The Effects of CSR Performance and Price on Consumer Purchase Decisions: A Moderated Mediation Analysis

Authors: Junhao Vincent Yu, Tim Kraft, Robert Handfield, Rejaul Hasan, Marguerite Moore

ABSTRACT:

Problem definition: Once a feature primarily associated with premium goods, the disclosure of corporate social responsibility (CSR) information has become more common for affordable products. While the literature has found that communicating good CSR performance can positively impact consumers’ valuations of a company or product, it has also been shown that consumers often equate low price with low quality. As such, designing an effective CSR communication strategy for affordable products presents new challenges for retailers.

Methodology/results: We use a controlled experiment in an online purchase context to examine how consumers’ willingness to buy is influenced by a retailer’s disclosure of a manufacturer’s CSR performance (both positive and negative). We hypothesize and test a mediation model based on two mediators: price fairness and product desirability. We then explore how two dimensions of price moderate these mediation effects: historical price paid and retail price. Our findings support the proposed mediation paths for both positive and negative CSR performance, with price fairness being particularly robust across all performance levels tested. Regarding moderators, we find that consumers’ historical price paid moderates the link between CSR performance and price fairness, with the negative (positive) indirect effect of negative (positive) CSR performance being driven by consumers with a higher (lower) historical price paid. Moreover, retail price moderates the ancillary influence of price fairness on product desirability and thus amplifies the strength of the moderating effect of historical price paid.

Managerial implications: We show that disclosing CSR performance is more challenging (and potentially riskier) with consumers who typically pay a higher price. Furthermore, offering a product at a low retail price can cause consumers with a higher (lower) historical price paid to further punish (reward) a retailer for its negative (positive) CSR disclosure.

Click here to read the full paper.