Agriculture and Human Values

, Volume 33, Issue 3, pp 597–609 | Cite as

Product differentiation via corporate social responsibility: consumer priorities and the mediating role of food labels

  • Marco Costanigro
  • Oana Deselnicu
  • Dawn Thilmany McFadden
Article

Abstract

This article examines quantitatively the determinants of purchase decisions based on corporate social responsibility (CSR), adopting a hierarchical conceptual model of decision making where the key factors are personal concern, information availability and financial considerations. We use best–worst methods to assess consumer priorities (personal concern) for CSR activities in milk production; and elicit consumer interpretation of four labels (organic, Validus, Colorado Proud and rBST free) in terms of CSR and other outcomes (information availability). We then elicit willingness to pay (WTP) for the labels (financial considerations), and estimate regression models to determine how predictive each label perceptual profile is of WTP for milk. Animal welfare and sustainable agricultural practices are the most important activities, and milk labels do convey CSR-related messages. With the exception of the pair animal welfare-Validus, the link between CSR messages and WTP is tenuous. The discussion emphasizes the central role of each label’s perceptual profile in triggering product differentiation among consumers.

Keywords

Corporate social responsibility Valuation Organic Animal welfare Max-diff Best–worst 

References

  1. Bagnoli, M., and S. Watts. 2003. Selling to socially responsible consumers: Competition and the private provision of public goods. Journal of Economics and Management Strategy 12: 419–445.CrossRefGoogle Scholar
  2. Baron, D. 2001. Private politics, corporate social responsibility and integrated strategy. Journal of Economics and Management Strategy 10: 7–45.CrossRefGoogle Scholar
  3. Benabou, R., and J. Tirole. 2010. Individual and corporate social responsibility. Economica 77(305): 1–19.CrossRefGoogle Scholar
  4. Bernard, J.C., and D.J. Bernard. 2009. What is it about organic milk? An experimental analysis. American Journal of Agricultural Economics 91(3): 826–836.CrossRefGoogle Scholar
  5. Castaldo, S., F. Perrini, N. Misani, and A. Tencati. 2009. The missing link between corporate social responsibility and consumer trust: The case of fair trade products. Journal of Business Ethics 84(1): 1–15.CrossRefGoogle Scholar
  6. Cornick, J., T. Cox, and B.W. Gould. 1994. Fluid milk purchases: A multivariate Tobit analysis. American Journal of Agricultural Economics 76(1): 74–82.CrossRefGoogle Scholar
  7. Costanigro, M., and J.L. Lusk. 2014. The signaling effect of mandatory labels on genetically engineered food. Food Policy 49(Part 1): 259–267.CrossRefGoogle Scholar
  8. Costanigro, M., D. Thilmany McFadden, S. Kroll, and G. Nurse. 2011. An in-store valuation of local and organic apples: The role of social desirability. Agribusiness 27(4): 465–477.CrossRefGoogle Scholar
  9. de Boer, I.J.M. 2003. Environmental impact assessment of conventional and organic milk production. Livestock Production Science 80(1–2): 69–77.CrossRefGoogle Scholar
  10. Deselnicu, O.C., M. Costanigro, D.M. Souza-Monteiro, and D. Thilmany McFadden. 2013. A meta-analysis of geographical indication food valuation studies: What drives the premium for origin-based labels? Journal of Agricultural and Resource Economics 38(2): 204–219.Google Scholar
  11. Donaldson, C., R. Thomas, and D.J. Torgerson. 1997. Validity of open-ended and payment scale approaches to eliciting willingness to pay. Applied Economics 29(1): 79–84.CrossRefGoogle Scholar
  12. Finn, A., and J.J. Louviere. 1992. Determining the appropriate response to evidence of public concern: The case of food safety. Journal of Public Policy and Marketing 11(2): 12–25.Google Scholar
