Impact of corporate social responsibility on customer loyalty behaviors evidence from vietnam

ABSTRACT The study investigated how corporate social responsibility CSR performance including towards society, environment and stakeholders affect brand likeability and relational switch

VIETNAM NATIONAL UNIVERSITY, HANOI VIETNAM JAPAN UNIVERSITY

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NGO THANH THANH HUYEN

IMPACT OF CORPORATE SOCIAL

RESPONSIBILITY ON CUSTOMER

LOYALTY BEHAVIORS: EVIDENCE

FROM VIETNAM

MASTER'S THESIS BUSINESS ADMINISTRATION

Hanoi, 2020

VIETNAM NATIONAL UNIVERSITY, HANOI

VIETNAM JAPAN UNIVERSITY

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NGO THANH THANH HUYEN

IMPACT OF CORPORATE SOCIAL

Prof TOHRU INOUE

Dr TRAN THI BICH HANH

Hanoi, 2020

ACKNOWLEDGEMENT

To finish the process of researching and complete this graduation project, there are no words to express my gratitude to Professor Tohru Inoue and Dr Tran Thi Bich Hanh who accompanied me and guided me directly during this time Thank you for not hesitating to help me a lot, from topic suggestions to how to do the topic even though you are very busy with your task Without your help, I could not to get very useful advice and could not go in the right direction I would like to choose this moment in order to acknowledge their contribution gratefully

On this occasion, I am very impatient for showing my appreciation to all staffs at Vietnam Japan University- Vietnam National University in particular for creating conditions and time for me during the course Especially, I am extremely grateful to Mrs Nguyen Thi Huong for giving me needed information and answered all my questions during the period of working on this project

Besides, my family, relatives and friends are very worthy to receive thanks from the bottom of my heart for always stood by and encouraged me to finish the graduation thesis and all participants who help me complete my survey

Lastly, I am so grateful for great learning environment and opportunities that Vietnam Japan University and Yokohama National University have brought for me Thanks to these, I have improved myself a lot

Sincerely,

Ngo Thanh Thanh Huyen

ABSTRACT

The study investigated how corporate social responsibility (CSR) performance including

towards society, environment and stakeholders affect brand likeability and relational

switching cost Concurrently, the relationship between brand likeability and relational

switching cost and customer loyalty behaviors including word-of-mouth and repurchase

intention The study’s sample size is 212 responses from Vietnamese respondents The

hypotheses are tested by regression analysis through SPSS software The findings show

CSR practice affects brand likeability and relational switching cost However, the effect

is different in term of degree When looking into the relationship between CSR

dimensions and brand likeability, CSR towards stakeholders is a more significant

predictor than others while CSR towards environment and society are supposed to have

more remarkable impact on relational switching cost Additionally, brand likeability and

relational switching cost positively affect word of mouth and repurchase intention Brand

likeability has more significant influence on word of mouth while both brand likeability

and relational switching cost affect nearly equally repurchase intention

TABLE OF CONTENTS

CHAPTER 1: INTRODUCTION 1

1.1 Background and necessary of the research 1

1.2 The research objectives 3

1.3 Research questions 3

1.4 Research scope 3

1.5 Research structure 4

CHAPTER 2: LITERATURE REVIEW AND HYPOTHESIS DEVELOPMENT 5 2.1 Corporate social responsibility (CSR) 5

2.2 Customer loyalty behaviors 11

2.3 CSR performance and brand likeability 12

2.4 CSR performance and relational switching cost 16

2.5 Brand likeability on Word-of-mouth and Repurchase intention 19

2.6 Relational switching cost on Word-of-mouth and Repurchase intention 20 CHAPTER 3: RESEARCH METHODOLOGY 23

3.1 Research design 23

3.2 Sampling 24

3.3 Data collection process 25

3.4 Questionnaire design 25

3.5 Data analysis 28

CHAPTER 4: DATA PRESENTATION AND FINDINGS 31

4.1 Data description 31

4.2 Reliability analysis 35

4.3 Exploratory factor analysis (EFA) 36

4.3.1 EFA of CSR scale 36

4.3.2 EFA of Brand Likeability scale 39

4.3.3 EFA of Relational Switching cost scale 41

4.3.4 EFA of WOM scale 42

4.3.5 EFA of Repurchase Intention scale 43

4.4 Regression analysis results 44

CHAPTER 5: RESULT DISCUSSION 49

5.1 Result discussion 49

5.2 Contributions of the research 52

5.2.1 Theoretical contribution 52

5.2.2 Practical contribution 53

5.3 Limitations and future research direction 55

REFERENCE 57

LIST OF TABLES

Table 3.1: Measurement items 26

Table 3.2: Likert scale for Agreement extent 28

Table 4.1: Descriptive Statistics of 212 respondents 31

Table 4.2: Samples’ demographic data 32

Table 4.3: Summary of retailing companies 34

Table 4.4: Reliability statistic of all scales 36

Table 4.5: EFA for CSR scale – 1 st test 36

Table 4.6: Rotated components matrix for CSR scale - 1 st test 37

Table 4.7: EFA for CSR scale – 2 nd test 38

Table 4.8: Rotated components matrix for CSR scale - 2 nd test 38

Table 4.9: EFA for Brand Likeability scale 39

Table 4.10: Component matrix for Brand Likeability scale 40

Table 4.11: EFA for Relational Switching cost scale 41

Table 4.12: Component matrix for Relational Switching Cost scale 41

Table 4.13: EFA for WOM scale 42

Table 4.14: Component matrix for WOM scale 42

Table 4.15: EFA for Repurchase Intention scale 43

Table 4.16: Component matrix for Repurchase Intention 43

Table 4.17: Correlations 45

Table 4.18: Collinearity Statistics 45

Table 4.19: Regression analysis coefficients 46

LIST OF FIGURES

Figure 2.1: Proposed theoretical model 22 Figure 3.1: Research process proposed by the author 23 Figure 4.3: Retailing companies distribution 34

