstrate that there is a positive influence of CSR on consumers' evaluations of the corporation, well as on their intentions to purchase products (Brown and Dacin, 1997; Sen and Bhattacharya, 2001; Mohr and Webb, 2005).

2.2.3. Public Administration

Corporations are affected by public decisions coming from regulations and legislation, but they also contribute to improve the social welfare and the level of development of the society by collaborating, for example, in governmental initiatives such as the integration of minorities or the hiring of workers belonging to certain groups (Escudero, 2006) such as those over 45 years of age. CSR can create security and synergies in the areas of employment, social integration, occupational health and safety, and the eradication of corruption. This can lead to tax benefits, be reduction or avoidance (Kim and Im, 2017), as well as a reduction in the risk of infringements and sanctions (Gong et al., 2021). In addition, corporations that adopt CSR criteria will reduce the risks derived from certain socially irresponsible behaviors, such as the possibility of receiving fines or other economic sanctions (Nieto and Fernández, 2004). As there is fluid contact with the Administration, corporations should be voluntarily committed to social programs and actions to anticipate, prevent, or even impede certain legislation (Detomasi, 2008).

2.2.4. Investors and shareholders

Companies that manage to pass the established filters from the major stock index providers see their reputation strengthened and, on many occasions, gain more favorable access to sources of financing. At this respect Saeed and Sroufe (2021) conclude that doing good is most of the times good for companies from the financial point of view. But also, the credibility and sympathy that socially responsible corporations arouse, and their reputation, will help them to access cheaper financing or, at least, to have easier access to (some banks take social and environmental risks into account when analyzing loan applications), as well as attract investors (El Ghoul et al., 2011) and create shareholder value (Nguyen et al., 2020).

2.2.5. Suppliers, retailers, and subsidiaries

One especially important stakeholder for multinational enterprises (MNEs) is the group of firms that are part of their value chain (Park et al., 2014; Park and Ghauri, 2015). Concretely in the textile sector, CSR helps to attract and retain good and closer partners, engaged by the values associated with CSR (Schrage and Gilbert, 2021).

2.2.6. Social media and society in general

MNEs care about social media and the image that they have in host-countries (Rathert, 2016). CSR improves a company's public image (Demetriou and Aristotelous, 2009), which in turn increases its visibility, trust, and sympathy for the company. Thus, for example, the press is more favorable and echoes the corporation's socially responsible initiatives, thus obtaining free publicity; in addition, the corporation is subject to less scrutiny.2.7.

2.2.7. Other entities, such as Nonprofit Organizations (NPOs)

CSR increases the support of the NPO towards the corporation that help it, giving it credibility and sympathy for collaborating in good causes. In addition, CSR allows entry into new markets and market niches (the NPO's target audiences), providing opportunities to build long-term relationships with them (Galan-Ladero et al., 2013).

Being fully aware of stakeholder management, corporations increasingly incorporate it into their CSR programs. Thus, corporate legitimacy is completed by taking care of the interests of stakeholders, in addition to local communities and the whole society. That is why legitimacy theory is closely related to stakeholder theory (Dewiyanti, 2021) as it has been previously highlighted, become the dominant core paradigm of the CSR field (Jones, 1995). In short, the social responsibility of corporations implies being aware of their stakeholders. At the same time, CSR can help to achieve a virtuous circle (Nelling and Webb, 2009; Smith, 2011; Servaes and Tamayo, 2013; Zhao and Murrell, 2022) because CSR attracts consumers, then sales increase, and the company becomes more profitable, which increases investor interest. If the company is doing well, then it favors employment stability and improves the work environment, providing better customer service, which attracts new customers and retains existing ones.

Applying the concepts of stakeholder management and legitimacy to the organizational context of MNEs, as the corporations seek congruence between their activities and the culture of the host countries, the term organizational legitimacy is used to refer two value systems (first, the corporation's values; and secondly, the society's values), when they are congruent (Dowling and Pfeffer, 1975). However, a legitimacy gap appears when there are differences between the values adopted by the corporation and the values of the community in which it operates. According to Dewiyanti (2021), that happens when the corporation only seeks economic profit and does not take into account its social and/or environmental impacts. It is when corporate donations can help to minimize the legitimacy gap by increasing the compatibility between company operations and community expectations.

