Csr and Brand Trust

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Project report on Impact of Corporate Social Responsibility on

Consumer Preference for a Brand with special reference to Classmate

brand of ITC

By

Muzamil Quadir

IV SEMESTER MBA

(11MB5105)

Guide

PROF. JULIE SUNIL

Project Report submitted to the University of Mysore in partial fulfilment of the requirements

of IV Semester MBA degree examinations2013

R I M S

Ramaiah Institute of Management Studies

#15, New BEL Road, MSRIT Post, M S Ramaiah Nagar

Bangalore560054


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Certificate from the Guide

Ramaiah Instituteof Management StudiesBangalore - 560054

CERTIFICATE

This is to certify that this Project Report on Impact of Corporate Social

Responsibility on Consumer Preference for a Brand with special reference

to Classmate brand of ITCis a bona fide study of Muzamil Quadirand carried out

under my guidance and supervision.

Place: Bangalore

Date: Prof. Julie Sunil


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Certificate from the Dean

Ramaiah Instituteof Management Studies

Bangalore - 560054

CERTIFICATE

This is to certify that this Project Report on Impact of Corporate Social


to Classmate brand of ITCis a bonafide study of MUZAMIL QUADIRand carried

while the study in the college under my guidance and supervision of Prof. Julie Sunil.

Place: Bangalore

Place: Dr.Rejimon

Thomas

DEAN


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DECLARATION

I hereby declare that this Project Report on Impact of Corporate Social


to Classmate brand of ITCsubmitted in partial fulfilment of the requirement for IVSemester MBA Degree examinations 2013 of University of Mysore through Ramaiah

Institute of Management Studies is my original work and not submitted to any other

university. This work has been done under the supervision of Prof. Julie Sunil in Ramaiah

Institute of Management Studies, Bangalore.

Place: Bangalore

Date: Signature of the Student

Muzamil Quadir

(11MB5105)


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ACKNOWLEDGEMENT

Acknowledgements are due to many persons without whose cooperation, support.

Encouragement and guidance, this dissertation would not have been carried out.

I owe a great debt of gratitude to my guide Prof. Julie Sunil for her scholarly guidance,constant help and encouragement throughout the study.

I also express my gratitude to the University of Mysore for providing me an opportunity to

do this dissertation work.

I am extremely thankful to the chairman, Department of Management, university of Mysore,

Mysore for providing an opportunity to do this work for my MBA Degree.

I also express my sincere thanks to Dr. M. R Pattabhiram, Director, Ramaiah Institute of

Management studies, for providing an opportunity to do my MBA in the Institute.

I also express my sincere thanks to Dr.Rejimon Thomas, Dean, Ramaiah Institute of

Management Studies, for providing an opportunity to do my MBA in the Institute.

I also express my sincere thanks to all faculty members and non- teaching staff of Ramaiah

Institute of Management Studies who have supported me to do this dissertation work.

I also owe my gratitude to the librarian and the staff, Ramaiah Institute of Management

Studies for helping me to get relevant literature from time to time.

I would like to express my grateful acknowledgement to those writes whose contributions are

quoted in the study as well as in the bibliography.

Place: Bangalore

Date:


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TABLE OF CONTENTS

Chapter

number

Particulars Page No.

Executive Summary 1

Introduction

Limitations of the research

2-12

13

Ch-1 Review of literature 14-32

1.1 CSR definition 141.2 Ethics and CSR 141.3 Research on CSR relationships 251.4 Stakeholders and Shareholders Relationships with CSR 26

1.5 CSR and brand trust 27

1.6 initiatives of Indian companies 31

1.7 Government initiatives to promote corporate social responsibility

among companies

29

Ch-2 Analysis and Findings 34-56

2.1 Chapter 2.1: Analysis and findings of data collected from consumers 41

Ch-3 Chapter 3: Responses of retailers 46-56

3.1 These below are the responses by retailers on rating the ITC

(CLASSMATE) as supplier.

52

3.2: Regression Analysis 57

Ch-4 Summary of findings 60

Ch-5 Recommendations and suggestions 62

Ch-6 Bibliography and Appendix 64


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LIST OF FIGURESSLNO

FIGURENO.

PARTICULARS PAGENO

1 FIG NO. 1 Ranking of brands 34

2 FIG NO. 2 Recall percentage 35

3 FIG NO. 3 Preference of classmate 35

4 FIG NO. 4 Attention towards CSR 36

5 FIG NO. 5 Premium price 36

6 FIG NO. 6 Deliberately buy Classmate 37

7 FIG NO. 7 Recommend others 37

8 FIG NO. 8 Sense of fulfilment 38

9 FIG NO. 9 Helping our country 39

10 FIG NO. 10 Giving back to society 40

11 FIG NO. 11 Advertising and publicity purposes 40

12 FIG NO. 12 Education for less privileged 41

13 FIG NO. 13 Save environment 41

14 FIG NO. 14 Public health and hygiene 42

15 FIG NO. 15 Women empowerment 42

16 FIG NO. 16 Rural development 42

17Most desired CSR

43

18 FIG NO. 17Gender

44

19 FIG NO. 18Age

44


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SL.No.

Figure noParticulars

Page no

20 FIG NO. 19Occupation

44

21 FIG NO. 20Monthly income

45

22 FIG NO. 21Educational level

45

23 RetailersFIG NO. 22 Time of association

46

24 FIG NO. 23Familiarity with ITC products

47

25 FIG NO. 24Quality

47

26 FIG NO. 25Sales performance

48

27 FIG NO. 26Promotional schemes

48

28 FIG NO. 27Rating on the basis of monthly sales

49

29 FIG NO. 28Margins

50

30 FIG NO. 29Shelf arrangement

50

31 FIG NO. 30Services

51

32 FIG NO. 31Promotion

51

33 FIG NO. 32Feeling of change in society

52

34 FIG NO. 33Interested in offering help

52

35 FIG NO. 34Sense of responsibility

53

SLNO.

Table no.Particulars

Pagenumber


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TABLES

36 FIG NO. 35Profit margins

53

37 FIG NO. 36Overall performance of scheme

54

38 FIG NO. 37Stake in the scheme

55

39 FIG NO. 38Awareness among consumers

56

40 FIG NO. 39Readiness to pay

59

SLNO

TABLENO

PARTICULARS PAGENO

1 Table-1 Model summary 57

2 Table-2 Coefficients 58

3 Table-3 ANOVA 58


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EXECUTIVE SUMMARY

This project is mainly focused on studying the consumer preference of Classmate stationery

by analyzing and studying the behavior of consumers towards the CSR initiatives undertaken

by companies. The other main purpose is to study the factors which are most important in

determination of a consumers preference of Classmate stationery. In this project various

factors were determined to study the preference of consumers and various quantitative tools

were used to study the same thoroughly.

Since CSR has really become one of the most discussed and debated topic, the present

research is aimed to explain whether the CSR initiatives taken up by companies help them in

securing consumer preference keeping in view the interests of all stakeholders. Earlier

researches identified that corporate social responsibility (CSR) has had a positive impact on

consumer behavior, but even so little was known about these effects. The present research

investigates the relationship between CSR and consumer preference, as well as the variables

that best represent CSR. The research also looks into the matter of charging premium price

for products and the consumers response towards the same.

The study was conducted by administering two questionnaires for consumers and retailers

separately. The questionnaire for consumers was circulated online and a paper questionnaire

was administered for retailers. The sampling method considered in this research is non-

probabilistic sampling viz. convenience sampling and the sample size is 100 and 30 of

consumers and retailers respectively. The respondents are from all walks of life including

students and employees. The data collected was first tabulated and presented in excel and

then SPSS data viewer was used to analyze it. The data was analyzed using regression

analysis. As per the findings collected and analyzed the CSR initiatives are taken quite

seriously and positively by consumers and it does influence in shaping their preference

towards a particular brand. Overall this study explores the linkages between CSR and

consumer preference. This study provides a foundation for further research and identifies

several important implications for the leaders of organizations to consider in terms of CSR

investment and the effects on brands within their portfolio. This positive reaction should

create a positive effect towards brand feelings and trust, for consumers of products and

services of companies that engage in CSR activities.


