Pretending to be Socially Responsible? The Role of Consumers’ Rewarding Behaviour

Authors

  • Margarida Catalão-Lopes Universidade de Lisboa, Portugal
  • Joaquim P. Pina MARE – Marine and Environmental Sciences Centre, Associate Laboratory; ARNET – Aquatic Research Network, and Departamento de Ciências Sociais Aplicadas, Faculdade de Ciências e Tecnologia, Universidade NOVA de Lisboa, Portugal
  • Ana S. Costa Universidade de Lisboa, Portugal

DOI:

https://doi.org/10.47743/saeb-2023-0024

Keywords:

Corporate Social Responsibility (CSR), firm behaviour, consumers’ perceptions, consumers’ reactions.

Abstract

Extant evidence on corporate social responsibility (CSR) shows that consumers are willing to pay a premium if they infer that the firm is truly "prosocial" (i.e if it is altruistic), but their valuation of the product will not increase as much (and may even decrease) if they believe the company has an ulterior motive for CSR (i.e. if the firm is opportunistic). We pose that the CSR level of investment can be strategically used as a signalling tool to help consumers identify the true nature of the firm and solve this incomplete information problem. Using a signalling game, where altruistic firms want to express their nature and opportunistic ones want to conceal it, we explore the relative effectiveness of consumers’ premiums and penalties (expressed as demand increases or decreases, respectively) in the promotion of corporate truth-revealing behaviour. We also characterize the conditions for market equilibria in which altruistic firms are distinguished from opportunistic ones, allowing consumers to solve the information asymmetry and, with that, influence firms’ profits. Contrary to what might be expected, we show that rewards for altruistic CSR and penalties for opportunistic CSR are not symmetrically effective. Our results help companies to improve their CSR decisions, by understanding how consumers solve the information asymmetry regarding the true nature of the CSR investments. Especially for altruistic firms, this may be important to guarantee that CSR effort and expenses are not just a cost but turn into higher revenues and profits.

Author Biographies

Margarida Catalão-Lopes, Universidade de Lisboa, Portugal

CEG-IST, Instituto Superior Técnico

Ana S. Costa, Universidade de Lisboa, Portugal

CEG-IST, Instituto Superior Técnico

References

Acabado, D., Branca, A. S., Catalão-Lopes, M., & Pina, J. P. (2020). Do distinct CSR categories have distinct determinants? The roles of market structure and firm size. European Management Review, 17(1), 5-17. http://dx.doi.org/10.1111/emre.12341

Alan, Y., Kurtulus, M., & Wang, C. (2019). The role of store brand spillover in a retailer’s category management strategy. Manufacturing & Service Operations Management, 21(3), 620-635. http://dx.doi.org/10.1287/msom.2018.0714

Alhouti, S., Johnson, C. M., & Holloway, B. B. (2016). Corporate social responsibility authenticity: Investigating its antecedents and outcomes. Journal of Business Research, 69(3), 1242-1249. http://dx.doi.org/10.1016/j.jbusres.2015.09.007

Arena, C., Liong, R., & Vourvachis, P. (2018). Carrot or stick: CSR disclosures by Southeast Asian companies. Sustainability Accounting. Sustainability Accounting, Management and Policy Journal, 9(4), 422-454. http://dx.doi.org/10.1108/SAMPJ-06-2016-0037

Beltratti, A. (2005). The complementarity between corporate governance and corporate social responsibility. The Geneva Papers on Risk and Insurance. Issues and Practice, 30(3), 373-386. http://dx.doi.org/10.1057/palgrave.gpp.2510035

Brandão, A., Popoli, P., & Passos Tomás, I. (2022). Joining the anti-brand communities on the Internet: Who and why. Scientific Annals of Economics and Business, 69(1), 1-27. http://dx.doi.org/10.47743/saeb-2022-0003

Cassely, L., Larbi, S. B., Revelli, C., & Lacroux, A. (2021). Corporate social performance (CSP) in time of economic crisis. Sustainability Accounting. Sustainability Accounting, Management and Policy Journal, 12(5), 913-942. http://dx.doi.org/10.1108/SAMPJ-07-2020-026

Catalão-Lopes, M., Pina, J. P., & Branca, A. S. (2016). Social responsibility, corporate giving and the tide. Management Decision, 54(9), 2294-2309. http://dx.doi.org/10.1108/MD-12-2015-0553

Chernev, A., & Blair, S. (2015). Doing well by doing good: The benevolent halo of Corporate Social Responsibility. The Journal of Consumer Research, 41(6), 1412-1425. http://dx.doi.org/10.1086/680089

Du, S., Bhattacharya, C. B., & Sen, S. (2010). Maximizing business returns to corporate social responsibility (CSR). The role of CSR communication. International Journal of Management Reviews, 12(1), 8-19. http://dx.doi.org/10.1111/j.1468-2370.2009.00276.x

Elfenbein, D., & McManus, B. (2010). A greater price for a greater good? Evidence that consumers pay more for charity-linked products. American Economic Journal. Economic Policy, 2(2), 28-60. http://dx.doi.org/10.1257/pol.2.2.28

Gatti, L., Seele, P., & Rademacher, L. (2019). Grey zone in–greenwash out. A review of greenwashing research and implications for the voluntary-mandatory transition of CSR. International Journal of Corporate Social Responsibility, 4(6), 1-15. http://dx.doi.org/10.1186/s40991-019-0044-9

