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I M P L I C A T I O N S OF C O R P O R A T E S O C I A L
RESPONSIBILITY ON MARKETING PERFORMANCE:
A CONCEPTUAL FRAMEWORK

Hardeep Chahal R.D. Sharma

Corporate Social Responsibility (CSR) means firm’s obligation to protect and


improve welfare of the society and its organization, now as well as in future,
through its various business and social actions, and ensures that it generates
equitable and sustainable benefits for the various stakeholders. As such CSR
can serve as an effective marketing tool to compete and sustain competitive
advantage in the present fast changing, hyper competitive environment. Though
there are research studies that provide the domain of CSR and its effects on the
business performance but they have varied viewpoints and are inadequate. Given
its broad conceptualization as such, it’s really arduous to define the domain of
CSR. Presently, lots of efforts are being taken to know its domain and its actual
impact on the organizational performance in various settings. The present paper
is an effort towards this direction. The main objective of the paper is to build
grounding for analyzing the impact of CSR on various marketing performance
measures through various propositions based on antecedents and consequences
of business and social actions. The authors have described the antecedents of
CSR from comprehensive perspective, which include organization culture, human
resources, products and services, social development activities, and regulatory
environment. The impacts of these activities are correlated with three marketing
performance parameters namely, economic, social and relationship measures.

INTRODUCTION

T
he terms like corporate social responsibility, corporate social
performance, strategic volunteerism, enviropreneurial marketing,
and strategic philanthropy have infiltrated the mainstream business
literature since long and their integration with and marketing strategy is
being seen as an effective socio-marketing strategy (Turban & Greening,
1997). The Corporate Social Responsibility (CSR) concept has been
increasingly in picture and in demand for its greater transparency (Ogrizek,
2002) regarding organizational operation environment and performance.
The organizations are being seen to show remarkable concern in undertaking
social initiatives in a highly competitive environment. Further, the growth
in socially responsible investments and in CSR awareness among public

Journal of Services Research, Volume 6, Number 1 (April 2006 - September 2006)


© 2006 by Institute for International Management and Technology. All Rights Reserved.
206 Implication of Corporate Social

have led to the thinking that the successful firm of future will be the firms
which will proactively balance short-term financial goals with long-term
sustainable corporate brand building (Ogrizek, 2002, Stroup & Newbert,
1987 and Varadarajan & Menon, 1988).
The factors that are driving this move towards corporate social
responsibility include new concerns and expectations of stakeholders,
citizens, consumers, public authorities and investors, influence of social
criteria in the investment decisions of individuals and institutions both as
consumers and as investors, increased concern about the damage caused
by economic activities to the environment, and transparency of business
activities brought about by the media and modern information and
communication technologies. Generally, CSR is considered as firm’s
obligation to protect and improve welfare of the society and its organization,
now as well as in future (Staples 2004), through various business and
social actions (Sen and Bhattacharya, 2001; Turban and Greening, 1997),
and ensures that it generates equitable and sustainable benefits on the
various stakeholders. Chakaraborty et al. (2004) have viewed CSR as a
mean of achieving commercial success in ways that honors ethical values,
respect people, communities and natural environment, and encompasses
all those actions of the organizations which affect the society and its well
being. The main fundamental embedded in CSR, according to them, is that
no business corporate can act as isolated from broader issues of society.
According to Ogrizek (2002), CSR is all about competing beyond technology,
quality, services and price, in fact, all areas where competitive advantage
is short-lived or lacking. He defines the scope of CSR to embrace not only
charitable, philanthropy and community involvement activities but also
business practices including environment management system, human
resources policy, and strategic investment for sustainable future. Rao (2005)
asserted organizations operating with good governance in the interests of
all stakeholders, ensuring to add to company’s wealth by following the
laws and customs of the society, developing the capabilities of all in the
enterprise and particularly of the disadvantaged, sensitivity to environmental
and ecological effects of their actions, and taking some responsibility for
improving the life of the community, can be said to be following CSR
practices.
Impact-wise, CSR has been considered as one of the antecedents for
economic performance and also as a measure of proactive social responsive
view (McGee, 1998). Maignan & Farrell (2004) have conceptualized CSR

Journal of Services Research, Volume 6, Number 1 (April 2006 - September 2006)