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INTRODUCTION


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COMPANY PROFILE

ITC is one of India's foremost private sector companies with a market capitalisation of nearly

US $ 14 billion and a turnover of over US $ 5 billion. ITC is rated among the World's Best

Big Companies, Asia's 'Fab 50' and the World's Most Reputable Companies by Forbes

magazine, among India's Most Respected Companies by Business World and among India's

Most Valuable Companies by Business Today. ITC ranks among India's `10 Most Valuable

(Company) Brands', in a study conducted by Brand Finance and published by the Economic

Times. ITC also ranks among Asia's 50 best performing companies compiled by Business

Week.

ITC has a diversified presence in Cigarettes, Hotels, Paperboards & Specialty Papers,

Packaging, Agri-Business, Packaged Foods & Confectionery, Information Technology,

Branded Apparel, Personal Care, Stationery, Safety Matches and other FMCG products.

While ITC is an outstanding market leader in its traditional businesses of Cigarettes, Hotels,

Paperboards, Packaging and Agri-Exports, it is rapidly gaining market share even in its

nascent businesses of Packaged Foods & Confectionery, Branded Apparel, Personal Care and

Stationery.

As one of India's most valuable and respected corporations, ITC is widely perceived to be

dedicatedly nation-oriented. Chairman Y C Deveshwar calls this source of inspiration "a

commitment beyond the market". In his own words: "ITC believes that its aspiration to create

enduring value for the nation provides the motive force to sustain growing shareholder value.

ITC practices this philosophy by not only driving each of its businesses towards international

competitiveness but by also consciously contributing to enhancing the competitiveness of the

larger value chain of which it is a part."

ITC's diversified status originates from its corporate strategy aimed at creating multiple

drivers of growth anchored on its time-tested core competencies: unmatched distribution

reach, superior brand-building capabilities, effective supply chain management and

acknowledged service skills in hoteliering. Over time, the strategic forays into new

businesses are expected to garner a significant share of these emerging high-growth markets

in India.

ITC's Agri-Business is one of India's largest exporters of agricultural products. ITC is one ofthe country's biggest foreign exchange earners (US $ 3.2 billion in the last decade). The

Company's 'e-Choupal' initiative is enabling Indian agriculture significantly enhance its

competitiveness by empowering Indian farmers through the power of the Internet. This

transformational strategy, which has already become the subject matter of a case study at

Harvard Business School, is expected to progressively create for ITC a huge rural

distribution infrastructure, significantly enhancing the Company's marketing reach.


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ITC's wholly owned Information Technology subsidiary, ITC InfoTech India Limited, is

aggressively pursuing emerging opportunities in providing end-to-end IT solutions, including

e-enabled services and business process outsourcing.

ITC's production facilities and hotels have won numerous national and international awards

for quality, productivity, safety and environment management systems. ITC was the first

company in India to voluntarily seek a corporate governance rating.

ITC employs over 25,000 people at more than 60 locations across India. The Company

continuously endeavours to enhance its wealth generating capabilities in a globalising

environment to consistently reward more than 3, 60,000 shareholders, fulfil the aspirations of

its stakeholders and meet societal expectations. This over-arching vision of the company is

expressively captured in its corporate positioning statement: "Enduring Value. For the nation

For the Shareholder."

History

ITC was incorporated on August 24, 1910 under the name of 'Imperial Tobacco Company ofIndia Limited'. Its beginnings were humble. A leased office on Radha Bazar Lane, Kolkata,

was the centre of the Company's existence. The Company celebrated its 16th birthday on

August 24, 1926, by purchasing the plot of land situated at 37, Chowringhee, (now renamed

J.L. Nehru Road) Kolkata, for the sum of Rs 310,000. This decision of the Company was

historic in more ways than one. It was to mark the beginning of a long and eventful journey

into India's future. The Company's headquarter building, 'Virginia House', which came up on

that plot of land two years later, would go on to become one of Kolkata's most venerated

landmarks. The Company's ownership progressively Indianised, and the name of the

Company was changed to I.T.C. Limited in 1974. In recognition of the Company's multi-

business portfolio encompassing a wide range of businesses - Cigarettes & Tobacco, Hotels,

Information Technology, Packaging, Paperboards & Specialty Papers, Agri-Exports, Foods,

Lifestyle Retailing and Greeting Gifting & Stationery - the full stops in the Company's name

were removed effective September 18, 2001. The Company now stands rechristened 'ITC

Limited'.

Though the first six decades of the Company's existence were primarily devoted to the

growth and consolidation of the Cigarettes and Leaf Tobacco businesses, the Seventies

witnessed the beginnings of a corporate transformation that would usher in momentous

changes in the life of the Company.

ITC's Packaging & Printing Business was set up in 1925 as a strategic backward integration

for ITC's Cigarettes business. It is today India's most sophisticated packaging house.

In 1975 the Company launched its Hotels business with the acquisition of a hotel in Chennai

which was rechristened 'ITC-Welcomgroup Hotel Chola'. The objective of ITC's entry into

the hotels business was rooted in the concept of creating value for the nation. ITC chose the

hotels business for its potential to earn high levels of foreign exchange, create tourism


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infrastructure and generate large scale direct and indirect employment. Since then ITC's

Hotels business has grown to occupy a position of leadership, with over 100 owned and

managed properties spread across India.

In 1979, ITC entered the Paperboards business by promoting ITC Bhadrachalam Paperboards

Limited, which today has become the market leader in India. Bhadrachalam Paperboards

amalgamated with the Company effective March 13, 2002 and became a Division of theCompany, Bhadrachalam Paperboards Division. In November 2002, this division merged

with the Company's Tribeni Tissues Division to form the Paperboards & Specialty Papers

Division. ITC's paperboards' technology, productivity, quality and manufacturing processes

are comparable to the best in the world. It has also made an immense contribution to the

development of Sarapaka, an economically backward area in the state of Andhra Pradesh. It

is directly involved in education, environmental protection and community development. In

2004, ITC acquired the paperboard manufacturing facility of BILT Industrial Packaging Co.

Ltd (BIPCO), near Coimbatore, Tamil Nadu. The Kovai Unit allows ITC to improve

Customer service with reduced lead time and a wider product range.

In 1985, ITC set up Surya Tobacco Co. in Nepal as an Indo-Nepal and British joint venture.

Since inception, its shares have been held by ITC, British American Tobacco and various

independent shareholders in Nepal. In August 2002, Surya Tobacco became a subsidiary of

ITC Limited and its name was changed to Surya Nepal Private Limited (Surya Nepal).

In 1990, ITC acquired Tribeni Tissues Limited, a Specialty paper manufacturing company

and a major supplier of tissue paper to the cigarette industry. The merged entity was named

the Tribeni Tissues Division (TTD). To harness strategic and operational synergies, TTD was

merged with the Bhadrachalam Paperboards Division to form the Paperboards & Specialty

Papers Division in November 2002.

Also in 1990, leveraging its agri-sourcing competency, ITC set up the Agri Business

Division for export of agri-commodities. The Division is today one of India's largest

exporters. ITC's unique and now widely acknowledged e-Choupal initiative began in 2000

with soya farmers in Madhya Pradesh. Now it extends to 10 states covering over 4 million

farmers. ITC's first rural mall, christened 'Choupal Saagar' was inaugurated in August 2004

at Sehore. On the rural retail front, 24 'Choupal Saagars' are now operatonal in the 3 states of

Madhya Pradesh, Maharashtra and Uttar Pradesh.

In 2000, ITC launched a line of high quality greeting cards under the brand name

'Expressions'. In 2002, the product range was enlarged with the introduction of Giftwrappers, Autograph books and Slam books. In the same year, ITC also launched

'Expressions Matrubhasha', a vernacular range of greeting cards in eight languages and

'Expressions Paperkraft', a range of premium stationery products. In 2003, the company

rolled out 'Classmate', a range of notebooks in the school stationery segment.

ITC also entered the Lifestyle Retailing business with the Wills Sport range of international

quality relaxed wear for men and women in 2000. The Wills Lifestyle chain of exclusive


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stores later expanded its range to include Wills Classic formal wear (2002) and Wills

Clublife evening wear (2003). ITC also initiated a foray into the popular segment with its

men's wear brand, John Players, in 2002. In 2006, Wills Lifestyle became title partner of the

country's most premier fashion event - Wills Lifestyle India Fashion Week - that has gained

recognition from buyers and retailers as the single largest B-2-B platform for the Fashion

Design industry. To mark the occasion, ITC launched a special 'Celebration Series', taking

the event forward to consumers. In 2007, the Company introduced 'Miss Players'- a fashion

brand in the popular segment for the young woman.

