The impact of CSR

Topics: Corporate social responsibility, Brand, Pearson product-moment correlation coefficient Pages: 57 (6403 words) Published: December 14, 2013
Kajian Malaysia, Vol. 30, No.2, 2012, 71–93

THE IMPACT OF CORPORATE SOCIAL RESPONSIBILITY ON
CONSUMER LOYALTY
Murali Raman1*, Wayne Lim2 and Sumitra Nair3
1,2,3

Faculty of Management, Multimedia University, 63000 Cyberjaya

*

Corresponding author: murali.raman@mmu.edu.my

More firms today are beginning to realise the importance of corporate social responsibility (CSR), and its impact on societal well being, apart from the overall governance of the supply chain processes of every organisation. Ratings are being developed to measure performances of most firms with regard to their CSR efforts besides their financial performance. This rating would then be used to measure each firm's progress in the business world. Many studies have been conducted linking CSR to consumer loyalty. It is found that the higher the CSR rating the stronger the bond would be between these two. Given this scenario, the main objective of this study is to find relevant evidence to link consumer loyalty and CSR initiatives within a company. A case study approach was used to empirically test our research model derived from the literature. Quantitative analysis based on a total of 100 responses from a leading electronics manufacturer in Malaysia was used to address the research objectives. The findings of this study suggest that the higher the practice of CSR the stronger is the consumer loyalty towards a particular firm. The study also shows that by investing in CSR, a firm could achieve a positive outcome in terms of its financial performance. CSR can provide the additional competitive edge to a particular firm. However, the linearity of this relationship warrants more testing and empirical research.

Keywords: corporate social responsibility (CSR) in Malaysia, customer loyalty, brand equity

INTRODUCTION
In the past, financial performance was the major criterion to evaluate a firm's value. Higher ranks were given to firms that provide greater margins financially. Maximisation of shareholders' wealth was, by far, the focal point of profit-driven organisations. In this regard, the emphasis on CSR in the past was not evident. In this decade, however, the perception about CSR has changed significantly (Aasad, 2010). The success of a company is now also being measured by its contribution to society (Pokorny, 1995; Saunders, 2006). Through CSR, © Penerbit Universiti Sains Malaysia, 2012

Murali Raman et al.

individualistic and unscrupulous behaviour in business can be prevented (Pakseresht, 2010).
More firms today are beginning to realise the importance of CSR and its impact on societal well being. Ratings are being developed to measure performance of most firms with regard to their CSR efforts besides their financial performance. Such ratings are being carefully monitored by independent watchdogs such as Malaysia Stock Exchange (Bursa Malaysia) in the local context (Lim, 2011). To date, some countries have already made it compulsory to include CSR ratings into their corporate report and some are even required to publish their CSR scores to the public. This reaffirms the relevance of CSR to the context of modern day business and management. Many studies have been conducted linking CSR to consumer loyalty. Contemporary review of CSR related literature indicates that well implemented CSR initiatives can improve consumer loyalty (Aasad, 2010; Saunders, 2006; Pakseresht, 2010).

The main objective of this study is to ascertain whether CSR efforts do impact consumer loyalty in a given company. Do CSR initiatives have significant value in helping to attract indirect marketing value for companies? Does CSR help to enhance customer loyalty towards a particular company? These questions motivate this study. A case study approach was used to empirically test our research model which is derived from the literature. A quantitative analysis based on a total of 100 responses from a leading electronics manufacturer in Malaysia was used to address the...


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