Kajian Malaysia, Vol. 30, No.

2, 2012, 7193

THE IMPACT OF CORPORATE SOCIAL RESPONSIBILITY ON

CONSUMER LOYALTY
Murali Raman1*, Wayne Lim2 and Sumitra Nair3
1,2,3

Faculty of Management, Multimedia University, 63000 Cyberjaya

Corresponding author: murali.raman@mmu.edu.my

More firms today are beginning to realise the importance of corporate social
responsibility (CSR), and its impact on societal well being, apart from the overall
governance of the supply chain processes of every organisation. Ratings are
being developed to measure performances of most firms with regard to their CSR
efforts besides their financial performance. This rating would then be used to
measure each firm's progress in the business world. Many studies have been
conducted linking CSR to consumer loyalty. It is found that the higher the CSR
rating the stronger the bond would be between these two. Given this scenario, the
main objective of this study is to find relevant evidence to link consumer loyalty
and CSR initiatives within a company. A case study approach was used to
empirically test our research model derived from the literature. Quantitative
analysis based on a total of 100 responses from a leading electronics
manufacturer in Malaysia was used to address the research objectives. The
findings of this study suggest that the higher the practice of CSR the stronger is
the consumer loyalty towards a particular firm. The study also shows that by
investing in CSR, a firm could achieve a positive outcome in terms of its financial
performance. CSR can provide the additional competitive edge to a particular
firm. However, the linearity of this relationship warrants more testing and
empirical research.
Keywords: corporate social responsibility (CSR) in Malaysia, customer loyalty,
brand equity

INTRODUCTION
In the past, financial performance was the major criterion to evaluate a firm's
value. Higher ranks were given to firms that provide greater margins financially.
Maximisation of shareholders' wealth was, by far, the focal point of profit-driven
organisations. In this regard, the emphasis on CSR in the past was not evident. In
this decade, however, the perception about CSR has changed significantly
(Aasad, 2010). The success of a company is now also being measured by its
contribution to society (Pokorny, 1995; Saunders, 2006). Through CSR,
Penerbit Universiti Sains Malaysia, 2012

Murali Raman et al.

individualistic and unscrupulous behaviour in business can be prevented

(Pakseresht, 2010).
More firms today are beginning to realise the importance of CSR and its impact
on societal well being. Ratings are being developed to measure performance of
most firms with regard to their CSR efforts besides their financial performance.
Such ratings are being carefully monitored by independent watchdogs such as
Malaysia Stock Exchange (Bursa Malaysia) in the local context (Lim, 2011). To
date, some countries have already made it compulsory to include CSR ratings
into their corporate report and some are even required to publish their CSR scores
to the public. This reaffirms the relevance of CSR to the context of modern day
business and management. Many studies have been conducted linking CSR to
consumer loyalty. Contemporary review of CSR related literature indicates that
well implemented CSR initiatives can improve consumer loyalty (Aasad, 2010;
Saunders, 2006; Pakseresht, 2010).
The main objective of this study is to ascertain whether CSR efforts do impact
consumer loyalty in a given company. Do CSR initiatives have significant value
in helping to attract indirect marketing value for companies? Does CSR help to
enhance customer loyalty towards a particular company? These questions
motivate this study. A case study approach was used to empirically test our
research model which is derived from the literature. A quantitative analysis based
on a total of 100 responses from a leading electronics manufacturer in Malaysia
was used to address the research objectives in response to the questions put forth
earlier.
The paper proceeds as follows. The following section provides an overview of
literature pertaining to CSR, customer loyalty, and the relationship between these
two concepts. Section three presents the methodology used in this study. Section
four discusses the study's findings. The paper ends with our recommendations
and limitations of the study in light of the given topic.

LITERATURE REVIEW
In a study conducted by Saunders (2006), it is found that the percentage of
consumers who are more likely to recommend a brand that supports a good cause
over the one that does not is 52%. Meanwhile 55% of consumers contend that in
a recession they will buy from brands that support good causes even if they are
not necessarily the cheapest. Companies that have made CSR a central part of
their businesses are reaping the benefits in the form of company sustainability,
reducing liabilities, and insurance costs, as well as improved brand image
(Saunders, 2006). Today, corporations know that CSR is inextricably linked to
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Corporate Social Responsibilty and Consumer Loyalty

