How are corporate social responsibility crises perceived by the consumer?
Catherine Janssen
PhD student – ICM Fellow
Louvain School of Management - Université catholique de Louvain (Belgium)
Valérie Swaen
Associate professor
Louvain School of Management – Université catholique de Louvain (Belgium)
Joëlle Vanhamme
Professor
Edhec Business School (Lille, France)
Comment les consommateurs perçoivent-ils les crises liées aux activités socialement
irresponsables de l'entreprise?
Résumé:
Ces dernières années, de plus en plus d'entreprises sont confrontées à des crises liées à leurs
activités socialement irresponsables (crises RSE). Lorsque de telles crises surgissent, les
professionnels du marketing doivent être en mesure de gérer les perceptions des
consommateurs vis-à-vis de ces crises et de développer des stratégies de communication de
crise appropriées. Cependant, notre compréhension de ce que les consommateurs perçoivent
comme étant une crise RSE reste à ce jour très limitée. Dans ce contexte, cet article offre un
aperçu des critères utilisés par les consommateurs pour définir une crise comme étant liée à
une question de RSE.
Mots-clés: Responsabilité sociétale de l'entreprise, crise, perceptions du consommateur
How are corporate social responsibility crises perceived by the consumer?
Abstract:
In the last few years, news reports about crises involving socially irresponsible corporate
activities (CSR crises) are on the rise. When such crises surface, marketing practitioners face
the difficult task of dealing with consumers' appraisal of the crisis situation and of developing
appropriate communication strategies to manage it. Yet, little is known about those CSR
crises. More specifically, we lack a clear understanding of how and when consumers perceive a
situation as being a CSR crisis. In that context, this paper offers an understanding of the main
characteristics that consumers are likely to use to define a crisis as being CSR-related.
Key-words: Corporate social responsibility, corporate crisis, consumer perceptions
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How are corporate social responsibility crises perceived by the consumer?
Introduction
There is no doubt that corporate social responsibility (CSR), defined broadly as “a company’s
commitment to minimizing or eliminating any harmful effects and maximizing its long-run
beneficial impact on society” (Mohr, Webb, and Harris, 2001, p. 47), has become an integral
part of today's business environment. For instance, many companies are developing socially
responsible activities, such as promoting good causes, philanthropy, or the development and
implementation of socially responsible business practices (Kotler and Lee, 2005), and
consumers appear to be particularly sensitive to companies' CSR actions (Bhattacharya and
Sen, 2004). Furthermore, public attention towards CSR-related issues has grown in
importance. Consumers have notably been showing a higher degree of sensitivity towards
social and environmental issues (e.g., Cone Consumer Environmental Survey, 2009), resulting
in greater societal expectations towards companies and in changing consumer demands.
Also, media coverage as well as advocacy group accusations about companies’ socially
irresponsible practices have dramatically increased in recent years (e.g., Chiquita, BP, Nike,
Nestlé), and the number of anti-corporate websites and movie documentaries revealing
corporate irresponsible activities is on the rise. As a consequence, allegations related to
socially irresponsible corporate actions occur more and more frequently, and the number of
such criticisms is even expected to grow in the future (Strike, Gao, and Bansal, 2006).
Of particular concern is that such negative CSR allegations can fall under the scope of crisis
situations. For instance, allegations about workplace discrimination are said to have reached
crisis status (James and Wooten, 2006). We also find evidence in the literature and in surveys
that consumers are willing to punish companies that are perceived to behave illegally or
unethically (e.g., Bollen, 2004; Frooman, 1997; GlobeScan, 2010) and that accusations of
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irresponsibility have a strong destructive impact on consumer attitudes toward the company
(Wagner, Lutz, and Weitz, 2009). When a crisis related to socially irresponsible corporate
activities – which we refer to as a CSR crisis – arises, marketing practitioners face the difficult
task of dealing with consumers' appraisal of the crisis situation and of developing proper
communication strategies to manage it. Because crisis management and communication
strategies need to fit the specific crisis type that the company faces (Coombs and Holladay,
2002; Pearson and Mitroff, 1993), it is critical for marketers to understand what those CSR
crises precisely are, especially in the eyes of the consumer.
