Customer Perception of CSR Initiatives - Its Antecedents and Consequences

Social Responsibility Journal
Customer perception of CSR initiatives: its antecedents and consequences

Samra Chaudary Zohad Zahid Saad Shahid Shamila N. Khan Sana Azar
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Samra Chaudary Zohad Zahid Saad Shahid Shamila N. Khan Sana Azar , (2016),"Customer perception of CSR initiatives:
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CUSTOMER PERCEPTION OF CSR INITIATIVES: ITS ANTECEDENTS AND

CONSEQUENCES
Abstract
Preceding examination on corporate social responsibility (CSR) investigates

employee judgment; nonetheless, customers perception of CSR stands and remains
considerably and principally unexplored. Organizational memoirs in addition to its virtues
and capabilities of corporation emerge as assets for the competitive gain and consequently
customer perceptions of CSR avocations execute a vital role in customer attachment and
loyalty to their organization coupled with performance of the corporation. Subsequently, this
research inspects and examines the way the perceived fit of culture in addition to CSR
capability impacts customer attachment and additionally performance of corporation by
means of the mediating constructs of their perceptions of CSR avocations. The empirical
discoveries through structural equation modeling relating to 250 respondents endorse that
perceived fit of culture along with CSR capability radically influences CSR perception within
consumer minds and so, subsequently, customer attachment and overall performance of the
corporation. The outcomes bestow significant ramifications for marketing and advertising
philosophy combined with practice.
Keywords: customer perception of CSR activities, CSR capability, Customer attachment,
corporate performance
1. Introduction
A renegotiation is taking place between the society and business across the globe in
the wake of recent global economic crises (Kemper and Martin, 2010). The crises had
underlined the notion that ethics is no more prosthesis for businesses rather both ought to be
integrated in this social relationship (Roberts, 2003). Indeed this integration effort has been
1
widely acknowledged after the macroeconomic and regulatory failures in liberal market
economies (Garriga and Mel, 2013). Especially, the role of corporate social responsibility
hereafter came to attention in both developed and developing countries.
As per the classical view of Friedman (1970) the CSR cannot create value for the firm
and the sole responsibility of a firm is to earn profits for its shareholders. Oliver (2014) puts
forward that critics of CSR argue that it is simply an added expense that does not grant to the
financial performance of the firm. Moreover, he also reported that higher green firms were
found not to be significantly related to the financial performance. In contrast, the proponents
of stakeholders perspective believed that firms can play a prolific role in a society by
engaging in CSR related activities (Pedersen and Neergaard, 2008). For instance, firms can
give valuable assistance to the societal and environmental aspects of the community (Kok,
2001). CSR practices by the businesses are communicated to stakeholders to highlight and
inform them for these value creating activities (Servaes and Tamayo, 2013). The
communication of CSR practices has gained much popularity in the past few decades through
promotional campaigns, company websites and annual reports. Due to established
institutions, standards, and legal system in developed countries, CSR practices are
predominantly considered as a Western phenomenon. However, weaker institutions of
developing countries present significant challenge concerning CSR practices in developing
countries including Asian countries (Mishra and Suar, 2010). Hence, it is pertinent that
research on CSR practices should give due consideration to the relevant institutional context
of a particular country or region (Brammer et al., 2012).
A recent survey by KPMG indicates that there has been extraordinary increase of 22%
in social responsibility communication in the Asia Pacific region (KPMG, 2013). More
importantly, there has been highest growth rate of reporting is recorded in India i.e. 53
percent since 2011. Similarly, China has an increase of 16 percent since 2011. These statistics
emphasize the efforts and contribution of firms in the developing countries of the Asian
region as regards to CSR practice and its communication. Hence, it has become relevant to
examine the influences of CSR practices in the subcontinent region. Especially, India and
Pakistan of this region have undergone epochal institutional reforms where it has become
mandatory in India to spend 2 percent of net profits on CSR related activities. Similarly,
Pakistan has already introduced regulatory interventions to address the externalities of
modern corporations in 2009. Securities and Exchange Commission of Pakistan (SECP)
mandated disclosure of CSR practices through SRO 2009. The SRO 2009 states that Every
company shall provide descriptive as well as monetary financial disclosures of the Corporate
Social Responsibility related activities undertaken by it during each financial year. Later in
2013, a more comprehensive set of guidelines has been provided by SECP. These voluntary
guidelines of 2013 aim at reinforcing practices of CSR in the Pakistani firms. This
institutional backdrop highlights the fact that developing countries of Asian region like
Pakistan are catching up with their developed counterparts regarding CSR practices.
A number of studies have been conducted about CSR practices in the Indian context
for example (Khan and Atkinson, 1987; Krishna, 1992; Sood and Arora, 2006; Mishra and
Suar, 2010) however; there is dearth of research in its neighbouring country Pakistan about
CSR practices and consumer perceptions. Therefore, this research aims to fill this gap by
examining CSR practices in Pakistan which has similar historical and colonial roots with
India. In doing so, this study ascertains the impact of CSR activities conducted on various
consumer and corporate related dimensions that incorporate customer loyalty, consumer
attachment, and corporate performance.
2. Literature Review
2.1 Green image
The public is increasingly becoming concerned about environmental issues. Green

