Academy of Entrepreneurship Journal (Print ISSN: 1087-9595; Online ISSN: 1528-2686)

Research Article: 2022 Vol: 28 Issue: 2S

Impact of CSR Practices on Customers Attitude towards Business an Empirical Study

Hussam Ali, Middle East University

Alhareth Abu Hussein, Amman Arab University

Mufleh Amin Al Jarrah, Amman Arab University

Younes Abed Al Aziz Megdadi, Amman Arab University

Anas A. Salameh, Prince Sattam Bin Abdulaziz University

Citation Information: Ali, H., Hussein, A.A., Jarrah, M.A.A., Megdadi, Y.A.A.A., & Salameh, A.A. (2022). Impact of CSR practices on customers attitude towards business- An empirical study. Academy of Entrepreneurship Journal, 28(S2), 1-10.

Keywords

CSR Practices, Customers Attitude, Factor Analysis, Sustainable Growth

Abstract

 Corporate Social Responsibility, abbreviated as CSR is impactful in businesses. The customer’s loyalty and attitude towards the brands is being influenced by the CSR initiatives taken by different firms. These initiatives are likely to impress the customers and build trust for the brands produced by the companies. The stakeholders always seek the best for themselves in the companies they have invested. The CSR activities showcases values withheld by the companies (Ogunfoworaet al., 2018). Henceforth, producing goodwill and sustainable growth. People are now inclined towards safeguarding the environment. Thus, enterprises need to take a closer look at these aspects of growth. The CSR programs undoubtedly enhances customer satisfaction and influences their purchasing behavior. Individuals prefer brands which have the reputation of serving best to their customers without hampering the nature in the process. The additional CSR projects gives an edge over other businesses who do not participate in such social activities (Barnettet al., 2020). Therefore, the main objective of this paper is to explore the factors that determine how CSR practices forms the attitude of the customers towards an organization. In the present study the data was collected from 212 respondents that belong to different CSR departments and the statistical tool called multiple regression was applied to reach to end results. The study concludes that there are different CSR practices that show significant impact on consumer’s attitude towards business.

Introduction

The paper deals with evaluation of consumer perception towards businesses based on CSR activities organized by the enterprises. It is known to the practitioners that there seems to be a positive impact on brand attitude and the authenticity of CSR. Corporate social responsibility happens to be a familiar concept in corporate scenario which gives an upper hand in the strategy making while considering social activity or sustainable growth as a competitive advantage. The enterprises are of the view that Corporate Social Responsibility will lead them to a better position and create a good reputation in the market (Den Hondet al., 2014).

The policy makers are of the view that organizations and societies are interdependent on each other. They are liable to the external environment or the societies in which they execute their operations. They are surrounded by some moral obligations and responsibilities, such as maintaining the harmony of environment, creating value-based ecosystem for the employees, social well-being schemes for workers, and other effective social development programs for the community. Businesses are taking CSR into consideration, since they know it plays a huge role in customer attitude towards a particular brand.

Catering to the social responsibility of businesses is an important mission for the business leaders. The strategists and analysts are spreading the word through worldwide campaigns for including a greater number of initiatives for the betterment of the society while earning profits. The CSR activities have gained much importance and is being showcased in magazines and advertisements after surpassing a lot of criticisms. Consumers are one of those stakeholders who represent the revenue targets, therefore it creates a greater impact in the overall economy (Dreyeret al., 2017). The corporate reputation of companies is dependent hugely on the corporate social activities. The customer appraisal strategies are impacted by the satisfactory levels of consumers. The customers decide which brands to purchase and be loyal to. Thus, the sentiments of the consumers cannot be taken for granted. Most of the literature on marketing are paying attention to the satisfaction level of customers for building plans and strategies according to the existing levels and how they would be able to alleviate the same for better results (Alalwanet al., 2017).