  13. Fisher, R.J. 1993. Social desirability bias and the validity of indirect questioning. The Journal of Consumer Research 20(2): 303–315.CrossRefGoogle Scholar
  14. Friedman, M. 1970. The social responsibility of business is to increase its profits. New York Times Magazine 13: 122–126.Google Scholar
  15. Greening, D.W., and D.B. Turban. 2000. Corporate social performance as a competitive advantage in attracting a quality workforce. Business and Society 39(3): 254–280.CrossRefGoogle Scholar
  16. Hart, O. 1989. Economist’’ perspective on the theory of the firm. Columbia Law Review 89(7): 1757–1774.CrossRefGoogle Scholar
  17. Hartmann, M. 2011. Corporate social responsibility in the food sector. European Review of Agricultural Economics 38(3): 297–324.CrossRefGoogle Scholar
  18. Innovation Center for US Dairy. 2013. 2013 US Dairy Sustainability Report, http://www.usdairy.com/sustainability/reporting/us-dairy-sustainability-report. Accessed Dec 2014.
  19. Kahneman, D., and A. Tversky. 1979. Prospect theory: An analysis of decision under risk. Econometrica 47(2): 263–292.CrossRefGoogle Scholar
  20. Kitzmueller, M., and J. Shimshack. 2012. Economic perspectives on corporate social responsibility. Journal of Economic Literature 50(1): 51–84.CrossRefGoogle Scholar
  21. Klein, J., and N. Dawar. 2004. Corporate social responsibility and consumers’ attributions and brand evaluations in a product-harm crisis. International Journal of Research in Marketing 21: 203–217.CrossRefGoogle Scholar
  22. Kong, D. 2012. Does corporate social responsibility matter in the food industry? Evidence from a nature experiment in China. Food Policy 37(3): 323–334.CrossRefGoogle Scholar
  23. Krystallis, A., C. Fotopoulos, and Y. Zotos. 2006. organic consumers’ profile and their willingness to pay (WTP) for selected organic food products in Greece. Journal of International Consumer Marketing 19(1): 81–106.CrossRefGoogle Scholar
  24. Lagerkvist, C.J., and S. Hess. 2011. A meta-analysis of consumer willingness to pay for farm animal welfare. European Review of Agricultural Economics 38(1): 55–78.CrossRefGoogle Scholar
  25. Lockie, S. 2009. Responsibility and agency within alternative food networks: Assembling the citizen consumer. Agriculture and Human Values 26(3): 193–201.CrossRefGoogle Scholar
  26. Loomis, J. 2011. What’s to know about hypothetical bias in stated preference valuation studies? Journal of Economic Surveys 25(2): 363–370.CrossRefGoogle Scholar
  27. Loureiro, M.L., and S. Hine. 2002. Discovering niche markets: A comparison of consumer willingness to pay for local (Colorado grown), organic, and GMO-free products. Journal of Agricultural and Applied Economics 34(3): 477–487.CrossRefGoogle Scholar
  28. Lusk, J.L., and B.C. Briggeman. 2009. Food values. American Journal of Agricultural Economics 91(1): 184–196.CrossRefGoogle Scholar
  29. Lusk, J.L., and F.B. Norwood. 2009. An inferred valuation method. Land Economics 85(3): 500–514.Google Scholar
  30. Lusk, J.L., and F.B. Norwood. 2011. Animal welfare economics. Applied Economic Perspectives and Policy 33(4): 463–483.CrossRefGoogle Scholar
  31. Maignan, I., B. Hillebrand, and D. McAlister. 2002. Managing socially-responsible buying: How to integrate non-economic criteria into the purchasing process. European Management Journal 20(6): 641–648.CrossRefGoogle Scholar
  32. Maloni, M.J., and M.E. Brown. 2006. Corporate social responsibility in the supply chain: An application in the food industry. Journal of Business Ethics 68(1): 35–52.CrossRefGoogle Scholar
  33. Marley, A.A.J., and J.J. Louviere. 2005. Some probabilistic models of best, worst, and best–worst choices. Journal of Mathematical Psychology 49(6): 464–480.CrossRefGoogle Scholar
