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Does it pay to be a reputable company? Insights from the instant noodles market

Author

Listed:
  • Youngjin Hong

    (Department of Economics, Sogang University, Seoul, Korea)

  • In Kyung Kim

    (Department of Economics, Sogang University, Seoul, Korea)

  • Kyoo il Kim

    (Department of Economics, Michigan State University)

Abstract

This paper empirically examines the extent to which enhancing a corporate image through diverse corporate social responsibility (CSR) activities affects consumer choices and firm sales. By utilizing sales and pricing information from the Korean instant noodles market in the 2010s, we find evidence that the improvement of Ottogi’s corporate image, one of the major instant noodle producers in the country, positively affected consumer utility for the firm’s products. Importantly, Ottogi’s annual sales increased by 52 million packages, or 12.4%, on average, thanks to the firm’s CSR activities and subsequent image improvement. This effect is equivalent in size to that of an 11% price cut or a 160% increase in advertising spending. Our findings suggest that CSR can promote firm growth by boosting product sales.

Suggested Citation

  • Youngjin Hong & In Kyung Kim & Kyoo il Kim, 2023. "Does it pay to be a reputable company? Insights from the instant noodles market," Working Papers 2304, Nam Duck-Woo Economic Research Institute, Sogang University (Former Research Institute for Market Economy).
    • Handle: RePEc:sgo:wpaper:2304
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    References listed on IDEAS

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    4. Caroline Flammer, 2015. "Does Corporate Social Responsibility Lead to Superior Financial Performance? A Regression Discontinuity Approach," Management Science, INFORMS, vol. 61(11), pages 2549-2568, November.
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    Keywords

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    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • L66 - Industrial Organization - - Industry Studies: Manufacturing - - - Food; Beverages; Cosmetics; Tobacco
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility

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