Corporate Social Responsibility

And Its Effects On Customer Behavior

An experimental study on how different types of CSR activities

impact customer loyalty, purchase intentions and word of mouth
within the retail industry.

Universiteit Maastricht
Faculty of Economics and Business Administration

Heike Mesarosch (i526096)

International Business – Strategic Marketing

Master Thesis

Supervised by Thomas Krings

Maastricht, November 2008

EXECUTIVE SUMMARY
Corporate social responsibility (CSR) is the manifestation of the idea that a company is an
integral part of society and therefore has to acknowledge responsibility to all of its
stakeholders. With CSR activities companies cannot only support a broad range of good
causes in different fields of social and environmental issues, but they can also positively
influence customer behavior. CSR was found to positively affect customer attitudes, product
evaluation, purchase behavior, word of mouth, and loyalty. However, not all researchers
confirm these positive relationships. Missing links are attributed to extraneous influences that
undermine the positive effects of CSR on behavior. The key influence is attributed to the
CSR activity itself. This study aims to shed light on whether the type of CSR activity
employed actually influences the behavioral outcome. Thereby it is concentrated on three
customer behaviors of major importance (i.e. loyalty, word of mouth and purchase intentions)
and on an industry that is characterized by close customer contact and thus dependent on
customer behaviors: the retail industry. The study examines if all types of CSR activities lead
to positive customer behavior and which type has the most impact on which element of
customer behavior. Additionally, it is explored if the effects of the different types differ across
demographic groups. In order to be able to analyze the differences in effectiveness between
CSR activities, first of all a valid classification of CSR activities is needed. Based on thorough
research of CSR activities applied in practice, the study develops a new taxonomy of CSR
activities based on two dimensions with two levels: direct vs. indirect customer involvement
and external vs. internal company engagement. Accordingly, four different CSR types evolve:
Good Deed For Sale (Type 1), Good Produces Good (Type 2), Distant Benefactor (Type 3)
and Sustainable On The Inside (Type 4). An experiment set in the fashion industry is created
with four scenarios, each representing one CSR type. In an online survey 219 respondents
are randomly assigned to one scenario. Using one-way ANCOVA the types are tested for
differences in effect on word of mouth, purchase intention and loyalty while controlling for the
extraneous influences of perceived fit, perceived sincerity and personal support of the good
cause. The results indicate that for purchase intention and loyalty, the type of CSR is not
deciding in this study: The four types do not substantially differ in their effect – however, a
tendency is observable: Type 1 always scores highest with a positive effect on all three
behavioral outcomes. For word of mouth, Type 1 (Good Deed For Sale) is even significantly
different from the other types in its positive influence. However, there are no differences in
responses across demographic groups. As an implication, managers are advised to
implement a type 1 activity if they intend to leverage customers’ recommendation behavior.
For theorists, the taxonomy is a first step to a commonly understood basis of classifying CSR
activities. Further, the findings confirm that at least certain behavioral outcomes are
susceptible to the type of CSR activity. Future research should address the exploration of
other outcomes and of further extraneous factors that influence CSR’s effectiveness.
TABLE OF CONTENTS

1. INTRODUCTION............................................................................................................... 1

2. LITERATURE REVIEW ..................................................................................................... 9

2.1 Corporate Social Responsibility – A Definition ............................................................. 9
2.2 CSR in Marketing........................................................................................................11
2.2.1 CSR and customer responses ..............................................................................13
2.2.1.1 Attitude ..........................................................................................................13
2.2.1.2 Product and Company Evaluation ..................................................................14
2.2.1.3 Purchase Behavior.........................................................................................15
2.2.1.4 Loyalty ...........................................................................................................16
2.2.1.5 Word-of-mouth ...............................................................................................17
2.2.2 Moderating Influences on Customer Behavior ......................................................18
2.2.2.1 Product Quality and Price ..............................................................................18
2.2.2.2 Skepticism / Perceived Sincerity ....................................................................18
2.2.2.3 Perceived Fit between Company and Good Cause........................................19
2.2.2.4 Consumer-Company Identification .................................................................19
2.2.2.5 Personal Support of the Good Cause.............................................................19
2.2.2.6 Perceived Personal Affect ..............................................................................19
2.3 CSR Initiatives ............................................................................................................21
2.4 Taxonomy...................................................................................................................22
2.4.1 Taxonomy – A Definition.......................................................................................22
2.4.2 The Development of a Taxonomy of CSR Activities..............................................24
2.4.3 The Types of CSR Activities .................................................................................27
2.4.3.1 Good Deed For Sale (Type 1) ........................................................................27
2.4.3.2 Good Produces Good (Type 2) ......................................................................28
2.4.3.3 Distant Benefactor (Type 3) ...........................................................................29
2.4.3.4 Sustainable On The Inside (Type 4)...............................................................30
2.5 Model..........................................................................................................................32

3. RESEARCH DESIGN.......................................................................................................33
3.1 The Research Setting .................................................................................................33
3.2 The Experiment ..........................................................................................................34
3.3 The Questionnaire ......................................................................................................35
3.4 The Measures.............................................................................................................37
3.4.1 Measuring Loyalty and Underlying Constructs......................................................37
3.4.1.1 Measuring Purchase Intention........................................................................38
3.4.1.2 Measuring Word of Mouth..............................................................................38
3.4.1.3 Measuring Attitudinal Loyalty .........................................................................39
3.4.1.4 Measuring Propensity to be Loyal ..................................................................39
 3.4.2 Controlling Extraneous Variables..........................................................................40
3.4.2.1 Measuring Personal Support of the Good Cause ...........................................40
3.4.2.2 Measuring Perceived Sincerity.......................................................................41
3.4.2.3 Measuring Perceived Fit between Company and Good Cause ......................41
3.4.2.4 Controlling Product Quality and Price.............................................................41
3.4.2.5 Controlling Consumer-Company Identification ...............................................42
3.4.2.6 Controlling Perceived Personal Affect ............................................................42
3.4.3 Demographics ......................................................................................................45
3.5 Conducting the Research............................................................................................45
3.6 The Sample ................................................................................................................46
3.7 Data Preparation.........................................................................................................47
3.8 Reliability and Validity of the Scales............................................................................48

4. RESULTS AND DISCUSSION .........................................................................................51

4.1 Preliminary Tests ........................................................................................................51
4.1.1 Normality ..............................................................................................................51
4.1.2 Linearity................................................................................................................51
4.1.3 Homogeneity of Variance .....................................................................................51
4.1.4 Homogeneity of Regression Slopes......................................................................52
4.1.5 Reliability of Covariates ........................................................................................52
4.1.6 Correlations among the Covariates ......................................................................52
4.2 Analysis of Covariance ...............................................................................................52
4.2.1 The Effectiveness of the CSR Activities on Loyalty...............................................53
4.2.2 The Effectiveness of the CSR Activities on Word of Mouth...................................54
4.2.3 The Effectiveness of the CSR Activities on Purchase Intention.............................56
4.2.4 The Influence of Demographics on Behavioral Outcomes ....................................57
4.3 Discussion ..................................................................................................................57
4.3.1 The Impact of the Different Types of CSR Activities .............................................58
4.3.2 The Impact of the Covariates................................................................................59
4.3.3 The Impact of Demographic Groups.....................................................................60

5. CONCLUSION .................................................................................................................62
5.1 Theoretical Implications ..............................................................................................63
5.2 Practical Implications ..................................................................................................64
5.3 Limitations and Future Research ................................................................................65

6. REFERENCE LIST...........................................................................................................69

7. APPENDIX .......................................................................................................................78
 INTRODUCTION

1. INTRODUCTION

The safety of children as well as the continuous trust of their parents are the two most
important principles a toy company strives for. However, in the case of the world’s largest toy
company, Mattel, customers’ confidence was severely shaken when in 2007 Mattel
announced that a range of its toys are posing a serious health hazard to children. It turned
out that Mattel first of all made severe construction and design mistakes and second did
knowingly not control the safety and quality standards of their Chinese production partners.
The produced toys included hazardous paint and little magnets that could easily be
swallowed by small children (www.focus.de). Thousands of these dangerous toys were
brought to market because Mattel missed to react to the grievances on time. When the
severe shortcomings on quality became public, Mattel was forced to start several callbacks,
in particular of large parts of the Fisher-Price series and Barbie dolls. In total, more than 20
million Mattel products were retrieved from the market. Not only did the trust parents had in
Mattel deteriorate dramatically with disastrous consequences for Mattel’s image, but also did
Mattel incur heavy losses. The Barbie brand alone noted a loss of $46.6 million in the first
quarter of 2008 due to stagnating revenues and the drastic additional costs of the recall
(www.focus.de).

The recent example of Mattel shows impressively how irresponsible behavior can harm a
company’s success. Mattel has not been the first company suffering from tremendous
damages to the corporate image. Already in the 1990s, for example, the famous case of
Nike’s sweatshops drew the attention of the public towards socially irresponsible company
politics. In 1997, an audit by Ernst & Young assigned by Nike Inc. leaked to the public. It
revealed that Nike let produce its footwear and apparel in Asian factories where workers
were exploited or had to work under unacceptable conditions (Hammond, 1997). Nike’s
unethical behavior led to severe negative repercussions for the firm. Especially as not only
social activists heavily criticized Nike’s immoral behavior publicly, exerting “intense pressure
(...) on the athletic giant [and] forcing it to take a long hard look at corporate responsibility”
(Zadek, 2004, p.125). More strikingly, there was an immense public outcry in western
societies in general and among Nike’s customers in particular. Still today, social activists
report about Nike’s (in)actions concerning their production policies (www.info-center.tv) and
call consumers to boycott Nike for its unethical behavior (www.stopnikesweatshops.org).

Both examples show that a company is never an isolated institution for itself but is part of the
environment it operates in. In fact, a company is always an active and influential part of
society and should therefore act responsibly – for the sake of its stakeholders and not at

1
 INTRODUCTION

least for its own benefits. This perception is called corporate social responsibility (CSR) and
is nowadays a much-discussed topic in business contexts. The European Commission
defines CSR as "a concept whereby companies integrate social and environmental concerns
in their business operations and in their interaction with their stakeholders on a voluntary
basis" (http://ec.europa.eu). CSR is supposed to bring benefits to various stakeholder
groups. As a consequence, stakeholders might establish a positive behavior towards the
firm, which in turn can result in benefits for the firm again. As Creyer and Ross (1997) proved
this certainly holds for one of the most important stakeholder groups, namely customers:
customers expect a company to be socially responsible and – most crucial – are willing to
reward ethical behavior.

Indeed, a steadily growing group of consumers has been starting to look for socially
responsible companies from which to buy sustainable products. These consumers are said
to be sophisticated and environmentally and socially conscious (Forster, 2007). The new
type of consumer poses a growing target group as already the Cone Corporate Citizen Study
showed: In 2004, 80% of the U.S. citizens stated that corporate support of causes wins their
trust – a 21% increase compared to 1997 (www.coneinc.com). Furthermore, a recent study
by Alloy Media+Marketing (2006) confirms the emerging trend towards social consciousness
among customers as it revealed that 24% of the U.S. college students bought a product in
the antecedent year because they considered the brand as socially aware (Seckler, 2006). In
2007, a LOHAS (Lifestyle of Health and Sustainability) study investigated consumer habits
and attitudes in the U.S. and 8 countries of the EU (Germany, Netherlands, Belgium, France,
Spain, Portugal, Great Britain and Italy). It revealed that 14.5% of the population (49 million
people) of the European countries and 13% of the U.S. American population (40 million
people) are LOHAS supporters (www.fundh.de). The percentage of consumers that live
according to the so-called ‘lifestyle of health and sustainability’ are estimated to grow to 15%
in Germany and 30% in the USA in 2008 (Forster, 2007). Hence, in two of the world’s biggest
consumer markets, the U.S. and Europe, a significant percentage of customers is apparently
thinking in new ways towards more sustainability of companies and products. This evolution
has grave implications for the business strategies of global companies.

Due to the changing consumers alone, CSR is certainly an issue of importance in every
industry. However, in some industries the need to adopt a CSR-strategy is even more
apparent than in others. For one reason, some industries are naturally involved with sensitive
issues just based on the business they are in. For instance, the oil industry obviously has a
special responsibility towards the environment whereas the tobacco industry has a special
responsibility towards society and especially the youth. Other industries, however, just gain a

2
 INTRODUCTION

high level of public attention through the media and are very much in the awareness of
consumers. This has certainly been the case for the fashion industry through Nike’s case in
the 1990s. As a result, consumers today know that due to globalization and the consequent
need to cut costs most fashion companies worldwide have outsourced their production to
development countries. And that this often happens under questionable conditions – child
labor, dumping wages and inhuman working conditions are just some examples of social
irresponsibility in the apparel production. Above that, the methods of the manufacturing and
supply of raw materials are also issues often criticized. The main factors are (unfair) trade
conditions with cotton farmers (Kleinewiese, 2007) and the treatment of cotton with
pesticides that are harmful to the environment (www.icac.org). Many fashion companies
today are aware of the special situation of their industry that is involved with many issues that
require the development of CSR policies. Furthermore, the companies have acknowledged
the urgent need to adapt strategies according to the demands of the changing consumers.
The opinion of a consumer is of great significance for a fashion company as a consumer only
buys, wears and recommends a branded apparel if his attitude towards the company is
positive. There are numerous examples of fashion companies that successfully communicate
their commitment. American Apparel, for instance, suggests already with its slogan “Made in
Downtown L.A.” its social contribution: They produce apparel in their home country where
they pay their factory workers above industry-average and offer their employees additional
benefits like private health insurance (Hendley, 2002). After a sweatshop scandal in the
1990s, Levi Strauss & Co. has started cooperating with unions and activists in order to
improve working conditions in its factories (Colwell, 2002). Since then, Levi Strauss & Co.
has engaged in community support, environmental friendly apparel production (partly with
organic cotton) and many more social issues, like the Red Tab Foundation
(www.levistrauss.com). Levi Strauss & Co. is obviously aware of the fact that consumers pay
attention to the company’s social engagement and that social activists closely monitor the
company’s activities. Consequently, the company tries to communicate that it takes its role
as a corporate citizen very seriously.

Clearly, those companies do not aim to become ideal corporate citizens merely out of
altruism but also in order to receive benefits in return. CSR can be a competitive advantage
as it influences customers and their behavior in a positive way, which leads to beneficial
outcomes for the company in the end. In the fashion industry, three facets of customer
behavior are of particular relevance and hence a desired outcome of CSR activities. What
these behaviors are and why CSR is an efficient tool for a fashion company to enhance
these behaviors is described below.

3
 INTRODUCTION

Loyalty
The fashion industry is competitive and fast-moving. Hence, in order to survive and prosper,
it is crucial for a company to build a stable customer base that stays loyal in a fast-changing
environment. Loyalty is not just a matter of repeated purchases but also of a personally held
belief about a brand or product (Oliver, 1999). Especially in fashion it is crucial that
customers trust and believe in a brand and the company behind it as consumers publicly
show their support for a brand when wearing branded apparel. They would not wear a brand
if they would not feel loyal or at least positive towards it. CSR is expected to enhance loyalty
(Pirsch et al. 2007). However, it has to be considered that „loyalty is an outcome of the
consumer-company identification concept” (Bhattacharya and Sen, 2004, p.19) which is in
turn influenced by the personal support of the CSR issue. Thus, proposedly, only the CSR
initiatives that fit the target group find customers’ personal support and can trigger consumer-
company identification and thus leverage loyal behavior.

Purchase Intention
For a fashion company, as for any other company, the purchase intentions of customers are
of utmost importance for two reasons. First of all, they potentially create sales and profits and
are a precursor of behavioral loyalty (Chaudhuri and Holbrook, 2001) that enhances cash
flows and secures long term survival (Jacoby and Chestnut, 1978). Second, purchase
intentions are also an indication of positive experiences the customer has made and thus a
signal for a company that customers perceive their products as favorable (Gupta and
Zeithaml, 2005). In order to positively influence their customers’ purchase behavior, a fashion
company can use CSR as an efficient tool. CSR can leverage purchase behavior (Creyer
and Ross, 1997), especially when the customer personally supports the CSR issue
(Bhattacharya and Sen, 2004; Carrigan and Attalla, 2001) and perceives the CSR activity as
sincere (Bronn and Vrioni, 2001; Yoon et al., 2006) and the fit between the good cause and
the company as high (Bhattacharya and Sen, 2004).

Word of Mouth
“One of the key behavioral outcomes of positive CSR activities is consumers’ willingness to
talk positively about the socially responsible company” (Bhattacharya and Sen 2004, p.20).
For a fashion company word of mouth (WOM) is indeed especially important. This is due to
the fact that by choosing an apparel brand consumers often rely on what their peers buy or
recommend to them. Especially young people consider it important which brands their friends
wear or consider as ‘cool’ (Grant and Stephen, 2005). Eventually, WOM can improve the
image of a brand and thus also leverage purchase intentions. It is advisable for a fashion
company to employ CSR as an efficient tool in promoting a brand as CSR positively

4
 INTRODUCTION

influences word of mouth. However, it is proposed that certain types of CSR might enhance
word of mouth more than others (Bhattacharya and Sen, 2004).

Also in theory, CSR has long been a relevant topic. The academic discussion on CSR can be
traced back into the 1950s where CSR as an overall construct was mainly relevant in
management literature (Carroll, 1999). Since the 1970s CSR’s impact on different
stakeholders has been studied. Research in this field started with examinations of CSR’s
influence on shareholders and employees (Gavin and Maynard, 1975) but gradually led to
research on the relationship between CSR and customers and hence became a relevant
topic for marketing scholars, too. The most significant studies in this field evolved in the late
1990s and focused on the relationships between CSR activities and different facets of
customer behavior. CSR was found to influence attitude (Becker-Olsen et al. 2006; Folkes
and Kamins, 1999), product and company evaluations (Brown and Dacin, 1997; Sen and
Bhattacharya, 2001), purchase intention (Bhattacharya and Sen, 2004; Boulstridge and
Carrigan, 2000; Carrigan and Attalla, 2001), willingness to pay (Creyer and Ross, 1997),
loyalty (Bhattacharya and Sen, 2004; Pirsch et al., 2007) and word of mouth (Bhattacharya
and Sen, 2004). During these studies the need emerged to learn more about which CSR
strategies have an impact on customers. Authors found that it does matter what kind of CSR
activity a company chooses and that not all CSR activities influence customer behavior in the
same way or to the same amount: Already in 1997, Creyer and Ross said that further
insights are needed under which circumstances customers care about ethics the most. Later,
Sen and Bhattacharya (2001) concluded that “managers may want to research a variety of
CSR initiatives and select those that enjoy the highest and most widespread support among
the company’s key consumer segments” (p.238). Boulstridge and Carrigan (2000) claim that
only a CSR activity that impacts personally upon the consumer would influence purchasing
behavior. They suggest that “further research on this subject may produce some useful
insights and provide guidance to business on how to best plan corporate behavior for most
impact on consumers” (Boulstridge and Carrigan, 2000, p.365). Similarly, Carrigan and
Attalla (2001) found low interest of consumers in social issues and no influence on purchase
behavior. However, when exploring the reasons for this the authors found that respondents
cared only about certain kinds of social issues. Some issues “did matter to them enough to
affect purchase behavior. Respondents stated they would be willing to pay a premium price
and actively search for a socially responsible produced product” (p.569). This is obviously
contradictive to what was said before by the respondents and calls for closer investigation.
Further the authors find that “young consumers seem to find animals more sympathetic than
people, while other consumer groups may champion different issues. This is something else

5
 INTRODUCTION

that future research should investigate as it has important implications for the ethical profile
of any company and its products” (p.571).

