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Environmental protection as a driver for

employee satisfaction and retention

A quantitative study on the Swedish cosmetics industry

Kvist, Ida - 930323-1949

Messerschmidt, Anna Maria – 950614–9625

School of Business, Society and Engineering

Course: Bachelor Thesis in Business Administration Supervisor: Ali Farashah Course code: FOA230 Co-Assessor: Emre Yildiz 15cr Date: 2020-06-09

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Abstract

Date: 2020-06-09

Level: Bachelor Thesis in Business Administration, 15 ECTS

Institution: School of Business, Society and Engineering, Mälardalen University

Authors: Ida Kvist (93/03/23), Anna Messerschmidt (95/06/14)

Title: Environmental protection as a driver for employee satisfaction and retention Tutor: Ali Farashah

Keywords: employee retention, employee satisfaction, cosmetics industry, CSR

Research question: How are the employee satisfaction and retention within the cosmetics industry

impacted by the company’s external CSR actions regarding environmental sustainability?

Purpose: The relationship between CSR and internal stakeholders has often been neglected in previous

studies. Therefore, the purpose of this study is to investigate whether a company’s CSR strategy can positively influence employee satisfaction and retention. Thereby, three different CSR dimensions are compared in order to draw comparisons based on the results. The cosmetics industry was chosen as a focus area as its products and packaging are a great concern regarding environmental pollution.

Method: Because the turnover rate among retail employees is particularly high, a quantitative survey across

salespeople and sales managers of the cosmetics industry was conducted. The data was analyzed with the use of IBM SPSS statistics.

Conclusion: Based on the findings of this study, environmental CSR has a significant influence on

employee satisfaction. Yet, it showed no influence on employee retention. Furthermore, the findings suggest that internal CSR plays an important role in satisfying and retaining employees. Social CSR on the other hand showed a negative influence on employee satisfaction.

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Table of Contents

1. Introduction 1

1.1 Problem Background 3

1.2 Aim & Purpose 4

1.3 Research Question 4

2. Literature Review 5

2.1 Corporate Social Responsibility 5

2.2 Environmental Sustainability in the Cosmetics Industry 6

2.3 Employee Satisfaction 8

2.4 Employee Retention 9

2.5 Conceptual Framework 10

2.5.1 CSR and Employee Outcomes 10

2.5.2 Moderator Effect of Importance of Environmental CSR 12

2.5.3 Employee Satisfaction and Employee Retention 12

2.5.4 Conceptual Model 13

3. Methodology 14

3.1 Research Approach 14

3.1.1 Primary Data 14

3.2 Survey Design 15

3.3 Sampling and sample size 15

3.4 Primary Data Collection 16

3.5 Questioning and Scaling 16

3.6 Analysis of the data 17

3.6.1 Descriptive Statistics 17

3.6.2 SPSS 18

3.7 Reliability and validity 19

3.7.1 Validity 19

3.7.2 Internal Reliability (Cronbach’s Alpha) 19

3.8 Methodological Limitations 21

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4.1 Descriptive Analysis 23

4.1.1 Correlation Table 23

4.1.2 Normality 24

4.2 H1: Testing the direct relationship between CSR and employee satisfaction 24 4.3 H2: Testing the relationship between CSR and employee retention 26 4.4 H3: Testing the moderator effect of importance of environmental sustainability 27 4.5 H4: Testing the relationship between employee satisfaction and employee retention 28

4.5.1 Mediation Analysis 28 4.6 Conceptual Model 29 5. Discussion 30 6. Conclusion 34 6.1 Future Research 34 6.2 Managerial Implications 35 Reference List 36 Appendix 42 Appendix 1 42 Appendix 2 42 Appendix 3 43 Appendix 4 48 Appendix 5 49 Appendix 6 51

SPSS Output: CSR and Employee Satisfaction 51

SPSS Output: CSR and Employee Retention 52

SPSS Output: Moderator Variable 53

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1

1. Introduction

The following section entails background information regarding the area of focus, as well as the aim and the purpose of the study. It finished with the research question being investigated. In today’s highly competitive environment, employees represent valuable assets that have a strong influence on organizational effectiveness. Companies therefore have to focus on building a strong and positive relationship with their employees in order to fulfill their needs and to retain them (Dobre, 2013).

It is believed that one way in which organizations can contribute to employee satisfaction and retention is by engaging in CSR (Corporate Social Responsibility) activities (Bauman and Skitka, 2012). According to the European Commission, CSR can be defined as “the responsibility of enterprises for their impact on society”. Hence, companies can become socially responsible, if they integrate “social, environmental, ethical, consumer, and human rights concerns into their business strategy and operations” while at the same time following the law (European Commission, 2019).

The two types of CSR activities that this study will focus on are internal and external CSR activities. Internal CSR activities focus on factors such as the well-being and satisfaction of internal stakeholders like employees. External CSR activities on the other hand are concerned with making sure that the organization behaves in an ethical and environmentally friendly manner that satisfies external stakeholders such as customers and business partners (Longo et al., 2005).

The implementation of internal and external CSR can lead to positive employee outcomes such as satisfaction and retention, because it is likely to evoke positive emotions such as pride and identification with the company (Onikla, 2015). Throughout the last decades, there is one value that gained significant importance: environmental sustainability.

According to Chen et al. (2011) there is a link between the integration of environmental sustainability into organizational values and employee satisfaction and retention. Employees who have a positive attitude towards their company act in accordance with the organization's goals and values, which leads to an increase in organizational effectiveness and are therefore beneficial for the organization as a whole (Onikla, 2015).

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2 Morelli (2011) defines environmental sustainability as “meeting the resource and services needs of current and future generations without compromising the health of the ecosystems that provide them.” Protecting the environment, hence protecting biodiversity, is of great importance, because it provides us with vital resources. However, due to climate change, human activities and pollution, the global extinction rate is 100 to 1000 times higher than the natural rate, which makes environmental sustainability such a relevant subject (European Commission, 2019).

That is why businesses are pressured now more than ever to engage in external CSR activities relating to environmental protection (Orlitzky et al., 2011). One industry that has a significant impact on the environment is the cosmetics industry. Cosmetic products are widely discussed, and the usage of ingredients and packaging have been under the loop for several years. Even though some people are dismissing the industry as an environmental villain, there is no denying that these cosmetics products are being used several times every day by most people, sometimes without even reflecting on it (Sahota, 2014). As the industry continuously grows, however, the amount of waste it produces increases with it. Many cosmetic companies have therefore started putting a strong emphasis on creating environmentally sustainable products and to engage in programs and activities (Cosmetics Europe, 2019).

