The Impact of the CSR-Embedded Crisis Response: The Role of Values Congruence between Leadership Styles and CSR Motives

Abstract

Grounded in the values congruence proposition, this study examined the interplay between leadership styles and corporate social responsibility (CSR) motives in different crisis contexts. The results of a 2 (crisis type) × 2 (leadership style) × 2 (CSR motives) between-subjects experiment showed that the congruent combination of leadership styles and CSR motives maximized the insulating effect of CSR practice but only when the crisis type was victim. In a victim crisis, utilizing intrinsic CSR motives gained greater word-of-mouth intention and purchase intention when combined with transformational leadership than with transactional leadership. In a preventable crisis, the positive effect of values congruence disappeared and even backfired. More specifically, the congruence between transactional leadership and extrinsic CSR motives amplified the negative impact of a crisis. Theoretical and practical implications are discussed.

Keywords

corporate social responsibility values congruence transformational leadership transactional leadership crisis type persuasion knowledge model

Introduction

When a corporate crisis occurs, public perceptions of the crisis and the company’s response strategies are critical to protect reputational assets. Prior research has examined public responses to different crisis strategies such as perceptions of crisis responsibility and behavioral intentions as reflected in word-of-mouth (WOM) and purchase intentions (e.g., Coombs, 1995, 2007b; Coombs & Holladay, 1996).

One line of research suggests different ways to utilize the company’s prior history of corporate social responsibility (CSR) in formulating crisis response strategies (e.g., Kim, 2014; Kim et al., 2009; Vanhamme & Grobben, 2009). Communicating CSR is a persuasive attempt made by the corporation that tries to create positive perceptions among stakeholders (Vanhamme & Grobben, 2009). Applying CSR communication to the context of a corporate crisis, previous studies have demonstrated that communicating CSR initiatives has the potential to mitigate the negative consequences of that crisis (e.g., Coombs, 1995; Kim, 2014; Vanhamme & Grobben, 2009). Companies’ engagement in CSR may create social capital based on a goodwill-building function, which can insulate the company from the negative effects of crises. However, CSR engagement may also trigger a contrast effect, intensifying rather than insulating stakeholders’ negative reactions, depending on different crisis characteristics such as crisis domain and severity (Janssen et al., 2015). Given the complex nature of a crisis, it is imperative to develop CSR-based crisis response strategies that account for other situational factors present at that time (Kim et al., 2009). Despite its potential role in crisis situations and its place as an important emerging issue in crisis management research, CSR as a bolstering strategy has been understudied (Laufer, 2015).

Research supports the idea that the leadership styles of Chief Executive Officers (CEOs) play an important role in formulating and delivering a company’s CSR strategies (Benn et al., 2010). A body of research has revealed that corporate leadership styles are highly associated with CSR practices by considering why corporate leaders conduct CSR activities (Angus-Leppan et al., 2010; Du et al., 2013). Although there is empirical research on effective leadership in the CSR context (e.g., Benn et al., 2010; Dunphy et al., 2007; Hemingway & Maclagan, 2004), little research explores leadership in CSR-based communication in combination with how the public interprets a corporation’s underlying intention behind CSR initiatives in the crisis communication context.

We employed the concept of “values congruence”—originally used in the workplace setting to describe the fit between one’s values and their organization’s values (Edwards & Cable, 2009; Li et al., 2013)—to delve into how the public’s perceived congruence between leadership and CSR motives affects responsibility attribution and behavioral intention depending on a particular crisis situation. We expected stakeholders to be more likely to interpret CSR communication with leadership information in ways aligned with the company’s CSR motives, thus affecting their evaluation of a given crisis at attitudinal and behavioral levels. Based on the values congruence proposition, in combination with the Persuasion Knowledge Model, the current study explored the influence of values congruence between leadership and CSR motives on specific crisis outcomes such as crisis responsibility, WOM, and purchase intention in different crisis types.

This study contributes to existing crisis communication research both practically and theoretically. With regard to practical implications, this study is the first attempt to explore how public perceptions of CEO leadership styles play unique roles in combination with CSR motives and different crisis situations. With regard to theoretical implications, this research considered values congruence through the lens of the Persuasion Knowledge Model, testing relationships in the crisis communication context. The results demonstrate how consumers interpret CSR-based communication in a holistic way. That is, rather than focusing only on the CSR practice itself, consumers considered the intersection of crisis type, leadership style, and CSR motives.

Literature Review

Using CSR in a Strategic Crisis Response

CSR history helps to establish a pre-crisis reputation (e.g., Varadarajan & Menon, 1988) and can also function as a useful post-crisis response strategy (e.g., Coombs, 1995; Vanhamme & Grobben, 2009). Communicating about previous CSR activities during a crisis is one tool to defend against attacks on corporate legitimacy (Ashforth & Gibbs, 1990; Vanhamme & Grobben, 2009), ultimately helping to protect or restore the goodwill and reputation of a company. Specifically, CSR initiatives can build strong relationships between a company and its various stakeholders (Hall, 2006; Manheim & Pratt, 1986) and utilize the initiatives as a means of defending against damage to their reputations (Varadarajan & Menon, 1988). A company’s past track record of CSR activity can provide the public with an important information cue, affecting perceptions, and assessments of a crisis.

In recent years, communicating CSR as a strategic crisis response has been explored within the framework of Situational Crisis Communication Theory (SCCT) (Ham & Kim, 2019, 2020). The theory was developed by Coombs and Holladay (2002) in recognition of the threat crises present to corporate reputation and the importance of strategic post-crisis response communication.

SCCT suggests examining crisis responsibility, crisis history, and prior reputation when assessing an organization’s reputational threat. Based on this assessment, appropriate crisis response messages can be crafted (Coombs, 2007a, 2019). The fundamental assumption of SCCT is that corporations should strategically respond to a crisis situation based on public attributions of organizational responsibility for the crisis. Extending attribution theory (Weiner, 1986), SCCT suggests that the public attributes more blame and responsibility to an organization if it perceives a crisis to be intentional (Coombs, 2007b; Coombs & Holladay, 1996; Kim et al., 2009). SCCT has been used to investigate how to match crisis type with crisis response strategies to protect corporate reputational assets.

