The impact of CSR on brand equity:
the moderating role of consumer
involvement in CSR
Master’s Thesis 15 credits
Abstract
While pursuing profits, modern firms begin to undertake corporate social responsibility (CSR). Different ways for firms to implement CSR have diverse impacts on consumer-based brand equity that reflects the meaning of the brand in consumers’ minds and is of considerable significance to corporate marketing strategy. However, previous research on CSR rarely uses signaling theory to explain the internal mechanism of generating consumer-based brand equity. It is also a gap of existing literature to study how to strengthen the impact of a firm’s CSR on consumer-based brand equity. This thesis, based on stakeholder theory and signaling theory, analyzes the effects of the degree of a firms’ CSR on consumer-based brand equity, including brand awareness, perceived quality, and brand loyalty, and how these effects are moderated by consumer involvement in CSR. This study adopts the quantitative approach and receives 201 valid questionnaires by taking Alipay (a Chinese firm providing online financial services) as the target of the survey.
The results indicate that the degree of a firm’s CSR positively impacts brand awareness, perceived quality, and brand loyalty through empirical analysis. Meanwhile, as a moderator, consumer involvement in CSR positively moderates the relationship between the degree of a firm’s CSR and perceived quality but shows no significant moderating effects on the other two associations. By uncovering the relationship between CSR and consumer-based brand equity through the signaling theory and by introducing the variable of consumer involvement in CSR, this study advances CSR research. It extends the application of signaling theory in a new research area as well.
Key words
Table of contents
1. Introduction...1 1.1 Research background ...1 1.2 Research purpose...2 1.3 Research contributions...2 1.4 Structure...3 2. Theoretical Framework...4 2.1 Theoretical background... 4 2.2 Hypotheses development...8 3. Research Methodology... 16 3.1 Research design... 16 3.2 Questionnaire design... 173.3 Sample and data collection... 18
3.4 Measurements...21
3.5 Common method variance control...23
3.6 Data analysis technique... 24
4. Results...25
4.1 Exploratory factor analysis and reliability analysis...25
4.2 Correlation analysis... 26
4.3 Regression analysis...27
5. Findings... 31
5.1 CSR and brand equity...31
6. Conclusion... 34
6.1 Main conclusions and managerial implications...34
6.2 Research contributions...35
6.3 Limitation and future research...36
References...37
1. Introduction
1.1 Research backgroundNowadays, consumers are increasingly rational and diversified in their brand evaluation of firms. In addition to considering the brand reputation and market share, consumers begin to pay close attention to each firm’s contribution to society through public welfare, which is mainly embodied in corporate social responsibility. According to the global survey on CSR by McKinsey, an internationally renowned management consulting company, 76% of managers believe that CSR has a long-term positive effect on the improvement of corporate shareholder value and 55% believe that CSR can help firms enhance social prestige (Mckincy and Company, 2018). Some firms devote to CSR initiatives to establish a good social image rather than for obtaining investment returns. However, in the practical, many other firms still act in a lack of social responsibility pursuing the short-term economic benefits but finally bring more significant harm to their brand equity.
Additionally, signaling theory is not widely used for research on CSR. Signaling theory is proposed to investigate how one party conveys its unobservable quality to another reliably and effectively but mostly applied in human resource management (e.g. Suazo et al., 2009; Moss et al., 2015). More recently, researchers also extend the application range of this theory to strategy and entrepreneurship studies (Taj, 2016), but only a few relate the signaling theory to CSR focusing on the relationship between firms and their investors (Su et al., 2016). Particularly, the literature of the signaling theory applied in CSR studies needs to be further expanded by examining the relationship between firms and their consumer.
1.2 Research purpose
To fill the research gaps mentioned above, drawing on stakeholder theory and signaling theory, this study investigates how the degree of a firm’s CSR has an impact on customer-based brand equity and how this impact is shaped by consumer involvement in CSR. In this study, the authors adopt the conceptual framework from Yoo and Donthu (2000), where brand awareness, perceived quality, and brand loyalty are the significant elements of consumer-based brand equity. To achieve the research purpose, we propose two specific research questions to be investigated:
Research question 1: How does the degree of a firm’s CSR influence on consumer-based brand equity?
Research question 2: What role does consumer involvement in CSR play in these effects?
1.3 Research contributions
which enables us to advance the research on CSR and to extend the application of signaling theory in a new research area. It suggests that a firm’s CSR may work as a signal providing additional information for consumers when evaluating the firm’s brand. Secondly, this study uncovers the relationship between the degree of a firm’s CSR and consumer-based brand equity by using the signaling theory, which extends the literature on CSR and branding. Thirdly, this research enriches the literature on CSR by introducing the variable of consumer involvement in CSR. It contributes to CSR related research by discovering the moderating effect of consumer involvement between the degree of a firm’s CSR and perceived quality.
1.4 Structure
2. Theoretical Framework
This chapter mainly presents the discussion of the literature on CSR concerning the stakeholder theory and the signaling theory and builds a research model. A critical literature review about CSR, stakeholder theory, and signaling theory is presented in the beginning. Then, the research model and hypotheses regarding the impact of the degree of a firm’s CSR on brand awareness, perceived quality, and brand loyalty are developed based on the theoretical background.
