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  • Published: 26 April 2023

Exploring the factors affecting the implementation of corporate social responsibility from a strategic perspective

  • Chao-Chan Wu   ORCID: orcid.org/0000-0002-3891-310X 1 ,
  • Fei-Chun Cheng 2 &
  • Dong-Yu Sheh 1  

Humanities and Social Sciences Communications volume  10 , Article number:  179 ( 2023 ) Cite this article

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  • Business and management

In general, the objective of a company is to pursue higher returns for its shareholders. Corporate social responsibility (CSR) is an ethical practice that seems to be contrary to the objectives of companies; as a result, companies lack sufficient motivation to implement CSR. Academics and practitioners have recently begun considering CSR from a strategic perspective. However, the definition and scope of strategic CSR have not been clearly defined or discussed in previous studies. This study uses the strategic triangle perspective as a theoretical basis to explore the key factors affecting the implementation of strategic CSR. Three main factors and ten sub-factors were summarized to form a hierarchical network structure based on a literature review. The weights of each factor and sub-factor were then prioritized using the analytic network process (ANP). The results of this study show that “company” is the most important main factor, while “corporate image”, “innovation ability”, “reputation risk”, “financial capacity”, and “investment intention” are the top five important sub-factors. The hierarchical network structure and critical factors suggested in this study contribute to implementing strategic CSR. The findings of this study will also help the theoretical development in the field of CSR.

Introduction

The purpose of businesses is to produce products or services that meet consumer demand. However, with the depletion of resources and environmental pollution, people have gradually realized the importance of sustainable development. Furthermore, with better living standards, people pay attention to social issues such as health and human rights. Various factors have led to higher expectations regarding the role of businesses in society (Huang, 2014 ). In addition to their growth, companies need to consider the overall well-being of society and make moral contributions beyond economic and legal aspects. Enterprises are not only economic entities that operate for profit but also exist to create an ideal society (Carroll and Shabana, 2010 ). Therefore, corporate social responsibility (CSR) has become an important research topic in recent years (Yuan et al., 2020 ).

The motivation for CSR implementation changes with the social environment (Bergquist, 2017 ). The goal of an enterprise is to make profits and maximize shareholder value. Thus, it is necessary to establish formal regulations to enforce the implementation of environmental protection and social issues by enterprises. Nevertheless, if CSR is merely a response to legal requirements, companies will not realize the value and benefits of this action. For organizations such as businesses that pursue economic benefits, implementing CSR may be viewed as a cost. This reactive motivation prevents companies from effectively implementing CSR (Bansal, 2022 ).

Social responsibility and corporate benefits do not conflict. This means that companies should not treat CSR as an expense incurred by contributions to fulfill public interest. Instead, companies should transform CSR from an ethical practice to one of their strategies (Porter and Kramer, 2006 ). If CSR is combined with a company’s strengths and strategies, its potential will maximize the benefits to society and the company (Branco and Rodrigues, 2006 ; Yuan et al., 2020 ). A strategic vision of CSR will allow companies to avoid seeing it as a cost or expense when implementing CSR, but will instead consider the relationship between CSR and the company’s core business and how to help the company achieve its strategic goals (Lepoutre and Heene, 2006 ; Manasakis, 2018 ). Strategic CSR can help companies achieve a win-win situation regarding economic benefits and social responsibility.

To implement strategic CSR, companies must identify the capabilities and resources that influence their social responsibility (Branco and Rodrigues, 2006 ). In addition, resources are limited to businesses, so selection and prioritization are important parts of strategic thinking (Porter, 2008 ). Identifying the key factors affecting the implementation of strategic CSR and recognizing the relative importance of these factors will help companies plan their strategic CSR activities. Therefore, it is important to explore the key factors that influence the implementation of strategic CSR. According to the strategic triangle perspective proposed by Ohmae ( 1982 ), the strategic thinking of a business is mainly based on company, customer, and competitor aspects. From the company aspect, the main description is the importance of internal resources in implementing a strategy. The customer aspect focuses on how a company uses its resources to provide attractive products and services to satisfy its customers. The principle of the competitor aspect is that a company should create as much competitive advantage as possible to enable it to compete with its competitors (Ohmae, 1982 ; van Vliet, 2009 ). The strategic triangle perspective can be used to develop a conceptual framework for strategic CSR.

This study aims to explore the key factors affecting the implementation of strategic CSR. Based on a literature review of the CSR concept and the strategic triangle perspective, this study identifies the main factors and sub-factors affecting the implementation of strategic CSR and establishes a hierarchical network structure for these factors. This study then uses the analytic network process (ANP) method to prioritize the relative weights of each factor and sub-factor in the hierarchical network structure. The results of this study contribute to determining the important factors that influence the implementation of strategic CSR to plan relevant strategies.

Literature review

This study examines the key factors influencing companies’ implementation of strategic CSR. In this section, we first review the general altruistic view of CSR. Second, the essence of corporate strategy was discussed within the framework of the strategic triangle. Then, we explain how to incorporate the strategic triangle perspective into the CSR concept to form strategic CSR. Finally, factors affecting the implementation of strategic CSR were selected to build a hierarchical network structure.

The concept of CSR

With the rise in sustainable development, CSR has become a popular topic. CSR means that enterprises are responsible for promoting social interests while pursuing their benefits (Carroll and Shabana, 2010 ; Josiah and Akpuh, 2022 ). The concept of CSR is a company’s response to social welfare and its responsibility to stakeholders affected by its development (Chang et al., 2014 ). CSR is strongly related to customers, investors, the government, and other stakeholders. Companies with social responsibility balance the needs of the company and stakeholders when making decisions so that they can contribute to society and stakeholders while pursuing profits (Hopkins, 2012 ). CSR mainly focuses on the positive actions of enterprises on social and environmental issues while paying attention to the rights and interests of stakeholders. However, it is difficult to link the ethical behavior of these companies to their own operations (Sheh, 2022 ). The traditional concept of CSR focuses on public interest but ignores the necessity of continuous profitability of companies (Matytsin et al., 2023 ). Companies must learn to integrate CSR actions into their operations rather than viewing CSR as additional philanthropy (Zollo, 2004 ). The current meaning of CSR is that companies must voluntarily incorporate social and environmental issues and interactions with stakeholders into their operations (Commission of the European Communities, 2001 ). Therefore, companies must consider both social responsibilities and operational performance, as well as their complementary strengths.

