Investing in Corporate Social Responsibility to Enhance Customer Value

The following post comes to us from the Conference Board Governance Center, and is based on a Conference Board report by John Peloza and Jingzhi Shang.

Corporate social responsibility (CSR) activities have the potential to create several distinct forms of value for customers. It is the customer perception of this value that mediates the relationship between CSR activities and subsequent financial performance. By categorizing major CSR activities and the different types of value each can create, this report offers a number of practical recommendations to business leaders embarking in CSR programs for their companies.

Investments in CSR activities are under scrutiny. Boards and shareholders are increasingly demanding that outcomes from these investments be measured to understand if and how they positively impact the profitability of the firm. Not surprisingly, a significant amount of research has been undertaken to understand the relationship between CSR and profitability.

Due to the importance of customers among business stakeholders, marketing research that examines the effects of CSR on profitability is particularly informative. In particular, this research shows that CSR leads to outcomes such as increased customer loyalty, willingness to pay premium prices, and lower reputational risks in times of crisis. [1,2,3] Each of these marketing outcomes in turn has the potential to support increased profitability.

However, the research findings in question are often equivocal and offer business leaders limited guidance when it comes to choosing and implementing specific CSR activities. In fact:

  • 1. the relationship between CSR activities and financial performance is typically affected by many other mediating variables, which are not always thoroughly considered by researchers; and
  • 2. the metrics used to define CSR vary widely among researchers.

To understand how CSR can impact profitability, this report focuses on customer value as a variable linking CSR activities and firm financial performance. This report argues that CSR activities have the potential to create several distinct forms of value for customers. It is the customer perception of (and subsequent response to) this value that mediates the relationship between CSR activities, positive marketing outcomes, and subsequent financial performance. By categorizing major CSR activities and the different types of stakeholder value each can create, this report provides guidance for business leaders embarking in CSR programs for their companies. For this reason, a section of the report is dedicated to a number of practical recommendations to board members and senior executives.

CSR Activities and Customer Value

Corporate social responsibility has been defined as “a business organization’s configuration of principles of social responsibility, processes of social responsiveness, and policies, programs, and observable outcomes as they relate to the firm’s social relationships.” [4] It consists of specific firm investments called “activities.” [5] Collectively, over time, these activities can lead to a reputation for social responsibility— a valuable business asset of its own.

Table 1: Categorization of CSR Activities

CSR Category Examples of Specific CSR Activities
Philanthropy • Donation of sales
• Unrestricted cash donations
• Donation of products
• Employee volunteerism
• Collection of customer donations
• Charity events
• Promotion of public service announcements
Business Practices
• Pollution levels
• Reduced energy consumption
• Recycling
• Labor practices (e.g. child/sweatshop labor)
• Diversity
• Fair trade
• Other supply chain responsibility (e.g., human rights)
• Third party awards for performance
• Customer relations
• Employee relations
• Packaging
• Animal testing
• False advertising
• Controversial advertising
• Ethical conduct
• Packaging
• Animal testing
• False advertising
• Controversial advertising
• Ethical conduct
• Competing fairly and ethically
• Investment in South Africa
• Local sourcing
• Industry codes of ethics
• Adherence to other standards (e.g., GRI)
• Product recalls
• Governance
• Carbon offset sales/offsets
• Six Sigma projects
• Lawsuits
• Decreased product use/moderation message
• Investment in workplace safety
Product-Related Activities • Energy efficiency
• Organic
• Product ingredients
• Controversial products (e.g., firearms, alcohol, gambling)
• Product quality

A recent review of financial metrics deployed to calculate the business case for CSR found 42 unique CSR activities (Table 1) used by analysts and researchers over four decades of studies of the subject. [6] Within this broad array of activities, perception by stakeholders naturally varies, as socially responsible corporate behavior may mean different things to different people at different places and times. [7] For example and in general terms, research shows that CSR in the form of community or diversity programs is more likely than CSR in the form of governance, employee relations, or product relations to provide insurance against negative events affecting the reputation of the corporation. [8]

The multi-faceted customer value of CSR

Clearly, stakeholders must perceive value in a certain CSR activity to support the firm’s engagement in it. This is particularly true for the customer, a key stakeholder for any business enterprise.

