The study of consumers perceptions of corporate social responsibility toward consumers trust, attiude and purchase intention, evidence from vietnam

UNIVERSITY OF ECONOMICS HO CHI MINH CITYInternational School of Business ---TRAN THANH DANG SON THE STUDY OF CONSUMERS’ PERCEPTIONS OF CORPORATE SOCIAL RESPONSIBILITY TOWARD CONSUMERS’

UNIVERSITY OF ECONOMICS HO CHI MINH CITY

International School of Business

-TRAN THANH DANG SON

THE STUDY OF CONSUMERS’

PERCEPTIONS OF CORPORATE SOCIAL RESPONSIBILITY TOWARD CONSUMERS’ TRUST, ATTITUDE AND PURCHASE INTENTION: EVIDENCE FROM VIETNAM

MASTER OF BUSINESS (Honours)

UNIVERSITY OF ECONOMICS HO CHI MINH CITY

International School of Business

-TRAN THANH DANG SON

THE STUDY OF CONSUMERS’

PERCEPTIONS OF CORPORATE SOCIAL RESPONSIBILITY TOWARD CONSUMERS’

TRUST, ATTITUDE AND PURCHASE INTENTION: EVIDENCE FROM VIETNAM

ID: 22130062

MASTER OF BUSINESS (Honours)

SUPERVISOR: DR NGUYEN THI MAI TRANG

Ho Chi Minh City – Year 2015

This final thesis concluded my academic study at University of Economics

Ho Chi Minh City on the International School of Business (UEH-ISB) Although itwas challenging, I am grateful to have been given this opportunity to study at UEH-ISB and to conduct this final research With this work, I have gained a goodknowledge of Corporate Social Responsibility (CSR), which is a new field of study.Nonetheless, it has received noticeable attention from the academics and scholarsfor its recognized roles in the economy I hope this study will be beneficial to thecompanies when it comes to CSR related decisions

I offer my sincere appreciation for the invaluable learning opportunitiesprovided by the committee during thesis process I would like to personally express

my gratitude to Dr Nguyen Thi Mai Trang who has actively guided and provided

me with valuable insights and suggestions to my dissertation Your thoroughreview of my dissertation has definitely made it perfect I am also deeply grateful

to my course mate Ms Nguyen Thi Ha, who is resourcefulness to me My family,especially my wife, deserves special thanks for their valueless contribution to myeducation, upbringing and my life in general

Tran Thanh Dang Son

This quantitative research is to examine the factors that encourageVietnamese consumers’ purchase intention toward CSR enterprises’ products Theresearch is to develop hypothetically suitable theoretical model that is thenempirically tested through an internet survey of 224 respondents in Vietnam Therespondents are chosen from diverse backgrounds Structural Equation Modelingtechnique is deployed in this study The results show that Vietnamese consumers’CSR perceptions and their trust of CSR have positively relationship with theirattitude toward firm and their purchasing intention toward products of enterprisesthat are engaged with CSR activities The research implications andrecommendations provide specific discussion about findings and future research.

TABLE OF CONTENTS

CHAPTER 1: INTRODUCTION 1

1.1 RESEARCH BACKGROUND 1

1.2 RESEARCH OBJECTIVE 4

1.3 SCOPE OF THE RESEARCH 5

1.4 SIGNIFICANCE OF THE STUDY 5

1.5 STRUCTURES OF THE RESEARCH 7

CHAPTER 2: LITERATURE REVIEW 8

Introduction 8

2.1 CORPORATE SOCIAL RESPONSIBILITY (“CSR”) 8

2.2 PURCHASE INTENTION 17

2.3 CONSUMERS’ PERCEPTIONS OF CSR 19

2.4 CONSUMERS’ TRUST OF CSR 22

2.5 ATTITUDE TOWARDS FIRM 24

2.6 CONSUMER DEMOGRAPHICS 25

2.7 RESEARCH MODEL 27

Summary 27

CHAPTER 3: RESEARCH METHODOLOGY 28

Introduction 28

3.1 RESEARCH DESIGN 28

3.2 MEASUREMENT SCALES 30

3.3 DATA ANALYSIS METHODOLOGY 32

Summary 36

CHAPTER 4: RESULTS OF DATA ANALYSIS 37

4.1 DATA COLLECTION 37

4.2 RESPONDENTS’ DEMOGRAPHICS 38

4.3 RELIABILITY STATISTICS BY CRONBACH’S ALPHA 40

4.4 FACTOR ANALYSIS 43

4.5 CONFIRMATORY FACTOR ANALYSIS (“CFA”) 45

4.5.1 CONVERGENT VALIDITY 45

4.5.2 DISCRIMINANT VALIDITY 46

4.5.3 MODEL FIT 46

4.6 STRUCTURAL EQUATION MODELING (“SEM”) 48

4.7 EFFECTS OF DEMOGRAPHICS IN THE RESEARCH MODEL 49

Summary 51

CHAPTER 5: CONCLUSIONS, IMPLICATIONS AND LIMITATIONS 53

5.1 CONCLUSIONS 53

5.2 MANAGERIAL IMPLICATIONS 53

5.3 LIMITATIONS 56

REFERENCES 59

APPENDIX A – Questionnaires in Vietnamese 64

APPENDIX B – Questionnaires in English 68

APPENDIX C: In-Depth Interview 72

Overview of tables

Table 2.1.1 Economic and legal components of Corporate Social Responsibility (Carroll,

1991) 10

Table 2.1.2 Ethical and philanthropic components of Corporate Social Responsibility (Carroll, 1991) 10

Table 3.2 Measurement scales 30

Table 3.3 Cronbach’s Alpha 33

Table 4.1 Source of data collection 38

Table 4.2 Respondents’ characteristics 38

Table 4.3.1 Cronbach’s Alpha coefficients for each measurement scale (before eliminated item) 409

