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These days, it is considered good business for companies to demonstrate that they are responsible corporate citizens. Google is promoting its solar-powered data centers. Apple talks about using recycled materials. Walmart explains its support for local communities.
But new research by Haas Associate Professor Tim McQuaid suggests there are some downsides to this narrative. McQuaid, along with Emanuele Coronelli and Niels Gormsen of the University of Chicago, will study how positive corporate messages can arouse negative associations among consumers and turn them away from policies that support companies in times of crisis. has been demonstrated.
“Even if they frame the information positively, consumers with pre-existing negative beliefs about social responsibility may retrieve mostly negative experiences from their memories,” McQuaid says. “In this way, messaging can do the opposite of what it was intended to do.”
Their results were published in The Review of Economic Studies.
Working with faulty memory
These results rely on modern models of how consumers keep information in mind when making decisions. Traditionally, economists have assumed that consumers are rational agents who examine all relevant knowledge they have when making decisions. McQuaid and colleagues found that people have limited memory, meaning they generally only have a limited set of information available to make decisions, and that certain cues influence what information they use. It draws on more recent understandings of cognition, such as what is possible.
Many advertisements are based on this premise. For example, when people are cued by the old Snickers catchphrase, “Hungry? Hold on,” they don’t think about whether they need calories or whether it’s better to spend money on something; You might buy candy just because it made you think. Other than that.
Understanding this overall picture of consumer psychology, researchers recruited nearly 7,000 participants and conducted a four-part study. The survey was conducted in May 2020, when many businesses were struggling under pandemic restrictions and the federal government was discussing possible relief.
Scenery of “dissatisfaction of large companies”
The first part of the survey asked basic questions about socio-economic background. The second included four different animated videos, three of which were used to demonstrate clear thinking patterns and one to create a control group.
The control group watched a video detailing the basic steps to complete the survey, along with definitions of concepts such as “corporate rescue” and “stakeholder.” The rest of the video started with this control segment, but included additional content. Some framed large corporations as relatively bad citizens, polluting the environment, overpaying executives, and underinvesting in local communities. The second video portrayed them as good citizens. The third made no mention of corporate citizenship, instead talking about the economic stability that corporate bailouts can bring.
After watching one of these four videos, participants were asked how well they thought large companies were doing what they should be doing regarding environmental, social, and governance (ESG) goals. In another section, participants were asked how strongly they supported economic bailouts for large corporations. (The order of sections 3 and 4 varies randomly.)
The raw results of this survey show that people have overwhelmingly negative views of corporate citizenship. “Our first important contribution was to demonstrate that there is a widespread recognition in society that, on many dimensions, companies are not doing what people think they should be doing,” McQuaid said. say. “We call this ‘big business dissatisfaction,’ and it’s a necessary condition for what we find next.”
How positive messages create negative associations
The researchers then looked at public support for relief.
As a result, study participants who were inspired to think about corporate social responsibility by the video were more likely to think about corporate social responsibility, regardless of whether the video portrayed the work positively or negatively. They found that participants who watched a video about economic stabilization expressed much less support for business bailouts. In fact, those who viewed the video-framing company’s ESG efforts positively expressed less support for the bailout than those who simply viewed the control video.
“When we push people to think about these policies through the lens of corporate social responsibility, the fact that there are pre-existing grievances with big companies, even if they view the initiative positively, means that they “It meant that the message of doing nothing backfired. There was no information at all,” McQuaid said. “Recall is imperfect, so even positive frames remind us of negative experiences such as the Enron accounting scandal, various environmental disasters, and low wages.”
This effect was even stronger among survey participants who were asked how well they thought companies were addressing ESG goals before being asked about their level of support for bailouts. This particular order of questions seemed to drown out even more negative memories. Lack of support for the bailout was also strongest among young people and liberals, and dissatisfaction was highest among big business.
find effective messages
Instead, survey participants who were shown videos discussing how the bailout contributed to economic stability expressed support for the policy. In other words, the themes that people are asked to consider, in this case ESG goals and economic health, have a significant impact on their policy preferences.
Its impact extends beyond corporate messaging to all areas of influence and persuasion. As McQuaid points out, groups often try to update people’s beliefs by providing positive information about some policy or action. Companies talk about their good citizenship. Politicians talk about their achievements.
“But if the area or topic they’re talking about is something that many people have a negative opinion of, it’s probably not the most effective way to garner support, because positive PR through communication “The framing effect may be greater than the effect,” he says. “Rather, they may want to refocus on other policy areas. This insight changes the way we think about optimal communication and optimal messaging.”
Further information: Emanuele Colonnelli et al., Selfish Corporations, Review of Economic Research (2023). DOI: 10.1093/restud/rdad057
Provided by Haas School of Business, University of California, Berkeley
Citation: Study shows how corporate social responsibility messaging can backfire (October 19, 2024) https://phys.org/news/2024-10-corporate-social- Retrieved October 19, 2024 from responsibility-messaging-backfire.html
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