Responsible you, despicable me: Contrasting competitor inferences from socially responsible behavior

JBR-08560; No of Pages 8 Journal of Business Research xxx (2015) xxx–xxx

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Journal of Business Research

Responsible you, despicable me: Contrasting competitor inferences from socially responsible behavior ☆ Jonathan Hasford a,⁎, Adam Farmer b a b

Florida International University, Miami, FL 33174, United States Mississippi State University, Mississippi State, MS 39762, United States

a r t i c l e

i n f o

Article history: Received 17 January 2015 Received in revised form 21 September 2015 Accepted 22 September 2015 Available online xxxx Keywords: Corporate social responsibility Inference making Attitude formation Alternative evaluation

a b s t r a c t An increasing number of products are emphasizing corporate social responsibility (CSR) as a point of differentiation. Despite this growth, however, research has been limited in investigating the impact of CSR activities on the competition. Here, we develop a new perspective of CSR by investigating consumer perceptions of direct competitors to socially responsible products. In three studies, we demonstrate that the socially responsible attributes of one product, while not affecting its overall evaluation, can lead consumers to form contrasting evaluations of competing products. Furthermore, we extend the inference making literature to highlight how and when the contrast toward competing products is formed. Published by Elsevier Inc.

1. Introduction Products may emphasize a variety of different features and attributes to distinguish themselves from competitors (Grewal & Levy, 2007). One way to appeal to consumers is to take an environmentally friendly or socially responsible position (Hartmann & Apaolaza-Ibanez, 2012). This increased focus on corporate social responsibility (CSR), an organization's commitment to protect the environment through sustainable and environmentally-friendly practices, has created a major shift in many markets. To understand this shift, research has investigated how CSR activities impact consumer attitudes toward socially responsible products (Cotte & Trudel, 2009; Luchs, Naylor, Irwin, & Raghunathan, 2010) as well as the conditions that impact consumer preferences for those products (Peloza, White, & Shang, 2013; White, MacDonnell, & Ellard, 2012). While these studies provide important implications for CSR products, they have yet to consider the impact of CSR on the competition. Thus, in order to develop a complete perspective on the effects of CSR activities, a widened view is needed for greater insight into the competitive effect of CSR. To address this, we investigate how CSR activities impact consumer perceptions of the competition. We utilize the inference making literature (Kardes, Posavac, & Cronley, 2004; Loken, 2006) to examine this ☆ The authors would like to thank John Peloza, Leslie Vincent, and Igor Makienko for helpful feedback on earlier drafts of this research. The authors would also like to thank the Von Allmen Center for Green Marketing for funding this research. The authors contributed equally to this research. ⁎ Corresponding author at. 345A Ryder Business Building, Florida International University, Miami, FL 33174, United States. E-mail addresses: [email protected] (J. Hasford), [email protected] (A. Farmer).

effect. Whereas prior research on consumer inferences has focused on the assimilation of attitudes across related products (e.g., Posavac, Sanbonmatsu, Kardes, & Fitzsimons, 2004; Raghunathan & Irwin, 2001), we examine contrasting inferences that emerge in response to CSR information which leads to less favorable attitudes toward direct competitors. The following research provides three main contributions to the CSR literature. First, we provide insight on how a focal firm's CSR activities negatively impact consumer attitudes toward the competition through contrasting inferences. These contrasting inferences are formed toward the competition when CSR information is specifically related to a product category. To our knowledge, this is the first research to examine contrasting inferences in consumer responses to CSR. Second, we incorporate the Multiple Pathway Anchoring and Adjustment model (Cohen & Reed, 2006) to understand when consumers will evaluate competitors of CSR products more negatively. These contrasting inferences emerge not when consumer beliefs in the importance of CSR are enhanced, but rather when consumers focus on socially responsible product attributes during the evaluation process. Lastly, we investigate when contrasting inferences toward the competition are formed. These inferences are not formed once consumers are exposed to CSR information. Instead, we provide evidence that contrasting inferences are formed only after consumers explicitly evaluate the CSR product. Together, these findings provide insights on how the CSR efforts of one product influence perceptions of the competition. 2. Conceptual background CSR is often utilized to enhance consumer attitudes and improve a brand's image in the marketplace (Oberseder, Schlegelmilch, &

http://dx.doi.org/10.1016/j.jbusres.2015.09.009 0148-2963/Published by Elsevier Inc.

