How Corporate Social Responsibility Adds Value to a Brand - Essay Example

Corporate Social Responsibility always adds Value to a Brand Executive Summary Even though the of corporate social responsibility has received a lot of exposure, there are still many corporations that do little more than promise to make policies that are environmentally-friendly while also giving back to the communities that have sustained them. Other companies may make the decision to implement corporate social responsibility initiatives, but do this as a result of peer pressure. Even fewer companies are led by executives who intrinsically feel that giving back to society and engaging in initiatives which help in preserving the environment is the decent thing to do once a corporation is making more money than it ever expected to. Whether reacting as a result of peer pressure or because of basic human decency, corporations that choose to implement corporate social responsibility initiatives improve their image and increase their brand value. This increases their competitive advantage and can enhance their image thus attracting talented or skilled workers who may wish to be hired by respected companies. The improved image will also positively affect the attractiveness of the organization’s goods or services. In all circumstances, CSR initiatives that are meant to improve the community or preserve the environment also generate environmental as well as social value, while simultaneously supporting the organization’s corporate objectives, improving relationships with all stakeholders, and reducing overall costs. Introduction In modern times, the trend of social consciousness is affecting every facet of public life. The business scene has particularly been impacted by the notion of giving back to the community that has given its support. Being socially conscious basically has to do with having additional commitments other than just meeting financial organisational objectives. The push for businesses to take on more socially-related responsibilities has produced a noticeable change in organisational stakeholders like workers, customers, contractors, and shareholders in most industries. This is because these stakeholders are usually vested in ensuring that their brands remain in the minds of present clients as well as potential customers. For brands to be marketable in Western nations today, they have to be linked to some type of socially conscious agenda. Organisations can no longer create interest by defining their brands in terms of their functions or abilities; they also have to include culturally related, environmentally-related, or socially-related statements in their marketing messages in order to attract customers- while also retaining the ones they have. The Emerging Significance of Brands For the most part, in past years, tangible assets were perceived as being the major source of transactional business value. These assets included land, financial assets like investments, manufacturing assets, and even building structures. Even though the market remained cognisant of the fact that there were intangibles assets that were possibly of more value, the true value of the intangibles could not be quantified; and so they were disregarded. Brands, for example, defined corporate success; however, because marketers could not determine how best to capitalise on them in order to attract more customers, they were mainly disregarded (Hull and Rothenberg 2008). More than a decade ago, business organisations were quite aware of the significance of their brands, as could be deciphered through their creation of the position of brand managers. However, in regards to the stock market, stock investors considered tangible assets as being the main source of value assessment. Corporate Social Responsibility A business’s reputation essentially comprises of its stakeholder’s assessment of it over a definite period of time (Lockett, Moon, and Visser 2006). This assessment will comprise of the stakeholder’s familiarity with the organisation’s behavior along with the images that the organisation has built (Sotorrio and Sánchez 2008). A good image basically comprises of qualities of an organisation that have to do with its manufacturing processes, merchandized goods, leadership styles and corporate objectives, financial performance, environmental responsibility, engagement initiatives with workers, and emotional appeal to the public. These factors may be adjusted over time so as to reflect any subtle changes that occur in the surrounding community. Just two decades ago, the most important factors for an organisation’s image were considered to be its financial records (Márquez and Fombrun 2005). In the present business scene, corporate social responsibility has become so influential that good CSR initiatives can actually improve the way that a company that is embroiled in scandal is perceived in spite of its obvious failings. According to Siegel and Vitaliano (2007) business organisations that are perceived as having few and weak Corporate Social Responsibility initiatives tend to suffer from incidences of stock decline at approximately twice the rate of companies that are perceived as having strong CSR policies and practices. This means that corporate social responsibility practices tend to proffer incremental gain when companies experience productivity and the moderation of negative publicity when they experience problems. CSR initiatives are also important because they help organisations to be more resilient. Essentially, having a well known and respected CSR policy translates to generating a base of goodwill for business organisations (Vogel 2005). Having a good CSR policy shows potential customers that an organisation can safely be presumed to be genuine and honest. Reasons for Organisations to Utilise CSR As a result of the widespread use of modern technology, business organisations today can be safely said to be more influential than national governments (Todd and Peloza 2011). In particular, multinational corporations have policies and create products that affect more communities than any one nation. Self-regulating business organisations tend to create initiatives that demonstrate a sense of corporate responsibility- this shows that they are more interested in realising financial profit (Porter and Kramer 2006). For such firms, corporate responsibility calls for business leaders to determine the effect of their corporate policies on the workers, consumers, and general communities. Companies can also demonstrate CSR initiatives by investing in solving health-based, environmental, and economic problems in the community. Many organisations also include the move to reduce the amount of harm caused by manufacturing processes in the surrounding environment as a CSR initiative. For firms such as Enron, which have become embroiled in ethical failings, corporate social responsibility also becomes a serious initiative as it has the capability to change the public’s opinion about the besieged firm. In developing as well as developed nations today, there are numerous organisations that have heavily invested in acquiring new and more ethical outlooks. According to Goyal (2006) consumers will use an organisation’s reputation to determine that kind of firms they wish to purchase from. In addition, the client’s perception of