2.1 Theoretical background 2.1.1 Corporate social responsibility
CSR is an essential managerial issue in modern firms. The definition of corporate social responsibility is first proposed by Bowen (1953) who defines it as “the obligations of businessmen to pursue those policies, to make those decisions or follow those lines of action which are desirable in terms of the objectives and values of society.” He discusses business ethics, social responsibility, and lays the foundation for corporate executives and scholars to use CSR as part of corporate strategy and management decisions.
and poor and social impacts for administrative practice (e.g. Wartick and Cochran, 1985; Wood, 1991). That is, CSR provides a multi-perspective explanation for the responsibility to be assumed in the development of firm and society, with far-reaching impacts. Therefore, a recently more agreed concept of CSR is “ Corporate social responsibility encompasses the economic, legal, ethical, and discretionary (philanthropic) expectations that society has of organizations at a given time ” (Carroll & Buchholtz, 2014, p.32) which is adopted by this thesis.
From the perspective of the firm, empirical researches illustrate the connection between CSR and firms’ benefits from branding (e.g. Cha, Yi, Bagozzi, 2016; Chung and Lee, 2019; Einwiller et al., 2019; Martinez and Bosque, 2013), where the degree of a firm’s CSR could directly or indirectly influence consumers’ purchase intention and brand identification (He and Li, 2011). CSR also matters in evaluating firm’s stakeholder related contribution (Costa and Menichini, 2013) and consumer perception (e.g. Claekson, 1995; Huang, Cheng, and Chen., 2017), mainly through fulfilling the economic responsibilities, fitting CSR with strategic intentions, and even being set as a method for the promotion of social order (Falck and Heblich, 2007). In short, CSR has been verified for its contributions to branding and consumer perception. However, the majority of previous studies focus on the involvement of firms or employees (e.g. Chong, 2009) in CSR and rarely pay attention to individual participation in firm’s CSR which is also a potential factor shaping the effect on consumer perception of a firm’s CSR.
2.1.2 CSR from stakeholder perspective
investigation of independent consumers and can link firms with their stakeholders from the aspects like ethics and management.
The stakeholder theory illustrates that the development of the firm is inseparable from the input or involvement of stakeholders. Stakeholders are defined as the individuals or groups that can influence a firm’s decisions through their relationship (Freeman, 1984). As this perspective is extensively used in the research on the impact of CSR, stakeholders are considered to be able to evaluate the degree of a firm ’ s CSR (Endacott, 2004; Rowley and Moldoveanu, 2003).
For researches about consumers (as an essential group of stakeholders) through the stakeholder theory and CSR, two major perspectives are emerging in recent years (Berger et al., 2007). In one stream, some studies start investigating how consumers are individually involved in CSR initiatives taken by firms (Rupp and Mallory, 2015; Gond et al., 2017). Consumers may enhance their loyalty and awareness to the firm by perceiving the value creation that CSR activities bring with, which is also a marketing output of the firm (Green and Peloza, 2011). Meanwhile, since the appreciation from consumers can contribute to the profitability of firms, empirical studies have come up with formulated processes and frameworks to measure the interaction between the consumer and the company through CSR activities (e.g. Bhattacharya and Sen, 2004). Hence, stakeholder theory is suitable to be used to study further how consumers participate in CSR and its effects on consumer-based brand equity.
However, despite the importance of consumer involvement in firms’ activities, little attention is paid to consumer involvement in CSR and its effects.
2.1.3 Signaling theory
Signaling theory is proposed to resolve the problem of information asymmetry (Spence, 2002) by figuring out how one party may signal its potential and tacit advantage to another one. Signaling theory highlights several main elements, such as signaler, signal, and receiver. Signalers are generally defined as insiders who have access to the internal information of the organization that outsiders can not acquire (Kirmani and Rao, 2000). Regarding signals involving the information about the firm, the products, and the relationship between the organizations, the quality of signals is emphasized (Spence, 2002) since different signals are detected to varying degrees by the receivers (Gulati and Higgins, 2003; Ramaswami, 2010; Spence, 2002). Additionally, signaling validity is also affected by the receivers who are usually particular individuals or groups. If the receivers lack the awareness or the correct methods of perceiving and interpreting the signals, the process of signal transfer does not work effectively (Gulati and Higgins, 2003; Srivastava, 2001). There are still other elements, such as the signaling environment and feedback that influence the process of information transfer and interpretation (Kirmani and Rao, 2000). To sum up, signaling theory is dedicated to solving how one party effectively conveys the unobservable quality to another one concerning the influences of every element.
signals to achieve greater or lesser fit with the perceptions of meaningful work outcomes. Su et al. (2016) find that signaling effects on CSR practices can promote the financial performance of firms in emerging economies. From the perspective of consumers, the application of signaling theory usually takes advertisement as a signal (BliegeBird et al., 2005) to improve sales and brand effect. They pay attention to the evaluation of a product’s quality when facing information asymmetry (Kirmani and Rao, 2000). Therefore, in a variety of consumer and marketing research, the advertising of quality is usually used to differentiate the product as a signal which is commonly defined as “an action that the seller can take to convey information credibly about unobservable product quality to the buyer” (Rao, 1999).
The review of signaling theory suggests that only a few studies focusing on the relationships between companies and consumers relates signaling theory to CSR. But firms’ CSR may function as a signal to express the positive sides of firms to stakeholders such as consumers, suppliers, investors and government, and different types of stakeholders could perceive firm’ CSR in diverse ways. Hence, the signaling theory is suitable to use when exploring the effects of the degree of a firm’s CSR on consumer-based brand equity.
