How Corporate Social Responsibility: Influences Brand Equity

Abstract

Many corporations engage in socially responsible behavior as a part of their normal business operations. These activities include positive actions toward the environment, social causes, and their communities. Examples include reducing their use of energy, supporting schools within their communities, and supporting organizations such as Feeding America or Habitat for Humanity. Corporate social responsibility (CSR) can benefit companies through promoting a positive public image while creating a workplace with satisfied employees, happy customers, and lower costs. It can be a win-win scenario for both the companies and their stakeholders. The creation of brand equity shares many similar elements. The purpose of my research is to examine the socially responsible behavior of three major companies in the retail industry to gain further insights into the correlation between CSR and the creation of brand equity. The need for CSR has been created through the many challenges with issues in the environment, such as global warming, energy usage, and the elimination of waste products. Social causes may include hunger, natural disasters, and childhood diseases. All of these offer companies opportunities to get involved by performing corporate social responsibility activities. Brand equity is defined best as assets associated with a brand name that increase the value of the product or service of an organization. (1) Strong brand equity can help an organization distinguish itself from its competitors and provide financial benefits. Steve Hoeffler and Kevin Keller describe six ways in which corporate social responsibility can help an organization build brand equity: 1. Building brand awareness, 2. Enhancing brand image, 3. Establishing brand credibility, 4. Evoking brand feelings, 5. Creating a sense of brand community, and 6. Eliciting brand engagement. (2) My research examines the socially responsible actions of Target, Lowe's, and Best Buy in relation to these six criteria. LITERATURE REVIEW There are many reasons an organization would engage in socially responsible behavior. The most prominent may be the importance of doing what is right toward your community, the environment, and social causes. Other reasons may include financial benefits (because of lower costs), earning a positive reputation as an organization, helping the environment, assisting local communities, improving employee job satisfaction, and stakeholder theory. One of the main reasons companies engage in socially responsible behavior is the possible financial gain that can come from it. Recent studies show that companies engaging in socially responsible behavior tend to show long-term financial gains and increases in value. The companies showed a financial loss or a small positive difference in the first three years because most of the benefits of socially responsible behavior occur over the long term. (3) Several aspects related to the environment end up creating cost savings, such as building a new office that uses solar power or geothermal heat and air. Many companies also pursue LEED (Leadership in Energy and Environmental Design) certification, a designation developed by U.S. Green Building Council, which requires third-party verification that a building is designed, built, and maintained in a sustainable, energy-efficient manner. An organization's reputation can be a strong reason for the company to engage in socially responsible behavior. In fact, one study found that 75% of a company's value is the result of its reputation. (4) Positive exposure and publicity may arise from socially responsible behavior, which improves an organization's reputation. As valuable as a positive business reputation is, a poor reputation can be a business disaster. Examples from the past could include the BP oil spill in the Gulf of Mexico or the lead paint found in toys from Mattel that were manufactured in China. …