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Journal of Business Ethics (2020) 161:443–458 https://doi.org/10.1007/s10551-018-3973-4

REVIEW PAPER

How do Consumers Reconcile Positive and Negative CSR-Related Information to Form an Ethical Brand Perception? A Mixed Method Inquiry

Katja H. Brunk1 · Cara de Boer2

Received: 2 June 2016 / Accepted: 9 July 2018 / Published online: 2 August 2018 © Springer Nature B.V. 2018

Abstract This research investigates how consumers’ ethical brand perceptions are affected by differentially valenced information. Drawing on literature from person-perception formation and using a sequential, mixed method design comprising qualita- tive interviews and two experiments with a national representative population sample, our findings show that only when consumers perceive their judgment of a brand’s ethicality to be pertinent, do they process information holistically and in line with the configural model of impression formation. In this case, negative information (brand misconduct) functions as a diagnostic cue to form an unethical brand perception, irrespective of other positive information at hand. However, in the case where processing relevance of the un/ethical information provided is low, brand perception formation is algebraic, in which case positive information (virtuous brand conduct) can counterbalance and neutralize the detrimental impact of brand misbehavior. Our findings extend existing research on consumer perceived ethicality as well as consumer reactions to corporate social responsibility and sustainability initiatives, which has so far assumed the asymmetric impact of negative information on ethical perceptions and consumer attitudes (negativity bias) to be prevalent. We derive a range of academic and managerial implications and present a number of important avenues for future research.

Keywords Consumer perceived ethicality (CPE) · Impression formation · Brand perceptions · Corporate social responsibility (CSR) · Corporate ethics · Mixed methods · Negativity bias · Brand ethics · Ethical consumption · Green marketing · Social desirability bias · Sustainability

Introduction

In September 2015, one of the largest corporate scandals of recent times hit the international press. The automaker Volk- swagen Group faced allegations of, and has subsequently admitted to, deliberately manipulating the emission controls of an estimated 11 million cars globally. The level of pollu- tion emitted under realistic driving conditions exceeded that permitted by regulatory testing in the United States by 40

times, exposing a case of intentional consumer and regula- tory deception on a monumental scale. Due to the extensive global press coverage, consumers inevitably became aware of the brand’s emission scandal. But the Volkswagen Group also has a tradition of global corporate social responsibility (CSR) involvement; hence, consumers might simultaneously hold knowledge about the Volkswagen Community Trust’s educational engagement and aid for poor communities in South Africa. In an example like this, how do consumers mentally reconcile contrasting positive and negative pieces of ethical information? Our research aims to answer this question.

Recent emerging research stresses that the types of un/ ethical or CSR-related behaviors able to influence consumer perceptions are multitudinous and continuously evolve in line with moral standards and newly emerging ethical sensi- tivities (Brunk 2010; Öberseder et al. 2013). Yet, despite this large spectrum of corporate behaviors capable of inducing un/ethical perceptions, there is no answer to the question of

* Katja H. Brunk [email protected]

Cara de Boer [email protected]

1 Center for Market Communications, Europa-Universität Viadrina, Große Scharrnstr. 59, 15230 Frankfurt (O), Germany

2 KU Leuven, Naamsestraat 22, 3000 Leuven, Belgium

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how consumers combine inconsistent—positive and nega- tive—pieces of information to form an aggregate moral impression of a brand, referred to as Consumer Perceived Ethicality (CPE) hereafter (Brunk 2012).

Aware that social responsibility has become an important facet of brand personality (Madrigal and Boush 2008), com- panies are concerned about how their brands are perceived by the consumer as un/ethical and, more frequently than in the past, ethical, sustainable, and CSR-related criteria are employed as a point of difference set against the competition, with brand managers positioning and marketing their brands as morally superior alternatives. In line with its growing societal and business relevance, academic research exam- ining different facets of sustainable or ethical brands and products is expanding rapidly (e.g., Gershoff and Frels 2015; Huber et al. 2010; Luchs et al. 2010; Madrigal and Boush 2008; Peloza et al. 2013; Singh et al. 2012; Torelli et al. 2012; Torres et al. 2012; White et al. 2012). In addition, numerous articles investigating the link between companies’ CSR or sustainability initiatives and consumer responses has emerged over the past 15 years, the majority of which concur that corporate transgressions and brand misconduct negatively impact consumer evaluations, whereas engage- ment in pro-social or CSR initiatives influences consumers positively (Auger et al. 2008; Berens et al. 2005; Lacey et al. 2015; Sen and Bhattacharya 2001; Trudel and Cotte 2009; Xie et al. 2015).