Strategic perspective and CSR

The purpose of strategy is to efficiently achieve the specific goal of an individual or organization, given the resources and capabilities. Strategic thinking integrates internal and external resources to achieve a competitive advantage in an uncertain and high-risk environment (Khalifa, 2020 ). In other words, the execution of strategy considers not only the current state within the company but also the situation of the external environment to choose the most appropriate way to achieve the goal (Hambrick and Fredrickson, 2005 ). Furthermore, Ohmae ( 1982 ) suggests a strategic triangle perspective and indicates that enterprises should focus on three factors when formulating their strategies, including the company, customer, and competitor. Companies must consider their own conditions and customer needs to provide products or services that are consistently better than those of their competitors and consider the interrelationships among the three factors.

In general, companies play a passive role in CSR implementation (Lindgreen et al., 2009 ). The main reason is that companies lack the motivation to implement CSR. The altruistic behavior of a company does not necessarily bring benefits to the company, and even the implementation of CSR conflicts with corporate profitability (Sprinkle and Maines, 2010 ). In this context, CSR is more of a moral act implemented by a company based on social expectations after making a profit. Even when CSR is linked to business operations, companies do not know how to convert it into business value and competitive advantage. If long-term investment in CSR does not give a company a competitive advantage, CSR will likely be seen as the cost of doing business. Companies tend to lack the motivation to implement CSR, which is not conducive to long-term sustainable development. In fact, companies rarely implement social responsibility purely from an altruistic perspective (Wang et al., 2016 ). The core concept of a company is to pursue performance; therefore, companies should rethink CSR through strategic thinking and select social issues or goals that enable them to fully utilize their core competencies to implement CSR (Porter and Kramer, 2006 ). In this way, companies can turn social responsibility issues into business opportunities, creating more benefits and competitive advantages (Drucker, 1984 ; Padgett and Galan, 2010 ; Manasakis, 2018 ).

Previous studies have mentioned that it is necessary to use a strategic perspective to examine CSR (Porter and Kramer, 2006 ; Wang et al., 2016 ). When thinking strategically, companies usually need to consider how they are positioned against their competitors and how they can use their resources and capabilities to achieve their goals (Porter and Kramer, 2002 ). In other words, companies must assess their internal resources and capabilities, evaluate the stakeholders and competitors involved, and develop appropriate strategies to achieve the desired CSR outcomes (Husted and de Jesus Salazar, 2006 ). Nevertheless, strategic CSR remains a relatively abstract concept requiring further exploration of its specific elements and components.

Therefore, the strategic triangle perspective can be used to establish the structure of strategic CSR and to form a precise concept. From a strategic triangle perspective, companies must take stock of their core competencies and resources, and then consider how to meet the needs of their customers. By integrating this perspective into CSR, strategic CSR can impact customers and stakeholders related to the company. Based on the above discussion, this study explicitly focuses the concept of strategic CSR on three main factors, including company, stakeholder, and competitor. The company factor refers to the resources and assets owned by the company, the stakeholder factor refers to stakeholders who interact with the business, and the competitor factor refers to the competitive advantage over competitors (Husted and Allen, 2007 ). The three main factors that affect the implementation of strategic CSR and the sub-factors within these main factors were discussed below.

From a strategic triangle perspective, the resources within a company can be considered the basis for strategy execution. According to the resource-based theory, valuable resources are the main source of a company’s competitive advantage (Barney, 1991 ). Promoting CSR is not only the responsibility of senior management or specific departments but also the recognition and participation of all employees in the company. Hence, human resources play an important role in CSR implementation (Arnaud and Wasieleski, 2014 ). Adequate professional manpower is a condition for companies to implement CSR (Meyer, 1999 ; Cohen et al., 2010 ). It ensures that sustainability-related strategies and proposals are sufficiently driven to help organizations achieve their goals and ultimately improve their effectiveness (Paillé et al., 2014 ; Voegtlin and Greenwood, 2016 ).

In addition to human resources, companies with sufficient financial resources to support the execution of operational strategies can significantly increase their likelihood of achieving their goals. Similarly, CSR implementation requires sufficient financial capacity (Branco and Rodrigues, 2006 ; Lepoutre and Heene, 2006 ). Moreover, the Fortune 500 spent $19.9 billion on CSR-related activities (Business Backs Education, 2015 ). This not only shows the importance that companies attach to CSR but also reflects that the implementation of CSR requires considerable financial resources.

On the other hand, corporate image is more abstract than other tangible resources because it is an overall performance composed of many factors related to a company (Moon, 2007 ). It is most widely defined as the reputation of a company, the overall impression of the company in the public’s minds (Agyei et al., 2014 ; Huang et al., 2014 ; Li et al., 2022 ). A great corporate image can be built based on a company’s ability, that is, the reputation that a company has built by consistently providing high-quality products or services. Thus, corporate image can also be derived from a company’s contribution to CSR (Vo et al., 2019 ). The image formed by CSR refers to the subjective feelings, attitudes, and evaluation of the public towards the social responsibility implemented by the company (Berens et al., 2005 ; Pérez and Rodríguez del Bosque., 2013 ). By engaging in charitable activities, such as protecting the environment, caring for community issues, and making charitable donations, a company can strengthen its public perception. A company’s image can be used as intangible capital for future public relations strategies to help it gain a competitive advantage.

Accordingly, human resources, financial capacity, and corporate image were adopted as sub-factors within the main factor of company in this study.

Stakeholder

In conventional business operations, a company operates by meeting its customers’ needs, and the results are ultimately reflected in its performance. As the external environment becomes more complex, the actual operation of a company will involve not only customers but also individuals or groups such as investors, media, and governments, all of whom will be affected by the company’s actions or influence its decisions (Freeman, 1984 ). In general, business strategy mainly focuses on the customer aspect, but strategic CSR affects a wider group of people than traditional strategies. According to previous studies, CSR has a significant relationship with corporate performance and stakeholder responsiveness (Alniacik et al., 2011 ; Ansu-Mensah et al., 2021 ). This means that companies can communicate with more stakeholders through CSR implementation (Manasakis, 2018 ). Several stakeholders that may influence CSR implementation, such as consumers, inventors, media, and governments, were discussed below.

First, Bhattacharya and Sen ( 2004 ) suggest that consumers consider a company’s actions towards the environment and society when making purchase decisions and state that CSR actions can increase consumers’ willingness to purchase a company’s products or services. When a company focuses on and contributes to a specific issue, consumers will likely translate their support for the issue into a willingness to buy its products (Thi et al., 2020 ; Zhang, 2022 ). Companies can choose to invest in CSR because consumers will respond to their efforts on social and environmental issues with a higher willingness to buy (Bhattacharya and Sen, 2004 ; Walker et al., 2021 ).