their reputation and brand identity (Ahearne, Bhattacharya and Gruen, 2010). The
consumers' idea of a company comprise perception in two broad categories,
brand performance and brand equity. Brand equity refers to the perception
consumers have about a company above and beyond those that are narrowly
reflected via product quality and company performance (Pokorny, 1995). Brand
performance refers to the contribution of the brand towards the business
performance as a whole (Pokorny, 1995). Ahearne, Bhattacharya and Gruen
(2010) relate brand performance to tangible and measurable outcomes that a
brand possesses with regard to the economic value of a company.
To win loyalty in today's markets, companies have to focus on building and
maintaining customer loyalty and CSR has become a useful tool in this regard.
However, the relationship between CSR and customer loyalty remains largely
unexplored (Liu and Zhou, 2010). CSR might affect the value of a company's
brand. Intense competition has in many markets decreased the prospects for
differentiation in terms of technology and product/service quality. For this
reason, CSR is an important attribute that can enhance a company's image
(Ahmad and Jaseem, 2006).
Corporate Social Responsibility
During the industrial revolution a significant portion of the human work force
was replaced with machines used in factories. This helped to produce a
substantial number of millionaires and corporate figures causing a significant gap
between the upper class and working class (Ahmad and Jaseem, 2006). The
significant income disparity between the rich (entrepreneurs) and the poor
(working class), led to the call for social justice and hence the advent of sound
realisation of socially responsible practices (Pokorny 1995; Bergtedt and Nilsson,
2010). In the last twenty years, CSR has become increasingly important to
multinational enterprises, with clear links to business case for corporations
(Brown and Dacin, 1997; Porter and Kramer, 2011). The major plus point that
CSR brings is to ensure that companies are on par with the expectations of their
customers (Surricchio, 2009). Baker (2001) stated that CSR is the positive
outcome a company provides while it manages its normal business trade. CSR is
said to provide a long term commitment to social contribution be it towards the
society or for the development of a particular company's workers. In doing so, a
company as a whole, can organise its business ethically in order to directly
contribute to the betterment of the society as a whole (Soni, 2009; Verhoeff,
2009; Verma, 2010).
Neito (2009) stated that when blended together, CSR and branding strategies can
add value to companies in the eyes of both customers and employees. Levine
(2008) suggested that due to the importance of CSR some non-governmental
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Murali Raman et al.

organisations (NGOs) are looking into options to make it legally mandatory for
CSR programmes to become part of every corporation's business agenda.

Figure 1: Baker's Model 2001

As shown in Figure 1, Baker (2001) stated that CSR efforts in an organisation

can impact society in four main areas namely, the environment, community,
workplace and the marketplace. The author further suggested that these four CSR
impact areas are tied to the relevant stakeholder groups for the organisation. The
main stakeholders that are impacted by the four CSR impact areas are
shareholders, employees and unions, local communities, and the government.
The author asserts that in terms of business quality, a company (driven by profits)
needs to stamp its impact on the marketplace, workplace, environment, and on
the community specifically. This is in addition to its traditional focus on financial
imperatives. The author further suggested that a company should develop and
execute carefully planned CSR initiatives to distinguish itself as a leader in terms
of being a responsible business entity, taking all major shareholder dimensions
into perspective, rather than solely focusing on the shareholders' maximisation
maxim.
Consumer Loyalty
Chaffey (2008) defined consumer loyalty as a desire on the part of the customer
to continue to conduct business with a given company over time. Kotler and
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Corporate Social Responsibilty and Consumer Loyalty

Armstrong (2008) uses the idea of repetitive buying patterns of a particular brand
as an indication of consumer loyalty. This also includes a verbal promotion of the
currently used product or services by the incumbent consumer to others who have
yet to try a particular product or service (Kotler and Armstrong, 2008). The
author classified purchase behavioural loyalty into three aspects: (1) The
hardcore those who only buy one particular brand; (2) The softcore those who
buy only a couple of brands; and (3) The switchers those with no loyalty.
Kotler's work in this context implies that CSR efforts could convert the "softcore"
and "switchers" consumers to the "hardcore" category. Grant (2000) stated that a
loyal consumer is seldom discount-oriented. He associated loyalty to recognition
and preference towards a particular company or its brands. The author further
asserted that consumer loyalty can be enhanced though its societal contributions.
Brand Equity
In the early days, giving away branded articles to customers will get businesses
recognised (Buchholtz and Carroll, 2003). Today, corporations know that CSR is
linked to their reputation and brand identity (Holding and Pilling, 2006).
Manhaimer (2007) stated that customer loyalty is linked to brand equity. Stated
differently, this means that there is a possible relationship between CSR and
loyalty via brand equity. CSR efforts by a company can enhance its brand equity
and thus the overall consumer loyalty.
Smith, Gradojevic and Irwin (2007) asserted that one of the most interesting
marketing factors that most private companies were indulging in is in developing
brand equity. Pakseresht (2010) argued that now, most companies are
distinguished by their brand thus they are evaluated based on how they perform
in the eyes of society. This is further substantiated given the fact that technology
and web-based intelligent sources assist consumers in verifying indexes about a
particular company vis-a-vis its social responsibility. Van Heerde, Gupta and
Wittink (2003) also suggested that brand equity can impact loyalty and these two
factors in turn can be driven by CSR initiatives.
Other researchers such as Balsara (2009) called for making CSR compulsory in
relation to a company's overall brand strategy. These authors added that CSR can
be used to not only promote a cause, but also help to create unique brand equity
for the company. Myers (2003) suggested that customers tend to affiliate
themselves with a particular brand based on the value of its brand. Upon such
significant relationship with the brand, a company can form a unique
identification between the customer and the brand.
The above discussion implies that a possible relationship exists between
consumer loyalty, brand equity and CSR initiatives.
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Murali Raman et al.

