How can corporate giving benefit consumers’ perceptions?
In this article, Kumar Ranjan, EDHEC Professor and Management in Innovative Health Chair Research Associate, analyses when and how corporate giving benefits a company or a brand, notably by changing the customers' perceptions.
We are all aware that making profit is the primary motive for businesses. However, getting involved in causes is becoming common practice amongst companies and brands.
One way for corporations to show their support to a cause is through corporate giving. This is when a company is giving back to society by making cash or in-kind gift donations towards a charitable cause. Still, apart from the philanthropic outcome of this involvement, how are these donations benefiting the company and the brand in general? Can corporate giving play a role in improving consumers' evaluation regarding the brand and company?
While we suppose there is a positive link between the two, we do not know its full extent yet. This is because many factors come into play when improving consumer perceptions through corporate giving, such as the good fit between the company and the cause and the donation type or amount. So how can we determine which factor has the most effect on consumers' perception? How can we help managers run more successful corporate giving campaigns?
We've conducted a meta-analysis (1) on 114 research papers with over 100 000 participants to look at the specific links between these factors and the consumers’ perceptions, such as brand attitude, company attitude, purchase intention and word of mouth (WOM).
Company attitude is the perception of the consumer towards the organization that markets or produces the products or services, such as Danone for example, while brand attitude is his perception towards a specific brand, such as Evian for example.
CSR’s undeniable effect
Of course, corporate giving had a positive effect on consumers’ perceptions. But taking all factors into account, Corporate social responsibility (CSR) had the most significant effect on company attitude. This means that the involvement in a social or environmental cause can significantly improve the attitude of the consumer towards the company. On the other hand, a good fit between the cause and the brand had the weakest influence on consumers’ perceptions of the company. CSR was also the most significant factor when it comes to improving purchase intention, while donation type had the least impact on it.
This means that consumers would have a better attitude towards Danone if the company would donate or participate in a CSR initiative rather than donate to a cause that is a good fit to its brands. Focusing on CSR would also have a positive effect on the consumers’ intent to purchase their products, as well as encouraging consumer’s involvement with the cause.
However, when it comes to improving brand attitude, we saw that all factors had a similar effect : brand cause fit, CSR, donation amount, donation type and cause involvement played a similar role. But focusing on highly engaging causes that are strongly aligned with the brand can help boost the consumer’s evaluation of the brand. In that example, Evian would benefit more positively by donating to a cause that is a good fit to its brand. Finally, to improve WOM, company-cause fit, cause involvement and CSR factors all played a significant role.
Conditional vs unconditional donations
But when deciding to run corporate giving campaigns, taking decisions regarding the type of donation or its amount can also become a challenge for managers.
This is why we pushed our study further, by looking into the impact of the nature of the donation on the consumers’ perceptions. Donations can either be conditional to the purchase of the product, for example when a certain percentage of the price is donated for each purchase, or it can be unconditional, when the company involves itself in giving money or sponsors a cause without imposing any condition on consumers.
Our study revealed that when the donation is unconditional, it has a positive effect on the link between a company cause fit and company attitude. This means that if a company donates unconditionally towards a cause that is a good fit, it would boost the positive impact it has on the consumers’ perception of the company.
This study provides interesting insights for managers looking to run their next corporate giving campaigns. It confirms that improving perceived CSR is the key to generate positive consumer evaluations. If corporate-giving managers want to improve consumer attitudes toward the company, the next best thing to CSR would be to increase company-cause fit.
But above all, proving such a strong positive relation between corporate giving and consumer perception could finish convincing even more companies to take the big plunge.
(1) Corporate giving and its impact on consumer evaluations: A meta-analysis. Sajeeb Saha, Kumar Rakesh Ranjan, Ravi Pappu, Saeed Akhlaghpour. Journal of Business Research - Volume 158, March 2023, 113656. https://doi.org/10.1016/j.jbusres.2023.113656