In particular, previous SCCT studies (Coombs, 2007b, 2010) suggested that denial strategies are more effective when the corporation is a victim, such as through natural disaster or product tampering. Strategies to diminish corporate responsibility for a crisis are appropriate for an accidental crisis, such as accidental technical errors. Strategies to rebuild reputation such as compensation and apology are most appropriate for a preventable crisis, such as one caused by human error or organizational misdeeds.

Coombs (2019) suggested using bolstering strategies as supplements to any of the three kinds of response strategies. As long as the company has a good prior reputation, it can use bolstering strategies such as reminding, ingratiation, and victimage, and CSR communication can be considered a strategy in which the public is reminded about the company’s past well-intended works.

Communicating CSR as a bolstering strategy aims to reduce the offensiveness of an event (i.e., crisis) and the negative feelings resulting from the offensive behavior (Benoit, 2014, 2015). By highlighting an organization’s commitment to enhancing society’s well-being before the crisis happened, stakeholders’ positive feelings toward the organization can be strengthened (e.g., David et al., 2005; Grunig, 2000; Mohr et al., 2001). In sum, CSR initiatives can build on prior reputation through strategic reminders during difficult times.

Other scholars have elaborated on how to use the reminding strategy regarding previous CSR. Becker-Olsen et al. (2006) emphasized the timing of CSR (proactive vs. reactive) and a match between CSR initiatives and the organization’s expertise when communicating CSR to stakeholders. In this research, a proactive CSR with a close fit between CSR initiatives and the organization’s expertise led participants to report less skepticism toward CSR motives, higher perceived credibility and ability of the organization, and purchase intention. Consumers’ behavioral responses to CSR activities are not always positive, but vary according to the company’s motives in engaging in the CSR activities and any subsequent skepticism toward CSR (Romani et al., 2016). Several other studies (Barone et al., 2000; Chung & Lee, 2019; Skarmeas & Leonidou, 2013) also showed a company’s CSR efforts can serve as an important information cue for the public’s evaluation of the company, thereby leading to the possibility of mitigating the damage by the given crisis.

Values Congruence between Leadership Styles and CSR

Prior research has examined the interplay between leadership styles and CSR practices and showed CEO leadership styles affected CSR strategy formulation and delivery (Benn et al., 2010; Waldman et al., 2006). Although no one particular type of leadership is exclusively effective for CSR initiative performance (Angus-Leppan et al., 2010), the literature classifies change-oriented leadership styles such as transformational, charismatic, and visionary leadership (Groves & LaRocca, 2011a) as well as responsible/ethical and authentic leadership (Shin, 2012) as effective CSR leadership styles.

Burns (1978) identified two leadership styles in terms of motivational beliefs: transformational and transactional. The transformational leader articulates a vision of the future, intellectually stimulates followers, and pays attention to individual employees (Pounder, 2003). The transactional leader, on the other hand, motivates employees mainly through contingent-reward exchanges. The transactional leader minimizes performance problems by using corrective transactions between the leader and employees (Groves & LaRocca, 2011a). Therefore, transactional leaders primarily focus on the maintenance of the status quo and pay attention to constraints and efficiency (Du et al., 2013).

Unlike transactional leaders who focus on rewards and sanctions to maximize self-interests of the CEO and employees, transformational leaders value “we-ness” by providing a unified vision and inspirational motivation, meeting employees’ individual needs, and developing mutual trust between the CEO and the employees. The visions of transformational leaders tend to reflect the demands of various stakeholders (Mendonca, 2001), and these leaders are more likely to realize the interdependent relationship between the company and its various stakeholders than transactional leaders (Du et al., 2013). Recent scholarship suggests that stakeholder values are closely related to transformational leadership, while transactional leadership is characterized by economic values (Bass & Steidlmeier, 1999; Groves & LaRocca, 2011b; Kanungo, 2001; Mendonca, 2001). In other words, transformational leaders tend to perceive the importance of the interconnections among the company’s multiple stakeholders rather than isolating the company from its community and environment.

The “we-ness” of transformational leadership, together with its recognition of the importance of building relationships with multiple stakeholders, encourages the company to act in socially responsible ways and to voluntarily serve the community to strengthen the company’s collective vision (Benn et al., 2010; Groves & LaRocca, 2011a, 2011b; Hood, 2003). Transformational leaders strengthen the employee beliefs regarding socially responsible actions by emphasizing the importance of CSR and serving different stakeholders for organizational effectiveness (Groves & LaRocca, 2011a).

Groves and LaRocca (2011a) suggested a theoretical framework for the values congruence between leadership styles and ethical values. Specifically, transformational leadership is associated with moral altruism, and transactional leadership is associated with utilitarianism. Although both transformational and transactional leadership styles can be ethically driven, perspectives on ethical values are different. Transformational leadership is characterized by an “internalized moral perspective” (Engelbrecht et al., 2014, p. 2) and advocates internal transparency to build mutual trust between the company and its employees. To inspire employees to behave morally, the concept of “values congruence” has been tested in the work setting. Studies have shown that when employees perceive their values as congruent with those of the organization, they will have more positive attitudes and a greater willingness to act in line with the organization’s values (Edwards & Cable, 2009; Li et al., 2013). According to Shamir et al. (1993), values congruence is critical for the success of transformational leadership, and leader persuasiveness depends on the extent to which employees’ existing values are in line with the efforts of the leader.

The match between the organization’s CEO attributes and the organization’s CSV (creating shared value; Porter & Kramer, 2011) activities from the external public’s perspective was explored by Chen et al. (2020). These scholars examined public perceptions toward the role of leadership in performing effective CSV activities. The public perceived that the moral characteristics (i.e., integrity, accountability, being trusted, and caring for people) of CEOs played a more important role in effective CSV behaviors than other individual characteristics across three countries (US, Germany, and China). As previous research showed that the attributes of transformational leaders include being trustworthy, having a strong ideology, energizing innovation, and possessing a long-term perspective (Jones, 2000; Ketola, 2006; Roome & Bergin, 2006; Shin & Zhou, 2003), Chen et al. (2020) demonstrated how the public infers the connection between an organization’s leadership and its CSR activities.