Please cite this article as: Hasford, J., & Farmer, A., Responsible you, despicable me: Contrasting competitor inferences from socially responsible behavior, Journal of Business Research (2015), http://dx.doi.org/10.1016/j.jbusres.2015.09.009

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J. Hasford, A. Farmer / Journal of Business Research xxx (2015) xxx–xxx

Murphy, 2013). Prior research has found that CSR enhances product evaluations under certain circumstances, including when the target market exhibits high levels of self-accountability (Peloza et al., 2013) and when consumer goals match the nature of the CSR communication (White & Simpson, 2013). However, CSR efforts are not always beneficial to product evaluations. When strength-related attributes are emphasized in a product category, CSR activities can hurt product attitudes and reduce the likelihood of choice (Luchs et al., 2010). Furthermore, while consumers may state a preference for socially responsible products, this interest often fails to translate into purchase behavior (Oberseder, Schlegelmilch, & Gruber, 2011). This failure of CSR to impact purchase behavior has recently been attributed to consumer skepticism toward CSR efforts (Skarmeas & Leonidou, 2013). Thus, given the mixed nature regarding the benefits of CSR for the focal brand, we develop a new perspective of CSR in which we consider the impact of CSR efforts on the competition. As CSR information is typically related to a single, target brand within a competitive marketplace (Peloza & Shang, 2011), we utilize the consumer inference literature to examine how consumers perceive the competition in response to CSR. Because consumers may not have access to or memory of all available product information, consumers often form inferences to account for missing information (Loken, 2006; Sanbonmatsu, Kardes, Houghton, Ho, & Posavac, 2003). Inferences are beliefs about unknown product attributes and characteristics that may or may not be true based on available information (Kardes et al., 2004). A number of factors can influence the formation of consumer inferences, including the nature of competition (Wänke, Bless, & Schwarz, 1998), the level of detail present in available information (Cooke, Sujan, Sujan, & Weitz, 2002; Häfner, 2004), the extremity of known product features (Kardes et al., 2004; Meyers-Levy & Sternthal, 1993), and the motivation of the decision maker to engage in higherlevel processing (Martin, Seta, & Crelia, 1990). Ultimately, the formation of inferences helps consumers evaluate new and unfamiliar products without complete knowledge of the marketplace. In the next section, we develop hypotheses related to consumer inferences in response to CSR activities. This is accomplished by examining whether category-specific CSR information will lead to more negative evaluations of the competition than other types of CSR and non-CSR information. Furthermore, we employ the Multiple Pathway Anchoring and Adjustment model (Cohen & Reed, 2006) to identify whether an external focus on attribute information or an internal focus on the importance of CSR drives this effect. Lastly, we investigate when these contrasting inferences are formed in the decision making process. 3. Hypothesis development 3.1. Contrast in inference making In response to the presentation of CSR information, consumers should infer that the competition is also socially responsible or that they are not engaging in CSR activities. Inference making theories often suggest that assimilation is the default response among consumers when faced with missing information (Meyers-Levy & Sternthal, 1993; Mussweiler, 2003). This is because consumers will infer missing information to be consistent with their existing knowledge when forming evaluations (Kardes et al., 2004). However, research has also suggested that consumers can form contrasting inferences when a target highlights a distinct attribute (Cooke et al., 2002; Häfner, 2004) or a unique subcategory of a product is introduced (Meyers-Levy & Sternthal, 1993). A prevalent belief among consumers is that socially responsible products only account for a small portion of the available options in a competitive landscape (Olson, 2013). Thus, CSR efforts highlight a unique product characteristic relative to the competition. As a result, inferences formed toward competitors should be contrasted against this CSR information (Raghunathan & Irwin, 2001). This

inference should also negatively impact competitor evaluations, as consumers tend to evaluate alternatives more negatively when relevant information is unavailable or unknown (Gunasti & Ross, 2009). For example, assume a technology manufacturer introduces a new, environmentally friendly printer. The introduction of CSR to the printer market should lead consumers to make a contrasting inference that competitors are not socially responsible, even if no claims are made in regards to the competitor's concern for the environment (Kardes et al., 2004). This inference should subsequently lead to more negative evaluations of a direct competitor. Furthermore, we suggest that these contrasting inferences will emerge only occur when the CSR information is specific to the product category itself. In other words, we predict that CSR information must be tied specifically to the product category as opposed to information on general, organization-wide CSR activities for contrasts to emerge. Though many companies engage in organization-wide CSR activities (e.g. reducing waste, recycling, and lowering energy consumption) as it is thought to improve their overall image, this general CSR information fails to provide differentiating information in a competitive environment (Mirvis, 2012). Additionally, when these efforts are aimed at consumers, their effectiveness is often limited as consumers tend to be less aware of these broad, non-category specific efforts (Pomering & Dolnicar, 2009). Thus, for consumers to contrast CSR information to competitors, we predict that information must be linked to the product category itself. Therefore, we hypothesize: H1. Consumers will more negatively evaluate a direct competitor to a CSR product when CSR information is related to a specific product category relative to general CSR information.

