Dr. Jacob Brower is an associate professor of marketing at Smith School of Business and a recognized expert on corporate social responsibility (CSR). His research areas include corporate reputation and brand management, CSR, brand activism, and sustainability. Brower’s work examines the factors that drive corporate social performance (CSP) by firms, and how a firm’s history of CSP impacts the payoffs from changes in its current CSP level. Prior to earning his PhD, he worked as a consultant and market research analyst specializing in brand management and tracking for several Fortune 500 clients including FedEx, AT&T and IBM.
You’ve made corporate social responsibility (CSR) a main focus of your research at Smith School of Business. What drew you to this particular area?
Back in high school, I was interested in the interface between businesses and the environment and in the ways that businesses could improve their impacts on the environment. When I started my undergraduate education, I intended to study environmental engineering, as I thought that would land me at the intersection of technology, business, and the environment. I quickly learned two things: that’s not what environmental engineering is about and I’m not an engineer.
I went on to pursue an Environmental Economics PhD, but that still felt too restrictive for the kinds of questions I wanted to focus on. It wasn’t until I ultimately wound up working in marketing that I was finally able to bring together my driving passions in marketing strategy and business adoption of environmental, social and governance (ESG) practices. It was a bit of a circuitous route, but ultimately brought me to a career I really enjoy and one that makes me want to get out of bed in the morning.
A survey commissioned by Smith School of Business reveals that Canadians believe businesses should dedicate 21% of their profits to solving important social issues. How can businesses balance social impact and profit?
I think one of the biggest challenges is to move away from looking at these two domains as being opposed. Evidence suggests that the two are intimately linked. On one hand, there are businesses that are using ESG and social impact to try to stand out from the crowd and drive positive responses from a variety of critical stakeholder groups. On the other hand, a business that fails to have its house in order is more likely to be punished when it makes mistakes, while those that have a stronger social record experience an insurance effect that can protect them from such punishment. Further, businesses are increasingly finding that access to capital is becoming more challenging if they haven’t considered these issues, so failing to focus on social impact can not only make operating in today’s world riskier, but also more expensive.
That said, businesses need to make sure they understand what their key stakeholders value and what will motivate them to continue to choose one business over another when they make decisions about where to shop, where to work, which partners to work with, etc. It’s very easy to get lost in the myriad demands that exist out there, but the best place to start is to understand those core stakeholders, what their expectations are, and to ensure you’ve got our house in order with respect to those issues. While my research suggests that this approach may not drive huge responses in terms of the top line, it does help us to make sure we are managing the risk-side of the equation to ensure stability in the face of rapidly changing market expectations.
When should business leaders speak out on social issues and why should they do so? How can businesses ensure their social impact initiatives are perceived as genuine and not just an attempt to capitalize on popular trends or improve their public image?
These are some of the biggest questions that we face now in the social impact space. Increasingly, businesses are being pushed to go beyond ‘cleaning house’ and being pushed to take a stand on some of the most pressing issues facing the world. This really goes back to the response above. Before a business decides to jump into the social activism space, they need to make sure they’ve got their ducks in a row. There are three big questions to consider before getting involved.
First, before a business decides to take a stand on a critical social issue, it’s important to make sure their house is in order. For example, when Starbucks launched the maligned #racetogether campaign, it immediately faced criticism for its record on hiring, retaining, and promoting people of color in the upper levels of the organization, as well as for its treatment of frontline employees who were tasked with implementing the new program. If an organization is going to jump into the discussion, they’d better understand that their record is going to be brought into the conversation. Are they ready for that, and what are stakeholders going to say?
Second, understand where an organization’s key stakeholders stand on a particular issue. These social activism stances are divisive by nature, and the ultimate market response is going to depend on the concentration of stakeholder’s sentiments on either side of a particular issue. In some cases, a business’s customer base, for example, may be unified in their perspectives, and even though there may be detractors out there, if they’re not connected to your business then the overall impact is likely to be at least minimally negative, and perhaps even drive a positive response from those who feel strongly about the issue. On the other hand, if the customer base is more evenly split, then the hardships that can be created by taking a stance can be much more significant. We saw this with Nike when they launched their Dream Crazy campaign featuring Colin Kaepernick. While there was an initial backlash from detractors, most of the people who were upset about Nike’s stance weren’t engaging with Nike in the first place, and it resulted in a significant boost to Nike customer preference and financial performance, despite the initial negative response from some disconnected groups.
Third, how likely is the business going to be able to drive meaningful change through the actions that they’re putting in place? If the first two questions above have been thoughtfully considered, it’s also important to consider whether (and how) we can do something meaningful to move the needle on a social issue. A great example of this was when Ben and Jerry’s launched their Dismantle White Supremacy campaign. It took a very thoughtful approach to both show how the organization could make the situation better, but also build strong relationships with stakeholders like the National Association for the Advancement of Colored People (NAACP) and Color of Change. This allowed Ben and Jerry’s to learn from these organizations and how they could best partner to help fight the entrenched systems of racism that exist in society at the highest levels. What this suggests is that if you’re going to take a stand, it needs to be a real stand. If it’s a surface level commitment, those stakeholders who care about these issues are going to notice, perceived authenticity will be lost, and you might get slammed from both sides: both by those who oppose the stance and by those who care about the stance but feel that the company is just trying to cash in rather than truly be part of the solution.
To read the full report from Smith School of Business on the role of business leaders in tackling social issues, view interview clips with leaders, and access a discussion guide for leadership teams, visit www.smithqueens.com/now.