Company Identity Attraction

Davis (2008) suggested that companies that associate themselves with consumer
attributes do better than companies that identify themselves by their products.
Verma (2010) elaborated that companies can distinguish themselves from their
competitors through the way that they carry out their business in accordance with
their own corporate mission that focuses on consumer loyalty. Melisende (2007)
explained that a firm can attract consumers by providing a unique identity. He
further asserted that identity attraction can also benefit from CSR ideals.
Longinos and Salvador (2007), in this context, argued that corporate performance
is associated with CSR initiatives and that CSR ideals can help a company to
raise its identity attraction thereby increasing consumer loyalty. In this regard,
one could hypothesise that CSR, company identity attraction, and consumer
loyalty are related (Pavithira, 2009; Chaffey, 2008; Langford and Smith, 2004).
Consumer-Company Identification
Consumer-company identification (CCI) is often defined as the extent to which a
consumer affiliates her/himself to a particular company's business objectives and
ideals in general (Davis, 2008; Farfan, 2007). Bhattacharya and Sen (2003)
defined CCI as the extent to which consumers are willing to identify themselves
and develop significant relationship with a company leading to consumers
becoming champions for the product, service, and what the company represents.
CCI is often measured in three ways: (1) The feeling of interest towards
supporting a particular company; (2) The affiliation towards the particular
company; and (3) The similarity between the other consumers of the particular
company (Davis, 2008; Farfan, 2007; Balsara, 2009; Marx, 2011; Melisende,
2007). Perez (2009) related CCI with the way in which a company carries itself
during trade and its business goal with the intention of influencing purchasing
habit. The author in this context suggested that CSR efforts can impact CCI as
CSR efforts can enhance the ability of consumers to identify themselves with a
particular product and company. Nevertheless, other researchers asserted only
limited studies exist to determine if CCI and CSR relationship does indeed hold
true (Marx, 2011; Brown and Dacin 1997; Melisende, 2007). Wu and Chen
(2010) also stated that the CCI and CSR relationship in relation to consumer
loyalty does not exist. Given rather sporadic viewpoints on this matter, this study
aims to examine if the CCI relationship does indeed impact consumer loyalty and
if this relationship is induced via CSR ideals.

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CONCEPTUAL FRAMEWORK

Consumercompany identity
(CCI)

H7

H5
Corporate social
responsibility
(CSR)

H6
Company identity
attraction (CIA)

Consumer loyalty
(CL)

H2
H3
H1

Brand equity
(BE)

H4

Figure 2: Conceptual framework

Figure 2 highlights the conceptual framework used in this study. The framework
is derived from the literature as discussed earlier. The framework consists of five
major constructs. The constructs, operational definition, and the sources from
which they were derived, are summarised in Table 1.
Table 1: Constructs and operational definition
Construct

Operational definition

Sources

Corporate social
responsibility (CSR)

Responsible efforts by a company in

its effort to contribute positively
towards various stakeholder groups
in society

Asaad, 2010
Pakseresht, 2010
Porter and Kramer, 2011

Consumer-company identity
(CCI)

Significant and meaningful

relationship between consumers and
a company that leads them to become
champions for the product and/or
company

Bhattacharya and Sen

(2003)
Davis (2008)
Farfan (2007)
Balsara(2009)

Company identity attraction

(CIA)

The ability of a company to

create/develop an identity that is
unique to the consumers

Davis (2008)
Pavithira (2009)
Chaffey (2008)

Brand equity (BE)

Value of a brand as perceived by

consumers

Balsara (2009)

Consumer loyalty (CL)

Extent to which consumers affiliate

themselves to a company, resulting
into repeat purchase behaviour

Kotler and Armstrong

(2008)
Chaffey (2008)

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Murali Raman et al.

