2 page article summary

Microfoundations of Corporate Social Responsibility and Irresponsibility

Catherine T. Shea

Tepper School of Business Carnegie Mellon University

Olga Hawn

Kenan-Flagler School of Business University of North Carolina, Chapel Hill

Abstract: This study examines how social perception of corporate social responsibility (CSR) and irresponsibility (CSI) affects specific outcomes. Drawing from the social psychology literature on stereotypes, we argue that two fundamental dimensions of social perception— warmth and competence—mediate and moderate the effects of socially responsible and irresponsible practices. We propose that firms engaging in CSR are perceived as higher in warmth and, by default, competence; moreover, different perceptions of warmth and competence of the organization can moderate rewards and penalties for CSR and CSI. We conduct two experiments: Experiment 1 links CSR with perceptions of warmth and competence, and shows that warmth perceptions mediate the relationship between CSR and important outcomes, such as purchase intentions and reputation. Experiment 2 adds information on firms’ countries of origin to show that CSR rewards and CSI penalties will differ depending on the (mis)alignment of CSR strategy with country stereotypes. Study 3 replicates these findings using behavioral paradigms. We find that firms from high-warmth countries (USA, Sweden, Portugal) pay higher penalties for CSI than firms from low-warmth countries (Germany, Pakistan); furthermore, this effect attenuates when combined with high competence. This micro-macro study extends social evaluation, strategic CSR, and international management literatures.

Key words: corporate social ir/responsibility, social perception, stereotypes, experiment, competence, warmth, international management

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Corporate social responsibility (CSR) has grown massively in the past decade both as an important phenomenon in practice and as a critical field in academia. We have theorized about its institutional (Campbell, 2007; Ioannou & Serafeim, 2012) and organizational drivers (Aguilera, Rupp, Williams, & Ganapathi, 2007; McWilliams & Siegel, 2001) as well as examined its effect on firm performance (Berman, Wicks, Kotha, & Jones, 1999; Cochran & Wood, 1984; McGuire, Sundgren, & Schneeweis, 1988; Orlitzky, Schmidt, & Rynes, 2003; Russo & Fouts, 1997; Waddock & Graves, 1997) and other outcomes (Berrone & Gomez-Mejia, 2009; Flammer, 2013; Turban & Greening, 1997; Yoon, Gürhan-Canli, & Schwarz, 2006). Yet CSR is primarily studied at the macro level (i.e., institutional or organizational level) compared to the micro level (i.e., individual level) of analysis: recent review of the CSR literature shows that only 4% of all studies examine individual level, while only 5% address CSR at two or more levels of analysis (Aguinis & Glavas, 2012). Accordingly, in this paper we address the need for micro studies of CSR with a multilevel approach (Morgeson, Aguinis, Waldman, & Siegel, 2013) in order to understand the underlying processes (i.e., mediating effects) and conditions under which (i.e., moderating effects) CSR leads to specific outcomes.

In particular, we still know very little about the microfoundations of CSR: how CSR and importantly, corporate social irresponsibility (CSI) (Lange & Washburn, 2012; Surroca, Tribó, & Zahra, 2013) are perceived by individuals, and what effect this perception might have on the relationship between CSR and specific outcomes at individual and organizational levels of analysis. For example, we know that CSR positively affects company reputation (Turban & Greening, 1997) – one of our outcomes – but why and what mediates this relationship at the individual level is still unclear. A small but growing literature on the micro approaches to CSR shows that involvement in CSR positively influences employee performance, behaviors, and attitudes, such as employee engagement (Caligiuri, Mencin, & Jiang, 2013), organizational citizenship behavior (Rupp, Shao, Thornton, & Skarlicki, 2013), identification with the firm and retention (Jones, 2010), in-role performance, and commitment, as well as attractiveness to prospective employees (Turban & Greening, 1997). Yet, few studies go beyond employees

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(existing or prospective) as a stakeholder (e.g., consumers). Our study applies to all individuals, including employees, customers, suppliers, environmentalists, the community as a whole, and owners/shareholders, because it examines general individual judgments and perceptions.

In addition, existing research investigating CSR at the individual level of analysis relies on yet a different set of theoretical frameworks, such as organizational justice, social influence, needs, and self-determination theories (Aguinis & Glavas, 2012). In this paper we draw from social psychology research on social perception and stereotypes to argue that CSR influences and is influenced by two fundamental dimensions of social perception—warmth and competence— which mediate and moderate the effects of CSR and CSI on outcomes. Again, the few prior studies at the individual level examine different mediators and moderators, such as trust (or whether, how, and when consumers’ perceptions of motives directly influence consumer responses to CSR) (Vlachos, Tsamakos, Vrechopoulos, & Avramidis, 2009), customer satisfaction (Luo & Bhattacharya, 2006), organizational pride and identity (Jones, 2010), while we focus on novel individual-level concepts of warmth and competence.

Warmth and competence serve as universal dimensions of social judgment (Cuddy, Fiske, & Glick, 2004; Fiske, Cuddy, & Glick, 2007; Fiske, Cuddy, Glick, & Xu, 2002). Warmth is defined as perceptions related to intent, including friendliness, trustworthiness, helpfulness, sincerity, and morality, whereas competence is conceptualized as perceptions related to ability, including skill, intelligence, creativity, and efficacy (Cuddy, Fiske, & Glick, 2008). With the help of these two dimensions, one can portray social perceptions of activities, individuals, organizations, and even countries (Cuddy, Fiske, & Glick, 2007). Moreover, social judgment of various degrees (i.e., high or low) of warmth and/or competence can predict a distinct emotion and behavior towards a target: e.g., being perceived as high on warmth and/or competence is beneficial, while being low on one of the dimensions is costly (Aaker, Vohs, & Mogilner, 2010).

While previous research mainly examines CSR, we apply these two fundamental dimensions of social perception to understand the microfoundations of CSR and CSI. Not surprisingly, our basic argument is that firms with CSR generate a greater warmth and (by

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default, without any other information) competence perception than control firms or firms engaging in CSI. We extend this logic to argue that this perception of warmth in turn mediates CSR and CSI effects on outcomes (i.e., CSR rewards and CSI penalties – the effects above and below the control condition). Importantly, we then argue that different perceptions of warmth and competence of the organization from other sources (in this paper based on its country of origin) moderate CSR rewards and CSI penalties depending on the (mis)alignment of CSR strategy with the (home country) stereotype. Using three experiments with 774 participants and the warmth and competence variation across four countries (i.e., USA, Germany, Portugal, Pakistan), we show that warmth and competence perceptions explain causal effects of CSR and CSI on purchase intentions, price, and reputation and quality assessments. Moreover, consistent with the stereotype content model, firms from high-warmth countries pay higher penalties for CSI than firms from low-warmth countries (Germany, Pakistan); moreover, this effect changes when combined with perceptions of high competence (USA, Sweden).

Our study has several important theoretical implications for the management literature on CSR, social cognition, and international business as well as practical applications. First, in comparison to a few existing micro studies of CSR, we incorporate a different theoretical mechanism by bringing in the research on stereotyping and individual perception: the two fundamental dimensions of social judgment may be affecting how stakeholders evaluate CSR, which in turn may have direct effects on important outcomes. Second, we examine a novel moderator not studied in past research that also speaks to our underlying individual perception mechanism: in particular, we show that actions that either confirm or disconfirm stereotypes influence important outcomes and perceptions. Third, while most prior studies focus on only one organizational practice, we distinguish between CSR and CSI – crucial for moving the CSR literature forward. Fourth, even though reputation has been previously studied as an outcome of CSR, very little work (except in marketing) examines purchase intentions as a dependent variable – it appears novel in comparison to the outcomes traditionally studied in organizational behavior literature. Finally, we extend the international management literature by showing that

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initial social judgments about the origin of the firm may improve or worsen outcomes based on the choice of CSR strategy. This has important practical implications, particularly for managers of firms that expand abroad for the first time.

THEORY AND HYPOTHESES

Social Perception

The ability to quickly judge another individual is a fundamental evolutionary skill. It helps us to ascertain whether “they” are a part of our social group and to assess the goodness of their motives and competence to enact these good motives (see Fiske et al., 2007, for a review). Despite common beliefs that we need (and use) a wealth of knowledge to form judgments about other individuals, research shows that we make trait inferences spontaneously (Newman & Uleman, 1993; Winter & Uleman, 1984; Winter, Uleman, & Cunniff, 1985). For instance, when observing a fictional character, Donald, help an old lady cross the street, we quickly (and rather permanently) conclude that Donald is a kind and helpful individual—despite our having only limited information about him. Related work on “thin slicing” shows that a mere 30 seconds watching a college professor teach is sufficient to predict their end-of-term teaching evaluations (see Ambady & Rosenthal, 1992, for a review). Thus, despite the wealth of social information at our disposal, individuals rely on quick social judgments of others, and filter all subsequent social information based on the first impression of someone (Newman & Uleman, 1993; Ross, Lepper, & Hubbard, 1975).

Many of these quick social judgments about other individuals result from stereotypes. Stereotypes are cognitive beliefs about the characteristics of another group (c.f. Fiske, 1998). Fiske and colleagues (Cuddy et al., 2008; Fiske et al., 2007; Fiske et al., 2002) identified two fundamental dimensions of all stereotypes used to evaluate people and social groups: warmth and competence. The Stereotype Content Model (SCM) posits that all social groups fit into one of four quadrants based on whether they are high or low on warmth and competence. Further research (Cuddy et al., 2008; Fiske et al., 2007; Fiske et al., 2002; Fiske, Xu, Cuddy, & Glick,

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1999) has demonstrated the robustness of the warmth and competence dimensions, and the fact that they can be used to classify not only individuals but also social groups (e.g., elderly people, Jews, housewives, immigrants, and the homeless) and even national cultures.

Importantly, this work on social perception has a behavioral analog, the Behaviors from Intergroup Affect and Stereotypes (i.e., the BIAS map) (Cuddy et al., 2007). Based on the dimensions of warmth and competence, the BIAS map predicts not only cognitions derived from group stereotypes but also specific behaviors toward the group. Warmth and competence evoke active and passive behaviors, respectively: in particular, while high-warmth targets are helped, low-warmth targets are harmed, and whereas high-competence targets are passively facilitated, low-competence targets are neglected (Cuddy et al., 2007). Furthermore, each combination of the two trait dimensions predicts a distinct emotion or behavior toward the target: people admire those who are high in both competence and warmth; they feel contempt toward those who are low-competence and low-warmth; they envy those who are competent but not warm; and they pity those who are incompetent but warm (Fiske et al., 2002; Lee & Fiske, 2006).

