Zeynep Gürhan-Canli Migros Professor of Marketing Director, Graduate School of Business

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1 Zeynep Gürhan-Canli Migros Professor of Marketing Director, Graduate School of Business

2 Are Inconsistent CSR Associations Always Detrimental? The Influence of Dialectic Thinking and the Brand s CSR Strategy Sonia Monga, University of South Carolina Zeynep Gürhan-Canlı, Koç University Vanitha Swaminathan, University of Pittsburgh

3 Corporate Social Responsibility CSR refers to perceived responsibilities of companies above and beyond legal compliance in order to improve quality of life and sustainability for all stakeholders (consumers, employees, community, environment). Creating shared value (Porter and Kramer 2011, HBR) Consumers all over the world are more empowered and demanding. Over 8000 companies across 140 countries Global compact strategy policy

4 Contradictory Information about CSR Has a strong CSR record but was found to exploit Ethiopian coffee growers Committed to reducing unhealthy trans-fats in its menu but the extent of these fats varies greatly from country to country Oil companies previously known for a bad CSR record are now investing in CSR Wagner, Lutz, Weitz (2009); Yoon, Gurhan-Canli & Schwarz (2006)

5 Bangladesh Factory Collapse Primark became the first retailer to announce a compensation package for workers caught up in the Bangladesh factory collapse ( Change.org is petitioning for brands like Mango to acknowledge their involvement and follow suit of brands taking responsibility. The Children s Place denied ties with the factory. Benetton labels were found in the rubble but the company initially denied that claim. They have since stated that they used that factory once.

6 Dialectic Thinking Dialectic thinkers: Change is constant Are more accepting of contradiction Prefer middle-of-the road approach Non-dialectic thinkers: Less accepting of contradiction No statement can be both true and false Prefer one of the two contradictory options Chinese/Koreans = dialectic, Americans = non-dialectic Varies across and within cultures (Peng & Nisbett 1999; Choi, Koo & Choi 2007)

7 Examples Dialectic thinkers prefer dialectic proverbs to non-dialectical proverbs: Dialectic = Beware of your friends not your enemies Non-dialectic = One against all is certain to fall Dialectic thinkers reconcile conflicts by compromising and addressing the issue from both sides: Peng & Nisbett 1999

8 Conceptual Framework Dialectic thinking X brand strategy Perceptions of hypocrisy Brand evaluations

9 Overview of Studies Study 1 Basic effect of dialectic thinking Study 2 Public vs. private environment as a moderator Study 3 Nature of the brand s CSR strategy (reactive vs. proactive) Study 4 Nature of the brand s CSR statement (abstract vs. concrete)

10 Study 1A Design: Dialectic vs. Non-dialectic thinkers identified using dialectic thinking scale (Choi, Koo, Choi 2007). Measures Brand attitude (3 item; Zenata is: 1= poor 7 = excellent) Behavioral intention (2 items; How likely are you to go to Zenata s website to search for more information, How likely are you to purchase a gas station card from Zenata? 1= very unlikely 7 = extremely likely)

11 Dialectic Thinking Sample items: It is more desirable to take the middle ground than go to extremes. When disagreement exists among people, they should search for ways to compromise and embrace everyone s opinions. Choosing a middle ground in an argument shold be avoided.

12 Stimuli Zenata is one of the world s largest petroleum and petroleum chemical company. In 2006, the company marked the highest revenues compared to its competitors. Its employees range from world-class engineers, and researchers to highly trained manufacturing specialists, to experts in sales, marketing finance, communication and human resources. However, it is considered to be the worst among petroleum and petroleum chemical companies in taking environmental responsibility seriously. For example, its greenhouse gas emissions are significantly worse than any other petroleum company. In 2007, oil spills from this company caused the greatest damage to the environment. In the last year, Zenata was one of the largest supporters of environmental protection and conservation activities. The company supported the National Environmental and Conservation Association and made numerous grants to environmental organizations to help protect the environment. Zenata has become instrumental in protecting and preserving the earth s resources. Yoon, Gürhan-Canli & Schwarz (2006)

13 Results p s <.05

14 Study 1B Design: Dialectic prime vs. No prime (Spencer-Rogers et al ). Manipulation check (dialectic scale): Dialectic prime > No prime No differences in mood, interest, and ease of processing across prime conditions Sample = 98 Asians from a consumer panel in Singapore

15 Dialectic Prime Life can be full of contradiction and uncertainty. We would like you to reflect, in writing, on a time in your life when it was full of contradiction and uncertainty.... We would like you to recall experiences in which you were very aware of both the pros and cons of the situations and there were no right answers. The situations or experiences had positive and negative consequences for you (and the people you care about)..finally, you decided to select a middle, compromise option. Think about these experiences... Tell us why you decided to picked the compromise option. Adapted from Spencer-Rogers et al. 2004

16 Results: Behavioral Intention p s <.05

17 Summary In response to inconsistent CSR information, dialectic thinkers respond more favorably than non-dialectic thinkers. Measuring and priming dialectic thinking lead to similar effects.