On closer examination of the test scenarios employed in the above surveys and experiments, it becomes apparent that these studies simulate a world in which consumers are exposed to ethical information that is directionally consistent in valence, meaning information that is either exclusively positive or negative. More concretely, in order to quantita- tively assess consumer responses to CSR or un/ethical brand behavior, extant empirical studies either (1) tap into pre- existing ethical or unethical brand perceptions (e.g., Berens et al. 2005); (2) predefine brands or companies as un/ethical without referring to particular activities (e.g., Luchs et al. 2010); (3) employ only single ethical behavior cues (e.g., Folkes and Kamins 1999; Trudel and Cotte 2009); or (4) employ multiple, yet directionally consistent pieces of ethi- cal information (i.e., all positive or negative) (e.g., Madrigal and Boush 2008; Mohr and Webb 2005).

However, as the opening example of Volkswagen illus- trates, companies do not always act consistently when it comes to CSR and ethics, so consumers may receive multi- ple, sometimes differentially valenced (ethical and unethi- cal) pieces of information about a brand’s conduct in dif- ferent domains across time. As a result, designing study stimuli with single or one-directional ethical cues limits the external validity of the studies’ findings and conclu- sions. While reasonable from a researcher-controllability point of view, the simplification of study scenarios does

not reflect today’s in-market reality. Sen and Bhattacharya (2001, p. 239) acknowledge this limitation and call for future research to incorporate multiple cue exposure of “differen- tially valenced CSR information in different domains” in future study designs.

Thus, we extend past research by focusing on the impor- tant question of how brand perception—the interpretation and integration of stimuli into an overall meaningful impres- sion (Pickens 2009)—is impacted by multiple and differen- tially valenced pieces of information about the brand’s ethi- cal conduct. While research into consumer responses to CSR and corporate ethics in the form of attitudes—the mindset and tendency to act in a particular way—and behavioral intention is continuously growing, little research attends to perceptions of ethicality (or greenness or sustainability) of a particular brand or product (Gershoff and Frels 2015). For example, White et al. (2012, p. 103) discuss the notion of positive “product ethicality,” yet little attention is paid to the issue of how this perceptual entity of “product ethical- ity” emerges in the first place.1 Yet, in order to increase our understanding of the link between un/ethical brand con- duct, consumer attitudes and consumers’ subsequent pur- chase behavior, it is valuable to learn more about how the consumer “sees” the brand, necessitating research into the preceding mental process—namely how ethical perceptions are formed (Brunk 2012; Shea 2010).

Drawing on person-perception formation literature, our empirical findings suggest that when processing relevance for ethical information is high, ethical brand perception (brand CPE) is formed in accordance with the configural model of impression formation. In this case, we observe a valence asymmetry in which negative information is con- sidered more diagnostic than positive information in deter- mining the direction of CPE. Consequently, virtuous brand behavior is unable to compensate for the perceptual dam- age caused by instances of brand misconduct. However, when the relevance to process ethical cues is low, formation of CPE appears more in line with the algebraic model of impression formation. By showing that when ethical cues have low processing relevance, positive brand behavior can counterbalance a transgression, this paper qualifies exist- ing research on consumer reactions to corporate ethics and CSR, which has assumed the negative valence asymmetry to be prevalent (Sen and Bhattacharya 2001; Trudel and Cotte 2009).

The paper is structured as follows. We begin by introduc- ing the conceptualization of our research and discussing the

1 Throughout this article, the concepts of corporate ethics and CSR are used interchangeably due to their conceptual overlap as well as consumers’ inability to distinguish clearly between both terms (for an in-depth discussion, see Brunk 2010).

445How do Consumers Reconcile Positive and Negative CSR-Related Information to Form an Ethical…

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overall methodological approach and philosophical under- pinnings of our mixed method design before sequentially presenting the three empirical studies. The article proceeds with a summary and discussion of our findings’ relevance for the academic as well as business community. We conclude by acknowledging potential limitations and proposing future research avenues.

Conceptualization: Person‑Perception Formation

Like humans, brands can have a personality. In brand per- sonality research, a brand is conceptualized as a perceptual entity with human-like traits and characteristics, and with which consumers may build relationships similar to social interactions between people (Aaker 1997; Aaker et al. 2004; Fournier 1998). Extending Aaker’s (1997) brand personal- ity dimensions, Madrigal and Boush (2008) identify social responsibility as an additional and important facet of brand personality. Building on this well-established notion of the “brand as a person,” this research draws on social psychol- ogy, and in particular person-perception research, which offers two competing theories of the mental strategies indi- viduals use when forming impressions of other people: the algebraic model and configural model. We will subsequently adapt these person-perception formation models for the con- text of brand perception formation.

Algebraic Model

According to the algebraic model (e.g., Anderson 1981, 1996; Lynch 1985), perceptions of others are formed fol- lowing a bottom-up, piecemeal integration approach. Indi- viduals evaluate each piece of information independently, subsequently balancing and combining these into a summary impression (Merritt et al. 2010; Effron and Monin 2010), with information “averaging” being the most commonly applied algebraic integration procedure (Anderson 1996; Lynch 1985).

