The Effect of Corporate Social Responsibility to Corporate Reputation on Word of Mouth Toward Customer Trust

Nizar Fauzan

doi:10.53889/gmpics.v1.83

The Effect of Corporate Social Responsibility to Corporate Reputation on Word of Mouth Toward Customer Trust

Nizar Fauzan

Abstract

Nowadays, corporate social responsibility (CSR) is essential for each consumer goods company. The company needs to improve environmental concerns to the society and enhance the corporate reputation. CSR is a crucial program to the interests of its customers, shareholders, and the ecological consequences of the business activities. CSR can play an essential role in relationships, enhancing customers' trust. This study analyzes customer perception of CSR and trust. The conceptual framework in this study has two mediating variables, including corporate reputation and word of mouth on CSR on customer trust. A causal survey design and by using quantitative method. The respondents were 160 consumers who knew the CSR programs of a consumer goods company. Then, data analysis used structural equation modeling to test the hypotheses. CSR negatively affects customer trust. Then, CSR positively influences corporate reputation and word of mouth. Moreover, this research found that reputation has a positive impact on word of mouth and trust. On behalf, the mediating effect of importance and word of mouth also positively impacts CSR and consumer trust. Thus, reputation and word of mouth could enhance suppliers' power and connect buyers.

Keywords

CSR; Corporate Reputation; Customer Trust; Word of Mouth

Full Text:

PDF

References

Aguilera-Caracuel, J., & Guerrero-Villegas, J. (2018). How corporate social responsibility helps MNEs to improve their reputation. The moderating effects of geographical diversification and operating in developing regions. Corporate Social Responsibility and Environmental Management, 25(4), 355–372. https://doi.org/10.1002/csr.1465

Ali, H. Y., Danish, R. Q., & Asrar-ul-Haq, M. (2020). How corporate social responsibility boosts firm financial performance: The mediating role of corporate image and customer satisfaction. Corporate Social Responsibility and Environmental Management, 27(1), 166–177. https://doi.org/10.1002/csr.1781

Balmer, J. M. T., & Greyser, S. A. (2009). Corporate marketing: apocalypse, advent, and epiphany. Management Decision, 47(4), 544–572. https://doi.org/10.1108/00251740910959413

Bettina, L. (2018). Corporate social responsibility's influence on organizational attractiveness. Journal of General Management, 43(3), 106–114.

Bhattacharya, C. ., & Luo, X. (2009). The Debate over Doing Good: Corporate Social Performance, Strategic Marketing Levers, and Firm-Idiosyncratic Risk. Journal of Marketing, 73(6), 198–213.

Bhattacharya, C. B., & Sen, S. (2003). Consumer company identification: A framework for understanding consumers' relationships with companies. Journal of Marketing, 67(2), 76–88. https://doi.org/10.1509/jmkg.67.2.76.18609

Bialkova, S., & Te Paske, S. (2021). Campaign participation, spreading the electronic word of mouth, purchase: how to optimize corporate social responsibility, CSR, effectiveness via social media? European Journal of Management and Business Economics, 30(1), 108–126. https://doi.org/10.1108/EJMBE-08-2020-0244

Boulding, W., & Kirmani, A. (1993). A Consumer-Side Experimental Examination of Signaling Theory: Do Consumers Perceive Warranties as Signals of Quality? Journal of Consumer Research, 20(1), 111. https://doi.org/10.1086/209337

Campbell, M. C. (1999). Perceptions of price unfairness: Antecedents and consequences. Journal of Marketing Research, 36(2), 187–199. https://doi.org/10.2307/3152092

Carroll et al. (1991). The Pyramid of Corporate Social Responsibility: Toward the Moral Management of Organizational Stakeholders. Business Horizons., 34(4), 39–48.

Cheng, G., Cherian, J., Sial, M. S., Mentel, G., Wan, P., Álvarez-Otero, S., & Saleem, U. (2021). The relationship between CSR communication on social media, purchase intention, and e-wom in the banking sector of an emerging economy. Journal of Theoretical and Applied Electronic Commerce Research, 16(4), 1025–1041. https://doi.org/10.3390/JTAER16040058

Cheung, C. M. K., Lee, M. K. O., & Thadani, D. R. (2009). The impact of positive electronic word-of-mouth on consumer online purchasing decision. Lecture Notes in Computer Science (Including Subseries Lecture Notes in Artificial Intelligence and Bioinformatics), 5736 LNAI, 501–510. https://doi.org/10.1007/978-3-642-04754-1_51