image marketing refers to the complete and whole management process responsible for
identifying, anticipating, predicting and satisfying the needs of customers and society, in a
profitable, sustainable and long lasting way (Paco, 2009).
The emergence of green
consumers sprouted in the beginning of 1990s (Lee et al., 2010). Ever since that point
environmentalists have emerged and raised the issues regarding the green image of
companies. The concept stemming from the new and well aware consumer and with ever
increasing government regulations corporations have been driven to the edge to incorporate
environmental aspect (Yusof et al., 2012). Dillion and Back (2014), on the contrary claim that
much of CSR deals with incorporating and dealing with firm based problems.
Green image has been the focal point of many authors due to the fact that the higher
the investment in green image the more markets a company develops, the more competitive
advantage a company is able to seek and the better corporate image a company is able to
establish within consumer minds (Ko, 2013; Lee et al., 2010; Chen, 2008). Prior research has
its focus on the entire energies on studying green image with respect to store loyalty and
shopping value, the effects of green image directly on store loyalty as well as using shopping
value as a mediator. However, literature also suggests that green image has a direct effect on
the image within consumer minds (Ko, 2013). Hence this study aims to incorporate the
customers perception of CSR activities finding out how is customer going to perceive a
company based on its green image.
H1: Green image positively affects customer perception of CSR activities
2.2 Perceived fit between corporate culture and CSR activities
One of the most important and useful concepts as far as building a brand image is
concerned is the orientation of a culture of the corporation (Hatch, 2001). The link between
an organization and its actions has been referred to as the link based on perception between a
4
cause and the image related to a corporation (Varadarajan, 1988). The fit between a company
and its CSR activities has been tested in prior studies. Sen and Bhattacharya (2001) analysed
whether that the fit leads to positive consumer responses and perceptions or not. Culture has
also been studied in Asian context and its implications on organizations performance have
also been analysed. The cultures relationship with organizations performance turned out to
be as predicted i.e. positive whereas it proved to be a shocking result when it turned out to be
a non-significant result (Mathew et al., 2012). Hence this article defines perceived link of
corporate culture with CSR activities as the degree to which customers deem that CSR
actions are harmonious and synonymous with the culture of the corporation. The previous
studies that empirically tested the effect of perceived link of corporate culture with CSR
activities on employee perception suggested strong positive results between the two while
also portraying a significant result (Lee et al., 2013b).
This study aims to add value and fill in the gap through testing it on customers since
previously customers have not been presented as mediators as far as their perception is
concerned regarding the link and congruency between corporate culture and CSR initiatives
and hence the following hypothesis:
H2: Perceived fit between corporate culture and CSR activities positively impacts customer
perception of CSR activities.
2.3 Perceived CSR capability
Perceived CSR capability can be spotted as the planning, execution, evaluation and
analysis of CSR activity based on organizations' knowledge, skills, and processes (Sharma
and Vredenburg, 1998). One of the foremost elements considered in determining ones
strategy is capabilities of the firm (Grant, 1991). Empirical studies conducted show that
quantity of a resource simultaneously with the level of CSR capability leads to a positive
effect on CSR of a corporation and therefore resulting in a higher corporate performance
5
(Elsayed, 2006). A positive relationship exists between CSR and corporate ability for
Peruvian consumers (Marquina and Morales, 2012). Moreover, customers are affected
through a chain in which firms capability affects product attributes which in turn leads to
product evaluation, thus capability of a firm has a link with consumers as well (Brown,
1997).
Prior research has studied perceived CSR capability in employees context and
perception of CSR actions, however, this study aims to fulfil the gap and add value through
studying it in relation with customers. Therefore, we devise the following hypothesis:
H3: Perceived CSR capability positively affects customer perception of CSR activities.
2.4 Customer perception of CSR activities
CSR is commonly portrayed as the activities, related to societys perception, as far as
its obligations towards a society exist (Sen and Bhattacharya, 2001). Therefore, this work
describes customer perception of CSR initiatives as the extent to which customers recognize
that a company aids the actions related to a social cause (Lee et al., 2013b). Adding customer
perception of CSR initiatives as a mediating variable adds the buyers perspective to CSR
studies for the first time. This study distinguished customer perception of CSR activities in
three parts; philanthropic CSR, environmental CSR and ethical CSR (Carroll, 1979).
Emphasis has also been laid on the legal aspects of CSR where a firm is not only ethically
responsible but has also legal concerns which are directed at the greater good of the society
(Carroll, 1991). McWilliams (2001) also points out that CSR relates to doing what is positive
and beneficial for the society which is beyond and in addition to doing what law requires.
Customer perception of CSR incorporates wide array of concepts one must be able to
understand its broad meaning (Maignan and Ferrell, 2001). Firstly, Philanthropy can be
explained as the voluntary giving of time, money, and resources to benefit, or aid others or
society without regard to personal gains (Seifert, 2004). The current professional
6
organizations demand candidates to excel and gain expertise in professional skills as well as
philanthropic character, thus involving themselves in philanthropic CSR (Fontaine, 2012).
Secondly, ethical CSR which can be defined as all those practices that improve the workplace
and benefit society in all those ways that go above and beyond what a company is legally
required to do (Nussbaum, 2009). Thirdly, the recent emphasis is not just on social
responsibility but towards practising corporate environmental responsibility (Margolis and
Walsh, 2003). Environmental CSR is explained as the impact of an organizations actions on
the ecosystem (Babiak and Trendafilova, 2011). Nussbaum (2009) goes on to define ethical