In 2000, ITC spun off its information technology business into a wholly owned subsidiary,

ITC Infotech India Limited, to more aggressively pursue emerging opportunities in this area.

Today ITC Infotech is one of Indias fastest growing global IT and IT-enabled services

companies and has established itself as a key player in offshore outsourcing, providing

outsourced IT solutions and services to leading global customers across key focus verticals -

Manufacturing, BFSI (Banking, Financial Services & Insurance), CPG&R (Consumer

Packaged Goods & Retail), THT (Travel, Hospitality and Transportation) and Media &

Entertainment.

ITC's foray into the Foods business is an outstanding example of successfully blending

multiple internal competencies to create a new driver of business growth. It began in August

2001 with the introduction of 'Kitchens of India' ready-to-eat Indian gourmet dishes. In 2002,

ITC entered the confectionery and staples segments with the launch of the brands mint-o and

Candyman confectionery and Aashirvaad atta (wheat flour). 2003 witnessed the introduction

of Sunfeast as the Company entered the biscuits segment. ITC's entered the fast growing

branded snacks category with Bingo! in 2007. In just seven years, the Foods business has

grown to a significant size with over 200 differentiated products under six distinctive brands,

with an enviable distribution reach, a rapidly growing market share and a solid market

standing.

In 2002, ITC's philosophy of contributing to enhancing the competitiveness of the entire

value chain found yet another expression in the Safety Matches initiative. ITC now markets

popular safety matches brands like iKno, Mangaldeep, Aim, Aim Mega and Aim Metro.

ITC's foray into the marketing of Agarbattis (incense sticks) in 2003 marked the

manifestation of its partnership with the cottage sector. ITC's popular agarbattis brands

include Spriha and Mangaldeep across a range of fragrances like Rose, Jasmine, Bouquet,

Sandalwood, Madhur, Sambrani and Nagchampa. ITC introduced Essenza Di Wills, anexclusive range of fine fragrances and bath & body care products for men and women in July

2005. Inizio, the signature range under Essenza Di Wills provides a comprehensive grooming

regimen with distinct lines for men (Inizio Homme) and women (Inizio Femme). Continuing

with its tradition of bringing world class products to Indian consumers the Company

launched 'Fiama Di Wills', a premium range of Shampoos, Shower Gels and Soaps in

September, October and December 2007 respectively. The Company also launched the

'Superia' range of Soaps and Shampoos in the mass-market segment at select markets in


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October 2007 and Vivel De Wills & Vivel range of soaps in February and Vivel range of

shampoos in June 2008.

Meaning of Name

ITC stands for Imperial Tobacco Company initially when it was incorporated for the 1 st

time in 1924. Later on the name has been changed to Indian Tobacco Limited in 1974.

After that, in recognition of the Company's multi-business portfolio encompassing a wide

range of businesses - Cigarettes & Tobacco, Hotels, Information Technology, Packaging,

Paperboards & Specialty Papers, Agri-Exports, Foods, Lifestyle Retailing and Greeting

Gifting & Stationery - the full stops in the Company's name were removed effective

September 18, 2001. The Company now stands rechristened 'ITC Limited'. There is no

specific meaning of ITC name is given on their website. But what I think is that it is the name

given to the company to signify the operation of the company. Since ITC started its business

in tobacco industry, they have chosen the name to demonstrate their nature of business and

what exactly what they want to perform.

Evolution of Name

ITC was incorporated on August 24, 1910 under the name of 'Imperial Tobacco Company of

India Limited'. ITC had a humble beginning and in the initial days it used to operate from a

leased office on Radha Bazar Lane, Kolkata. On its 16th birthday on August 24, 1926, ITC

purchased the plot of land situated at 37, Chowringhee, (now renamed J.L. Nehru Road)

Kolkata. Two years later company's headquarter building, 'Virginia House' came on that plot.

Progressively the ownership of the company Indianised, and the name of the Company was

changed to I.T.C. Limited in 1974. In recognition of the Company's multi-business portfolio

encompassing a wide range of businesses, the full stops in the Company's name were

removed effective September 18, 2001 and the Company was rechristened as 'ITC Limited'.

Since the present research is based on the educational and stationery offering the profile of

the same is given as below:

Education & Stationary products

ITC made its entry into the stationery business in the year 2002 with its premium

range of notebooks, followed in the year 2003 with the more popular range to augment its

offering.

Today, ITC continues to blend its core capabilities to market a growing range of

education and stationery products. These capabilities include,

a. Manufacturer of Indias first Ozone treated environment friendly Elemental Chlorine

Free (ECF) pulp, paper an

d paperboard.


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b. Knowledge of image processing, printing & conversion garnered from its Packaging

& Printing Business.

c. Brand Building & Trade Marketing & Distribution strengths resident in its FMCG

Business.

ITCs stationery Brands are marketed as Classmate and Paperkraft, with

Classmate addressing the needs of students and Paperkraft targeted towards college students

and executives.

Classmate - Indias truly largest National brand, reaching 65,000 outlets across the

country, has over 300 variants in its range which comprises notebooks, long books, practical

books, drawing books, scrap books, reminder pads etc.

The Classmate Fun N Learn range of children books targeting pre school learners,

comprising categories like Pre School Learner, Active Minds and Read Aloud Tales with

features like Wipe n Use again, Trace & Color and Puzzles ensure that a child's first lessons

are truly enjoyable.

Classmate Invento Geometry Boxes, launched for school students comprise a world-

class precision compass and high quality plastic instruments coupled with interesting trivia

and useful information, to make geometry more fascinating for students.

Aesthetically designed, Classmate pens offer the consumer a smoother and more

comfortable writing experience through use of ergonomic design, reducing the effort required

for writing. The initial launch comprises ball pens - Classmate Safari and Classmate Ilet - and

gel pens - Classmate Glider and Classmate Octane.

A new entry to the Classmate portfolio is its range of HB Jet Black pencils. Designed

attractively for school kids, the pencils offer a unique advantage of lesser lead wear out and

thus, Stay Sharper for Longer.

The Classmate Notebook range builds in regional preferences and caters to the

requirements of All India & State Education Boards. Every Classmate notebook carries ITC's

Corporate Social Responsibility message on its back. For every four Classmate Notebooks,

ITC contributes Re. 1 to its rural development initiative that supports, among other projects,

primary education in villages.

Classmate has successfully run the Classmate Young Author & Artist Contest for 5years. The contest is a national level event going across 34 cities and getting participation

from 5000 schools.

The Paperkraft brand recently launched premium business paper an environment

friendly multipurpose paper for office and home use. The paper has been crafted by ITCs

Bhadrachalam unit using a pioneering technology, called Ozone Treated Elemental Chlorine


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PURPOSE OF THE RESEARCH

Corporate Social Responsibility is understood as the obligation of decision-makers to take

actions that protect and improve the welfare of society as a whole along with their own

interests. Every decision the business person makes and every action he or she contemplates

has social and business implications. It is debatable whether the CSR initiatives really help to

achieve the company goals. It has become a very common practice for the companies. In

most cases, CSR activities aim at reducing negative externalities, such as pollutant emissions

or the variability of farmers' income. In some cases, positive externalities are produced, as in

the financing of technological transfers to local farming communities, or school building.

CSR has increasingly become an important concept in public policies, corporate

communication and management sciences, which have used various conceptual framework to

examine consumer demand for CSR (see, inter alia, Carrigan and Attalla, 2001; Mohr et al.,

2001; Sen and Bhattacharya, 2001; Chatzidakis et al., 2007; Valor, 2008). Consumers'

responses to CSR have been less carefully analysed in economics, perhaps because there is

wide gap between positive attitudes toward social responsibility and actual purchase

behaviours. Opinion surveys reveal that there is a growing interest of consumers in the use of

socially responsible technologies by companies (Doane, 2001). According to MORI (2000),

70 per cent of European consumers declare that they are willing to pay more for a product.

AIM

Is CSR a fruitful activity keeping in view the interests of all stakeholders especially in and

how it benefits the ultimate owner?

OBJECTIVES

To study the methods by which companies communicate their CSR to the public and how

well does that help in the consumers recall of the brand at the time of purchase.

