Responding to a societal crisis: How does corporate social responsibility engagement influence corporate reputation?

Abstract

While both an “insurance” and “penance” effect of corporate social responsibility (CSR) has been discussed within prior literature, it is unclear how a firm’s CSR engagement in response to a societal crisis such as the COVID-19 pandemic impacts its short-term and long-term corporate reputation. Drawing from case examples of firms’ responses to the recent COVID-19 pandemic and from relevant aspects of crisis management theory, expectancy violations theory, and signaling theory, this paper presents a conceptual framework of corporate reputation change during and after a societal crisis that describes how the direction and speed of a firm’s visible CSR engagement during a societal crisis can change its corporate reputation. Specifically, this paper suggests that firms who exceed stakeholder expectations with lower pre-crisis levels of visible CSR engagement have greater opportunities for increasing their short-term corporate reputations while firms with higher pre-crisis levels of visible CSR engagement are at greater risk for experiencing a decline in their short-term corporate reputations. These changes in short-term corporate reputations are expected to diminish over time, though this depends upon whether firms return to their pre-crisis levels of visible CSR engagement. Finally, building on the case examples and conceptual framework presented, this manuscript concludes with practical guidelines for managers of firms preparing to navigate future societal crises and provides an alternative pathway for both qualitative and quantitative inquiry that has the potential to illuminate important insights for both organizational studies and firms.