Table 4.3.2 Cronbach’s Alpha coefficients for each measurement scale (after eliminated item) 40

Table 4.4.1 KMO and Bartlett's Test 43

Table 4.4.2 Total Variance Explained 43

Table 4.4.3 Pattern Matrix 44

Table 4.5.1 Convergent Validity 45

Table 4.5.2 Discriminant Validity 46

Table 4.5.3 Key goodness-of-fit indices 46

Table 4.6.1 Unstandardized Regression Weights (SEM) 48

Table 4.6.2 Summary of hypothesis and structural equation model analysis results 51

Overview of figures

Figure 2.1 The pyramid of Corporate Social Responsibility 10

Figure 2.7 Research Model 27

Figure 3.1 Research Process 28

Figure 4.5 Confirmatory Factor Analysis (Standardize estimates) 47

Figure 4.6 Structural results (standardized estimates) 48

Gender Figure 4.7.1.1 Multi group analysis 76

Figure 4.7.1.2 Constant group analysis 76

Age Figure 4.7.2.1 Multi group analysis 77

Figure 4.7.2.2 Constant group analysis 77

Income Figure 4.7.3.1 Multi group analysis 78

Figure 4.7.3.2 Constant group analysis 78

A growing body of academic research attests that CSR has positive influence

on consumers’ evaluations and purchase intentions of company’s product

(Mohr & Webb, 2005; Sen & Bhattacharya, 2001), enhancing trust andstrengthening relationship between consumers and business (Porter & Kramer,2006) More companies are willing to increase their CSR investment and integrate

it into the long-term strategic plan to maintain or even enhance long-term marketperformance (Mahoney & Thorne, 2005)

The concept of Corporate Social Responsibility was first introduced widely

in Vietnam in recent years through various activities of international Governmental Organizations (NGOs) and multinational companies According to aCSR Survey conducted by SRI Vietnam (as cited in Pham, 2010), there are 90% ofinterviewees misunderstand the idea of CSR and related issues This surveyreported that Vietnamese consumers’ perception toward CSR as well as otherethical behaviors remains virtually unknown 40% of interviewees consider CSR as

Non-a sociNon-al obligNon-ation of businesses, which mNon-ainly consists of community works Non-andevents While the level of awareness about CSR of Vietnamese is still low, thesuspicion of the media continues to add up to the difficulty in dealing with generalpublic Lack of in-depth knowledge and professional research about CSR inVietnam has led to incomplete information provided, which then turns intoinaccurate news and articles that can influence consumers and governmentaldepartments CSR programs are often cited as PR (Public Relations) activities,another communication concept in Vietnam, that is frequently misinterpreted asnegative as well As a result, the main challenge is to raise the level of awareness ofCSR among consumers, increase their appreciation of CSR and associate it in theirchoice of products to buy and to relate CSR with social concerns

On the business side, lack of resources and commitment for CSR is themajor cause for the current situation Many local companies resist to change andstill maintain their conventional thinking system, in which business performance ismeasured by simple and more visible metrics They are more driven by short termincentives to make money, therefore using CSR as a branding tool is in fact more

sensible to them Even for companies that want to pursue a longer term, moresustainable approach to CSR, finding competent staff to overlook CSR activities isalso challenging In a country like Vietnam where CSR is a new concept even topeople working in business, the number of people with professional training inCSR is very limited while the subject of CSR is not yet taught or even mentioned inmost universities’ bachelor programs On top of that, the attitude of businessesremains as an internal barrier to practice CSR at the moment Many businesses inVietnam believe that “CSR is only for big, multinational corporations”, or even

“CSR is a luxury of the developed world, which is not relevant in a developingcountry” Therefore, it is important to change their attitude from “CSR as a cost” to

“CSR as an investment” in order to see more active CSR initiatives among localbusiness community in the near future

According to Bui (2010), in emerging countries like Vietnam, a largepopulation is still influenced by price and quality of products when making theirbuying decisions However, following some serious environmental damagescaused, serious food safety and health problems that Vietnamese consumers havebeen facing during the past few years As accentuated by Vietnam JournalistAssociation (2008), the most gigantic pollution scandal in Vietnam in year 2008was the case of a company named Vedan Vietnam that dangerously polluted thelocal river for more than 14 years without being noticed and caught Similarly, inthe same year, another company called Miwon was also caught of adverselycontaminating another local river In additions, there were various cases of healthsafety problems in recent years such as tainted milk distribution, toxic ingredients

in consumer goods and pesticide remained in vegetables, etc These scandals havebeen raising a greater concern on corporate social responsibility among Vietnameseconsumers, and have pushed them to reconsider the importance of environment andhealth factor in their purchase intention Vietnamese consumers currently begin totake actions against food safety problems while taking for granted societal and

environmental dimensions of CSR Bui (2010) said that an ethical segment ofconsumers has been also emerging gradually in the Vietnamese market.