Since the life cycle of a cosmetic product consists of five stages, namely design, sourcing, manufacturing, distribution, consumer use and the post-consumer phase, there are many factors that must be considered when reducing the environmental footprint. One step that is specifically important in order to reduce CO2 emissions is to reduce energy consumption, water consumption and waste generation, which many cosmetic companies nowadays attempt by using more sustainable materials in their products and packaging (Cosmetics Europe, 2019).

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3

1.1 Problem Background

There have been numerous previous studies about the relationship between CSR and external stakeholders, but only few about the relationship between CSR and employee outcomes (Lee and Chen, 2018). The few studies that examine the relationship between CSR and employees mostly cover CSRs influence on employee’s commitment and performance (Gond et al., 2010 as cited in Brammer et al., 2007; Maignan and Ferrell 2001; Peterson, 2004). As employees count as the most valuable assets of an organization, it is of great importance to find ways to satisfy their needs and to retain them.

Retaining talented staff, however, has become a challenge for many industries. According to a study from 2018, the retail industry is the sector with the second highest turnover rate (Booz, 2018, Smith et al., 2014). According to Harver (2018), this especially concerns part-time retail employees. Losing sales employees does not only lead to the loss of knowledgeable and experienced employees, it also causes high replacement costs, which are problematic for the organization (Noble, 2008).

Another problem factor is that salespeople form relationships with their customers, which are put at risk when they leave the organization and in turn potentially reduce revenue (DeConinck and Johnson, 2009). The relationship between the customers and salespeople are what enables superior customer service and are benefiting the company in terms of recurrent customers. It is salespeople who can help the companies to increase brand trust and to inspire confidence in customers, which are all aspects that benefit the customer experience and therefore the image of the company (McFarlane, 2016).

According to Lee and Chen (2018), it is therefore important for organizations to pay attention to environmental factors of CSR in order to achieve positive employee outcomes. But can a focus on environmental sustainability really increase employee satisfaction and retention? This question could be specifically important for the cosmetic industry as environmental sustainability has become a main concern when looking at corporate social responsibility (Sahota, 2014).

According to a study by Zero Waste Europe (2018), the global cosmetics industry produces more than 120 billion units of packaging every year, many of which are not recyclable and therefore

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4 affect biodiversity by polluting the environment. Moreover, the cosmetic industry is known to add ingredients such as palm oil, which result in massive deforestation (Sahota, 2014).

1.2 Aim & Purpose

Environmental sustainability is a matter that increasingly gains importance in everyone’s lives. People try to make ethical choices and buy products that have a neutral or positive impact on the environment. According to previous research, it is believed that a good fit between a person and an organization is important (Rousseau and Parks, 1992), which could mean that the implementation of environmentally sustainable activities could increase employee satisfaction and retention.

The cosmetics industry was considered to be a relevant industry and a focus area of this study, as it is an industry that is often talked about in regard to environmental pollution, especially because cosmetic products are part of people's daily routine. It was therefore considered worth questioning if the influence of environmental CSR on employee satisfaction and employee retention is particularly strong within the cosmetics industry.

Furthermore, this study investigates the effect of internal CSR and external CSR regarding social responsibilities in order to draw comparisons between the different dimensions of CSR and to draw conclusions about which CSR dimension could be perceived as most important in regard to employee satisfaction and retention.

Due to the high turnover rate in the retail industry, this study will be focused on salespeople and front-line sales managers within cosmetic stores in Sweden.The cosmetic retail stores chosen for this study are stores that sell their own cosmetic brand, because it could be assumed that it is difficult for salespeople to differentiate the CSR strategy of their own brand from the CSR strategies of the brands that they are selling.

1.3 Research Question

How are the employee satisfaction and retention within the cosmetics industry impacted by the company’s external CSR actions regarding environmental sustainability?

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2. Literature Review

The following section will give an overview over previous research conducted about CSR, environmental sustainability in the cosmetics industry, employee satisfaction and employee retention. Furthermore, the theoretical framework and a corresponding conceptual model will be presented.

2.1 Corporate Social Responsibility

Corporate social responsibility (CSR) has become a growingly important subject for businesses around the world. Implementing a proper CSR strategy helps companies to gain and sustain a competitive advantage (Gorski et al., 2014). Even though there has been a lot of research regarding CSR, there is no widely accepted definition. In this study, the following definition from the European Commission (date) will be used: “CSR is the responsibility of enterprises for their impact on society” and can be executed by “integrating social, environmental, ethical, consumer, and human rights concerns into their business strategy and operations” while at the same time following the law. CSR is often classified as either ethical or instrumental (Barkarat et al.,2016, as cited in Rahbek Pedersen and Neergaard, 2009). The instrumental view implies that there is a positive relationship between the implementation of CSR and the financial performance of an organisation. This relationship could among other reasons emerge, because the organisation gains a competitive advantage towards other companies that do not act as responsible. The ethical view is built upon society's norms and values and their expectations for a company to act socially responsible (Barkarat et al., 2016, as cited in Barnett, 2007; Jones, 1996). Moreover, a very common conceptual approach is Carroll's CSR pyramid. (1991). According to Carroll, there are four types of responsibilities that can be fulfilled through CSR (Appendix 1). These can be visualized in a four-level pyramid, in which economical responsibilities provide the base. Economic responsibilities concern a business’s responsibility to produce goods and services needed by society and to sell them for a profit. When selling products and services, companies need to stay within the legal frame, which leads to the second level of the pyramid, dealing with legal responsibilities. Companies have an obligation to adhere to the law and to play by the rules. If a company ignores its legal obligations, it risks losing its license. The third level of the pyramid deals with ethical responsibilities. Ethical responsibilities are not enforced by the law but are

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6 expected by society (ibid). Distinguishing ethical responsibilities from legal ones can be tricky at times, since legal responsibilities may be a consequence of ethical responsibilities (Carroll, 2016). As protecting the environment for instance started as an ethical concern in the beginning, it is now regulated by laws and policies (Carroll and Buchholtz, 2006). The uppermost level of the pyramid represents philanthropic responsibilities, which focus on businesses' obligation towards society and on being a “good citizen in the community”, for example through charities and development projects. These responsibilities, however, are more voluntary for an organization and not expected in an ethical sense (Carroll, 2016). In order to better understand how CSR strategies, affect employee loyalty and employee retention, this study distinguishes between internal and external CSR activities (Cornelius et .al, 2008). Internal CSR activities are focused on the physical and psychological working environment of internal stakeholders, primarily employees (Turker, 2009). This is reflected in “concern for the health and well-being of employees, their training and participation in the business, equality of opportunities and work-family relationships” (Peng, 2014; Vives, 2006). External CSR activities, on the other hand, are focused on environmental and social operations. Implementing external CSR helps strengthen an organization's legitimacy and reputation among its stakeholders (Hameed et al., 2016, as cited in Carroll, 1979; Brammer et al. 2007). Among other activities, external CSR activities include social responsibility and environmental and wildlife protection (Hameed et al., 2016, as cited in Brammer et al., 2007; Chen et al., 2008; Cornelius et al., 2008).

