The Good, the Bad and the Ugly truth - How Corporate Social Responsibility (CSR) Violations Affect Marketing Effectiveness

Although that managers may not intend to act unethically, situations can arise in which consumers interpret ordinary business decisions as a CSR violation. Research so far only focused on the direct negative outcomes of CSR violations like i.e. image and sales losses. However, a violation could also hurt the effectiveness of a company’s marketing instruments like the price- or the product performance elasticity. The present study is based on the answers of 600 participants in four Best/worst-Scaling experiments. The study investigates the impact of two CSR violation scenarios for hedonic and functional products. The results show a significant decrease in price and product performance sensitivity for the violating company. Contrary, the non-violating company benefits from apositive price elasticity but also suffers from a decrease of the product performance elasticity.