Strategic corporate social responsibility

 

Title of the Review

 

Table of Contents

Abstract. 3

Introduction. 4

Consumer Behaviour. 5

Key Learning. 9

Brand Management. 9

Key Learning. 14

Strategic corporate social responsibility. 15

Key Learning. 18

Methodology. 19

Conclusion. 20

 

Abstract

This article provides a comprehensive review of relevant body of knowledge on corporate social responsibility and it covers  three major themes namely; consumer behavior, brand management, and strategic corporate social responsibility. The review includes 65 articles published on the three concepts in the period from 1990 to 2010 with an aim to capture both the historical and current perspective of the topics. The article presents a brief background of each theme; it also provides some working definitions of each of the three themes this article also examines the different aspects of each theme found in the selected existing body of knowledge. Finally, a conclusion is drawn from the debates in the literature, sighting the gaps found in the review of the existing body of knowledge. In the selection of the relevant articles to each of the three themes, the snowballing approach was applied.

 

Corporate Social Responsibility

Introduction

            Corporate social responsibility sometimes referred to as corporate citizenship entails the initiatives of a company that goes beyond the set regulations by incurring short-term costs for the positive environmental and social change (Castelo & Rodrigues 2006).  The concept of corporate social responsibility therefore, ensures that there is a continuous commitment by business organization to foster economic development and to act ethically as well as improve the quality of life of workers, their families and the community (Dowling 1994). CSR encompasses a several aspects that touch strategic corporate social responsibility, brand management, and consumer behaviour. This study will present and analysis each of these themes.  Research indicate that strategic corporate social responsibility entails the plans and execution of initiatives by business that gives them a competitive advantages for instance enhancing the reputation and image of the company as well as attracting and retaining valuable employees (Winer 2009). This relates to brand management in the sense that it is a function of marketing that is used for purpose of preserving not only value of a given product but also the value of the company (Fombrun 1996). When the brand is managed effectively, the company is able to earn the loyalty of customers and the products may fetch high prices. Consequently, the concept of consumer behaviour comes in as the consumers familiarize with the brand. This topic has elicited massive attention both in the past and in the recent years by marketers and researchers. For purposes of obtaining relevant articles used in this study, a snowball methodology was employed.  This methodology involved finding the most relevant article on the subject of consumer behaviour. Finding other articles entailed a chronological development from the first single article on predicting purchase decision was used to obtain other articles with related subjects and themes. A body of relevant literature was consequently established with various approaches to the concept of consumer behaviour.

Consumer Behaviour

The performance of any business is highly dependent on consumer behavior and as such  Lancaster et al (2002) suggest that understanding consumer behaviour is a key factor that a business should consider in an effort to remain competitive, relevant and profitable in the market.  Indeed, the fierce competition among businesses has sparked a spirited interest among marketers and scholars to study and understand the dynamics of consumer behavior (Rose and Samouel (2009). This section will review a body of diverse literature discuss, the decision making process of consumers and the five stages involved in such decision making process, as well as the different perspectives related to consumer behavior in the existing body of literature.

The central aim of studying or understanding consumer behavior particularly in marketing is to learn how organizations, groups, and individuals choose, purchase, utilize, and dispose products (Stallworth 2008; Rao 2007). Other scholars share the opinion that understanding consumer behavior does not only enable the marketers to appreciate the process of consumer decision-making process of a consumer when purchasing, but also enables an organization to  appreciate other factors that consumers consider while deciding what to make purchase for instance   taste, previous experience, branding, and price (Winer 2009; Bagozzi & Warsaw 1990). Before going into the details of the discussion however, it is important to define certain terms and concepts related to consumer behavior for a better appreciation of the topic.

The term consumer is defined by Solomon (1995) as a study of the steps involved when organizations groups or individuals select, buy, utilize, or dispose of services, products, experiences, or ideas for purposes of satisfying desires and needs. In the marketing context however, the term consumer is used to refer to both the act of buying as well as the aggregate pattern of purchasing which includes activities before purchasing and after purchasing (Hoyer & Macinnis 2008).  Consumer behavior therefore can be defined defines consumer behavior as the aggregate acts undertaken by an individual or groups, which are directly involved in selecting, obtaining, utilizing, and disposing of products and services (Tyagi and Kumar 2004). It is worth noting that consumer behavior (Blackwell et al 2006) also involves other factors that influenced the purchasing decisions of consumers such as branding, taste, price and previous experience.