2.3. New insights from the ethics of Care Theory

By adopting the practices and values of caring in CSR, organizations can significantly strengthen their impacts on the community. Caring is a universal human attribute, which is the foundation of morality (André, 2013). Behind the donation behavior of corporations, we find concern for people in need under the theoretical framework of the ethics of care. Initially, Gilligan (1982) proposed the ethics of care theory and was considered by some as a feminist perspective of ethics. However, the theory has been re-examined and defined “as an empathic disposition which is translated into practices for the sake of other human beings” (André, 2013: 35), evolving towards a care-based morality (Formentin and Bortree, 2019).

The application of this theory to the field of organizations involves incorporating values traditionally considered feminine (such as care and empathy), emotions and relationships into the organizational management model (“feminization” of companies), which can provide a competitive advantage (Oruc and Sarikaya, 2011). In this context, corporate donations can be considered a useful instrument to put into practice the ethics of care. It implies that the corporation should be responsible and attentive, recognize the stakeholders’ needs, and be competent to respond to them. Caring practices and values should consequently encompass trust building, mutual respect and concern, responsiveness to needs, mutually beneficial relationships, human flourishing, and communication within the organization (Formentin and Bortree, 2019; Madden et al., 2022; Lemon and Boman, 2022). And all this can be done through the various CSR actions, but specially through corporate donations, which will improve the quality of life of the various stakeholders and concretely will solve social problems as Inditex had done during the pandemic as it will be analyzed as follows.

3. Inditex in context: the COVID-19 pandemic in Spain

At the end of 2019, an outbreak of an unknown viral pneumonia was detected in Wuhan (China). Due to the danger of the new virus (called SARS-CoV-2 virus, and its disease, COVID-19 – neutral names to avoid any stigmatization – WHO, 2020), and its quick spread to other countries, the World Health Organization (WHO) declared an international health emergency in January 2020. Subsequently, WHO declared it as a pandemic, and all alarms went off worldwide. Thus, something that seemed remote and improbable in the 21st century, a global pandemic, became a brutal and unimagined reality (El País, 2021).

But the global situation worsened, and the health systems of some countries began to collapse due to lack of material, human resources, and space. In March 2020, the global economy was paralyzed with a general lockdown in most countries (borders were closed, non-essential commercial and non-commercial activities were suspended, and people had to stay home, to try to curb the high number of infections and deaths).

As described by Galan-Ladero and Rivera (2021), field hospitals had to be built alongside the reference hospital centers, some hotels were adapted as hospitals, and temporary health facilities were created (e.g., in sports centers, convention centers, etc.), and even new hospitals were built, to accommodate the growing number of people who required medical attention, especially in Intensive Care Units – ICUs. For instance, in Madrid (Spain), the new hospital called “Nurse Isabel Zendal” was built in only 100 days to exclusively treat COVID-19 patients, thus leaving space in public hospitals to treat other pathologies and avoid spreading COVID-19 to other patients and healthcare personnel (El Mundo, 2020).

In addition, the shortage of medical supplies (e.g., Personal Protective Equipment - PPE: masks, gloves, gowns, etc.; alcohol and other disinfectants; and respirators and medical oxygen) in hospitals from different countries in the first months, increased the number of infections among healthcare personnel. The situation was particularly dramatic in some European countries such as Italy or Spain and, later, in the UK. But also, in the USA, in numerous Latin-American nations, and in many other countries around the world in the following months.

In the face of this scenario, companies became involved with CSR initiatives, such as corporate social marketing, cause-related marketing programs, and other actions of a philanthropic nature, which included donations (in cash or in-kind), and/or the reconversion of productive chains for the manufacture of masks and sanitary gowns, respirators, alcohol and disinfectants, and other products that were practically impossible to obtain through the usual channels, or, at least, to provide them in the necessary quantity (Galan-Ladero and Rivera, 2021). To sum up, the situation created by the COVID-19 pandemic, especially during the lockdown in many countries, provoked a wave of solidarity and an unprecedented donation behavior by many companies worldwide.

In the specific case of Spain, there has been an enormous solidarity effort made by all types of companies, from large multinationals and IBEX-35 corporations to small businesses. All of them, to a greater or lesser extent, wanted to do their part to help save lives, fight against the pandemic, and mitigate its impact, by intensifying their CSR policies. According to Albendea (2020), the companies made a multitude of donations and altruistic actions. They contributed both economic resources and protective health material for the Health System, logistical support, and changes in the production of industrial plants to improve supply levels, with the sole objective of improving the situation of the population in general, and the Spanish Health System in particular (to tackle the health problem as soon as possible and mitigate the subsequent economic crisis). They were organized in various aid blocks, some headed by specific sectors, such as textiles.