3.2. Attitude formation and contrasting inferences Because inference formation is dependent on an individual's prior knowledge, motives, and beliefs (Kardes et al., 2004), we also consider the basis by which an individual forms their attitudes as an important determinant of whether contrasting inferences in response to CSR will emerge. A prevailing model of attitude formation, the Multiple Pathway Anchoring and Adjustment (MPAA) model (Cohen & Reed, 2006), suggests that attitudes and preferences can be formed in one of two ways. Individuals may recall prior knowledge and experience from memory to formulate preferences (inside-out attitude formation), where attitudes form internally from held values or social identity. Conversely, individuals may form preferences based on exposure to an external object, issue, or person (outside-in attitude formation), where attitudes are constructed based on external stimuli. Research on environmental concern and sustainability has primarily focused on consumer attitudes toward companies that engage in CSR. For instance, despite beliefs in the importance of CSR, consumers often retain a strong preference toward non-socially responsible products in many domains (Luchs et al., 2010; Olson, 2013). Companies often face a paradox in the pressure they receive from consumers to invest in CSR and the lack of marketplace support they receive (Oberseder et al., 2011). Furthermore, consumers high in environmental concern may even perceive socially responsible products to be inferior to competitors (Lin & Chang, 2012). Together, these findings suggest that consumers who believe in the importance of CSR do not respond negatively toward non-CSR brands. Thus, we expect that when consumers form evaluations around internal beliefs in the importance of CSR (i.e., inside-out attitude formation), contrasting inferences toward competitors will not emerge. Instead, when CSR is introduced as a new feature or benefit, consumers should use this external information as a basis for forming new attitudes about the competitive environment (i.e. outside-in attitude formation). Prior research suggests that when new product attributes are introduced to consumers, these attributes shift how the

Please cite this article as: Hasford, J., & Farmer, A., Responsible you, despicable me: Contrasting competitor inferences from socially responsible behavior, Journal of Business Research (2015), http://dx.doi.org/10.1016/j.jbusres.2015.09.009

J. Hasford, A. Farmer / Journal of Business Research xxx (2015) xxx–xxx

marketplace is evaluated (Mukherjee & Hoyer, 2001; Nowlis & Simonson, 1996). Consumers will often contrast competitors against a product that introduces a new attribute or feature, as the introduction of a new attribute signals a new standard in the product category (Meyers-Levy & Sternthal, 1993). When no information about competitors to the CSR brand is provided, this missing information can generate inferences about the competition (Simmons & Lynch, 1991). Subsequent attitudes toward competitors should be impacted from the inferred lack of innovation in regards to CSR. These competitors should be viewed more negatively based on the external introduction of CSR as a product innovation. Therefore, we hypothesize: H2. When attitudes toward CSR efforts are formed from the outside-in (inside-out), consumer evaluations of a direct competitor to a CSR product will (not) become more negative.

3.3. When contrasting inferences form in the decision making process To further understand how CSR information impacts consumer inferences toward the competition, we also investigate when these competitive inferences are formed. Upon exposure to information, inferences may form immediately in memory, or may not form until consumers explicitly evaluate the alternatives being considered (Kardes et al., 2004). When consumers form inferences immediately upon learning information, additional information is often ignored as judgments are established prior to explicit decision making (Van Osselaer & Alba, 2000). Conversely, individuals may not form inferences until making a comparative judgment between stimuli (Mussweiler, 2003). In these instances, the perceived similarity between stimuli is critical in determining how inferences impact consumer evaluations (Mussweiler, 2003). Prior CSR research has identified that the use of CSR information in judgments is based on a consideration of the underlying purpose of CSR. For example, Yoon, Gürhan-Canli, and Schwarz (2006) found that perceptions of sincerity underlying CSR efforts impacted evaluations of CSR products. Here, considering whether the CSR efforts were genuine, after exposure to that information, impacted consumer attitudes toward the product. Furthermore, the degree to which consumers perceive ethical products to be weaker is a function of which benefits are valued in the product category (Luchs et al., 2010). In other words, considering the importance of CSR relative to other product category attributes impacted evaluations. In these instances, the influence of CSR information on decision making is not immediate. Rather, consumers deliberate about the purpose and meaning of the CSR effort during attitude formation. Thus, we expect that inferences about CSR competitors (and subsequent attitude reduction) will not occur until consumers explicitly evaluate the CSR product. Therefore, we hypothesize: H3. Evaluations of a direct competitor to a CSR product will become more negative only once the CSR product has been explicitly evaluated by consumers. Three studies are conducted to test our hypotheses. Study 1 investigates when information about an environmentally conscious product leads to contrasting inferences. Study 2 further refines our conceptual model by utilizing the MPAA framework to explain how contrasting inferences occur. Study 3 investigates when, in the decision making process, that contrasting inferences toward CSR competitors emerge. The studies are described next. 4. Study 1 Study 1 examined whether CSR information about a company would generate contrasting inferences toward a direct competitor. Furthermore, we tested whether that information needed to be directly related to a product category as opposed to general CSR information about a

