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In recent years the phenomena of corporate social responsibility have been one of
business concern and there is growing interest in exploring the links between
corporate social responsibility and customer behavior. This chapter is covering the
literature review of corporate social responsibility which includes the concept and
how customers perceive it and how it could be measured. The chapter also
demonstrates the service quality dimensions and types and what were the
relationship that found in previous studies between it and corporate social
responsibility. Finally an overall frame for customer loyalty and what were the
relationship that found in previous studies between it and the corporate social
responsibility is illustrated.
they are all about corporate responsibility toward stakeholders (El-Megharbel and
Foad, 2008).
Corporate social responsibility can be a source of good and a source of innovation,
competitive advantage and value creation for the organization. The concept of
corporate social responsibility has been approached from several perspectives by
many scholars, and researchers have adopted varying perspectives. Initially, the
concept was exclusively associated with economic aspects, understood as the
organization's obligation to maximize shareholder value. Another research flow
appears relating the concept with marketing activities with a social dimension, in
areas such as environment protection, community development, resource
conservation and philanthropic giving. According to Wood (1991) "the basic idea of
corporate social responsibility is that business and society are interwoven rather than
distinct entities" and for Mallenbaker (2005) "corporate social responsibility is about
how organizations manage the business process to produce an overall positive impact
on society" (Liu and Zhou, 2009).
The corporate social responsibility is a concept that offers organizations the
opportunity to treat the environmental and social problems as a part of their
business operations. It helps organizations to respond in a positive manner to the
present needs without compromising the ability of future generations to meet their
own needs. It turns the environmental protection that was considered as costs and
vulnerabilities source for the organizations, into a new competitiveness growth
opportunity. It's important to understand that corporate social responsibility offers
opportunities, not adding to organizations new rules or obligations (Sima, 2007).
Corporate social responsibility also referred to as pro-social corporate endeavors or
corporate social performance, has traditionally been conceptualized rather broadly as
"the managerial obligation to take action to protect and improve both the welfare of
society as a whole and the interest of organizations" (Turban and Greening, 1997).
Alternative perspectives on the role and place of organizations in the broader social
environment have engendered multiple concepts for corporate social responsibility
ranging from a purely economic one to more recently a comprehensive "proactive
social responsiveness view" that articulates organization's long-term role in a
dynamic social system (Sen and Bhattacharya, 2001).
Corporate social responsibility depends on the stakeholder theory which states that
the main purpose of any business is maximizing value for stakeholders (ElMegharbel and Foad, 2008). Corporate social responsibility should be understood as
a broad concept, particular note is the Carroll's (1979, 1999) framework, which is the
most widely accepted and used framework to explain the construct. According to this
framework, organizations have economic, legal, ethical and philanthropic obligations
towards their environment, and these four dimensions make up corporate social
responsibility (Liu and Zhou, 2009).
While corporate social responsibility provides support to worthy causes;
organizations practice it as much to increase visibility as to create social impact, and
invest heavily not only in good actions but also in communicating them. For
example, in 1999, Phillip Morris made $75 million in charitable contributions, and
then launched a $100 million campaign to publicize these charitable to increase its
visibility in the society (Vlachos et al., 2009).
The impact of business activities on people's quality of life leads to increase concerns
about corporate social responsibility. Nowadays, corporate social responsibility is
considered by individuals as an absolute necessary and has resulted in businesses
which have been expected to define their roles in society in applying social, ethical,
and legal responsibilities to their businesses (Onlaor and Rotchanakitumnuai, 2010).
Carroll's (1979, 1991) Pyramid of Corporate Responsibility (CSR four dimensions
economic, legal, ethical, and philanthropic) identifies a spectrum of obligations that
organizations have toward society. The Carroll's pyramid serves as a framework
which places primary emphasis on economic results but argues for legal, ethical and
philanthropic behavior.
In a recent conceptualization, Carroll 1998 terms the four dimensions of corporate
social responsibility as "the four faces of corporate citizenship". Economic
responsibilities pertain to the necessity for corporations to be profitable and grow.
Legal responsibilities require organizations to operate within the boundaries of laws
and national policies. Ethical responsibilities demand that organizations operate
morally, fairly, justly and obligation to follow the norms placed on them by society.
Philanthropic responsibilities oblige organizations to contribute financial and other
resources for the welfare and betterment of society and the community (Salmones
and Bosque, 2011).
According to Carroll (1979, 1991), organizations have economic, legal, ethical and
philanthropic responsibilities towards all their stakeholders, and these four
dimensions give shape to the structure of social responsibility. This framework of
Carroll (1979, 1991) has become a reference to explain responsible behavior;
however, in some studies, doubts are introduced in the inclusion of economic
matters (Maignan and Ferrell, 2001). Actually, Aupperle et al. (1985) observe that
economic dimension is inversely correlated with the remaining associations; this
result of Aupperle et al. (1985) leads them to consider the categories "concern for
society" and "concern for economic outcome". In the same way, Salmones et al.
(2005) verified that customers do not include the economic dimension in the global
construct of corporate social responsibility, and Bign et al. (2006) noticed that
economic issues are weakly correlated to corporate social responsibility practices
(Salmones and Bosque, 2011).