2.2 Hypotheses development
2.2.1 The effects of CSR on consumer-based brand equity
financial asset from the perspective of financial market output. This thesis takes consumer-based brand equity as the research object. The literature review suggests that the specific dimensions of consumer-based brand equity include brand loyalty, perceived quality, brand awareness (Yoo et al., 2000), perceived value for the cost, brand uniqueness, and the willingness to pay a price premium for a brand (Netemeyer, 2004). According to the multidimensional brand equity scale developed by Yoo and Donthu (2000), this study will examine consumer-based brand equity from three dimensions which are brand awareness, perceived quality, and brand loyalty.
Brand awareness
Brand awareness is defined as brand recognition (Keller, 1993) that means the node strength of a brand in consumers’ memory. In other words, brand awareness reflects the degree to which consumers are able to recognize and identify the brand in different situations (Rossiter and Percy, 1987). It determines whether consumers can tell which brands they have seen before when they enter the store. Brand awareness plays a vital role in consumer decision making because it increases the chance of a brand to be a member of the consideration set (Baker, 1986; Nedungadi, 1990) which means a collection of brands that are considered when making a purchase decision. Some studies have implied that the degree of a firm’s CSR can positively impact brand awareness (e.g. Servaes and Tamayo, 2013; Tian et al., 2011) but little with the situation where consumer involvement is engaged.
ethical consumerism. Further, when firms actively put information about their CSR initiatives into the social media or the message is passively received by consumers, consumers’ perceptions of CSR are formulated, which positively affect the consumer-based brand equity, especially brand awareness (Lai et al., 2010). Specifically, such information enables consumers to realize that firms are making contributions to society and willing to transfer part of their benefits to society. As a result, consumers will think that such firms are socially responsible and may pay more attention to broadcasting the brands under them. Compared with firms who do not undertake CSR, consumers are more familiar with those who are socially responsible (Huang and Sarigollu, 2014).
From the perspective of signaling theory, companies usually take CSR actions as signals which help convey their underlying quality, such as firm culture to distinguish themselves to be trustworthy in consumers’ minds and finally increase brand awareness. Also, people are more willing to receive the relevant information of a responsible firm, including the introduction of its core businesses and brand logo so that brand awareness is strengthened. Thus, the following hypothesis can be formulated:
Hypothesis 1: The degree of a firm’s CSR is positively related to brand awareness. Perceived quality
Perceived quality refers to “ the consumer ’ s judgement about a product’s overall excellence or superiority” (Zeithaml, 1988, p. 61). It relates to consumers’ intangible and comprehensive perception of brands, and the influencing factors include product quality and service quality. What needs to be emphasized is that perceived quality is not the actual quality of products or services but subjective evaluation of their condition from consumers (Zeithaml, 1988). Perceived quality is a crucial reason for consumers to make a purchase decision. For firms, higher perceived quality can differentiate products, increase profits and even premium.
degree of a firm’s CSR and perceived quality, for instance, the direct positive impact of CSR on consumer perceived quality (Liu et al., 2014) and the positive mediating effect of perceived ethicality from CSR on word-of-mouth (Makovic et al., 2018). Illustrated by signaling theory, a firm’s CSR actions may be signals that convey a brand image with strength and reliability to receivers. Considering that there exists lack of transparency in some markets, consumers are more willing to establish relations with firms with large scale, strong R&D ability and good reputation, so they tend to take their overall impression of firms interpreted from signals as an essential basis for judging a specific product’s characteristics. Undertaking social responsibilities helps people believe that the firm is responsible and the products it provides will also be reliable (Martinez and Bosque, 2013). Such kind of trust will amplify consumers’ satisfaction toward the products and improve their perceived quality.
On the other hand, owing to the increasing awareness of environment protection, firm’s CSR activities often involves protecting the environment and helping people in need. Many people think that environment-friendly products or services are more valuable to people’s physical and mental health, which makes them believe that the products from CSR related firms are of higher quality. The following hypothesis can be formulated:
Hypothesis 2: The degree of a firm’s CSR is positively related to perceived quality. Brand loyalty
increase profits. The impact of the degree of a firm’s CSR on brand loyalty is well documented (e.g. Cha, Yi, and Bagozzi, 2016; Khan et al., 2019; Rivera et al., 2019) and most of the research show positive relations between them in the context of different industries or diverse countries. In addition to illustrating such direct influences, Osakwe et al. (2020) try to illuminate the mechanism through which CSR indirectly influences brand loyalty and identify corporate reputation and trust as mediators.
From the perspective of firms, sincerity can positively enhance the maintaining of brand loyalty (Lin, 2010), where firm’s CSR thus become valid signals that help create an image of integrity (Yoon et al., 2006), conveying information and building trust with consumers acknowledgement. When releasing such signals, consumers who do not expect the firm to be socially responsible before may be surprised. They feel the sense of responsibility of the firm and over satisfied by it, which enables consumers to identify with their own choices to a higher degree and eventually improves brand loyalty. So, the following hypothesis can be formulated:
Hypothesis 3: The degree of a firm’s CSR is positively related to brand loyalty. 2.2.2 The moderating role of consumer involvement in CSR
“insiders” when participating in firms’ CSR during the interaction processes. In this essence, consumers who are involved receive more potent signaling effects of a firm’s CSR to a brand than those without the involvement in CSR. Therefore, consumer involvement in CSR is supposed to strengthen the impact of the degree of a firms’ CSR on consumer-based brand equity (e.g. brand awareness, perceived quality, and brand loyalty).
