When consumers encounter negative information about a company, its reputation for corporate social responsibility can help — but only sometimes.
Negative information about businesses is omnipresent. Even much-admired businesses, such as Apple Inc., must deal with negative information, as Apple discovered when consumer complaints surfaced in 2010 about the antenna design of its iPhone 4. Negative information tends to spread faster than positive and, because of increased usage of social media and the Internet, businesses are likely to be confronted with more — not less — negative information about their companies in the future. While the spread of negative information may not always be under the control of a business, it can try to mitigate the potential damage from negative information in different ways.
An increasing number of companies invest money in corporate social responsibility initiatives, in part to build general good will for their organizations. However, we have not known how effective corporate social responsibility initiatives are in strengthening customer resistance to negative information, compared to other tactics that can enhance a company’s reputation — such as investing in product or service quality or customer care. Does doing good help protect a business’s reputation against negative information it may be confronted with in the future?
Not completely, some recent research of ours suggests. We conducted a study with Gaia Rubera, an assistant professor of marketing at Eli Broad College of Business at Michigan State University, and Matthias Seifert, an assistant professor of operations and technology at IE Business School in Madrid, to look at how customers reacted to negative information about a company. Detailed results from the study were published in the February 2011 issue of the Journal of Service Research.
A.B. Eisingerich, G. Rubera, M. Seifert and G. Bhardwaj, “Doing Good and Doing Better Despite Negative Information? The Role of Corporate Social Responsibility in Consumer Resistance to Negative Information,” Journal of Service Research 14, no. 1 (February 2011): 60-75.
In the first part of our study, we surveyed 854 customers of a commercial bank about their opinions of the company and how they would react to negative information about it.