The CSR policies can be theoretically written and kept for no use, it remains unworthy until and unless the initiatives are taken for implementing the same in the organization. The consumers who have been purchasing from a particular brand, on knowing their CSR initiatives, might choose to reward them by being the ambassadors of the same brand (Mukherjee & Althuizen, 2020). They might also show resilience to some extent with non-negative comments for the company. The literature of various papers reveals the fact that the business leaders are on the voyage to find appropriate ways to meet customer demands by working on the motivational factors. Instrumental, moral, and relational aspects of motivation delineate them to focus on customer needs. However, it has been observed that they often neglect the CSR initiatives and its impact on customer satisfaction. An understanding based on various papers suggests that CSR activities have a positive impact on customer perception. The positive attitude of existing consumers may also influence new consumers to join the tribe and be loyal ambassadors of the respective brands (Rialtiet al., 2017). Therefore, this paper has accomplished the objective of understanding the factors associated to consumer attitude towards the CSR initiatives taken by businesses.

Literature Review

This literature establishes an understanding for the relationship between CSR activities of company in the context of customer perception towards the companies. The data has been collected from different customers of IT companies, using an empirical research methodology. This paper has determined the facts with respect to CSR initiatives on the satisfaction level of consumers. In drawing the metrics for the business leaders or managers, the satisfaction of customers is given prime importance (Kumar, 2018). The processes and mechanisms which have an impact on CSR with respect to customer satisfaction is another way of determining the relationship the two shares with each other. The variables are complementary to each other.

The notion of CSR is a type of self-driving responsibility for the business enterprises that has its objective focused on the societal development by participating in volunteering exercises. These activities had a foundation on ethics that served for the betterment of societies while attracting customers by generating trust and earning a good brand name. This also involves several laws confined to corporate strategy that moves ahead as responsibilities of the entire industrial scenario. The companies which have a complex structure, the difficulties lie with them. The companies growing at a humongous rate and spreading its manufacturing units all over the globe, have the probability of creating hazards in the environment on a larger scale. Thus, consumers have higher expectations from such big firms. The current paper tries to analyze the CSR activities and its effect on the attitude of consumers and their buying behavior. The stakeholders are impacted affirmatively as CSR activities takes on the responsibility for the reputation of firms in the social endeavors. It is found that more than eighty percent of fortune 500 companies are participating in the CSR initiatives to develop their brand image in the social development context (Hoqueet al., 2018). The studies have confirmed a positive significant relationship between CSR initiatives taken by companies and the purchasing intent of consumers. The top authority must encounter difficulties like the audits done by social representatives, the corporate social documenting, and so on. These are essential for the companies and earlier the European countries focused on conducting research for CSR activities but in the present scenario the Indian markets are also considering CSR as an important factor that has a key role to play in consumer perception.

The consumers knowledge related to CSR initiatives are limited to only few aspects of it. Thus, the reaction of consumers would be positive only for those initiatives which are relatable to them (Ailawadiet al., 2014). The consumers would appreciate only in terms of brand characteristics, profile of the company and its products. They wouldn’t dwell much into the characteristics of CSR initiatives. The consumer attitude towards the specific brands is largely dependent on their source of information collected, the trust perceived by the hearsay of people and in the view of CSR activities and corporate skills. The assessment of CSR initiatives has also considered several other aspects of businesses such as the cultural context, political, social, economic, and technological (Tilt, 2016). The paper highlights the main importance of the effect of CSR initiatives on consumer perception, but it has also brought forward the research gap which suggests that there may be other variables which directly or indirectly affecting the CSR adoption in the enterprises for better brand reputation.