Firstly, a recent study by Hur, Kim, and Woo (2014) implies that a firm’s CSR activities such as charity events help formulate brand awareness for firms that serve a broad range of consumers. By getting involved in a firm’s CSR, consumers can learn more about the details of CSR events and receive a deeper understanding of how the firm makes efforts to make the world better. Combined with signaling theory, consumer involvement serves as a strengthened signal which emphasizes a firm’s CSR behaviors in consumers’ mind so that they become more familiar with the brand. That is to say, consumer involvement in CSR increases the positive relationship between the degree of a firm’s CSR and brand awareness, and this kind of recognition is supposed to be gradually enhanced by the involvement as reminders. So, the following hypothesis can be formulated:
Hypothesis 4: Consumer involvement in CSR positively moderates the relationship between the degree of a firm’s CSR and brand awareness.
involvement will also enhance the understanding of identity, making consumers think that they are part of the project. To express differently, consumers feel like they are the firm’s members to some extent so that regard the firm’s CSR activities to be meaningful and the products to be reliable. So, the following hypothesis can be formulated:
Hypothesis 5: Consumer involvement in CSR positively moderates the relationship between the degree of a firm’s CSR and perceived quality.
Thirdly, consumers’ emotions, consciousness, willingness, and behavior are crucial to maintaining consumer loyalty to a brand, both attitudinal and behavioral, such as a consumer’s desire to recommend a product to other potential consumers (Anisimova et al., 2007; Jang et al., 2015). Bettencourt (1997) illustrates that the consumer voluntary performance increases the likelihood of them communicating with companies, which helps build a positive relationship and enhance psychological loyalty. As a moderator, customer participation in CSR is found to impact the indirect relationship between a firm’s CSR-brand fit and service brand loyalty (Cha et al., 2015). For service industries, with the inseparability as characteristics, consumers participate at some level in creating the service as employees, which improves their satisfaction (Bitner et al., 1997; Chen and Raab 2014), resulting in brand loyalty. Moreover, consumers may feel valued and cared about by the firms when being invited to participate in their CSR activities, which leads to higher evaluations by them towards a firm’s CSR, so the influence of the degree of a firm’s CSR on brand loyalty is stronger with consumer involvement. The following hypothesis can be formulated:
3. Research Methodology
This chapter outlines the research method of this thesis to examine the hypotheses developed in the previous section. We adopt a quantitative research method via a survey to the consumers of a famous online financial service provider - Alipay in the Chinese market. Specifically, this chapter demonstrates the research design, followed by questionnaire designing, sampling, data collection, sample description, and data analysis technique.
3.1 Research design
Based on what Cooper & Schindler (2014) illustrate, as the research design is a process of selection where most plans, methods, and techniques will be chosen to satisfy the demand of the research objects, the process of selecting a target firm has been made with consideration. Qualitative methods tend to illustrate the understanding in depth (Matveev, 2002)，while the quantitative methods are generally more suitable for conducting surveys on a large number of samples, generalizing a large amount of data, and testing hypotheses at the same time. (Westerman, 2006). Owing to qualitative tools such as interviews are more capable of processing descriptive data, quantitative methods can enhance data generalization and test relationship-based hypotheses better. Hence, our study is suitable to utilize a quantitative research method.
Alipay (China) Network Technology Limited Company. The following reasons are demonstrated to explain that Alipay is representative:
First, as of the first half of 2018, the number of mobile payment users in China is about 890 million, and the penetration rate of mobile payment among mobile phone users in China(that is, the proportion used in the past three months) has reached 92.4% (State Information Center et al., 2019). Meanwhile, as widely functions as Paypal in the European market, Alipay holds the leading market share as 54.4% of China’s Third-Party Payments Providers in 2019 (iResearch Consulting Group, 2020). Thus, Alipay owns a top-ranked user scale in the Chinese mobile financial industry.
Second, many CSR activities organized by Alipay have obtained much attention from the consumers and society, in which consumers could be engaged in kinds of events and share their kindness, for instance, maximizing service value and social response by applying digital technology to consumer service (Accenture, 2020). In the program Ant Forest, consumers are encouraged to record their daily energy savings and reduced carbon dioxide emissions, and when the cumulative savings reach a specific target, the real trees will be planted in certified areas. A survey suggests that such a program can positively affect the user’s intention and awareness through perceived persuasiveness, sense of achievement (Yang et al., 2018).
3.2 Questionnaire design
The language of the questionnaire is firstly set as English, and translation into Chinese is done afterwards. Following the back-translation technique proposed by Brinslin (1970), two students with good English proficiency are invited to translate the Chinese version back to the English version and provide suggestions for translation. Then, we have a pre-test of the Chinese questionnaire. Notably, 8 interviewees are invited to fill out the questionnaire and put forward their understandings, questions, and suggestions for modification. Among the 8 interviewees, there are 3 males and 5 females with the age span range from 17 to 35 years old, and they are all consumers who have been using Alipay for more than 2 years. This pre-test helps to eliminate misunderstandings and uncertainties in the Chinese context. During this revision, our supervisors also gave us efficient and valuable advice for the improvement of applicability.
