Antecedents and Consequences of Socially Responsible Brands

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Antecedents and Consequences of Socially Responsible Brands: A Focus on
Firms Offering Controversial Products
by
Suraksha Gupta
Suraksha Gupta is a Senior Lecturer of Marketing and Strategy at Kent Business
School, University of Kent, UK. Email: [email protected]
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Abstract
Researchers on social responsibility and brand reputation of firms offering
controversial products that are harmful in nature have, till now, yielded inconsistent
results. Although literature recommends social behaviour as one of the determinants
of reputation, it fails to satisfactorily identify the factors that would particularly
enable a brand offering controversial products to be recognized as a socially
responsible brand. Authors use the inductive approach to examine existing research
and review anecdotes to build a conceptual model, which identifies factors to be
considered for facilitating recognition of a brand offering controversial products such
as tobacco or gambling as a socially responsible brand. In addition, the role of
business customers of the brand is also reviewed to understand if they can moderate
the causal relationship between the socially responsible image of the brand and brand
reputation. Guidelines for future research on the propositions made are provided in
this paper.
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Introduction
A business can be considered controversial due to various reasons (Cai et al. 2011).
Some of these reasons are the type of raw material used to manufacture the products,
illegitimate practices adopted by managers, waste produced as a result of production
or risk involved in activities of a business. For e.g., mining, production of medicines,
use of animals for research etc. (Gardner 1996; Lantos, 2001) However, vulnerability
of humans to the after effects of the usage of products plays a role in the assessment
and evaluation of the firm offering those products. Products, which are evaluated
negatively by the society because they make users vulnerable in any way, are
considered to be controversial in nature (Smith and Cooper –Martin, 1997). Such
products have been studied by various disciplines such as business, health and law
(Bradford et al., 2005; Kilberth, 2010; Becchetti and Trovato, 2011). Anecdotes and
empirical business research indicates that multi-million dollar industries offering
controversial products give better returns to shareholders in comparison to traditional
industrial activities (LBO Report, 2004; Pinguelo et al., 2010). Although firms
operating in such sectors are not allowed to use ‘pull’ based marketing strategies, they
have successfully demonstrated that this sector can create higher value for
shareholders based on the demand of their products in the consumer segment (Rein
1996; Kesselheim and Outterson, 2011). While products of such industries are quite
regulated and legal, factors such as low level of acceptance of their products by
certain sections of the society, i.e., not favourably consented by the society, and the
overall effect of products on consumers’ life, i.e., long-term effects on health of users,
does not allow these companies to use their products as a value based marketing tool
(Chaudhry and Walsh, 1995; Milne and Patten, 2002).
Individuals and external firms also try to distance themselves and do not
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express much interest in associating themselves with businesses offering controversial
products due to the negative reputation of products offered by them (Tsalikis and
Fritzsche, 1989; Hanson and Logue, 1998). It has been noticed that shareholders of
supplier companies who earn high returns from supplies they make to firms offering
controversial products also try to push their managers to stop being a part of the
delivery process of harmful products. For e.g., shareholders of Kimberly Clark are
reported to push the company to stop supplying paper and sheets made from the
processed tobacco to cigarette manufacturers (Davidson, 2003). The long-term effect
of products from controversial sectors also leads to the development of self-related
concerns in the unconscious minds of consumers (Deshpande and Webster, 1989;
Conchar, 2004). Their concerns push companies to deemphasize on the product
during promotions and instead focus more on development of a corporate brand that is
socially responsible (Mohr et al., 2005).
While the notion of corporate social responsibility highlights the need for
businesses to develop a reputation of being socially responsible, it is highly
challenging for managers to overcome the social taboos associated with the products
from controversial industry sectors (Palazo and Ritcher, 2005). The challenge in
marketing such products is to demonstrate value through activities and initiatives
while dealing with unethical and unsolicited practices associated with the reputation
of products as the product cannot be used by managers for marketing purposes
(McWilliams and Siegel, 2001). Literature indicates that such companies drive the
perceptions of stakeholders towards legitimate practices followed by them and
manage their reputation by involving themselves in socially responsible activities
(Lantos, 2001). Authors have reviewed existing knowledge about firms offering
controversial products, brand development, reputation management and corporate
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social responsibility to understand how brand managers use different viewpoints to
ethically legitimize their business activities and manage an image of being a socially
responsible brand. Since the context is brand and not corporation, this research
contributes to the understanding of brand management by firms offering controversial
products based on a nexus that philosophically integrates moral, emotional, and
rational requirements of businesses aiming to be recognized as socially responsible.