CSR as all those practices that improve the workplace and benefit society in all those ways
that go above and beyond what a company is legally required to do. (Marquina and VasquezParraga (2013) found that companys environmental commitment gives consumers utility the
most in USA as well as in Peru.
Prior research emphasized upon employee perception of CSR activities, with all the
three dimensions being studied with job satisfaction and trust. The relationships of ethical,
philanthropic and legal CSR were found to be positive and significant with job satisfaction
and trust (Lee et al., 2013a). This study, however, adds value by taking customer perception
of CSR as a mediator and proposing that the relationship between green image and perceived
corporate performance is through customer perception of CSR and hence the following
hypothesis:
H4: Customer perception of CSR activities mediates the positive relationship between green
image and perceived corporate performance.
2.5 Perceived corporate performance
Jin (2010) defines corporate performance as the organization's performance measures
or outcomes namely revenues, market share and profits. There is a significant relationship
and link between perceived corporate performance and CSR (Verschoor, 1999). Time series
7
analyses have been used to identify and portray that the cumulative effects of CSR on
corporate performance strengthen over time thus proving a positive link between the two
(Peters and Mullen, 2009). In Peru, managers with a high stakeholder orientation were
highly satisfied with organisational performance (Angelopoulos, 2013). Prior research shows
that there exists a positive significant relationship between philanthropic activities i.e. CSR
and financial soundness (Lindgreen, 2009) and hence the following hypothesis:
H5: customer perception of CSR activities positively affects corporate performance.
2.6 Customer attachment
Bowlby (1979) defines the variable as an attachment that is recognized such as an
emotion-laden, distinctive bond between a human and an object, the attachment diverges in
strength; tougher attachment is linked with much more powerful sentiment or moods of
affection, attachment, passion, and fondness. The common topic of discussion holding much
interest in the corporate world is regarding the employee attachment (Becker, 2003).
Prior research has focused on emotional attachment towards brands, leading to a
positive significant result (Grisaffe, 2011). More dedicated employees are most significant
team players and more interested within their jobs (Yanhan, 2013). Therefore, we come up
with the following hypothesis:
H6: customer perception of CSR activities leads to positive customer attachment.
2.7 Customer loyalty
Evanschitzky (2006) defines loyalty as the intention and readiness to repurchase from
a particular company or recommend a company. The most important aim of retailers is to
consistently make their product unique within consumer minds (Verhoef, 2007). Companies
aim to promote loyalty with the help of the unique attributes of the product within consumer
minds hence satisfaction is the most associated factor with loyalty (Chen et al., 2008).
Loyalty in consumers is triggered through satisfaction moderated by purchase size. The
8
common belief among the researchers has been proved accurate up to the last detail that
satisfaction triggers loyalty although satisfaction relates to a range of measures that can be
used to describe satisfaction of a consumer but its safe to establish the fact that once
triggered, satisfaction leads to creation of loyalty among customers (Flavin, 2006).
Christodoulides and Michaelidou (2010) also reinforce the same results. However, some
researchers negate the findings that satisfaction plays such a critical role in provoking loyalty
(Taylor and Hunter, 2003). Lamberg (2012) analysing the project of best practices of CSR
communication in Peru suggests that in order to attract new investors and customers the
businesses could diffuse information on the effect on the corporate outcome, the achieved
employee commitment and loyalty and eventually operations efficiency generated by the
motivated employees. These stakeholders keenly seek such CSR information thus the Peru
project could be clustered with the release of the firms annual reports and CSR publications
when targeting such stakeholders.
This study aims to add value by determining whether customer perception based on
CSR activities plays relatively more important role in initiating loyalty. This study aims to fill
in the gap by focusing on the effect of customer perception of CSR on customer loyalty.
H7: customer perception of CSR activities leads to positive customer loyalty.
2.8 Repurchase intention
Much of debate about repurchase intention relates to how repurchase intention is
affected by transactional factors such as low price (Anderson and Srinivasan, 2003). It was
found that there is a positive relationship between CSR and consumer buying behaviour and
that Peruvian consumers are more responsive to CSR attributes of products than Spanish
consumers (Marquina and Morales, 2012). Repurchase intention is not just affected by low
price, therefore, other factors need to be explored. On the contrary some argue that there is no
need to look beyond transactional factors (Bansal, 2004). To counter the argument some
9
suggest that analysing just a single factor i.e. transactional factors may not yield accurate
results of what affects repurchase intention, the fact remains that single point focus never
yields accurate results and single focus factor should not form the bases for concluding that
only one factor establishes a causal relationship with repurchase intention and up to a great
extent, other factors remain untested up till now (Burnham, 2003).
Thus this study focuses upon identifying other factors that affect repurchase intention;
defining repurchase intention as the common consumer's subjective probability of repatronizing with a corporation, and is the major and significant determinant of buying action
(Wu et al., 2014). This study has aims at identifying factors beyond transactional cost factors
that lead to repurchase intention such as customer perception of CSR activities.
H8: customer perception of CSR activities leads to positive customer repurchase intention.
Green Image
..
Perceived
Corporate
Performance
H4 (+)
H1 (+)
H5 (+)
Perceived fit
between
Corporate
Culture and
CSR Activities
H2 (+)
Customer
Perception of CSR
Activities
-Philanthropic
CSR
-Environmental
CSR
-Ethical CSR
H7 (+)
Customer
loyalty
H6 (+)
H3 (+)
H8 (+)
Customer
Attachment
Perceived CSR
Capability
Figure 1: Conceptual Framework
Repurchase
Intention
3. Methodology
3.1 Sample:
10
A self-administered questionnaire was rotated amongst the CSR consumers ranging in

