Influence of Corporate Social Responsibity

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1. INTRODUCTION

1.1 Background of the Study Corporate social responsibility (CSR) initiatives are becoming increasingly important for organisations to succeed themselves in the business world (Visser, 2010). European Commission (2011) defines CSR as “the responsibility of enterprises for their impacts on society". However, it should be noted that the CSR definition remains elusive (Jamali, 2007). According to Porter’s generic theory, organisations may establish competitive advantages through differentiation strategies (Magretta, 2012). Berg and Engstrand (2011) mentioned that organisation can differentiate itself by associating CSR values in the brand, which may help in enhancing positive brand image and eventually result in positive purchase intention. However, the important role of CSR plays in an organisation has always been questioned since 1950’s, particularly when Friedman (1970) argues that corporate should focus only on the marketing strategies that lead to profit maximisation. Thus, this paper aims to understand the influence of CSR in helping to create positive brand association and brand image that may affect the consumer’s purchase intention.

1.2 Research Question How corporate social responsibility helps in developing positive brand association and brand image that eventually influences purchase intention towards a particular brand?

1.3 Objectives  To understand the impact of brand association, that build upon corporate social responsibility, on purchase intention  To investigate the relationship between corporate social responsibility, brand image and purchase intention 1

1.4 Research Framework

Brand Association Corporate Social Responsibility Brand Image Purchase Intention

Figure 1.0: Relationship between CSR and Purchase Intention Conceptual Framework

Figure 1.0 introduces the conceptual framework for this paper, outlining how importance of CSR as a variable, helps in developing positive brand association and brand image that affect purchase intention, which is the dependent variable.

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2. LITERATURE REVIEW

2.1 Perspectives on Corporate Social Responsibility (CSR)

The theoretical framework of this paper is based primarily on stakeholder theory. Stakeholder theory is argued to be ‘a necessary process in the operationalisation of CSR, as a complimentary rather than conflicting body of literature’ (Matten et al., 2003) because it focuses on how stakeholders (i.e. shareholders, creditors, employees, customers, suppliers, communities, governments) should view and act upon the organisation’s purpose according to some ethical principles, such as the ethical moralist current ‘Business Ethics’, the ‘Business and Society’ current and the ‘Social Issue Management’ (Friedman & Miles, 2006). CSR is proposed to be viewed as a strategy in encompassing the organisation’s goals that may comply with and promote sustainability (Rana et al., 2009). Based on stakeholder theory, Wong et al. (2011) emphasises that developing good relationship with stakeholders is susceptible of leading a particular organisation to increase financial advantages and developing valuable intangible assets (i.e. corporate reputation), which may be the sources of competitive advantage because such assets are very likely to differentiate the organisation from its competitors. Branco and Rodrigues (2007) also further support this argument by concluding that organisations have social responsibilities which require them to show concern and consider the interests of all stakeholders. In contrast, Mackey et al. (2007) propose mathematically that CSR initiatives may not necessary help in maximising the organisation’s future cash flow. In the recent meta-analysis of social performance-firm performance link, Margolis et al. (2007) also claim that although CSR effect on organisation performance is positive, yet it is analysed to be significantly small in contribution to the organisation’s receipts. Even though the financial...
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