Corporate social responsibility practices and customer brand engagement, evidence from vietnam

UNIVERSITY OF ECONOMICS HO CHI MINH CITYInternational School of Business ---Tran Quoc Trung CORPORATE SOCIAL RESPONSIBILITY PRACTICES AND CUSTOMER BRAND ENGAGEMENT: EVIDENCE FROM VIETNA

UNIVERSITY OF ECONOMICS HO CHI MINH CITY

International School of Business

-Tran Quoc Trung

CORPORATE SOCIAL RESPONSIBILITY PRACTICES AND CUSTOMER BRAND ENGAGEMENT: EVIDENCE FROM

VIETNAM

MASTER OF BUSINESS (Honours)

Ho Chi Minh City –2015

UNIVERSITY OF ECONOMICS HO CHI MINH CITY

International School of Business

-Tran Quoc Trung

CORPORATE SOCIAL RESPONSIBILITY PRACTICES AND CUSTOMER BRAND ENGAGEMENT: EVIDENCE FROM

VIETNAM

ID: 22130089 MASTER OF BUSINESS (Honours)

SUPERVISOR: LE NGUYEN HAU

Ho Chi Minh City – 2015

Firstly, I would like to express my deepest gratitude to my supervisor Assoc Prof LeNguyen Hau for his professional guidance, valuable comments, and continuousencouragement as well as helpful support that made this thesis possible

I am sincerely thankful to proposal examination committee Their valuable suggestionscontributed significantly to this study and supported me in completing with best results.Special thanks to all of my classmate in MBUS 4 class, who gave me useful support forconducting this study

I also would like to express my grateful thanks to my friends and people in Vietnam whoparticipated in filling the questionnaires for providing the valuable information to this study.Personally and finally, the deepest and sincerest gratitude go to my beloved family for theboundless support, abundant love and encouragement throughout my period of study.Therefore, I devote this work as a gift to them all

In the Vietnam context after Doimoi, Vietnam is one of the transition economic nations stronglyaffected by global market With expectation, this research explores the effect of customerperception of a firm’s corporate social responsibility on customer brand engagement through asurvey of 226 people who live in Ho Chi Minh City The collected data was analyzed andevaluated by SPSS program with analysis of reliability, factor analysis, and multiple regressionanalysis Current study finds out that economic, legal, ethical, and philanthropy CSR perceptionhave significant impact on customer brand engagement

Generally, this study contributes ideas about CSR to brand owners as well as managers.Customer also identify more clearly about CSR practices and reorient their chosen Thesefinding suggest that the brand owners, managers should carefully consider the ethicalpractices, then philanthropy, economic and legal practices in order to engage more customer.Besides, the managers should state out their practices, which enhance perception ofcustomer about their practices

Key words: economic CSR perception, legal CSR perception, ethical CSR perception,

philanthropy CSR perception, customer brand engagement

Abbreviation 1

List of Figure 1

List of table 1

CHAPTER 1: INTRODUCTION 1

1.1 Research background 1

1.2 Research problem 2

1.3 Research gap 3

1.4 Research objectives 4

1.5 Significance of study 5

1.6 Research scope and methodology 5

1.7 Research structure 5

CHAPTER 2: LITERATURE REVIEW 7

2.1 Customer engagement (CE) 7

2.2 The concept of corporate social responsibility (CSR) 9

2.3 Corporate social responsibility (CSR) theories 10

2.3.1 Stakeholder theory 10

2.3.2 Caroll’s CSR conceptualization-Carroll’s CSR pyramid 11

2.4 Research framework 12

2.5 Research Model 15

CHAPTER 3: METHODOLOGY 17

3.1 Research design 17

3.1.1 Research process 17

3.1.2 Qualitative research 19

3.1.3 Quantitative research 19

3.2 Measurement scale 19

3.3 Research sample 21

3.4 Data collection 22

3.5Data analysis method 23

3.5.1 Descriptive statistic 23

3.5.2 Cronbach’s Alpha 23

3.5.3 Exploratory Factor Analysis (EFA) 24

3.5.4 Multiple Regression Analysis 25

CHAPTER 4: DATA ANALYSIS 27

4.1 Sample description 27

4.2 The reliability analysis: Cronbach’s Alpha test 28

4.3 Exploratory Factor Analysis (EFA) for measurement scale 29

4.3.1 Independent factors: CSR perceptions 30

4.3.2 Dependent factor: Customer brand engagement 32

4.3.3 Validity analysis 35

4.4 Multiple regression analysis: testing hypothesis 36

4.4.1 Assumption testing 36

4.4.2 Hypothesis testing: relationship between independent variables and dependent variable 38

4.5Discussions on the results 40

CHAPTER 5: CONCLUSIONS, IMPLICATIONS AND LIMITATIONS 46

5.1 Conclusion 46

5.2Managerial implication 47

5.3 Limitation and further research 49

References 51

Appendix 1 Guidelines for In-depth Interview Respondents’ information 63

Appendix 2: English version of Questionnaire Survey 65

Appendix 3 Vietnamese version of Questionnaire Survey 69

Appendix 4: Brand Frequency 73

Appendix 5: Charts of multiple regression analysis 74

Appendix 6: Rotated Component Matrix before removing items 75

WTO World Trade OrganizationTNCs Transnational corporations3MCPD 3-chloropropane-1, 2-diol