an organisation’s corporate social responsibility initiatives has the ability to influence attitudes towards goods and services, customer switching behaviour, identification with a specific company, customers’ behavioural intentions, consumer defection, recommendation intentions, and repeat patronage. The Effect of CSR on Brand Value According to Galan (2006) if customers remain unaware of an organisation’s CSR initiatives, they may not necessarily be influenced to buy its products. Customers are not just interested in an organisation’s CSR initiatives, but they also try to find out the reasons why business organisations invest in the said CSR initiatives. For all customers as well as potential consumers, the aim of the CSR initiatives has to be sincere (Penn 2010). Fake images pretending care are usually quite easy to see through- and can result in even more alienation for an organisation if discovered. Organisations have to work hard in order to ensure that its stakeholders remain aware of all their efforts. It may even be beneficial for organisations to include their customers in some of their programs for improving the surrounding community. It is only under such circumstances that CSR-reputation relationships are formed. Corporate Social Responsibility through the Corporate Image According to the stakeholder theory, an organisation has to satisfy its stakeholders so as to be able to retain their loyalty. This includes using corporate social responsibility policies to draw their interest. Corporate social responsibility attracts customers because there is a definite image that can be created by responsible organisations. According to Fan (2005) an organisation’s image is generated in the minds of consumers from the past activities as well as incidences involving the company. According to Chu and Keh (2006) the corporate consumers perception of a corporate image may not be absolute but is actually usually relative. The idea of the corporate image actually describes the consumers reaction to the values, offerings, and impressions that the surrounding community has about the company in question (Werther, Jr., and Chandler 2006). This means that the image is also comprised of a business name, the ideology associated with the company, the merchandise that it produces, and the feeling of quality that is communicated by every individual worker to the company’s clients. In regards to an organisation’s corporate image, there are two important elements that have to be consider; the emotional as well as functional factors (Valor 2005). The functional element is associated with tangible attributes that can be assessed, while the emotional aspect is connected with psychological aspects that are manifested by customer’s attitudes towards the corporation in question. The feelings in the emotional component are derived from personal experiences that customers have with a business organisation. According to Brammer and Pavelin (2006) organisational images usually function as filters that can affect a consumer’s perception of a firms operations. A corporate image can even contribute towards enhancing its competitive position by means of strategic marketing operations. Ways in which CSR affects Brands Corporate social responsibility initiatives, once included in the effort to improve a company’s image, can positively affect an organisation in different ways. Some of these ways include: In Generating Brand Awareness -Generating brand awareness has to do with consumers ability to recall the brand even from among groups of similar products. CSR initiatives can contribute towards a brand’s increased brand recognition. Enhancing Brand Image –Improving a brand’s image has to do with ensuring that customers are constantly reminded of what the brand stands for. This can be accomplished by initiatives such as the giving of donations which benefit communal social organisations such as schools or social organisations. Generating Brand Credibility – According to Bies, Bartunek, Fort, and Zald, (2007) brand credibility can be defined by values such as trustworthiness, expertise, and likability- all of which could be CSR products. Inspiring strong feelings among the Organisation’s Customers about the Brand – Constructive or positive feelings are linked with self-respect as well as social approval. Brands that inspire positive feelings in an organisation’s customers usually also make it possible for them to feel better about their choices (Berrone, Surroca, and Tribó 2007). This can be beneficial in additional ways as their good feelings could also prompt them to be keener about conserving the environment by recycling products. Generating a Sense of Brand Community – The notion of a sense of brand community has to do with the creation of a connection with the brand and all other customers who are using the product. This feeling could almost be perceived as being a sense of the community’s moral responsibility. Realising Brand Engagement -Brand engagement has to do with creating a situation in which consumers are encouraged to invest their time and assets in relation to the corporate activities. The efforts made to engage customers have to be constant in order to be successful. Sporadic engagement can easily turn to be counter-productive. For example, if one project in engagement of customers is successfully completed, the organisation has to seek another more challenging way to engage the customers so as to retain their interest. The engagement process should not be allowed to be cyclical, but should be continuous- with commitment being elicited from all the stakeholders. Conclusion The subject of brands being influenced by corporate social responsibility is set to become a major concern in the coming years. Brand and reputation scholars have addressed the developing importance of elements such as benchmarks for different segments of business industries, and how the public understanding about the significance of corporate citizenship measures up against expert ratings of citizenship performance. In addition, it is likely that the future need for CSR initiatives will be generated through different factors such as the challenges that are brought about by issues such as energy usage, global warming, and the removal of waste products that bring toxins the environment. There are also social challenges such as natural disasters, the incidence of famine in different areas of the world, and the incidence of childhood diseases in developing nations which organisations could also seek to help in as part of their corporate social responsibility initiatives. Any type of participation in areas that have suffered from any of these calamities will definitely endear an organisation to a community; thus improving its image among potential consumers and creating brand awareness for its products. References Berrone, P., Surroca, J. & Tribó, J.A. (2007) ‘Corporate ethical identity as a determinant of firm performance: a test of the mediating role of stakeholder satisfaction’, Journal of Business Ethics, vol. 76, pp. 35-53. Bies, R.J., Bartunek, J.M., Fort, T.L. & Zald, M.N. (2007) ‘Corporations as social change agents: Individual, interpersonal, institutional, and environmental dynamics’, Acad. Management Rev., vol. 32, pp. 788–793. Brammer, S. & Pavelin, S. 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