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

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

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

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

ACKNOWLEDGEMENT

Firstly, I would like to express my deepest gratitude to my supervisor Assoc Prof Le Nguyen Hau for his professional guidance, valuable comments, and continuous encouragement as well

as helpful support that made this thesis possible

I am sincerely thankful to proposal examination committee Their valuable suggestions contributed 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 for conducting this study

I also would like to express my grateful thanks to my friends and people in Vietnam who participated 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 the boundless support, abundant love and encouragement throughout my period of study Therefore, I devote this work as a gift to them all

ABSTRACT

In the Vietnam context after Doimoi, Vietnam is one of the transition economic nations strongly affected by global market With expectation, this research explores the effect of customer perception of a firm’s corporate social responsibility on customer brand engagement through a survey of 226 people who live in Ho Chi Minh City The collected data was analyzed and evaluated by SPSS program with analysis of reliability, factor analysis, and multiple regression analysis Current study finds out that economic, legal, ethical, and philanthropy CSR perception have 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 These finding suggest that the brand owners, managers should carefully consider the ethical practices, then philanthropy, economic and legal practices in order to engage more customer Besides, the managers should state out their practices, which enhance perception of customer about their practices

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

philanthropy CSR perception, customer brand engagement

Contents

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

3.5 Data 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

4.5 Discussions on the results 40

CHAPTER 5: CONCLUSIONS, IMPLICATIONS AND LIMITATIONS 46

5.1 Conclusion 46

5.2 Managerial 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

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 many executives 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 the world 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) In addition, many professional bodies such as the Association of Chartered Certified Accountants (ACCA), the Chartered Institute of Management Accountants (CIMA), the Canadian Investment Manager (CIM) and universities have been reinforcing themselves by identifying the role of CSR in sustainable business (Hassan, Nareeman & Pauline, 2013) Carroll (1991) defines the CSR as the social obligations to many stakeholders, environment while 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 firms improving their effectiveness and profits in current situation and in the future Many researchers have debated about the role of CSR, as declaration of Luetkenhorst (2004) CSR plays a role that push corporation from a state of mere compliance to a mode of engagement, from harm minimization to value creation The resources of world recently are scarcer and more dwindling, CSR is therefore founded on a stronger position in business activity as an active partner

CSR is a worldwide issue across all over the world and it has been observed in many developed and developing countries, Vietnam with open economic conditions has also faced with this impact In Vietnam, the notion of CSR gained it momentum over past few years From Doi Moi reforms (economic renovation) in 1986 and open-door policy, Vietnam government admitted 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 global economy With this shift, Vietnam market has been predominantly pushed by international and transitional factors In addition, joining the World Trade Organization

(WTO) in 2007 was the further step in this direction that made more efforts in following codes

of conduct of global Accompanying with the changes of economy is the popularity of CSR 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 to the Vietnam government for setting up Vietnam Agenda 21 as a CSR-related sustainability strategy that officially signed in 2004 for serious consideration of government about sustainable development in Vietnam, but also to business to make more adaptation to compete 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 an important role for positioning the market Contrary to the past, the development of information age has supported customers, especially in connecting variety of information, CSR is not excluded Besides, customers have more opportunities for choosing brands from numerous objectives Recently, CSR become the new factor influence on their critical decision making (Pham, 2011) For example, nearly 73 percentage of Vietnamese customers willing pay more money for brands relating to CSR and they also most interest about CSR when compare to the world (Nielsen, 2014) On the other hand, along with the open-door and integration deeply, it is required that brands need innovating for engaging the belief of customer Brand managers are changing to adopt CSR for connecting more customers Many brand managers are striving to meet customer need by their best effort, not only the quality

of product and service, but also the responsibility to society For example, the corporation groups received the award Giai Thuong Sao Vang Dat Viet 2015 whose activities all relating

to CSR and the top 10 enterprises received CSR award are almost small and medium enterprises (Lê Mỹ, 2015) However, CSR practices are not considered completely in Vietnam Pham suggests that there are companies consider CSR 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 activities should begin from empathy to the society (Kim Yến, 2015) Besides, Pham states that the Vietnamese customer awareness about CSR information is strong, but they do not have clear attitude There are customers just think that companies should have commitments to them and community at large, whatever it is (Bui, 2010) Majority of them have very limited information about CSR and just focus on price (Central Institute for Economic Management, 2014) Therefore, the practice of CSR by business and the perception of Vietnamese customers about CSR are fairly ambiguous Much worse, recently many issues occur that destroy the belief of customers about CSR practices of companies such as: the violation of environmental standards by Taiwanese food manufacturer, Vedan, who was accused 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 customers and efforts of companies to their brand Hence, CSR practices has not yet contributed effectively to relationship of customer and brands in Vietnam situation

1.3 Research gap

Recently, some researchers propose that CSR concept lets the executives define the social 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 stakeholders such 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, the previous researchers emphasize the importance of CSR toward engagement of customer to brand, 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 customers have 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 CSR reputation is constantly making efforts to enforcing brand

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

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

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 between Vietnamese 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?