207 Chahal, Sharma

holistically under four heads, social obligation, stakeholders obligation, ethics-


driven and managerial process, on the basis of the studies conducted by
various authors. The present paper has adopted comprehensive view of CSR
by integrating the different concepts given by various authors under five
heads, namely organization culture, human resources, products and services,
social development activities and regulatory environment.
From the comprehensive aspect, in general, CSR activities embrace
all organizational activities relating to organization and society. These
may include; operational support (undertaking operations ethically and
with integrity), employees support (safety, job security, profit sharing,
employee participation, treating employees fairly and equitably etc.),
community support (actively involved in education, health and housing
related supportive activities, co-opting activities, philanthropic activities),
product/services (product/service quality, product safety, delivery, research
and development etc.), environment support (sustaining the eco-friendly
environment, producing environment friendly products, waste management,
recycling etc.), and miscellaneous support (active participation in non-
native country development) (Rao, 2005; Sen and Bhattacharya, 2001;
Staples, 2004). Being considered as a active source of competitive
advantage, CSR can serve as a proactive business philosophy and effective
marketing tool to compete and sustain competitive advantage in the present
hyper competitive and fast changing, environment (Maignan & Ferrell,
2001; Liechtenstein, Drumwright and Braig, 2004). According to Ogrizek,
(2002) there are clear and concrete market-driven benefits and competitive
advantages for companies, which integrate their business policies with
CSR. The corporations have realized that for survival and competition in
the global hyper competitive market, they have to evolve from doing good
to doing better (Stroup & Newbert, 1987) and may be to the best in the later
future. And this, on the part of the organizations, demands them to harmonize
the expectations of the stakeholders-customers, employees, business
partners, society, environment and community to sustain growth and survive
(Chakraborty et. al., 2004). Socially responsible and awared stakeholders
(present and potential), in turn, happier to be associated with such
organizations and may expect the organization to go beyond complying
with the legislative rules and procedures and become transparent in
communication of its performance, be ethical and trustable, have strong
corporate governance procedures, be responsive to the needs and views of
its stakeholders and responsible in its actions, attitude and values in general.

Journal of Services Research, Volume 6, Number 1 (April 2006 - September 2006)


208 Implication of Corporate Social

CSR EFFECTS
The increase in CSR initiatives are being taken by companies that have
increasingly recognized CSR as a key factor to success (Liechtenstein,
Drumwright & Braig, 2004). Majority of the past researches on corporate
social performance have been basically conducted to find out the
relationship between corporate social involvement and financial performance
(Maignan & Farrell, 2001). The effects of CSR on economic performance
are found to be inconsistent in the literature (Maignan and Farrell, 2001;
Sen and Bhattacharya, 2001; Stanwick and Stanwick, 1998 and Coffey
and Fryxell, 1991). The research has also begun to focus on the effects of
CSR on employees and customers (Maignan and Farrell, 2001, Ellen, Mohr
and Webb, 2000; Brown & Dacin, 1997; Creyer & Ross, 1997; Murray
and Vogel, 1997 and Turban & Greening, 1997). Ellen, Mohr and Webb
(2000) found that consumers attitudes vary with the type of cause-related
marketing efforts taken by the retailer companies. Murray and Vogel (1997)
expressed that managers are more willing to consume from acompany
which is associated with CSR. Creyer and Ross (1997) found a positive
association between ethics and consumer choices. Because of the positive
relationship between CSR and Business performance, companies are found
to be successfully integrating public purpose marketing with their economic-
oriented marketing strategies (Handelman and Arnold, 1999’ Drumwright,
1996). The present paper, in addition to economic performance and
relationship based measures, has also included social measures to assess
the overall impact of CSR. The existing literature on CSR and its return on
social investment is found to be missing in the literature. CSR, being
considered as social investment (Ogrizek, 2002; Stroup and Newbert, 1987),
as such the cost-benefit analysis of company’s CSR efforts and their
return on investment can be measured to assess the social performance of
the organization. In addition, the Four C Methodology, comprising
construction, content, certainty and continuity, given by Lingane and Olsen
(2004) can be considered for the social investment analysis.
CONCEPTUAL FRAMEWORK
The conceptual framework for CSR proposed here comprises five
antecedents-organization culture, human resources, product/services, social

Journal of Services Research, Volume 6, Number 1 (April 2006 - September 2006)


209 Chahal, Sharma

development activities and regulatory environment. Economic, relationship


and social goals are used to analyze the impact of CSR on the specific
measures to be achieved under these goals. The profitability, sales value
and market share for economic goals; consumer satisfaction and retention,
employee satisfaction and retention, shareholders satisfaction and retention
and channel partners satisfaction and retention for the relationship measure
and lastly cost and benefit analysis of type and number of social activities
(community development, cause-related, philanthropic, environment-
supportive and co-opting activities) and social return on investment for the
social measures (Figure 1).