age from 17 to 45 to have a more range of point views. The individuals were considered
CSR consumers who had some knowledge and awareness of CSR and green image being
advertised and or labelled by the company (such as printing Recycled or other eco-friendly
images/labels on shopping bag, fliers, outlets etc.) and are consumers/customers of such
firms. The income levels ranged between 10,000 Rs to 2 lakh Rs to measure our variables
across SEC A and B. About 55% of the sample consisted of females and 44% fell into the age
bracket of 20-25. Only about 4% crossed over 40 years of age. The participants of this
research were expert enough in text book knowledge at least that is associated with CSR
campaigns. Lack of practical knowledge (by respondents) of actual CSR initiatives
incorporated by firms might have disclosed the higher expectations of the CSR practices.
The respondents awareness was measured by asking them to recall organizations that
might have eco-friendly policies. Almost 70% of the sample were able to recognize CSR and
green marketing by grocery stores (20%), international fast food chains (30%), FMCG
(15%), miscellaneous (5%) while almost 30% of the individuals that were contacted for data
collection were not able to recognize any CSR activities. The study effectively targeted a
population sample of up to 250 approximately towards the data collection period in
accordance with the minimum requirement of structural equation model (SEM) of at least
200 sample size (Shah and Goldstein, 2006). The data were collected in January (2014)
April (2014).
3.2 Measures:
The research measures firm level construct such as CSR and green image at the
individual level of analysis. The measures were adapted from literature that was reliable,
valid and widely accepted. Seven items of Green image items were developed from Ko
(2013). Corporate culture with CSR activities were adopted from Cable and DeRue (2002)
11
while perceived CSR capability was adapted from Vorhies (2003). Modified items of
philanthropic CSR and Ethical CSR were utilized from their basic source and adapted in
accordance with this current study (Lee et al., 2013b). Environmental CSR belongs to the
same source of author with the exception of last item relating to solid waste that was adapted
in accordance with this study (Mohr et al., 1998). The seven items relating to customer
attachment that used a likert scale for their evaluation were borrowed from Thomson et al.
(2005). Perceived corporate performance related factors modified to be in accordance with
the current study were utilized from (Menon et al., 1996). Repurchase intention construct was
developed from Khalifa and Liu (2007) and Zhou et al. (2009). Lastly loyalty related items
were developed from Valvi and West (2013). All of the items utilized within this article have
been extracted from existing data and literature and modified to suit the current study under
discussion. The items use a 5-point likert scale ranging from 1 being strongly disagree to 5
being strongly agree.Table1shows each items used for the development and analysis of this
research.
Table1: Variables with Measurement Items