3.3 Sample and data collection
The target samples are Alipay’ s consumers in China. The way we use for data collection is Convenience Sampling because it provides more possibility to collect as many samples as we can considering affordability, easiness and availability (Etican et al., 2016).
Since Alipay offers most of its services online, an online survey is more in line with the living habits of these consumers than a paper questionnaire, which also helps enhance the efficiency. Moreover, due to the recent epidemic, a study based on an online inquiry is used for the data collection. By generating a link that is easy to spread from the online questionnaire platform Wenjuan Xing, and posting the link on the WeChat (the most widely used communication tool in China), our questionnaire can get access to a large number of diverse sampling with less cost of time.
some questions, we ask twice from opposite angles. If the respondents answer them inconsistently, the corresponding answer sheet will be deleted. Consequently, 53 questionnaires are excluded because they did not meet the condition.
3.4 Descriptive information of samples
As shown in Table 1, among the 201 valid questionnaires, 135 answers are from females with a proportion of 67.2%, which is twice as much as males. This could result from the fact that female WeChat users pay more attention to Alipay, social responsibility, and other subjects related. It may also because women are more active on social media, and they are more inclined to establish connections by social media than men (Vermeren, 2015). For the age, 81.1% of the respondents are from 18 to 44 years old, but there are no answers from people over 65. Students and full-time workers make up the majority and account for 43.3% each. Due to the large proportion of students, there are 85 people with a personal income of less than 2800 CNY. In the dividing values of 2800 and 7400, the percentage of low, medium and high-income samples is 42.2%, 37.8% and 20.0%, where the three groups of values are relatively well-distributed in terms of income. With the remarkable improvement of education in China in recent decades, an increasing number of Chinese receive higher education, so the number of respondents who have not achieved a college degree is only 15.
financial status, education levels, and from 25 provincial-level regions (there are overall 31 provincial-level regions in mainland China).
Table 1 Descriptive statistic of respondents’ characteristics
Item Frequency Percent (%) Item Frequency Percent (%)
Employment status Student 87 43.3 Income (CNY) 0-2800 85 42.3 Full time 87 43.3 2800-5600 32 15.9 Others* 27 13.4 5600-7400 22 10.9 Gender Male 66 32.8 7400-10200 22 10.9 Female 135 67.2 10200-15800 21 10.5 Education level College degree or below 35 17.4 15800+ 19 9.5 Bachelor’s degree 106 52.7 Age 0-18 6 3.0 Master and 60 29.9 18-24 86 42.8 above Marriage Single 137 68.2 25-34 77 38.3 Married 64 31.8 35-64 32 16
*. Other situation of employment. e.g. homemaker, part-time, self-employed, unemployed, and retired Chart 1 location distributionof respondents’ characteristics*
3.4 Measurements
3.4.1 Dependent and independent variables
Empirical studies are used to develop the questionnaire for accuracy. The cited literature contribute to the survey with a higher degree of reliability and a better-constructed measurement scale (See Table 2 below). All the items apart from those related to the personal information are set in the form of the seven Likert levels (Bell et al., 2018; Likert, 1932), from which “1” equals to “strongly disagree” and “7” equals to “strongly agree”.
The degree of a firm’s CSR, the independent variable, is operationalized as the contribution and improvement to the well-being of society offered by the firm. We adopt the perceptual measure from Hur et al. (2020) and Iglesias et al. (2018) to evaluate the degree of Alipay’s CSR from its consumers, where five questions are given in the questionnaire.
This study has three dependent variables. Brand awareness, which is defined as a reflection to scale how much consumers can recognize and identify the brand in different situations. Three questions developed by Washburn and Plank (2002) are adapted to capture the degree of the awareness. Perceived quality, which refers to the consumer perception of the offerings by the firm in a whole, is tested with question adopted from Washburn and Plank (2002) with five questions for different aspects. Brand loyalty implies consumer’s willingness of repeating purchase and recommending the brand to others, and it is assessed via five questions adopted from Huddleston et al. (2003) and Washburn and Plank (2002).
Table 2 Constructs and measure items in the questionnaire
Constructs Measure items Source
The degree of a firm’s
CSR
CSR1: Alipay is a socially responsible company.
Hur et al. (2020) CSR 2: Alipay is concerned with improving the well-being of
society.
CSR 3: Alipay behaves responsibly regarding the environment. CSR 4: Alipay is more beneficial to society’s welfare than
other companies. Iglesias et al.
(2018) CSR 5: Alipay contributes to society in positive ways.
Brand awareness
AW1: I know what Alipay looks like.
Washburn and Plank (2002) AW2: From many products and services, I can recognize
which come from Alipay (rather than other competing brands). AW3: I am aware of Alipay.
Perceived quality
PQ1: Alipay’s services/products appear to be of very poor quality.
Washburn and Plank (2002) PQ2: The likely quality of Alipay’s services/products is
extremely high.
PQ3: The likelihood that Alipay’s services/products would be functional is very high.
PQ4: The likelihood that Alipay’s services/products are reliable is very high.
PQ5: Alipay’s services/products must be of very good quality·.
Brand loyalty
BL1: I consider myself to be loyal to Alipay.
Washburn and Plank (2002) BL2: Alipay would be my first choice.