García (2021) has pointed out that the Spanish State received a total of 17.75 million Euros in donations for the fight against COVID-19, in the period between March 2020 and April 2021. Only in April 2020, it received 16.78 million Euros, being that month the most supportive in donations against COVID-19. This can be justified because April 2020 was, precisely, a critical month of the pandemic in Spain, when after several weeks of exponential growth of infections and deaths, the first wave reached its peak, and already in full confinement, everyone began to be aware of the real impact, at all levels, that the pandemic was having on Spanish society, as well as the need for everyone to work together to deal with the pandemic and mitigate its effects, given the impossibility of the Spanish Government to do so alone.

These donations were regulated by Royal Decree Law 11/2020 of March 31, which adopted urgent complementary measures in the social and economic sphere to deal with COVID-19. Specifically, its article 47 indicated that the money received in this way (through an official bank account), “would be for the exclusive financing of the expenses derived from the health crisis caused by COVID-19 (expenses for health equipment and infrastructure, material, supplies, hiring of personnel, research, and any other that requested to contribute to reinforce the response capacities to the crisis derived from COVID-19)”. These donations would receive tax benefits.

The Spanish government received about 3,800 donations against COVID-19 from individuals, and 90 donations from private entities (García, 2021). However, this has been only part of what companies, alone or in collaboration with NGOs and other organizations, as well as individuals, have done since the beginning of the pandemic. In addition to monetary donations, in-kind donations such as protective health material for the Health System, logistical support, and changes in the production of industrial plants to improve supply levels have predominated (Albendea, 2020).

According to Merco (2021), the companies with the best CSR and governance during the pandemic in Spain were the following very well-known corporations: Inditex, Mercadona, Seat, Santander, Iberdrola, El Corte Inglés, Caixabank, Grupo Social ONCE, Naturgy, and Telefónica (Figure 1). It is remarkable that this ranking has been formed according to different criteria such as the support provided in terms of protective and medical material and donations to the Health System as well as the donations made to NGOs in support of solidarity initiatives, among others (Ipmark, 2021). Therefore, among all these organizations, Inditex stands out significantly. It has been the most valued and recognized brand by the Spanish citizens for its collaboration in the health crisis and its active work for the Spanish society (Davara, 2020). This is the reason to study and analyze the case of Inditex during the pandemic - one of the world's leading fashion multinationals - under the following research proposition: Inditex has modified its strategy to CSR and sustainability during the COVID time by reinforcing their donation pattern.

Figure 1.

Companies with the best CSR and governance in Spain during the pandemic.

Source: Own elaboration, based on Merco (2021).

4. Research methodology

4.1. Research design

As the motivation of this paper seeks to examine, analyze, and evaluate Inditex's behavior of corporate donations during the COVID-19 pandemic, to understand how this firm builds its corporate reputation, the research design is based on the single case-study of Inditex. According to Yin (2014), case studies place an object in context, and therefore allow detail, depth, and richness of data. Thus, case studies allow us to pay attention to a phenomenon in a specific context and this allows us to analyze the data in detail and in great depth (Galan-Ladero and Robson, 2022).

Case studies, as a research methodology, can have different objectives (Ellram, 1996): to explain, explore, describe, or predict a specific phenomenon of interest. Therefore, case studies are excellent for theory building, development, testing, refinement, or extension (Voss et al., 2002), “for providing detailed explanations of ‘best practices’, and providing more understanding of data gathered” (Ellram, 1996: 115). Consequently, case-study research can be one of the most powerful research methods and have very high impact when the purpose of the research is to obtain a depth of understand of a real phenomenon, which can be studied in its natural setting or also study emerging practices (Voss et al., 2002). For all these reasons, case-study research is widely used in management disciplines (Voss et al., 2002).

Thus, in our research, from an exploratory and qualitative approach, we used case study methodology (a single case study) because the purpose of our work is to obtain a depth of understanding of Inditex's CSR practices during the pandemic, and our goal is also to expand and generalize the different theories that we consider here.

4.2. Data collection

We have collected secondary data from Inditex's official website (www.inditex.com), but also from other publicly available online documents, to avoid biases. Thus, a wide range of sources were reviewed: (1) news and reports about corporate donations in Spain during the pandemic, and about Inditex's role particularly; (2) official on-line publications, such as WHO press dossiers and government reports. This was considered important to ensure a balanced view of the real Inditex's corporate donation behavior.

Data collection covered a two-year period, from January 2020, when the first news about the pandemic were published by WHO, to the end of 2021. The search terms used (in Spanish and English) included Inditex, Zara, COVID-19, and donations.