Second, investors must consider various factors when selecting investment targets. The reason why investors are willing to invest their capital in a company depends mainly on its profitability (Lin et al., 2018 ). Companies that contribute to CSR can manage their relationships with employees, suppliers, and other stakeholders, resulting in more stable operational and financial performance (Platonova et al., 2018 ). Moreover, companies that do not integrate environmental and social issues into their business models have a higher chance of being sanctioned by the government or law, including fines and litigation dilemmas, as well as loss of profits due to revelations of corporate misconduct or the outbreak of major industrial and environmental accidents (Brown, 1997 ). A Company that integrates CSR into its business strategy is less susceptible to negative events, convincing investors that it is a better investment target than its competitors.

Third, with the boom in information technology and media, the public has much faster and easier access to information than in the past, and both positive and negative news can be disclosed at the first opportunity (Dhëmbo et al., 2021 ; Fortunato and Pecoraro, 2022 ). The more prestigious a company, the more likely it is to receive media attention and be maliciously attacked by negative media. Companies that are good at preventing reputation risks use the media as a stakeholder to avoid damaging their reputation and improve their ability to respond to external events by voluntarily implementing CSR (Diageo, 2005 ; Unerman, 2008 ). In addition, by evaluating the results of their investments in social and environmental issues, companies can diagnose the potential risks that may arise in their operations and formulate timely improvement plans to avoid reputational damage (GRI, 2002 ).

Finally, the government is an important stakeholder that can force companies to implement CSR (Zueva and Fairbrass, 2021 ). From a strategic perspective, CSR is more than a passive response to regulatory pressure. By proactively engaging in CSR, companies can build bridges and maintain good relationships with the public sector, thereby increasing their influence on public decision-making. CSR increases trust between businesses and the government; helps companies obtain licenses, permissions, and other official documents faster and more smoothly; and avoids redundant bureaucratic costs (Mathis, 2008 ).

Based on these arguments, this study includes purchase intention, investment intention, reputation risk, and government relations as sub-factors within the main factor stakeholder in the hierarchical network structure.

According to the strategic triangle perspective, companies achieve superior financial performance by leveraging their strengths to satisfy their customers while creating a relative advantage over their competitors (Ohmae, 1982 ). In the competitor aspect, the factor that affects a company’s profitability is the price of product relative to the competitor. CSR is an important evaluation criterion for consumers when making purchases. Companies can make consumers perceive that they are concerned about social issues through CSR, which affects consumers’ perceptions of products (Bhattacharya and Sen, 2004 ). Even though not everyone is willing to pay a higher price for the products of companies that implement CSR, for advocates of social and environmental issues, paying a price premium can symbolize their concern and support for a particular issue and serve as a reward for responsible companies (McGoldrick and Freestone, 2008 ). Accordingly, companies can use this feature to set higher product prices (Danko and Nifatova, 2022 ).

Companies that have already established positions in a specific industry must protect themselves from potential competitors and maintain their market share. From a traditional strategic perspective, companies usually adopt cost-cutting strategies to take advantage of price wars to defeat competitors or invest more resources in research and development to build barriers to entry into the industry (Porter, 2008 ). Furthermore, Buccella and Wojna ( 2017 ) suggest that incumbent companies in the industry can regard CSR as a moat against potential competitors and turn it into a weapon to maintain their market position.

On the other hand, a company’s growth is driven by the continuous development of new products or the improvement of existing business models. Innovation ability has become one of the most important strategic considerations in companies’ decisions (Chkir et al., 2021 ). Innovation ability is the driving force behind the implementation of CSR if companies can integrate CSR thinking into their products (Padgett and Galan, 2010 ). Companies that implement CSR are better able than their competitors to use efficient processes for product development and manufacturing (Husted and Allen, 2007 ).

Based on the above points, this study summarizes price premium, entry barrier, and innovation ability as sub-factors within the main factor competitor.

Methodology

The hierarchical network structure.

When applying ANP, the decision problem needs to be clearly structured, and the interrelationships between the factors must be presented in a network manner. The hierarchical network structure can be established mainly through the literature review and the opinions of experts in the field, which contains goal, main factors, and sub-factors (Saaty, 2005 ). This goal indicates that a decision problem must be resolved. The main factors, sub-factors, and interdependencies among factors can be obtained by reviewing the literature and collecting expert opinions on the decision problem (Saaty, 2004 ).

This study aims to identify the factors that may affect the implementation of strategic CSR. Based on the literature review, three main factors and ten sub-factors were obtained to construct the hierarchy. The main factors contain company, stakeholder, and competitor. Company consists of three sub-factors, including financial capacity, human resources, and corporate image. Stakeholder has four sub-factors, including purchase intention, investment intention, reputation risk, and government relations. Competitor has three sub-factors, including entry barrier, price premium, and innovation ability. Then, this study collects expert opinions on the interdependence of factors through questionnaires to form a network structure based on Ngeru et al. ( 2011 ). To ensure that the experts are sufficiently professional and to improve the quality of the data collected, they were selected from among professionals with experience in the field of CSR. A total of twelve experts have an average of 10 years of experience in public relations, consulting, manufacturing, and financial industries, and they are all engaged in CSR-related work in these industries. Twelve questionnaires were distributed and collected, with a 100% return rate. Finally, a hierarchical network structure, including the interrelationships among factors, was established, as shown in Fig. 1 . The operational definitions of the three main factors and ten sub-factors were described in Tables 1 and 2 .

figure 1

It includes three main factors, ten sub-factors, and the interdependence of factors.

The procedure of ANP

ANP is a scientific approach to decision-making when factors have dependencies and feedbacks, and is an extension of analytic hierarchy process (AHP) (Saaty, 2004 ). One of the assumptions of AHP is that the factors are independent of each other (Stein and Ahmad, 2009 ). However, in reality, many decision problems cannot be structured hierarchically because elements in the hierarchy involve many interactions and interdependencies. Therefore, the structure of ANP usually includes many networks of elements with interdependent relationships, which makes analysis results more realistic (Lee and Lee, 2012 ). The reason for adopting ANP in this study is that it addresses the complexities of implementing strategic CSR and provides best possible outcome for decision-making. The specific steps of ANP were shown as follows (Chung et al., 2005 ).

Step 1: Constructing the pairwise comparison matrix

In this step, a series of pairwise comparisons were conducted to determine the relative importance of factors. Paired comparisons are two-by-two comparisons of factors based on ANP questionnaire, which uses a scale of one to nine as proposed by Saaty ( 2005 ). As shown in Table 3 , a score of 1 means that two factors are equally important to each other, while a score of 9 means that one factor is extremely important compared to the other. And then, the experts in the given field were asked to judge the relative importance between factors in the questionnaire.

The pairwise comparison matrix was obtained by the judgments of experts using ANP questionnaire. If pairwise comparison matrix M is an n  ×  n matrix, then n ( n  − 1)/2 ratings should be calculated. The matrix M was established as below (Saaty, 2004 ).

where b ij is the comparison value of factor i and factor j for one expert, b ij  > 0; b ji  = 1/ b ij ; i, j  = 1, 2,…, n .