2.2 Environmental Sustainability in the Cosmetics Industry

As the population and therefore the economy has continuously grown over the past decades, there has been an increasing demand for resources, which are being consumed at a rate that is unsustainable for the planet. As land is being degraded, biodiversity is decreasing and climate is changing, there is a pressure for organizations to engage in CSR activities regarding environmental sustainability (Bom et al., 2019). Sustainability itself has many different definitions, one of the widely accepted ones being “meeting the needs of the present without compromising the ability of future generations to meet their own needs”. In an environmental context that means that there is a requirement to remain the natural capital intact (Sahota, 2014). Acting in an environmentally sustainable manner is therefore not only a legal concern, but also an ethical one (Bom et al., 2019). One of the industries being greatly affected by that shift is the cosmetics industry (Jaini et al. 2019).

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7 Cosmetic products go through several phases within their lifecycle: design, sourcing, manufacturing, packaging, distribution, consumer use and post-consumer use. When creating environmentally sustainable products, cosmetic companies therefore have to consider how each phase of the product life cycle will affect the total sustainability of it as a whole (Sahota, 2014). Bom et al. (2019) have created a model (Figure 1), which represents how each phase in the life cycle can affect the environment.

Figure 1: Cosmetic product life cycle with a sustainable approach (S. Bom et al., 2019)

It becomes apparent that the initial design stage plays a determining role in creating a sustainable product. The design stage includes the choice of ingredients and packaging. This represents a challenge for cosmetic companies, since they need to ensure the protection of the product, while also guaranteeing its correct application. When looking more closely at the ingredients and the packaging, there are several interesting elements that cosmetic companies today need to consider when developing products and their packaging. There are ingredients that can have a negative effect on the environment. The cosmetics industry is in fact one of the largest users of palm oil in the world. The usage of palm oil itself does not represent a problem, but the sourcing does. If unethically produced it contributes to the tropical rainforest destruction, which portrays a threat to animals in need for that specific climate for survival (Sahota, 2014). Another constituent that has been researched is the antimicrobial ingredients such as triclocarban and triclosan. These ingredients are being used in soaps, sanitizers and disinfectants. When researched in 2012 by the Arizona State University and federal authorities, these kinds of ingredients were found in the waterways, contaminating the water with its toxic characteristics towards aquatic bacteria.

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8 Microplastic is another ingredient that is often used within the cosmetics industry, specifically in shower products such as scrubs and shower gels. They are harmful to the seas and oceans, and further endanger biodiversity. Because of their slow biodegradable properties, they damage and disrupt the existing marine ecosystems (ibid). When it comes to packaging within the cosmetics industry, the products are often packed in multiple layers, using more resources than needed for the aim and thereby causing a negative impact on the environment. Thanks to its flexibility and light weight, plastic has often been the first choice in regard to packaging. This is problematic because of the environmental pollution that it creates due to not being biodegradable (ibid). As plastic is well known to have these adverse effects on the environment and as the consumer behavior has been shifting, there has been a demand for different solutions. As a result, more and more cosmetic companies introduce refillable or plant-based packaging (ibid). As the packaging and the ingredients of a product are the first aspects which the consumer is aware of, using sustainable options in this stage serves as a source of business advantage (Bom et al., 2019; Dunphy et al., 2017).

2.3 Employee Satisfaction

As a result of globalization and therefore increasing global competition, having satisfied employees is nowadays a key issue for organizations (Onikla, 2015). There are numerous definitions of employee satisfaction. Satisfaction itself can be defined as “the level of fulfillment of one’s needs, wants and desires. It depends basically upon what an individual wants from the world, and what he gets” (Morse, 1997 as cited in Sageer et al., 2012). Hence, employee satisfaction can be defined as a measure of how satisfied a worker is with their job and working environment (Saager et al., 2012). Employee satisfaction has become an important matter for managers, as satisfied employees are likely to perform better and to retain within the organization (Onikla, 2015). There are many theories that examine employee satisfaction, among others Herzberg's two-factor theory, which looks at hygiene and motivation factors that independently influence either job satisfaction or job dissatisfaction (Herzberg, 1993). Another widely used theory among scholars is Maslow's hierarchy of needs (Appendix 2), which represents a five-tier model of human needs. The base of the pyramid represents physiological needs, which include biological needs such as food, water, shelter and oxygen. To fulfill these needs, employees need to be provided with an adequate salary. When the physiological needs are fulfilled, the need for

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9 safety and security becomes active, which means that organizations need to provide a safe and secure working environment that is free from potential harms or dangers. The third level of the pyramid represents belongingness and love needs. According to Maslow (1943), it is important to overcome feelings of loneliness and to give and receive love. Organizations can satisfy these needs by encouraging employees to participate in social events such as dinners and festivities. The fourth level of the pyramid is concerned with needs for esteem, which include both self-esteem and the esteem that is received from others. When employees achieve a milestone, it is therefore important for organizations to give approval to employees and to reward them. When employees have self-respect and feel self-respected, the last level of the pyramid – needs for self-actualization – becomes active. Self-actualized employees are considered to work to their maximum potential (Maslow 1943).

2.4 Employee Retention

Employee turnover is a challenge that many industries have to face, one of them being the cosmetics industry (Tootell et al., 2009). Even though it is neither possible nor desirable to prevent turnover, it is possible to lower it to a manageable rate (Rombaut and Guerry, 2019; Rai and Bansal, 2014; Holtom et al., 2005). Retaining employees is beneficial for many reasons, for instance that their skills and knowledge serve as an economically competitive advantage (Hiltrop 1999). As the baby boom generation is retiring and the competition of attaining skilled employees increases, a lot of these competencies get lost and are difficult to replace (Burke and Ng 2006, as cited in Frank et al. 2004). Another factor that makes it difficult to retain employees nowadays is that the younger generations generally no longer strive for a traditional career within the same company, which makes them more opportunistic and therefore less loyal to their organization (Burke and Ng 2006, as cited in Hiltrop 1999). According to Rodriguez (2008), it is therefore important to provide employees with development opportunities that can expand their knowledge and skills. If employees feel like they are not learning and growing, they are less likely to retain with the organization and tend to look out for other job opportunities. An industry that particularly struggles with turnover rates is the retail industry (Dubinsky et al., 1990). Accordingto Richardson (1999), the turnover rate in the sales profession is twice as high as in other career settings. Losing skilled and experienced salespeople can lead to various issues. These are among others recruiting,

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10 hiring and training costs that occur when new employees get hired. Moreover, valuable relationships with customers are at risk (Dubinsky et al., 1990).