In conclusion, CSR does have a positive impact on customer behavior, however this impact
is not consistently proven across different studies. Researchers assume the reason for this to
lie in the CSR activity itself. In general, CSR activities are an under-researched topic. Thus
far, just one attempt was made to classify CSR activities for subsequent analysis (Pirsch et
al., 2007). However, a classification of CSR activities is indispensable when wanting to
explore their effects and most importantly their differences. Apparently, there is a gap in
literature when it comes to the question which types of CSR activities exist and which of
them are most influential on customer behavior and hence bring the most benefit to a
company. An answer to this question would not only contribute to academic research but
also facilitate efficient decision making for managers. The study at hand intends to examine
different types of CSR activities in relationship with three of the most crucial behavioral
outcomes, i.e. loyalty, purchase intentions and word of mouth, in the context of the retail
industry. Characteristic for the retail industry is a close customer contact. Thus, a direct
influence on customer behavior is desirable and – given the right strategies – possible. CSR
can be one of these strategies to positively impact customers. Thus, CSR is especially for
the retail industry an important issue. Consequently, in summary this study proposes the
following as the central problem statement:

“How do different types of CSR activities impact customer loyalty, purchase intentions and
word of mouth in the retail industry?”

In order to solve this question, first of all a valid classification of CSR activities is needed.
The study develops a new taxonomy of CSR activities based on two dimensions that each
have two levels: direct vs. indirect customer involvement and external vs. internal company
engagement. Accordingly, four different types evolve: Good Deed For Sale (Type 1), Good
Produces Good (Type 2), Distant Benefactor (Type 3) and Sustainable On The Inside (Type
4). The taxonomy is easy to implement and hence useful in practice but also in theory since it
might deliver a commonly understood basis for further research. It will be the core of this
research to find out if CSR indeed affects word of mouth, purchase intention and loyalty
positively, and if all four types of CSR activities lead to the desired behavioral outcomes or if
there are differences in their effectiveness. It is also explored which type has the most impact
on which element of customer behavior. For example, a certain type might be most suitable
to enhance word of mouth, while in order to leverage purchase intention another type is most
appropriate. In order to test for differences, an experiment with four scenarios is developed.

6
 INTRODUCTION

Each scenario represents one type of CSR activity. Respondents are randomly assigned to
one scenario. Finally, one-way ANCOVA is used to analyze the differences between the
types (i.e. scenarios) on the behavioral outcomes. Additionally, it is tested which types of
CSR activity appeal to which customer segments within the retail industry (i.e. demographic
groups across age, gender, education and income). Maybe some customers only react to
direct CSR activities that affect them personally (like for example clothing made of organic
cotton which guarantees that they are wearing chemical-free fabric on their skin), whereas
other customers might tend to react more strongly to company-internal CSR activities (like
extraordinary positive treatment of employees) because they render them a higher credibility.

As mentioned before, the field of CSR in customer behavior research is still relatively young
and many of the first studies are based on exploratory research. Often studies produce
opposing results. However, CSR is becoming a crucial topic in practice: First of all, because
consumers more and more expect companies to engage in CSR (Creyer and Ross, 1997;
Foster, 2007) and second because managers increasingly see the potential of CSR as a
competitive advantage (Pohle, 2008). Thus, it is essential to know how CSR operates.
Consequently, marketing theory has the task, if not the responsibility, to fully investigate
CSR’s effects on customer behavior and how it can be successfully implemented as a
marketing tool. This is where this study is positioned: It intends to clarify how CSR influences
customer behavior. Marketing researchers asked for the identification of CSR activities that
are most effective for companies when using CSR to positively influence customer behavior
(Carrigan and Attalla, 2001; Boulstridge and Carrigan, 2000). The study at hand attempts to
close this gap in marketing literature and to increase the understanding of CSR activities as
an important marketing tool.

CSR does not only have relevance for marketing theorists but also for marketing
practitioners. Often a company is engaged in supporting several good causes and hence
mostly also in performing different types of CSR activities. When promoting a certain cause
though, managers face the challenge to decide what kind of CSR activity to integrate into
marketing strategy. A good cause can be supported in different ways, for example the
customer can be involved directly or indirectly, the engagement of the company can be
internal or external to the organization. In order to use CSR as a successful marketing tool
when communicating with its customers, a company has to know which CSR activity is most
effective in influencing customer behavior. When it comes to CSR activities directed at
customers it is certain that “one size does not fit all” (Bhattacharya and Sen, 2004, p.10).
Different customers are responsive to different types of CSR activities. Therefore, this study
develops a taxonomy classifying all possible CSR activities into four different types and tests

7
 INTRODUCTION

the effectiveness of the four different types on customer behavior in general and on certain
customer groups in particular (e.g. customer segments based on age and gender). The
results of the study help managers decide which CSR activity to implement and to
consequently communicate to their environment. This decision might also depend on the
characteristics of the customer base a company has. It is important for managers to ensure
that a CSR activity has the desired impact on customers otherwise they risk that resources
are being wasted. Besides, a successful CSR strategy leads to actual payback for the
company. When a company engages in CSR it does this also for its own benefit as the role
of a benefactor alone is simply not the function of a business. However, as an outcome of the
company’s engagement, three parties are positively affected (Bhattacharya and Sen, 2004),
which equals a win-win situation: First of all, the good cause receives financial support and
public attention. Second, the customers’ sense of well-being is enhanced and often
customers directly benefit from CSR based products (e.g. organic food, clothes of organic
cotton etc.). Third, CSR positively effects customer behavior by increasing loyalty and word
of mouth engagement and enhancing purchase behavior. This is in turn beneficial for the
focal company. Eventually, the overall beneficiary is society.

The remainder of this thesis consists of four further chapters. First, a literature review gives a
detailed overview of CSR as a relevant topic in a business context. The historical
development and CSR’s diverse definitions are examined. A particular focus lies on the
meaning of CSR in marketing. Thereby the most crucial research of CSR in relation to
customer behavior is reviewed. Customer responses to CSR and influencing factors on
CSR’s effects are introduced and the role of CSR initiatives in this context is discussed.
Especially for the study at hand, a taxonomy of CSR activities is developed that is
considered to build the basis to solve the research problem. Subsequently, according
hypotheses are derived. The subsequent chapter illustrates the research design. A
questionnaire for an online survey has been developed to collect the required data. The
measures employed, the execution of the research and the profile of the actual sample are
specified. Next, the hypotheses are tested through according statistical tests whose results
are introduced and explained in a separate chapter. Finally, the conclusion summarizes
relevant implications of the results in a theoretical and managerial context and gives direction
for future research on CSR activities.

8
 LITERATURE REVIEW

2. LITERATURE REVIEW
With CSR activities a company can support a broad range of good causes in different fields
of social and environmental issues. However, CSR activities do not simply differ in the good
cause they support. In fact, it is proposed that the most significant factor that differentiates
CSR activities from each other is the way in which a company engages in CSR. This is
assumed to be deciding in how much effect CSR has on customers and their behavior. It is
the aim of the study to extend existing marketing literature by examining how different types
of CSR activities (i.e. ‘Good Deed For Sale’, ‘Good Produces Good’, ‘Distant Benefactor’ and
‘Sustainable On The Inside’) impact customer behavior (i.e. purchase intention, loyalty and
word of mouth). The objective of this chapter is first to reveal a detailed understanding of
CSR (2.1) and to introduce CSR’s role in a marketing context (2.2) with a focus on CSR’s
effects on customer responses. Based on this, CSR initiatives (2.3) and the related gap in
research are described. Finally, CSR activities are classified into four new types whose
potential effects on customer behavior are discussed (2.4).

2.1 Corporate Social Responsibility – A Definition

The meaning of CSR and its implications for global business is a central theme for today’s
business world. Consulting companies employ experts for CSR, the European Commission
issued a special CSR department and most companies develop CSR strategies or at least
publish an annual social responsibility report. Nevertheless, business’ concern for society is
not a modern idea but can be traced back for centuries. However, it was not always called
CSR nor was it always clearly defined, its definition rather developed and changed over time.
The perception that a company is an integral part of society and has to acknowledge
responsibility towards its stakeholders has been manifested only over the last three decades.
The very first beginnings towards this perception of CSR evolved at the beginning of the 20th
century when CSR became a crucial topic in business magazines and academic journals.
Fortune magazine, for example, conducted polls with executives on the topic of social
responsibility of companies already in the 1940s (Carroll, 1999). Academic writing on CSR,
however, started only in the 1950s, where CSR was rather seen as a general business
concept. CSR then was viewed as a pure obligation a company has to fulfill. Howard R.
Bowen is deemed to be the “Father of Corporate Social Responsibility” as he initiated
modern literature on CSR (Carroll, 1999). Bowen gave the first formal definition of CSR ever:
CSR “refers to the obligations of businessmen to pursue those politics, to make those
decisions, or to follow those lines of action which are desirable in terms of the objectives and
values of our society” (Bowen, 1953, p.6). Clearly, this definition was rather vague in that it is
not obvious what the terms “society” or “desirable objectives and values” incorporate. The
understanding of CSR was extended in the 1960s where social responsibility was seen as

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responsibilities a firm acknowledges that extend beyond legal and economic obligations.
Examples would be engaging in politics, welfare of community, education, or employee well-
being (Davis, 1967). Exerting social responsibility was seen as voluntary activities that create
cost to the firm but not necessarily economic returns (Walton, 1967). Thus, social
responsibility was not considered as a source for generating profit, but as a matter of
morality. Still, the main responsibility of a company stayed economic to that time; a company
was supposed to produce goods and services and sell them at a profit (Carroll, 1999). This
perception is rooted in Milton Friedman’s stockholder theory. He claims that CSR does not
go beyond the obligation towards stockholders, hence that “there is one and only one social
responsibility of business: to use its resources and engage in activities designed to increase
its profits so long as it stays within the rules of the game” (whereby ”rules of the game”
means obeying the law) (Friedman, 1982, p.133). Parallel to Friedman’s stockholder theory a
contrary view on social responsibility was developed by some academics. Already Johnson
(1971) said that a firm is responsible to ‘society’ and that the entities incorporated in this
‘society’ are “employees, suppliers, dealers, local communities and the nation” (p.50). This
can be seen as a first approach to the stakeholder theory that was formulated and advanced
by Freeman in the 1980s. Freeman described the firm as being responsible for its own well-
being and that of its stakeholders, whereby stakeholders are “entities and interests that are
involved, either voluntarily or involuntarily, in the operations of the firm” (Post et al., 2002,
p.6). (In contrary to Johnson’s entities of society, Freeman’s stakeholders also include
customers.) A firm should coordinate the interests of different stakeholders and be guided by
them rather than by its own economic interests (Evan and Freeman, 1988).

A remarkable statement by Johnson (1971) on CSR was that it could serve as a mean to
create long-term profit for a corporation. It was the first time CSR was considered as being a
potential benefit to a company itself. This thought was pushed further later on: In the 1980s
more and more researchers examined the implications of CSR in practice and CSR’s
meaning for a company and its performance. To that time the consensus on the meaning of
CSR was a strong emphasis on the voluntary character and the obligation towards a broad
range of stakeholders (employees, suppliers, customers, communities) – in congruence with
Freeman’s stakeholder theory. Moreover, the “core concepts of CSR began to be recast into
alternative concepts, theories, modules or themes” (Carroll, 1999, p.284) like corporate
social responsiveness, corporate social performance, public policy, business ethics, or
stakeholder management. Epstein (1987) argues that these concepts are all linked and even
overlap and are so closely related that they present the same principles. During these
discussions, eventually the question arose if a firm can be socially responsible and at the
same time profitable. It was indeed argued that social problems could be turned into

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economic opportunities (Carroll, 1999). First of all, this depends on how CSR is perceived. It
can either be seen as an ethical stance or as a business strategy (Wan-Jan, 2006). Both
perceptions incorporate the importance of shareholders and profitability. However, if CSR is
considered as an ethical stance, profit is desirable to be able to exercise social responsibility
at all – because if the business does not prosper it is not capable of contributing to society’s
well-being. Thus, CSR is the goal set that can only be achieved by a certain tool, namely
profit. On the other hand, when CSR is viewed as a strategy and integrated into overall
business strategy it works as a tool that helps reaching a certain goal, namely generating
incremental profit (Wan-Jan, 2006). Thus, CSR as a business strategy is by definition able to
translate into profits. Studies over the past decade confirmed that CSR has an impact on
company performance through positively impacting different stakeholders, mostly employees
and consumers. Bronn et al. (2001) confirm this by saying that “CSR requires investments
and yields measurable outcomes” (p.207) and that CSR can be leveraged to a competitive
advantage.
Also managers changed from seeing CSR as the fulfillment of an obligation to considering it
as a tool. According to manager George Pohle (IBM Global Business Service) and his
experience from practice, CSR can help generate (new) revenue streams, increase customer
loyalty and market share and support development of new products and services. 68% of the
executives interviewed in a study by the IBM Institute for Business Value in 2008 say that
they are using CSR activities to help generate revenue (www.ibm.com). CSR has become so
vital that it is a topic even in politics and economics. It has become understood that
companies have a responsibility – internally and externally. The European Commission
defines CSR as the following: "A concept whereby companies integrate social and
environmental concerns in their business operations and in their interaction with their
stakeholders on a voluntary basis" (http://ec.europa.eu). From this definition it can be
retrieved that CSR should not be a separated concept but be integrated into business
strategy and into interactions with (internal and external) stakeholders. Again, there is an
emphasis on the fact that CSR is a voluntary engagement, thus reaching beyond legal and
economic constraints and embracing all stakeholders and their needs (http://ec.europa.eu).

2.2 CSR in Marketing

There has long been a conflict about what a business’ purpose is: just generating profit for
stockholders or accepting responsibility beyond economic obligations. Accordingly, research
on CSR has changed over time. The first stream of research on CSR examined mainly the
basic concept of CSR, how it is defined and how it can be applied without harming the
company. Later on the perception slowly evolved that CSR is not something a business must

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do and does not merely create costs, but that CSR has the potential to create a competitive
advantage and generate additional revenue. As a consequence, the focus of recent research
studies has been mainly on performance outcomes of CSR and its impacts in context with
different stakeholders (Carroll, 1999). This section gives a short overview of literature on
CSR with a focus on marketing research. CSR can influence customer behavior, which has
positive consequences for the socially responsible company. The different behavioral
outcomes of CSR and the influences that moderate these outcomes are discussed and form
the foundation for the basic assumptions of this study.

CSR is applied in many business functions, such as quality management, marketing,

communication, finance, human resource management and reporting (Marrewijk, 2003)
thereby focusing on different stakeholders. For instance, CSR in marketing is focusing on the
customer, whereas in finance the focus is on stockholders and in human resources on the
company’s employees. As a consequence, research on CSR became more specific by
starting to concentrate on the particular business functions. CSR’s effects and consequences
in the context of employees and their performance were among the first subjects to be
studied. One of the earliest and most significant studies revealed implications of CSR for
employee expectations and satisfaction: Gavin and Maynard (1975) demonstrated a link
between employee performance and a company’s social commitment. Employees who
perceive a company as behaving socially responsible perceive the company also to be fair.
As this would also mean fair rewards for their work employees perceive a socially
responsible firm as beneficial for themselves, which in turn leads to satisfaction with their
work and thus to much higher motivation. In conclusion, a company’s CSR efforts lead to
benefits for the company itself, namely to better company performance through optimal
employee performance. The authors already ask if a similar relationship can be expected
between CSR and customers: “With the growth of consumerism, can organizations expect
adverse impacts from customers should they fail to meet their social obligations?” (Gavin and
Maynard, 1975, p.386) Even though already then academics assumed CSR to impact
customers as well, research in this field evolved much later, namely in the 1980s. Of most
interest hereby are the accomplishments in the field of marketing where also the research on
CSR- customer relationships is rooted. One of the earlier, vital studies concerning CSR in the
context of marketing was conducted by Robin and Reidenbach (1987). The authors
demonstrate a very limited perspective on CSR as they regard social responsibility mainly as
staying within legal constraints and neglect potential benefits. They propose an approach to
integrate social concepts into marketing strategy without having disadvantages for the
company. The potential of CSR as an influential marketing tool or a competitive advantage
was not considered at that stage. However, the authors do claim that the company image

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could be negatively impacted if a company behaves unethically. Thus, it is the first step
towards the exploration of the various impacts of CSR, for example with image as the
transmitter of CSR influencing customers. The authors conclude the article with the question
“Is it possible for marketers to behave ethically in a competitive world and both survive and
prosper?” (Robin and Reidenbach, 1987, p.56) The answer is given in the 1990s by
numerous studies in the field of marketing. Even though some authors neglect that CSR has
an effect on customers and their behavior, the general bottom line of the different research
efforts is that CSR indeed enhances company performance by leveraging customer
satisfaction, loyalty and attitude, and eventually increasing sales. For instance, Creyer and
Ross (1997) were one of the first to find that ethical behavior is considered important during
purchase decisions. In general, customers do expect ethical corporate behavior. They are on
the one hand willing to reward ethical behavior by paying a price premium and are on the
other hand willing to punish unethical behavior by paying lower prices (Creyer and Ross,
1997). Consequently, positive CSR benefits the company since it can lead to higher
revenues while unethical behavior harms it as it might force the company to decrease prices.
However, the authors say that further insights are needed into under which circumstances
customers care about ethics the most.

2.2.1 CSR and customer responses

Numerous studies have attempted to solve this question by examining different facets of
customer behavior and their relationship with CSR. The following subsection will give an
overview of the most important findings. Thereby gaps in marketing literature concerning the
effectiveness of CSR initiatives will be traced and assumptions will be developed that form
the basis of this research.

2.2.1.1 Attitude
Becker-Olsen et al. (2006) examined the circumstances under which CSR initiatives
embedded in promotions positively influence consumer responses (beliefs, attitudes and
intentions). How a CSR-based promotion is perceived depends on three factors: consumers’
perception of the fit between the product and the promoted good cause, the perceived
corporate motive (profit-oriented vs. other-oriented) and the timing of the promotion
(proactive vs. reactive). The authors found that CSR-based promotions are only successful
when they are not perceived as the reaction to a negative incident in the past (like a natural
disaster or a corporate crisis etc.) and the motives of the company are not perceived as
being profit-oriented. Further, the perceived fit between the good cause and the promoted
product has to be high. Thus, CSR in promotions can – under certain circumstances –
enhance attitude. Also Folkes and Kamins (1999) were able to prove a link between CSR

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and customer attitude. (Un)ethical behavior of companies influences the forming of customer
attitudes, and customer attitude influences the customer evaluation of the firm or product.
Folkes and Kamins (1999) examine how “consumers are influenced by information about
firms’ ethical behaviors and product attribute information when forming attitudes towards the
firm” (p.243). Product attribute information plays definitely a larger role in influencing attitudes
than information about ethical behavior. Information about ethical behavior has only an
amplifying effect. If a product is superior customer attitude is enhanced far more towards an
ethically behaving firm than towards an unethically behaving firm. Ethical behavior takes
influence on product evaluation and hence attitude even “when the action lacks a direct
impact on the customer (...), when the unethical action is legal (...), [and] when there is no
overt social pressure” (p.257). However, ethical behavior that is perceived to be rooted in
extrinsic motives is not as favorably for the customer as ethical behavior for intrinsic motives.
Also Bhattacharya and Sen (2004) confirm that customers value proactive social company
behavior more than defensive social behavior. When a product’s attributes are inferior
though, information about a firm’s ethical behavior hardly has an impact on product
evaluation. In general, “virtuous behavior is not a substitute for product quality, nor does
superior quality [totally] compensate for unethical behavior in influencing attitudes towards
the firm” (Folkes and Kamins, 1999, p.257). In a market where products cannot be
distinguished as their attributes are of equal quality, CSR can help to differentiate a product
from its competitors since CSR can create a superior customer attitude towards a particular
quality product and make it stand out from the mass (Folkes and Kamins, 1999).

