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The purpose of this research is to empirically examine relationships between a multi-dimensional set of corporate social responsibility (CSR) initiatives, numerous dimensions of customer trust, and corporate image in an emerging economy. It also analyzes the mediating effect of customer trust on the relationship between CSR and corporate image. This study focuses on two of the most well-known hotel chains situated in Pakistan. Close-ended, self-administered questionnaires were circulated amongst a total of 300 hotel customers. The research data was analyzed using a partial least square-structural equation modeling (PLS-SEM) model. The results revealed that economic, legal, and ethical CSR significantly impacted corporate image, while philanthropic CSR did not affect the corporate image. However, economic, legal, and philanthropic CSRs were found to be in a significant relationship with customer trust, while ethical CSR was not in a significant relationship with customer trust. Finally, customer trust fully mediated the relationship between economic and legal CSR with corporate image, whereas it partially mediated the relationship between ethical and philanthropic CSR. This study is unique from earlier CSR research based on an assessment of the connection between CSR dimensions and corporate image to examine customers’ trust in an emerging economy, especially in times of crisis.
Keywords: corporate social responsibility, multi-dimensional CSR, corporate image, customer trust, emerging economy, times of crisis, smart PLS, mediation
Corporate Social Responsibility (CSR) describes how a company manages its industry and takes responsibility for its social impact. Corporate social responsibility encompasses various characteristics like economic dependence, legal conformity, ethical requirement, and societal influences [1]. CSR has been suggested to benefit the reciprocally advantageous long-term and reliable relations with its participants [2]. Customers are key participants of a corporation, hence, exploring corporate social responsibility from the perception of customers has progressively drawn the attention of investigators and experts, especially in the service industry [3]. Furthermore, times of crisis are described as the complex challenges faced by the companies. These challenges are mostly related to the strategic focus of the companies in times of economic downturns. According to public opinions, financial challenges and profit-making ability are deemed as the core aspects of a company in times of crisis. In contrast, other social challenges and responsibilities of the business are important but ignored in previous research, however, these challenges are supported by some of the previous research papers [4,5,6].
Consequently, corporations are expected to fulfill ethical and social responsibilities rather than utilizing them as a differentiating approach to achieve organizational authenticity [7]. The growing awareness and insight of CSR initiatives have driven CSR activities as a competitive strategy between firms.
Corporations consider the use of CSR strategies crucial in determining organizational objectives for enhancing corporate image (CI) and profitability by recognizing the need and significance of CSR activities [8]. Customers are extra positive to corporations that enthusiastically publicize their corporate social responsibility programs as compared to those corporations that would not promote their CSR activities [9]. Corporations’ CSR methods have significantly influenced corporate image in a positive manner and caused the largest growth in market share [10]. Therefore, many corporations have utilized CSR activities as a distinctive management approach. A corporation’s CSR execution can, as a result, have both a negative and a positive impact. As CSR becomes essential, both as a key academic course and a component of the corporate plan, customers are following up on corporations’ commitment in CSR more enthusiastically than earlier. The corporate image that is achieved as a consequence from CSR procedures may possibly enhance customer social accountability conduct and the association among the company and customers [11].
Customers will participate actively like the firm’s employee if he/she has an optimistic image of the corporation [12]. Corporate social responsibility additionally operates as a marketing instrument since it provides to set a constructive corporate image [1,13,14]. Numerous investigations have recognized the growing association concerning corporate image and corporate social responsibility initiatives. Corporate social responsibility is a crucial component in enhancing corporate image. Corresponding to a study performed in Korea confirmed that corporate achievements of financial and legal corporate social responsibility policies had an immediate and significant impact on the corporate image [15]. Moreover, a significant association between corporate social responsibility and the corporate image was exhibited to impact market share [16,17]. To be precise, companies’ legal and ethical status concludes in a constructive corporate image of the company. Furthermore, companies are expected to engage in socially responsible endeavors by their customers, and the customers express their gratitude to the companies’ behaviors by purchasing their products [18]. A few research scholars claimed that customers who believe admirably of companies are highly prone to engage in long-term relations with those companies [19].
Corporate social responsibility has a significant influence on business interactions with customers, and disreputable marketing conduct negatively affects the attitudes of customers, social conduct, and satisfaction. The business and its customers can be deemed corporate allies and their relationships are significantly influenced by their belief in mutual trust [20,21]. Furthermore, services industries have to handle several additional interactions with their customers in comparison to fast-moving consumer goods (FMCG) industries [21]. Therefore, in a service commerce’s competitive framework, businesses can not merely introduce trust via truthful, and honest communication initiatives, but they also need to produce trust at each particular interaction phase, which forms a positive customer experience in the minds of customers, specifically when customers communicate with the frontline staff [22]. Hence, service industries have to build and represent their dedication to corporate social responsibility policies and programs thoroughly at all the various interaction points creating the customer experience [23]. In addition, the innovative digitalized and linked atmosphere additionally presents customers the likelihood of networking considerably more immediately with businesses [24,25]. Moreover, corporate social responsibility’s relationship with customers and company’s characteristics [26] causes mediation in the relationship between corporate social responsibility programs and company’s assessments [27]. Customers’ trust related to a corporation and its products is strengthened by the effective execution of CSR initiatives. [27]. Although customers’ trust is an important factor to be examined, yet limited research has been conducted to explore the role of customers’ trust within the framework of CSR. This research has utilized the rising multi-dimensional view of this construct.
