Is This Why Corporations Donate To Charity?

Photo (cc) by DFID - UK Department for International Development

You might not have even heard of the “benevolent halo effect,” but new research shows you’re probably subject to it as a shopper.

The effect refers to how hearing about a company’s charitable donations, or corporate social responsibility, impacts consumers’ perception of the quality of the company’s products.

As Alexander Chernev and Sean Blair of Northwestern University’s Kellogg School of Management write in a study:

Corporate social responsibility can lead consumers to believe that the products of companies engaged in socially responsible activities are better performing. We attribute this to a “benevolent halo effect” where positive attitudes toward a company translate into positive beliefs about the company’s products….

Contrary to the popular view among many executives that corporate social responsibility is unlikely to benefit their company, our findings suggest that in addition to benefiting society, corporate social responsibility can contribute to a company’s bottom line.

Chernev and Blair’s study, titled “Doing Well by Doing Good: The Benevolent Halo Effect of Corporate Social Responsibility,” was published in this month’s issue of the Journal of Consumer Research.

For the study, they tested how corporate social responsibility affected consumers’ perceptions of red wine, running shoes, teeth whiteners and hair-loss products, according to a press release from the journal. For example, consumers gave a better rating to the wine’s taste after being told that the winery donated to the American Heart Association.

The results might explain why, as Nielsen found last year, most consumers say they’re willing to pay more for products and services provided from “companies that are committed to positive social and environmental impact.”

Granted, the Nielsen study of consumers in 60 countries found that U.S. consumers are among the least likely to feel that way:

The propensity to buy socially responsible brands is strongest in Asia-Pacific (64 percent), Latin America (63 percent) and Middle East/Africa (63 percent). The numbers for North America and Europe are 42 and 40 percent, respectively.

The latest research found, however, that companies diminish the benevolent halo effect when they advertise their good deeds. Less direct channels, like social media and public relations, are better ways to share charitable contributions and still benefit from them.

Do you think corporate charity has affected your sense of product quality? Share your thoughts in the comments section below or on our Facebook page.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

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