CHAPTER 1: INTRODUCTION

1.1 Background and necessary of the research

Retailing alluded to direct sale of goods to the ultimate consumers who do not commercialize or reselling In the other words, these products or services are just for their own use There are many different types of retailing organizations such as independent stores, conjoint retailers, hypermarkets, chain stores or shopping malls Retailing activities could be directly related many environmental issues such as “energy and water consumption, waste, the volume of packaging, land use, and transportation, the use of chemicals by suppliers and offering genetically modified food” (Martinuzzi,

et al., 2011) Additionally, retailing is an intensely competitive market Therefore, maintaining repurchase behavior of customers is very important to retailing companies Especially in the case that costs of attracting and getting new customer are estimated to

6 times as big as retaining the existing ones (Huddleston, et al., 2004) Moreover, customer loyalty can benefit firms by an increase in loyal customers’ spending and appealing potential customers through oral communication among people (Curasi & Kennedy, 2002) At the same time, customers are believed to be unlikely to purchase products or service which has low or unacceptable corporate social performance (Castaldo & Perrini, 2004) and they expect the brand they are going to buy product or service to meet some certain minimum level of social performance as well (Meijer & Schuyt, 2005) In this case, CSR is considered as integral value when customers make purchase decision In other words, retailing companies are supposed to implement their social responsibilities as a corporate citizen so that they can create their positive public image and opinion (Jones, et al., 2007) besides their purpose of economic gain

Vietnamese retailing industry has been thriven consecutively and impressively over the recent years (McKinsey & Company, 2019) This is so fascinating an emerging market that the flock of foreign investors would like to jump into According to Vietnamese

General Statistics Office, in 2019, retailing sales of goods reached nearly USD $ 162 billion, accounting for 75.9% of the total and increasing by 12.7% compared to 2018 In

2018, retailing sales Vietnam's goods were estimated at nearly 143 billion USD which increased by 12.4% over the previous year In 2017, it was nearly 130 billion USD which increased by 10.9% In 2016, retailing sales reached about USD 118 billion, increasing

by 10.2% compared to USD 110 billion of 2015 Along with the impressive growth rate, the fact that the Vietnamese retailing market fully opened to allow foreign enterprises to invest 100% capital since January 11, 2015 and the signing of a series of new generation

of Free Trade Agreements have led to fierce competition between retail supermarket systems in Vietnam market with the arrival of many large enterprises from abroad such

as Lotte, K Mart , Central Group, Aeon, , Auchan, Family Mart or Circle K Therefore, maintaining repurchase behavior of customers and efforts to differentiate itself from others are very important to retailing companies in Vietnam now In the current context

of Vietnam, many businesses are not paying attention to their social responsibility, which includes frauds in business, production of poor quality goods or intentionally causing environmental pollution have made many customers annoyed (Hoang, 2019) Whereas, customers are believed to be unlikely to purchase products or service which has low corporate social performance (Meijer & Schuyt, 2005) Therefore, executing social responsibilities is an effective marketing tool and an indispensable condition for retailing companies in Vietnam in term of creating positive opinion (Jones, et al., 2007) and meeting customers’ certain minimum level of social engagement (Meijer & Schuyt, 2005) which in turn can help them increase loyal customers’ spending, appeal potential consumers through WOM communication (Curasi & Kennedy, 2002) and make themselves become more outstanding relative to their competitors (Porter & Kramer, 2007) through enhancing customer loyalty (Martínez & Bosque, 2013)

Additionally, CSR has gotten lots of attention from researchers and become a main topic

in customer behavior literature (Amatulli, et al., 2018) In addition to literature which

explained the direct influence of CSR on customer behaviors, many researchers made their effort to explain the effect of CSR initiatives on customer behaviors through many different routes such as the enhancement of satisfaction, valuation of service, identification, trust, corporate image, reputation, commitment, perceived value or social media engagement However, the impact of CSR on “brand likeability” and “relational switching cost” and ultimately on customer loyalty behaviors are underexplored Therefore, exploring these relationships is essential and is going to be conducted in this research

1.2 The research objectives

The research aims at exploring the chain effect of CSR on brand likeability as well as relational switching cost and ultimately on customer loyalty behaviors Also, the study provides the Vietnamese companies with managerial implication

1.3 Research questions

The thesis is answering the questions as follows:

1 How significant do CSR dimensions (environment, society, stakeholders) affects brand likeability which in turn impacts on customer loyalty behaviors (word of mouth and repurchase intention) ?

2 How significant do CSR dimensions (environment, society, stakeholders) impact

on relational switching cost which in turn impacts on customer loyalty behaviors (word of mouth and repurchase intention) ?

1.4 Research scope

The research focuses on CSR dimensions (environment, society, stakeholders) and customer loyalty behaviors ( word of mouth and repurchase intention) in Vietnamese context Also, the sample was collected in Hanoi, the capital of Vietnam in the period from the end of 2019 to 2020

- Chapter 2: Literature review and hypothesis development

 The theoretical framework will be presented in detail by displaying the fundamental concept and explaining the relationship of key variables From that, the hypothesis will be developed

- Chapter 3: Research methodology

 Data collection and analysis plan as well as questionnaire designing is about

to be shown

- Chapter 4: Data presentation and findings

 Data description will be shown Also, the results of data analysis and hypothesis test that are taken from SPSS software will be presented

- Chapter 5: Discussions and conclusion

 Answers for the questions which are mentioned in chapter 1 will be revealed Besides, the findings will be discussed and from that some suggestions are about to be shown Moreover, limitations as well as future research direction are being mentioned

CHAPTER 2: LITERATURE REVIEW AND HYPOTHESIS

DEVELOPMENT

2.1 Corporate social responsibility (CSR)

Corporate social responsibility is not really a new concept but it is still an academic and management subject that receives a lot of growing attention (Maon, et al., 2010; Peloza

& Shang, 2011) since it was first mentioned by Sheodon (1923) in his work and first formally defined by (Howard Bowen, 1953) CSR is defined as “the commitment of business to contribute to sustainable economic development working with employees, their families, the local community and society to improve their quality of life in ways that are good for both business and good for development.” Moreover, there have been

