group 9_class presentation

8/12/2019 Group 9_Class Presentation

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MaximizingBusiness Returns

Ishpreet Singh 12P139 Karan Jaidka 12P141Lucky Sharma 12P145 Prabhat Singh 12P154Vignesh Patil 12P177 Viswanath Kuppa 12P18

PGPM Section C Group 9


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AgendaO Introduction

O Stakeholders Attribution

O Challenges of CSR CommunicationO What to Communicate

O Where to Communicate

O Moderators of Communication

Effectiveness

O Conclusion

O Further Scope


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IntroductionO What is CSR?

O CSR is a commitment to improve societal well-being through discretionary business practicesand contributions of corporate resources

O Why important?

O It is not only the ideological thinking thatcorporations can bring powerful social change

but also the multi-faceted business returns thatfirms can reap from CSR endeavors


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Maximizing ReturnsO Ways in which corporations benefit:-

O Individuals buy more products

O They seek employment in the companyO They invest in the company

O How to reap those benefits:-

O Creating awareness among companys

external and internal stakeholdersO Minimizing stakeholder skepticism


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Stakeholders Attribution

Stakeholders think of company in two ways:-

1. Extrinsic Company is seen as attempting to increase

its profits It leads to less favorable stakeholders

attitudes and behaviors towards thecompany

2. Intrinsic

Company is viewed as acting out of agenuine concern for the focal issue

It reacts more positively towards thecompany


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Issues in CSR CommunicationO What to communicate

O Message Content

O Where to communicateO Message channel to be used

O Company and Stakeholders specificfactors that impact effectiveness of CSR

communication


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Mixed Motive versus

Extreme View (1/2)Researchers found that

Respondents reactions are more positive

when CSR attributions were mixed thanwhen they were purely intrinsic or extrinsic

Stakeholders are tolerant of extrinsicmotives as long as CSR activities areattributed to intrinsic motives as well


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Mixed Motive versus

Extreme View (2/2)They also found

Stakeholders do not respond

negatively to extrinsic CSRmotives per se, but respondnegatively to any marketingstrategies that seem

manipulative or deceptive By acknowledging both intrinsic andextrinsic motives in its CSRcommunication, a firm can inhibitstakeholder skepticism


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What to Communicate (1/2)CSR message can be

1. Associated with social cause

Consumers are more likely to besuspicious of ulterior motives as suchadvertising does not fit schemerschema

Company should emphasize the

importance of social issue andcommunicate a lack of vested self-interest by choosing issues that are notrelated to the companys business


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What to Communicate (2/2)2. Companys specific involvement

in a social cause

Most of the times companiescommunicate like this Company can emphasize on:-

i. Commitment to a causeii. The impact it has on the cause

iii. The CSR motiveiv. The congruity between the cause

and the companys business


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CSR CommitmentO Target in its 2007 CSR report talked about its

Take Charge of Education (ECOE) program

O

Various aspects of commitment The amount of input

Like, Target giving input of about $246 mn

The durability of the association

Target running this program from 1997

The consistency of input Donating one percentage of purchase made

from Target Credit Cards


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CSR Impact (1/2)O Here, company focus on output side like

societal impact or actual benefits that

have accrued to the target audienceO Like, in partnership with UNICEF, Pampers

launched an initiative, 1 Pack = 1 Vaccine

O This was to give tetanus vaccines toexpectant women in developing countries

O The title clearly communicates the societalimpact


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CSR Impact (2/2)O Durability of support is seen as

1. Long Term Commitments

Seen as driven by a genuine concern forincreasing societal/community welfare

2. Short Term Commitments

Viewed as a way of exploiting the causefor the sake of the profit


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CSR Motives (1/2)O Questions to be answered are

1. Should companies only emphasize

altruistic, intrinsic motives denyingbusiness-related motives in their CSRcommunication?

2. Should they be honest and acknowledge

the business motives underlying theirCSR initiatives?