2.2.1.2 Product and Company Evaluation

Earlier Brown and Dacin (1997) also tested CSR’s effect on customer company evaluation –
like Folkes and Kamins (1999) – however not in the context of customer attitude but in
conjunction with corporate associations. A consumer has certain associations with a firm and
evaluates the firm accordingly. These associations are based on many factors, such as
personal preferences, attitudes, or former experience. By creating certain associations about
a company at the customer, also CSR takes influence on consumers’ response to a new
product (Brown and Dacin, 1997). Positive CSR associations lead to a positive evaluation of
the company and consequently have a positive effect on product evaluation. Negative CSR
associations (triggered by unethical company behavior), however, lead to a negative
corporate evaluation and a negative product evaluation (Brown and Dacin, 1997). Both,
Folkes and Kamins (1999) and Brown and Dacin (1997) prove that by giving the customer
positive CSR information positive customer behavior can be triggered with positive
associations about the company as a transmitter. However, Sen and Bhattacharya (2001)
found that CSR’s impact on company evaluation is only positive if a person highly identifies

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with a company and generally supports the company’s CSR domain. Thereby “consumers’
company evaluations are more sensitive to negative CSR information than positive CSR
information” (p.238). This sensitivity depends mainly on customers’ support of a CSR
domain. Hence it is strongly recommended that “managers (...) research a variety of CSR
initiatives and select those that enjoy the highest and most widespread support among the
company’s key consumer segments” (p.238). Sen and Bhattacharya (2001) were among the
first to say that not all CSR initiatives have a successful effect and that it has to be
investigated which types of CSR initiatives deliver the desired output. Overall, marketers
need to “adopt a strategic perspective in making CSR decisions, aligning their CSR initiatives
with not only the company’s overall strategic thrust but also its competitive positioning and
the positions of key stakeholder groups on alternative CSR issues” (p.238).

2.2.1.3 Purchase Behavior

One of the most crucial customer responses for a company is certainly positive purchase
behavior since this promises continuous generation of revenues and hence profits. Creyer
and Ross (1997) say CSR always plays a role in purchase decisions. They do not mention
circumstances under which that might not hold. Sen and Bhattacharya (2001) put this in
perspective by saying that CSR’s impact on purchase intention is only high when customers
have high beliefs about the company’s CSR domain. However, this is not true when a
customer has the perception that a company’s CSR activity hurts the quality of the product
(e.g. resources are invested in CSR instead in quality control). Also Boulstridge and Carrigan
(2000) explored if there exists a link between responsible corporate behavior and purchase
decision. Their respondents believed that companies have a social responsibility and that
those companies who act ethically responsible earn a good reputation but that this does not
influence purchase behavior or decision making at all. Purchase behavior was rather
influenced by price, cost/value, quality, and brand familiarity, whereas social issues were of
very moderate importance. Interestingly, respondents accounted for this by saying that they
did not consider these issues as they perceive them to not affect them directly (which is
contrary to the findings of Folkes and Kamins). But what would have been the consequence
if the company behavior had concerned issues that customers had felt directly affected by?
Sen and Bhattacharya (2001) claim that if a customer personally believes in the CSR domain
a company is active in CSR can positively influence purchase intentions. Similarly,
Boulstridge and Carrigan (2000) state that corporate socially responsible behavior that
directly impacts consumers might affect their purchasing behavior both negatively and
positively and that further research should address which CSR strategy leads to the most
impact on customers. In another attempt to clarify whether CSR has beneficial
consequences for a firm Carrigan and Attalla (2001) asked consumers if they cared about

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social responsibility and whether ethical issues influenced their purchase decisions. In
general, the results indicated low awareness of consumers in social issues. A poor ethical
record of a company had no effect on purchase intentions, nor did CSR have an influence on
purchase decision. Above that, consumers were not willing to boycott products of unethically
behaving companies. However, when exploring the reasons for this the authors found that
respondents cared only about certain kinds of social issues. Some issues (e.g. dolphins
being killed) “did matter to them enough to affect purchase behavior” (p.569). Interestingly,
“young consumers seem to find animals more sympathetic than people, while other
consumer groups may champion different issues” (p.571). Respondents stated they would be
willing to pay a premium price and actively search for a socially responsible produced
product. This is obviously contradictive to what was said before by the respondents and calls
for closer investigation by future research. Carrigan and Attalla (2001) assume that only a
CSR-strategy that fits the firm’s target market encourages positive customer behavior. It is
important to “attract consumers wanting to make a difference in society through their
purchasing” (Bronn and Vrioni, 2001, p.208). Based on Carrigan and Attalla’s (2001) and
Boulstridge and Carrigan’s (2000) claim that it depends on the characteristics of a CSR
activity whether purchase behavior is influenced, this study assumes the following:
Assumption 1: Not all types of CSR initiatives impact purchase intentions.

2.2.1.4 Loyalty
Loyalty is “a deeply held commitment to rebuy or repatronize a preferred product/service
consistently in the future, thereby causing repetitive same-brand or same brand-set
purchasing, despite situational influences and marketing efforts having the potential to cause
switching behavior” (Oliver, 1999, p.34). As this definition shows, loyalty is not just a matter
of repeated purchase but also of a personally held belief about a brand or product.
Researchers distinguish between behavioral loyalty (consistent repurchase) and attitudinal
loyalty (a psychological commitment combined with positive beliefs, feelings and intentions
towards the product) (Jacoby and Chestnut, 1978). Behavioral loyalty incorporates, for
instance, repeat-purchase frequency or relative volume of purchasing whereas attitudinal
loyalty includes such factors as repurchase intentions, intend to recommend to others,
likelihood of switching or likelihood of buying more (Gupta and Zeithaml, 2005). These two
loyalty dimensions can appear separately (i.e. someone can just have a loyal attitude or just
show a loyal behavior). True loyalty, however, incorporates both, consistent attitudes and
behaviors and is called ‘intentional loyalty’ (Day, 1969). The drivers of loyalty are manifold.
Oliver (1999) argues that loyalty is driven by a combination of perceived product superiority,
personal determinism and social bonding. Satisfaction can be a driver, too, however even
though all loyal customers are satisfied, satisfaction in turn does not always translate into

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loyal behavior (Oliver, 1999). Depending on the loyalty dimensions, the drivers of course
differ. Behavioral loyalty, for instance, can also be driven by a certain dependency on the
product (e.g. lack of alternatives), whereas attitudinal loyalty is driven by a positive attitude
and commitment towards the brand or product (Chaudhuri and Holbrook, 2001). Loyalty
induces beneficial outcomes for a company. Loyal customers express “preference for a
company over others, by continuing to purchase from it or by increasing business with it in
the future” (Zeithaml et al., 1996, p.34). Loyalty can also translate into engagement in word-
of-mouth communication (Reichheld, 2003). Thus, customer loyalty is indeed a worthwhile
objective, and CSR can be extremely helpful in achieving it (Pirsch et al., 2007). CSR
activities have a positive impact on customer attitude (Becker-Olsen et al., 2006; Folkes and
Kamins, 1999). A positive attitude, in turn, is a driver of loyalty (Chaudhuri and Holbrook,
2001). Also Bhattacharya and Sen (2004) find a positive relationship between a company’s
CSR activities and customer loyalty towards this company. However, they see the reason for
this relationship in the fact that “such loyalty is an outcome of the consumer-company
identification concept” (p.19). In other words, customers buy from a company because they
identify with and are convinced of it based on their CSR engagement. A respondent said: “If
you keep supporting what your customers believe in they keep coming back” (Bhattacharya
and Sen, 2004, p.19). A key condition for the consumer-company identification is the
customer support of the social issue (Bhattacharya and Sen, 2004). Proposedly, only the
CSR initiatives that fit the target group find customers’ personal support and can trigger
consumer-company identification. Thus, this study makes the following assumption:
Assumption 2: Not all types of CSR initiatives impact loyalty.

2.2.1.5 Word of mouth (WOM)

There is a general consensus in marketing literature on the fact that WOM has an impact on
consumer product response (Keiningham et al., 2007). WOM plays an important role in
purchase decisions (Bayus, 1985) and in product judgments (Herr et al. 1991). The drivers of
WOM are loyalty (Reichheld, 2003) and satisfaction (Anderson et al., 2004). WOM also
influences a firm’s profitability as it enhances cash flows by reducing acquisition cost, and
accelerates cash flows by enhancing faster market penetration (Anderson et al., 2004).
Reichheld (2003) even says WOM is not just an indicator of profitability but also a measure
for growth. WOM can be stimulated by marketing activities (Bayus, 1985). This leads to the
thought that also CSR activities might be able to stimulate WOM. Indeed, Bhattacharya and
Sen (2004) found that WOM is “one of the key behavioral outcomes of positive CSR
activities” (p.20). In their study even people who themselves did not consider a company’s
CSR activities during purchase decision recommended socially responsible companies to
their friends. Often CSR activities lack influence, as customers do not even know about them

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(Carrigan and Attalla, 2001). Through WOM, however, the awareness of a company’s CSR
commitment among customers can be increased. WOM can help creating a basis on which
CSR’s impact can unfold. „In the face of decreasing product differentiation and heightened
competition, CSR initiatives are an innovative and less-imitable means of strengthening
customer relationships“ (Bhattacharya and Sen, 2004, p.11) and thus companies should also
concentrate on relational outcomes of CSR like WOM. Thereby it is assumed that one driver
of WOM in this context is individual identification with an organization and that certain types
of CSR might enhance an individual’s identification with an organization more than others.
Consequently, this study makes the following assumption:
Assumption 3: Not all types of CSR initiatives impact word of mouth.

2.2.2 Moderating Influences on Customer Behavior

During research on the relationship between CSR activities and customer behavior several
moderating factors have been discovered that either strengthen or weaken CSR’s impact on
customer behavior. The most crucial moderators are described below.

2.2.2.1 Product Quality and Price

Before a customer considers a company’s CSR activities, price and quality of a product are
his priorities during purchase decisions (Boulstridge and Carrigan, 2000). If the quality of a
product is poor even a convincing CSR-strategy cannot neutralize this negative effect on the
customer (Folkes and Kamins, 1999). Further, product quality must not be perceived to suffer
from a company’s CSR commitment (Sen and Bhattacharya, 2001). The price also has to be
appropriate, however, if the CSR activity is extremely appealing to the customer he will even
pay a price premium (Creyer and Ross, 1997).

2.2.2.2 Skepticism / Perceived Sincerity

If customers’ skepticism is high the positive influence of CSR on customers’ associations and
attitude is undermined. (Bronn and Vrioni, 2001). Thus, firms have to pursue CSR strategies
that are perceived as being authentic and not just as being a mere marketing strategy to
attract customers. The corporate motive that drives a company’s CSR strategy should be
intrinsic (Folkes and Kamins, 1999) and not be profit-oriented (Becker-Olsen et al. 2006).
Then CSR can also enhance company reputation (Bronn and Vrioni, 2001). Yoon et al.
(2006) support this view by saying that the perceived sincerity, which can be seen as a
closely related construct to skepticism, is deciding for the effectiveness of CSR activities. If
perceived sincerity is high CSR improves company image, whereas if perceived sincerity is
ambiguous CSR has no effect and if the CSR activity appears insincere to the customer CSR
even has a detrimental effect on image. Sincerity can be moderated by the reputation of the

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company and the perceived fit between the company and the supported good cause
(Bhattacharya and Sen, 2004).

2.2.2.3 Perceived Fit between Company and Good Cause

If the customer perceives that the character of the supported good cause is in line with a
company’s philosophy and image, literature calls this a high perceived fit. A high perceived fit
strengthens CSR’s positive effect on purchase behavior (Bhattacharya and Sen, 2004) and
on attitude (Becker-Olsen et al. 2006).

2.2.2.4 Consumer-Company Identification

CSR activities are linked to consumer-company identification in two ways. First, CSR
activities that fit with the target customers can enhance customer-company identification
(Bhattacharya and Sen, 2004). If a company chooses CSR activities that are supported by its
customers, these will identify with the company’s philosophy and consequently feel
connected to the company. Second, the degree to which a customer can identify himself in
general with a company influences CSR’s degree of impact on attitudes, intentions (Becker-
Olsen et al. 2006) word of mouth and loyalty (Bhattacharya and Sen, 2004). The more a
customer can identify, the more responsive he is to CSR.

2.2.2.5 Personal Support of the Good Cause

“Consumers’ support of the CSR issues emerged as one of the key moderators of their
reactions to a company’s CSR efforts; the more supportive the customers were of the CSR
issue, the more positive the outcomes” (Bhattacharya and Sen, 2004, p.18). Customer’s
personal support moderates CSR’s impact on purchase intention (Sen and Bhattacharya,
2001). If a customer is supportive of the CSR domain, his purchase behavior and attitude is
positively affected (Bhattacharya and Sen, 2004) and so is his willingness to pay a price
premium (Bhattacharya and Sen, 2004; Carrigan and Attalla, 2001). The more a customer
supports the company’s CSR domain the more he can identify with the company (Sen and
Bhattacharya, 2001), which finally leads to increased loyalty and intention to recommend
(Bhattacharya and Sen, 2004). Furthermore, the customer will actively search for the socially
responsible company’s product (Carrigan and Attalla, 2001).

2.2.2.6 Perceived Personal Affect

Boulstridge and Carrigan (2000) believe that CSR plays a greater role in purchase decisions
if customers perceive to be directly affected by the company’s CSR activity.

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Table 1: Overview of the most significant literature concerning CSR and its effects.

Author(s) Construct Context Major findings

examined

Becker-Olsen Attitude CSR-based promotions CSR enhances customer attitude if perceived fit
et al. between company and good cause is high,
(2006) perceived corporate motive is not profit-oriented and
timing is proactive.

Bhattacharya Loyalty CSR and its internal and The positive relationship between CSR and
and Sen external outcomes customer loyalty is driven by customer-company-
(2004) identification and personal support of the good
cause.

Word of CSR and its internal and Positive CSR leads to positive WOM.
Mouth external outcomes Customer-company-identification is assumed to be
a driver of WOM.

Boulstridge Purchase Corporate behavior and its A relationship between CSR and purchase behavior
and Carrigan Behavior influence on consumers is not found but an effect is assumed if perceived
(2000) personal affect is high.

Bronn and Company CSR as a marketing tool The positive relationship between CSR and
Vrioni image company reputation is moderated by skepticism.
(2001)
Attitude CSR as a marketing tool Positive CSR leads to positive customer attitudes.
Brown and Product and Corporate associations Positive CSR leads to positive corporate
Dacin Company associations, which in turn leads to positive product
(1997) Evaluation evaluation.

Carrigan and Purchase Effect of good and bad CSR’s impact on purchase intentions is not proven
Attalla Behavior ethical conduct on but it is assumed that CSR has an effect if it fits the
(2001) consumers’ purchase target market.
behavior

Creyer and Purchase Consumers and business CSR influences purchase decisions. Customers
Ross Behavior ethics reward ethical and punish unethical behavior.
(1997)
Folkes and Attitude Product evaluation Positive CSR leads to positive product evaluation,
Kamins which in turn leads to positive customer attitude.
(1997)
Pirsch et al. Customer Differences in CSR Depending on the program, CSR has an effect on
(2007) Behavior programs loyalty, intention to purchase, skepticism, and
attitude.
Sen and Product and Moderating influences on Customer-company-identification and personal
Bhattacharya Company CSR (company and support of the good cause moderate the positive
(2001) Evaluation individual specific factors) relationship between CSR and product and
company evaluation.

Purchase Moderating influences on Personal support of the good cause moderates the
Behavior CSR (company and positive relationship between CSR and purchase
individual specific factors) intention.

Yoon et al. Company Consumer perceptions of The positive relationship between CSR and
(2006) image a company’s motives for company reputation is moderated by perceived
CSR sincerity.

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2.3 CSR Initiatives

So far, research on different CSR initiatives is very limited. CSR has mainly been used and
examined as a holistic approach. However, as previously elaborated, just developing a CSR
strategy is not enough. At least not if customer behavior is supposed to be influenced.
Whether customers react on CSR or not depends on the type of CSR initiative employed
(Boulstridge and Carrigan, 2000; Carrigan and Attalla, 2001; Pirsch et al., 2007; Sen and
Bhattacharya, 2001). For a company it is highly desirable that customers react positively to
its CSR-strategy and the aligned CSR initiatives. First of all, because valuable resources
have been employed to engage in CSR and second because positive customer reactions
would mean desirable responses like positive beliefs and attitudes, positive evaluations,
positive purchase behavior etc. All these responses could eventually enhance company
performance through more loyal customers, positive word-of-mouth and higher sales. Thus, it
is of the utmost importance that future research sheds light on the different effects of different
CSR initiatives. In order to do so, this study proposes a taxonomy of CSR activities and
investigates the impacts of the different types on customers, so that in the future CSR can be
used as an adequate tool.
There has been just one recent attempt to classify CSR initiatives. Pirsch et al. (2007) argue
that “CSR programs can fall along a continuum between two endpoints: Institutionalized
programs and Promotional programs” (p.125). The authors examine the effects of the two
endpoints and find that they foster different customer responses and that both lower the level
of skepticism (which, according to Bronn and Vrioni (2001), moderates the impact of CSR on
customers). Seven categories of possible social operations are used to evaluate a
company’s CSR profile (community involvement, corporate governance, employee diversity,
overall employee relations, environmental policies, human rights positions, and product
evaluation). A CSR program is considered as institutionalized if it has policies within all
seven categories and as promotional if it concentrates on only few categories. The research
results of Pirsch et al. (2007) were that “Institutional CSR programs have a greater effect on
consumer loyalty, intention to purchase, consumer skepticism (...) and on attitude toward the
company than do Promotional CSR programs” (p.134). Nevertheless, the used
categorization of CSR programs is questionable for several reasons. Just the two extremes
of the continuum were studied. However, in practice there hardly is something as the
institutionalized program. It is improbable that a company actually fulfils all categories and
even if it does it would be difficult to communicate that to the customer. Often companies
concentrate on specific issues they communicate to their customers (otherwise the customer
suffers from an information overload which rather complicates forming an opinion (Carrigan
and Attalla, 2001)). Second, the authors do not investigate what happens to programs that
engage in three or four categories. What would be the effect then? Above that, it is

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questionable if the seven categories proposed really cover all potential CSR initiatives a
company can engage in. For example, there is no category where the funding of charity
organizations (like for instance AIDS funds or global organizations for animal protection)
would fit in. Furthermore, the used classification does not differentiate if the CSR program
approaches a customer directly or indirectly. However, this makes a difference when it
comes to purchase intentions: if a customer is directly affected, for example through certain
product features, e.g. healthy ingredients, his purchase intention is assumed to be higher
than when he is only indirectly affected by a CSR activity (Boulstridge ad Carrigan, 2000). In
conclusion, the classification of Pirsch et al. (2007) has several major drawbacks. Overall,
their study does not deliver sufficient results to solve the problem of which CSR initiatives
work best. Thus, further research on this subject is urgently needed. This study attempts to
close this gap by classifying CSR initiatives in an innovative way – as described below – and
by subsequently testing their impact on customer behavior.

2.4 Taxonomy
In the following, first a short definition of the concept of a taxonomy in general will be given.
After that, criteria will be introduced that define a good taxonomy. Then, explicitly for the
study at hand, a new taxonomy will be developed that classifies CSR activities into four
distinct types. The quality of the taxonomy will be proven by checking its accordance with the
criteria described before. Subsequently, each of the four types is introduced and according
hypotheses are developed.

2.4.1 Taxonomy – A Definition

The term taxonomy is often used interchangeably with the terms typology or classification.
However, by definition slight differences exist. Classification is a general term meaning the
“general process of grouping entities by similarity” (Bailey, 1994, p.4) on the basis of one
(unidimensional) or more fixed dimensions (multidimensional). These dimensions can be a
continuum or dichotomized (e.g. the dimension ‘motivation’ could be dichotomized as
motivated / unmotivated). Typology is another term for classification. Compared to a
classification, however, a typology is always multidimensional and conceptual and is
“generally characterized by labels or names in their cells” (Bailey, 1994, p.4). Taxonomy has
the same meaning as typology and can be used as a synonym. There only exists one
exception, namely when the term taxonomy is used to describe the overall procedure of
developing a classification. However, in the context of this study the term taxonomy stands
for the actual classification system and hence has the same meaning as the term typology.