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company. One-hundred twenty-one undergraduate students were randomly assigned to one of four (information condition: product CSR information/general CSR information/general company information/ no information) between-subjects factors. The study follows a 2 × 4 mixed design as participants rated both products featured in the study. 4.1. Method Participants began by reading one of four brief articles that differed in their information (see Appendix A). In the product CSR information condition, participants read about how the printer company Lexmark has developed a new line of environmentally friendly printers. This article was based on an actual press release by Lexmark to enhance external validity and provide CSR information directly related to the product category. In the general CSR information condition, participants read about organization-wide CSR activities at Lexmark that were not specific to any product category. This was designed to test whether CSR information needed to be related to a specific product category for contrasting inferences to occur. In the general company information condition, participants read a description of Lexmark, including information on its location, size, and areas of operation. This information was designed to test whether merely providing participants information about a company would lead to contrasting inferences. Lastly, in the no information control condition, participants read about upcoming new movies. This condition provided a baseline for consumer attitudes. To examine whether contrasting inferences emerge toward a direct competitor, no information was provided in regards to any CSR activities at HP. After the information manipulation, participants were presented with information on a Lexmark and HP printer (see Appendix A). To enhance realism, the Lexmark printer included a price premium as CSR products are often more expensive than their competitors (Lin & Chang, 2012). The printer information was pretested across twentythree undergraduates without any CSR information, and no significant differences were present across evaluations of each printer (MHP = 5.15 vs. MLexmark = 5.08, t(22) = .25, p N .10). After viewing the printer information, participants completed four seven-point attitude items (bad/good, negative/positive, unfavorable/ favorable, unsatisfactory/satisfactory) for the HP (α = .95) and Lexmark (α = .94) printer. Attitudes were measured to examine whether contrasting inferences were formed toward the HP printer. Given that both printers possessed equivalent attitudes from pretesting when no CSR information was presented, any changes in attitudes toward HP must be directly attributable to inferences made in response to the CSR information. 4.2. Results A repeated measures ANOVA was used to assess the 2 × 4 mixed subjects design. The interaction between the information condition and printer attitudes was non-significant (F(3, 117) = 1.79, p N .10). Main effects of printer attitudes (F(1, 117) = 8.10, p b .01) and information condition (F(3, 117) = 2.49, p b .10) were observed. The null interaction is not unexpected, however. Recall that negative inferences should only emerge toward the competitor (HP) in the product CSR information condition. We expect all other conditions will be statistically equivalent as they do not present information that should lead to negative inferences. In designs such as ours, it is not uncommon for an interaction to be non-significant and is still appropriate to proceed with planned comparisons (Iacobucci, 2001). However, before conducting planned comparisons, we also pooled the three information conditions with expected null effects into one group and tested this against the product CSR condition for the two printers. Here, the interaction was significant (F(1, 119) = 5.11, p b .05), with main effects of printer attitudes (F(1, 119) = 13.13, p b .01) and information condition (F(1, 119) = 7.37, p b .01) as well.

Please cite this article as: Hasford, J., & Farmer, A., Responsible you, despicable me: Contrasting competitor inferences from socially responsible behavior, Journal of Business Research (2015), http://dx.doi.org/10.1016/j.jbusres.2015.09.009

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J. Hasford, A. Farmer / Journal of Business Research xxx (2015) xxx–xxx

Next, we examined differences in printer attitudes by condition (see Fig. 1). HP attitudes in the product CSR information condition (M = 4.37, SD = 1.09) were significantly lower relative to the other experimental conditions. Specifically, HP attitudes were lower relative to when participants were exposed to general CSR information (M = 5.13, SD = 1.03, t(60) = 2.81, p b .01), general company information (M = 5.11, SD = 1.29, t(59) = 2.41, p b .05), or no information (M = 5.18, SD = 1.12, t(56) = 2.79, p b .01). Furthermore, attitudes toward the HP printer were significantly lower relative to attitudes toward the Lexmark printer (M = 5.08, SD = .90) for participants in the product CSR information condition (t(29) = 3.85, p b .01). Lastly, there were no differences between HP and Lexmark attitudes across the general CSR information, general company information, and no information conditions (all comparison ps N .10). Together, these findings support H1. 4.3. Discussion Study 1 demonstrates how a company's CSR activities can lead to contrasting inferences toward competitors. Despite no changes in attitudes toward a company engaging in various forms of CSR, participants were more negative in their attitudes toward a direct competitor when CSR actions taken by the target product were specifically related to the product category under consideration. 5. Study 2 In study 2, we examine how attitude formation affects these contrasting inferences observed in study 1. In doing so, we also examine two potential alternative explanations to these findings. First, participants could be exhibiting a “halo effect”, where the bias of one evaluation influences other related judgments (Nisbett & Wilson, 1977; Sanbonmatsu, Kardes, & Sansone, 1991; Schuldt, Muller, & Schwarz, 2012). Halo effects can impact evaluations of CSR, as previous research has shown that CSR associations influence consumer attributions about the brand and impact subsequent judgments (Klein & Dawar, 2004). Therefore, consumers could be holding strong beliefs about the importance of CSR, which leads to more negative evaluations of competitors who are inferred to lack CSR. Similarly, the results of study 1 could also be driven by conversational (as opposed to contrasting) inferences. Theories of conversational inferences suggest that communications convey new and relevant information (Grice, 1975). This principle of informativeness (Xu & Wyer, 2010) also suggests that individuals may infer unknown information about other related products and brands based on the information that is presented. For example, when consumers are introduced to a new product feature, that information may lead consumers to infer that other products are lacking that attribute (Wyer, 2004). These inferences are developed solely from information in the communication and not from attitude formation processes.

Fig. 1. Printer attitudes by condition and brand.

