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Reseach Paper On CSR CONSUMER BEHAVIOUR
Reseach Paper On CSR CONSUMER BEHAVIOUR
Reseach Paper On CSR CONSUMER BEHAVIOUR
empirical study
ABSTRACT
Although research into CSR and consumer behavior is still relatively young, there exists a
growing interest in studying the links between CSR and marketing. The Indian consumers are
now well aware that, in pursuing their business endeavors, companies now have to show more
responsibility towards society and the environment where they are operating and at the same
time do managers increasingly see CSR as a marketing tool to help create a competitive
advantage. But what is the actual impact of companies’ engagement in CSR on consumer
behavior? The consumers are getting more aware of the corporation involved in corporate social
responsibility (CSR) through better education and the increased influence of the media. The
companies up to a certain extent has already been realized that their socially responsible
behaviour have a direct impact on the consumer buying behaviour.
In this research paper effort has been employed to investigate that how consumers are
considering corporation’s CSR initiatives at the time of deciding on their purchase decision of
products and services. For measuring CSR economic, legal, ethical and philanthropic variables
have been considered from Carroll's definition.
A random stratified sample of 250 respondents have been considered, the data have been
collected with the help of structured questionnaire. After the data collection appropriate
statistical data analysis was performed in the software program SPSS.
Results confirm a positive relationship between perceived CSR activities and consumer buying
behaviour.
Multinational corporations first introduced the term stakeholder in the late 1960’s. Stakeholders
were described as those who were in any way affected by the corporations’ activities. Soon
thereafter, the term “corporate social responsibility” came into common use. The goal of
corporate social responsibility (CSR) is to take responsibility for all the company’s actions and to
have a positive impact on its environment, communities, employees, consumers and all other
stakeholders (Freeman et al., 2010).
The European Commission (2011) defines CSR as “the responsibility of enterprises for their
impacts on society”. More specifically, the responsibility of corporations includes the integration
of social, environmental and ethical issues as well as human rights and consumer concerns, into
their business operations and core strategy in close collaboration with their stakeholders. In
research literature, CSR is defined as “a business organization’s configuration of principles of
social responsibility, processes of social responsiveness, and policies, programs, and observable
outcomes as they relate to the firm’s societal relationships” (Wood, 1991:693).
In their opinion, the free market in that sense contributes to society by realizing this prosperity
and therefore does not have any other obligations in that matter. However, on the other side of
the spectrum the free market is viewed as inhibiting human freedom (e.g. through child labor)
and as the root cause of economic and cultural imperialism in many developing countries. CSR
is also seen as a way to attempt to be one step ahead of governmental interference, in order to
avoid any kind of legislative restrictions or reprimands. Additionally, CSR is regarded as being
used merely as a marketing tool, which introduces concerns about hypocrisy. As with many
ethical issues, a great amount of organizations operate in the broad space in between these
extremes, and the topic remains subject to continuous discussion (Friedman, 1970).
One of the most important stakeholder groups is the consumer, and as Creyer and Ross (1997)
confirmed; customers do indeed expect socially responsible behavior from companies. More
interestingly, customers are willing to reward this behavior. It is no surprise that a steadily
growing group of consumers pro-actively look for companies with ‘sustainable’ products and
production methods. This new type of consumer is subject to an increasing amount of research
by social and economic scientists, and characterized as ‘sophisticated’ and ‘environmentally and
socially conscious’ (Forster, 2007).
Corporations that do not equip themselves with CSR activities will often be left behind with the
increasing global competition and borderless markets, and international corporations with sound
CSR activities grow stronger (Altman, 2007). As the education level increases, consumers are
made more aware of the need for pro social corporate behaviour.
A lot of work has been done in Western countries to identify an organization’s behaviour
regarding consumer purchasing decisions. However, not many studies have been conducted in
emerging markets, such as India. CSR activities should enhance a corporation's image.
This paper aims to examine the influence of perceived CSR initiatives on the buying behaviour
of Indian consumers. We are interested in exploring whether consumers in India consider
organisations' CSR issues before associating themselves with organisations’ products and
services. Apart from that, this study also aims to identify the awareness level of Indian
consumers towards CSR. The results of this study will also be useful for business organisations
in understanding the consumers' priority for the CSR activities that they should be engaging in,
and it will contribute to the existing literature.
The remainder of this paper is structured as follows. The next section will discuss the literature
review. The third section will explain on the methodology used. The findings and discussion will
be presented in the fourth section and will be followed by conclusions and implications in the
final section.