Given the values congruence framework (Groves & LaRocca, 2011b; Shamir et al., 1993), together with the literature showing an association between leadership and CSR practices, we argue that the public will have different expectations of transformational and transactional leadership. Transformational leaders—whose focus is to create and maintain positive relationships with various stakeholders for shared values (e.g., environment and society’s well-being)—are inherently expected to support more intrinsically motivated CSR practices than transactional leaders. We attempt to apply a values congruence framework emphasizing a fit between leadership and organizational values to the crisis communication context. That is, if there is perceived congruence between leadership style and CSR motives (such as a transformational leader with intrinsic CSR motives), the insulating effect of CSR-embedded crisis response can be reinforced in reducing the damage driven by a corporate crisis. In a similar vein, we argue that in comparison to extrinsic CSR motives, intrinsic CSR motives will be more effective in insulating the negative consequences of a crisis only when coupled with transformational leadership, which inspires more institutional CSR practices linked to the intrinsic nature of CSR motivation (Du et al., 2013).

The Persuasion Knowledge Model: How the Public Perceives Leadership Styles, CSR Motives, and CSR Communication

Our proposition regarding consumers’ active interpretations of a given crisis situation is grounded in the persuasion knowledge model (PKM; Friestad & Wright, 1994). The PKM argues that people actively utilize three types of knowledge when faced with a persuasion attempt: persuasion knowledge, agent knowledge, and topic knowledge.

Persuasion knowledge refers to an individual’s intuitive theory about how persuasion works. In a crisis situation, an organization acting as a persuasion agent must respond to the crisis with crisis response strategies such as denial, bolstering, compensation, and apology to mitigate any damage, as specified in the SCCT (Coombs, 2007b; Coombs & Holladay, 1996). Persuasion knowledge allows the public to make inferences about underlying motives and intentions behind crisis messages such as a CSR-embedded crisis response, and to cope with the response based on these inferences. When evaluating CSR efforts, the public makes inferences about why the company supports those social causes. The success of CSR communication as a crisis response strategy likely depends on public inferences regarding the company’s underlying motives for the CSR activities (Becker-Olsen et al., 2006; Ellen et al., 2006; Forehand & Grier, 2003; Kim & Lee, 2012; Skarmeas & Leonidou, 2013; Yoon et al., 2006). According to previous studies, the public perceives two primary types of CSR motives: intrinsic and extrinsic motives. Intrinsic motives highlight the company’s genuine concern for a social issue, indicating that the company is interested in potential benefits to people outside the company. In contrast, extrinsic motives focus on the company’s attempts to increase its profits or other business returns (Barone et al., 2007; Forehand & Grier, 2003; Romani et al., 2016; Yoon et al., 2006). People’s perceptions of extrinsic CSR motives have been found to have a negative influence on the company’s CSR effectiveness, while perceptions of intrinsic CSR motives have been shown to have a positive impact (Kim & Lee, 2012; Romani et al., 2016; Sen & Bhattacharya, 2001; Skarmeas & Leonidou, 2013; Yoon et al., 2006).

Agent knowledge refers to the public’s knowledge about the persuasion agent (e.g., the organization) including the organization’s current management and leadership, history, reputation, and current and past marketing activities. Agent knowledge can enhance people’s ability to infer how and why the organization has responded the way it has; it can moderate the effects of persuasion knowledge (Campbell & Kirmani, 2000; Holt, 2002; Lafferty & Goldsmith, 1999; Vonk, 1999).

Topic knowledge refers to people’s existing knowledge about the given persuasion situation such as the current context and background information about the crisis including crisis type and severity. Topic knowledge helps persuasion targets actively interpret the overall persuasion situation and moderate the impact of persuasion knowledge accordingly. In the context of crisis communication, the public’s knowledge of different crisis situations is considered as topic knowledge. In a victim crisis situation where ethical standards are met, stakeholders are more likely to interpret CSR communication as new crisis information in a way that is consistent with their prior beliefs or expectations about the company’s CSR efforts. As a result, the organization is likely to suffer less reputational loss than those in a preventable crisis situation where the crisis is seen as unethical. Therefore, we propose a contingent framework that demonstrates the link between CSR motives and leadership styles to mitigate the negative impact of a crisis on the corporation by emphasizing the combined effects of a company’s CSR practice and its leadership style in different crisis situations.

The PKM proposes that the public’s persuasion, agent, and topic knowledge interact with each other in response to a corporate’s strategic communication (Ham & Kim, 2019; Ham & Nelson, 2016). By combining the PKM’s basic proposition with the values congruence proposition, we propose that public perceptions of CEO leadership (i.e., agent knowledge) can interact with perceptions of CSR motives (i.e., persuasion knowledge). However, we argue that such interactions will occur in different patterns depending on the crisis situation (i.e., topic knowledge).

To be more specific, based on the literature showing a link between transformational leadership and corporate sustainability (e.g., Benn et al., 2010; Chen et al., 2020; Waldman et al., 2006), we argue that when the CEO leadership style (mis)matches with CSR motives, the company’s response will be more (or less) acceptable to a given public. However, such interactions must be evaluated within the context of the crisis situation. In the victim crisis condition, a transformational leader whose CSR initiatives are driven by intrinsic motives will be more effective in reducing the potential damage of the crisis than a transactional leader. In the preventable crisis condition, this values congruence effect will disappear due to a high level of crisis responsibility, making a bolstering strategy ineffective and thus generating a backlash. While the CSR-embedded crisis response, as a bolstering strategy, may reduce the blame stakeholders place on a company for a crisis, this reduction of blame can only be expected to happen when stakeholders perceive a low to moderate level of corporate responsibility for a crisis (Janssen et al., 2015). People tend to elicit the least attributions of responsibility when the company is a victim of a crisis and values congruence is perceived between CEO leadership and CSR motives. However, this values congruence effect will disappear in a preventable crisis driven by a company’s failure in terms of management, resulting in people attributing greater responsibility to the company.

H1a,b. Crisis type, CSR motives, and leadership will interact with crisis responsibility. (a) In the victim crisis condition, CSR motives and leadership will interact such that when the CSR motives are intrinsic, transformational leadership will lead to lower crisis responsibility than transactional leadership. However, when CSR motives are extrinsic, this difference will disappear. (b) In the preventable crisis condition, this interaction effect will not occur.

