When Doing Good, What Good to Do?: Examining Whether and Why Firms Benefit From Their CSR Initiatives

55 Pages Posted: 29 Aug 2018

See all articles by Dionne Nickerson

Dionne Nickerson

Georgia Institute of Technology, Scheller College of Business

Michael Lowe

Georgia Institute of Technology - Scheller College of Business

Adithya Pattabhiramaiah

Georgia Institute of Technology - Scheller College of Business

Date Written: August 8, 2018

Abstract

Corporate social responsibility (CSR) has become an integral part of brand strategy for firms. However, the important question of whether CSR initiatives have an impact on brand sales remains unanswered. While meta-analyses suggest a small, positive effect of CSR on various measures of firm financial performance, studies have produced mixed results. Focusing primarily on consumer response to CSR, the authors introduce a new framework for categorizing CSR as “corrective”, “compensating”, or “cultivating” CSR actions, and document the influence of these types of CSR on brand sales. The authors leverage a database of CSR press releases issued by leading CPG brands combined with sales data and employ the synthetic control method to measure the causal effect of CSR announcements on brand sales. The findings suggest that CSR initiatives that seek to reduce a brand’s negative externalities (corrective) produced the greatest sales lift, while those that don't (cultivating) can actually hurt sales. The authors examine the mechanism behind this effect under controlled experimental settings. The experimental results show that, conditional on brand reputation, CSR type influences perceptions of brand sincerity regarding the CSR initiative and thereby brand attitudes.

Keywords: Corporate Social Responsibility, Sustainability, Sales Returns From Marketing, Branding, Synthetic Control

JEL Classification: M31, M14

Suggested Citation

Nickerson, Dionne and Lowe, Michael and Pattabhiramaiah, Adithya, When Doing Good, What Good to Do?: Examining Whether and Why Firms Benefit From Their CSR Initiatives (August 8, 2018). Georgia Tech Scheller College of Business Research Paper No. 18-33. Available at SSRN: https://ssrn.com/abstract=3230035 or http://dx.doi.org/10.2139/ssrn.3230035

Dionne Nickerson

Georgia Institute of Technology, Scheller College of Business ( email )

800 West Peachtree St.
Atlanta, GA 30308
United States

Michael Lowe

Georgia Institute of Technology - Scheller College of Business ( email )

800 West Peachtree St.
Atlanta, GA 30308
United States

Adithya Pattabhiramaiah (Contact Author)

Georgia Institute of Technology - Scheller College of Business ( email )

800 West Peachtree St.
Atlanta, GA 30308
United States

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