Nowadays, the public shows increasing interest in social responsibility ofbusiness and also reacts strongly against those that fail to do so, both foreign andlocal companies start paying more attention to CSR in Vietnam Nevertheless, CSR

is still a very new concept and pioneers in this area are facing numerous challenges

in executing CSR programs in Vietnam

1.2 RESEARCH OBJECTIVE

The overall objectives of this study are to gain the understanding of themanner that consumers come up with the purchase intention for products ofenterprises that are engaged with CSR activities Specifically, this study examineswhether consumers’ perceptions of CSR that could cause positive impact toconsumers’ trust, attitudes toward firm, and then affect to purchase intention Onthat purpose, this study addresses following relationships:

1 The relationship between the consumers’ perceptions of CSR and trust of CSR practices

2 The relationship between the consumers’ trust of CSR practices and attitude towards firm

3 The relationship between the consumers’ perceptions of CSR and attitude towards firm

4 The relationship between the consumers’ perceptions of CSR and purchase intention

5 The relationship between the consumers’ attitude towards firm and purchase intention

6 The effect of the consumer’s demographics on the relationship

between consumers’ perceptions of CSR and purchase intention

1.3 SCOPE OF THE RESEARCH

FMCG industry has been booming, in turn, many leading players are takingpart in ambitious programs to assist with community development Companies ofthe FMCG industry have realized the importance of CSR and have started working

on the prevention and minimization of the negative impacts by their businesspractices as well as the maximization of shared values for all stakeholders.Nowadays, most of FMCG companies are involved in the social responsibilityactivities in several sectors, such as education, environment, communitydevelopment, rural development, etc These CSR initiatives will create a positiveimage of the company and will benefit by increasing the sales (Manimalar &Sudha, 2015)

Many research focus on an important stakeholder and driver of CSR – theconsumer – has been increasing (Mohr & Webb, 2005; Sen & Bhattacharya, 2001).Many studies on consumers’ attitudes on CSR and the role of CSR in theconsumer’s evaluation of a company and their decisions to purchase its productsare quite general (Becker-Olsen, Cudmore & Hill, 2006)

1.4 SIGNIFICANCE OF THE STUDY

Most of studies have been done in developed countries like the UnitedStates, the United Kingdom, and Spain, and amongst the developing countries,China has been an exception in publication of studies in the field of CSR (Fatma &Rahman, 2015), but no single study was made in the FMCG industry in the context

of Vietnam There is a need to explore similar studies in Vietnam because of thecultural and social-economic development differences; the findings in one countrycannot be generalized in the other country without validation Therefore, this studymakes it particularly interesting and meaningful to investigate consumers’perceptions of CSR, trust of CSR, consumers’ attitude toward firm, and purchase

Although the CSR concept is not new in Vietnam, its role and its impact onthe business success and well-being of consumers have not yet attracted a greatnumber of Vietnamese economists to get involved in such a research work.Besides, in the academic and non-academic literature on CSR, studies conducted byinternational authors do not treat the Vietnamese case More importantly, theVietnamese consumers' perception toward CSR as well as their ethical consumptionbehavior remains virtually unknown even though they have been suffering seriousconsequences caused by growing CSR issues during the past few years.

This study examines whether consumer perceptions of CSR that could causeconsumer positive trust of CSR actions, and then affect to attitude toward firm andpurchase intention Therefore, it is important for managers to understand theeffectiveness of their CSR activities so that they can manage the best combination

of actions that will yield the expected outcomes

Of more importance to companies conducting CSR activities is tounderstand how consumer perceptions of CSR and attitude toward the firms andpurchase intention as the result of companies' CSR actions Our researchcontributes to help managers and professionals elaborate an effective integratedmarketing communication strategy to meet the requirements of the emerging class

of ethical consumers and to enhance their company’s sustainable reputation

This study is structured as follows: first, relevant literature is reviewedconcerning the definition of CSR and the hypotheses to test Next, the methodologyadopted in the research is presented, followed by results Finally, the author discussthe findings and conclude the article by discussing managerial implications andsuggesting new directions for future studies

1.5 STRUCTURES OF THE RESEARCH

This research is organized in five chapters with details as follow:

Chapter 1: Introduction This chapter has provided an introduction of theresearch background which includes the research objectives and scope of study

Chapter 2: Literature review A literature study is carried out to gainunderstanding of the main theoretical concepts related to the research and toexamine to which extent existing literature already covers the subject The concept

of Corporate Social Responsibility (CSR) and the CSR activities are discussed.After that, there is literature review on consumers’ perceptions of CSR, consumers’trust of CSR, their attitudes toward firm, and their purchase intention This chapterfocuses on developing the hypotheses and theoretical framework, which forms afoundation for the study

Chapter 3: Research Methodology This part includes research design,measurement scales and measurement model It also described the process of doingthe research to test the hypotheses

Chapter 4: Result of data analysis This chapter is designed to presentpatterns of results and to analyze them for their relevance to the researchhypotheses

Chapter 5: Conclusion, Managerial implications and Limitations The finalchapter with conclusions and discussion of this research Furthermore,recommendations on how to use CSR actions in business strategies and therelevance of our research are outlined It then ends with the limitations of presentresearch and recommendation for future investigation on similar topic

CHAPTER 2: LITERATURE REVIEW Introduction

This chapter explores the concept of Corporate Social Responsibility (CSR),different definitions of CSR are analyzed and different sections of CSR activitiesare explained in detail Then, the concepts of consumers’ perceptions of CSR,consumers’ trust of CSR, attitude toward firm and purchase intention are clearlydiscussed This chapter proposes that the consumers’ perceptions of CSR activitieshas relationship with trust of CSR, their attitude toward firm and purchaseintention The basic assumption is that consumers' purchase intention are affected

by the firm’s CSR activities and the consumers’ attitude towards the company One

of the aims of this study is to explore consumer perceptions of CSR activities andthe extent to which such activities influence consumer purchase intention Besides,consumer trust of CSR and consumers’ attitude toward firm were assumed to have

an effect on relationship between consumers’ perceptions of CSR and purchaseintention

European Commission in year 2006 proposed a definition of CSR as “Aconcept whereby companies integrate social and environmental concerns in their

business operations and in their interaction with their stakeholders on a voluntarybasis” The concept emphasize the importance of enterprises’ voluntarycontribution, in cooperation with their stakeholders, to social and environmentalissues It is claimed that through CSR, enterprises of all sizes can boost theirbusiness in a long-term run since CSR initiatives can help to build (and rebuild)trust in the focal companies, and to meet customers’ sustainable needs andexpectations Since CSR implementation can reconcile economic, social andenvironmental ambitions, it has gradually become an important concept bothglobally and within the EU.