Organisation
Culture

Relationship
Human Measures
Resources

Products/
Services Economic CSR Brand
Performance Image Equity
Measures

Regulatory
Environment
Social COMPETITIVE
Measures ADVANTAGE

Social Development
Activities

Figure 1: Conceptual Framework of Corporate Social Responsibility


The marketing performance metrics for relationship and economic goals
have been taken from a study conducted by Anmbler, Kokkinaki and Puntoni
(2004). The hypotheses developed for the framework are discussed as
under:
Organization Culture : The organizational culture and ethical values have
assumed considerable importance in the business concerns because of
their impact on employee performance and satisfaction, sales growth, social
return on investment and corporate image (Lingane and Olsen, 2004). The
organization culture and ethics are the basic roots to the development of

Journal of Services Research, Volume 6, Number 1 (April 2006 - September 2006)


210 Implication of Corporate Social

CSR culture in the organization and are considered to be more enduring


and resistant to competitive claims than product attributes. Organization
culture is the pattern of basic assumptions that organizations uses to cope
with its problems of external adoption and internal integration (Schein,
1984). These assumptions may relate to philosophic ideologies, values,
assumptions, beliefs, expectation, attitudes, and norms that knit an
organization both internally and externally (Aswathappa, 2003). To create
socially positive culture, top management should create and encourage a
corporate culture that can internalize the social activities with the economic
activities. It is the ethical responsibility of the firms to abide by moral
values in conducting the business. Creyer & Ross (1997) found that
consumers’ preference generally exceed with degree of ethicality in the
company’s operations. CSR activities, by strengthening and communicating
organizational attributes, can increase stakeholders’ associationship with
company and per se, may contribute to the competitive advantage. Thus,
it is hypothesized that
Hypothesis 1: The degree of organization culture and ethical values has
positive impact on economic performance (profitability, market share and
sales volume); relationship performance (employees, channel members
and consumers satisfaction and retention) and social performance measures
(social return on investment (SROI).
Human Resources: Human Resources, is considered as the next significant
antecedent of CSR. The positive role of the human resources is important
for socially responsible business organizations (Bhandarker, 2003).
According to Grahame (2004), a good corporate reputation always signifies
trust in the company, creates an emotional and intellectual bond with
employees, target customers and other important stakeholders; and acts as
the source of authority and credibility for an organization’s dealing. Srinivas
(2002) stated that organizational corporate image and effectiveness could
be built and increased by systematically moulding corporate social
responsibility practices towards employees with the selected competition
strategy. The organizations without fulfilling their corporate social
responsibility toward employees are going to find increasingly difficult to
recruit and retain high caliber staff. Bell and Menguc (2002) examined
organizational citizenship behaviors as critical link between aspects of the
employees- organization relationship and customers’ perceptions of service

Journal of Services Research, Volume 6, Number 1 (April 2006 - September 2006)


211 Chahal, Sharma

quality and suggested the role of job autonomy in providing the necessary
behavioral discretion for employees to be able to perform citizenship
behaviors. Thus, to what extent the organizations satisfy its employees and
retain them to contribute maximally to organizational goals will be the
significant implications of the human resources domain of the CSR. Hence,
Hypothesis 2: Higher the degree of service to employees, better will be the
long-term relationship with employees, and higher will be orientation of
organization towards corporate social responsibility.
Product and Service : Delivering continually qualitative products and
services to the customers is valued as the key component for the sustainable
success of the business operations (Henard & Szymanski, 2001), which
demands adequate investment on research and development and market
research efforts. According to Chakraborty et al., (2004), corporate social
responsibility starts with producing quality product using fair process and
with ploughing back a substantial part of profits so that the products can be
further improved, delivered faster and produced at much lower costs. Though
no company can neglect to focus on its products and services, but
involvement of the company in community issues can help to improve the
product acceptability by making the customers and employee aware about
the role of the organization in various philanthropic, cause-related and
charitable activities. Thus, the hypothesis,
Hypothesis 3: Better the quality of product, better will be the degree of
economic outcomes. Higher will be the retention rate and higher will be
the contribution to the community services
Social Development Activities: In hyper competitive atmosphere, growth,
stability, economic existence and social orientation of an organization
strongly depends upon its ability to perform social responsibility towards
community. The philanthropic or charitable activities of a business include
voluntary contribution of the business to the society like involvement in
community development or other social programmes. Unlike these voluntary
programmes, cause-related social programmes always contribute to the
economic performance positively (Varadarajan and Menon, 1988). The
social development activities also include in its domain the co-opting and
green-environment concerned activities. Stroup & Newbert (1987) reflected
that philanthropy and social responsiveness, undertaken by corporations

Journal of Services Research, Volume 6, Number 1 (April 2006 - September 2006)


