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Many companies focus on benevolent practices, humanitarian aid, or community service. But a strong corporate social responsibility record does not necessarily translate into better brand perception.
A pair of Harbert College researchers – Linda and O.C. Ferrell – surveyed 351 consumers and learned that what a company does internally – not externally – impacts brand attitude. In other words, business ethics outweighs corporate social responsibility.
“Identifying risks, avoiding misconduct, dealing with risks, monitoring the reporting, how they treat employees, and all of those internal mechanisms and processes are more valued than a company that’s philanthropic – and doing the external things associated with doing good,” said Linda Ferrell, Marketing Department Chair. “It’s been more damaging if you don’t pay attention to your internal culture, values, principles, monitoring and behavior. This is more important in developing positive brand attitudes.”
Their paper, “Business ethics, corporate social responsibility and brand attitudes: An exploratory study,” was just published by the Journal of Business Research, an elite journal. The Ferrells co-authored the study with Dana Harrison, Assistant Professor of Marketing at East Tennessee State University, and Joe Hair, Director of the Doctorate of Business Administration program at the University of South Alabama.
The research reports that corporate social responsibility has been related to firms’ reputation and can influence hiring opportunities, employee loyalty and relationships with regulatory groups. It also reveals that ethical conduct is more aligned with brand attitude and that possible business ethics transgressions could decrease expectations related to brand performance.
The Ferrells, who have been at Harbert College since 2017 and co-authors of a leading business ethics textbook used in colleges of business, conceptualized the study based on their research in business ethics and social responsibility. Prior research failed to differentiate attitudes toward business ethics and corporate social responsibility.
“What we found, over time, is that most consumers and academic scholars view business ethics and social responsibility as one in the same,” said O.C. Ferrell, the James T. Pursell Senior Eminent Scholar in Ethics. “But consumers could differentiate these as two distinct areas based on behaviors and artifacts.
Popular brand names impacted by questionable, and sometimes illegal, ethical practices of late, the Ferrells pointed out, have included infamous tales of Wells Fargo and Volkswagen.
“Some companies embrace social responsibility as ethics,” O.C. Ferrell added. “We don’t want to diminish the role of corporate social responsibility because there are a lot of studies to show that’s going to change people’s attitudes towards the company, especially sustainability or philanthropy are important. But things that happen internally in terms of ethical decision-making seem to get companies in more trouble with attitudes toward the brand.”