The scope of the study has been limited to CSR initiatives of corporate and consumer buying
behaviour only. The study has been confined to Delhi & NCR region as this area has greater
number of top notch corporations
3. Objectives
1. To study and analyze the current CSR practices being employed by corporations in India.
2. To find out the level of awareness of consumer about CSR
3. To find out the relation and impact of corporation’s CSR initiatives on consumer buying
decisions
4. Research Methodology
The study is based on descriptive research design. A structured questionnaire has been designed,
to know the level of awareness and impact of corporation’s CSR initiatives on their buying
decisions. The questionnaire consists of three major sections. The first section gathers
information on consumers’ awareness towards corporate social responsibility (CSR). This
section covers some general questions to obtain the respondent's understanding of the term CSR,
which indicates the ability of the respondent to complete the rest of the questionnaire. The
respondents who indicated having no knowledge in CSR were not included in the data analysis.
Second section covers questions on consumer buying behaviour towards CSR initiatives by the
business organisations. The statements were divided into four subsections based on Carroll's
pyramid of CSR, which include economic, legal, ethical and philanthropic responsibilities.
While third section designed to gather demographic information of the respondents such as
gender, age, education level and monthly income level. Section A and Section C were designed
using nominal scales, whereas Section B was designed using a five-point Likert scale ranging
from "1" for "strongly disagree" to "5" for "strongly agree".
Cronbach's Alpha coefficient was used to evaluate the reliability of the measures. The
Cronbach's Alpha coefficient for the four independent variables and one dependent variable was
0.759.
The survey was conducted in Delhi & NCR; responses of 250 respondents were collected. We
targeted respondents who are seems to be conscious buyer and hence the sampling technique is
non-probability convenience sampling. For visual representation of finding and results bar
charts, pie charts and tables etc. ahs been used.
5. Review of literature
During the 21th century, the focus of the environmental aspect of CSR grew even stronger and
society’s increased interest regarding environmental issues put new light on CSR. Hence, even
higher pressure was put on corporations and their initiatives for support of the environment. This
can be seen in the European Commission’s CSR-report from 2002, in which CSR is described to
have a close relationship between companies and societies to tackle both social and
environmental concerns: “CSR is a concept whereby companies integrate social and
environmental concerns in their business operations and in their interaction with their
stakeholders on a voluntary basis. In their latest definition, the European Commission (2011)
explains CSR as “the responsibility of enterprises for their impacts on society”.
Another trend emerging in the 21th century was the focus of CSR from a consumer perspective.
The fact that corporations started to work and participate actively in projects regarding CSR
predictably woke up an interest also among consumers. Researchers were then eager to find out
whether CSR activities had any influence on consumers or not, and if so, in what way and to
what extent. In 2001, Mohr et al. studied the relationship between CSR and consumers’ buying
behavior. The results of the study showed that the majority of the respondents were in general
positively disposed towards social responsible firms and moreover expected firms to be highly
active within CSR. Furthermore, the results revealed that a small majority of the respondents did
not really think about basing their purchase behavior on CSR or did it only sometimes, even if
CSR as a buying criterion didn’t play much of a role in the decision processes or purchase
behavior. However, 39% of the respondents were basing some or much of their purchasing on
CSR (Mohr et al., 2001).
In 2005, Becker-Olsen and Hill contributed with two studies investigating the role of perceived
fit (e.g. Similarity between corporate mission and social initiative), perceived corporate motive
(other-centered versus profit-centered), and timing of an announcement (reactive versus
proactive) on consumers’ responses to corporate social initiatives. The aim of the study was to
explore the impact of perceived CSR on consumer behavior. The results of the study
demonstrated that an overwhelming majority of the respondents believed that firms should
engage in social initiatives and 76% thought that those initiatives would benefit the firms. About
half of the respondents stated that they would boycott firms that acted irresponsibly, if
reasonable alternatives were available (Becker-Olsen & Hill, 2005).
Finally, another relatively new trend within CSR developed in the 21th century is to view and
utilize the whole concept as a competitive advantage. In 2006, the marketing and strategy guru
Michael Porter wrote an article together with Mark R. Kramer, in which they introduced a
framework that organizations can use to identify the impact they have on society, determine
which effects to address and then suggest effective ways to do so. The authors propose that when
looking at CSR from a strategically perspective it can become a source of remarkable social
progress, since corporations apply their resources, expertise, and insights to activities that benefit
society as a whole (Porter & Kramer, 2006).
In carrying out their economic responsibility, corporations are expected work within the
framework of laws and regulations as a partial fulfillment of the "social contract” between
corporations and society. Carroll (1991) stated that it is important for legal responsibility to be
performed in a manner that is consistent with the expectations of governments and laws
complying with the various federal, state and local regulations. A successful corporation should
be recognised as one that fulfils its legal obligations.
Conchius (2006), on the other hand, stated that legal responsibility includes abiding by
consumer and product laws, environmental laws and employment laws while also adhering to
laws and regulations governing competition in the marketplace. However, legal responsibilities
do not embrace the full range of behaviours expected of corporations by society. Laws are
important, but they are often inadequate. First, they cannot possibly address all of the issues or
areas that a corporation may face. Second, laws often lag behind more recent concepts of what is
considered right behaviour, and third, laws may represent the personal interests and political
motivations of legislators (Carroll, 1998).