RESEARCH QUESTIONS

Do the CSR initiatives and efforts taken by companies translate into the preference of the

brand over the other brands not doing CSR?


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RESEARCH METHODOLOGY

Research Design:The descriptive research design is followed in the current research because the study

aims to study the relationship of CSR and consumer behaviour in preference of a

particular brand.

Descriptive research, also known as statistical research, describes data and characteristics

about the population or phenomenon being studied. However, it does not answer

questions about e.g.: how/when/why the characteristics occurred, which is done under

analytic research. Although the data description is factual, accurate and systematic, the

research cannot describe what caused a situation. Thus, Descriptive research cannot be

used to create a causal relationship, where one variable affects another. In other words,

descriptive research can be said to have a low requirement for internal validity.

The description is used for frequencies, averages and other statistical calculations. Often

the best approach, prior to writing descriptive research, is to conduct a survey

investigation. Qualitative research often has the aim of description and researchers may

follow-up with examinations of why the observations exist and what the implications of

the findings are.

Hypotheses H0: There is no relationship between the CSR and consumer preference

H1: There exists a positive relationship between the CSR and consumer preference.

H0: There is no relationship between the CSR and the willingness to pay a premium

price.

H1: There exists a positive relationship between CSR and the willingness to pay a

premium price


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Sampling Plan: Sampling unit: Consumers, Retailers Sample size: 100 consumers, 30 retailers Non-probabilistic sampling i.e.; convenience sampling

Sampling is the use of a subset of the population to represent the whole population.

Probability sampling, or random sampling, is a sampling technique in which the probability

of getting any particular sample may be calculated. Nonprobability sampling does not meet

this criterion and should be used with caution. Nonprobability sampling techniques cannot be

used to infer from the sample to the general population. Any generalizations obtained from a

nonprobability sample must be filtered through one's knowledge of the topic being studied.

Performing nonprobability sampling can be considerably less expensive than doing

probability sampling. However, the results of studies conducted using nonprobability

sampling are of extremely limited value.

Convenience, Haphazard or Accidental sampling - members of the population are chosen

based on their relative ease of access. To sample friends, co-workers, or shoppers at a single

mall, are all examples of convenience sampling. Such samples are biased because researchers

may unconsciously approach some kinds of respondents and avoid others (Lucas 2012), and

respondents who volunteer for a study may differ in unknown but important ways from

others

Data collection:Primary Data: This research has been conducted by administering two structured

questionnaires online as well as offline for retailers and consumers separately. A total

of more than 130 questionnaires were distributed. There were separate questionnaires

for consumers and retailers; the consumers questionnaire was circulated online

through websites like Facebook, Gmail and Linked In and the questionnaire for

retailers was directly filled in person, total of 30 questionnaires were circulated

among retailers.

Data Analysis: SPSS and MS Excel

Regression analysis: A body of statistical techniques in which the form of the relationship

between a dependent variable and one or more independent variables is established so that

knowledge of the values of the independent variables enables prediction of the value of the

dependent variable or likelihood of the occurrence of an event if the dependent variable is

categorical. Regression analysis is a method by which quantitative social science seeks to


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establish how things are caused. The objectives are both scientific description and prediction.

If we know the form of the relationship between things we have measured and know to be

causal to something else, then we can predict the value of the caused thing.

The dependent variable in this research is Consumer preference and independent variables

are many which affect the consumer preference of consumers.


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LIMITATIONS OF THE PROJECT STUDY

Since the topic corporate social responsibility is one of the most discussed topics in the

modern day business, it has drawn attention from all the stakeholders including

consumers. Consumers are also building consciousness towards the same. Since the

present research has been conducted to study the topic impact of CSR on the consumer

preference though the research has been conducted quite rigorously but still like the rule

says every research has some limitations to which a researcher cant attend to due to the

inherent limitations in the research process. The present research suffers from following

limitations:

Small sample size: The sample size of the present research is 100 which is quitesmall keeping in view the scope of Corporate Social Responsibility and its impact

on the society, it would have been prudential to involve the beneficiaries of the

scheme but due to constraints of time and finance it was subject to confinement.

Composition of sample: The sample is composed of good number of educatedpeople who are quite conscious of the positive or negative measures of the

companies. In addition to that almost none of the minor students has found a place

in sample which also would have been quite useful in understanding the behavior

of children towards the scheme, because they are also the direct customers of the

Classmate products.

Method of sampling: Convenience sampling though quite useful but suffers frommany limitations that limit the equal chance of every individual being selected in

the sample. Since the sampling frame is not known, and the sample is not chosen

at random, the inherent bias in convenience sampling arises that the sample is

unlikely to be representative of the population being studied. This undermines our

ability to make generalizations from the sample to the population we are studying.

CSR being a social initiative, it is supported by every individual on paper: Thebias arises from the human nature which is people tend to support causes on paper

but when action is to be taken only a few prove to be pragmatic.

Online data collection: Though the online data collection is convenient and costeffective method, it limits the interaction of respondents with the enumerator.


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CHAPTER 1: LITERATURE REVIEW

1.1CSR Definition

CSR is the concept of organizations promoting, participating and initiating social programs

in order to address an issue or concern in the wider community. A broad definition, including

multiple dimensions such as philanthropy and stakeholders, is favoured by academics (De

Los Salmones et al., 2005; Godfrey & Hatch, 2006; Piercy & Lane, 2009). The definition of

CSR has developed over time from the 1950s to the present. Literature from the 1980s

onwards presents fewer set definitions and further research into CSR (Carroll, 1999).

1.2Ethics and CSR

Ethical decision making in leadership and in regards to the environment is an important partof CSR. Agatiello (2009) states ethics is made up of role, responsibilities and interactions

between people. However, the foundations of each of these principles are different depending

on the practice and the person (Frederiksen, 2010). Sharp and Zaidman (2009) suggest that

CSR decisions can be divided into two groups, from an ethical and moral basis or from a

business orientation. Although, Quairel-Lanoizelee (2011) propose demand for virtue is

weak in the business world but the expectation for ethical and responsible company behavior

is still strong.

Agatiello (2009) advise there needs to be a rigid structure for making ethical decisions for

environmental strategy. Similarly, Sharp and Zaidman (2009) conclude that CSR decisions

need to be governed by strict rules. Ethical decisions are now valued as major responsibilities

for corporations and these corporations have a duty to environmental conservation.

Frederiksen (2010) discussed the moral frameworks for ethical decisions and concluded that

utilitarianism would dictate the best CSR action; this creates the most happiness for majority

of stakeholders. Bansel and Roth (2000) support the idea of involving stakeholders in

important decisions. Duarte (2010) concludes the creation of an organizational identity that

supports ethical decision making can help mould a culture that supports CSR activities by

highlighting sustainability, environment, ethics and transparency.

Creyer and Ross (1997) advocate that the behaviours a company engages in can affect the

way the consumer views a product, consumers may even be more willing to reward good


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ethical behaviour by actions such as paying a higher price for a product. However, Carrigan

and Attalla (2001) suggest stating ethical firm behaviour will be rewarded with purchase

intention is neither straightforward nor simple.

Creyer and Ross (1997) discovered if consumers perceive no difference between companies

offering a similar product, it may be the marketing manager promoting the ethics of the firm

that sways the purchase decision. CSR by definition is an ethical behaviour, but the actual

definitions of ethical and unethical need to be determined. Carrigan and Attalla (2001)

suggest consumers are more informed in this modern age and may have less sympathy with

causes they feel they can not relate to. However, Ardvisson (2010) discovered businesses

fundamentally engage in CSR activities and communication to avoid negative impacts rather

than proactively wanting to help society. The reactive response directly influences corporate

reputation and brand building.

CSR has increasingly become an important concept in public policies, corporate

communication and management sciences, which have used various conceptual framework to

examine consumer demand for CSR (see, inter alia, The spectrum of activities covered by

CSR is likely to be large, as social responsibility requires that attention be paid to many

stakeholders, including the companys stock holders, its suppliers, its employees, its

customers, and all individuals and communities that may be affected by its decisions. This is

reminiscent of considerations of externalities associated to private actions in publiceconomics. In most cases, CSR activities aim at reducing negative externalities, such as

pollutant emissions or the variability of farmers' income. In some cases, positive externalities

are produced, as in the financing of technological transfers to local farming communities, or

school building. Hence, from a neo-classical point of view, favouring the development of

CSR has three key advantages. It may help to solve some market imperfections, such as the

externalities generated by market activities. It may increase the local provision of public

goods in an efficient, decentralized, manner. A priori, state intervention is kept at a

minimum, and so are market distortions.