Study 2 was designed to examine how the nature of attitude formation impacts evaluations of the competition in response to CSR. If a halo effect explains our results, participants should evaluate a competitor more negatively when attitudes are formed around beliefs in the importance of CSR (i.e. inside-out attitude formation). Furthermore, if conversational inferences are leading to negative evaluations, the nature of attitude formation should not impact competitor attitudes. However, if contrasting inferences are being formed as predicted, priming the importance of CSR via inside-out attitude formation should not impact evaluations. Instead, when consumers are primed to form their attitudes externally by learning about CSR as a product innovation (i.e. outside-in attitude formation), competitor evaluations should be negatively impacted when category-specific CSR information is presented. To test this prediction, one hundred forty-one undergraduate business students were randomly assigned to one of two attitude priming (inside-out/outside-in) between subjects factors, and one of two information (product CSR information/no information) between-subjects factors. The study follows a 2 × 2 × 2 mixed design as all participants rated both printers featured in the study. 5.1. Method Participants began by completing attitude formation priming measures following Cohen and Reed (2006) via a writing task. Each priming task asked participants to write about their attitudes regarding consumer electronics (e.g., computers, televisions, printers). As inside-out attitude formation is centered on the person and their internal beliefs, participants here were asked to write about their attitudes and opinions toward companies that provide environmentally friendly consumer electronics. Outside-in attitude formation, however, is centered on external perceptions of an object, entity, or idea. Thus, participants here were asked to write about the external factors they consider when evaluating consumer electronics. In both writing tasks, only the focus of attitude formation was manipulated. Next, participants read either the product CSR information article or the no information movie article from study 1. Then, to conclude, participants viewed the printer information and completed the same attitude measures for both the Lexmark (α = .96) and HP (α = .97) printers. 5.2. Results To begin, a content analysis of the priming task was performed. Two independent coders identified whether participants wrote about their internal beliefs (priming inside-out attitude formation) or external factors (priming outside-in attitude formation). Examples of internal belief statements include “I would rather buy an environmentally friendly product” and “I value those companies for helping the world”. Examples of external factors statements include “Warranty, speed, and quality are important” and “Price is most important, followed by durability”. The coders displayed high reliability in coding statements as internal (ϕ = .94, p b .01) and external (ϕ = .85, p b .01). Disputes were resolved by a discussion between coders. Results revealed that the inside-out priming task was more likely to generate statements related to internal beliefs (94.6% of participants) relative to the outside-in priming task (20.9% of participants, z = 8.91, p b .01). Furthermore, the outside-in priming task was more likely to generate statements related to external product characteristics (95.5% of participants) relative to the inside-out priming task (23.0% of participants, z = 8.70, p b .01). Together, these findings suggest the priming task effectively activated different styles of attitude formation. Next, to examine differences in attitude formation and information on contrasting inferences across the two printers, a repeated measures ANOVA was conducted. A significant three-way interaction between attitude formation, information condition, and printer attitudes emerged (F(1, 137) = 4.41, p b .05). Additionally, the two-way interaction between information condition and printer attitudes was significant

Please cite this article as: Hasford, J., & Farmer, A., Responsible you, despicable me: Contrasting competitor inferences from socially responsible behavior, Journal of Business Research (2015), http://dx.doi.org/10.1016/j.jbusres.2015.09.009

J. Hasford, A. Farmer / Journal of Business Research xxx (2015) xxx–xxx

(F(1, 137) = 4.60, p b .05), but the two-way interactions between attitude formation and printer attitudes (F(1, 137) = .05, p N .10) and attitude formation and information condition (F(1, 137) = 1.59, p N .10) were non-significant. There was also a significant main effect of attitude formation (F(1, 137) = 4.50, p b .05), a marginal main effect of printer attitudes (F(1, 137) = 3.51, p b .10), and a non-significant main effect of information condition (F(1, 137) = .01, p N .10). Next, we examined differences in printer attitudes by condition (see Fig. 2). For the no information condition, HP attitudes were not significantly different across inside-out (M = 5.58, SD = 1.10) and outside-in (M = 5.64, SD = 1.28, t(63) = .21, p N .10) attitude priming. However, for the product CSR information conditions, HP attitudes were significantly lower when attitudes were primed from the outside-in (M = 4.98, SD = 1.20) as opposed to the inside-out (M = 5.79, SD = 1.17, t(74) = 2.97, p b .01). Additionally, when attitudes were primed via outside-in attitude formation in the product CSR information condition, attitudes toward the HP printer were significantly lower relative to attitudes toward the Lexmark printer (M = 5.67, SD = .96; t(39) = 3.72, p b .01). Furthermore, there were no differences between the Lexmark and HP printer evaluations across any of the other conditions (all other comparison ps N .10). Together, these results support H2. 5.3. Discussion Study 2 demonstrates how attitude formation impacts contrasting inferences toward CSR competitors. When beliefs in the importance of CSR were primed (i.e. inside-out attitude formation), consumers were not more negative in their evaluations of a non-CSR competitor. However, when consumers were primed to externally learn about CSR as a product innovation (i.e. outside-in attitude formation), consumers were more negative toward a non-CSR competitor. Together, these findings provide additional evidence that contrasting inferences underlie competitor evaluations in response to CSR while also ruling out a halo effect or conversational inference explanation of our findings. 6. Study 3 Study 3 was designed to test when contrasting inferences are formed in the decision making process. We predict that inferences toward CSR competitors will emerge only after the consumer has explicitly evaluated the CSR product. This would provide further support for our prediction that contrasting inferences are formed in response to CSR information as part of a comparative judgment (Kardes et al., 2004). To test this prediction, we manipulated when consumers evaluated the CSR product and its competitor by examining differences in the joint and separate evaluation of products (Hsee & Leclerc, 1998). We also generalized the results of studies 1 and 2 by adding a new product category and utilizing a new type of CSR information. For study 3, we recruited one-hundred sixty-three individuals from MTurk to participate