37 definitions of CSR published (Dahlsrud, 2008) and a lot of research have been done

to bring a better understanding of CSR concept

Although there are not any CSR definitions that are universally recognized (Freeman & Hasnaoui, 2011), most defined CSR as multidimensional concept (Rowley & Berman, 2000) The most well-known CSR concept was introduced by Carroll (1991), which suggested pyramid of CSR including economic, legal, ethical as well as philanthropic According to Carroll’s work (1991), he supposed that businesses initially need to fulfill their economic responsibilities by providing the goods and services that customers demand and earning acceptable profits because it is almost the basic condition for businesses to perform their other responsibilities Many authors accepted this definition and some found out the positive relationship between economic CSR and customer satisfaction (Akroush, 2012) Legal dimension of CSR referred to the corporates’ responsibilities of doing business within the framework of the law and regulations that promulgated by the government (Carroll, 1991) There are some researches that supported the positive link of legal CSR with customer satisfaction which led to an increase in customer retention such as Nareeman and Hassan (2013) Carroll (1991)

supposed ethical dimension of CSR to be responsibilities including acknowledged standards, norms or expectations in society Most of the previous studies indicated that the companies behaving ethically can improve the customers’ satisfaction and retention (Galbreath, 2010; Hassan & Nareeman, 2013) According to Carroll & Shabana’s work (2010), philanthropic dimension of CSR contains all activities of the companies in effort

to improve that the companies are good corporate citizen, which is society’s expectation Contributing to better community would make business become their preference (Jamali

& Mirshak, 2007) Lev, et al., (2010) revealed that firms involving in charitable contribution would increase their customer retention

Similarly, Maignan, et al., (1999) also considered CSR as multidimensional concept with

“economic, legal, ethical and discretionary” responsibilities of businesses toward their stakeholders Pinney (2001) simply regarded CSR as set of management practices which organizations choose to minimize their negative impact on society Among the many different definitions of CSR, Mohr et al (2001) grouped them into two major sorts including CSR towards stakeholders which is based on multidimensional definitions and CSR towards society relied on societal marketing principle Specially, multidimensional definitions describe most duties of companies towards their diversified stakeholders such

as owners, customers, employees or the community Societal marketing concept was defined as companies’ decision making that improves the well-being of both customers and society (Kotler, 1991) Mohr et al (2001) used this to define CSR at more abstract level

Faced with the constant increase in environmental issues that are supposed to be related

to the unethical business interests and human careless attitudes (Banyte, et al., 2010), businesses are turning to try to integrate environmental consideration into their business activities and consider this as a payback tool (Rashid, et al., 2015) Therefore, CSR towards environment has been focused in numerous researchers’ studies recently (Mohr

& Webb, 2005; Dahlsrud, 2008; Liu, et al., 2014) beside these major classifications of

CSR from Mohr et al.’s work (2001) which are used in various researches (Maignan & Ferrell, 2004; Maloni & Brown, 2006; Mandhachitara & Poolthong, 2011; Pomering & Dolnicar, 2009) CSR toward environment is supposed to be visible and feasible in business operations (Liu, et al., 2014) In the other words, it is easy for CSR toward environment to be understood and recognized by media and consumers (Rahbar & Wahid, 2011)

Therefore, this study chose to focus on studying three aspects of CSR including: society, stakeholders and environment There exist a number of researches that also have concentrate on studying these three aspects of CSR environment (Liu, et al., 2014; Mohammed & Al-Swidi, 2019; Dahlsrud, 2008)

Turker (2009) defined CSR toward society as activities contributing to well-being of society These activities contains “philanthropy, public welfare contributions, culture promotion and sustainable development” (Liu, et al., 2014) Environmental CSR is viewed as the companies’ contribution in balancing and improving environmental effects without damaging economic performance in order to sustain their development (Williamson, et al., 2006) It is supposed to include environmental pollution prevention, energy conservation as well as green production or service provision From stakeholders viewpoint, Turker (2009) viewed CSR towards stakeholders as businesses’ responsibility which go beyond economic interest and have a positive influence over their stakeholders including “owners, customers, employees or the community” Stakeholders activities comprise returns to investors, employee treatment, community development, monitoring and influencing supplier behaviors (Liu, et al., 2014; Dahlsrud, 2008)

CSR practices was well-known as a factor that affects consumer responses which determines the success of companies (Castro-Gonzalez, et al., 2019), especially when customers are likely to ask for more than just a good quality or low price product from

companies (Bhattacharya & Sen, 2004) In other words, social and environmental standards are increasingly being considered by customers when making purchasing decision (Knox & Maklan, 2004) Customers, nowadays, expect organizations to offer superior products or services and contribute to improving societal issues in addition to the task of economy development (Polychronidou, et al., 2014) Therefore, many organizations have been increasingly conscious of CSR’s magnitude (Hemingway & Maclagan, 2004) and thus enhance its CSR initiatives Also, CSR has gotten lots of attention from researchers and become a main topic in customer behavior literature (Amatulli, et al., 2018)

Many literature indicates that CSR can have direct or indirect impact on customer behaviors in nature In addition to literature which explained the direct influence of CSR

on customer behaviors, many researchers made their effort to explain the effect of CSR initiatives on customer behaviors through many different routes such as the enhancement

of satisfaction, valuation of service, identification, trust, corporate image, reputation, commitment, perceived value or social media engagement Among them, many researchers focused on cognitive aspects to explain the way that CSR efforts have impact

on customer behaviors For example, in empirical survey with 203 Islamic banks in Bahrain, Mostafa & ElSahn, (2016) showed that CSR association drives customers identify themselves with the banks based on their cognitive evaluation, which is then positively related to customer loyalty Similarly, Pérez, et al., (2013) revealed similar relationship between CSR activities and customer identification with the company in empirical study with sample of 781 financial services users Besides, Gürlek, et al., (2017) contended that CSR activities can create positive corporate image which is

“primary antecedent of perception” (Kasliwal, et al., 2017) based on its effect on customer’s assessment and opinion, which in turn contribute to customer loyalty Additionally, “satisfaction” defined as customers’ overall appraisal of commodities and services relying on customers’ previous experience with them is also found as a factor

which are positively influenced by companies’ CSR activities (Pérez & Bosque, 2015; Martínez & Bosque, 2013; Barcelos, et al., 2015) Moreover, “trust” which is defined as belief of customers about the products or services regarding the company’s appropriate or good characteristics, goals or policies is believed to be linked with CSR initiatives (Kennedy, et al., 2001; Swaen & C., 2018) There are several researchers even supported the role as a mediator of “trust” in CSR initiatives’ association with customer loyalty such as(Choi & La, 2013; Barcelos, et al., 2015)