Carrigan and Attalla, 2001; Mohr et al., 2001; Sen and Bhattacharya, 2001; Chatzidakis et

al., 2007; Valor, 2008). Consumers' responses to CSR have been less carefully analyzed in

economics, perhaps because there is wide gap between positive attitudes toward social

responsibility and actual purchase behaviors. Opinion surveys reveal that there is a growing


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interest of consumers in the use of socially responsible technologies by companies (Doane,

2001). According to MORI (2000), 70 per cent of European consumers declare that they are

willing to pay more for a product which they perceive as ethically superior and 66 per cent

declare that a CSR claim has triggered a purchase at least once in the past year. From the

economists point of view, CSR products are both private goods and public goods. Their

consumption produces some private hedonic benefits, but consumers can also derive utility

from knowing that the firm is committed to care for the well-being of their suppliers and their

employees or for the environment, i.e., that it produces some public good alongside the

product supply chain ( Hines and Ames, 2000). Yet, market shares remain quite low: French

consumers and U.S. consumers spent only 1.71 Euro and 1.14 Euros respectively per year on

purchases of fair-trade products in 2005, as against 19.02 Euros for the Swiss or 4.62 Euros

for the British (Poret, 2007). It complements marketing- and psychology-based insights into

this question, by focusing on the two main economic barriers to CSR consumption: (i) the

consumers subjective valuation of CSR, and (ii) the information asymmetry between

companies and consumers. Understanding and breaking down these barriers is a key issue,

because companies involvement into social responsibility is partly determined by the

prospect of not losing profits or expanding market opportunities.

In this perspective, we show that the development of CSR may be favored by appropriate

consumer policies. From the economists point of view, CSR products are both private

goods and public goods. Their consumption produces some private hedonic benefits, butconsumers can also derive utility from knowing that the firm is committed to care for the

well-being of their suppliers and their employees or for the environment, i.e., that it produces

some public good alongside the product supply chain ( Besley and Ghatak, 2007). Whether

the consumption of CSR products leads to additional welfare gains for consumers, as

compared to standard products, depends on two conditions. First, consumers must grant some

value to the public good aspect of their purchase. Second, they must be well informed about

the quantity of public good that has been incorporated into the product during the production

process.

The decision to purchase a CSR product is primarily determined by the consumer's

willingness-to-pay (WTP) for CSR. The WTP is a monetary measure of his/her preference

for this product attribute. It depends on two parameters of her utility function: the marginal

utility of income and the marginal utility of CSR. The latter is determined by her social


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preferences, which refers to her propensity to internalize the effect of her own actions on

others welfare. We first show how social preferences are revealed by econ omic experiments

using actual monetary incentives. This literature suggests a first explanation for the attitude-

behaviour gap: most (if not all) measures of attitudes toward ethical consumption are not

incentive compatible. We then trace social preferences back to three important motives:

altruism, self-image and social image. Self-image concerns are important for those

individuals Self-image concerns are important for those individuals who want to reassure

themselves that they are good people by contributing to the provision of public good. Social

image concerns may also drive the choice of CSR products, when their consumption is a

means of buying social prestige or of avoiding social stigma (Bnabou and Tirole, 2010). We

present empirical evidence that, in addition to pure altruism and self-image, social-image

concerns strongly affect individuals generosity, which should be more intensively used in

the private and social marketing of ethical products. Last, following the recent advances in

the economics of personality psychology, we relate social preferences to some personality

traits. For psychologists, personality traits are "relatively enduring patterns of thoughts,

feelings, and behaviours that reflect the tendency to respond in certain ways under certain

circumstances" (Roberts cited in Almlund et al., 2011). Interestingly, some traits have been

linked to the individual propensity to donate to charities or to engage in social activities. As

personality traits have been shown to be sensitive to interventions, especially during early

childhood, education is a means of favouring the consumption of ethical products (Borghanset al., 2008). However, well-developed social preferences will not translate into actual

purchase decisions for consumers with a high marginal utility of income, i.e. for the less

well-off, as the latter reduces their WTP.

In addition, a high WTP for CSR products will lead to a purchase only if consumers have

accurate information about who has made the product, and how it has been made. That the

production process followed socially responsible procedures is largely a credence attribute:

its presence cannot be verified by a careful and low-cost pre-purchase inspection, as it would

be the case for a search attribute, or by the repetition of consumption experiences. This

raises problems of information asymmetry between consumers and firms, and the latter are

likely to develop strategic behaviors on the supply side of the market. Since consumers with

well-developed social preferences are often willing to pay more for a CSR product,

unsubstantiated claims may proliferate and cause adverse selection, whereby consumers are


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not able to distinguish the true from the false CSR products. As a consequence, since

producing the former is generally more expensive, the true CSR products will be selected out

of the market (as in the market for lemons described by Akerlof, 1970). Labeling is a

natural solution to adverse selection. A key distinction between simple communication (the

so-called green washing) and labeling is that the latter requires a reputable certification

agent whom consumers can trust (Caswell and Mojduszka, 1996). Labels transform credence

attributes into search attributes. They favor the emergence of a separating market

equilibrium, whereby consumers with social preferences are matched with CSR-firms, and

consumers without social preferences are matched with non-CSR firms. Although the

literature on labels is mainly theoretical, we present some recent empirical results from

laboratory experiments that evaluate the effect of labels on consumers under different label

regulation rules. Last, we point several limits to the use of labels, which essentially relate to

biases in the consumers perception and treatment of information. This suggests that the

proliferation of labels should be avoided, and that labels should be unified and carefully

regulated by public authorities The reminder of the paper is organized as follows. Section 2

focuses on consumers social preferences. Section 3 analyzes the information issue, and the

role of labels. Section 4 concludes on the role of consumer policies in the development of

CSR.

The objective of reviewing germinal works on CSR, CA, and CnSR is to obtain a deep and

broad understanding of the concepts and their relationships. The following sections include aliterature review related to the independent variables and then the dependent variable.

I ndependent Var iable: Corporate Social Responsibi li ty

In its evolution, the concept of CSR passed through several stages. Starting with the

chronological classification developed by Schwalb and Garca (2003) and integrating new

concepts from the literature, it is possible to identify the following stages: germinal,

emergent, development, and generalization and audit.

Germinal stage.The germinal stage started during the last decades of the 19 thcentury, and an

entrepreneurial spirit and the laissez-faire philosophy characterized this stage. During this

stage, the terms corporate philanthropy and welfare capitalism emerged. This last concept

became the name of the system in which companies provided extensive community facilities


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and company programs for their workers (Jacoby, 1997). Little direct regulation of business

occurred during this period.

Emergent stage. The second stage began with the Great Depression and a focus on

managerial values and principles. This was a normative and ethical philosophical period. The

emergence of the formal concept of corporate social responsibility (CSR1) characterized this

stage. Bowen (1953) defined CSR as comprising the obligations of businessmen to pursue

those policies, to make those decisions, or to follow those lines of action which are desirable

in terms of the objectives and values of our society (as cited in Wolff & Barth, 2005, p. 6).

Bowen clearly emphasized the ethical considerations over the economic ones.

Development stage. This stage started in the 1960s. The attention shifted away from

theorizing about what was good for society to analysing which demands on business society

put forward. The focus was the processes that ensure the capacity of a firm to respond to its

environment. This stage had an action-oriented managerial inclination. Social activism and

the rise of consumerism; increasing public awareness of environmental and ethical issues;

and increasing pressure from environmentalists, consumer advocates, feminists, young

people, and civil rights movements characterized this period. During this stage and in the late

1970s, Carroll (1979), working on the founding concept of Bowen (1953), developed a more

structured analysis and formulated a four-part definition of CSR, suggesting that companies

have four responsibilities: economic, legal, ethical, and philanthropic (or altruistic or

humanitarian). Between 1970 and 1990 and parallel to the development of CSR, otherconcepts began to appear, often tied to environmental subjects such as sustainable

development and sustainability. The emergence and evolution of the principles of sustainable

development have had an important impact on the concept of CSR, resulting in two

significant contributions to the construct: incorporating the environmental variable as one of

the main social expectations to be covered and considering sustainability. Essentially,

organizations must satisfy not only the expectations of current society but also those of future

generations. Moreover, the environmental concern caused CSR to shift away from the

theoretical and philosophical level, to a more concrete and practical dimension, the urgent

necessity for the firm to respond to its environment.