212 Implication of Corporate Social

voluntarily, consume corporate resources and as such always reduce


organizational profits but some authors argue that even these voluntary
actions are not entirely altruistic (Varadarajan & Menon, 1988). There are
some activities which have direct affect on the profit, unlike those based
on purely selfless motive (Keim, 1978). The following hypothesis is
formulated in this concern,
Hypothesis 4: The philanthropy, and other social activities (excluding
cause-related) always have low position impact on economic performance
measures but high position impact on relationship and social measures.
Regulatory Environment: Lastly, regulatory environment is considered
to be another important component of CSR. According to Carroll (1979),
legal responsibilities of organization require that all economic goals of
business organizations should be achieved within the framework of legal
requirements. Thus, the extent to which organization are obeying various
laws like COPRA, EP Act, IT Act, Labour Welfare etc. while performing
their operational functions determine the ethico-legal approach of the
organization. Higher the organization orientation towards legal requirements,
higher will be the contribution of organization towards CSR activities.
Thus, hypothesis in this regard.
Hypothesis 5: There exists direct and positive relationship between legal
regulations followed by organizations and relationship goals and corporate
image.
Overall: The research studies on the impact of CSR on business
performance have found mixed results, primarily because of inconsistent
and unsuitable corporate social performance measures (Maignan and Ferrell,
2001). The existence of positive and monotonic relationship between
performance and CSR and CSR as a source of competitive advantage has
been supported by Maignan and Farrell (2004), Sen and Bhattacharya (2001),
Clarkson, (1995), Day (1994), Graves and Waddock (1994). Being a
source of competitive advantage, CSR may be associated with overall
higher performance and brand equity. Hence it is proposed that,
Hypothesis 6: Higher the degree of integration among CSR antecedents,
higher will be the marketing performance measures, CSR image, brand
equity and competitive advantage.

Journal of Services Research, Volume 6, Number 1 (April 2006 - September 2006)


213 Chahal, Sharma

MANAGERIAL IMPLICATIONS
Corporate Social Responsibility is being considered as a marketing strategy,
which adds to the knowledge of managers and provides broader benefits to
their companies ( Liechtenstein, Drumwright and Braig, 2004) by enhancing
image and building corporate brand equity. The introspection of organization
culture, human resources capital, product/services capital and regulatory
environment can help the managers in understanding the impact of CSR in
strengthening the relationship with stakeholders, enhancing corporate
reputation and ultimately economic/ financial performance. On the contrary,
poor monitoring over CSR antecedents and their relationship with economic,
social and relationship measures or absence of CSR investment or wrong
portfolio investment in CSR can damage company’s reputation, and create
misunderstanding and wrong perceptions about the company’s offering.
Per se, the proper focus on various determinants can help in maintaining
long-term meaningful relationships with stakeholders and contribute to
building strong brand image and competitive advantage over competitors,
which is difficult to imitate (Aaker,1996). Thus, pursuing such type of
study, at local, national or global levels, could provide a roadmap for the
companies to proceed further to strengthen its image, competitive advantage
and credibility from various stakeholders’ perspective. The longitudinal
study on corporate social responsibility in the organizations will surely
contribute to a better understanding of the CSR antecedents and its outcome
and prove to be very beneficial for the organizations which wants to sustain
competitive advantage and excel in the market.
FUTURE RESEARCH
In the wake of its growing significance, pursuing research on CSR has
become essential to establish CSR framework. Though the paper contributes
to building CSR grounding but still further examination of the CSR
antecedents namely organization culture, human resources, products/
services and regulatory environment and their impacts on business
performance viz, economic, social and relationship performance measures
may be analyzed. This makes it essential for the researchers to test various
research propositions made in the paper regarding culture, products/services
and regulatory environment in different settings at various levels. Though
the relationship between corporate social performance and corporate
financial performance has received much attention, but still concrete

Journal of Services Research, Volume 6, Number 1 (April 2006 - September 2006)


214 Implication of Corporate Social

relationship between these two could not be identified (Margolis and Walsh
2003). Some researchers have considered positive relationship, some group
of researchers have linked it negatively with the business performance and
some others even have concluded absence of relationship between the two
(Dentchev, 2004). In such circumstances, the model proposed here could
strengthen the CSR conceptual framework and may provide a new path for
analyzing this relationship. Further, the other research implications is that
can CSR be considered as a marketing tool for the companies? These and
other related issues have to be resolved in the further research.
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Hardeep Chahal and Prof. R.D. Sharma are in Department of Commerce,


University of Jammu, J&K, India.

Journal of Services Research, Volume 6, Number 1 (April 2006 - September 2006)


Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.

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