Some of the aspects that may have an impact on consumer behavior include personal habits and previous experience (Blackwell et al 2006). For instance, if a consumer has used a cell phone from a particular company and the services were satisfactory, such a consumer is more likely to purchase another cell phone from the same company.  In a study conducted by Acebron et al (2000) on consumer behavior, the researchers took a kin interested in assessing how previous experience influenced consumer behavior in relation to buying fresh foods. The findings of their study indicate that indeed previous experience and personal habits of consumers have a direct effect on the purchasing decision of such consumers.

The purchasing decision of consumers is directly influenced by the image of the product and in an effort to encourage consumers to continue buying such a product; they recommend that the image of such a product should be improved continuously (Kacen and Lee 2002). The image of a product is not only the product line but also the packaging and branding in general (Blackwell et al 2006). Consumers are more likely to make a decision to purchase a particular product that they are familiar with and a product that is appealing (Neal and Questel (2006)   (Blackwell et al 2006) conducted a study to analyze the impact of packaging on consumers in relation to their decision making process for buying fast moving products. The major focus was retail shopping by the low-income consumers. According to the findings of the research, the preference of premium packaging was high among low-income consumers because such packaging can be re-used even after consumption of the product.

There are a number of stages involved in the process of decision making by a consumer. Most of the researchers agree on the five stages (Kacen and Lee 2002; Neal and Questel 2006; Chiffman and Kanuk 2007) even though there are others who postulate more or less stages.  According Lee (2005) the influence of family members played a significant role in the five stages of decision making process of a consumer. The five stages as described by Kacen and Lee, (2002) include recognition of need or problem, search for information, evaluation of alternatives, making a purchase decision, and evaluation after the purchase. Different researchers define each of these stages in their own way but all of them have a common view of what is involved in each stage.

According to Neal and Questel (2006), the first stage, which is need recognition, may be triggered by a number of circumstances and factors for instance lifestyle, professional, or even personal and these factors may in turn bring about the idea of buying a particular thing. Bruner (1993) however, suggested that recognition of a need comes about when an individual realizes difference between what they already have as opposed to what they want to obtain.

Chiffman and Kanuk (2007), postulate that the second stage, information search, involves a search for information regarding a desired service or product by a consumer. The search for product information as suggested by Rose and Samouel (2009) can be internal or external search where internal search involves consume use their personal believes or experiences while external search entails extensive investigation of information including but not limited to inquiries about the product or service, information from the media among other.

After obtaining the relevant information about the desired service or product, the next stage entails examining the alternatives (Chiffman and Kanuk 2007). Some authors are of the view that analyzing the alternative is one of the crucial stages because other alternatives are considered and other factors such as the price, quality, and size (Kotler and Keller 2005). In their study, Backhaus et al (2007) indicate that the decision to purchase a desired product is one of the most vital stages as there is a transaction involved. This stage is vital because after the other three stages, a consumer makes a decision as to whether or not to make a purchase. According to Perugini, & Bagozzi, (2001) the decision to make a purchase can be subdivided into impulse purchase, partially purchase or planned purchase.

The final stage is the post-purchase decision which according to Neal et al (2004), it entails the experience of the consumer in relation to the purchase they make. Many authors however, do not highlight the importance of this stage. Those who analyze this stage such as Kahle and Close (2006) argues that the relevance of the stage is that it directly determines and affect the decision making process of a consumer when purchasing similar products or services at a later date (Bruch & Walter 2005).

There is massive body of literature in relation to the topic as the theme has a direct impact on the performance of business as well as because of the ever-increasing competion in the retail industry (Wiedermann et al., 2007). Scholars and academics have carried out numerous studies to analyze and identify factors influencing consumer behavior. Even though different authors have identified and classified several concepts of consumer behavior in different ways, the results are comparable in both purpose and scope (Schiffman et al., (2007).

