How Corporate Social Responsibility Affects Consumer Behavior - Literature review Example

How Corporate Social Responsibility (CSR) affects consumer behaviour Review of related literature There are different studies which have sought to establish the impact of CSR on consumer behaviour. These studies mostly indicate the importance of CSR in terms of consumer behaviour and how it can influence their patronage of specific brands. In the market economy, business behaviour is influenced by consumer behaviour and acceptance. Instead of assessing business behaviour alone, or relinquishing the responsibility to the consumers and the market, it also seems important to assess environmental sustainability as a responsibility of both the consumers and corporations (Brinkmann, 2004). The study by Fahlquist (2008) points out that those in industrialized countries are sufficiently knowledgeable about roles in related issues. These citizens chose to function in ways which contribute to issues or their corresponding solutions. In effect, individuals have now become more morally responsible in managing their environmental issues (Fahlquist, 2008). Since such obligation mostly relates to citizenship, it has assisted in accomplishing obligations supporting elements of citizenship. Consumer citizens often functions beyond their interests as consumers and are responsible for the long-term issues beyond themselves (Varney, 2002). The highlight of consumer responsibility is for citizens considering the impact of their purchasing choices, for themselves, but also the outside world. As corporations have been prompted to apply practices relating to CSR, consumers are also responsible for applying purchase votes to ensure favourable social results (Dickinson and Carsky, 2005). Consumers have specific stages of responsibility which they also express in terms of preferences in relation to socially favourable features or more extensive CSR qualities, thereby including new products and supporting new socially effective factors for production and consumption (Vogel, 2005). Corporate actions which assess company and their social and environmental actions which exceed legal and regulatory standards are usually based on a business case where consumer views and demands impact on corporate social responsibility and sustainability resources (Barnett, 2007). Still, findings from different studies are not consistent (Margolis, et.al., 2008). Moreover, reviews of such research relating to consumer impact imply how CSR influences consumer behaviour (Bhattacharya and Sen, 2004). Although CSR has significant implications on marketing functions including advertising and branding, not much is known about the impact on consumer decision making. Studies have indicated that there is a contingent effect of CSR on consumers. Sen and Bhattacharya (2001) established how the impact of CSR data on company assessments are affected by consumer-company relations and also by the consumers’ support of the company’s CSR. Yoon and colleagues were able to identify the presence of a mediating role of company motives in terms of consumer evaluation. In the study by Wagner, et.al., (2009) they assessed the impact of unclear CSR data on consumers and determined the presence of a mediating role for what is viewed as corporate hypocrisy. As reported by Trudel and Cotte (2009), some consumers are willing to pay for specific qualities which may make some products more ethical, but only to a specific point. They are also likely to impose penalties for unethical activities to a more significant extent. Smith (2008) picks up also on this point, labelling such behaviour as negative ethical consumerism. This behaviour can also include boycotts and a refusal to purchase. Studies on boycotts indicate how participating in boycotts may be based on different elements, affected by factors including the possibility of success in boycott and the high costs for boycotts (Sen, et.al., 2001). As pointed out by Klein and Dawar (2004), a CSR halo may impact on consumer behaviour, especially those who are CSR sensitive. Such halo refers to the positive reviews which can emanate from favourable actions of corporations. This halo is often perceived in a positive light by consumers who are likely to support corporations exhibiting such ‘halo.’ As proposed by Luchs and colleagues (2007) there if a basic tradeoff between a product and its ethical qualities as well as a product’s efficacy or performance. This is consistent with the findings set out by Sen and Bhattacharya (2001) which found that consumers consider less efficacy of ethical products based on the extent to which these consumers believe ethical considerations to be significant. On the other hand, individual differences are not significantly considered in relation to consumer response, but mostly to the extent to which the halo effect is apparent within the CSR setting. The study by Smith, et.al., (2009) established that although consumers are usually considered the drivers of the business case for CSR, not much is known about the actual impact of CSR on consumers. It has been generally known that socially responsible behaviour may be subjected to a halo effect with the consumer awareness of a specific set of CSR actions affecting the beliefs on CSR performance in other areas where not much information is known. The two studies considered by Smith and colleagues (2009) indicate support for the halo effect in the environmental domain and in other domains. Their research indicates that consumers may infer about company CSR performance based on limited data. This has major implications for company CSR tools and for public policy where companies are seeking to apply the CSR halo to transform consumer views of CSR applications. The focus of CSR, specifically on the environment has increased in recent years and such focus is seen to expand with society’s growing interest on environmental issues which have emerged. In effect, more pressure is seen for corporations, including their environmental initiatives. This can be observed in the report by the European Commission in 2002 where the CSR was seen to share a close relationship with companies and societies in terms of social and environmental concerns. Researchers were focused on establishing whether CSR activities had any impact on consumers or not, and if they did, how and to what extent. Mohr and colleagues (2001) considered the link between CSR and the buying behaviour of consumers. The study found that most of the respondents were more disposed towards the socially responsible firms and therefore expected these firms to be more active in the CSR setting. Moreover, the results indicate that not many respondents did not actually base their purchase behaviour on CSR or may have done it at times, even if the CSR as a buying criterion did not have a major role in the decisions