The definition of CSR by the World Business Council for SustainableDevelopment (2000), CSR is expressed as “the commitment of business tocontribute to sustainable economic development, working with employees, theirfamilies, the local community and society at large to improve their quality of life,

in ways that are both good for business and good for development” This position isgenerally interpreted as business’ commitment to minimizing negative externalitiesand maximizing beneficial impacts on society (Mohr et al., 2001)

Above all definitions, Carroll’s pyramid of Corporate Social Responsibilityhas received the most attention In his article on Business Horizons, Carroll (1991)proposed a pyramid of corporate social responsibility that portrays its fourcomponents including economic, legal, ethical and philanthropic responsibilities asshown in figure 2.1

Figure 2.1 The pyramid of Corporate Social Responsibility

(Carroll, 1991, P.42)

Responsibility (Carroll, 1991).

1 Profitability is the first priority 1 It is important to obey the laws

2 Maintaining a strong competitive and other local regulations.position is an important target 2 A successful firm is the one that

3 Efficient operation is a must fulfills its legal obligations.

3 Provide goods and services thatmeet minimal legal requirements

is key to keep the firm operated

Clarifying the role of each dimension derived from the conceptualization ofCSR as follow: Economic and legal responsibilities are the basic level of CSRwhich must be carried out by corporations with no doubt Therefore, the existingstudies mainly discuss CSR practices in higher levels (ethical and philanthropicresponsibilities) which are also the primary concerns in this study

Along with economic responsibilities, firms are expected to comply with thelaws and regulations imposed by the governments under which the enterprises areoperating In other words, companies are not supposed to engage in illegalpractices in order to generate profits, but are expected to fulfill their economicmissions within the framework of the law (Carroll, 1991).

Table 2.1.2 Ethical and philanthropic components of Corporate Social

Responsibility (Carroll, 1991)

1 Ethical norms go beyond laws 1 Managers and employees should

2 Ethical norms should be charitable activities in their localrecognized and respected communities.

3 Ethical norms must not be 2 Providing assistance to the localcompromised in order to achieve educational institutions is a good

3 Contributing to those projectsthat improve the community’s

“Quality of life” is important

Ethical responsibilities embody those practices that are approved ordisapproved by the society even though they are not stated in the law This ethicalaspect of CSR should direct the companies not only to avoid harm but also to doright Ethics is closely connected to values and norms formed during thedevelopment of societies and cultures

Finally, philanthropic responsibilities encompass activities in response to theexpectations of society that businesses be good corporate citizens These practices

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2.1.2 Approaches of CSR

Van Marrewijk (2003) acknowledges a sequence of three approaches toCSR that has been referred to by various authors in academic literature Eachapproach includes and transcends the previous one and tries to formulate thesubject of responsibility for the organization (Van Marrewijk, 2003)

A first approach is the shareholder approach Van Marrewijk (2003) quotedFriedman (1962), who said that according to the shareholder approach “the socialresponsibility of business is to increase its profits” (p 96) This approach startsfrom profit maximization as an ultimate goal This approach states thatorganizations should only be concerned with CSR to the extent that it contributes

to the profit maximization goal of the business (Van Marrewijk, 2003)

A second approach is the stakeholder approach This approach indicates that

an organization should not only be accountable to its shareholders, but that itshould also take into consideration the interests of all its stakeholders which might

be affected by the organization trying to achieve its objectives (Van Marrewijk,2003)

A third and last approach is the societal approach This approach indicatesthat “companies are responsible to society as a whole, of which they are an integralpart” (Van Marrewijk, 2003, p 97) It means that an organization should operate in

a way that serves and satisfies the needs of society

2.1.3 Types of CSR initiatives

Kotler and Lee (2005) identified six major initiatives, of which most socialresponsibility activities are performed: cause promotion, cause-related marketing,corporate social marketing, corporate philanthropy, community volunteering, andsocially responsible business practices

Cause Promotion A goal of this initiative is to build awareness and concern

for social causes by informing the public of the facts and statistics about a cause It

tries to persuade people to donate time, donate money, donate nonmonetaryresources, and participate in events Contributions or support provided to a causeare not tied to the sale of specific products Cause promotion does not intend tochange people’s behaviors, related to the cause; it only calls for action related tobuying certain products over others.

Cause-Related Marketing “A corporation commits to making a

contribution or donating a percentage of revenues to a specific cause based onproduct sales Most commonly this offer is for an announced period of time and for

a specific product and a specified charity” (Kotler & Lee, 2005, p 81-82) In thisCSR initiative type, the distinctive feature is the relationship with product sales Acompany cooperates with a non-profit organization to create a mutual relationshipthat intentionally provides increased product sales as well as financial support tothe charity Moreover, it usually involves the marketing department because itsintention is to increase sales (Kotler & Lee, 2005) However, according to Smith(2003), this initiative potentially causes a problem when customers assume that acompany is engaging in this activity only to increase the company’s profits

Corporate Social Marketing According to Kotler and Lee (2005), intention to

change behavior is the focus of this initiative They refer to corporate socialmarketing as when “a corporation supports the development and/or implementation

of a behavior change campaign intended to improve public health, safety, theenvironment, or community well-being” (p 23) The distinguishing feature fromcause marketing is the focus on behavior change, instead of supporting awareness,fundraising, and volunteer recruitment for a cause In addition, it tends to be acooperation between a company and the public sector such as health department,etc Examples of this initiative are the Unilever campaign to encourage children tobrush their teeth after meal, and every day before going to sleep Another example

is Co-op Mart encouraged their customers using green bag replaced for nylon bags

Corporate Philanthropy In this type of CSR initiative, a company directly

contributes to charity or causes in the form of cash, donations, and/or in-kindservices This is the most traditional form of CSR Typical programs includedonating cash, products, services, providing technical expertise, offering the use ofequipment, and allowing the use of facilities and distribution channels Corporatephilanthropy, sometimes known as community giving, community relations,corporate citizenship, or community affairs, has been strategically used to buildgood images for companies (Kotler & Lee, 2005) Carroll and Shabana (2010)looked at corporate philanthropy as a discretionary part of a company’s socialresponsibilities to respond to society’s expectation that businesses be goodcorporate citizens.

