It is frequently stated that global brands do not have strong CSR records, and they are accused of predatory behaviour. For example, Coca Cola was confronted with protests by customers in the UK and the USA because of what was considered their poor environmental record in India and allegations of human rights violations in Columbia. Yet, in this paper we show that implementation of a strong corporate social responsibility (CSR) policy by global brands may improve the relationship with stakeholders like employees, customers, suppliers, and investors, and thereby enhance brand equity.
Read more about this article by FEB Researchers Tammo Bijmolt and Peter Verhoef (together with Anna Torres and Josep Tribó) in International Journal of Research in Marketing
The key contribution of this study is that we investigate the effects of CSR practices to different stakeholders on global brand equity (BE) , emphasizing the role played by credible CSR initiatives. We address these issues using panel data of 57 global brands originating from 10 countries (the US, Japan, South Korea, France, the UK, Italy, Germany, Finland, Switzerland, and the Netherlands), as included in the 2002–2008 Sustainalytics Global Profile (SGP) database. In the analysis phase, we account for endogeneity of CSR and estimate a panel data model. We provide several new insights on CSR effects.
First, we find that CSR directed at various stakeholders generates positive effects on both short-term and long-term global brand equity. In general, we find little difference between CSR directed towards different stakeholder groups. This indicates that “internal” stakeholders such as employees and suppliers are as important as community and customers given that the latter provide the type of valuable intangible resources which are the basis of a firm’s competitive advantage, which, in turn, enhance a firm’s BE. Hence, global brand managers should indeed incorporate CSR as a main component into their brand equity-enhancing strategy.
Second, our study confirms that joint CSR initiatives combining visibility (customers) and credibility (the community) have a stronger effect on global BE than other combinations. This finding points towards the indirect beneficial effect of CSR to community. The satisfaction of community interests gives credibility to a firm as an entity with an ethical stance to all stakeholders. Such gained reputation has a direct value of its own, particularly to global brands. The indirect effect of CSR to community is a reinforcing mechanism (positive moderator), in terms of the positive impact of satisfying all stakeholders’ interests on BE. So, global brands that aim to improve BE with CSR should develop CSR initiatives to communities that reinforce CSR initiatives with other stakeholders. This is the sort of strategy followed by firms such as Heineken, Rabobank or ING, that are perceived simultaneously as global brands and firms with strong roots in the different national communities.
Contact: Prof. Tammo Bijmolt or Prof. Peter Verhoef
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