Scholars have highlighted the need to connect the impact of a crisis to two behavioral consequences associated with crises: WOM and purchase intention (Coombs & Holladay, 2007). For example, Grappi and Romani (2015) examined how post-crisis communication strategies affect public reactions such as attitudes, intention to buy, and negative WOM. As a potential threat to an organization, negative WOM has a unique quality different from purchase intention: a viral effect that lasts longer than purchase intention (Coombs, 2007b). Negative WOM has the potential to become an increasing threat to an organization in a crisis given that social media (such as Facebook) complements traditional media as a source of crisis information (Jin & Liu, 2010; Liu et al., 2013). Thus, given the effects of post-crisis response strategies on both purchase intention (Jorgensen, 1996) and WOM (Coombs, 2007b), we see both as important variables in predicting a potential threat that could damage an organization’s reputation. Thus, we propose additional three-way interaction effects between the type of crisis, CSR motives, and leadership styles on WOM intention and purchase intention.

H2a,b. Crisis type, CSR motives, and leadership will interact with WOM intention. (a) In the victim crisis condition, CSR motives and leadership will interact such that when the CSR motives are intrinsic, transformational leadership will lead to higher WOM intention than transactional leadership. However, when CSR motives are extrinsic, such difference will disappear. (b) In the preventable crisis condition, this interaction effect will not occur.

H3a,b. Crisis type, CSR motives, and leadership will interact with purchase intention. (a) In the victim crisis condition, CSR motives and leadership will interact such that when the CSR motives are intrinsic, transformational leadership will lead to higher purchase intention than transactional leadership. However, when CSR motives are extrinsic, this difference will disappear. (b) In the preventable crisis condition, this interaction effect will not occur.

Method

Experimental Design

To examine the proposed hypotheses, this study employed a 2 × 2 × 2 between-subjects experimental design. Each participant of the experiment read two news articles. The first independent variable, crisis type (topic knowledge: victim vs. preventable), was manipulated in the first news story. The second and the third independent variables, CSR motives (persuasion knowledge: intrinsic vs. extrinsic) and CEO leadership (transformational vs. transactional) were manipulated in the second news article. By combining these, we created eight different experimental conditions. The dependent variables included crisis responsibility perception and two behavioral intentions: WOM intention and purchase intention.

Participants

We recruited a general adult sample using Amazon Mechanical Turk (MTurk), an online marketplace where people sign up to participate in online surveys and receive a small amount of monetary compensation. This sampling source is appropriate because important stakeholders in corporate crisis situations come more from the general population than from the college student population. All participants were given monetary compensation in exchange for their participation.

A total of 149 U.S. adults participated in the online survey. Gender was balanced (male: n = 87, 58.4%; female: n = 62, 41.6%). The age of the participants ranged from 22 to 73 years (M = 38.61, SD = 11.24). The majority of the participants were Caucasians (n = 125, 83.9%), followed by Asian Americans (n = 8, 5.4%), Hispanic Americans (n = 7, 4.7%), African Americans (n = 6, 4.0%), and others (n = 3, 2.0%). The majority of the participants held either bachelor’s degree (n = 62, 41.6%), or some college degree (n = 41, 27.5%), followed by associate’s degree (n = 22, 14.8%) and master’s degree (n = 15, 10.1%).

The Creation of Stimulus Materials

We developed a series of news stories to create eight different conditions across the two stages of the experimental procedure. To make the experimental situation more realistic, we used the two-stage approach in which the study’s participants were exposed to the crisis type first (victim vs. preventable) and then crisis responses (CSR motives: intrinsic vs. extrinsic; CEO leadership: transformational vs. transactional). We used a fictitious company name, “EcoMart,” to avoid biases about existing companies. The first stage of the research manipulated crisis type (victim vs. preventable) in news stories describing a retail company either as a victim of a sophisticated cyberattack or as failing to prevent a data breach. The victim crisis article described the retailer as the victim of a malware attack with an unprecedented level of sophistication. The preventable crisis article framed the crisis as a result of the retailer’s failure to properly segregate systems handling sensitive payment card data from the rest of its network.

In the second stage, CSR motives (intrinsic vs. extrinsic) and CEO leadership (transformational vs. transactional) were manipulated with four news stories. CSR motives were manipulated by describing why the company invested in CSR efforts. For intrinsic CSR motives, the news story portrayed the company’s CSR practices as sincere, indicating the firm’s obligation to help the community and environment. For extrinsic motives, the company was described as having an interest in gaining financial advantages while engaging in CSR practices. CEO leadership was manipulated based on the two leadership styles, transformational and transactional. News stories in the transformational leadership condition emphasized the CEO’s charisma for motivating and empowering employees toward the company’s vision by appealing to their higher ideals and moral values. In the transactional leadership condition, CEO leadership was described as demonstrating a reward system based on performance outcomes and highlighting the close monitoring of employees for any mistakes to ensure performance goals are met.

Each of the four news articles started by briefly mentioning the recent data breach crisis followed by the company’s CEO statement. As an example, the article featuring intrinsic CSR motives and transactional leadership included the CEO’s emphasis on the company being socially responsible and feeling obligated to solve the crisis by quoting the CEO’s statement. The article then introduced the company’s socially responsible programs targeting its employees over recent years (though acknowledging these efforts were not sufficient to prevent the cybercrime). The training programs had aimed to advance employees’ skills in data protection, workplace environment, and other health and safety issues. By including quotes from an expert in business ethics and CSR, the article mentioned the way in which the company achieves its goals through reward and punishment strictly based on performance outcomes.

Procedures

A two-stage experiment was performed on Qualtrics.com where participants consented to participate in the study. After random assignment to condition, participants completed the first stage in which they were instructed to read the first news article reporting a corporate crisis (victim or preventable). They were then asked to rate their feelings about whether the company was a victim of the crisis or could have prevented the crisis. In the second stage, participants were notified that the second news article came out a few days after the first article had been published. They were then asked to read the second news article, which reported one of the four combinations of the crisis response messages: intrinsic CSR motives-transformational leadership, intrinsic CSR motives-transactional leadership, extrinsic CSR motives-transformational leadership, and extrinsic CSR motives-transactional leadership. After reading the second article, respondents were asked to report how much they believed the company was responsible for the crisis, WOM intention, and purchase intention. Manipulation checks were performed, and demographic information was obtained at the end of the procedure.