1.6 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 area and demographic characteristic in our country

Because the CSR concept is still new in Vietnam Therefore, this research just focuses on general 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 to test the scale reliability (Cronbach’s Alpha), then factor analysis to determine which set of items are answered similarly by the respondents Finally, Multiple Regression is used to check 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 the research structure

Chapter 2: Literature review and hypotheses

In this chapter, the fundamental theories and definition for each mentioned concept are presented 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, data collection and data analysis method

Chapter 4: Data analysis and data results

For this chapter, the characteristics of collected data is summarized and result of the research

is presented after analyzing collected data From that result, study shows discussion for 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 in theory 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 the platform for research Hypotheses according to the conceptual framework selected for this research 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 to employee engagement He suggests that people have multiple awareness in work roles that influence 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 psychological aspects, the fundamental of the employee engagement construct may provide a base for customer engagement which means that engagement is “a positive, fulfilling, work-related state of mind that is characterized by vigor, dedication, absorption” (Schaufeli, Salanova González-Romá, & Bakker, 2002, p.74) In contrast, from marketing perspective, Marketing Science Institute (2010) suggests CE as “customer’s behavioral manifestation toward a brand

or firm beyond purchase, which results from motivational drivers” (pp 4) Such focus is in behavior aspect and also being proved by other practitioners (Shevlin, 2007) and academics (Bijmolt et al., 2010) Bijmolt et al believe that these perspective more traditional and well-established with the key behavioral manifestations including word-of-mouth, co-creation and complaining behavior However, Patterson, Yu, and Ruyter (as cited in So et al., 2014) argue that employee engagement is applicable to customer engagement but not enough Focus of customer engagement differs and goes beyond employee engagement in workplace, reflecting both psychological and behavioral aspects (So et al., 2014)

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

Customer engagement (CE) is a psychological state that occurs by virtue of interactive, 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 and behavioral aspects, it seems that there remains another viewpoint in respect to the conceptualization of the concept such as Bijmolt et al (2010) respect to CE as a behavioral construct that resulting from various motivational drivers

The evidence for support the application of a multidimensional approach is conceptualization of composite loyalty (e.g., behavioral and attitudinal) (So et al., 2014) Jacoby and Chestnut (1978) suggest that composite loyalty is measured by behaviors alone may lack a conceptual basic and insight into repeat behavior The conceptualization of Brodie

et al (2011) that covers both psychological and behavioral dimensions which are presented 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 in value creating in marketing relationship

In Vietnam situation, the term of Customer Engagement has not been observed much because of new emergence though many previous studies about behavior aspect of customer look 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’s profitability (The economic intelligent unit, 2007), superior competitive advantages (Sadley,

as cited in Brodie et al., 2011) and enable customers to continue on interactions rather than make transactions 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 should include components, namely, enthusiasm which means strong level of excitement and interest, attention which is conscious or unconscious, absorption which means pleasant state, interaction which means sharing and exchanging, and identification which means self-image

overlap the brand’s image All these components represented for both psychological and behavior dimension and these components also the base for this current study Hence, for examining the level of Vietnamese customer engagement toward specific brand, current study

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 It has 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) Despite non-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 had significant 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 new fabric of CSR concept (Freeman, 1984) and it then expands to a multidimensional perspective because of globalization In last decade, the international consideration has occurred in CSR which all aspects such as human right, environment and social at global level (Hanzaee & Rahpeima, 2013)

Despite lively evolution of CSR concept with many comprehensive and integrated definition, there is no consensus definition about CSR Orlitzky (2005) believes that plurality

of the 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 a responsible manner ‘Ethically or responsible’ means treating stakeholders in a manner deemed acceptable in civilized societies” (pp 15-16) From the World Business Council for Sustainable Development Center (2015) CSR is defined as “the commitment of business to contribute to sustainable economic development, working with employees, their families, the local community and society at large to improve their quality of life” More generally, CSR

is a construct of policies, practices, and program that are integrated throughout business operations and strategy decision-making processes, and for the purpose that ensures company maximizes the positive impacts of its operations on society (Business for Social