2.5 Conceptual Framework

2.5.1 CSR and Employee Outcomes

Because this study is aimed on examining the relationship between CSR and employees, it is important to take a closer look at the different dimensions of CSR. As mentioned, there are four CSR responsibilities an organisation has to fulfil: economic-, legal-, ethical-, and philanthropic responsibilities (Carroll, 1979). For a very long time, however, it was enough for organizations to be socially responsible by solely making profit. That is because when an organisation makes profit, it ensures survival and can therefore benefit society in the long run. In fact, there are numerous studies that cover the relationship between employee outcomes and an organizations profitability. However, opposite to this study, they often focus on the influence of employee outcomes such as satisfaction on profitability (Bernhardt, Donthu and Kennett, 2000). This study assumes that profitability and employee outcomes mutually influence each other, whereas the other three levels of the pyramid influence employee outcomes rather than being influenced by employee outcomes, which is why economic responsibilities will not be further considered. Nowadays it is more important than ever to focus on environmental and social problems (McWilliams and Siegel, 2001). Socially responsible organizations are often viewed as good and attractive employers, because employees view their company as fair and responsible when they implement CSR. When employees work for a responsible organisation, they feel pride and enthusiasm. That is, because employees want to work for an organization that they can identify with and which they feel a sense of belonging towards, but also because their organisation has a good reputation among society (Tajfel and Turner, 1985; Turker, 2008; Brammer et al., 2005; Smith et al., 2001). It is therefore worth questioning, whether a company's external CSR strategy towards the environment and the society can influence employee satisfaction and their retention intention. Previous studies have investigated this connection and found that certain CSR dimension indeed have a positive influence on these employee outcomes (Lee and Chen, 2018; Turker, 2009). According to Aguilera, Rupp, Williams and Ganapathi (2007; as cited in Lee and Chen, 2018), employees are more likely to retain in an organisation that implements CSR activities, as it promotes a meaningful connection between the organisation and society, which in turn gives them a sense of belonging.

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11 This study examines the social and environmental dimension of external CSR. Thereby, environmental CSR is considered legal and ethical, as it is expected by society, but also regulated by the law. Social CSR responsibilities, on the other hand, will be considered as philanthropic responsibilities whose aim it is to “be a good corporate citizen” by improving the quality of life (Carroll, 1979). Additionally, this study will investigate the influence of internal CSR on employee outcomes. Internal CSR, in fact, is a dimension that is often neglected in connection to employee satisfaction, even though it is concerned with the physical and psychological working environment of employees (Turker, 2009). It could be argued that that the boundaries between internal CSR and efforts to satisfy and retain employees are blurry, as they aim at similar outcomes. Investigating several CSR dimensions is considered beneficial for this study as it enables a comparison as to which dimension has the strongest or weakest influence. Therefore, the following two hypotheses with each three-sub hypothesis were developed:

H1: CSR positively affects employee satisfaction

H1a: External CSR regarding environmental responsibility positively affects employee

satisfaction

H1b: External CSR regarding social responsibility positively affects employee satisfaction H1c: Internal CSR positively affects employee satisfaction

and

H2: CSR positively affects employee retention

H2a: External CSR regarding environmental responsibility positively affects employee retention H2b: External CSR regarding social responsibility positively affects employee retention

H2c: Internal CSR positively affects employee retention

Hypothesis 1 suggests that there is a positive relationship between CSR and employee satisfaction. Thereby, it is worth investigating and comparing the influence of environmental-, social- and internal CSR. For that, employee satisfaction represents the dependent variable and CSR represents the independent variable. The findings could give indications towards which CSR dimension is perceived as most important by employees and which of these dimensions managers of cosmetic companies should potentially focus on. Hypothesis 2, on the other hand, suggests that CSR (independent variable) positively influences employee retention (dependent variable). As the

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12 turnover rate among retail employees is particularly high, it seemed reasonable to questionwhether employee turnover could be decreased by implementing any of the mentioned CSR dimensions.

2.5.2 Moderator Effect of Importance of Environmental CSR

As mentioned before, employees want to be proud of the company they are working for, and they want to join and retain with a company that is committed to the same values as they are (Sam and George, 2009). When employees are proud of their work, they feel as if their self-concept is reflected in their work (Berger et al. 2006). According to Onikla (2015), personal values and needs play an important role in how employees perceive the CSR strategy of their organization. As protecting the environment has become an important value in many people’s lives, it is worth questioning whether the employees' beliefs about the importance of CSR regarding environmental sustainability play a significant role in determining the strength of the relationship between the implementation of environmental CSR activities and job satisfaction (Dunphy et al., 2017). It could be suggested that an employee who personally considers environmental sustainability as specifically important, will feel either more or less satisfied, depending on the implemented environmental CSR strategy, than an employee who is mainly focused on the pride and reputation aspect of the strategy. Therefore, the moderator effect of importance of environmental responsibility on the relationship between CSR and employee satisfaction will be measured. A moderator variable can help investigate whether a relationship between two variables depends on a third variable (Bryman and Bell, 2015). The findings could show whether the personal involvement into environmental protection influences the strength to which environmental CSR influences employee satisfaction.

H3: The beliefs of an employee to the importance of CSR moderates the relationship between CSR

and employee satisfaction as such higher levels of importance strengthen the relationship

2.5.3 Employee Satisfaction and Employee Retention

Previous research suggests that employee satisfaction is a predictor of turnover intention (Tschopp et al., 2014). If the relationship is positive, it could be important to look at the dimensions that influence employee satisfaction in order to draw conclusions about, which dimensions finally influence employee retention. Therefore, hypothesis 4 is concerned with examining whether

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13 employee satisfaction has a positive influence on employee retention. Thereby, employee satisfaction is the independent variable and employee retention is the dependent variable.

H4: Employee satisfaction is positively related to employee retention

2.5.4 Conceptual Model

Based on the previous literature and the developed hypothesis, the following conceptual model was created. As visible, the model predicts a positive relationship between CSR and employee satisfaction and employee retention. Furthermore, it assumes that the moderator effect of the importance of environmental responsibility moderates the relationship between CSR and employee satisfaction. Finally, it predicts that employee satisfaction positively influences employee retention. Thereby, employee satisfaction mediates the relationship between CSR and employee retention.

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3. Methodology

This following section will describe the process of conducting this study in terms of research design and approach. The chosen data collection method and process will be defined as well as the different stages of the research. Furthermore, reliability and validity for this study will be elaborated.

