Pepsi’s Refresh Project funded 238 ideas for improving communities.  The company’s “human right to water” program pledged more than $15 million for safe water across the world. Walmart has pledged $2 billion in cash and food donations to food banks and, in 2009, it unveiled its Sustainable Product Index.

Like Pepsi and Walmart, many companies engage in a spectrum of corporate social responsibility initiatives and invest heavily in publicizing them. While the intrinsic satisfaction of doing good is important, as author Tim Sanders has argued, CSR programs tend to be meaningful and sustained only when they align corporate financial needs (profit,  revenue, growth) with social needs (people, community, planet).  So which, if any, of the plethora of CSR initiatives beget positive returns?

The truth is that, until recently, we didn’t know.

Several cross-sectional studies spanning firms across different industries have correlated CSR performance with financial performance.  The correlation is often positive, but there are also several negative and insignificant effects. Add to these mixed results the ambiguous direction of causality (meaning, does good corporate citizenship lead to better financial returns or do financially sound companies devote more resources to CSR?); the inconsistency among studies with respect to which CSR dimensions do and do not generate positive returns; and that different stakeholder groups respond differently, and it becomes clear that we don’t really know much about whether, how, and how much CSR benefits a company.

We set out to answer this question for a major sector of the economy— consumer goods retail.  We collected field data from more than 3,000 grocery shoppers regarding the major grocery retailers in their markets.  We measured their perceptions of retailers’ CSR on four dimensions, as well as other attributes such as price, merchandise quality, service and assortment. We then estimated a model of how these variables affect consumers’ attitudes toward the retailers and their share of wallet.

Here is what was found.

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