Consumer responses to corporate social
irresponsibility
The role of relatedness between the crisis and the company’s reputation
Master thesis
Melody Baeriswyl
Supervisor: Marlene Vock
Kennewegsteeg 4B
Date:
5882958
Second reader:
2312CZ Leiden
06 12051529
[email protected]
Abstract
Corporate social responsibility (CSR) has been researched a lot in the past few years.
Recently there is a new phenomena which is becoming more important, corporate social
irresponsibility. Behaving in a corporate social irresponsible manner, can have serious
consequences for companies. This research investigates the possible negative effects as a
result of behaving irresponsible and the role of the CSR reputation. A favorable CSR
reputation is important for companies, because it leads to positive consumer attitudes, higher
buying intentions, customer identification and positive word of mouth. In contrast, a negative
CSR reputation becomes less and less acceptable in an era of critical, aware and informed
consumers. It seems like creating a positive CSR reputation is the key to success. But what
happens when a company with a good CSR reputation finds itself in a CSR crisis? Will the
good reputation be able to protect the company from the damaging effects of the crisis? The
outcomes of this research show, that a good CSR reputation can indeed protect the company.
Furthermore the results will also give insights under what circumstances this ‘protection
effect’ occurs and how it works for companies with a negative CSR reputations.
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Table of contents
1. Introduction ........................................................................................................................................4
1.1 Corporate Social Irresponsibility (CSI) .....................................................................................4
1.2 The role of a company’s CSR reputation ...................................................................................5
1.3 A related vs an unrelated CSR crisis ..........................................................................................6
1.4 Problem Definition .......................................................................................................................6
1.5 Theoretical contribution ..............................................................................................................7
1.6 Managerial contribution ..............................................................................................................8
2. What is corporate social responsibility? And how do consumers respond toward CSR
activities? .................................................................................................................................................9
2.1 What is CSR? ................................................................................................................................9
2.2 Consumers’ responses to CSR activities...................................................................................11
3. Corporate Social Irresponsibility (CSI) and CSR crises ..............................................................13
3.1 What is a CSR crisis? .................................................................................................................13
3.2 CSI and CSR crises and the effect on consumers ....................................................................15
4. CSR reputation, the ‘halo’ effect and the role of fit ......................................................................17
4.1 CSR reputation ...........................................................................................................................17
4.2 A good reputation leads to the ‘halo’ effect .............................................................................18
4.3 The role of related vs unrelated CSR........................................................................................20
5. What is the role of consumer emotions on consumer attitudes in response to CSR and CSI? 21
6. Methodology .....................................................................................................................................24
6.1 Introduction ................................................................................................................................24
6.2 Manipulations and variables .....................................................................................................24
6.3 The selection of the respondents................................................................................................28
6.4 The pretest...................................................................................................................................28
7. Research findings .............................................................................................................................31
7.1 Reliability analysis ......................................................................................................................31
7.2 Descriptives .................................................................................................................................34
7.3 Hypotheses testing ......................................................................................................................37
7.3.1 Hypothesis 1 .....................................................................................................................37
7.3.2 Hypothesis 2 .....................................................................................................................38
7.3.3 Hypothesis 3 .....................................................................................................................39
8. Conclusion .........................................................................................................................................43
8.1 Introduction ................................................................................................................................43
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8.2 Conclusion based on the hypotheses .........................................................................................43
8.3 Theoretical and managerial implications .................................................................................44
9. Discussion ..........................................................................................................................................46
References .............................................................................................................................................47
Appendix A: Pretest .............................................................................................................................53
Appendix B: Experiment .....................................................................................................................56
Appendix C: Outputs experiment .......................................................................................................63
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1. Introduction
1.1. Corporate Social Irresponsibility (CSI)
Corporations are increasingly encouraged by stakeholders to behave socially responsible.
Today most researchers and also more and more managers agree that it is not whether
corporate managers should consider the needs of society but to what extent they should do this
(Bertels & Peloza, 2008; Lii & Lee, 2011; Wilson, 2003). Being accused of CSI is not
something that only happens to organizations without any CSR activities or organizations that
are considered irresponsible overall. Cases of corporate social irresponsibility (CSI) can
happen to all companies, even if their operations in general are responsible. H&M is an
example of an organization that had to deal with a lot of CSI accusations throughout the past
few years. In 2010 the Volkskrant published an item filled with critique about the
irresponsible practices of H&M like, the use of child labor, not paying enough taxes to their
host countries, underpaying employees and the presence of serious safety issues (Volkskrant,
2010). Another example of an organization that had to cope with a great amount of negative
media attention is BP. Think about the oil spill in 2010 and the skeptic news items that
followed (het Financieele Dagblad, 2010).
Worldwide business scandals involving big high profile organizations represented in the news,
like in the two examples above, led to organizations finding themselves in serious CSR crises.
Eventually, a CSR crisis or CSI leads to bad consumer confidence (Leonard & McAdam,
2003). Consumers have more positive attitudes towards socially responsible brands than to
brands with irresponsible behavior or brands with unknown CSR behavior. Furthermore,
literature shows that consumers dealing with socially irresponsible corporate brands are less
likely to reward and more likely to punish the brands (Sweetin, Knowles, Summey &
McQueen, 2013). Past research showed that CSI results in negative emotional reactions like
anger, sadness and disgust, which eventually leads to consumer actions like negative word of
mouth and protest behaviors (Grappi, Romani & Bagozzi, 2013). But still, there is a lot more
research and knowledge about positive consumer reactions and attitudes to CSR than negative
consumer reactions and attitudes to CSI. Also the role of a company’s prior CSR reputation in
a CSR crisis and its effect on consumers’ attitudes has rarely been addressed in existing
research about CSI/CSR crisis. Thinking about the role of a company’s CSR reputation in a
crisis raises the question if a company’s positive CSR reputation could serve as a buffer or
protection when CSI occurs?
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1.2. The role of a company’s CSR reputation
In general, a good reputation can lead to better customer loyalty, increased customer
identification with the company, the ability to charge premium prices and attract better human
resources (Lii & Lee, 2011). For this reason, the importance of developing a good reputation
is well recognized by firms (Bertels & Peloza, 2008; Lii & Lee, 2011). Already more than
80% of companies that are in the Fortune 500 mention CSR issues on their websites and there
are also the companies that are participating in CSR initiatives without mentioning it. This
probably reflects the belief that being involved in CSR activities does lead to better a
reputation (Lii & Lee, 2011).
According to Einwiller, Fedorikhin, Johnson and Kamins (2006) highlighting CSR aspects
that appeal to stakeholders can enhance a favorable CSR reputation and enhance consumer’s
identification with the organization. Companies like Starbucks and Tom’s are examples of
companies that use a CSR strategy and highlight their strong environmental stances in order
to achieve a good CSR reputation. But a good CSR reputation does not protect companies
from getting into a CSR crisis. An example of a company with a good CSR reputation that
was accused of unethical practices is Toyota. They are known for their environmental friendly
cars, but still found themselves in a CSR crisis after ignoring safety issues (NRC Handelsbald,
2014) and conflicts with their employees in developing countries (Financiële Dagblad, 2014).
Shell is an example of a company that has a bad CSR reputation despite of the fact that they
are trying to improve this reputation by being involved in a lot of CSR initiatives. Their
involvement in CSR crises and the constant stream of negative media attention caused them to
have a bad CSR reputation. Even though, a good CSR reputation cannot prevent a CSR crisis,
results showed that identification as a result of good CSR reputations can have a buffering
effect in times of crisis, unless the conditions are extremely negative (Coombs & Holladay,
2006; Einwiller, et al., 2006). So a CSR reputation can protect companies in a crisis.
However, there has not been a lot of research about the buffer effect yet and the ‘buffer’ effect
has not been researched in the context of CSR related crises in connection with the company’s
prior CSR reputation. If the CSR crisis is related/unrelated to the company’s prior CSR
reputation could be topic related (like environmental CSR reputation and environmental
crisis) or related in a sense that the CSR reputation is negative just like the crisis. In this thesis
these contexts will be researched to find out how strong the ‘buffer’ effect is when the crisis is
CSR related and when it is unrelated.
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1.3. A related vs an unrelated CSR crisis
What if the crisis is related to the company’s CSR reputation? An example would be
Starbucks that is known for their Fairtrade coffee which ‘guarantees’ fair treatment of the
coffee farmers. If they would be in a crisis due to bad working conditions of their coffee
farmers, the crisis would be directly related to their CSR reputation. Would the buffer effect
of a positive CSR reputation still work in such a related crisis? Or would they be better off
with a crisis unrelated to their reputation, like environmental pollution? Fennis and Stroebe
(2014) show in their research that the buffer effect can occur in the case of self-disclosure.
Their results show that a company’s self-disclosure can help companies with a poor reputation
to promote positive effects on consumers’ judgment. However, Fennis and Stroebe (2014)
only focused on the general reputation of companies. This general reputation was based on
financial value and market value and not on CSR. Also they mainly looked at the halo/buffer
effect of self-disclosure and not if a good reputation can serve as halo or buffer effect. The
relatedness of Fennis and Stroebe (2014) is about relatedness to consumer expectations and
not relatedness between the reputation and the crisis. In this thesis the focus will not be on the
general reputation but the CSR related reputation which is dependent of a company’s CSR
behavior and not their financial value or market value. Even though it is interesting that the
buffer effect of the self-disclosure only worked when the prior CSR reputation was negative,
this does not say anything about the buffer effect of the CSR reputation. In this thesis the
buffer effect of the CSR reputation will be researched.
1.4. Problem definition
The purpose of this master thesis is to find out what the impact of an existing CSR reputation
is on consumers attitudes in a CSR crisis, and how relatedness of the crisis to the existing
reputation influences this effect. Also the mediating role of consumer emotions will be
researched. Thus, this leads to the following main research question:
Do consumers’ responses to a CSR crisis differ for companies with a positive versus a
negative CSR reputation? And do these responses depend on the level of relatedness between
the CSR reputation and the crisis?
This will lead to an interesting research because it implies that the relatedness or unrelatedness of a CSR crisis and the existing CSR reputation can make a big difference on
consumer attitudes. This would mean that it is not only about which crisis strategy or CSR
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strategy is used but that a large part of the positive or negative outcome is due to the nature of
the crisis and if this is related to the CSR reputation. If this is true, it would be no longer a
given that a good prior CSR reputation leads to more favorable outcomes after a crisis. The
goal of this research is to gain useful insights about the relatedness between reputation and the
crisis. The following research questions can be addressed:
1. What is corporate social responsibility? And how do consumers respond toward CSR
activities?
2. What is a CSR crisis? And how do consumers respond to irresponsible CSR behavior?
3. Can a positive CSR reputation serve as a buffer during a CSR crisis?
4. How can related versus unrelated CSR influence consumers?
5. What is the role of consumer emotions on consumer attitudes in response to CSR and
CSI?
By conducting an experiment through online questionnaires the research questions will be
answered and the results will show how the relatedness of CSR reputation and a CSR crisis
influence consumer attitudes towards the company or brand.
1.5. Theoretical contribution
CSR in general but also CSR reputation, CSR crises and relatedness of CSR are popular
topics in literature. A general conclusion is that a favorable prior CSR reputation can lower
the negative impact of the crisis on the post-crisis reputation and consumer attitudes due to the
so called ‘halo’ or ‘buffer’ effect (Coombs & Holladay, 2006; Einwiller, et al., 2006).
According to Wagner, Bicen and Hall (2007), there is still a lot to be discovered about
conumers’ negative CSR perceptions. So far, in spite of demonstrated significance of the
consequences of a company’s irresponsible behavior, the literature has mainly focused on
outcomes of responsible behavior (Lange & Washburn, 2012). Previous literature already
contains research about CSR in relation to corporate reputation but so far, there has been no
research on the effects of reputations that are based on CSR. Furthermore, the ‘buffer’ effect a
relatively new research topic and has yet not been addresses in the current context. This
research will focus on the possible negative and positive effects of related versus unrelated
CSR crises and how relatedness influences the ‘halo’ or ‘buffer’ effect. Current literature will
be completed by this new.
