How brand CSR responses to the pandemic impact brand value, growth, and rank

The study explores the relationship between corporate social responsibility (CSR) initiatives and brand performance, specifically focusing on the impact of pandemic-related CSR actions. Several theoretical frameworks are examined, including social responsibility theory (companies have an ethical obligation to contribute to society), stakeholder theory (companies should consider all stakeholder interests), institutional theory (companies are influenced by societal norms), and resource dependence theory (companies engage in CSR to access resources). The research question focuses on whether different types of CSR responses by the top 100 global brands in 2020 (as identified by Interbrand) influenced brand value, growth, or rank. The central argument is that the type of CSR response matters for short-term outcomes like brand growth, while long-term indicators like brand value and ranking are less responsive to short-term initiatives.

Existing research extensively examines the link between CSR and corporate financial performance. Systematic reviews and meta-analyses consistently demonstrate a positive correlation. However, the strategic value of CSR during crises remains less clear, particularly regarding its impact on brand-specific performance metrics. Studies highlight the importance of brand equity, socially responsible brand image, and the significant role of corporate reputation in influencing company stock prices. While some research indicates that consumer preferences are associated with brands engaging in higher proportions of profit donation (even if absolute amounts are smaller), the specific effects of various CSR approaches during the pandemic on brand performance remain an open question. The reviewed literature generally supports the expectation of a positive correlation between CSR and brand outcomes.

The study uses data from Interbrand's Best Global Brands 2020 report, which ranks the top 100 brands globally based on brand value, growth, and rank. The researchers analyzed the CSR responses of these brands to the COVID-19 pandemic, categorizing them into four types: cash donations, in-kind donations, improved customer services, and employee support. Information on CSR actions was gathered from the US Chamber of Commerce Foundation's Corporate Aid Tracker, company websites, and social media. To quantify CSR response orientations, a max-min normalization formula was used to create normalized response orientation (RO) scores for each of the four categories. Three regression models were used, one for each dependent variable (brand value, brand growth, and brand rank change), with the four normalized RO scores as independent variables. The Interbrand methodology, while proprietary, is described as integrating consumer behavior, competitive attractiveness, and financial performance aspects of the brand.

The regression analysis revealed that in-kind donations (b2=0.686, t=2.169, p=0.033) and improved customer service (b3=0.741, t=2.314, p=0.023) significantly and positively impacted brand growth. However, none of the four CSR response types showed a significant relationship with brand value or rank change. The R-squared values for the regression models were relatively low (0.016, 0.077, and 0.032 for brand value, brand growth, and brand rank change, respectively), suggesting that other factors beyond the analyzed CSR responses significantly influence brand performance.

The findings suggest that short-term, pandemic-related CSR initiatives may have limited impact on long-term measures of brand value and rank. In contrast, in-kind donations and customer service improvements, likely because of their tangible nature and direct engagement with consumers, demonstrated a positive effect on short-term brand growth. Cash donations and employee support, lacking the same visibility and immediate consumer impact, did not significantly affect brand performance in the studied period. The results support prior findings that CSR actions need to align with leadership, engagement, and relevance as defined by the Interbrand brand strength framework for them to have a demonstrable positive impact. The short timeframe of the study (one year) likely limited the observation of long-term effects of CSR.

This study contributes to the understanding of the relationship between CSR actions and brand performance, particularly in crisis contexts. The key takeaway is that the type of CSR response adopted significantly influences its outcome on brand performance. While CSR is valuable for building long-term brand equity, short-term brand growth can be positively impacted by focusing on customer-centric initiatives and in-kind donations that are visible and memorable. Future research could explore the long-term impact of these actions, the influence of industry differences and firm size, and the development of a more comprehensive typology of CSR programs designed to maximize brand impact.

The study's primary limitation is the reliance on a single data source (Interbrand's 2020 report), limiting the generalizability of the findings. The proprietary nature of Interbrand's methodology restricts the detailed explanation of its underlying metrics. The categorization of CSR responses into four categories may not capture the full spectrum of actions undertaken. Furthermore, the confounding effect of industry-specific demand changes due to the pandemic could have influenced the results. The analysis also focuses only on the year 2020 and cannot reflect long-term cumulative impacts of CSR.