strategic csr - gayathra

Strategic CSR – A New Perspective Based on Marketing Research


Below article is composed based on the academic research done by (Bhattacharya, Good and Sardashti, 2020). Also, this is highly condensed and interpreted to keep concise and interesting.

A different approach to CSR based on evidence

 

Corporate social responsibility or CSR is a highly regarded concept in the corporate world. It has also become a buzz word, especially with large firms, as initiatives such as ”carbon credit schemes” have begun to emerge. Engaging in CSR activities have now become more of an obligation rather than an initiative of goodwill, in order to keep up with the competition. Hence, CSR is now considered to be a facet of marketing and a beacon of the corporate reputation of a particular firm.

 

Historically, CSR activities assumed to yield the following benefit for the organization.

 

  • It signals the brand value and enhances corporate reputation.
  • Interacting with a firm which engages in heavy CSR, makes consumers feel good about themselves and importantly about the particular firm.
  • Enhancement of brand preference, brand loyalty and positive word of mouth.
  • The HALO effect – Various contributions from CSR activities for the society, assumed to have an implicit yet direct effect on the customers themselves.

 

So… firms engaging in CSR, is massively beneficial to the firm itself. right? Not quite.

 

Based on this research, which is a longitudinal research of empirical studies, some conflicting implications have been found.

The researchers have conducted tests to determine the connection between CSR and perceived Brand quality, Brand differentiation and Brand value. Under normal circumstances, brand value and brand differentiation showed a weak yet positive correlation with CSR activities. Brand quality did not show any significant correlation.

 

But here’s the kicker. The study was specifically designed to measure the impact of CSR under a recession. (2009 economic collapse has been taken as the contextual recession)

 

When there is a recession, Brand value and brand quality showed significantly higher correlations with CSR. Although brand differentiation did not reach a statistical significance.

 

The gist of the study is that CSR activities yield far more benefits to the respected firm in a period of recession than in normal times. Although this has been conducted based on the 2009 recession, this is very much applicable for today’s Covid-19 pandemic induced recessions. Also according to the study, from a pure marketing perspective, CSR does not provide a significant benefit for an organization.

When there is a recession, marketing and CSR becomes the first cut or the cost reduction target. This study emphasizes the continuous or better yet, an increased significance to be bestowed upon CSR activities in these times.

 

Apart from the study results, there are some other psychological factors that could be contributing to this behaviour as listed below.

 

  • The economic restraints of the customers will make them more conscious about the quality of the product and not just the price when making the purchase decision to avert the risks associated with buying. And higher CSR of the firm/brand inevitably implies higher quality.
  • Engaging in CSR activities during a recession implicates the authenticity of the firm.
  • Recessions inherently famous for increasing unethical behaviours of firms, mainly to reduce costs. At a time like this, engaging in more CSR activities makes a perticular firm stand out from the rest.
  • People tend to value altruism more during recessions and reject materialism. This is directly related to a firm’s CSR.

 

Overall, the obvious and important giveaway is this:

During these unstable times, maintain or increase the CSR activities (even if the firm is not doing well) and never cut back on it. Also, the same could not be stated for normal times.

 

Reference

Bhattacharya, A., Good, V. and Sardashti, H., 2020. Doing good when times are bad: the impact of CSR on brands during recessions. European Journal of Marketing, 54(9), pp.2049-2077.