Although economic and legal responsibilities represent ethical standards concerning fairness and
justice, ethical responsibility encompasses those activities and practices expected or prohibited
by society that expand beyond the limitations of legal responsibilities. Ethical responsibility
embodies those standards and expectations that reflect a concern for what consumers, employees,
shareholders, and the community regard as fair, just, or in keeping with the respect or protection
of stakeholders' moral rights (Carroll, 1979).
Balancing economic, legal and ethical responsibilities is important. If the corporation does
something that is appropriately economic and legal, it must also be appropriately ethical.
Philanthropic responsibility refers to corporate actions that are in response to society's
expectations of good corporate citizens. Corporate philanthropy is likely to enhance the image of
corporations especially those that have high public visibility. Corporate philanthropy should also
increase employee loyalty and improve customer ties. Philanthropic activities include business
contributions in terms of financial resources or executive time, such as contributions to the arts,
education, or communities.
This paper aims to examine consumers' buying behaviour as a result of corporate CSR
initiatives. We are interested in examining that whether the purchase decisions of the products
and services of consumers in India are based on corporation's CSR initiatives or not. In addition,
we also seek to identify which type of CSR component based on Carroll's pyramid of CSR will
have significant impact on consumers' buying behaviour.
Several studies have suggested that there is a positive relationship between a corporation's CSR
activities and consumers' attitudes towards that corporation and its products (Brown & Dacin,
1997; Creyer Ross, 1997; Ellen, Webb, & Mohr, 2000). Mohr, Webb and Harris (2001)
examined and their finding indicated a significant relationship between CSR and consumer
responses.
Sen and Bhattacharya (2001) research on reaction of consumers to CSR shows that CSR will
directly affect consumers' intentions to purchase corporation's products.
As cited in Pomering and Dolnicar (2008), marketplace polls reported that consumers expect
corporations to provide information about what they do, and they will support those corporations
that pursue CSR initiatives. Environics International Ltd. (Environics, 1999) conducted a survey
regarding consumer responses towards corporate social responsibility. The result of the survey
indicated that Australians have the highest CSR consumer expectations from businesses. A total
of 86% of US respondents in the survey of Cone Inc. (2004) said that corporations should
provide information on how they support social issues.
The above table shows that 48.4% of male and 51.6% female respondents, it shows that more
females are making purchasing as compared to men.
Table 2: Age of respondents
Age in years
Majority of respondents are in age group of 25-32 (45.2%) years and 32-39 years (35.2%) both
of this age group alone contains around 78% of total respondents. Therefore, it may be
concluded that most of the shoppers are in 25-39 years of age.
Table 3: Disposable Income of respondents
Disposable Income
Most of the respondents are having disposable income ranging between 5000-15000 (74%).
Table 4: Nature of jobs of respondents
Nature of job
Valid Cumulative
Frequency Percent Percent Percent
Valid Cumulative
Frequency Percent Percent Percent
Valid Cumulative
Frequency Percent Percent Percent
Moderately
102 40.8 40.8 76.8
Understood
It is evident from the above table that almost (97.6%) of the respondent are aware of CSR
initiative of corporations they are transacting with, while only 2.4% (6 in numbers do not have
any idea regarding CSR), these 6 respondents will not be included in the further processing of
data.
Table 6: Definition of CSR
Definition of CSR
Valid Cumulative
Frequency Percent Percent Percent
Valid Addition In
23 9.2 9.2 9.2
Shareholder's Value
Meeting legal
101 40.4 40.4 49.6
Obligations
Contributing To
84 33.6 33.6 83.2
Charitable firms
Doing Community
39 15.6 15.6 98.8
Services
The finding shows that meeting legal obligations has obtained the highest (40.4%), followed
closely by contribution to charitable firms (33.6%). Doing community Services (15.6%) was the
third choice.
Valid Cumulative
Frequency Percent Percent Percent
Minimisation of
29 11.6 11.6 100.0
Discrimination
The above table shows that production of safe products (36%) and community work (35.2%)
scored the highest among the activities organizations must involved into.
7. Impact of Perceived CSR Initiatives on Consumer’s Buying Behaviour
Multiple regression analysis has been performed to get the relationship between dependent and
independent variables. A regression analysis provides the opportunity to examine the relationship
between independent variables and dependent variables. More specifically, it helps us to
understand how the value of the dependent variables is affected by variations in the value of the
independent variable, with other variables (control variables) held fixed. In our case the
dependent variable is consumer Behaviour (CB) and independent variables are CSR (economic,
legal, ethical and philanthropic variables).
According to the model summary of multiple regressions in Table 8, the multiple R is 0.572.