The Pyramid of corporate social responsibility is a total general framework. It
possesses key research constructs to develop an instrument for undertaking
empirical studies in the field of corporate social responsibility because there is still a
need for researches in this field (Tan and Komaran, 2006; Chiu and Hsu, 2010).
Corporate social responsibility was intended on some occasions to be a onedimensional variable, centered on the organization's orientation towards society and
environment. However, considering that responsible behavior includes all moral
obligations that maximize the organization's positive impact on the social
environment and minimize its negative one, it is more correct to widen the concept
and regard it as multidimensional (Salmones and Bosque, 2011).
Corporate social responsibility is a debatable issue as there are two points of view.
The first one states that the organizations have to have a specific framework for the
corporate social responsibility programs as to ensure that human resources are not
misused and to protect environment, and human rights. In this case organizations
will follow the framework of corporate social responsibility that have been decided
according to organization plans and which will lead to high profits. On the other side,
the second point of view indicates that the government has to put corporate social
responsibility in a specific framework by laws for corporate social responsibility to
organizations to follow which will make organizations not to do more than what is
required by corporate social responsibility laws. This reflects that government has to
make corporate social responsibility laws a requirement for any organization to work
and that will lead to more bureaucratic system and increasing corporate social
responsibility cost. Corporate social responsibility programs differ from one
organization to another which makes it hard to put general rules (El-Megharbel and
Foad, 2008).
products. But it is not known when, how, and for whom specific CSR initiatives work
(Sen and Bhattacharya, 2001).
Several marketing studies have found that social responsibility programs have a
significant influence on numerous customer-related outcomes (Liu et al., 2010).
Customers increasingly expect business to go beyond delivering economic outcomes
and also contribute to society's welfare and sustainability by being sociallyresponsible, and will support them if they do so (Pomering and Dolnicar, 2009).
Salmones et al. (2005) found that customer perceptions of CSR behavior can be
important and have direct consequences for their valuation of the service and
perceived service quality (PSQ). It has been shown, experimentally, that customer
knowledge of organization's CSR initiatives may lead to a higher evaluation of the
organization and a more positive evaluation of the organization's product (Vlachos et
al., 2009).
Corporate social responsibility activities can help organizations in creating strategic
benefits. For instance, CSR involvements by organizations could lead positive longterm financial impact. CSR engagements could help organizations increase sales and
market share, strengthen brand positioning, improve corporate image, attract,
motivate and retain employees, reduce operating costs and enhance appeal to
investors and financial analysts (Tan and Komaran, 2006).
In deciding how to evaluate service providers, customers may consider both
economic-oriented offerings and corporate social responsibility as important, but
may consider bad performance in economic offerings more threatening than poor
performance in CSR. Often, people continue to buy from unethical organizations
because these organizations perform well on economic-oriented offerings, rendering
corporate social responsibility information less dominant in customer decisionmaking (Vlachos et al., 2009).
Customer awareness of organization CSR actions in one domain such as recycling
will influence their perceptions of corporate social responsibility performance in
other domains which they have little or no information about them (Smith et al.,
2010).
It's difficult to measure the effect of corporate social responsibility programs on some
variables such as stock prices, market share, or return on investment and some other
variables.
The success and profitability (that any organization work to achieve them) of some
organizations depend on their reputation which in turn depends on some factors
such as protecting the environment, taking care of human resources, trust, quality,
and transparency and these factors are part of corporate social responsibility.
Wolfe and Aupperle (1991) indicated that there isn't any specific best way to measure
corporate social responsibility activities. Waddock and Graves (1997) also pointed
out how it's difficult to measure corporate social performance and assessed the
alternative methods, including forced-choice survey instruments, reputation indices
and scales, content analysis of document, behavioral and perceptional measures, and
case study. Maignan and Ferrell (2000) categorized the methods of measuring CSR
into three main approaches: expert evaluations, single-issue and multiple-issue
indicators, and surveys of managers (Turker, 2009). Although there are some
difficulties in measuring CSR, there are still some measures organizations use to
evaluate the degree of success of corporate social responsibility programs such as:
Rating indices according to CSR - these measures include DOW Jones indicator, and
the financial times stock exchange which measures to what extent organizations
follow environmental standards, human rights and stakeholders rights. Advanced
sustainable performance indices is one of the measures that is used to rank
organizations according to their corporate social responsibility activities.
Rules of practicing - this represents the standards that organizations follow to review
their performance, and this includes internal or external evaluation and whether
formal or informal. The organization could use any of the following standards for
internal evaluation:
United Nations Global Compact (UNGC) - a United Nations action to encourage
businesses worldwide to adopt sustainable and socially responsible policies, and to
report on business implementation.
Ethical Trading Initiative (ETI) - an alliance of organizations, trade unions and
voluntary organizations working in partnership to improve the working lives of
people across the globe who make or grow customer goods.
Sullivan principles - the names of two corporate codes of conduct, developed by the
African-American preacher Rev. Leon Sullivan, promoting corporate social
responsibility. Developed in 1977 to apply economic pressure on South Africa in
protest of its system of apartheid, then the principles eventually gained wide
adoption among United States-based organizations. The new and expanded