3.1 Research Approach

The research design used in this study is a quantitative method with a deductive approach. A deductive approach aims on investigating the relationship between theory and research. In the initial stage of the research, four hypotheses were created based on literature and theories from previous research and studies related to the chosen subject. (Bryman and Bell, 2015). Given the nature of the research question and the aim of this study, a quantitative method was considered the most suitable approach to this study. There are several research designs possible for quantitative methods, one of them being a survey research approach which has been used in this study. “Survey research provides the researchers with a quantitative or numeric description of attitudes, trends or opinions among the population being studied” (Creswell, 2014). Furthermore, it investigates the relationship between different variables and tests objective theories than can be analyzed through statistical procedures. Qualitative research, on the other hand, is usually described in a more narrative fashion (Bryman and Bell, 2015). The desired outcome for this study was an accurate sample that can be generalized for and apply to the whole population (VanderStoep and Johnson, 2009).

3.1.1 Primary Data

Primary data is new data that is collected for the specific purpose of the study and aims at answering the research question (Bryman and Bell, 2015). The advantages of using primary data for analysis is that the data is collected for the specific aim and can therefore be more consistent with the specific research question and objectives. The largest disadvantage is the time aspect, as it is often very time consuming and demands a lot of preparations and time effort to perform this kind of data collection. (ibid).

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3.2 Survey Design

The questions in the survey (Appendix 3) were directed at answering the research question and at giving a foundation for a comparison to previous research. Even though the questions were aimed at Swedish employees, the survey was conducted in English due to the it being the common language of the authors and minimizing the risks of translating. Therefore, there was an emphasis on keeping the language plain and simple in order to avoid any misunderstandings. It was also important to avoid long questions, so that respondents would give the questions enough attention and would not skim through them. The order of the questions was randomized to avoid any obvious pattern. (Bryman and Bell, 2015). However, the initial structure was the following. The survey began with socio-demographic questions about gender, age, education level and seniority years.

These were followed by questions concerning internal and external CSR. Even though this study is focused on external CSR regarding environmental sustainability, questions about external CSR regarding social responsibility and internal CSR were asked in order to allow a comparison to previous studies in the discussion. Thereafter, questions about employee satisfaction and employee retention were asked. The last set of questions was focused on the individual's perception of the importance of environmental CSR.

3.3 Sampling and sample size

A convenience sample, which is a kind of non-probability sample, was used for this study (Bryman & Bell, 2015). This kind of sample was chosen as a result of time restrictions and a limited accessibility to companies. The population targeted for this study were Swedish salespeople and front-line sales managers from the cosmetics industry. 102 employees participated in the survey. Out of the 102 responses, 100 responses could be used for the data analysis, as 2 responses had to be removed due to straight line answering. The respondents were categorized into different groups depending on gender, age, education level and seniority years. Based on the received answers, 96% of the respondents are female, 1% are male and 3% prefer to not say. Furthermore, 87% of the respondents are under 30 years old, 12% are between 31 and 40 years old and 1% is between 41-50 years old. As for higher education, 79% of the respondents answered that they have a high school degree, 19% have a bachelor's degree and 2% have a master’s degree. A majority of 43% had worked at the store for 1-3 years, 24% have worked there between 6 months and a year, 15%

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16 worked there less than 6 months, 13% worked there for 4-5 years, 4% worked there for 6-10 years and 1% worked there above 10 years.

3.4 Primary Data Collection

To collect the primary data, front sales managers of retail stores from six well-known cosmetic brands were contacted over phone. If they agreed to participate in the data collection, they received an email (Appendix 4) with a link to the survey, which they then distributed among the salespeople of the store. The email also included a brief informative text regarding the purpose and aim of the study. Initially, it was planned to visit the retail stores personally, as it was expected to generate higher response rates. Due to the spread of Covid-19, however, alternatives had to be considered. The data was collected in April 2020 through Google Forms.

3.5 Questioning and Scaling

The questions used for the online surveys were well established scales that have been used and tested by previous researchers. Some questions were modified to match the purpose of this study. When using existing scales, it is possible to draw a comparison to previous research and to examine whether there is a difference to previous research (Bryman and Bell, 2015). As this study uses a different sample by focusing solely on the cosmetics industry, it is possible that there will be significant differences. It is important to note that all scales used in this study were rated with a 5-point Likert scale, which ranged from strongly disagree to strongly agree. To measure the constructs employee satisfaction and employee retention, a modified scale of Du et al. (2015) and Lee and Chen (2018) was used. The items of this scale measured how satisfied employees are by asking how pleased they are and if they see their company as a good place to work. Furthermore, they measured how likely the employees are to retain within the company by asking how well they can handle their job, if they plan a long-term career development in the company, and whether they would retain if another company would provide similar positions. To measure the employee’s perception of external CSR to the environment, measures by Glavas and Kelly (2014), Lee, Park and Lee. (2013) and Lee and Chen (2018) were used. All items of that scale were used as they seemed relevant to the research question. To measure internal CSR and external CSR to social stakeholders, a scale developed by Turker (2008) was used. The subscale for internal CSR

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17 provided six items, of which three were chosen for this study. The choice of the items was based on the definition used in literature review and aimed on asking employees about work-life balance, flexibility, fairness and opportunities for the development of skills and career. For CSR to social stakeholders, three out of six items were chosen as they were considered most relevant for the cosmetic industry. The questions were aimed at asking whether the company supports the well-being of society. To measure the moderator variable IENR (Importance of environmental responsibility), a modified version of the ICSR scale by Turker (2008) was used. Turker (2008) derived and modified this scale based on a subscale of Etheredge’s (1999) PRESOR scale (Perceived Role of Ethics and Social Responsibility Scale). The scale used in this paper was also slightly modified. Since this study focuses on environmental sustainability, the word “social responsibility” in the scale was replaced by “environmental responsibility”. In the conceptual model the moderator variable is denoted as IENR instead of ICSR in order to avoid confusion about the different dimensions of CSR that are subject in this paper. A 5-point Likert scale from strongly disagree to strongly agree was used.

3.6 Analysis of the data

3.6.1 Descriptive Statistics

To get a general overview and a better understanding of the data, a correlation table was created. Next, the data was tested for normality. Normality tests examine whether the data is normally or non-normally distributed. Two measures that are commonly used are skewness and kurtosis. Thereby, skewness measures how symmetrical the distribution is. A positive value indicates that the distribution tails off to the right side, while a negative value indicates that it tails of to the left side. However, when using Likert-scales data is bound either to the left or to the right as it is discrete in nature. Kurtosis measures how peaked or flat the distribution is compared to a normal distribution (Hair, 2010). According to Hair (2010), normality can be assessed by calculating a statistic value (z) for each skewness and kurtosis. Thereby, the following formulas are used, where N is the sample size:

𝑧𝑠𝑘𝑒𝑤𝑛𝑒𝑠𝑠= 𝑠𝑘𝑒𝑤𝑛𝑒𝑠𝑠 √ 6 𝑁 𝑎𝑛𝑑 𝑧𝑘𝑢𝑟𝑡𝑜𝑠𝑖𝑠= 𝑘𝑢𝑟𝑡𝑜𝑠𝑖𝑠 √24 𝑁

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18 If the calculated z-value is higher or lower than the specified critical value, it means that the distribution is non-normal. The most commonly used critical value for a desired significance of 0.05 lies between + 1.96 and – 1.96.