Firms as Subject to Stereotypes

Although originally developed to explain personal and social group perception, the SCM has been extrapolated to non-human objects. Kervyn, Fiske, and Malone (2012) in their “Brands as Intentional Agents” framework show that consumers perceive brands in the same way they perceive people. Cuddy et al. (2007) use the SCM to map social perceptions of EU countries. Aaker et al. (2010) apply the SCM to organizations, explaining for-profit and not-for-profit firms’ success and failure, and showing that not-for-profit organizations are associated with higher warmth and lower competence than for-profit firms.

It is not surprising that organizations are often anthropomorphized into human beings—

famously so in the movie “The Corporation” and in recent decisions by the U.S. Supreme Court, such as in the Citizens United case. In management studies, organizations are often perceived to possess actions, thoughts, opinions (Knobe & Prinz, 2008), goals, tastes, styles, personalities (c.f. Pfeffer, 1981), and even attention (Ocasio, 1997). In fact, they are viewed as social actors similar

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to individuals precisely because the features that distinguish humans as actors are functionally equivalent to the features common to organizational actors (King, Felin, & Whetten, 2010). Yet, when compared to human beings, organizations are thought to have equal capability for agentic (i.e., competence) behavior (Gray & Wegner, 2010; Haran, 2013; Knobe & Prinz, 2008) but are less likely to be seen as experiencing emotions and feelings (Gray & Wegner, 2010).

Nonetheless, a large literature in marketing demonstrates that people perceive brands to have personalities (Aaker, 1997) and that people form “relationships” with various brands and products (Aaker & Fournier, 1995; Fournier, 1998). We build off this previous literature by going beyond brands and products and examining the perceptions of organizational practices. Specifically, in this paper we will compare perceptions of socially responsible and irresponsible organizations, predicated on social perception dimensions developed to classify individuals and social groups. Before we discuss how socially (ir)responsible activities may generate social perception of warmth and/or competence, we need to define CSR and CSI. Corporate Social Responsibility, Irresponsibility, and Social Perception

CSR, sustainability, corporate citizenship, and other terms are generally used to describe a portfolio of socioeconomic activities, including environmental, social, and corporate governance actions of the firm (Gardberg & Fombrun, 2006). Because these voluntary actions are aimed at improving social or ecological conditions (McWilliams & Siegel, 2001), many observers regard CSR as an activity that benefits firms, markets, and societies (Orlitzky, 2013).

We propose that CSR represents organizational behavior that connotes warmth and that as such it should lead to perceptions of greater warmth. Why should CSR be associated with warmth? Individuals and social groups associated with high warmth are associated with behaviors that are trustworthy and moral (Fiske et al., 2007). By definition, CSR includes a trustworthy behavior (i.e., “responsible” in its name); furthermore, prior literature distinguishes CSR—social actions motivated by moral obligation—from corporate social performance—social actions of firms—to highlight that CSR is primarily a moral behavior (Baron, 2009).

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At the individual level, people who engage in warmth behaviors are themselves perceived as having higher levels of warmth (Fiske et al., 2007). Hence, at the level of organizations, firms who engage in warmth behaviors, like CSR, will generate a social perception of higher warmth for themselves. For example, socially responsible organizations regularly donate to charities: because such activity generates social perception of warmth, such firms will be perceived as warm by social evaluators.

In turn, to distinguish between CSR and CSI, we will follow Campbell’s threshold (2007): if corporations (a) knowingly do something that could harm their stakeholders—their investors, employees, customers, suppliers, or the local community within which they operate— and (b) do not rectify the harm caused by them (whenever it is discovered and brought to their attention), the minimum behavioral standard with respect to the corporation’s relationship to its stakeholders is broken, and such corporate behavior becomes socially irresponsible. For example, CSI behavior includes using child labor, sweatshops, and polluting facilities in manufacturing operations. CSR behavior, on the other hand, includes charity, volunteering, community engagement, fair labor practices, and environmentally friendly manufacturing facilities. In comparison to CSI and other organizational behavior, CSR behavior resembles the same set of attributes that social psychologists traditionally associate with being high in warmth. Therefore, as our baseline hypothesis, we propose that

Hypothesis 1: Ceteris paribus, firms engaging in CSR will be perceived as having higher levels of warmth.

Spillover and Primacy Effects of Warmth Judgments

Warmth perceptions have two effects that are worth discussing: halo effects (c.f. Nisbett & Wilson, 1977) and the primacy of warmth over competence. First, let us discuss the halo effect: that is, when the presence (or lack) of warmth spills over into our judgments of competence (Cuddy et al., 2008; Fiske et al., 2007; Singh & Teoh, 2000; Tausch, Kenworthy, & Hewstone, 2007). This effect is particularly salient when we have no information beyond that on

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warmth. Thus, we automatically assume—in the absence of further information—that an individual possessing warmth also possesses some degree of competence.

In our setting, this will mean that in comparison to CSI firms, in the absence of further information, because CSR firms are associated with higher warmth they will also be associated with higher competence. We argue that this will be the case because the limited information on CSR practices suggests to the evaluator that the organization mastered at least one skill and therefore is intelligent and competent. Competence is conceptualized as perceptions related to ability, including skill, intelligence, creativity, and efficacy; therefore, in comparison to firms engaging in CSI demonstrating their inability to be a corporate citizen and behave in socially responsible ways, the perception of competence will be greater for firms engaging in CSR.

This prediction is consistent with recent work in consumer research: products of companies engaged in prosocial activities are perceived as performing better – due to the moral undertone of the company’s motivation for engaging in socially responsible behavior; more importantly, this effect holds even when consumers can directly observe and experience the product and when the acts of social goodwill are unrelated to the company’s core business (Chernev & Blair, 2015). Another alternative explanation why CSR engagement may be perceived high in competence is that in comparison to CSI, it can improve firm reputation, performance and other outcomes (Choi & Wang, 2009; Margolis, Elfenbein, & Walsh, 2007; Yoon et al., 2006) traditionally associated with competence.

A counter-argument will require a discussion of the purpose of the firm (Friedman, 1970), market actors as social evaluators, and more information on other organizational practices, activities, or performance. For example, if evaluators were market actors (particularly in earlier years), they might have assumed that firms engaging in CSR were less competent because CSR investment requires diverting scarce resources from other more strategic or core business activities of the firm. However, in comparison to CSI, recent strategy work shows that CSR engagement is now making organizations more competent because they perform better even in financial markets (Cheng, Ioannou, & Serafeim, 2013; Eccles, Ioannou, & Serafeim, 2014;

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Ioannou & Serafeim, 2015). Therefore, due to the “halo effect” of warmth as well as other alternative explanations listed above, we propose that

Hypothesis 2: Ceteris paribus, firms engaging in CSR will be perceived as having higher levels of competence.

Second, let us discuss the primacy effect of warmth judgment. Although the SCM is predicted on two dimensions—warmth and competence—when it comes to forming a social perception, a large body of research highlights the primacy of warmth (Cacioppo, Gardner, & Berntson, 1997; Kenworthy & Tausch, 2008; Wojciszke, Bazinska, & Jaworski, 1998). That is, we anchor on perceptions of warmth and adjust—albeit insufficiently—based on perceptions of competence. At the individual level, this happens because information needed to determine warmth (e.g., facial expressions, interpersonal skills) is simply more readily available during the beginning of social interactions than information needed to determine competence (e.g., skills, knowledge, and abilities). Hence, when it comes to initial social judgments, warmth information carries more weight than competence information (Cuddy et al., 2008: 89-92; Singh & Teoh, 2000; Tausch et al., 2007).

At the level of organizations, we argue that this primacy effect will be important in the relationship between CSR and outcomes, particularly those that involve a single immediate evaluation or a first encounter with the firm because just like at the individual level, information needed to determine warmth is simply more readily available during the beginning of social interactions with this social actor (King et al., 2010) than information needed to determine competence. CSR studies have long examined the effect of CSR on firm performance (Cochran & Wood, 1984; Waddock & Graves, 1997) among other organizational outcomes (Sen & Bhattacharya, 2001; Turban & Greening, 1997), generally finding a significant positive effect (Margolis et al., 2007). We distinguish between outcomes that involve a single immediate evaluation (i.e., a purchase intention or reputation assessment based on the first encounter with the firm) and those involving an ongoing evaluation (e.g., by market analysts and investors that

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collect information over time, accumulate more information contributing to a competence perception of the firm, and value competence over warmth in their judgment).

We argue that for first-time encounters, the warmth perception that CSR generates could in fact act as the mechanism by which CSR affects these outcomes. In particular, we suggest that in the absence of further information, the primacy of warmth over competence will play a mediating role in this relationship. We previously argued that when individuals evaluate CSR, they perceive greater levels of warmth and, by default, competence than when they evaluate CSI. Now we argue that when observers make single immediate evaluations of CSR/CSI behavior, they will pay more attention to the warmth than to the competence perception. There are three reasons for this. First, cognitively, people prove more sensitive to warmth information than to competence information. Second, they judge warmth faster than they do competence (Cuddy et al., 2008: 90). Third, higher warmth leads to higher levels of helping behavior (Cuddy et al., 2007); in an organizational context, help can be conceptualized as positive evaluations and willingness to purchase from the firm. Therefore,

Hypothesis 3: Warmth perceptions will mediate the relationship between CSR/CSI and outcomes that involve single immediate evaluation.

Stereotype Fulfillment and Violation

When we evaluate people from other social groups or cultures, stereotypes act as cognitive shortcuts. For instance, we meet a rule-abiding, formal German and our stereotype of German people is confirmed (i.e., high competence, low warmth; Cuddy et al., 2007). But what happens when we meet a bubbly, scatterbrained German? Social judgments broadly fall into two categories: assimilation and contrast (Biernat, 2005; Newman & Uleman, 1993; Sherif & Hovland, 1961). Assimilation occurs when we judge the target according to the held stereotype (e.g., rule-abiding, formal German), and contrast occurs when we differentiate the target from our traditionally held stereotype (e.g., bubbly, scatterbrained German). In the absence of contradictory evidence, assimilation is relatively automatic (Dijksterhuis, Spears, & Lépinasse, 2001); otherwise, contrast takes place.