Choi, B., & La, S. (2013). The impact of corporate social responsibility (CSR) and customer trust on the restoration of loyalty after service failure and recovery. Journal of Services Marketing, 27(3), 223–233. https://doi.org/10.1108/08876041311330717

Chu, S. C., & Chen, H. T. (2019). Impact of consumers' corporate social responsibility-related activities in social media on brand attitude, electronic word-of-mouth intention, and purchase intention: A study of Chinese consumer behaviour. Journal of Consumer Behaviour, 18(6), 453–462. https://doi.org/10.1002/cb.1784

DAM, T. C. (2020). The Effect of Brand Image, Brand Love on Brand Commitment and Positive Word-of-Mouth. The Journal of Asian Finance, Economics and Business, 7(11), 449–457. https://doi.org/10.13106/jafeb.2020.vol7.no11.449

Doosti, S., Jalilvand, M. R., Asadi, A., Khazaei Pool, J., & Mehrani Adl, P. (2016). Analyzing the influence of electronic word of mouth on visit intention: the mediating role of tourists' attitude and city image. International Journal of Tourism Cities, 2(2), 137–148. https://doi.org/10.1108/IJTC-12-2015-0031

Fatmawati, I., & Fauzan, N. (2021). Building Customer Trust through Corporate Social Responsibility: The Effects of Corporate Reputation and Word of Mouth. Journal of Asian Finance, Economics and Business, 8(3), 0793–0805. https://doi.org/10.13106/jafeb.2021.vol8.no3.0793

Fernández, M., Gil, A., & Galán, F. (2016). Corporate reputation and market value: Evidence with generalized regression neural networks. Expert Systems With Applications, 46, 69–76.

Fombrun, C., & Shanley, M. (1990a). What's in a Name? Reputation Building and Corporate Strategy. Academy of Management Journal, 33(2), 233–258. https://doi.org/10.5465/256324

Fombrun, C., & Shanley, M. (1990b). What's in a Name? Reputation Building and Corporate Strategy. Academy of Management Journal, 33(2), 233–258. https://doi.org/10.5465/256324

Fomburn, C. (2005). Building Corporate Reputation Through CSR Initiatives : Evolving Standards. Corporate Reputation Review; 8(1), 7–11.

Heinberg, M., Ozkaya, H. E., & Taube, M. (2018). Do corporate image and reputation drive brand equity in India and China? - Similarities and differences. Journal of Business Research, 86, 259–268. https://doi.org/10.1016/j.jbusres.2017.09.018

Hur, W. M., Kim, H., & Kim, H. K. (2018). Does customer engagement in corporate social responsibility initiatives lead to customer citizenship behaviour? The mediating roles of customer-company identification and affective commitment. Corporate Social Responsibility and Environmental Management, 25(6), 1258–1269. https://doi.org/10.1002/csr.1636

Hustvedt, G., & Kang, J. (2014). Building Trust Between Consumers and Corporations: The Role of Consumer Perceptions of Transparency and Social Responsibility. Journal of Business Ethics, 125(2), 253–265.

Jalilvand, M. R., Nasrolahi Vosta, L., Kazemi Mahyari, H., & Khazaei Pool, J. (2017). Social responsibility influence on customer trust in hotels: mediating effects of reputation and word-of-mouth. Tourism Review, 72(1), 1–14. https://doi.org/10.1108/TR-09-2016-0037

Keh, H. T., & Xie, Y. (2009). Corporate Reputation and customer behavioural intentions: The roles of trust, identification, and commitment. Industrial Marketing Management, 38(7), 732–742. https://doi.org/10.1016/j.indmarman.2008.02.005

Kim, Y., Park, M. S., & Wier, B. (2012). Is earnings quality associated with corporate social responsibility? Accounting Review, 87(3), 761–796. https://doi.org/10.2308/accr-10209

Lacey, R., & Kennett-Hensel, P. A. (2010). Longitudinal Effects of Corporate Social Responsibility on Customer Relationships. Journal of Business Ethics, 97(4), 581–597. https://doi.org/10.1007/s10551-010-0526-x

Lange, D., Lee, P. M., & Dai, Y. (2011). Organizational Reputation: A review. Journal of Management, 37(1), 153–184. https://doi.org/10.1177/0149206310390963

Lee Brown, D., Guidry, R. P., & Patten, D. M. (2009). Sustainability reporting and perceptions of corporate reputation: An analysis using fortune. 83–104. https://doi.org/10.1108/s1479-3598(2010)0000004007

Lim, M. (2020). The negative impact of market-discrimination CSR: How do consumers respond to perceived company greed? Journal of General Management, 45(2), 93–106. https://doi.org/10.1177/0306307019875896

