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Corporate social responsibility and consumer choice: Lessons from the milk boycott

Author

Listed:
  • In Kyung Kim

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

  • Kyoo il Kim

    (Department of Economics, Michigan State University)

Abstract

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 eight percent, or equivalently by 8.1 million liters during the 12-month post-boycott 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.

Suggested Citation

  • In Kyung Kim & Kyoo il Kim, 2024. "Corporate social responsibility and consumer choice: Lessons from the milk boycott," Working Papers 2401, Nam Duck-Woo Economic Research Institute, Sogang University (Former Research Institute for Market Economy).
    • Handle: RePEc:sgo:wpaper:2401
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    File URL: https://zrr.kr/YDxN
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    More about this item

    Keywords

    boycott; CSR; discrete choice demand; milk;
    All these keywords.

    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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