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The effect of contrasting social judgments can be both positive and negative. For instance, professionals—perceived as highly competent—receive differential treatment based on their gender after having a baby (Cuddy et al., 2004). Professional women are seen as less competent and do not experience a boost in perceived warmth from motherhood to make up for their newly perceived lack of competence. Men, on the other hand, receive increased perceptions of warmth and maintain their competence, gaining a net benefit from parenthood (Cuddy et al., 2004). Likewise, agentic women—violating the female stereotype—experience a backlash when they apply for feminized jobs, whereas prototypical women do not (Rudman & Glick, 1999, 2001). These studies suggest that additional information on other sources of warmth and/or competence perception for the subject of interest (e.g., gender) can help explain the benefits and detriments of certain behavior. The mechanism is that additional information may strengthen the original stereotype through assimilation, or change it through contrast.

In order to examine how CSR and CSI behaviors affect outcomes based on social perceptions they generate, and under what conditions they generate greater (lower) outcomes, we also add another piece of information about the firm that exogenously changes perceptions of its warmth and competence. As discussed in Study 2, we achieve this by adding cues on the firm’s origin: Cuddy and colleagues (2007) portrayed stereotypes of countries on the two dimensions of warmth and competence, finding significant variation. In this section, to further our understanding of CSR as a warmth strategy, we mainly focus on the warmth dimension of the firm (or its origin); this helps to disentangle the mediating or supplemental warmth effects, if any, of CSR. This also helps address a potential reverse-causality issue: if firms perceived to be high in warmth are the ones who engage in CSR in the first place, this section of our theory (and analysis) helps to identify the leftover effect, if any, of CSR as a warmth strategy.

Based on prior CSR literature, we assume that CSR generates rewards—and CSI, penalties—for the firm1. We are interested in how social perception of the firm based on other

1 We operationalize them through our control condition: rewards are above and penalties are below the means in the control condition

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sources of information (i.e., its origin) affects CSR rewards and CSI penalties. In particular, if firms engaging in CSR are perceived higher in warmth and this warmth perception mediates the effect of CSR on our outcomes (H1 and H3), does an increase (decrease) in warmth help improve (attenuate) these outcomes for firms engaging in CSI (CSR)? We suggest that because of assimilation with the existing stereotype (i.e., a match between low-warmth country of origin and low-warmth practice of CSI), firms perceived to be low in warmth will be forgiven for CSI behavior, and therefore, will not be punished as harshly. High-warmth firms, on the other hand, assimilate with CSR, not CSI, so when they engage in socially irresponsible practices, contrast occurs, and the penalty is high (i.e., a mismatch between high-warmth country of origin and low- warmth practice of CSI results in greater punishment).

A similar logic applies to CSR firms: if a high-warmth firm engages in CSR, this demonstrates stereotypical behavior for this kind of a firm (i.e., assimilation occurs); hence the benefits are mediocre. If a low-warmth firm engages in CSR, on the other hand, that contradicts the stereotype and, as a result, generates greater rewards from the surprised but positive reaction of the firm’s observers. Hence,

Hypothesis 4: The higher the perception of warmth of the firm, the higher the penalties for CSI. Hypothesis 5: The higher the perception of warmth of the firm, the lower the rewards for CSR.

Our key hypothesis is that CSR is predominantly perceived as influencing warmth. However, given that warmth and competence are orthogonal factors that can be present simultaneously, and given previous research on halo and compensation effects between warmth and competence (Cuddy et al., 2004), we believe that the different degrees of perceived competence can further influence the processes proposed in Hypotheses 4 and 5. In particular, prior research found that although not-for-profit organizations were perceived to be high in warmth, consumers were less willing to buy from them unless they perceived them highly competent (Aaker et al., 2010). We speculate that the presence of high levels of perceived competence in addition to high warmth may reverse the direction in the above relationships.

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In particular, for high-warmth firms paying higher penalties for CSI (i.e., H4), high competence can compensate for the contrasting social judgment (i.e., highly competent organizations must be aware of what they are doing) and as a result reduce the penalties. In turn, for high-warmth firms getting lower rewards for CSR (i.e., H5), high competence can signal to a stakeholder that the organization has mastered socially responsible practices like no one else, and hence it will be rewarded to a greater extent than low-warmth, low-competence organizations. Therefore, we predict that the simultaneous presence of high warmth and high competence will amplify the positive impact of CSR and attenuate the negative impact of CSI. This supplemental effect can also be explained by the concept of a holistic organization: organizations high in both competence and warmth are perceived as one unity, able to overcome any obstacles by drawing on high levels of either perceived competence or warmth, or both.

Hypothesis 6: The higher the perception of warmth and competence of the firm, the lower the penalties for CSI. Hypothesis 7: The higher the perception of warmth and competence of the firm, the higher the rewards for CSR.

METHODS

We conducted three experimental studies to examine the causal links between CSR and social perceptions. In Study 1, we manipulated CSR and CSI to examine perceptions of warmth and competence as well as such outcomes as purchase intentions and reputation. In addition, thanks to the temporal order in our experimental design, we were able to infer warmth mediation. In Study 2, thanks to the differences in the domain of the country of origin, we manipulated our Study 1 mediator, warmth, as well as competence, and examined how CSR and CSI influenced firm outcomes. Specifically, we examined four countries representing each quadrant of the warmth–competence BIAS map (i.e., USA, Germany, Portugal, and Pakistan) and three CSR conditions (i.e., CSR, CSI, and control). Finally, in Study 3 we replicate and extend these effects in a behavioral study measuring helping and purchasing behaviors.

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STUDY 1

Study 1 examines the relationship between CSR activities and perceptions of warmth and competence. It also examines whether warmth and competence serve as mediating mechanisms between CSR and important organizational outcomes, such as purchase intentions (Sen & Bhattacharya, 2001) and reputation (Wagner, Lutz, & Weitz, 2009). Sample and Procedures

Participants and design. One hundred two participants (66 males, meanage = 31, s.d. = 10.11) were recruited from Amazon’s Mechanical Turk (Buhrmester, Kwang, & Gosling, 2011; Horton, Rand, & Zeckhauser, 2011; see also O'Reilly, Robinson, Berdahl, & Banki, 2014, for recent management research using this data source; Paolacci & Chandler, 2014) in exchange for $0.30 in Amazon credits. All participants were based in the United States and were employed full-time. All participants passed attention filters embedded in the survey (i.e., “I will choose ‘disagree’ to demonstrate that I am paying attention”), and all participants had a unique IP address located within the United States. We used a one-factor design that assigned participants to either a CSR, CSI, or control condition randomly.

Procedure. Participants were told that they would read a brief business scenario and provide their opinions. Participants completed the study online.

CSR manipulation. Participants read about “Company X,” a fictitious company that engaged in either CSR or CSI activities, involving fair/unfair manufacturing processes overseas – the vignette established in prior literature (Sen & Bhattacharya, 2001). We also included a control condition with no information on CSR (see Appendix A for full vignettes). Measures

Warmth and competence. Immediately following the CSR manipulation, participants rated whether they believed Company X to possess various attributes. Specifically, they rated whether Company X was tolerant, warm, good-natured, and sincere (Fiske et al., 2002), and competent, confident, independent, competitive, and intelligent (Fiske et al., 2002). These items were randomly embedded in other, unrelated attribute items. Confirmatory factor analysis using

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principal component analysis supported a two-factor solution that explained 72.20% of the variance. The four warmth items loaded onto factor one with loadings ranging from .80 to .85. The five competence items loaded onto factor two with loadings ranging from .77 to .84. The internal consistency coefficient of the warmth and competence items, measured using Cronbach’s alpha, were .93 and .86 respectively. In the control condition, warmth and competence were not significantly correlated (r = .19, p = .26).

Additional dependent variables. After rating Company X on the dimensions of warmth and competence, participants answered questions about two additional dependent variables. First, participants indicated their purchase intentions. Specifically, they were asked: “If the products from Company X were available for purchase, what is your likelihood of purchasing a product from Company X?” (1 = not at all likely, 7 = very likely) (see Chandon, Morwitz, & Reinartz, 2005 for a discussion of external validity). After rating their purchase intentions, participants rated their perceptions of the firm’s reputation: favorable, good, pleasant, positive (reputation α = .97; Homer, 1995; Wagner et al., 2009). Then participants completed another manipulation check, regarding the content of the CSR scenario, and provided demographic data. We note that in the control condition, purchase intention and reputation were significantly correlated (r = .47, p = .004). Study 1: Results and Discussion

Insert Table 1 about here

H1: Warmth. A one-way ANOVA showed that participants who were assigned to CSR, CSI, or control manipulations were more likely to judge the firm as possessing significantly different levels of warmth: F(2, 99) = 133.43, p < .000, ηp2= .729 (see Table 1). Results of planned comparisons indicated that participants assigned to the CSR condition (mean = 4.33, s.d. = 0.58) were more likely to view the firm as warm than were participants assigned to the CSI condition (mean = 2.02, s.d. = 0.61; F(1, 67) = 265.25, p < .000, ηp2= .798) or to our control condition (mean = 3.20, s.d. = 0.59; F(1, 67) = 66.71, p < .000, ηp2= .499). Participants in the control condition perceived the firm as having significantly higher levels of warmth than did

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those in the CSI condition (F(1, 64) = 64.32, p < .000, ηp2= .501). The means are displayed in Table 1 and provide support for H1.

H2: Competence. A one-way ANOVA showed that participants who were assigned to CSR, CSI, or control manipulations were more likely to judge the firm as possessing significantly different levels of competence: F(2, 99) = 15.65, p < .000, ηp2= .240 (see Table 1). Results of planned comparisons indicated that participants assigned to the CSR condition (mean = 4.14, s.d. = 0.48) were more likely to view the firm as competent than were participants assigned to the CSI condition (mean = 3.30, s.d. = 0.88; F(1, 67) = 24.68, p < .000, ηp2= .269). The CSR was marginally significantly different from the control condition (mean = 3.93, s.d. = 0.50; F(1, 67) = 3.18, p = .08, ηp2= .045), while participants in the control condition perceived the firm as having significantly higher levels of competence than did participants in the CSI condition (F(1, 64) = 12.70, p = .001, ηp2= .166). The means are displayed in Table 1 and provide support for H2.

