This study suggests that efforts to enhance brand sales through philanthropic efforts has far less impact than actions taken by organizations to directly address environmental and social issues as part of their business models. In fact, Corporate Social Responsibility (CSR) that focuses on promoting good will can hurt sales. Click here for a YouTube interview with the authors.
“The Impact of Corporate Social Responsibility on Brand Sales: An Accountability Perspective,” published recently in the Journal of Marketing, makes it clear that corporate philanthropy has much less impact on brand engagement than demonstrable actions to address environmental or social issues. In fact, CSR efforts can hurt sales.
In this study by professors Dionne Nickerson of Indiana University; Michael Lowe and Adithya Pattabhiramaiah of Georgia Tech and Sorescu Alina of Texas A&M University, the authors report that on average, CSR initiatives that seek to reduce a brand’s negative externalities (what they call corrective and compensating actions) provide a boost to brand sales while those focused on philanthropy (cultivating goodwill) lead to a modest drop in sales.
According to the authors, “consumers are increasingly mindful of corporate social responsibility when making purchase and consumption decisions, but evidence of the impact of CSR initiatives on actual purchase decisions is lacking.” This study intends to introduce “a novel brand accountability–based framework of consumer response to CSR initiatives, which categorizes CSR efforts as ‘corrective,’ ‘compensating,’ or ‘cultivating goodwill.’”
Based on a database of CSR press releases by leading consumer packaged goods brands, “the authors examine the effect of the different types of CSR announcements on brand sales. The findings suggest that CSR initiatives that genuinely aim to reduce a brand's negative externalities (“corrective” and “compensating”) lift sales, whereas CSR actions focused on philanthropy (‘cultivating goodwill’) can hurt sales.”
Their 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.”
Master the “S” of Environmental, Social, Governance (ESG), A.k.a. Stakeholder Capitalism
The Enterprise Engagement Alliance at TheEEA.org is the world’s first and only organization that focuses on outreach, certification and training, and advisory services to help organizations achieve their goals by fostering the proactive involvement of all stakeholders. This includes customers, employees, distribution and supply chain partners, and communities, or anyone connected to an organization’s success.
Training and Thought Leadership
- Founded in 2008, the Enterprise Engagement Alliance provides outreach, learning and certification in Enterprise Engagement, an implementation process for the “S” or Social of Stakeholder Capitalism and Human Capital Management and measurement of engagement across the organization.
- The Enterprise Engagement Alliance provides a training and certification program for business leaders, practitioners, and solution providers, as well as executive briefings and human capital gap analyses for senior leaders.
- The EEA produces an education program for CFOs for the CFO.University training program on Human Capital Management.
- Join the EEA to become a leader in the implementation of the “S” of ESG and Stakeholder Capitalism.
- The ESM information portal and The Enterprise Engagement Advisors Network solution provider marketplace cover all aspects of stakeholder engagement, and the EEA information library lists dozens of resources.
- The RRN information portal and Brand Media Coalition marketplace address the use of brands for gifting, incentives, recognition, and promotions. The BMC information library provides information and research resources.
The EEA Human Capital Management and ROI of Engagement YouTube channel features a growing library of 30- to 60-minute panel discussions with leading experts in all areas of engagement and total rewards.
- Enterprise Engagement for CEOs: The Little Blue Book for People-Centric Capitalists. A quick guide for CEOs.
- Enterprise Engagement: The Roadmap 5th Edition implementation guide. A comprehensive textbook for practitioners, academics, and students.
Enterprise Engagement Advisory Services
The Engagement Agency helps:
- Organizations of all types develop strategic Stakeholder Capitalism and Enterprise Engagement processes and human capital management and reporting strategies; conduct human capital gap analyses; design and implement strategic human capital management and reporting plans that address DEI (Diversity, Equity, and Inclusion), and assist with managed outsourcing of engagement products and services.
- Human resources, sales and marketing solution providers profit from the emerging discipline of human capital management and ROI of engagement through training and marketing services.
- Investors make sense of human capital reporting by public companies.
- Buyers and sellers of companies in the engagement space or business owners or buyers who seek to account for human capital in their mergers and acquistions.
For more information: Contact Bruce Bolger at Bolger@TheICEE.org or call 914-591-7600, ext. 230.