WBCSD World Business Council for Sustainable Development

CSP Corporate social performance

List of Figure

Figure 1: The pyramid of Corporate Social Responsibility ……… 12

Figure 2: Concept model……… … 15

Figure 3: Research process……… 18

Figure 4: Histogram of Customer Brand Engagement ………74

Figure 5: Normal P-P plot of Customer Brand Engagement ……… 74

Figure 6: Scatter plot of Customer Brand Engagement ……… 74

List of table

Table 3.1 Measurement scale ……… 20

Table 4.1 Sample Characteristic ……… ……… 27

Table 4.2 Result of Cronbach’s Alpha ……… 28

Table 4.3 KMO and Bartlett's Test……… 30

Table 4.4 Total Variance Explained ……… 30

Table 4.5 Rotated Component Matrix ……… 31

Table 4.6 KMO and Bartlett's Test ……….32

Table 4.7 Total Variance Explained ……… 32

Table 4.8 Component Matrix ………….……….32

Table 4.9 Cronbach’s Alpha after reducing items ……….…….34

Table 4.10 Correlation Matrix ……… … 35

Table 4.11 Coefficients Matrix ……… 37

Table 4.12 Model Summary ………38

Table 4.13 ANOVA ………38

Table 4.14 Summary of hypotheses testing result ……… 40

Table 6.1 Rotated Component Matrix ……… 75

Table 6.2 Reliability Statistic ……… 75

CHAPTER 1: INTRODUCTION 1.1 Research background

Corporate social responsibility (CSR) has received increasing attention by manyexecutives and researchers throughout the world, especially in recent decades For example,

in 2011, the survey of KPMG international corporate about CSR practices in business in theworld showed that there were 3400 companies in 34 countries consider CSR as mainstream

in businesses, this figures in 2013 were 4100 companies in 41 countries (KPMG, 2013) Inaddition, many professional bodies such as the Association of Chartered CertifiedAccountants (ACCA), the Chartered Institute of Management Accountants (CIMA), the

Canadian Investment Manager (CIM) and universities have been reinforcing themselves byidentifying the role of CSR in sustainable business (Hassan, Nareeman & Pauline, 2013).Carroll (1991) defines the CSR as the social obligations to many stakeholders, environmentwhile making profits for shareholders CSR is the necessities that utilizing whole resources

of business in bring the harmony to the society and leading sustainability (Chung, Yu, Choi

& Shin, 2015) Cardebat and Sirven (2010) also argue that CSR activities help firmsimproving their effectiveness and profits in current situation and in the future Manyresearchers have debated about the role of CSR, as declaration of Luetkenhorst (2004) CSRplays a role that push corporation from a state of mere compliance to a mode ofengagement, from harm minimization to value creation The resources of world recently arescarcer and more dwindling, CSR is therefore founded on a stronger position in businessactivity as an active partner

CSR is a worldwide issue across all over the world and it has been observed in manydeveloped and developing countries, Vietnam with open economic conditions has also facedwith this impact In Vietnam, the notion of CSR gained it momentum over past few years FromDoi Moi reforms (economic renovation) in 1986 and open-door policy, Vietnam governmentadmitted and encouraged the privately-owned enterprises besides state-owned bodies that was

an initial mark for dynamic transition with the aim for better integration into the globaleconomy With this shift, Vietnam market has been predominantly pushed by international andtransitional factors In addition, joining the World Trade Organization

(WTO) in 2007 was the further step in this direction that made more efforts in followingcodes of conduct of global Accompanying with the changes of economy is the popularity ofCSR which was spread early in Vietnam by Western transnational corporations (TNCs)(Debroux, as cited in Hamm, 2012), those forces of economy bring the pressure not only tothe Vietnam government for setting up Vietnam Agenda 21 as a CSR-related sustainabilitystrategy that officially signed in 2004 for serious consideration of government aboutsustainable development in Vietnam, but also to business to make more adaptation tocompete with global market.

1.2 Research problem

In Vietnam, the remarkable economic development recently has promoted the integration

of the Vietnam’s business into the global market deeply With this, their brand plays animportant role for positioning the market Contrary to the past, the development of informationage has supported customers, especially in connecting variety of information, CSR is notexcluded Besides, customers have more opportunities for choosing brands from numerousobjectives Recently, CSR become the new factor influence on their critical decision making(Pham, 2011) For example, nearly 73 percentage of Vietnamese customers willing pay moremoney for brands relating to CSR and they also most interest about CSR when compare to theworld (Nielsen, 2014) On the other hand, along with the open-door and integration deeply, it isrequired that brands need innovating for engaging the belief of customer Brand managers arechanging to adopt CSR for connecting more customers Many brand managers are striving tomeet customer need by their best effort, not only the quality of product and service, but also theresponsibility to society For example, the corporation groups received the award Giai ThuongSao Vang Dat Viet 2015 whose activities all relating to CSR and the top 10 enterprises receivedCSR award are almost small and medium enterprises (Lê Mỹ, 2015) However, CSR practicesare not considered completely in Vietnam Pham suggests that there are companies considerCSR is only charity more than real need of them The knowledge of CSR is incomprehensive(Luu, 2011), most of companies do not have right direction about CSR and its role as well(Central Institute for

Economic Management, 2014) In addition, many large groups consider CSR activitiesshould begin from empathy to the society (Kim Yến, 2015) Besides, Pham states that theVietnamese customer awareness about CSR information is strong, but they do not have clearattitude There are customers just think that companies should have commitments to themand community at large, whatever it is (Bui, 2010) Majority of them have very limitedinformation about CSR and just focus on price (Central Institute for EconomicManagement, 2014) Therefore, the practice of CSR by business and the perception ofVietnamese customers about CSR are fairly ambiguous Much worse, recently many issuesoccur that destroy the belief of customers about CSR practices of companies such as: theviolation of environmental standards by Taiwanese food manufacturer, Vedan, who wasaccused of destroying the Thi Vai Rivers for about 14 years; soy sauce 3MCPD; melamine-tainted milk; petrol station fraud; etc These things create the distance between customersand efforts of companies to their brand Hence, CSR practices has not yet contributedeffectively to relationship of customer and brands in Vietnam situation.

1.3 Research gap

Recently, some researchers propose that CSR concept lets the executives define thesocial obligations and build trusting relationship according to their strategy (Kim, Hur & Woo,2014) Against this backdrop, the concept has been focusing on many aspects of stakeholderssuch as owner’s wealth (Lee, Seo & Sharma, 2013), customer behavior (Nehme, Charbel &Aline, 2013), employee attitude (Glavas & Kelley, 2014) and even financial performance(Waworuntu, Wantah & Rusmanto, 2014), etc Among studies on customer behaviors, theprevious researchers emphasize the importance of CSR toward engagement of customer tobrand, meaning that they have specific emotion and consideration to a certain brand (Goldsmith

& Goldsmith, 2012) According to Australian Consumer Association (as cited in McDonald &Rundle-Thiele, 2008), the CSR activities without customer perception that make the customershave highly switch brand behavior These studies indicate CSR perception has a positive impact

on customer engagement to public listed brands which have more confirmative reports(Mattera, Baena & Cervino, 2012) Similarly, in the study by Popescu (2012) indicates that CSRreputation is constantly making efforts to enforcing brand

trust and reputation Therefore, customer perception to CSR is very important in customer’sbrand engagement because it decides the customer favor to a specific brand.

