In an effort to attract customers, companies like Amazon and Zoom have been highlighting their corporate social responsibility (CSR) efforts through detailed 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 investigation involving the examination of numerous Chinese companies, a collaborator and I aimed to address this inquiry. Our results indicated that CSR disclosures lessen a company’s dependence on its current clientele by 2.1%.
This result is promising for businesses—it indicates that these additional sales are being driven by new customers who are positively influenced by the company’s CSR activities.
Nonetheless, the outcomes additionally highlighted difficulties.
In order to boost sales, businesses frequently find it necessary to broaden their supply acquisition. This leads to the following inquiry: Do CSR disclosures aid companies in gaining 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.
Thus, while CSR disclosures can attract customers, they may alienate suppliers—posing a potential downside.
While previous research has established that CSR disclosures can boost sales, it has been unclear whether these sales are sourced from new or existing customers. Our study provides clarity that can guide 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 considered introducing mandatory CSR reporting. Until such requirements are in place, many American companies will likely continue to publish these reports voluntarily.
In light of these developments, the need for empirical evidence on the costs and benefits of CSR reporting is greater 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.