An effective model to examine the potential customer value creation of CSR activities defines value as an interactive, relativistic preference experience. [9] Value is interactive because it can be created only when a firm and its customer come together. Value is based on preference because each customer responds to a product, service, or corporate initiative based on her personal, subjective taste. Finally, value is relativistic because each customer’s perception is influenced by external factors relative to the environment in which the customer lives (e.g., sensitivity to certain social issues depends on the level of education and the intellectual or experiential exposure of the customer to the issue).

Table 2: The Multi-faceted Customer Value of CSR Activities in the Form of Organic Agricultural Practices

Multi-faceted Customer Value Intrinsic value
(i.e., does not require the involvement of a third party to be enjoyed)
Extrinsic value
(i.e., does require the involvement of a third party to be enjoyed)
Self-oriented value
(i.e., only directly enjoyed by the customer)
Quadrant 1
Efficiency or excellence
(e.g. organics as a healthier product, free from pesticide residues or other contaminants)
Quadrant 3
Status or esteem
(e.g., organics as a way to represent to others one’s concern for the environment)
Other-oriented value
(i.e., not only directly enjoyed by the customer)
Quadrant 2
Joy or aesthetics
(e.g., organics as a simple product, representing a “slow-food” quality of living)
Quadrant 4
Ethics or spirituality
(e.g., organics as a way to contribute to environmental conservation)

The model is illustrated in Table 2, through its application to CSR activities in the form of organic agricultural practices. Each of the four quadrants outlined in the model represents potential types of customer value resulting from a certain CSR activity:

  • Self-oriented intrinsic value The efficiency or excellence of the product or service offered by the business
  • Other-oriented intrinsic value The personal joy or aesthetic appreciation resulting from consuming the product or using the service
  • Self-oriented extrinsic value The status or esteem associated with consuming the product or using the service
  • Other-oriented extrinsic value The ethical or spiritual benefit of the product consumption or service use

The model shows how a certain consumption behavior can contribute to multiple or even all types of value, and that the coexistence of these value types in a certain CSR activity is the norm rather than the exception.

On the vertical axis of Table 2, the self-oriented or other-oriented value dichotomy refers to whether the value resulting from the CSR activity is self-serving to the customer or can be enjoyed even by others. On the vertical axis, the extrinsic or intrinsic value dichotomy illustrates whether the perception of value by the customer results from the CSR activity per se or requires the involvement of some relevant third party (e.g., the network of family members, colleagues, or friends within which the customer establishes her personal status or esteem; or a reputable not-for-profit organization that sets the environmental standards the customer will use to evaluate a certain corporate practice).

In the example on organic agriculture, the model permits identifying four types of customer value:

  • Organics as a healthier product, free from pesticide residues or other contaminants: an “efficiency or excellence” value type that is self-oriented (as it is directly enjoyed by the customer) and intrinsic (as the perception of value by the customer stems from the CSR activity per se and does not require the involvement of some relevant third party).
  • Organics as a simple product, representing a “slow-food” quality of living: a “joy or aesthetics” value type that is other-oriented (as it is enjoyed not only directly by the customer but also by the community at large) and intrinsic (as the perception of value by the customer does not require the involvement of some relevant third party).
  • Organics as a way to represent to others one’s concern for the environment: a “status or esteem” value type that is self-oriented (as it is directly enjoyed by the customer) and extrinsic (as it requires a community or group within which the customer establishes her personal status or esteem).
  • Organics as a way to contribute to environmental conservation: an “ethics or spirituality” value type that is other-oriented (as it is not only directly enjoyed by the customer) and extrinsic (as it requires the environmental standards defined by a third party to be a value the customer can perceive and appreciate).

Ultimately, as the model suggests, business leaders should be mindful of all four types of value that may be present in the same CSR activity.