Step 2: Calculating priority vector and eigenvalue

The priority vector (also called eigenvector) and eigenvalue of each pairwise comparison matrix in ANP can be derived as in AHP by solving the following formula (Saaty, 2005 ).

where M represents a pairwise comparison matrix, w is the priority vector (eigenvector), and λ max is the largest eigenvalue of M . The priority vector w and the eigenvalue λ max can be computed by the following sub-steps (Al-Harbi, 2001 ).

Step 2-1: Dividing each comparison value of matrix M by the sum of its column to produce the normalized pairwise comparison matrix.

Step 2-2: The priority vector w can be calculated by dividing the sum of each row in the normalized pairwise comparison matrix by the number of factors in the matrix.

Step 2-3: Firstly, multiplying matrix M by priority vector w to generate the vector Mw . And then, divide the values of the vector Mw by their respective values of priority vector. Finally, the eigenvalue λ max can be calculated by averaging the values generated above.

Step 3: Consistency test

The consistency test must be implemented to ensure that there are no logical fallacies in the judgments. The consistency index (CI) and consistency ratio (CR) can be utilized to check the consistency of each matrix. The CI was formulated as follows (Saaty, 2005 ).

where n is the number of factors.

And then, the CR of each matrix can be computed as below (Saaty, 2005 ).

where the random index RI represents the random consistency of various size of matrices. The values of RI were shown as Table 4 . If CR is less than a threshold value, then the matrix has acceptable consistency. The thresholds value proposed by Saaty ( 2005 ) is 0.1.

Step 4: Building the supermatrix

To address the dependencies between factors in the research framework, ANP uses supermatrix to calculate the relative weights of factors. A supermatrix consists of a combination of sub-matrices, each of which contains dependencies of elements within each cluster and is compared cross-cluster with elements from other clusters. If there is no correlation between the elements, the pairwise comparisons in the sub-matrices are equal to zero (Saaty, 2005 ). In this study, the main factors represent clusters and the sub-factors represent elements.

As shown in Eq. ( 5 ), W ij is the eigenvectors generated by comparing the element in cluster i with the element in cluster j . If the cluster j has no effect on the cluster i , the value is equal to zero. The structure of supermatrix is generated based on this logic (Saaty, 2004 ).

The standard form for a supermatrix was shown in Eq. ( 6 ) (Saaty, 2004 ). In general, each column of this matrix is not normalized or equal to one, which makes this matrix an unweighted supermatrix.

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where C h is the cluster of a decision system; h  = 1, 2,…, n , and each cluster h has m h elements, denoted by e h 1 , e h 2 ,…, e hmh .

The supermatrix needs to be column-stochastic in order for convergence to occur. To achieve this, the weighted supermatrix W’ was established after the normalization (Saaty, 2004 ). Furthermore, it is necessary to raise the weighted supermatrix to exponential powers in order to reach stabilization or convergence. The resulting matrix is called limit supermatrix W limit , as shown in Eq. ( 7 ) (Saaty, 2005 ). The form of limit supermatrix is the same as the weighted supermatrix, but each column of the limit supermatrix is the same. Finally, the global weight of each factor can be obtained in the limit supermatrix.

where k is an arbitrarily large number.

This study examines the important factors for companies to implement strategic CSR. As companies consider many aspects in practice, and each factor may be related, ANP was used to obtain the relative weight of each factor. The weights of factors in the hierarchical network structure were generated according to the steps proposed in the methodology section.

In step 1, a series of pairwise comparisons were conducted to construct pairwise comparison matrices. Paired comparisons are two-by-two comparisons of factors based on ANP questionnaire using the scale of 1 to 9 shown in Table 3 . The experts were asked to make three levels of pairwise comparisons in the questionnaire, including the comparisons between main factors, comparisons between sub-factors within each main factor, and comparisons of dependencies for main factors or sub-factors. A total of fifteen experts working in the field of CSR were selected to fill out the questionnaire. These experts have an average of 12 years of CSR-related experience, with ten from industry and five from academia, as shown in Table 5 . After collecting fifteen questionnaires, the data were imported into Excel to form the pairwise comparison matrix of each expert. Next, the pairwise comparison matrices of fifteen experts were integrated into the aggregated pairwise comparison matrices using the geometric mean method, and then imported into Super Decisions V3.2 software for subsequent analysis. Table 6 presents the aggregated pairwise comparison matrix of main factors. Table 7 , Table 8 , and Table 9 describe the aggregated pairwise comparison matrices of sub-factors within each main factor, respectively.

In step 2, the priority vector and eigenvalue λ max of each pairwise comparison matrix was computed by Eq. ( 2 ) using Super Decisions V3.2 software. And then, CR value of each matrix was calculated by Eqs. ( 3 ) and ( 4 ) in step 3. The priority vector and CR value for each matrix was also shown in Table 6 , Table 7 , Table 8 , and Table 9 . Since all CR values are less than 0.1, the consistency of each matrix is acceptable (Saaty, 2005 ). Finally, the limit supermatrix was generated based on Eqs. (6) and ( 7 ) in step 4 and shown in Table 10 . Considering the dependencies among factors and sub-factors, the global weights of sub-factors were computed using Super Decisions V3.2 software.

Table 6 shows the relative importance of three main factors without considering dependencies. “Company” has the highest weight (0.4992), “stakeholder” has a weight of 0.3310, and “competitor” has a weight of 0.1698. Tables 7 to 9 present the relative importance of sub-factors within the main factors of company, stakeholder, and competitor, respectively, regardless of the dependencies. In the “company”, the sub-factor “financial capacity” possesses the highest weight (0.4650). Within the main factor “stakeholder”, “purchase intention” is the most important sub-factor (0.4125). In the main factor “competitor”, the most critical sub-factor is “innovation ability” (0.4783).

The global weights of sub-factors were listed in Table 11 . “Corporate image” has the highest weight (0.1779), followed by “innovation ability” at 0.1653, while “reputation risk”, “financial capacity”, and “investment intention” also have higher weights at 0.1282, 0.1264, and 0.1237, respectively. These five sub-factors are key elements that companies need to consider when implementing strategic CSR. In addition, the three sub-factors at the “company” level account for 0.4028 (0.1264 + 0.0985 + 0.1779) of the global weights. The weights of sub-factors in the “stakeholder” adds up to 0.3766 (0.0944 + 0.1237 + 0.1282 + 0.0303). It can be seen that main factors “company” and “stakeholder” account for nearly 80% of the weight, and these two factors have a significant impact on the implementation of strategic CSR.