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Attitude Formation Fig. 2. Printer attitudes by social responsibility, attitude formation, and brand.

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for payment, allowing us to generalize beyond the student samples of studies 1 and 2. Participants in study 3 were randomly assigned to one of three order of evaluation (joint/CSR first/CSR last) between-subjects factors. Once again, participants rated both the CSR and non-CSR product, creating a 2 × 3 mixed design. 6.1. Method Study 3 was conducted in the domain of athletic shoes to generalize the incidence of contrasting inferences. Prior to collecting study 3, two fictitious athletic shoes with real brand names (Saucony and Avia) were created (see Appendix A) and pretested across thirty-one undergraduates. No differences were present in shoe attitudes (MSaucony = 5.19 vs. MAvia = 5.22, t(30) = .09, p N .10) when viewed independently of CSR information. This suggests that our stimuli are suitable for testing whether contrasting inferences emerge toward a competitor in response to CSR information. Participants began by reading a news article about how the athletic shoe company Saucony is donating a portion of sales from a new line of athletic shoes to charity (see Appendix A). We used CSR information related to philanthropy in study 3 to generalize our findings beyond the CSR information related to business practices used in studies 1 and 2. Furthermore, no information was provided in regards to any socially responsible actions at Avia. After reading the article, participants were randomly assigned to an order of evaluation condition. Participants in the joint evaluation condition were presented with information on the Saucony and Avia shoes (see Appendix A). After seeing the shoes jointly, participants answered a single likelihood-to-buy (LTB) item measuring purchase intentions for each shoe. Participants in the CSR first evaluation condition were initially presented with information only on the Saucony shoes. Participants then completed a LTB item toward Saucony. Next, participants were presented with information on the Avia shoes, followed by the LTB item. In the CSR last condition, participants followed the same procedure as the CSR first condition but evaluated the Avia shoes first. If inferences about competitors are formed earlier in the decision making process, no order of evaluation effects should emerge. However, if inferences toward CSR competitors are formed only after the CSR product is explicitly evaluated, LTB should be lower when the CSR product is evaluated with or before its direct competitor. 6.2. Results A repeated measures ANOVA was conducted to compare LTB for the Avia and Saucony shoes across the evaluation conditions. The interaction of purchase intentions and order of evaluation was significant (F(2, 160) = 5.17, p b .01). Additionally, the main effect of purchase intention was significant (F(1, 160) = 12.91, p b .01) while the main effect of order of evaluation (F(1, 160) = .89, p N .10) was not. Next, we examined differences in purchase intentions by evaluation condition (see Fig. 3). Participants were less likely to buy the Avia shoes when they were presented after the Saucony shoes (M = 4.28, SD = 1.40) than before (M = 4.85, SD = 1.26; t(108) = 2.23, p b .05). Similarly, participants were less likely to buy the Avia shoes when they were presented jointly with the Saucony shoes (M = 4.30, SD = 1.41) than when they were presented before (t(104) = 2.11, p b .05). Participants were also more likely to buy the Saucony shoes (M = 4.85, SD = 1.38) relative to the Avia shoes in the joint evaluation condition (t(52) = 3.27, p b .01) and in the Saucony first condition (M = 4.70, SD = 1.57; t(56) = 3.51, p b .01). However, there was no difference in LTB between the Avia shoes and Saucony shoes (M = 4.77, SD = 1.34) in the Avia first condition (t(52) = .53, p N .10). Finally, there were no differences in LTB across the order of evaluation conditions for Saucony (ps N .10). Together, these findings support H3.

Please cite this article as: Hasford, J., & Farmer, A., Responsible you, despicable me: Contrasting competitor inferences from socially responsible behavior, Journal of Business Research (2015), http://dx.doi.org/10.1016/j.jbusres.2015.09.009

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J. Hasford, A. Farmer / Journal of Business Research xxx (2015) xxx–xxx

Fig. 3. Likelihood to buy by order of evaluation and brand.

6.3. Discussion Study 3 investigates when, in the decision making process, contrasting inferences toward competitors of CSR products are made. Consistent with an account that suggests these inferences form during the explicit evaluation of products (as opposed to when information is initially learned), consumers were more negative toward a CSR competitor only when the CSR product was evaluated jointly with or prior to evaluations of the competitor. This finding provides further support that CSR information leads consumers to forming contrasting inferences as part of a comparative judgment. This finding also further rules out alternative explanations related to the halo effect or conversational inferences. Neither conversational inferences nor the halo effect is contingent on order of measurement, which conflicts with our observed results.