Variable
Green image
(Ko, 2013)
Operational definition
GI1: Your desired company distributes eco-friendly published fliers
GI2: Your desired company deals with products with green labels
GI3: Your desired company increases sales of brands in eco-friendly products
GI4: Your desired company has eco-friendly shopping space in their outlets
GI5: Your desired company operates eco-shops to sell eco-friendly products
Perceived fit between

PF1: Your desired company's CSR activities are congruent with their corporate
culture
corporate culture and CSR
activities
PF2: Your desired company's CSR activities are relevant to its corporate culture
(Cable and DeRue, 2002) PF3: Your desired company's CSR activities are similar to its corporate culture
PF4: Your desired company's CSR activities reflect its corporate culture
Perceived CSR capability
(Vorhies, 2003)
CSR1: Your desired company tries to understand its customers needs

CSR2; Your desired company makes use of its customers information
CSR3: Your desired company considers its customers requirements
CSR4: Your desired company serves its customers demands
12
Philanthropic CSR
(Lee et al., 2013b)
PCSR1: Your desired company helps solve social problems

PCSR2: Your desired company has a strong sense of corporate social responsibility
PCSR3: Your desired company gives adequate contributions to local communities
PCSR4: Your desired company allocates some of its resources to philanthropic
activities
PCSR5: Your desired company plays a role in society that goes beyond the mere
generation of profits
PCSR6: Your desired company encourages its employees to participate in
voluntarily activities
Ethical CSR
(Lee et al., 2013b)
ECSR1: Your desired company emphasizes the importance of its social

responsibilities to its employees
ECSR2: Your desired company organizes ethics training programs for its
employees
ECSR3: Your desired employees are required to provide full and accurate
information to all customers
ECSR4: Your desired company has a comprehensive code of conduct
ECSR5: Your desired company is recognized as a trustworthy company
Environmental CSR
(Lee et al., 2013b)
ECSR1: Your desired company tries to offer environmentally friendly products

ECSR2: Your desired company has an environmentally related mission
ECSR3: Your desired company makes all-out efforts to maintain and preserve the
environment
ECSR4: For your desired company solid waste or garbage problem is of little
concern
(Mohr et al., 1998)
Perceived Corporate
performance
(Menon et al., 1996)
PCP1: Your most preferable company has a competitive advantage in sales

growth
PCP2: Your most preferable company has a competitive advantage in market
share
PCP3: Your most preferable company has a competitive advantage in profit
growth
PCP4: Your most preferable company has a competitive advantage in return on
investment
Customer attachment
(Thomson et al., 2005)
CA1: Positive customer perception of CSR activities elicits Affections towards

your desired company product
CA2: Positive customer perceptions of CSR activities give rise to Love towards
your desired companys product
CA3: Positive customer perceptions of CSR activities lead to Friendly feelings
towards your desired companys product
CA4: Positive customer perceptions of CSR activities results in sense of Passion
towards your desired companys product
CA5: Positive customer perception of CSR activities lead to sense of Delight
while purchasing your desired companys product
CA6: Positive customer perceptions of CSR activities make you feel Connected
with your desired companys product
CA7: Positive customer perceptions of CSR activities help you form a Bond with
your desired companys product
CL1: I seldom consider switching to another product that I use regularly
CL2: As long as the present service continues from my desired company, I doubt
that I would switch products
CL3: I try to use the same product whenever I need to make a purchase
CL4: When I need to make a purchase, this product I use regularly is my first
choice
CL5: I like using this product I use regularly
CL6: To me the product that I use regularly is the best retail product to buy
CL7: I believe that that product is my favorite product which I use regularly
Customer loyalty
(Valvi and West, 2013)
13
Repurchase
RI1: I intend to continue to purchase goods from the company that I regularly use
intention(Khalifa and Liu, RI2: I intend to recommend the product that I regularly use to people around me
2007; Zhou et al., 2009)
RI3: I intend to use the product that I regularly use as the priority online product for
future purchases
RI4: Except for any unanticipated reasons, I intend to continue to use the product
that I regularly use
3.3 Analysis:
The study incorporated structural equation modeling (SEM) which consists of the
measurement model or confirmatory factor analysis (CFA) and the structural model or path
analysis. The main objective of CFA is to incorporate the determination of the validation of a
priori model as compared to a model that is suitable (Gefen and Straub, 2000). Any specific
variable with a factor loading less than 0.5 was disregarded (Tang and Chang, 2010).
Construct reliability refers to the existence of the vertical correspondence between an
unobservable variable (Peter, 1981). Any value in excess of 0.7 is acceptable. The work made
use of average variance extracted (AVE) or convergent validity for validity of instruments,
their benchmark was assigned to be 0.5. The discriminant validity was also used for validity
purpose of the items under consideration. CFA is followed by the path analysis which shows
the results for hypotheses testing, significance values and explanatory power of the model.
Model fits are checked for both measurement and structural models. CMIN having a
benchmark of less than 3, GFI (goodness of fit), CFI (comparative fit index), NFI (normed fit
index) and RMSEA (root mean square error of approximation), all to be having a standard
value or benchmark of 0.9. The path analysis attempted to introduce CMIN/df i.e. the chi
square was adjusted for the degree of freedom. Last but not the least the methodology strived
to complete the milestone of parameter estimates while also portraying the sign and
magnitude of the relationships highlighted. In the end the methodology also practiced to
include significance level within the work.
This research tested mediation through adaptation of Bootstrap technique while
leaving out Baron and Kenny approach, which is popular and a well accepted mediation
14
technique. Baron and Kennys procedure has grown to become intensive to examine
mediation, nevertheless, numerous statisticians have recognized flaws with the technique and
thus prescribed substitute sturdy and robust methods to evaluate mediation (Mackinnon et al.,
2007). Subsequently it was preferable to plausibly unlearn the truth of Baron and Kennys
procedure. Presented were the 4 stages in case one or more these particular interactions and
relationships were insignificant, experts frequently, surmise that mediation is not feasible or
simply very likely though this is not consistently valid and it tends to skip various accurate
mediation results (Baron and Kenny, 1986).
To test for mediation it is essential condition that the indirect effect is significant.
Substantially more strenuous and dynamic test is bootstrap assessment (at 95% confidence
interval) in place of Sobel test (Zhao and Lynch, 2010). Hence, mediation was tested and
evaluated across two variables and relationship that incorporated green image and corporate
performance by considering consumer perception of CSR activities as a mediator.
4. Results
4.1 Descriptive statistics
Univariate normality was tested and put to scale in terms of variables as far as the
usage of skewness and kurtosis is concerned and it was seen that the data was not skewed or
had kurtosis since it was in the range of (+2 , -2).The study carried out the test of Harmons
single factor which explains in depth variance explained by each variable (Podsakoff and
Organ, 1986). The highest explanatory power of the variable was 33% and meets the
benchmark. The study does not possess common method bias as it exceeds the requirement to
arrive at the cumulative variance of 66% and the largest variance was 43% from a single
factor.
15
About 55% of the sample consisted of females. Maximum number of respondents i.e.
about 44% fell into the age bracket of 20-25. Only about 4% crossed over 40 years of age.
Schooling years consisted of maximum audience falling into 10-15 years of education.
4.2 Confirmatory Measurement Model
Co-relations being latent trait were found not to be statistically significant from each
other (Anderson and Gerbing, 1988).All the loadings exceeded the minimum value of 0.5. All
reliability meets the criteria of 0.7. Convergent validity must be above 0.5 (Hair and Tatham,
1992). Others resort to a lesser benchmark of 0.4 (Verhoef and Franses, 2002). Hence most of
the AVEs cross 0.5 whereas a few of them fall below 0.5 but do manage to fall well above
0.4 (Refer to table 2).
Table 2: Reliability and Validity Results
Variables
Authors
Loyalty
Green image
Valvi and West,