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1.6. Managerial contribution
Since it is widely accepted by organizations that it is important to develop a good reputation
(Bertels & Peloza,2008; Lii & Lee, 2011), it would be useful to know how the effect of a
good or bad reputation can be influenced by the relatedness of a crisis. Managers need to
protect the organization’s reputation from the possible harm a crisis can cause, hereby, the
effect of the relatedness of the crisis should be taken in consideration when mapping out a
strategy. This research will give managers an indication to what level of harm, on consumer
attitudes, a crisis might lead. Also if the strong effect of a good CSR reputation still exists in
the new context of this research is important to know for managers, it tells them how much
they can trust on the effect of their favorable prior reputation. But it could also reveal that an
unfavorable CSR reputation might not have worse effect on consumers attitude than
a
favorable reputation. With this information managers can adjust their strategies and decide
how important their CSR reputation is in a crisis. The results will be useful for any company
that is coping with crises or bad media attention.
Overview and focus of the rest of the thesis:
In chapter two to five the sub-research questions mentioned earlier in chapter 1.4 will be
addressed. These three chapters represent the theoretical framework of this research. Previous
research that addresses the relevant topics to answer these questions will be analyzed. Chapter
two will start with some general information about corporate social responsibility and the way
consumers react to it. In chapter three the same will be done but this time for corporate social
irresponsibility. Chapter four will introduce the idea of the ‘halo/buffer’ effect of a favorable
CSR reputation and the role of the related versus the unrelated crisis. Also in chapter four, the
first few hypotheses will be presented. Chapter five, the final chapter of the theoretical
framework, will elaborate on the role of consumer emotions. In the remaining chapters, six to
nine, the method and the results of the pre-test and the actual experiment will be presented.
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2. What is corporate social responsibility? And how do consumers respond
toward CSR activities?
2.1. What is CSR?
Only few notions have captured the corporate imagination in a way corporate social
responsibility (CSR) has. Now, companies are supporting CSR initiatives more than ever and
with greater financial and marketing input (Bhattacharya & Sen, 2004). Researchers argue
that being socially responsible is not only the right thing to do, but it also leads to doing
better (Bhattacharya & Sen, 2004; Lindgreen & Swaen, 2010). But what is meant by CSR?
The meaning of corporate social responsibility can be different depending on the context in
which it is used or explained and different associations people might have with it. CSR
includes issues like human rights, environmental aspects, unfair business practices,
community involvement, social development and workplace issues (Leonard & McAdam,
2003).
Carriga and Melé (2001) developed a classification system that groups the main CSR theories.
They did this to bring some clarity and to show that theories share similarities which makes it
able to group them. One group of theories falls under instrumental theories, here the
corporation is viewed as an instrument for wealth creation. Only the economic aspect is
considered and wealth creation is the only social responsibility, this means CSR is viewed as
an instrument to reach the goal of better profits (Carriga and Melé, 2001). It is safe to say that
this group of theories is probably outdated because today’s companies are highly pressured by
their stakeholder to behave responsible. A second group of CSR theories falls under political
theories where the social power of the corporation is emphasized, specifically power in
relationship with society and its responsibility in the political field. As a result corporations
accept social duties or participate in a social cooperation. The third group consists of
integrative theories which is about social demands. These theories argue that business
depends on society for growth and even for the existence of the business itself. The last and
fourth group falls under ethical theories. Here, CSR is viewed as a relationship between
business and society (Carriga & Melé, 2001). This fits the perspective of Moir (2001) who
argues that business and society are independent of each other when it comes to their needs
for a certain environment, in other words, business and society are interwoven rather than
opposite entities. The interdependence between those two entities and their shared needs
resulted in CSR becoming more and more popular. Now that business and society become
9
connected, for some companies the right thing for business and being ethical become one and
the same (Leonard & McAdam, 2003). This is in line with the idea of Bhattacharya and Sen
(2004) and Lindgreen and Swaen (2010) that being ethical is the right thing to do and the right
thing for business because it leads to doing better.
To explain what is really meant by CSR, researchers developed many definitions. In this
thesis Carroll’s definition will be used because it is considered as the most suitable in general
and also for this thesis for two reasons: One, Carroll’s (1979) definition is used in many
articles discussed in this thesis. And two, it is about the stakeholders’ expectations and it
acknowledges the fact that those expectations and thus CSR is not static but always changing.
“The social responsibility of business encompasses the economic, legal, ethical, and
discretionary expectations that society has of organizations at a given point in time” (Carroll,
1979, p.500).
This definition is based on normative arguments and states that a company has to fulfill those
four main responsibilities (Podnar & Golob, 2007). According to Carroll (1979), to have a
definition that embodies the entire range of obligations businesses have to society it must
include the economic, legal, ethical and discretionary categories. The four groups of CSR
theories discussed before by Carriga and Melé (2001) can be recognized in the four categories
Carroll (1979) distinguishes. The basis of businesses is economic and this is therefore an
important social responsibility. A business is responsible to produce goods and services to
serve a society’s wants and needs and sell these with profit. But there are also ground rules
under which business is expected or has to operate. Society expects businesses to operate
within the legal framework. Ethical responsibilities are not always codified into law but
society expects businesses to behave according ethical norms. The last dimension of Carroll’s
(1979) definition is discretionary responsibilities. Society has no clear message to business
and discretionary responsibilities are left to individual judgment and choice. Even though they
are at business discretion and not directly demanded by society they can still be called
responsibilities because society expects businesses to take social roles above the previous
three described. But it is voluntary and the decision to participate is left to businesses and
their desire to engage in CSR. It seems like discretionary responsibilities offer therefore the
best way to differentiate. The fact that CSR could offer ways to differentiate led to researchers
increasingly examining the strategic role of CSR in organizations instead of simply
identifying CSR activities (McWilliams, Siegel & Wright, 2006).
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2.2 Consumers’ responses to CSR activities
Customers form one of the most important stakeholder groups and appear to be particularly
susceptible to company’s CSR initiatives. General marketplace polls show a positive relation
between CSR initiatives and consumers’ responses to the company (Sen & Bhattacharya,
2004). But research found that the relationship between CSR activities and consumer
reactions is not straightforward and that there are several factors that affect this relationship.
Sen & Bhattacharya (2001) found two factors as key moderators of consumers’ responses to
CSR initiatives, company-specific like the CSR domain or product quality and individualspecific like CSR-related beliefs. The corporate social responsibility – corporate ability (CSRCA) belief is an important moderator and is about consumers’ beliefs about the relationship
between CSR and a company’s ability to make quality products. Their findings show that the
beliefs about the trade-offs a company makes between its CSR and CA efforts can play a
central role in the reactions to CSR. When consumers perceive the CSR initiatives as
damaging for CA, the CSR initiatives will not be perceived as positive. Furthermore, the
results of Sen & Bhattacharya (2001) highlight the mediating role played by consumers’
perceptions of relatedness between their own characters and that of the company, also called
‘consumer-company identification’. If consumers feel connected to the CSR of a company
and feel that it relates their own characters they will respond more positively than in the case
of low congruence between their character and a company’s CSR. Not only level of
congruence plays a role in consumers’ attitudes but also positive or negative CSR associations
in general. Positive CSR associations can enhance product evaluations and negative CSR
associations have a detrimental effect on overall product evaluations. What is notable is that
consumers’ company evaluations are more sensitive to negative CSR information. Only if
consumers are highly supportive of the CSR issue they react positively to positive CSR
information while all consumers react negatively to negative CSR information. This means
that corporate social irresponsibility (CSI) can have a significant impact on consumers’
perceptions about a company and it is extremely important for companies to act carefully.
Green and Peloza (2011) found another influence on consumer responses. Consumer
responses to CSR depend on the type of CSR or in other words how CSR is manifested
(Green & Peloza, 2011). CSR can be manifested as environmental responsible or as product
responsible and this leads to different outcomes on how the CSR actions are perceived by
consumers. Bhattacharya and Sen (2004), use the ‘Socrates: The corporate social ratings
11
monitor’ database to divide different CSR actions undertaken by 600 companies into six
broad domains:
-
Community support: housing initiatives, education, support of arts and health
programs.
-
Diversity: family, race, gender.
-
Employee support: employee involvement and protection, profit-sharing, job security.
-
Environment: waste management, pollution control, recycling.
-
Non-US operations: overseas labor practices, operations in countries with human
rights violations.
-
Product: product safety, marketing controversies, innovation, R&D.
(Bhattacharya & Sen, 2004).
Each domain can have different outcomes depending on what consumers consider to be CSRrelated activities. This means that there is a significant heterogeneity in consumers’ responses
toward CSR initiatives and different CSR reputations companies have. What works for one
consumer does not always work for the other. This shows that the type of CSR reputation
influences consumers’ perceptions. The role of a CSR reputation will be further expanded in
this thesis. Because consumers react so differently to different kinds of CSR reputations
companies must ascertain clearly and concretely the value of the resources devoted to CSR
activities and keep in mind that the desired outcomes might be difficult to achieve and depend
on a lot of factors (Bhattacharya & Sen, 2004). Also, for initiatives to provide the desired
returns to the company, the initiatives must first provide a return to individual stakeholders.
Stakeholders responds to CSR initiatives based on the amount of personal benefits the
individual can derive (Bhattacharya, Korshun & Sen, 2009). If firms want consumers to
support their engagement in CSR, the consumer must receive value from the exchange. This
is another example of how the ‘win-win situation’ between company and consumer arises, the
‘consumer win’ is received value and the ‘company win’ is the received reward by the
consumer.
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Table 1: Summary of important factors that influence consumer behavior
Important factors
Source
Sen &
(2001)
Bhattacharya Company specific (like the CSR domain
and product quality)
Consumer-company identification
Inidividual specific (like CSR-related
beliefs)
CSR-CA belief
Green & Peloza (2011)
Type of CSR
CSR reputation
Bhattacharya,
& Sen (2009)
Korshun Personal benefits
As explained before, consumers are more sensible to negative CSR information. Sometimes
even companies that do not intentionally behave irresponsible find themselves in a CSR crisis.
This means that if company’s choose to participate in CSR activities driven by market
considerations rather than just by ideology, they should select those initiatives that enjoy the
most support among their consumers. Managers need to be particularly aware of the dangers
of being perceived as socially irresponsible and eventually end up in a CSR crisis (Sen &
Bhattacharya, 2001). Even good CSR initiatives can turnout negative for a company, there
are conditions under which consumers can become suspicious about the true motives
underlying CSR behavior. Companies do not need to be perceived as irresponsible in order for
consumers to become suspicious or skeptical. Once consumers perceive CSR efforts as a way
only to enhance a company’s image, the CSR activities become inefficient and may
eventually backfire (Yoon et al, 2006).
3. Corporate Social Irresponsibility (CSI) and CSR crises
3.1 What is a CSR crisis?
In the past few years, there were numerous corporate crises and corporate social
irresponsibility scandals (Kolk & Pinks, 2006). While the public might enjoy reading about a
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good crisis in the media now and then, most companies fear the thought of becoming the
center of negative attention (Fennis & Stroebe, 2013). Worldwide business scandals involving
big high profile organizations have resulted in a lot of negative media attention and critical
articles about companies’ socially irresponsible behavior. Corporate social irresponsible (CSI)
behavior is bad for consumers confidence in business leaders and it creates concerns about
business ethics (Leonard & McAdam, 2003). Eventually CSI can result in a corporate (CSR)
crisis. A corporate crisis is “a sudden and unexpected event that threatens to disrupt an
organization’s operations and poses both a financial and a reputational threat” (Coombs,
2007, p. 164). This is why a crisis goes hand in hand with high consequences, ambiguity and
decision making time pressure (Hale, Dulek, & Hale, 2005).
