Market Research Shows Revenue Tracks Corporate Social Responsibility

Consumer Purchase Intention and Brand Image Are Related to CSR

Consumers Monitor and Respond to Corporate Social Responsibility. Getty Images | KidStock | Blend Images

Corporate social responsibility (CSR) is generally considered on a holistic basis as something a company does to benefit others or the environment, and that is associated with improved returns. The literature on corporate social responsibility repeatedly showed that "corporations could enhance their brand image and promote consumers’ purchase intention by positively engaging in CSR activities" (Li, et al., 2013).

 

The 4 Dimensions of Corporate Social Responsibility

Li, et al. (2013) examined the effects of corporate social responsibility according to four dimensions:

The conceptual model used by Li, et al. (2013)  in their research included brand image and perceived product quality in addition to corporate social responsibility.  

Li, et al. (2013) conducted a survey of 449 consumers and used a structural equation model to test the hypotheses. The research findings indicate that the four dimensions of corporate responsibility have different effects on brand image and perceived product quality.  Li, et al. (2013)  found that a significant positive effect on brand image can be obtained through the practice of economic responsibility and philanthropic responsibility.  A significant positive effect on perceived product quality is seen for the demonstration of ethical responsibility, whereas, no significant effect on brand image was obtained as a result of the practice of legal responsibility.

To summarize:

  • Economic responsibility > + brand image
  • Philanthropic responsibility > + brand image
  • Ethical responsibility > + perceived product quality
  • Legal responsibility <-> brand image 

Brand Management and Company Reputation

A company's reputation is at the hub of its operations success as many variables pivot according to changes in business reputation, and business reputation is influenced by many variables, both internal and external.

 The timing and type of communications about corporate social responsibility and environmental initiatives is an important aspect of brand management.  Indeed, this area of business communication requires a high level of nuance and monitoring of consumer sentiment. Seminal research conducted by Wagner, Lutz, and Weitz (2009) presents a classic study of the maze of corporate communications related to image, reputation, and crisis management.

Gatti, et al. (2012) at the Università della Svizzera Italiana and the University of Malta studied consumers' perceptions about corporate social responsibility, ethical trade, and product quality in terms of its impact on brand reputation and their purchase intentions.  The researchers found:

Now That You Know

Gatti, et al. (2012) concluded that brand marketers and advertisers should devote energy and resources to a three-pronged approach:

  1. Create honest advertising about their product quality by giving "correct and sincere information about the characteristics and qualities of the product;"
  2. Ensure employees and executives of the company behave ethically in their business transactions with customers and when pursuing their business goals;
  3. Demonstrate corporate commitment to social responsibility and environmental initiatives, and appropriately communicate about the initiatives.

Sources:

Gatti, L, Caruana, A., & Snehota, I. (2012).  The role of corporate social responsibility, perceived quality and corporate reputation on purchase intention: Implications for brand management.  Journal of Brand Management, 20(1), 65-76. 

Li, Y., Hu, J., Liu, J., Liu, X., & Zheng, X.. (2013, March). An empirical study on the relationship among corporate social responsibility, brand image and perceived quality.  Advances in Information Sciences and Service Sciences (AISS),5(6),1177-1184. doi:10.4156/AISS.vol5.issue6.141.

Wagner, T., Lutz, R. J., & Weitz, B. A. (2009). Corporate hypocrisy: overcoming the threat of inconsistent CSR perceptions.  Journal of Marketing, 73, 77-91.

Van Dyke, F. (2014).  Advertising transformed: The new rules for the digital age.  London: Kogan Page Limited.