2013
Ko, 2013
perceived fit between

corporate
Corporate performance
Customer attachment
Corporate
Capability
Repurchase
Intention
CSR
Philanthropic
Ethical
Environmental
Factor
Loading
(min- max)
(0.61-0.76)
CR
AVE
DV
Chronbach
Alpha
0.88
0.51
0.71
.87
(0.63-0.68)
0.84
0.52
0.72
.83
Cable and DeRue,

2002
(0.64-0.72)
0.77
0.46
0.68
.77
Menon et al.,
1996
Thomson et al.,
2005
Vorhies, 2003
(0.64-0.71)
0.80
0.50
0.71
.77
(0.61-0.67)
0.84
0.44
0.66
.84
(0.66-0.77)
0.77
0.46
0.67
0.80
(0.54-0.71)
0.74
0.43
0.65
.74
(0.61-0.74)
0.98
0.96
0.98
0.84
0.78
0.74
Khalifa and Liu,

2007
Lee et al., 2013b;
Mohr et al., 1998
Discriminant validity exists when the AVE of a construct exceed the co-relations of
items (Brown, 2006). Constructs must represent distinctiveness among each other. Items must
hang together as one unit (Gau and Pratt, 2008). An explanation here depicting lack of
discriminant validity is that establishment of high co-relations between variables results in
16
low discriminant validities whereas to achieve good discriminant validities moderate corelations must exist (Kline, 2005). The current study depicted strong co-relations among
constructs hence satisfactory discriminant validities were established. Reliability (Internal
consistency) must be well above its benchmark of 0.7 to ensure items reliability (Schmitt,
1996). All variables are resting well above the benchmark of 0.7 (Refer to table 2).
Next the study resorted to measure the uni-dimensionality which portrays items
chosen belong to one construct (Cropanzano et al., 1986). The benchmark considered
effective for CMIN/df falls between 1 and 3 (Segars and Grover, 1998). It is not uncommon
for the p-value to hold at insignificant level of 0.000 (Kster and Vila, 2011). X2s limitation
lies in the fact that a biasness of this measure exists towards a large sample (Hu and Bentler,
1999). CMIN/df came out to be 2.156 for the default model. Some authors believe GFI to be
0.7 (Kster and Vila, 2011). The study showed a (GFI=.732) for the default model.
The study jumped onto an (NFI=.724). Some authors claim and report NFI to be
0.66 (Kushner et al., 1994). The model at hand has a (CFI=.829). Having a benchmark of 0.8
shows a good fit of model (Kster and Vila, 2011). Some authors claim effective RMSEA to
be at 0.8 (Lin and Wang, 2006). The (RMSEA=.067) shows a closer value to its benchmark
thereby indicating a good model fit.
4.3Structural Model
All the hypotheses were accepted at 99% confidence interval. Explanatory power (R2)
of the endogenous variables lie above 0.8 for all constructs with the exception of customer
attachment, loyalty and environmental CSR thereby concluding that the explanatory power of
it arrives at 0.69, 0.73 and 0.78 respectively (Refer to table 3).
Structural model depicted good model fits (p= .000, X2/df= 2.544, CFI=.772, NFI=.673,
GFI=.709, and RMSEA=.077) all for the default model. The recommended value for
RMSEA is and recognized at less than 0.8 (Lin and Wang, 2006). GFI is argued it to be at 0.7
17
also accepted p value is at .000 (Kster and Vila, 2011). CFI is deemed acceptable at 0.75
(Hughes and Eastwood, 2006). NFI reported must be at 0.76 (Kushner et al., 1994).
Table 3: Results of Structural Model
Relationships
Estimates/
P-value
CSR (R2=0.80)
<---
Green image
.299
***
Hypothesis
Decision
Accepted
CSR (R2=0.80)
<---
perceived Fit
.490
***
Accepted
CSR (R2=0.80)
<---
Corporate capability
.419
***
Accepted
Customer attachment
(R2=0.73)
Corporate performance
(R2=0.80)
Repurchase Intention
(R2=0.97)
Loyalty (R2=0.69)
<---
CSR
.833
***
Accepted
<---
CSR
.916
***
Accepted
<---
CSR
.947
***
Accepted
<---
CSR
.916
***
Accepted
4.4 The mediating role of CSR between green image and corporate performance
The study uncovers the mediating role of customer perception of CSR activities
between green image and corporate performance using boot strap test in SEM. The model
added a direct path from green image to corporate performance as a pre-requisite to test of
mediation. The pre-requisite fulfilled itself through the inclusion of a direct path which
depicted a significant p-value of 0.001 (=.001). Test of chi-square difference depicts that the
direct path addition to model revealed insignificance due to the fact that p-value of direct path
through or with mediation existed at 0.220 (=.220>.005). The indirect path served a p-value
of 0.001 (=.001<.05) hence ensuring the presence of full mediation. The confirmation was
based upon the direct relationship being insignificant and indirect relationship being
statistically significant from zero within direct effect through mediation.
5. Discussion and Managerial Implications
18
The paper seeks to uncover the ongoing effects of customer perception of CSR
activities, perhaps the most searched and popular topic nowadays within Asia, and its
consequences. The study contributes to the dearth of CSR literature in Pakistani context and
puts forward implications for managers to implement that are in line with customers
perceptions. First, it examines the holistic customers perceptions of CSR antecedents; green
image and cultural fit and capability along with the direct and indirect effect of green image
on corporate performance which shed importance on new relationship in this region. Second,
the study takes further the perceptions to witness the outcomes. Most preceding work on
CSR is either obsessed with employees or the corporate sector since the origin of CSR was
firms who initiated the concept. Since then researches conducted on CSR were more
corporate focused. This paper musters strength to conduct the research on a very practical and
important segment previously untouched; customers. Previous researches on customers
generally illustrate the effects of CSR on customers but none of them carry the link forward
to determine that how this effect in return affects corporate revenues thus by incorporating
consumer perceptions effect of company performance.
