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How Does Corporate Social Responsibility Engagement Influence Word of Mouth on Twitter? Evidence from the Airline Industry

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Abstract

Our study examines how a company’s engagement in corporate social responsibility (CSR) influences word of mouth (WOM) about the company on Twitter, particularly during a service delay. We use the airline industry as the study context. On the popular social medium Twitter, people post tweets about airline services and raise concerns about service delays when flights are delayed, canceled, or diverted. Drawing on the literature on legitimacy and the halo effect, we argue that a company’s CSR engagement enhances its corporate image, which in turn, influences WOM about the company on Twitter. We predict and find that airlines with better CSR engagement receive more positive word of mouth (PWOM) and less negative word of mouth (NWOM) on Twitter. We also find that service delays reduce PWOM and increase NWOM, with the additional finding that the positive relationship between service delays and NWOM is less strong for airlines with better CSR engagement. We conduct additional analyses to investigate the effects of environmental, social, and governance CSR on PWOM and NWOM. Our study has practical implications in informing companies about the benefits of CSR engagement in relation to public opinion during service delays.

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Notes

  1. Details of the Harvard Business School Conference can be found at http://www.hbs.edu/faculty/conferences/2013-corporate-accountability-reporting/Pages/default.aspx.

  2. For example, since 1994, American Airlines has participated in the United Nations Children’s Fund (UNICEF) Change for Good program by collecting donations from passengers; Southwest Airlines ensures that at least 30% of the energy used at its Dallas and Houston headquarters comes from renewable sources, and recycles and reduces waste to enhance environmental sustainability; and in 2010, Brussels Airlines launched the Bike for Africa program to raise donations to support African children.

  3. SNAP files were downloaded from https://snap.stanford.edu/index.html.

  4. Details of SentiStrength can be found at http://sentistrength.wlv.ac.uk/.

  5. This classification is consistent with those of prior CSR studies (Cho et al. 2013; Galema et al. 2008; Jo and Harjoto 2012), as well as with the MSCI ESG database, in which these four aspects of CSR are also considered “Social Indicators” (MSCI ESG Research, 2015).

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  1. Research School of Accounting, The Australian National University, Canberra, Australia

    Tam Thien Vo & Shuk Ying Ho

  2. Department of Accounting, Monash University, Melbourne, Australia

    Xinning Xiao

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Appendix 1: Examples of Social, Environmental, and Governance Engagement by the Airlines of Interest

Appendix 1: Examples of Social, Environmental, and Governance Engagement by the Airlines of Interest

Airlines

Social

Environmental

Governance

Alaska Airlines

Low employee diversity (only 17% are people of color)

Fewer than average donation programs in cash and miles by airlines of interest

Has the second-lowest greenhouse gas (GHG) emission-intensity ratios among the airlines of interest, but only has basic fuel-efficiency-enhancing strategies that aim to cut cost

Compensation for nonemployee directors is around US$130,000 annually, while CEO compensation seems reasonable at around US$3 million per year, considering the strong results of the airline

American Airlines

Moderate employee diversity (34% are people of color)

Partnered with UNICEF since 1994 in the Change for Good program and was the first airline to arrive to Haiti to deliver relief supplies after the 2010 earthquake

Has the second highest GHG emission-intensity ratios among the airlines of interest

In 2015, stockholders proposed transparency in political accountability by requiring the company to report on its lobbying activities, but the proposal was objected by the board of directors

Stockholders also proposed to have an independent board chairman on a prospective basis, which was also objected to by the board of directors

Delta Air Lines

High employee diversity (62% are people of color)

Holds multiple fundraising events. For example, company builds houses and provides free meals to the elderly in its headquarters’ city

Has the lowest GHG emission-intensity ratios among the airlines of interest, with beyond-standard fuel-efficiency-enhancing strategies

Ensures all airplanes meet and exceed legal noise-compliance requirements

Compensation for the CEO is around $15 million per year, while nonemployee directors receive approximately US$300,000 annually, the highest compensation among all airlines of concern to this study

JetBlue

Moderate employee diversity (44% are people of color)

Runs an employee dollar-for-dollar donation-matching program along with multiple social projects

Has the third-highest among the considered airlines GHG emission-intensity ratios, with young but rapidly aging aircraft

Has exceptionally high number of sound violations

Non-employed board directors receive around US$110,000 in compensation per year, while the CEO receives over US$2 million in benefits—the lowest annual compensation among all six airlines considered in this study

Southwest Airlines

Total monetary donations is lower than that of airlines of similar size (around 30% of American Airlines)

No diversity information released on its Web site or in its reports

Has the highest greenhouse gas (GHG) emission-intensity ratios among the airlines of interest

Thirty percent of energy used in its two headquarters (in Dallas and Houston) comes from renewable energy

Has been heavily involved in a number of controversial political issues, such as the Wright Amendment campaign and “American first” policy in 2017 and multiple incidents involving Middle Eastern passengers in 2015 and 2016

United Airlines

Moderate employee diversity (40% are people of color)

Established social program such as United Volunteer Impact Grants

Has the third-lowest among the airlines of interest in GHG emission-intensity ratios

Committed to alternative biofuels, with several demonstration and commercial flights using alternative fuels)

Received Eco-Aviation Airline of the year award in 2013

Was involved in a Federal investigation regarding political accountability issue (favor bribery) that has led to the resignation of its CEO and several high-level managers since 2015

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Vo, T.T., Xiao, X. & Ho, S.Y. How Does Corporate Social Responsibility Engagement Influence Word of Mouth on Twitter? Evidence from the Airline Industry. J Bus Ethics 157, 525–542 (2019). https://doi.org/10.1007/s10551-017-3679-z

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