The Impact of Corporate Social Responsibility on Brand Sales: An Accountability Perspective

Abstract

Consumers are increasingly mindful of CSR when making purchase and consumption decisions, but evidence of the impact of CSR initiatives on actual purchase decisions is lacking. This paper introduces a novel, brand accountability-based framework of consumer response to CSR initiatives, which categorizes CSR efforts as “Corrective,” “Compensating,” or “Cultivating goodwill” actions. Leveraging a database of CSR press releases by leading CPG brands, the authors examine the effect of the different types of CSR announcements on brand sales. The findings suggest that CSR initiatives that genuinely seek to reduce a brand’s negative externalities (“Corrective” and “Compensating”) lift sales, while CSR actions focused on philanthropy (“Cultivating goodwill”) can hurt sales. The authors propose two moderators – CSR reputation and CSR focus on environmental or social causes – and also a mechanism for these effects, which they examine under controlled experimental settings. The 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.

Keywords: corporate social responsibility, sustainability, CSR reputation, brand sincerity, environmental initiatives, social initiatives.

JEL Classification: M31, M14