The research framework suggests that CSR efforts, when implemented well can
impact:
1. CCI (Bhattacharya and Sen, 2003; Davis, 2008; Farfan, 2007; Balsara 2009)
2. CIA (Davis, 2008; Pavithira, 2009; Chaffey, 2008)
3. BE (Balsara, 2009)
The framework further suggests that CCI, CIA and BE can impact consumer
loyalty as suggested by researchers such as Chaffey (2008) and Kotler and
Armstrong (2008). Given this backdrop, a total of seven hypotheses are formed
and tested. The hypotheses are presented in a null form (Robson, 2003):
H1:
H2:
H3:
H4:
H5:
H6:
H7:

CSR initiatives and BE are not related

CSR does not impact CIA
BE does not impact CIA
BE does not impact CL
CSR does not impact CCI
CIA does not impact CCI
CCI does not impact CL

METHODOLOGY
This study is driven by a positivistic epistemology based on quantitative
techniques. Robson (2003) states that in discussing methodology, four aspects are
vital: (1) role of theory; (2) the instrumentation process; (3) sampling process;
and (4) data collection method used in the study. In terms of theory, as
mentioned, the conceptual model used in this study (as presented in Figure 2) was
derived from the literature based on earlier work by various authors. We have
combined these into a consolidated model that was put through testing. All the
five variables earlier stated in the conceptual framework were operationalised
into measurable statements in the questionnaire. The exogenous variable consists
of CSR while the endogenous variables consist of CCI, CIA and BE.
The unit of analysis was individual customers of a large scale electronic
manufacturing company, based in Penang, Malaysia.1 Purposive sampling was
used to select the company based on two criteria. Firstly, the company or case
examined has a strong brand presence in Malaysia. Secondly, the identified
company has experience in implementing CSR related projects. Upon
identification of this company based on these two criteria, a total of 150
questionnaires were sent to the customers of this company, based on the sample
frame of existing customers of the company. This process was facilitated by the
sales manager of the company he assisted the project team members in
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Corporate Social Responsibilty and Consumer Loyalty

distributing the surveys to the existing consumers based on the 2011 listing of
existing consumers. In this process, a simple random sampling technique was
used to identify the target respondents. In terms of analysis, both descriptive and
inferential statistics were conducted using SPSS.

ANALYSIS
The post analysis results were used to verify the conceptual framework to
determine if CSR is related to the other variables namely; CCI, CIA, BE and CL.
The findings were then used to examine the implications of CSR on CL in the
context of the case examined. After eliminating for errors in responses, 101
questionnaires were deemed useful for analysis.
Descriptive Results
As indicated by Table 2, 4% of the respondents were below the age of 20, 39.6%
were in the age 2130 category, 34.7% under the range of 3140, 17.8% were
aged between 4150 and the remaining 4% respondents were 51 and above.
Majority of the respondents were aged between 2130. They can be considered as
baby boomers and they represent the newer members of the workforce.
In terms of gender, 62.4% of the respondents were females while 37.6% were
male. In terms of educational background, the majority of the respondents were
graduates (66%). In terms of salary, the majority of the respondents earned more
than RM70,000 annually (approximately 26%), followed by approximately 25%
who earned between RM40,000RM50,000. 10% of the respondents earned
below RM30,000 annually.

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Table 2: Frequency on demographic profile