BL3: I will not pay to other brands if Alipay is available. BL4: I am very willing to recommend Alipay to my friends. BL5: I will try to experience other services/products offered by Alipay.
Huddleston et al. (2003)
Consumer involvement
in CSR CI1: I regularly participate in Alipay’s CSR activities.
Cha et al. (2016)
3.4.2 Control variables
some variables are being controlled based on previous studies. The literature review suggests that individuals’ characteristics usually affect their attitudes toward a brand or company (e.g. Chen and Green, 2011; Mathras et al., 2016). Firstly, gender, religion, education level, and personal income are controlled. The principle of division is based on the condition of Chinese society. Religion is measured by a seven-point Likert Scale with the question that “ I consider I ’m religious” . Education level are set according to the highest degree that currently can be obtained. Personal income is classified into 7 levels according to China ’ s social income stratification and proportion (National Bureau of Statistics of China, 2020).
In addition to that, previous research also suggests that brand competitiveness impacts customer loyalty (Ahmad et al., 2008; Mechinda et al., 2010), so brand substitutability is controlled. Brand substitutability is measured by a scale question that “Apart from Alipay, I can enjoy the same services or products from other companies” on seven Likert scales.
3.5 Common method variance control
For this research, the main risk affecting reliability and validity refers to Common method variance (CMV), which means "variance that is attributable to the measurement method rather than to the constructs the measures represent" (Podsakoff et al., 2003, p.879), it may influence the estimation of the relationship between the variables. Due to the potential effects presented by Podsakoff et al. (2003), the issue of CMV is considered in this research, and methods are used to reduce the influence caused by CMV.
Chinese context). Second, since most of the questions on the scale are positive, the reverse questions are arranged in the questionnaire to test whether the respondent’s process of answering the inquiry is focused and serious. At the same time, reversal items reduce the impact of respondents’ consistent responses. Third, the questions and control combinations used to investigate the same factor are scattered in different parts of the questionnaire. The purpose of this decentralization is mainly to avoid that respondents give the same answer to questions of the same factor habitually. Fourth, to guarantee the questionnaire is valid, it needs to meet the condition of passing the two-side polygraph test from a similar question where 53 answers were eliminated, as mentioned above. Fifth, for reducing the CMV derived from social expectations, the answering process was set to be anonymous to avoid the respondents from consciously providing non-completely true ideas.
3.6 Data analysis technique
4. Results
This chapter illustrates the empirical results based on data analysis through SPSS 25. Quantitative tests and analysis are demonstrated, mainly including factor analysis, reliability analysis, and regression analysis of the hypotheses.
4.1 Exploratory factor analysis and reliability analysis
Exploratory factor analysis is mainly used to condense the measurement items and extract all items into several general factors, to reduce the repeated information and improve the validity (Pallant, 2016). Firstly, the result of the Kaiser-Meyer-Olkin test for the group is 0.941, much higher than the requirement as 0.6 (Kaiser, 1974), implying a great measurement model for factor analysis. The significance of the Barlett Test of Sphericity is 0.000, much less than 0.05, indicating that the original data variables are correlated, and the data is suitable for factor analysis.
Secondly, the reliability and validity of all the relative constructs’ measurement models are involved (See Table 3). Cronbach’s alpha is 0.939, which is higher than the standard coefficient as 0.6 (Nunnally, 1978), meaning that the scale used in this study has internal consistency. The current Cronbach’s alpha is higher than the Cronbach’s alpha value obtained by removing any item so that all current items can be retained. Among the KMO values of each variable, the lowest value is 0.886 (AW2), much larger than 0.5. In Communalities, all values were higher than 0.7, except CSR4 (0.631).
the measurements of this model have reliability and consistency, truly reflecting the condition of the sample.
Table 3. Factor,reliability and validity analysis
Variables Labels Mean deviationStandard Communalities LoadingFactor Cronbach’sAlpha Cronbach’s Alphaif Item Deleted The degree of a firm’s CSR CSR1 5.47 1.068 0.749 0.693 0.942 0.929 CSR2 5.28 1.050 0.820 0.753 0.925 CSR3 5.47 1.077 0.835 0.783 0.924 CSR4 5.21 1.003 0.631 0.648 0.942 CSR5 5.41 1.026 0.835 0.760 0.924 Brand awareness AW1 5.11 1.258 0.843 0.784 0.943 0.922 AW2 5.30 1.179 0.900 0.854 0.902 AW3 5.50 1.145 0.817 0.822 0.927 Perceived quality PQ1 5.17 1.110 0.844 0.732 0.956 0.944 PQ2 5.41 1.088 0.807 0.705 0.948 PQ4 5.44 1.103 0.813 0.751 0.946 PQ5 5.29 1.080 0.851 0.753 0.944 PQ6 5.40 1.119 0.792 0.751 0.948 Brand loyalty BL1 4.80 1.285 0.797 0.793 0.929 0.907 BL2 4.92 1.152 0.733 0.764 0.913 BL3 4.52 1.136 0.702 0.778 0.917 BL4 5.20 1.214 0.751 0.714 0.911 BL5 5.06 1.182 0.678 0.714 0.918 Consumer involvement in CSR CI1 4.12 1.468 4.2 Correlation analysis
Table 4 implies the result of the correlation test. As it can see, among them, some control variables have significant impacts on dependent variables. For example, gender has a slightly significant effect on brand loyalty and perceived quality, while education level has a more substantial impact on brand awareness, brand loyalty, and perceived quality. The coefficients of the independent variable CSR are all lower than 0.7. Therefore, according to Pallant (2016), the results illustrate that all variables are acceptable.