The ongoing irresponsible behavior of many companies suggests that for a long period of time,
companies did not take care of stakeholder interests. Until the crisis or the scandal, these
companies chose to neglect their stakeholder demands. The businesses did not believe in their
moral duty or CSR (Kolk & Pinkse, 2006). A corporate crisis can occur either because the
accused is held responsible for an action or because the act is considered offensive. There will
not be an unfavorable impression of a firm if there is not the belief that the company is
responsible for the act or if the act is not considered offensive. This shows that perceptions
play an important role in responsibility more than reality does. It does not matter whether the
business is in fact responsible for the offensive act, but what matters is if the firm is thought to
be responsible for the offensive act or not. Because as argued before, even companies with
good CSR reputations can find themselves in CSR crises. If the firm is in fact responsible for
the offensive act or not can be a component that influences the company’s response. But
importantly, as long as the company is considered as socially irresponsible, the corporate
(CSR) reputation is at risk (Benoit, 1997; Wagner, Bicen & Hall, 2007). The survival of a
company when acting irresponsible depends partly on satisfying expectations from its
environment (Lange & Washburn, 2012). Since companies are usually aware of their
irresponsible behavior long before the crisis occurs they have to consider what kind of
reaction stakeholders would expect from them. However, congruence or no congruence
between consumer expectations and a company’s response, behaving in a socially
irresponsible manner
has an impact on consumers’ perceptions and leads to negative
consequences for companies (Lange & Washburn, 2012
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3.2. CSI and CSR crises and the effect on consumers
What is clear so far is that consumers decide whether behavior is irresponsible or not on the
basis of their perceptions, once a company is perceived as irresponsible this can lead to
multiple negative consequences. This part will focus on the negative consequences CSI and
CSR crises have on consumers. Despite heavy investment by companies in order to publicize
their good work, reported incidents of irresponsible corporate behavior abound (Skarmeas,
Leonidou, 2013). Information consumers receive about firms has been long recognized to
influence consumer’s attitudes (Eisingerich, Rubera, Siefert & Bhardwaj, 2011). Consumers
are more often exposed to negative than positive CSR information about retailers through
mass media and are also more likely to share negative than positive information with each
other (Eisingerich, et al., 2011; Wagner, et al., 2007). According to Wagner et al. (2007),
there are numerous factors that influence perceived CSI in the retail industry. These factors
are: practices that are potentially harmful to the natural environment, the threat for local
businesses, foreign economies, local employment, societal rules, employee benefits, employee
wages, local working conditions, employee discrimination, foreign labor, sales practices,
dishonesty, offensive material and pricing policies (Wagner et al., 2007). So just like the type
of CSR reputation has a different effect on consumers so does the type of CSR crisis. In this
thesis different types of CSR crises will be researched to see if they will have different
outcomes in combination with positive or negative CSR reputations.
Only if consumers are highly supportive of the CSR issue they react positively to positive
CSR information while all consumers react negatively to negative CSR information. This is in
line with Lange and Washburn’s (2012) argumentation about negative CSR information. They
argue that when consumers are confronted with negative behavior, they will spend more time
thinking about this negative behavior than they would about positive behavior. This is
because after being confronted with information about irresponsible behavior, consumers will
search more extensively for information. So their reactions and behavior will be more extreme.
However, expectations and evaluations about CSR are not objective realities in the firm’s
environment but they are subjective and above all changeable (Lange & Washburn, 2012).
Important in light of the current research, is that information about CSI weights heavier than
positive information and has severe consequences for the company that is considered as
irresponsible (Lange & Washburn, 2012; Sen & Bhattacharya, 2001). This makes it so
important to research CSI.
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Furthermore, what becomes apparent from previous literature is that consumers have a
growing amount of skepticism toward CSR claims and that they are willing to punish CSI
(Murphy & Schlegelmilch, 2013; Skarmeas & Leonidou, 2013). Grappi et al. (2013),
investigated two types of consumer responses after corporate social irresponsibility. These
consumer responses are in line with the will to punish CSI (Murphy & Schlegelmilch, 2013;
Skarmeas & Leonidou, 2013). The first is negative word of mouth in which consumers share
their emotions with others. Negative word of mouth can take the form of saying negative
things, recommending against purchasing and discrediting the company. The second
consumer response is protest behavior, actions against CSI. Logically, consumers experience
emotions after CSI. The will to punish and the reaction of consumers in general is influenced
by the type of CSI or CSR crisis but also by the type of emotions consumers experience. CSI
can take different forms of moral transgressions which will result in different emotions.
Following this explanation Bhattacharya and Sen (2010) assume that any discrepancies
between stakeholder’s perceived motives and the company’s stated motives would trigger
skepticism and feelings of deception (Bhattacharya & Sen, 2010). The reason why underlying
motives are shortly discussed in this thesis is because they will eventually influence the way
the firm is perceived. This will contribute to a company’s positive or negative CSR reputation,
which will possibly make consumers react differently once there is a CSR crisis.
Table 2: The negative effect of CSI on consumer attitudes
CSI's negative effect
Source
Eisingerich, et al. (2011), Wagner, et al. (2007)
Lange & Washburn (2012)
Murphy & Schlegelmilch (2013), Skarmeas & Leonidou
(2013)
Bhattachary & Sen (2010), Murphy & Schlegelmilch
(2013), Skarmeas & Leonidou (2013)
Negative word of
mouth intentions
More extreme
reactions and behavior
Punishing intentions
Growing skepticsm
What can be concluded is that companies can find themselves in a CSR crisis like an
environmental disaster that happened outside their control or they can be in fact responsible.
Sometimes it was outside the companies direct control but consumers still hold the company
16
responsible so the reputation is always at risk. But the complexity lies in the fact that it is hard
to control consumer responses because they are dependent of many different factors like
products, industry, origin-related cues, consumers’ unconscious level, stereotypes, consumer
perceptions, type of CSR reputation, type of CSR crisis and so on. Despite of the complexity,
some companies are able to successfully change the negative effects into positive ones
through their CSR activities, but for some the same strategy backfires (Yoon et al., 2006). An
even better scenario arises when it is not even necessary to fight negative effects because the
current reputation is so good that it protects a company from negative effects during a crisis.
Under what circumstances does this happens? And how does it work?
4. CSR reputation, the ‘halo’ effect and the role of fit
4.1. CSR reputation
The importance of developing a good reputation is well recognized by firms (Bertels &
Peloza,2008; Lii & Lee, 2011). A general common definition for corporate reputation is:
“A corporate reputation is a stakeholder’s overall evaluation of a company over time. This
evaluation is based on the stakeholder’s direct experiences with the company, any other form
of communication and symbolism that provides information about the firm’s actions and/or a
comparison with the actions of other leading rivals” (Gotsi & Wilson, p. 29, 2001).
In this thesis the focus is not on general corporate reputations but corporate CSR reputations.
Which means, companies that earned their good CSR reputation because of their ethical
behavior and their negative CSR reputation because of CSI which can take many different
forms.
As argued before by Wilson (2003), it is no longer the question if a firm should make CSR
commitments but how they should do this best (Bertels & Peloza, 2008; Lii & Lee, 2011).
CSR has become an integral component for firms’ reputations. This led to firms that have a
corporate reputation based on CSR, like Starbucks, Ben & Jerry’s, and Tom’s shoes. One of
the reasons CSR is so important for reputation are the earlier mentioned stakeholder
expectations, this encourages firms to integrate CSR activities with core values and
competencies to create a CSR focused reputation (Bertels & Peloza, 2008). According to
Hillenbrand and Money (2007), antecedents of a good reputation include proper CSR
standards, philanthropic giving and a good relationship with stakeholders. This probably
17
reflects the believe, that being involved in CSR activities does lead to better a reputation, in
other words being good leads to a good CSR reputation (Lii & Lee, 2011).
It is known that the people who decide if a company has a good corporate CSR reputation or
not are consumers and other stakeholders, as also became clear in the earlier mentioned
definition of reputation, and dedicating a share of the revenues to social issues is expected by
the public (Tixier, 2003). But for most consumers it is not easy to verify CSR claims made by
organizations. If an organization claims good working for their employees in Bangladesh,
consumers cannot easily go there and have a look themselves. This is why most consumers
are skeptic when it comes to information directly obtained from firms, and search and
experience are viewed as more provable (Pomering & Dolnicar, 2009). Most companies are
aware of the pressure by public opinion and their desire for greater commitment to causes of
public interest. Those companies spend a lot of time and resources to make sure they have a
good CSR reputation (Tîxier, 2003). Once companies achieve the desired CSR reputation,
they could experience a lot of potential benefits in times of crisis.
In chapter three it became clear that even though companies cannot control the diffusion of
negative information, they can attempt to mitigate the damage through things like openness
and fulfilling consumers’ expectations. But above all building a strong reputation can protect
companies in times of crisis (Eisingerich et al., 2011). But the question is; how strong is the
protection effect of a CSR reputation during a crisis and under what circumstances the effect
of a good CSR reputation becomes stronger or weaker?
4.2. A good reputation leads to the ‘halo’ effect
Building a strong CSR reputation may eventually lead to consumers’ resistance to negative
information, this is the so called ‘halo’ or ‘buffer’ effect. This means that companies with a
good CSR reputation will experience less damage from a crisis because their reputation serves
a ‘buffer’. So how does this work? The idea of the halo effect is based on the argument that
CSR may enable firms to enjoy greater levels of goodwill with consumers and thus lower
firm-idiosyncratic risk (Eisingerich et al., 2011). Thus, this suggests that a strong CSR
reputation offers companies a kind of insurance against negative information about their
irresponsible behavior in times of crisis. Resistance to negative information, the ‘halo’ effect,
can be explained as consumers that do not allow negative information to diminish their view
of a firm (Eisingerich et al., 2011). Peloza (2006) even argues that this can reduce the risk of
18
potential harm like boycotts. Eisingerich et al. (2011), conducted a research to find out how
effective CSR is in insulating firms from scrutiny. Furthermore, their study compared the
importance of the CSR protection effect compared to other important marketing measures,
such as service quality orientation. The results show that CSR practices make consumers
more resistant to negative information when confronted with negative information about the
firm. CSR shields companies from negative information about CSR practices but not from
negative information about a firm’s core service offerings. Eisingerich, et al. (2011), state that
CSR offers less of a halo effect than assumed in previous research. The respondents in the
research were asked to answer questions about their own telephone provider. One of the
questions was perceived CSR of their telephone provider, this made it possible to view if CSR
leads to higher resistance to negative information levels. However they did not look at a
company where the reputation is actually based on CSR, a CSR reputation.
Klein and Dawar (2004) show another view on the ‘halo effect’. They view the ‘halo’ effect
as a spillover effect. What has been demonstrated the past years is that CSR plays a role in
consumer behavior that goes beyond economic and rational considerations. This means that
CSR has a spillover effect on non-product associations’. Klein and Dawar (2004) researched
how the ‘halo’ effect (or spillover effect) of consumers’ prior beliefs about a company’s CSR,
influences attributions in a product-harm crisis. Klein and Dawar (2004) found that the
consumers’ prior beliefs, or in other words the CSR reputation, has an important effect on
consumers’ perceptions. If the company that is involved in the CSR crisis has a long-standing
good reputation and is viewed as integer and competent, it is unlikely that the crisis can do
serious damage to the company’s reputation. Even though the type of crisis and seriousness of
the crisis play a role in consumers’ perceptions, in general the CSR reputation will diminish
the negative outcomes. Fennis and Stroebe (2013) agree with the idea that a strong reputation
can make up for negative impacts crises normally have. They argue, that when there is no
shield of a positive reputation, the company will probably face more severe negative
consequences. Klein and Dawar (2004) explain why CSR reputation plays such an important
role in times of crisis. A crisis results in a context where consumers cannot rely on product
evaluation anymore. The findings of Klein and Dawar (2004) suggest that CSR associations
start playing a significant role in these non-product evaluation contexts when consumers rely
on corporate associations to inform their judgments. It could be said that CSR has a type of
‘dormant’ effect that only becomes visible in crisis circumstances in which consumers rely on
19
non-product associations to base upon their judgments. Klein and Dawar (2004) call CSR a
kind of insurance policy that is there when you need it. This leads to hypothesis one:
H1: Consumer attitudes after a crisis will be less negative for companies with a positive CSR
reputation than for companies with a neutral or negative CSR reputation.