This study aims to identify the key factors affecting the implementation of strategic CSR. First, the main factors and sub-factors affecting the implementation of strategic CSR were selected based on a literature review. Subsequently, a hierarchical network structure was constructed for these factors. The ANP method was then utilized to prioritize the relative weights of each main factor and sub-factor in the hierarchical network structure. Based on the results of analysis, this section discusses three aspects of company, stakeholder, and competitor.

“Company” has the highest weight among all main factors in this study. In this main factor, “corporate image” and “financial capacity” are among the top five sub-factors with the highest weights. Primary, “corporate image” has the highest weight among all sub-factors. This finding confirms previous research that corporate image is an important factor related to CSR (Arendt and Brettel, 2010 ; Vo et al., 2019 ). The public’s overall opinion of a company is key to its sustainable operation, and intangible assets such as corporate image can provide the basis for strategic planning. Therefore, building a corporate image is an inevitable incentive for operators when planning CSR strategies.

Furthermore, “financial capacity” is ranked fourth in weighting among all sub-factors. This highlights that the financial resources available to companies impact the implementation of strategic CSR. The result is consistent with previous studies that have made similar arguments about CSR, company size, and financial situation (Branco and Rodrigues, 2006 ; Choi et al., 2018 ). Large enterprises typically have more resources, stable financials, and mature business models than start-ups; therefore, they do not need to worry about the impact of implementing CSR on their financial performance, and their solid foundation increases the likelihood that they will invest in CSR (McGuire et al., 1988 ; Brammer and Millington, 2006 ). Companies should reserve appropriate budgets for CSR strategies in advance according to their financial situation and formulate corresponding CSR strategies based on the available resources.

External groups are one of the factors that influence companies when planning CSR strategies. In this study, “stakeholder” is given secondary weight in all main factors. Among all sub-factors, “reputation risk” within the main factor “stakeholders” has the third highest weight, indicating that companies view CSR as a way of risk management. Avoiding reputational damage is one of the main motivations for enterprises to implement CSR (Branco and Rodrigues, 2006 ; Choi et al., 2018 ). The reason is that if a company’s long-established reputation is destroyed by media coverage, it will cause a great loss to the company. The best way to deal with this risk is to review and improve the company’s negligence in business processes through CSR so that the media cannot criticize the company’s reputation.

“Investment intention” has the fifth highest weighting of all sub-factors. This indicates that when a company pursues its CSR outcome, it is expected to be seen by investors as a company with greater growth potential and ultimately creates higher value for shareholders. This feature allows companies to obtain more capital from investors to support their operational activities and strategic planning (Malik, 2015 ). In fact, CSR investment has already made its mark on the financial market. Investors prefer to invest in responsible companies (Brown, 1997 ; Msiska et al., 2021 ).

Corporate strategy aims to gain a competitive advantage. The second highest weight is given to “innovation ability” among all sub-factors. The result supports the idea that a company’s ability to innovate helps implement CSR strategies and develop more business opportunities by considering the connection to environmental and social issues (Husted and Allen, 2007 ; Padgett and Galan, 2010 ). There is already a precedent for companies combining corporate innovation with social responsibility. Toyota launched a range of innovative vehicles with hybrid fuel and electric engines to address growing environmental concerns and vehicle emissions through product innovation (Iyer and Soberman, 2016 ).

Conclusions

This study integrates the strategic triangle perspective with the concept of CSR to generate strategic CSR and identify the key factors that affect the implementation of strategic CSR. The strategic CSR proposed in this study emphasizes that companies should take the initiative to integrate social responsibility with their own goals and core business while considering internal resources, stakeholders, and the competitive environment to formulate the most appropriate strategic plan. This enables companies to achieve their strategic goals while fulfilling CSR.

This study has several important managerial implications. First, by integrating strategic thinking into CSR, the scope of social responsibility is not only to fulfill the civic duties of enterprises to benefit society but also to maintain relationships with stakeholders and gain competitive advantages. Second, the hierarchical network structure proposed in this study can help CSR practitioners think about strategic CSR from a holistic perspective so that the concept of CSR can be better integrated into business strategies and become an issue to be considered when companies conduct strategic planning.

Third, the findings of this study will enable CSR practitioners to understand the relatively important factors that influence the implementation of strategic CSR and to invest resources and effort in areas related to these key factors. This enables strategic CSR to be implemented more efficiently and ultimately has the greatest impact. Finally, these results help companies comprehend how the implementation of CSR relates to their own goals and performance, and the benefits it can bring them. In this way, CSR will no longer be seen as a cost or expense but as a strategy that can help companies achieve their goals. From this perspective, companies will be more motivated than ever to fulfill their CSR, leading to better social and economic development.

Concerning its methodological contributions, the ANP method has some advantages. Primarily, ANP is an appropriate technique for solving multi-criteria decision-making problems in which there are dependencies among factors. This can simplify complex problems and effectively identify the key factors that affect the implementation of strategic CSR. Next, by applying the ANP method, which combines both qualitative and quantitative information, a precise hierarchical network structure was proposed to systematically examine these factors. Finally, because ANP uses pairwise comparisons derived from the judgments of experts, accurate weights of the main factors and sub-factors can be generated based on professional considerations.

Nevertheless, this study has some limitations that should be examined in future research. Primarily, the main factors and sub-factors were selected from the literature review, which may have confined the range of factors that could be selected. Future research could combine a literature review with other methods, such as focus group, nominal group technique, and in-depth interviews, to identify additional factors. Furthermore, this study uses ANP as a single method to establish a hierarchical network structure for determining the key factors influencing strategic CSR implementation. Future research could further consider the ambiguity associated with the judgments of experts and incorporate fuzzy numbers into the ANP method to evaluate the relative weights of factors.

Data availability

The datasets generated during and/or analyzed during the current study are available from the corresponding author on reasonable request.

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Wu, CC., Cheng, FC. & Sheh, DY. Exploring the factors affecting the implementation of corporate social responsibility from a strategic perspective. Humanit Soc Sci Commun 10 , 179 (2023). https://doi.org/10.1057/s41599-023-01664-4

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The Role of Corporate Social Responsibility and Corporate Image in Times of Crisis: The Mediating Role of Customer Trust

Chih-cheng chen.

1 Department of Marketing and Distribution Management, College of Management, National Kaohsiung University of Science and Technology, Kaohsiung 824005, Taiwan; wt.ude.tsukn@civlov

Tanaporn Hongsuchon

2 Chulalongkorn Business School, Chulalongkorn University, Bangkok 10330, Thailand; ht.ca.aluhc.sbc@lopahta

Athapol Ruangkanjanases

Yen-tzu chen.