  34. McWilliams, A., and D. Siegel. 2001. Corporate social responsibility: A theory of the firm perspective. Academy of Management Review 26(1): 117–127.Google Scholar
  35. Michaud, C., D. Llerena, and I. Joly. 2013. Willingness to pay for environmental attributes of non-food agricultural products: A real choice experiment. European Review of Agricultural Economics 40(2): 313–329.CrossRefGoogle Scholar
  36. Mohr, L.A., and D.J. Webb. 2005. The effects of corporate social responsibility and price on consumer responses. Journal of Consumer Affairs 39(1): 121–147.CrossRefGoogle Scholar
  37. Mohr, L.A., D.J. Webb, and K.E. Harris. 2001. Do consumers expect companies to be socially responsible? The impact of corporate social responsibility on buying behavior. Journal of Consumer Affairs 35(1): 45–72.CrossRefGoogle Scholar
  38. Moon, J., and D. Vogel. 2009. Corporate social responsibility, government, and civil society. In The Oxford handbook of corporate social responsibility, ed. A. Crane, A. McWilliams, D. Matten, J. Moon, and D.S. Siegel, 303–326. Oxford, UK: Oxford University Press.Google Scholar
  39. Musso, F., and M. Risso. 2006. CSR within large retailers international supply chains. Symphonya: Emerging Issues in Management (1): 1–14.Google Scholar
  40. Nicholson, C.F., M.I. Gómez, and O.H. Gao. 2011. The Costs of increased localization for a multiple-product food supply chain: Dairy in the united States. Food Policy 36(2): 300–310.CrossRefGoogle Scholar
  41. Öberseder, M., B. Schlegelmilch, and V. Gruber. 2011. Why don’t consumers care about CSR? A qualitative study exploring the role of CSR in consumption decisions. Journal of Business Ethics 104(4): 449–460.CrossRefGoogle Scholar
  42. Onozaka, Y., and D.T. McFadden. 2011. Does local labeling complement or compete with other sustainable labels? A conjoint analysis of direct and joint values for fresh produce claim. American Journal of Agricultural Economics 93(3): 689–702.CrossRefGoogle Scholar
  43. Panapanaan, V.M., L. Linnanen, M.M. Karvonen, and V.T. Phan. 2003. Roadmapping corporate social responsibility in Finnish companies. Journal of Business Ethics 44(2/3): 133–148.CrossRefGoogle Scholar
  44. Pirsch, J., S. Gupta, and S.L. Grau. 2007. A framework for understanding programs corporate social responsibility as a continuum: An exploratory study. Journal of Business Ethics 70(2): 125–140.CrossRefGoogle Scholar
  45. Porter, M., and M.R. Kramer. 2006. Strategy and society. Harvard Business Review 84: 78–83.Google Scholar
  46. Skarmeas, D., and C. Leonidou. 2013. When consumers doubt, watch out! The role of CSR skepticism. Journal of Business Research 66(10): 1831–1838.CrossRefGoogle Scholar
  47. Spar, D.L., and L.T. La Mure. 2003. The power of activism: Assessing the impact of NGOs on global business. California Management Review 45(3): 78–101.CrossRefGoogle Scholar
  48. US Census Bureau (USCB). n.d. State and County Quick facts (2007–2011). http://quickfacts.census.gov/qfd/states/08000.html. Accessed 1 Mar 2015.
  49. Verbeke, W. 2005. Agriculture and the food industry in the information age. European Review of Agricultural Economics 3(3): 347–368.CrossRefGoogle Scholar
  50. Yuan, W., Y. Bao, and A. Verbeke. 2011. Integrating CSR initiatives in business: An organizing framework. Journal of Business Ethics 101(1): 75–92.CrossRefGoogle Scholar

Copyright information

© Springer Science+Business Media Dordrecht 2015

Authors and Affiliations

  • Marco Costanigro
    • 1
  • Oana Deselnicu
    • 2
  • Dawn Thilmany McFadden
    • 3
  1. 1.Department of Agricultural and Resource EconomicsColorado State UniversityFort CollinsUSA
  2. 2.OracleBroomfieldUSA
  3. 3.Department of Agricultural and Resource EconomicsColorado State UniversityFort CollinsUSA

Personalised recommendations