Does Corporate Social Responsibility Matter For Marketing Performance?

In recent years, there has been increasing interest among society, consumers, investors, and managers in firms’ Corporate Social Responsibility (CSR), or, Environmental, Social, and Governance (ESG) activities.

The Norwegian Sovereign Wealth Fund (popularly known as the “Oil Fund”) has been a pioneer in screening firms for ESG risks before investing. Many investors have followed their example and implemented the same thinking in their practices.

But are CSR/ESG investments worth it? And should marketing managers care about them?

What research says

Research has indeed shown that CSR improves financial performance. However, from a marketing perspective, CSR’s impact is much less obvious. Many marketing managers struggle to understand if and how CSR activities affect their key performance indicators, such as brand, customer satisfaction, and innovation.

A team of researchers, led by BI’s Stefan Worm, recently tried to answer the question if firms’ CSR drives (or maybe even reduces) their marketing performance.

“We wanted to know if CSR only affects the stock market directly, just because investors are looking for ESG investments, or whether CSR also boosts actual product-market performance,” explains Worm.

Their study uses empirical data from a large number of existing research studies in a so-called meta-analysis.

“The first results show that CSR affects three important Marketing key performance indicators (KPIs). It enhances consumers’ brand perceptions, it boosts corporate reputation, and it triggers innovation,” says Worm.

“Marketing plays a key role”

The ongoing study also finds that there is a chain of effects. By enhancing these marketing KPIs, CSR activities indirectly drive financial performance. That is, CSR actually drives business performance through marketing.

“This means that marketing plays a key role in leveraging CSR activities for the benefit of the firm,” highlights Worm.

Going forward, marketing managers need to understand  CSR as an additional element of their toolbox.

“CSR activities and marketing go hand in hand, so marketing managers need to adjust accordingly and coordinate CSR-related initiatives with their marketing efforts,” says Worm.

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This article is published in the upcoming edition of BI's Marketing Magazine.