Empirical Research on CSR Activities

Considering the multi-faceted stakeholder (customer) value of almost any CSR activity, it is helpful to gain a comprehensive view of the business decisions that can be made in the realm of CSR to impact customer attitudes and behaviors. In particular, given that most firms now engage in some type of CSR, business leaders responsible for choosing activities would benefit from a greater understanding of the value creation of one CSR activity over another through empirical studies. [10] The considerations included in this report are based on the analysis of 163 articles from the most relevant empirical literature on the subject. This report first categorizes the CSR activities examined by the articles into one of three broad groups (i.e., philanthropy, business practices, or product-related activities) and subsequently elaborates on the potential of each category to create customer value, concluding with recommendations for business leaders.

Philanthropy Philanthropy is the dominant category of CSR activities. It is a potential source of other-oriented, extrinsic value since it entails the ethical benefit of supporting others in need (Quadrant 4 of Table 2, page 3). Philanthropy is also a means of gaining social status and, as such, can be a source of self-oriented, extrinsic value (Quadrant 3, Table 2). To further add to the analysis conducted so far, one form of corporate charity may carry more favorable perceptions (that is, greater value) than others. For example, charitable contributions tied to sales may be described as more self-serving and less socially honorable, and thus have lower extrinsic value for stakeholders in general. [11] A similar consideration could be made for those charitable contributions that, instead of cash, are made in the form of unsold products or employee volunteerism.

Business practices The next most common category of CSR activities includes those related to the business practices of the firm. Like philanthropy, CSR activities in the form of business practices carry the potential to enhance extrinsic value for customers. For example, supporting a firm that recycles can make an individual feel that he or she is practicing good community responsibility, and can be used to define to others that one is environmentally conscious (i.e., extrinsic, self-oriented value). Despite the seemingly implicit assumption that supporting ethical business practices is other-oriented, many of these CSR activities can also greatly enhance self-oriented stakeholder value. For example, employees perceive very favorably many employee relations policies (think of benefit plans), for obvious self-oriented reasons.

Product-related features The third category of CSR activities is product-related features. Corporate social responsibility in the form of product features has the potential to provide the broadest spectrum of value to stakeholders in general; although customers are considered the relevant stakeholder type for product-related features, these CSR activities can also affect other stakeholders, such as employees. Of particular importance is the potential of product-related features for self-oriented value: this is because customers are unlikely to trade quality for more traditional, other-oriented CSR. [12]

A review of studies of CSR activities within these categories leads to a number of findings that appear particularly salient for business leaders. However, considering these findings for the purpose of making CSR-related business decisions is appropriate if two caveats are also kept in mind. First, analysts are often inconsistent in measuring the customer value of CSR activities; their conclusions can be meaningful to a business decision-making process only to the extent that they are calibrated to the specificities of the business. Second, there is limited comparison of the success of one form of CSR relative to others, which is indicative of the need to continue supporting empirical research on the subject. Both caveats are discussed below.

Caveat 1: Inconsistency of measures of CSR-activity stakeholder value

Analysts typically measure the customer value of CSR activities by referring to:

  • a single activity, e.g., cause-related marketing;
  • focused activities that include multiple activities within the same category, e.g., cause-related marketing and other philanthropic activities such as volunteerism; or
  • diffuse activities that include activities from two or even three categories, e.g., philanthropic donations combined with business practices and/or product-related CSR.

Each approach to measurement has its pros and cons. Single activity measurement allows for easy comparison with other research that focuses on the same activity, however this approach limits the potential for stakeholders to gain a holistic view of a company. Focused activities measurement offers the advantage of examining different sources of customer value and provides a more holistic picture of the firm’s activities, however the simultaneous use of multiple CSR items limits the ability to define their relative priority for stakeholders. Diffuse activities portray the general tendencies of a firm toward social responsibilities, however it is difficult to compare findings across studies since none use the same coherent framework of diffuse measures. In addition, when a more holistic approach is adopted (i.e., focused or diffuse activities), the CSR activities examined by the analyst or researcher may not be consistent with the company’s CSR strategies. For all of these reasons, business leaders should always take the conclusions of studies measuring CSR value as a mere indication, which needs to be tested in practice, based on the specificities of their company and its key customer base.