Nonetheless developing countries (including Asian countries) present considerable
challenges concerning CSR activities in developing countries (Mishra and Suar, 2010).
KPMG (2013) survey reveals that an astonishing increase of 22% in social responsibility
communication in the Asia Pacific region is observed. The paper strives to remove that
biasness on the assumption and philosophy that different cultures react to different agendas
and principles in a different manner thus the effects and results concluded with regard to CSR
will perhaps hold true for the Western society but might fail to generate the same effects
within Asia due to distinguished ethical and cultural backgrounds.
Green marketing was strictly thought to be a western related element whereas Asia
was thought to be a step behind or totally ignorant of this concept (Ko and Wan, 2007). The
19
research findings can be used by marketers to shift the focus of consumers from the cluttered
consumer variables (which fight for market share as point of parities) towards CSR as it
results in purchase intentions. This diversion of consumers attention to eco-friendly products
and the benefits they provide for the overall society may be emphasized - creating a point of
differentiation for the brand.
Corporate culture does stimulate CSR activities as Elsayed (2006) puts forward the
level of CSR capability leads to a positive effect on CSR of a corporation and hence resulting
in a higher corporate performance. Our results provide support to these claims, indicating that
managers incubating a culture in their organizations that fosters CSR initiatives will dervice
performance. The apptitude towards creating a better society is perceived to be practising an
aggregrate approach to better standards of performance.
However, through testing of mediating role of consumer CSR perception mesmerizing
break-through was discovered. interesting fact remained centre of attention previously that
image within consumer minds critically determines and predicts, in a retail environment, their
repurchase attention (Ramasamy and Yeung, 2008). Hence showing green image has direct
effect and perceived CSR by customers also have indirect affect on firms profitability. This
research adds that positive consumer perception results in positive repurchase intention.
Positive image within consumer minds leading to loyalty confirms the previous
work (Karaodmanoglu and Melewar, 2006). The newly established hypothesis of positive
user (customer) perception resulting in higher loyalty and attachment towards the firms
products reveal and expose the inability of the previous works providing any sufficient
empirical evidence to support their stance of only employees affecting customer attachment
due to inefficient selection of survey objects i.e. customers.
The study re-confirms the previously identified three rigorous components of CSR
activities thereby adding authentication in (Lee et al., 2013b) as our data also empirically
20
confirms it is the second order variable which is yet a new idea. Research indicates that this is
the primary and the only study that confirms the claim made by (Lee et al., 2013a). The
research adds onto the Korean studies carried out to form connection and link between
corporate images in determining corporate outcome in terms of performance of firms (Ellen,
2006).
CSR activities are primarily considered as a Western phenomenon. This research
attempts to negate the mindset that developing countries struggle with lower order needs and
thus are not concerned with higher order philosophical ideas like corporate social
responsibility. We have managed to provide support that the corporate social responsibility
has an impact of purchase intentions of the consumers as they perceive such organizations to
be concerned with the consumers wellbeing, along with their orientation towards healthier
employee and performance standards. Consequently, the current study contributes, uniquely,
to both the literature and the industry.
The research offers a number of vital implications for managers and marketing
researchers. Managers gain insight through understanding that important stakeholders exist in
the form of consumers other than employees. While planning and constructing plans
regarding CSR consumer satisfaction must be imparted its fair share of importance. The
article further discloses the effect of positive consumer perception of CSR activities in
triggering and ensuring a users attachment to a company and in convincing a consumer to
stay with the company for all their future transactions. Some customers might prefer to
purchase products of socially responsible companies for their personal satisfaction. Hence
managers must make sure that initiatives for societal benefit are well accepted and well
recognized by consumers in a positive array of light.
Corporations enthusiastically and devotionally involved in initiating CSR activities
expect and forecast a positive year end income statement, the study guides managers into not
21
falling this misconception and pit by recognizing that sole CSR activities amount to nothing
if the firm is missing some baseline constructs and practices such as matching the CSR
actions with the internal culture of the firm, the fact is that the company managers must only
expect higher performance levels once their CSR is in synchronization with the firms
culture. Therefore it is critical to understand that spending funds on CSR activities is not
going to help unless you invest in the alignment of the culture.
Furthermore it is of utmost importance for the firm to enhance and establish the strong
hold of their CSR capability, the more consistently the managers seek to reinvent new ways
of increasing CSR capability the more positive feelings inspire within consumer minds
regarding CSR initiatives, because it will eventually affect the financial performance.
6. Future Research and Conclusion

