To appeal to consumers, enterprises such as Amazon and Zoom have been emphasizing their corporate social responsibility (CSR) initiatives through comprehensive reports.
These documents enable companies to present their efforts that positively impact employees, clients, neighborhoods, and the environment—emphasizing goals that extend beyond mere profit-making. Studies suggest that reporting on CSR is associated with a rise in sales.
As a marketing professor, this correlation prompted a compelling question: Are the additional sales driven by CSR disclosures coming from new customers, or are they simply boosting purchases from the existing customer base?
In a recent study analyzing several hundred Chinese companies, a colleague and I sought to answer this question. Our findings revealed that CSR disclosures reduce a company’s reliance on its existing customers by 2.1%.
This outcome is encouraging for companies—it shows that the extra sales are being fueled by new clients who are favorably impacted by the firm’s CSR initiatives.
However, the results also revealed challenges.
To increase sales, companies often need to expand their procurement of supplies. This raises another question: Do CSR disclosures help businesses attract new suppliers?
Surprisingly, we found the opposite. Companies that issued CSR reports appeared to deter new suppliers. This could be because suppliers often shoulder additional costs when a company prioritizes social responsibility.
Relying heavily on suppliers can become costly for businesses. When suppliers recognize that a company depends on them, they are more likely to demand cash payments instead of extending credit. This reduction in credit availability can strain a company’s cash flow, leaving fewer resources for investment.
Therefore, although revealing CSR activities might draw in clients, it could also drive away suppliers, presenting a possible drawback.
Although earlier studies have shown that CSR disclosures have the potential to increase sales, it was not evident if these sales came from new or current customers. Our research offers insights that can assist in business decision-making.
This understanding is equally pertinent to legislators, authorities, and supporters of corporate accountability, as they discuss the potential requirement for CSR reporting to be obligatory.
Although the U.S. does not obligate businesses to publish CSR reports, other countries, including China, do. Starting in 2009, every publicly traded company in China has been required to file yearly CSR reports, which laid the groundwork for our research.
Interestingly, the U.S. Securities and Exchange Commission has thought about the possibility of mandating CSR disclosure. Until such regulations are established, numerous American firms will probably keep issuing these reports on their own initiative.
Considering these advancements, the demand for empirical data regarding the advantages and expenses of CSR reporting is more crucial than ever.
Forthcoming Paths
Increasing worries regarding severe weather phenomena and their effects on people have sparked my interest in ecological accountability. I am presently engaged in two research endeavors in this field.
First, I am examining corporations’ public statements to evaluate their environmental risks and the steps they’ve implemented to address these issues. Second, I am exploring how CEO motivations impact corporate environmental statements, initiatives, and expenditures—or the absence of such measures.