4.3. Phases of data analysis

The final database of documents therefore provided a very detailed account of the Inditex's CSR actions during the pandemic. Data analysis was conducted in three phases: (1) the official Inditex's website was deeply analyzed. All sections in it were read several times, in order to gain familiarity with data. Following the repeated readings, the solidarity actions that took place were ordered and summarized; (2) other online sources were consulted to complement the first screening and to have a general analysis; and (3) a thematic content-analysis assisted by ATLASti software was carried out with the intention of finding the relationship with stakeholders and the weight of communication about donations during the pandemic period in relation to the global set of corporate communication.

5. Outcomes of the inditex case-study research

5.1. Inditex: the corporation and its strategy

Inditex began as a small workshop, Confecciones Goa, founded by Amancio Ortega in 1963, and has become one of the largest fashion distribution companies in the world. It currently has seven commercial formats: Zara, Pull&Bear, Massimo Dutti, Bershka, Stradivarius, Oysho, Zara Home (Uterqüe has ceased operations in 2022, integrating into Massimo Dutti - Inditex, 2022).

Inditex addresses all phases of the fashion process: design, procurement, product and manufacturing quality control, logistics, and sales through stores and online (Inditex, 2021). It currently sells online in 215 markets and has more than 6,000 physical stores in the world (Inditex, 2022). However, its initial business model has not changed and remains the same today - the customer is the most important aspect for the company - the customer is at the center of everything Inditex does. And the three key pillars of its business model are: flexibility, integration, and sustainability (Inditex, 2021).

Inditex is headquartered in Arteixo (La Coruña, Spain). In 2021, it worked with 1,790 suppliers and had 8,756 factories worldwide (Inditex, 2022). It has had a very rapid growth rate. In the early 1980s, Zara began to grow in Spain; and at the end of that same decade, in 1988, it began an accelerated internationalization process. Since 2019 and, especially with the pandemic, the digital and sustainable transformation of the company has intensified, with an integrated platform of stores and online in practically all over the world (Inditex, 2021). This digital transformation has involved a store optimization plan in the period 2020–2021, focusing on larger stores (with an integrated model for physical and online sales) and the absorption of small stores (Gutiérrez, 2021).

5.2. CSR in fashion industry: the inditex case

The fashion sector plays a significant role in the global economy, but it is also one of the most polluting industries (D'Adamo and Lupi, 2021; Tebaldi et al., 2022) and consumes large amounts of resources (water, above all). For years, therefore, CSR and sustainability have become priority aspects in this sector, and a variety of strategies have been adopted as explained by Arrigo (2021), DáAdamo and Lupi (2021) and Vatamanuescu et al. (2021) (see Table 1).

Table 1.

A selection of sustainable practices in the fashion industry.

- A whole re-definition of their supply chain (traceability).

- A deep shift in production processes and operating models (eco-design; use of more environmentally friendly raw materials - organic, sustainable and/or recycled -; cleaner production practices, promotion of collaborative consumption platforms - related to the rental, repairing, and sale of second-hand goods -, etc.).

- Reduction of water and energy consumption.

- Reduction of the use and release of harmful chemicals.

- Minimization of the pollution generated by production and/or distribution processes (using efficient, cleaner, and renewable energy sources).

- Fight against climate change.

- Respect for their employees, offering fair wages to their employees and suppliers.

- Circular economy model: “reuse, recycle, recovery”.

- Change the “fast fashion” concept (“Take, Make, Waste”), for the “Slow fashion” concept: “Buy less, buy better”.

- Packaging in e-commerce.

Source: own elaboration.

And although the industry was already facing this transformation process before COVID-19, the pandemic has accelerated it. The fashion sector has been one of the most affected (Vatamanescu et al., 2021), due to the closure of stores and the accumulation of stocks (Tebaldi et al., 2022), and has had to adapt quickly to the new situation, readjusting its strategies (Vatamanescu et al., 2021) and intensifying its e-commerce. But, at the same time, it has engaged in specific CSR actions during the lockdown, acting in the interests of all stakeholders – including customers, employees, suppliers, investors, and wider society (McKensey and Company, 2022).