Age
Valid

Below 20

Cumulative
percent

4.0

4.0

4.0

39.6

39.6

43.6

3140

35

34.7

34.7

78.2

4150

18

17.8

17.8

96.0
100.0

Gender

4.0

4.0

101

100.0

100.0
Cumulative
percent

Frequency

Percent

Valid percent

Male

38

37.6

37.6

37.6

Female

63

62.4

62.4

100.0

101

100.0

100.0

Total
Education background
Primary

Frequency

Percent

Valid percent

Cumulative
percent

3.0

3.0

3.0

Secondary

15

14.9

14.9

17.8

Degree

67

66.3

66.3

84.2

Master

7.9

7.9

92.1

PhD/Doctorate

7.9

7.9

100.0

101

100.0

100.0

Total
Salary range (RM)
Valid

Valid percent

40

Total

Valid

Percent

2130

51 and above

Valid

Frequency

Frequency

Percent

Valid percent

Cumulative
percent

Below 30,000

10

9.9

9.9

9.9

30,00140,000

15

14.9

14.9

24.8

40,00150,000

24

23.8

23.8

48.5

50,00160,000

16

15.8

15.8

64.4

60,00170,000

10

9.9

9.9

74.3
100.0

70,001 and above

Total

26

25.7

25.7

101

100.0

100.0

Hypothesis Testing
In order to test the hypothesis, the bi-variate correlations were generated to
determine the significance between the variables defined and posited in the seven
hypotheses. The value generated through Pearson's Correlation Coefficient and
sig (2-tailed) were used to determine the strength of relationship between the
affected nodes. Owing to the nature of the questionnaire, the direct and indirect
effect estimation could not be conducted.
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Corporate Social Responsibilty and Consumer Loyalty

Hypothesis 1
The first hypothesis implies that there is no relationship between BE and CSR.
Based on Table 3, all paired wise correlations are positive. This is an indication
that there exists a positive relationship between BE and CSR. Twelve out of 15
P-values are below 0.05. This shows that most of the time, the increase in CSR
will result in higher BE. Therefore hypothesis 1 is proven to be false. There is a
significant relationship between BE and the CSR, contrary to the null hypothesis
presented earlier.
Table 3: Regression weights on hypothesis 1
CSR1

CSR2

CSR3

BE1

BE2

BE3

BE4

BE5

Pearson Correlation

.179

.115

.216(*)

.226(*)

.178

Sig. (2-tailed)

.073

.252

.030

.023

.074

101

101

101

101

101

Pearson Correlation

.724(**)

.351(**)

.718(**)

.594(**)

.638(**)

Sig. (2-tailed)

.000

.000

.000

.000

.000

101

101

101

101

101

Pearson Correlation

.678(**)

.354(**)

.686(**)

.590(**)

.634(**)

Sig. (2-tailed)

.000

.000

.000

.000

.000

101

101

101

101

101

Note: * significance at 90% confidence level

** significance at 95% confidence level

Hypothesis 2
The second hypothesis states that there is no relationship between the CIA and
CSR. Based on Table 4, all paired wise correlations are positive. This is an
indication that there exists a positive relationship between CIA and CSR. Seven
out of nine P-values are below 0.05. This shows that most of the time, the
increase in CSR will result in higher CIA. Therefore hypothesis 2 is proven to be
false. There is a significant relationship between CIA and the CSR based on the
findings of this study.
Hypothesis 3
The third hypothesis states that there is no relationship between BE and the CIA.
Based on Table 5, all paired wise correlations are positive, indicating that there
exists a positive relationship between BE and CIA. All P-values are below 0.05.
This result implies that an increase in BE will result in higher CIA. Therefore

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Murali Raman et al.

hypothesis 3 is proven to be false. There is a significant relationship between BE

and the CIA, based on the findings of this study.
Table 4: Regression weights on hypothesis 2
CSR1

CSR2

CSR3

CIA1

CIA2

CIA3

Pearson Correlation

.266(**)

.189

.195

Sig. (2-tailed)

.007

.058

.050

101

101

101

Pearson Correlation

.771(**)

.673(**)

.699(**)

Sig. (2-tailed)

.000

.000

.000

101

Pearson Correlation

.701(**)

.675(**)

.676(**)

Sig. (2-tailed)

.000

.000

.000

101

101

101

101

101

Note: ** significance at 95% confidence level

Table 5: Regression weights on hypothesis 3

BE1

BE2

BE3

BE4

BE5

Pearson Correlation

CIA1
.868(**)

CIA2
.802(**)

CIA3
.752(**)

Sig. (2-tailed)

.000

.000

.000

101

101

101

Pearson Correlation

.539(**)

.464(**)

.435(**)

Sig. (2-tailed)

.000

.000

.000

101

101

101

Pearson Correlation

.822(**)

.808(**)

.803(**)

Sig. (2-tailed)

.000

.000

.000

101

101

101

Pearson Correlation

.748(**)

.723(**)

.739(**)

Sig. (2-tailed)

.000

.000

.000

101

101

101

Pearson Correlation

.778(**)

.683(**)

.668(**)

Sig. (2-tailed)

.000

.000

.000

101

101

101

Note: ** significance at 95% confidence level

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Corporate Social Responsibilty and Consumer Loyalty