However, most scholars in the crisis literature stream have not adopted a consumer-oriented
perspective to define and classify crises, but have remained focused on the company's
viewpoint, and therefore fail to reflect consumers' increasing concerns for CSR-related issues
in the existing crisis conceptualization. Similarly to the idea of marketing myopia (Levitt,
1960), focusing on the company's perspective is perhaps too shortsighted. Managers might thus
be using the wrong criteria to define and classify the potential crises that arise in their
environment and, in so doing, they put their company at risk, in at least two respects. First,
they take the chance of not recognizing a situation as a crisis when it actually is perceived as
such by consumers. Second, as they seek to develop crisis management strategies that fit the
crisis situation perceived by their company, they are likely to develop crisis communication
strategies that do not meet consumers' expectations and needs. Adopting a more consumer-
oriented perspective therefore appears as a relevant alternative to the current focus of the crisis
literature to understand CSR crises, especially since “the recent financial crisis and the
Deepwater Horizon oil spill has highlighted the general public's increasing awareness and
interest in such crises” (PA Consulting Group, 2010).
Accordingly, this working paper investigates how consumers perceive a situation as being a
CSR crisis and offers a first understanding of the main characteristics that consumers are likely
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to use to define a crisis as being CSR-related. The remainder of this article proceeds as follows:
we first provide a definition of the corporate crisis concept and briefly present the existing
crisis classifications that have been developed. We then focus on gaining a better
understanding of consumers' perceptions of CSR crises. Finally, we discuss some avenues for
further research and conclude by presenting the main contributions and implications of our
work.
1. Corporate crises and crises classifications
1.1. Definition of a corporate crisis
A corporate crisis is far from being a unanimously defined concept, which can partly be
explained by the fact that corporate crises encompass a multitude of characteristics and can
differ in various ways. Some researchers notably highlight that a company is vulnerable to
limitless types of crises (e.g., Pearson and Clair, 1998; Pearson and Mitroff, 1993), in a way
that every crisis could somehow be viewed as a “uniquely undesirable experience” (Snyder &
al., 2006, p. 372). What appears in the literature to be the common ground of all corporate
crises is the threat that they represent for the company (Dutton, 1986): a threat to its most
fundamental goals, such as delivering its products and services, but also a threat to its
financial performance, its relationships with its stakeholders, its reputation, and even its
viability (e.g., Barton, 1993; Coombs, 2007; Fink, 1986; Lerbinger, 1997; Milburn, Schuler,
and Watman, 1983; Seeger, Sellnow, and Ulmer, 1998; Weick, 1988) (see Appendix 1).
Moreover, although most scholars in the field have only considered the corporate side of this
threat, Pearson and Clair (1998, p. 66) are among the few authors recognizing that a crisis is
also a situation “that is perceived by critical stakeholders to threaten the viability of the
organization and is subjectively experienced by these individuals as personally and socially
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threatening”. Such a statement emphasizes that crises also represent a threat for the company's
stakeholders, i.e., “any group or individual that can affect, or is affected by, the achievement
of a corporation’s purpose” (Freeman, 1984, p. 46), such as its employees, its consumers, its
suppliers, the local communities and the natural environment. In addition, “the extent of the
crisis damage typically extends well beyond the afflicted organization” (Ulmer and Sellnow,
2000, p. 144) and crises therefore have the potential to create a new category of stakeholders
that the company had not anticipated before, i.e. the victims (Marcus and Goodman, 1991;
Ulmer and Sellnow, 2000), which are “any individuals who believe that they have been
traumatized by the unfortunate event” (Pearson and Clair, 1998, p. 62).
1.2. Crises classifications
Given the limitless types of crises that a company might face, various typologies of crises
have been developed throughout the years. The value of a crises classification for companies
lies in the fact that “dealing with crises means dealing with nightmares and nightmares
become less of a threat if someone turns on the light. So classifying crises is the first step to
keep them under control since they can be named and analyzed” (Gundel, 2005, p. 106).