Considering that brand managers are not the sole authors of brand image and
management of a business is a very dynamic process, a conceptual framework that
identifies antecedents and consequences of building socially responsible brands is
presented (Figure 1) and areas for future research are discussed here.
Research Motivation
Research indicates that both individuals and firms prefer to be associated with
corporations that operate in reputable industrial sectors such as finance, technology or
environment instead of a company from a controversial industry like alcohol
(Charlton, 1999; Jacobs, 1999). The literature on human resources supports this
school of thought for individuals as employees with an argument that the kind of firm
an individual associates with in the initial phase of its career development, influences
the type of companies that can become his or her future employer (Taormina, 1997;
Martin et al., 1998; Billett, 2000). Business-to-business literature also indicates that
the reputation of the manufacturer firm influences the image and performance of its
business customer firms (Doney and Cannon, 1997; Gounaris, 2005). Our concept of
brand reputation goes beyond brand image as it considers reputation to be a concept
that keeps changing based on the actions of the firm (DeChernatony, 1999). This
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makes it important for researchers to understand the reason for individuals or
companies not wanting to associate with brands offering controversial products.
Primary reason as per secondary information is the nature of products. Academic
research justifies the aversion of individuals and firms to be associated with a firm
offering controversial products, but fails to provide a solution to the problem faced by
managers using a brand for offering products that are controversial in nature.
What do we mean by Nature of Products
Nature of products has been discussed in academic literature from different
perspectives. Lee et al. (2011) referred to the characteristics of a product while
discussing its inherent qualities as nature of products. Smith (1956) adopted an
economic view of demand and supply of a product to discuss nature of products as an
important criteria used by managers while selecting the channel for its distribution.
The nature of products as per Waller (1999) means inborn features of a product. Fahy
et al. (1995) explained these products as not only unacceptable to the society but also
harmful to the users. Products considered controversial in nature are such that when
used they either cause harm or reflect on the indecency of the user (Rehman and
Brooks, 1987). Aversion of consumers to controversial products is based on factors
such as a risk to the health or reputation that discourage them with a fear that usage
will make them vulnerable to crime, death, family dysfunction, social exclusion or
diseases (Waller, 1999). Products considered controversial have also been termed as
socially sensitive products by authors such as Shao and Hill (1994). Study by Shao
and Hill (1994) reflected on the reputation of the agency that was managing
marketing activities of controversial products as products not accepted well by its
other customers.
Stakeholder viewpoint recommends that firms offering products controversial
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in nature should build a reputation of being a responsible business through actions
that influence the credibility of both individuals and firms that are associated with it
as shareholders, employees, consultants, vendors, suppliers or business customers,
i.e., (Rao et al., 1999; Rust et al., 2004). Waller (2005) studied controversial
products from marketing perspective and found that customers find marketing of
these products very offensive and socially irresponsible. Ethical dimension was
studied as product harm and consumer vulnerability by Jones and Middleton (2007).
Their findings reflected how actions and activities adopted by companies facilitated
assessments and evaluations of product harm and self vulnerability by the users. The
central problem addressed by this research is how can companies offering products
that are controversial in nature can integrate the focus of their different activities and
actions to develop a brand that is considered socially responsible. A socially
responsible brand provides confidence to the customers about the intentions, integrity
and conduct of the firm. The premise of this article is about products considered
controversial by nature, e.g., addictive drugs, alcohol, weapons or from the gambling
industry etc. While consumption of controversial products mentioned previously
destroys developmental prospects of humans, they defend business interests of
producers (Mathieu and Dearden, 2006). In this context, our focus while discussing
the nature of products will be upon the features that make the product unacceptable
due to the harm they cause when utilized or negatively affect the reputation of the
user (Waller, 1999).
Reputation and Controversial Products
Reputation plays an important role in the positive acceptance of products by
customers and constructive acknowledgement of activities of the firm by those
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associated with it for business (Parkhe, 1998; McDaniel and Malone, 2009). Firms
offering controversial products struggle to manage their reputation due to the
negativity involved in the usage of their products (Carrigan, 1995). To alter this
negativity, they incorporate the philosophy of social accountability into their
emotional and commercial agenda so that they can develop the reputation of being a
socially responsible firm (Simon, 1991; Kapelus, 2002). Commercial activities, for
e.g., the production setup of controversial products when analysed in this light,
highlights that the manufacturing setup of products from this industry sectors are
generally located in underdeveloped regions or countries (Bello and Rosenfeld, 1990).
While firms use the resources available in the backward areas for commercial reasons,
they focus on promoting and developing these under developed areas through their
social initiatives (Shrivastava, 1995). Social initiatives guard business interests of
these firms and also act as shields for managing the negativity that influences its
reputation in a community at the emotional level (Karkkainen, 2001).