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 LITERATURE REVIEW

Taxonomies are a dominant and elaborated technique in the field of the sciences of biology
and chemistry where they emerged first. However, they are extremely relevant not only in
these contexts but in almost every scientific discipline as “perhaps the most important and
basic step in conducting any form of scientific inquiry involves the ordering, classification, or
other grouping of the objects or phenomena under investigation” (Carper and Snizek, 1980,
p.65). Thus, taxonomies are a relevant method in business research, too. Taxonomies pose
numerous advantages as a research tool. For instance, taxonomies include a wide array or
even a definitive array of types. Hence, they allow a “researcher to ascertain quickly how a
particular type scores on a particular dimension and which types are contiguous to a
particular type” (Bailey, 1994, p.12). Through a taxonomy data masses can be condensed
into few types and be made easier to analyze (Bailey, 1994). Also Carper and Snizek (1980)
reinforce that “a taxonomy would allow large amounts of information (...) to be collapsed into
more convenient categories that would then be easier to process, store and comprehend”
(p.73). Furthermore, a taxonomy helps to detect similarities. All cases belonging to one type
(scoring equally on the dimensions deployed) share certain similarities. Knowing this helps
analyzing them. In the same way, a taxonomy is useful to detect differences, which helps
avoiding treating two cases the same way when they are actually different (belonging to
different types) and require different treatment. A taxonomy allows fast and easy
comparisons between types and above that allows the inventory and management of types.
Thus, it provides researchers with opportunity to locate any case and to know what types are
available for research (Bailey, 1994).

“One basic secret to successful classification (...) is the ability to ascertain the key or
fundamental characteristics on which the classification is to be based” (Bailey, 1994, p.2).
These fundamental characteristics or dimensions a taxonomy is based on define the
characteristics of the different types, i.e. the different cells. All types have different
dimensional characteristics. Empirical cases can be allocated to a type based on matching
dimensional characteristics. It is a great challenge to define the right dimensions for a
taxonomy and find adequate empirical cases for each cell, as there does not exist any
specific method for this. Bailey (1994) argues that it should be relied on “prior knowledge and
theoretical guidance” (p.2) and that “care and foresight generally result in successful
typologies” (p.16). If the dimensions are well chosen the resulting taxonomy should be able
to fulfill three fundamental criteria that judge the quality of a taxonomy. These criteria are
comprehensiveness (every case needs to be included), mutual exclusivity (each case can,
according to the chosen characteristics, only belong to one type) and explicitness (the basis
for building the typology is clear and traceable) (Speed, 1993). In order to evaluate the
quality of a taxonomy next to the three classical criteria, Speed (1993) proposed four

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 LITERATURE REVIEW

additional criteria. First of all, he refers to meaningfulness in the sense of managerial

relevance and research excellence. Second, he suggests to evaluate a taxonomy on its
usefulness, i.e. whether it focuses on an important or a rather trivial concept and on whether
it allows the detection of new concepts. With his third criterion, parsimony, he argues that the
types within the taxonomy must not be too few otherwise the groups might not differ
significantly enough from each other. Fourth, the taxonomy has to add value to the research.
A taxonomy that fulfills all criteria is understood as being a very good and reliable
classification.

2.4.2 The Development of a Taxonomy of CSR Activities

A company can translate its social engagement into numerous CSR activities. A CSR activity
is an initiative taken by a company to support a certain good cause. In this study, the term
‘CSR activity’ incorporates rather a single type of action supporting a good cause than a
combination of actions or programs. For instance, if the supported good cause would be
environment protection, the term CSR activity would here not mean all activities a company
engages in to support environment protection, but the single action the company undertakes.
In other words, buying one square meter of rain forest for every unit sold is a CSR activity for
itself, whereas the donation the same company gives every year to WWF to protect
endangered areas of rain forest from uprooting is also a CSR activity for itself. A CSR
program, on the other hand, consists of all these single CSR activities.
The purpose of the study at hand is to find out which types of CSR activities the ideal CSR
program should consist of, whereby the ideal form in this case is the one to which customers
are most responsive. Therefore, it is necessary to get an overview of the different CSR
activities a company can employ and to determine what different types of CSR activities
exist. The different types mirror the different approaches a company can take to support
social issues. Having examined existing CSR activities that are currently or were recently
employed by companies in the retail industry, two factors emerged to be especially
conspicuous. First, looking at the company’s role in a CSR activity it can be observed that it
is either actively involved in the CSR activity as it very much concerns its own internal
organizational policies (such as employment or manufacturing practices) or that it plays the
more passive role of a donator to good causes that go beyond company-related issues (such
as supporting charities financially). An example for active involvement would be American
Apparel, who is known for fair employment policies. American Apparel still produces in its
home country and hence creates jobs domestically. The company pays its factory workers
above industry-average and offers its employees additional benefits like private health
insurance (Hendley, 2002). Hugo Boss, on the other hand, is an example for passive
engagement. The company acknowledges its social responsibility by establishing a

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 LITERATURE REVIEW

partnership with Unicef where Hugo Boss supports the project ‘Schools for Africa’
(http://group.hugoboss.com). Second, customers are of course always a part of a CSR
activity as well, as it is aimed at customers and intended to trigger positive reactions from
them. However, companies differ in how far they involve customers in their CSR activities.
Some do not involve them in the activity itself but only communicate the activity and its
beneficial consequences to them (as would be the case with companies donating to charities
or paying factory workers above average). Other companies directly affect customers with
their CSR and make them a part of it. In 2008, for instance, “H&M teamed up with some of
the world’s most contemporary artists to produce a special Fashion Against AIDS collection
where 25% of the sales price are donated to youth HIV/AIDS awareness projects“
(http://projects.greatworks.se). Such a CSR activity gives the customer the feeling that he
himself can decide when and how much to contribute to a good cause. Other companies
involve their customers directly by letting them benefit from products that have a higher
quality in terms of environmental friendliness, tolerance, or health benefits. For example, Levi
Strauss & Co. engages in environmentally friendly apparel production and thereby also uses
organic raw material. What the consumers receive from that in the end are jeans on the basis
of organic cotton and the good feeling of wearing chemical-free fabric on their skins
(www.levistrauss.com).
Based on the examples above functioning as empirical cases, and according to logical and
intuitive considerations, two dimensions for the CSR activity taxonomy have evolved: the
dimension of customer involvement (which can be direct or indirect) and the dimension of
company engagement (which can be firm-internal or firm-external).
In the following, the quality of the proposed dimensions is checked based on the three
classical criteria (mutual exclusiveness, comprehensiveness, explicitness) and Speed’s
(1993) additional criteria (meaningfulness, usefulness, parsimony, adding of value) described
before. This way the quality of the resulting fourfold taxonomy can be guaranteed. First of all,
since the dimensions are dichotomized a case can always just be one of the two opposing
characteristics, i.e. a CSR activity cannot at the same time affect a consumer in its role as a
customer directly and indirectly. Thus, a case can always just belong to one type, which
guarantees mutual exclusiveness. Second, all CSR activities naturally involve the company
and the customer. The company is, of course, the initiator of its own CSR activities, whereas
also the customer is always part of CSR as he is the one to be influenced by these activities.
Consequently, as there is no CSR activity that does not involve both parties, the taxonomy is
comprehensive. (In this context, it has to be mentioned that companies and customers are
not the only parties involved in a CSR activity. Lastly, there is a third party, namely the good
cause itself that is also affected. CSR activities can create awareness and enhance people’s
general support for the good cause in terms of time, money and word of mouth

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(Bhattacharya and Sen, 2004). However, the supported cause itself is merely the aim of a
CSR activity and – compared to customer and company involvement– does not account for
the approach that should be used in order to influence customer response. Due to this,
characteristics of the social issue are not included in this taxonomy.) Third, the basis for
building the typology is clear and traceable since the basis incorporates a simple and
obvious concept, namely the degree of involvement of the two parties being mainly affected
by a CSR activity. This means that it also fulfills the criteria of explicitness. In addition, the
dimensions chosen for this taxonomy offer another significant advantage. They incorporate
variables (e.g. degrees of customer and company involvement) that are known and easy to
interpret and that can be controlled and determined by the company itself. The taxonomy
does not incorporate dimensions (such as perceived fit between company and cause or
customer’s personal support of the cause) that cannot or only very difficultly be controlled.
The presented classification is the first taxonomy of CSR activities in literature. It is an
essential basis of the study at hand that in turn will close an important gap in marketing
literature and might become the foundation for further research. Above its academic
contribution, the taxonomy will pose a relevant tool for managers developing a CSR program.
Thus, the taxonomy fulfils the criterion of meaningfulness in a research and a managerial
context. Furthermore, as it will be the basis for testing an innovative model and the according
hypotheses, it will lead to new insights and hence be a taxonomy of high usefulness.
According to Speed’s (1993) third criterion, parsimony, the types within the taxonomy must
not be too few. Looking at other taxonomies in the field of marketing, four types are a
commonly used quantity of types. Sausen et al. (2002) developed a fourfold taxonomy of
strategic market orientation, Sawhney et al. (2005) used a fourfold typology of web-based
applications in the customer co-creation process and Shih (2004) employed a fourfold
typology of different user types in the context of a use-diffusion model for innovations. Carper
and Snizek (1980) examined the most frequently cited taxonomies in the field of organization
theory. Thereby they introduced 14 taxonomies (1947-1977) out of which six used four types
and five even less than four types. Thus the introduced fourfold taxonomy should satisfy
Speed’s (1993) criterion. Eventually, the taxonomy also fulfils the last criterion of adding
value to the research. The taxonomy at hand will lay the foundation for a model that will be
able to answer the question posed by marketing researchers (i.e. Bhattacharya and Sen,
2004; Carrigan and Attalla, 2001; Boulstridge and Carrigan, 2000; Creyer and Ross, 1997)
on which type of CSR activity is most effective in influencing customer behavior and thus
should be employed. In conclusion, the taxonomy of CSR activities does not only fulfill the
three classical evaluation criteria but also satisfies Speed’s additional criteria and can
consequently be considered of good quality.

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 LITERATURE REVIEW

Figure 1: Taxonomy of CSR Activities

direct
CUSTOMER INVOLVEMENT

Type 1 Type 2
Good Deed For Sale Good Produces Good

Type 3 Type 4
Distant Benefactor Sustainable On The Inside

indirect
external internal

COMPANY ENGAGEMENT

2.4.3 The Types of CSR Activities

In this subsection, the four types of CSR activities retrieved from the new taxonomy above
are introduced. In chapter 2.2.1 (CSR and Customer Responses) assumptions have been
made that not all types of CSR activities have the same effect on different desirable
customer behaviors, i.e. loyalty, word of mouth and purchase intention. This study proposes
that the four different types have a positive impact on these customer behaviors but that the
degree of this impact varies between the four types. The according hypotheses are
developed in the following.

2.4.3.1 Good Deed For Sale (Type 1)

A CSR activity belonging to type 1 is characterized by external company engagement but
direct customer involvement. This means, the CSR activity does not concern internal
company policies but is related to external institutions, i.e. charity organizations, community
work or other social projects. The company is merely a supporter of a charitable project that
is initiated or co-created by an external ‘partner’. The customer, on the other hand, is directly
affected by the CSR activity and is consequently aware of the supported cause. Direct
involvement means that the product the customer uses is clearly affected by CSR or that the
customer can actively take part in a CSR activity. Thus, in a figurative sense the company
‘sells a good deed’ to the customer. An example for a type 1 CSR activity would be a
company that supports a charity project with a certain percentage of its sales, which gives
the customer the opportunity to directly impact the amount of the donation through the
quantity of units purchased. It is suggested that CSR activities belonging to type 1 influence
customer behaviors positively. This assumption is based on two factors. First of all, the fact
that the company’s engagement is external might signal the customer that the company has
a true concern for the supported good cause (Bronn and Vrioni, 2001; Yoon et al., 2006) and

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gains no direct benefit. Thus, the customer feels that he does not merely support the
company with its purchase, recommend or loyalty intention, but most importantly rather
serves a good cause and consequently makes a difference for society. This thought might
increase the consumers’ motivation to react upon a type 1 CSR activity. Second, the
customer’s direct involvement leads to increased awareness of the company’s CSR
engagement. High awareness of a CSR activity is the ideal precondition if behavior is to be
influenced (Folkes and Kamins, 1999). In more detail, this would mean the following for the
customer behaviors in the focus of this study: First of all, when customers are convinced of a
company based on the information they have about it, they become loyal. This information
they receive may well include the company’s CSR engagement. Thus, a convincing CSR
activity can enhance customer loyalty (Folkes and Kamins, 1999; Pirsch et al., 2007),
especially when the customers’ awareness of it is high. Consequently, this study proposes
the following:

H1a: CSR Activity Type 1 has a positive impact on loyalty and this impact differs
from the impacts of the other types of CSR activities.

A CSR activity can still lead to the intention to recommend the company to others even if no
other behavior is stimulated at the customer (Bhattacharya and Sen, 2004). CSR activities
enhance word of mouth especially if the awareness at the customer is high – which is the
case as the customer is directly affected by a type 1 CSR activity. Thus, it is proposed:

H1b: CSR Activity Type 1 has a positive impact on word of mouth and this impact
differs from the impacts of the other types of CSR activities.

Further, if customers feel directly affected CSR is assumed to particularly impact purchase
behavior (Boulstridge and Carrigan, 2000). Thus, it is proposed:

H1c: CSR Activity Type 1 has a positive impact on purchase intention and this
impact differs from the impacts of the other types of CSR activities.

2.4.3.2 Good Produces Good (Type 2)

A CSR activity belonging to type 2 is characterized by internal company engagement and
direct customer involvement. Thereby, the company has socially responsible internal policies
in fields such as employment, manufacturing or environment policies. Thus, the company
supports a good cause independently through responsible and sustainable management.
The customer is directly affected by the company’s social engagement – in this case mostly
through the products, as active participation in internal CSR activities is rather rare. The
company has sustainable internal policies that create sustainable output for the customer,

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hence ‘good produces good’. An example for a type 2 CSR activity would be a company that
engages in environmentally sound production thereby abandoning chemistry. This results in
products that are environmentally friendly and are not posing a hazard to customers’ health.
It is assumed that customer behavior is positively influenced by a type 2 CSR activity as the
customer is (again) personally affected and the CSR activity is company-internal. Next to the
perception described before that external involvement evokes greater credibility and
customer motivation, there is an oppositional theory: External engagement could also be
perceived as a mere marketing strategy as it has a greater publicity effect. However, a
company that acknowledges its social responsibility within its internal policies might be
perceived as motivated by intrinsic motives – which is perceived as positive by the customer
(Folkes and Kamins, 1999). Further, the customer knows that the company’s products are
created under CSR aspects that not only benefit the corporate employees or the environment
but also the products and thus the customer himself. This thought of a closed chain of
sincere sustainability, and of the personal benefit for the customer might wake the
customer’s desire to support such a company. For the focal facets of customer behavior the
following propositions are consequently made: As described in the previous section, a CSR
activity is assumed to have a positive effect on loyalty (Pirsch et al., 2007), which might be
even stronger if the customer is directly involved (Boulstridge and Carrigan, 2000). Thus, it is
proposed:

H2a: CSR Activity Type 2 has a positive impact on loyalty and this impact differs
from the impacts of the other types of CSR activities.

Customers’ awareness of the CSR activity is a prerequisite for engaging in word of mouth
(Folkes and Kamins, 1999). If the customer is directly involved in the CSR activity awareness
is guaranteed. Thus, it is proposed:

H2b: CSR Activity Type 2 has a positive impact on word of mouth and this impact
differs from the impacts of the other types of CSR activities.

As mentioned, CSR is assumed to have a particular effect on purchase behavior if customers

feel directly affected (Boulstridge and Carrigan, 2000). It is proposed:

H2c: CSR Activity Type 2 has a positive impact on purchase intention and this
impact differs from the impacts of the other types of CSR activities.

2.4.3.3 Distant Benefactor (Type 3)

A CSR activity belonging to type 3 is characterized by external company engagement and
indirect customer involvement. Here again the company is a supporter of a charity project

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that is not related to internal policies. The customer, on the other hand, is only affected
indirectly by the CSR activity. This means, he cannot actively contribute to the good cause
nor are the products any different through CSR. The company acts in this case as a ‘distant
benefactor’ that engages in charitable support for a good cause to which neither the
company nor the customer is directly related. Whereas internal engagement could also be
seen as a direct benefit for the company and thus not as altruistic but as self-serving,
external engagement signals more strongly the support of a good cause that benefits society
as a whole, which might be a higher motivation for customers (see ‘Good Deed For Sale’).
For instance, a customer might choose to buy from a company because he knows it makes
regular donations to an aids fund. Knowing that a company shows high engagement for a
certain cause, the customer may develop a positive attitude towards this firm (Becker-Olsen
et al., 2006; Folkes and Kamins, 1999) and find it worth supporting this firm through regular
purchases or recommendations to friends (Bhattacharya and Sen, 2004). In support of this,
Folkes and Kamins (1999) found that CSR takes influence on attitude and thus on loyalty
and word of mouth – even when the customer is not directly affected (which is contradictive
to Boulstridge and Carrigan, 2000). Thus, it is proposed:

H3a: CSR Activity Type 3 has a positive impact on loyalty and this impact differs
from the impacts of the other types of CSR activities.

and accordingly:
H3b: CSR Activity Type 3 has a positive impact on word of mouth and this impact
differs from the impacts of the other types of CSR activities.

CSR activities have a positive impact on purchase behavior (Creyer and Ross, 1997),
especially if the customer beliefs in a company (Sen and Bhattacharya, 2001). Thus, it is
proposed:

H3c: CSR Activity Type 3 has a positive impact on purchase intention and this
impact differs from the impacts of the other types of CSR activities.

2.4.3.4 Sustainable On The Inside (Type 4)

A CSR activity belonging to type 4 is characterized by internal company engagement and
indirect customer involvement. In this case, the company has socially responsible policies
concerning internal fields. The customer is affected indirectly, which means he is not actively
involved in the CSR activity. Thus, the company can be considered as ‘sustainable on the
inside’ whereas the customer – similar to type 3 ‘Distant Benefactor’ – knows about the
company’s sustainability policies and therefore supports it. An example would be a company

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that creates domestic jobs while employing excellent labor policies. The company
communicates its social engagement to its customers, who in turn form a positive attitude,
which may be followed by positive behavior towards the company (Bhattacharya and Sen,
2004; Folkes and Kamins, 1999). Following the theory that an internal CSR activity signals
intrinsic motives and thus has a positive impact on customers’ reactions on CSR (see ‘Good
Produces Good’), a type 4 CSR activity is strongly assumed to lead to a positive effect on
customer behavior. Even though the customer is not directly involved, CSR takes influence
on attitude and thus loyalty and word of mouth (Folkes and Kamins, 1999). Consequently, it
is proposed:

H4a: CSR Activity Type 4 has a positive impact on loyalty and this impact differs
from the impacts of the other types of CSR activities.

and accordingly:
H4b: CSR Activity Type 4 has a positive impact on word of mouth and this impact
differs from the impacts of the other types of CSR activities.

CSR activities have a positive impact on purchase behavior (Creyer and Ross, 1997),
especially if the customer believes in a company (Sen and Bhattacharya, 2001), which is
presumably leveraged by internal engagement. Thus, it is proposed:

H4c: CSR Activity Type 4 has a positive impact on purchase intention and this
impact differs from the impacts of the other types of CSR activities.

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 LITERATURE REVIEW

2.5 Model
The model below summarizes the hypotheses and their directions and the applied control
variables.

Figure 2: Theoretical Framework

CSR Activity Customer

Behavior
Type 1
H1abc + Loyalty
+

Type 2 H2abc +
Word of
Mouth
Type 3 H3abc +
Purchase
H4abc + Intentions
Type 4

Control Variables (all Control Variable (Loyalty &

behaviors): Purchase Intention):
• Personal Support of • Perceived Fit
the Good Cause between Company
• Perceived Sincerity and Good Cause

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 RESEARCH DESIGN

3. RESEARCH DESIGN
The objective of this study is to find out if all four types of CSR activities have a positive
impact on loyalty, word of mouth and purchase intention. Furthermore, it is detected if the
types differ in their effectiveness. The required data have been obtained through an online
survey. The following will reveal the most important factors concerning the setting for the
experiment (3.1; 3.2), the development of the questionnaire (3.3) and the measures (3.4), the
conduction (3.5), the sample profile (3.6) and the reliability and validity of the scales (3.7).