Based on statement of So, King and Sparks (2014), they believe that theconceptualization of customer engagement covers both psychological and behavioraldimensions including components, namely, enthusiasm which means strong level ofexcitement and interest, attention which is conscious or unconscious, absorption whichmeans pleasant state, interaction which means sharing and exchanging, and identificationwhich means self-image overlap the brand’s image In Vietnam, according to my best effortfor finding the literature about customer engagement, the application of customerengagement concept is still new, there is few study relating to comprehensive knowledge ofcustomer brand engagement The previous researches that just only focus on aspects ofcustomer behavioral and psychological separately and independently such as satisfaction,loyalty… (Nguyen & Pan, 2015; Nguyen, 2015) Although many studies through the worldhave investigated the customer brand engagement, particularly in the relationship betweencustomer’s perceptions to CSR and customer engagement, the application of CSR forengaging customers in Vietnam is still limited Therefore, there is remain a question forrelationship between customer perception to CSR and their brand engagement Accordingly,this study attempts to investigate the impact of customer’ CSR perception on customerbrand engagement in Vietnam market by investigating the relationship between the fourdimensions of CSR as developed by Carroll (1991) and customer brand engagement

1.4 Research objectives

The main objective of this research is to investigate the relationship betweenVietnamese customer’s CSR perception and their brand engagement of many FMCG brands

in Ho Chi Minh City (HCMC)

Thus, this research is to answer two questions:

 Is there any relation between Vietnamese customer’s CSR perception and their brand engagement?

 How customer’s CSR perception affects on their brand engagement?

1.5 Significance of study

After this study, it is hopeful that the study founding will enable brand owners andmanagers to develop suitable strategies to harmonize the social beneficiary and company and todevelop sustainable prospect for their operation The findings of the research will also helpcustomers to have an overview of perceived CSR when they attend the purchasing process

1.6 Research scope and methodology

The research was conducted on consumers in Ho Chi Minh City which is one of largest city

in Vietnam It embeds all trading activities and gathers people from different geography areaand demographic characteristic in our country

Because the CSR concept is still new in Vietnam Therefore, this research just focuses ongeneral perception of customer about CSR practices impacting on their engagement

Data analysis tool SPSS is used to process the collected data Afterward, SPSS is used totest the scale reliability (Cronbach’s Alpha), then factor analysis to determine which set ofitems are answered similarly by the respondents Finally, Multiple Regression is used tocheck the relationship between independent variables and dependent variable

1.7 Research structure

Chapter 1: Introduction

This chapter presents the research background of the study, research problems, research gap,research objectives, the significance of the study, research scopes and methodology, and theresearch structure

Chapter 2: Literature review and hypotheses

In this chapter, the fundamental theories and definition for each mentioned concept arepresented The conceptual model and hypotheses of the study are also built

Chapter 3: Research Methodology

This chapter mentions about the research design, measurement scale, research sample, datacollection and data analysis method

Chapter 4: Data analysis and data results

For this chapter, the characteristics of collected data is summarized and result of theresearch is presented after analyzing collected data From that result, study shows discussionfor the research hypotheses proposed in Chapter 2

Chapter 5: Conclusions, implications and limitations

This chapter illustrates the main results of the research, the contribution of the study intheory and practice as well as the limitations of the study for future research

CHAPTER 2: LITERATURE REVIEW

This chapter present the theoretical concepts and conceptual framework as being theplatform for research Hypotheses according to the conceptual framework selected for thisresearch are discussed and developed for testing

2.1 Customer engagement (CE)

Engagement is early primarily studied in psychology (Morgan, Beatty & Vivek, 2012).Kahn (1990) is the pioneer to use the concept of engagement to workshop that referred toemployee engagement He suggests that people have multiple awareness in work roles thatinfluence engagement From then, there is an evolution of concept among practitioners as well

as academics The term “customer engagement” has been paying more attention since 2005(Brodie, Hollebeek, Juríc & Ilíc, 2011) So et al (2014) state that from the psychologicalaspects, the fundamental of the employee engagement construct may provide a base forcustomer engagement which means that engagement is “a positive, fulfilling, work-related state

of mind that is characterized by vigor, dedication, absorption” (Schaufeli, Salanova Romá, & Bakker, 2002, p.74) In contrast, from marketing perspective, Marketing ScienceInstitute (2010) suggests CE as “customer’s behavioral manifestation toward a brand or firmbeyond purchase, which results from motivational drivers” (pp 4) Such focus is in behavioraspect and also being proved by other practitioners (Shevlin, 2007) and academics (Bijmolt etal., 2010) Bijmolt et al believe that these perspective more traditional and well-establishedwith the key behavioral manifestations including word-of-mouth, co-creation and complainingbehavior However, Patterson, Yu, and Ruyter (as cited in So et al., 2014) argue that employeeengagement is applicable to customer engagement but not enough Focus of customerengagement differs and goes beyond employee engagement in workplace, reflecting bothpsychological and behavioral aspects (So et al., 2014)

González-In respect to the conceptualization of CE, Brodie et al (2011) consider CE in boththe psychological aspects of engagement as well as behavioral participations From thisperspective, the definition that is followed:

Customer engagement (CE) is a psychological state that occurs by virtue ofinteractive, co-creative customer experiences with a focal agent/object (e.g., a brand)

in focal service relationships (pp 260)

While Brodie et al (2011) definition concentrates CE in both psychological andbehavioral aspects, it seems that there remains another viewpoint in respect to theconceptualization of the concept such as Bijmolt et al (2010) respect to CE as a behavioralconstruct that resulting from various motivational drivers

