Corporate Social Responsibility (CSR)

Today, consumers are more Corporate Social Responsibility (CSR)-conscious. We know that companies should not only concern themselves with how to maximize profit for shareholders but also have concern for the environment, for local communities, for employees and ethical practices.

CSR is oftentimes also described as the corporate “triple bottom line”– the totality of the corporation’s financial, social, and environmental performance in conducting its business (Chandler, 2002). We know corporate social responsibility is valuable, but why should companies practice it?

Because of globalization, today, companies are facing much more competitive and rapidly changing business markets than ever. They are in competitions for skilled employees, investors and consumer loyalty (Chandler, 2002). There has been a debate on whether companies can engage in CSR and still be profitable. Cases have shown that a company can do well while doing good.

Companies like McDonald’s, for example, and other fast-food outlets proved that engaging in CSR can be profitable. They have expanded their menus to include salad and other options designed for health-conscious consumers (Karnani, 2010). I believe companies practice CSR will, in turn, greatly contribute to the sustainability of its business success. Empirical research results has suggested it is possible that companies investing in CSR activities, in a long term, will lead to profitability.

First, researchers found that IA, identity-attractiveness contributes to consumer’s decision making because they strongly link the corporate brand with their identity (Marin & Ruiz, 2007). A company’s corporate social responsibility spirit reflects to its perceived social obligation and to the corporate behavior. Its socially responsible behaviors may trigger consumer identification. They would most likely reward firms for their support of social programs by for example purchase their products as if they reward themselves for doing good.

Secondly, CSR activities also increase customer loyalty. A research report, published in International Journal of Research in Marketing in 2007, found that “positive CSR beliefs held by consumers are associated not only with greater purchase likelihood but also with longer-term loyalty and advocacy behaviors” (Du, Bhattacharya & Sen, 2007).

Moreover, the researchers found that “not all CSR initiatives are created equal: a brand that positions itself on CSR, integrating its CSR strategy with its core business strategy, is more likely than brands that merely engage in CSR to reap a range of CSR-specific benefits in the consumer domain” (Du, Bhattacharya & Sen, 2007). Corporate social responsibility can have a positive effect on a product harm crisis situation too.

A lot of research have shown that CSR in marketing has shown CSR plays a role in consumers’ brand and product evaluations such as product attributes. And, CSR has a “halo effect” on consumer judgements such as the evaluation of new products.

CSR activities can influence consumer judgment such as evaluation of new products. CSR activity can lower reputational risks in times of crisis (Klein and Dawar, 2004). I encourage every company to invest in CSR. The rewards are too obvious to ignore.

References:

Aneel Karnani. (2010, August 22). The Case Against Corporate Social Responsibility. Retrieved from http://sloanreview.mit.edu/executive-adviser/2010-3/5231/the-case-against-corporate-social-responsibility/

Chandler, S. G. (2002, July). What is Corporate Social Responsibility? Catalyst Corporation and U.S. Agency for International Development (USAID), Retrieved from http://www.rhcatalyst.org/site/DocServer/CSRQ_A.pdf?docID=103

Du, S., Bhattacharya, C. B., & Sen, S. (2007). Reaping relational rewards from corporate social responsibility: the role of competitive positioning. International Journal of Research in Marketing. 24 (3), 224-241. doi: 10.1016/j.ijresmar.2007.01.001

Klein, J., & Dawar, (2004). Corporate social responsibility and customers’ attributions and brand evaluations in a product-harm crisis. International Journal of Research in Marketing. 21(3), 203-217. doi:10.1016/j.ijresmar.2003.12.003

Marin, L., &Ruiz, S. (2007). I need you too! Corporate Identity attractiveness for consumers and the role of social responsibility. Journal of Business Ethics. 71(3), 245-260. Doi:10.1007/s10551-006-9137-y

Noam Noked. (2011, February 28). Invest in corporate social value to enhance customer value. Retrieved from http://blogs.law.harvard.edu/corpgov/2011/02/28/investing-in-corporate-social-responsibility-to-enhance-customer-value/#1

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One comment

  1. I think you are right. Companies should concern more about Corporate Social Responsibility(CSR). It is a way to help them have a good reputation and they can keep more consumers loyalty by using CSR activities. As a PR person,this is part of information we should know and provide it to our client in the future. Thanks for posting this topic and now I can understand how companies will lead to profitability.

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