Creating an emotional bonding with customers by firms offering products with
a negative reputation requires managers to repeatedly remind their customers about
the social initiatives a firm takes to fulfill its responsibility towards the community
(Humphries, 2000; Luo and Bhattacharya, 2006). Managing socially responsible
reputation requires a conduct of accountability to be reflected in the actions of both
the manufacturing firm and those who are associated with it for the benefit from the
nature of its business (Lantos, 2001). Social orientation in the actions of the firm
leads to development of the community, which further strengthens its reputation as a
responsible business and benefits the manufacturer and the associate firms (Leger and
Nutbeam, 2000). Research on corporate social responsibility recommends a
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demonstration of concern towards the overall environment and employees as
important elements of responsible business practices (Schutter, 2008).
The concern of the firm towards the social issues faced by the local
community and its behaviour of integrity and accountability through self-regulation
are also considered to be highly important for creation of emotional bonding based
reputation by firms from controversial industry sectors (Crane and Kazmi, 2010).
Though emotional aspects based on social initiatives do not have a direct impact on
financial performance, i.e., on the purchase intention of customers, they create a
differentiation by building a reputation that influences customers at the emotional
level while they make purchases (Gupta and Pirsch 2006). However, managing
favourable reputation based on the reputation of being socially responsible becomes a
problem for firms whose core business functions like production and supply chain are
managed by external associations or its business customers at remote locations
(Holbrook, 1999). It becomes even more important for such manufacturers whose
products are sold through a business-to-business network of business customer firms
(Kumar, 2004). For firms offering controversial products through the business-tobusiness market and seeking to develop a favourable reputation, involving business
customers through the use of a brand becomes very important (Laufer, 2003). While
business customers play an important role in the achievements of commercial
objectives of the firms, brands enable manufacturers to efficiently communicate their
social initiatives to their target segment and create stronger linkages at the emotional
level (Ostrom et al., 2010).
The corporate brand management practices provide assurances to consumers
and business customers about intentions and commitment of the firm to add value to
their requirements (Lumsden and Fridman, 2007; Ringold, 2008). Brand orientation
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enables manufacturers to use ‘push’ based marketing strategies and address issues
linked with the promotion of products offered by the manufacturer (Ringold, 2008;
Wilkie and Moore, 2003). In the case of controversial sector companies, a corporate
brand enables managers to attract small and medium enterprises to be associated with
them in a business relationship as its business customers (Bennett, 1997; Bloom,
2001). For promoting controversial products through ‘push’ based promotions,
relationship based marketing strategies have also been reported to be successful
strategies for managing business-to-business markets by manufacturer firms (Wilkie
and Moore, 2003). Bloom (2001) reported effect of push based relationship
marketing strategy on the efficiency of the brands owned by manufacturers operating
in controversial industry sectors.
Marketing literature acknowledges the role of business customers in building a
reputation, which is an important facet of the overall value contributed by a company
to its associations who are either individuals or firms and are associated with the
business for psychological or financial gains (Yoon et al., 1993; Ulaga and Eggert,
2006; Siltaoja, 2006). However, existing literature has not been critiqued to explain
the contribution of business customers in nullifying the effect of the harmful nature of
controversial products offered by a corporate brand. According to current research, in
order to nullify the effect of harmful nature of their products, manufacturers of
controversial products should take up socially responsible activities (Schuck, 1994).
Such actions demonstrate the concerns of the manufacturer towards the society
(Carrigan and Attalla, 2001) and reflect on the efficiency of business standards
adopted by the manufacturer (Weaver et al., 1999). As per Du et al. (2007)
integrating socially responsible activities into core business activities builds a
reputation that can drive the responses of consumers and business customers towards
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products not highly desirable.
While literature recommends actions that demonstrate corporate social
responsible behaviour of the firm for building a favourable reputation (Becker-Olsen
et al., 2006; Maignan and Raltson, 2002), there is a lack of understanding about the
kind of actions that the manufacturer of controversial products and its business
customers should jointly undertake to build their brand’s reputation of being a
‘socially responsible brand’. Academic literature does not report how manufacturer
firms offering controversial products can develop a socially responsible brand. To fill
this gap in the current literature, authors have reviewed current academic knowledge
about socially responsible brands and the role of business customers in building brand
reputation from the context of firms offering controversial products for creating a
research agenda and identifying avenues for future research. The agenda thus created
is based on a synthesis of arguments from various disciplines such as management,
business ethics, corporate governance and corporate social responsibility in the form
of a conceptual model and reflects on their relevance to marketing (Figure 1).