Table 4 Sperman’s rank correlation
GEN IN EDU RL SUB CI CSR AW BL PQ
Gender 1 Income -0.176* 1 Education level 0.105 0.006 1 Religion -0.036 0.072 -0.174* 1 Brand substitutability -0.134 0.070 0.043 0.141 * 1 Consumer involvement in CSR 0.126 -0.038 0.055 0.075 0.071 1 The degree of a firm’s CSR 0.166 * -0.052 0.242** -0.099 -0.055 0.387** 1 Brand awareness 0.104 -0.015 0.154* 0.043 0.060 0.309** .0538** 1 Brand loyalty 0.179* -0.001 0.169* -0.025 -0.080 0.358** 0.725** 0.435** 1 Perceived quality 0.172* -0.005 0.214** -0.137 -0.066 0.348** 0.806** 0.532** 0.727** 1 **. p<0.01; *. p<0.05 4.3 Regression analysis
Table 5-7 shows the descriptive statistics that contain the correlations between the tested variables. As can be seen from the tables, all the models passed the ANOVA test, and their significances are 0.00, which are less than 0.05 as required. In other words, they are of statistical significance. Also, all independent variables pass the t-test (p<0.05).
Table 5. The degree of a firm’s CSR → Brand awareness
Variables Hypothesis Model 1 Model 2
coefficients t coefficients t Gender -0.064 -0.466 -0.100 -0.742 Income -0.023 -0.734 -0.022 -0.721 Education level 0.068 1.050 0.061 0.971 Religion 0.077* 2.039 0.056 1.487 Brand substitutability 0.044 1.095 0.036 0.895 CSR H1 0.754** 10.924 0.634** 9.121 CI 0.173* 2.547 CSR×CI H4 -0.103 -1.908 Model Summery R Square 0.412 0.353 ANOVA F 22.677 18.845 Sig. 0.000 0.000 **. p<0.01; *. p<0.05
CSR=The degree of a firm’s CSR; CI=consumer involvement in CSR
Table 6. CSR → Perceived Quality
Variables Hypothesis Model 1 Model 2
coefficients t coefficients t Control Variables Gender 0.178 1.668 0.064 0.074 Income 0.021 0.852 0.034 1.419 Education level -0.002 -0.042 -0.006 -0.140 Religion -0.031 -1.044 -0.038 -1.541 Brand substitutability 0.006 0.194 0.006 -0.219 CSR H2 0.784** 00.728 0.941** 20.894 CI 0.338** 7.648 CSR×CI H5 0.220** 4.790 Model Summery R Square 0.571 0.726 ANOVA F 41.033 45.600 Sig. 0.000 0.000 **. p<0.01; *. p<0.05
Table 7. CSR → Brand Loyalty
Variables Hypothesis Model 1 Model 2
coefficients t coefficients t Control Variables Gender 0.275* 2.226 0.133 1.730 Income 0.009 0.302 0.015 0.711 Education level -0.011 -0.182 -0.019 -0.524 Religion 0.067 1.959 0.040 1.857 Brand substitutability -0.007 -0.191 -0.021 -0.923 CSR H3 0.723** 11.639 0.976** 24.542 CI 0.671** 17.215 CSR×CI H6 -0.061 -1.829 Model Summery R Square 0.452 0.456 ANOVA F 26.636 20.099 Sig. 0.000 0.000 **. p<0.01; *. p<0.05
5. Findings
This chapter mainly discusses the empirical findings and explains some results that are not consistent with previous studies concerning the Chinese market’s unique situation. 5.1 CSR and brand equity
5.1.1 CSR and brand awareness
Our empirical results suggest that the degree of a firms’ CSR matters in shaping consumer-based brand equity. In other words, the degree of a firm’s CSR is positively related to brand awareness, which means that taking CSR activities helps strengthen the brand recognition in consumers’ mind, which is in line with the studies by Mattera et al. (2012) and Martínez et al. (2019), where the positive effects of consumers’ perceptions of firm’s CSR can be found for brand recognition. This result suggests that CSR activities can deliver a positive signal towards consumers. Consumers have a stronger brand awareness when the company substantially engaged in CSR activities, just like Alipay’s actions to strengthen the image of an excellent product/service (Huang and Sarigollu, 2014; Servaes and Tamayo, 2013). In China, firms are encouraged to initiatively undertake social responsibilities, and firms that actively fulfill their social obligations are often reported by the mainstream media, which can also be an effective way of propaganda to deepen the brand impression in consumer’s minds.
5.1.2 CSR and Perceived Quality
consumers to perceive the quality of products and services provided by the firm and eventually establish a positive image of excellence in their minds (Martinez and Bosque, 2013).
Additionally, combined with some previous studies like Chen and Myagmarsuren (2011), CSR activities can contribute to a sustainable relationship. For the online financial services industry, because the services are mainly provided through online channels on mobile devices, the image of reliability is more direct and effective for improving perceived quality by internet software than offline industries. This stable and long-term recognition is of great benefit to formulating a sustainable relationship.