to purchase. Still, about 39% of the respondents were considering some or most of their purchasing decisions on CSR (Mohr, et.al., 2001). Becker-Olsen and Hill (2005) presented two studies which assessed perceived fit, the perceived corporate motive, and the timing of announcements on consumer responses to CSR decisions. The authors set out to assess the effect of perceived CSR on consumer behaviour. The study indicated that most of the respondents believed that firms must participate in social activities and about 75% believed that such initiatives must also benefit the corporations. Majority of the respondents indicated that they would boycott firms who did not act responsibly, especially if there were related alternatives (Becker-Olsen and Hill, 2005). Carroll (1991) discusses that it is crucial for legal responsibility to be addressed in consistent ways, alongside considerations for governments and laws supporting related federal, state, and local functions. Successful corporations must fulfil their legal responsibilities. However, as pointed out by Conchius (2006), legal functions include the importance of functioning based on by-consumer and product provisions, environmental laws, as well as employment rules while also following laws related to the competitive marketplace. Such legal responsibilities however do not cover the different behaviours required from corporations by society. Laws are very much important, however, they are often not sufficient. They cannot address the different problems which corporations may encounter. Also, laws usually fall behind in terms of recent ideals relating to correct behaviour. Laws may also present personal concerns and interests from lawmakers and politicians (Carroll, 1998). While economic and legal functions relate to ethical frameworks referring to fairness and justice, ethical responsibility covers such activities and behaviours expected or rejected by society which goes beyond the specific parameters of the laws. Ethical responsibility covers such standards and expectations which indicate a concern for consumers, employees, and the community in relation to what is fair or just and what protects stakeholders and their moral rights (Carroll, 1979). In a later study by Carroll (1991), corporate performance may be affected by a corporation’s consistent support of moral and ethical rules. Where corporations apply corporate citizenship, corporate activities would be supported. Ethical responsibility also acknowledges that corporate integrity as well as ethical practice must not be focused on what is imposed by the laws alone. It is important to consider economic, legal, and ethical functions. Where corporations function appropriately and legally, it must also be ethical. Philanthropic functions cover corporate actions which react to society and its expectations relating to good corporate citizenry. Corporate philanthropy would likely support the functions of corporations, especially those which are visible to the public (Doan, 2012). Corporate philanthropy must therefore increase the loyalty of employees and ensure consumer ties. Philanthropic behaviour covers corporate actions which relate to financial responsibilities or executive functions, including contributions to the arts, education, as well as communities. The distinguishing element between philanthropic and ethical functions is the fact that philanthropic functions do not need to be ethical or moral (Doan, 2012). Philanthropy is seen within the voluntary and discretionary setting of corporate function and has not always been related to profits or the ethical functions of the corporation (Ferrell, 2004). While society wants corporations to support philanthropy, it would be considered voluntary for the corporations (Carroll, 1991). Doan (2012) discusses that philanthropy emanates from different sources, and philanthropists declare that while philanthropy may not support direct economic benefits, it would support the company and its long-term competitive function using intangible benefits in terms of reputation and employee loyalty. Lichtenstein, et.al., (2004) pointed out that the perceived CSR of a company impacts on consumer purchasing behaviour, supporting consumer-corporation and identification. They highlight the fact that a means for the CSR functions to secure benefits for corporations seem to relate to how consumers identify with the corporation. Gupta (2002) indicates evidence which supports the belief that in case price and quality is the same, consumers would likely go for the company which has secured related CSR objectives. In effect, the consumer’s behaviour is determined by corporate actions relating to CSR. Maignan and Ferrell (2004) also discuss that there is a positive link between CSR and consumer loyalty. Based on retail values, CSR activities, including the support of non-profit causes or favourable ethical applications, can promote store loyalty and emotional attachment to store interests. As a result, there is a favourable increase in shopping at the stores, including the amount purchased (Lichtenstein, et.al., 2004). Other studies support the fact that there is a collective impact of various CSR strategies on consumer attitudes. Brown and Dacin (1997) have assessed the general impact of different CSR actions which provide support for causes and environmental actions. They have established that CSR impacts on product attitudes due to the impact on general company functions. Murray and Vogel (1997) have assessed the impact of CSR practices on consumers and their results were also the same. Mohr, et.al., (2001) also indicated similar results, mainly, that there is a significant link between CSR and consumer reactions. Sen and Bhattacharya (2001) discussed how CSR impacts significantly on the intention of consumers to purchase corporate products. Pomering and Dolnicar (2008) also discussed that consumers expect corporations to present data on what they do, and they would support corporations whish seek CSR roles and initiatives. The studies above emphasize that it is important for corporations to pattern their behaviours based on CSR requisites and roles. The link between CSR and consumer behaviour is strong as explained by these studies, with a company’s fulfilment of CSR roles and functions pointing towards a more inviting prospect for consumers. Most of the studies cover various companies featuring different products, however, there are only limited studies on the automobile industry, specifically Mercedes Benz and how the company’s CSR impacts on their consumer behaviour. References Barnett, C., Cafaro, P., & Newholm, T. (2005). Philosophy and ethical consumption. In The ethical consumer, edited by Harrison, R., Newholm, T. and Shaw, D. 11-24. Sage: London. Becker-Olsen, K. L., Cudmore, B. A. & Hill, R. P. (2006). 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