3.1 The Research Setting

The experiment to test the hypotheses and the according model is set in the retail industry,
or more precisely in the fashion industry. This has multiple reasons. First of all, social
responsibility is a sensitive issue in context with the production of apparel. Most production
facilities are in third world countries where labor is cheap but where working conditions are
questionable. The industry has often been disapproved for employing child labor or
cooperating with factories that exploit their workers (Iwanow et al., 2005) (Nike’s sweatshop
scandal is exemplary for this). Above that, methods of the manufacturing and supply of raw
materials are often considered deficient. The main factors of criticism are (unfair) trade
conditions with cotton farmers (Kleinewiese, 2007) and the treatment of cotton with
pesticides that are harmful to the environment (www.icac.org). Especially when dealing with
two particular stakeholder groups, a good CSR strategy is essential for a fashion company.
On the one hand, there is the group of social activists who monitor a company’s activities
closely and judge it based on its (un)ethical behavior. Today, social activists are
professionally organized and make use of modern media that report very quickly and, thanks
to global communication, reach a huge number of consumers. Thus, social activists have the
potential to damage a company’s reputation. On the other hand, there is the group of the
changing consumers who are sophisticated and environmentally and socially conscious
(Forster, 2007). They look for the sustainability of brands and products, they want to know
where the products they buy come from and pay attention from what kind of company they
buy these products. They expect companies to act in a socially responsible way (Creyer and
Ross, 1997). The so-called LOHAS consumers are a growing group in two of the world’s
biggest consumer markets, in Europe and the U.S. (www.fundh.de), and logically include
customers of fashion companies as well. In Germany, for instance, 22.7% of the consumers
want to know how a piece of clothing they buy was manufactured and 50.2% care to wear
clothing that does not consist of materials that were treated with harmful chemicals (Outfit 6,
2007). Second, the behavioral outcomes under examination in this study are of particular
importance for a fashion company. As the fashion industry is competitive and fast-moving it
is crucial to build a loyal customer base in order to survive and prosper in a fast-changing

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environment. An appropriate CSR-strategy that makes the customer feel connected to the
product can help enhancing the relationship between the customer and the product and thus
create a competitive advantage. Particularly in fashion it is crucial that customers trust a
brand and the company behind it as consumers publicly show their support for a brand when
wearing branded apparel. They would not wear a brand if they would not feel loyal or at least
positive towards it nor would they talk about it to peers (Reichheld, 2003). For a fashion
company, as for any other company, the purchase intentions of customers are of utmost
importance. Especially as purchase intentions are a precursor of behavioral loyalty (repeated
purchases) that has the potential to enhance cash flows and secure long term survival
(Jacoby and Chestnut, 1978). Furthermore, purchase intentions are an indication of positive
experiences the customer has made and thus a signal for a company that customers
perceive their products as favorable (Gupta and Zeithaml, 2005). When choosing an apparel
brand consumers often rely on what their peers buy or recommend to them. In particular
young people who want to be up-to-date and wear the latest trends consider it important
which brands their friends talk about or consider as ‘cool’ (Grant and Stephen, 2005). Hence,
word of mouth influences purchase decisions and can consequently be an efficient tool in
promoting a fashion product. This makes word of mouth another desirable outcome of CSR
for a fashion company.

3.2 The Experiment

The research design chosen for the study at hand involved an experiment in a between-
groups design, or more precisely a 2x2 factorial design. The factorial design was based on
the taxonomy of CSR activities developed in the previous chapter. Accordingly, the two
factors adapted for the experimental design were customer involvement and company
engagement. Both of them were manipulated on two levels: direct vs. indirect customer
involvement and internal vs. external company engagement. “Factorial designs involve a cell
for every possible combination of treatment variables” (Malhotra, 2007, p.237). In this case
the 2x2 factorial design allows four combinations and thus equals four cells, where every cell
represents one type of CSR activity. Accordingly, four different scenarios were developed for
the questionnaire. Data for the experiment were collected through an online survey where
respondents were randomly assigned to one of the four scenarios. Thus, different subjects
were used in each experimental condition.

Figure 3: The Experiment direct

Involvement
Customer

Scenario 1 Scenario 2

Scenario 3 Scenario 4
indirect
external internal
Company Engagement

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 RESEARCH DESIGN

3.3 The Questionnaire

The questionnaire starts with the description of one of the four scenarios. For the scenarios a
fictitious fashion company (VelveTin) is introduced. All scenarios start with a neutral text that
first reports about VelveTin’s new casual wear line for men and women. It is mentioned that
this line includes t-shirts, polo shirts and longsleeves, as these are the most purchased
garments by German men and women. 22.3% of the males buy a shirt of that kind every
three months, which makes it the most frequently purchased clothing category in menswear.
For women it is the second most purchased clothing category (after stockings): 28.3% of the
females buy a t-shirt, polo shirt or a longsleeve every three months (Typologie der Wünsche,
2007). Respondents learn that quality and price (i.e. medium price range) of VelveTin’s
fashion products are appropriate. Further, the short text informs about the company’s CSR
activities concerning environment protection. Whereas the product description always
remains the same, the description of the CSR activity differs. In Scenario 1, a Type 1 CSR
activity is described (Good Deed For Sale). In this case, the respondents get the information
that 15% of the sales price of a shirt are donated to an ecology organization (i.e. BUND). In
Scenario 2 it is said that the clothing is manufactured of organic cotton that is free of
pesticides, which is representative of a Type 2 CSR activity (Good Produces Good). In
Scenario 3, the information is given that the company makes regular donations to an ecology
organization (i.e. BUND), which refers to CSR activity Type 3 (Distant Benefactor). A Type 4
CSR activity (Sustainable On The Inside) is specified in Scenario 4 where the company’s
environmentally friendly production process is described. Respondents are always told to
read the scenario completely and that the subsequent questions refer to this text. The
questions that follow the scenario are in all four cases the same. The questionnaire includes
nine closed questions (measured on five-point Likert scales) and classification information. It
was designed according to Malhotra’s (2007) guideline concerning wording, sequence, form
and layout. First, the respondents’ reactions to the text are tested by measuring behavioral
aspects such as word of mouth and intention to purchase, as well as pure loyalty aspects
such as attitudinal loyalty and propensity to be loyal. Subsequently, respondents’ personal
support for environment protection, their perceptions of how well VelveTin and ecological
commitment fit together and of how sincere the company’s commitment is are tested. Thus,
the second part measures the control variables. To avoid response bias those have not been
placed first: the respondents’ attention was not supposed to be drawn to environment
protection and personal attitudes before measuring behavioral outcomes through the
scenarios. Finally, the respondents are asked for personal information, which includes
demographics such as age, gender, income, employment status and education. This
information allows to classify respondents and detect if certain customer groups are more
responsive to CSR than others. (See Appendix 1 for the complete questionnaire.)

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 RESEARCH DESIGN

The questionnaire was distributed in the German language, as the target population of the
survey were Germans. Germany is Europe’s biggest consumer market (www.mb-
research.de) and thus an interesting target for market research in a retail context. In order to
guarantee that results are not falsified or biased due to comprehension problems, the survey
has been translated from English into German. Before publishing the German survey,
however, it was translated back into English for reasons of validity and reliability. Six neutral
persons with a very good command of the English language performed the translation. The
gathered translations were then compared to the original items. In all cases the meaning had
basically stayed the same and only slight adjustments had to be made to the German
version.

Before distributing the online questionnaire, a pretest was conducted in order to identify and
eliminate potential difficulties concerning the wording, the scenario content, question content,
the instructions and the sequence. Each scenario was pre-tested on two respondents from
the target population in a personal interview. Thereby the methods of protocol analysis and
debriefing (Malhotra, 2007) were applied. Afterwards the questionnaire was corrected and
adapted accordingly. Thereby misleading or confusing items were rephrased or deleted. A
second pretest was then conducted in the actual form of the survey, i.e. as online
questionnaire. Four respondents each tested one scenario on comprehension difficulties and
ease of administration. Except a slight change in the introductive part, the questionnaire
required no further adjustments and was consequently published and sent to a larger target
population.

Table 2: Respondents of the Pretest (Interview)

Scenario 1 1 2 2 3 3 4 4

Gender m f m f f f m f

Age 26 50 33 25 54 25 55 24

Occupation working housewife working working working student working student

Table 3: Respondents of the Pretest (Online)

Scenario 1 2 3 4

Gender m f m f

Age 26 24 57 29

Occupation working student working student

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 RESEARCH DESIGN

3.4 The Measures

This section is intended to give an overview of first the applied measures for behavioral
outcomes (3.4.1), and second the applied measures for the control variables (3.4.2).
Measures were chosen after a careful review of appropriate marketing research literature.
The decision which measures to adapt was made based on how often the measures have
been used before, in which context they have been used and in which journals they have
been published. The wording of the scales was adapted to fit the context of this study.
Furthermore, redundant items that were not appropriate for the proposed research were
eliminated.

3.4.1 Measuring Loyalty and Underlying Constructs

Despite being a highly crucial construct in marketing, universally used loyalty measures do
not exist. Even the Marketing Scales Handbook published by the American Marketing
Association (Bruner and Hensel, 1992) includes only one scale for loyalty measurement,
which has a very specific focus on soft drinks and is thus not overly useful for other studies
(Chaudhuri, 1999). Loyalty is a very rich construct and includes various behavioral and
attitudinal aspects (Day, 1969). Every researcher defines loyalty based on different aspects
due to the “absence of explicit and agreed-upon conceptual definitions” (Jacoby and
Chestnut, 1978, p.68) and consequently uses different measures. Thus, for the study at hand
a measurement for loyalty has to be composed of different measures. When developing a
loyalty measure it is important to realize that using just one measurement including items that
test all different aspects of loyalty is not as precise as using a separate measurement for
every behavioral and attitudinal aspect. The latter is called reflective approach and can be
used to find out how strong the influence of each aspect is, whereas the first approach lumps
all aspects together and can just be a general indicator of loyalty as the influences of the
single aspects tested are not revealed (Söderlund, 2006). In the study at hand both, a
reflective and a general approach, are used. First of all, each facet is measured separately
by multi-item scales, which leads to precise results and unravels the different impacts of the
different facets. Second, a general score for loyalty is calculated based on an aggregation of
these different facets. For the assessment of the loyalty facets for this study Rundle-Thiele
(2005) poses a guideline. Rundle-Thiele (2005) reviewed and summarized existing marketing
literature of loyalty measures. She grouped the measures according to the aspect of loyalty
they tested. As a result, seven factors of loyalty measures evolved (namely complaining
behavior, behavioral intention, word of mouth, resistance to competing offers, attitudinal
loyalty, behavioral loyalty, and propensity to be loyal). However, for the measurement of
loyalty in this study not all factors are appropriate as not all components apply. For instance,
testing ‘complaining behavior’ or ‘resistance to competing offers’ would not be feasible, as

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the product tested is fictitious and the respondents have not known the product before. The
same holds for ‘behavioral loyalty’ as it consists of measures that refer to past purchase
behavior. The adequate factors are thus ‘behavioral intention’ (refers to the dimension of
behavioral loyalty and is subsequently called ‘purchase intention’ as in this case both terms
represent the same construct), ‘word of mouth’, ‘attitudinal loyalty’ (refer both to the
dimension of attitudinal loyalty) and ‘propensity to be loyal’ (tests the general tendency of the
respondent to engage in loyal behavior or attitudes) (Rundle-Thiele, 2005). These four
factors are tested as separate constructs and are afterwards taken together to form a single
result for the construct ‘loyalty’ that includes all aspects in one. How the single factors are
measured is described in the following.

3.4.1.1 Measuring Purchase Intention

In order to increase accuracy two different multi-item scales are used to measure purchase
intention. First, a scale is adapted from Baker and Churchill (1977) who developed a widely
cited three-item scale to measure intention to seek out, try and buy a product on a seven-
point semantic differential scale ranging from ‘yes definitely’ to ‘no definitely not’. Second,
three out of six items from a scale for purchase intentions from Mackenzie, Lutz and Belch
(1996) were selected. Respondents had to rate the probability that they would purchase the
focal product on a seven-point Likert scale. However, as the majority of the applied scales in
this survey is based on five points, the measures for purchase intentions are reduced to five
points as well. This consistency allows respondents more convenience and accuracy in
handling the questionnaire and further it facilitates data analysis for the ‘loyalty’ construct.
However, purchase intention is a vital construct for itself in this study. It will subsequently be
also analyzed and interpreted separately.

3.4.1.2 Measuring Word of Mouth

Zeithaml et al. (1996) based their loyalty measurements within their behavioral-intentions
battery on items that measure word of mouth and purchase intention, which is in line with
Rundle-Thiele’s (2005) factors and underlines the importance of these two constructs that
also play a major role in the study at hand. Word of mouth and purchase intentions are the
most widely used measures for loyalty (see Hennig-Thurau et al., 2006; Johnson et al., 2006;
Seiders et al., 2005; Selnes, 1993; Zeithaml et al., 1996) as they are believed to have the
strongest linkages to antecedents and outcomes of loyalty (Söderlund, 2006). Thereby often
the behavioral-intentions battery by Zeithaml et al. (1996) is applied. For instance,
Sirdeshmukh (2002) applied scales from the behavioral-intentions battery in order to
measure intention to recommend and repurchase likelihood in the context of retail clothing. In
order to measure future loyalty intentions Hennig-Thurau et al. (2006) also adapted three

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items reflecting word of mouth from Zeithaml et al. (1996). Lam et al. (2004) measured
customer loyalty in a B2B service context with the recommend dimension by Zeithaml et al.
(1996). As Zeithaml et al.’s (1996) measurements seem widely accredited, they were applied
for measuring word of mouth in this study as well. Therefore, a three-item scale by Zeithaml
et al. (1996) from the recommend dimension of the behavioral-intentions battery is adapted,
which is based on a seven-point likelihood scale ranging from 1 meaning ‘not at all likely’ to 7
meaning ‘extremely likely’. Again, the scale is reduced to five points to fit the other measures.
Word of mouth is one aspect of loyalty measurement. However, the construct itself is so
crucial that it deserves separate analysis and interpretation.

3.4.1.3 Measuring Attitudinal Loyalty

Chaudhuri and Holbrook (2001) measured loyalty on two dimensions, namely attitudinal
loyalty and behavioral loyalty, by referring to Jacoby and Chestnut (1978). For measuring
attitudinal loyalty they employed a two-items scale that measures commitment. As their
measurement for this factor has also been recommended by Rundle-Thiele (2005), it has
been employed by this study as well. However, the wording of the first item had to be
strongly adapted. The authors did not disclose on which scale the items were measured, but
said that the respondents were asked to indicate their agreement with the proposed
statement. Due to conformity and logical reasons, the study at hand employs a five-point
Likert scale ranging from 1 meaning ‘strongly disagree’ to 5 meaning ‘strongly agree’.
Bennett and Rundle-Thiele (2002) measured attitudinal loyalty based on attitude towards the
act of purchasing a brand. They used a five-items scale from which the study at hand adapts
the two most appropriate items. These items test how the respondent feels about buying a
VelveTin product and are measured on a five-point semantic differential scale.

3.4.1.4 Measuring Propensity to be Loyal

“An individual’s propensity to be brand loyal or the personality trait approach [as opposed to
the product category approach] relates to the characteristics of an individual customer,
possibly personality traits, and positions attitudinal loyalty as a characteristic of a consumer
regardless of the brand” (Bennett and Rundle-Thiele, 2002, p. 195). In order to measure
propensity to be loyal a measure by Bennett and Rundle-Thiele (2002) is adapted where
seven personality trait items on a five-point Likert scale are employed ranging from 1
meaning ‘strongly disagree’ to 5 meaning ‘strongly agree’. As one item did not fit the context
of this study and two items led to confusion among the pretest respondents, only four were
selected for the final questionnaire. As opposed to the measures of the three constructs
described before that were product specific measures, this measure is individual specific.

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 RESEARCH DESIGN

This means it reflects a customer’s personal tendency to engage in loyal behavior,

regardless of the product.

3.4.2 Controlling Extraneous Variables

In order to guarantee internal and external validity, all factors that influence CSR’s impact on
the behavioral outcomes under examination must be controlled for (Malhotra, 2007). The
study intends to filter out the pure effects of the CSR activities themselves. For the
moderators perceived sincerity, personal support and perceived fit between company and
good cause the method of statistical control is applied. This means the variables are
measured and their effects are adjusted through statistical analysis. The variables quality
and price, consumer-company identification and perceived personal affect are controlled
through the design of the experiment.

3.4.2.1 Measuring Personal Support of the Good Cause

Personal support of the good cause needs to be integrated in this study as a control variable
since it affects CSR’s effect on the behavioral outcomes under examination. First of all,
customer’s personal support moderates CSR’s positive impact on purchase intention
(Bhattacharya and Sen, 2004; Sen and Bhattacharya, 2001). Furthermore, high personal
support leads to high customer-company identification (Sen and Bhattacharya, 2001), which
in turn leads to loyalty and word of mouth (Bhattacharya and Sen, 2004). Thus, personal
support is also an indirect moderator on loyalty and word of mouth.
In the proposed research the supported good cause is environment protection. In order to
measure in how far a respondent personally supports environment protection, the
ECOSCALE by Stone et al. (1995) is applied. Stone et al. (1995) examined customers’
awareness of and attitude towards environmental problems, their willingness to take actions
to alleviate these problems and their actions taken. The ECOSCALE tests the ‘consumer
environmental responsibility’ on seven dimensions. For the study at hand three of these were
appropriate. The first dimension tested in this study is the ‘opinions and beliefs dimension’
based on six items. Two of them did not fit the context of the questionnaire and were deleted.
The four items adapted test in how far the respondents believe the environment to be worth
protecting. Second, three out of four items on the ‘attitude dimension’ were considered
appropriate. Thereby the attitudes concerning environment protection in general and in how
far the individual can play a role in this are examined. Finally, the ‘action taken dimension’ is
supposed to reveal in how far a respondent would or does actively protect the environment in
daily life. In this case, two out of five items were inappropriate for the target population and
were eliminated. Eventually, the questionnaire contains a ten-items measure based on a five-
point Likert scale ranging from 1 meaning ‘strongly disagree’ to 5 meaning ‘strongly agree’.

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Originally, the ‘actions taken dimension’ is scored on a five-point ‘never’ to ‘always’ scale.
However, considering the content of the items and considering conformity issues, the
application of a five-point ‘strongly disagree’ to ‘strongly agree’ scale seemed much more
appropriate for this study.

3.4.2.2 Measuring Perceived Sincerity

Perceived sincerity is deciding for CSR’s effectiveness. If a customer perceives a CSR
activity as insincere, CSR’s positive effect on attitude is undermined (Bronn and Vrioni, 2001;
Yoon et al., 2006). As attitude is assumed to impact customer behavior (Bennett and Rundle-
Thiele, 2002) it is highly desirable that attitude is positively influenced by a CSR activity.
Therefore, the motives of a company have to be perceived as authentic (Becker-Olsen et al.,
2006; Folkes and Kamins, 1999) and the source of information about a company’s CSR
activities has to be perceived as reliable (Yoon et al., 2006). Through the neutral description
(i.e. no company source) of VelveTin’s product and CSR activity, perceived sincerity should
be less of a concern. However, in order to control for potential intruding effects in spite of
this, perceived sincerity is measured on a two-item semantic-differential scale by Yoon et al.
(2006). Thereby respondents have to indicate their inferences about the sincerity of the
company’s motives by rating two statements about VelveTin’s concern of the environment on
a seven-point Likert scale anchored by ‘extremely unlikely’ versus ‘extremely likely’. Again,
this scale has been reduced to five points for conformity reasons.

3.4.2.3 Measuring Perceived Fit between Company and Good Cause

A high perceived fit increases CSR’s positive impact on purchase behavior (Bhattacharya
and Sen, 2004). Therefore, it needs to be tested in how far the respondents would consider
environment protection an appropriate CSR domain for a fashion company like VelveTin. An
extremely low fit could explain a potential absence of CSR’s effect on purchase intention. As
purchase intention is a subconstruct of loyalty here, loyalty is also assumed to be influenced
by perceived fit. In their study on CSR’s impacts, Becker-Olsen et al. (2006) developed four
items on a semantic differential scale ranging from 1 to 7 in order to measure perceived fit.
As one item led to major confusion with pretest respondents, only three items were
considered appropriate for this study. Furthermore, the scale was changed to a five-point
semantic differential scale.

