Opinion: Corporate Social Responsibility Doesn't Pay Off

October 17, 2008

Opinion: Corporate Social Responsibility Doesn't Pay Off

Contrary to the belief that companies that demonstrate strong corporate social responsibility enjoy stronger profits as a result, evidence that corporate virtue is rewarded and corporate irresponsibility punished is rather weak, says an opinion article in Forbes.

In a special section on corporate social responsibility, David Vogel, professor at the Haas School of Business at the University of California at Berkeley, writes that only a handful of consumers know or care about corporate social practices and records, and that most goods and services are purchased on the basis of price, convenience, and quality, rather than ethical appeal.

Plus: The magazine ranks the most-generous companies in America, based largely on data supplied by The Chronicle of Philanthropy’s annual survey of corporate giving.

(A paid subscription or short-term pass is required to view the Chronicle survey.)

Comments

Perhaps the reason consumers don’t know or care about corporate social practices is because corporations aren’t actually publicizing it. Social responsibility alone is NOT cause branding. There is plenty of evidence showing that companies that use their social responsibility in branding efforts do show true financial results. – Clover Frederick
www.nmn-online.org

— Clover Frederick Oct 17, 02:05 PM #
I agree with Clover. I forget where the recent entry was posted, but there was an overwhelmingly positive response given from a poll of individuals and business people who were asked if they were more prone to use services of companies that engagemed in charitable causes and social responsibility. Coming from a PR & marketing background, I understand the power of branding a company as socially responsible to actually get results.

http://www.linkedin.com/in/envisionglobal

— Candace D. Reese Oct 17, 02:42 PM #
Target is actively promoting their social responsibility in TV ads as we speak. Perhaps if Forbes, etc. put a little more ink behind these efforts, people would make better choices. It’s hard for me to stomach the thought that if people knew which companies were socially responsible, they wouldn’t care.

— Chris Casquilho Oct 17, 04:00 PM #
Mr. Frederick and Mr. Casquilho are 100% on Target (sic). If the corporations promote their social responsibility in a tasteful manner, they will get a very good return on investment (ROI). However, it is up to BOTH sides of any Cause Marketing partnership (the nonprofit recipients and the corporations) to promote the benefits of “Doing Well By Doing Good.” In my work with chambers of commerce, nonprofit associations/networks and many nonprofit and for-profit members, I have participated in well over 50 np/fp partnerships, all of which have flourished as they benefit one another! I agree that Forbes should make an effort to promote Cause Branding/Marketing successes…which would naturally help this positive economic and community force have greater success. “If you build it (and, tell someone about it!), they will come!”

— David M. Roth Oct 17, 04:53 PM #
While it may be true that consumers, especially in difficult economic times, may choose products based upon price rather than the manufacturer’s social responsibility practices, it has been proven that if prices are comparable, people will purchase from companies that have socially responsible business practices rather than from those that don’t. Also, let’s not forget that CSR isn’t just about consumer products. It’s also about how a company includes the community as a broad stakeholder in its success and if it conducts business ethically. Employee satisfaction, recruitment and retention are other reasons why companies engage in socially responsible and community involvement programs. Why? Because employees want to work for a company that is holistic and caring about more than just the bottom line. Looking at one facet of a CSR program without also measuring the effectiveness of other aspects of a program doesn’t paint a full picture.

— Diane Solinger Oct 17, 06:13 PM #
I agree with Diane. Is the primary purpose of CRM to increase sales of a particular item? Maybe there are less tangible, but equally important benefits. For example, consumers may have a more positive impression of the company on a whole, even if they never buy the product. And, employees of the company probably get a first hand look into corporate social responsibility, which likely increase their pride in their employer. The cost savings in employee retention surely out weigh the increased profit from selling a few more pink trinkets at the register.
I think in order to determine the costs and benefits of CRM one must consider all the facets of why companies engage in this practice.

— Julie Oct 17, 08:46 PM #

Commenting is closed for this article.

Previous: Give and Take: How Badly Will Charities Be Hurt by the Economic Fallout?
Next: Harvard Art Museum Receives $45-Million, Plus Major Art Gifts