7. General discussion The current research identifies a previously unexplored outcome of when companies emphasize CSR, namely, how contrasting inferences toward the competition can emerge. In three studies, we demonstrate that contrasting inferences regarding a focal company's CSR efforts lead to more negative evaluations of a direct competitor. In doing so, we identify how and when these contrasting inferences occur. These inferences emerge not when attitudes are formed on the basis of customer beliefs about the importance of CSR (inside-out), but rather when consumers' attitudes are formed from the importance of a new attribute to the marketplace (outside-in; Cohen & Reed, 2006). We also provide evidence for when these effects occur in the decision making process. Only when a consumer has explicitly evaluated a CSR product will contrasting inferences negatively impact the competition. This finding suggests that consumers are forming inferences in response to CSR information as part of a comparative judgment. These findings have important implications as companies continue to enhance CSR efforts. The results of study 2 suggest that consumers will focus on CSR when external information directs them toward its importance as a product attribute. Ironically, consumers who focus on the importance of CSR may merely see the company as fulfilling an expectation and competitors to CSR products within the product category may not be impacted. Our findings also provide marketers with guidance on how to influence these contrasting inferences. In order to maximize the effectiveness of CSR information on product evaluations, marketers should present the CSR product before or with its competitors for consumers to form contrasting inferences. For example, when searching a retailer's website, a CSR product could be one of the first to appear within a particular product category. Conversely, for whatever reason, if a marketer wanted to minimize contrasting inferences to the competition, the competition could be introduced prior to the CSR product. In a retail setting,

this could involve displaying the non-CSR product in a prominent location such as on an end-cap or promotional display. It is also important to note the role of price in CSR. One potential reason why consumer support for socially responsible products has lagged is because such products often carry a price premium (Lin & Chang, 2012). Thus we included a price premium on each product that was linked with CSR information. However, even when a socially responsible product is priced higher than a non-socially responsible product, contrasting inferences toward a direct competitor still emerge. This finding was robust across two product categories. While our findings identify contrasting inferences occur in response to CSR, some limitations should be noted. First, we assessed brand attitudes and likelihood to buy as our primary outcomes. These dependent variables provide indirect measures of the inferential reasoning that occurred among participants. As all products were pretested to ensure that participant attitudes were equivalent toward all products in the absence of CSR information, it is unlikely that anything other than contrasting inferences can explain our results. We also preferred these measures as direct measures of inferences could confound our results by leading participants to report inferences they may not have formed otherwise (Kardes, Posavac, Cronley, & Herr, 2008). We recommend that future studies include direct measures of inferences to further explore our findings. A second limitation of our findings is that none of our studies found an effect of CSR information on the target product. This is important as companies often engage in CSR activities to enhance their product image (Cotte & Trudel, 2009; Peloza et al., 2013). Our results, however, are consistent with prior research that is mixed in regards to the benefits of CSR on target product attitudes (e.g. Luchs et al., 2010; Oberseder et al., 2011; Skarmeas & Leonidou, 2013). Future research should continue to investigate instances where CSR product information enhances evaluations of the target product. Emerging research has also investigated the impact of CSR activities by a retailer independent of the products they carry (Ganesan, George, Jap, Palmatier, & Weitz, 2009). Potential incongruities could exist between a retailer's CSR and the CSR products carried within a product category. Given that the image of the retailer and store products are often linked (Jacoby & Mazursky, 1984), this relationship could impact the formation of contrasting inferences. For instance, consumers may erroneously attribute a retailer's CSR activities to the products they carry, independent of any single product. On the other hand, a product's CSR activities may be most impactful when the retailer is not committed to CSR, thus highlighting the unique characteristic of the product. Research is needed to better address and understand these potential interactions between the retailer and product. Furthermore, future research should continue to investigate what mechanisms underlie CSR effects on consumer attitudes. Peloza et al. (2013) provide evidence that self-accountability impacts consumer attitudes toward CSR efforts, such that subtle activations of selfaccountability are more effective at enhancing consumer preferences for socially responsible products relative to guilt appeals. Research should continue to uncover what psychological mechanisms impact the preference for socially responsible products. This work provides an initial step in understanding the effect of CSR actions by a firm on perceptions of the competition. This research builds upon the inference making literature to explain why negative evaluations of the competition emerge in response to a focal company's CSR activities. Future research should continue to examine why these contrasting inferences emerge and uncover additional potential negative consequences for competitors. Such consequences may ultimately have a major impact on consumer attitudes toward CSR activities. Appendix A Information conditions. Focal CSR Information (studies 1 and 2).