4.3 The role of related versus unrelated CSR
What is clear now is that a good CSR reputation is expected to limit the negative effects of a
CSR crisis. But the effect might not be unconditional and for bad reputation companies it
only occurs when it disconfirms consumers’ expectations. When companies communicate
inconsistent CSR information they are basically lying because this would mean that there CSI
is directly related to their CSR (Wagner et al., 2009). So this suggests that consumers find it
less hypocrite if the CSI activity is unrelated to the previous CSR reputation. According to
Wagner, et al. (2009), a CSR crisis can lead to corporate hypocrisy which is the belief that a
firm claims to be something that it is not. A consumer’s attitude towards a company’s CSR is
his or her overall assessment of the extent to which a company is socially responsible (Du, et
al. 2007). Consumers’ exposure to CSR information leads to the consumers’ CSR beliefs.
Some companies choose to actively promote their CSR efforts to create a reputation of social
responsibility, examples are Starbucks and The Body Shop. Other companies only start
promoting their CSR activities to protect their reputation after reported information about
socially irresponsible actions. The results of Wagner, et al. (2009), show that inconsistent
CSR information has a big impact on consumers. Inconsistent
CSR information raises
feelings of hypocrisy and affects the attitudes towards the CSR of the company. It is possible
that if the CSR reputation and the CSR crisis are related people feel deceived and as a result
view the company as hypocrite. In contrast, when the crisis is unrelated to the CSR reputation,
people might feel less deceived but it still may raise skepticism. This leads to hypothesis 2a:
H2a: A positive CSR reputation will lead to more negative consumer attitudes when the crisis
is related and less negative consumer attitudes when the crisis is unrelated.
When the CSR reputation is already negative relatedness of the crisis would probably lead to
less skepticism. If Shell already has a negative reputation regarding the natural environment
and now appears to be involved in another environmental scandal, we are not surprised. This
means that there is no need for feelings of hypocrisy or skepticism. In the case of a negative
20
CSR reputation an unrelated crisis would probably lead to more negative consumer feelings.
A possible explanation is that an unrelated crisis means that they were already doing wrong in
one CSR area and now also in a second CSR area. This leads to hypothesis 2b:
H2b: A negative CSR reputation will lead to more negative consumer attitudes when the crisis
unrelated and less negative consumer attitudes when the crisis is related.
5. Consumer emotions as mediating factor
In this thesis it is expected that emotions mediate the effect of the CSR reputation and the
CSR crisis plus their relatedness on consumer perceptions. In previous research, emotions
emerged as an important mediating role in several contexts such as complaining and product
attitudes. The type of emotion a consumer experiences, influences the outcomes in consumer
behavior, perceptions and attitudes. The article of Laros and Steenkamp (2005) proposes four
negative and four positive basic emotions. They tested these emotion levels for different types
of food and show that this is a better categorization of emotions than just looking at emotions
as either positive or negative. The four negative emotions that fall under the negative affect
are anger, fear, sadness and shame and the four positive emotions that fall under the positive
affect are contentment, happiness, love and pride. According to Green and Peloza (2011),
emotion is one of the three value drivers of CSR alongside social value and functional value.
The emotions that arise from a CSR reputation are a result of a social or environmental
attribute that makes consumers experience a ‘warm glow’. This means that good CSR can
lead to value creation for consumers because they will experience positive emotions. However
they did not research how this phenomenon works when the emotions are negative so value
diminishing instead of creating. During a crisis, consumers can also develop all kinds of
negative emotions. According to Jorgensen (1996), emotions play an important role in
consumers perceptions of a company after the crisis. As said before, this eventually influences
their purchasing behavior and their attitudes toward the company. Furthermore, emotions are
highly linked to the amount of responsibility of a company in a crisis. Again, this is not about
actual responsibility but perceived responsibility. Anger toward the company is higher when
they are considered to be highly responsible. So emotions are influenced by the type of crisis
and the prior reputation and influence consumers’ attitudes and perceptions. Angry consumers
are for example more likely to share their negative experiences (Eisingerich et al., 2011).
21
Furthermore, Grappi et al. (2013) argue that emotions as a result of irresponsible corporate
behavior motivates consumers to participate in protest behaviors and negative word of mouth.
Next they argue that these emotions are moderated by the strength to which consumers hold
certain ethical virtues. This means that emotions were stronger for consumers who were more
ethically responsible themselves. After being moderated by consumer virtues, emotions have
a direct effect on negative word of mouth and consumer attitudes.
There are (1) ethical transgressions which concerns harm done to other people such as
employees and arises for example because of freedom violation. And there are (2) social
transgressions, this is when a corporation does harm to a community.
The three main
emotions that were found in the study of Grappi et al. (2013), after consumers faced a social
and a ethical transgression are, contempt, anger and disgust. In the experiment of this thesis
the emotions of Grappi et al. (2013) will also be used because the results showed that they
influence consumer attitudes. Therefore it is expected that these consumer emotions might
mediate the effect of the CSR crisis and the CSR reputation on consumer attitudes. The
emotions of Grappi et al. (2013) are complemented with the emotions researched by Laros
and Steenkamp (2005). The emotions distinguished in their research are; anger, fear, sadness,
shame, contentment and happiness. Because the experiment is about a CSR crisis the
emotions contentment and happiness will not be used.
This leads to the following hypotheses:
H3: Consumer emotions will mediate the effect CSR crisis and CSR reputation have on
consumer attitudes
H3a: The stronger the negative consumer emotions are, the more negative consumer
attitudes will be
H3b: The more positive consumer emotions are, the more positive consumer attitudes
will be
22
Figure 1: conceptual model
relatedness
reputation
Consumer
emotions
Consumer
attitudes
CSR crisis
23
6. Methodology
6.1. Introduction
Next the methodology of the present study will be presented which is an experiment via
online questionnaires. To answer the main research question of this thesis: “Do consumers’
responses to a CSR crisis differ for companies with a positive versus a negative CSR
reputation? And do these responses depend on the level of relatedness between the CSR
reputation and the crisis?”, the experiment is considered as the most suitable method. This is
because to answer the main research question, causal hypotheses will be tested. With the help
of an experiment the hypotheses can be tested under controlled circumstances. By
manipulating the conditions in different ways, it is possible to demonstrate the different
effects as a result of the manipulations. This means that the independent variables are
differently manipulated so that eventually the possible differences in the dependent variable
will show. Because the experiment is conducted via online questionnaires, the questionnaires
contain manipulation texts to which the respondents will be exposed to.
The questionnaires are created and spread among the respondents with the use of Qualtrics.
The study employed a 3 (neutral CSR reputation, positive social CSR reputation, negative
social CSR reputation) x 3 (social crisis, community, environmental crisis) between subjects
design. The respondents were informed that the questionnaire
would be about a retail
company and they were asked to give their personal opinion about the company. The retail
company used in the presented scenario’s is the fictive company f+m. They could indicate
their personal opinion by indicating whether they agreed or disagreed with statements using a
7-point Likert Scale.
6.2. Manipulations and variables
6.2.1. Manipulations
All respondents were exposed to a manipulation check and one of the three transgressions
(crises). First respondents were informed about what they were going to read, this explained
that they had to pretend to be real f+m customers browsing the internet and crossing
information about the company. After the general information, the respondents continued by
reading one of the three manipulation texts. The manipulation texts contain some general
background information about f+m and information about f+m’s CSR reputation. The first
24
group ‘the control group’ was only exposed to the neutral information and did not read any
information about f+m’s CSR reputation. The neutral information informs the respondents
about what kind of retail company f+m is and about their attractive low prices. The people in
the positive CSR reputation group also received neutral background information but also
information about the positive social reputation of f+m. They received information about how
well f+m treats its employees in developing countries. In contrast, the respondents in the
negative CSR reputation group read information about how bad f+m treats its employees and
the bad working conditions and salaries they offer. The positive as well as the negative CSR
information is about the social CSR reputation of the company.
After the information about the CSR reputation, respondents were asked to give their opinion
about the company’s CSR. This served as a manipulation check and shows the effect of the
independent variable ‘CSR reputation’ on the dependent variable ‘perceived CSR reputation’,
before the respondents were exposed to the crises. The scale for the manipulation check
‘perceived CSR reputation’ is based on Eisingerich, et al. (2011), view appendix B. After the
manipulation check the respondents were exposed to one of the three transgressions, the
crises. One of the crises was about a fire in a f+m factory in Bangladesh were many workers
got hurt. This is a social transgression/social crisis and is therefore related to the negative and
the positive social CSR reputation. The second crisis is about how f+m is polluting the
Chinese rivers with toxic chemicals. This is an environmental crisis unrelated to the negative
and the positive social reputation, and is therefore one of the two unrelated transgressions.
And the third crisis is about how f+m scorns the homeless in New Delhi (see appendix B).
This is a community crisis and is the second unrelated transgression.
Figure 2: Different experimental conditions
25
6.2.2. Dependent variables
All the experimental conditions were followed up by the same questionnaire where the
respondents were asked to give their personal opinion about given statements with the use of a
7-point Likert Scale. The questionnaire includes questions about the respondents’ emotions,
which will be tested as the mediator. The used scale to test consumer emotions is based on
Grappi, et al. (2013) and Laros and Steenkamp (2005). Also the respondents were asked to
indicate their attitude towards the company. The consumers’ attitude is the dependent variable
in the conceptual model. The used scale to test consumers’ attitudes is based on Spears and
Singh (2004). And respondents were asked to give their opinion about the relatedness
between the CSR reputation and the CSR crisis, which is used to test the moderator in the
conceptual model. The scale to test relatedness is based on Wagner, et al. (2009) and Mohr
and Webb (2005).
Previous research showed that there will not be an unfavorable impression of a company if
there is not the believe that the company was guilty or responsible for the crisis (Benoit, 1997;
Wagner, et al. 2007). If there are no significant results on consumer attitudes the company’s
responsibility might offer an explanation. The company’s perceived responsibility in the crisis
will therefore serve as one of the control variables. The used scale is based on Jorgensen
(1996). Furthermore, the respondents personal CSR involvement could offer an explanation
for the differences between the experimental groups. Grappi, et al. (2013) argue that emotions
can be influenced by the strength to which consumer hold ethical virtues. That means that
emotions can be stronger for consumer who are more ethically responsible themselves. The
CSR involvement of the respondents is therefore the second control variable and the used
scale will be based on Mohr and Webb (2005). The control variables will only be included in
further analysis if the descriptive statistics show that there are significant results between the
respondents in the different conditions. Because if there are a lot more respondents in one
group that are highly involved in CSR than in the other groups, this might influence the
results. However, if there are no significant differences between the groups in CSR
involvement and perceived responsibility they will not cause any skewness in the dependent
variable consumer attitudes. Table 3 shows a summary of the scales, for the survey and the
complete scales see appendix B.
26
Table 3: Research scales
Scale
Source
Perceived CSR reputation
Eisingerich, et al.