Following sections discuss the arguments developed and make propositions based on
a description of the constructs on which the conceptual model is based.
<Insert Figure 1 about here>
Literature Review and Research Propositions
The economic view of a business suggests that every activity taken up by a firm and
its associates should be focused towards improving consumption and making profits
(Hofer, 1975; Vargo and Lusch, 2004) while the notion of branding takes up the
stakeholder view and recommends that firms should behave responsibly and pay
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attention to their actions (Robin and Reidenbach, 1987; Mohr et al., 2001).
Managerial actions oriented towards efficient management of businesses can lead to
outcomes that can make a brand develop perceptions of being irresponsible due to
various reasons (Garriga and Mele, 2004). Some of the reasons can be flawed
business practices, business viability, imperfect business processes or inadequate
understanding of stakeholders (Gerhart, 2003; Laplume et al., 2008). Irresponsible
business outcomes require brands to contradict the orientation of their core functions
by demonstrating intentions of being socially responsible through accountability
(Ripken, 2009). From the overall industry perspective, accountability, commitment
and community development has been discussed as some of the value contributing
facets of socially responsible behaviour of a corporate in the academic literature
(Carrigan and Attalla, 2002; Maignan and Raltson, 2002). Cai et al. (2011)
empirically examined correlation between firm value of companies from controversial
industry sectors and their socially responsible engagements and found a positive
effect of socially responsible behaviour on the value perceived.
Socially Responsible Behaviour
Socially responsible behaviour of a corporate has been reviewed by academic
researchers from various perspectives. Campbell (2007) used institutional theory to
explain how organisations can be acknowledged as socially responsible based on two
reasons (1) knowingly they do not act in a manner that may harm any individual (2)
incase harm is inevitable due to the nature of the business, the rectification should be
voluntary. Reinhardt et. al. (2008) undertook the economic perspective to explain
socially responsible behaviour of corporates by examining the concept of profit
sacrificing for social and public interests. The need to maintain a sustainable social
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behaviour by firms was reinforced by Renhardt et al. (2008) to face competitive
pressures. Freeman and Velamuri (2008) undertook stakeholder view to integrate
business, ethics and social considerations made by firms for fulfilling social
responsibilities and addressing competition. The social contact theory was used by
Dunfe (2006) to discuss the need for firms to behave in a socially responsible manner
for successfully managing associations through communications involving dialogues
and engagement.
Academic research discusses the demonstration of socially responsible
behaviour by brands but has somehow ignored the complexity of controversial
industry sectors that successfully use brand management theories to build associations
for products that are unavoidably harmful in nature. This sector has been given some
attention by organisations such as the European Union and World Health
Organisations. European Union directive (2000) recommended scientific and
transparent partnerships between the manufacturer from this sector and its associate
firms and recommends a socially responsible behaviour during the buying-selling
processes. According to the report, responsible behaviour of a manufacturer and its
associate firms when oriented towards social needs of the community leads to the
development of confidence in stakeholders. This confidence is embedded in the
conduct of the company in a regulated environment. A report by the British
American Tobacco Corporation (BAT) identified a few steps that can be adopted by
businesses and governments following which companies can demonstrate a socially
responsible and accountable behaviour.
Werther and Chandler (2005) reviewed social behaviour of firms from
branding perspective and reflected on strategic benefits of business ethics
demonstrated by corporates through their activities as a competitive advantage against
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management lapses that happen due to social expectations, affluency and
globalisation. Prosenak et al. (2008) considered societal marketing practices from a
holistic view to discuss how socially responsible behaviour demonstrated through
social initiatives taken up ethically by the firm may lead to affluence based on the
well-being of everyone in the community. Based on a synthesis of the arguments
presented by various research studies from different streams we have identified three
constructs, i.e., social initiatives, business ethics and brand associations as antecedents
to make assumptions about their combined ability to drive socially responsible
behaviour of brands that ultimately influences brand reputation. We have also
considered guidelines from the EU Report to conceptualise the moderating role of
business customers in driving brand reputation by demonstrating socially responsible
behaviour. A theoretical underpinning of our assumptions is discussed and presented
as research propositions.
Social Initiatives
Academic research recommends that firms offering controversial products should take
up social initiatives to address the concerns of its stakeholders (Lantos, 2001; Menon
and Menon, 1997; Srivastava et al., 1998; Kumar, 2005). The guidelines specified by
Janardhan (1997) discuss in accordance with this argument and suggest that
companies should communicate regularly with their customers for creating awareness
about the risk associated with the products they offer as their social initiative.