3.4.2.4 Controlling Product Quality and Price

Low quality and a high perceived price undermine CSR’s positive effect on purchase
behavior (Boulstridge and Carrigan, 2001; Folkes and Kamins, 1999). To counter this effect,
all scenarios describe the quality of VelveTin’s products as high (‘high quality cotton shirts

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with an excellent fit’) and the price as appropriate (high quality ‘at a fair price in the medium
price segment’). This way, respondents’ perception of price and quality should be neutral and
a response bias through price and quality consciousness should be eliminated.

3.4.2.5 Controlling Consumer-Company Identification

Consumer-company identification influences CSR’s effect on attitudes, behavioral intentions
(Becker-Olsen et al., 2006), word of mouth and loyalty (Bhattacharya and Sen, 2004). One
driver of consumer-company identification is personal support of the CSR issue. As this
study controls for the influence of personal support it simultaneously controls for customer-
company identification as well. Of course, also the attitude a customer has towards a
company or product influences identification (Sen and Bhattacharya, 2001). However, the
company description in the scenarios of the questionnaire is short and does not reveal much
information about VelveTin itself. Second, VelveTin is merely fictitious and is thus not familiar
to the respondents. Under these circumstances, it is highly improbable that the respondents
develop such a relationship other than over personal support to VelveTin that it justifies the
term consumer-company identification. In other words, a consumer-company identification
via attitudes can be excluded due to the characteristics of the experimental design and via
personal support control measures are taking hold.

3.4.2.6 Controlling Perceived Personal Affect

Folkes and Kamins (1999) found that CSR has an effect even “when the action lacks a direct
impact on the customer” (p.257). However, Boulstridge and Carrigan (2000) claim that CSR
would have a greater effect on purchase behavior if the customer felt personally affected by
the CSR activity. The research at hand regards both propositions as they are both
incorporated in the different CSR types. The dimension ‘customer involvement’ determines in
how far the customer is personally affected. The dimension has two levels: direct customer
involvement, which is represented by CSR activity Type 1 and 2 (Good Deed For Sale and
Good Produces Good) and indirect customer involvement, which is represented by CSR
Type 3 and 4 (Distant Benefactor and Sustainable On The Inside). If perceived personal
affect has a beneficial or detrimental effect will be revealed by testing the effectiveness of the
different types. A possible result might be that it depends on the desired behavioral outcome
or on the characteristics of the customer itself which degree of customer involvement in CSR
is most effective.

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Table 4: Loyalty and Underlying Measures – Overview

Scale Origin of the

Construct Items Translated Items
Adapted Scale measure

Purchase 7-point (1) Would you like to try (1) Würden Sie Kleidung von Baker &
Intention semantic clothes from VelveTin? VelveTin gerne ausprobieren? Churchill
differential (2) Would you buy clothes (2) Würden Sie Kleidung von (1977)
(1 yes from VelveTin if you VelveTin kaufen, wenn Sie sie
definitely, happened to see them in a zufällig in einem Geschäft
7 no definitely store? sehen würden?
not) (3) Would you actively seek (3) Würden Sie gezielt in einem
Changed to out clothes from VelveTin in Geschäft nach Kleidung von
5-point sem.d. a store in order to purchase VelveTin suchen?
them?

7-point (1) unlikely vs. likely (1) unwahrscheinlich vs. Mackenzie,

semantic wahrscheinlich Lutz & Belch
differential (2) impossible vs. possible (2) unmöglich vs. möglich (1996)
Changed to (3) definitely would not use (3) würde VelveTin definitiv
5-point sem.d. vs. definitely would use nicht tragen vs. würde VelveTin
definitiv tragen

Word of 7-point How likely is it that you Wie wahrscheinlich ist es, Zeithaml et
Mouth likelihood scale would... dass Sie... al. (1996)
(1 not at all (1) say positive things about (1) anderen Leuten Positives
likely, VelveTin to other people? über VelveTin berichten
7 extremely würden?
likely) (2) recommend VelveTin to (2) VelveTin jemandem
Changed to someone who seeks your empfehlen würden, der Ihren
5-point advice? Rat sucht?
likelihood scale (3) encourage friends and (3) Ihre Freunde und
relatives to purchase Verwandte bestärken würden,
VelveTin products? Kleidung von VelveTin zu
kaufen?

Attitudinal 5-point Likert (1) I am committed to (1) Ich bin von VelveTins Chaudhuri &
Loyalty scale VelveTin Produktkonzept überzeugt Holbrook
(1 strongly (2) I would be willing to pay a (2) Ich wäre bereit einen (2001)
disagree, higher price for this brand höheren Preis für diese Marke
5 strongly over other brands als für vergleichbare Marken zu
agree) bezahlen

5-point Purchasing clothing from Kleidung von VelveTin zu Bennett &

semantic VelveTin would be kaufen wäre Rundle-
differential (1) good vs. bad (1) gut vs. schlecht Thiele (2002)
(2) favorable vs. unfavorable (2) vorteilhaft vs. nachteilig

Propensity 5-point Likert (1) I would rather stick with a
to Be Loyal scale brand I usually buy than try
(1 strongly something I am not sure of.
disagree,
5 strongly (2) If I like a brand, I rarely
agree) switch from it just to try
something different.
(3) I rarely introduce new
brands and products to my
friends and colleagues.
(4) I would rather wait for
others to try a new brand
than try it myself.
(1) Ich würde eher bei meiner Bennett &
gewohnten Marke bleiben, als Rundle-
etwas auszuprobieren, von Thiele (2002)
dem ich mir nicht sicher bin.
(2) Wenn ich eine Marke mag,
wechsele ich sie selten nur um
etwas anderes auszuprobieren
(3) Ich stelle meinen Freunden
und Kollegen selten neue
Marken und Produkte vor.
(4) Ich warte immer bis Andere
eine neue Marke ausprobiert
haben, bevor ich diese selbst
ausprobiere.

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Table 5: Control Measures – Overview
Scale
Construct Adapted Items
Scale
Personal 5-point (1) Excess packaging is one
Support of Likert scale source of pollution that could
the Good (1 strongly be avoided if manufacturers
Cause disagree, were more environmentally
5 strongly aware.
agree) (2) Economic growth should
take precedence over envir-
onmental considerations.
(3) The burning of the oil
fields in Kuwait, the meltdown
in Chernobyl, and the oil spill
in Alaska are examples of
environmental accidents
whose impact is only short
term.
(4) The earth‘s resources
should be used to the fullest
to increase the human
standard of living
(5) There is nothing the
average citizen can do to
help stop environmental
pollution.
(6) My involvement in
environmental activities today
will help save the
environment for future
generations.
(7) I would not car pool
unless I was forced to. It is
too inconvenient.
(8) I turn in polluters when I
see them dumping toxic
liquids.
(9) The earth is so large that
people have little effect on
the overall environment.
(10) People who litter should
be fined $500 and be forced
to work on road crews and
pick up garbage.
Perceived 7-point (1) VelveTin has genuine
Sincerity sem. diff. concerns for environmental
scale protection and conservation
(1 extr. when it supported various
unlikely, environmental organizations
7 extr. (2) VelveTin sincerely cares
likely) about environmental
Changed to protection and conservation
5-point when it supported various
sem. d. environmental organizations
Perceived 7-point (1) low fit vs. strong fit
Fit between sem. diff.
Company scale (2) inconsistent vs. consistent (2) unvereinbar vs. vereinbar
and Good Changed to (3) not complementary vs.
Cause 5-point complementary
sem. d.
Origin of the
Translated Items
measure
(1) Verschwenderisches Verpacken Stone et al.
ist eine Quelle von Umwelt- (1995)
verschmutzung, die vermieden werden ECOSCALE
könnte, wenn die Hersteller
umweltbewusster wären.
(2) Ökonomisches Wachstum sollte
Vorrang vor umweltpolitischen
Überlegungen haben.
(3) Die brennenden Ölfelder in Kuwait,
das Kernschmelzen in Tschernobyl
und Ölverschmutzung in Alaska sind
Beispiele für Umweltunfälle, deren
Auswirkung nur kurzfristig ist.
(4) Die Ressourcen der Erde sollten
voll genutzt werden um den
menschlichen Lebensstandard zu
erhöhen.
(5) Es gibt nichts, was der
Durchschnittsbürger tun kann, das
helfen würde, die
Umweltverschmutzung zu stoppen.
(6) Wenn ich mich heute an
Umweltschutzaktivitäten beteilige,
helfe ich die Umwelt für zukünftige
Generationen zu bewahren.
(7) Ich würde keine
Fahrgemeinschaften bilden, es sei
denn ich würde dazu gezwungen. Es
ist zu lästig.
(8) Ich melde Umweltverschmutzer,
wenn ich sehe wie sie giftige
Flüssigkeiten illegal abladen.
(9) Die Erde ist so groß, dass
Menschen eine geringe Auswirkung
auf die allgemeine Umwelt haben.
(10) Leute, die Müll verstreuen, sollten
500€ Strafe zahlen und gezwungen
werden am Straßenrand zu arbeiten
und Müll aufzusammeln.
(1 )Der Natur- und Umweltschutz ist Yoon et al.
VelveTin ein echtes Anliegen, wenn (2006)
es Umweltorganisationen unterstützt.
(2) VelveTin kümmert sich aufrichtig
um den Natur- und Umweltschutz,
wenn es Umweltorganisationen
unterstützt.
(1) passen kaum zusammen vs. Becker-
passen extrem gut zusammen Olsen et al.
(2006)
(3) ergänzen sich nicht vs. ergänzen
sich
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3.4.3 Demographics
To which type of CSR activity a customer is most responsive might depend on individual
characteristics. Carrigan and Attalla (1997) claim that age and gender play a role in CSR’s
effectiveness. Barksdale and Darden (1972) found already earlier that age made a
difference, however in their study gender had no effect. The study at hand examines the
potential differences across consumer groups concerning age, gender, education,
employment status and income. Next to age and gender, income could play a major role as it
influences what the priorities of a customer during purchase decisions are. Consumers with a
small income might consider first of all (and perhaps only) price, whereas a consumer with a
higher disposable income might consider other criteria first, like for instance the sustainability
of a product. The consumers’ awareness and knowledge of the environmental or social
issues a company supports with its CSR might differ across education level. A highly
educated and thus highly knowledgeable consumer might be more supportive of a socially
responsible company than a consumer who is not aware of the problems that the company is
trying to alleviate.

3.5 Conducting the Research

The online survey was created with the software program NetQuestionnaires. Respondents
received an invitation to participate in the survey via an email containing a link to the online
questionnaire. This way, the questionnaire was distributed very fast and without any cost. A
major advantage of an online survey is the high perceived anonymity of the respondents,
which is also ideal for obtaining sensitive information (Malhotra, 2007). The first invitations
were sent out on 18th August 2008. The questionnaire was closed on 14th September 2008
as by then the number of 200 respondents was exceeded. Thus, data were collected for 28
days. The target population included Germans of all age groups with different backgrounds
concerning education and income. Respondents were selected via non-probability sampling.
First judgmental sampling was employed, later snowball sampling was used. This means that
certain respondents (i.e. 100 respondents) were chosen to receive a survey invitation via
email. These respondents in turn were asked to forward the invitation to other Germans who
were willing to contribute to the survey. In addition, paper versions of the survey were
handed out to respondents with no Internet access. These results were then transferred to
NetQuestionnaires by the researcher. An incentive was not offered, it was rather relied on
the respondents’ social motivation.

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 RESEARCH DESIGN

3.6 The Sample

In total, 219 respondents successfully completed
the experiment. As all questions of the online Variable Frequency %
survey were mandatory there were no missing
Gender
cases, thus all 219 cases were used for analysis. female 112 51.1
male 107 48.9
The sample represented an almost equal number
Age
of males and females of different age, education < 20 2 0.9
and income groups. The age group of 20-30 years 20-30 120 54.8
31-40 30 13.7
is most dominant in the sample, including 54.8% of 40-50 21 9.6
> 50 46 21.0
the respondents. The second largest age group
Education
with 21% is the 50+ group. The majority of the Graduation
Hauptschule 14 6.4
sample can be considered as highly educated as Realschule 40 18.3
Gymnasium 165 75.3
75.3% graduated from the ‘Gymnasium’ (which is
comparable to a high school degree) and two Professional Education
Apprentice Training 56 25.6
thirds of the respondents have a college or College Degree 71 32.4
University Degree 75 34.2
university degree. 73.5% are working in a job. No professional
education 17 7.8
Furthermore, respondents are quite equally
Profession
distributed over income groups. NetQuestionnaires employed 161 73.5
not employed 58 26.5
randomly assigned the 219 respondents to one of
four treatments, the so-called scenarios. Thus, Income
> 1,000€ 46 21.0
four groups of similar size evolved based on 1,000€ - 2,400€ 77 35.2
2,500€ - 3,500€ 48 21.9
chance. The population within each group is > 3,500€ 48 21.9
representative of the total population as age,
education and income groups and gender are relatively equally distributed across the
scenarios. For further analysis it is crucial that the scenarios do not differ too much in size.
The sample sizes range from 49 subjects within the smallest group, Scenario 1, and 60
subjects within the largest group, Scenario 4. According to Pallant (2007) the number of
subjects of the largest group divided by those of the smallest group should not exceed the
value of 1.5. In the case at hand, the value of 60/49= 1.22 is definitely acceptable. Thus, the
small differences in group size do not pose a problem for any data analysis comparing the
different groups. The table below gives a detailed overview of the sample characteristics of
the different scenarios and shows how the total sample is distributed across the four
scenarios.

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 RESEARCH DESIGN

Table 6: Sample Profile Across Scenarios

Scenario 1 Scenario 2 Scenario 3 Scenario 4
Ntotal=219 N1=47 N2=59 N3=53 N4=60
Frequency % Frequency % Frequency % Frequency %
Gender
female 26 55.3 29 49.2 24 45.3 33 55.0
male 21 44.7 30 50.8 29 54.7 27 45.0

Age
< 20 0 0 1 1.7 0 0 1 1.7
20-30 28 59.6 25 42.4 29 54.7 38 63.3
31-40 8 17.0 10 16.9 8 15.1 4 6.7
40-50 3 6.4 10 16.9 3 5.7 5 8.3
> 50 8 17.0 13 22.0 13 24.5 12 20.0

Education
Graduation
Hauptschule 4 8.5 4 6.8 2 3.8 4 6.7
Realschule 10 21.3 15 25.4 9 17.0 6 10.0
Gymnasium 33 70.2 40 67.8 42 79.2 50 83.3

Professional
Education
Apprentice
Training 14 29.8 18 30.5 10 18.9 14 23.3
College Degree 18 38.3 20 33.9 19 35.8 14 23.3
University Degree 11 23.4 18 30.5 19 35.8 27 45.0
No professional
education 4 8.5 3 5.1 5 9.4 5 8.3

Profession
employed 37 78.7 45 76.3 38 71.7 41 68.3
not employed 10 21.3 14 23.7 15 28.3 19 31.7

Income
< 1,000€ 10 21.3 12 20.3 8 15.1 16 26.7
1,000€ - 2,400€ 20 42.6 20 33.9 20 37.7 17 28.3
2,500€ - 3,500€ 10 21.3 12 20.3 13 24.5 13 21.7
> 3,500€ 7 14.9 15 25.4 12 22.6 14 23.3

3.7 Data Preparation

As the data set was directly exported from NetQuestionnaires to SPSS 16.0 the required
cleaning of the data was limited. First of all, values had to be assigned to the 9 cases that
filled in the open option (i.e. ‘other’) of question 16 (Professional Education). A value out of
the formerly designed variables (‘No professional education’, ‘Apprentice Training’, ‘College
Degree’, ‘University Degree’) was assigned that approximated the respondent’s description
best. As a consequence, the category ‘other’ was abundant and professional education then
had just four categories instead of five. The values of the two variables school education and
professional education were added up to form one variable ‘Education’ with values ranging
from 2 to 8. Furthermore, the items 2 to 6 and item 8 of ‘Personal Support for the Good
Cause’ had to be reverse coded, so that low scores equal high values that indicate high
support for environment protection and high scores equal low values for low support. As a

47
 RESEARCH DESIGN

next step, several new variables were created. First of all, in reference to an approach
described by Hadler (2005) the new variable ‘Scenario’ assigned values from 1 to 4 to the
cases according to the treatment they were assigned to. A variable ‘Loyalty’ representing the
construct loyalty in the model of this study was created by adding the single item scores of
the variables of ‘Word of Mouth’, ‘Purchase Intention’, ‘Attitudinal Loyalty’ and ‘Propensity to
be loyal’ – 17 items in total. Further, average summated scales were also calculated for
‘Word of Mouth’, ‘Purchase Intention’, ‘Attitudinal Loyalty’, ‘Propensity to be loyal’, ‘Personal
Support’, ‘Perceived Fit’ and ‘Perceived Sincerity’.

3.8 Reliability and Validity of the Scales

“Reliability is an assessment of the degree of consistency between multiple measurements of
a variable” (Hair et al., 2006, p.137). The most commonly used measure for reliability is
internal consistency, which represents the principle that every individual item of a scale
should measure the same construct. Two ways to assess internal consistency are first item-
to-total correlations and inter-item correlations and second the reliability coefficients
according to Cronbach (Hair et al., 2006). To consider a scale reliable a Cronbach alpha
coefficient should reach the value of .6 (Eckstein, 2004), especially with surveys (Hadler,
2005). However, higher values are desirable. Values of .8 are considered to indicate a very
good internal consistency (Pallant, 2007). The item-to-total correlations should be above .3
(Pallant, 2007) and ideally exceed .5 (Hair et al., 2006). The majority of the items used is
above the .5 level and the remaining items are close to .3 or higher. The lower values do not
pose a problem as long as the Cronbach alpha value is still on an acceptable level. The inter-
item correlations should exceed .3 (Hair et al., 2006), which is always the case except for the
construct ‘Personal Support’. However, the Cronbach alpha coefficient for this scale implies
sufficient reliability. From two of the constructs measured, one item had to be deleted as it
negatively impacted internal consistency. The item ‘introduce new brands’ of the construct
‘Propensity to be Loyal’ stood out from the other items of the scale. It had to be removed as it
showed far too low values on the inter-item correlation, ranging from .074 to .142. Also the
item-to-total correlation was far below the level of acceptance of .3, namely .149. The
inconsistent values for ‘introduce new brands’ were probably caused by the high mean value
of this item compared to the other items. When it was removed the former Cronbach alpha
value of .593 increased to .710, indicating a good internal consistency. The item ‘economic
growth’ of the construct ‘Personal Support’ also showed irregularities on the inter-item
correlation matrix with most values below .2, and with a value of .203 it had a too low item-to-
total correlation. ‘Economic growth’ also exhibited a comparatively low mean. Thus, this item
had to be removed. Consequently, the Cronbach alpha increased to .669, indicating an
acceptable moderate internal consistency. The Cronbach alpha values of the other

48
 RESEARCH DESIGN

constructs range between .700 and .895 indicating moderate to very good internal
consistency.