Purchase intentions. To check the validity of our assumption that CSR generates rewards and CSI generates penalties, we assigned participants to CSR, CSI, and control conditions and used a one-way ANOVA to analyze the different intentions to purchase from the firm. The model was statistically significant: F(2, 99) = 52.15, p < .000, ηp2= .513 (see Table 1). Results of planned comparisons indicated that participants assigned to the CSR condition (mean = 5.61, s.d. = 1.15) were more likely to have higher purchase intentions than participants assigned to the CSI condition (mean = 2.70, s.d. = 1.38; F(1, 67) = 91.11, p < .000, ηp2= .576) or to our control condition (mean = 4.82, s.d. = 1.03; F(1, 67) = 8.49, p = .005, ηp2= .112). Moreover, participants in the control condition had higher purchase intentions than participants in the CSI condition (F(1, 64) = 47.57, p < .000, ηp2= .426). These results support our assumption (i.e., rewards are above and penalties are below the control condition—see Table 1).

Reputation. We ran the same check for our second dependent variable. Participants who were assigned to CSR, CSI, or control manipulations perceived significantly different levels of firm reputation: F(2, 99) = 134.71, p < .000, ηp2= .731 (see Table 1). Results of planned

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comparisons indicated that participants assigned to the CSR condition (mean = 4.57, s.d. = 0.63) perceived the firm as having a better reputation than did participants assigned to the CSI condition (mean = 1.84, s.d. = 0.73; F(1, 67) = 279.94, p < .000, ηp2= .807) or to our control condition (mean = 3.48, s.d. = 0.72; F(1, 67) = 45.12, p < .000, ηp2 = .402). Participants in the control condition perceived the firm as having a significantly better reputation than did participants in the CSI condition (F(1, 64) = 83.73, p < .000, ηp2 = .567). This test supports our assumption (i.e., rewards are above and penalties are below the control condition—see Table 1).

H3: Warmth and competence as mediators. Using Hayes’s (2013) Process macros and the bootstrap method, we ran mediational analyses, predicting two dependent variables: purchase intentions and firm reputation. We used the bootstrap model of Preacher and Hayes (2004) to estimate the indirect effect of warmth and competence based on 10,000 bootstrap samples. This method is preferred to the traditional method proposed by Baron and Kenny (1986), as it does not rely on the assumption that the sampling distribution of the mediation effect is normal. We follow Hayes and Preachers’s (2014) addendum guidelines for analyzing multi-categorical independent variables using the mcx command with the CSR condition as the reference group.

Results for purchase intentions. We constructed mediation model in which CSR, CSI, and control conditions predicted purchase intentions, with warmth and competence as mediators. When examined as joint predictors with the three experimental conditions, both warmth (β = .50, t = 2.48, p = .01) and competence (β = .73, t = 3.99, p = .001) predicted purchase intentions. Next, we examined the indirect pathway (i.e., CSR influences purchase intentions through warmth and competence) in each experimental condition. The 95% CI for the bootstrap estimation of the indirect pathway did not overlap with 0 when examining warmth in the CSR condition (β = 0.3593, 95% CI: [.0416, .7067]), the CSI condition (β = -1.1575, 95% CI: [- 2.2174, -.1411]), and in the control condition (β = -.5709, 95% CI: [-1.0320, -.1002]). The 95% CI did not contain 0 when examining competence in the CSR condition (β = 0.1649, 95% CI: [.0613, .3286]) and the CSI conditions (β = -0.6171, 95% CI: [-1.0786, -.3030]), but it did contain 0 in the control condition (β = -0.1548, 95% CI: [-.4079, .0019]). This indicates that

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warmth consistently mediates the relationship between CSR/CSI and purchase intentions, whereas competence does not consistently mediate it, supporting H3.

Results for reputation. We constructed mediation model in which CSR, CSI, and control conditions predicted reputation, with warmth and competence as mediator. When examined as joint predictors with the three experimental conditions, warmth (β = .75, t = 2.63, p = .009) predicted reputation, while competence (β = .04, t = .44, p = .44) did not. Next, we examine the indirect pathway (i.e., CSR influences reputation through warmth and competence) in each experimental condition. The 95% CI for the bootstrap estimation of the indirect pathway did not overlap with 0 when examining warmth in the CSR condition (β = 0.5434, 95% CI: [.4207, .6871]), the CSI condition (β = -1.7506, 95% CI: [-2.2193, -1.3275]), and in the control condition (β = -.8634, 95% CI: [-1.1525, -.6114]). The 95% CI did contain 0, however, when examining competence in the CSR condition (β = 0.0093, 95% CI: [-.0367, .0567]), the CSI condition (β = -0.0350, 95% CI: [-.1899, .1259]), and in the control condition (β = -0.0088, 95% CI: [-.0787, .0259]). This further indicates that warmth mediates the relationship between CSR and firm reputation, whereas competence does not, further substantiating H3.

Discussion. Study 1 provides support for Hypotheses 1 through 3. When “Company X” engaged in CSR activities, it was judged to be significantly higher in warmth than both control and CSI firms (supporting H1). In addition, per traditional halo effects in psychological research (c.f. Ross & Nisbett, 1991) as well as other alternative explanations, we observed a positive relationship between CSR and competence ratings (supporting H2). However, although ratings of competence differed between CSR and CSI conditions, the control condition was not significantly different from the CSR condition (p > .08), indicating that competence is not directly related to the presence of CSR activities but is rather related to their absence (i.e., CSI). This finding is consistent with Fiske, Cuddy, and Glick (2007) which found that negative behaviors are more indicative of competence, while positive behaviors are more indicative of warmth. Next, we established further evidence of CSR as a warmth strategy in our mediational analyses. Specifically, warmth, not competence, mediates the relationship between CSR/CSI and

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purchase intentions, as well as between CSR/CSI and firm reputation (supporting H3). This evidence confirms previous research on the primacy of warmth when forming social judgments (Cuddy et al., 2008; Fiske et al., 2007; Singh & Teoh, 2000; Tausch et al., 2007).

Although this study represents, to our knowledge, one of the first empirical links between corporate strategy and social perception, many questions remain. These results are about “Company X”—a fictitious organization used to maintain experimental control. Typically we know more about an organization when making a purchase and evaluating firm reputation (e.g., country of origin, size, status/brand of the firm). Much of this auxiliary information can be related to the dimensions of warmth and competence. Our results so far suggest that just like stereotypes of organizations (Aaker et al., 2010), stereotypes of organizational practices indeed exist, and warmth and competence are in fact organizing dimensions that help individuals categorize companies and their strategies (i.e., CSR or CSI). Moreover, warmth perceptions mediate the relationship between CSR/CSI and outcomes. However, if this is the case, do warmth and competence perceptions of organizations from a whole spectrum of these organizing dimensions color the way in which CSR and CSI are evaluated? Could they shift individual willingness to buy or evaluation of firm reputation or other behavioral outcomes of CSR and CSI? Experiments 2 and 3 were designed to address these questions.

STUDY 2

Study 1 examined the relationship between a firm’s CSR activities and perceptions of warmth and competence to establish CSR as a warmth strategy. Study 2 focuses on the warmth- competence moderating effect: if CSR (CSI) is perceived higher (lower) on both warmth and competence, then do low (high) warmth and competence perceptions of the organization from other sources (i.e., country of origin) attenuate (improve) the effects of CSR (CSI) on outcomes? In other words, under what conditions do firms achieve greater rewards (penalties) for CSR (CSI) in terms of favorable (unfavorable) evaluations? To test this, we manipulate the perception of the organization by changing a firm’s country of origin to reflect different levels of warmth

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and competence (i.e., high or low). Just as the national origin of immigrants guides majority members’ perceptions of them (Lee & Fiske, 2006), we expect the country of origin to affect the social perception of the firm. Sample and Procedures

Participants and design. Five hundred seventy-two participants (357 males, meanage = 32.13, s.d. = 11.12) were recruited from Amazon’s Mechanical Turk (Buhrmester et al., 2011) in exchange for $0.50 in Amazon credits. To avoid the out-of-group bias (e.g., rating a U.S. firm differently if you were based outside the U.S.), all participants were based in the U.S. and passed attention filters embedded in the survey. We used a three-factor design that randomly assigned participants to a CSR state (i.e., CSR, CSI, or control), country-of-origin warmth (i.e., high, low), and competence (i.e., high, low). We also included a pure control condition that did not manipulate country of origin; its inclusion did not change the significance or pattern of our results. However, because this experiment tests Hypotheses 4 through 7 using warmth and competence perceptions of the countries of origin and the control condition does not specify any country (and hence, warmth or competence), we do not include it in the final analyses.

Procedure. Participants completed the study online. They were asked to read a brief business scenario and to provide their opinions by rating the warmth and competence of the firm’s country of origin as well as their perceptions of the firm based on the CSR vignette.

CSR manipulation. Participants read the same vignettes as in Study 1 (Sen & Bhattacharya, 2001), modified to manipulate warmth and competence via country of origin.

Warmth and competence manipulations. Based on previous research we chose the in- group to represent the high-warmth, high-competence country (in our sample, the U.S., as all participants were based in the U.S.) (c.f. Cuddy et al., 2008). We chose Germany (low warmth, high competence) and Portugal (high warmth, low competence) as the two European countries farthest from each other on the BIAS map (see Cuddy et al., 2007). Finally, we chose Pakistan with the lowest ranking on the BIAS map as our low-warmth, low-competence country (see

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Cuddy et al., 2007).2 To manipulate warmth and competence, we changed the name of the organization in the vignette to include the country of origin: USA Tech Corp., Pakistan Tech Corp., German Tech Corp., Portugal Tech Corp., and Company X for the control condition. Measures

Measures of warmth and competence. Participants completed the same warmth and competence items as in Study 1 (Fiske et al., 2002: warmth α = .94, competence α = .84). In our pure control condition (no CSR/CSI, or country of origin) we performed a confirmatory factor analysis using principal component analysis, which supported a two-factor solution that explained 75.69% of the variance. The four warmth items loaded onto factor 1 with loadings ranging from .73 to .97. The five competence items loaded onto factor 2 with loadings ranging from .40 to .92. The internal consistency coefficient of the warmth and competence items, measured using Cronbach’s alpha, were .96 and .80 respectively. Warmth and competence were not significantly correlated in our control condition, r = .35, p = .12.