Haas, M. R., & Hansen, M. T. (2007). Different knowledge, different benefits: Toward a productivity perspective on knowledge sharing in organizations. Strategic Management Journal, 28(11), 1133-1153. http://dx.doi.org/10.1002/smj.631

Hashimoto, T., & Karasawa, K. (2018). Impact of consumer power on consumers’ reactions to corporate transgression. PLoS One, 13(5), e0196819. http://dx.doi.org/10.1371/journal.pone.0196819

Kirmani, A., & Rao, A. R. (2000). No pain, no gain: A critical review of the literature on signaling unobservable product quality. Journal of Marketing, 64(2), 66-79. http://dx.doi.org/10.1509/jmkg.64.2.66.18000

Kumar, D., Goyal, P., & Kumar, V. (2019). Prioritizing CSR barriers in the Indian service industry: A Fuzzy AHP Approach. Scientific Annals of Economics and Business, 66(2), 213-233. http://dx.doi.org/10.47743/saeb-2019-0009

Luo, X., & Bhattacharya, C. B. (2009). The debate over doing good: Corporate Social Performance, Strategic marketing levers, and Firm-idiosyncratic risk. Journal of Marketing, 73(6), 198–213. http://dx.doi.org/10.1509/jmkg.73.6.198

Moisescu, O. I. (2017). From CSR to customer loyalty: An empirical investigation in the retail banking industry of a developing country. Scientific Annals of Economics and Business, 64(3), 307-323. http://dx.doi.org/10.1515/saeb-2017-0020

Mulder, L. (2008). The difference between punishments and rewards in fostering moral concerns in Social Decision Making. Journal of Experimental Social Psychology, 44(6), 1436-1443. http://dx.doi.org/10.1016/j.jesp.2008.06.004

Neacșu, M., & Georgescu, I. E. (2023). Financial Performance - Organizational Sustainability Relationship. Literature Review. Scientific Annals of Economics and Business, 70(SI), 99-120. http://dx.doi.org/10.47743/saeb-2023-0016

Pimentel, L., Branca, A., & Catalão-Lopes, M. (2016). International comparisons of corporate social responsibility. International Journal of Economics & Management Sciences, 5(2), 1-5. http://dx.doi.org/10.4172/2162-6359.1000327

Ribeiro, A. C., Catalão-Lopes, M., & Costa, A. S. (2022). Corporate Social Responsibility and consumers’ reaction: An experiment. Journal of Sustainable Business and Economics, 5(3), 1-11. http://dx.doi.org/10.30564/jsbe.v5i3.13

Ritter, J. R., & Welch, I. (2002). A review of IPO activity, pricing, and allocations. The Journal of Finance, 57(4), 1795-1828. http://dx.doi.org/10.1111/1540-6261.00478

Schlegelmilch, B., & Pollach, I. (2005). The perils and opportunities of communicating Corporate Ethics. Journal of Marketing Management, 21(3-4), 267-290. http://dx.doi.org/10.1362/0267257053779154

Skilton, P. F., & Purdy, J. M. (2017). Authenticity, power, and pluralism: A framework for understanding stakeholder evaluations of Corporate Social Responsibility activities. Business Ethics Quarterly, 27(1), 99-123. http://dx.doi.org/10.1017/beq.2016.60

Smith, N. C. (2008). Consumers as drivers of corporate responsibility. In D. Siegel, J. Moon, D. Matten, A. McWilliams, & A. Crane (Eds.), Oxford Handbook of Corporate Social Responsibility (pp. 281-302): Oxford University Press.

Torelli, C. J., Monga, A. B., & Kaikati, A. M. (2012). Doing poorly by doing good: Corporate Social Responsibility and brand concepts. The Journal of Consumer Research, 38(5), 948-963. http://dx.doi.org/10.1086/660851

Torres, A., Bijmolt, T., Tribó, J., & Verhoef, P. (2012). Generating global brand equity through Corporate Social Responsibility to key stakeholders. International Journal of Research in Marketing, 29(1), 13-24. http://dx.doi.org/10.1016/j.ijresmar.2011.10.002

Wagner, T., Lutz, R., & Weitz, B. (2009). Corporate hypocrisy: Overcoming the threat of inconsistent Corporate Social Responsibility perceptions. Journal of Marketing, 73(6), 77-91. http://dx.doi.org/10.1509/jmkg.73.6.77

Yoon, Y., Gürhan‐Canli, Z., & Schwarz, N. (2006). The effect of Corporate Social Responsibility (CSR) activities on companies with bad reputations. Journal of Consumer Psychology, 16(4), 377-390. http://dx.doi.org/10.1207/s15327663jcp1604_9

Zerbini, F. (2017). CSR initiatives as market signals: A review and research agenda. Journal of Business Ethics, 146(1), 1-23. http://dx.doi.org/10.1007/s10551-015-2922-8

Downloads

Published

2023-06-27

How to Cite

Catalão-Lopes, M., P. Pina, J., & S. Costa, A. (2023). Pretending to be Socially Responsible? The Role of Consumers’ Rewarding Behaviour. Scientific Annals of Economics and Business, 70(2), 163–183. https://doi.org/10.47743/saeb-2023-0024

Issue

Section

Articles

Similar Articles

1 2 3 4 5 6 7 8 9 10 > >> 

You may also start an advanced similarity search for this article.