Table 7: Construct Reliability

Construct & Items Mean Standard Mean Item-to-total Cronbach
Deviation Inter-Item correlation Alpha
Correlation

Word of Mouth .678 .863

Say positive things 3.03 1.243 .735
Recommend 3.21 1.173 .758
Encourage friends and relatives 2.70 1.133 .728

Purchase Intention
I. .494 .745
Try VelveTin 3.68 1.040 .662
Buy VelveTin 3.42 .897 .554
Seek out VelveTin 2.34 1.003 .278
II. .583 .803
Unlikely – Likely 3.25 1.094 .694
Impossible – Possible 3.73 .999 .664
Would not wear – Would wear 3.50 .832 .618

Attitudinal Loyalty
I. .543 .700
Committed 3.23 1.034 .543
Pay higher price 2.77 1.182 .543
II. .682 .811
Bad – Good 4.06 .821 .682
Unfavorable – Favorable 3.84 .837 .682

Propensity to Be Loyal .446 .710

Stick with brand 2.18 1.141 .535
Rarely switch 2.37 1.152 .630
Wait for others 1.64 .987 .434

Loyalty .810 .821

includes all items of the constructs see above see above see above
Word of Mouth, Purchase Intention,
Attitudinal Loyalty and Propensity to Be
Loyal

Personal Support .209 .667

Excess packaging 4.67 .673 .463
Burning oilfields 4.51 .988 .332
Use earth’s resources 4.25 1.094 .295
What the average citizen can do 4.67 .711 .415
Involvement in environmental activities 4.14 1.196 .356
Car pooling 3.86 1.304 .293
Turn in polluters 4.04 1.226 .393
Effect of people on the environment 4.68 .709 .459
Fine for littering 3.91 1.256 .366

Perceived Fit .672 .857

Low – Strong Fit 3.62 .823 .777
Inconsistent – Consistent 3.88 .759 .723
Not complementary – Complementary 3.64 .889 .702

Perceived Sincerity .810 .895

Genuine concern 3.53 1.037 .810
Sincerely cares 3.32 1.035 .810

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 RESEARCH DESIGN

In order to obtain a better understanding of the quality of the higher-order construct loyalty,
construct validity is assessed, which reveals the extent to which the loyalty measure used is
representative. Loyalty here is measured based on four different constructs (i.e. word of
mouth, purchase intention, attitudinal loyalty and propensity to be loyal) that together have 16
items. If these items measure the construct they are supposed to measure is tested by
confirmatory factory analysis (CFA) that assesses “the degree to which the data meet the
expected structure” (Hair et al., 2006, p.105). First, the pattern coefficients revealed that the
item ‘seek out VelveTin’ (construct purchase intention) and the items ‘committed’ and ‘pay
higher price’ (construct attitudinal loyalty) load on factors (i.e. constructs) they are not
supposed to load on. Thus, they are excluded from further analysis. Repeating CFA with
oblimin rotation, all remaining 13 items load significantly on the appropriate constructs (see
Table 8) and above that have high communalities above .5 indicating that “a large amount of
the variance in a variable has been extracted by the factor solution” (Hair et al., 2006, p.149).
In total, the four constructs explain 71.4% of the variance. As no item is cross-loading but
only representing one latent construct with a high value, discriminant validity is adequate.
Also convergent validity is appropriate as every construct has a variance extracted between
.54 and .74, which is above the critical value of .5 (Hair et al., 2006). Consequently, the
loyalty measure can be considered of sufficient validity.

Table 8: Construct Validity of the Loyalty Measure (CFA)

Factor Pattern Coefficients Total
Construct & Items Communalities Variance
1 (WOM) 2 (PInt) 3 (AttLoy) 4 (PropLoy) Explained
Word of Mouth 39.6 %
Say positive things -.825 .783
Recommend -.869 .797
Encourage friends and relatives -.880 .776

Purchase Intention 15.5 %

I.
Try VelveTin .641 .641
Buy VelveTin .770 .628
Seek out VelveTin
II.
Unlikely – Likely .797 .753
Impossible – Possible .652 .628
Would not wear – Would wear .815 .658

Attitudinal Loyalty 8.8 %

I.
Committed
Pay higher price
II.
Bad – Good .737 .809
Unfavorable – Favorable .904 .856

Propensity to Be Loyal 7.5 %

Stick with brand .730 .624
Rarely switch .865 .750
Wait for others .754 .579

Variance Extracted (VE) .54 .62 .74 .68

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 RESULTS AND DISCUSSION

4. RESULTS AND DISCUSSION

This chapter presents the results of the statistical analysis that eventually lead to the
confirmation or rejection of the hypotheses proposed in this study. In the following, the first
part introduces the most important preliminary tests (4.1), and the second part describes the
results of the main analysis, three one-way analyses of covariance, as well as the influence
of demographic characteristics (4.2). In the final part, the results of the statistical tests are
discussed with a focus on the effectiveness of the different types of CSR activities (4.3).

4.1 Preliminary Tests

First, preliminary tests were conducted to ensure that there was no violation of the
assumptions underlying the use of an analysis of covariance (ANCOVA).

4.1.1 Normality
For each level of the independent variable (i.e. scenario) the dependent variables (i.e. word
of mouth; purchase intention; loyalty) have to be normally distributed. First, values for
skewness indicating the symmetry of distribution and kurtosis indicating the peakedness of
the distribution were examined for all three dependent variables. All values showed the
required value of |1| or smaller implying normality (Pallant, 2007). The histograms, normal Q-
Q plots and box plots further confirmed the assumption of normality and indicated that there
were no problematic outliers. Also the very small differences between the mean and the 5%
trimmed mean of the four scenarios on the different dependent variables indicate normal
distribution.

4.1.2 Linearity
“The ANCOVA model is based on the assumption that the relationship between each
covariate and the dependent variable and the relationships among pairs of covariates are
linear” (Tabachnick and Fidell, 2007, p.236). The linear relationships of all twelve pairs have
been examined by scatterplots that were checked for each treatment (i.e. scenario). All
scatterplots showed straight lines indicating linear relationships.

4.1.3 Homogeneity of Variance

Parametric techniques to compare groups make the assumption that the variability of scores
for each group (in this case for each scenario) is of almost equal variance (Pallant, 2007).
The Levene’s test for equality of variances tests this assumption. For purchase intention and
loyalty the Levene’s test was insignificant at .559 and .996 respectively, indicating similar
variances in the variability of scores for each scenario. For word of mouth the Levene’s test

51
 RESULTS AND DISCUSSION

was significant. However, this violation does not pose a problem as the analysis of
covariance is reasonably robust (Tabachnick and Fidell, 2007).

4.1.4 Homogeneity of Regression Slopes

Here the relationship between the covariates, the dependent variable(s) and the scenarios is
examined. There must be no interaction between the covariates and the experimental
manipulation (i.e. the different scenarios). Tabachnick and Fidell (2007) suggest that “a more
stringent alpha criterion than .05 is advisable for the multitude of tests produced by this
method of evaluating homogeneity of regression” (p.237). Thus, an alpha level of .03 was
employed. No interaction between the variable scenario and the different covariates across
the three dependent variables was significant. In fact, most showed a significance value of .1
and higher.

4.1.5 Reliability of Covariates

It is assumed that the covariates are measured without error. The Cronbach alpha values for
personal support, perceived fit and perceived sincerity were .667, .857 and .895 respectively
and indicate moderate to very good internal consistency, which implies reliable measurement
of the constructs.

4.1.6 Correlations among the Covariates

Covariates should not strongly correlate with each other. The results of a correlation analysis
of all three covariates showed low to moderate correlation with Pearson product-moment
correlation coefficients ranging from .368 to .507. Ideally, the covariates should correlate
more with the dependent variable than with each other. However, the dependent variables
only showed small to moderate correlations with the covariates. Thus, the dependent
variables correlate approximately as strong with the covariates as the covariates do with
each other. This is not quite optimal and increases the potential danger of increased error
variance (Tabachnick and Fidell, 2007).

4.2 Analysis of Covariance

The proposed hypotheses assume that there is a difference between the scenarios in their
effect on word of mouth, purchase intention and loyalty while controlling for the effects of
personal support of the cause, perceived fit between the company and the good cause and
perceived sincerity. In order to examine potential differences between the scenarios, three
one-way analyses of covariance (ANCOVA) have been conducted. The procedure and
results of the statistical tests are introduced in the following section.

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 RESULTS AND DISCUSSION

4.2.1 The Effectiveness of the CSR Activities on Loyalty .

In order to test the hypotheses of the positive impact of all CSR types on loyalty and of
whether the types differ in their impact (H1a, 2a, 3a, 4a) while controlling for extraneous
variables, a one-way ANCOVA is performed. The independent variable is scenario and has
four levels, each representing a unique combination of the two levels of customer
involvement (direct vs. indirect) and company engagement (internal vs. external). The
dependent variable loyalty is measured on a five-point scale. The value 3.0 is seen as
neutral, with higher values indicating greater loyalty and lower values indicating weaker
loyalty. As the respondents’ personal support of the good cause, the perceived sincerity of
VelveTin’s CSR activities and the perceived fit between VelveTin and environment protection
are assumed to obscure the effects of CSR (and thus of the scenarios), these three variables
are treated as covariates. All covariates are measured on a continuous scale ranging from 1
(indicating low personal support, low perceived sincerity and fit) to 5 (indicating high personal
support, high perceived sincerity and fit). The test of between-subjects effects was not
significant (F (3, 212) = 1.684, p=.172) suggesting that there is no significant difference
between the scenarios’ scores on loyalty. Consequently, none of the hypotheses related to
the differences between the CSR types on loyalty (H1a, 2a, 3a, 4a) can be fully supported.
However, next to the assumption that there are significant differences between scenarios,
the hypotheses all state that CSR types 1, 2, 3, and 4 have a positive effect on loyalty. All
values above the neutral point of 3.0 are considered as positive tendency towards loyalty. As
the scenarios’ mean scores are MScenario1=3.21; MScenario2=3.02; MScenario3 =3.00; and MScenario4
=3.04; it can be said that Type 1 with the highest mean score has a positive effect on loyalty,
thus the hypothesis H1a can be partially supported. The effects of the other three types,
however, can be merely considered as neutral as their mean scores are very close to or
exactly 3.0. Consequently, H2a, 3a and 4a have to be rejected.

Table 9: Test of Between-Subjects Effects (Loyalty)

df F Sig. Partial Eta
Squared
Scenario 3 1.684 .172 .023
Significance level at p<.05

As a next step, the influences of the three covariates are explored. It is inspected if there is a
significant relationship between the covariate and the dependent variable while controlling for
the independent variable. The covariates sincerity and fit indeed exert influence on the
relationship between the dependent and independent variable. Sincerity is a significant
covariate at F (1, 212) = 7.393, p=.007 and fit is significant at F (1, 212) = 10.155, p=.002.
Both have a medium effect size according to Cohen and together explain 8% of the variance

53
 RESULTS AND DISCUSSION

in loyalty. Personal support, however, proved to be insignificant at F (1, 212) = .184, p=.668
and presumably has no influence on how a respondent scores on the loyalty measure.

Table 10: Influence of Covariates (Loyalty)

df F Sig. Partial Eta
Squared
Personal Support 1 .184 .668 .001
Sincerity 1 7.393 .007 .034
Fit 1 10.155 .002 .046
Significance level at p<.05

Table 10 shows the means without controlling for the covariates and the adjusted means
after controlling for the covariates. The difference between these two categories of values is
rather small. The ranks remain the same before and after the adjustment.

Table 11: Descriptive Statistics (Loyalty)

Scenario N Mean Std Deviation Adjusted Adjusted mean Standard
Rank Error
1 47 3.22 .603 1 3.209 .076
2 59 3.02 .589 3 3.018 .068
3 53 2.95 .522 4 3.002 .072
4 60 3.07 .554 2 3.038 .067
Total 219 3.06 571

4.2.2 The Effectiveness of the CSR Activities on Word of Mouth.

To examine which treatment had the most effect on word of mouth and if the different types
of CSR activities (i.e. the scenarios) significantly differed in their effect, a second one-way
ANCOVA has been performed. The independent variable is again scenario with four levels
referring to the four different types of CSR activities. The dependent variable is word of
mouth measured on a continuous scale ranging from 1 indicating low levels of engagement
in word of mouth to 5 indicating high levels of word of mouth engagement. Perceived
sincerity and personal support are assumed to influence CSR’s effects on word of mouth.
Thus, it has to be controlled for their influence. Consequently, sincerity and personal support
are used as covariates. After adjusting for these two variables, there was a significant
difference found somewhere between the scenarios at F (3, 213) = 5.146, p=.002 and a
partial eta squared of .068, indicating a medium effect size. Thus, scenario explained 6.8% of
the variance in word of mouth.

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 RESULTS AND DISCUSSION

Table 12: Test of Between-Subjects Effects (WOM)

df F Sig. Partial Eta
Squared
Scenario 3 5.146 .002 .068
Significance level at p<.05

In order to find out between which groups the significant difference(s) lie, a post hoc test was
conducted. The main effects were compared using a Bonferroni confidence interval
adjustment (Tabachnick and Fidell, 2007). The pair wise comparisons showed that Scenario
1 was significantly different from all of the other three scenarios. No other significant
differences were found among the other scenarios.

Table 13: Post Hoc Test (WOM)

Scenario Scenario Mean Std. Error Sig.
Difference
1 2 .567* .191 .020
3 .709* .197 .002
4 .581* .191 .016
2 1 -.567* .191 .020
3 .142 .186 1.000
4 .014 .180 1.000
3 1 -.709* .197 .002
2 -.142 .186 1.000
4 -.128 .186 1.000
4 1 -.581* .191 .016
2 -.014 .180 1.000
3 .128 .186 1.000
*The mean difference is significant at the .05 level

Inspecting the covariates, it is revealed that again personal support is insignificant, whereas
perceived sincerity is significant at F (1, 213) = 14.738, p=.000. Thus, sincerity does have
significant influence as a covariate with an effect size of .065, indicating moderate strength.
Personal support does not add adjustment to the dependent variable over that of perceived
sincerity. However, the comparatively low correlation of personal support with word of mouth
had already given reason to take this possibility into consideration.

Table 14: Influence of Covariates (WOM)

df F Sig. Partial Eta
Squared
Personal Support 1 .175 .677 .001
Sincerity 1 14.738 .000 .065
Significance level at p<.05

The fact that one out of two covariates did not have a significant effect might be a reason
why the corrected mean values of word of mouth do not differ a substantially from the
unadjusted means. However, the ranks slightly changed (between Scenario 2 and 4).

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 RESULTS AND DISCUSSION

Table 15: Descriptive Statistics (WOM)

Scenario N Mean Std Deviation Adjusted Adjusted Standard
rank mean Error
1 47 3.48 .950 1 3.463 .143
2 59 2.90 .908 2 2.899 .128
3 53 2.70 1.106 4 2.739 .135
4 60 2.92 1.092 3 2.896 .127
Total 219 2.98 1.048

Overall, the findings indicate that one type of CSR activities, namely Type 1, significantly
differs from all other three types. Type 1 positively influences word of mouth (MScenario1=3.463)
and has thereby a significantly greater effect than the other types. Thus, hypothesis 1b is
fully supported. The other related hypotheses (H2b, 3b, 4b) made assumptions that Type 2,
3, and 4 have a positive effect on word of mouth and that this effect differs from other types.
These hypotheses are not supported. First of all, types 2, 3, and 4 do not significantly differ
from each other in their impact. Second, they do not even have a positive impact on word of
mouth as all their mean scores are below 3.0 (MScenario2=2.90; MScenario3 =2.74; MScenario4
=2.90), hence below the neutral level and thus already in the rather negative zone of the
word of mouth scale.

4.2.3 The Effectiveness of the CSR Activities on Purchase Intention

A third one-way ANCOVA tests the last set of hypotheses concerning the relationship of the
different types of CSR activities and purchase intention. The extraneous variables assumed
to influence CSR’s effects on purchase intention are personal support, perceived fit and
perceived sincerity, which are again used as covariates. The test of between-subjects effects
was insignificant (F (3, 212)= .401, p=.460) implying that the scenarios and thus the types do
not differ in their effect. Thus, the hypotheses cannot be fully supported. However, exploring
the mean values, it is found that all types of CSR activities have a positive impact on
purchase intention as they are all well above the neutral level of 3.0 (MScenario1=3.42;
MScenario2=3.24, MScenario3 =3.38; MScenario4 =3.27). Thus, hypotheses 1c, 2c, 3c, and 4c can be
partially supported. Below, the original and adjusted means are displayed. The adjusted
means changed the original rank order. After controlling for extraneous influences, Scenario
1 scored highest and Scenario 2 scored lowest on purchase intention.

Table 16: Test of Between-Subjects Effects (Purchase Intention)

df F Sig. Partial Eta
Squared
Scenario 3 .401 .460 .012
Significance level at p<.05

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 RESULTS AND DISCUSSION

Table 17: Descriptive Statistics (Purchase Intention)

Scenario N Mean Std Deviation Adjusted Adjusted Standard
rank mean Error
1 47 3.43 .830 1 3.424 .099
2 59 3.25 .800 4 3.241 .089
3 53 3.31 .658 2 3.377 .094
4 60 3.31 .712 3 3.267 .088
Total 219 3.32 .749

Eventually, the influence of the three covariates is explored. Again, personal support was
insignificant (F (1,212)= .641, p=.421), meaning that it had no extraneous influence on
purchase intention. Also sincerity did not add any adjustment to the dependent variable as it
proved to be insignificant as well (F (1, 212)= 3.402, p=.066). Perceived fit, however, is a
significant covariate (F (1, 212)= 7.702, p=.000), explaining 7.3% of the variance in purchase
intention, which implies a medium effect size.

Table 18: Influence of Covariates (Purchase Intention)

df F Sig. Partial Eta
Squared
Personal Support 1 .649 .421 .003
Sincerity 1 3.402 .066 .016
Fit 1 7.702 .000 .073
Significance level at p<.05

4.2.4 The Influence of Demographics on Behavioral Outcomes

The effects of demographic variables across the four scenarios on the dependent variables
loyalty, word of mouth and purchase intention were explored. For every demographic factor a
two-way ANCOVA was conducted. Thereby the dependent variable was loyalty, word of
mouth or purchase intention respectively. The covariates that apply to each dependent
variable were also included. The first independent variable was scenario and the second was
age, gender, income, education, employment status or household size respectively. In total,
18 two-way ANCOVAs were conducted. No significant main or interaction effects were found
implying that there is no statistical significant difference between demographic groups on
behavioral outcomes in general and on behavioral outcomes across the four scenarios. The
different groups do not respond differently to CSR activities.

4.3 Discussion
What the statistical results mean for the effectiveness of the types of CSR activity, for the
importance and validity of the control variables and for the role of demographic groups in
context with CSR’s outcomes is elaborated below.

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 RESULTS AND DISCUSSION

4.3.1 The Impact of the Different Types of CSR Activities

In general, former research found that CSR has a positive impact on word of mouth
(Bhattacharya and Sen, 2004), purchase intention (Creyer and Ross, 1997; Sen and
Bhattacharya, 2001) and loyalty (Pirsch et al., 2007). In particular, many researchers found
that these positive relationships do not hold for all CSR activities (Bhattacharya and Sen,
2004; Boulstridge and Carrigan, 2000; Carrigan and Attalla, 2001). In the study at hand it is
examined if and how different types of CSR activities differ. Starting with the construct
loyalty, it can be stated that just Type 1 has a positive impact on loyalty, other types have a
neutral effect. However, it must be considered that this is just a tendency as the differences
between the types are of no statistical significance. In general, the findings rather disconfirm
the findings of Pirsch et al. (2007). A reason for this outcome might lie in the fact that a
fictitious company like VelveTin might not be able to evoke positive attitudes that are intense
enough to result in loyalty. Results might have been different with a company that is known
to the respondent. Nevertheless, this study supports that CSR activities have a positive effect
on purchase intention. Purchase intention even reached higher scores than loyalty or word of
mouth. Evidentially, this impact is independent from the type of CSR activity. However, it is
remarkable that Type 1 again has the highest mean scores. The positive effect of all types
and the fact that the CSR type is not deciding is contradictive to Boulstridge and Carrigan
(2000) and Carrigan and Attalla (2001). Boulstridge and Carrigan (2000) also claim that
customer behavior in general and purchase intention in particular is mainly affected when the
customer feels personally impacted by the CSR activity. The study at hand does not confirm
this: For purchase intention, the means of types who directly involve the customer do not
significantly differ form those types that only indirectly involve the customer. Looking at the
values of the means, Type 1 (Good Deed For Sale) scores highest, however Type 2 (Good
Produces Good) scores lowest on purchase intention. Thus, no inferences can be made that
direct involvement in general creates higher purchase intention than indirect involvement.
The same holds for loyalty. Type 1 and Type 2 do not have the highest means of all types.
Concerning these two behavioral constructs, rather Folkes and Kamins’ (1999) findings that
customer behavior is influenced even when the customer is not directly affected have
validity. When examining word of mouth, on the other hand, Boulstridge and Carrigan (2000)
at first seem supported in that Type 1 has the highest mean score and significantly differs
from other types, while Type 2 is the second strongest type on word of mouth. However,
Type 2 ranges below 3.0 indicating no positive effect on word of mouth. This also means that
it is not supported that CSR always has a positive influence on word of mouth, which is in
line with Bhattacharya and Sen (2004) who claim that it depends on the CSR activity. In this
study, just one certain type influences word of mouth positively and is thereby significantly
different: Type 1. The subjects studied by Bhattacharya and Sen (2004) that did not show

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 RESULTS AND DISCUSSION

purchase intentions nonetheless recommended the socially responsible company to their

peers, which implied that word of mouth is the behavioral outcome easiest to evoke. In this
study, however, the mean scores on purchase intention were higher than on word of mouth,
weakening this particular finding of Bhattacharya and Sen (2004).