The performance of CSR activities is measured by aspect of customer satisfaction (Zhanget al., 2020).The corporate social responsibility or the initiatives taken by the businesses to contribute to the society by different ways and means, is an automatic plan of action that assists an organization with being responsible for different stakeholders associated to its business for instance, the business itself, its partners, and the common people in general. By rehearsing corporate social activities, likewise, also known as corporate citizenship, organizations can have the knowledge about the sort of effect they are creating or are having on all parts of community, including monetary, social, and ecological. However significant as CSR may be for the local area, it is also very important for an organization. CSR exercises can assist with building a more grounded connection among the representatives who are working and partnerships, to support their spirit of contribution, and to support the employees, workers, and the businesses at large (Lévesqueet al., 2018). The people working in the enterprise feel more associated with their general surroundings. The organizations ought to be socially mindful about their whereabouts in the community. The firms must be aware about its stakeholders and should be responsible to itself and its investors. Usually, companies have earned a reputation in the market, and they need to keep it intact for the purpose of attracting more customers. They have certain liability to the society they are working in. Therefore, the organizations need to pay back to the society in whichever ways possible. CSR happens to be such a strategy which helps companies to maintain their standards of empathy towards the people and ethical behavior because of which customers respect them for what they are doing for everyone (Antonetti & Maklan, 2015). The more prominent and successful a business enterprise is, the more it must take care of its reputation in and around its competitors, customers, and the society at large. Organizations that take on CSR programs have developed their business to where they can reward the society in a much better way. In this manner, CSR is ordinarily a system that is executed by enormous partnerships. The first and foremost step would be to determine the type of initiatives taken by the companies for serving the purpose of corporate social responsibility. Many authors have confirmed the fact that consumer perception differs from the kind of initiatives taken by companies.

Some of the studies suggested that the promotion of CSR initiatives on social media led to positive results on the customer satisfaction of the brands. Social media has become a trending platform for showcasing the activities of the organizations for doing sort of an employer branding. With the help of CSR initiatives, firms attempt to show a brand character to the public, somewhat, by benevolent qualities (Pelozaet al., 2015). Hence, customers start a course of intellectual elaboration yet in an exceptionally basic manner, with one fundamental objective, that is to obtain certain guarantees with respect to its brand reputation and according to the company's participation in its social responsibility, ensures that the way the firm is promoting itself to the consumers by its CSR program. This presents the values withheld by the enterprise and the way consumers perceive them.

This rational cycle depends on a progression of decisions taken about the association's reputation and credibility, its standing or brand name between the CRS initiatives, the policies indicating the company’s profile and the positioning and advertising done by it is showcased with the help of several digital media. Besides this, customers might be by and large happy and satisfied with CSR movement in two possible ways: (1) communicating with the enterprise that completes CSR drives is a way of fulfilling the satisfaction level of consumer and their interest in taking part in the social assistance of the society or community, except if they see advantage or opportunism uncalled for issues; (2) the buyers reward CSR drives as a trigger for the initiatives coming in future, in similar ways, since organizations will peruse consumer loyalty as a way to grow more CSR drives or develop the existing programs. In a similar manner, it is contended that there are two processes for achieving the goal of fulfilling demands of consumers and catering to customer satisfaction. The first way is an immediate one comprising of an intellectual interaction set off by view of the CSR movement. Basically, this implies that purchasers should be made mindful and persuaded of CSR drives and truthfulness through specialized instruments for instance, social announcing. The second is an aberrant course through perspectives, where social the consumer’s recognizable proof with the organization taking part in CSR drives makes an impression that should have an immediate, positive impact on purchaser mentalities toward the brand. It very well may be proposed that customers will in general have more impactful impression of CSR and "reward" the CSR activities in the same line as customer attitude (Liet al., 2017).

Trust is a crucial aspect in the business domain. Trust is generated from various thought processes, attributes, and beliefs of the trade partners and the consideration, suppositions, and projected by the buyers with respect to the confirmed results of the enterprise. Trust is made up of three principal perspectives which are identified with apparent validity, the perceivable truth, and generosity shown by the company towards its customers.