Key Learning

Most authors discuss the science of consumer behavior in relation to corporate social responsibility. It is clear from the literature review that consumer behavior is a broad topic that involves a study and understanding of a combination acts undertaken by an individual, groups, or organizations, which are directly involved in selecting, obtaining, utilizing, and disposing of products and services. The role of corporate social responsibility has a central role in consumer behavior as it directly affect their decision depending on the ability of an organization to undertake initiatives that have positive social and environmental value, which may give a business competitive advantage such as consumer loyalty.

Brand Management

This section presents an overview of literature about brand management. It also provides a number of the key arguments on this topic. After considering the definition of brand management, this section will highlight the debates surrounding the nature and role of brand management in a business. In this section, the snowballing methodology was used in obtaining relevant article to the subject matter. The utilization of this methodology where one article was used as a guide to other articles ensued that all the other articles provided comprehensive and diverse in literature but specific and relevant to the theme of brand management.

The value of a business in the past decades was measured in terms of the plants, tangible assets, equipments, and real estate owned by such a company (Schultz et al 2000). In the resent years however, the brand of a company is its primary capital (Rust et al 2004). Most businesses have realized that the value of a company is in the minds of their prospective consumers or buyers rather than physical assets of the company (Gregory 1997). A brand may also be defined as a symbol or a name that identify or signifies the source of a promise to and a relationship with the consumer as well as a source of unique products and the overall experience of a customer with the company (Schultz et al 2000). According to Keller (2003) a brand is a design, symbol, term, sign, or name, or a combination of them, used for purposes of identifying products of business or even to identify the business itself and differentiate such products or firm from others. As such, unlike products which are introduced by a company and disappear at one point or another, brands endure and stand the test of time.

A brand according to Upshaw and Earle (2000) is the personality of a company and therefore, it is the most valuable asset of a firm. Some authors however believe that a brand is not just a symbol, slogan, logo, or name but a representation of attitude, thoughts, experience, beliefs and feelings that customers associate with a particular company (Kotler and Kevin 2005). As such, one of the major ways in which a company change the attitude feelings , experiences and thought is through undertaking CSR or philanthropic activities that are beneficial to the society and ultimately to the business in the long run (Halme et al 2009).

Brand management as suggested by Raggio and Leone (2007) is part of corporate social responsibility (CSR) as it entails building the reputation of both the products and the name of the corporation. Landa (2006) however, argues that corporate social responsibility (CSR) is an essential part of brand management and perhaps a mandatory process that any company should employ in an effort to control its brand for purposes of maintains its competitive advantage in the market. Evidently, the concept of brand management therefore, entails a continuous strengthening of the positive image that consumers associate the company and the only way to built a positive image and remain relevant to the consumers is through CSR   (Aaker 1997). This can be done through emphasizing a specific message.

The notion of brand management entails quite a number of concepts which may explain why many companies hire brand mangers to specifically ensure that the brand of the company is not misused or diminished (Keller 2003).   Landa (2006) suggest that brand management requires a careful creation and maintenance of signals that depict what the brand of the company actually stands for in an effort to bring out the difference in the minds of people. Brand is therefore an idea but the concept of brand management is the transmission of that idea for instance through giving back to the community and as such fulfilling the CSR of a corporation  as rightly pointed out by (Adamson 2006).

According to Adamson (2006) there are a number of questions that must be answered while embanking of brand management. These three questions are: what is the business plan of the company?; What does the brand represents in the customers’ minds?; whether the company live up to its promise in relation to the brand idea? (Balmer and Soenen 1999). The essence of these three questions as Hatch and Majken (2001) suggest is to understand whether or not the brand the company will benefit from the brand.  However, some authors believe that these questions are not only meant to determine the competitive advantage of the business but the interests of the local community and society as a whole, which leads back to the social responsibility of a corporation (Balmer and Soenen,1999).  In case it is established that the brand does not fit the intended business strategy, it is difficult for a firm to manage such brand effectively and as such, the company may record negative cash flow because of poor performance (Pringle and William 2001).

The reputation and profitability of a company significantly depends on the ability of a company to deliver the brand together with its promise (Kotler and Nancy 2005).  Without effective implementation of social responsibilities however, it is utterly impossible for a company to be able to meet the expectations of customers in relation to brand (Brown 1998). Additionally Schultz et al (2005) suggest that innovation of new products is a continuous process and as such; corporate social responsibility, which is a core part of brand management will always be a critical and important part of firms.