Researchers such as Paladino (2005) hold manufacturers responsible for educating
customers about the management of the risk that is linked with their products while it
is continuously involved in innovatively developing risk free products that benefit the
community. Literature on brand management argues that a brand’s social initiatives
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oriented towards community development have positive consequences (Algeshiemer
et al. 2005).
Martin et al. (2010) recommended to brands offering controversial products
that they should ethically reflect on their level of commitment to take initiatives
oriented towards fulfillment of its social responsibility through community
development programmes. A recent study of firms offering controversial products
was performed by Cai et al (2011). They found that the top management was
sincerely involved in the social initiatives of the firm with an aim of enhancing the
long-term value their firm contributes to its associations. Controversial products have
been reviewed for discussing engagement of firm in social initiatives from the
perspective of value offered by the firm but has not made recommendations that
would help managers to strategically approach their social initiatives with the purpose
of building a socially responsible brand. While different aspects of social initiatives
taken by firms have been tested individually by previous researchers, the total effect
of different dimensions of social initiatives is not known. To understand the
cumulative effect of three types of social initiatives on a brand offering controversial
products, we propose:
P1a: Brands that emphasise on building awareness about the nature of its products
amongst its customers will have a higher probability of being recognised as socially
responsible brands.
P1b: Brands that emphasise on educating its customers about the management of risk
associated with its products will have a higher probability of being recognised as
socially responsible brands.
P1c: Brands that emphasise on participating in community development programmes
will have a higher probability of being recognised as socially responsible brands.
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Authors such as Crane and Kazmi (2010) studied social issues linked to products in
the context of children and established the need for a brand to identify issues and
manage its social initiatives to resolve those issues very strategically. If we look at
industrial practices, Glaxo Smithkline has been socially very active in community
development but its failure in educating customers about the side effects of its drugs
has made it look socially irresponsible. Simultaneously, Merck has ensured that it
provides access to everyone to better healthcare products but has not been very
participative in community development (Lyon, 2007). As a result, Merck is not
considered as a socially responsible company. Although both academics and
managers are aware of the three types of social initiatives identified by us, they are
unaware of their individual effects. As current literature does not explain the optimal
level of engagement of firms in different dimensions of social initiatives required by
them, we argue that:
P1d: Impact of community development will be stronger in comparison to educating
customers about the management of risk associated with the product; which in turn,
will be greater than creating an awareness of products that are controversial in nature
by brand to be known as a socially responsible brand based on its social initiatives.
Business Ethics
The study by Lacznaik and Murphy (2006) recommended ethical practices to be
followed by managers to achieve business aspirations. Implications of business
pressures on ethical behaviour of firms and the outcome of these behaviours on
expectations of those associated with businesses has been discussed by literature on
corporate governance as an important challenge to be addressed by managers
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(McCarthy et al. 2003; Guay et al. 2004). A study of business ethics from corporate
social responsibility perspective by Maignan and Ferrell (2004) revealed transparency
in actions as an important requirement for a business to be considered ethical.
Jeurissen (2004) used the political lens to understand firms as socially responsible
citizens in an institutional environment and highlighted strategic self-regulation as
one of the criteria based on which a business can build a reputation of being ethical
and can be held responsible for the actions taken and influence of their actions.
Commitment demonstrated by a firm towards providing solutions to the social
problems being faced by the community through self-regulation can also help its
brand to be recognized as a socially responsible brand (AmbaRao, 1993; Denis et al.,
2000).
While ethical practices have been acknowledged as the pillars of a socially
responsible business by academic researchers such as Buhner et al., (1998), the cases
of companies associated with controversial activities are continuously kept under
surveillance by its stakeholders (Lyon, 2007). Companies such as Halliburton are
highly motivated to behave responsibly, but, their involvement in the supplies they
made to the military for the Iraq war has put them under the ethical lens of social
responsibility investigators for the commitment they have demonstrated towards
human rights. Union Carbide’s Bhopal tragedy highlighted the unethical practices
being followed by companies at the global level and the need for self-regulation
policies (Amba-Rao, 1993). Drawing upon these examples and research directions
provided by Bartley (2003) who studied the ethical behaviour of corporates in terms
of corporate conduct during certification procedures and monitoring mechanisms, a
complete understanding of business ethics is necessary. Lack of managerial
understanding and corporate pressure pushes managers to take short cuts and ignore
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ethical business practices (Campbell 2007). To get the holistic view of business
ethics for brands vulnerable to being labeled unethical due to the nature of their
products, we would like to know if:
P2a: Brands that emphasise on commitment for demonstrating business ethics will
have a higher probability of being recognised as socially responsible brands.