Community Volunteering Kotler and Lee indicated community

volunteering is an initiative in which “a corporation supports and encouragesemployees, retail partners, and/or franchise members to volunteer their time tosupport local community organizations and causes” (2005, p 24) They also statedthat a corporation may mandate a form of community volunteering itself or letemployees choose an activity to be supported by a company in the form of gettingpaid time off This initiative is perceived as the most genuine and satisfying of alltypes of CSR Thus, this initiative can build the strongest relationship between acorporation and a community as a result of a sincere corporate spirit of doingsomething good for a community Community volunteering employs a realcommitment and requires more effort by a corporation and its employees toactually do something rather than just write a check (Kotler & Lee, 2005)

Socially Responsible Business Practices In this initiative, “A corporation

adopts and conducts discretionary business practices and investments that supportsocial causes to improve community well-being and protect the environment”(Kotler & Lee, 2005, p 24) The concepts of discretionary activities, community,and well-being distinguish this type of CSR initiatives from others Discretionaryactivities are not mandated by law They are about the morality and ethics of a

corporation Community refers to everyone who is involved with a business being refers to psychological and emotional health and safety (Kotler & Lee, 2005).

Well-2.1.4 Different views on CSR

In addition to the growth of various definitions of CSR, there are differentviews on the relationship between CSR and business and that there is still an on-going academic debate as to whether “corporate decision makers should beconcerned with issues other than profitability” (Mohr, Webb & Harris, 2001, p.46)

Proponents of CSR

Proponents of CSR believe in several different points First argument byDavis (1973) that is in business’s long-run self-interest to be socially responsible.This argument states that spending money on social programs is actually in thelong-run interest of the business itself By creating a better community and a bettersociety, through these social programs, the firm will benefit as well In that waycompanies create a better environment for their business

A second argument is “public image” Each individual firm aims atenhancing its own public image and hopes it leads to an increase in customers,better employees, and other benefits

Another argument is “viability of business” It is reasoned that business, as

an institution, only exits because it performs valuable services for society (Davis,1973)

Some other reasons proposed by Davis (1973) include the role of cultural norms as well as possibility of solutions to problems transforming intoprofits Business operations are not detached from a set of cultural constraints in thesociety At the same time, business is also capable of handling and turning socialproblems into profitable business potentials

socio-Furthermore, prevention is better than cure and pro-acting is better than

reacting Proactively handling social problems is less costly than reacting to theproblems after they have developed into bigger ones It is argued that it is actuallymore economical to deal with them now before they grow into bigger problems Ifbusiness postpones dealing with these problems now, it might have to spend a lotmore time on them in the future, which will leave less time to achieve its primaryobjectives.

Opponents of CSR

On the contrary, opponents of CSR may have based their stance on severalreasons First, business only has one function, being an economic one Thereforesuccess will be measured by only using economic values as criteria Management’sresponsibility is to maximize profit of owners or shareholders

Second, businesses are not equipped to handle social activities as they maylack social skills The outlook of business is primarily economic and so are theirskills They are not trained to pursue social goals Therefore they may lack thenecessary skills and perceptions do deal with social matters If they are forced to do

so, it may lead to serious consequences

Third, social responsibility dilutes business’ primary purpose, that is, economicproductivity The idea here is that CSR would only distract firms from its economicrole As a result, the business would perform poorly both in its economic role as in itssocial role CSR is assumed to decrease business productivity in the marketplace thatmay end up in failure to play its economic and social roles

Another argument is that social programs are costly for business and theywill look for ways to recover those costs Generally the recovery of the costs will

be done by adding them to the price of the product The problem with a higherprice is that business loses some competitiveness in the business environment.These views are based on the opinion that social programs would add on tobusiness cost, which eventually ends up on price increase

2.2 PURCHASE INTENTION

Purchase intentions are defined in various ways Ajzen (as cited in Rahman,2013) defined intention as behavioral dispositions, that until there are a proper timeand opportunity, will be realized in the form of action Purchase intention reflectswhat consumers think they will buy in future to fulfill their needs and wants Thetrend of consumer purchase intention is influenced by the attitudes held byconsumers is concerned Strong attitude toward a product is a good predictor todetermine the products that will be bought by consumers Spears and Singh (2004)defined purchase intention can be understood as the inclination of a person toengage in purchasing behavior

Eagly and Chaiken (as cited in Rahman, 2013) proposed that attitudes can belearned, therefore, feelings of favorability or unfavorability are also learned throughinformation about the attitude object or through direct experience with the attitudeobject Attitude can change along with newly acquired information and/orexperience According to Eagly and Chaiken (as cited in Rahman, 2013), whereasattitudes represent favorable or unfavorable evaluations of objects, intentionsrepresent the person’s motivation in the sense of his or her effort to carry out abehavior This view reflects a closer representation to reality in which consumersmay, at times, like a product but decides not to purchase it as purchasing it willcause his financial resources to decrease