Generali zation and audit stage. Between the 1980s and 1990s, the stakeholder theory

contributed significantly to the development of CSR. This theory proposes that a firm is a

nexus of contracts between stakeholders and that the responsibility of a business is not to


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society at large but to legitimate stakeholders: shareholders, employees, customers, suppliers,

and local communities (Van der Putten, 2005). The impact of the environmental and

sustainability discourse initiated in the previous stage and the proposal of concepts, such as

the triple bottom line (Elkington, 1999), developed the CSR concept to include the three

dimensions of sustainability: social, ecological, and economic bottom line. Despite its long

history, the evolution of the concept, and the increasing importance of CSR worldwide, a

universally accepted definition of CSR does not exist. Different terms in the literature

describe the phenomena related to corporate responsibility in society: corporate social

responsibility, corporate citizenship, corporate philanthropy, corporate giving, corporate

community involvement, community relations, community affairs, community development,

global citizenship, corporate societal marketing, society and business, social issues

management, public policy and business, stakeholder management, corporate accountability,

and corporate sustainability (Garriga & Mel, 2004; Kotler & Lee, 2005). The criteria of

CSR may change between generations and cultures and will be different in Europe (welfare

society) and the United States than in developing countries. Previous research indicates that

these differences exist because of differences in culture, economic development, legal and

political environment, organizational ethical climate, and gender (Juholin, 2004; Lines, 2003;

Papasolomou-Doukakis et al., 2005; Singhapakdi & Karande, 2001). The following

comprehensive definition for use in the proposed research borrows and integrates elements

from these different areas and approaches: CSR involves running a business with an action-oriented managerial strategy under a comprehensive set of policies, practices, and programs

integrated throughout the business operations. Decision making includes a voluntary

commitment to contribute to sustainable development by making decisions that fairly balance

the claims of all key stakeholders, shareholders, employees, customers, suppliers, and local

communities. These decisions should maximize the positive impact and minimize the

negative effects of the business, while maintaining concern for societys long -term needs in

ways that address or exceed the ethical, legal, environmental, commercial, and other wants or

expectations of society, with consumers trying to be accountable to society for performance

by explaining, justifying, or reporting on their actions.

I ndependent Vari able: Corporate Ability A number of researchers have investigated the

degree to which consumers associations regarding a company influence them (Berens, 2004;


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Berens et al., 2005; Brown & Dacin, 1997; Dacin & Brown, 2002; Sen & Bhattacharya,

2001). In their germinal work, Brown and Dacin (1997) defined corporate associations as a

generic label for all the information about a company that a person holds (p. 69). Corporate

associations include the following: Perceptions, inferences, and beliefs about a company: a

persons knowledge of his or her behaviors with respect to the company; information about

the companys prior actions; moods and emotions experienced by the person with respect to

the company; and overall and specific evaluations of the company and its perceived

attributes. (p. 69) Furthermore, Berens (2004) defined corporate associations as a

heterogeneous set of perceptions, which may relate to a wide variety of aspects of a

company (p. 17). Berens et al. (2005) remarked that perceptions of individual people, rather

than groups of people, define corporate associations. In addition, corporate associations are

regarded as a set of perceptions, which may or may not be related to one another, rather than

as a holistic picture, and as Brown (1998) pointed out, corporate associations are a

heterogeneous set of perceptions, which may be related to a wide variety of aspects of a

company. Berens and Van Riel (2004), after developing an overview of the studies on

corporate associations of the last five decades, established three main typologies of corporate

associations. They include (1) the different social expectations that people have regarding a

company, (2) the different personality traits that people attribute to a company, and (3) the

different reasons they have to trust or not to trust a company (p. 174). Berens (2004) stated

that in terms of the social role typology, two specific types of corporate associations exist:corporate ability (CA) and CSR associations. In their germinal work, Brown and Dacin

(1997) introduced and studied these two types of corporate associations as a way to explain

the inconsistent results observed in previous studies under the rubric of corporate image.

They demonstrated that what consumers know about a company can influence their

evaluations of products introduced by the company (p. 68) and that different types of

corporate associations (i.e. CA and CSR) can have important (p. 68) but different influences

on company and product evaluations. The authors provided participants either with extensive

attribute information about new products or information about corporate associations and

measured the associations. They found that CA may have a greater impact on both specific

product attribute perceptions and the overall corporate evaluation than a reputation for social

responsibility (p. 80). However, they also observed that CSR has a positive influence on

consumer response to new products. Researchers have begun investigating the conditions


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under which CA association and CSR association may influence consumers preferences, and

in some cases, their results are contradictory. Sen and Bhattacharya (2001) found that the

CSR issues addressed by the company, the quality of its products, the consumers

personal support for the CSR issues, their general beliefs about CSR, and the consumers

perceptions of congruence between their own characters and that of the company in their

reactions to its CSR initiatives (p. 225) moderated the effect of CSR on product preferences.

Moreover, they found that consumers are more sensitive to negative CSR than positive CSR

and that the consumers perceptions of the tradeoffs between CSR and CA efforts play a

significant role in their final response. Berens (2004) found that the effect of CA association

and CSR association on product evaluations and purchase intentions is different depending

on the accessibility of the associations, their diagnostic value, and the corporate brand

strategy that a company uses. The experimental results of Mohr and Webb (2005) indicated

that CSR had an important and positive influence on company evaluation and purchase

intent. Their results showed that American consumers reacted more strongly to negative

than to positive CSR (p. 139) and that a low price did not appear to compensate for a low

level of social responsibility (p. 142). According to Berens et al. (2005), academic

researchers, on the influence of corporate associations in consumer response, have found

that associations with a companys corporate ability (CA) and its corporate social

responsibility (CSR) both influence product evaluations but that CA associations have a

stronger effect than CSR associations (p. 35). In contrast, Marin and Ruiz (2007)demonstrated that the contribution of CSR is stronger than CA. The authors suggested that

the increasing competition and the decreasing CA-based variation in the marketplace may be

responsible for this result. Moreover, they claimed that CA may have become a base line

below which companies face great difficulties to stay in the market, and above which

companies benefit from competitive advantage in the form of associations obtained from the

undertaken CSR activities (p. 255).

Dependent Var iable: Consumer Social Responsibi li tyA growing body of academic research

supports this new corporate global approach. Researchers claim that the business case of

CSR includes improved financial performance, reduced operating costs, long-term

sustainability of the company, increased staff commitment and involvement, long-term return

on investments, enhanced capacity to innovate, enhanced brand value and


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reputations,development of closer links with customers, and greater awareness of their needs

(Jones, Comfort, Hillier, & Eastwood, 2005). Researchers have investigated the interface

between CSR and the customer broadly, and as the literature shows, this is a truly complex

matter. Many surveys developed at an international level suggest that a positive relationship

exists between a companys CSR actions and consumers reaction to that company and its

product (Bhattacharya & Sen, 2004; Sen & Bhattacharya, 2001). A growing body of

academic research corroborates and attests to the generally positive influence of CSR on

consumers company evaluations and product purchase

intentions (Brown & Dacin, 1997; Carrigan et al., 2004; Creyer & Ross, 1997; Maignan,

2001; Schroeder & McEachern, 2005; Uusitalo & Oksanen, 2004). This kind of consumerism

mainly incorporates environmental issues but also extends to animal welfare, human rights,

and labor working conditions in the third world (Tallontire et al., 2001). The links to

consumers positive product and brand valuations, brand choice, and brand recommendations

documented the relationship between CSR and consumer attitudes. As a result of the broad

literature, Devinney, Auger, et al. (2006) proposed a new concept highlighting the important

role that CSR plays in consumer behaviour, consumer social responsibility (CnSR: The

conscious and deliberate choice to make certain consumption choices based on personal and

moral beliefs (p. 32). This concept has ethical and consumerism components, which can

appear as an expressed activity in terms of purchasing or no purchasing behaviour; and as

an expressed opinion in surveys or other forms of market research (p. 32). Conversely,recent investigations demonstrate that the relationship between CSR and ethical consumerism

is not always direct and evident. The results are in many cases contradictory and establish

numerous factors that affect whether a firms CSR activities translate into consumer

purchase. They include trade-offs with traditional criteria like price, quality, and convenience

and lack of information (Mohr et al., 2001); corporate brand dominance (Berens et al., 2005);

and the type of CSR, quality of products, consumers personal support for the CSR issues,

and their general beliefs about CSR (Sen & Bhattacharya, 2001). There seems to be a

contradiction between what the international polls and surveys established in terms of

intentions to buy products with CSR features and the real purchasing of them (Devinney,

Auger et al., 2006). Auger et al. (2003) explained that the differences occurred because in the

former studies, researchers used surveys to rank the importance of some CSR issues, without

any trade-off between traditional features and CSR product features. These types of


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instrument overstate the relevance of CSR issues because Likert-type scales do not give

incentives to answer questions truthfully (Auger & Devinney, 2005, p. 2) and because

respondents may want to edit their private judgment before they report it to the researcher,

due to reasons of social desirability and self-presentations (p. 6). Hence, these surveys may

overstate the importance of social features, since there are clearly more socially acceptable

answers (Auger et al., 2006, p. 6).