Moreover, companies can hardly plan for all crises that could potentially affect them (Mitroff
and Alpaslan, 2003). Therefore, when crises are grouped on the basis of their similarities,
companies are better able to analyze those crises and to prepare themselves to deal with them.
Some classifications are based on the type of failure involved, which can either be natural,
technical, or human-made (e.g., Egelhoff and Sen, 1992; Lerbinger, 1997; Mitroff,
Shrivastava, and Udwadia, 1987; Pearson and Mitroff, 1993), or on the means through which
crises are initiated, which can either be normal everyday events or aberrant and deviant
situations (e.g., Pearson and Mitroff, 1993; Mitroff and Alpaslan, 2003). Other scholars
suggest that crises differ in at least two respects: first, on the easiness with which the victims
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of the crisis can be identified; and second, on the easiness with which the company can deny
its role in causing the crisis (Marcus and Goodman, 1991). Another distinction is often made
between internal and external crises, that is whether they originate within the company and
remain company-specific or outside of the company and can affect multiple organizations
(e.g., Coombs and Holladay, 1996; Snyder & al., 2006). However, these classifications have
been built from the company's viewpoint, some of them arising from organization-based
surveys and interviews with managers.
Existing typologies therefore fail to reflect consumers' definition of corporate crises, even if
the business perspective of what crises are might not be congruent with consumers'
perceptions. For instance, a distinction between the business perspective and consumers'
perspective on corporate crises could be made regarding natural disasters, such as floods,
earthquakes, or wildfires. Indeed, natural disasters are considered a specific type of corporate
crises by most authors as they are threatening and can have a detrimental impact on
companies' operations. Companies have to prepare for these crises as well as to defend
themselves when such disasters occur (Mitroff and Alpaslan, 2003). However, they are not
business-related in any way. Thus, despite the fact that natural disasters clearly are a type of
corporate crises in the eyes of the company, they are more likely to be perceived as
uncontrollable acts of nature rather than as corporate crises by the consumer.
A first step toward a more stakeholder-oriented perspective has been initiated by Coombs and
Holladay (2002). Based on the attribution framework of blame developed by Weiner (1980;
1985), the authors have identified three crises clusters, according to the degree to which
stakeholders attribute responsibility to the company for the crisis event: the victim cluster, that
triggers weak attributions of responsibility, where “the organization is a victim of the crisis
along with the stakeholders”; the accidental cluster, that triggers moderate attributions of
responsibility, where “all of the crises represent unintentional actions by the organization”;
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and the preventable cluster, that triggers strong attributions of responsibility, where the crises
involve “either purposefully placing stakeholders at risk, or knowingly taking inappropriate
actions, or human error that might have or could have been avoided” (Coombs and Holladay,
2002, p. 179). Nevertheless, such a classification focuses on stakeholders' reaction to crises,
and more specifically on the process through which they attribute responsibility to the
company. As a result, the literature remains silent about the way consumers perceive and
define corporate crises in the first place, even though “clearly understanding the individual's
process of crisis definition is a necessary first step” (Billings, Milburn, and Schaalman, 1980,
p. 300).
2. Toward an understanding of consumers' perceptions of CSR-related crises
A preliminary step for consumers to perceive a situation as a CSR crisis is their awareness of
a business-related crisis situation, which depends on the information about the situation that is
made available. Unless they are the direct victims of the crisis, much of what consumers learn
about companies and the issues that surround them come from news reports in the media (e.g.,
Deephouse, 2000; Dutton and Dukcrich, 1991), even though some information might also be
glanced from the company itself. News media play an important agenda-setting role through
“their ability to influence the salience of both topics and their image among the public”
(Carroll and McCombs, 2003, p. 36). According to Carroll and McCombs (2003), the agenda-
setting function of the media has two dimensions. First, “agenda-setting effects are on
attention” (p. 38), that is, the media make an issue salient by giving it repeated attention,
which in turn influences the salience of the issue on the public agenda. Second, “agenda-
setting effects are on comprehension” (p. 38), that is, the media frame the issue, or in other
words, emphasize some aspects of it, ascribe meaning to the stories they report, and in so
doing, shape consumers’ interpretation of the reported issues (Hallahan, 1999). Hence,
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whether a situation is perceived as a crisis by consumers is likely to depend on the amount of
attention it receives from the media as well as on the way it is depicted in the media.