The relationship between attitudes and behavior has been extensively studiedover decades According to Ajzen and Fishbein's (as cited in Rahman, 2013),Theory of Reasoned Action proposed two conceptually independent determinants

of intentions: (1) attitude toward the behavior refers to the degree to which a personhas a favorable or unfavorable evaluation or appraisal toward behavior of interest(e.g purchasing the brand) and (2) subjective norms, refers to the perceived socialpressure to perform or not to perform the behavior Extending this theory to thecontext of CSR initiatives and consumers, it is, therefore, logical

to propose that consumers' positive attitudes toward a firm's CSR initiatives maylead to consumers' subsequent purchase intentions As CSR initiatives are generallyperceived as good deed actions by firms, subjective norms would suggest that suchactions should be supported In the context of consumer responses, which supportbehavior would translate into, at least, higher purchase intentions In additions,since CSR initiatives are generally viewed as good deeds, there may be a normativedrive to support the initiatives, which may induce motivations to support them.Therefore, consumers may adopt a more generous gesture in their attitudeformation Therefore, in the context of CSR-related consumption, merely acquiring

or being exposed to information about CSR initiatives by a firm without having toexperience the direct benefits of the CSR to the self, may be enough to moveconsumers to form a strong positive attitude toward the firm and/or the action itself,which eventually predicts future purchase intentions

According to Fishbein's and Ajzen (as cited in Rahman, 2013), using theunidimensionalist view in the study of attitude, attitude is seen as being made up byaffective; while cognition and conation are antecedent and consequence,respectively Cognitive refers to the belief that an individual holds about an attitudeobject (e.g “I believe ”); while affective refers to the resulting emotional reactions

to the attitude object (e.g “Therefore, I like ”) Conative component encompassesthe intended and actual behaviors (e.g “I intend to purchase ”) Therefore, attitude

is treated as a separate construct, which may lead to subsequent behavior orbehavioral intentions, for instance, purchase intentions

2.3 CONSUMERS’ PERCEPTIONS OF CSR

According to Maignan (2001), consumers’ perception of CSR refers to theability of the consumer to ‘‘differentiate between corporate economicresponsibilities on the one hand and corporate legal, ethical, and philanthropicresponsibilities on the other hand’’ It deals with the importance the consumer puts

on companies that are socially responsible If the consumer considers the economic responsibilities of companies to be important, they might support thecompany by exercising their socially responsible consumption in favor of thecompany

non-As cited in Chaisurivirat (2009), CSR initiatives influence consumers’beliefs about the company in terms of contributions to a community andtrustworthiness CSR campaign can be perceived as a good strategy to build a goodimage for a company Being more socially responsible will provide companies withperceived goodwill and help them build long-term relationships with a community.Since firms’ involvement in CSR campaigns is considered an ethically justifiablebehavior (Vlachos & Tsamakos, 2011), consumers who perceive such CSR arelikely to yield strong trust on the firms

As cited in Fatma, Rahman and Khan (2015), Brown and Dacin stated that acompany’s socially responsible initiatives provide information about its characterand values that helps in building trust in the company Hosmer (1995) stated thatconsidering ethical principles in companies’ strategic decision-making processhelped firms build trust among stakeholders In line with this view, Pivato, Misaniand Tencati (2008) proposed that consumer trust in a firm’s ethical practices wasone of the most immediate outcomes of the company’s social performance andsignificantly affected consumer actions responding to CSR CSR activities areunderstood as pro-social corporate endeavors that protect and improve the welfare

of society as a whole along with protecting the interest of company’s thus buildingtrust among consumers (Sen & Bhattacharya, 2001) Consumers hold a high level

of trust for companies that are perceived socially responsible In the study ofFatma, Rahman and Khan (2015), they concluded that consumers tend to perceivesocially responsible companies as more trustworthy and regard them favorably.

The following hypothesis is proposed:

H1: A higher level of consumers’ perceived CSR leads to higher level of

consumers’ trust of CSR.

Consumers’ perceptions of CSR mainly discusses whether consumers areperceive of CSR activities in real consumptions (Pomering & Dolnicar, 2009).Consumers’ perceptions of CSR is an exogenous construct susceptible to thepolitical traditions, cultural, and economic development in a certain society, and itprobably varies from country to country (Singh et al., 2008) In Vietnam, and manyconsumers are not perceive of CSR especially in the ethical and philanthropic level.The lack of awareness and perceptions may become an inhibitor of consumersensitivity to CSR On the contrary, the more the consumers are perceive of CSR,the better they understand about CSR activities (Lee & Shin, 2010); thus, thoseconsumers with a higher level of perceptions of CSR are more likely to showpositive attitudes toward the firm, and a higher level of purchase intention (Lee &Shin, 2010) Furthermore, consumers try to comprehend the firm’ motivations andinterpret on the real motives behind the firm’ CSR activities (Barone, Miyazaki, &Taylor 2000; Ellen, Webb, & Mohr 2006; Herpen, Meulenberg & Pennings 2003).Therefore, studies also showed that perceptions of companies’ CSR initiativeswould affect the consumers’ attitude toward firm and are relevant for consumers’purchase intentions

The following hypothesis is proposed:

H2: A higher level of consumers’ perceived CSR leads to higher level of

consumers’ attitude toward firm.

According to Tian, Wang and Yang (2011), their study had been tested thatconsumers who are more perceive of CSR in daily consumption will show a higherlevel of purchase intention under CSR stimulus, which probably means that theseconsumers have a better understanding of CSR activities Sen and Bhattacharya(2001) in their research has concluded that perceived CSR activities have asignificant positive relationship on their purchase intention.