5.1.3 CSR and brand loyalty
Our results reveal that the degree of a firm’s CSR plays a decisive role in shaping brand loyalty. That is, the more social responsibilities a firm undertakes, the stronger its consumer loyalty will be. This finding is consistent with He and Lai’s (2014) and Moisescu’s (2015) results. Firms’ CSR activities are usually multiple and sustainable with a certain degree of sociality, helping to keep long-term interactions with consumers. This interaction can satisfy the expectation through the user experience of high quality and reflect the company’s sincerity, as Lin (2010) argues. This relationship can also encourage consumers to pay for the brand more in their lives and increase loyalty, with a profound impression of humanistic care.
5.1.4 The role of consumer involvement in CSR
consumers to participate in CSR activities, the firm will consider more from the perspective of the user experience. Consequently, consumers are likely to experience considerate service, and the perceived quality will be increased.
We also find that consumer involvement in CSR does not play a moderating role in the relationship between the degree of a firm’s CSR and brand awareness. This means consumer involvement cannot shape the impact of a firm’s CSR on brand awareness. It may be that CSR activities concerning consumer involvement, such as environmental protection and fund-raising projects, do not have enough advertising so that the main participants are the existing consumers and rarely involve new consumers to the brand. Therefore, it does little help improve consumer’s brand recognition, especially to make new consumers more impressed by their CSR involvement.
6. Conclusion
6.1 Main findings and managerial implications
This research, drawing on stakeholder theory and signaling theory, is aimed to explore how the degree of a firm’s CSR influences consumer-based brand equity, including brand awareness, perceived quality, and brand loyalty, as well as to examine the role of consumer involvement in these effects. Based on the data collected from Alipay’s consumers by online questionnaires, it is found that the degree of a firm’s CSR has positive impacts on brand awareness, perceived quality, and brand loyalty. Meanwhile, consumer involvement in CSR leads to a more substantial effect on the degree of a firm’s CSR on perceived quality, but its moderating impact on the other two relationships are not confirmed. This suggests that CSR can positively signal consumers to influence consumer-based brand equity, and this signaling effects of CSR on perceived quality can be enlarged by consumer involvement in CSR.
6.2 Research contributions
This study has several contributions to the literature and theory. Firstly, this study invokes a relatively under-explored theoretical view in the research on CSR and signaling theory (Spence, 1973), which enables us to advance the research on CSR and to extend the application of signaling theory in a new research area. Signaling theory is well used to explore different research areas such as entrepreneurship, strategic management, human resource management, and marketing. However, it has rarely been adopted in CSR literature. Unlike previous studies, we integrate signaling theory and stakeholder theory to examine the effects of the degree of a firm’s CSR on consumer-based brand equity. Our study suggests that CSR can act as a signal to provide additional information for consumers when evaluating the firm’s brand and highlights the signaling role of CSR.
Secondly, this study uncovers the relationship between the degree of a firm’s CSR and consumer-based brand equity by using the signaling theory, which extends the literature on CSR and branding. In the existing literature, there is a lack of research on the relationship between CSR and brand equity and its impact mechanism, but this thesis provides a new perspective (e.g. signaling theory) to identify the effects of the degree of a firm’s CSR on consumer-based brand equity.
6.3 Limitation and future research
Some limitations exist in this study. Different consumer characteristics lead to different awareness and understanding of CSR so that consumer attitudes may be inconsistent in the data collection process. Future studies may classify consumers based on their heterogeneity and investigate the differences in their perception of the firm’s CSR information to increase the theoretical and application value. Meanwhile, after posting the questionnaire on WeChat, it takes more time to receive enough valid answers than expected, this may result from some WeChat users selectively ignore our invitation.
Another difficulty is that the sample of answers we receive from the middle-aged and elderly consumer groups is relatively small, which may weaken the sample’s representativeness. In this study, questionnaire links are sent to the 14 chat groups dominated by middle-aged and elderly consumers. We also encourage the respondents to invite their relatives and friends to participate in this survey. This means that the age of consumers may have a potential impact on CSR perception and consumer involvement. Thus, future research can extend the analysis to more specific samples, like the older generation.
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Appendix
Appendix 1: Questionnaire in English
Hello! Thank you very much for your participation in the survey of consumers' attitudes towards corporate social responsibility based on Alipay. All information in this survey is strictly confidential and is for scientific research purposes only. The answer is expected to take five minutes. There are no standard answers to this questionnaire, either good or bad answers, so please fill in according to your true judgment.
1.What is your gender? A. Male B.
Female 2．Your age?
A.0-18 B.0-24 C.25-34 D.35-44 E.45-54 F．55-64 G.65+ 3．Your live location?
(Chosen by the respondent) 4．Monthly income A.0-280 0 B.2800-560 0 C.5600-740 0 D.7400-102 00 E.10200-130 00 F.13000-158 00 G.15800+ 5．Employment Status
A. Student B. Housing work C. Part-time D. full-time
E. Retired F. Self-employed G. Unemployed H. Others
6. Education Status A. High school and lower
B. College C. Bachelor D. Master E．PhD and higher 7．Marriage Status
A. Single B. Married without children C. Married with children
8．I have participated in corporate social responsibility activities of Alipay (China) Network Technology Co., Ltd. (hereinafter referred to as Alipay), such as online donations on Alipay platform, Ant Forest activities?
* Corporate social responsibility refers to the enterprise not only pursuing profits, but also making behaviors that are beneficial to its society and environment.
A. Yes B. No