Majority of the private companies say they embrace corporate social responsibility not only

because its the right thing to do, but also because it strengthens their brands . The percentage

of brand value represented by corporate social responsibility is trending upward but all other

identifiable contributors to corporate brand value-advertising, market cap, and the industry in

which a company competes appear to be declining. The relationship between brand image

and Corporate Social Responsibility is strongest for familiarity, not for favourability. That is,

if the company is well known in its community, its Corporate Social Responsibility activities

will strengthen its brand image more than they would if the company were less well known.

According to a study by financial paper, The Economic Times, donations by listed

companies grew 8% during the fiscal ended March 2009. As many as 108 companies donated

up to 20% more than the previous year.

Consumers increasingly expect companies to make a broader contribution to society. The

business benefits of doing are not evident. Prior studies conclude that consumerspurchase

decisions are positively influenced by socially responsible initiatives. According to the

research carried by Cone Inc., in 2009, 79% of consumers would switch to a brand associated

with a good cause. Bharat Petroleum and Maruti Udyog came on top with 134 points each,

followed by Tata Motors (133) and Hero Honda (131). The study was based on a public

goodwill index and India received 119 points in the index against a global average of 100.

Thailand was at the top slot with 124 points. Malini Mehra, founder and CEO of Social

Markets, an organization that works towards transition to sustainable development and

realisation of human rights and social justice, explains, There is minimalist version,

Corporate Social Responsibility is little more than a philanthropic activity-tree planting,

schools and health clinics. In the maximalist version, Corporate Social Responsibility is

about character and conduct, where integrity and responsibility run right through every seam

of the firms activities and ethos. External Relations Director Lee Bansil of Procter and

Gamble explains: co-donation and cause-related marketing help promote competition, which


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in turn leads to corporate innovation. He believes this is essential for developing sustainable

products and promoting sustainable consumption.

1.3 Research on CSR Relationships

Pivato et al. (2008) investigated the consumer trust and CSR realm, but although hypotheseswere developed, the findings are based on other literature and not an empirical study. There

is empirical evidence relating to brand and consumer behaviour in reference to CSR such as

Becker-Olsen et al. (2006) and Pivato et al. (2008). Specifically relating to brand loyalty and

consumer valuation of services, De Los Solmones et al. (2005) conducted a survey to

investigate the effect that selected companys socially responsible activities had on the

consumers service evaluation.

Other research investigates leadership, culture and strategy (Angus-Leppan et al., 2010;

Sharp & Zaidman, 2009; Duarte, 2010; Lee, 2009). Strategy relies on leadership for

execution and the development of a culture that fosters CSR initiatives. Cruz and Pedrozo

(2009) used case studies to investigate green management. Yu, Ting and Wu (2009)

investigated greenness of firms directly influencing financial performance in relation to

SMEs and large corporations. Sen et al. (2006) had the only field study identified, which

explored stakeholder relationships in relation to CSR.

There are a number of studies that examine the use of CSR to attract employees and

influence levels of organisational commitment. Job seekers found companies with higher

CSR involvement more attractive, as it was perceived these companies had greater diversity

and employees were more valued (Albinger & Freeman, 2000). Organisational commitment

was investigated by Brammer et al. (2007) and Turker (2009), who studied organisational

commitment in relation to CSR and commitment levels of employees in CSR orientated

organisations respectively. Peloza and Shang (2011) identify several studies investigating

CSR in single and diffuse activities involving a range of other subjects such as businesspractices, philanthropy, products, fit and consumers. Vlachos, Tsmakos, Vrechopaulos and

Avramidis (2009) and Castaldo, Perrini, Misani and Tencati (2009) investigated trust, with

organisational reputation as a regulating factor, when assigning consumer attributions to

brand or company.


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In order to test conceptual ideas, empirical investigation is conducted. For this particular

study, variables from Turkers (2009) conceptual measurement scale for CSR was used. The

Turker (2009) scale was developed from multiple areas including legal, environment,

employee and ethics and has been adapted and applied in the data analysis. Turker (2009)

conducted empirical research in order to develop a 21 factor variable list, but the scale has

not been tested in a wider CSR context. An adaptation of Turkers (2009) scale is used as it

provide a multidimensional representation of CSR, which can help determine which

dimensions will have an effect on brand trust.

1.4 Stakeholders and Shareholders Relationships with CSR

1.4.1 Stakeholders

Piercy and Lane (2009), De Los Salmones et al. (2005) and Godfrey and Hatch (2006)

identify stakeholders as important in relation to CSR. Conceptual theorists have suggested

that research into CSR can be made operational, especially to examine marketing benefits of

CSR on stakeholder relations (Maignan & Ferrell, 2004). Russo and Perrini (2009) state that

social capital explains SMEs approach to CSR more appropriately, where stakeholder theory

explains the CSR approach by large organisations. Larger organisations CSR approach can

include different individuals as well as consumers. The differences in strategy and ethical

considerations between CSR and SMEs are other areas for development. Russo and Perrini(2009) concluded that stakeholder views have a large impact on the decisions of large firms

in relation to CSR activities. Similarly, Piercy and Lane (2009) propose the support a

company receives from investors and the strength of business relationship are prominent

factors in the implementation and success of CSR efforts. According to Pivato et al. (2008),

people in authority in business are now recognising CSR as important.

Sen, Bhattacharya and Korschun (2006) concluded that CSR influences stakeholders into

purchasing brands as well as strengthening the overall relationships. Implementing CSR to

foster stakeholder relationships is important, as individual stakeholders such as shareholders

and employees may have multiple relationships with the company (Sen et al., 2006).

Stakeholders need to be informed of organisational policy or goals, the communication

increases stakeholders confidence in the companys actions (Bansel & Roth, 2000).

Stakeholders are important to consider in CSR implementation. Walton and Rawlins (2010)


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25 even suggest using the topics important to stakeholders as a tool to measure CSR such as

employee well-being and economic performance.

1.4.2 Shareholders

Sjostrom (2010) suggests that shareholders can provide a benchmark for organisational socialactivities. In contrast, Arvidsson (2010) suggests that focus has moved from shareholder

value to CSR efforts after corporate scandals (i.e. companies employing child labour).

Shareholder value can be built by CSR activities giving insurance protection for companies

in bad times, meaning the positive reputation, which would foster brand trust and loyalty, can

help reduce the bad effect of a negative event (Godfrey et al., 2008).

Hsieh (2009) determined that managers should make decisions on the overall happiness of

society (through CSR activities), sometimes at the expense of shareholder interests. This ideadoes not consider shareholders as a main benchmark for CSR as suggested, but simply an

addition to the main societal responsibilities of an organisation. Godfrey and Hatch (2006)

identified shareholder capitalism for an organisation as negative when considered in relation

to the CSR-CFP (corporate financial performance). Shareholder capitalism for an

organisational strategy focuses on the manufacture of economic goods to contribute to social

welfare and this has a negative effect on the CSR-CFP relationship (Godfrey & Hatch, 2006).

The buying of shares and the impact on organisational financial performance can be affected

by the activities organisations are involved in. Adam and Shavit (2008) state investments

have increased over time in organisations that consider the social needs of the market and

operate best practice policies. There is also indication that organisations that are socially

responsible can positively change investor attitudes by having a greater social responsibility

ranking (Adam & Shavit, 2008). Ranking companies in relation to a social responsibility

could motivate organisations to participate in CSR to improve image in the market.