Additional dependent variables. After rating the firm on the dimensions of warmth and competence, participants answered the same questions constituting our two dependent variables as in Study 1. Participants then completed a manipulation check regarding the content of the CSR scenario and provided demographic information.3 Study 2: Results and Discussion

Data analysis strategy. Hypotheses 4 through 7 predict uneven benefits and penalties of engaging in CSR or CSI, contingent on the warmth and competence of the firm. These hypotheses predict relative differences (as opposed to mean differences), therefore we test for interaction effects between our CSR/CSI conditions at low/high levels of warmth and competence as compared to the control condition. To test Hypotheses 4 and 5 we analyzed the interaction effects between warmth and CSR/CSI conditions. To test Hypotheses 6 and 7 we

2 It also has one of the lowest scores on the Corruption Perception Index: in 2013, Pakistan scored 127 out of 177 countries, 139 in 2012, 134 in 2011, 143 in 2010, and 139 in 2009. See http://cpi.transparency.org/ for more. 3 In our pure control condition, purchase intentions and reputation were not significantly related, r = .29, p = 21.

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examined three-way interactions as well as planned comparisons whether changes in competence can supplement corporate strategy connoting warmth.

Reputation. Figure 1a presents the means with standard error bars across all conditions predicting reputation. Figure 1b include a separate plot collapsing across our warmth conditions. First, we ran a 3-way ANOVA to analyze the effect of Condition (CSR, CSI, Control) by Warmth (high, low) and Competence (high, low) on Reputation. A significant main effect emerged for CSR condition, F(2, 494) = 613.94, p = .000, ηp2 = .713. Interaction effects emerged between Warmth X Condition, Competence X Condition, and Warmth X Competence (Fs > 2.4, ps <.10, ηp2 > .009). These effects were qualified by a significant three-way interaction: F(2, 494) = 4.37, p = .01, ηp2 = .017.

Insert Figure 1a and 1b about here

Second, we ran a series of planned comparisons to test our hypotheses. To test Hypothesis 4, a 2-way ANOVA was run to analyze the relative effect of Condition (CSI, control) by Warmth (high, low) on Reputation. A main effect for CSI emerged, F(1, 324) = 533.72, p = .000, ηp2 = .622, and this effect was qualified by a significant interaction between CSI X Warmth, F(1, 324) = 4.37, p = .04, ηp2 = .013. No significant differences emerged in the control condition between high (m = 3.63, s.d. = .62) and low (m = 3.52, s.d. = .75) warmth firms: F(1, 152) = 1.12, p = .29, ηp2 = .007. However, when high warmth firms engaged in CSI (m = 1.56, s.d. = .70) they received lower reputation evaluations than low warmth firms (m = 1.78, s.d. = .88), F(1, 172) = 3.58, p = .06, ηp2 = .020. This provides support for Hypothesis 4—high warmth firms face a larger penalty (∆2.07) for engaging in CSI than low warmth firms (∆1.74).

To test Hypothesis 5, a 2-way ANOVA was run to analyze the relative effect of Condition (CSR, control) by Warmth (high, low) on Reputation. Although a main effect emerged for CSR, F(1, 3258 = 89.95, p = .000, ηp2 = .204, such that CSR (m = 4.27, s.d. = .69) led to higher reputation than control (m = 3.58, s.d. = .69), the interaction was not significant, F(1, 328) = 1.18, p = .28, ηp2 = .004 and thus, we do not find support for Hypothesis 5.

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Next, to test Hypothesis 6, a 3-way ANOVA was run to analyze the relative effect of Condition (CSI, control) by Warmth (high, low) and Competence (high, low) on Reputation. The 3-way interaction was significant, F(1, 328) = 1.18, p = .28, ηp2 = .004. At low levels of warmth, an interaction between CSI and competence emerged, F(1, 157) = 5.00, p = .02, ηp2 = .031. Specifically, while firms from Germany (m = 1.83, s.d. = .99) and Pakistan (m = 1.74, s.d. = .75) do not differ when they engage in CSI (F < .18, p > .67), a significant difference emerges in the control condition, F(1, 72) = 16.31, p = .000, ηp2 = .185, such that firms from Germany (m = 3.85, s.d. = .47) have higher reputation than firms from Pakistan (m = 3.20, s.d. = .84). This suggests that competence may not save reputation when low warmth firms engage in CSI (∆Germany = 2.02; ∆Pakistan = 1.46). At high levels of warmth, the interaction between CSI and competence is not significant (F < .02, p > .88). This suggests that low warmth firms may not benefit from competence when engaging in CSI, while high warmth firms do not need competence as a buffer, providing lack of support for Hypothesis 6.

Next, to test Hypothesis 7, a 3-way ANOVA was run to analyze the relative effect of Condition (CSR, control) by Warmth (high, low) and Competence (high, low) on Reputation. The 3-way interaction was significant, F(1, 324) = 6.69, p = .01, ηp2 = .020. At low levels of warmth, an interaction between CSR and competence emerged, F(1, 159) = 12.59, p = .001, ηp2 = .073. Specifically, while Germany (m = 4.25, s.d. = .66) and Pakistan (m = 4.35, s.d. = .63) do not differ when they engage in CSR (F < .18, p > .67), the interaction is driven by the relative differences (∆Germany = 0.41; ∆Pakistan = 1.14) gained from engaging in CSR. At high levels of warmth, the interaction between CSR and competence is not significant (F < .02, p > .88). This suggests the benefits of competence are limited for low warmth firms when engaging in CSR; Pakistan, a low-low country made higher relative gains compared to Germany when engaging in CSR. At high levels of warmth, competence did not matter. This provides no support for Hypothesis 7.

Purchase intentions. Figure 2a presents the means with standard error bars across all conditions predicting purchase intentions. Figure 2b include a separate plot collapsing across our

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warmth-competence conditions. First, a 3-way ANOVA was run to analyze the effect of Condition (CSR, CSI, Control) by Warmth (high, low) and Competence (high, low) on Purchase Intentions. A significant main effect emerged for CSR condition, F(2, 494) = 266.50, p = .000, ηp2 = .519. The three-way interaction did not reach significance, F(2, 494) = 2.00, p = .14, ηp2 = .008.

Insert Figure 2a and 2b about here

Second, we ran a series of planned comparisons to test our hypotheses. To test Hypothesis 4, a 2-way ANOVA was run to analyze the effect of Condition (CSI, control) by Warmth (high, low) on Purchase Intentions. A main effect for CSI emerged, F(1, 324) = 246.41, p = .000, ηp2 = .432 and this effect was qualified by a significant interaction between CSI X Warmth, F(1, 324) = 4.41, p = .04, ηp2 = .013. When firms high (m = 2.28, s.d. = 1.30) or low (m = 2.57, s.d. = 1.52) in warmth engage in CSI, purchase intentions are not significantly different, F(1, 172) = 1.93, p = .16, ηp2 = .011. However, marginally significant differences emerged between high (m = 4.73, s.d. = .94) and low (m = 4.45, s.d. = 1.07) warmth firms in the control condition, F(1, 152) = 2.95, p = .09, ηp2 = .019. When high warmth firm shift from no strategy to CSI (∆2.45), versus low warmth firms (∆1.88), they face a bigger deficit in purchase intentions. This provides support for Hypothesis 4.

To test Hypothesis 5, a 2-way ANOVA was run to analyze the effect of Condition (CSR, control) by Warmth (high, low) on purchase intentions. Although a main effect emerged for CSR, F(1, 328 = 43.39, p = .000, ηp2 = .117, such that CSR (m = 5.43, s.d. = 1.27) led to higher purchase intentions than control (m = 4.59, s.d. = 1.01), the interaction was not significant, F(1, 328) = 1.84, p = .18, ηp2 = .006 and does not provide support Hypothesis 5.

Next, to test Hypothesis 6, a 3-way ANOVA was run to analyze the effect of Condition (CSI, control) by Warmth (high, low) by Competence (high, low) on purchase intentions. The 3- way interaction was marginally significant, F(1, 320) = 3.30, p = .07, ηp2 = .010. At low levels of warmth, an interaction between CSI and competence emerged, F(1, 157) = 6.18, p = .01, ηp2 = .038. Specifically, while Germany (m = 2.41, s.d. = 1.64) and Pakistan (m = 2.74, s.d. = 1.38) do

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not differ in purchase intentions when they engaged in CSI (F < 1.05, p > .30), a significant difference emerges in the control condition, F(1, 72) = 8.68, p = .004, ηp2 = .108, such that Germany (m = 4.81, s.d. = .95) has higher purchase intentions than Pakistan (m = 4.11, s.d. = 1.09). This suggest that competence provides a buffer to purchase intentions when low warmth firms behave neutrally, but not when they engage in CSI (∆Germany = 2.40; ∆Pakistan = 1.37); this offers no support for Hypothesis 6. At high levels of warmth, the interaction between CSI and competence is not significant (F < .02, p > .91). This suggests that low warmth firms do not reap the same benefits from competence when engaging in CSI as high warmth firms, providing no support for Hypothesis 6.

Next, to test Hypothesis 7, a 3-way ANOVA was run to analyze the effect of Condition (CSR, control) by Warmth (high, low) by Competence (high, low) on purchase intentions. The 3- way interaction was significant, F(1, 324) = 3.44, p = .06, ηp2 = .011. At low levels of warmth, an interaction between CSR and competence emerged, F(1, 159) = 5.11, p = .03, ηp2 = .031. Specifically, while Germany (m = 5.40, s.d. = 1.18) and Pakistan (m = 5.52, s.d. = 1.34) do not differ when they engage in CSR (F < .21, p > .64), the interaction is driven by the relative differences gained (∆Germany = .59; ∆Pakistan = 1.41) by engaging in CSR. At high levels of warmth, the interaction between CSR and competence is not significant (F < .12, p > .77). This suggests low warmth firms—in the absence of competence—receive a larger relative benefit when engaging in CSR, but high warmth firms do not see differences with the addition of competence. This does not support Hypothesis 7.