Hypothesis 4
The fourth hypothesis implies that there is no relationship between CL and BE.
Based on Table 6, all paired wise correlations are positive, suggesting that there
exists a positive relationship between BE and CL. All P-values are below 0.05,
suggesting that an increase in BE will result in higher CL. Therefore hypothesis 4
is proven to be false. There is a significant relationship between BE and the CL,
based on the findings of this study.
Table 6: Regression weights on hypothesis 4
CL1
BE1

.758(**)

.809(**)

Sig. (2-tailed)

.000

.000

.000

.000

101

101

101

.383(**)

.416(**)

.511(**)

.519(**)

Sig. (2-tailed)

.000

.000

.000

.000

101

101

101

101

Pearson Correlation

.729(**)

.742(**)

.731(**)

.825(**)

Sig. (2-tailed)

.000

.000

.000

.000

101

101

101

101

Pearson Correlation

.678(**)

.683(**)

.721(**)

.732(**)

Sig. (2-tailed)

.000

.000

.000

.000

101

101

101

101

N
BE5

101

Pearson Correlation

N
BE4

CL4

.765(**)

N
BE3

CL3

.754(**)

N
BE2

CL2

Pearson Correlation

Pearson Correlation

.667(**)

.652(**)

.662(**)

.805(**)

Sig. (2-tailed)

.000

.000

.000

.000

101

101

101

101

N
Note: ** significance at 95% confidence level

Hypothesis 5
The fifth hypothesis states that there is no relationship between CSR and CCI.
Based on Table 7, all paired wise correlations are positive, suggesting that there
exists a positive relationship between CSR and CCI. Eight out of 12 of the Pvalues are below 0.05. In this context, one could argue that an increase in CSR
will result in higher CCI even when the relationship is not highly significant.
There is still a weight-age of dependency relationship between these two
variables. Therefore hypothesis 5 is also proven to be false. There is a mild
relationship between CSR and the CCI based on the findings of this study.

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Murali Raman et al.

Table 7: Regression weights on hypothesis 5

CSR1

CCI1

CCI2

CCI3

CCI4

Pearson Correlation

.159

.198(*)

.167

.134

Sig. (2-tailed)

.113

.047

.095

.181

101

101

101

101

N
CSR2

CSR3

Pearson Correlation

.291(**)

.446(**)

.621(**)

.642(**)

Sig. (2-tailed)

.003

.000

.000

.000

101

101

101

101

Pearson Correlation

.279(**)

.521(**)

.628(**)

.640(**)

Sig. (2-tailed)

.005

.000

.000

.000

101

101

101

101

Note: * significance at 90% confidence level

** significance at 95% confidence level

Hypothesis 6
The sixth hypothesis implies that there is no relationship between the CIA and
the CCI. Based on Table 8, all paired wise correlations are positive, indicating
that there exists a positive relationship between CIA and the CCI. All of the Pvalues are below 0.05. In this regard, one can suggest that an increase in CIA will
result in higher CCI. Therefore hypothesis 6 is proven to be false. There is a
significant relationship between CIA and the CCI based on the findings of this
study.
Table 8: Regression weights on hypothesis 6
CIA1

CCI1

CCI2

CCI3

CCI4

Pearson Correlation

.396(**)

.509(**)

.751(**)

.741(**)

Sig. (2-tailed)

.000

.000

.000

.000

N
CIA2

101

101

101

Pearson Correlation

.324(**)

.539(**)

.732(**)

.813(**)

Sig. (2-tailed)

.001

.000

.000

.000

N
CIA3

101

101

101

101

101

Pearson Correlation

.300(**)

.393(**)

.682(**)

.750(**)

Sig. (2-tailed)

.002

.000

.000

.000

101

Note: ** significance at 95% confidence level

84

101

101

101

Corporate Social Responsibilty and Consumer Loyalty

Hypothesis 7
The seventh hypothesis states that there is no relationship between CCI and CL.
Based on Table 9, all paired wise correlations are positive, indicating that there
exists a positive relationship between CCI and CL. All the P-values are below
0.05. This suggests that an increase in CCI will result in higher CL. Therefore
hypothesis 7 is proven to be false. There is a significant relationship between CCI
and CL based on the findings of this study.
Table 9: Regression weights on hypothesis 7
CL1
CCI1

CCI2

CCI3

CCI4

CL2

CL3

CL4

Pearson Correlation

.343(**)

.314(**)

.362(**)

.342(**)

Sig. (2-tailed)

.000

.001

.000

.000

101

101

101

101

Pearson Correlation

.527(**)