Measures

We employed three sets of manipulation check items to determine whether the participants perceived the crisis news stories in the direction of stimuli manipulations. For the manipulation of crisis type, we used two items (e.g., Lee, 2005): “To what degree do you think the organization could have prevented the incident” with responses ranging from 1 (not at all preventable) to 7 (absolutely preventable), and “The company is the victim of the crisis” with responses ranging from 1 (strongly disagree) to 7 (strongly agree) (Cronbach’s α = .77). For the manipulation of CSR motives, we used four items adapted from Skarmeas and Leonidou (2013). In terms of intrinsic CSR motives, we used two items, one of which was “The company has been involved in socially responsible activities because it is trying to give back something to employees and the society” with responses ranging from 1 (strongly disagree) to 7 (strongly agree) (Cronbach’s α = .90). Another of the four items addressed extrinsic CSR motives: “The company has been involved in socially responsible actions because it actually wants to increase its profits” with responses ranging from 1 (strongly disagree) to 7 (strongly agree) (Cronbach’s α = .86). We adopted four items to check the manipulation of CEO leadership from prior research (e.g., Du et al., 2013; Lowe et al., 1996). For transformational leadership, we employed two items measuring the “inspiration” and “intellectual stimulation” components of the leadership. One item was “CEO shows a clear vision and confidence about what needs to be done to accomplish the vision” with responses ranging from 1 (strongly disagree) to 7 (strongly agree) (Cronbach’s α = .70). We used two items for “contingent reward” and “management by exception-active” as measures for the manipulation of transactional leadership. An example item was “CEO tends to use reward and punishment strictly to get employees to achieve the company’s goals” with responses ranging from 1 (strongly disagree) to 7 (strongly agree) (Cronbach’s α = .87).

For the measure of crisis responsibility, we adopted two items from Lee (2005): “How much responsibility the organization should bear” with responses ranging from 1 (not at all responsible) to 7 (totally responsible) and “To what degree you thought the organization should be blamed” with responses ranging from 1 (not at all to be blamed) to 7 (absolutely to be blamed) (Cronbach’s α = .93; M = 5.41, SD = 1.42). To measure WOM intention, we used four items adopted from previous research (e.g., Brown et al., 2005; Yang & Kang, 2009): “I would encourage friends to buy products from the company,” “I would encourage family members or relatives to buy products from the company,” “I would recommend the company’s products to someone who asks my advice,” and “I would say positive things about the company and its products to other people,” each rated on a seven-point Likert scale from 1 (definitely would not) to 7 (definitely would) (Cronbach’s α = .96; M = 2.74, SD = 1.39). Finally, the measure for purchase intention also came from the prior literature (MacKenzie et al., 1986). Participants were asked to indicate their level of agreement with the following statement on a seven-point semantic differential scale: “I would consider buying this company’s product when I need to buy one next time.” The scale presented three responses: unlikely/likely, impossible/possible, and improbable/probable (Cronbach’s α = .96; M = 3.30, SD = 1.62). All measures used in this study are shown in Table 1.

Table 1.

Descriptive Statistics of Crisis Responsibility, WOMI, and Purchase Intention Scales.

		Mean	SD	Corrected item-total correlation
Crisis responsibility (α = .93)		5.41	1.42
How much responsibility the company should bear for the data breach incident?		5.59	1.38	.87
To what degree do you think the company should be blamed for the data breach incident?		5.23	1.57	.87
WOMI (α = .96)		2.74	1.39
I would encourage friends to buy products from the company.		2.76	1.42	.94
I would encourage family members or relatives to buy products from the company.		2.64	1.45	.93
I would recommend the company’s products to someone who asks my advice.		2.72	1.47	.93
I would say positive things about the company and its products to other people.		2.83	1.54	.83
Purchase intention (α = .96)		3.30	1.62
I would consider buying the company’s product when I need to buy one next time.	Very unlikely – Very likely	3.09	1.64	.93
	Improbable – Probable	3.09	1.70	.93
	Impossible – Possible	3.72	1.73	.88

Note. WOMI = Word-of-mouth intention.

Results

Manipulation Checks

We ran three independent t-tests to check on the efficacy of the manipulations. The first t-test results showed that crisis type was successfully administered. Participants in the victim crisis condition indicated stronger agreement on the company as a victim of the crisis than those in the preventable crisis condition (t = 9.57, df = 147, p < .001; M_victim = 5.96, SD = 1.41; M_preventable = 3.47, SD = 1.72). Participants perceived higher preventability in the preventable crisis condition than those in the victim crisis condition (t = −14.41, df = 147, p < .001; M_victim = 3.48, SD = 1.63; M_preventable = 6.38, SD = 0.69). The second t-test revealed that the intrinsic CSR motives score was significantly higher in the intrinsic motives condition than in the extrinsic motives condition (t = 7.51, df = 147, p < .001; M_intrinsic = 4.86, SD = 1.67; M_extrinsic = 2.92, SD = 1.50), whereas the extrinsic CSR motives score was significantly higher in the extrinsic motives condition than in the intrinsic motives condition (t = −4.85, df = 147, p < .001; M_intrinsic = 5.11, SD = 1.58; M_extrinsic = 6.15, SD = 0.99). The third t-test confirmed that the transformational leadership score was significantly higher in the transformational leadership condition than in the transactional leadership condition (t = 10.23, df = 147, p < .001; M_{transformational} = 5.23, SD = 1.11; M_{transactional} = 3.16, SD = 1.36) whereas the transactional leadership score was significantly higher in the transactional leadership condition than in the transformational leadership condition (t = −12.72, df = 147, p < .001; M_{transformational} = 3.59, SD = 1.36; M_{transactional} = 6.14, SD = 1.08). Therefore, all three experimental manipulations were successful.

Hypotheses Testing

Hypothesis 1 (a and b) predicted a three-way interaction effect between crisis type, CSR motives, and leadership style on crisis responsibility. The result of the first ANOVA revealed that there was no significant three-way interaction effect on crisis responsibility (F(1, 141) = 0.316; p > .1; partial η² = 0.00). Due to the insignificant result in the three-way interaction test, we did not run post-hoc analyses to test H1a (in victim crisis) or H1b (in preventable crisis). Thus, H1a and H1b were not supported.