(2011)
I consider f+m as a socially responsible firm
The company does not contribute to society in positive
ways
This firm is more beneficial to society's welfare than
other firms
This firm contributes to society
Consumer emotions
Grappi, et al. (2013)
and Laros &
Anger
Surprise
Disgust
Sadness
Shame
Sympathy
Aversion
Consumer's attitude
Spears & Singh (2004)
Unattractive-attractive
Bad-good
Unpleasant-pleasant
Unfavorable-favorable
Unsympathetic-sympathetic
Perceived relatedness
F+m's recent behavior is consistent with its reputation
Wagner, et al. (2009)
and Mohr & Webb
F+m acts hypocritically
CSR involvement of the consumer
Mohr & Webb (2005)
I try to buy from companies that help the needy
I try to buy from companies that pay their employees a
living wage
When giving a chance to switch to a brand that gives
back to community, I take it
When I am shopping, I try to buy form companies that
are working to improve conditions for employees
Company's responsibility
Jorgenssen (1996)
Responsible for the crisis
To blame for the crisis
Controllable role in the crisis
27
6.3. The selection of the respondents
The selection of the respondents happened through a snowball effect/convenience sampling
method. First some easy accessible acquaintances were approached to fill in the questionnaire
and asked if they could send the link to the questionnaire to family, friends and others like
colleagues. The questionnaire was only accessible online and spread via Facebook and via email. Since all people are consumers, everyone could participate in this experiment.
The respondents got assigned to one of the nine experimental conditions and in total 247
consumers participated:
1) Neutral reputation + social crisis:
N=28
2) Neutral reputation + community crisis:
N=31
3) Positive reputation + social crisis:
N=26
4) Positive reputation + community crisis:
N=25
5) Negative reputation + social crisis:
N=27
6) Negative reputation + community crisis:
N=29
7) Neutral reputation + environmental crisis:
N=26
8) Positive reputation + environmental crisis:
N=27
9) Negative reputation + environmental crisis:
N=28
6.4 The pretest
A short pretest was conducted in order to test the stimuli that will be used for the actual
questionnaire. The pretest’s aim was to find out which type of crisis scenarios/transgressions
are suitable for the actual experiment, the eventual goal was to identify three suitable CSR
domains. One that is related to the CSR reputation, which is a social issue, and two that are
unrelated to the CSR reputation (i.e. different from a social issue). If the transgressions are
suitable for the actual experiment is determined by how much their effect on credibility,
perceived CSR and perceived relatedness differ. In order to be comparable in the actual
experiment they cannot differ too much from one another. Furthermore, a manipulation check
for CSR reputation is done in order to find out if there is a significant difference in how
consumers perceive negative versus positive information about a company.
A quantitative pretest was conducted with 20 respondents via an online questionnaire. Ten
respondents received information about a positive CSR reputation, followed by four types of
crisis. And ten respondents received information about a negative CSR reputation, followed
28
by four types of crisis. The four crises in both the negative and the positive condition are;
social crisis, community crisis, environmental crisis and an animal crisis. Just like in the
actual experiment, the social crisis is the crisis related to the CSR reputation. The other three
crisis are the unrelated transgressions.
Figure 3: Pretest conditions, positive CSR reputation (10 respondents)
Positive social reputationCSR
Animal
Social
Environm
ental
Community
And ten respondents were exposed to information about a company with a negative social
CSR reputation that was linked to four different crises:
Figure 4: Pretest conditions, negative CSR reputation (10 respondents)
Negative social reputation
Social
Animal
Environm
ental
Community
Table 4 shows the results of the manipulation check, in other words, the different effect of the
negative and the positive CSR reputation on consumers’ perceived CSR of the company.
There are big differences between the two groups, this means that the negative CSR
reputation and the positive CSR reputation differ enough to use in the real experiment
F(1;18)=31.95, p<0.001.
29
Table 4: Perceived social responsibility of the company (1=negative perceived CSR to 7=positive
perceived CSR)
Reputation
Positive
Negative
Mean
4.97
1.44
SD
1.13
0.64
Furthermore, the results show that all the respondents viewed the described scenario’s as
credible and realistic, all the means are >4. This means that the scenarios are realistic enough
to use in the experiment. The next tables 5 and 6 show that the pretest does not show big
differences in the perceived relatedness between the CSR reputation and the crisis. This is
probably because the respondents in the positive reputation scenario were exposed to all four
crises as well as the respondents in the negative reputation scenario. It is possible that this
makes it more difficult to rate relatedness.
Table 5: Perceived relatedness (reputation*crisis) in the positive reputation condition
Mean
SD
Social
3,68
0,98
Environmental
4,00
1,55
Animal
3,60
1,35
Community
4,15
1,00
Table 6: Perceived relatedness (reputation*crisis) in the negative reputation condition
Mean
Social
Environmental
Animal
Community
SD
4,38
4,56
3,56
4,44
1,41
1,55
2,13
1,94
Table 7 shows that there are no big differences in hypocrisy, which makes the different crises
comparable to each other. This means that overall the results show, that all four crises
scenario’s are suitable for the real experiment. The decision was therefore randomly made to
use the environmental and community crisis as the two unrelated transgressions and the social
crisis as the related transgression.
30
Table 7: Perceived hypocrisy
Reputation Crisis
Mean
SD
Positive
Social
4,45
1,37
Environmental
4,50
1,51
Community
3,90
1,60
Animal
4,60
1,65
Negative
Social
4,25
2,27
Environmental
5,13
2,56
Community
3,88
2,30
Animal
4,63
2,20
7. Research findings
7.1. Reliability analysis
The findings were first tested with Cronbach’s Alpha to assure the reliability of the multipleitem scales. The first scale’s internal consistency was tested for the manipulation check
variable ‘CSR reputation’. The Cronbach’s Alpha of CSR reputation is 0.76 which is above
0.70 which means that the scale’s reliability can be seen as acceptable.
Table 8: Cronbach’s Alpha coefficients for multiple-item scale (CSR reputation)
Cronbach's
St.
Alpha if
Mean
deviation item
deleted
Social
Responsibility
3,75
Adds no positive to
society
4,94
Better than other
companies
3,33
Adds to society
4,12
1,92
0,66
1,49
0,84
1,60
0,59
1,57
0,64
Even though the reliability of the CSR reputation scale could be improved by deleting the
item ‘Adds no positive to society’, this was not executed because the reliability of the scale
was already acceptable.
31
Next the scale for the mediator ‘consumer emotions’ was tested. The Cronbach’s Alpha of
emotions is 0.62, this is not a very high score but could not be improved by deleting an item.
Table 9: Cronbach’s Alpha coefficients for multiple-item scale (emotions)
Mean
St.
deviation
Cronbach's
Alpha if item
deleted
Anger
4,81
1,41
0,51
Surprise
3,82
1,82
0,59
Disgust
3,90
2,01
0,62
Sadness
3,84
1,63
0,56
Sympathy
5,60
1,54
0,63
Shame
4,31
1,78
0,50
Aversion
5,07
1,45
0,49
The Cronbach’s Alpha for the scale of the dependent variable ‘consumer attitudes’ is 0.86,
which means that the reliability of this scale can be viewed as high. The scale cannot be
improved by removing any items.
Table 10: Cronbach’s Alpha coefficients for multiple-item scale (attitudes)
Mean
St.
deviation
Cronbach's
Alpha if item
deleted
f+m is unattractive attractive
3,08
1,33
0,84
f+m is bad-good
2,94
1,21
0,84
f+m is unpleasant-pleasant 3,16
f+m is unfavorablefavorable
3,20
f+m is unsympatheticsympathetic
2,55
1,23
0,83
1,35
0,85
1,20
0,87
The Cronbach’s Alpha for the interaction effect of CSR reputation and crisis ‘relatedness
between reputation and crisis’ is very low 0.28. The scale only consists of two variables
which explains why the reliability is so low and no items can be deleted.
32
Table 11: Cronbach’s Alpha coefficients for multiple-item scale (relatedness)
Behavior
conform
Hypcrisy
St.
Mean deviation
Cronbach's
Alpha if item
deleted
3,59
1,56
Not possible
3,45
1,40
Not possible
The scale of the control variable ‘CSR involvement of the consumer’ is highly reliable 0.93.
Table 12 shows that it was not necessary to remove any items to improve the scales reliability.
The scale for ‘perceived responsibility’ of the company has a low score on reliability,
Cronbach’s Alpha is 0.61. However, table 13 shows that the reliability could not be improved
by removing any items.
Table 12:Cronbach’s Alpha coefficients for multiple-item scale (CSR involvement of the
consumer)
Cronbach's
St.
Alpha if
Mean
deviation item
deleted
Goodworkcondition 4,13
1,62
0,90
Goodpay
Helping
Change to
responsible retailer
4,20
4,00
1,56
1,58
0,90
0,91
4,50
1,61
0,94
Table 13:Cronbach’s Alpha coefficients for multiple-item scale (perceived responsibility)
Mean
Perceived
responsibility
Perceived
guilt
Perceived
controllability
Cronbach's
St.
Alpha if item
deviation
deleted
4,15
1,68
0,46
4,76
1,6
0,35
4,51
1,53
0,68
33
7.2. Descriptives
In this part of the thesis the descriptive statistics of this research will be explained. This
research makes use of a 7-point Likert scale which means that the scores equal or higher than
4 can be viewed as neutral/positive scores for the scales, and 3 and lower can be viewed as
negative scores for the scales. This goes for all the scales. The aim of the descriptive statistics
is to summarize the datasets and give insights in consumer attitudes, consumer emotions,
consumers’ CSR involvement, perceived responsibility, and perceived CSR reputation. With
the results from the descriptive statistics it is easier to interpret the results from the rest of the
analysis like ANOVA.
The following tables summarize the results of the descriptive statistics.
Table 14: Consumer attitudes before the crisis (manipulation check)
Negative
Neutral
Positive
Mean
SD
3,08
0,11
3,82
0,11
5,27
0,11
Table 14 shows the descriptives of the manipulation check. The respondents in the positive
condition are more positive than the respondents in the neutral and the negative condition.
This means that consumer perceptions about the company’s CSR are influenced by the
company’s CSR reputation.
Table 15a+b: Consumer emotions (mediator)
a: Consumer emotions in the
b: Consumer emotions in the different
different CSR reputation conditions
CSR crisis conditions
Mean
Negative
Neutral
Positive
SD
4,45
4,42
4,64
0,99
0,80
0,95
Mean
SD
Community
4,71
0,89
Social
4,35
0,99
Environmental
4,43
0,84
The tables 15 a and b show that there are no big differences between consumer emotions in
the different groups. The respondents had to rank their emotions with the 7-point Likert Scale,
1=do not feel the negative emotion at all to 7=feel the negative emotion a lot. Most consumer
ranked >4 which means that they all had negative emotions after the CSR crisis, whereby the
34
consumers in the positive CSR reputation condition and the community crisis condition
scored the highest.
Table 16a+b: Consumer attitudes
a: Consumer attitudes in the
b: Consumer emotions in the different
different CSR reputation conditions
CSR crisis conditions
Mean
Negative
Neutral
Positive
SD
2,63
3,01
3,42
0,12
0,12
0,13
Community
Social
Environemental
Mean
SD
2,98
0,12
3,13
0,12
2,95
0,13
The results in table 16 a and b show that the consumer attitudes after the crisis are negative
<4. The consumer attitudes in the negative CSR reputation condition are the most negative
and the consumer attitudes in the positive CSR reputation condition are the least negative, this
could be because of the ‘halo’ effect. Furthermore, the results show that the respondents who
were exposed to the related transgression (social crisis) have a less negative attitude than the
respondents who were exposed to the unrelated transgressions (community and environmental
crisis). However the differences between the three crises groups are small.
Table 17a+b: Perceived responsibility in the crisis (control)
a: Perceived responsibility in the
b: Perceived responsibility in the different
different CSR reputation conditions
CSR crisis conditions
Mean
Negative
Neutral
Positive
SD
4,67
4,26
4,49
0,14
0,15
0,15
Mean
SD
Community
4,22
0,14
Social
4,46
0,14
Environmental
4,74
0,15
The control variable will probably not have a significant effect on consumer attitudes because
overall the respondents viewed the f+m as responsible for the crisis >4, and the differences
between the groups are small.