The evidence for support the application of a multidimensional approach isconceptualization of composite loyalty (e.g., behavioral and attitudinal) (So et al., 2014).Jacoby and Chestnut (1978) suggest that composite loyalty is measured by behaviors alonemay lack a conceptual basic and insight into repeat behavior The conceptualization ofBrodie et al (2011) that covers both psychological and behavioral dimensions which arepresented fully complexity of CE and guarantee for truly engaged customers (So et al.,2014) Moreover, Banyte and Dovaliene (2014) agree that conceptualization of Brodie et al.about CE has main role in reflecting the interactive experience of customer co-creation invalue creating in marketing relationship

In Vietnam situation, the term of Customer Engagement has not been observed muchbecause of new emergence though many previous studies about behavior aspect of customerlook at the loyalty, satisfaction and intention, etc (Vu, 2012; Wang & Pho, 2009) However,studies all over the world have proved that CE is a strategic issue supports for entity’sprofitability (The economic intelligent unit, 2007), superior competitive advantages (Sadley, ascited in Brodie et al., 2011) and enable customers to continue on interactions rather than maketransactions as well as co-create value (Sashi, 2012) The conceptualization of Brodie et al.(2011) is examined validity and reliability for customer engagement toward brand by study of

So et al (2014) They also believe that a comprehensive understanding of CE concept shouldinclude components, namely, enthusiasm which means strong level of excitement and interest,attention which is conscious or unconscious, absorption which means pleasant state, interactionwhich means sharing and exchanging, and identification which means self-image

overlap the brand’s image All these components represented for both psychological andbehavior dimension and these components also the base for this current study Hence, forexamining the level of Vietnamese customer engagement toward specific brand, currentstudy uses the scale that is developed by So et al.

2.2 The concept of corporate social responsibility (CSR)

The concept of Corporate Social Responsibility is an achievement of 20th century Ithas diverse history of evolution and its assumption was early defined that businesses have

an obligation towards citizens and social responsibility during 50’s (Carroll, 1991) Despitenon-development of CSR literature in period 60’s and 70’s (Hanzaee & Rahpeima, 2013),Carroll believes that Davis (1973) was among the most famous authors in this era as he hadsignificant contribution to concept of CSR which bring long-term advantages to a firm(Davis, 1973) In period 80’s, a notion of continuous, long-term process was seen as the newfabric of CSR concept (Freeman, 1984) and it then expands to a multidimensionalperspective because of globalization In last decade, the international consideration hasoccurred in CSR which all aspects such as human right, environment and social at globallevel (Hanzaee & Rahpeima, 2013)

Despite lively evolution of CSR concept with many comprehensive and integrateddefinition, there is no consensus definition about CSR Orlitzky (2005) believes that plurality ofthe definitions causes ambiguous and ill-defined meaning of them For example, Hopkins(2007) defines CSR is concerned with “treating the stakeholders of the firm ethically or in aresponsible manner ‘Ethically or responsible’ means treating stakeholders in a manner deemedacceptable in civilized societies” (pp 15-16) From the World Business Council for SustainableDevelopment Center (2015) CSR is defined as “the commitment of business to contribute tosustainable economic development, working with employees, their families, the localcommunity and society at large to improve their quality of life” More generally, CSR is aconstruct of policies, practices, and program that are integrated throughout business operationsand strategy decision-making processes, and for the purpose that ensures company maximizesthe positive impacts of its operations on society (Business for Social

Responsibility as cited in Jamali, Safieddine & Rabbath, 2008) Despite many definition, themainly CSR is that corporate should decide for better participation with society Therefore,the consideration of CSR concept should be a solution for phenomenal gaps (Van, 2001).

Jamali et al (2008) believes that the most common conceptualization of CSR that is

of Carroll (1991) which she defines that is the social obligation towards wider stakeholders,environment white making profit for the shareholders Xuan and Gregory (2011) suggestthat Carroll concept have a comprehensiveness of definition that integrating all existingaspects and can be explained by all approaches of defining CSR Many studies have usedthe concept of Carroll as a base for observation throughout the world (Jamali et al., 2008;Hanzaee & Rahpeima, 2013; Hassan et al., 2013) Similarly, the concept of Carroll is alsoexamined the validity and reliability in developing countries (Jamali & Mirshak, 2007;Hanzaee & Rahpeima, 2013; Hassan et al., 2013) etc In Vietnam, the CSR concept which isdeveloped by Carroll is used in many studies to investigate perception of corporate socialresponsibility in Vietnam (Luu, 2012; Lai, Le & Truong, 2013) Moreover, Lai et al statesthat CSR concept of Carroll is most widely-accepted and used in academic and practicalstudies in Vietnam even though there is remain a continuing controversy of how definingCSR Thereforce, this study applies framework of Carroll and the CSR values scaledeveloped by previous studies based on framework of Carroll

2.3 Corporate social responsibility (CSR) theories

2.3.1 Stakeholder theory

Over decade, many researchers have observed the relationship between society andbusiness in context of corporate social responsibility (CSR) based on concept of Carroll (1991)and stakeholder theory (Freeman, 1984) Beside, corporations also promote socially responsibleactions and policies to effectively respond to stakeholder demands According to Donaldson andPreston (1995) stakeholders including investors, political groups, customers, communities,employees, trade associations, suppliers, government Against this backdrop, regarding tobusiness responsibilities to society, Brown and Forster (2013) debate that sometimes CSR andstakeholder theory are not agreed as to both nature and limit, and they

are delineated by differences in difference objectives However, many studies believe thatstakeholder is an important influencing factor that affects on corporate decision and strategy,also a motivation for CSR (Lee et al., 2013; Nehme et al., 2013; Glavas & Kelley, 2014).Moreover, Wood and Jones (1995) argue that there is a different influence of CSR onperformance because the expectation and evaluation of CSR differ from one stakeholdergroup to another Therefore, in this study, customer as an importance stakeholder will beobserved for more evidence.