Hypothesis 2 (a and b) predicted a three-way interaction effect between crisis type, CSR motives, and leadership style on WOM intention. The result of the second ANOVA showed that a significant three-way interaction effect on WOM intention (F(1, 141) = 5.53; p < .05, partial η² = 0.04). A series of post-hoc analyses then tested the relationships proposed in the subsequent hypotheses (H2a and H2b). For the victim crisis (H2a), a two-way ANOVA revealed that there was a marginally significant interaction effect between CSR motives and leadership style on WOM intention (F(1, 67) = 3.01; p = .085, partial η² = 0.04). The following single effect analyses showed that when the CSR motive was intrinsic, those in the transformational leadership condition (M = 4.37, SD = 1.57) showed significantly higher WOM intention than those in the transactional leadership condition (M = 2.44, SD = 0.99; F(1, 31) = 17.96; p < .001; partial η² = 0.37). When CSR motives were extrinsic, those in the transformational leadership condition (M = 3.01, SD = 1.04) showed significantly higher WOM intention than those in the transactional condition (M = 2.03. SD = 0.96; F(1, 36) = 8.95, p < .01, partial η² = .20). Under both CSR motives conditions in victim crisis, WOM intention was significantly higher in the transformational leadership condition than in the transactional leadership condition; but the mean difference was greater in intrinsic CSR motives than that in extrinsic CSR motives condition although with marginal statistical significance (p = .085). Thus, we concluded that H2a was partially supported as the transformational leadership condition had a higher WOM intention than the transactional leadership condition for both intrinsic and extrinsic CSR motives. In the preventable crisis (H2b), the two-way ANOVA revealed that there was no significant interaction effect between CSR motives and leadership on WOM intention (F(1, 74) = 0.1; partial η² = 0.03). There was no significant interaction effect between CSR motives and leadership style on WOM intention when crisis type was preventable. Thus, H2b was supported. In sum, H2a was partially supported and H2b was fully supported. Descriptive statistics and interaction effect figures are shown in Table 2 and Figure 1 respectively.

Figure 1.

Three-way interaction effects of crisis type, CSR motives, and leadership on WOM intention.

Table 2.

Descriptive Statistics.

Crisis type	CSR motives	Leadership style	Responsibility		WOMI		PI		N
Crisis type	CSR motives	Leadership style	M	SD	M	SD	M	SD	N
Victim	Intrinsic	Transformational	3.69	1.44	4.38	1.58	5.17	1.44	16
		Transactional	5.21	1.47	2.44	1.00	3.12	1.14	17
		Total	4.47	1.62	3.38	1.62	4.11	1.64	33
	Extrinsic	Transformational	4.47	1.14	3.01	1.04	3.63	1.14	19
		Transactional	5.37	1.41	2.04	0.96	2.79	1.27	19
		Total	4.92	1.34	2.53	1.11	3.21	1.27	38
	Total	Transformational	4.11	1.32	3.64	1.46	4.33	1.48	35
		Transactional	5.29	1.42	2.23	0.99	2.94	1.21	36
		Total	4.71	1.49	2.92	1.42	3.63	1.51	71
Preventable	Intrinsic	Transformational	5.85	1.17	2.95	1.40	3.80	1.90	20
		Transactional	6.29	0.77	2.79	1.51	2.93	1.63	19
		Total	6.06	1.01	2.87	1.44	3.38	1.80	39
	Extrinsic	Transformational	5.90	1.07	2.80	1.27	3.38	1.59	20
		Transactional	6.16	1.01	1.71	0.84	1.84	0.73	19
		Total	6.03	1.04	2.27	1.20	2.63	1.46	39
	Total	Transformational	5.88	1.11	2.88	1.32	3.59	1.74	40
		Transactional	6.22	0.89	2.25	1.32	2.39	1.36	38
		Total	6.04	1.02	2.57	1.35	3.00	1.67	78
Total	Intrinsic	Transformational	4.89	1.68	3.58	1.63	4.41	1.82	36
		Transactional	5.78	1.26	2.63	1.29	3.02	1.41	36
		Total	5.33	1.54	3.10	1.53	3.71	1.76	72
	Extrinsic	Transformational	5.21	1.31	2.90	1.15	3.50	1.38	39
		Transactional	5.76	1.28	1.88	0.91	2.32	1.13	38
		Total	5.48	1.31	2.40	1.15	2.92	1.39	77
	Total	Transformational	5.05	1.49	3.23	1.43	3.94	1.66	75
		Transactional	5.77	1.26	2.24	1.16	2.66	1.31	74
		Total	5.41	1.42	2.74	1.39	3.30	1.62	149

Note. WOMI = Word-of-mouth intention; PI = Purchase intention.

Hypothesis 3 (a and b) posited a three-way interaction effect between crisis type, CSR motives, and leadership style on purchase intention. The result of the third ANOVA revealed that there was a significant three-way interaction effect on purchase intention (F(1, 141) = 4.14; p < .05, partial η² = 0.03). We ran a series of post-hoc analyses to test the hypothetical relationships proposed in H3a and H3b. When the crisis type was victim (H3a), the two-way ANOVA showed that there was a significant interaction effect between CSR motives and leadership style on purchase intention (F(1, 67) = 4.12; p < .05, partial η² = 0.06). The following single effect analyses revealed that when CSR motives were intrinsic, those in transformational leadership style (M = 5.17, SD = 1.44) showed significantly higher purchase intention (F(1, 31) = 20.72; p < .001; partial η² = 0.40) than those in transactional leadership (M = 3.12, SD = 1.14). When CSR motives were extrinsic, however, there was no significant difference in between transformational (M = 3.63, SD = 1.14) and transactional leadership style conditions (M = 2.79, SD = 1.27) with F(1, 36) = 4.60, p > .05, η² = 0.11. Thus, H3a was supported. When the crisis type was preventable (H3b), a two-way ANOVA result revealed that there was no significant interaction effect between CSR motives and leadership style on purchase intention (F(1, 74) = 0.94; p > .1; partial η² = 0.12). Thus, H3b was supported. In sum, both H3a and H3b were fully supported. Descriptive statistics and interaction effects are demonstrated in Table 2 and Figure 2 respectively.

Figure 2.

Three-way interaction effects of crisis type, CSR motives, and leadership on purchase intention.