Moreover, trust is also considered as a key aspect or a significant variable for the development of responsibility (Parket al., 2014). It comes from the customer's wishes or desires and their willingness to move on with the relationship that they share with the enterprise. The actual meaning of responsibility which has been delivered by an author expresses that 'responsibility or commitment addresses a drawn out wish to maintain an important relationship' – it bluntly presents the three key components which are worthwhile for this idea. In the first place, responsibility must be a long process; in other words, it describes the different groups must move along with the relationship past the current form of exchanges. Second, responsibility also means a wish; in other words, it should be founded on an individual’s inclination towards proceeding with the relationship past the legitimate commitments (Dobeleet al., 2014). In the same way, third, responsibility must be pointed towards accomplishing the existing satisfaction levels of customer and thereafter aimed at higher satisfaction levels. The groups will keep up with the relationship if they accept that this connection will permit them to a greater number of benefits coming about because of the goals embraced.

Some of the examples of CSR initiatives taken by organizations for the betterment of societies are

a) Infosys, a famous IT organization has spent through more than 360 Crore rupees in Coronavirus alleviation exercises as a part of its CSR initiatives which incorporates offices for isolation bed arrangements (Sharmaet al., 2020). They also embrace social advancement exercises through the Infosys Foundation.

b) Mahindra & Mahindra organization spent around INR 93.50 Crores on CSR drives during the financial year of 2018-19 (Kumari, 2020). They have a prime focus on social development plans. The huge enterprise has set global benchmarks for corporate achievement and sustainable development of the society. Mahindra & Mahindra has started the greatest CSR program in India for teaching the young girl children. Not exclusively does the venture give free training to young girls belonging to low-pay families in rustic and metropolitan pockets, it also engages and looks after their families.

The last few years have seen a wonderful expansion in the joining of the standards of CSR into management of business. Albeit the primary investigations date from the 1950s, it isn't until the start of the twenty-first century that it was seen, CSR being really consolidated into business the executives as a separating component equipped for producing upper hand. During this entire period, the idea of CSR has developed ceaselessly. At the first place, CSR was drawn nearer as a commitment with respect to organizations (Moryet al., 2016). However, this perspective on CSR as a commitment paved the way during the 1990s to a new plan of CSR as a commitment stretched out to every one of the partners (vested parties) that are identified with the enterprise. Under this methodology, the commitments of CSR are extended to all the specialists of the industry, straightforwardly or by implication influenced by the firm’s movement. This extensive perspective on the promises made by the enterprises for their interest parties was scrutinized by certain authors because it saved the idea of commitment or obligation. CSR was introduced as a compulsory activity and was hence persuaded by the business’s interests (Dobeleet al., 2014). According to some eminent authors, CSR should react to a positive responsibility of a business towards the development and improvement of society and should go past a commitment given by the firm. Along the same line, the organization shall have a pre-emptive disposition to the betterment of the society.

The consumers share an important role in the group of the of partners to whom organizations can easily relate. All through the literature of various research papers have exhibited the fact that, the CSR initiatives should impact the behavior of buyers (Elg& Hultman,2016). Many authors have stated the fact that purchasers are the main stakeholders of any organization. It was once expressed by an eminent author that consumers are viewed as those key stakeholders who are generally influenced by the accomplishment or attainment of the objectives of an enterprise. Along this line, as of late, not many authors likewise stressed the significance of the customer by calling attention to the point of view that the social obligation of purchasers is the genuine or actual corporate social responsibility a.k.a. CSR. This way of perceiving of what the consumers expect or need basically necessitates that we must check out the organization from both external as well as an internal view instead of the doing vice versa, to consider it from the viewpoint of customers. According to a similar point of view, and hence can be better positioned to behave in consistence with their assumptions and desires.

Objective

1. To find different CSR practices followed in business sector.

2. To know the impact of CSR practices on consumer’s attitude towards business.

Research Methodology

A sample of 212 people was surveyed with the help of a structured which was specially designed for the present study. Respondents were from different CSR departments and had shared their opinion about different CSR practices and its impact of CSR practices on consumer’s attitude towards business. The study is empirical in nature and the data collection method used was random sampling. Statistical tool called multiple regression was applied to get the end results of the study.