In the specific case of Inditex, CSR has played a fundamental role throughout its history, but especially since 2001, when the Group was first listed on the Stock Exchange. Inditex wanted to avoid any scandal that could affect its international reputation and, consequently, its stock market listing (at that time, the Nike and Adidas scandals were very recent). For this reason, among other measures, it adopted and developed a Code of Conduct, aimed at manufacturers and suppliers, which it has been expanding and completing since then. Inditex also joined the Dow Jones Sustainability Index and, in the following years, created its strategic environmental plan, which it has subsequently renewed. It has also been participating in numerous and varied social and solidarity initiatives, and collaborating with different NGOs. As a result, CSR has been gaining greater importance within the company, year after year.

The company allocates more than 40 million euros each year to investments in social projects (more than 600 different initiatives of more than 400 social entities, helping more than two million people each year - eleconomista. es, 2020). But only in 2020, the Group invested 71 million Euros in social programs worldwide (Inditex, 2021). In addition to Inditex's CSR, the Amancio Ortega Foundation (www.faortega.org) was also created in 2001, with the aim of "contributing to a model of society that offers equal opportunities to all those who are part of it" (Amancio Ortega Foundation, 2021) and "based on the principles of solidarity, understanding, commitment, hard work, authenticity, and loyalty" (Amancio Ortega Foundation, 2021). Its priority actions are focused on two key sectors: education and social welfare. Currently, it is focused on contributing to the fulfillment of the Sustainable Development Goals - SDGs (Agenda 2030) in the areas in which it operates, which mainly revolve around the axis of people: SDG 1, SDG 2, SDG 3, SDG 4, SDG 9, and SDG 17. In the last year with official information available, 2021, investment in educational and social projects reached 70.6 million euros (Amancio Ortega Foundation, 2022). Some of the most relevant donations in the history of this Foundation are listed in Table 2.

Table 2.

Some of the most relevant donations of the Amancio Ortega Foundation.

Donation	Amount	Objectives
COVID-19 pandemic	63 million Euros	Purchase of sanitary material, according to the technical-sanitary indications of the Spanish authorities, to fight against the COVID-19 pandemic: to be donated to the National Health System.
Public oncology support program (2015–2021)	310 million Euros	To renew the technological material and equipment related to oncological treatments (specifically, radiotherapy for cancer patients).
Donation to Caritas	40 million Euros	To help nearly 160,000 families that suffered from the economic crisis in Spain since 2008.
Education	32 million Euros	Creation of 8 nursery schools in Galicia.
		Scholarship Program: to study high school in the United States and Canada (600 students/year).

Source: Adapted from Redacción Médica (2020) and Amancio Ortega Foundation (2021).

5.3. General analysis: inditex during COVID-19 pandemic

The Inditex Group offered the Government of Spain, Autonomous Communities, hospitals, as well as other companies and individuals, its supply logistics system to bring urgently sanitary and protection material to Spain, as well as its cooperation in managing purchases made by the Government of Spain abroad, particularly in China, taking advantage of its operational capacity (La Voz de Galicia, 2020). It is remarkable that Inditex has many years of experience in its commercial relations with the Asian giant and maintains close ties with local suppliers and institutions such as the Central Government, the Beijing and Shanghai City Councils, the Environmental Council, and Tsinghua University. All this allowed the corporation to quickly identify key suppliers for the manufacture of sanitary protection, in addition to maintaining transport capacity at such critical times (La Vanguardia, 2020).

In addition, the corporation reconverted their factories around the world to produce masks and protective gowns for hospitals. The message that appeared on the sanitary material from China that Inditex donated to the Spanish Public Health System to deal with the COVID-19 pandemic was “although the oceans separate us, we are united by the same moon”.

Thus, Inditexás emergency aid during the COVID-19 pandemic has focused on different initiatives and actions related to the ethics of care “in order to tackle the health and economic consequences” (Inditex, 2021), giving priority to people, especially the most vulnerable. By stakeholders, the assistance has been focused on:

• -People in Inditex (employees): Inditex undertook actions and programs to provide health and financial assistance to workers in its supply chain, with special attention to the most needed groups.
• -Inditex suppliers: The corporation reinforced their contacts with its suppliers, to try to ensure the adoption of health and hygiene protection measures by all its manufacturers. Inditex guaranteed the payment of all orders already placed and in the production phase, according to the original terms and speeding up payments in those cases where there were logistical difficulties for the delivery of the merchandise. Financing mechanisms were also created for suppliers and manufacturers to enable them to overcome the economic impact of the pandemic, giving priority to guaranteeing the payment of salaries and strengthening the health and safety measures.
• -Public Administration and Inditex collaboration: The City Council of A Coruña, the Xunta de Galicia, or the entity IFEMA (Madrid Trade Fair Institution Consortium), from the Autonomous Community of Madrid, also participated in the distribution process.
• -The communities where Inditex is present: On the one hand, investment in the community consisted of activating a global emergency program, to which more than 40.4 million Euros were allocated. This program has also made it possible to mobilize 177 million units of health and basic necessities. On the other hand, the company allocated 31,000 items such as blankets and bedding to the homeless, shelters and health centers. These resources were distributed through the Red Cross and Caritas, organizations with which the Group works regularly.