Caveat 2: Limited comparability of one form of CSR to others

There are three types of studies comparing the effectiveness of CSR activities on customer value: those that examine differences within the same CSR activity, those that examine differences within the same category of CSR activities, and those that examine differences in CSR activities across categories.

  • An example of comparison within a single activity is a study on the degree of logical fit between the firm and the charity. [13] A similar study can be helpful to the business as it provides guidance to improve the efficacy of that specific activity. However, its limit is that it does not show the customer value proposition of the activity in question as opposed to other CSR activities in which the company could allocate its limited resources. In the example, arguably the only valid conclusion that can be claimed from this type of literature is that a higher degree of fit between the core business of the firm and the related not-for-profit organization improves value for customers.
  • An example of comparison of CSR activities within the same category includes a study testing philanthropy in the form of employee volunteerism, a cash donation, and cause-related marketing. The study finds that cause-related marketing is less effective than other forms of philanthropy at countering negative news about a firm. This type of study tends to coalesce around the concept of customer attribution; in particular, activities that lead customers to attribute selfless (as opposed to selfish) motives to the firm behind the activity are valued more.
  • An example of comparison of CSR activities across different categories is the study of philanthropy and environmental business practices by firm. [14] The study shows that the concern of customers for the relevant domain (i.e., philanthropy versus environmental protection) predicts customer support. Although not explicitly measuring customer value, the study demonstrates the importance of understanding how different forms of CSR can deliver different value to stakeholders.

Provided that the two caveats described are kept in consideration, the following findings can be helpful to business leaders making CSR-related decisions:

  • While philanthropy and business practices are sources of other-oriented value, product-related CSR activities lend themselves to enhancing a combination of self-oriented and other-oriented value.
  • Faced with a choice between value components, customers choose self-oriented, intrinsic value.
  • Similarly, customers are unlikely to reward a company that charges more for its environmentally friendly product if there is a cheaper alternative product with at least some amount of CSR value.
  • Customers come in different types, with self-enhancement customers viewing the profit-making aspect of CSR more positively than self-transcendent customers, whereas self-transcendent customers view the legal, ethical, and philanthropic elements of CSR as more important than self-enhancement customers.
  • Customers’ awareness of a company’s CSR increases as a result of multiple, coordinated CSR activities by the same companies. When left alone, a single CSR initiative could go unnoticed by customers, especially if the company is outperformed by the competition in its CSR investment.
  • Customer response to a CSR activity is directly proportional to the long-term commitment of the company to the activity. Short-term initiatives could go unnoticed by customers.
  • On the other hand, incremental customer value appears to be greatly reduced above an optimal level of investment in CSR activities. Above that level, additional CSR investment may be detrimental to shareholder value.
  • Adherence to social norms is a significant motivator for customer support of CSR, and cause-related marketing can make a compelling case for such adherence.
  • Customer value is not always a mediating variable linking CSR activities and firm performance. For example, a protocol adopted by the company to reduce energy consumption in the production process provides a cost savings and an environmental benefit without the necessary value perception by customers.

Recommendations to Business Leaders

Using value creation as a lens, this section offers a series of recommendations on how business leaders can enhance the effectiveness of CSR activities on customer responses.

