Business insights-Corporate hypocrisy

In many aspects, Corporate Social Responsibility – CSR – activities have become an integral part of marketing. Examples abound: Body Shop is synonymous with eco-friendliness and appreciated as a “good” brand because it frowns on animal testing; Starbucks enjoys its liberal image via its social-contribution projects benefiting local communities, culture, the arts, and the environment. The list goes on and on, showing that corporate social contribution is widespread.

On the other hand, fundamental questions ride alongside: What side effects are there or will there be? Will these social contribution activities help raise brand value? Will consumers accept the social contribution of a “bad company”? If an oil giant causes an environmental disaster by oil spill then later trumpets its environmental protection campaigns as social contribution, how would communities and customers respond?

This study measures changes in customers’ perceptions of social contribution activities according to firms’ various situations.

First, based on existing research, I assumed that three factors – i) the corporation’s reputation, ii) the extent of the crisis to be solved, and iii) the corporation’s preemptive efforts for the social contribution – affect communities’ and customers’ perceptions of hypocrisy. Then, that in mind, I examined the influence of each of those three factors via experiment manipulation.

The experiments indicate that consumers tend to perceive the corporate social contribution to be more hypocritical, that is, as an unfaithful-money act, reducing its corporate reputation and increasing the perception of how big a crisis the company is in. More: that hypocrisy perception is found to affect (of course most negatively) communities’ and customers’ attitude’ towards the corporation.

Such results carry a distinct message: corporations should see crystal-clearly that social contribution activities themselves are no guarantee – let me emphasize that: are absolutely zero offset – against a rapid 180-degree reversal in corporate image. In fact, the hypocrisy perception immediately brings into play the possibility (maybe the probability) of a negative   image of the corporation. In crisis mode, consumers do not judge corporate morality by a yardstick of corporate social contribution. They judge it by the circumstances of the crisis and by their perception of the company’s intention. Please note the sophistication here, (which, alas, corporations too often do not realize consumers possess): although, say two corporations each have achieved closely-similar results from their social contribution activities, consumers’ perceptions can and will show a world of difference based on the reputation, conduct and responses of those two corporations.

Such study results are interesting in that they imply we judge corporate behaviors and individual human behaviors by similar moral standards. From the ethical viewpoint we judge behavior based on two criteria, one of which is the act’s outcome. According to utilitarian ethics, this is an attitude that recognizes and praises the action as having developed society if its outcomes are positive regardless of its intention. The other criterion is a categorical ethic that Kant claimed, according to which we should look beyond outcomes, to intention. If an act’s intention is to covet one’s own benefits, it cannot be said to be a genuinely good deed; rather it is condemnable for its greed-based hypocrisy.

As ‘good company’ marketing is recently fashionable, these findings imply what corporations should have in the forefronts of their collective in-house minds when developing their social contribution activities. First: understand the ethical tendency/ies of target consumers. In formal terms: Know Thy Target. Second: when corporate reputation dips below stellar; or the corporate situation is near crisis mode or already has entered it, social contribution activities’ intentions easily can be suspected irrespective of their real motive. To extend those formal terms: Know Thy Target. And Tread Warily.

Warily? Well, yes, and in many ways. For instance, try a sensitive and quiet promotion rather than massive and trumpeted. Identify possible side effects and work to minimize them. Think compensation and think genuine when thinking social contribution. Also do the necessary homework, by bringing to the table some (three or four is a good number) thorough case-studies of reasonably-recent previous corporate-caused major disasters and how responses to those backfired and worsened matters and/or were mitigated and earned respect. Hint: don’t simply read those case-studies. Instead, bring the actual case-studier and writer to the table, the actual-, in-depth-, real-, genuine specialist.

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