2.3.2 Caroll’s CSR Conceptualization-Carroll’s CSR pyramid

In 1979, Carroll proposed a four-part definition of CSR that is embedded in concept

of corporate social performance (CSP), she believed that various responsibilities that societyexpects businesses to assume were categorized into four-part framework includingeconomic, legal, ethical and discretionary These four categories always simultaneouslyexist in organization and not mutually exclusive However, these four classes are simply thatactivities can be categorized as primarily one or another of these four kinds Business fromthis perspective is the basic economic unit in society that Carroll suggested that during thehistory of business is an early concentrate on economic aspect and then the legal aspect andlater for ethical and discretionary consideration

In 1991, Carroll revised his four-part definition of CSR and reconstructed the notion

of corporate social responsibility in a pyramid structure as shown in Figure 1 In thispyramid, economic responsibility is the basic foundation and discretionary is apex Fromthis conceptualization, economic and legal responsibility are social requirement, ethicalresponsibility are social expectation and philanthropy is social desire (Windsor, 2001).However, Carroll implies that these distinct components always “in constant but dynamictension with one another” and of course they are as a unified whole without mutuallyexclusive

Figure 1 The pyramid of Corporate Social Responsibility (Carroll, 1991)

2.4 Research framework

Carroll (1991) states that economic viability is ability business does for society aswell describe the economic component as a responsibility to produce goods and servicesthat customers want and do right thing what customers expect This engage customer tobrands Previous studies have shown the link between economic CSR and customerengagement such as economic CSR positively related to customer enthusiasm, attention,absorption, interaction and identification (Kim, Lee, Lee & Li, 2012; Alam & Rubel, 2014;Chung et al., 2015) which are components for customer engagement (So et al 2010)

More generally, Carroll (1991) divides economic dimension into being competitive(high quality and low cost), operational efficiency, continuous profitability, shareholder’swealth maximization, and generate profit Against this backdrop, Baron and Nambisan(2009), Füller (2010), Roberts and Alpert (2010) indicate social benefits, economic benefits(such as cost savings) and quality of products engage enthusiasm of customer In addition,Increase consumer expected utility may enhance brand equity which eliciting the customerattention (Abdolvand & Charsetad, 2013) Greater operational competency provides greaterabsorption to customer which enhance engagement of them (Hur et al., 2014) Beside, firmscan facilitate Customer Engagement by providing effective platforms for information

exchange and interaction (Baron & Warnaby, 2011) Firms also enhance customeridentification by enhance perception to quality and innovation (Pérez & Bosque, 2015).

In empirical study, Fensel, Toma, García, Stavrakantonakis, and Fensel (2014); Lee,Lee, Chan, Zheng, and Cheung (2014) argue that economic CSR practices (cost saving,quality and operational efficiency) directly enhances customer engagement Besides, intheoretical study, Kaltcheva, Patino, Laric, Pitta, and Imparato (2014) believe that minimumcost positively influences customer brand engagement Therefore, it is expected thatcustomers with greater economic CSR perception will be more engagement to brand

Hypothesis 1: there is a positive impact of perception of economic CSR on Customer brand engagement.

Legal responsibilities of CSR dimension are measured in terms of the extent thatorganization’s activities are consistent with laws and regulations, law-abiding corporate citizen,fulfilling legal obligation, and goods and services must meet the minimal legal requirement(Carrol1, 1991) Wirtz, Lwin, and Williams (2007) argue that customers with greater trust andconfidence when firms act in accordance with legal regulation to protect consumer Thisperception of trust and confidence engage customer’s interest because of assessment of fairness

in their mind (Bala, 2014) Customers also have more attention to companies than others whoincompliance with law and code (Dorsch, Swanson & Kelly, 1998) They feel more satisfaction(Hassan, et al., 2013), securitize and show more interaction with legal firm (Lai, Nataraajan &Ndubisi, 2013) Furthermore, stronger compliance to legal and standards of firms makes moreidentification to customer (Pérez & Bosque, 2015)

In empirical study, Sarabdeen (2014) argues that legal risks negatively affect tocustomer engagement Besides, in theoretical study, Doorn et al (2010) believes that legalaction lead to customer engagement Hence, it is expected that customers with greater legalCSR perception will be more engagement to brand

Hypothesis 2: there is a positive impact of perception of Legal CSR on Customer brand engagement.

Ethical responsibility of CSR dimension is measured in terms of societal mores andethical norms, extent that organization adjust themselves to emerging moral norms, degree

of compromising ethical standards or norms, corporate citizenship behavior accepted bysociety and the extent that organization go beyond the legal and regulation requirements tomaintain integrity of the organization (Carroll, 1991) Adam (as cited in Bala, 2014) showsthat people have nature desire to engage in equitable relationship People pay more attentionwith firms who exhibit more “Citizenship behaviors” (Masterson, Lewis, Goldman &Taylor, 2000) Furthermore, CSR-based moral capital of firms leads to brand credibilityamong customers (Luo & Bhattacharya, 2009) because customers do not want a company totake advantage of it relationship with them or to be cheated (Pérez, Cáceres & Alcañiz,2010) The more ethical consideration of firms that customers perceive, the more interaction

to firms they make (Ndubisi et al., 2013) Ethical perception spurs identification of customer

to brands (Pérez & Bosque, 2015)

In empirical study, based on study by Hammedi, Kandampully, Zhang, andBouquiaux (2015) that morality responsibility positively affects on customer engagement.Besides, in theoretical study, Roberts and Alpert (2010) agree that corporate citizenshipbehavior enhances customer brand engagement Therefore, it is expected that customerswith greater ethical CSR perception will be more engagement to brand

Hypothesis 3: there is a positive impact of perception of ethical CSR on Customer brand engagement.

