Corporate Social Responsibility, Community

Engagement and Consumer Preference

Laura Oblinger, Todd Sanders & Alex Zelinski

Agenda

• Introduction & Overview

• The Problem & Our Objectives

• Literature Review & Insights

• Our Research Plan & Methods

• Interview Insights

• Consumer Survey Insights

• Conclusion

Introduction & Overview

• “What impact does social responsibility

and community engagement have on a

business?”

• Led to: – How do companies do this?

– Why do companies do this?

• Team believed social responsibility and

community engagement are important –

to us… – Are they important to others?

Statement of Problem &

Research objectives

Statement of the Problem

Corporate social responsibility positively

influences consumer preference.

• Corporate social responsibility (CSR) – “The obligation

or duty of the organization to positively affect and

impact the environment, community and people in

which it operates”

• Community engagement (CE) – “Planned process that

businesses use to work with identified groups and

causes”

• CSR ~=~ CE

• How? and Why?

Research Objectives

Identify a relationship between corporate

social responsibility and consumer

preference

1. Most consumers prefer companies that are

recognized as being socially responsible over

companies that are not. (Research claim)

2. Why do companies choose to be socially

responsible and engaged in their community

and how is this involvement executed?

Literature Review & Insights

Literature Review

• Very popular subject! – Abundance of studies, books, and case

studies

– Exploration into different demographic

variables • gender, age, geographic location, beliefs, values,

etc.

– Conscious Capitalism

– Firms of Endearment

– What Matters Most

Insights

• Tsoutsoura – Performance of the S&P 500 companies

from 1996-2000 – “Positive association” between socially responsible

companies and profitability

– “…Companies analyzed were large and financially secure

already…allowing them to more easily implement a more

socially responsible strategy”

• Grewal and Levy – Looked at TOMS Shoes – Existence is to put shoes on the feet of the less fortunate

– Don’t just engage in charitable acts; the charitable acts

are the company

Insights

• Bateman and Snell – “Difficult for businesses

to see a positive correlation between social

responsibility, a bigger bottom line and

consumer preference” – Socially responsible actions can have long-term

benefits • Avoid unnecessary and costly regulation

– “Honesty and fairness may pay great dividends

to the conscience, to the personal reputation,

and to the public image of the company as well

as in consumer preference and brand loyalty”

Insights

• Sisodia, Sheth and Wolfe – Demonstrated

companies that changed culture to focus

on CSR experienced greater long-term

success

– Explored shift from stereotypical self-serving

to passionate and purposeful

– “…[O]utperformed the S&P 500 by 14 times

and Good to Great companies by 6 times over

a period of 15 years”…!!!

Insights

• Hollender and Fenichell – Is CSR realistic or

just a marketing tactic? – Looked at Nike, Ben & Jerry's and Starbucks

• Mackey, co-founder and co-CEO of Whole

Foods Market – – Ground ones business in values and ethics

– Make conscious decisions that do not harm people

or the environment, profits, prosperity

– Growth will follow

Insights

• Hirschberg – Environmentally conscious business can

increase their bottom line – Patagonia: credo is “to make the best product, cause no

unnecessary harm, and use business to inspire and

implement solutions to the environmental crisis”

• Aburdene – Companies that implemented practices in

their business that promote ethics and values – 3M, Chiquita, Timberland

– Data suggests values driven consumer (conscious

consumer) spends money on brands that share the same

values

Insights

• Eggers & MacMillan – Look at why big businesses have

become so philanthropic – Microsoft

– “Solution revolution” - big and small businesses have decided

to focus on finding solutions for the world's most pressing issues

• Weeden – Businesses should attempt to extract as much

business value as possible from “social investing” – Cause-related marketing: business donates % of their profits to

another organization

– Business should engage in these types of activities if the values

and beliefs of business and charity organization align

Research Plan & Methods

Research Plan

• Gain insights from business owners &

consumers – Why do businesses support CSR?

– How do they do it?

– Does it influence consumers?

• Consumer Preference Survey

• Business Owner Interviews

Methods - Survey

• 10 questions

• Survey Monkey – 110 responses (n)

• Distributed via link / social media / email

• “Please rank the options below in order of why

you choose to do business with a particular

company. (1 first choice, 4 last choice)” – Price (Best value / lowest prices)

– Location (Closeness / convenience)

– Perception of their community engagement and

social responsibility

– Quality of products and/or services

Survey

• “Does a business’s reputation for being socially

responsible or involved in its community impact

your decision on doing business with them?”

• “Have you ever avoided a business because of a

bad reputation in social responsibility?”

Methods - Interviews • Spent ~1 hour with 6 company leaders

• 6 guiding questions, meant to spark discussion

• “How does your company invest in the

community?”

• “Does your company have a community-giving

budget? Either in number of hours volunteered

and/or financial budget for giving”

• “How do you keep the staff aligned with this

culture?”

Interview Insights

Interview Insights

• Many identified profit benefits of CSR /

CE – But not a driver of why they do it

• Some companies created specifically for

this purpose

Interview Insights

• “What goes around, comes around”

• “The right thing to do”

• “Investing in the community is a part of

the company mission”

Consumer Survey Insights

Survey Insights

• Hypothesis Test

(Claim) “Most consumers prefer companies that are recognized as being socially responsible over companies that are not.”

• Evaluated Reputation Influence variable:

“Does a business’s reputation for being socially responsible or involved in its community impact your decision on doing business with them?” (yes / no)

Survey Insights

• REJECT the Null Hypothesis:

Total responses (N): 110 “Yes” (X): 91 “No”: 19 Test and Confidence Interval for One Proportion: Test of p = 0.5 (50%) vs p > 0.5 (50%) (e.g. “most”) X N Sample p 95% Lower Bound Z-Value P-Value 91 110 0.827273 0.767989 6.86 0.000 Using the normal approximation.

Sample data supports the claim that

most consumers prefer companies that

are recognized as being socially

responsible over companies that are not.

Survey Insights

• CSR is important

– Not the most important

“Good rep”

important -

“Yes”

Survey Insights

• “Reputation” is important

“Avoid” - “Yes”

“Research CSR policy” - “Yes”

Survey Insights

• No correlation between Age and

Increased Price

– “If a business had a great reputation for

being socially responsible and involved in its

community, how much more (%) would you

pay for their products or services?”

Correlation: Age, Percentage greater

Pearson correlation of Age and Percentage greater = -0.080

P-Value = 0.403

Conclusion

• Consumers choose based on price and quality – Top factors

– But…corporate social responsibility is important

• A business that adds value to the community

may have that value assigned to its brand – Converse?

• We want more businesses to understand the

opportunity and incorporate it into its

strategies