35
Table 18a+b: Consumer’s CSR involvement
a: Consumer’s involvement in the
b: Consumer’s involvement in the different
different CSR reputation conditions
CSR crisis conditions
Mean
Negative
Neutral
Positive
SD
4,04
4,20
4,41
0,17
0,18
0,18
Mean
SD
Community
4,60
0,17
Social
3,96
0,17
Environmental
4,10
0,18
The tables 18 a and b show that overall all respondents are medium involved in CSR. Only
the respondents in the social crisis group are slightly less involved in CSR
while the
respondents in the community group are the most involved in CSR.
Because the differences in the groups for CSR involvement and perceived responsibility are
minimal they will not be considered in all of the analysis to test the hypothesis.
Table 19a+b: Relatedness between the CSR reputation and the crisis
a: Relatedness in the
b: Relatedness in the different
different CSR reputation conditions
CSR crisis conditions
Mean
Negative
Neutral
Positive
SD
4,00
3,56
2,95
1,25
0,95
0,90
Mean
SD
Community
3,27
1,21
Social
3,79
1,05
Environmental
3,48
1,06
The results in tables 19 a and b show that overall respondents scored low on perceived
relatedness between the CSR reputation and the CSR crisis <4. Especially when the CSR
reputation is positive the respondents perceive the CSR reputation and the crisis as unrelated.
The related transgression ‘social crisis’ was in ranked as most related to the CSR reputation
which is in line with the expectations.
36
Correlation matrix:
1
Gender
Perceived CSR (manipulation
check)
Emotions
2
3
4
6
0,02
-0,34
0,08
0,11
0,39
-0,26
Consumer's CSR involvement
-0,24
0,01
0,34
-0,26
Perceived responsibility
-0,08
0,02
0,25
-0,31
Consumer attitudes
5
0,29
7.3. Hypotheses testing
7.3.1. Hypothesis 1
Consumer attitudes after a crisis will be less negative for companies with a positive CSR
reputation than for companies with a neutral and negative CSR reputation.
A one-way ANOVA test shows that the independent variable CSR reputation has a significant
effect on the dependent variable consumer attitudes F(2;192)=10.06, p<.001. When the
company has a good CSR reputation prior to the crisis respondents will be more positive than
if the company has a neutral or negative CSR reputation prior to the crisis. However the mean
consumer attitude for f+m with a positive CSR reputation is M=3.41 which is below 4, so
even if the prior CSR reputation is positive consumers will have negative attitudes after the
crisis.
Table 12: consumer attitudes for different CSR reputations
Reputation
Negative
Neutral
Positive
Mean
2,63
3,01
3,41
SD
0,12
0,12
0,13
The results of the pair wise comparisons between the groups show that the differences in
consumer attitudes as a result of CSR reputation differ significantly from one another;
negative from neutral, M=-0.38, SD=0.17, p<.05, 95% CI [-0.72, -0.04], negative from
positive M=-0.78, SD=0.17, p<.001, 95% CI [-1.13, -0.44] and neutral from positive M=-
37
0.40, SD=0.18, p<.05, 95% CI [-0.75, -0.05]. Hypothesis 1 can be accepted with a P<.001 for
consumer attitudes.
7.3.2. Hypothesis 2
a) A positive CSR reputation will lead to more negative consumer attitudes when the crisis is
related and less negative consumer attitudes when the crisis is unrelated.
First a two-way Anova was conducted with CSR reputation and relatedness as the
independent variables and consumer attitudes as the dependent variable. The results of the test
show that there is no significant interaction effect between CSR reputation and perceived
relatedness F(16;169)=1.36, p=0.17. Also perceived relatedness had no significant effect on
consumer attitudes F(12;169)=1.61, p=0.09
Next each of the conditions was tested with a one-way Anova. This means first a one-way
Anova was conducted for the respondents in the positive CSR reputation condition with the
related transgression (social crisis) and an unrelated transgression (community crisis as
independent variables and consumer attitudes as dependent variable. The results of the oneway Anova show that there are no significant results in consumer attitudes between the
related (social crisis) and the unrelated (community crisis) transgression F(1;44)=0.01, p=0.93.
Table 20: Consumer attitudes (community crisis-social crisis)
Community
Social
Mean
SD
3,52
0,99
3,49
0,89
Next a one-way Anova was conducted for social crisis and environmental crisis as
independent variables and consumer attitudes as dependent variables. The results of the oneway Anova show that there are no significant results in consumer attitudes between the
related (social crisis) and the unrelated (environmental crisis) transgression F(1;43)=1.20,
p=0.28.
Table 21: Consumer attitudes (environmental-social crisis)
Mean
SD
Environmental
3,22
0,76
Social
3,50
0,89
38
The results of the Anova tests show that hypothesis 2a can be rejected.
b) A negative CSR reputation will lead to more negative consumer attitudes when the crisis
unrelated and less negative consumer attitudes when the crisis is related.
To test hypothesis 2b the same one-way Anova test as for hypothesis 2a was conducted. The
first one-way Anova tested social crisis and community crisis as the dependent variables and
consumer attitudes as the independent variable, but this time only for the respondents in the
negative CSR reputation condition. There are no significant results in consumer attitudes
between the related (social crisis) and the unrelated (community crisis) transgression
F(1;46)=0.26, p=0.61.
Table 22: Consumer attitudes (community-social crisis)
Community
Social
Mean
SD
3,54
1.08
2.73
1.42
The one-way Anova to test environmental crisis and social crisis as the independent variables
and consumer attitudes as the dependent variable shows that there are no significant
differences between the groups F(1;43)=0.07, p=0.80.
Table 23: Consumer attitudes (environmental crisis-social crisis)
Mean
SD
Environmental
2.63
1.42
Social
2.73
1.11
This means that hypothesis 2b is also rejected.
7.3.3. Hypothesis 3
Consumer emotions will mediate the effect CSR crisis and CSR reputation have on consumer
attitudes
H3a: The stronger the negative consumer emotions are, the more negative consumer
attitudes will be
39
H3b: The more positive consumer emotions are, the more positive consumer attitudes
will be
According to Baron and Kenny (1986), testing for mediation requires four steps. Step 1: is X
related to Y (ignoring the mediator). Step 2: Is X related to the mediator (ignoring Y). Step 3:
is the mediator related to Y (controlling for X). Step 4: is X related to Y (controlling for the
mediator). Hypotheses 2 a and b were rejected which means that there is no effect of the
relatedness between CSR reputation and CSR crisis on consumer attitudes. However it is
possible that there is an effect of relatedness on consumer emotions. Therefore, before starting
to test for the mediation effect according to the four steps of Baron and Kenny (1986), a twoway Anova is conducted for relatedness.
The first two-way Anova was conducted with community crisis as the unrelated transgression
and social crisis as the related transgression. The Anova test with relatedness, crisis and
reputation as the independent factors and consumer emotions as the dependent show that there
is a significant effect of relatedness on consumer emotions F(12;95)=2.03, p=0.03. Next a
two-way Anova was conducted with environmental crisis as the unrelated transgression and
social crisis as the related transgression. The results show that there are no significant results
for the effect of relatedness on emotions when the unrelated transgression is the
environmental crisis F(11;89)=1.27, p=0.25.
Next the steps as described by Baron and Kenny (1986) will be conducted. Because there are
two unrelated transgression the mediation for these two unrelated transgression will also be
tested separately to see whether the hypothesis holds or should be rejected for both conditions.
Also, because there are significant results for the relationship between relatedness and
emotions when community crisis is the unrelated transgression, the mediation for this
relationship will also be tested.
Step 1a: Are X’s (CSR reputation, CSR crisis (community and social) and relatedness) related
to Y(consumer’s attitude)?
To test this relationship a regression analysis was conducted. The results show that CSR
reputation and consumer attitudes are related, t= 3.28, p<0.01 and c=0.39 with 95% CI
[0.15,0.62]. The more positive the CSR reputation the more positive the consumers attitudes.
However there is no relationship between the crisis and consumer attitudes t=1.17, p=0.25 and
40
c=0.21 with 95% CI {-0.15,0.57} and relatedness and consumer attitudes t=-0.82, p=0.41 and
c=-0.07 with 95% CI [-0.23,0.10].
Step 1b: Are the X’s (CSR reputation, CSR crisis (environmental and social)) related to Y
(consumer’s attitude)?
When the unrelated transgression is the environmental crisis the same results show as when
the unrelated transgression was the community crisis. There is a significant relationship
between the CSR reputation and consumer attitudes t=3.30, p<0.001 and c=0.34 with 95% CI
[0.14,0.55] but no significant relationship between the crises and consumer attitudes t=-1.09,
p=0.28 and c=-0.19 with 95% CI [-0.53,0.15].
Step 2a: Are the X’s (CSR reputation, CSR crisis (community and social) and relatedness)
related to the mediator (consumer emotions)?
The regression analysis shows that there is a significant relationship between relatedness and
emotions t=-0.19, p=0.04 and c=-0.16 with 95% CI [-0.31,-0.01]. The more CSR crisis and
the CSR reputation are perceived as related the more negative the consumer emotions. This
also explains why no effect was found of relatedness on consumer attitudes in hypothesis 2,
apparently this effect is mediated by consumer emotions.
There is no significant relationship between the crisis and emotions t=-0.16, p=0.07 and c=0.30 with 95% CI [-0.62,0.02]. Also there is no significant relationship between the CSR
reputation and emotions t=0.99, p=0.32 and c=0.10 with 95% CI [-0.10,0.31].
Step 2b: Are the X’s (CSR reputation and CSR crisis (environmental and social)) related to
the mediator (consumer emotions)?
The results of the regression analysis show that there is also no significant relationship
between CSR reputation and emotions t=1.20, p=0.23 and c=0.12 with 95% CI [-0.78,0.31]
and CSR crisis and emotions t=0.59, p=0.56 and c=0.10 with 95% CI [-0.23,0.42] when the
unrelated transgression is the environmental crisis.
Step 3a : Is the mediator (consumer emotions) related to Y (consumer attitudes) controlling
for X (CSR reputation, relatedness, CSR crisis (unrelated transgression is community crisis))?
41
The regression analysis shows that there is a significant relationship between consumer
emotions and consumer attitudes t=-2.57, p=0.01 and c=-0.24 with 95% CI [-0.43,-0.06]. The
more negative the consumer emotions are, the more negative consumer attitudes will be and
the more positive consumer emotions are, the more positive consumer attitudes will be. This
means that hypothesis 4a and b can be accepted with p=0.01.
Step 3b: Is the mediator (consumer emotions) related to Y (consumer attitudes) controlling for
X (CSR reputation, CSR crisis (unrelated transgression is environmental crisis))?
Again there is a significant relationship between consumer emotions and consumer attitudes
t=-3.53, p<0.001 and c=-0.33 with 95% CI [-0.51,-0.14].
Step 4a: Is X (CSR reputation, relatedness, CSR crisis (community as unrelated transgression))
related to Y (consumer attitudes) controlling for the mediator (consumer emotions)?
When controlled for the mediator the results of the regression analysis show that there is a
significant relationship between CSR reputation and consumer attitudes t=3.70, p<0.001 and
c=0.42 with 95% CI [0.20,0.64]. But not for the crisis t=0.65, p=0.52 and c=0.11 with 95% CI
[-0.23,0.46] and not for ‘relatedness’ t=-1.46, p=0.15 and c=-0.12 with 95% CI [-0.28,0.04].
4b: Is X (CSR reputation, CSR crisis (environmental as unrelated transgression)) related to Y
(consumer attitudes) controlling for the mediator (consumer emotions)?
