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Cited by 962Corporate Social Responsibility ReportingCorporate Identity and ReputationFinancial Markets and Investment Strategies

The Debate over Doing Good: Corporate Social Performance, Strategic Marketing Levers, and Firm-Idiosyncratic Risk

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Luo, Xueming, Bhattacharya, C.B.·2009·Journal of Marketing
DOI 10.1509/jmkg.73.6.198
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Abstract

Marketers and investors face a heated, provocative debate over whether excelling in social responsibility initiatives hurts or benefits firms financially. This study develops a theoretical framework that predicts (1) the impact of corporate social performance (CSP) on firm-idiosyncratic risk and (2) the role of two strategic marketing levers, advertising and research and development (R&D), in explaining the variability of this impact among different firms. The results show that higher CSP lowers undesirable firm-idiosyncratic risk. Notably, although the salutary impact of CSP is greater in firms with higher (versus lower) advertising, a simultaneous pursuit for CSP, advertising, and R&D is harmful with increased firm-idiosyncratic risk. For theory, the authors advance the literature on the marketing–finance interface by drawing attention to the risk-reduction potential of CSP and by shedding new light on some critical but neglected roles of strategic marketing levers. They also extend CSP research by moving away from the long-fought battle for a universal CSP impact and toward a finer-grained understanding of when some firms derive more risk-reduction benefits from CSP. For practice, the results indicate that the “goodwill refund” of CSP is not unconditional. They also empower marketers to communicate more effectively with investors (i.e., doing good to better manage the risk surrounding firm stock prices).

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Crossref · 10.1509/jmkg.73.6.198

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69 of 69 references verified0 citation errors · 0 not checkable

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  • CSR generates "moral capital" through customer trust, employee loyalty, lower price elasticities, or goodwill with regulators, providing insurance-like protection and resulting in lower volatility of future cash flows.

    “One argument being put forth is that CSR generates “moral capital,” for instance, through customer trust, employee loyalty, lower price elasticities, or goodwill with regulators (e.g., Luo and Bhattacharya 2009). Such moral capital provides insurance-like protection against negative future events and the reactions of stakeholders to such events, resulting in a lower volatility of future cash flows”

    From Mandatory CSR and sustainability reporting: economic analysis and literature review (2021) · cites this paper as Luo and Bhattacharya 2009

  • Some studies have empirically shown that organizations paying attention to multiple stakeholders perform better.

    “some studies have empirically shown that organizations paying attention to multiple stakeholders perform better (e.g., Homburg et al. 2013;Koll et al. 2005;Luo and Bhattacharya 2009;Sisodia et al. 2007).”

    From Stakeholder marketing: theoretical foundations and required capabilities (2015) · cites this paper as Luo and Bhattacharya 2009

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Authors
Luo, X., & Bhattacharya, C. B.
Affiliations
  • The University of Texas at Arlington (US)
  • Boston University (US)
Corresponding author
  • Luo, Xueming
  • Bhattacharya, C.B.
ORCID
Venue
Journal of Marketing
Publisher
SAGE Publications
Published
2009-11
Volume
73
Issue
6
Pages
198-213
ISSN
  • 0022-2429 (ISSN-L)
  • 1547-7185
DOI
10.1509/jmkg.73.6.198
OpenAlex
W2152198904
Cited by
962
References
66
Citations by year
2026: 49 · 2025: 83 · 2024: 69 · 2023: 79 · 2022: 75 · 2021: 86 · 2020: 78 · 2019: 63 · 2018: 54 · 2017: 49 · 2016: 58 · 2015: 48 · 2014: 52 · 2013: 35 · 2012: 37
FWCI
79.74
Type
journal article
Language
en
Open access
Licence
journals.sagepub.com/page/policies/text-and-data-mining-license (tdm)
Locations
  • Journal of Marketing (publishedVersion)
  • SSRN Electronic Journal (submittedVersion)
Topics
  • Social Sciences › Business, Management and Accounting › Strategy and Management › Corporate Social Responsibility Reporting
  • Social Sciences › Business, Management and Accounting › Strategy and Management › Corporate Identity and Reputation
  • Social Sciences › Economics, Econometrics and Finance › Finance › Financial Markets and Investment Strategies
Keywords
corporate social performance, firm-specific risk, advertising, research and development, marketing-finance interface, social responsibility, stock price risk, goodwill, investor relations, CSR and financial performance

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