Once consumers are aware of a potential crisis situation, one can investigate whether they
perceive the crisis situation as being CSR relevant, or in other words, as involving socially
irresponsible corporate activities. Through their case study research, Kolk and Pinkse (2006)
suggest that CSR scandals arise whenever the company has neglected one or more of its
stakeholders, even though such practices are not always deliberate. Yet, while much has been
written about CSR and what it means to behave in a socially responsible way, only a few
researchers have focused their attention on examining companies’ socially irresponsible
activities (e.g., Strike, Gao, and Bansal, 2006; Wagner, Bicen, and Hall, 2008). Consequently,
our understanding of what can be considered socially irresponsible corporate practices
remains quite fuzzy, especially since it is likely to be dependent of each individual consumer's
judgment. However, in the light of the existing CSR literature, two aspects appear important
to consider.
The first aspect pertains to whether consumers care about the issue at stake (e.g., Sen and
Bhattacharya, 2001). Consumers do not necessarily care about all issues reported in the
media. Poll results indicate that “consumers, themselves, are deciding which CSR issues are
important” (Fleishman-Hillard, 2007, p. 11) and that the most important issues for consumers
are those that they find most personally relevant. Such findings find support in the academic
literature. For instance, Brunk (2010)'s research, which investigates the sources of consumer
perceived un/ethicality of a brand or a company, highlights that six domains – consumers,
employees, environment, local community and economy, business community, and overseas
community – can influence un/ethical perceptions of a company. Both Brunk (2010)'s
research and consumer surveys suggest that consumers are more likely to perceive a situation
as CSR-related whenever the crisis situation involves an issue that directly affects their own
8
well-being (e.g., issues related to product quality, freedom of choice, misleading advertising
campaigns, etc.) or indirectly affects them through its impact – or expected impact – on other
stakeholder groups they care about or easily relate to, such as employees, the environment, or
the local communities. Hence, the proximity to consumers’ CSR concerns of the issue at stake
in the crisis situation is likely to be one characteristic that consumers use to define the CSR-
relatedness of a corporate crisis.
The second aspect pertains to the degree to which the corporate crisis harms consumers and/or
the stakeholders they care about. Beyond its severity, defined as the amount of financial,
human, and environmental damage it inflicts (Coombs and Holladay, 2002), a crisis also
generates more abstract, psychological harm. The same way “consumers are able to fulfill
certain values or important life goals, such as social connectedness, self-esteem and a sense of
harmony” through the positive CSR activities developed by companies (Bhattacharya and Sen,
2009, p. 358), a crisis that involves an issue close to the consumers’ CSR concerns might more
or less challenge their sense of values, well-being, and rightness. Such a perspective suggests
that consumers are more likely to perceive a situation as CSR-related whenever the situation is
deemed serious, in both the concrete and abstract sense of the term. Hence, the seriousness of
the crisis situation is likely to be one characteristic that consumers use to define the CSR-
relatedness of a corporate crisis.
3. Further research
The consumer-oriented approach toward the CSR crisis definition adopted in this working
paper provides new and important insights into the corporate crisis conceptualization. Indeed,
although they appear important to consider from a consumer standpoint, none of the
characteristics that we discuss – that is, the amount of media attention given to the crisis issue,
the proximity to consumers’ CSR concerns of the issue at stake, and the seriousness of the
9
crisis situation – are used by scholars in the crisis literature stream to define and classify
corporate crises. However, our objective in the next stage of this research in progress is to
improve our understanding of consumers’ perceptions and definition of CSR crises by
empirically investigating whether the characteristics identified are the appropriate ones or if
other characteristics should be considered.