1.5 CSR and Brand Trust

Branding is used to differentiate one product or service from another using a symbol, name

or design (Pride et al., 2006, p.208). Branding can be used for customers to identify a product

or service, making the introduction of new products into the market easier, whilst building

brand equity, or the value a company can leverage off the brand. More importantly whilst


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branding makes it easier for consumers to identify products, it also makes it easier to develop

brand loyalty (Pride et al., 2006, p.209). Although brand loyalty will vary depending on the

item and consumer, brand trust is a major component to loyalty; consumers have faith in the

product or service they are purchasing. Dunn and Davis (2004) state one of the greatest

challenges CEOs can address is managing consumer loyalty effectively. Whether trust can be

affected by external actions of the company rather than the performance of the product or

service is what this study aims to research.

CSR and branding have a number of linkages, specifically through trust, corporate reputation

and consumer attribution. Gurhan-Canli and Fries (2009) developed a corporate social

responsibility and brand-related outcomes model. Gurhan-Canli and Fries (2009) suggest that

both consumer characteristics, such as awareness of CSR programmes and personal

judgement and company characteristics such as reputation are factors influencing brandingoutcomes. The branding outcome would include evaluation of the company, brand and

product, in which brand trust would be considered. Fit between the CSR activities and the

company and brand itself also impacts on the way consumers perceive the CSR activities

(Ellen et al., 2000; Yoon et al., 2006).

Delgado-Ballester and Munuera-Aleman (2005) suggest that brand equity can be developed

through brand trust. Brand trust must be maintained not only to foster consumer loyalty and

brand equity, but to create a sustainable competitive advantage (Delgado-Ballester andMunuera-Aleman, 2005).

Consumer Attributions and Corporate Reputations

The awareness of CSR in general provides influence on attitude, attribution and purchase

decisions (Pomering & Dolcinar, 2009; Ellen at al., 2006; Yoon et al., 2006). Similarly,

Maignan (2001) suggests further study to identify at which point consumers are aware of the

CSR efforts a company has undertaken. This is associated with leadership ability in the

corporation and the need to communicate CSR activities (cause marketing included) while

developing an appropriate direction or strategy (Morlin-Azorin et al., 2009; Murillo &

Loranzo, 2006). Marin and Ruiz (2007) suggest CSR has direct influence on a companys

identity attractiveness; this identity can both attract new consumers and influence marketing


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power for that company. Attractiveness is strongly affiliated with the awareness of a specific

brand.

Peloza and Shang (2011) suggest that product-related CSR means higher levels of consumer

awareness. Du, Bhattacharya and Sen (2007) found evidence to suggest that a brand that

positions itself as a CSR brand can improve consumer awareness levels, in contrast to a

brand that just engages in CSR activities. This may due to the consumer being directly

exposed to the CSR information. Bhattacharya and Sen (2004) expressed that CSR activities

had greater influence on outcomes internal to a consumer, such as awareness and attributions,

which are easier to target than external outcomes such as purchase behaviour. Bhattacharya

and Sen (2004) suggest CSR awareness is a stumbling block for most companies, who can

only get the benefits from CSR once consumer awareness is increased. De Los Salmones et

al. (2005) state the possibility that the perception of CSR influences the valuation ofindividual services as well as goods, as the concept of perceived quality can apply to both

service and goods.

Affiliated with consumer awareness, corporate reputation is another area that could be

influenced by CSR activities (Yoon et al., 2006; Ellen et al., 2006). Yoon et al. (2006)

identified suspicion in consumers as a factor influencing positive or negative attribution to

the company. Bhattacharya and Sen (2004) also identified corporate reputation as moderating

consumer suspicion. If a company has a good reputation the consumer will act favourably toevent sponsorship even if there is not perceived fit between the event and the company. If the

consumer suspects the reason for the CSR activity is for an ulterior motive, other than

legitimately helping a cause then there will be a negative response. Bhattacharya and Sens

(2004) findings imply that consumers are aware of CSR activities and the legitimacy of these

activities in relation the company. Likewise, Ellen et al. (2006) states decisions made for

CSR activities that display self-centred motives or are for stakeholder benefit can receive

negative feelings from consumers, impacting on consumer trust.

Kitchin (2003) expresses that the responsibility in CSR is brand responsibility and that it is in

fact the brand that has the social responsibility. The brand relies on brand promises and

relationship to the stakeholders to convey the CSR efforts. Kitchin (2003) concludes CSR

activities are not considered a separate entity from a brand or company, but part of

everything the brand does. Brand learning gaps can only be decreased by further cultural


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understanding into the needs of society on behalf of the companies participating in CSR

(Kitchin, 2003).

Cultural perspectives in regards to branding and CSR have been explored to a small extent.

Little is known about public relations practices and culturally specific CSR to date (Kim &

Kim, 2010). Other studies have not considered a cultural approach, this could impact on the

brand trust perspectives as different cultures may consider different practices as more

trustworthy.

Other empirical studies support the relationship between CSR and brand performance. Lai,

Chin, Yang and Pai (2010) concluded that both CSR and corporate reputation had a positive

effect on brand equity in the industrial sector. The brand equity also included brand loyalty

and brand awareness. Brand equity can help adjudicate a relationship between brand

performance and CSR.

Biloslavo and Trnavcevic (2009) suggest using websites to communicate green corporate

identity. In each case of 20 Slovene companies, green reputation was used in an attempt to

create a lasting competitive advantage. All the companies presented information about social

responsibility through green messages and supporting the environment, but it did not

translate to a distinct advantage for each company such as consumers purchasing more

products (Biloslavo & Trnavcevic, 2009). Websites that communicate green messages and

convey corporate social responsibility need to be combined with activities that consumers

can see, thus reducing the amount of scepticism from the consumer. 34

Curras-Perez et al. (2009) state that CSR helps construct a brand with personality that can be

differentiated by consumers, while fulfilling their needs. However, effectiveness of CSR can

often be hard to measure (Pivato et al., 2008). CSR activities are mainly associated and

compared to financial gains. Godfrey and Hatch (2006) identified extensions beyond profit

for CSR activities, but there are has not been any empirical evidence to date. This study plans

to add exploratory empirical evidence to the CSR and branding relationship.

De Los Salmones et al. (2005) concluded although social responsibility has become popular

in recent years, there have been few studies conducted towards CSR in reference to consumer

behaviour and attitudes. Maignan, Ferrell and Hult (1999) suggest CSR has general positive

consequences for business, but there is limited research on the impact from a marketing


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perspective. In terms of how, when and for which specific consumers CSR initiatives work

best, there are scarce studies (Sen & Bhattacharya, 2001). There is however a few studies

exploring the connections between CSR and corporate reputation and reputation can provide

an influence on brand trust. The relationship between reputation and brand trust is explored

in the next section.

1.6 Initiatives of Indian companies to promote brand image with

the help of corporate social responsibility

The 2010 list of Forbes Asias48 heroes of Philanthropy contains four Indians. Nearly all

leading corporate in India are involved in Corporate Social Responsibility programmes in

areas like education, health, livelihood creation, skill development and empowerment of

weaker sections of society. Notable efforts have come from the Tata Group, Infosys, BhartiEnterprises, ITC Welcome group, IOC among others. For brands, it is an excellent way to

show they care, taking the lead with innovative giving back schemes. Few ways by which

Procter and Gamble did in the past was, that they teamed up with UNICEF to introduce

Nutristar-a powdered drinking product that addressed micronutrient malnutrition in some

populations and by acquiring the PuR brand to bring low-cost water purification technologies

to consumers in developing markets. The company also promoted better hygiene in at-risk

communities and in return had the benefit of forming new markets for its products like soap

and toothpastes.

A recent initiative of Corporate Social Responsibility by Procter and Gamble is that it joined

hands with the International Olympic Committee (IOC) jointly announced a sponsorship

scheme wherein Procter and Gamblesportfolio of brands will sponsor Proud Sponsor of

Moms campaign globally. To celebrate the dedication and sacrifices of moms, families and

Olympians, Procter and Gamble will produce a documentary video series called Raising an

Olympian that will provide the insight into the experiences of mom of an Olympian which

will guide and improve the li

Documents

Csr and Brand Trust