Rodríguez-del-In addition to cognitive aspect, emotional aspect was found to be positively affected by companies’ CSR efforts Being supported by previous literatures proving the effect of CSR activities on customer emotion (Pérez & Bosque, 2015) as well as the effect of emotion on buying decision (Wang & WU, 2016), Castro-Gonzalez, et al., (2019) proved the exist of CSR performance’s association with admiration that is then linked to customer advocacy behaviors They supposed that the company performs CSR activities which is likely to associated with a heartfelt drive customer feel warm because customers tend to think CSR activities as something company do beyond their profit and try to contribute to society That finally leads them to experience moral emotions, namely, admiration which make them willingly purchase products or service of the companies Moreover, following the trend of companies in integrating CSR activities into their business strategy to obtain advantages from branding (Hoeffler & Keller, 2002), several scholars make an attempt to scrutinize the link of CSR performance with results of branding strategy For example, Ho (2017) revealed CSR activities positively affect customer’s brand love which in turn contributes to consumer behavioral intentions including repurchase intention as well as willingly paying a premium price Besides, with a convenience sample of 243 responders in China, (Liu, et al., 2014) found that CSR towards stakeholders impact brand preference the most in comparison with one towards society and environment

Based on the literature of CSR and its relationship with customer behavior, it is very obvious that it has gotten a lot of attention from the researchers with many different explanation about the route that CSR activities affect customer behavior However, there

is still theoretical gap that need to be filled It is the fact that the effect of CSR on branding has gotten great attention recently with research of “brand love” (Ho, 2017) or

“brand preference” (Liu, et al., 2014) Nevertheless, those researches just focused on understanding the effect from affect-based perspective, namely, emotion, rather than examining the customers’ perceptions “Brand likeability” which is perception-oriented has not been fully examined in the relationship with CSR initiatives in order to bring more various view of CSR-branding relationship Besides, likeability is suggested to appear in all phase of transaction and to be a precursor of brand love, brand preference and other important outcomes such as satisfaction or favorable attitudes toward brand as well (Nguyen, et al., 2013); so “how to increase the likelihood that firms are perceived

to be likeable” is very important question for firm’s managers Therefore, exploring the connection of CSR activities with “brand likeability” and the clout of “brand likeability”

on customer loyalty behaviors including word of mouth as well as repurchase intention

is extremely necessary because they are underexplored

In addition, “relational switching cost” which is known as positive one among several types of switching cost which is a barrier that makes customers “willing to stay” with brands rather than other “have to stay” types of switching cost (Marcos, 2018) is also believed to be linked to company’s CSR activities The positive effects from a positive like barrier “relational switching cost” are suggested to be “antecedents of customer loyalty”(Blut, et al., 2015; Barroso & Picón, 2012; Ngo & Pavelková, 2017) Although there are many literature studying of “switching cost” in general and “relational switching cost” in particular and their effects on customer loyalty and intention, few literature focused on relational switching cost in relationship with CSR Therefore it can

be said that a study of effect of CSR activities on relational switching cost which then affects customer loyalty behaviors is essential

2.2 Customer loyalty behaviors

Oliver (1997) defined loyalty as “ a deeply held commitment to rebuy or repatronize a preferred product/service consistently in the future, thereby causing repetitive same brand or same brandset purchasing, despite marketing efforts to cause ‘switching behavior” In addition, Dick and Basu (1994) defined customer loyalty as the link between relative attitude and repeated purchase However, the concept of customer loyalty hasn’t got much consensus in spite of its popularity (Zhang and Bloemer, 2008) For instance, some researches conceptualized customer loyalty by “behavioral, attitudinal and integrated perspectives” (Dick and Basu, 1994; Homburg and Giering, 2001; Hur et al., 2012) Important to the this study, Fullerton (2003) and Zhang and Bloemer (2009) constructed customer loyalty as essentially “behavioral intention” and named “customer loyalty behaviors” which includes willing to pay, word of mouth communication and repurchase intention The study is going to focus on the two later dimensions

An actual customer behavior of buying the same brand more than one time can define repurchase (Ibzan, et al., 2016) Intention is defined as a motivation of someone when they wants to perform their behavior (Rezvani, et al., 2012) While repeated purchase is considered as actual action, repurchase intention is explained as consumers’ decision of continuing to purchase a product or service when it comes in handy (Keller, 2001) Dodds, et al., (1991) insisted repurchase intention is representatives for consumers’ possibility of keeping on purchasing a product or service Therefore, intention to repurchase can be considered as customer loyalty

Word-of-mouth (WOM) was defined by Söderlund (1998) as the extent to which customers will share their consumption experience with their friends, relatives, and

colleagues consumption experience Put another way, WOM is verbal communication related to a product, service, organization or brand There are 2 types of word-of-mouth including positive and negative The research focused on positive WOM which is defined as “a desire to help the company, altruism, a desire to signal expertise to others and product involvement” (Angelis, et al., 2012) WOM is widely accepted by customers and they consider them as an important communication source People enjoy talking about their possibilities and experiences (Kelly, 2007) Also, when making purchase decision, customers have more confidence in WOM communication rather than radio, television, and publications (Cakim, 2010) There are between 50-70% of buying decisions are affected by WOM (Sweeney, et al., 2008) Therefore, firms’ effort in enhancing positive WOM is very vital not only since it can bring them more new customers but only because it is like an express of their success in increasing the customer loyalty

2.3 CSR performance and brand likeability

The concepts of brand love and brand preference have been getting lots of attention in

an academic and management subject recently It is very easy to confuse brand likeability with them because they “may have similar cognitive and some emotional elements” (Nguyen, et al., 2013) However, while brand love contains multiple cognition, emotion and behavior that are a mental prototype orientation (Batra, et al., 2012), Nguyen, et al (2013) regarded brand likeability as a less emotional and perception-oriented concept Whereas brand preference indicates a comparison among numerous brands, brand likeability is less behavioral (Nguyen, et al., 2013) Customers have their own idea about the company they like and dislike and their perceptions of likeability affect customers’ reaction to firms (Reysen, 2005) The brands that are liked by the customers would get advantages and privilege which the disable brands would not (Nguyen, et al., 2013) Therefore, it is very essential for the oranizations to understand the concept along with

divers of likeability so that they can raise the likelihood that customers would perceive them as more likeable ones (Nguyen, et al., 2013)

