Author Archives: Isobel

Can Corporate Social Responsibility save firms from negative customer feedback?

New research by Birkbeck’s Dr Benedetta Crisafulli and co-authors Dr Paolo Antonetti and Professor Stan Maklan adds insight to the relationship between company failure, CSR and customer response.

Picture the scene: you’re at a restaurant and your order is taking longer than expected to arrive. The waiter has been steadfastly ignoring your gaze since you sat down and when you finally do manage to flag him down, he is rude and unapologetic.

How would you respond?

Anger, frustration and a desire to tell your friends never to dine in that restaurant are all common responses. At the same time, you might feel a desire for reconciliation – to receive an apology and be offered a discount on your bill.

Would your reaction be different if you knew the restaurant was committed to Corporate Social Responsibility (CSR)? Would the fact that the restaurant is a morally responsible business excuse them from your harshest criticism?

This is the question that researchers from Birkbeck’s Department of Management, NEOMA Business School and Cranfield University sought to answer in their latest study on the relationship between company failures, CSR and consumer response.

CSR and consumer behaviour: what we know so far

Prior research suggests that CSR acts as a reservoir of goodwill that companies can draw on following a crisis. If we believe that a company is caring and well-intentioned, we are more willing to give it the benefit of the doubt in the event of a brand failure such as poor product performance.

However, existing evidence from research is less clear on whether CSR does indeed mitigate the negative impact of failed service delivery.

How does CSR impact consumer reactions to failed service delivery?

The results from an online experiment showed that the nature of the failed service is key in determining consumer response:

  • when competence-based, CSR is an effective service recovery strategy
  • when integrity-based, CSR is unable to inoculate the negative effect of poor service performance

In the case of a competence failure, a company’s CSR generated impressions of warmth , which softened the negative impact of the failure.

In the case of an integrity failure, the service failure contradicted the impression of warmth conveyed by CSR; as a result, CSR fails to save the company from consumers’ retaliation.

Does a consumer’s relationship with a company matter?

Of course, not all consumers are alike. The researchers found that the nature of the relationship between consumer and company has an impact on consumer response to CSR.

Consumers with high communal orientation, that is those who are concerned for others’ interests and benefits and value a company that is caring are less likely to feel betrayed by the company and CSR would reinforce the positive relationship. A less positive effect would be felt for consumers with an exchange orientation, who are concerned about individual gains from the relationship.

What does this mean for managers?

For managers looking to mitigate the impact of service failures, it is essential to monitor the types of service failures in their organisation to assess the likely impact of CSR initiatives.

When it comes to communicating CSR activities, firms are advised to focus on communicating the altruistic objectives of their CSR initiatives.

In the event of a competence failure, CSR can buffer negative effects, Explanations and apologies should focus on reassuring customers that the company did not intentionally cause the failure.

It would also be helpful for companies to capture consumers’ level of communal orientation as part of their market research and to target CSR messaging to the segments aspiring to a communal relationship.

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Why are social networking sites so reluctant to ban hateful users?

The right to free speech is not an excuse for turning a blind eye to online aggression.

Picture of Donald Trump giving a speech

Social networking sites have been both the heroes and villains of the COVID-19 pandemic, connecting loved ones across Tiers and time zones while simultaneously providing a safe haven for fake news and hate speech.

This latter is perhaps best illustrated by none other than the former President of the United States, Donald Trump, whose tweets following the presidential election have been widely condemned for inciting the January Capitol riot, which led to the deaths of five people.

While Trump is the most eminent figure to have been banned by the social media giant, he is by no means the first. In November 2018, the Canadian journalist Meghan Murphy was banned permanently from Twitter for hateful speech towards transgender people. Murphy’s response was to launch a legal dispute contesting her right to free speech.

When right-wing commentator Katie Hopkins suffered a similar fate in June 2020, BBC News drew comparisons between Hopkins and Trump, but commented that ‘leaving such tweets up in the public interest is an exception Twitter makes for world leaders – other accounts like Ms Hopkins’ risk being suspended when they break Twitter’s rules.’

Is the right to free speech, even if it constitutes hateful abuse, really in the public interest? And, if so, will it always take a riot to prompt social media giants to act?

Social media – a censorship free zone?

We have no problem identifying aggression or unacceptable conduct in real life. When it comes to social networking sites, however, the boundaries seem more blurred.

