(6.1) Brands, purpose, CSR and CSA Flashcards
Define Purpose
Purpose = multidimensiol construct about competence, culture and cause.
> Competence = function that our product serves
> Culture = intent with which we run our business
> Cause = social good to which we aspire
Define CSR
Corporate social responsibility = company actions that advance social good beyond what is legally required
Define CSA
Corporate sociopolitical activism = firm public demonstration of support for/ opposition to one side of a partisan sociopolitical issue»_space; firms thus more and more take position in these society relevant questions
Explain the contrast between companies like Nike and companies like AB Inbev
Purpose gets more complex when your product is unhealthy!
Explain the current importance of shareholder value and purpose
Company cannot achieve long-term profit without embracing purpose and considering the needs of a broad range of stakeholders
» Shareholder value = customer + employee + supplier + community
Explain the 3 kinds of CSR and their effect on sales
- Corrective > adresses harm to society and environment, changes own business practices INCREASE IN SALES
- Compensating > adresses harm to society and environment, no change in business practices, compensating consumers for good behavior but not doing anything theirselves INCREASE IN SALES
- Cultivating > no adressing of harm - only filantropy
DECREASE IN SALES
What are the general findings on research to CSR?
Consumers don’t respond good to every form of CSR
– Reducing own brand’s harm is important to see an increase in sales
What are the implications of the CSR researcg?
- Importance of cleaning up your own mess (otherwise clearly only for goodwill)
- Only consider CSR engagements that reduce own harm
- Business, consumer, social and environment interests CAN align when businesses reduce their adverse impact for global betterment
What is CPA?
Corporate political activity»_space; lobbying and donations to political parties which is kept silent. They do this to make sure politics acts like wished, and to have market advantages.
> > Higher partisanship as CSR, lower publicity as CSA
What are the characteristics and sources that drive the effect of CSA events on abnormal changes in stock returns?
CHARACTERISTICS OF CSA RESOURCE IMPLEMENTATION
- (-) Form of support
- (-) Announcement source stature
- (+) Business interest communication
- (+) Coalition size
SOURCES OF CSA DEVIATION
- (-) Deviation from customer values
- (-) Deviation from employee values
- (-) Deviation from government values
Firm, CEO, event, industry, time-specific control variables.
How did this CSA research go?
Event study method
1) Event definition and sampling
2) Treatment of confounding effects due to concurrent or overlapping events
3) Selection of appropriate asset pricing model
4) Tests of significance and their power
5) Common determinants of abnormal returns
What are the managerial implications of this CSA research?
- Engaging in CSA mostly hurts firm value
- Stakeholders political view matters, deviations are harmful
- CSA reveals the firms value to the public
- CSA is less harmful when
» statements ipv actions
» not announced by CEO
» justified by business objective
» announced in coalition with other firms
Explain how Ukraine X Russia is a CSA event
What drives firms to react to the war? A lot of comapnies left Russia or cutted relations. This has a huge financial impact!
What are layoffs?
= simultaneous termination of the labor contracts of a large group of workers
Are layoffs still relevant today?
Yes very common in the Western World!
First months of 2024: 75k in tech companies