Likeability is described to be “a persuasion tactic and a scheme of self-presentation” (Cialdini, 1993; Reysen, 2005) and is considered as multidimensional concept including cognitive and affective elements (Alwitt, 1987) Attribution theory, “the study of the causal interpretations that persons give to events in their environment” (Crittenden, 1983) is very helpful in defining “likeability” That means it was supposed that when people face or cope with an surprising or negative event, they tend to look for causal interpretation for that event The way people interpret that event can imply their thinking and behavior As the attribution concept’s suggestions, the likeability is expected to occur when consumers have positive inference from firm’s activities (Nguyen, et al., 2013) Once a positive assessment attaches to a firm, that firm will be found likeable and vice versa In order to make any inference about any firms, customers usually assess

firm’s profit and motives, past behavior and reputation (Cox, 2001; Campbell, 2007)

Therefore, building and maintaining good reputation can affect more positively inference

of customers towards firms, which increases brand likeability

Besides, attractiveness model (McGuire, 1985) also provides insight in defining likeability The connection of customers’ negative or positive awareness of attractiveness with likeable firm are found (Nguyen, et al., 2013) This finding suggests that firms improving their offerings’ attractiveness which may comprise “building relationships with fair trade organizations, delivering green products, and supporting charities” are well regarded by their customers In addition, good reputation can be also

a kind of attractiveness (Nguyen, et al., 2013)

Many previous studies showed that CSR toward environment affects perception of customer Laroche, et al., (2001) revealed that people pursuing a more environmentally friendly lifestyle would have high purchasing intention toward firms related to

environmental practices Brown & Dacin (1997) believed that what customers know about the companies would determine their belief and attitude toward the products of the company They suggested that when the customers consider CSR performance of the companies as positive, they make positive inference of the companies’ business Mohr

& Webb (2005) showed that customers’ positive company evaluation and strong purchase intention was impacted by the manufacturers who implement CSR towards environment Reputation could be one of criteria for customer to determine their perception toward a company and its attractiveness (Nguyen, et al., 2013) A bank ’s reputation for CSR activities, for example, environmental efforts, therefore, positively affects customer’s liking towards it (Rives, et al., 2009) A green brand image is supposed to have a positive link with consumers’ satisfaction (Chen, 2010) It is very obvious that consumers tend to like the companies which make donation for environmental organizations (Nguyen, et al., 2013) because when firms support to these activities, they can develop goodwill among customers which would generate likeability effect While Kucukusta, et al., (2013) found the CSR factors related to environment, mission and vision could be predictor the visitors’ stay preference, Liu, et al (2014) contended that environmental CSR would yield more brand preference by customers In sum, with the support and evidence from the literature for the environmental CSR’s positive association with brand likeability, the first hypothesis is defined as:

H1: CSR towards environment positively impacts brand likeability

Daub & Ergenzinger (2005) supposed that several customers care many things rather than just consumption experience These consumers are tendentiously more contented with the products of socially responsible companies (Luo & Bhattacharya, 2006) Therefore, firm’s CSR activities, in general, bring positive context for customer’s perception and assessment about them (Luo & Bhattacharya, 2006) Especially, the firms which integrates with social CSR also deeply impress their customer (Murray & Vogel, 1997) and enhance consumers’ evaluation (Henderson, 2007) Similarly, CSR activities

intended to enhance social interests increase and enhance brand image (Singh, et al., 2008) and brand association (Ricks, 2005) In support, there are various researchers including Hassan & Nareeman (2013), Galbreath (2010) and Lee, et al., (2013) provided the evidence proving that the businesses’ philanthropic activities which contribute to community’s well-being could generate higher level of customer satisfaction The contribution to community’s well-being which are regarded as meeting community expectation would drive the firm be its favor (Jamali & Mirshak, 2007; Wood, 2010) In support, (Nguyen, et al., 2013) contended that customer is likely to like the companies which involve in social activities such as supporting charity With supportive evidence from the literature, engaging in CSR towards society can make the firms become more likeable As a result, the hypothesis is:

H2: CSR towards society positively impacts brand likeability

CSR activities that affects positively the firm’s stakeholders also have been studied recently CSR effort toward stakeholders can decrease customers’ skepticism and increase customers’ trust towards firms (Vlachos, et al., 2008) Therefore, Creyer (1997) indicated that the company’s CSR activities which are related to their stakeholders are favored by the customers This study also contended that CSR towards stakeholders is also a very important factor determines customers’ purchase decision Evaluation of CSR efforts of firms in managing relationship with their stakeholders can be effective for assessment of stakeholders’ satisfaction (Clarkson, 1995) Customer satisfaction is regarded as a predictor of brand preference Sen, et al., (2006) concluded consumers’ perception of businesses’ employee treatment and investment behavior are linked to more positive responses Liu, et al., (2014) showed that CSR endeavor towards stakeholders such as customers and staffs can increase customers’ degree of preference Based on those previous studies related to CSR towards stakeholders’ positive link with brand likeability, the third hypothesis is shown as:

H3: CSR towards stakeholders positively impacts brand likeability

2.4 CSR performance and relational switching cost

Due to the increasingly high competition and the decline in market growth rate, protecting market share towards companies has become more important than ever Switching costs can be one of the effective strategy to create customer loyalty which helps companies to maintain their market share against their competitors In (1998), Poster defined switching cost as the costs consumers incur once they migrate to another products or service provider Chen & Wang (2009) contended that switching costs could

be “the form of termination costs from the current service provider to joining costs with the alternative service provider”

Klemperer (1987) supposed that there were 3 kinds of switching cost including

“transaction, learning and contractual costs” Transaction cost arises when customers stop buying products or using services from a provider and find a new one Learning cost refers the cost of immigrating to a new brand after learning to use another brand Contractual cost is supposed to be the expense of losing programs for loyal customers that they got from current brand such as “repeat-purchase coupons or frequent-flyer program” (Klemperer, 1987)