Discussion

We explored how a CSR-embedded crisis response functions, focusing on the role of values congruence between leadership styles and CSR motives. Crisis communication studies based on the SCCT have proposed and examined various (un)matching crisis response situations, confirming that crisis response strategies should be dependent on types of crisis. However, only a handful of studies have looked at the role of communicating CSR as a bolstering crisis response strategy, and even fewer studies have examined how leadership styles can influence the effect of CSR-embedded crisis response. We attempted to fill this gap by applying the PKM, examining how the public perceives corporate leadership styles (agent knowledge: transformational vs. transactional), in combination with their interpretations of CSR motives (persuasion knowledge: intrinsic vs. extrinsic), under the different types of crisis (topic knowledge: victim vs. preventable). We employed the SCCT as an umbrella theory and examined how, within that framework, values congruence between leadership styles and CSR motives mitigates the negative impact of a crisis.

Most interestingly, we found three-way interaction effects among the situational (crisis type) and responsive message (leadership style and CSR motives) variables on the two behavioral intentions: WOM and purchase intention. In the victim crisis, the public showed significantly higher purchase intention when the CSR motives were intrinsic and the leadership style was transformational (values congruent) than when the leadership style was transactional (not congruent). However, this difference between the leadership styles was reduced for WOM intention and disappeared for purchase intention when the CSR motives were extrinsic. In the preventable crisis, on the other hand, the difference between the two leadership styles occurred only when the CSR motives were extrinsic and not when the CSR motives were intrinsic. The results reveal that people respond to a company’s CSR communication, simultaneously considering not only its leadership style and CSR motives but also evaluating the combined effects differently in each distinctive crisis situation.

Recent studies have proposed the positive impact of values congruence, often conceptualized as stakeholders’ perception of how well their values are congruent with those of their leaders (Groves & LaRocca, 2011b) or as shared values determined by calculating the similarity between the leader’s and stakeholders’ self-reported values (Kristof, 1996). We applied this idea to our study. When stakeholders perceive that the CSR motives match the company’s leadership style (e.g., intrinsic CSR motives with transformational leadership), a synergetic effect occurs to insulate the negative impact of a crisis. When they do not match (e.g., extrinsic CSR motives with transformational leadership), however, such a synergetic effect may not occur, and accordingly, the insulating effect will be weakened. Studies (e.g., Du et al., 2013; Waldman et al., 2006) support the idea that leadership styles are significantly associated with CSR practices. Specifically, transformational leadership is positively associated with a corporation’s institutional CSR, which aims to achieve benefits for broader stakeholders (e.g., community well-being). Transactional leadership, on the other hand, is related to technical CSR, which refers to CSR actions designed to enhance product quality and safety or benefits of narrower stakeholders (e.g., employee healthcare or company’s profit increase; Godfrey et al., 2009; Mattingly & Berman, 2006).

Consistent with this line of research, we argue that values congruence between CSR motives and leadership style (e.g., intrinsic CSR motives with transformational leadership) plays an effective role in insulating the negative impact of a crisis whereas values incongruence (e.g., intrinsic CSR motives with transactional leadership) does not play such a role. However, this argument is not enough to address the three-way interaction effects—that is, why such an insulation effect occurred only in the victim crisis situation, but not in the preventable crisis. We can speculate that crisis responsibility attribution played a role. As the SCCT argues, crisis type (victim, accidental, or preventable) is a main factor determining crisis responsibility. The more control the company had in preventing the crisis, the more responsibility will be given to the company. It is possible that the heightened crisis responsibility in a preventable crisis triumphed over the insulation effect. It is also possible that a company involved in a preventable crisis is viewed as unethical. The unethical aspect of the crisis can create the perception of hypocrisy when previous CSR activities are communicated, because CSR activities are inherently perceived as an ethical behavior (Shim & Yang, 2016; Sohn & Lariscy, 2012).

This means that CSR communication can insulate the company from the negative impact of victim or accidental crises because both are ethically aligned. A CSR-embedded crisis response amplifies the negative impact when the organization is involved in a preventable crisis because the organization is viewed as unethical. The halo effect in the context of crisis communication research explains such a relationship. According to Coombs and Holladay (2006), prior reputation can create a halo effect that can protect an organization during a crisis. In particular, the prior reputation/halo as a shield effect seems to prevent potential reputational damage from a crisis. The halo as a shield phenomenon reflects the psychological concept of expectancy confirmation. For instance, stakeholders tend to focus on the positive aspects of the company and ignore the recent negative information generated by the crisis because of information processing biases toward new evidence to support previous conclusions or beliefs (Coombs & Holladay, 2006). Research shows the halo effect as a shield only in a limited crisis domain. For example, a very positive prior reputation can serve as a shield that deflects reputational damage from a crisis (Coombs & Holladay, 2006). As such, when ethical standards are not violated (i.e., in a victim crisis), the public can process the crisis information in a way to support the prior CSR activities/reputation, and therefore, the prior CSR reputation can serve as a shield and mitigate the negative impact of a crisis. However, when the crisis is viewed as unethical (i.e., in a preventable crisis), the public may fail to process the crisis information in a way to support the previous CSR activities/reputation). Accordingly, the prior CSR reputation may not function as a shield, thus not mitigating the negative impact of the crisis.

Taking the values congruence proposition together with the halo effect as a shield, we argue that values congruence between intrinsic CSR motives and transformational leadership can significantly insulate a company from the negative impact of a crisis when the organization is in a crisis that is not morally challenged (i.e., victim crisis). Our study demonstrated that the match between leadership and CSR motives (high values congruence) resulted in the highest WOM and purchase intentions. However, when there is an apparent transgression (i.e., preventable crisis), the congruence between transactional leadership and extrinsic CSR motives amplified the negative impact of a crisis, resulting in the least WOM and purchase intentions.

We did not find the same three-way interaction effect for crisis responsibility, however. We thus argue that a CSR-embedded crisis response can serve as a bolstering strategy that can help an organization recover positive behavioral intentions, but it may not mitigate crisis responsibility itself. That is, the role of CSR communication should be limited to recovering positive behavioral intentions, but not necessarily aim to reduce attributed responsibility driven by the nature of the crisis. This result is in line with the findings of a meta-analysis of SCCT: Impact of matching crisis response strategies on protecting reputation was much weaker than the crisis responsibility-reputation association (Ma & Zhan, 2016).