Also in step 4b the relationship between CSR reputation and consumer attitudes is significant
t=3.90, p<0.001 and c=0.39 with 95% CI [0.19,0.58] and the relationship between CSR crisis
and consumer attitudes is not t=-0.94, p=0.35 and c=-0.15 with 95% CI [-0.47,0.17].
In conclusion these are the significant relationship according to the mediation steps:
CSR reputation  consumer attitudes
Relatedness  consumer emotions (only for the condition with the social crisis and the
community crisis)
Consumer emotions  consumer attitudes
This means that hypothesis 4 partly supported, there is a mediation effect of consumer
emotions on the effect of perceived relatedness on consumer attitudes. However, the
mediation effect of emotions was only significant when tested for the social crisis as related
transgression and the community crisis as unrelated transgression.
42
8. Conclusion
8.1. Introduction
The purpose of this master thesis was to find out what the impact of an existing CSR
reputation is on consumer attitudes in a CSR crisis, and how relatedness of the crisis to the
existing reputation influences this effect. Also the mediating role of consumer emotions was
researched. The main research question is;
“Do consumers’ responses to a CSR crisis differ for companies with a positive versus a
negative CSR reputation? And do these responses depend on the level of relatedness between
the CSR reputation and the crisis?”
So far a lot of research focused on the positive effect of CSR and not on the negative effects
of CSI. This thesis addressed CSI in a new context whereby relatedness between the CSR
reputation and the crisis were researched and the possible ‘buffer’ effect a good CSR
reputation.
8.2. Conclusion based on the hypotheses
A conclusion will be drawn based on the hypotheses. Previous literature argued that a strong
CSR reputation leads to consumers’ resistance to negative information. This is the ‘halo’ or
‘buffer’ effect .This is because CSR enables firms to enjoy a level of goodwill which lowers
the risk from CSI (Eisingerich et al., 2011; Fennis & Stroebe, 2013; Peloza, 2006). The first
hypothesis confirms existing literature about the ‘halo’ effect. When companies have a
positive CSR reputation consumers will be less negative after the crisis. This signifies the
protection effect of a positive CSR reputation. Even though consumers’ attitudes are less
negative after a CSR crisis when the company has a good CSR reputation, the attitudes are
still negative. This means that companies do benefit from the ‘halo effect’ but only in the way
that consumers will be milder than in the case of a negative CSR reputation.
In this thesis different types of CSR crises were researched to see if they had different
outcomes in combination with the CSR reputation. Previous researched already argued that
different type of CSR crises have a different effect on consumers (Wagner et al., 2007).
Furthermore previous literature argued that discrepancies between stakeholder’s perceived
motives and the company’s stated motives would trigger skepticism and feelings of deception.
Therefore it was expected that if a positive CSR reputation and the crisis would be related
43
people would feel deceived and therefore have more negative attitudes and if the crisis would
be unrelated it would lead to less negative consumer attitudes. However this was tested and
hypothesis 2a had to be rejected because there is no interaction effect of CSR crisis and CSR
reputation on consumer attitudes. And also the perceived relatedness between the CSR
reputation and the CSR crisis did not have a significant effect on consumer attitudes.
However, the mediation test shows that there is no direct effect because the effect is mediated
by consumer emotions. Also, it was expected that for companies with a negative CSR
reputation it would work to other way around (hypothesis 2b), but this was also rejected. The
results showed that overall the respondents had a negative attitude towards the company after
the crisis.
In previous research, consumer emotions played a mediating role in contexts like complaining
and product attitudes. Emotions can influence the outcomes in consumer perceptions and
behavior. A good CSR reputation results in consumers experiencing positive emotions and a
negative CSR reputation results in consumers experiencing negative emotions (Peloza, 2011).
Also Jorgensen (1996) argued that emotions play an important role in consumer perceptions
after the crisis. Therefore, it was expected that consumer emotions would have a mediating
effect. The results show that there is a mediation effect of consumer emotions. Consumer
emotions mediated the effect of perceived relatedness on consumer attitudes. This was only
the case when this relationship was tested with the social crisis as the related transgression
and community crisis as the unrelated transgression, and not when the environmental crisis
served as the unrelated transgression. Also, results in previous literature that show that
consumer emotions influence factors like consumer perceptions (Jorgensen, 1996) can be
confirmed. The effect of consumer emotions on consumer attitudes is significant. The more
negative the consumer emotions are the more negative consumer attitudes will be and the
other way around.
8.3. Theoretical and managerial implications
The findings of this research may offer additional insights on consumer behavior, corporate
reputation and corporate crisis literature. Previous research already proved that a positive
reputation can have a ‘ buffer’
effect. However, the focus in the past was mainly on
companies that participate in CSR activities but not on companies where the reputation is
actually based on CSR. The current research was manipulated in such way that respondents
44
were exposed to information about a company with a CSR reputation. Also past literature
(Eisingerich, et al., 2011; Fennis & Stroebe, 2013; Klein & Dawar, 2004; Peloza, 2006) did
not research how the ‘halo’ effect works for consumer attitudes. Instead they focused on the
effect of concepts like consumer perceptions, product attitudes and negative word of mouth
intentions. Furthermore as the theoretical framework of this research already showed, there
are a lot of possible factors that can influence consumer attitudes, like; company specific
factors and congruence between consumers’ characters and CSR (Bhattacharya et al., 2009;
Green & Peloza, 2011; Sen & Bhattacharya, 2001) . This study makes a contribution by
including the relatedness of the CSR reputation and the crisis, which has not been researched
before.
An important conclusion of this research is that even though the buffer effect occurs,
consumer attitudes and purchase intentions are still negative. This confirms the arguments of
Eisingerich, et al. (2011) that CSR offers less of a buffer effect than often assumed. Previous
research explains the ‘ halo’ effect as resistance to negative information. But the results of this
thesis show differently. The ‘halo’ effect only exists partly, it leads to less negative attitudes
than for companies with no CSR reputation or a bad CSR reputation, but the consumer
attitudes are still negative. For managers this means that the ‘halo’ effect can offer them
protection, but they cannot completely rely on this effect. They should take measures to
further limit the negative effects of a crisis on consumer attitudes.
In the theoretical framework it also became clear that consumers are way more susceptible to
negative CSR information than positive CSR information (Sen & Bhattacharya, 2001), which
is important for managers to keep in mind. Previous research has mainly focused on the effect
of positive emotions. This research also looked how emotions work when they are negative
and value diminishing instead of creating. The results show that managers should be aware of
consumer emotions and handle them carefully. The avoidance of negative emotions might
limit the negative consequences of the crisis. The way a company reacts to a crisis and if it
takes it responsibility might influence consumer emotions and could therefore limit negative
emotions, this could be interesting for further research. It is possible that the relatedness of the
CSR reputation and the crisis affect consumer attitudes but that this effect is mediated by
consumer emotions. In the current research this was only partly supported, future research is
needed to confirm or reject this effect. Because relatedness has an effect on consumer
emotions managers can use this to estimate the negativity of the consumer emotions and
adjust their post crisis strategy.
45
9. Discussion
Overall the research of this thesis provided new insights and interesting results. This part will
discuss possible room for improvement and more future research directions.
A general limitation of the current research is the use of a scenario based experiment. The
scenario’s were realistic in a sense that they were ranked as credible and realistic in the pretest
and they were based on actual news items. But maybe respondents paid more attention to the
scenarios than if they would have read it on the internet, the newspaper or an magazine. That
is why it would be favorable if a replication of this study would be done under more natural
circumstances. It would be interesting to see if there would be differences in the results when
an existing company is used instead of a fictive company.
Previous research showed that different CSR domains can have different outcomes on
consumer perceptions and attitudes (Wagner, et al., 2009}. This research did include different
types of crisis but only focused on one CSR reputation, the social CSR domain (focused on
employees). Future research should investigate if the use of a different CSR domain would
have had different outcomes. Also, the outcomes of this research are only applicable to retail
companies. Future research is needed to expand the knowledge by investigating other
domains. For example; the retail industry might be less appealing to men which could cause
them to be less involved. Investigating other industries and other CSR reutations can
strengthen the generalizability of the research.
Respondents lacked information about how the company responded to the crisis. This might
be interesting to include in future research. Another interesting future direction is to research
if damage caused by the crisis (negative consumer attitudes, low buying intentions, punishing
intentions etc.), are easier to recover from for companies with a positive CSR reputation.
46
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52
Appendix A: Pretest
Part 1:
Positive social CSR reputation (10 respondents):
Imagine the following situation: while browsing on the internet, you come across a review of
various fashion companies on a blog. The review reflects the industry knowledge and
opinions of an influential fashionista with thousands of followers. One of the reviewed
companies is ‘fashion+more’ known as f+m, whose stores you visit regularly. You read the
following information about the company:
F+m’s design team creates trendy fashion for all, always at the best price. The collections
include everything from dazzling party collections to quintessential basics and functional
sportswear – for women, men , teenagers and children. F+m’s collection includes clothes,
shoes, bags, jewelry, make up and underwear. F+m, one of the world’s largest fashion chains
in the world, offers customers inspiring shopping experiences in 53 markets, as well as
through a growing online shop.
F+m is known as the industry leader when it comes to social responsible business practices.
The company stands out with regard to the positive impact they have on their employees. For
instance, f+m is currently known as the company with the best working conditions for
employees in development countries and they make sure that their employees do not work any
longer than their employees in western countries. The company’s leadership in social
responsible business practices has resulted in several awards by NGOs and industry groups.
Negative social CSR reputation (10 respondents):
Imagine the following situation: while browsing on the internet, you come across a review of
various fashion companies on a blog. The review reflects the industry knowledge and
opinions of an influential fashionista with thousands of followers. One of the reviewed
companies is ‘fashion+more’ known as f+m, whose stores you visit regularly. You read the
following information about the company:
F+m’s design team creates trendy fashion for all, always at the best price. The collections
include everything from dazzling party collections to quintessential basics and functional
sportswear – for women, men , teenagers and children. F+m’s collection includes clothes,
shoes, bags, jewelry, make up and underwear. F+m, one of the world’s largest fashion chains
53
in the world, offers customers inspiring shopping experiences in 53 markets, as well as
through a growing online shop.
F+m is one of the industry laggards when it comes to taking social responsibility. The
company is known for the negative impact they have on their employees. For instance, f+m is
currently one of the companies that is known for their low wages for employees in
development countries. Also, the average working days are way too long and there are hardly
any days off. The company’s lack of effort with regard to the natural environment has resulted
in many complaints by NGOs and industry groups.
Part 2: questionnaires
Below you will read four different statements about the company. Please indicate your
opinion about the statements (scale 1-7, completely disagree – completely agree)
To measure perceived CSR reputation:
Based on the CSR behavior of this company:
(1) I consider f+m as a socially responsible firm
(2) The company does not contribute to society in positive ways
(3) This firm is more beneficial to society’s welfare than other firms
(4) This firm contributes something to society
Based on source: Eisingerich, Rubera, Seifert and Bhardwaj (2011)
Transgression 1: Social crisis
Fire in the Bangladesh Factory
F+m faced a storm of protest after it emerged that the working conditions for employees in
the factory are far from safe. Last week there was a fire in the factory in Gazipur
(Bangladesh), employees who were knitting ‘jumpers’ in the factory got caught by the fire.
Eleven fire trucks fought more than two hours in order to control the fire, but they could not
prevent the death of 21 employees and the more than 50 injured. Several reports from
Bangladesh reported that the factory had worthless fire equipment.
54
Transgression 2: Community crisis
F+m scorns the homeless
F+m faced a storm of protest after it emerged that New Delhi stores were destroying and
discarding unworn garments as unemployment soars and the city’s homeless brave near
freezing temperatures as a cold spell sweeps across India. Sana Bhakta, a graduate student,
discovered that workers at the store were throwing out bags of new clothing items after
destroying them to make the unusable: fingers were cut off gloves and men’s jacket were
slashed apart so that insulating fiber spilled out. The country’s unemployment rate is on the
rise and New Delhi has been working to secure extra shelter space for its homeless population
during the cold temperatures.