Responsibility as cited in Jamali, Safieddine & Rabbath, 2008) Despite many definition, the mainly 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) suggest that Carroll concept have a comprehensiveness of definition that integrating all existing aspects and can be explained by all approaches of defining CSR Many studies have used the 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 also examined the validity and reliability in developing countries (Jamali & Mirshak, 2007; Hanzaee & Rahpeima, 2013; Hassan et al., 2013) etc In Vietnam, the CSR concept which is developed

by Carroll is used in many studies to investigate perception of corporate social responsibility

in Vietnam (Luu, 2012; Lai, Le & Truong, 2013) Moreover, Lai et al states that CSR concept

of Carroll is most widely-accepted and used in academic and practical studies in Vietnam even though there is remain a continuing controversy of how defining CSR Thereforce, this study applies framework of Carroll and the CSR values scale developed 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 and business in context of corporate social responsibility (CSR) based on concept of Carroll (1991) and stakeholder theory (Freeman, 1984) Beside, corporations also promote socially responsible actions and policies to effectively respond to stakeholder demands According to Donaldson and Preston (1995) stakeholders including investors, political groups, customers, communities, employees, trade associations, suppliers, government Against this backdrop, regarding to business responsibilities to society, Brown and Forster (2013) debate that sometimes CSR and stakeholder theory are not agreed as to both nature and limit, and they

are delineated by differences in difference objectives However, many studies believe that stakeholder 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 on performance because the expectation and evaluation of CSR differ from one stakeholder group to another Therefore, in this study, customer as an importance stakeholder will be observed 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 society expects businesses to assume were categorized into four-part framework including economic, legal, ethical and discretionary These four categories always simultaneously exist in organization and not mutually exclusive However, these four classes are simply that activities can be categorized as primarily one or another of these four kinds Business from this perspective is the basic economic unit in society that Carroll suggested that during the history

of business is an early concentrate on economic aspect and then the legal aspect and later 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 this pyramid, economic responsibility is the basic foundation and discretionary is apex From this conceptualization, economic and legal responsibility are social requirement, ethical responsibility are social expectation and philanthropy is social desire (Windsor, 2001) However, Carroll implies that these distinct components always “in constant but dynamic tension with one another” and of course they are as a unified whole without mutually exclusive

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 as well describe the economic component as a responsibility to produce goods and services that customers want and do right thing what customers expect This engage customer to brands Previous studies have shown the link between economic CSR and customer engagement 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’s wealth 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 customer attention (Abdolvand & Charsetad, 2013) Greater operational competency provides greater absorption to customer which enhance engagement of them (Hur et al., 2014) Beside, firms can facilitate Customer Engagement by providing effective platforms for information

exchange and interaction (Baron & Warnaby, 2011) Firms also enhance customer identification 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, in theoretical study, Kaltcheva, Patino, Laric, Pitta, and Imparato (2014) believe that minimum cost positively influences customer brand engagement Therefore, it is expected that customers 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 that organization’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 and confidence when firms act in accordance with legal regulation to protect consumer This perception 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 who incompliance 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 more identification to customer (Pérez & Bosque, 2015)

In empirical study, Sarabdeen (2014) argues that legal risks negatively affect to customer engagement Besides, in theoretical study, Doorn et al (2010) believes that legal action lead to customer engagement Hence, it is expected that customers with greater legal CSR 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 and ethical norms, extent that organization adjust themselves to emerging moral norms, degree of compromising ethical standards or norms, corporate citizenship behavior accepted by society and the extent that organization go beyond the legal and regulation requirements to maintain integrity of the organization (Carroll, 1991) Adam (as cited in Bala, 2014) shows that people have nature desire to engage in equitable relationship People pay more attention with firms who exhibit more “Citizenship behaviors” (Masterson, Lewis, Goldman & Taylor, 2000) Furthermore, CSR-based moral capital of firms leads to brand credibility among customers (Luo & Bhattacharya, 2009) because customers do not want a company to take 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, and Bouquiaux (2015) that morality responsibility positively affects on customer engagement Besides, in theoretical study, Roberts and Alpert (2010) agree that corporate citizenship behavior enhances customer brand engagement Therefore, it is expected that customers with 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 is measured in terms of philanthropic and charitable expectation of society, assistance provided

to fine and performing arts, extent that managers and employees of the organization involvement voluntary charitable activities organized by community, and assistance provided

