Nonprofits Are Seen as Warm and For-Profits as Competent: Firm Stereotypes Matter

Consumers use warmth and competence, two fundamental dimensions that govern social judgments of people, to form perceptions of firms. Three experiments showed that consumers perceive nonprofits as being warmer than for-profits but as less competent. Further, consumers are less willing to buy a product made by a nonprofit than a for-profit because of their perception that the firm lacks competence. Consequently, when perceived competence of a nonprofit is boosted through subtle cues that connote credibility, discrepancies in willingness to buy disappear. In fact, when consumers perceive high levels of competence and warmth, they feel admiration for the firm—which translates to consumers’ increased desire to buy. This work highlights the importance of consumer stereotypes about nonprofit and for-profit companies that, at baseline, come with opposing advantages and disadvantages but that can be altered.