3 Department of Information and Learning Technology, National University of Tainan, Tainan 70005, Taiwan; wt.ude.ntun.2mg@uztney

Ornlatcha Sivarak

4 Mahidol University International College, Mahidol University, Nakhon Pathom 73170, Thailand; [email protected]

Shih-Chih Chen

5 Department of Information Management, National Kaohsiung University of Science and Technology, Kaohsiung 824005, Taiwan; wt.ude.tsukn@nehccs

The purpose of this research is to empirically examine relationships between a multi-dimensional set of corporate social responsibility (CSR) initiatives, numerous dimensions of customer trust, and corporate image in an emerging economy. It also analyzes the mediating effect of customer trust on the relationship between CSR and corporate image. This study focuses on two of the most well-known hotel chains situated in Pakistan. Close-ended, self-administered questionnaires were circulated amongst a total of 300 hotel customers. The research data was analyzed using a partial least square-structural equation modeling (PLS-SEM) model. The results revealed that economic, legal, and ethical CSR significantly impacted corporate image, while philanthropic CSR did not affect the corporate image. However, economic, legal, and philanthropic CSRs were found to be in a significant relationship with customer trust, while ethical CSR was not in a significant relationship with customer trust. Finally, customer trust fully mediated the relationship between economic and legal CSR with corporate image, whereas it partially mediated the relationship between ethical and philanthropic CSR. This study is unique from earlier CSR research based on an assessment of the connection between CSR dimensions and corporate image to examine customers’ trust in an emerging economy, especially in times of crisis.

1. Introduction

Corporate Social Responsibility (CSR) describes how a company manages its industry and takes responsibility for its social impact. Corporate social responsibility encompasses various characteristics like economic dependence, legal conformity, ethical requirement, and societal influences [ 1 ]. CSR has been suggested to benefit the reciprocally advantageous long-term and reliable relations with its participants [ 2 ]. Customers are key participants of a corporation, hence, exploring corporate social responsibility from the perception of customers has progressively drawn the attention of investigators and experts, especially in the service industry [ 3 ]. Furthermore, times of crisis are described as the complex challenges faced by the companies. These challenges are mostly related to the strategic focus of the companies in times of economic downturns. According to public opinions, financial challenges and profit-making ability are deemed as the core aspects of a company in times of crisis. In contrast, other social challenges and responsibilities of the business are important but ignored in previous research, however, these challenges are supported by some of the previous research papers [ 4 , 5 , 6 ].

Consequently, corporations are expected to fulfill ethical and social responsibilities rather than utilizing them as a differentiating approach to achieve organizational authenticity [ 7 ]. The growing awareness and insight of CSR initiatives have driven CSR activities as a competitive strategy between firms.

Corporations consider the use of CSR strategies crucial in determining organizational objectives for enhancing corporate image (CI) and profitability by recognizing the need and significance of CSR activities [ 8 ]. Customers are extra positive to corporations that enthusiastically publicize their corporate social responsibility programs as compared to those corporations that would not promote their CSR activities [ 9 ]. Corporations’ CSR methods have significantly influenced corporate image in a positive manner and caused the largest growth in market share [ 10 ]. Therefore, many corporations have utilized CSR activities as a distinctive management approach. A corporation’s CSR execution can, as a result, have both a negative and a positive impact. As CSR becomes essential, both as a key academic course and a component of the corporate plan, customers are following up on corporations’ commitment in CSR more enthusiastically than earlier. The corporate image that is achieved as a consequence from CSR procedures may possibly enhance customer social accountability conduct and the association among the company and customers [ 11 ].

Customers will participate actively like the firm’s employee if he/she has an optimistic image of the corporation [ 12 ]. Corporate social responsibility additionally operates as a marketing instrument since it provides to set a constructive corporate image [ 1 , 13 , 14 ]. Numerous investigations have recognized the growing association concerning corporate image and corporate social responsibility initiatives. Corporate social responsibility is a crucial component in enhancing corporate image. Corresponding to a study performed in Korea confirmed that corporate achievements of financial and legal corporate social responsibility policies had an immediate and significant impact on the corporate image [ 15 ]. Moreover, a significant association between corporate social responsibility and the corporate image was exhibited to impact market share [ 16 , 17 ]. To be precise, companies’ legal and ethical status concludes in a constructive corporate image of the company. Furthermore, companies are expected to engage in socially responsible endeavors by their customers, and the customers express their gratitude to the companies’ behaviors by purchasing their products [ 18 ]. A few research scholars claimed that customers who believe admirably of companies are highly prone to engage in long-term relations with those companies [ 19 ].

Corporate social responsibility has a significant influence on business interactions with customers, and disreputable marketing conduct negatively affects the attitudes of customers, social conduct, and satisfaction. The business and its customers can be deemed corporate allies and their relationships are significantly influenced by their belief in mutual trust [ 20 , 21 ]. Furthermore, services industries have to handle several additional interactions with their customers in comparison to fast-moving consumer goods (FMCG) industries [ 21 ]. Therefore, in a service commerce’s competitive framework, businesses can not merely introduce trust via truthful, and honest communication initiatives, but they also need to produce trust at each particular interaction phase, which forms a positive customer experience in the minds of customers, specifically when customers communicate with the frontline staff [ 22 ]. Hence, service industries have to build and represent their dedication to corporate social responsibility policies and programs thoroughly at all the various interaction points creating the customer experience [ 23 ]. In addition, the innovative digitalized and linked atmosphere additionally presents customers the likelihood of networking considerably more immediately with businesses [ 24 , 25 ]. Moreover, corporate social responsibility’s relationship with customers and company’s characteristics [ 26 ] causes mediation in the relationship between corporate social responsibility programs and company’s assessments [ 27 ]. Customers’ trust related to a corporation and its products is strengthened by the effective execution of CSR initiatives. [ 27 ]. Although customers’ trust is an important factor to be examined, yet limited research has been conducted to explore the role of customers’ trust within the framework of CSR. This research has utilized the rising multi-dimensional view of this construct.

To address the previous research inadequacies of CSR related to the measurement and conceptualization of CSR and customers’ trust, this research study provides and empirically examines the research model that integrates the relationships between a multi-dimensional set of CSR initiatives namely legal, ethical, economic, and philanthropical CSR proposed by Carroll [ 28 ] and a numerous dimensions of customer trust containing integrity, experience, and benevolence, based on trust theory [ 29 ] and corporate image in an emerging economy. This research attempts to address at least four key research gaps related to CSR. First, we examine how CSR helps support corporate image. Second, we explore the relationship of CSR with customer trust. The third research gap covers the impact of customer trust on corporate image. This contributes to the fourth research gap, which is built on prior work by assessing the mediating role of trust on CSR to illustrate the influence of corporate social responsibility on corporate image.

2. Theoretical Background and Hypotheses Development

2.1. corporate social responsibility (csr) and corporate image (ci).