Findings

Table 1 is showing the general profile of the respondents in which it is observed that in total number of 212 respondents 55.2% are male and 44.8% are female. Among them 33.5% are from the age group 27-31 yrs, 42.0% come under the age group 31-37 yrs and rest 24.5% are above 37 yrs of age. 27.8% of the respondents are the member of CSR team, 28.8% are working as CSR team leaders, 32.5% are CSR team managers, and 10.8% are working on other designations of CSR department. 37.3% are working from 0-6 years in the CSR department, 39.1% are having a work experience of 6-10 years, and rest 23.6% are working from more than 10 years in their department. Table 2.

Table 1
General Profile Of The Respondents
Variable Respondents %age
Gender    
Male 117 55.2
Female 95 44.8
Total 212 100
Age    
27-31 yrs 71 33.5
31-37 yrs 89 42.0
Above 37 yrs 52 24.5
Total 212 100
Occupation    
CSR team member 59 27.8
CSR team leader 61 28.8
CSR team manager 69 32.5
Others 23 10.8
Total 212 100
Work experience    
0-6 years 79 37.3
6-10 years 83 39.1
More than 10 years 50 23.6
Total 212 100
Table 2
Csr Practices Followed In Business Sector
SI. No. CSR practices followed in business sector
1. CSR practices influences the customer’s loyalty and attitude towards the brands
2. Customer satisfaction is enhanced by CSR practices and it also influences their purchasing behavior
3. CSR activities have a positive impact on customer perception
4. CSR practices focuses on the societal development by participating in volunteering exercises
5. CSR activities takes on the responsibility for the reputation of firms in the social endeavors
6. CSR initiatives on social media led to positive results on the customer satisfaction of the brands
7 CSR drives makes an impression and shows immediate, positive impact on purchaser mentalities toward the brand
8 CSR practices helps in celebrating achievements of the company with their customers
DV Overall impact of CSR practices on consumer’s attitude towards business

Analysis of Multiple Regression

Table 3, 4, and 5 shows the relationship of the 10 independent variables and 1 dependent variable which is “Overall impact of CSR practices on consumer’s attitude towards business.”

Table 3
“Model Summary”
“Model” “R” “R Square” “Adjusted R Square” “Std. Error of the Estimate”
1 0.908a 0.825 0.818 0.35269
a. Predictors: (Constant), CSR practices influences the customer’s loyalty and attitude towards the brands, Customer satisfaction is enhanced by CSR practices and it also influences their purchasing behavior, CSR activities have a positive impact on customer perception, CSR practices focuses on the societal development by participating in volunteering exercises, CSR activities takes on the responsibility for the reputation of firms in the social endeavors, CSR initiatives on social media led to positive results on the customer satisfaction of the brands, CSR drives makes an impression and shows immediate, positive impact on purchaser mentalities toward the brand, and CSR practices helps in celebrating achievements of the company with their customers

The Value of adjusted R square is 0.818, which means that the model explains around 82% of the variation. Table 4 shows the values of ANOVA, which is significant (sig. value below 0.05) which reflects the impact of independent variables is significant on dependent variable.

Table 4
“ANOVA”
“Model” “Sum of Squares” “df” “Mean Square” “F” “Sig.”
Regression 118.636 10 14.829 119.218 0.000b
Residual 25.250 203 0.124    
Total 143.887 211      
DV: Overall impact of CSR practices on consumers attitude towards business
b. Predictors: (Constant), CSR practices influences the customer’s loyalty and attitude towards the brands, Customer satisfaction is enhanced by CSR practices and it also influences their purchasing behavior, CSR activities have a positive impact on customer perception, CSR practices focuses on the societal development by participating in volunteering exercises, CSR activities takes on the responsibility for the reputation of firms in the social endeavors, CSR initiatives on social media led to positive results on the customer satisfaction of the brands, CSR drives makes an impression and shows immediate, positive impact on purchaser mentalities toward the brand, and CSR practices helps in celebrating achievements of the company with their customers

Table 4 presents the value of ANOVA and F value. The value in the significance column of the table 4 is .000 which means that one or more variables are significant on dependent variable. The impact of independent variables on dependent has been explained in the table 5.