The "Red Cross Responds" program was launched to deliver basic necessities to 25,000 people, telephone assistance and accompaniment for almost one million people, support in labor material for 16,000 people, in addition to offering a place to sleep for 3,000 homeless people (elconomista.es, 2020). The Caritas program "In the face of the coronavirus, every gesture counts”, was aimed at the comprehensive care of especially vulnerable groups: it offered care to elderly people living in the organization's centers and in their homes, as well as offering assistance to homeless people through the organization's shelters, soup kitchens, and other hygiene services (eleconomista, 2020).

• -Inditex collaboration with other stakeholders and NGOs: The collaboration has been focused in particular entities with the main unions or workers' rights organizations such as the International Federation of Trade Unions (IndustriALL Global Union), Ethical Trading Initiative, and Action, Collaboration, Transformation (ACT). Inditex also provided special support to the Doctors Without Borders’ Emergency Unit, another NGO with which it has maintained a stable collaboration since 2011 (La Vanguardia, 2020), through the “MSF COVID-19 Fund”, created with the aim of establishing temporary hospitalization units, helping to decongest hospitals and health centers, as well as to provide support to professionals who were on the front line of care for the elderly (eleconomista, 2020).

A summary of the most important figures is the following:

• -Inditex has donated over 40.4 million Euros and has distributed 177 million units of personal protective equipment and other necessities “to where they were urgently needed” (from acquisitions by Spanish Government, other Spanish Public Administrations, and private donors, including the Amancio Ortega Foundation and Inditex itself). They were transported in 66 freight aircraft. Although the company has not given official data, the health material transported by Inditex for the Spanish Government, to combat the coronavirus, has been valued at about 457 million Euros (La Voz de Galicia, 2020). And only the transport has been estimated at 100 or 150 million Euros (Ugalde, 2020). In any case, it has been an initiative that the textile Group has carried out free of charge (La Voz de Galicia, 2020).
• -Inditex made more than 140,000 waterproof health gowns in its facilities.
• -Inditex donated 31,000 items from the Zara Home bedding collection (blankets, sheets, and pillows) to health centers and homeless shelters, and over 1 million items to people in need. Those products were distributed through different NGOs.

In short, spending has exceeded 300 million Euros (Malagon, 2020): between 150 and 200 million Euros, the non-temporary employment regulation file, and between 100 and 150 million, the transport (Ugalde, 2020). Inditex has also made donations (monetary and in-kind) in China. Efforts focused on the purchase of medical supplies for distribution to hospitals, through the Tsinghua University Education Foundation and the Hubei Provincial Charity Federation. As a result of this collaboration, more than 2.5 million health care items were donated. And also, to charities in the USA, Italy, Mexico, and the UK. It has also reformulated the collaboration programs with different NPOs “to address the new needs emerging around the world as a result of the pandemic” (e.g., education, prevention, and awareness campaigns) in Argentina, Bangladesh, Brazil, Bolivia, Cambodia, Central African Republic, Colombia, Democratic Republic of the Congo, Ecuador, Ethiopia, India, Lebanon, Mexico, Morocco, Paraguay, Peru, South Africa, Spain, Syria, The United States, Uruguay, and Venezuela.

To sum up, all this effort has different dimensions: (1) the decision to maintain employment and renounce the use of a temporary employment regulation file due to force majeure, to support the public coffers, assuming the labor costs of all of its employees in Spain; (2) the provision to the State of all its logistics, especially the air corridor with China to expedite the arrival of medical supplies to Spanish hospitals; (3) the support to suppliers by not renegotiating prices and maintaining the original contracts; and (4) the donations made directly by the Group.

According to Ugalde (2020), all this commitment, this solidarity and patriotic work carried out by Inditex, together with the closure of its stores in many countries, is what led Inditex to make losses for the first time in its history (409 million Euros, in the first quarter of 2020 – period from February 1 to April 30, 2020) although in the following months it recovered and returned to profit.

