Module Title RESEARCH METHOD

Exam MID-TERM EXAM

Date of Exam 13 / 11 /2022

Lecturer Nguyễn Văn Thích

Class IBP20D01-03

Group Member Nguyễn Đông Thức-110320210021

Lê Mẫn Diệp-110320210035

Đoàn Thanh Trúc-110319200098

Phạm Ngọc Thiên Ân-110320210028

Group No 4

Total number of pages (in words: ……14.…… pages)

 THE IMPACT OF CORPORATE SOCIAL RESPONSIBILITIES (CSR)
ACTIVITIES OF A BRAND ON CUSTOMER’S LOYALTY IN VIETNAM

1. Introduction

Corporate Social Responsibility (CSR) is a topic that has always received the attention of
researchers for many years. Foreign and domestic corporations have realized that CSR is
necessary for the business operations and development of the corporation. Aside from
benefiting the company and its community, CSR also positively affects the customers’
loyalty to the company’s brand. Therefore, CSR has been integrated into various business
strategies by market analysts due to the fact that many present-day consumers have the
tendency to select and overestimate the product comes from business that has valuable
contribution to the development of society (Dương and Nguyễn 2019).

Leading brands in CSR activities in Vietnam like Vingroup Corporation, FPT, Vinamilk,
etc., have been creating a positive influence in the domestic community. In contrary,
some businesses have violated the CSR conduct for their own personal interest through
providing unqualified products, not ensuring safety regulations for the workers and
purposely discarding waste into the environment leading to the degradation of natural
resources. Some exemplary examples are: In 2008, Vedan company discharged untreated
wastewater into the Thi Vai River or Formosa Steel Corporation released waste toxic
substances related to steel refinery into the sea in 2016 (Anh and Nguyễn 2021) leading
to the mass fish poisoning up to 100 tons and wash ashore, causing the local fishing
industry suffered heavy losses.

The research has revealed that when purchasing a product, consumers often rely on
several factors of CSR (environmental protection, charity, ethical employment, etc.) and
prioritized to purchasing products and service from businesses that have good reputation
in CSR activities because consumers often see that these CSR activities also contribute in
the development of society. Despite of commonly being the victims of CSR
violations ,Vietnamese consumers still do not know how to use their rights of consumers
to take drastic measures and actions against the CSR violation of corporations to protect
their own interests (Dương and Nguyễn 2019) .Moreover, CSR is a pressing issue in
today's Vietnam that needs to be addressed by government, society, and businesses.
Accordingly, the author considers this study to be a pressing need, both theoretically and
practically, in a time when customers are becoming increasingly interested in CSR
activities (Anh and Nguyễn 2021).

2. Literature Review

What is Corporate Social Responsibility (CSR)?

Corporate social responsibility is a form of activities planned by businesses to contribute

to society with the goal of community, volunteering and humanitarian spirit, this is the
internal policy and strategy organization's business ethics (Wikipedia).

CSR is considered an initiative that contributes to improving brand reputation. While

many definitions have been given on this issue since the 1960s, there is still no
consensus. EG: For instance, an NGO may regard a CSR strategy as "environmental
consumer distraction" (greenwash) while an entrepreneur may define it as a business
strategy, or It is seen as a voluntary provision.

(Sheehy 2015) recently characterized corporate social responsibility (CSR) as a type of

"business self-regulation" by global private businesses. Sheehy also learned from
Professor Archie Carroll how to explain CSR using a responsibility pyramid.

What is Customer Royalty?

Customer loyalty refers to the desire to repeatedly buy the same brand of goods and
services. This is the aim of the industry. Loyalty also refers to a strongly held
commitment to regularly repurchase or patronize a favored good or service in the future.
Thus, one of the major elements in determining a company's success is client loyalty.
According to numerous studies, retaining a current client costs five to six times less than
acquiring a new one, and a five percent increase in customer retention results in a 25 to
125 percent gain in profit. The definition of customer loyalty and an explanation of its
notion are the main goals of this study (Khan 2013).