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

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

Figure 2: Concept model

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

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 brand engagement

In summary, this chapter presents the literature review about definition and theoretical 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 CSR perception and philanthropy CSR perception There are four hypotheses in this study

Questionnaire was designed in English based on the various measurement scales from previous studies, after that the questionnaire’s translation into Vietnamese was taken for 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 were delivered to the respondents in interview The interviewees were asked for best understanding and suitable to the context of study which was took place in Ho Chi Minh City with objectives were brands of FMCG companies The responses of interviewees for modifying the questionnaire were collected

Step 3: Modifying the questionnaire

The measurement scale was modified for more suitable and understanding to the context of the study (see Appendix 1) After that, the measurement scale was decided for reforming for final questionnaire Besides, the sample population for the main survey was suggested 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 for analyzing 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 scale was considered reliable by Cronbach’s Alpha coefficient After that, Exploratory Factor Analysis (EFA) was used to test the validity of scales and modify the research model accordingly if any

Step 6: Testing the structure model and hypothesis

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

3.1.2 Qualitative research

Based on the literature review of CSR and customer brand engagement, four hypotheses were proposed in Chapter 2 After that, the model was built and the preliminary scale was selected for questionnaire of the study from consolidation and citing of previous studies 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 sure for comprehensive understanding by most of participants, the interviewees are currently following the master’s degree program at University of Economics who could obtain the correct items which suitable to Vietnamese consumers In this phase, scale modifying had been taken for more suitable and understanding to context of this study (see appendix 1) In the 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 survey was conducted widely by using convenience sample which collected from consumers in Ho Chi 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 Multiple Regression 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, the scales were 21 items, Economic CSR perception was measured by 4 items and Legal CSR perception was measured by 4 items based on Arli and Lasmono (2010) Ethical CSR perception 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, Alexander and Sullivan (2006) The measurement scale of So et al (2014) was be used to measure the engagement of customer into brand, this scale included 5 items which present for

enthusiasm, attention, absorption, interaction, and identification which are reflect both psychological 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 Ethical CSR perception from study of Ho and Rashid concentrate on multi groups who have different ethic perception, while study of Mulki and Jaramillo capture customer judgements about ethical practices of both the organization and salesperson, in which salesperson is an important 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 trading activities and gathers people from different geography area and demographic characteristic in our country Therefore, the combination of previous studies of Ethical CSR perception supports for complete understanding of ethical CSR practices of firms including salesperson from different groups of people

Table 3.1 Measurement scale

I believe that this brand must control their production cost strictly

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

I believe that this brand must always improve economic performance

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

by the regulatory system

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

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

Brand

Engagement

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

I feel excited about this brand

I concentrate a lot on this brand When interacting with the brand intensely, I feel happy

In general, I thoroughly enjoy exchanging ideas with other people in the brand community

3.3 Research sample

Sample size was chosen which followed to Hair, Black, Babin & Anderson (2009) that the minimum of sample is equal or greater than five times of number of variables but not less than 100 Measurement scale in current study which consists of 05 factors and 26 variables Hence, the minimum sample should greater than or equal n=26*5=130 observations For standard multiple regression analysis, the required sample was recommended by Tabachnick and Fidell (1991) with equation: n>50+8m (where m was number of independent variables) There were 4 independent variables in this research Hence, the minimum sample required to run multiple regression in this study is n> 50+8*4=82 observation In conclusion, the expected sample size in this current study is at least 130 observations

3.4 Data collection

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

In the second phase (quantitative research), the questionnaire had been brought to main survey 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 minimum sample size of about 130, current study used the method of self-administered survey with the main instrument which was used to interview in this survey was mail survey in which using indirect method via electronic mail and Google survey tool to deliver questionnaire to target respondents in Ho Chi Minh City All respondents were asked to choose only one brand from listed 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 consumer who participated in this study about Corporate Social Responsibility, these brands were chosen from famous companies in Vietnam such as Unilever, Nestle, and Vinamilk as

a representative for 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 5 which illustrate the agreement from strongly disagree to strongly agree was used Data was collected 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 collected samples 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 which numerous statistic methods had been used in this research for sample description and measuring the results by tools of SPSS 22 and Microsoft Excel After that, the reliability and validity of measurement scales were tested by using Cronbach’s Alpha coefficient and Exploratory Factor Analysis (EFA) Finally, Multiple Regression analysis was applied to test the hypotheses

