Can Companies Do Well By Doing Good?

This seems like the modern paradox: Can companies increase profits through socially conscious marketing and charitable donations?

‘Sure thing’, say Satya Menon of the University of Chicago Graduate School of Business and Barbara Kahn of the Wharton School, University of Pennsylvania.

Their research underscores the link between a product’s goodwill image and a consumer’s purchase of the product. The authors find significant differences between the predominant types of philanthropic sponsorship, Cause Promotion and Advocacy Advertising:

• Purchase rates are higher for cause promotion products that are linked to a charitable cause that closely reflects the company image or mission.
• For advocacy advertising (companies advertising social issues, e.g., heart disease), consumers favor products have a lower level of perceived fit between the company and the cause. (A right-handed person advocating for left-handedness is more persuasive than a left-hander taking the same stance.)

The complete article can be found at http://www.chicagogsb.edu/capideas/fall99/menon.html.