No long-term consequences for social irresponsibility? Adidas’ rent incident during the COVID-19 pandemic in Germany

ABSTRACT

Research question

How does corporate social irresponsibility affect a brand during a worldwide health crisis? This study investigates how Adidas’ announcement to withhold rent payments in Germany and the ensuing public criticism impacted its brand metrics.

Research methods

Nationally representative survey data on sentiment, reputation, purchase intent, and behavior for five major sporting goods manufacturers spanning 1,096 continuous days is combined with Google Trends and stock price data to estimate the causal impact of Adidas’ social irresponsibility using a series of Bayesian structural time-series models.

Results and findings

Adidas took a significant initial hit in sentiment and reputation immediately and months after the scandal. However, purchase intentions, consumer behavior, and stock prices indicate that the company continued to be a preferred brand.

Implications

Findings suggest that the pandemic affected the outcome of Adidas’ behavior in two ways. While the initial impact was likely amplified by the heightened public attention to corporate behavior during the crisis, lower-funnel and long-term effects might have been mitigated by the rapid development of the pandemic that caused public attention to shift.

KEYWORDS:

• Marketing
• social responsibility
• sporting goods
• consumer behavior
• brand perceptions

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 Rorsted explained that payments would only be delayed rather than cut; and that most of the affected landlords were large real estate management companies rather than individuals.

2 Adidas ran a full-page advertisement containing a formal apology in major German daily newspapers; see Amirkhizi (2020) and Reuters (2020) for the original advertisement and additional information.

3 Alongside Adidas, two other companies (Swedish clothing-retail company H&M and one of Europe's largest footwear retail chains, Deichmann) announced similar rent cuts, but neither received nearly as much attention.

4 Adidas constantly ranked as the sporting goods manufacturer with the most positively sentiment in Germany (see Figure 6).

5 Even though it is beyond the scope of this analysis to evaluate Adidas's response to the the socially irresponsible behavior in detail, it needs to be noted that the company engaged in several image reparation efforts, such as public apologies and reversing the initial decision to withhold rent payments.

6 In addition to the sample used for analysis, we downloaded the entire history of Adidas’ brand tracking from YouGov to explore the impact of different crises and get a better sense for the data.