JM Insights in the Classroom
Teaching Insight:
This study finds that on average, corporate social responsibility (CSR) initiatives that seek to reduce a brand’s harm to society and the environment (“corrective” and “compensating”) provide a boost to the sales of participating brands, while CSR actions focused on philanthropy (“cultivating goodwill”) lead to a slight drop in sales. Thus, brands should strive to “clean up their own mess” before engaging in philanthropy, which consumers may view as insincere and aimed simply at garnering consumer goodwill. In sum, managers should reconsider engaging in CSR actions that cannot be clearly linked to reducing the brand’s harm on society or the environment.
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Related Marketing Courses:
Marketing Strategy
Full Citation:
Nickerson, Dionne, Michael Lowe, Adithya Pattabhiramaiah, and Alina Sorescu (2021), “The Impact of Corporate Social Responsibility on Brand Sales: An Accountability Perspective,” Journal of Marketing.
Article Abstract:
Consumers are increasingly mindful of CSR when making purchase and consumption decisions, but evidence of the impact of CSR initiatives on actual purchase decisions is lacking. This paper introduces a novel, brand accountability-based framework of consumer response to CSR initiatives, which categorizes CSR efforts as “Corrective,” “Compensating,” or “Cultivating goodwill” actions. Leveraging a database of CSR press releases by leading CPG brands, the authors examine the effect of the different types of CSR announcements on brand sales. The findings suggest that CSR initiatives that genuinely seek to reduce a brand’s negative externalities (“Corrective” and “Compensating”) lift sales, while CSR actions focused on philanthropy (“Cultivating goodwill”) can hurt sales. The authors propose two moderators – CSR reputation and CSR focus on environmental or social causes – and also a mechanism for these effects, which they examine under controlled experimental settings. The experimental results show that, conditional on CSR reputation, consumers perceive varying degrees of sincerity in the different CSR types, and that sincerity mediates the effect of CSR type on purchase intentions. Overall, the results suggest that consumers are more inclined to reward firms that directly reduce the negative by-products of their own business practices than to be impressed by public goodwill gestures.
Special thanks to Holly Howe (Ph.D. candidate at Duke University) and Demi Oba (Ph.D. candidate at Duke University), for their support in working with authors on submissions to this program.
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