Description

With the rise of Corporate Social Responsibility, new studies have discovered the noble edge effect – companies which demonstrate social responsibility tend to reap extra profits due to the goodwill garnered by their responsibility, but only when it is seen as genuine. This primarily stems from the fact that Millennials are proving to be more socially conscious than previous generations. As such, they drive purchasing decisions towards companies which demonstrate genuine social responsibility. For instance, a company is more likely to garner the goodwill of consumers if consumers are told that it donates to charity – however, this effect only occurs if the consumers are told this by an outside source. If it is discovered via an inside source (such as company advertising), then it is more likely to be perceived as a marketing ploy, making it less likely to create goodwill and increased profits.

Example

For example, Warby Parker has been able to succeed primarily because social responsibility is perceived to be their primary motivator, while profits are perceived to come second. Whether or not this is justified, it is the general consensus among consumers and as such Warby Parker has performed above-average compared to its competitors.

Further Reading

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The Decision Lab is a think tank focused on creating positive impact in the public and private sectors by applying behavioral science.

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