3.6.2 SPSS

To analyze the quantitative data, IBM SPSS (version 26) statistics was used. Several multiple regression analyses were conducted in order to analyze whether a change in the dependent variables causes a change in one of the independent variables. Thereby, a confidence interval of 0,95 was used, which means that there is a 0,05 probability that the value solely occurred by chance (Saunders, 2009). To be able to draw conclusions regarding the socio-demographic distribution of the study, the control variables gender, age, educational background and seniority years were re-coded into numerical variables. For gender, “female” was directed to value 1, “male” was directed to value 2 and “prefer not to say” was directed to value 3. For ages “under 30 years” was directed value 1, “31-40 years” was directed value 2, “41-50 years” was directed value 3, “51-60 years” was directed value 4 and “above 60 years” was directed value 5. For educational background “high school or below” was directed value 1, “bachelor's degree” degree was directed value 2, “master’s degree” was directed value 3 and “PhD” was directed value 4. Lastly, for seniority years “less than 6 months” was directed value 1, “6- months-less than a year” was directed value 2, “1-3 years” was directed value 3, “4-5 years” was directed value 4, “6-10 years” was directed value 5 and “above 10 years” was directed value 6. Next, the mean was calculated for each item of each variable. For employee satisfaction for example, the answers for “overall, I am pleased with my work”, “my company is a good place to work” and “I would recommend this company as a good place to work” were added and then divided by the number of the items, which is 3. Next, the standardized z-score of each mean value was calculated. To investigate if there is a relationship between the dependent and independent variables, a multiple regression was run for H1, H2 and H4. In each regression analysis the standardized z-scores were used. Furthermore, the control variables were added as independent variables. For H1, “employee satisfaction” was the dependent variable and the different CSR dimensions were added as independent variables. For H2 “employee retention” was the dependent variable and the different CSR dimensions were independent variables. Lastly, for H4 “employee retention” was entered as the dependent variable and “employee satisfaction” was added as an independent variable. For H4 an additional

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19 mediation analysis was run in order to investigate whether “employee satisfaction” mediates the relationship between “CSR” and “employee retention”. Finally, a last regression analysis was run to investigate the moderator effect of “importance of environmental sustainability” on the relationship between “CSR activities regarding environmental sustainability” and “employee satisfaction”. To avoid multicollinearity, which refers to the difficulty of determining separate effects of independent variables, a z-score was calculated for the moderator variable “importance of environmental sustainability” and “environmental CSR” (Saunders, 2009). The z-scores were then multiplied by each other to get the value for the moderator effect.

3.7 Reliability and validity

3.7.1 Validity

An important aspect to consider in quantitative research is validity. Validity examines whether it is possible to draw meaningful conclusions from the scores of the instruments used in the study. Thereby, the three most traditional forms of validity testing are content validity, predictive or concurrent validity and construct validity (Creswell, 2014). Content validity was considered as most relevant for this study, since it helps examining whether the items measure what they were intended to measure. To establish content validity a pilot survey was conducted in order to potentially improve the questions, format and scale. Pilots tests are recommended for this type of study, especially when using convenience sampling (Bryman & Bell, 2015).

3.7.2 Internal Reliability (Cronbach’s Alpha)

To test the internal reliability, SPSS was used to calculate Cronbach’s alpha for the different items. Testing internal reliability is crucial when trying to find out if the items relate to each other or, if they lack coherence. Cronbach's alpha ranges from 0 (no correlation and no internal consistency) to 1 perfect correlation and therefore complete internal consistency). Typically, a result of 0,8 and above counts as an acceptable level, but some researchers also consider an alpha of 0,7 to be efficient, depending on varying factors (Bryman and Bell, 2015). The results from the calculations are presented in table 1.

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20 Table 1: Cronbach’s Alpha

Construct Items 𝛼 Source

External CSR: Environmental Responsibility (ENR)

1) My company continues to conduct environmentally friendly activities

2) My company adopts digital technologies to reduce environmental impact

3) My company propagates and promotes the concept of environmental protection

.851

CSR perception scale (environment) from Lee and Chen (2018), reported 𝛼= .898

External CSR: Social

Responsibility (SR)

1) My company emphasizes the importance of its social responsibilities to society

2) My company supports the non-governmental organizations working within problematic areas (e.g. gender equality, human rights)

3) My company contributes to the campaigns and projects that promote the well-being of the society

.889

CSR scale with 17 items from Turker (2008),

reported 𝛼= .9013

Internal CSR (IR)

1) My company policies encourage the employees to develop their skills and career

2) My company implements flexible policies to provide a good work and life balance for its employees

3) The managerial decisions related with the employees are usually fair

.825

CSR scale with 17 items from Turker (2008),

reported 𝛼= .9013

Employee Satisfaction (ES)

1) Overall, I am pleased with my work. 2) My company is a good place to work.

3) I would recommend this company as a good place to work.

.944

Employees’ outcomes scale with 3 items from Lee and Chen (2018), reported 𝛼= .917

Employee Retention (ER)

1) I can handle my job well.

2) I plan a long-term career development in this company.

3) Even if other companies provide similar positions (salary, title, and job content), I will choose to stay in this company.

.714

Employees’ outcomes scale with 3 items from Lee and Chen (2018), reported 𝛼= .802

Importance of Environmental Responsibility (IENR)

1) Being environmentally responsible is the most important thing a firm can do

2) Environmental responsibility of a firm is essential to its long-term profitability

3) Business has an environmental responsibility beyond making profit

4) Environmental responsibility is critical to the survival of a business enterprise

.896

ICSR scale with 10 items from

Turker (2008), reported 𝛼= .8168

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21 The Cronbach’s alphas for the constructs CSR regarding environmental responsibility (ENR), CSR regarding social responsibility (SR), internal CSR (IR), employee satisfaction (ES) and importance of environmental responsibility (IENR) were generally above an acceptable level, with employee satisfaction (ES) representing the highest internal reliability with a Cronbach’s alpha of 0.944. The construct of employee retention (ER) on the other hand reported a lower Cronbach’s alpha of 0.714. The reason could be that even though employees might be able to handle their job well, they do not plan a long-term career within the company. If item 3 (“I can handle my job well”) would have been deleted, the Cronbach’s alpha would have increased to 0.738. As this difference was considered as not very significant, the item was kept and considered in the data analysis.

