Can luxury brands be ethical? Reducing the sophistication liability of luxury brands

Abstract

Past research suggests that consumers may negatively evaluate luxury brands that engage in corporate social responsibility (CSR) because they do not perceive a consistency between luxury and ethical consumption (sophistication liability). As luxury is an increasingly relevant industry, it is important to understand how to promote ethical luxury consumption and cleaner production practices in luxury. This article extends previous findings and provides a framework that shows the conditions under which luxury and ethical consumption can be compatible. In particular, we find that consumers perceive sophisticated brands as less ethical than sincere brands when their social identity goals are salient (i.e., they focus on their social relationships); however, when consumers personal identity goals are salient (i.e., they focus on themselves), they perceive sophisticated brands as equally ethical as sincere brands. Finally, we also show that luxury brands' CSR actions should focus on the firms' own consumers whereas sincere brands’ CSR actions should focus on society in general. This research contributes to the literature on sustainability by demonstrating when and how sophisticated brands can engage in socially responsible practices like CSR and cleaner production.