Discussion. There are several implications of Study 2. First, consistent with our hypotheses, the effectiveness of a CSR/CSI strategy was contingent on the warmth and competence perception of the organization’s country of origin. Specifically, high warmth firms received harsher evaluations while engaging in CSI. Companies from low-warmth and low- competence countries (Pakistan) received relatively greater benefits for engaging in CSR (as seen in mean gains made compared with control) while averting the higher penalties associated with CSI behavior. While competence gives a boost generally, it did not fully buffer German

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firms from the penalties of engaging in CSI nor provide additional supplementation when engaging in CSR. We theorize that these effects are driven by assimilation (CSI) and contrast (CSR) effects from the stereotypes associated with low-warmth countries. Competence— without—warmth did not have the impact that we predicted in Hypothesis 6 and 7. We additionally did not find that our high warmth-high competence country (USA) outperformed other countries when engaging in CSR, but rather that high warmth (via country-of-origin or CSR) made the biggest impact. Importantly, this study provides insight into why some organizations fare better or worse depending on their corporate strategies. The attributes of the firm—conceptualized as country-of-origin warmth and competence in this study—significantly influenced important organizational perceptions such as reputation, and purchase intentions.

Second, this study explores the question of endogeneity regarding whether high-warmth organizations are more likely to engage in CSR behavior in the first place—to earn greater benefits from it. We find support only for H4 that states that firms with higher warmth will pay a lower penalty for CSI, and no support for H5 about lower rewards for CSR. Likewise, the penalties for engaging in irresponsible behavior are also the highest for organizations high on only one dimension. In fact, firms from Pakistan (low-warmth and low-competence country) experienced the greatest rewards for CSR engagement and the lowest penalties for CSI. To conclude, Study 2 demonstrates that a firm’s country of origin (manipulating warmth and competence perceptions) influences the success or failure of its CSR strategies. Specifically, we find that CSR can supplement for low-warmth (and low-competence) country of origin, and that low-warmth country of origin shields organizations from harsher judgments of CSI.

STUDY 3

Studies 1 and 2 showed how corporate social responsibility and irresponsibility affects the perceived warmth and competence of an organization, and that these effects are amplified depending on the firms’ country of origin. Study 3 aims to replicate and extend these findings while addressing various shortcomings of Studies 1 and 2. First, while Studies 1 and 2 measure

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perceptions, Study 3 uses behavioral measures (Colquitt, 2008), adding external validity to our previous measures. Specifically, participants used their own money to purchase products from firms with differing social strategies and also provided feedback to the organizations. Second, to ensure that our high warmth-high competence results are not an artefact of an in-group bias, Study 3 uses Sweden as the high warmth-high competence country.4 And finally, we switched our social responsibility manipulations to a fact-sheet format and include information on both labor and environmental performance to ensure that our effects were not idiosyncratic to our Study 1 and 2 materials.

Sample and Procedures

Participants . We recruited 100 participants from a paid student research lab at a private Midwestern university. We excluded one participant due to expletive language in all of our written prompts, and 11 participants who failed the manipulation check. Including these participants in analyses does not alter the direction of effects. Likewise page-timers report these participants spent less time reading the manipulations.

Design . Study 3 employed a mixed design methodology. A 3 cell (CSR, CSI, control condition) by a 2(Order: Pricing first, Feedback first) between subjects factors across a 4-factor country-of-origin warmth by competence (HH: Sweden, HL: Germany, LH: Portugal, LL:

4 Prior to running Study 3 we sought to validate previous research on the BIAS map (Cuddy et al., 2007) with regards to where countries fall on the warmth and competence dimensions. Likewise we sought to replace the USA in the final study. Using a unique sample of ninety-five Mechanical Turk workers, we assessed the warmth and competence of seven countries (Germany, Iran, Pakistan, Portugal, Spain, Sweden, and USA) previous research classified into one of the four quadrants on the BIAS map. We first asked about the warmth and competence of each country (Fiske et al., 2002) and then had participants rank order the countries in terms of their warmth and competence. Pair-wise comparisons, rank order, and correlational evidence support our classification in our experimental paradigm. First, ranked from highest to lowest warmth: Sweden, USA, Spain, Portugal, Germany, Pakistan, and Iran; and second, ranked from highest to lowest competence: Germany, USA, Sweden, Spain, Portugal, Iran, and Pakistan. Looking at correlations between warmth and competence, the USA (r = .55, p < .000) and Sweden (r = .70, p < .000) are seen as high warmth and competence. Given that we are using US participants, we use Sweden to mitigate in-group bias concerns and “Made in America” preferences in our Study 3. Pakistan is viewed as low warmth and competence (r = .50, p < .000) as compared to Iran (r = .21, p < .000), given the high correlation between warmth and competence as well as low means. Germany was viewed as high competence and low warmth (r = .21, p = .04), given the smaller correlation. Portugal was viewed as high warmth and low competence (r = .48, p < .000) as compared to Spain (r = .63, p < .000); although not as cleanly manipulated, we believe that Portugal represents the better manipulation of low competence and high warmth given the smaller correlation coefficient and previous research on the BIAS map.

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Pakistan) within subjects factor. We randomized the order of our country-of-origin manipulation as a repeated measure across all conditions.

Procedure . The study was advertised as a 30 minute product development study. Participants received $8 in exchange for their participation and an additional $1 for a purchase decision. The study asked participants to test, evaluate, and make purchase decisions about a series of pens. We chose pens as an experimental stimulus as pens have been used successfully in previous research (e.g., Shah & Wolford, 2007). We purchased four types of pens priced $0.78-$0.83 from a wholesaler. Pens did not differ on measures of quality or looks. Upon arrival to the lab, each participant was seated at a computer station where they received a plastic baggie containing four “prototype” pens to evaluate as well as $1 in coins for the pricing task (in addition to the $8 payment). They also received a notepad to test out each of the pens. Participants completed the entire study at a computer station.

Warmth-Competence Manipulation . To manipulate country of origin we had the pens labelled as “Made in Sweden”, “Made in Germany”, “Made in Portugal”, and “Made in Pakistan” in 1 millimeter font. We then used neutral labels on each pen to serve as logos and translated the word “fine” into each of the four languages to put on the logo. Each participant received and rated each of these four pens as a within subjects’ variable.

Social Responsibility Manipulation . Participants were randomly assigned one of three experimental conditions: CSR, CSI or control. We provided background information about the manufacturers for participants to read about each of the four pen manufacturers whose products they would be testing. Embedded within neutral performance information was information on environmental impact and labor practices of each of the four pen manufacturers. In the CSR condition, participants read that all four pen manufacturers were going out of their way to promote strong on environmental protection and repair, as well as employee standards. In the CSI condition pen manufacturers were stated to be poor in environmental standards and were not desirable in terms of their labor practices. In the control condition participants were provided with neutral information. All companies were established in their industries and in good financial

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standing. Each condition had the same number of categories to describe the organization. Please see Appendix B. Measures

Participants completed a feedback task set and a purchasing task. The two tasks were counterbalanced.5 We control for order where relevant. Each participant completed each dependent measure across the four country-of-origin manipulations.

Feedback Task . The first set of tasks examined the time and effort that participants devoted to providing feedback to each pen manufacturing organization. Participants were told that the pens were prototypes and that the organizations would like feedback on the pen designs. We encouraged participants to try out each pen in order to form an opinion of each product. Participants were given a blank essay box to provide feedback to the organization on their pen design. We measured the number of words written (M = 21.87, SD = 10.42) as a measure of helping (see adapted from Porath & Erez, 2007). We also measured subjective quality of each pen (“The pen is of high quality”, “The pen is desirable”; alphas = .72-.76).

Purchasing Task . The second task was a purchasing task using the Becker-DeGroot- Marcshak (BDM) method (Becker, DeGroot, & Marschak, 1964). This method has been used to reveal true reservation prices in a variety of contexts (Burbano, 2016; Kahneman, Knetsch, & Thaler, 1991; Lerner, Small, & Loewenstein, 2004). In this task, participants were given an additional dollar and were told that they could use this money to purchase on the pens from the experiment and to keep whatever money they did not use to purchase a pen. Participants were told that the computer program would randomly select one pen and a random price would be generated that would determine what pen they had the opportunity to purchase. If their stated price was below the randomly generated price, they would not have the opportunity to purchase the pen. If their stated price was above the randomly generated price, they would have the opportunity to purchase the pen. Participants had to successfully recall these instructions prior to

5 Pre-tests indicated that licensing effects may occur when tasks were sequential (i.e., I did not help the organization, so I supplement by over-paying for their product, or vice versa).

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continuing in the study to ensure that they understood the experimental paradigm. This goes above traditional willingness-to-pay measures by forcing participants to forgo some of their bonus pay to make a purchase. Likewise the random lottery nature of the task ensures that participants reveal their true purchase prices (Becker et al., 1964). Participants stated a purchase price for each of the four pens on a sliding scale between $0.01 and $1.00 (m = $0.33, s.d. = $0.17). No pens significantly differed from this price and no pen was consistently priced as the “top” pen across the entire sample. After participants stated their price for each pen, a random payment price was generated, they took the pen (if purchased), and left the purchase price at the computer station at the end of the study.

Additional Dependent Measures . Participants then rated both the warmth and competence of the pen manufacturing organizations using a single item measure (“The pen manufacturing organizations seem to be warm/competent”). These served as a check that our experimental manipulations produced the same effects as Studies 1 and 2. Participants then completed a manipulation check about the social practices of the pen manufacturers, as well as demographic questions. Study 3: Results

Data Analysis Strategy . Unless otherwise stated, we ran a series of Repeated Measures Analysis of Variance (RM-ANOVA) across dependent measures. We first ran a CSR condition (3: CSR, CSI, Control) by Order (2: Pricing first, Feedback first) across the four country-of- origin manipulations as a repeated measures ANOVA. To directly test hypotheses, we re-ran models with a series of planned comparisons to probe statistically significant interaction effects. Using paired samples t-tests, we test our hypothesized comparisons within different conditions of our experiment. Assumption of sphericity was not violated in any of the analyses; therefore, we report the sphericity-assumed results.

