Strategic and institutional sustainability: corporate social responsibility, brand value, and Interbrand listing

Abstract

Purpose

This study aims to investigate the impact of strategic and institutional (normative) corporate social responsibility (CSR) on brand value and brand reputation, based on the strategic and legitimacy theory of CSR. It argues that because CSR strengths represent firms’ proactive approach to satisfy their stakeholders’ interests, the authors expect that this proactive approach is likely to generate an accumulated level of reservoir of goodwill that is positively related to the level of brand value. In contrast, the authors would expect that social irresponsibility (CSR concerns), as a measure of firms’ reactive position to stakeholders’ interests, adversely affects the incremental change in this reservoir of goodwill.

Design/methodology/approach

This paper measures strategic CSR using CSR strengths and normative (institutional) CSR from CSR concerns scores from the MSCI ESG (Kinder Lydenburg Domini). This paper measures the level of brand value from the Interbrand listing, and it measures the brand reputation based on changes in brand value and brand ranking from Interbrand’s 100 global brands.

Findings

This paper finds evidence to support the authors’ theory that one-, two- and three-year lagged CSR strengths positively affect the level of brand value. This study also finds empirical evidence to support the authors’ hypothesis that CSR concerns adversely affect changes in brand value and brand ranking. This study concludes that the differing impacts of CSR strengths and CSR concerns help the authors better understand the impacts of firms’ pro-action and reaction to stakeholders’ interests ion brand values and ranking.

Practical implications

The findings indicate that strategic CSR enhances brand value, while socially irresponsible activities that are against social norms, values and ethics adversely affect the companies’ legitimacy and adversely affect changes in brand reputation.

Originality/value

This research offers a new perspective to distinguish the differing impacts of CSR strengths and concerns on brand value and brand reputation.

Citation

Agus Harjoto, M. and Salas, J. (2017), "Strategic and institutional sustainability: corporate social responsibility, brand value, and Interbrand listing", Journal of Product & Brand Management, Vol. 26 No. 6, pp. 545-558. https://doi.org/10.1108/JPBM-07-2016-1277