According to Carroll (1991), philanthropy is the highest level of CSR, where it ismeasured in terms of philanthropic and charitable expectation of society, assistance provided tofine and performing arts, extent that managers and employees of the organization involvementvoluntary charitable activities organized by community, and assistance provided by organization

to the projects that enhances “quality life” Morgan et al (2012) illustrates that brands canengage individuals by their status value such as their humanitarian or social value which havestrong link to philanthropy Firm’s social activities sent a signal of non-self-serving orientationwhich may generate positive attributions that affect to customer

psychology positively (Godfrey, Merrill & Hansen, 2009) Lichtenstein, Drumwright andBraig (2004) argue that non-profit or altruistic practices let to store emotional attachment tocustomer Further, customer also more value philanthropy on their interaction which showmore extra-role such as recommendation (Lii & Lee, 2012) Those aware of an actualcorporate philanthropy initiatives have stronger identification with brands (Sen,Bhattacharya & Korschun, 2006).

In empirical study, Wirgau, Farley, and Jensen (2010) argue the donations encouragecustomer engagement Besides, in theoretical study Kaltcheva et al (2014) agree that firms

do for society as an asocial firms enhance customer brand engagement Therefore, it isexpected that customers with greater philanthropy CSR perception will be more engagement

to brand

Hypothesis 4: there is a positive impact of perception of philanthropy CSR on Customer brand engagement.

2.5 Research Model

Figure 2: Concept model

H1: There is a positive impact of perception of economic CSR on Customer brandengagement

H2: There is a positive impact of perception of Legal CSR on Customer brand engagement

H3: There is a positive impact of perception of ethical CSR on Customer brand engagement.H4: There is a positive impact of perception of philanthropy CSR on Customer brandengagement.

In summary, this chapter presents the literature review about definition andtheoretical background of corporate social responsibility and customer brand engagement.Against the backdrop of previous study, customer brand engagement is positively impacted

by CSR perception including economic CSR perception, legal CSR perception, ethical CSRperception and philanthropy CSR perception There are four hypotheses in this study

Questionnaire was designed in English based on the various measurement scalesfrom previous studies, after that the questionnaire’s translation into Vietnamese was takenfor delivering to respondents in interview.

Step 2: Refining the questionnaire by pilot qualitative research

A list of questions about CSR perception and customer brand engagement weredelivered to the respondents in interview The interviewees were asked for bestunderstanding and suitable to the context of study which was took place in Ho Chi MinhCity with objectives were brands of FMCG companies The responses of interviewees formodifying the questionnaire were collected

Step 3: Modifying the questionnaire

The measurement scale was modified for more suitable and understanding to thecontext of the study (see Appendix 1) After that, the measurement scale was decided forreforming for final questionnaire Besides, the sample population for the main survey wassuggested simultaneously

Step 4: Taking the main survey

A total of 400 questionnaires were delivered to respondents through electronic mail.After three weeks, there were 238 were sent back in which 226 responses could be used foranalyzing data, 12 responses were invalid because of same answers

Step 5: Testing the reliability and validity of data

Cronbach’s Alpha was used to test the reliability of measurement scale The scalewas considered reliable by Cronbach’s Alpha coefficient After that, Exploratory FactorAnalysis (EFA) was used to test the validity of scales and modify the research modelaccordingly if any

Step 6: Testing the structure model and hypothesis

The multiple regression analysis was used to test the conceptual model and itshypotheses

3.1.2 Qualitative research

Based on the literature review of CSR and customer brand engagement, fourhypotheses were proposed in Chapter 2 After that, the model was built and the preliminaryscale was selected for questionnaire of the study from consolidation and citing of previousstudies The daft questionnaire was designed and translated into Vietnamese Then the in-depth interviews were conducted with 7 people in Ho Chi Minh City In order to make surefor comprehensive understanding by most of participants, the interviewees are currentlyfollowing the master’s degree program at University of Economics who could obtain thecorrect items which suitable to Vietnamese consumers In this phase, scale modifying hadbeen taken for more suitable and understanding to context of this study (see appendix 1) Inthe end of this phase, the final questionnaire was completed for next quantitative research

3.1.3 Quantitative research

After qualitative research, the questionnaire was summarized again from suggestions

of interviewees for more easy understanding in Vietnam market Afterward, the main surveywas conducted widely by using convenience sample which collected from consumers in HoChi Minh City SPSS program 22 was used to test the data For the reliability and validity,Cronbach Alpha and Exploratory Factor Analysis (EFA) were used Then, Standard MultipleRegression was applied to test the hypothesized model

3.2 Measurement scale

The measurement scales applied in this study that were already developed and validated

in previous study (see table below) These studies of CSR focus on customer perspective, thescales were 21 items, Economic CSR perception was measured by 4 items and Legal CSRperception was measured by 4 items based on Arli and Lasmono (2010) Ethical CSRperception was measured by 8 items based on Mulki and Jaramillo (2011); Ho and Rashid(2003), Philanthropy CSR perception was measured by 5 items based on Oppewal, Alexanderand Sullivan (2006) The measurement scale of So et al (2014) was be used to measure theengagement of customer into brand, this scale included 5 items which present for

enthusiasm, attention, absorption, interaction, and identification which are reflect bothpsychological and behavioral dimensions of customer.

In this study, Ethical CSR perception was measured by 8 items based on the research

of Mulki and Jaramillo (2011), Ho and Rashid (2003) The measurement scales of EthicalCSR perception from study of Ho and Rashid concentrate on multi groups who havedifferent ethic perception, while study of Mulki and Jaramillo capture customer judgementsabout ethical practices of both the organization and salesperson, in which salesperson is animportant aspect of customer’s assessment to the seller’s ethics (Babin, griffin, & Boles,2004) Besides, this research took place in Ho Chi Minh City which embeds all tradingactivities and gathers people from different geography area and demographic characteristic

in our country Therefore, the combination of previous studies of Ethical CSR perceptionsupports for complete understanding of ethical CSR practices of firms including salespersonfrom different groups of people

Table 3.1 Measurement scale

I believe that this brand must control their production cost strictly.

perception

I believe that this brand must plan for their long term success.

I believe that this brand must always improve economic performance.

Legal CSR I believe that this brand must ensure that their employees act within Arli and Lasmono

I believe that this brand must refrain from putting aside their contractual obligations.

I believe that this brand must refrain from bending the law even it this helps improve the performance.

I believe that this brand must always submit to the principles defined

by the regulatory system.