  • 1. Diversify the CSR portfolio Other-oriented customer value is potentially present in CSR activities related to philanthropy and business practices. Instead, CSR delivered through the firm’s products and services carries the potential for both other-oriented and self-oriented customer value. For this reason, business leaders should attempt to embed multiple forms of value across their company’s CSR portfolio and even within CSR activities themselves.
  • 2. Offset value trade-off of multiple activities Although the creation of multiple forms of value is the norm rather than the exception, one CSR activity may alter the customer value perceived in another. [15] In particular, with respect to a CSR activity that provides other-oriented value, customers will be sensitive to tradeoffs with self-oriented value. For example, customers perceive fair trade coffee (a potent source of other-oriented value) as having less enjoyable taste (a reduction in self-oriented value) than regular coffee. [16] Similarly, energy efficient automobiles are also perceived as less powerful despite advances in hybrid and electric motor technology that allow customers to retain power while gaining cost efficiency. However, recent research suggests that the perception of these tradeoffs can be offset by the use of performance guarantees. [17] For this reason, companies should strive to offset negative tradeoffs through the use of targeted promotions and information.
  • 3. Prioritize product-related CSR activities over philanthropy and business practices Faced with a choice, customers will favor CSR activities categorized as product-related over philanthropy and business practices. For example, it has been shown that customers tend not to sacrifice minimum standards on product performance (a self-oriented value) when faced with information about other CSR activities (e.g., testing on animals, child labor). [18] Similarly, customers are unlikely to reward a company that prices higher its environmentally friendly product if there is a cheaper alternative product embedding at least some amount of CSR value. [19] For this reason, companies should not myopically assume that CSR involves exclusively the goodwill of customers, rather, whenever possible, companies should build a strong self-oriented value component in other-oriented product-related CSR activities. By pursuing a CSR strategy that does not neglect the self-oriented stakeholder value, the firm can even command a premium price over competitors whose CSR activities rely solely on other-oriented forms of customer value.
  • 4. Be mindful of your customer type The idea that the type of customer is important in evaluating the business merit of CSR activities has also found some support in research. Referring in particular to the environmental context, CSR research distinguishes two customer types: the self-oriented (self-enhancement) customer and the other-oriented (self-transcendent) customer. [20] Customers with self-enhancement goals carry an egoistic view of the world, while self-transcendent customers are concerned with the welfare of others and of nature. Further studies have revealed that self-enhancement customers view the profit-making aspect of CSR (i.e., financial sustainability) more positively than self-transcendent customers, whereas self-transcendent customers view the legal, ethical, and philanthropic elements of CSR as more important than self-enhancement customers. [21] Finally, while both self-transcendent and self-enhancing types of customers perceive self-oriented value in product-related CSR activities, only the self-transcendent customers are also likely to perceive other-oriented value in product-related CSR activities. For these reasons, in order to gain a larger customer market share, managers should be sure to include in their CSR portfolio a number of activities that are likely to be supported even by self-enhancement customers.
  • 5. Ensure coherence of CSR activities to build a “CSR brand” Researchers have found evidence that when a company positions itself as a “CSR brand” — as opposed to a company that just engages in CSR activities — customers’ awareness levels increase. [22] For example, while Danone/ Dannon and Yoplait, two competing companies, both engage in CSR activities in the form of philanthropy, a third competitor, Stonyfield Farm, has elevated its commitment to CSR to the status of “CSR brand” in the production of yogurt and other fresh dairy products. Stonyfield Farm’s philanthropy initiatives are coordinated within a coherent portfolio of CSR initiatives where over 80 percent of the company’s product portfolio is organic and uses an innovative packaging that reduces waste. For this reason, companies should not only ensure that their CSR portfolio embeds multiple types of activities but also improve the cohesiveness of such activities to build a “CSR brand.”