Such an investigation could be achieved through face-to-face interviews and/or focus groups
with consumers, and a subsequent interpretive analysis. Indeed, the unexplored nature of the
subject calls for an explorative research, which would allow gaining insights into the
phenomenon of interest, rather than for a hypothesis-testing, quantitative research. In contrast
to quantitative research, which is primarily concerned with the measurement of concepts and
variables, qualitative research is directed toward discovering the meanings and experiences of
social actors (e.g., Blaikie, 2000; Mason, 2002; Spiggle, 1994) and therefore suits our general
objective of generating a comprehensive understanding of consumers' perceptions of
corporate crises, and specifically of CSR crises. In addition, survey-based inquiries present
some methodological limitations. For instance, the use of hypothetical scenarios, as in the
case of Coombs and Holladay (2002)'s research, takes respondents’ awareness of the crisis
situations for granted and imposes the researcher's own view of what corporate crises are,
which contrasts with our objective of seeking the 'insider view' (Blaikie, 2000), i.e.
consumers' own appraisal of the phenomenon.
Not only are we unwilling to impose our own understanding of corporate crises beforehand
but we are also interested in discovering all the situations that consumers could potentially
perceive and conceptualize as CSR crises. Accordingly, interviews and/or focus groups with
consumers appear as the best means of collecting data. Even though other possible qualitative
research methods, such as case studies (Yin, 2003) or netnography (Kozinets, 2002), could be
insightful, they would imply to restrict the field of investigation to a few particular crisis
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situations. In a further stage, however, the adoption of a netnographic approach – that is,
using the information that is publicly available in online forums organized around particular
crisis situations – could be a relevant complementary way of collecting data in order to
identify the characteristics used by consumers to define CSR crises. In addition, in the context
of interviews and focus groups, announcements about various negative business-related
allegations reported in newspapers and in the managerial press could be used in order to
stimulate discussion and direct participants' attention to the corporate crisis topic. Indeed, the
use of elicitation materials in conjunctions with interviews and focus groups appears
particularly appropriate since, at first glance, consumers might not think of corporate crises as
a personally relevant and easy topic to talk about. Elicitation materials could therefore
facilitate communication and help consumers to elaborate on corporate crises (Moisander and
Valtonen, 2006). Thus, prior to interviewing consumers, we plan on collecting news reports
about a representative array of business-related issues.
A challenge that arises when trying to tackle CSR-related topics, and which should therefore
be taken into account, is the potential social desirability response bias (Crane, 1999).
“Socially desirable responses are answers that make the respondent look good, based on
cultural norms about the desirability of certain values, traits, attitudes, interests, opinions, and
behaviors” (Steenkamp, de Jong, and Baumgartner, 2010, p. 200). Although this bias has
mainly received attention in the context of quantitative research (e.g., de Jong, Pieters, and
Fox, 2010; Mick, 1996; Steenkamp, de Jong, and Baumgartner, 2010), qualitative
interviewing methods are equally affected (Crane, 1999). One way to minimize any social
desirability effects on responses is to keep the interviewees anonymous (Mohr, Webb, and
Harris, 2001). Additionally, face-to-face interviews allow the researcher to account for this
bias, to some extent, by recording the respondents' physical and verbal responses to the more
ethically-oriented questions (Fineman, 1996).
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Some consumer-specific factors that could potentially moderate their perception of the CSR
nature of corporate crises should also be taken into consideration. Those factors can be socio-
demographic ones (e.g., age, gender) or linked to consumers’ social value orientation, which
relates to their motivation to process CSR information (Du, Bhattacharya, and Sen, 2010) and
which can either be prosocial, individualistic, or competitive (Van Lange & al., 1997).