P2b: Brands that emphasise on transparency for demonstrating business ethics will
have a higher probability of being recognised as socially responsible brands.
P2c: Brands that emphasise on self-regulation for demonstrating business ethics will
have a higher probability of being recognised as socially responsible brands.
Practitioners of business ethics recommend committed behaviour of firms in its
actions and processes in a way that firm adheres to regulations specified by the law.
Companies such as Reliance who offer controversial petroleum products in India have
demonstrated a very strong commitment to its shareholders and customers, but have
been unsuccessful in managing the ethical dimensions due to the translucent nature of
its operations and failure to follow regulations. As per Crane and Kazmi (2010) it is
important to understand the individuality of different dimensions of ethical behaviour
of businesses wanting to become socially responsible. Following guidelines of Crane
and Kazmi (2010), we would like to propose that the:
P2d: Impact of commitment demonstrated will be stronger in comparison to selfregulation; which in turn, will be greater than transparency maintained by the brand to
be known as a socially responsible brands based on its ethical business practices.
Brand Associations
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Low and Lamb (2000) studied measurement and dimensions of brand associations
and found that brand associations differ across brands and product categories. Robin
and Reidenbach (1987) reviewed the concepts of brand associations from the point of
view of social responsibility and found that brands that try to find solutions to the
social issues being faced by the community are able to create associations stronger at
the emotional level. Pomering and Johnson (2009) studied how brands manage
expectations of their associations beyond economic benefits and proposed
engagement in non-economic activities for becoming socially responsible. Caring for
the society by demonstrating accountability and intentions to fulfill the expectations
of those associated with it helps managers to develop a brand that is recognized as a
socially responsible brand (Schutter, 2008; Kraisornsuthasinne and Swierczek, 2009).
However, these studies seem to be biased when considering anecdotes that
highlight the case of Monstano being held responsible for tragic suicides committed
by farmers (Malone, 2008) or use of corporate mercenaries offering private military
and security services by brands such as Exxon Mobl or De Beers (Mathieu and
Dearden, 2006) or Nestle, Mars and Hershey using cocoa harvested by slaves and
underage labour to manufacture their products (Orr, 2006). Although these two
brands have been able to successfully build strong brand associations, their actions
have damaged their reputation of being socially responsible despite of their focused
approach and programmes oriented towards corporate social responsibility. The
empirical (Becchetti and Ciciretti 2006) and anecdotal information on brands
operating in controversial industry sectors reflect on the strength of associations
created by a brand and indicate a debate between stakeholder theory and shareholder
theory. Application of brand management theories for providing confidence to
stakeholders has been discussed as socially responsible behaviour of a brand by the
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literature on corporate social responsibility (Siltaoja, 2006; Lacznaik and Murphy,
2006). We contribute further to this debate by investigating if associations built by a
brand offering controversial products can help the brand to be recognized as a socially
responsible brand by its stakeholders, we argue that:
P3a: Brands that reflect on emotions in their social initiatives for building
associations will have a higher probability of being recognized as socially responsible
brands.
P3b: Brands that reflect on accountability in their social initiatives for building
associations will have a higher probability of being recognized as socially responsible
brands.
P3c: Brands that reflect on fulfillment of responsibilities in their social initiatives for
building associations will have a higher probability of being recognized as socially
responsible brands.
Phau and Teah (2009) examined influence of attitude and personality characteristics
of brands on consumers and found their impact on status of the brand, consumption of
its products and its integrity perceived to be positive. They did not find a strong
effect of attitude and personality on gratification and value consciousness of
consumers. Industry reports also discuss these relationships in a similar fashion for
brands such as Monsanto -- an agriculture giant. Monsanto has been held responsible
for farmers committing suicide due to its failure to behave socially responsible
because of its monopolistic practices. Such cases require researchers to provide a
complete understanding of brand associations to be developed based on its socially
responsible activities. Keeping a focused approach to our research, we would like to
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understand creation of brand associations for products that can be considered
controversial based on following arguments:
P3d: For developing socially responsible brands based on brand associations by
companies offering controversial products, the impact of emotional dimension of the
brand will be stronger in comparison to accountability; which in turn, will be greater
than the fulfillment.