  • 6. Ensure consistent, long-term commitment to each CSR activity in the portfolio In addition to the value perception of the activity per se, different corporate activities may have different impacts on the customer’s perception of the overall firm’s effort and long-term commitment to CSR. These two effects of CSR activities (the perception of value and the perception of firm commitment) are instrumental in customers’ decisions to support the firm, with higher levels of perceived effort and long-term commitment leading to more positive customer responses. [23] In particular, as mentioned above, CSR activities related to products will be perceived as requiring greater effort and commitment than other CSR activities (e.g., writing a check versus investing in R&D or re-engineering the supply chain). For this reason, business leaders should ensure that investments in philanthropy and business practices are made — and promoted — consistently over long periods of time.
  • 7. Make adequate use of marketing to enhance the customer value proposition of CSR Cause-related marketing that makes a compelling case for the adoption of new social norms can help enhance the customer value proposition of a certain CSR activity. An excellent example of value enhancement realized through cause-related marketing is the study of hotel guests’ towel reuse, which shows that the savvy promotion of the program by a mid-priced hotel chain (including references to the aggregate amount of water and detergents that would be saved annually) resulted in a significant increase in participation. [24] With respect to a private customer behavior such as the use of bath towels, the assumption would be that customers would not trade their self-oriented value for a social value. However, by effectively showing the importance of adhering to new social norms on towel use, program participation rates went from a low 35 percent to almost 50 percent.
  • 8. Tie CSR activities to functional and utilitarian products Not all product categories evoke the same emotional state when consumed. [25] Specifically, marketing experts classify products as experiential, symbolic or functional based on the primary needs they satisfy. [26] Experiential products satisfy the need for sensory pleasure (e.g., the new 3D television sets); symbolic products fulfill needs for self-enhancement or group membership (e.g., fashionable clothing); and functional/utilitarian products (or services) address more pressing customer issues (e.g., a non-dairy product addresses the issue facing a lactose-intolerant customer). Research shows that appeals that more closely match the specific needs satisfied by the product category are the most persuasive to customers. [27] In particular, CSR activities that also enhance a self-oriented value (in the organics agricultural practices of the aforementioned example, the value of adopting healthier eating habits) will receive the highest level of support by customers. [28]
  • 9. Seek optimal level of CSR investment Empirical evidence demonstrates that, above an optimal level, CSR investment can be detrimental to financial performance without producing incremental stakeholder value. [29] For this reason, business leaders should not simply look to outspend their competition on CSR, or assume that greater levels of CSR investment will be matched by an equally greater customer perception of value. As part of a preliminary analysis of the multi-faceted effects of CSR activities on stakeholder value, companies should also include testing the effects of incremental investments in those activities so as to determine the optimal level of CSR return on investment. Above that level, additional CSR investment may be detrimental to shareholder value. Ultimately, the most successful customer brands are those that use CSR activities to provide incremental customer value without distracting critical resources to other elements of the business strategy.
  • 10. Be mindful of the impact of CSR on financial performance and shareholder value Many CSR activities can create firm value without the intervening step of stakeholder perception (including customer value). [30] For example, a protocol adopted by the company to reduce energy consumption in the production process provides a cost savings and an environmental benefit without the necessary value perception by customers. Therefore, in deciding on CSR activities, business leaders should not only assess customer value but also use CSR instrumentally to enhance financial performance and shareholder value.