5.4. Content analysis

In an attempt to quantify the importance of donations in the corporate communication of the company during the pandemic time, a thematic content-analysis was carried out involving the analysis of a selection of written documents. Concretely, all news and documents provided on the website of the company in the section called Press Release during 2020 and 2021.

In line with Friese (2014), our analytic approach was the NCT analysis, where N is noticing things, C is collecting things, and T is thinking about things. Total word count was 40,262. After a mechanical word crunch provided by the ATLASti software, codes and related categories were created and counted in an inductive process. The software provided a word frequency distribution, as a replicable result, which is considered the first step in scientific content analysis, to be later modified to fit individual researcher needs. It was assumed that frequency is a signal of the importance of each topic (Krippendorff, 2004). Content analysis has received significant attention in academic literature for a wide range of fields and it has also been a recurrent method for management studies (Duriau et al., 2007; Horneaux-Junior et al., 2017). In addition, press releases of companies have been a recurrent set of documents to be analyzed to study corporate reputation (Choi, 2012; Ritala et al., 2018; Ajayi and Mmutle, 2021). The general categories found on the analysis of press releases are shown in Figure 2.

Figure 2.

Main categories.

Source: Own elaboration.

The detailed findings of the content analysis of these press releases are shown in Figure 3, where data coding and frequencies are included. The central category found is the new approach to sustainability of the company. We could say that the general purpose of the press releases during the two years analyzed was to communicate how Inditex has adapted its strategy to sustainability to the emergency derived from the pandemic. In this new strategy, several categories have high relevance: stakeholders (where valuing internal talent has an important weight in the strategy), efficiency and innovation, environment, digital transformation, and powering the customer experience. But the main topic communicated by the company was the commitment to people throughout COVID-19 (as an addition of Covid and donating).

Figure 3.

Overview of the content analysis results.

Source: Own elaboration.

As expected, donating emerges as a key issue during the pandemic with the highest frequency (223), after the general and related category of Covid (252). The category donating includes several related codes such as donations, refugees or disabilities. And it should be noted that it has been revealed as the protagonist of the content analysis, confirming our research proposition.

6. Final Reflexions and conclusion

During the pandemic, and despite the need to intensify health aid, to address food shortages and to manage the lack of access and support for education, NPOs have been limited in their ability to generate income, and governments have been mainly focused on funding programs to protect the lives of citizens. This has led corporations to analyze the best way to serve society at the same time that improve their reputation and gain legitimacy. MNEs have changed their CSR strategies, being aware of their stakeholders’ needs, putting in action the ethics of care by reinforcing corporate donations, focusing on determining the most urgent health, welfare, and education needs to be addressed, and responding quickly to them.

As a result, the COVID-19 pandemic has provoked corporate donation behavior worldwide. In Spain, one of the most affected countries by the pandemic, the MNE Inditex has made significant donations, both monetary and in kind, at the most critical moments. Inditex has been in fact a good example of a company that has been able to adjust production very quickly and efficiently, and has even reduced stocks in pandemic time. Inditex is also an example of a company that has developed all aspects of CSR (economic, social, and environmental) at the same time that has established better relationships with their stakeholders.

6.1. Theoretical contributions

Theoretically, the analysis of this emblematic case study serves: (1) to verify that the Stakeholder Theory is expanded by the Legitimacy Theory. Inditex has deployed a solid corporate communication to guarantee that its behavior as donor is regarded as conforming to societal needs from the perspective of its main stakeholders; (2) to verify that the Stakeholder Theory, Legitimacy Theory, and the Ethics of Care theoretical framework are increasingly interrelated. The key to the company's success will be in the efficient and effective management of its relationships with stakeholders. For that purpose, CSR practices can and should be conceptualized in the context of the ethics of care.

The interrelation of the three theoretical frameworks supports the idea that corporate donations, under the ethics of care umbrella, help to minimize the legitimacy gap in times of crises and satisfy stakeholders by increasing the compatibility between company operations and community expectations. This approach should result in greater trust in the corporation and should be an added value for both the organization and the society, and the company will have a better reputation.

Thus, this case study is relevant because there is scarce research examining the link between corporate donations and reputation in COVID-19 pandemic times. In addition, its novelty lies in its theoretical approach from three different but complementary theories. This paper contributes to the extant literature and CSR knowledge in times of COVID-19 pandemic by offering critical information from a case study of a highly reputable company.

6.2. Managerial contributions

This case study has also a contribution for practitioners because it shows how Inditex manages reputation, as perceived irresponsibility could lead to boycotts and other undesirable consumer actions. From a practical point of view, as corporate reputation is one of an organization's most valued intangible assets and can provide a sustained competitive advantage, corporate donations must start being seriously taken into consideration by MNEs.