.413(**)

.429(**)

.568(**)

Sig. (2-tailed)

.000

.000

.000

.000

101

101

101

101

Pearson Correlation

.747(**)

.710(**)

.663(**)

.808(**)

Sig. (2-tailed)

.000

.000

.000

.000

101

101

101

101

Pearson Correlation

.767(**)

.678(**)

.698(**)

.795(**)

Sig. (2-tailed)

.000

.000

.000

.000

101

101

101

101

Note: ** significance at 95% confidence level

DISCUSSION
The summary of the study's findings are presented in Table 10. The implications
of the results to the existing body of work on CSR are discussed therein. As
mentioned earlier, the hypotheses were written in null form (Robson, 2003), and
as such, a rejection of any particular hypothesis implies that a relationship does
exist between the constructs under study (Robson, 2003).

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Table 10: Summary of findings

Hypothesis

Results

H1: CSR initiatives and BE are not related

Rejected

H2: CSR does not impact CIA

Rejected

H3: BE does not impact CIA

Rejected

H4: BE does not impact CL

Rejected

H5: CSR does not impact CCI

Rejected

H6: CIA does not impact CCI

Rejected

H7: CCI does not impact CL

Rejected

Overall, this study has strengthened the previous research done on CSR and CL.
The outcome of the analysis result shows (as per Table 10) that the final model is
a tested one based on the framework of 7 hypotheses thus reaffirming the
implication of CSR towards CL. The rejection of hypothesis 1 implies that there
is a relationship between CSR initiatives and BE in the case of this company.
This finding is in line with prior work by Neito (2009) who stated that CSR
imperatives can add value to all major stakeholders in a company and this
includes adding value to consumers. Consumers are likely to perceive CSR ideas
and ideals positively and thus could perceive the overall brand as adding value to
their lives (Neito, 2009). This finding also echoes prior work by Buchholtz and
Carroll (2003), and Kotler and Armstrong (2008) who also suggested that CSR,
when implemented well in a company, can lead to greater BE.
Hypothesis 2 states that CSR does not impact CIA which implies that there is no
relationship between CSR and the identity CSR efforts offers to a particular
company. Our findings show that this hypothesis was rejected; implying that, in
the case of this company in Penang, CSR efforts do impact the identity of the
company, making it more attractive to consumers. When executed properly, CSR
initiatives are able to better position a company in the eyes of consumers thus
making this company more attractive relative to its competitors (Neito, 2009).
Examples of such initiatives include establishing proper governance in the supply
chain activities and also providing consumers with clear and transparent pricing
strategies (Porter and Kramer, 2011). Our findings are also in line with prior
work by Pavithira (2009); Chaffey (2008); Langford and Smith (2004). A similar
case in point in the local scene would be DiGi, the telecommunications player
famous for its brand attractiveness given its sustained CSR momentum in the
marketplace and community (DiGi, 2010).
In the third hypothesis, we examined the relationship between BE and CIA and
stated that the two constructs are not related. Our findings rejected H3 indicating
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Corporate Social Responsibilty and Consumer Loyalty

that, in the case of this company, BE and CIA are related. This is in line with
prior findings by Balsara (2009) and Melisende (2007). Balsara (2009), for
instance, stated that higher BE often leads to the product/company being more
attractive to consumers. Similar sentiments were found in the work of Kotler and
Armstrong (2008). In this context, in relation to BE and CIA, our findings are
consistent with prior findings as reported in the literature.
Hypothesis 4 which states that BE does not impact CL was also rejected. In the
case of this company, our findings suggest that BE does impact CL. As put forth
by earlier commentators such as Holding and Piling (2006), Manhaimer (2007),
Buchholtz and Carroll (2003) and Smith, Gradojevic and Irwin (2007), BE and
CL are closely related. A higher BE often leads to more loyal consumers
(Manhaimer, 2007). When a consumer perceives a brand to be of high value, the
probability of repeat purchase behaviour is greater (Kotler and Armstrong, 2008;
Manhaimer, 2007). Our finding in relation to this hypothesis is consistent with
the literature the customers of the company studied tend to repeat their
purchases as they perceived the company's brand positively.
As mentioned in the literature review, the relationship between CCI, CSR and CL
remains inconclusive (Wu and Chen, 2010; Perez, 2009). While commentators
such as Perez (2009) suggested that CCI can lead to greater CL, the relationship
between CCI and CL mediated by CSR ideals remains inconclusive. Our findings
in this context, is consistent with the sporadic viewpoints in the literature.
Although H5 was rejected, i.e., suggesting that there is a relationship between
CCI and CSR in this case, the relationship is rather weak. In this regard, more
research can be done in to ascertain the impact of CSR on CCI.
With reference to H6, this study suggests that CIA and the CCI are indeed
related, consistent with the arguments from prior work by Davis (2008), Farfan
(2007), Balsara (2009), Marx (2011) and Melisende (2007). Generally, our study
supports prior arguments that the ability of a company to attract consumers given
a unique value proposition in its product/service offering, naturally results into a
significant and meaningful relationship between consumers and a company that
leads them to become champions for the product and/or company (Bhattacharya
and Sen, 2003; Davis, 2008; Farfan, 2007; Balsara, 2009). In addition, consistent
with prior findings, the results of this study also shows that CCI and CL are
positively correlated (Bhattacharya and Sen, 2003; Davis, 2008; Kotler and
Armstrong, 2008).
Implications to Theory
The findings of this study imply that the higher the practice of CSR the stronger
the CL towards a particular firm. CSR can provide the additional competitive
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Murali Raman et al.