A lack of clarity and universality when it comes to bans is certainly not helping, as more than 70% of Americans, and more than 80% of Republican-leaning voters, believe that social networking sites intentionally censure opinions they do not agree with. Even scholars in Law and Ethics disagree on what constitutes harmful speech and whether such forms of speech should be restricted.

When Meghan Murphy accused Twitter of stifling her right to free speech, she tapped into the heart of the issue that is tying Twitter’s hands. Does permanently removing an individual from a social media platform stifle necessary debate? In the interests of avoiding a repeat of Capitol Hill, it is essential that we clarify the boundaries between free speech and hate speech and/or the processes necessary to define acceptable speech.

Consensus and consistency

One concern for social networking sites is the public backlash they might receive for ‘no-platforming’ controversial speakers. In the first study to model the factors that influence the acceptance of restrictions on free speech by social media sites, we find that users closely scrutinize how social networking sites handle controversies arising from political debates. Findings from our research show that observers of online aggression make trade-offs between free speech and the desire to punish aggression. Our findings show that, while observers of social media interactions dislike aggression and are willing to see it punished, the rhetoric of free speech is systematically employed to justify aggression that come from the observer’s own political side. In other words, free speech concerns are leveraged to foster partisan interests. .

The importance of preserving public trust means that social media sites should evaluate each banning case cautiously. In circumstances where banning an individual is inevitable because of high levels of online aggression, it is essential that the sites justify their decision to observing users and explain why the ban should not be interpreted as a limitation to users’ right to free speech.

The controversy that currently surrounds social media bans highlights the need for wider and more transparent discussions on what kind of speech should be restricted on social media, especially when it comes to political debates. Embedding rules against online aggression into public policy, rather than relying on the discretion of tech giants, would be one way to ensure a consistent approach to banning decisions. A clear policy, with buy-in from users, could prevent scepticism around bans that emerges from inconsistently and unfounded application of censorship.

We have seen the deadly consequences that can result from online aggression. Policy makers must exercise their power to make sure there are no safe spaces for hate speech.

Professor Paolo Antonetti, Professor in Marketing at NEOMA Business School and Dr Benedetta Crisafulli, Senior Lecturer in Birkbeck’s Department of Management are co-authors of the paper “I will defend your right to free speech, provided I agree with you”: How social media  users react (or not) to online out-group aggression recently published by Psychology & Marketing.

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The surprising impact of innovation on reducing climate change

New research by the Department of Management’s Dr Fred A. Yamoah and colleagues explores the relationship between innovation input, governance and carbon dioxide emissions.

Picture of a wind farm

There is no doubt that the humanitarian and economic impact of climate change is a matter for global concern. However, prior research tells us that it is emerging and developing economies that are likely to be hit hardest by the impact of global warming.

In their 2019 report, the Intergovernmental Panel on Climate Change (IPCC) found that emerging and developing economies, with their heavy reliance on agriculture, forestry and tourism, were more at risk from the adverse impact of climate change than more developed economies. Indeed, the IPCC found that every one-degree centigrade increase in temperature would lead to a 1.3% drop in economic growth in an emerging economy.

What role does innovation play in the fight against climate change?

Typically, the fate of countries in this position has been viewed somewhat fatalistically, with little known about what can be done to mitigate the damage caused by the poor climate choices of more developed countries. However, since innovative technologies are known to have a positive impact on climate change factors by conserving energy and reducing emissions, we wanted to know whether increased innovation input could support developing economies in the fight against climate change.

Our study involved an analysis of data from the World Bank database on 29 emerging countries over the period from 1990 to 2018. My colleagues Godfred Adjapong Afrifa, Gloria Appiah (both Kent Business School), Ishmael Tingbani (Bournemouth University) and I examined whether investment in cutting-edge technologies could help address climate change problems in emerging economies, and how this relationship is supported or mitigated by governance factors.

The impact of governance

Why is it important to consider governance alongside innovation and climate change? First of all, it is good for business: stakeholder theory tells us that organisations that please their stakeholders by following ethical norms of fairness, trustworthiness and respect are likely to see improved overall performance in the long term.

When it comes to climate change targets, governments and international governing bodies such as the EU or ECOWAS are among the most critical stakeholders, as they are more likely to take a long term view and possess the necessary regulatory powers to ensure best practices are upheld.

How innovation benefits emerging economies

The introduction of innovative technologies and practices can benefit emerging economies in a number of ways. For farmers, genetic technologies can develop resilient crops that adapt to environmental challenges in agriculture. New technologies also typically conserve energy and reduce harmful fuel emissions.

