Preexisting Cognition

It’s popular for companies to show they’re responsible corporate citizens. Google touts its solar-powered data centers. Apple talks about its use of recycled materials. Walmart describes its support for local communities.

But these narratives have some downsides, according to new research by Associate Professor Tim McQuade published in The Review of Economic Studies. With colleagues from the University of Chicago, McQuade demonstrates how positive corporate messaging can trigger negative associations among consumers, nudging them away from policies that support companies in times of crisis.

“Even if you frame information in a positive way, consumers with preexisting negative beliefs regarding social responsibility might draw up mostly negative experiences from memory,” McQuade says. “In this manner, the messaging can do the opposite of what’s intended.”

These results hinge on an updated model of consumer cognition that holds that people are not purely rational actors and generally only draw on a limited set of information to make decisions. Specific cues can influence what information they use.

The researchers recruited nearly 7,000 participants to complete a survey in May of 2020, when federal bailouts were under consideration for companies struggling under pandemic restrictions. Participants were shown one of four videos: one framed big companies as bad citizens (polluting, overpaying executives, etc.); one framed them as good citizens; another discussed economic stability provided by bailouts; and a fourth contained neutral instructions for a control group.

The first key finding was that “there’s this broad perception that corporations are not doing what people think they should be doing,” McQuade says. “We call this ‘big business discontent,’ and it becomes a necessary condition for what we find next.”

Survey participants who were cued to think about corporate social responsibility—whether the video framed this work positively or negatively—expressed much lower support for corporate bailouts than those who watched the video about stabilizing the economy. In fact, those who watched the positive video expressed even lower support for bailouts than the control group.

“Because recall is imperfect, the positive framing still brings to mind negative experiences,” McQuade says, such as the Enron accounting scandal, various environmental disasters, or poor wages. Meanwhile, participants who watched the video discussing how bailouts contributed to economic stability expressed support for the policy. 

The implications extend beyond corporate messaging into all realms of persuasion. As McQuade notes, groups often try to update people’s beliefs by providing positive information on some policy or action. 

“But if the domain or topic they’re talking about is one that many people have negative views on, then it is probably not the most effective way to gather support,” he says. “The framing effect could outweigh any positive PR effects of the communication.”