18 Hypothesis Prior research suggests that dialectic thinking emerges when people are afraid of loss of social approval (Kim & Markman 2006) Public versus private nature of the decision would affect responses. For inconsistent CSR information, Dialectic thinkers would give more favorable responses in public than in private Non-dialectic thinkers would not differ in responses between public and private

19 Study 2 Design: 2 (Thinking style: Dialectic vs. Non-dialectic ) x 2 (public, private) Sample 185 participants Measures Behavioral intention Dialectic scale (Choi et al. 2007) Public = your responses will be shared with others from your class Private = your responses to this survey will be kept confidential

20 Stimuli Two major European car brands joining forces to launch a new line of cars (PR NEWSWIRE) October 4, 2008 Today, insiders in the European automobile industry reveal that a collaboration deal is in progress between two major brands, Avera and Renata. A recent ranking released by the European Environmental Protection Agency ranked all car brands on the basis of their emissions and showed the relative performance of Avera and Renata. Avera and Renata will collaborate together to develop and launch a new automobile line, which will include a 2-door and 4-door sedan. Brand Air pollution score Greenhouse gas score (1=worst, 10 = best) (1=worst, 10 = best) Avera 1 2 Skiona 3 2 Cruzer 8 9 Renata 9 10

21 Results: Behavioral Intention 2-way interaction p <.05

22 Summary Dialectic thinkers have higher behavioral intentions in public than in private Non-dialectic thinkers do not differ in behavioral intentions between public and private Evidence for the process mechanism: dialectic thinking appears to be a socially driven process

23 Nature of the Brand s CSR Strategy Proactive strategy = a firm s efforts to present a favorable socially responsible brand image before any potentially negative behavioral CSR information is received Reactive strategy = when firms make statements about their social responsibility after some socially irresponsible actions have been reported Wagner, Lutz, Weitz 2009

24 Conceptual Background Hypocrisy occurs when there appears to be a distance between assertions and performance (Shklar 1984, p. 62). When consumers are unable (vs. able) to resolve the contradiction, perceptions of hypocrisy will be higher (vs. lower).

25 Hypothesis Proactive strategies = positive socially responsible behavior initiated by the part of the brand without being prompted by the external situation (an oil spill takes place and everyone knows about it) Reactive strategies = the external situation is forcing the brand to become more socially responsible For non-dialectic thinkers = reactive (vs. proactive) strategies are evaluated more favorably For dialectic thinkers = both strategies are evaluated similarly

26 Study 3 Design: 2 (Dialectic vs. Non-dialectic ) x 2 (Reactive vs. Proactive) Sample 200 Asians from Qualtrics panel Measures Brand attitude (3 item; 1=poor 7=excellent) and intentions Hypocrisy (e.g., The brand acts hypocritically/says and does two different things/pretends to be something it is not; Wagner et al. 2009)

27 Reactive Stimuli Zenata Corp., is one of the world's largest petroleum and petroleum chemical companies. In 2006, the company marked the highest revenues compared to its competitors. Its employees range from world-class engineers and researchers to highly trained manufacturing specialists, to experts in sales, marketing, finance, communication and human resources. Two weeks ago, you read a newspaper article about an environmental scandal involving Zenata. The Department of Environmental Conservation officials reported a toxic spill at an oil field managed by Zenata. And, Zenata's greenhouse gas emissions are significantly worse than most petroleum companies. Today, you received the latest edition of Zenata's newsletter. In the section on the company background, you found the following announcement: "Zenata proudly announces its superior dedication to preserving the natural environment! We are committed to making a greener planet. All our activities are geared toward reducing oil spills and minimizing our greenhouse emissions."

28 Proactive Stimuli Zenata Corp., is one of the world's largest petroleum and petroleum chemical companies. In 2006, the company marked the highest revenues compared to its competitors. Its employees range from world-class engineers and researchers to highly trained manufacturing specialists, to experts in sales, marketing, finance, communication and human resources. Two weeks ago, you received the latest edition of Zenata's newsletter. In the section on the company background, you found the following announcement: "Zenata proudly announces its superior dedication to preserving the natural environment! We are committed to making a greener planet. All our activities are geared toward reducing oil spills and minimizing our greenhouse emissions." Today, you read a newspaper article about an environmental scandal involving Zenata. The Department of Environmental Conservation officials reported a toxic spill at an oil field managed by Zenata. And, Zenata's greenhouse gas emissions are significantly worse than most petroleum companies.

