Consumers look for sincerity in good works, research says

Consumers look for sincerity in good works, research says

BY PAM SHERIDAN
Special to the Rice News

In the age of Enron and corporate scandals, it is no longer sufficient for companies to make good products; they also need to be good citizens. But as a recent study shows, companies must pass a variety of tests of sincerity before consumers will give them credit for corporate social responsibility activities.

While British Petroleum successfully moved away from its negative image by embarking on a socially and environmentally “friendly” campaign, the same strategy backfired for Exxon. As important as corporate social responsibility (CSR) activities are for a company’s image, when consumers are suspicious of the company’s interest in the cause it supports, such activities can be ineffective at best.

In a study titled “When Doing Good is Bad for You: Backfire Effects of Corporate Responsibility Activities,” Yeosun Yoon, assistant professor of management at the Jesse H. Jones Graduate School of Management, and colleagues from the University of Michigan investigated under which conditions CSR campaigns are likely to be successful and when they may “backfire” with negative consequences for the company’s image.

“Whether consumers distrust or believe in the sincerity behind a company’s commitment to a particular cause often determines the effectiveness of that CSR activity,” Yoon said. “We were interested in finding what factors and processes cause consumers to be suspicious about a company’s ulterior motives and become skeptical of a company’s CSR activities.”

In two experiments, Yoon and her colleagues asked consumers to evaluate both a fictitious tobacco company and an oil company with a bad reputation. The consumers were supplied with information about each company, including details about the CSR activities sponsored by each company, and the source of the CSR information. In a third experiment, the subjects were tested to determine how companies could improve consumers’ perceptions of their sincerity regardless of their prior reputation when they embark on a CSR activity.

“Not surprisingly, consumers take for granted that companies support worthwhile causes for promotional reasons regardless of companies’ prior reputations,” Yoon said. “What influenced consumers positively or negatively in our study was how serious a company appeared to commit to their CSR activity.”

The researchers also examined how a company’s sincerity might be influenced by the amount of money it is willing to spend on CSR activities.

Yoon and her colleagues theorized that consumers are more likely to draw on the relationship between the cause supported by the company’s CSR and what the company is known for. They proposed a number of factors that could influence consumers’ attitudes about a company’s CSR commitments: if the CSR activities were related to or incongruent with a company’s core business; if consumers were informed about the activity through company advertising or a more objective source and if the expenses of its CSR activity exceeded the cost of related advertising.

“We found that even a company with a bad reputation can overcome a CSR campaign that has backfired if its spending for that particular cause far exceeds its efforts to brag about its good deeds,” Yoon said. “It’s called ‘the pain of giving.’”

The team also found that consumers attributed the most sincerity to a company with a bad reputation whose CSR activity is unrelated to its core business, and if they learn about it from a source other than the company.

The reverse was true as well. The study showed that when a company supports a cause that is incompatible with the company’s prior reputation, and consumers learn about it through the company’s own advertising, they are particularly suspicious of the company’s motives. Under those circumstances, consumers evaluated a company more negatively than if the company had not engaged in any CSR activity.

“Most consumers understand that companies ultimately want to improve their images and sell more products,” Yoon said. “However, when they see that a company really cares about a particular cause or consumers’ well-being at the same time, then the consumer feels positive about that company.”

Yoon and her colleagues presented these findings at the Society for Consumer Psychology Conference of the American Psychological Association.