Even though the types did not significantly differ besides the exception of Type 1 in relation
with word of mouth, tendencies can be detected. It is striking that Type 1 (Good Deed For
Sale) scores always highest and positive across all behavioral outcomes.

Figure 4: Mean Scores of the Scenarios on the Dependent Variables

3,5

Loyalty
3,0 Word of mouth
Purchase Intention

2,5
1 2 Scenario 3 4

4.3.2 The Impact of the Covariates

The respondent’s personal support of the CSR issue was called a key moderator of
consumers’ reactions to CSR activities by Bhattacharya and Sen (2004) and was further
found to moderate the relationship between CSR and purchase intention (Sen and
Bhattacharya, 2001). In spite of this, personal support played no deciding role in this study. It
was not a significant covariate for any of the three dependent variables it was expected to
influence. Accordingly, personal support could be discarded from future analysis, as the
pattern of results would not change noticeably. Also the perceived sincerity of VelveTin’s
CSR activities was assumed to influence the results and was thus controlled. In context with
word of mouth and loyalty, sincerity was a significant covariate of a medium effect size.
Consequently, the findings of Bronn and Vrioni (2001) and Yoon et al. (2006) seem
supported. Both argued that sincerity is deciding for CSR’s effectiveness on behavioral
outcomes. However, even though this holds for loyalty and word of mouth it is not valid for
purchase intention: here sincerity is not deciding. A reason might be that perceived sincerity
influences primarily associations and attitudes (Bronn and Vrioni, 2001), and these
constructs are rather a driver of attitudinal constructs like attitudinal loyalty and word of

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 RESULTS AND DISCUSSION

mouth than of mere behavioral construct like purchase intention. It was also contemplated if
external or internal company engagement evokes higher perceived sincerity, however, there
are no tendencies in one or the other direction. The only covariate that was always significant
when applied was perceived fit. It evidentially is an influential extraneous variable in context
with purchase intention and loyalty. This confirms the findings of CSR research by
Bhattacharya and Sen (2004) who revealed the influence of fit on purchase intention and by
Becker-Olsen et al. (2006) who found that fit is related to attitude and thus to loyalty.
Perceived fit is hence a valuable covariate for future studies.

Table 19: Summary Covariates

Personal Support Perceived Sincerity Perceived Fit
Scenario N Mean SD Mean SD Mean SD
1 47 4.31 .564 3.47 1.115 3.72 .750
2 59 4.32 .628 3.44 .891 3.73 .686
3 53 4.26 .561 3.29 1.016 3.55 .731
4 60 4.31 .434 3.50 .952 3.82 .743

Significant control none Word of Mouth (p=.000) Purchase Intention (p=.000)

variable for Loyalty (p=.007) Loyalty (p=.002)

4.3.3 The Impact of Demographic Groups

Former research suggested that CSR’s effectiveness varies across age (Barksdale and
Darden, 1972; Carrigan and Attalla, 1997) and gender (Carrigan and Attalla, 1997). The
study at hand produced findings to the contrary as age and gender made no difference on
CSR’s effects. However, it has to be taken into consideration that age was biased towards
the age groups of 20-30 years (55%) and above 50 years (21%). Also three other
demographic variables were tested which had never been tested in context with CSR’S
effectiveness before. In the previous chapter it was assumed that education would be
representative of a respondent’s knowledge and awareness of social and environmental
issues. Greater awareness and knowledge was assumed to lead to higher responsiveness
on CSR. However, this has not been the case. The large group of highly educated
respondents (60.7% reached 7 or 8 scores on the ascending education scale ranging from 2
to 8) did not differ in its responses from the less educated respondents. The same holds for
income: it was found that income also made no difference on behavioral outcomes (opposed
to Bhattacharya and Sen’s (2004) assumption). Most surprisingly is that this was not even
the case with purchase intention. The four roughly equally sized income groups did not differ
significantly in their intention to purchase scores. Purchase intention even was the behavioral
outcome with the highest mean scores. Furthermore, the influence of the employment status
was examined. Whether someone is working in a job or not has no influence on the
behavioral response to a CSR activity.

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 RESULTS AND DISCUSSION

Table 20: Overview of Hypotheses

Hypothesis Effect Direction Support
1a Type 1 + Partially supported
1b Type 1 + Supported
1c Type 1 + Partially supported
2a Type 2 + Not supported
2b Type 2 + Not supported
2c Type 2 + Partially supported
3a Type 3 + Not supported
3b Type 3 + Not supported
3c Type 3 + Partially supported
4a Type 4 + Not supported
4b Type 4 + Not supported
4c Type 4 + Partially supported

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 CONCLUSION

5. CONCLUSION

Being highly discussed by business theorists and practitioners for almost a century, CSR has
finally become a relevant topic in marketing. For the last decade, researchers have examined
the impact CSR has on customer behavior in order to detect CSR’s effectiveness and
adequacy as a marketing tool. CSR was found to positively affect customer attitudes, product
and company evaluation, purchase behavior, word of mouth, and loyalty. However, not all
researchers can confirm these positive relationships. Missing links are attributed to
extraneous influences that undermine the positive effects of CSR on behavior. The key
influence is attributed to the CSR activity itself. Researchers claim that it depends on the
CSR activity if the customer is influenced or not. Thus far, research on CSR activities is
limited. There has been just one minor attempt to classify CSR activities. A classification,
however, would first create a common basis for comparisons of different studies and second
allow comparing types and test which types of CSR activities are most efficient. This study
has aimed to shed light on whether the type of CSR activity employed actually influences the
behavioral outcome. Thereby it was concentrated on three customer behaviors of major
importance and on an industry that is characterized by close customer contact and thus
directly dependent on customer behavior. Hence, the following question guided the research
at hand:

“How do different types of CSR activities impact customer loyalty, purchase intentions and
word of mouth in the retail industry?”

Thereby it was of interest if all types of CSR activity lead to positive customer behavior, if
types differ in their effectiveness and which type has the most impact on which element of
customer behavior (i.e. loyalty, purchase intentions, word of mouth). Additionally, it was
contemplated if the effects of the different types differ across demographic groups. In order
to solve these questions, several steps were taken. First of all, an extensive literature review
showed the larger context of CSR in business and especially in marketing. The most
important findings were reviewed and put into perspective. The findings on CSR’s effects on
loyalty, word of mouth and purchase behavior built the basis for the conceptual model. The
study intended to examine if these relationships hold for all types of CSR activities or just for
particular types. Based on the thorough research of CSR activities applied in practice, a new
taxonomy of CSR activities was developed based on two dimensions that each has two
levels: direct vs. indirect customer involvement and external vs. internal company
engagement. Accordingly, four different types evolved: Good Deed For Sale (Type 1), Good
Produces Good (Type 2), Distant Benefactor (Type 3) and Sustainable On The Inside (Type

62
 CONCLUSION

4). The taxonomy equals a 2x2 factorial design and has formed the basis of the research
design. An experiment was created with four scenarios, each representing one CSR type. In
an online survey 219 respondents were randomly assigned to one scenario. Subsequently,
using one-way ANCOVA the scenarios were tested for differences on word of mouth,
purchase intention and loyalty while controlling for the influences of perceived fit, perceived
sincerity and personal support of the good cause. The results indicated that the types did not
substantially differ in their effect on purchase intention and loyalty. All types had a positive
impact on purchase intention, whereas the impact on loyalty was neutral for Types 2, 3 and
4. Type 1 (Good Deed For Sale) had a positive impact on loyalty, however the difference was
not significant. Nevertheless, a clear tendency was observable: Type 1 always scored
highest and had a positive effect on all three behavioral outcomes. Most importantly, Type 1
was significantly different from other types in its positive influence on word of mouth. As
control variables only sincerity (in relation with word of mouth and loyalty) and perceived fit
added significant adjustment. In conclusion, when word of mouth is to be influenced, the type
of CSR activity matters: Only ‘Good Deed For Sale’ (Type 1) has a positive impact. For other
behaviors, the type of CSR was not deciding in this study.

5.1 Theoretical Implications

The study developed a new taxonomy of CSR activities that enables assigning each CSR
activity a company can possibly employ to one of four types. Classifying CSR activities is of
the utmost importance for two reasons. First of all, it makes studies comparable. If a
researcher obtains a result with a specific CSR activity employed, these results should only
be transferable to contexts where a similar CSR activity was used. Thus far however, every
researcher has used different CSR activities to test customer behavior. These CSR activities
employed might belong to different types and therefore produce different results. If a
commonly understood taxonomy would be employed, researchers that want to verify
assumptions or duplicate findings from other studies were able to use the same types of
CSR activities. If then results differed, it would be certain that this does not depend on the
CSR activity but on other factors that have to be examined. Second, a taxonomy allows
comparing the different types. Researchers already proposed that CSR activities differ in
their effect and even though in this study not many differences between the types could be
detected there are at least indications that types have different tendencies. These tendencies
might become significant in other contexts outside this study. Thus, the taxonomy developed
might have value beyond the study at hand. In either case, it is recommended that theorists
use some general classification system when examining CSR activities.
The assumption of several researchers that it depends on the CSR activity if customer
behavior is influenced is partially confirmed by this study. For word of mouth, the type of CSR

63
 CONCLUSION

activity is indeed relevant. Even though the assumption did not hold for loyalty and purchase
intention, the finding can still be seen as an indication that other behavioral or emotional
outcomes that were not subject of this study might be susceptible by the type of CSR activity.
Examples would be attitudes, product or brand evaluation, or perceived reputation. However,
it should be kept in mind that the type of CSR explained only a small part of CSR’s influence
on customer behavior in this study – which implies that the type of CSR might not be a major
explaining factor with other behavioral outcomes either.
The study gives a further implication concerning extraneous influences. Although the control
variables employed represented theoretically based effects, they explain only little of the
variance in the dependent variables. This of course gives reason to question the value and
the explanatory power of these factors. Personal support has repeatedly been said to
influence purchase behavior by several researchers (Bhattacharya and Sen, 2004; Carrigan
and Attalla, 1997, Sen and Bhattacharya, 2001), however, in the study at hand this has not
been the case. As a consequence, future studies should consider dropping personal support
as a covariate. Perceived fit and perceived sincerity were significant and are thus valuable
control variables. However, their small effect size implies that there must be other extraneous
factors that play a role in context with CSR’s effects.

5.2 Practical Implications

The results of this study have important implications for marketing practitioners who would
like to use their company’s CSR as a tool to positively influence customer behavior. For word
of mouth the results are unambiguous: The type of CSR does matter. Only Type 1 (‘Good
Deed For Sale’) can enhance word of mouth and hence should be clearly preferred to the
other types. Word of mouth as a behavioral outcome should not be underrated. Especially for
a retailer, word of mouth is the key to an excellent image and a first step towards a growing
customer base. Peers of the actual customer might try the company and recommend it even
further. In the ideal case, the company and its products become a topic of conversation
through their CSR activity and thus push their image. A good image might attract new
customers. Thus, the CSR activity has laid the foundation. Now, other marketing activities
can take hold, like loyalty programs, that further strengthen customer relationships and
increase loyalty or purchases.
As all types, also the ‘Good Deed For Sale’ already finds application in the retail industry.
Converse Inc. donates 10% of the net wholesale price of the Converse (PRODUCT) RED™
Chucks to The Global Fund to Fight Aids, Tuberculosis and Malaria in Geneva
(www.converse.com). The Esprit Group donated the sales proceeds of all stores in Hong
Kong and Macau of one special day to support the victims of the Sichuan earthquake
(www.esprit.com). For every crate of beer sold, the Krombach brewery makes a donation to

64
 CONCLUSION

its project partner WWF, who uses the money to buy and thus protect one square meter of
rain forest in Central Africa (www.wwf.de). These companies deliver examples of how a Type
1 activity can be translated into practice. They can be a guide for companies who want to
develop a type 1 activity to use as an efficient tool to push word of mouth. Moreover, the
study also showed that sincerity has an influence on CSR’s effect on word of mouth. To fully
exploit the potential of a ‘Good Deed For Sale’, managers should employ CSR activities that
are authentic and credible from a customer’s perspective. Thereby the way of communicating
the CSR activity is crucial: the communication style should be neutral and should suggest
intrinsic rather than profit-oriented motives (Becker and Olsen et al., 2006; Folkes and
Kamins, 1999).
Further, CSR can also positively influence purchase intention, independently from the type of
CSR. Hereby it is crucial that managers choose a good cause for the focus of their CSR
activity that fits to the company’s business and image. How customers perceive this fit
influences CSR’s effectiveness on purchase intention: it can be disrupted or leveraged. For
instance, a marketing manager of Krombach said that as Krombach’s overall marketing
strategy evolves around the topic ‘close to the nature’ a CSR activity that supports nature
conservation is consistent and thus promising (www.wwf.de). If this consistency were not
given, customers’ responsiveness would be limited.
A CSR activity’s success does not depend on the personal support of the customer, which
makes researching CSR topics that concern customers personally abundant. Further, a
company does not need to adapt its CSR activities for different target groups: CSR’s effects
are independent from age, gender, educational background or income. Knowing this,
managers can avoid investing valuable resources in issues – like customer research or the
adjustment of CSR activities – that are not required to reach the intended goal.

5.3 Limitations and Future Research

Even though the study at hand delivered valuable insights into the effectiveness of CSR
activities, its limitations have to be acknowledged. The limitations give implications about the
validity and value of this research and may initiate and guide future research.
First of all, findings can only be generalized to a larger population from which a random
sample has been taken (Tabachnick and Fidell, 2007). As judgmental and snowball sampling
have been employed, generalizability of the findings is severely limited. Furthermore, the
sample is not equally distributed over education and age groups. It is biased towards the age
groups of 20-30 years and over 50 years and consists mainly of highly educated people.
Thus, caution has to be taken when trying to universally apply the results. One major
limitation of this study lies in the experimental design itself. The scenarios can never replicate
a real life experience. The description was, as a necessity, short and contained little

65
 CONCLUSION

information and is thus not fully comparable to a real life situation. To alleviate this weakness
of the experiment itself, field studies should be employed in the future that measure customer
behavior in real situations where emotions and involvement are certainly higher and have
greater impact.

The effectiveness of CSR was found to be influenced by several factors. The study tried to
control for the most important ones that were also introduced in the literature part. This was
done either through statistical or design control. To eliminate the influence of quality and
price, the scenarios described both as adequate. However, as elaborated above, this
description cannot do justice to a real situation. In real life, a customer would know the exact
price. Under this circumstance, price might play a much greater role than it did in this study,
as the customer might give priority to price considerations (Boulstridge and Carrigan, 2000).
The customer usually has a certain price range in mind that he is willing to spend, especially
in relation with the quality he attributes to the product. Also there, a product description can
never replicate a real shopping situation where a customer can see and touch the product,
which allows a more thorough judgment. Presumably, price and quality considerations were
eclipsed in the manipulation since the respondents were aware of the hypothetical character
of the situation. As a negative effect of poor quality would not be neutralized by CSR (Folkes
and Kamins, 1999), quality will always take precedence in reality. Hence, the findings of this
study certainly not apply when the product’s quality is considered insufficient. Whereas
Boulstridge and Carrigan (2000) say that price has priority in purchase decisions, Creyer and
Ross (1997) contradict by saying that if the CSR activity is convincing price is secondary and
the customer might even be willing to pay a price premium. In this research, purchase
intentions were rather high despite the price in the medium price range. However, this could
have been different if a price in numbers had been announced. Future research should
attempt to clarify how a CSR activity takes effect in relation with price and if the types
proposed differ under those conditions. For instance, it could be that a customer is willing to
spend more on a product if a percentage of the sales price goes to a charity project (i.e.
‘Good Deed For Sale’). In this case, the customer makes an indirect donation and might thus
be willing to pay an extra on the price he usually is willing to pay. However, if the company
‘merely’ employs socially responsible policies internally (i.e. ‘Sustainable On The Inside’) the
customer might see no direct inducement to pay a price premium.
CSR’s effectiveness is apparently complex and influenced by factors that are not part of this
study. The scenarios together with the according control variables never explained more than
13% of the variance in a behavioral outcome. Opposed to prior expectations that were based
on Bhattacharya and Sen (2004), Carrigan and Attalla (2001) and Sen and Bhattacharya
(2001) personal support even had no influence at all. Consequently, there must be more

66
 CONCLUSION

influential factors that determine the strength of CSR’s effects on behavior. What these
factors are and how they operate should be addressed by future research.

Former research has assumed that brand familiarity takes precedence over CSR in purchase
decisions (Boulstridge and Carrigan, 2000). How influential brand familiarity is for the
conceptual model of this study would also be an interesting topic for future research. Results
might have been different if the manipulations had not been based on a fictitious company
but on an existent company. Of course, in the study at hand none of the participants was
familiar with VelveTin and thus participants were neither positively nor negatively biased in
their responses. If the exact same study were conducted with a familiar brand, results would
certainly depend on the respondents’ attitudes towards the brand and the company. Those
attitudes would also be strongly related to if not even rooted in the degree of the consumer-
company identification, which again influences CSR’s effectiveness (as described by Becker-
Olsen et al., 2006). How a respondent perceives a CSR activity depends also on what he
associates with the company based on former experience, attitudes and preferences (Brown
and Dacin, 1997). Some companies, like for example The Body Shop might – based on the
image it cultivates – evoke stronger associations with positive CSR and maybe also a higher
credibility than a company that is rather associated with negative incidences like Royal Dutch
Shell. CSR activities certainly have a different effect on someone who perceives a company
as favorable as on someone who dislikes a company or a brand. In this context, does it
matter which CSR type is employed? For example, might a certain type be more effective for
customers with rather negative attitudes and another type for customers with a positive
attitude? As Type 1 (‘Good Deed For Sale’) surely possesses the greatest publicity effect, it
might be more suitable to attract new customers and outrival competitors than, for instance,
Type 3 (‘Distant Benefactor’). A manipulation with existing brands would shed light on these
questions and furthermore contribute to brand research in relation with CSR.

Another limitation of this study is that the scenarios describe a fashion company. Even
though the study attempts to find implications for the retail industry in general, the findings
might not hold for every product category. As clothing gives people pleasure, helps their self-
expression and is an important part of their lifestyle (Michalidou and Dibb, 2006), it can be
considered as a high involvement product that is of rather hedonic than utilitarian meaning to
most consumers. Thus, the findings should be applicable with product categories that evoke
a similar degree of involvement, but might not be adequate in context with utilitarian
products.

67
 CONCLUSION

In conclusion, this study has contributed to marketing research by developing a taxonomy of

CSR activities and answering the question on which CSR activities work best. It revealed that
the type of CSR activity is only relevant for certain behavioral outcomes (i.e. word of mouth).
The findings have important theoretical as well as managerial implications. However, the
limitations described constrain the generalizability of the results obtained. Moreover, further
research is needed to unravel extraneous influences on CSR’s effects on customer behavior
that have not been addressed in this study. In particular, the role of price and brands should
be examined as those factors might exert major influence and possibly lead to different
results than those obtained by the study at hand. Future research should also examine
CSR’s effectiveness and the role of the types of CSR activities in real life situations.

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 APPENDIX

7. APPENDIX

Appendix 1
The Questionnaire.

The following shows screen prints of the online questionnaire used for data collection. The
questionnaire was distributed in German only. The respondents were randomly assigned to
one of the four scenarios displayed. However, every respondent had to answer the same
subsequent questions.

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