“The era of self-interested companies trying to maximize shareholder wealth at any cost appears to have been supplanted by an era of corporate social responsibility, a phrase used to describe a decision by the company’s management to consider the impact their decisions will have on their customers, employees, suppliers and communities, as well as their shareholders.” So write Remi Trudel and June Cotte in their article “Does It Pay To Be Good?” in the Winter 2009 issue of MIT Sloan Management Review.
Trudel and Cotte report some interesting findings from their research: Consumers are willing to pay more for goods that are ethically produced and expect to pay less for those that are unethically produced. What’s more, consumers were generous in their definitions: In an experiment, they rewarded a company that had 25% organic cotton in t-shirts with a price premium similar to what they gave a company with 100% organic shirts.
That kind of favorable consumer response to social responsibility may help explain another trend — one reported on this week by Fortune: Despite the economic downturn, companies are not abandoning their corporate social responsibility programs. “This recession is wiping away a lot of things, but so far, corporate responsibility seems to be a survivor,” Aron Cramer, president and CEO of Business for Social Responsibility, told Fortune.