Not So Lucky After All: How Perceived Financial Gains from Exogenous Public Adversities Influence Reputational Returns from Compnaies' Relief Actions

In times of public adversities—such as pandemics, wars, climate crises, and mass migrations—companies often engage in Corporate Social Responsibility (CSR) initiatives, either monetary or in-kind, to bolster their reputations and generate positive word-of-mouth (WOM) while avoiding public backlash. However, our research, spanning six studies (including one experimental pilot study, one Twitter-based pilot study, and four experiments), reveals a complex challenge for these companies: While the public expects them to engage in CSR, the perceived financial gains from these adverse events lead to a diminished tendency for the public to spread positive WOM. This paper introduces a critical dilemma for financially gaining companies due to public adversities: although CSR actions are anticipated by the public, they are often viewed as insincere, undermining their intended reputational benefits. Our findings suggest that companies in such positions must carefully consider the type of CSR actions they undertake. Across various scenarios—including the opioid crisis, the COVID-19 pandemic, global heatwaves, the Ukraine-Russia conflict, and the global refugee crisis—our studies demonstrate that companies perceived as financially benefiting from exogenous public adversities should prioritize in-kind (material) donations over monetary ones. When companies opt for in-kind donations, the negative impact of their perceived financial gains on public WOM tendencies is significantly mitigated.<br>