In the opinion of Kotler and Kevin (2005), branding forms a core part of brand management and it involves creating difference. Brand managers therefore have the responsibility to ensure that consumers are informed of the significant points of difference in the brand of the company and the differentiation can be effectively achieve through positive social initiative by the company in its CSR or other charitable initiatives that distinguishes the business from others as suggested by Upshaw and Earle (2000). In order to achieve meaningful successful branding and indeed effective brand management, the company must ensure that the consumers understand “who”, “what” the product is, and “why” consumers should pay attention to the brand (Fombrun, 1996).

Adamson  (2006) argues that effective brand management must ensure that consumers understands “who” the product is. This means that the brand must be given a suitable name, symbol, sign and other related brand elements for purposes of ensuring that consumers are able to identify the product or the company just by a mere mention of the name, symbol, or other specific elements related to the brand. Dowling (1994) however believes that the concept of “who” the product is”, has nothing to do with name, sign and all those physical aspects but rather the reputation. As such, the only viable to build a reputation is through positive initiative by corporations in their CSR aimed at improving lives of people and booting competitive advantage

Raggio and Leone (2007) point out that  with effective brand management, the current as well as prospective consumers should be in a position to know “what” the product is. Consumers will always pay attention to what they know than what they do not know. As such, creating awareness among consumers in respect of what a brand stands for is a core element of brand management.  Equally, Pringle and William (2001) note that brand management must ensure that it is clearly defined as to why consumers should give preference to the brand.   In an effort to ensure that a brand is reputable and profitable to a company the team in the department of brand management must convince the current and prospective consumers as to why they should look out for that particular brand and what that brand offers that is different from the competitors (Schultz et al 2000).  In their argument Husted and Salazar (2005)  contend that social responsibility is one reason as to why consumers may buy products from a company. corporations that take seriously their CSR are more likely to have competitive advantage over others as they give their consumers a reason as to why they should buy their products and that reason is the charitable initiatives of the company.

Brand management also involves designing a strong brand construct. The key concept in designing a strong brand is differentiation. Research shows that brands that offer differentiation are likely to attract more customers, which may mean more profitability (Barich and Philip 1991).  One of the ways to create a strong brand may involve ensuring that the brand is relevant to the lives of consumers. This means that consumers should be able to establish a bond with the brand. Balmer and Soenen (1999) however, contend that the most important thing is brand consistency  as ensures that a company is able to build a strong brand. In essence, the brand should be able to offer a consistent message and something feasible to the consumers in an effort to win the loyalty of consumers and to entice others (Kotler and Kevin 2005).

Indeed a business acquiring or creating a name symbol, sign, color scheme, tagline, or even a logo and publishing them or bring them to the public domain is not enough for the company to build a reputation and earn profits from the brand (Raggio and Leone 2007). For this reason, brand management is required in an effort to create a unique identity of the company’s brand and to establish a link between the brand and the consumers and that link can only be created through CSR. It is therefore, evident from the literature review that brand management enables a company to control and maintain a positive reputation of the company through continuous strengthening the perspective of customers towards brand (Upshaw and Earle 2000).

Key Learning

Overall, most authors agree that the value and importance of brand bulling and management need not be emphasized as it has a direct impact on the performance of business and corporate world. Most authors have linked the concept corporate social responsibility (CSR) with branding and brand management urging that the more a business create initiatives that have a positive impact on the society or help alleviate the lives of workers and the society, the more it achieves competitive advantage and this is branding in the form of CSR. Consequently, brands in the past few years have transformed into the most valuable assets that a company use to boost its performance.

Strategic corporate social responsibility

The body of knowledge in the field of corporate social responsibility (CSR) is quite diverse. The topic, entails concepts such as corporate citizenship, the study of voluntary work, the relationship between the community and corporations, corporate philanthropy and giving, models of environmental and social management to mention but a few. Executives and scholars in the past few years have devoted much of their time analyzing the implications of corporate social responsibility practices and policies and the relation they have on business strategy. Generally, corporate social responsibility involves voluntary environmental as well as social practices and initiative of corporate, which are connected to the core activities of business (Husted and Salazar (2005). However, it is worth noting that these initiatives and practices by business go beyond their existing legal requirements (Sasse and Trahan 2007). Strategic corporate social responsibility is therefore a business plan that a business organization incorporates within its core objectives and competencies for purpose of creating positive social and environmental values, and business values, which are integrated in the daily operations and culture of the business (Halme et al 2009).