Carroll [ 28 ] conceptualized the CSR model by proposing to integrate four accountabilities: economic (delivering required products and services), ethical (implementation of the ethical conduct), legal (compliance to policies), and philanthropic (participating in volunteer activities). Furthermore, Carroll [ 28 ] stressed that the advantages gained by the company from CSR might also impact its stakeholders. A stakeholder can be described as “an entity or a group which might impact or is impacted by the fulfillment of the corporation’s objectives” [ 30 ].

CI, achieved by the company’s performance towards CSR initiatives, can be defined as the subjective view of customers related to the performance in terms of the stakeholders’ societal concerns [ 8 ]. Corporate image is characterized as the reaction to the amount of trust, concepts, and thoughts the communities have in the direction of a corporation [ 31 ]. Furthermore, it is also related to the stakeholders’ perception regarding the necessary measures taken by the company for the betterment of its stakeholders. Corporate image is an intangible asset that can improve customers’ behavior intention including customers’ need fulfillment, commitment, and repurchase intention to endorse [ 8 ]. Corporate Image is significant for achieving trade gains, hence the significance of social accountability in terms of establishing an optimistic image of a corporation is enhanced [ 32 ]. CSR integrates CI in the minds of customers and a positive corporate reputation is achieved. A corporation’s reputation is a critical tactical source for achieving viable gain [ 33 ]. On the Contrary, not implementing corporate social responsibilities can eventually cause an adverse impact on the company. Previous research suggested that companies that honestly take measures for their social responsibilities and provided an optimistic image to their stakeholders were further expected to generate strong financial outcomes [ 34 ]. Effective CSR implementation can be achieved by the active simultaneous participation of external and internal stakeholders; hence it can enable a company to forecast and take benefit of rapidly changing social environments and beliefs. Service firms, like any other company, are required to be in harmony with sociocultural, socioeconomic, and environmental activities. Earlier studies confirm the relationships among corporate social responsibility and corporate image by verifying that a company’s corporate social responsibility methods significantly impact the company’s image, consumer attitudes and the company’s ([ 8 , 11 , 35 ]. These initiatives additionally enhance relations among the customers and the company [ 10 , 36 ]. Park et al. (2014) have claimed that a company’s realization of legal and economic corporate social responsibility activities had a significant impact on a company’s reputation, however, both philanthropic and ethical corporate social responsibility activities had a significant impact. Plewa et al. [ 11 ] presented that acquaintance of customers with a company’s Corporate Volunteering (CV) initiative is significantly associated with customer insights of the corporate image and customer acknowledgment of other placed motivations, furthermore, customers’ perceptions of a company’s corporate social responsibility reputation are significantly associated to the company’s image. Consequently, it can be inferred that corporate social responsibility initiatives can improve a firm’s corporate image for shareholders. In the research studies related to hospitality, Kim et al. [ 10 ] uncovered that each element of corporate social responsibility (ethical, economic, philanthropic, and legal) with the exception of legal accountability had a significant impact on the CI in the casino business. Ghaderi et al. [ 37 ] confirmed that each aspect of corporate social responsibility has direct and positive effect on the performance of the hotel.

Previous research on corporate social responsibility uncovered that corporate social responsibility has a significant association with corporate image, suggesting the utilization of corporate social responsibility as the instrument to improve corporate image. In additional words, when service suppliers operate well at corporate social responsibility, customers will create a constructive impression of them. This mutual association has been endorsed by current literature [ 38 , 39 , 40 , 41 ]. Popoli [ 42 ] also assert that corporate social responsibility has a significant impact on improving customers’ views on a corporation’s image. According to Hillenbrand, Money, and Pavelin [ 43 ], an improvement in the company’s image might be a consequence of a company’s philanthropic contributions, in that case, if the initiative and motivations related to the donation are perceived as optimistic. Additionally, for a company to achieve a responsible corporation reputation, the company is necessary to be viewed as a well-behaved corporation by its stakeholders (i.e., being professional in conducting company’s interests, transparent, sustainable, and reduce adverse social effects) and with decent intentions (i.e., being reliable, honorable, and honestly care about the people).

B. Kim, Lee, & Kang [ 44 ] hypothesized that corporate social responsibility performances have a significant impact on company reputation in the framework of tourism. Lee, Kim, & Ham [ 45 ] uncovered that CSR affects brand trust and brand image. Thus, it is evident from the empirical and theoretical perspective that if the CSR initiatives are perceived optimistically by the stakeholders, they might be more favorable in leading towards the corporate image. Hence, established on Carroll’s [ 28 ] four corporate social responsibility aspects and the previous study, we recommend the following hypotheses.

Economic (CSR) positively influences corporate image (CI) in times of crisis.

Legal (CSR) positively influences corporate image (CI) in times of crisis .

Ethical (CSR) positively influences corporate image (CI) in times of crisis .

Philanthropical (CSR) positively influences corporate image (CI) in times of crisis .

2.2. Corporate Social Responsibility and Customer Trust

Customer trust is the topic of significant efforts to describe it. For Barber (1983) trust is defined as a group of “socially realized and verified beliefs” that individuals have of other individuals or organizational bodies. Trust builds as a consequence of a company’s belief that the trustee is trustworthy, sincere, and compassionate [ 46 ]. According to the customer’s perspective trust can be defined as the customer’s belief that a company will operate based on the expectations concerning its capability, goodwill, and integrity. Trust is perceived as a multidimensional concept [ 47 ], though most of the time it has been theorized and operationalized as a unidimensional global concept [ 27 , 48 ]. The customers and brand can be deemed corporate partners, whose relationships are impacted by their individual opinions of shared trust [ 20 ]. Consequently, trust can be described as the belief that every corporate partner should perform with reliability and trustworthiness throughout their collaborations. Conventionally, numerous researchers have recommended reliability and integrity as essential dimensions of trust. Moreover, corporate partners are prone to build trust by staying trustworthy, altruistic, and benevolent [ 21 ]. In this research study, the three-dimensional description of customer trust proposed by Mayer & Davis [ 47 ] is adopted, which comprises integrity, expertise, and social benevolence.

The viewpoint regarding the dearth of devious conduct between corporate partners is likewise vital for trust advancement, as is the viewpoint that the brand works reasonably, accountably, and conscientiously for its customers [ 20 ]. Various researchers have demonstrated that customer assessments that the business performs in a socially accountable way are significantly associated with customer trust in that business [ 49 , 50 , 51 ]. Analyzing customer experiences of corporate social responsibility, Vlachos et al. [ 52 ] recommended a framework linking customer opinions of the business’s motivations for accepting corporate social responsibility measures to customer trust. Generally, socially accountable conduct is crucial, since a business, which is recognized as socially conscientious is further expected to be trustworthy by its customers [ 51 ]. Similarly, in the service industry, García de los Salmones et al. [ 53 ] discovered that the ethical conduct of a customer services business has a significant influence on customer trust. Furthermore, Choi and La [ 54 ] uncovered that corporate social responsibility has a significant effect on customer trust in several service industries including financial services, restaurants, and airlines. In the hotel business, Martínez and Rodríguez del Bosque [ 50 ] offered statistical proof of a significant impact of corporate social responsibility on customer trust.

