Problem: Academic research and the popular press emphasize the importance of social responsibility in running a business, especially given the consumer and employment preferences of Millennials. How important are these factors to local stakeholders?
Creating social value and protecting our natural resources have been touted as important components of a firm’s strategy. One reason is that research indicates some stakeholders care about these issues. Abundant research focuses on how consumers’ and employees’ perceptions of social responsibility affect purchasing habits, employees’ attitudes and firm financial performance, among other things. Additionally, based on global surveys, Nielson reports that the majority of consumers will pay more for products offered by socially and environmentally conscious firms, while the majority of employees prefer to work for these firms. This is increasingly true for younger stakeholders.
So what do individuals in our community value? To get an idea, we surveyed 65 upper-level undergraduate students. In regard to future employers, 75.4 percent agreed that it is important to work for an environmentally friendly firm. When asked about the importance of working for a firm that is committed to creating social value, 84.6 percent agreed. Although a small sample, these results offer evidence that local university students (your future employees) care about social and environmental impacts.
Several students commented on why this matters.
• “Working for a company that has the same values as me is motivational. I feel like I would work harder in order to help my company achieve its goals.”
• “A company that has committed to social value and environmental initiatives also commits to its employees and displays a caring attitude. I don’t want to work for a company that only focuses on profit and cost savings.”
• “It is important to me not only because of my personal values, but also because it makes good business sense.”
Importantly, not all students agreed. For example, one student explained, “I would not focus on whether or not [a future employer] has high environmental and social values. If it is a company that I see growth in, I would not let that set me back.”
When asked about purchasing habits, 73.8 percent agreed they would pay a premium for products and services that come from firms committed to positive social and environmental impact. Related to this, students were given a hypothetical scenario about purchasing a new shirt. They were told that the shirt costs $20 from a company not committed to investing in social and environmental initiatives. Then, they were asked how much they would be willing to pay for a similar shirt from a company that is environmentally friendly and committed to creating social value. The median price that students were willing to pay from the latter company was $25, or a 25 percent premium.
Again, not all students agreed. For example, one student commented, “A company’s commitment to social values and the environment has no impact on me. I buy a product for the product, not what the company is doing for the environment.”
Research on the general population and surveys of local university students imply that a firm’s social and environmental impacts matter. These action steps provide guidance on how business leaders can advance their own social responsibility agendas.
1. Engage stakeholders. Stakeholders’ participation in social and environmental initiatives can heighten positive outcomes. For example, if employees feel they are part of the process, they are more likely to identify with, and increase their commitment to, the firm. Examples of stakeholder engagement include promoting compensated corporate volunteer days, soliciting feedback on ways to reduce environmental impact, and developing a one-for-one product.
2. Avoid greenwashing. Not all “responsibility” is created equal. For example, despite good intentions, when firms produce one-off cause marketing campaigns or promote a one-time philanthropic donation, stakeholders often perceive this negatively. Successful firms build values into their cultures and strategies, so efforts are perceived as genuine.
3. Communication is key. If the second point is followed, communication can help shape positive perceptions. Too often, stakeholders are unaware of a firm’s social responsibility efforts. Initiatives and outcomes should be communicated via multiple outlets, such as internal company communication, social media, product packaging, the firm’s website, and sustainability reports.
Kaitlyn DeGhetto, Ph.D., is an assistant professor of management in the College of Business at UCCS. Prior to her academic career, DeGhetto worked in both the health care and wholesale/distribution industries. She is the author of research articles on business strategy, public policy and entrepreneurship. Contact: OPED@uccs.edu.