Journal of Marketing Report: Cut the Diversity Theater and Greenwashing - It Doesn't Work

This study suggests that efforts to enhance brand sales through philanthropic efforts has far less impact than actions taken by organizations to directly address environmental and social issues as part of their business models. In fact, Corporate Social Responsibility (CSR) that focuses on promoting good will can hurt sales. Click here for a YouTube interview with the authors. 

 

“The Impact of Corporate Social Responsibility on Brand Sales: An Accountability Perspective,” published recently in the Journal of Marketing, makes it clear that corporate philanthropy has much less impact on brand engagement than demonstrable actions to address environmental or social issues. In fact, CSR efforts can hurt sales.

 

In this study by professors Dionne Nickerson of Indiana University; Michael Lowe and Adithya Pattabhiramaiah of Georgia Tech and Sorescu Alina of Texas A&M University, the authors report that on average, CSR initiatives that seek to reduce a brand’s negative externalities (what they call corrective and compensating actions) provide a boost to brand sales while those focused on philanthropy (cultivating goodwill) lead to a modest drop in sales. 

 

According to the authors, “consumers are increasingly mindful of corporate social responsibility when making purchase and consumption decisions, but evidence of the impact of CSR initiatives on actual purchase decisions is lacking.” This study intends to introduce “a novel brand accountability–based framework of consumer response to CSR initiatives, which categorizes CSR efforts as ‘corrective,’ ‘compensating,’ or ‘cultivating goodwill.’” 

 

Based on a database of CSR press releases by leading consumer packaged goods brands, “the authors examine the effect of the different types of CSR announcements on brand sales. The findings suggest that CSR initiatives that genuinely aim to reduce a brand's negative externalities (“corrective” and “compensating”) lift sales, whereas CSR actions focused on philanthropy (‘cultivating goodwill’) can hurt sales.” 

 

Their 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.”