Brand Reputation
The concept of the reputation of a brand being socially responsible alludes to benefit
or goodwill that a business accrues from the application of branding theories in its
actions while fulfilling its social responsibilities (Knox et al., 2005). The theory of
brand reputation, if reviewed from the perspective of socially responsible behaviour
of a corporate explains the role a brand plays in the development of a community and
also the place a community occupies in business management and brand management
strategies (deChernatony, 1999; Smith 2010; Hillestad, 2010). The reputation thus
built by a brand when studied through the lens of operations and management
highlights the influence of transparency a brand maintains in its business activities
and the notion of corporate social responsibility it reflects in its business practices and
actions (Angus-Leppan et al., 2010; Davies and Ryals, 2010). Literature on corporate
governance discusses how transparency and responsibility recognized by customers
and business associates of the firm enables them to assess the integrity of its socially
responsible intentions (Vo, 2008).
To be able to manage transparency in actions as a part of business activities
requires the management to practice business ethics as an essential component of its
corporate agenda (Zadek, 1998). Developing reputation of a brand also requires
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clarity in business ethics based marketing plans of brand to be implemented in such a
way that they minimize the risk of damage that any unforeseen action or activity may
make to the reputation of the brand (Lacznaik and Murphy, 2006). Particularly for
companies from controversial industrial sectors ethical practices followed by a brand
require efficient management of expectations of its stakeholders as they lead to the
development of respect for the manufacturer brand amongst its associations (Young et
al. 2010).
Apart from efficient management of expectations, the willingness of
management to be held accountable for its activities contributes to the reputation of
being socially responsible for a brand (Metzger, 1984). In the case of controversial
products, the harmful nature of the product reflects on the unaccountability of the
brand making it difficult for managers to implement strategies that are aimed at
developing a reputation of being a socially responsible brand (Shaw, 2007).
According to Lacznaik and Murphy (2006), socially responsible brands should try to
educate customers about how to use their products in a safe manner. To understand if
the recognition of a brand offering harmful products to users as socially responsible
can strengthen its reputation, this is what we propose.
P4: Recognition of a brand as being socially responsible will have a positive influence
on the reputation of a brand offering controversial products.
Business Customers and Brand Reputation
Associating with external firms for managing social initiatives can strengthen the
reputation of a firm owning a brand in a competitive market (Drumwright, 1994; Park
and Dickson, 2008). Brands associate with external firms in many ways. For the
purpose of offering products to consumers at distant locations, they associate
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themselves with external firms as business customers (Gupta et al. 2008).
Associating with firms operating independently as agents or business customers
improves the capabilities of the brands in distant and competitive markets (Anderson
and Gatignon, 1986; Achrol and Kotler, 1999). While brand managers prefer to
associate with not-for-profit organisations instead of involving their business
associations for managing social initiatives (Reed et al., 2010), business customers
can add higher value to the initiatives taken up by brands (Ogrizek, 2002). Business
customers are able to act as credible commentators who aid in the positioning of the
firm in the consumer segment as a responsible corporate citizen (Karkkainen, 2001).
Business customers have also been reported as a useful resource for creating
awareness of product characteristics amongst purchasers (Srinivasan and Lip, 2003;
Cretu and Brodie, 2007). Educating consumers located in remote markets requires the
support of business customers due to their close interaction with the local community
(Lantos, 2001).
Social initiatives taken up jointly by the manufacturer brand and its business
customers reflect on the ethical conduct of the business (Kennedy et al., 2001).
Involving business customers can enable a brand to successfully establish strategic
alliances in the business-to-business markets with small and medium firms that share
similar values. Sharing of similar values can enable the brand to carry the effect of its
socially responsible actions till the end of its supply chain (Ciliberti et al., 2011).
Business customers can facilitate projecting the brand to be socially responsible brand
by enabling managers to successfully perform their important business functions such
as educating retailers of products about the nature of the products (Gupta et al., 2008).
Educating business customers about the laws to be complied with while selling
controversial products can also enable the brand to adhere to the regulations under
23
which the products are to be sold (Tsalikis and Fritzsche, 1989). Adhering to laws
and regulating the sales of products as per the legal requirement contributes to the
reputation of a brand (Laczniak and Murphy, 2008). Participation of business
customers in initiatives of the brand aimed at educating consumers strengthens the
emotions of belongingness between brand and its sellers (Henderson et al., 2011).
Such belongingness to the brand felt by business customers strengthens their
association at the emotional level, which is based on rational objectives (Gounaris,
2005).
Identifying, educating and supervising business customers on (1) compliance
with the law (2) management of risk involved with the product adds brand value to
the product and builds a stronger reputation of the brand (Grisaffe and Jaramillo,
2007; Ogrizek, 2002). The level of involvement of business customers in managing
social initiatives of a brand, brings opportunities centered around a set of beliefs and
standards that reflect on the care that brand has for the quality of life of its users apart
from reflecting on the standard of living of users (Ostrom, 2012). The opportunities
thus received help brands to compete at the global level and allow business customers
to compete at the local level (Smith, 2010). Therefore, we assume that while selling
products that can be harmful to customers at a later date, business customers enable
brands to efficiently communicate and educate customers about social initiatives it
takes to responsibly contribute to the community strengthens the reputation of the
brand. Hence, we argue that:
P5: The impact of a brand recognized as socially responsible will be higher on brand
reputation in the context of a business to business customer.
