Corporate Social Responsibility and Consumer Choice: Lessons from the Milk Boycott

We study the impact of a boycott on one of the largest Korean dairy producers, triggered by the exposure of the firm’s unethical management practices, on sales of its own and others. We find empirical evidence that the boycott had substantial and long-lasting consequences. First, consumer utility from the boycotted products decreased significantly, reflecting consumers’ strong willingness to take part in collective action. Second, our discrete choice demand model, which addresses both price endogeneity and product substitution, estimates that sales of the boycotted firm decreased by almost 8% or, equivalently, by 8.1 million liters during the 12-month postboycott period. Third, the boycotted firm’s sales and revenue decreases would have been more severe had the firm not cut prices after the boycott outbreak. Our findings emphasize top-level managers’ role in fostering an ethical organizational culture within the firm and taking proper and timely countermeasures to curb losses incurred by a boycott. This paper was accepted by Eric Anderson, marketing. Funding: This work was supported by the Asian Studies Center of Michigan State University [Dr. Delia Koo Faculty Endowment Award] and Sogang University [New Faculty Research Funding Grant 202310031.01]. Supplemental Material: The online appendix and data files are available at https://doi.org/10.1287/mnsc.2021.01062 .

• 저널Management Science · 71(7) · 5625–5644
• 토픽Consumer Market Behavior and Pricing · Marketing
• DOI10.1287/mnsc.2021.01062
• 저자In Kyung Kim, Kyoo il Kim