Transgression 3: Environmental crisis
F+m is polluting China’s rivers
F+m faced a storm of protest after it emerged that the company’s factories in China are
polluting the Yangtze and Pearl River deltas with toxic chemicals. A year-long investigation
revealed that the factories excrete waste-water discharges that are contaminated with heavy
metals and hazardous, hormone-disrupting substances. These harmful chemicals are restricted
across the United States and the European Union because they are non-degradable and cannot
be removed by water treatment plants. China has yet to implement such restrictive policies.
Transgression 4: Animal crisis
f+m continues selling angora products despite disturbing fur farm video (animal issue)
f+m faced a storm of protest after animal rights group PETA released a gut-wrenching exposé
into the angora industry in China, which is responsible for 90 percent of the world’s supply of
angora wool. Investigators went to ten different angora farms and witnessed appalling abuse
of animals at all ten locations. At half of the farms a particularly barbaric form of live
plucking is used to remove the fur. In China, there are no penalties for the abuse of animals on
farms and minimal, if any, standards to regulate their treatment.
Questionnaire following transgression 1,2,3,4:
55
Based on the information you just read about f+m, how would you evaluate the company’s
behavior? (score 1-7).
-
Morally wrong – morally right
-
Not acceptable – acceptable
-
Unfair – fair
-
Negative – positive
Please answer the following statements: (scale 1-7, completely disagree – completely agree):
-
The information I just read about the company was credible
-
The situation described was realistic
Please indicate the degree to which you agree/disagree with the following statements:
(Transgression related vs unrelated to CSR reputation, 1-7: completely disagree – completely
agree)
1) f+m’s recent behavior is consistent with its reputation
2) f+m acts hypocritically
Appendix B: Experiment
Part 1: CSR reputation (respondents read 1 out of 3 scenario’s)
Imagine the following situation: while browsing on the internet, you come across a review of
various fashion companies on a blog. The review reflects the industry knowledge and
opinions of an influential fashionista with thousands of followers. One of the reviewed
companies is ‘fashion+more’ known as f+m, whose stores you visit regularly. You read the
following information about the company:
Scenario 1: Neutral reputation (no CSR mentioned)
F+m’s design team creates trendy fashion for all, always at the best price. The collections
include everything from dazzling party collections to quintessential basics and functional
sportswear – for women, men , teenagers and children. F+m’s collection includes clothes,
56
shoes, bags, jewelry, make up and underwear. F+m, one of the world’s largest fashion chains
in the world, offers customers inspiring shopping experiences in 53 markets, as well as
through a growing online shop.
Scenario 2: Positive social SCR reputation
F+m’s design team creates trendy fashion for all, always at the best price. The collections
include everything from dazzling party collections to quintessential basics and functional
sportswear – for women, men , teenagers and children. F+m’s collection includes clothes,
shoes, bags, jewelry, make up and underwear. F+m, one of the world’s largest fashion chains
in the world, offers customers inspiring shopping experiences in 53 markets, as well as
through a growing online shop.
F+m is known as the industry leader when it comes to social responsible business practices.
The company stands out with regard to the positive impact they have on their employees. For
instance, f+m is currently known as the company with the best working conditions for
employees in development countries and they make sure that their employees do not work any
longer than their employees in western countries. The company’s leadership in social
responsible business practices has resulted in several awards by NGOs and industry groups.
Scenario 3: Negative social CSR reputation
F+m’s design team creates trendy fashion for all, always at the best price. The collections
include everything from dazzling party collections to quintessential basics and functional
sportswear – for women, men , teenagers and children. F+m’s collection includes clothes,
shoes, bags, jewelry, make up and underwear. F+m, one of the world’s largest fashion chains
in the world, offers customers inspiring shopping experiences in 53 markets, as well as
through a growing online shop.
F+m is one of the industry laggards when it comes to taking social responsibility. The
company is known for the negative impact they have on their employees. For instance, f+m is
currently one of the companies that is known for their low wages for employees in
development countries. Also, the average working days are way too long and there are hardly
any days off. The company’s lack of effort with regard to the natural environment has resulted
in many complaints by NGOs and industry groups.
57
Part 2: First part questionnaire
Below you will read four different statements about the company. Please indicate your
opinion about the statements (scale 1-7, completely disagree – completely agree)
To measure perceived CSR reputation:
Based on the CSR behavior of this company:
(1) I consider f+m as a socially responsible firm
(2) The company does not contribute to society in positive ways
(3) This firm is more beneficial to society’s welfare than other firms
(4) This firm contributes something to society
Based on source: Eisingerich, Rubera, Seifert and Bhardwaj (2011)
Part 3: CSR crisis (respondents read 1 out of 3 crisis scenario’s)
Crisis scenario 1: social crisis
Fire in the Bangladesh Factory
F+m faced a storm of protest after it emerged that the working conditions for employees in
the factory are far from safe. Last week there was a fire in the factory in Gazipur
(Bangladesh), employees who were knitting ‘jumpers’ in the factory got caught by the fire.
Eleven fire trucks fought more than two hours in order to control the fire, but they could not
prevent the death of 21 employees and the more than 50 injured. Several reports from
Bangladesh reported that the factory had worthless fire equipment.
Crisis scenario 2: community crisis
F+m scorns the homeless
F+m faced a storm of protest after it emerged that New Delhi stores were destroying and
discarding unworn garments as unemployment soars and the city’s homeless brave near
freezing temperatures as a cold spell sweeps across India. Sana Bhakta, a graduate student,
discovered that workers at the store were throwing out bags of new clothing items after
58
destroying them to make the unusable: fingers were cut off gloves and men’s jacket were
slashed apart so that insulating fiber spilled out. The country’s unemployment rate is on the
rise and New Delhi has been working to secure extra shelter space for its homeless population
during the cold temperatures.
Crisis scenario 3: environmental crisis
F+m is polluting China’s rivers
F+m faced a storm of protest after it emerged that the company’s factories in China are
polluting the Yangtze and Pearl River deltas with toxic chemicals. A year-long investigation
revealed that the factories excrete waste-water discharges that are contaminated with heavy
metals and hazardous, hormone-disrupting substances. These harmful chemicals are restricted
across the United States and the European Union because they are non-degradable and cannot
be removed by water treatment plants. China has yet to implement such restrictive policies.
Part 4: Second part of the questionnaire
To measure consumer emotions:
Please rate the degree to which you experience the following emotions at this moment, after
having read the newspaper article (1-7, not at all – extremely): I feel:
1.Anger
2. Surprise
3. Disgust
4. Sadness
5. Shame
6. Sympathy
7. Aversion
Based on sources: Laros and Steenkamp (2005) and Grappi, Romani and Bagozzi (2013).
59
To measure attitude:
The next statements are about your opinion about f+m. I think f+m is (scale 1-7)
1) Unattractive – attractive
2) Bad – good
3) Unpleasant – pleasant
4) Unfavorable – favorable
5) Unsympathetic – sympathetic
Based on source: Spears and Singh (2004)
To measure protest behaviors:
How likely is it that you will… (scale 1-7, completely agree – completely disagree)
1) Participate in boycotting the company
2) Spread negative information about the company through social media (e.g. blogs,
social network sites, etc).
3) Participate in strikes against the company
4) Participate in actions of resistance against the company
5) Support legal actions against the company
6) Join collective movements against the company
7) Complain to the company
Based on source: Grappi, et al. (2013)
Word of mouth intention:
How likely is it that you will… scale 1-7, completely agree – completely disagree)
1) Tell friends, family and others negative things about the company
2) Advise friends, family and others not to buy products from the company
3) Discredit the company to friends, family and others
Based on source: Grappi, et al. (2013)
Buying intention:
How likely is it that you will buy products from this company? (scale 1-7)
60
1) Impossible – possible
2) Unlikely – likely
3) No chance – big chance
Based on source: Prabu, Kline and Dai (2009)
To measure perceived relatedness:
Please indicate the degree to which you agree/disagree with the following statements:
(Transgression related vs unrelated to CSR reputation, 1-7: completely disagree – completely
agree)
3) f+m’s recent behavior is consistent with its reputation
4) f+m acts hypocritically
Based on sources: Wagner, Lutz and Weitz (2009) and Mohr and Webb (2005)
To measure CSR involvement of the consumer:
(the socially conscious/responsible consumer)
Please indicate the degree to which you agree/disagree with the following statements:
(scale 1-7: completely disagree – completely agree)
1) I try to buy from companies that help the needy
2) I try to buy from companies that pay their employees a living wage
3) When given a chance to switch to a brand that gives back to the community, I take it
4) When I am shopping, I try to buy from companies that are working to improve
conditions for employees in their factories
Based on source: Mohr and Webb (2005)
To measure perceived degree of company’s responsibility in the crisis:
According to you the company is…. (scale 1 – 7)
1) Not at all responsible for the crisis – completely responsible for the crisis
2) Not at all to blame – very much to blame
61
According to you the crisis was….
3) Very controllable – not at all controllable
Based on source: Jorgensen (1996)
What is the extent to which the company should be forgiven? (scale 1-7)
1) Not at all forgiving – fully forgiving
2) Full pardon – no pardon
Based on source: Jorgensen (1996)
To measure demographics:
Age:
1) 13 – 17
2) 18 – 24
3) 25 – 34
4) 35 – 44
5) 45 – 54
6) 55 – 64
7) 65 – 74
Gender:
1) Woman
2) Man
Education:
1) VMBO/mavo
2) Havo
3) VWO/Atheneum/Gymnasium
4) MBO
5) HBO
6) WO
62
Based on source: http://www.qualtrics.com/
Appendix C: Outputs experiment
Correlations: gender, age, education, CSR reputation before the crisis, consumer
emotions, consumer attitudes:
63
The effect of and the differences between the groups of CSR reputation and CSR crisis
on consumer attitudes (Mean_CSR_After_Crisis):
64
The effect of CSR reputation on consumer attitudes:
65
The effect of the crises types on consumer attitudes and the differences between the
groups:
66
67
The interaction effect of CSR reputation and CSR crisis:
68
Positive CSR reputation group (community crisis-social crisis), the effect on consumer
attitudes:
69
Positive CSR reputation group (environmental crisis-social crisis), the effect on
consumer attitudes:
Negative CSR reputation group (community crisis-social crisis), the effect on consumer
attitudes:
70
Negative CSR reputation (environmental crisis-social crisis), the effect on consumer
attitudes:
Overall effect on consumer attitudes:
71
The mediation effect of emotions
Two-way Anova, positive CSR reputation with the community crisis and the social crisis
Tests of Between-Subjects Effects
Dependent Variable: meanemo
Type III Sum of
Source
Squares
df
Mean Square
F
Sig.
a
44
1,122
1,380
,097
1223,225
1
1223,225
1504,050
,000
Reputation
,373
2
,187
,229
,795
Crisis
,009
1
,009
,012
,914
19,790
12
1,649
2,028
,030
,783
2
,392
,481
,619
13,147
14
,939
1,155
,323
5,131
8
,641
,789
,614
1,210
4
,302
,372
,828
Error
77,262
95
,813
Total
3001,978
140
126,636
139
Corrected Model
Intercept
49,373
Relatedness
Reputation * Crisis
Reputation * Relatedness
Crisis * Relatedness
Reputation * Crisis *
Relatedness
Corrected Total
a. R Squared = ,390 (Adjusted R Squared = ,107)
Dependent variable: emotions
72
Dependent variable: consumers’ attitudes
Step 1a of mediation analysis:
73
Step 1b:
Step 2a:
Step 2b:
Step 3a:
74
Step 3b:
Step 4a:
Step 4b:
75
Control variables:
CSR of the consumers:
Perceived guilt in the crisis:
76
The effect of the type of CSR crisis on perceived guilt:
77