In addition to those explicit cost, there exists implicit switching costs which are psychological and emotional costs Burnham, et al., (2003) divided switching costs into

3 kinds, in which these psychological and emotional costs are mentioned as relational costs Relational costs are “affective losses associated with breaking the bonds of identification that have been formed before" (Burnham, et al., 2003) They could be

“with the people with whom the customer interacts” or “with the brand or company with which a customer has associated” (Poster, 1980) In other words, the social bonds, personal rapport and trust have been formed over a period of time between the brand and the customer can become a huge psychological exit barrier The customers would have

to experience or incur emotional discomfort because of the loss of identity, the breaking

of bonds, the risk and the uncertainty that the termination of the current relationship could bring

According to social identity theory, people connect themselves with the multitude of social categories that they feel familiar with through self-definition (Tajfel, 1981) Identification research drawing on “social identity theory” supposes people usually tend

to identify themselves with the organizations whose perceptions overlap with their perception, reflect their self-concept and enhance their self-esteem as well (Tajfel & Turner, 1985) Moreover, people also desire to differentiate themselves from others (Tajfel & Turner, 1985) Hence, they are likely to find groups or organizations that are distinctive to identify with Meanwhile, CSR plays a transmitter-receiver role which transmits distinctive values as well as bolsters company identities’ attractiveness (Sen,

et al., 2006) Thus, identification with the organizations engaged in CSR initiatives are supposed to contribute to self-esteem of the customers In support, firms’ CSR efforts were found to increase customers’ perceptions of customer-company identification (Sen and Bhattacharya, 2001; Lichtenstein et al., 2004) CSR actions related to environment can contribute to the company’s distinctive characters (Bhattacharya & Sen, 2004), which can drive the company more attractive in the customer’s eyes and then foster them

to form the identification with Besides, customers consider the company to be doing something good for environment on their behalf and thus, help them enhance their self-esteem and self-expression regarding their ethical and moral social image (Aquino & Reed, 2002) Martínez & Bosque (2013) also revealed that CSR (including responsibility towards environment) can impact positively C-C identification which enhance customer loyalty Moreover, customers usually have greater satisfaction and trust with products which do not harm the environment (Balabanis, et al., 1998) The bonds of trust and identification are formed over period of time towards organizations implementing environmental CSR activities can increase discomfort and resistance toward switching

to another provider or brand of customers With supportive evidence from the literature, the following is hypothesized:

H4: CSR towards environment positively impacts relational switching cost

The characters that are contributed to organizations by CSR actions, for example, fair employment policies, supports for society and environment are much more distinctive than other facets of the company-schema (Bhattacharya & Sen, 2004), which becomes attractive point for customers to identify themselves with Besides, all CSR efforts towards society, for example, funding to community programs, create both added-value for community and for business on account of their reflection about company identification matching with beneficent values Those values can create the company’s association as well as identification with its purchasers (Sen, et al., 2006) Consumers always desire a better society and that is also the reason why they are likely to feel the overlap between their value and company which involves in CSR for the welfare of society (Abbas, et al., 2018) In support, Pérez & Rodríguez-del-Bosque (2015) ,in a survey with saving bank customer, found that CSR oriented to society can enhance C-C identification Mostafa & Elsahn (2016) also revealed consumer-bank identification was positively affected by philanthropic CSR initiatives Those bonds of identification that are enhanced by CSR towards society strengthen the discomfort that customers incur if they switch to another provider With supportive evidence from the literature, engaging

in CSR towards society can increase psychological barriers called relational switching cost As a result, the hypothesis is:

H5: CSR towards society positively impacts relational switching cost

It is known that customers specifically notice the tangible aspects of organizations, for example, “quality, innovation, compliance to standards, guarantees, and other information provided about the product” are much influenced by them (Maignan & Ferrell, 2001) Therefore, purchasers are likely to react more positively to customer-

centric CSR activities In support, Saleem & Gopinath (2015) indicated that consumer CSR was found to affect positively customers’ trust towards firms Also, Marquina & Vasquez-Parraga (2013) indicated that CSR image related to employee affairs has

positive impact on customer behavior Moreover, CSR effort toward stakeholders can

decrease customers’ skepticism and increase customers’ trust towards firms (Vlachos, et al., 2008) Consumers are supposed to found an association with their favorable firms or show consumers’ personality through those (Fournier, 1998); while Liu, et al., (2014) showed CSR endeavor towards stakeholders can make the brands become customers’ preference As a consequence, the sixth hypothesis is defined as:

H6: CSR towards stakeholders positively impacts relational switching cost

2.5 Brand likeability on Word-of-mouth and Repurchase intention

Nguyen, et al., (2013) stated that consumers assess companies’ brand likeability and tendentiously link the assessment to positive outcomes, namely, “customer satisfaction and positive word of mouth” Besides, consumers experiencing feelings of love towards

a brand (Carroll & Ahuvia, 2006), consequently, value it more (Roberts, 2005) Therefore, when a brand is loved by their customers, those people are likely to involve

in spreading their positive experience about that brand’s product or service and recommend that to others There are a lot of researchers supporting the strong positive association of brand love with WOM such as Carroll & Ahuvia (2006), Kudeshia, et al., (2016) and Niyomsart & Khamwon, (2015) Moreover, the degree of satisfaction or dissatisfaction about experience with a brand’s product or service could be prerequisite word of mouth about them (Bitner, 1990; Arndt, 1967; Dichter, 1966; Yi, 1990; Westbrook, 1987).When customers are satisfied or impressed by the brand, they would engage in positive WOM about that firm (Bitner, 1990; Bloch, 1986; Hunt, 1977; Oliver, 1980; Reichheld & W Earl Sasser, 1990) In support, a direct positive connection of customer satisfaction with word of mouth was found by Schlesinger & Heskett (1991)

and Taghizadeh, et al., (2013) With supportive evidence from the literature, the hypothesis is:

H7: Brand likeability positively impacts word of mouth

Suetrong, et al (2018) revealed that in short-term, customers like a brand if they are contented with its characteristics or benefits In case of customers’ keeping this feeling relative to alternatives, it is conceivable that they would keep on repurchase that brand (Suetrong, et al., 2018) Also, a favorable attitude towards a firm can lead to repeat purchase (Buil, et al., 2013) based on theory of reasoned action related to explanation for relationships between “attitudes, intentions and behavior” (Fishbein & Ajzen, 1975) Theoretically, consumer preference is a direct premise of intention (Bagozzi, 1983) Consistent with this perspective, there are some researchers’ empirical evidences support positive link between customers’ favor toward a brand and their willingness to buy it again In other words, they supported the role of brand preference in motivating customers’ intention to repurchase (Hellier, et al., 2003; Ebrahim, et al., 2016; Roest & Pieters, 1997; Hellier, et al., 2003; Andreassen & Lindestad, 1998) Besides, feeling of attachment such as brand love is considered a great predictor of repurchase intention (Suetrong, et al., 2018) Moreover, a satisfied customers are also supposed to be more likely to be interested in repurchasing intention In support, there are some researchers found that customer satisfaction is the precedent of customer repurchase intention such

asBearden & Teel (1983), Anderson & Sullivan (1993), Innis (1991) , Roest & Pieters (1997) or Olive (1980) With supportive evidence from the literature, a likeable brand can positively affect repurchase intention As a result, the hypothesis is:

H8: Brand likeability positively impacts repurchase intention

2.6 Relational switching cost on Word-of-mouth and Repurchase intention

Positive switching cost are found to be a premise of loyalty (Blut, et al., 2015; Barroso

& Picón, 2012; Ngo & Pavelková, 2017) Whereas, customer loyalty can benefit firms

by an increase in loyal customers’ spending and appealing more consumers through WOM communication (Curasi & Kennedy, 2002) Besides, Vasudevan, et al., (2006) and Patterson, et al., (2001) contended that relational switching cost are positively associated with commitment; whereas commitment was found to be likely to enhance positive WOM (Bougie, et al., 2003; Derbaix & Vanhamme, 2003; Fazal-e-Hasan, et al., 2017) With supportive evidence from the literature, relational switching cost can positively affect WOM As a consequence, the hypothesis is:

H9: Relational switching cost positively impacts word-of-mouth

When customers perceive barriers or switching cost which prevents them from migrating

to another brand or provider, consumers tendentiously continue staying with the current brand or provider (Burnham, et al., 2003) The direct effects of switching cost was proved at both industry and the global switching cost level (Anderson & Sullivan, 1993; Bansal & Taylor, 1999; Weiss & Heide, 1993) More specifically, when Burnham, et al., (2003) along with Blut, et al., (2015) was studying about effects of various kinds of switching cost, they found the positive impact of relational switching cost on repurchase intention Blut, et al., (2015) even proved relational switching cost has stronger association with repurchase intention rather than other types of costs including financial

as well as procedural switching cost In support, Blut, et al., (2016) revealed that relational switching cost is the most important type which could have positive link with share of wallet In other words, relational switching cost can lead to customers’ purchasing more product from the key brand relative to its competitors Moreover, Vasudevan, et al., (2006) and Patterson, et al., (2001) contended that relational switching cost are positively associated with commitment; while commitment was found as the determinant of customer retention (Ercis, et al., 2012; Morgan & Hunt, 1994) With supportive evidence from the literature, relational switching cost can positively affect

repurchase intention As a result, the hypothesis is:

H10: Relational switching cost positively impacts repurchase intention

Figure 2.1: Proposed theoretical model

CHAPTER 3: RESEARCH METHODOLOGY

3.1 Research design

The research was conducted as follows:

Figure 3.1: Research process proposed by the author

Identify research interest and motivation

Review the literature

Identify theoretical and practical gaps

Develop conceptual framework and propose research model

Determine research methods:

questionnaire/survey

Determine research sample

Develop questionnaire

Pilot test

Correct and finalize questionnaire

Distribute questionnaire online

Analyze data by SPSS

Interpretation, conclusions, discussions and suggestions

3.2 Sampling

According to the study of Hair, et al., (1998) about the expected sample size for Exploratory Factor Analysis, the minimum number of sample is determined by the total measurement item in questionnaire multiple by 5 This research’s questionnaire includes

30 measurement items Therefore, the number of respondents, or in other words, the minimum sample size needed to conduct this should be: 30*5=150

Besides, Tabachnick & Fidell (2007) suggested that the minimum sample size for multivariate regression models must be calculated by 50 plus (8*the number of independent variable) The maximum amount of independents is 3 for this study Therefore, the minimum sample size needed to conduct this should be: 50+8*3=74 Normally, if a paper incorporates multiple analysis methods, the sample size would be the largest required one of all the methods In this study, the author intends to use two methods including EFA and multivariate regression analysis Therefore, the minimum sample size shall be 150 which is minimum sample size needed to conduct EFA However, in case there is invalid responses that need eliminating and to boost reliability and validity of the research, the author decided to distribute 225 questionnaires

The research uses convenience sampling method to sample data Because time is limited and data availability is rare and expensive, the convenience sampling method is suitable

in term of easy and promptness Besides, the survey is conducted in Hanoi because there are the concentration of a lot of different types of retail such as supermarket, convenience store or shopping mall there and it is infeasible to conduct the survey throughout Vietnam Moreover, the questionnaires is distributed randomly online without any limitation of respondents’ demographic characteristics

3.3 Data collection process

To ensure that the final questionnaire that was officially distributed to the respondents was understandable and error-free, 30 questionnaires were sent to 30 people who are highly educated and have high perception of CSR initiatives of companies with expectation of getting useful comments about the content and wording of the questionnaire In general, the questionnaire received good feedback from these people Some errors in word usage have been corrected and modified before being formally contributes to main respondents

After finalizing the questionnaires, these were distributed online via google doc file in order to collect the primary data The data then was used to be analyzed and found out the results for the research