Looking at the data, our results suggest that emerging countries with high innovative competencies reduce climate change problems by approximately 26.8%, with a 10% increase in cutting-edge technology.

While these findings show the dramatic impact of innovation on mitigating the negative effects climate change, it is important to note that the positive results were moderated by governance factors, as the quality of governance influences countries’ investment in innovative technologies towards curbing environmental damage.

Contrary to the typically deterministic view of climate change, our results suggest that emerging economies’ innovation efforts could have a significant impact on national and global success in the fight against climate change.

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The economics of public sector employment

Our Dr Pedro Gomes has been researching public employment for nearly fifteen years. He shares why it is so important to understand how the public sector works and the key findings from his research.

Public employment is a significant consideration in any national economy. In developed countries, public employment makes up 15-30 percent of total employment and represents the large majority of government consumption. In the US, for example, the government spends 60 percent more on general government employees than on the purchase of intermediate goods and services.

The public sector also operates according to different rules than the rest of the economy, as governments do not face the same competitive forces, nor have the same objectives as private sector firms.

Considering that the public sector is responsible for delivering many key services in our society, from education to healthcare, it is essential to have a good understanding of how its employment operates. The recent COVID-19 pandemic has again put focus on the importance of having a modern public sector, with an employment force prepared to face difficult, unpredictable and unlikely crises, but its aftermath with high public debt, also puts emphasis on the costs of the public sector workforce.

Below are three of the key findings from my research into this area.

Governments hire disproportionately more educated workers

In the paper Public Employment Redux, my colleagues Pietro Garibaldi, Thepthida Sopraseuth and I explore the phenomenon whereby governments hire more educated workers than the private sector.

We noticed that governments hire very few workers with low qualifications. In the US, for example, one third of workers have a masters or a PhD qualification, and one third of these work for the government.  We documented empirical evidence for this education bias in the US, UK, France and Spain.

There are a few different explanations for this trend:

  • The government needs more educated workers to provide its highly technical goods and services, such as healthcare, education and the judicial system.
  • Higher educated workers take more of a wage penalty to work in the public sector, so are relatively less expensive to hire.
  • Public sector jobs that require low qualifications pay more than similar level jobs in the private sector, so they attract workers with more qualifications.

Within our model, we found that the technological skills needed for the public sector was the main driver of the disproportionate representation of educated workers, but that wage setting and excess underemployment explain 12-15 percent of the education bias.

Unlike other sectors, the government is able to set wages more freely, as the cost is financed from tax revenue. If the government chooses to pay very high wages, too many people will choose a skilled role in the public sector as their first choice. However, if wages are too low, too few workers will want to join the government.

In reality, a balance is needed, so the government can always attract the workers it needs, without leading to underemployment in the public sector.

Nepotism in hiring practices allows friends and family to ‘jump the queue’ for government roles

Public sector hires are often based on nepotism: Scopa (2009) found that the probability of working in the public sector is 44% higher for individuals whose parents also work in the public sector, while Colonnelli et al. (2020) found that politically connected individuals in Brazil enjoy easier access to public sector jobs.

In my research into this topic with Andri Chassamboulli, we suggest that workers can use their connections to find jobs in the public sector faster. We created a search and matching model with private and public sectors to test this theory.

Surprisingly, we encountered some positive side effects to nepotistic practices. Conditional on high public sector wages, our findings suggest that hiring through connections reduces unemployment, as people who do not have connections will instead find roles in the private sector. Conversely, if the government sets the optimal wage possible for the successful running of the public sector, nepotism is reduced.

We conclude, therefore, that nepotism is a symptom of a problem in the public sector, rather than the disease, and the problem is created when wages are set too high.

Women prefer working in the public sector

In most countries, the public sector hires disproportionately more women than men. My colleague Zoë Kuehn and I developed a model to try to make sense of this imbalance.

Our findings show that the gender imbalance in the public sector is driven by supply, meaning that women self-select to work in the public sector more than men. One explanation for this is that the type of job carried out by the government is coincidentally the type of work preferred by women, such as healthcare and education. However, even discounting these sectors, women’s public employment remains 20-25% higher than men.

This remaining imbalance can be explained by the different characteristics of public and private employment. The gender wage gap and working hours are both reduced in the public sector, making this an attractive choice for women who may be factoring family commitments alongside work opportunities in their choice of employment. Alongside reduced working hours, the public sector offers additional benefits such as more sick days, flexible hours and employer-provided childcare, ensuring an overall better work-life balance in the public sector.

 

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