Is Corporate Social Responsibility Important During Economic Turmoil?
The people who believe in your product are more likely to build trust around your brand. This gradual relationship isn't occurring from over a dozen transactions but over-passing value. More than politicians promising a couple of economic improvements to their citizens, people trust businesses. It is not us who are saying this; 61% of the people affirm that.
This speaks about the power in the voice of a CEO, but the question is, have corporations taken the initiative to be involved in social responsibility?
It has been the norm that unless a government imposes the requirement, businesses have not stood out to make the change that the people seek. Growing the number of firms is essential, but gaining trust among the people can go a long way toward building something more meaningful than numbers.
Quite less than not, the economy is seen in turmoil. The recent event of a living coronavirus disrupted the way the economy operated. Where sales hit the lows for most companies, nothing could grab the attention of worrisome living beings.
It points out the fact that there is no economy or business without people, and the one thing that could make a huge difference is corporate social responsibility during uncertain times.
The Need to Give Back to Society
The stance to give back to society can position a brand’s image to an extent where growth is inevitable. If corporates are visible to the people who make them, they can lead the industry where their peers follow the steps to abide by. So, where have you been on this journey so far?
If they have been planting more trees back to nature, a manufacturing company cutting trees for their profits is still obliging to be responsible for the environment. Fair treatment of employees in corporations, given favorable benefits, builds the environment for employees to stay motivated toward the company’s objectives, exhibiting ethical responsibility.
Contributing to sponsoring fundraising events for a cause the corporations believe in can make all the difference to those who stand by your brand in a philanthropic way. Even training the employees about environmental concerns or social awareness speaks of the financial responsibility of a corporation.
Corporate social responsibility can only sometimes be quantified but can be qualified for stronger brand recognition. People want to transact with those who positively impact society, and employees feel more connected to being entitled to a corporate.
Corporate Social Responsibility Goes Beyond the Transaction and the Product You Sell
During unprecedented scenarios of economic downturns like recession, we have been hearing of the practices of corporations involved in mass firing to save their profits. Although this action might seem reliable from a stakeholder and company’s growth standpoint, the negative impact of dissatisfying your company's employees during difficult times tends to stay longer in how employers perceive your brand. On the other hand, a corporate wanting to churn profits with lower-quality products has impacted consumer sentiments about their brand perception.
Regardless of the economic event, the vision of the business must be more focused on long-term survival than short-term, where layoffs and quality reduction shouldn't be a concern, while corporate social responsibility can play a more major role in building a connection. It is neither something to incorporate in the good times nor in the uncertain times, but an event that projects the core value of a business at all times.
People are convinced to pay higher premiums for services to companies more committed to doing good sustainably. Companies that cost-cut the budget for CSR activities will likely never have embedded CSR in their systems, while those already in the cause are increasing their budget for CSR activities. Regardless of their economic situation, the companies are part of CSR activities for doing good to society and are differentiators.
CSR is an Unaffordable Luxury, Saying That a Company Ignores Its Positive Impact on the Future Performance of a Firm
During restricted times of revenue expenditure, it's quite essential to allocate money thoughtfully to an avenue. In such a situation, thinking of corporate social responsibility activity might seem like a challenging decision to make, but its implementation is bridging the interests of both consumers and stakeholders, which is a positive note to begin such activities.
Moreover, it has increased the image of brand quality in consumers' perceptions, differentiating them from others. When combined with CSR, a marketing activity increases the quality of the brand's perception. But if you wonder why, consumers think your efforts to help society are like helping them.
There is a fine line difference between branding and CSR activities. Branding is when your product is ready and impacts the brand's perception concerning its quality, features, and benefits. CSR contributes to society's goodwill, projecting the organization as socially responsible. When these two activities are combined, it can increase the quality of brand perception.
For instance, when a brand promotes a part of every purchase by a consumer that goes to a charitable purpose, it makes a difference in the brand's quality.
So, assuming the consumer knows a brand, the impact of CSR in heightening the brand’s differentiation and perceived quality holds only to the group where a brand is relevant, which is not universal. A brand needs to be known to consumers to benefit the most from CSR activities; this opposes recognizing a brand after CSR activities.
Indulging More into the Matter of CSR and Economic Turmoil Relation
A recession can re-evaluate consumer purchasing behavior, and the brand's notion of decreased sales activity during these times is acceptable. A fresh perspective on this by adding CSR activities would be to create significant differentiation, as a brand can create value in the future.
The re-evaluation of a consumer during turmoil is based on the value the brand promises. A brand, including a CSR activity, can leverage a consumer's thought to abide by the values, which isn't false but deciphering. Consumers look forward to a value that incorporates both quality and price optimization. CSR activities can project this value to what a consumer is looking for.
On the other hand, during an economic expansion, the consumer generally expects motivated actions through CSR, and during turmoil, even they understand the corporation will not be in a position to do so. However, a CSR activity during this time can influence consumers’ perceptions about how greenwashing is not in their practice, which depicts true social responsibility.
Thus, it imbibes a stronger perceived brand quality in consumers’ perceptions during an economic turmoil than at any other time.
When all the corporations have thought to cut advertising spending in such times, the clutter-free environment becomes an opportunity for marketing with a firm's corporate social responsibility values to have a leading voice as a differentiator in the herd.
This echoes in the market about brand quality and differentiation led by CSR activities during the recession to increase the overall brand value that persists to stay longer in the consumer’s mind for its trueness.
Especially where incidents such as unethical practices in corporations have risen, the CSR activity of corporations adds more value to gaining consumer trust, showcasing that the firm is in line with the social interests of consumers.
Corporate social responsibility can reduce consumers' uncertainty in making decisions during times of turmoil.
In the 2008 housing crash recession, Intel had lost about 42 percent of the stock price, yet they pledged to contribute $100 million to the education programs. During this crisis, Microsoft increased its corporate tax rate to 2.61% in 2009 from 2.09% in 2008.
That speaks to their true contribution to CSR, which could build strong brand value.
The Prevailing Thought
Most corporations cut their expenses for social commitment due to unpredicted sales activity in a recession. Although a recession is unmanageable by an individual, how the firm runs its marketing efforts can significantly reduce the negative impact of economic turmoil. Including corporate social responsibility during these times can prepare the company for a stronger future performance by significantly altering the consumer's perception of brand value. The effect of it will remain not just in the downturn but even after it.
If a corporation is true to its social beliefs, thinking away from profits is still worth it for enhancing brand value for a consumer and expecting brand loyalty for longer sustainable returns. The relationship between consumers’ willingness to pay and how they perceive the brand's value has to be understood to run a CSR activity that your brand resonates and aligns with.
The choice of being invested in CSR activity must not be only during expansion but also during contraction; otherwise, it may seem like over-embossing and less abiding by the value they initially put forth. Does the brand have to put its efforts into corporate social responsibility during economic turmoil? Yes, they must surely do.