It’s lately been considered good business for companies to show they are responsible corporate citizens. Google touts its solar-powered data centers. Apple talks about its use of recycled materials. Walmart describes its support for local communities.
It’s lately been considered good business for companies to show they are responsible corporate citizens. Google touts its solar-powered data centers. Apple talks about its use of recycled materials. Walmart describes its support for local communities.
But these narratives, according to new research by Haas Associate Professor Tim McQuade, have some downsides. With Emanuele Colonnelli and Niels Gormsen of the University of Chicago, McQuade demonstrates how positive corporate messaging can evoke negative associations among consumers, in turn nudging them away from policies that support corporations in times of crisis.
“Even if you frame information in a positive way, consumers with pre-existing negative beliefs regarding social responsibility might draw up mostly negative experiences from memory”, McQuade says. “In this manner, the messaging can do the opposite of what’s intended.”
Their results were published in The Review of Economic Studies.
These results hinge on an updated model of how consumers call information to mind when making decisions. Traditionally, economists assumed consumers to be rational actors sifting through all the relevant knowledge they have when making a decision. McQuade and his colleagues draw on a more recent understanding of cognition in which people have limited recall—meaning they generally only draw on a limited set of information to make decisions—and in which specific cues can influence what information they use.
Much advertising relies on this premise. For instance, if people are cued with the old Snickers tagline, “Hungry? Why wait”, they may buy the candy simply because they are prompted to think about their hunger and not consider whether they need the calories or could better spend money on something else.
With this picture of consumer psychology in place, the researchers recruited nearly 7,000 participants to complete a four-part survey.