29 Results: Brand Attitude Proactive Reactive Dialectic Non-dialectic

30 Results: Hypocrisy Proactive Reactive Dialectic Non-dialectic

31 Summary For dialectic thinkers = proactive strategies and reactive strategies are evaluated equally For non-dialectic thinkers = reactive strategies are evaluated more favorably then proactive strategies. Perceptions of hypocrisy mediated our effects

32 Brand s CSR Statement Abstract CSR statement: We are committed to protecting the environment We are committed to employee safety Concrete CSR statement: We recycle 70% of our paper waste Our patented welding process minimizes burn hazards and eliminates exposure to ultraviolet radiation for our employees (Torelli, Monga & Kaikati 2012; Wagner et al. 2009)

33 Hypothesis Abstract mindsets help in resolving contradictions Concrete mindsets are likely to make it harder to resolve contradictions (Smith and Trope 2006) Abstract CSR statements = dialectic and nondialectic thinkers will respond similarly Concrete CSR statements = dialectic thinkers will respond less favorably than non-dialectic thinkers

34 Study 4 Design: 2 (Measure: Dialectic vs. Non-dialectic ) x 2 (CSR statement: Abstract, Concrete) Sample 139 Americans Measures Brand attitude (3 item; 1=poor 7=excellent) Hypocrisy perceptions (e.g., The brand acts hypocritically/says and does two different things/pretends to be something it is not; Wagner et al. 2009) Open-ended thoughts Dialectic thinking scale

35 Abstract CSR statement Powermart is one of the largest retailers of consumer electronics. The chain operates stores all over the nation, offering an attractive selection of electronic goods such as home entertainment systems, personal computers and digital cameras. Because Powermart sells its goods at very competitive prices in an attractive store environment, their stores tend to be very popular. You are subscribed to their quarterly newsletter which informs you about their latest product offers and provides you with interesting information about the company. Two weeks ago, you received the latest edition of the newsletter. You see the following statement: "Powermart announces its overall dedication to ensuring well-being of its employees! Our company policy makes protecting the physical health of its employees a top priority." Today, you browsed through your local newspaper. You came across the following item in the business section: Poor Employee Coverage by Powermart: Retailer Powermart does not provide medical insurance coverage to the vast majority of its store employees. Most individuals working at the retailer must pay for medical benefits out of their own pockets or rely on state-subsidized programs. Wagner et al. 2009

36 Concrete CSR statement Powermart is one of the largest retailers of consumer electronics. The chain operates stores all over the nation, offering an attractive selection of electronic goods such as home entertainment systems, personal computers and digital cameras. Because Powermart sells its goods at very competitive prices in an attractive store environment, their stores tend to be very popular. You are subscribed to their quarterly newsletter which informs you about their latest product offers and provides you with interesting information about the company. Two weeks ago, you received the latest edition of the newsletter. You see the following statement: "Powermart takes concrete action to ensure the well-being of its employees through providing complimentary healthcare benefits! All of our full and part time associates receive complete medical insurance coverage provided by our company." Today, you browsed through your local newspaper. You came across the following item in the business section: Poor Employee Coverage by Powermart: Retailer Powermart does not provide medical insurance coverage to the vast majority of its store employees. Most individuals working at the retailer must pay for medical benefits out of their own pockets or rely on state-subsidized programs. Wagner et al. 2009

37 Brand Attitude

38 Hypocrisy Perceptions

39 Hypocrisy-related Thoughts

40 Results: Mediation Analysis A mediation analysis confirmed that hypocrisy perceptions mediated the effects of dialectic thinking and brand s CSR statement on brand attitudes.

41 Summary Abstract CSR statements = dialectic and non-dialectic thinkers respond similarly Concrete CSR statements = dialectic thinkers respond less favorably than non-dialectic thinkers Perceptions of hypocrisy mediated the effects

42 Theoretical Contributions We introduce dialectic thinking to the area of CSR Show evidence for the process mechanism (socially driven) Moderating role of CSR strategy: Dialectic thinkers: proactive = reactive strategies Non-dialectic thinkers: proactive < reactive strategies Moderating role of CSR statement: Abstract CSR statements = dialectic and non-dialectic thinkers respond similarly Concrete CSR statements = dialectic thinkers respond less favorably than non-dialectic thinkers

43 Managerial Implications Prior research shows that dialectic thinkers can vary across cultures and even within a culture Dialectic thinkers appear to be more favorably disposed to inconsistent information Making proactive investments in CSR can pay off in regions characterized by high dialectic thinking Making abstract statements about CSR work equally well with dialectic and non-dialectic thinkers (but, concrete statements could backfire)