Conclusion

Business leaders face competing demands for resources dedicated to CSR initiatives. By linking CSR activities with increased customer value, or developing new sources of customer value, companies can gain a competitive advantage. Moving from the analysis of multiple value types that CSR activities offer to customers, this report provided recommendations on how board members and senior executives committed to their company’s social and environmental responsibility can ensure effective and profitable investments in CSR.

Endnotes

[1] Du, S., Bhattacharya, C. B., and Sen, S. “Reaping Relational Rewards from Corporate Social Responsibility: The Role of Competitive Positioning.” International Journal of Research in Marketing 24, no. 3 (2007): 224-241.
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[2] Creyer, E. H., and Ross Jr., W. T. “The Impact of Corporate Behavior on Perceived Product Value.” Marketing Letters 7, no. 2 (1996): 173-185.
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[3] Klein, J., and Dawar, N. “Corporate Social Responsibility and Customers’Attributions and Brand Evaluations in a Product-harm Crisis.” International Journal of Research in Marketing 21, no. 3 (2004): 203-217.
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[4] Wood, D. J. “Corporate Social Performance Revisited.” Academy of Management Review 16 (1991): 693.
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[5] Barnett, M. “Stakeholder Influence Capacity and the Variability of Financial Returns to Corporate Social Responsibility.” Academy of Management Review 32, no. 3 (2007): 794-816.
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[6] Peloza, J. “The Challenge of Measuring Financial Impacts from Investments in Corporate Social Performance.” Journal of Management 35, no. 6 (2009): 1518-1541.
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[7] Campbell, J.L. “Why Would Corporations Behave in Socially Responsible Ways? Institutional Theory of Corporate Social Responsibility.” Academy of Management Review 32, no. 3 (2007): 950.
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[8] Godfrey, P. C., Merrill, C. B, and Hansen, J. M. “The Relationship between Corporate Social Responsibility and Shareholder Value: An Empirical Test of the Risk Management Hypothesis.” Strategic Management Review 30 (2008): 425-445.
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[9] Holbrook, Morris B. “ROSEPEKICECIVECI versus CCV.” 2006. Quoted in R.F. Lusch and S.L. Vargo, The Service-dominant Logic of Marketing: Dialog, Debate, and Directions. Armonk, NY: M.E. Sharpe, 2006, 208- 221.
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[10] McKinsey Quarterly, “Valuing Corporate Social Responsibility: McKinsey Global Survey Results,” February 2009, http://www.mckinseyquarterly.com/Valuing_corporate_social_responsibility_McKinsey_Global_Survey_Results_2309
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[11] Ellen, P. S., Webb, D. J., and Mohr, L. A. “Building Corporate Associations: Customer Attributions for Corporate Socially Responsible Programs.” Journal of the Academy of Marketing Science 34, no. 2 (2006): 147-157.
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[12] Auger, P., Devinney, T. M., Louviere, J. J., and Burke, P. F. “Do Social Product Features Have Value to Customers?” International Journal of Research in Marketing 25 (2008): 183-191.
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[13] Simmons, C. J. and Becker-Olsen, K. L. “Achieving Marketing Objectives Through Social Sponsorships.” Journal of Marketing 70, no. 4 (2006): 154-169.
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[14] Mohr, L. A. and Webb, D. J. “The Effects of Corporate Social Responsibility and Price on Customer Responses.” Journal of Customer Affairs 39, no. 1 (2005): 121-147.
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[15] Ellen, Webb, and Mohr. “Building Corporate Associations: Customer Attributions for Corporate Socially Responsible Programs.” 2006.
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[16] Obermiller, C., Burke, C., Talbott, E., and Green, G. P. 9 “Taste Great or More Fulfilling’: The Effect of Brand Reputation on Customer Social Responsibility Advertising for Fair Trade Coffee.” Corporate Reputation Review 12, no. 2 (2009): 159-176.
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[17] Luchs, M. G., Naylor, R. W., Irwin, J. R., & Raghunathan, R. (2010). “The sustainability liability: potential negative effects of ethicality on product preference.” Journal of Marketing, 74 (5), 18 31.
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[18] Auger, P., Burke, P., Devinney, T. M., and Louviere, J. J. “What Will Customers Pay for Social Product Features?” Journal of Business Ethics 42 (2003): 281-304.
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[19] Trudel, R., and Cotte, J. “Does It Pay to Be Good?” MIT Sloan Management Review 50, no. 2 (2009): 61-68. Note: However, the authors do find significant differences between the neutral and ethical products and products perceived as unethical. In other words, although customers will not necessarily reward firms’CSR, they will severely punish what they perceive as unethical behavior.
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[20] Schuler, D. A., and Cording, M. “A Corporate Social Performance- Corporate Financial Performance Behavioral Model for Customers.” Academy of Management Review 31, no. 3 (2006): 540-558.
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[21] Golob, U., Lah, M., and Jancic, Z. “Value Orientations and Customer Expectations of Corporate Social Responsibility.” Journal of Marketing Communications 14, no. 2 (2008): 83-96.
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[22] Du, S., Bhattacharya, C. B., and Sen, S. “Reaping Relational Rewards from Corporate Social Responsibility: The Role of Competitive Positioning.” International Journal of Research in Marketing 24, no. 3 (2007): 224-241.
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[23] Ellen, P. S., Mohr, L. A., and Webb, D. J. “Charitable Programs and The Retailer: Do They Mix?” Journal of Retailing 76, no. 3 (2000): 393-406.
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[24] Goldstein, N. J., Cialdini, R. B., and Griskevicius, V. “A Room with a Viewpoint: Using Social Norms to Motivate Environmental Conservation in Hotels.” Journal of Customer Research 35, no. 3 (2008): 472-482.
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[25] Hirschman, E. C., and Holbrook, M. B. “Hedonic Consumption: Emerging Concepts, Methods, and Propositions.” Journal of Marketing 46, no. 3 (1982): 92-101.
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[26] Park, C. W., Jaworski, B. J., and Macinnis, D. J. “Strategic Brand Concept/Image Management.” Journal of Marketing 50 (October, 1986): 135-145.
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[27] Shavitt, S. “The Role of Attitude Objects in Attitude Functions.” Journal of Experimental Social Psychology 26, no. 2 (1990): 128-148.
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[28] Okada, E. M. “Justification Effects on Customer Choice of Hedonic and Utilitarian Goods.” Journal of Marketing Research 42, no. 1 (2005): 43-53.
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[29] Wang, H., Choi, J., and Li, J. “Too Little or Too Much? Untangling the Relationship between Corporate Philanthropy and Firm Financial Performance.” Organization Science 19, no. 1 (2008): 143-159.
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[30] Elkington, J. Cannibals with forks: The triple bottom line of 21st century business. Oxford: Capstone, 1997.
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2 Comments