Lack of accessibility to an individual persons desired firms performance represented
un-surety regarding the firms actual performance. Future researches can ensure accurate
collection of company financials of various consumers desirable firms. Also restrictive
generalizability of the data raises questions, the study only resorts to customer related
samples; in future various other stakeholders can be incorporated to reveal a more diverse
view. Time constraints hindered the practice of the technique of cross sectional study and the
enhancement of the sample size to a greater extent and the smaller the sample size the higher
the characterization of greater X2 biasness (Jackson, 2003). Future researches can rely on a
greater sample size that too not from single source to retrieve better model fits.
Investigation was constructed to grasp in extensive minute detail regarding the formed
perception relating to CSR within consumer minds and was allowed to display and act out a
mediating role in order to cast out an impact on consumer attributes relating to their long term
loyalty and attachment to their preferred organization. The key findings erupted were an
22
amalgamation that incorporated significance of consumer perception of CSR activities as a

mediator. On the other hand statistically significant results were grasped that inferred that the
green image initiatives by the firm positively affected consumer perception of CSR activities
leading to higher consumer loyalty and attachment.
The results suggest that the latest way to acquire loyalty and to provoke existing
buyers towards repurchase, marketers must engage in CSR practice since it significantly
impacts the consumer related traits. To influence CSR perception positively organizations
need to engage in allocation of more resources to heighten their CSR capabilities along with
launch of ever new campaigns to go beyond profit seeking motive.
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Customer Perception of CSR Initiatives - Its Antecedents and Consequences

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CUSTOMER PERCEPTION OF CSR INITIATIVES: ITS ANTECEDENTS AND

Preceding examination on corporate social responsibility (CSR) investigates

The public is increasingly becoming concerned about environmental issues. Green

The emergence of green

Figure 1: Conceptual Framework

A self-administered questionnaire was rotated amongst the CSR consumers ranging in

Table1: Variables with Measurement Items

Perceived fit between

CSR1: Your desired company tries to understand its customers needs

PCSR1: Your desired company helps solve social problems

ECSR1: Your desired company emphasizes the importance of its social

ECSR1: Your desired company tries to offer environmentally friendly products

(Mohr et al., 1998)

PCP1: Your most preferable company has a competitive advantage in sales

CA1: Positive customer perception of CSR activities elicits Affections towards

Valvi and West,

perceived fit between

Cable and DeRue,

Khalifa and Liu,

5. Discussion and Managerial Implications

6. Future Research and Conclusion

amalgamation that incorporated significance of consumer perception of CSR activities as a

Bansal, H. S. (2004), "A three-component model of customer commitment to service

Carroll, A. B. (1979), "A three-dimensional conceptual model of corporate performance",

Kster, I. and Vila, N. (2011), "The market orientation-innovation-success relationship: The

Maignan, I. and Ferrell, O. C. (2001), "Antecedents and benefits of corporate citizenship: An

Roberts, J. (2003), "The manufacture of corporate social responsibility: Constructing

Sood, A. and Arora, B. (2006), "The Political Economy of Corporate Responsibility in

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