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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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    File URL: https://zrr.kr/IqOP
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    References listed on IDEAS

    as
    1. Jonas Björnerstedt & Frank Verboven, 2016. "Does Merger Simulation Work? Evidence from the Swedish Analgesics Market," American Economic Journal: Applied Economics, American Economic Association, vol. 8(3), pages 125-164, July.
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    3. Cardell, N. Scott, 1997. "Variance Components Structures for the Extreme-Value and Logistic Distributions with Application to Models of Heterogeneity," Econometric Theory, Cambridge University Press, vol. 13(2), pages 185-213, April.
    4. John A. List & Fatemeh Momeni, 2021. "When Corporate Social Responsibility Backfires: Evidence from a Natural Field Experiment," Management Science, INFORMS, vol. 67(1), pages 8-21, January.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Corporate image; CSR; Nested Logit; Instant noodles;
    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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