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CSR Motives (2/2)O Researchers say that

Consumers often see multiple motives and theyunderstand the companies often seek to achieve

certain business goals through their CSRinitiatives

Acknowledgement of extrinsic, firm-servingmotives in their CSR message will actuallyenhance the credibility of a companys CSRcommunication and inhibit stakeholder skepticism

O Therefore, a company should emphasize theconvergence of social and business interests andfrankly acknowledge that its CSR endeavors arebeneficial to both society and itself


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CSR Fit (1/3)O Stakeholders expect companies to

sponsor only those social issues that havea good fit with their core corporate

activitiesO CSR fit may result from Common associations that a brand shares

with the cause

Affinity with specific target segments Corporate image associations created by

the brands past conduct in a specificsocial domain


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CSR Fit (2/3)O According to two-stage model of

attributions

1. Consumer will first attribute CSRactivities to dispositional motives i.e.intrinsic motives

2. Then, correct this if they allocatesufficient processing capabilities and

engage in more effortful elaboration byconsidering contextual factors e.g.competitive pressure


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CSR Fit (3/3)O Why CSR Fit is important?

Low CSR Fit is likely to increase cognitiveelaboration and make extrinsic motives moresalient, thereby reducing stakeholders positive

reactions to a companys CSR activitiesO What to do if natural fit is not there?

In such a case, the company should elaborate onthe rationale for its social initiative to increaseperceived fit

For example, DenTek Oral Care (sponsor of

American Diabetes Association) includes in itscommunication the information that diabetes canlead to tooth decay, bad breath, dry mouth andgum disease


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Where to CommunicateO Different channels are:-

1. Official Documents such as an annual

corporate responsibility report2. TV commercials

3. Magazines

4. Billboards advertisements

5. Company Website6. Product packaging


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CommunicatorsO The communicator can be company-

controlled or external

External Communicators such as media,customers are generally more thancompany-controlled

Company can exert greater control overcontent of CSR communication by

members of its value chain rather than bythose who are not part of that value chain


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Trade-off between

Controllability and Credibility (1/2)O Less controllable the communicator is, the

more credible it is

O Individuals are more critical of messages from

sources they perceive to be biased or self-interested

O CSR communication via corporate sourceswill trigger more skepticism

O For example, anti-drinking and driving

message sponsored by a beer companyinferred more self-serving motives of thesponsor


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Trade-off between

Controllability and Credibility (2/2)

O Consumers react more positively to acompanys CSR activities when they learnthem from a neutral source

O What should companies do to achievethat?1. They should try hard to get positive

media coverage from independent,unbiased sources

2. They should try to encourage informalyet credible communication channelssuch as word-of-mouth of stakeholders


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Some ExamplesO Timberland, as part of Earthkeeper program

launched an innovative global network of onlinesocial networking tools, including a strong

Facebook presence, a blog and a YouTubechannel

O The company was proactive in its use of socialmedia to engage consumers to be their CSRadvocates

O Other companies such as Stonyfield Farm and

Ben & Jerrys butter pecan ice cream benefit fromconsumer ambassadors who rave in the virtualworld about their social responsibility endeavors


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Moderators of

Communication EffectivenessO Two moderators are:-

1. Company-Specific Factors

2. Stakeholder-Specific Factors


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Company-Specific FactorsO Two factors are:-

1. CSR Reputation

It is a collective representation of a firmspast actions and results that describesthe firms abilities to deliver valued

outcomes to multiple stakeholders

Encompasses different dimensions of

product quality, innovation, investmentvalue, people management and CSR


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How Reputation Affects (1/2)O It serves as a pre-existing schema upon which

stakeholders rely to interpret ambiguousinformation about the company

O

Companies with good reputation areperceived to have high source credibility andfind positive effects of CSR communication

O However, effects of CSR communication incase of companies with poor reputation will bedampened or even backfire

O Companies with neutral ethical reputation arelikely to reap more benefits than companieswith positive ethical reputation


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How Reputation Affects (2/2)O A companys existing or prior CSR record,

is perceived as a particularly diagnosticcue in stakeholders evaluation of CSR

communicationO Also, the industry in which company

operates moderates the effectiveness ofCSR communication

O For example, stakeholders are suspiciousof companies in industries like tobacco,oil, etc.


