A century ago, American Psychologist Edward Thorndike observed something fascinating while studying military personnel. He observed that when commanding officers rated their subordinates on qualities such as leadership, character, & intelligence, soldiers who were simply taller or more attractive were consistently rated as more intelligent and better leaders (Thorndike, 1920).
This cognitive shortcut was later coined as “halo effect” , which refers to the tendency for a single positive trait to favourably influence judgment on completely unrelated attributes (Thorndike, 1920). This phenomenon remains one of the most powerful forces shaping how consumers and employees perceive brands and organisations today.
In business and management context, psychological biases employ a significant effect over brand perception and corporate reputation. Today’s organisations tactically harness this phenomenon through authentic corporate social responsibility (CSR) and good actions. When a positive imprint is formed based on an organisation’s commitment to social or environmental initiatives, that promising perception radiates outward. It affects assessments of product quality, ethical standards and complete trustworthiness (Parera, 2023; Perez, 2021).
CSR is no longer an afterthought, but rather a fundamental driver of brand equity and consumer loyalty. Research confirms the deep nature of this influence, signifying that it activates 42% of a brand’s image in consumers (Birkett, 2023; Nancholas, 2025; Noor, et al., 2023). The present marketplace consumers look for authenticity and trust, focusing on value. Approximately 80% of consumers require trust in a brand before making a purchasing decision (Dompnier, et al., 2006). Organisations that genuinely commit to good deeds create a compelling market opportunity. A recent study found that 33% of consumers actively choose brands they believe are doing social or environmental good, representing an estimated market value of $1.2 trillion (Weed, 2025).
The halo effect also provides disproportionate returns on investment in marketing. Research shows that the halo effect accounts for approximately 50% of advertising’s total impact, allowing messaging for one initiative to positively influence the entire brand portfolio (WARC, 2025; Thanigaimani & Reddy P, 2024).
The power of halo manifests across diverse industries. Outdoor retailer Patagonia’s motto, “We’re in business to save our home planet,” is operationalised through guarantees of donating 1% of total sales to environmental causes and ensuring that 87% of products are made from recycled materials (Ferrell, et al., 2021; Mckinsey, 2023), creating an influential halo which extends positive perception to not just product quality but also to corporate integrity. Equally, in the automotive and energy sectors, Tesla holds a reputation for cutting-edge innovation and a perceived environmental mission, driven by its efforts to reduce its dependence on fossil fuels. The electric vehicles it creates create a halo that bolsters consumers’ confidence in entirely separate product lines (Lang, et al., 2019; Miller, 2013).
On a more internal level, good actions significantly improve the organisational culture and competitiveness in the talent market. CSR initiatives create employee engagement by aligning work with personal values, which measurably improves retention. Employees who participated in a social impact project were approximately 50% less likely to leave the organisation compared to those who did not (London School of Economics, 2025).
Research indicates that 45% of UK employees rank “great culture” as the one of the most important factor when seeking new employment, more important than salary (31%) and flexible working (27%) (People Management, 2025; Rovert Walters, 2015). CSR directly contributes to this by defining this positive culture, creating a halo effect around the employer brand (Bhalla, n.d.). Furthermore, employee volunteers are twice as likely to recommend their organisation to a job seeker, fueling a cycle of attraction (Team Benevity, 2025).
This evidence overwhelmingly supports that good deeds are not just “nice-to-haves” but fundamental strategic imperatives. Purposedriven brands grow considerably faster than competitors, demonstrating that leveraging the halo effect through candid commitment to social responsibility is foundational to sustained competitive advantage and building lasting relationships with all stakeholders.
References
• Bhalla, K., n.d. [Online] Available at: https://mantra.care/employee-retention/csr-andemployee-retention/
• Birkett, A., 2023. Halo Effect in Marketing: 6 Examples in Persuasion Strategies. [Online] Available at: https://cxl.com/blog/halo-effect/ [Accessed 2025 21 2025].
• Dompnier, B., Pansu, P. & Bressoux, P., 2006. An integrative model of scholastic judgements: Pupil’s characteristics, class context, halo effect and. European Journal of Psychology of Education, 21(2).
• Ferrell, O. et al., 2021. From the Outside In: Corporate Social Responsibility at Patagonia. [Online] Available at: https://harbert.auburn.edu/binaries/documents/center-for-ethicalorganizational- cultures/cases/patagonia.pdf
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• Perez, K., 2021. The impact of CSR on brand perception: COVID’s role in the relationship. [Online] Available at: https://www.drpgroup.com/en/news-blog/the-impact-of-csr-on-brandperception-covids- role-in-the-relationship [Accessed 21 10 2025].
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• Thanigaimani, S. & Reddy P, S., 2024. Corporate Social Responsibility and Its Impact on Brand Loyalty Among Millenial Consumers. International Journal of Commerce, Mangement. Leadership and Law, 1(1), pp. 9-20.
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• Weed, K., 2025. Unilever Consumer Study Shows A Third of Consumers Prefer Brands Doing
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