Ethical CSR I believe that this brand salesperson is honest with me Mulki and Jaramillo

I believe ethical problems do not occur at this brand

I believe this brand is a highly ethical brands.

I think this brand would not market unsafe product Ho and Rashid (2003)

I think this brand would not be lying that the product is “new and improved

I think that this brand would not give deceptive instructions

I think that this brand would not sell defectives products.

I think that this brand would not irritation in advertisement.

Philanthropy I think that this brand has good activities at provision for education Oppewal, Alexander

Perception

I think that this brand has good activities at support for better work condition in local industry.

I think that this brand has good activities at help local people in need.

I think that this brand has good activities at support for national cultural and sport events

I think that this brand concern for local natural environment.

Customer When someone praises this brand, it feels like a personal compliment So et al (2014)

Brand I feel excited about this brand

3.4 Data collection

Data collection was taken in two phases In the first phase (qualitative research) datawas collected from in-depth interview with 7 interviewees who are currently following themaster’s degree program at University of Economics It was important to check the contentand meaning of words used in the initial measurement scales and modify them to be moresuitable and understanding to context of this study Changes for Vietnamese version weremade for the purpose of accuracy and clarity because of comments and recommends fromrespondents and that were taken note in the Appendix 1, the ones which people confuse orunclear was deleted After this phase, the final questionnaire was completed frommodification, one item from So et al (2014) was deleted because of unsuitability (seeAppendix 1)

In the second phase (quantitative research), the questionnaire had been brought to mainsurvey In this phase, the data was collected from the target respondents who are consumers in

Ho Chi Minh City using convenience sampling method With expectation to obtain a minimumsample size of about 130, current study used the method of self-administered survey with themain instrument which was used to interview in this survey was mail survey in which usingindirect method via electronic mail and Google survey tool to deliver questionnaire to targetrespondents in Ho Chi Minh City All respondents were asked to choose only one brand fromlisted brands (SuSu, Vinamilk, OngTho, Probeauty, Vfresh, OptimumGold, Flex and Dielac,AXE, Clear, Comfort, Dove, Hazeline, Knorr, Lifebuoy, Lipton, Viso, Omo, Pond’s, P/S,Sunlight, Sunsilk, Vim, Wall’s, Nescafe, Maggi, CafeViet, KitKat, Mon&me, Nestea, Milo)before answering the questionnaire To make sure the understanding of Vietnamese consumerwho participated in this study about Corporate Social Responsibility, these brands were chosenfrom famous companies in Vietnam such as Unilever, Nestle, and Vinamilk as a representativefor all brands doing CSR in Ho Chi Minh City because they are popular in Vietnam(BrandsVietnam, 2014), having widely CSR activities (BrandsVietnam, 2012), the market share

is large and they all have over ten-year operation in Vietnam The Likert Scale ranking 1 to 5which illustrate the agreement from strongly disagree to strongly agree was used Data wascollected in 3 weeks After interview, there were 238 questionnaires were sent

back, but only 226 questionnaires out of 238 (approximately 95%) could be used as collectedsamples and for analyzing data 12 questionnaires were rejected because of same answers.

3.5 Data analysis method

In this study, the SPSS 22 program was used for analyzing collected data in whichnumerous statistic methods had been used in this research for sample description andmeasuring the results by tools of SPSS 22 and Microsoft Excel After that, the reliability andvalidity of measurement scales were tested by using Cronbach’s Alpha coefficient andExploratory Factor Analysis (EFA) Finally, Multiple Regression analysis was applied to testthe hypotheses

3.5.1 Descriptive statistic

The descriptive statistic was conducted in order to provide the general information ofinterviewee evaluation in regard of gender, income, education level, and age Thedemographic factors helped identifying the degree of consumer’s awareness about CSR ontheir brand engagement via values of frequency and percentage calculated from collecteddata

3.5.2 Cronbach’s Alpha

Cronbach’s Alpha was used for measurement of the internal consistency of theconstructed items in this study The constructs with high reliability are those in which theitems are highly inter-correlated and they are all measured with the same construct (Hair etal., 2009) Beside, according to Connelly (2011):

Cronbach’s alpha is used as only one criterion for judging instruments or scales Itonly indicates if the items “hang together”; it does not determine if they aremeasuring the attribute they supposed to measure Therefore, scales also should bejudged on their content and construct validity (p.45)

In this study, the acceptable value of Cronbach’s Alpha for reliability should be above0.7 (Morgan, Barrett & Leech, 2005) However, it can reduce to 0.6 if there is only a handful ofitems in the scales As Morgan et al., Cronbach’s Alpha is very high (greater than 0.9), it

means that the items are repetitious or there are more items in the scale than necessary for areliable measure of the concept.

Simultaneously, the Corrected Item- Total Correlation is also important to consider.This correlation is equal to or above 0.4, the item is probably correlated with most of theother items (Morgan et al., 2005) If the Item-Total Correlation is negative or too low (lessthan 0.3), it would be considered to be excluded for improvement of the reliability level ofthe construct

3.5.3 Exploratory Factor Analysis (EFA)

Morgan et al (2005) suggest that EFA method is used to identify which of a set ofitems go together as a group, or are answered most similarly by respondents Otherwise,EFA also applied to test the uni-dimensionality, discriminant validity and convergentvalidity of model Hair et al (2009) suggest that uni-dimensionality considers the strongrelation of all the items in the scale and convergent validity assesses the degree of twomeasurements of same concept are correlated, and Steenkamp and Trijp (1991) believes thatdiscriminant validity as the items in one single construct hang together and the items arenegatively associated with the opposite construct

In EFA analysis, the coefficient of KMO statistic should between 0.5 and 0.9 atBartlett’s test significance less than 5% to show correlation highly enough to provide areasonable basis for factor analysis (Field, 2000) Beside, Hair et al (2009) suggest that thevalue of each item in each factor should be more than 0.5 to show strong correlation in thatcomponent and significance In addition, in same item the factor loading must higher thanother factor which at least 0.25

In validity analysis, Hair et al (2009) suggest that the value of each item in eachfactor should be more than 0.5 and the difference of loading value by same item in differentfactors should at least 0.25 are required for convergent validity Correlation values betweenconstructs should be less than 1 with significant statistic (p value <0.05) to show the scalemeet the requirement of discriminant validity (Steenkamp & Trijp, 1991) In addition, Items

loading greater than 0.5 on their appropriate factors which support their unidimensionality(Hair et al., 2009).