Managerial Implications and Future Research
24
As businesses continue to strive towards making higher profits for economic reasons,
stakeholders such as vendors, suppliers, employees and customers seek emotional
benefits for social reasons apart from rational benefits from their association with the
business (Sheth and Parvatiyar, 1995). These desires of stakeholders require
businesses to develop a reputation that is difficult to be challenged. Customers of
products, which can harm users, want to see such businesses behaving responsibly
Schuck, 1994). Businesses whose products may endanger human survival have used
corporate brand management theories for addressing this requirement of stakeholders
and building reputation of accountable companies (Jayawardena et al. 2008). The
pressure from consumers to be accountable further pushes managers of firms offering
controversial products to adhere to the philosophy of social responsibility (Ford,
2008). The notion of social responsibility requires companies offering controversial
products to work for the benefit of the stakeholder with practices such as care for its
employees, their work conditions, health and safety measures it adopts for production,
care for the environment and compliance with the law (Lacznaik and Murphy, 2006).
These efforts make can make a company offering controversial products become a
preferred employer by employees who take pride in the products they produce
(Lantos, 2002). Our conceptual model presents a structured framework that based on
existing knowledge to enable such firms in developing a socially responsible brand
for managing the favourable reputation of their brand. A positivistic approach for
future research on this topic would be appropriate as it will help in empirically testing
the propositions made.
The framework reinforces the concept that firms owning brands are
considered to be a part of the social community in which they operate in many ways
One it highlights the responsibility of the management to ensure that profits are made
25
following industry standards and are utilized and distributed in a way that every
stakeholder benefits from the profits made within the periphery of societal norms and
values (Bansal and Roth, 2000). Two, to fulfill its societal responsibilities it
recommends that managers can take up special initiatives to improve the quality of
experience its stakeholders have with the brand (Seuring and Muller, 2008). Three, it
reflects on how a responsible brand can successfully build a favourable reputation
based on its efficiency to ensure attractive returns on investments made for the
investors. Four, by building strong associations at the emotional level with
employees, suppliers, vendors and sellers it suggests that brands can reduce the cost
of its products based on flawless and volumetric production (Smith, 2010). Finally,
the fifth point can be to enable the manager to combine all these factors for improving
the efficiency of the brand’s supply chain through the adoption of the just-in-time
philosophy.
All these aspects of a brand individually effect the associations that are both
internal and external to the brand. The combined effect of the individual effects on
different associations can reflect on the values of the firm behind the brand and builds
reputation of being socially responsible for the brand. For brands offering
controversial products extra support is required by the brand from its associates to
build a reputation of being a responsible brand. While being acknowledged as a
socially responsible brand both internal and external associations help the brand
offering unsafe products in building its reputation. We recommend future researchers
to empirically test the framework as it will help them to understand the extent to
which brands can utilize their business customers in managing the activities related to
corporate social responsibility as they can effectively communicate about its social
26
initiatives for better outcomes. However, researchers will have to also investigate the
reasons why it is not happening in practice.
This research also suffers from its limitations. One of the limitations could be
country specific, i.e,. in some countries firms get the benefit of tax exemption for
social activities performed through not-for-profit organisations. This study has created
a research agenda for researchers focusing particularly on 1) branding and 2)
controversial industry sectors. It provides directions for exploring these two streams
of research further from the perspective of social responsibility of firms. For the
purpose of generalization, the topic taken up by this research is very broad.
Researchers should continue to conduct further research on this topic. However, we
recommend that research objectives should be refined using expert views. Other
limitations exist. As it integrates concepts and theories from both business-tobusiness and business-to-consumer research, we propose to future researchers of this
topic that they can divide this research into two projects with individual focus on
business-to-consumer or business-to-business theories. Conducting this research
through two projects might give them better clarity on findings and their implications.
Summary
In this article we have drawn on previous research studies as well as relevant research
that has not been reported in academic journals to synthesise key constructs pertaining
to the reputation of brands from controversial industry sectors. Based on the
synthesis we have drawn assumptions and built a conceptual model to propose a
research agenda pertaining to products offered by firms offering controversial
products using brand management theories. The agenda thus developed needs further
empirical investigation to establish the causal relationships assumed.
27
28
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