3.5.1 Descriptive statistic

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

3.5.2 Cr onbach’s Alpha

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

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

In this study, the acceptable value of Cronbach’s Alpha for reliability should be above 0.7 (Morgan, Barrett & Leech, 2005) However, it can reduce to 0.6 if there is only a handful

of items 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 a reliable 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 the other items (Morgan et al., 2005) If the Item-Total Correlation is negative or too low (less than 0.3), it would be considered to be excluded for improvement of the reliability level of the construct

3.5.3 Exploratory Factor Analysis (EFA)

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

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

In validity analysis, Hair et al (2009) suggest that the value of each item in each factor should be more than 0.5 and the difference of loading value by same item in different factors should at least 0.25 are required for convergent validity Correlation values between constructs should be less than 1 with significant statistic (p value <0.05) to show the scale meet 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 its hypotheses (Morgan et al., 2005) The multiple linear regression of SPSS 22 program was applied in order to predict one outcome from several independent variables that suitable to assumptions of multiple regression analysis According to Morgan et al., the assumptions of multiple regression analysis include: the residuals were independent, there was linear relationship between independent variables and dependent variables, the residual or error was distributed normally, and no multicollinearity

In this study, the residuals were independent that identified by plotting the residuals against any possible sequencing variable (Hair et al 2009) The linear relationship between independent variables and dependent variables that identified by Normal P-P Plot Graphs and Scatter Graphs The residual or error was distributed normally that identified by histogram and scatter plot with mean nearly 0 and Std Dev nearly 1 Finally, no multicollinearity that identified by evaluating two collinearity diagnostic factors (Tolerance and the Variance Inflation Factor-VIF) The Variance Inflation Factor (VIF) performs the influence of collinearity among factors in a regression model VIF is always greater than or equal to 1 When tolerance value is less than 0.1 and VIF >2 show that there is high possibility 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 that research process includes two phase: qualitative research and quantitative research In the qualitative research, research conducted the questionnaire and brought to the pilot in-depth interview with 7 interviewees to check if the meaning as well as the words using in the scale were easy to understand and suitable to research context After qualitative research, the questionnaire was modified following to the responses of the interviewees and then brought

to the 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 collected data to be useful for coding to data to SPSS program for analyzing The research used online questionnaire through electronic email to distribute to respondents After collecting and cleaning data, the amount of questionnaires that could be used for analysis including 226 questionnaires Finally, research presented the method to analyze the collected data The next

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 testing about influence of Customer’s CSR perception on Customer brand engagement Firstly, the descriptive statistic of sample was presented Next, the reliability and validity of the scales

were 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

155 women (occupied 68.6 percent), aged from 18 to over 30 years old with majority is the age from 24 to under 30 (occupied 51.8 percent) In term of degree of education, most of respondents were graduates who accounted for 52.2 percent of the sample Regarding to income per month, it was ranged from less than 5 million VND per month to over 10 million VND per month, but the majority of respondents had a monthly income was from 5 to 10 million VND per month which accounted for 39.8 percent (see the table below)

Table 4.1 Sample characteristics

Description Frequency Percentage (%)

Table 4.1 showed that statistic of demography characteristics was not the same for each category This combination might have influenced on result of the study and ability to generalize to population However, because collected data was based on convenience sampling method Therefore, this combination of data in table above was suitable for current study

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 one scale were reliable in measuring the research concept Cronbach’s Alpha also support for deleting inconsistent items Previous literatures suggest that value of Cronbach’s Alpha should 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 – Total Correlation) should be higher than 0.3 (Nunnally & Bernstein, 1994) If the value of Corrected Item – Total Correlation is negative (less than 0.3), it is required to check again the 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

Scale mean if item deleted

Scale variance if item deleted

Corrected item total correlation

Cronbach’s Alpha if item delected

Crobach’s Alpha

After considering the result of reliability, the Cronbach’s Alpha coefficient of all scales 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, All Corrected Item – Total Correlation value in all scales were over 0.3 This indicates all scales consistent with requirement of reliability Therefore, these measures were used for testing the study hypotheses

4.3 Exploratory Factor Analysis (EFA) for measurement scale

After analyzing the reliability, measurement scales were tested by exploratory factor analysis (EFA) to find out which items go together as a group or were answered similarly by respondents (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 to legal CSR, customer perception to ethical CSR, customer perception to philanthropy CSR, and dependent factor which is customer brand engagement EFA with Varimax rotation method helped 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

Variance

Cumul ative %

Total % of

Variance

Cumul ative %

Total % of

Variance

Cumul ative %