Will CSR help or hinder during corporate crises?

By CB Bhattacharya, Catherine Janssen, and Sankar Sen

Will CSR help or hinder during corporate crises?

Many companies believe that their CSR activities may act as a reservoir of goodwill, insulating them from the negative impact of crises. They may be wrong.

Actually, when a crisis arises, its effect hinges on the way stakeholders see a company’s CSR motives. If they are aware of CSR activities developed by the company before and found them to be sincere, the ethical identity of the company will have become a blueprint.

The crisis evaluation will be based on this blueprint and:

The type of crisis. If a crisis is digestible and a company’s responsibility moderate, stakeholders may attribute less blame to the company engaging in CSR than would be the case in the absence of CSR. If, on the other hand, the company appears utterly responsible for the crisis, its CSR engagement will likely intensify rather than mitigate stakeholders’ negative reactions.

The severity of the crisis. Severe situations (e.g., loss of human life or environmental destruction) are, by definition, extremely negative. Any indication in the CSR-company’s crisis response that they are not fully sensitive to the severity of the event will violate stakeholder’s expectations and lead to negative reactions, independent of previous goodwill.

If, however, the crisis response aligns with or even exceeds their expectations, stakeholders may perceive this reaction as proof that social responsibility is taken seriously and be more lenient with regard to the respective company.

The stakeholders’ identification with the company. Stakeholders who identify with a company that implements CSR may be inclined to forgive the company, even if it is found responsible for the crisis. Their resilience reaches its limits, though, when the crisis is extremely negative. In that case they may react even more strongly than stakeholders whose feelings towards the company are neutral and may be prompted to revise their evaluations of the company’s CSR motives per se.

In short: Companies have to understand the role their CSR plays in the public’s reaction to a corporate crisis and factor this into their crisis management and communication.

Corporate Responsibility and Ethics, Organizational Behavior

Professional Service Firms, Technology Based Industries

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