Daniel Diermeier explains the recent evolution of CSR

Good Samaritan-ship and other principles of effective CSR

Once managers understand the contexts in which CSR can drive economic value, they need to think about how best to deploy responsibility initiatives to capture that value. Recent research has uncovered several principles that corporations need to mind to generate a positive stakeholder response. One example situation related to these principles is where the firm has no perceived causal role, such as natural disasters. In such situations we can apply the Good Samaritan Principle, based on the biblical story of the Samaritan who helped an injured robbery victim others had merely passed by. Like the Samaritan, companies offering their help should be seen as motivated more by altruism than self-interest. Similarly, firms are judged by the competence and warmth they demonstrate when helping; in a disaster situation individuals view the company as a community member, rather than a provider of goods and services in exchange for benefits. Laboratory experiments confirm that people evaluate firms more positively when they see evidence of competence and warmth—for example, having executives assist victims personally is viewed far more positively than just donating money. So it is not just the thought that counts, but the way CSR efforts are carried out.

In the specific context of natural disasters, the strategic fit of responsibility efforts with companies’ core products or capabilities is less important. A “well-fitting” response may even be viewed negatively. For example, if a beauty company were to send cosmetics or skin moisturizer to victims needing clean water, the public would likely pan them for it, seeing the move as self-serving. Communications represent another potential pitfall for CSR efforts. In 2000, when Philip Morris spent $150 million on advertising to publicize the $115 million it had contributed to battered women’s shelters and other causes, the company was attacked widely. Blowing one’s own horn too loudly leads the public to suspect ulterior motives. In contrast, Walmart’s communications strategy around its efforts to help Hurricane Katrina victims in 2005 highlighted the corporation’s competence (for example, delivery of water and other supplies well before the federal government’s relief effort) and warmth (such as store managers voluntarily distributing nonperishable items), yielding large reputational benefits. Walmart allowed store managers and truck drivers to talk directly to the media.  The emotional impact of their personal stories of neighbors helping neighbors played an important role in boosting positive perceptions of Walmart and energizing the business’s employees.

In short, to maximize reputational and economic value, businesses can look to several principles when deploying responsibility efforts as related to natural disasters and other situations:

Companies face increasing expectation that they will not only maximize shareholder value but also contribute to their broad communities on multiple dimensions. That means executives need to understand when CSR efforts can drive economic and reputational value, and how to implement them to maximize that value. Taking this approach can transform CSR from a potentially value-destroying product of good-but-misguided intentions to a real value-generating strategy.

Republished with permission of the Kellogg School of Management and Kellogg Insight. © Kellogg School of Management at Northwestern University.

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