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Good corporate citizenship behavior toward all stakeholders can help build trust in a firm among employees and customers

Takeaway: Customers and employees care about how firms relate to other stakeholders. Increases in employee and customer experiences of firm corporate responsibility activities – both directly and through observation of activities affecting other stakeholders – lead to more positive beliefs about the corporate responsibility of a company as well as increases in trust and positive intent toward a firm.

Suggested audiences: Corporate citizenship managers developing and communicating about programs, executives dealing with reputational issues, communication managers.

Researchers examined how corporate responsibility-related experiences and beliefs influenced stakeholder trust and positive intent toward a financial services company. They surveyed 708 customers and 359 employees of a financial services firm that introduced a range of CR-related activities into its business including efforts to ensure fair and transparent practices in customer interactions, training and development for staff, initiatives to help nonprofits market themselves effectively, and encouraging business partners to make contributions to the local community.

The CR-related experiences of those surveyed were identified as self-related or other-related. Customers’ experiences receiving goods and services and employees’ experiences of working terms and conditions are self-related. Observations by customers or employees of a firm’s community involvement, business practices and environmental impact are other-related.

Key findings:

The findings suggest that companies need to balance a variety of issues and that CR activities can have impacts in multiple directions on a wide variety of stakeholders.

  • Both customers and employees base their perceptions of the CR of a firm to a large extent on how the firm relates to them directly.
  • Customers and employees care also about how companies relate to many groups of stakeholders other than themselves, including local communities and society as a whole.
  • Increases in customer and employee experiences of corporate responsibility, directly and indirectly, lead to increases in positive beliefs about the CR of a firm as well as trust toward the firm and positive intent toward the firm.
  • For customers and employees, observation of CR activities directed toward others has a stronger link to beliefs about the CR of a firm than to trust. This suggests that observation of how others are treated has a stronger direct impact on how they think about a firm than how they feel about a firm emotionally.

If citing, please refer to original article: “Unpacking the Mechanism by which Corporate Responsibility Impacts Stakeholder Relationships”, British Journal of Management, Vol. 24, 127–146 (2013), Carola Hillenbrand, Kevin Money and Abby Ghobadian

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