3.8 Methodological Limitations

As this study aims to investigate the cosmetics industry, it would be beneficial to have as many companies as possible participating in the data collection. Due to limitations of time and a global pandemic, however, only six companies were able to participate in the survey. From the six different companies, 102 responses where received, of which 100 could be used. For a study like this, a larger sample would be beneficial. Another limitation that should be considered is the gender distribution of the sample. Out of the 100 respondents, only 1% were male, which is due to the fact that the salesforce and also the customer base of the cosmetics industry is female dominated. However, it limits the generalizability of the study. Another aspect regarding the generalization of the results is the use of convenience sampling. It is not neither possible, nor recommended to generalize results based on this kind of sample, which could represent as a limitation for this study. Furthermore, the language used in the survey could represent a limitation. The survey was carried out in English and considering that it is not the native language in Sweden, it could possibly have affected the respondents in terms of misunderstandings and full comprehensiveness of the survey regarding concepts and questions. Another aspect is the geographical point of view. This survey was conducted in Sweden and is therefore only looking at the Swedish perspective of this subject. A possible way to overcome this limitation is to conduct a study in several other countries or continents as well to bring even more reliability to the study. Another limitation is the risk of biased answers and results. Although it was assumed that all the respondents answered the survey themselves, it cannot be verified in any way due to the nature of the data collection. It cannot either

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22 be verified that the respondents answered the survey accurately and honest. Therefore, the answers might have been biased by colleagues or peer pressure when done at the workplace. The design and the method of the thesis were initially created with the aim of minimizing these potential risks. Lastly, this study does not measure employee retention as such, but rather employee’s retention intention. It also rather measures CSR perception instead of the actual CSR activities performed.

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23

4. Results

4.1 Descriptive Analysis

4.1.1 Correlation Table

Table 2: Correlation Table

A correlation table (table 2) was created to assess the strength of the linear relationship between the different variables. This relationship can be expressed as a correlation coefficient, which can take on any value between -1 and 1. Thereby, a positive value of 1 represents a perfect positive correlation and a value of -1 represents a perfect negative correlation. A value of 0, on the other hand, represents an independent relationship. The stars (*) next to the numbers indicate the level of confidence, whereby a p-value, which is less than 0,05 is flagged with one star (*) and a p-value which is less than 0.01 is flagged with two stars (**) (Saunders, 2009).As mentioned in an earlier section, the majority of the respondents were females, which were under 30 years old. Most of the respondents had a high school degree and some of them had a bachelor’s degree. The seniority years varied, but most of the population had worked at the company for 1-3 years. Only very few employees had worked at the company for more than 6 years. By paying attention to the mean of the CSR variables, it becomes apparent that most respondents perceived that their company is implementing environmental, social and internal CSR. The highest mean was observed for internal CSR, which means that it was perceived as the most present CSR dimension. Furthermore, most of the respondents seemed to be satisfied and planned to retain their organization. Thereby, the mean for employee satisfaction was slightly higher than the one for employee retention. The mean

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24 for the importance of environmental responsibility indicated that most respondents seemed to find it important that a company helps protect the environment.

4.1.2 Normality

Table 3: Test for skewness and kurtosis

Variable Skewness Kurtosis 𝑧𝑠𝑘𝑒𝑤𝑛𝑒𝑠𝑠 𝑧𝑘𝑢𝑟𝑡𝑜𝑠𝑖𝑠

ENR1 -.711 -.653 2.90 1.33 ENR2 -.439 -.510 1.79 1.04 ENR3 -.826 -.297 3.37 0.61 SR1 -.517 -.802 2.11 1.64 SR2 -.521 -.760 2.13 1.55 SR3 -.747 -.464 3.05 0.95 IR1 -.1014 -.035 0.41 0.07 IR2 -.871 -.174 3.56 0.36 IR3 -.768 -.222 3.14 0.45 ES1 -1.532 1.565 6.25 3.19 ES2 -1.602 1.930 6.54 3.94 ES3 -1.474 1.483 6.02 3.03 ER1 -1.604 4.710 6.55 9.61 ER2 -.562 -.800 2.29 1.63 ER3 -.869 -.365 3.55 0.75 IENR1 -.048 -.838 0.20 1.71 IENR2 -.569 -.576 2.32 1.18 IENR3 -.628 -.694 2.56 1.42 IENR4 -.373 -.792 1.52 1.62

As presented in table 3, nearly all z-values regarding skewness are located outside the specified interval, which means that the variables are considered non-normal. As mentioned, this result can be justified by the nature of the scale. Regarding the statistic values for kurtosis, all variables regarding employee satisfaction exceed the critical value, which means that the distribution of this data is non-normal. Additionally, the ER1 variable is also considered non-normal.

4.2 H1: Testing the direct relationship between CSR and employee satisfaction

A multiple regression analysis was run to test the relationship between CSR and employee satisfaction. The control variables gender, age, education level and seniority years were included in the model (table 4). Thereby, only gender showed a significant influence (p=0,06). As 96% of all respondents, however, are female and the other 4% are male or prefer not to say, it is not possible to draw any conclusions about differences in gender.

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25

H1a External CSR regarding environmental responsibility positively affects employee satisfaction: The relationship between the independent variable external CSR regarding

environmental responsibility and the dependent variable employee satisfaction was significant at the p-value 0,000 with a b-value of 0,437. Hence, if external CSR regarding environmental responsibility increases by one unit, employee satisfaction will increase by 0,437 units. Therefore, H1a was confirmed.

H1b External CSR regarding social responsibility positively affects employee satisfaction:

The relationship between the independent variable external CSR regarding social responsibility and the dependent variable employee satisfaction was significant at the p-value 0,013 with a b-value of -0,274. Hence, if external CSR regarding social responsibility increases by one unit, employee satisfaction will decrease by 0,274 units. Therefore, H1b was rejected.

H1c Internal CSR positively affects employee satisfaction

The relationship between the independent variable internal CSR regarding and the dependent variable employee satisfaction was significant at the p-value 0,000 with a b-value of 0,709. Hence, if internal CSR increases by one unit, employee satisfaction will increase by 0,709 units. Therefore, H1c was confirmed.

Table 4: Relationship between employee satisfaction (dependent variable) and CSR (independent variable)

Standardized B p Gender .168 .006 Age -.098 .147 Education Level -.036 .487 Seniority Years .058 .353 External CSR: Environmental Responsibility (ENR) .437 .000 External CSR: Social Responsibility (SR) -.274 .013 Internal CSR (IR) .709 .000

The calculated r-square for this model is 0.788, which means that 78,8% of the variance in the dependent variable employee satisfaction can be explain by the independent variables (Appendix 6).