CSR and Customer Satisfaction:

The corporation with strong CSR positively influences customer evaluation and attitude
toward the organization. Based on this, (Daub and Ergenzinger 2005) credited that the
term “generalized customer” would refer to individuals who are both genuine latent
stakeholders in order organization as well as customers of the company. However, using
the amenities that are provided by an unofficially accountable institution gives regular
consumers more satisfaction. In general, shoppers are supplementary gratified by
utilizing the amenities that are offered by an informally answerable organization. 

According to stakeholder theory (Freeman, Harrison et al. 2010) CSR activities help to
promote a positive view of the brand image for all the customers, the employee
stakeholder of the corporation. In the market, when an organization provides valuable
products and does something that is in favor of society and the environment can lead to
customers being more satisfied with that organization. 

CSR and Customer Identification (CCI):

CCI is based on “social identity theory” ((Stets and Burke 2000); (Tajfel and Turner
2004)) and “self-categorization theory” (Hornsey 2008), CCI has been through a
cognitive categorization process, where people set themselves as participants such an
association with their co-worker and by differentiating with other organizations.
Customer Identification is a close relationship between the clients and the corporation
which increases the perception of the customer related self-esteem. CSR association plays
a vital role in allowing the regulars to categorize and promote a long-term identification
with the organization ((Bhattacharya and Sen 2003); (Marin, Ruiz et al. 2009)).
Especially, (Lichtenstein, Drumwright et al. 2004) mentioned that “the way that CSR
initiatives create benefits for companies appears to be by increasing consumer’s
identification with the company” which means people who are socially responsible
organizations build up the complex cases of documentation with the operation than the
ones that are unconscious of the organization (Bhattacharya and Sen 2003). 

CSR and Customer Commitment:

Customer commitment represents a long-term wish to maintain a valuable relationship

(Moorman, Zaltman et al. 1992). Each mention about three ideas of commitment: first
and foremost, it has to be a long-term commitment, so the customer and the company can
make more transaction than current transaction (Dwyer, Schurr et al. 1987). Secondly, the
clients and organizations can develop a relationship which is right to the legal
obligations. Finally, customers might achieve higher levels of satisfaction and enjoy
maximum benefits from each other through this relationship ((Dwyer, Schurr et al. 1987);
(Morgan and Hunt 1994)). CSR associated with customer commitment helps to raise
customer’s interest, emotions, and feelings toward goods and services ((Brammer,
Millington et al. 2007); (Bravo, Matute et al. 2011); (N'Goala 2007)).

3. Research Objectives

To identify the effect of corporate social responsibility on customer’s buying behavior,

the relations between CSR and intentions to change the brand of the customers and
recommendations for this challenging question 

(1) The importance of CSR to the corporation while activating in the market.

(2) How does CSR have an impact on customer’s perception of the corporate services and
products? 

4. Hypothesis
Hypothesis 1: CSR perceptions and client loyalty

In terms of the goals and values of our society, CSR is defined as "the obligation of
business to pursue those policies, to make those decisions, or to follow those courses of
action" (Bowen 2013).CSR has evolved from the philanthropic approach to a purely
strategic business approach that successfully gives organizations a competitive advantage
(Latif, Pérez et al. 2020).As a result, CSR is viewed as a way to accomplish business
goals while reducing how negatively business actions affect the natural and social
environment (Chan 2011). Customer loyalty is the propensity of customers to develop a
reliable and long-lasting relationship with service providers (Singh and Sirdeshmukh
2000). This is likely the main objective of firms, and it aids in the development of a long-
lasting competitive edge (Armstrong, Adam et al. 2014). As a result, businesses—
including fast-food chains-strive to concentrate on customers' key needs in order to
cultivate a loyal clientele. The available literature has demonstrated the strategic value of
the CSR idea and reported that CSR appears to influence stakeholders' attitudes and
behaviors, particularly those of customers. Correspondingly, CSR is viewed as a way to
accomplish business goals while reducing how negatively business actions affect the
natural and social environment (Chan 2011). Customer loyalty is the propensity of
customers to develop a reliable and long-lasting relationship with service providers
(Singh and Sirdeshmukh 2000). This is likely the main objective of firms, and it aids in
the development of a long-lasting competitive edge (Armstrong, Adam et al. 2014). As a
result, businesses—including fast-food chains, hotel industry and various corporations—
strive to concentrate on customers' key needs in order to cultivate a loyal clientele. The
available literature has demonstrated the strategic value of the CSR idea and reported that
CSR appears to influence stakeholders' attitudes and behaviors, particularly those of
customers (Miles 2012).Customer loyalty and customer impression of CSR activities
have been found to be significantly positively correlated in the hotel business ((Kim and
Kim 2016); (Liu, Wong et al. 2014);(Kim, Song et al. 2017);(Abbas, Gao et al. 2018)).
As a result, it is suggested that customer perceptions of CSR may significantly affect
customer loyalty.