Warmth . A 3 cell (CSR, CSI, control conditions) between subjects analysis of variance on perceptions of Warmth revealed a significant effect of social responsibility condition, F(2, 81) = 5.73, p = .005, ηp2 = .124. Specifically, individuals in the CSR condition (m = 4.56, s.d. =

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1.41) had significantly higher perceptions of warmth than individuals in the CSI condition (m = 3.33, s.d. = 1.42), F(1, 53) = 10.18, p = .002, ηp2 = .161. Individuals in the Control condition (M = 3.97, SD = 1.18) had marginally higher perceptions of warmth than individuals in the CSI condition, F(1, 57) = 3.44, p = .07, np2 = .057. Individuals in the CSR condition had marginally higher perceptions of warmth than individuals in the control condition, F(1, 52) = 2.82, p = .09, ηp2 = .052. This replicates our previous studies that found CSR and CSI are linked with perceptions of warmth, supporting Hypothesis 1.

Competence . A 3 cell (CSR, CSI, control conditions) between subjects analysis of variance on perceptions of Competence revealed a significant effect of social responsibility condition, F(2, 81) = 5.14, p = .008, ηp2 = .113. Specifically, individuals in the CSR condition (m = 5.56, s.d. = .82) had significantly higher perceptions of competence than individuals in the CSI condition (m = 4.70, s.d. = 1.26), F(1, 53) = 8.56, p = .005, ηp2 = .139. Individuals in the Control condition (m = 5.31, s.d. = .93) had significantly higher perceptions of competence than individuals in the CSI condition, F(1, 57) = 4.44, p = .04, ηp2 = .072. Individuals in the CSR and control conditions did not differ significantly in perceptions of competence, F(1, 52) = 1.08, p = .30, ηp2 = .020. This replicates our previous studies that found CSR and CSI are linked with perceptions of competence while control conditions often times do not differ from CSR, supporting Hypothesis 2.

Words . A 3 cell (CSI, CSI, control condition) by 2 (Order: Pricing first, Feedback first) repeated measures ANOVA was run on the number of words written in the Sweden, Germany, Portugal, and Pakistan country-of-origin conditions. No significant emerged in the models, Fs < 2.02, ps > .11. When examined as a between subjects analysis, a significant effect emerged for social responsibility condition, F(2,78) = 3.46, p = .036, ηp2 = .079. Specifically, individuals in the CSR condition (m = 26.28, s.d. = 14.10) wrote marginally more words than individuals in the CSI condition (m = 20.53, s.d. = 7.22), F(1,53) = 3.81, p = .056, ηp2 = .067. Individuals in the CSR condition wrote significantly more words than individuals in the control condition (m = 19.45, s.d. = 8.48), F(1,52) = 4.80, p = .033, ηp2 = .085. The CSI and control conditions did not

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significantly differ (F < .3, p > .60). Although we did not see variation within our country-of- origin manipulation, individuals provide more help to organizations that engage in CSR, providing conceptual extension of Hypothesis 1.

Subjective Quality . A 3 cell (CSI, CSI, or control condition) by 2 (Order: Pricing first, Feedback first) repeated measures ANOVA was run on subjective quality in the Sweden, Germany, Portugal, and Pakistan country-of-origin conditions. Including all CSR/CSI/control conditions, the 3-way interaction is marginally significant, F(6, 234) = 1.83, p = .09, ηp2 = .045; excluding the control condition, the 3-way interaction is significant, F(3, 153) = 3.46, p = .02, ηp2 = .064. When the feedback task came first, a significant interaction emerged between CSR/CSI and country-of-origin, F(3, 69) = 3.90, p = .01, ηp2 = .249. Probing this interaction further, a 1-factor ANOVA between CSR and CSI conditions on Pakistan’s subjective quality revealed a significant effect, F(1,23) = 11.48, p = .003, ηp2 = .333. Specifically, subjective quality for the Pakistan pen was significantly higher in the CSR condition (m = 3.58, s.d. = .87) than in the CSI condition (m = 2.54, s.d. = .66). No other country-of-origin conditions were significantly different between conditions (Fs < .33, ps > .57).

Paired samples t-tests were used to make comparisons across countries-of-origin within CSR and CSI conditions. In the CSR condition, a paired samples t-test indicated that Pakistan (m = 3.58, s.d. = .87) had a significantly higher subjective quality than Portugal (m = 2.83, s.d. = .65), t(11) = 2.37, p = .04; and a marginally significant higher subjective quality than Sweden (m = 3.00, s.d. = .90), t(11) = 1.83, p = .09. This suggests that a low warmth firm gain significantly higher benefits for doing CSR than high warmth firms; this support Hypothesis 5. No significant effects were observed between other conditions (all ts < 1.74, ps > .11). In the CSI condition, a paired samples t-test indicated that Pakistan (m = 2.54, s.d. = .66) had a significantly lower subjective quality than Sweden (m = 3.19, s.d. = .78), t(12) = 2.85, p = .02. No significant effects were observed between other conditions (all ts < 1.67, ps > .12). This provides some support to Hypothesis 6—higher warmth and high competence firms (in this case, Sweden) are buffered from the negative effects of CSI. For full results, please see Figure 3.

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Purchase Price . A 3 (Condition: CSI, CSI, or control) by 2 (Order: Pricing first, Feedback first) repeated measures ANOVA was run on Purchase Price in the Sweden, Germany, Portugal, and Pakistan country-of-origin conditions. Including all social responsibility conditions, a marginally significant interaction effect between Order and country-of-origin emerged, F(3, 234) = 2.56, p = .08, ηp2 = .028. Excluding the control condition, this interaction became significant, F(3, 153) = 2.61, p = .05, ηp2 = .049. Probing this interaction further within Order conditions, when purchase price was determined after the feedback task, a significant interaction emerged between CSR/CSI and country-of-origin, F(3, 69) = 3.45, p = .03, ηp2 = .130.6 Paired samples t-tests were used to make post hoc comparisons between conditions. In the control condition, no significant differences in purchase price emerged (all ts < 1.67, ps > .11). In the CSR condition, no significant differences in purchase price emerged (all ts < 1.55, ps > .14). In the CSI condition, a paired samples t-test indicated that Sweden (m = .43, s.d. = .25) had a significantly higher price than Germany (m = .25, s.d. = .12), t(12) = 2.69, p = .02; likewise Sweden had a higher price than Pakistan (m = .31, s.d. = .17), t(12) = 2.70, p = .019. No significant effects were observed between any other conditions (ts < 1.87, ps > .15). The finding that our high-warmth, high-competence country-of-origin (Sweden) did not experience pricing decreases while acting irresponsibly provides support to Hypothesis 6. For full results, please see Figure 4. Study 3: Discussion

Study 3 replicates and adds nuance to effects observed in Studies 1 and 2. First, organizations were perceived as being higher in warmth and competence when engaging in CSR and lower in warmth and competence when engaging in CSI. This supports our research premise that corporate strategies are linked to social stereotypes and provides additional support for Hypotheses 1 and 2. When it came to behavioral measures, participants in the CSR condition wrote longer explanations for how organizations could improve their product offering, further suggesting that people are more willing to help organizations that engage in CSR (see also

6 Including control: F(6, 114) = 1.99, p = .07, ηp2 = .095

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Burbano, 2016). Although we observed this helping behavior as a main effect, the country-of- origin manipulation highlighted how CSR and CSI can interact to produce different types of behavior. Specifically after playing with pen prototypes and inadvertently receiving information on the country-of-origin, this new piece of information affected the quality assessments of the pens. When engaging in CSR, a Pakistani firm’s pen was perceived to be significantly higher in quality than other pens, yet the same pen, when in the CSI condition, was perceived to be of significantly lower quality. This suggests that people weigh both the actual product as well as the softer attributes when making important evaluations.

Likewise, we observed purchasing behavior contingent on CSI, CSR, and country of origin. In the CSI condition, Swedish pens priced higher than Pakistani and German pens (low warmth countries) but they were statistically comparable to Portuguese pens (high warmth, low competence country), suggesting that both high warmth and competence may be necessary to buffer negative effects of CSI. This effect emerges only after participants had spent a good portion of the experiment carefully evaluating the product and not as spontaneously as we observed in previous studies. This could be due to our more subtle manipulation of country of origin which may not have been very apparent while making pricing decisions immediately. These behavioral outcomes add robustness to our perceptual results of Studies 1 and 2.

In many of the analyses our control condition was not significantly different from one of the CSR or CSI condition; at times we excluded the control condition from the analyses to directly test hypotheses. One reason that the control condition may not have been statistically different from other conditions is due to the subtlety of our manipulations; while Studies 1 and 2 explicitly manipulated social responsibility, this study used a subtler approach by embedding this information into a broader information set about the organizations. The control condition contained neutral information about social practices in order to match the amount of information given in the CSR and CSI conditions. In this situation, it is perhaps easy for participants to “fill in the blanks” with their lay theories of organizations which could have led to the mixed results. Given that this was an initial study about the micro-foundations of social responsibility and

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irresponsibility, we replicate and extend previous research looking at corporate reputations and pricing using discrete behaviors. Although the results are not entirely clean, our aim is to present the data based on a priori hypothesizing. We assumed that people help organizations that are socially responsible, but their financial behavior has more nuances.

DISCUSSION AND CONCLUSION

In this paper we describe three experimental studies that examine how CSR relates to the two fundamental dimensions of social perception—warmth and competence—but as we have found empirically, warmth is of particular importance (see Table 2 for a summary of hypothesis tests). We argue and find evidence that CSR is a warmth strategy; moreover, warmth perceptions mediate CSR effects on specific outcomes (be it CSR rewards or CSI penalties in terms of better or worse purchase intentions and company reputation compared to the control). By exploiting the variation in country-level warmth and competence, we also find that regardless of CSR strategy (i.e., CSR or CSI), low-warmth firms are better off than high-warmth firms with regard to CSR/CSI effects on outcomes. In particular, low-warmth and competence firms that engage in CSR are not consistent with the stereotype, and, as a result, they get higher relative gains in terms of purchase intentions, quality, and evaluations of firm reputation than do high- competence firms. On the other hand, due to their consistency with the stereotype, low-warmth firms do not get punished as harshly for CSI behavior as high-warmth firms. However, this effect reverses if the firm has competence in addition to warmth: the rewards for CSR are greater and penalties for CSI are lower for firms coming from a high-warmth, high-competence country as observed with actual behaviors in Study 3. The combination of high perceived warmth and competence from other sources can benefit firms engaging in both CSR and CSI, but our results suggest external signals of warmth hold greater power than competence. These findings demonstrate the importance of social judgment and underlying dimensions of social perception for CSR/CSI effects on various outcomes.

