For Companies, Tweeting Leads to More Corporate Social Responsibility, Study Shows



By Scott Lewis

Social Media Links

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When a company donates to a charitable cause or takes action to reduce the amount of waste it sends to landfills, it will almost certainly use Twitter and other social media platforms to help spread that positive news.

A study by researchers at Illinois Institute of Technology shows that the company’s use of Twitter is probably what spurred it to make the donation or cut back on non-recyclable waste in the first place.

“What we found is that after a company establishes a Twitter account, just this action—just being present on Twitter—can actually improve its corporate social responsibility,” says Yiwei Fang, associate professor of finance at Illinois Tech’s Stuart School of Business and one of the co-authors of the research paper. “Social media has a causal effect [that] encourages a company to be aware of its image and to improve the accountability and transparency of its behavior, which is good for society overall.”

Corporate social responsibility, or CSR, refers to socially beneficial activities that companies voluntarily engage in and that go beyond simply toeing the legal and regulatory line. Examples are businesses reducing their carbon footprint, improving employee benefits, or developing environmentally friendly products.

Fang and her Stuart colleagues, Harold L. Stuart Endowed Chair in Business Siva K. Balasubramanian and Zihao Yang (Ph.D. MSC ’20), lay out their findings in “Twitter Presence and Experience Improve Corporate Social Responsibility Outcomes,” published recently in the Journal of Business Ethics.

“All the results show that companies with more years of experience on Twitter, more followers, or higher number of tweets outperform their peers with less or no social media exposure on CSR performance,” the research team notes in the paper. Their study also establishes that self-selection is not at play in these results; that is, companies with high CSR ratings are not more likely to start using Twitter than companies with low CSR ratings.

This project grew out of the research interests of the two faculty—Fang’s interest in corporate performance and Balasubramanian’s in social media and marketing. They saw that the period following the introduction of Twitter in 2006, when the number of companies adopting the new platform grew from a trickle to a torrent, was ripe for investigating the dynamic between social media and CSR.

The team compiled a dataset on nearly 450 companies in the S&P 500 Index between 2004 and 2014. Data points included CSR ratings, a variety of financial information, and metrics on Twitter account activity—including the number of years a company has been on Twitter, the number of followers, and the number of tweets. Yang took the lead in conducting the extensive quantitative analyses that are central to the project’s results.

Reporting on how a company’s activity on Twitter influences its CSR performance, the research team writes that “the improvement in CSR outcomes is primarily driven by a social media presence that is constantly followed or watched by the public.”

Through social media, Fang and Balasubramanian point out, the public can have a larger potential impact on CSR at companies than ever before.

“Anybody can have a place at the table to influence the actions of major corporations,” says Balasubramanian. “That is the big motivator in why companies’ participation in a social media platform is actually influencing positively on their corporate social responsibility outcomes. What our research has done is to reinforce the direction of that causality.”

“The decision [by a company] to be present on social media is already a commitment to do better in CSR,” Fang says. “Everyone can change the world because we have this tool now, this channel.”