Hypothesis 2: CSR and Corporate Reputation

Corporate reputation is the overall and collective interpretation of a company's operations

held by outside observers, and it indicates a company's capacity to produce outcomes that
are loved by them ((Latif, Pérez et al. 2020); (Fombrun and Van Riel 1997)). Corporate
reputation and corporate image are slightly different. Consumers' opinions about a firm as
a result of their interactions with it are referred to as its reputation (Fombrun and Shanley
1990), whilst customers' perceptions of its operations are referred to as its image (Walker
2010). As a result, the corporate image has been mentioned in the existing research as a
factor in corporate reputation (Walker 2010). Given the signaling theory, CSR establishes
positive associations in the minds of stakeholders and spreads favorable signals to other
stakeholders, including customers (Latif, Pérez et al. 2020). These affiliations assist
businesses in gaining institutional legitimacy ((Latif, Pérez et al. 2020); (Luo and
Bhattacharya 2006)), which has a beneficial impact on their reputation((Latif, Pérez et al.
2020); (Arikan, Kantur et al. 2016)).

Hypothesis 3: CSR and Customer Satisfaction

Customer satisfaction is defined as a measurement that determines how happy customers

are with a company’s products, services, and capabilities. Customer satisfaction
information, including surveys and ratings, can help a company determine how to best
improve or changes its products and services. An organization’s main focus must be to
satisfy its customers (Bowen and Chen 2001). This applies to industrial firms, retail and
wholesale businesses, government bodies, service companies, nonprofit organizations,
and every subgroup within an organization. According to the stakeholder theory,
businesses view their consumers as among their most important stakeholders ((Latif,
Pérez et al. 2020); (Arikan, Kantur et al. 2016)) and seem to take their interests into
account when conducting business (Stanaland, Lwin et al. 2011). Companies seek to
meet the demands of their customers by offering superior products and services in an
effort to uphold these obligations (Latif, Pérez et al. 2020). According to reports, the
adoption of better CSR plans and practices leads to increased employee satisfaction with
the business (de los Salmones Sánchez, del Mar et al. 2018). As a result, it will enhance
how clients rate the business ((Latif, Pérez et al. 2020); (de los Salmones Sánchez, del
Mar et al. 2018)). Customers should therefore value and positively evaluate businesses
that are devoted to stronger CSR policies and practices (Latif, Pérez et al. 2020).

5. Methods

According to this study, provided information from both primary and secondary sources
are used. Primary data is directly collected from web survey research. This supports the
thesis statement of the secondary sources of data which were gathered from journals,
articles, webpages and other published sources.

6. Research Results Expected

This study's results will effectively address all of the research questions. This will address
topics: The relationship between CSR and financial performance, the impact of CSR on
consumers, the purchase decision-making process, the timing of CSR investments, and so
on.

7. Value of The Research

The research could be beneficial to Foreign and Domestic corporations CSR activities in
order to gain the customer loyalty. Results of this research may suggest a more important
hypothesis and CSR scenarios for the corporations to follow and apply in real-life
scenarios that could benefits both of the corporation and the customers.

8. Limitation

The time for doing research and targeted people are still limited . 
The information is not fully completed due to the searching ability of the students.

The definition of the topic is different and up to the point of view of various kinds of
people.

9. Time Line

Date Activity
31/10-01/11 - Collect & Analyze related information
- Confirm the key aims of the research, set the contents including in
the thesis
02/11 Introduction
03/11-04/11 Literature Review
05/11 Research Objective
06/11-07/11 Hypothesis
08/11 Method and Expected Result
09/11-10/11 Value of Research
11/11 Limitation and Time Line
12/11 Preferences

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