Why do businesses choose to invest in the public good? What is it that they get out of it? Well, in the case of companies like Ben and Jerry’s ethical behavior or ‘corporate social responsibility’ was simply a part of the founders’ mission. But there are many global businesses that spend millions social responsibility initiatives, who sponsor charitable causes, or develop strategic alliances with nonprofits or nongovernmental organizations.
Does it improve their profitability? Does it improve their reputation? To be blunt, the research for CSR are a bit of a mixed bag. Some studies point to a lot of positive outcomes for organizations that engage in CSR AND use their CSR initiatives as a point of promotion for the organization.
So, on the positive side, we see that there are findings suggesting that companies who are socially responsible often:
- Have improved brand loyalty
- Attract better employees
- Reduce their risks when crises emerge – in some cases, the social responsibility schemes themselves actually function to manage risks to prevent crises from emerging.
- Promote identification between consumers and companies – people want to patronize companies that they see as sharing their values and concerns.
- And CSR can improve an organization’s trustworthiness and reputation.
Yet, there is a lot of research on CSR where the story is less positive and consistent findings showing:
- A difficulty in proving the specific return on investment of the resources (time, personnel, and money) spent on CSR programs.
- It can even build up higher expectations for organizations to perform well, so if an organization commits a transgression, stakeholders can feel betrayed by the organization. This was certainly the case with Volkswagen and the emissions scandal.
- We are living in an era where people are often cynical about the authenticity of CSR – people often view CSR initiatives as shameless efforts to curry favor.
- Finally – green-washing specifically references pro-environmental activities that organizations claim.
Findings from focus group discussions provide some interesting insights for both public relations and marketing. CSR matters when it’s authentic and when consumers learn about it ‘organically’. However, CSR is less relevant when it’s connected with cause-related marketing. This is good news for the field of public relations and bad news for marketing. When we’re talking about CSR, from our data, it’s not that consumers aren’t interested and actively seeking out what companies and organizations are good and bad, it’s just that they don’t want it used as a point of promotion. So, how do consumers judge authentic and inauthentic efforts at CSR.
What Does Authentic Corporate Social Responsibility Look Like?
If an organization wants its CSR initiatives to be viewed as authentic and thus be more effective, then very simply – they need to show consumers that the consumer matters and consumer choice to support socially responsible organizations matters.
Second, they need to demonstrate that the CSR is making a difference in the communities that their consumers live – not half way around the world.
Third, to be viewed as authentic, the organization needs to have a good reputation.
So, here’s the sticky wicket when it comes to issues and crisis management. For CSR to seem authentic, it needs to be a part of how the organization does business on a regular basis. So, when we’re talking about building crisis resistant organizations, despite some of the cautions from some authors about building too high of expectations, frankly, being socially responsible demonstrates the company is motivated to do good. When it comes to a crisis context, so long as a company isn’t facing a transgression that they’ve committed time and time again, then being socially responsible is an effective way to minimize or mitigate the brand damage and all of the negative outcomes that come with crises.
But this isn’t the whole story – there’s more that is telling when it comes to CSR.
What Does Inauthentic Corporate Social Responsibility Look Like?
It turns out that when it comes to stakeholders making judgements that organizations are just trying to make themselves look good or a hygiene conclusion, those judgements are formed by:
First, the consumers’ belief that whether or not they spend money with the organization isn’t going to really make the organization decide anything different.
Second, for CSR to matter, the impact needs to be local. If we combine these first two points – people seem to want to feel like their choices have a positive impact, so if they spend with a company that does good in their own communities, they are getting something out of their consumption that they can feel good about.
Third, having a bad reputation means that socially responsible actions are not going to lead to positive outcomes – at least in the short run. However, it’s important to note that there isn’t a negative outcome associated with it – just that it fails to be effective. For organizations that have gone through a crisis that damaged their reputation, this means that they may not be able to rely on social responsibility programs to bail them out for a quick reputation fix. However, doesn’t mean that socially responsible action isn’t going to help them rebuild trust and their reputation in the long term. Reputation is a long-term judgement and people want constant evidence about a company’s ‘good’ work, so this can still be an effective part of a crisis reputation recovery strategy, it’s just that the benefits are long term ones.
Finally, promoting the company for sales and marketing purposes on the basis of it being a socially responsible company is just not persuasive. In this way, the data suggests that it’s the positioning of the CSR work along side the specific action-step of making a purchase or supporting the company is what is ineffective. Talking up a company’s engagement in the community is desirable, but it seems it just cannot be a method to get a sale.
The story on CSR hasn’t ended there. This question of whether CSR can make an organization more crisis resilient is something that I’ve tested and the post script is that when consumers are presented with information about a company that shows it to be socially responsible as a regular part of its business objectives AND a crisis is introduced, that the company suffers less reputational damage, maintains the trust of its consumers, and can actually lead to improved intention to support the company through the crisis.
However, if the same company is socially irresponsible it fares far worse. So this tells me pretty clearly that as a response strategy social responsibility is a bad idea unless the organization has a good history and good relationships with its communities of stakeholders. However, consumers don’t need to be reminded that the company is a good company when a crisis strikes – they just need to get on with the business of correcting the problems to move on.