Warm Glow or Extra Charge? The Ambivalent Effect of Corporate Social Responsibility Activities on Customers’ Perceived Price Fairness

By Johannes Habel, L. Schons, S. Alavi, J. Wieseke. 2016

247 citations recorded by the source corpus.

Prior research has firmly established that consumers draw benefits from a firm's engagement in corporate social responsibility (CSR), especially the feeling of a “warm glow.” These benefits positively affect several desirable outcomes, such as willingness to pay and customer loyalty. The authors propose that consumers do not blindly perceive benefits from a firm's CSR engagement but tend to suspect that a firm's prices include a markup to finance the CSR engagement. Taking customers’ benefit perceptions and price markup inferences into account, the authors suggest that CSR engagement has mixed effects on consumers’ evaluation of price fairness and, thus, on subsequent outcomes such as customer loyalty. The authors conduct one qualitative study and four quantitative studies leveraging longitudinal field and experimental data from more than 4,000 customers and show that customers indeed infer CSR price markups, entailing mixed effects of firms’ CSR engagement on price fairness. The authors find that perception critically depends on customers’ CSR attributions, and they explore the underlying psychological mechanisms. They propose communication strategies to optimize the effect of CSR engagement on perceived price fairness.

Subfields: Marketing, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/b30b9cfeaf754f48df9834f6b2196de83d68c4b5

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Citations in the corpus

Consistency Matters! How and When Does Corporate Social Responsibility Affect Employees’ Organizational Identification? (2016, background): “Furthermore, a burgeoning management literature has emphasized the importance of investigating the role of CSR as a strategic tool to improve the relationships between business organizations and their stakeholders (Flammer and Luo, 2016; Habel et al., 2016; Luo and Bhattacharya, 2006).”
An Investigation of Passengers’ Psychological Benefits from Green Brands in an Environmentally Friendly Airline Context: The Moderating Role of Gender (2017, background): “[34] showed that if customers perceive warm glow when purchasing products, they are more likely to experience a higher perception of prices fairness.”
Can doing good lead to doing poorly? Firm value implications of CSR in the face of CSI (2017, background): “Although CSR topics continue to gain momentum in marketing research (Habel et al. 2016; Hult 2011; Lacey et al. 2015), the questions of how and when CSR efforts affect firm value in the context of CSI represent a major research gap.”