  1. massigit
    Posted Monday, March 7, 2011 at 7:45 am | Permalink

    very good article. how about the appication of good corporate governance and business ethic? are they include in CSR or different topic?
    regards.

  2. Bob from Share Trading
    Posted Thursday, April 14, 2011 at 1:10 am | Permalink

    I’m taken with your point that “self-oriented intrinsic value” should be maximized. Traditional philanthropy is most often unknown to customers and unappreciated. If customers feel they’re accomplishing social good just by purchasing a product they’d want anyway, the business will see a bottom-line effect of their CSR.

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  1. By The ROI of CSR « isabelmcdevitt on Tuesday, June 21, 2011 at 10:29 pm

    […] study by Harvard Law School – Investing in Corporate Social Responsibility to Enhance Customer Value does a good job outlining the outcome considerations company leadership should have selecting a CSR […]

  2. […] there’s the overall impact on the company’s reputation. With social media taking over the way people research and make purchasing decisions, truly […]

  3. […] We all know how big businesses are socially responsible, don’t we? Corporate Social Responsibility is probably one of the biggest buzzwords of  the last decade. Defined by Businessweek as “a way of managing a business by considering the impact of activities on customers, suppliers, employees, shareholders, communities and other stakeholders, as well as the environment.” investment in Corporate Social Responsibility has increased exponentially. […]

  4. […] The key is to contribute your charity dollars to organizations that your customers support, in ways that do not appear self-serving. Research shows that, done correctly, your investment in social responsibility can enhance customer value. […]

  5. […] The key is to contribute your charity dollars to organizations that your customers support, in ways that do not appear self-serving. Research shows that, done correctly, your investment in social responsibility can enhance customer value. […]

  6. By Stakeholders | The Corporate Governance Lawyer on Wednesday, January 25, 2012 at 12:18 am

    […] a corporation. Corporate social responsibility can enhance customer value–that’s why consumers will pay more for organic or environmentally friendly products. In addition to creating more valuable products, focus on stakeholder concerns may also increase […]

  7. By Recent Posts on Sunday, April 1, 2012 at 9:45 pm

    […] to  the Harvard Law School Forum on Corporate Governance and Financial Regulation, there are three categories of CSR based on empirical […]

  8. […] responsibility, but also just good business. The organization’s work has been spotlighted on the Harvard Law School blog via a Conference Board Governance Center report. Stonyfield co-founder and chairman Gary […]