4. Conclusion
Corporate crises “have become an inevitable, natural feature of our everyday lives” (Mitroff
and Anagnos, 2001, p. 3). Nowadays, a growing number of crises appears to be related to
socially irresponsible corporate practices but such CSR crises remain ill defined. Indeed,
although the crisis conceptualization should be adapted to the continuous flow of new
challenges that companies face in their environment, the existing crises’ definitions and
typologies do not reflect the increasing public interest in CSR-related issues. The fact that the
crisis literature has not adopted a more consumer-oriented perspective on crises in the past
might explain such a lack of CSR considerations. This working paper is a first step toward
filling those gaps. We offer some new insights into the main characteristics that consumers
are likely to use to interpret corporate crises and to define them as being CSR-related –
namely, the amount of media attention given to the crisis issue, the proximity to consumers’
CSR concerns of the issue at stake, and the seriousness of the crisis situation. Moreover, as it
provides insights to managers and marketing practitioners into consumers’ perceptions of CSR
crises, our research also has important managerial implications. Identifying consumers’
definition of CSR crises could not only help marketers to better identify and understand the
type of crisis their company is dealing with, but could also offer them a more accurate
foundation for the identification and development of crisis management and communication
strategies that would match consumers' needs and expectations in times of CSR crisis situations.
12
By outlining the characteristics that consumers are likely to use to define corporate crises as
being CSR-related, we hope to contribute to an understanding of corporate crises that better
match the current environment in which companies operate, where CSR and related issues
have gained a lot of importance. We also hope to provide interesting and relevant insights for
research developing around the identification and elaboration of appropriate crisis
management and communication strategies.
In keeping with this idea, further research should notably focus on identifying the crisis
communication strategies that best suit CSR crises. In this perspective, attention should not
only be given to reactive but also to proactive strategies, as recent research suggest that sending
messages about the company before the crisis may provide an alternative strategy to crisis
management (Wan and Pfau, 2004). In their research, Wigley and Pfau (2010) notably show
that inoculation, bolstering, and sending positive CSR messages are three proactive
communication strategies that might be effective in reducing the company's reputational loss
in the event of a crisis. However, in the prospect of a CSR crisis, developing a proactive CSR
communication might not be in the company’s best interest, as some research seem to suggest
that promoting the company as socially responsible might increase, rather than decrease, the
damage caused by negative CSR allegations (e.g., Knight and Greenberg, 2002; Pashupati,
Arpan, and Nikolaev, 2002; Wagner, Lutz, and Weitz, 2009).
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Appendix 1: Key corporate crisis definitions
REFERENCES DEFINITION
Hermann
(1963)
“(1) threatens high-priority values of the organization, (2) presents a
restricted amount of time in which a response can be made, and (3) is
unexpected or unanticipated by the organization” (p. 64)
Milburn,
Schuler, and
Watman
(1983)
“(a) opportunity for the organization to attain its current goals; or (b)
demand or threat on the organization which either prevents the
organization from attaining its goals or actually removes or reduces an
organization's ability to attain its goals, that the organization seeks to
resolve because the outcomes at stake are important and the resolution
strategy is uncertain” (p. 1144)
Fink (1986)
“A situation that runs the risk of escalating in intensity, falling under
close media or government scrutiny, interfering with the normal
operations of business, jeopardizing the positive image presently enjoyed
by a company or its officers, and damaging a company’s bottom line in
any way” (pp. 15-16)
Weick (1988) “Characterized by low probability/high consequences events that threaten
the most fundamental goals of an organization” (p. 305)
Barton
(1993)
“A major, unpredictable event that has potentially negative results. The
event and its aftermath may significantly damage an organization and its
employees, products, services, financial condition and reputation” (p. 2)
Lerbinger
(1997)
“An event that brings, or has the potential for bringing, an organization
into disrepute and imperils its future profitability, growth, and, possibly,
its very survival” (p. 4)
20
REFERENCES DEFINITION
Pearson and
Clair (1998)
“A low-probability, high impact event that threatens the viability of the
organization and is characterized by ambiguity of cause, effect, and
means of resolution, as well as by a belief that decisions must be made
swiftly” (p. 60)
Seeger,
Sellnow, and
Ulmer (1998)
“A specific, unexpected and non-routine event or series of events that
create high levels of uncertainty and threaten or are perceived to threaten
an organization's high priority goals” (p. 233)
Fearn-Banks
(2002)
“A major occurrence with a potentially negative outcome affecting the
organization, company, or industry, as well as its publics, products,
services, or good name.” (p. 2)
Coombs
(2007)
“A sudden and unexpected event that threatens to disrupt an
organization's operations and poses both a financial and a reputational
threat” (p. 164)