3.5.4 Multiple Regression Analysis

The multiple regression analysis was used to test the conceptual model and itshypotheses (Morgan et al., 2005) The multiple linear regression of SPSS 22 program wasapplied in order to predict one outcome from several independent variables that suitable toassumptions of multiple regression analysis According to Morgan et al., the assumptions ofmultiple regression analysis include: the residuals were independent, there was linearrelationship between independent variables and dependent variables, the residual or errorwas distributed normally, and no multicollinearity

In this study, the residuals were independent that identified by plotting the residualsagainst any possible sequencing variable (Hair et al 2009) The linear relationship betweenindependent variables and dependent variables that identified by Normal P-P Plot Graphsand Scatter Graphs The residual or error was distributed normally that identified byhistogram and scatter plot with mean nearly 0 and Std Dev nearly 1 Finally, nomulticollinearity that identified by evaluating two collinearity diagnostic factors (Toleranceand the Variance Inflation Factor-VIF) The Variance Inflation Factor (VIF) performs theinfluence of collinearity among factors in a regression model VIF is always greater than orequal to 1 When tolerance value is less than 0.1 and VIF >2 show that there is highpossibility of multicollinearity

Summary, this chapter discuss the research design, measurement scale of the construct,research sample, data collection and data analysis method The research described clearly thatresearch process includes two phase: qualitative research and quantitative research In thequalitative research, research conducted the questionnaire and brought to the pilot in-depthinterview with 7 interviewees to check if the meaning as well as the words using in the scalewere easy to understand and suitable to research context After qualitative research, thequestionnaire was modified following to the responses of the interviewees and then brought tothe main survey In quantitative research, the research followed to steps such as: defining

the sample size, the method to deliver the questionnaire to respondents, cleaning collecteddata to be useful for coding to data to SPSS program for analyzing The research used onlinequestionnaire through electronic email to distribute to respondents After collecting andcleaning data, the amount of questionnaires that could be used for analysis including 226questionnaires Finally, research presented the method to analyze the collected data Thenext chapter will present the data analysis results of main survey.

CHAPTER 4: DATA ANALYSIS

This chapter presents the assessment of measurement and result of hypotheses testingabout influence of Customer’s CSR perception on Customer brand engagement Firstly, thedescriptive statistic of sample was presented Next, the reliability and validity of the scaleswere tested After that, the model hypotheses were verified by multiple regression analysis

4.1 Sample description

400 questionnaires were sent to interviewees who are consumers in Ho Chi Minh City.There were 238 replies in which 12 of them were invalid because of repeating same answers.The valid questionnaires were 226 respondents include 71 men (occupied 31.4 percent) and 155women (occupied 68.6 percent), aged from 18 to over 30 years old with majority is the agefrom 24 to under 30 (occupied 51.8 percent) In term of degree of education, most ofrespondents were graduates who accounted for 52.2 percent of the sample Regarding to incomeper month, it was ranged from less than 5 million VND per month to over 10 million VND permonth, but the majority of respondents had a monthly income was from 5 to 10 million VNDper month which accounted for 39.8 percent (see the table below)

Table 4.1 Sample characteristics.

Description Frequency Percentage (%) Total 226 100 Gender Male 71 31.4

Female 155 68.6

18 to 24 55 24.3 Age

24 to 30 117 51.8 Over 30 54 23.9 Undergraduate 32 14.2 Educational degree

Graduate 118 52.2 Postgraduate 76 33.6 Less than 5 61 27 Income per month (VND

From 5 to 10 90 39.8 million)

Over 10 75 33.2

Table 4.1 showed that statistic of demography characteristics was not the same foreach category This combination might have influenced on result of the study and ability togeneralize to population However, because collected data was based on conveniencesampling method Therefore, this combination of data in table above was suitable for currentstudy.

4.2 The reliability analysis: Cronbach’s Alpha test

The test was carried out for each constructs in order to make sure that all items in onescale were reliable in measuring the research concept Cronbach’s Alpha also support fordeleting inconsistent items Previous literatures suggest that value of Cronbach’s Alphashould be equal or above 0.6 for internal reliability (Nunnally & Bernstein, 1994) Besides,the correlation item with total of the other items in the scale (Corrected Item – TotalCorrelation) should be higher than 0.3 (Nunnally & Bernstein, 1994) If the value ofCorrected Item – Total Correlation is negative (less than 0.3), it is required to check againthe words used in the questionnaire or delete the items

The results of Cronbach’s Alpha test for each construct were reported in below table:

Table 4.2 the results of Cronbach’s alpha

After considering the result of reliability, the Cronbach’s Alpha coefficient of allscales meet the requirement for reliability, the highest was Philanthropy CSR perception(with 0.876) and the lowest was Economic CSR perception (with 0.745) Moreover, AllCorrected Item – Total Correlation value in all scales were over 0.3 This indicates all scalesconsistent with requirement of reliability Therefore, these measures were used for testingthe study hypotheses.

4.3 Exploratory Factor Analysis (EFA) for measurement scale

After analyzing the reliability, measurement scales were tested by exploratory factoranalysis (EFA) to find out which items go together as a group or were answered similarly byrespondents (Morgan et al., 2005) As the conceptual model in this study, there are five factor:

Independent factors including customer perception to economic CSR, customer perception tolegal CSR, customer perception to ethical CSR, customer perception to philanthropy CSR, anddependent factor which is customer brand engagement EFA with Varimax rotation methodhelped examining if the items belong to constructs actually were in the same group.

4.3.1 Independent factors: CSR perceptions

Table 4.3 KMO and Bartlett's Test

Table 4.4 Total Variance Explained

Comp Initial Eigenvalues Extraction Sums of Squared Rotation Sums of Squared