To address the previous research inadequacies of CSR related to the measurement and conceptualization of CSR and customers’ trust, this research study provides and empirically examines the research model that integrates the relationships between a multi-dimensional set of CSR initiatives namely legal, ethical, economic, and philanthropical CSR proposed by Carroll [28] and a numerous dimensions of customer trust containing integrity, experience, and benevolence, based on trust theory [29] and corporate image in an emerging economy. This research attempts to address at least four key research gaps related to CSR. First, we examine how CSR helps support corporate image. Second, we explore the relationship of CSR with customer trust. The third research gap covers the impact of customer trust on corporate image. This contributes to the fourth research gap, which is built on prior work by assessing the mediating role of trust on CSR to illustrate the influence of corporate social responsibility on corporate image.
Carroll [28] conceptualized the CSR model by proposing to integrate four accountabilities: economic (delivering required products and services), ethical (implementation of the ethical conduct), legal (compliance to policies), and philanthropic (participating in volunteer activities). Furthermore, Carroll [28] stressed that the advantages gained by the company from CSR might also impact its stakeholders. A stakeholder can be described as “an entity or a group which might impact or is impacted by the fulfillment of the corporation’s objectives” [30].
CI, achieved by the company’s performance towards CSR initiatives, can be defined as the subjective view of customers related to the performance in terms of the stakeholders’ societal concerns [8]. Corporate image is characterized as the reaction to the amount of trust, concepts, and thoughts the communities have in the direction of a corporation [31]. Furthermore, it is also related to the stakeholders’ perception regarding the necessary measures taken by the company for the betterment of its stakeholders. Corporate image is an intangible asset that can improve customers’ behavior intention including customers’ need fulfillment, commitment, and repurchase intention to endorse [8]. Corporate Image is significant for achieving trade gains, hence the significance of social accountability in terms of establishing an optimistic image of a corporation is enhanced [32]. CSR integrates CI in the minds of customers and a positive corporate reputation is achieved. A corporation’s reputation is a critical tactical source for achieving viable gain [33]. On the Contrary, not implementing corporate social responsibilities can eventually cause an adverse impact on the company. Previous research suggested that companies that honestly take measures for their social responsibilities and provided an optimistic image to their stakeholders were further expected to generate strong financial outcomes [34]. Effective CSR implementation can be achieved by the active simultaneous participation of external and internal stakeholders; hence it can enable a company to forecast and take benefit of rapidly changing social environments and beliefs. Service firms, like any other company, are required to be in harmony with sociocultural, socioeconomic, and environmental activities. Earlier studies confirm the relationships among corporate social responsibility and corporate image by verifying that a company’s corporate social responsibility methods significantly impact the company’s image, consumer attitudes and the company’s ([8,11,35]. These initiatives additionally enhance relations among the customers and the company [10,36]. Park et al. (2014) have claimed that a company’s realization of legal and economic corporate social responsibility activities had a significant impact on a company’s reputation, however, both philanthropic and ethical corporate social responsibility activities had a significant impact. Plewa et al. [11] presented that acquaintance of customers with a company’s Corporate Volunteering (CV) initiative is significantly associated with customer insights of the corporate image and customer acknowledgment of other placed motivations, furthermore, customers’ perceptions of a company’s corporate social responsibility reputation are significantly associated to the company’s image. Consequently, it can be inferred that corporate social responsibility initiatives can improve a firm’s corporate image for shareholders. In the research studies related to hospitality, Kim et al. [10] uncovered that each element of corporate social responsibility (ethical, economic, philanthropic, and legal) with the exception of legal accountability had a significant impact on the CI in the casino business. Ghaderi et al. [37] confirmed that each aspect of corporate social responsibility has direct and positive effect on the performance of the hotel.
Previous research on corporate social responsibility uncovered that corporate social responsibility has a significant association with corporate image, suggesting the utilization of corporate social responsibility as the instrument to improve corporate image. In additional words, when service suppliers operate well at corporate social responsibility, customers will create a constructive impression of them. This mutual association has been endorsed by current literature [38,39,40,41]. Popoli [42] also assert that corporate social responsibility has a significant impact on improving customers’ views on a corporation’s image. According to Hillenbrand, Money, and Pavelin [43], an improvement in the company’s image might be a consequence of a company’s philanthropic contributions, in that case, if the initiative and motivations related to the donation are perceived as optimistic. Additionally, for a company to achieve a responsible corporation reputation, the company is necessary to be viewed as a well-behaved corporation by its stakeholders (i.e., being professional in conducting company’s interests, transparent, sustainable, and reduce adverse social effects) and with decent intentions (i.e., being reliable, honorable, and honestly care about the people).
B. Kim, Lee, & Kang [44] hypothesized that corporate social responsibility performances have a significant impact on company reputation in the framework of tourism. Lee, Kim, & Ham [45] uncovered that CSR affects brand trust and brand image. Thus, it is evident from the empirical and theoretical perspective that if the CSR initiatives are perceived optimistically by the stakeholders, they might be more favorable in leading towards the corporate image. Hence, established on Carroll’s [28] four corporate social responsibility aspects and the previous study, we recommend the following hypotheses.
Hypotheses 1a (H1a).Economic (CSR) positively influences corporate image (CI) in times of crisis.
Hypotheses 1b (H1b).Legal (CSR) positively influences corporate image (CI) in times of crisis.