Because multiple R is positive in value, it shows that there is a positive linear relationship
between ethical, legal, economic and philanthropic activities and consumers' buying behaviour.
Adjusted R
Model R R Square Square Std. Error of the Estimate
CSR-
.573a .329 .315 .36483
CB
Model Summary of Multiple Regressions
Adjusted R
Model R R Square Square Std. Error of the Estimate
CSR-
.573a .329 .315 .36483
CB
An analysis of variance (ANOVA) has been preformed to test whether there is a statistical
significant linear relationship between the combination of the four CSR components (Economic,
legal, Ethical and philanthropic) and consumers' buying behaviour exists or not. According to
Table 9, the p-value is .000, indicating that the four CSR components significantly influence
consumers' buying behaviour.
Sum of
Model Squares df Mean Square F Sig.
CSR-
12.149 4 3.036 22.817 .000a
CB Regression
Sum of
Model Squares df Mean Square F Sig.
CSR-
12.149 4 3.036 22.817 .000a
CB Regression
A coefficient table is very much helpful in explaining the relationship between the four CSR
components and consumers' buying behaviour. Based on the calculated significances in
Significance (Sig.) column of Table 10, the p-value for each CSR component is less than 0.05,
which indicates that all the CSR components have a statistically significant relationship with
consumers' buying behaviour.
Coefficientsa
Unstandardized Standardized
Coefficients Coefficients
CSR- (Constant)
CB 1.286 .324 3.968 .000
Economic
.259 .068 .253 3.776 .000
Legal
.112 .053 .148 2.087 .038
Ethical
.166 .068 .170 2.416 .017
Philanthropic
.168 .055 .211 3.052 .003
In Table 10, the unstandardised beta coefficient is used for the values of the numbers in the linear
regression equation. Theory explains that a higher beta value indicates a greater impact of the
independent variable on the dependent variable. The independent variable (CSR components)
can be ranked according to the magnitude of the beta coefficient to determine which component
has the most significant impact on consumers' buying behaviour.
The regression model relates Y (the dependent variable) to a function of X (the independent
variable) and β (the unknown parameter). It is formulated as Y ≈f(X, β). The multiple regression
analyses performed in this study are modeled as follows:
Yi = β1xi1 + β2xi2 + β3xi3 + β4xi4
Therefore, the multiple regressions line equation for this current study is:
Consumer Behaviour = 1.286 + 0.259 Economic Responsibility + 0.168 Philanthropic
Responsibility + 0.166 Ethical Responsibility + 0.112 Legal Responsibility.
The results explicitly defines that the economic responsibility attribute has the most significant
impact on consumers' buying behaviour, as it has the highest beta value, followed by
philanthropic responsibility, ethical responsibility and, finally, legal responsibility.
Indian consumers seem to view CSR priority differently from other nations. Economic
responsibility was still the basic utmost priority preferred. However, they ranked philanthropic
responsibility as the second most important responsibility compared with legal responsibility. It
is not surprising that Indian consumers see corporations' philanthropic responsibility as being
more important than their legal responsibility. Consumers want corporations to contribute their
money, facilities and employees' time to humanitarian programs or purposes. Indians have been
known as one of the most generous nations in the world. For example, the country's rate of
donation and participation in helping the victims of natural disasters in the world has always
been very encouraging. In addition, we have always heard that the generous Indians have made
financial pledges and contributions to help those in need, they be orphaned children, the poor,
accident victims and so on. Although the Indian consumers themselves have been very generous,
the expectation for business institutions to do the same is unquestionable.
As for complying with rules and regulations, it is not surprising that Indian consumers ranked
legal responsibility last compared with Carroll's pyramid, which suggested that legal
responsibility is the next most important responsibility
Compared with those in developed nations, Indians regard rules lightly, to a certain extent, as we
have always heard from the news about how Indians bend and ignore stipulated rules and
regulations. Among the most common examples are the bending of traffic rules and regulations
promoting environmental protection.
Managers should note that this research supports previous results reported in the literature,
suggesting that a substantial, viable and identifiable consumer group exists that considers a
company's level of social responsibility in its purchase decisions. Manufacturers and retailers
have an opportunity to appeal to this group while simultaneously meeting their business
objectives and make contributions to society. The type of CSR activities that should be engaged
by the corporations should preferably be based on the priority indicated in the finding of this
study, where the economic responsibility attribute has the most significant impact on consumers'
buying behaviour, followed by philanthropic responsibility, ethical responsibility and finally,
legal responsibility. However, companies that promote themselves as socially responsible need
to be prepared to deal with criticisms of any irresponsible behaviour they are seen as committing,
as information travels within seconds in this information technology era. In contrast, companies
who disregard expectations concerning social responsibly may risk consumer boycotts as a result
of the strengthening of consumers' awareness and rights in today's market scenario.
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