edge to a particular firm albeit the linearity of this relationship warrants more
testing and empirical research. Our review of literature on CSR and marketing
suggests that while there is some evidence that CSR imperatives can have
tangible outcomes to a company's financial performance and sustainability, the
literature in general lacks sound empirical support (e.g., Porter and Kramer, 2011;
Kotler, 2008). In addition, a comprehensive framework that examines the
relationship between CSR and fundamental marketing constructs e.g., BE, CL
and consumer identification with companies is still at its infancy. The research
framework used in this study therefore offers a platform for future work and
researchers who intend to examine CSR and CL.
Implications to Practice
In most emerging economies such as Malaysia, the phrase CSR is often confused
with Corporate Philanthropy or Promotional CSR. Promotional CSR is when
corporate sustainability and responsibility are seen mainly as a public relations
opportunity to enhance brand, image and reputation of the company (Visser,
2010). The concept of creating shared value is not well understood nor
appreciated, and firms often view CSR as a nice to have yet an extravagant add
on to improve branding or corporate reputation instead of a "must have" aspect
that is integrated into business to ensure long term sustainability and maximising
stakeholder value. Part of the problem lies with companies themselves which
remain trapped in an outdated approach to value creation that has emerged over
the past few decades (Porter and Kramer, 2011). But this trend is visibly
changing. There is evidence that mainstream investors and analysts are paying
greater attention to CSR-related issues and, more generally, to intangible assets
and intellectual capital. This is likely to increase the profile of CSR issues in the
financial valuation of enterprises (David, 2010).
Many managers of larger firms are not reluctant to engage in this non-revenue
measurable practice. Most that follow the practice of the CSR believe that CSR
will indefinitely provide them with an additional advantage towards CL, and
hence increase their competitive edge. Most researchers believe that consumers
are channelling their purchasing focus to moral and ethical concerns of a
particular company rather than putting too much emphasis over the cost of a
product. This middle ranged income group has emerged as one of the most
influential groups that determine a market preference trend, and hence CL.

LIMITATIONS OF STUDY
The survey is conducted based on a limited number of respondents, confined to a
particular demographic only. The results might actually differ should respondents
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Corporate Social Responsibilty and Consumer Loyalty

from different states or even country are obtained. This is because the social
mentality of a particular group of people could vary based on their actual
location. The context is only based on a single large firm. CL with regard to CSR
was examined within the boundaries of a single company.
Any future studies should try to include several companies into the study context.
Future researchers should also include a wider demographic or country given the
diversity in relation to demography, lifestyle, and perhaps awareness of the CSR
concept and implementation within an institutional setting.

CONCLUSION
Upon reviewing previous studies done on CSR, we could hardly get any that
links CL to the CSR particularly via the BE, CCI and CIA relationship. In this
context, one can suggest that this study has enhanced and strengthened the
implication of CSR on CL in the case of a large electronics manufacturing
company in Malaysia.
The results of the analysis show that positive relationships are obtained and a
final model is derived to link CSR with CL. BE, CCI and CIA were also found to
have significant relationship with CSR. The limitation of the current study is also
explained in order to provide a better picture of the situation in relation to this
study. As such this study can be used and extended by future researchers who
intend to examine the relevance of CSR in light of developing effective brand
strategies and in order to unleash the value of the proposition offered by CL.

NOTES
1.

The researchers are not allowed to disclose the name of the company based on company
policy.

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