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26

4.3 H2: Testing the relationship between CSR and employee retention

A multiple regression analysis was run to test the direct relationship between CSR and employee retention. The control variables gender, age, education level and seniority years were included in the model (table 5). A significant (0,004), positive relationship was found between the number of seniority years and employee retention.

H2a External CSR regarding environmental responsibility positively affects employee retention: The relationship between the independent variable external CSR regarding

environmental responsibility and the dependent variable employee retention was not significant at the p-value 0,818. Therefore, H2a was rejected.

H2b External CSR regarding social responsibility positively affects employee retention: The

relationship between the independent variable external CSR regarding social responsibility and the dependent variable employee retention was not significant at the p-value 0,764. Therefore, H2b was rejected.

H2c Internal CSR positively affects employee retention: The relationship between the

independent variable internal CSR and the dependent variable employee retention was significant at the p-value 0,000 with a b-value of 0,682. Hence, if internal CSR increases by one unit, employee retention will increase by 0,682 units. Therefore, H2c was confirmed.

Table 5: Relationship between employee retention (dependent variable) and CSR (independent variable)

Standardized B p Gender .043 .604 Age .008 .933 Education Level -.081 .259 Seniority Years .251 .004 External CSR: Environmental Responsibility (ENR) -.032 .818 External CSR: Social Responsibility (SR) .045 .764 Internal CSR (IR) .682 .000

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27 The calculated r-square for this model is 0.604, which means that 60,4% of the variance in the dependent variable employee satisfaction can be explain by the independent variables (Appendix 7).

4.4 H3: Testing the moderator effect of importance of environmental

sustainability

To test the moderator effect of importance of environmental sustainability on the relationship between environmental CSR and employee satisfaction a multiple regression analysis was run. Employee satisfaction was entered as the dependent variable and the z-scores for importance of environmental responsibility and external CSR regarding environmental responsibility were entered as the independent variables.

H3 The beliefs of an employee to the importance of CSR moderates the relationship between CSR and employee satisfaction as such higher levels of importance strengthen the relationship: A multiple regression analysis was run to test the moderator effect of the importance

of environmental responsibility on the relationship between external CSR regarding environmental responsibility and employee satisfaction. The moderation effect was significant at the p-value 0,062 with a b-value of -0,117. Hence, the positive relationship between CSR regarding environmental responsibility and employee satisfaction is stronger among the employees with a lower level of importance. Therefore, H3 was rejected with 93,6% confidence.

Table 6: Moderator effect of importance of environmental sustainability

Standardized B p

Importance of Environmental Responsibility (IENR)

-.117 .062

z-score: Importance of Environmental Responsibility

-.031 .732

z-score: External CSR: Environmental Responsibility (ENR)

.544 .000

The calculated r-square for this model is 0.521, which means that 52,1% of the variance in the dependent variable employee satisfaction can be explain by the independent variables (Appendix 8).

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28

4.5 H4: Testing the relationship between employee satisfaction and employee

retention

A multiple regression analysis was run to test whether employee satisfaction has a positive influence on employee retention. The control variables gender, age, education level and seniority years were included in the model. As presented in table 7, the control variable seniority years is significant at the p-value 0,220. None of the other control variables showed a significant influence on employee retention.

H4 Employee satisfaction is positively related to employee retention: The relationship

between the independent variable employee satisfaction and the dependent variable employee retention was significant at the p-value 0,000 with a b-value of 0,698 Hence, if employee

satisfaction increases by one unit, employee retention will increase by 0,698 units. Therefore, H4 was confirmed.

Table 7: Moderator effect of importance of environmental sustainability

4.5.1 Mediation Analysis

Based on the structure of the conceptual model, ES can be seen as a mediator for the relationship between CSR and ER. As internal CSR was found to be the only CSR variable that had a significant effect on ER, a mediation analysis was run with internal CSR as the independent variable. The results from the analysis are presented in table 8.

Table 8: Mediation analysis for the relationship between internal CSR and ER

Indirect effect Confidence interval Employee Satisfaction (ES) .3022 [0.0856, 0.5005]

Unstandardized B p

Gender -.094 .633

Age .052 .799

Education Level -.117 .371

Seniority Years .220 .001

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29 For the result to be significant, 0 must not lay within the confidence interval. As zero is not included in the confidence interval, it can be assumed that there is a significant indirect effect of 0,3022 of internal CSR on employee retention through employee satisfaction.

4.6 Conceptual Model

Based on the results of the study, the final conceptual model is presented in figure 3. The numbers presented in the figure are the b-values, which were obtained through the multiple regression analysis. Thereby, the numbers colored in grey are non-significant values.

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30

5. Discussion

The following section will provide a discussion and analysis based on previous literature and the findings from the conducted research.

In summary, all three tested CSR dimensions showed a significant influence on employee satisfaction. Internal CSR showed the strongest influence, followed by environmental CSR. Social CSR, on the other hand, showed a negative influence on employee satisfaction. The moderator effect, which measured how the importance of CSR influences the relationship between environmental CSR and employee satisfaction was, opposite to what was expected, negative as well. Furthermore, the results indicate that internal CSR is the only CSR dimension that has a significant influence on employee retention. Lastly, it was confirmed that employee satisfaction has a significant positive influence on an employee’s retention intention.

The results concerning the relationship between CSR and employee satisfaction mainly confirm previous findings. Testing the relationship between the implementation of CSR and employee satisfaction showed that employee satisfaction increases when a cosmetic company implements environmental CSR activities. This is consistent with previous research from Lee and Chen (2018), who found out that employee satisfaction will be low if the employees’ perception of environmental CSR is low. It furthermore confirms research from Turker (2008), Brammer et al. (2005) and Smith et al. (2001), who claim that employees want to work for a responsible organization and do work that they are proud of, which in turn leads to higher employee satisfaction. Adding to that, another possible reason could be that the information regarding environmental CSR is now more available than before, due to increased attention among companies’ practices towards areas such as environmental protection (Gray et al., 1995, Turker 2009). As a result, employees might have increased their attention towards these aspects. Besides, giving the employees more information within the area might increase their personal interest.

Despite the fact that environmental CSR proved to have a positive effect on employee satisfaction, the moderator effect of the importance of environmental CSR, which was tested with H3, showed a negative influence on the relationship between CSR and employee satisfaction among employees with a higher level of importance. This finding contradicts previous research, which claims that job satisfaction increases when an employee’s self-concept is reflected in their work. However,

Figure

Figure 1: Cosmetic product life cycle with a sustainable approach (S. Bom et al., 2019)
Figure 2: Conceptual Model (created by the authors)
Table 1: Cronbach’s Alpha
Table 2: Correlation Table
+7

References

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