Effects of Increased Corporate Social Responsibility on Consumer Confidence Towards Company with Corporate Social Incident Associated with Financial Fraud

This study addressed whether the costs associated with having a Corporate Social Responsibility (CSR) program offset the reputational harm losses caused by an organizational Corporate Social Incident (CSI), specifically from financial fraud exposure. A recent study conducted by Johnson, Xie, & Yi, focusing on the costs associated with financial fraud, found that 6% of customers surveyed stopped doing business with a company that was caught in a financial fraud scandal (2014). A Cone Communication study (Communication, 2017) not only found that 88% of consumers would stop doing business with a company that was irresponsible or deceptive in their business practices, but that nearly one-in-two had boycotted a company in the previous year for irresponsible business actions. This qualitative case study approached the problem by using a phenomenology approach that focused on how consumers alter their confidence and behavior when CSR programs and financial fraud are present. The results of this study show that there is a significant relationship between the company's CSI and its reputation. Qualitative data for each section resulted in keywords being none or nothing, and the four themes that surfaced were customer services, employees, reputation, and confidentiality. Each theme should be equally focused on as a means to create business strategies that effectively offset the negative impact a CSI may have on a company