8 January 2020

As businesses come under growing pressure to tackle the climate crisis and address inequality actions really do speak louder than words, according to new research.
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Data collected by academics including Marina Candi, Professorial Fellow at the University of Edinburgh Business School, show that investing in environmentally sustainable practices or employee wellbeing leads to greater customer acceptance.

Firms that simply report on their social responsibility are less likely to enjoy this advantage. Professor Candi explains:

"We were curious to understand whether there was a difference between companies that simply say they are committed to social responsibility and those who actually do things that have a positive social impact. So we reached out to 3,000 managers in commercial firms across Europe and across sectors, including architecture, the arts, engineering, and manufacturing. We collected 355 responses, which is a response rate of 12%, so pretty good for our purposes.

"We asked about commitment to social responsibility, such as the company having a formal strategy. We asked about social innovation, such as the company investing in research and development projects to improve the wellbeing of society in the future. We asked about reporting on social responsibility, such as communicating to stakeholders in a transparent way. And finally, we asked about customer acceptances—⁠in other words, were customers more satisfied than those of the company's competitors.

Firms that act are likely to perform better than firms that simply report.

"We found that the greater a firm's level of social innovation, the less likely it is to report on its commitment to social responsibility, and vice versa. In other words, a company with a core remit to consider its impact on society doesn't shout about it as much as a company actually doing less. This was true across the different industry sectors.

"Perhaps the most socially active companies see what they're doing as basic and the right thing to do, whereas other firms feel the need to overcompensate for a lack of investment in social innovation. An area for further research!

"One key finding is that social innovation appears to drive customer acceptance—so by making positive changes you improve feelings towards your business. But simply reporting on social responsibility, saying you care, does not. Firms that act are likely to perform better than firms that simply report.

"Managers need to turn their attention towards society if they want to improve stakeholder satisfaction."

The research paper 'Saying and Doing: Social Responsibility Declared and Applied' was published in the Journal of Creativity and Innovation Management.

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