Donaldson & Preston  (1995) observe that social corporate responsibility for corporations has become indispensable. As such, the strategic corporate decisions entail both economic as well as social consequences that are connected eventually. In their study, Barney (1996) examines the interdependence that exists between business and society. They contend that indeed there is a link between the two as the activities of a company impact the life communities where such companies operate. The corporation’s activities can have both positive and negative   consequences (Pearce and Doh 2005; Wanderley et al 2008). However,  in the opinion of  Logsdon and Wood (2002) it is  important according to for executives and strategists to put into consideration the expectations and decisions of the society because there may be some alternatives that are attractive when service to society or goodwill are well thought-out. As such, during the formulation of a strategy, corporations should consider the possible positive and negative consequences that may arise and affect not only the company but also those that might affect the stakeholders and the community at large (Mintzberg 1993; Russo & Fouts 1997).

McWilliams & Siegel (2001) believes that the central concern of strategic corporate social responsibility is to establish corporate goals and objectives that are geared towards mitigating social problems and respecting diversity, promoting sustainable social development, preserving cultural as well as environmental resources for the present and future generations. Nevertheless, (Castelo et al 2006) points out that, the notion of corporate social responsibility is widly recognize and given much attention by businesses. For this reason, the top management in various corporations has incorporated it as vital element in the jobs of executives. Strategic advantage as well as altruism and personal values are the major motivations of corporate social responsibility (Bruch & Walter, 2005; Pollach 2003).

According to Castelo et al (2006), in the event that there is a change in the executive body of a company, there is likelihood that an organization might also change its strategies in relation to corporate social responsibility. This perspective is supported by Pearce and Doh (2005); Aguilera et al (2007) who note that corporate social responsibility strategies may change with the change of executives and add that the changes may be influenced by the different values held by different executives.

A number of studies suggest that strategic corporate social responsibility should be linked four elements, which include: structure of the industry, the resources of the company, the relationship with stakeholders, and ideologies and values of the Corporation (Barney 1991; Molteni 2006; Zadek 2006). Indeed most scholars agree with validity of the need to consider the aforementioned elements while formulation social corporate strategies. It is worth noting that the concept of social responsibility itself is corporate strategy in the sense that it can be utilized by the management of a corporation to inspire ingenious solutions founded on the expectations of stakeholders of the company (Hemphill 2004). Some authors however are skeptical about the intent of some corporations while undertaking CSR, and whether the trend is motivated by a genuine need to giving back to the society or solely to achieve competitive advantages (Zadek 2005; Molteni 2006). Husted and Salazar (2005) suggest that strategic corporate social responsibility should be implemented with the intention of alleviating social performance and the economy.

In a study conducted by Husted and Salazar (2006) about social investment, the authors identified three main types of social investment, which were strategic, selfish, and altruistic investment. The best type of investment as most studies suggest is strategic among the three for the business that would try to achieve both social performance and profits simultaneously Amato & Amato (2007).  In a strategic social investment the business, engage in the creation of society welfare and benefits to the local community and society. (Zadek 2005) contend that there are additional benefits of strategic CSR to the business such as boosting the reputation of the company, acquiring the best workers, and boosting the prices of products. The study concludes that a business can achieves competitive advantage and add value through CSR, however it must operate in a strategic way and there should be a link between CSR and corporate strategies.  Mahon (2002) contend that the actions of a corporation especial those related to corporate social responsibility should be perceived in the eyes of the society as adding value to the product as well as alleviating the condition of local business. However, if such actions relating to social responsibility are not viewed by the society as important and valuable to their lives, then the company should revise its strategy otherwise there is a risk of losing both  its competitive advantage to the competitors as well as diminish its reputation (Molteni 2006; Husted and Salazar 2005)

Key Learning

After a thorough research on the above theme, most authors believe that Social responsibility by corporation is a trend that has picked momentum across the globe. To promote corporate changes as well as execute corporate social responsibilities, businesses must design a stratagem that incorporates such social responsibility within the business strategies and also enable the business to have a competitive advantage. The strategy or the plan of corporate social responsibility defines the contributions and nature of the company’s activities both economic and non-economic. Most importantly, strategic corporate social responsibility defines the relationship the community, customers, employees as well as the shareholders.

