Executive summary of “The impact of corporate social responsibility (CSR) performance and perceived brand quality on customer-based brand preference”

Citation

(2014), "Executive summary of “The impact of corporate social responsibility (CSR) performance and perceived brand quality on customer-based brand preference”", Journal of Services Marketing, Vol. 28 No. 3. https://doi.org/10.1108/JSM-03-2014-0105

Executive summary of “The impact of corporate social responsibility (CSR) performance and perceived brand quality on customer-based brand preference”

Article Type: Executive summary and implications for managers and executives From: Journal of Services Marketing, Volume 28, Issue 3

This summary has been provided to allow managers and executives a rapid appreciation of the content of the article. Those with a particular interest in the topic covered may then read the article in toto to take advantage of the more comprehensive description of the research undertaken and its results to get the full benefit of the material present.

Having become an inescapable priority for business leaders throughout the world, it is no surprise to see China’s government ministries and agencies furnishing companies with guidelines such as “Recommended CSR Standards for Chinese Corporations” and “Compilation of Best Practices” published by the China Enterprise Corporation and the China Business Council for Sustainable Development. The concept of corporate social responsibility (CSR) in China has gained considerable support and intensive media attention during the past decade, and consumers have increasing awareness and expectations of business obligations toward the broader society.

So how do Chinese consumers regard CSR in a service industry? Does CSR performance really play a significant role in China’s service sector? Are all CSR activities equally effective in the Chinese service sector? In their paper “The impact of corporate social responsibility (CSR) performance and perceived brand quality on customer-based brand preference”, Dr Matthew Tingchi Liu et al. focus on the hotel industry – one of the most common and typical service providers in China – in an attempt to answer these questions. As expected, results demonstrate that service providers could learn from customer responses to their CSR practices.

The Chinese hotel industry has developed rapidly over the past three decades, largely as a result of it being one of the industries initially opened to foreign investments in the 1980s. Consequently, it has become a highly commercialized, market-oriented and internationalized industry. CSR efforts are major concerns for hotels and they have been implemented by many hotel operators in China. For example, InterContinental Hotels Group’s (IHG) programs include greater efforts for energy efficiency, water conservation, climate change awareness and procuring coffee (one of the most consumed products at their hotels) from suppliers practicing sustainable operations. As a result, IHG (China) won the Eco-lodging Award at the China Hotel Investment Summit. Similarly, Marriott hotels practice the “Green Marriott program” for environmentally conscious hotel operations. The leading hotel brand in Asia – Banyan Tree Hotels and Resorts – effectively differentiates itself in the market and enhances brand equity through incorporating significant CSR programs and featuring them in their marketing strategies.

Chinese consumers are beginning to use CSR information to evaluate brands. Offering consumers more information and demonstrating convincible evidence about service providers’ CSR practices will enhance not only consumers’ brand preference but other possible critical dimensions as well, such as perceived service quality or customer loyalty. Enhancing customers’ understanding about service providers’ CSR performance and strengthening customers’ brand quality perception will be a good way to increase customers’ brand preference.

The current study found that performance in each of three CSR domains under scrutiny (i.e. environment, society and stakeholders) positively impact brand preference, although to different degrees. For instance, CSR to stakeholders was found to have the strongest influence on Chinese customers’ brand preference. One possible reason might be that, because hotel guests are by definition stakeholders, hotel CSR to stakeholders is more relevant – and more valuable – to them. On the other hand, Chinese customers currently regard hotels’ societal and environmental CSR practices (e.g. treatment of employees, energy conservation, recycling) as less important. These two CSR domains are relatively less well known and/or more difficult to evaluate due to their complex nature and lack of information by hotel guests. In this case, consumers probably show a lower level of sensitivity to CSR matters if their awareness is more limited.

Customers in emerging markets still appear to be focused more on the quality of brands, and, as discovered in this research, to some extent stakeholder CSR practice as these provide direct benefits to customers. Having a brand perceived to be socially responsible does not guarantee a competitive advantage. In practice, a socially responsible brand image may enhance Chinese consumers’ preferences toward the brand. However, CSR’s effect, no matter how positive, cannot offset negative factors such as low product quality.

An implication for managers is that CSR endeavors should be devoted to stakeholder (rather than environmental or societal) concerns and societal obligations (i.e. support for non-governmental organization [NGO] operations, commitment to sustainable growth, contributions to social well-being). This recommendation is slightly at odds with service providers’ more common CSR focus on appearing “green” and focusing on environmental protection practices (e.g. pollution levels).

While an NGO may either issue threats (such as boycotts or negative media campaigns), or promise rewards (such as endorsements) to induce a company to accede to its demands, actively informing consumers and NGOs about companies’ commitments to engage in CSR to environment activities is an effective and quick way to show corporate determination. In addition, larger corporations and global companies typically engage in CSR in more than one area, simultaneously contributing funds to humanitarian, social service and environmental conservation, while undertaking CSR programs that are integrated into business planning and operations. Smaller service providers face resource restrictions and may elect to concentrate their CSR performance into corporate core values or a business operational concern.

To read the full article enter 10.1108/JSM-09-2012-0171 into your search engine.

(A précis of the article “The impact of corporate social responsibility (CSR) performance and perceived brand quality on customer based brand preference”. Supplied by Marketing Consultants for Emerald.)