3.4 Questionnaire design

The measurement items for all variables in this study was obtained from the similar previous literature Also, each item is evaluated on 5-point Likert-type scale ranging from 1 (strongly disagree) to 5 (strongly agree) Measurement items of 3 different CSR dimensions was taken from different studies In detail, CSR towards Society and Environment are measured using 6-item scale which are proposed by Herrera (2017) and CSR toward Stakeholders are measured by 8-item scale introduced by (Liu, et al., 2014) Besides, the measurement of Brand Likeability was adopted from Nguyen, et al., (2013) while Relational Switching Cost are measured with 3-item scale from Özer, et al., (2009) In addition, the study measures Word of Mouth by 3-item scale taken obtained from (Abbas, et al., (2018) Also, Repurchase Intention is measured 3-item scale developed by Fang, et al., (2011)

Additionally, questionnaires is designed in English and translated in Vietnamese before distributing online to responders because the research’s targeting responders are Vietnamese people The questionnaire is divided and presented into 2 parts:

- Part 1: contains 4 demographic questions

- Part 2: comprises of 30 measurement items for measuring: CSR towards Society, CSR towards Environment, CSR towards Stakeholders, Brand Likeability, Relational Switching Cost, Word of Mouth and Repurchase Intention However, those measurement items is mixed randomly and not arranged in order corresponding with the variables it measures Thanks to that, responders cannot come up exactly with the purpose of the research Therefore, the research can limit the potential biases and increase its reliability

Table 3.1: Measurement items

This brand is trying to sponsor public health

This brand is trying to sponsor cultural

This brand is trying to make financial

This brand is trying to help to improve quality

CSR

towards

Environm

ent

This brand is trying to sponsor

Herrera (2017)

This brand is trying to allocate resources to offer services compatible with the environment ECSR2 This brand is trying to carry out programmes to

This brand is trying to protect the environment ECSR4 This brand is trying to recycle its waste

This brand is trying to use only the necessary

CSR towards

Stakeholders

This brand respects consumer rights beyond

Liu, et al., (2014)

This brand provides full and accurate information about its products/services to customers

StCSR2

Customers’ satisfaction is highly important

This brand provides a healthy and safe

This brand complies with legal regulations

Pornography, gambling and drug abuse are

Brand

Likeability

I believe that this brand continues to get

et al., (2013)

I would say that the brand is approachable BL3

RSC1 Özer, et

al., (2009)

I am thinking positive about this brand RSC2 The name of this brand is important for me RSC3

I recommend the services or products of this brand to friends, relatives and other people WOM2

I mention favorable things of this brand to

Repurchase

Intention

If I could, I would like to continue purchase

Fang, et al., (2011)

It is likely that I will continue purchasing products from this brand in the future RI2

I intend to continue purchasing products from

5-point Likert-type scale for agreement extent is presented as follows:

Table 3.2: Likert scale for Agreement extent

- Cronbach’s alpha varies from 0 to 1

- Theoretically, this value is understood as the higher, the better It is supposed to

be great as it is higher than 0.9 and poor when it is lower than 0.5 (George & Mallery, 2010) However, that α is higher than 0.95 is believed to lead to duplication in scale

Besides, when doing reliability analysis by Cronbach’s alpha in SPSS software, there are some indicators needing to be paid much attention as follows:

- “Corrected Item – Total Correlation” of each measurement item: should be equal

or more than 3 in order not to be removed

- If “Cronbach's Alpha if Item Deleted” of a measurement item is more than Cronbach’s alpha, that item will be removed

b Exploratory factor analysis (EFA)

Besides assessing the reliability of scale, assessing the value of the scale is also essential EFA is used to shorten a set of k variables into a smaller set of variables, namely, F (F<k), which makes them more meaningful When doing EFA by SPSS software, there are something needing to be paid much attention as follows:

- “Kaiser-Meyer-Olkin” (KMO) which is used to consider whether factor analysis

is suitable or not, must be equal or more than 0.5 (0.5 ≤ KMO ≤ 1) If KMO is less than 0.5, factor analysis is likely to be inappropriate for the data set

- “Bartlett's test of sphericity” is used to consider correlation of the observed variables in a factor “Sig Bartlett's Test” must be less than 0.5 in order to demonstrate that they are correlated with each other

- The “Eigenvalue value” is to figure out the amount of factors for EFA Those whose Eigenvalue is equal or more than 1 are retained and vice versa

c Pearson correlation analysis

After finishing reliability analysis and exploratory factor analysis, “Pearson correlation analysis” is conducted to explore linear relationship among the variables in the model Based on Pearson correlation coefficient which is abbreviated as R, the author could determine strict degree of linear relationship between two quantitative variables:

- R ranges from -1 to 1 The more R approaches to 1 and -1, the stronger the linear correlation is; in which more approaches to 1 is positive correlation and more approaches to -1 is negative correlation

- The more R approaches to 0, the weaker the linear correlation is

- If R equal 0, there is no linear correlation

However, when doing this analysis by SPSS, it is necessary to notice “Sig” indicator which shows whether the correlation between 2 variables is meaningful The correlation

is supposed to be meaningful when “Sig” is less than 0.5

d Regression analysis

Regression analysis is used to analyze the relationship between a dependent variable and one or more than one independent variables When doing this by SPSS, there are some indicators needing to be paid attention as follows:

- “R Square and Adjusted R Square”: which indicate magnitude of interpretation

of dependent variable of independent variables in regression model range from 0

to 1 It is believed that the higher this indicator, the better model

- “Durbin – Watson”: should be from 1.5 to 2.5 in order not to lead to first-order correlation with each other

- “VIF”: check for multi-collinear phenomena should be less than 2

CHAPTER 4: DATA PRESENTATION AND FINDINGS

4.1 Data description

A summary of data description including the minimum, maximum, mean and standard deviation are shown as follow

Table 4.1: Descriptive Statistics of 212 respondents

(Source: Data analysis by SPSS)

The author distributed 225 questionnaires via google doc file However, after screening all received responses, the author eliminated 13 disqualified samples and retained the set

of 212 valid samples as presented in table above The reason that those 13 samples were removed is the respondents of them chose the same option for all questions in questionnaires

Table 4.2: Samples’ demographic data

(Source: Data analysis by SPSS)

Taking a look at the table 4.2 about samples’ demographic data, it is obvious that the amount of male and female respondents are not equal Among all 212 subjects, there are