Theoretical and Practical Implications

Theoretically, this study contributes to the crisis management literature by showing the effects of a CSR-embedded crisis response within the frameworks of values congruence and the PKM. We applied values congruence to the crisis communication literature to explain how leadership style interacts with CSR motives under a different crisis situation. Studies have proposed that the CSR effect is maximized when the transformational leadership style matches the institutional CSR (e.g., Du et al., 2013). The PKM (Friestad & Wright, 1994) proposes that people cope with persuasive communication by simultaneously inferring persuasion knowledge and agent knowledge.

Given the limited research on the combined role of CSR and leadership styles in the crisis context, our results offer some evidence for the conditions under which a company’s CSR engagement—when paired with leadership—can buffer the company from different crisis situations. Applying the idea to the crisis context, we argue that the public proactively infers the underlying intention of CSR-embedded crisis response by interpreting CSR motives (persuasion knowledge) and the company’s leadership style (agent knowledge), which should be congruent to maximize the insulating effect of CSR communication in response to corporate crises. According to SCCT (Coombs, 2007b), organizations can use bolstering strategies (e.g., reminding stakeholders of the organization’s past good deeds) when they have positive relationships with their publics. Our findings contribute to the SCCT literature by demonstrating how the interplay between CSR motives and leadership styles functions as bolstering strategies by crisis types.

From a practical perspective, we suggest that when a crisis happens, communication professionals should promptly recognize the type of crisis and express an appropriate combination of CSR-embedded crisis response and leadership style. Specifically, if a victim crisis happens, the professionals can emphasize transformational leadership with intrinsic CSR motives to maximize the insulating effect of CSR. If a crisis is preventable or intentional, however, response messages with the combination of transactional leadership and extrinsic CSR motives should be avoided because it can escalate the negative consequences of a crisis. While CSR-based crisis communication should work in general, details of how to compose a CSR-embedded message are more important to cope effectively with the crisis. An incongruent combination of CSR motives and leadership style may deteriorate the crisis situation if any contrast effect occurs during the public’s processing of a CSR-embedded crisis response. This result is in line with Kim et al.’s (2017) study showing that when a company deals with a crisis issue involving a violation of its key corporate associations (e.g., when the company with CSR associations is accused of unethical behavior), the company should use more accommodative crisis response strategies.

Due to the real-time sharing of news through social media, today’s public is more likely to engage in active interpretation of news about corporate crises. A well-crafted crisis response strategy requires an understanding of public inferences, particularly through the concept of values congruence. Our findings highlight the importance of organizational leadership in utilizing CSR communication as a bolstering crisis response strategy in different crisis situations. It seems necessary for corporate leaders to create a socially responsible corporate culture based on CSR initiatives and utilize these initiatives to establish legitimacy (Carter & Jennings, 2004) during crises.

Our results showed that by lining up transformational leadership with CSR activities, a company can secure its strategic position when dealing with crisis situations. As transformational leaders place importance on meeting the needs of multiple stakeholders, they are more likely to perform intrinsic CSR that contributes to the overall well-being of society. When they consider intrinsic CSR activities, they can fully utilize their leadership characteristics such as envisioning goals and stimulating innovative thinking by their subordinates so that the activities can be further promoted and sustained by the employees. A socially responsible corporate culture, presumably together with values congruence between transformational leadership and intrinsic motives, will be evaluated positively by the multiple external stakeholders because they will view the CSR activities as more authentic and genuine. This synergy is beneficial for the company to maintain good relationships with multiple stakeholders, especially if the company is facing difficulties such as a crisis.

Limitations and Suggestions for Future Research

This study has several limitations. One is that we examined only victim and preventable crisis types. Future studies may investigate how values congruence works in a different crisis situation (e.g., accidental crisis) to show a comprehensive representation of SCCT crisis clusters. For the study’s effect size, a priori power analysis suggested a total sample size of 128 with power (1 − β) set at the recommended 0.80 level (Cohen, 1988). Although the study had 149 participants, it is still possible that the modest sample size could have limited statistical significance. Non-significant results, such as the absence of a three-way interaction among crisis type, CSR motives, and leadership style on crisis responsibility, should be explored in future research with a larger sample size.

We adopted the two items from Lee’s (2005) study for the measure of crisis responsibility, and future research should consider adopting additional dimensions for measuring crisis responsibility (e.g., blame, Coombs & Holladay, 2002). It appears that crisis responsibility was largely determined by crisis type in our study, but by further investigating dimensions of crisis responsibility, future studies can find another interesting dynamic between CSR motives and organizational characteristics affecting crisis responsibility. As the literature supports the mediating role of crisis responsibility attribution, which drives outcomes at the attitudinal or behavioral level (Coombs, 2010), future research can explore whether the perceived attribution of crisis responsibility as a mediator influences the relationship between the CSR perception-leadership style association and attitudinal/behavioral outcomes in the context of crisis communication. Lastly, we employed a fictitious crisis situation and company to prevent any irrelevant biases from affecting the results. To improve the external validity of our findings, it may be necessary to replicate our study in different crisis contexts and a real-life situation. In addition, we did not control the perceived severity of the crisis. Recent studies highlight the importance of crisis severity in crisis communication research and that high crisis severity can damage reputation regardless of crisis type (e.g., Zhou & Ki, 2018). Thus, future research should control or examine the impact of crisis severity.

Footnotes

Declaration of Conflicting Interests

The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

Funding

The author(s) disclosed receipt of the following financial support for the research, authorship, and/or publication of this article: This study was funded by Incheon National University (The Incheon National University Research Grant in 2017).

ORCID iD

Hyun Jee Oh

Author Biographies

Jeesun Kim (Ph.D., University of Missouri) is an associate professor in the Department of Mass Communication at Incheon National University, Korea. Her main research interests include crisis management and communication, the role of corporate social responsibility in the context of corporate crises, and strategic conflict management in public relations.

Hyun Jee Oh (Ph.D., University of Missouri) teaches at Hong Kong Baptist University, Hong Kong. Her research is centered on health communication and crisis management both involving message framing and relationship-building among and between different groups, including organizations, the media, and the public.

Chang-Dae Ham (Ph.D., University of Missouri) is an associate professor and Director of Graduate Studies in the Charles H. Sandage Department of Advertising at the University of Illinois at Urbana-Champaign, USA. His research focuses on how consumers cope with various persuasion tactics in contexts including online behavioral advertising, online video advertising, native advertising, and corporate social responsibility.

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