Inditex's corporate communication evidences that CSR in general, and corporate donations particularly, could increase awareness of, and sympathy for, the corporation, generating a positive perception of it and a more positive image in the consumer. Corporate donations can induce customers to be identified with the corporation (emotional bonding, company-customer identification), which is expected to be translated into an increase in sales and market share in a virtuous circle. Hence, other MNEs could follow the example of Inditex improving their donor behavior, because it is worth it to include the values of the ethics of care into the business model recognizing the actual asymmetries cause by the COVID-19 pandemic and the potential ones in the future, and the obligation of care for mitigating stakeholdersá suffering.

6.3. Final conclusions

This work has analyzed existing data about Inditex as a case study, and have reported novel insights in form of a scoping review. This case study has shown that collaboration between the public sector (led by the Government) and the private sector is possible and useful, and not only in the case of emergencies. This type of collaboration should be continued and even boosted in the future, because it opens up new opportunities for the provision of quality public services, to obtain synergies and seek excellence and transparency. Ultimately, it would benefit the citizens, who are the users of these services.

Inditex has not only met the expectations of stakeholders during the pandemic but has even surpassed them. Knowing that Inditex managed the supply of masks and medical supplies gave Spaniards peace of mind. After the analysis of the secondary data retrieved from Inditex, it could be said to conclude that Inditex has clearly passed a test of legitimacy under the ethics of care framework during the pandemic, demonstrating a quick adaptation to circumstances attending the expectations of society as a whole, and being aware of its key stakeholders - employees (keeping jobs), customers (selling online), shareholders (recovering benefits after confinement), government (making all its logistics and production capacity available to it), and other NGOs (receiving their donations). Legitimacy must have been strengthened because the donation behavior of the corporation has been consistent with the current social values and, consequently, its corporate reputation has improved, being the most valued company at the moment.

The objective of this paper was to analyze Inditex, one of the most important and admired firms in the fashion industry, as a case study and reflect on the impact of its donation behavior on its corporate reputation. The study has shown the highest weight of corporate communication about donations during the pandemic in relation to the global set of corporate communication at this time demonstrating that caring practices have been revealed as a key element of the CSR strategy. As a result, the reputation of Inditex has been improved, becoming the number one thanks to its corporate donation behavior, reinforcing the relationship with the corporate stakeholders and ensuring the growth and long-term survival of the corporation.

The case study methodology allowed us to extend the application of the three proposed theories - Stakeholder Theory, Legitimacy Theory, and Ethics of Care Theory - to the field of corporate giving and corporate reputation, studying in depth the behavior of the Inditex company during the pandemic in general, and the confinement in particular. In fact, this Spanish company has become an example for its fast reaction and the enormous effort made to help in this dramatic situation, and it has been at the top of all the rankings that have assessed the most supportive companies and their CSR initiatives during the pandemic (and the lockdown in particular).

6.4. Limitations

However, this work is not without limitations. Lack of generalizability has been the major criticism of case studies because this affects external validity. Thus, care is needed in drawing generalizable conclusions based on the analyzed case. Instead, what is intended is that this case, and the good practices analyzed, serve as benchmarks for other companies.

6.5. Future research perspectives

Nevertheless, the stated limitation could be addressed by replicating the study by analyzing other multinationals in the sector and verifying patterns. This would partially confirm or disprove our case study. Thus, new research opportunities open up: (1) This study can be used as a foundation for future related studies on a national and international basis. Similar studies could be conducted in other companies, sectors, countries, and contexts, and a comparison could be done among them; and (2) A comparative study with other companies that were prominent during the pandemic (and the lockdown in particular), both in their industry and in other industries, could detect similar or different effects on the impact of their supportive behavior on corporate reputation.

Declarations

Author contribution statement

M. Mercedes Galan-Ladero, PhD; M. Isabel Sánchez-Hernández, PhD: Conceived and designed the experiments; Performed the experiments; Analyzed and interpreted the data; Contributed reagents, materials, analysis tools or data; Wrote the paper.

Funding statement

This research has been funded by the Regional Government of Extremadura (Junta de Extremadura) and the European Union (European Regional Development Fund—A way of making Europe), supporting Research Groups (SEJO21 —GR21078) of the Universidad de Extremadura.

Data availability statement

Data will be made available on request.

Declaration of interest's statement

The authors declare no conflict of interest.

Additional information

No additional information is available for this paper.