Long, W., Li, S., Wu, H., & Song, X. (2020). Corporate social responsibility and financial performance: The roles of government intervention and market competition. Corporate Social Responsibility and Environmental Management, 27(2), 525–541. https://doi.org/10.1002/csr.1817

Lys, T., Naughton, J. P., & Wang, C. (2015). Signalling through corporate accountability reporting. Journal of Accounting and Economics, 60(1), 56–72. https://doi.org/10.1016/j.jacceco.2015.03.001

Maden, C., Arıkan, E., Telci, E. E., & Kantur, D. (2012). Linking Corporate Social Responsibility to Corporate Reputation: A Study on Understanding Behavioral Consequences. Procedia - Social and Behavioral Sciences, 58, 655–664. https://doi.org/10.1016/j.sbspro.2012.09.1043

Mahoney, L. S., Thorne, L., Cecil, L., & LaGore, W. (2013). A research note on standalone corporate social responsibility reports: Signaling or greenwashing? Critical Perspectives on Accounting, 24(4–5), 350–359. https://doi.org/10.1016/j.cpa.2012.09.008

Markovic, S., Iglesias, O., Singh, J. J., & Sierra, V. (2018). How does the Perceived Ethicality of Corporate Services Brands Influence Loyalty and Positive Word-of-Mouth? Analyzing the Roles of Empathy, Affective Commitment, and Perceived Quality. Journal of Business Ethics, 148(4), 721–740. https://doi.org/10.1007/s10551-015-2985-6

Mayer, R. C., Davis, J. H., & Schoorman, F. D. (1995). An Integrative Model of Organizational Trust. The Academy of Management Review, 20(3), 709. https://doi.org/10.2307/258792

Mellahi, K., & Rettab, B. (2019). CSR in the Middle East: From Philanthropy to Modern CSR. Practising CSR in the Middle East, 39–51. https://doi.org/10.1007/978-3-030-02044-6_3

Odriozola, M. D., & Baraibar-Diez, E. (2017). Is Corporate Reputation Associated with Quality of CSR Reporting? Evidence from Spain. Corporate Social Responsibility and Environmental Management, 24(2), 121–132. https://doi.org/10.1002/csr.1399

Ogunmokun, O. A., & Timur, S. (2020). Effects of the Awareness of University's CSR on Students' Word-of-Mouth Intentions. 133–147. https://doi.org/10.1007/978-3-030-42416-9_13

Ozdora Aksak, E., Ferguson, M. A., & Atakan Duman, S. (2016). Corporate social responsibility and CSR fit as predictors of corporate Reputation: A global perspective. Public Relations Review, 42(1), 79–81. https://doi.org/10.1016/j.pubrev.2015.11.004

Park, J., Lee, H., & Kim, C. (2014). Corporate social responsibilities, consumer trust, and corporate Reputation: South Korean consumers' perspectives. Journal of Business Research, 67(3), 295–302. https://doi.org/10.1016/j.jbusres.2013.05.016

Pavelin, S., & Brammer, S. J. (2006). Corporate reputation and social performance: The importance of fit. Journal of Management Studies, 43(3), 435–455. https://onlinelibrary.wiley.com/doi/pdf/10.1111/j.1467-6486.2006.00597.x

Petkova, A., Rindova, V., Sever, J., & Williamson, I. (2005). Being Good or Being Known: An Empirical Examination of the Dimensions, Antecedents, and Consequences of Organizational Reputation. The Academy of Management Journal, 48(6), 1033–1049. https://doi.org/10.2307/20159728

Pivato, S., Misani, N., & Tencati, A. (2007). The impact of corporate social responsibility on consumer trust: the case of organic food. Business Ethics: A European Review, 17(1), 3–12. https://doi.org/10.1111/j.1467-8608.2008.00515.x

Podnar, K., & Golob, U. (2017). The Quest for the Corporate Reputation Definition: Lessons from the Interconnection Model of Identity, Image, and Reputation. Corporate Reputation Review, 20(3–4), 186–192. https://doi.org/10.1057/s41299-017-0027-2

Roberts, P. W., & Dowling, G. R. (2002). Corporate reputation and sustained superior financial performance. Strategic Management Journal, 23(12), 1077–1093. https://doi.org/10.1002/smj.274

Rose, C., & Thomsen, S. (2004). The impact of corporate reputation on performance: Some Danish evidence. European Management Journal, 22(2), 201–210. https://doi.org/10.1016/j.emj.2004.01.012