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Second factor - CSR Positioning

O CSR positioning is the extent to which a companyrelies on its CSR activities to position itself, relativeto the competition, in the minds of consumers

O For example, Companies like Timberland, Ben &Jerrys are considered to be socially responsiblebrand

O Since some companies take the risky stance ofpositioning itself on CSR rather than superficiallyengaging in such activities, Stakeholders pay more attention to its CSR

message They believe in the authenticity of its CSR

endeavors, resulting in greater persuasion infavor of the company


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Stakeholder-Specific FactorsO Factors are:-

1. Stakeholder Type

2. Issue Support3. Social Value Orientation


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Stakeholder Type (1/3)O Different audiences such as press,

investors, consumers, employees, etc.have different expectation and hence,respond differently to various CSRcommunications

O It is imperative for a company to tailor itsCSR communication to specific needs of

different stakeholder groups


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Stakeholder Type (2/3)O Stakeholders can be classified into two types:-

1. Opinion-Leader Audiences such asbusiness press, investors, NGOs, etc.

They proactively seek out CSR informationand use companys reports to get acomprehensive picture of its CSR record

To increase credibility of its CSR report, thecompany should adhere to leading reporting

standards such as the Global ReportingInitiative andAccountAbilitysreportingstandard, AA1000


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Stakeholder Type (3/3)O The General Public such as consumers and

local communities They are concerned with shareholder value

maximization For them, companies should explicitly discuss

the business impact of their CSR activities They should be told that how social initiatives

are linked to key business metrics such ascustomer equity, employee retention, etc.

They generally become aware of CSR activitiesthrough independent channels such as editorialcoverage on TV, advertising, etc.


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Issue Support (1/2)O It is related to Stakeholders motivationO Information perceived as self-relevant elicits

voluntary attention and hence, more effective

O Ways to increase Issue Support Companies should explain and communicate

the importance of focal issues of their socialinitiatives

Actively engage stakeholders in the socialinitiative

Before launching social initiative, a companyshould engage in marketing research to gaugestockholders support for various social issues


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Issue Support (2/2)O Example related to Issue Support:-

Some firms like Gap provide flexibility tostakeholders to choose which issue andwhich non-profit organization to donate to

O Companies should always monitor whatare considered the top priority issues byits key stakeholders but they should

always balance selecting a hot issue withconsideration of CSR fit


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Social Value Orientation (1/3)

O It is defined as individuals stablepreferences for certain patterns ofoutcomes for oneself and others

O It is related to stakeholders motivation toCSR information

O Three-category topology is:- Pro-social

Individualistic Competitive


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O Prosocials tend to maximize outcomes forboth themselves and others and minimizedifferences between outcomes for

themselves and othersO Individualists tend to maximize their own

outcomes with little or no regard forothers outcomes

O

Competitors tend to maximize their ownoutcomes relative to others outcomes,seeking relative advantage over other


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O CSR research has identified a segment ofindividuals named CSR activists. Theyare More likely to purchase on ethical criteria More aware of companys CSR activities

More likely to investigate companies CSRbehavior

O There are both disbelievers and activists.CSR communication is more effectiveamong advocates or activists ascompared to disbelievers


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ConclusionO Investing in CSR activities generates favorable

stakeholder attitudes and behaviors

O But, stakeholders skepticism can be a criticalimpediment to maximize benefits as CSR

communication is a very delicate matterO How is it delicate?

Stakeholders claim they want to know the gooddeeds of companies they interact with but becomeleery of extrinsic motives when companies promote

CSR communication can have a backlash effectO Hence, a key challenge of CSR communication is

to overcome stakeholder skepticism and togenerate favorable CSR attributions


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Further Scope of ResearchO Mediating mechanisms that account for

effectiveness of CSR communication canbe explored like psychologicalmechanisms

O Since, different stakeholder groups havedifferent expectations of businesses anddifferent information needs, a research on

how best a company can communicate itsCSR initiatives to respective targetaudiences can be done


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