When applied to a CPE formation context, this model suggests that consumers take all salient pieces of ethical and unethical brand information into account to combine these into a summative ethical brand impression. If this were the case, the impact of unfavorable ethical conduct could be neutralized by favorable ethical conduct and vice versa, meaning brands are able to compensate transgressions with benevolent activities.

Configural Model

The configural model, on the other hand, is rooted in the Gestalt tradition of psychology and suggests a holistic,

top-down approach of impression formation (Asch 1957). When compared to the algebraic model, the processes of information evaluation and integration are reversed: indi- viduals first form an initial impression of another person based on a cue that is considered diagnostic,2 and then sort subsequent information in accordance with that formed dis- position, potentially leading to a change-of-meaning effect (e.g., Asch and Zukier 1984; Kunda et al. 1997). Thus, with configural impression formation, pieces of information are evaluated in relation to each other with subsequent informa- tion interpreted to fit the pre-existing disposition. Beyond ethics-related or CSR-related research, this tendency has been established in pre-decision-making research, where perceptions are formed by distorting new information in accordance with an initial disposition (Bond et al. 2007; Carlson et al. 2006).

When applied to the ethical brand perception formation context, the configural model suggests that potentially a sin- gle ethical cue—one that is perceived as diagnostic—may determine the overall direction of CPE, irrespective of other salient information. In terms of cue diagnosticity, person- perception research provides evidence for a negativity bias when it comes to morality-based judgments (Skowronski and Carlston 1987), meaning that a person’s immoral acts have a stronger impact on impression formation than his/ her moral ones. Consistent with this, there is a marked prominence of the “bad is stronger than good” notion in other literature streams (Baumeister et al. 2001; Rozin and Royzman 2001). In person-perception research, the higher perceived diagnosticity is rooted in the cultural definition of a good or bad person (Reeder and Spores 1983) as well as beliefs in behavior–trait interrelations. In order to be con- sidered a “good” person, one is expected to act consistently in a virtuous way. As a consequence, behaving immorally in one instance may be sufficiently diagnostic to result in a categorization as a “bad” person. Put differently, a person who commits a transgression only once (e.g., shoplifts) will always be considered a culprit.

Translating this person-perception research to ethical brand perception formation implies that if ethical and unethi- cal cues are received for impression formation, the negative will most likely determine the direction of CPE due to its higher degree of diagnosticity. Thus, if ethical perception formation follows the configural model, not only can one piece of unethical information function as the decisive cue

2 What kind of cue is considered most diagnostic and therefore deter- mines the direction of the overall impression of another person also depends on the trait to be judged. While for ability-based judgments a positivity bias can be observed (positive information weighs more strongly than negative), for morality-based judgments a negativity bias is prevalent (for more information, see Skowronski and Carlston 1987).

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in shaping negative CPE, but, more precariously from a brand management point of view, virtuous conduct would be unable to compensate for a transgression.

Table 1 provides a summary of the key aspects of the algebraic and configural models and synthesizes implica- tions for brand CPE formation that can be derived from these opposing theories.

Objective and Overview of Methodological Approach

Given the lack of earlier research in the area of ethical brand perception formation, this research takes an explora- tory, inductive approach. Rather than hypothesizing either configural or algebraic CPE formation a priori, empirical data are generated and subsequently analyzed in search of support or refutation of either model with the help of a multi-study, mixed methods approach that consecutively builds evidence. First, empirical data are generated through an exploratory study based on which hypotheses are devel- oped. The following two experimental studies, respectively, test these hypotheses and explore a potential boundary con- dition. More concretely, the program of inquiry consists of three empirical studies with general consumers in the United Kingdom using a sequential, fully integrated mixed methods design (Bahl and Milne 2006; Creswell 2003). This type of study design usually encompasses qualitative and quantita- tive methodologies for both data generation and analysis. In our case, this entails two different types of data collection techniques—interviews and controlled experiments.

From a philosophy of science perspective, this research adopts pragmatism as its guiding principle. Unlike (post-) positivism or constructivism, which tend to be married to specific data collection methods, pragmatism dismisses paradigmatic dualism and is regarded as a suitable partner for mixed methods research (Creswell 2003; Johnson and Onwuegbuzie 2004; Teddlie and Tashakkori 2009). After identifying a concrete research need—in our case the explo- ration of consumers’ ethical brand perception formation— pragmatism calls for the identification of the most appropri- ate data collection and analysis techniques for answering the project’s objective, thereby making use of both qualitative and quantitative techniques, as well as deductive and induc- tive logic (Tashakkori and Teddlie 1998).

Study 1 serves the purpose of empirical familiarization. Twelve one-to-one consumer interviews were conducted to explore inductively ethical perception formation dynam- ics based on which hypotheses for the subsequent empiri- cal investigation could be formulated. The study moreover aimed to identify brands with positive and negative CPE as well as helped to develop a variety of realistic testing sce- narios for the planned experiment/s. Ta

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