Methodology

            In an effort to compile a comprehensive and objective research, it is important to undertake a review of the existing body of literature. In the first theme, collection of information was treated as a matter of design, which would facilitate the internal validity, external reliability, and compilation of the study. Some of the sources used in the collection of secondary date were books, journals, and articles from the existing databases on consumer behavior. All the articles used were related to each other, relevant to the topic, and as such giving the research a broad and comprehensive perspective of the topic. Understanding consumer behavior in the market allows an organization to learn how organizations, groups, and individuals choose, purchase, utilize, and dispose products (Stallworth 2008), this was further supported by Rao (2007). It is clear from the study that no single source was favoured over the others. Most of the sources however, treated the concept of consumer behaviour in different perspectives. Nonetheless, they all agree that understanding consumer behaviour is an integral part in marketing.

In the second theme, the information in most of articles was gathered from the field; as such they provided a review of literature that enhanced a deeper appreciation of brand management. Through corporate social responsibility, an organization is able to build a reputation and thus its brand. Most articles agree that the concept of brand management is not limited to the management of a particular product line (Upshaw and Earle 2000; Aaker 1997) but it also related to the reputation of an organization (Landa 2006). The research was all-inclusive in general and it was able to avail comprehensive data and facts related to brand and brand management. Based on the numerous articles, journals and books used to gather information on theme 2, it is clear that for a business to perform well in the market effective brand management is paramount as the brand is the value of a company in the minds of prospective consumers (Rust et al 2004; Gregory 1997). Companies should therefore embark on building their brands to enhance their reputation (Schultz et al 2000) and earn the loyalty of their consumers (Hill 2004).

In theme three, the data in a majority of the sources was collected using the survey method; for this reason, they were able to cover the important aspects related to strategic corporate social responsibility. Most of the sources reviewed provided comprehensive facts on the importance of corporate social responsibility and how social responsibility may be strategically used to create positive social and environmental values, as well as enhance business values (Halme et al 2009; Burke & Logsdon 1996). Most articles had a detailed coverage of information on strategic corporate social responsibility affirming that corporations can achieves competitive advantage,  add value, and achieve positive social and environmental value through CSR, however it must operate in a strategic way and there should be a link between CSR and corporate strategies. As such, application of strategic corporate social responsibility is the only way that business organizations can be able to achieve those benefits simultaneously.

Conclusion

            The concept of corporate social responsibility is indeed a wide discipline that encompasses a number of themes. Basing on the data reviewed from the many sources used in this study, it is evident that each of the three themes namely, consumer behaviour, brand management, and strategic corporate social responsibility are related in one way or another with the concept of corporate social responsibility even though each of the themes can be discussed as individual topics. Consumer behaviour for instance entails the understanding of all the steps involved when consumers are selecting, buying, utilizing, or disposing of services, products, experiences, or ideas for purposes of satisfying desires and needs (Solomon 1995; Hoyer & Macinnis, 2008). One of the aspects that may indeed influence the decision of a consumer to purchase a product is the branding of the product and the previous experience of a consumer (Winer, 2009., Bagozzi & Warsaw, 1990). A brand is not necessarily limited to the product line, name, or symbol of the company but also involves the personality of the company and public perception of the company (Upshaw and Earle 2000), which perception is created through the activities undertaken by businesses in relation to the society. This brings in the concept of corporate social responsibility and the competitive advantage as well as social and environmental values that accrue. It is worth noting that the concept of consumer behaviour involves not only an understanding of the decision making process of a consumer to purchase (Stallworth 2008) but also an understanding of other factors that may influence such a decision (Rao 2007). The study has also established that brand management entails the aggregate stapes undertaken by a business in an effort control not only the image of a product but also the reputation of the company (Keller 2003).

 

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