Table 5
“Coefficient”
“Model” “Un standardized Coefficients” Standardized Coefficients “t” “Sig.”
“B” “Std. Error” “Beta”
(Constant) 0.499 0.207   2.410 0.017
CSR practices influences the customer’s loyalty and attitude towards the brands -0.080 0.030 -0.084 -2.655 0.009
Customer satisfaction is enhanced by CSR practices and it also influences their purchasing behavior 0.076 0.031 0.081 2.439 0.016
CSR activities have a positive impact on customer perception 0.002 0.036 0.002 .048 0.962
CSR practices focuses on the societal development by participating in volunteering exercises -0.066 0.031 -0.069 -2.101 0.037
CSR activities takes on the responsibility for the reputation of firms in the social endeavors 0.172 0.052 0.166 3.300 0.001
CSR initiatives on social media led to positive results on the customer satisfaction of the brands 0.545 0.057 0.532 9.573 0.000
CSR drives makes an impression and shows immediate, positive impact on purchaser mentalities toward the brand 0.262 0.049 0.270 5.343 0.000
CSR practices helps in celebrating achievements of the company with their customers -0.040 0.032 -0.039 -1.229 0.221

Table 5 shows that out of 10 variables, 6 variables namely CSR practices influences the customer’s loyalty and attitude towards the brands, Customer satisfaction is enhanced by CSR practices and it also influences their purchasing behavior, CSR practices focuses on the societal development by participating in volunteering exercises, CSR activities takes on the responsibility for the reputation of firms in the social endeavors, CSR initiatives on social media led to positive results on the customer satisfaction of the brands, and CSR drives makes an impression and shows immediate, positive impact on purchaser mentalities toward the brand shows significant impact of CSR practices on consumers attitude towards business as the value in the significant is below the significant value (0.05) and the variables namely CSR practices helps in celebrating achievements of the company with their customers, and CSR activities have a positive impact on customer perception has no significant impact of CSR practices on consumers attitude towards business as the value in the significant column is above (0.05).

Conclusion

The idea of “corporate social responsibility” has acquired a lot of significance in the present era and thus it has been a subject of discussion in most of the companies because of expanded awareness about its importance in businesses and its operations. It has turned into a significant component in business and scholarly world. There is no question about the way that “Corporate Social Responsibility” (CSR) exercises have developed in the current scenario, and it is clarified that there is a solid relationship with the consumers dynamic behavior and the CSR initiatives (Huret al., 2018). The current study has brought forward a view that consumers with regards to “corporate social responsibility” initiatives which depends on the enthusiastic, reasonable, and unique reasoning for a product. It was also understood that there is a solid and positive connection between CSR exercises and a consumer’s buying choices. CSR activities plays a significant part in forming a trustworthy relationship between a consumer in an organization which at last acts as a loyal ambassadorspreading a good word with respect to the firm. The review is likewise upheld by some significant discoveries that general and explicit trust positively affects the consumers’ purchasing intent.

The study concludes that there are different CSR practices such as CSR practices influences the customer’s loyalty and attitude towards the brands, Customer satisfaction is enhanced by CSR practices and it also influences their purchasing behavior, CSR practices focuses on the societal development by participating in volunteering exercises, CSR activities takes on the responsibility for the reputation of firms in the social endeavors, CSR initiatives on social media led to positive results on the customer satisfaction of the brands, and CSR drives makes an impression and shows immediate, positive impact on purchaser mentalities toward the brand that shows significant impact on consumers attitude towards business.

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Received: 27-Nov-2021, Manuscript No. AEJ-21-9592; Editor assigned: 29- Nov -2021, PreQC No. AEJ-21-9592 (PQ); Reviewed: 10- Dec -2021, QC No. AEJ-21-9592; Revised: 20-Dec-2021, Manuscript No. AEJ-21-9592 (R); Published: 03-Jan-2022

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