Saeidi, S. P., Sofian, S., Saeidi, P., Saeidi, S. P., & Saaeidi, S. A. (2015). How does corporate social responsibility contribute to firm financial performance? The mediating role of competitive advantage, reputation, and customer satisfaction. Journal of Business Research, 68(2), 341–350. https://doi.org/10.1016/j.jbusres.2014.06.024

Schaefer, S. D., Terlutter, R., & Diehl, S. (2021). Talking about CSR matters: employees' perception of and reaction to their company's CSR communication in four different CSR domains. Leveraged Marketing Communications, 186–207. https://doi.org/10.4324/9781003155249-11

Singh, N. P. (2021). Managing the adverse effect of supply chain risk on corporate Reputation: The mediating role of corporate social responsibility practices. Journal of General Management, 46(4), 251–261. https://doi.org/10.1177/0306307020969474

Souki, G. Q., De Oliveira, R. L. P., Isabella, G., & Silva, J. T. M. (2018). The impact of global perceived quality on the behaviour of automobile's consumers. Revista Brasileira de Marketing, 17(3), 444–458. https://doi.org/10.5585/remark.v17i3.3843

Spence, M. (2002). Signalling in retrospect and the informational structure of markets. American Economic Review, 92(3), 434–459. https://doi.org/10.1257/00028280260136200

Stephanie, B., & John, P. (2008). Running Just to Stand Still? Managing CSR Reputation in an Era of Ratcheting Expectations. Corporate Reputation Review, 11(1), 56. http://proquest.umi.com/pqdweb/?did=1456513611&Fmt=7&clientId=27520&RQT=309&VName=PQD

Su, L., Swanson, S. R., & Chen, X. (2015). Social responsibility and reputation influence the intentions of Chinese Huitang Village tourists: Mediating effects of satisfaction with lodging providers. International Journal of Contemporary Hospitality Management, 27(8), 1750–1771. https://doi.org/10.1108/IJCHM-06-2014-0305

Tong, C. (2014). The Influences of Corporate Social Responsibility to Customer Repurchases Intentions, Customer Word-of-Mouth Intentions and Customer Perceived Food Quality of Fast-Food Restaurants in Hong Kong and the Mediating Effects of Corporate Reputation. British Journal of Economics, Management & Trade, 4(11), 1655–1678. https://doi.org/10.9734/bjemt/2014/11311

van der Laan Smith, J., Adhikari, A., Tondkar, R. H., & Andrews, R. L. (2010). The impact of corporate social disclosure on investment behaviour: A cross-national study. Journal of Accounting and Public Policy, 29(2), 177–192. https://doi.org/10.1016/j.jaccpubpol.2009.10.009

Vo, T. T., Xiao, X., & Ho, S. Y. (2019). How Does Corporate Social Responsibility Engagement Influence Word of Mouth on Twitter? Evidence from the Airline Industry. Journal of Business Ethics, 157(2), 525–542. https://doi.org/10.1007/s10551-017-3679-z

Walker, K. (2010). A systematic review of the corporate reputation literature: Definition, measurement, and theory. Corporate Reputation Review, 12(4), 357–387. https://doi.org/10.1057/crr.2009.26

Walsh, G., Mitchell, V. W., Jackson, P. R., & Beatty, S. E. (2009). Examining the antecedents and consequences of corporate Reputation: A customer perspective. British Journal of Management, 20(2), 187–203. https://doi.org/10.1111/j.1467-8551.2007.00557.x

Wang, H. M., Yu, T. H. K., & Hsiao, C. Y. (2021). The Causal Effect of Corporate Social Responsibility and Corporate Reputation on Brand Equity: A Fuzzy-Set Qualitative Comparative Analysis. Journal of Promotion Management, 27(5), 630–641. https://doi.org/10.1080/10496491.2020.1851851

Wang, R., & Huang, Y. (2018). Communicating corporate social responsibility (CSR) on social media. Corporate Communications: An International Journal, 23(3), 326–341. https://doi.org/10.1108/ccij-07-2017-0067

Wu, C. H. J., Liao, H. C., Hung, K. P., & Ho, Y. H. (2012). Service guarantees in the hotel industry: Their effects on consumer risk and service quality perceptions. International Journal of Hospitality Management, 31(3), 757–763. https://doi.org/10.1016/j.ijhm.2011.09.012

Zhao, Z., Meng, F., He, Y., & Gu, Z. (2019). The influence of corporate social responsibility on competitive advantage with multiple mediations from social capital and dynamic capabilities. Sustainability (Switzerland), 11(1). https://doi.org/10.3390/su11010218

DOI: https://doi.org/10.53889/gmpics.v1.83