According to Bui (2010), in the Vietnamese context, consumers seem towelcome CSR companies and clean and green products Philanthropicresponsibility dimension in Carroll’s CSR pyramid is an important criterion inregard to purchasing intention by a great number of the population Although, inemerging countries like Vietnam, a large population is still influenced by price andquality of products when making their buying decisions However, serious foodsafety and health problems that Vietnamese consumers have been facing during thepast few years (tainted milk, soybean and fish sauce, bird flu, blue ear pig disease,dry hot chilies, false jewels, etc…) have pushed them to reconsider the importance

of environment and health factor in their purchase intention In additions, in spite oftheir slow and weak reaction to ethical issues, Vietnamese consumers currentlybegin to take actions against food safety problems while taking for granted societaland environmental dimensions of CSR Bui (2010) said that an ethical segment ofconsumers has been also emerging gradually in the Vietnamese market They tend

to select clean food (fish sauce, soybean sauce, eggs, chicken, pork, milk, fruit andvegetable) and green products (solar water heater device, green constructionmaterial,…) and avoid products that might endanger their health

The following hypothesis is proposed:

H3: A higher level of consumers’ perceived CSR leads to higher level of

purchase intention.

2.4 CONSUMERS’ TRUST OF CSR

Trust is a fundamental element in the customer-company relationship(Pivato et al., 2008) From a CSR perspective, trust has been understood asconsumer expectations of socially responsible behavior from companies (Vlachos

& Tsamakos, 2011) According to Brown and Dacin (as cited in Fatma, Rahman &Khan, 2015), when consumers consider a company moral or its behavior sociallyresponsible and trustworthy, their evaluation, attitude toward the company maytend to be positive

Consumer trust is an important issue in the marketing literature, becausetrust is another way of establishing long-term relationships between consumers andcompanies (Kayabasi & Mucan, 2015) Building a trustworthy relationship withcustomers is not easy Hahn and Kim (as cited in Kayabasi and Mucan, 2015)asserted that consumer trust has been acknowledged as a crucial factor forsuccessful business trades, and in turn, the development and management of a longterm customer relationship They concluded that consumer trust affects purchaseintention positively in term of consumers’ perception of CSR

Previous literature recognizes trust as a prerequisite for building customerrelationship and consequently facilitating purchase intention (Bhattacharya & Sen,2004; Vlachos & Tsamakos, 2011) Hillenbrand, Money and Ghobadian (2011)used a model based on the theory of reasoned action (TRA), proposed by Fishbeinand Ajzen, to explore the impact of social responsibility on consumer trust, further

on a positive attitude towards the company They found that CSR directlyinfluences trust, attitudes, which would lead to the formation of positive purchaseintention A study (Kang & Hustvedt, 2013) shows that consumers’ perception of acompany’s efforts to be socially responsible by giving back to the local communityplays a critical role in building consumers’ trust and positive attitude toward thecompany and in turn developing their intentions to purchase from the company.Building the consumer-company relationship should be grounded on trust Trust is

a consumer’s belief that a company will act in the best interests of its consumersand keep what the firm promises (Chaudhuri & Holbrook, 2001) Trust builtbetween consumers and a company significantly contributes to positive outcomesfor the company such as positive attitude and loyalty toward the company,customer retention, product choices, purchase intention, willingness to act, andoverall market performance For this reason, being considered a trust-worthycompany by consumers is more critical than ever and companies should befocusing on what it takes to build such trust with its consumers.

Consumers’ trust of CSR is generally defined as consumers’ expectationthat the company, as a sponsor of CSR program, is willing to keep promise and tofulfill obligations with honesty, goodwill and non-opportunistic motives (Amoroso

& Roman, 2015) Drumwright found that even though managers described firm’smotives as mixed – serving both economic as well as social objectives – these samemanagers believed that consumers are simplistic in their judgments about CSRinitiatives and view them as either serving economic ends or reflecting sinceresocial concerns A consumer’s trust of firm’s CSR practices is one of the mostimmediate consequences of a company’s social performance (Pivato et al., 2008),and significantly affects his or her subsequent attitudes and actions responding toCSR

Consumers who believe that company meets the legal, social and ethicalnorms are more likely to get satisfaction because they feel company behavesconsistently with consumer's self-concept Consumers who hold these trusts andpositive attitudes toward company will also be more likely to survive in a businessrelationship with company (Dick & Basu, 1994) Implementation of CSR programswill give non-financial rewards for company, one of which is trust Implementation

of CSR programs will certainly increase the positive consumers’ perception.Positive perceptions, will increase consumer trust, which in turn will lead topositive attitudes toward company

The following hypothesis is proposed:

H4: A higher level of consumers’ trust of CSR leads to higher level of

consumers’ attitude toward firm.

2.5 ATTITUDE TOWARDS FIRM

Many streams of research investigate the association between CSRinitiatives, attitudes, and purchase intentions Mohr and Webb (2005) examinedthe effect of CSR activities and price on consumer evaluation and purchaseintention They intended to see which of the two options: CSR activities or price -would bring greater influence on consumer evaluation and purchase intent Theyfound that CSR actions positively influenced consumer evaluation and purchaseintention

According to the research results of Rahman’s dissertation for his Degree ofDoctor of Business Administration, he found that in general, consumers showedmore favorable attitudes when the CSR action of a firm was directed toward localcommunity There is a relationship between consumers' attitude toward CSRaction, attitudinal change toward the firm, and behavioral intention toward the

product of the firm Consumers were found to be more willing to purchase and pay

higher price for products of a firm that was engaged in a CSR for the localcommunity (Rahman, 2013) Sen and his colleague believe there is a positiverelationship between CSR initiatives of the company and consumer attitudestoward the company and their purchase intention (Sen et al., 2006) Vahdati,Mousavi and Tajik (2015) stated that purchase intention is influenced by theperceptions of CSR and consumers’ attitude toward firm

In the study of Vietnamese consumers’ awareness and their perceptions ofcorporate social responsibility (CSR), as well as whether their attitude towardsCSR is positive, Pham (2011)’s research results show that the awareness of

Vietnamese consumers and their purchasing decisions influence significantly onthe CSR implementation as well as CSR disclosure of companies The results CSR

is familiar to consumers, and a majority of surveyors expressed their want ofbuying products of a company with good social responsibility practices Inaddition, respondents said they would make some changes in behavior for socialresponsibility

The following hypothesis is proposed:

H5: A higher level of consumers’ attitude toward firm leads to higher level

of purchase intention.