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Although we get mixed support for all hypotheses, the effects are most consistent when firms exhibit negative behaviors (CSI) and when country-of-origins are low in warmth. This is consistent with extensive research in psychology supports the existence of a general negativity bias in information processing (e.g., Cacioppo & Gardner, 1999; Taylor, 1991). Through this bias, individuals perceive negative information as more diagnostic (Herr, Kardes, & Kim, 1991; Skowronski & Carlston, 1987) and influential (Ito, Larsen, Smith, & Cacioppo, 1998) than positive information. This tendency leads individuals to weigh negative information more heavily when forming evaluative judgments (Baumeister, Bratslavsky, Finkenauer, & Vohs, 2001; Rozin & Royzman, 2001; Skowronski & Carlston, 1989). When firms behave badly, or come from less stereotypically privileged places, they gain our increased attention. Theoretical Implications

This paper is important in terms of understanding the microfoundations of CSR—a notorious “black box” in CSR research (Morgeson et al., 2013). As Devinney (2013: 84) recently noted, “microfoundations can be a key platform in moving the management field forward. It opens up the possibilities of bridging the macro-micro divide that pervades management research by serving as a conceptual forum to debate whether it is possible for us [to] come up with a more unified and parsimonious characterization of our field.” In doing so, this study offers several theoretical contributions. First, for the growing CSR literature, particularly on CSR’s relationship to different outcomes, this study helps tease out the conditions under which the link could be weaker or stronger (i.e., moderators), as well as demonstrating the underlying mechanisms linking CSR with outcomes (i.e., mediators). We show that first of all, CSR increases our warmth perception of the firm, and second, increased warmth perception yields lower benefits for CSR and higher penalties for CSI, yet this effect could be rendered if the firm is also perceived to be high in competence. Altogether, these findings uncover the underlying processes and conditions that help explain the causal linkages between CSR and specific outcomes at the individual level of analysis—a significant knowledge gap in this area of research (Aguinis & Glavas, 2012).

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Second, we contribute to the limited but growing research investigating CSR at the individual level of analysis that relies on yet a different set of theoretical frameworks, including organizational justice, social influence, needs, and self-determination theories. In order to understand the factors that affect individual perceptions of CSR, a significant gap in our knowledge (Morgeson et al., 2013), we introduce the concepts of warmth and competence from the social psychology literature: they help understand the underlying mechanisms of value creation from CSR activity. To social evaluators CSR represents warmth and, as a result, competence (due to halo effects and other mechanisms); moreover, due to the primacy of warmth in social judgment, all effects of CSR on outcomes are mediated by warmth perceptions. This means that at least for outcomes that involve immediate first-time evaluations, CSR as a high- warmth strategy can be helpful. Nonetheless, even for these outcomes, firms may be judged on warmth and/or competence from other sources: thus, CSR can be viewed as a potential supplement for low-warmth (and low-competence) firms—an important strategic tool as discussed below.

Third, by separating the effects and determining the microfoundations of CSR and CSI, we help explain how social perception of such activity is formed and how it may affect different organizations in different ways. Previous research mainly focuses on CSR or in rare cases CSI, while we provide a more grounded understanding of both types of activities. Our research suggests that CSR and CSI are not a linear distinction between engaging in these activities versus staying socially neutral. Our results suggest that CSR and CSI have strong links to warmth while CSI may also have unique links to competence (cf., Fiske et al. 2006). Likewise our results highlight a negative bias in the attention focused on negative acts (CSI) and actors (low warmth). We also build a more general theory in this paper by examining individual judgments and perceptions of all individuals (they could be employees, customers, suppliers, environmentalists, the community as a whole, and owners/shareholders). We acknowledge, that social judgment by all stakeholders matters for the ultimate success of the firm, yet some stakeholders may have more say (Harrison & Freeman, 1999; Mitchell, Agle, & Wood, 1997), particularly for firm

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performance (Berman et al., 1999; Schuler & Cording, 2006), so future research shall examine how particular/different stakeholder judgments can influence CSR/CSI outcomes.

We also make contributions to the social cognition and strategy literatures by finding a link between corporate strategy and the SCM: to our knowledge, this is one of the first studies to suggest such a link (Aaker et al. (2010) showed a link between the type of the organization – for- profit or not – and warmth/competence perceptions). We confirm that social perception matters with regard to CSR strategy, especially judgments about perceived warmth. Engaging in high- warmth strategies, such as CSR, leads to better outcomes, in terms of perceived reputation and purchase intentions, especially for firms lacking warmth in the first place. We demonstrate that these evolutionary and individual-level processes influence organizational-level outcomes – an additional contribution to the CSR literature, only 5% of which is currently studying CSR at multiple levels of analysis (Aguinis & Glavas, 2012). This research contributes to the burgeoning literature that looks at the anthropomorphizing of organizations to have individual-level characteristics (King et al., 2010). Firms, like individuals, can be subject to stereotypes.

Finally, this research is also important to the international management literature. By drawing from the SCM to explain how firms from different countries are perceived, based on warmth and competence stereotypes of their countries of origin, we add another dimension to country distance (as perceived by social evaluators) and discuss a potential strategy to deal with such social perceptions. Thus, firms from low-warmth countries may find it helpful to engage in CSR if their managers have the needed resources and aim for higher rewards than their competitors from high-warmth countries. Ironically, if low-warmth firms lack these resources, it will not hurt them as much to engage in CSI as it would firms from high-warmth countries. This uneven of benefits and costs of CSR/CSI behavior is important to understand and explain, not only to academics seeking to find a uniformly positive link between CSR and various outcomes but also to managers.

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Practical Implications

It is no secret that managers should be and are aware of their CSR choices, as institutional (Lim & Tsutsui, 2012; Marquis & Qian, 2013) and stakeholder pressures for CSR are ever-increasing (Kassinis & Vafeas, 2006; Surroca et al., 2013). However, they have limited resources to respond to such pressures (Delmas & Toffel, 2008; Weaver, Trevino, & Cochran, 1999), and understanding how CSR and CSI choices will be perceived is important in their decision-making. We find that CSR connotes warmth and therefore might be helpful in times of crisis, as a risk-management strategy (Godfrey, 2005), or at the time of the first interaction with the firm when the other party has no prior information about the firm (e.g., start-ups or multinationals from emerging markets). In addition, if the firm is perceived to be low in warmth, CSR may help boost its perceived competence, whereas CSI may not hurt the firm as much as if it was perceived to be high in warmth. In addition, knowing that firms are evaluated on warmth– competence dimensions for other firm attributes beyond their CSR/CSI behavior (e.g., such as country of origin), managers can make more thoughtful decisions, allocating those scarce resources. Limitations and Directions for Future Research

There are several limitations in this study that we hope will provide direction for future research. First, even though the choice of our method (i.e., controlled experiments) is our strength, because it helps to compare a control group to CSR and CSI conditions by isolating the causal effect of CSR/CSI at the individual level, by design (i.e., using scenarios previously established by Sen & Bhattacharya, 2001) it has some weaknesses that may offer several future research avenues. These could include using other scenarios (e.g., firms in other industries, engaging in CSR/CSI behavior outside of overseas manufacturing), other social evaluators (e.g., external or internal stakeholders with direct interest/stake in the company), and other outcomes (e.g., regulatory approval, analyst ratings, employee satisfaction). For ideas, see Clarkson (1995).

Second, some may wonder if our results can be attributed to a ceiling effect (i.e., participants select the maximum value on the scale). We believe this concern is mitigated by the

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fact that our dependent variables were measured on different scales: purchase intentions on a 7- point scale with mean values around 5, and reputation on a 5-point scale with high mean values just above 4 (on a four-item scale). This suggests that we have no ceiling effect in our data.

Third, the limited choice of countries in our second study could be expanded to include more countries along the warmth–competence continuums. In addition, given that firms cannot control their origin, examining other firm-level and country-level attributes (e.g., size, status) that could mediate the effect of warmth and/or competence is warranted. We hope that by collecting “real world” data, future research could also examine whether warmth–competence perceptions of countries affect country-level social evaluations, such as ratings on the Corruption Perception Index, or The Most Innovative Countries List, among others. Obviously, since first- time judgments are crucial to regulatory approval in international expansion of firms, another intriguing area of research includes testing the ideas presented in this paper in a large-scale quantitative study (e.g., in the context of cross-border M&As).

Fourth, our study was tested in a single industry (even though one can infer two industries from the scenarios – technology and manufacturing). Thus, another research opportunity lies in adding industry stereotypes to the existing study: this kind of information (e.g., “dirty” versus “clean” industry) can provide additional insight on the process of generating social perception. Importantly, our study provides a basis for testing our findings in other industry settings with longitudinal or experimental data.

Finally, the issue of decoupling by design could not have been sufficiently addressed in this study: future research could look into the social perception or potentially even a stereotype that “green-washing” firms generate in the minds of various stakeholders. Based on our study we would predict that such behavior would almost certainly generate the perception of CSI; however, the mechanisms by which this happens and the dynamics by which stakeholders receive information about a firm’s symbolic and substantive CSR actions require further attention. In addition, future research would benefit from disentangling the effects of the various CSR actions on social perception as well as various outcomes: while some activities (e.g.,

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philanthropy) may generate the perception of warmth, others may relate to competence more directly (e.g., cutting waste). Conclusion

This cross-disciplinary research (including management, strategy, marketing, psychology, international management and organizational behavior disciplines) shows that social perception serves an important role in organizational life, as it affects not only perceptions but also behaviors towards the firm. By introducing the concepts of warmth and competence from the social psychology literature to the management area of CSR, this study extends the boundaries of existing research to include the microfoundations of corporate strategy in our understanding of the differential effects of certain activities on outcomes. These findings create broad implications for CSR, international business, and management scholarship by highlighting the critical importance of social perception of the firm based on several of its attributes. Our hope is that this study will spark interest in comparing the differential impacts of social perception of different practices on distinct performance outcomes as well as move the CSR field forward by addressing knowledge gaps regarding underlying processes and mechanisms and insufficient work at the individual level of analysis.