Please cite this article as: Hasford, J., & Farmer, A., Responsible you, despicable me: Contrasting competitor inferences from socially responsible behavior, Journal of Business Research (2015), http://dx.doi.org/10.1016/j.jbusres.2015.09.009

J. Hasford, A. Farmer / Journal of Business Research xxx (2015) xxx–xxx

Lexmark has just announced a new lineup of inkjet and monochrome laser, multifunction, eco-friendly printers that are suitable for home consumers and small businesses. Touted to reduce energy consumption while maintaining productivity levels comparable with industry standards, the new line of Lexmark printers is generating excitement. “We are committed to providing customers with high-quality products that are environmentally friendly,” Lexmark president Paul Rooke stated. “Consumers demand products that are sustainable and preserve the environment. Printers are no different, and here at Lexmark we are excited to meet those needs with our new printers.” The new lineup of printers includes the multifunction SCX-4729FD and SCX-4729FW, and the single function ML-2955ND and ML2955DW models. The multifunction models have the ability to scan and fax as well. The SCX-4729FW and ML-2955DW models feature wireless printing capabilities, and even work with Lexmark's MobilePrint app. All the printers are said to be energy star 2.0 compatible when in use and have options for adjusting toner usage, and CO2 emissions which makes the printers both eco-friendly when it comes to harmful gasses and noise pollution. The ML-2955ND, ML-2955DW, SCX-4729FD and SCX-4729FW will be available in late September. Focal CSR Information (study 3). Saucony has just announced a new line-up of athletic shoes that are designed for various types of exercise and training. The E-Series shoes are designed with not only athletic training in mind, but an environmental purpose as well. For each pair of E-Series shoes purchased, Saucony will donate 5% of the proceeds to charities involved in the protection of forestry and plant life. “We are committed to providing customers with high-quality products and protecting the environment,” Saucony president Richie Woodworth stated. “Because many of the materials involved in the manufacturing of shoes come directly from nature, we want to make sure that we help protect the environment for future generations.” Several models within the E-Series are being developed, including the Ride, Guide X, Kinvara 6, and Hurricane 14. The E-Series shoes are expected to be in both sporting goods and specialty running stores later this summer. General CSR Information (study 1). Lexmark International is committed to being a responsible company and a responsible employer. In addition to manufacturing printers and imaging products, Lexmark is committed to a better global society. Lexmark has taken several steps toward becoming more environmentally friendly in recent years. Lexmark has invested in energy efficiency fixtures for their factories, increased the use of natural resources in manufacturing, incorporated other features that reduce the environmental impact of Lexmark, and deepened its efforts in building and developing a more responsible supply chain. Lexmark is also committed to improving the local communities in which they operate. Before doing business in a new location, Lexmark conducts an environmental impact analysis to ensure that the company's operations will improve the region. Lexmark also makes every effort to improve the local economy when they enter a new market. In recognition of these efforts, Lexmark was recently selected to be included in the United Nations Global Compact 100—a new, global index that recognizes companies for their commitment to sustainability and profitability. Moving forward, Lexmark has implemented a five-year plan to sustainability. Through these activities, Lexmark will continue its commitment to improving the environment as Lexmark strives to be a global, environmental leader both in thought and action. General Company Information (study 1). Lexmark International, Inc. is an American corporation which develops and manufactures printing and imaging products, including laser and inkjet printers, multifunction products, printing supplies, and services for business and individual consumers. Lexmark was formed in 1991 when IBM divested its printer and printer supply

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operations to the investment firm Clayton & Dubilier, Inc. in a leveraged buyout. Lexmark became a publicly traded company in 1995. Lexmark has offices throughout North and South America, Asia, Africa and Europe. The company has more than 13,000 employees worldwide. Lexmark was a Fortune 500 company until they were ranked #507 in the 2009 Fortune 500 rankings. In addition to manufacturing hardware under their own name, Lexmark also does third party development of printers for other major companies, such as Dell and IBM InfoPrint. Lexmark, together with its subsidiaries, engages in the development, manufacture, and supply of printing, imaging, document workflow, and content management solutions for offices in North and South America, Europe, the Middle East, Africa, Asia, the Pacific Rim, and the Caribbean. It offers monochrome and color laser printers, laser multifunction products, inkjet all-in-one devices, dot matrix printers, cartridges and other supplies, and services and solutions including maintenance, consulting, and systems integration. Study 1 Stimuli. Attribute

HP

Lexmark

Print speed B&W Print speed color Color printer resolution Type of interface Input paper capacity Average consumer rating Price

28 ppm 20 ppm 4800 × 1200 dpi USB 2.0 & Firewire Up to 70 4.3 $73

27 ppm 22 ppm 4800 × 1200 dpi USB 2.0 & Firewire Up to 70 4.7 $78

Study 3 Stimuli. Attribute

Saucony

Avia

Shoe weight Distance rating Sole type Insert padding Colors available Customer rating Price (plus tax)

9.3 oz. per shoe 375 miles Raised ¼ of an inch Multiple 4.5/5 stars $110

10.1 oz. per shoe 400 miles Raised ¼ of an inch Multiple 4.6/5 stars $105

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Please cite this article as: Hasford, J., & Farmer, A., Responsible you, despicable me: Contrasting competitor inferences from socially responsible behavior, Journal of Business Research (2015), http://dx.doi.org/10.1016/j.jbusres.2015.09.009