2.6 CONSUMER DEMOGRAPHICS

This study examines the moderating effect of demographic characteristics onthe impacts of perceptions of CSR and purchase intention One important issueshould be considered by managers, when they decide to adopt CSR strategy toplease consumers, is that which consumer groups will be more sensitive to CSR.Some scholars have explored the demographic characteristics of consumers whorespond to CSR more positively or negatively, and results show that women, highereducation, and higher income groups are more supportive of firm’s CSR practices(Youn & Kim, 2008), and older consumers are more likely to favor ethical issuesthrough purchasing (Carrigan, Szmigin & Wright, 2004)

Tian et al (2011) found that demographics, such as age, gender, income,and education and product category moderates the relationship between consumers’perceived CSR and their responses to CSR (e.g purchase intention) Specifically,when consumers receive CSR information on a firm selling experience goods (vs.search or credence goods), a higher level of perceived CSR leads to consumers’more positive responses to CSR According to Tian et al (2011), he classifiedconsumers into three types which were named warm type, practical-type, and

shrewd-type First, in the warm-type group, there are income and age consumers They are more likely to support CSR practices that are beneficial tosociety and acts out such support by consumptions Second, the practical-typegroup has the more young people with low income, this group does not base theirpurchasing on ethical and philanthropic CSR especially under low-incomeconditions Third, in the shrewd-type group, consumers with higher income andeducation, tend to respond to CSR neutrally Because they are the middlegeneration affected by both traditional and modern values, thus they are morelikely to balance between economic and normative factors, and show a neutralattitude toward CSR in their consumption.

middle-Dodd (2010) had overall concluded that gender, age and income havemoderating effect on the relationship between CSR perception and purchaseintention Older people and females are moderately more likely; and youngerpeople and males are less likely to purchase products from socially responsiblebusinesses The research also showed that consumers with higher levels of incomeand education exhibit more likely to purchase products from socially responsiblebusinesses than the consumers with lower levels of income and education

In the context of Vietnam, Pham (2011) suggested that the young customersshow the higher positive attitude toward CSR than the older Many of them arestudents and young workers with better education so they pay more attention tocompanies’ CSR strategies

The following hypotheses are proposed:

H6a: The impacts of consumers’ perceived CSR on purchase intention are stronger for female consumers than for male consumers

H6b: The impacts of consumers’ perceived CSR on purchase intention are stronger for older consumers than for younger consumers

H6c: The impacts of consumers’ perceived CSR on purchase intention are

stronger for higher income consumers than for lower income consumers.

of CSR

H2 H1

Chapter 2 started by presenting various definitions of Corporate Social

Responsibility (CSR) leading to comprehensive definition of CSR that incorporates

important elements of the construct Different types of CSR were introduced to

provide a general idea how CSR actions can range, followed by description of

perceived pros and cons of CSR This chapter provided thorough explanations of

and discussed theories on perceptions of CSR, trust of CSR, attitudes toward firm,

and purchase intentions, as well as relationships among these constructs Besides,

understanding the linkage between how CSR initiatives affect consumer

perception, their trust, their attitude to firm, and finally affect to purchase intention

is crucial before further research is done Some important previous findings on the

relationship have been also concluded in this chapter as well

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CHAPTER 3: RESEARCH METHODOLOGY Introduction

Chapter 3 presents research methodology to be applied in carrying out thisresearch study, including: research design, questionnaires development, and datacollection and data analysis methods

3.1 RESEARCH DESIGN

The research design included two phases The first one is implementedthrough qualitative research, and the second one is main survey which isimplemented through quantitative research The research process is presented inFigure 3.1

Figure 3.1 Research Process

Literature reviews

Qualitative study

In-depth interview (n=8)

Revision Draft questionnaires

Final questionnaires Translation

Quantitative

study

Main survey (n=300) Confirmatory Factor Analysis

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Based on the previous research and the Vietnamese context, the draftquestionnaires consisted of four measurement scales, which were: perception ofCSR, trust of CSR, attitude toward firm and purchase intention Through thequalitative study, in-depth interview were carried out with 8 colleagues based onthe draft questionnaire developed from literature review in order to modify andrevise all observed items of the draft questionnaires to make improvement for theofficial questionnaires It was different from language and culture; so, through thisstage, it was determined that which questions are suitable for the research The in-depth interview helped author finalize questionnaire that are easy for respondents tounderstand Furthermore, it was valuable in measuring observed variables beforelaunching the main survey Based on the feedback of respondents, the surveyquestionnaires were smoothly made clearer and more understandable Thequestions which made respondents confused or unclear meaning were deleted.

In the main survey, a convenience sampling method was used to collect datafrom consumers in Ho Chi Minh City and data was collected through online survey.The choice of online survey was preferred for reasons of financial affordability, fastresponse time, control of sample, and efficient

The author decided to send 300 questionnaires Participants were recruited

by using author's personal networks of friends and acquaintances This studyinvited consumers within Ho Chi Minh City to help conduct the survey Of the 300questionnaires distributed, 224 usable questionnaires were returned for aquestionnaire response rate of 75% A satisfactory response rate of this survey ismainly due to the full support of my friends and networking