Does Doing Good Lead to Good Performance?
- by Susan McDonnell
You could say that ice cream changed to course of CB Bhattacharya’s life.
After he completed his Ph.D. in Marketing at Wharton, Bhattacharya, G’91, GRW’93, was approached by Ben Cohen, co-founder of Ben & Jerry’s, with an intriguing research question: Did the ice-cream company’s commitment to social and environmental issues—as highlighted on its packaging—drive sales?
“I thought it was an interesting problem, though a little different from what I was working on. I decided to move forward with it,” said Bhattacharya, the E.ON chair in corporate responsibility and dean of international relations at the European School of Management & Technology, during a March 20 lecture on Wharton’s campus. “That was the start of my work in this area.”
In recent years, companies have felt pressure to act as forces for social and environmental good. Organizations from the Gap to Starbucks to Procter & Gamble have strived to attract consumers through campaigns highlighting social outreach. While such activities may foster good will among consumers, employees and investors, Bhattacharya has delved deeper: under what conditions can doing good lead to doing well?
“If we want to convince companies to invest in this area, to add this to their corporate strategy, we need to show them that there is some way to reap benefits,” he said.
On the surface, the answer seems simple: commit to doing good, gain a following, make a profit. Bhattacharya cited a survey in which 87 percent of respondents said, if quality and price of two products were equal, they would pick the product associated with a good cause. But in the real world, all products are not created equal.
After 15 years of research, Bhattacharya has determined factors—what he refers to as the three Us—that determine the power of social campaigns:
Understanding: If the consumer does not know what a company is doing, corporate responsibility doesn’t work.
Usefulness: Actions need to create value and have functional benefit.
Unity: High levels of understanding and usefulness lead to a high level of unity, which leads to a higher level of loyalty and advocacy.
Bhattacharya found that corporate responsibility can also lead to higher levels of employee loyalty and retention and encourage investment. However, he emphasized, corporate responsibility cannot be thought of in a vacuum. There is no return if a corporation is doing good but produces a low-quality product.
Bhattacharya’s talk was part of the Wharton Program for Social Impact Lecture Series. By enabling the integration of learning and experience and the development of research, outreach and student-centered programs, the Wharton Program for Social Impact furthers the commitment to make Wharton a “force for social good.”