A community’s ethical view regarding the company is vital to construct a reliable connection, hence companies are more motivated to engage in socially responsible programs to express their dedication to the community [ 55 ]. According to Kim et. al [ 56 ], CSR is found to be one of the top approaches to stimulate trust in customers. Trust can be described as “the belief of ethically acceptable behavior” [ 57 ]. Firms, engaged in CSR initiatives, discovered CSR to deliver advantages like customer loyalty, customer satisfaction, good image, and high market value [ 48 ]. Performing company functions in an ethical fashion affects the complete image of the company’s products or services and enhances customer trust [ 58 ]. An optimistic view of the company concerning CSR will impact consumer trust. Trust in a service industry is greatly linked to experiences of service provider’s honesty, integrity, and morality [ 54 ]. Paine [ 59 ] asserts that devotion to moral norms offers the foundation for trust that improves to create repute, and strengthens the supply of value services. Similarly, ethical conduct by the staff of a business has a significant influence on customer trust.

These research studies provide evidence that CSR initiatives must place trust in the minds of customers’ regarding the company’s societal concern intent to engage in CSR initiatives to establish a positive impact on corporate image. In the model ( Figure 1 ), the three types of trust are positioned as mediators of the effects that the four types of CSR initiatives have on corporate image.

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Theoretical Framework.

Economic (CSR) positively influences customer trust in times of crisis.

Legal (CSR) positively influences customer trust in times of crisis.

Ethical (CSR) positively influences customer trust in times of crisis .

Philanthropical (CSR) positively influences customer trust in times of crisis .

2.3. Customer Trust and Corporate Image

The collaboration among employees and customers to produce an image must turn out to be an attractive study. According to a research finding, service companies like hotels were indicated as brands. Consequently, the values of a company are characterized by brands. Corporate image is an element of the argument regarding brands [ 60 ]. Based on this argument it can be underlined that whenever an employee presents a brand via collaborative initiatives with customers, the view regarding the company’s image can be influenced. Service companies like hotels perform corporate image by agents of supervisors in conveying and delivering services to customers [ 61 ]. The managers and employees of the company deliver values to customers which in turn becomes optimistic impressions and beliefs [ 61 , 62 ].

Trust is an essential concept in several academic disciplines, particularly in theories related to marketing and organizational management. In a provided exchange association, trust is described as the degree of trustworthiness ensured by the service provider to the customer, and it was demonstrated to be a vital aspect in retaining a constructive connection between the business and the customer in marketing. Customer trust is regarded as customers’ trustworthiness about a business that is defined by a business’s ability to genuinely fulfill the promises made to the customers. Since the corporate image is created by trustworthy initiatives of a company, hence, trust is deemed as a critical element in the success of a business. Providing agreed value is crucial to developing an optimistic repute. As trustworthiness is fragile, there is a great effort to recapture trustworthiness after it is lost [ 63 ]. Trust was additionally discovered to be the antecedent component of corporate image [ 15 , 63 ].

The hotel industry’s psychological image can be described by several methods, comprising trust, favorability, status, and recognition. Corresponding to the opinion of the hotel managers the corporate image is exhibited by the customers’ trust in the hotel [ 60 ]. It is also found that the hotel management finds trust to be a major factor for attracting visitors to the hotel. Hence, it implies that each hotel should be able to develop a psychological understanding of the attitudes of customers so that they can be motivated to experience the same brand one more time [ 64 , 65 ]. Privacy and safety are found to be vital factors in determining trust in a hotel. Hence, managers at a hotel are found to be paying close attention to ensuring the privacy and security of customers [ 60 ].

Based on the following discussions it can be proposed that:

Customer trust has a significant association with the corporate image in times of crisis.

2.4. Mediating Role of Customer Trust

If a company is trusted by the customers, the customers would be more committed to facing risks, and therefore, this risk-taking conduct would have certain constructive consequences on the business [ 29 ]. A company’s CSR initiatives are found to be an important factor in deciding the perception of customers’ trust in the company. By participating in CSR programs, a business demonstrates to customers that it is concerned regarding the outcomes of its actions (benevolence) and supports some key values, such as reducing its adverse impacts on the community and the ecosystem (integrity) [ 66 ].

Consumer trust is influenced by the presence of principles that the customers and the company communicate. Concerning CSR programs, this conduct offers knowledge about business personality and principles, and it is valuable for boosting overall trust in the direction of the company [ 50 ]. As Hosmer [ 67 ] reveals, by introducing ethical and trustworthy values into businesses’ tactical decision-making practices companies can improve the trust of all shareholders, as well as customers. The view that a business is moral and trustworthy promotes trust-based relations established in the principle that each exchange partners’ activities will be plausible ahead of any legal or contractual limitations [ 51 ]. In an endorsement of this viewpoint, Pivato et al. [ 48 ] additionally recommended that “the establishment of the trust is one of the greatest direct outcomes of a business’s societal functioning” or the direct or highly immediate consequence of CSR actions. Social relationships have been implemented primarily via customer trust in marketing relationship studies. Trust has been identified as the presence of a connection where one associate that is the customer in this study, trusts in the other associate that is the hotel in this study in terms of integrity and reliability [ 3 , 68 ]. Additionally, customer experiences of trust correlate to the business’s thoughtfulness and reliability beyond its competence [ 69 ]. Therefore, it has been indicated that a business’s real commitment to corporate social responsibility actions concerning its customers is useful for enhancing overall trust and decreasing distrust for the business [ 52 ]. Moreover, studies by Nicki [ 3 ], Swaen and Chumpitaz [ 51 ], and Garcı´a de los Salmones et al. [ 53 ] discovered a significant correlation between a business’s corporate social responsibility and customer trust in the service industry indicating that trust is the direct or most immediate result of a business’s CSR initiatives.

According to the results of the study by Triatmanto et al [ 60 ] respondents approved that the psychological insight of the corporate image was certainly perceived as trust, awareness reputation, and favorability. Trust was found to be the most vital indicator from the four mentioned indicators, which was viewed optimistically by the respondents, indicating that in the hotel business, customers are more involved with hotels that are perceived to be trustworthy. Safety and privacy offered by a hotel can earn the trust of a hotel [ 70 , 71 ]. According to the model ( Figure 1 ), the customers’ trust is placed as a mediator of the impacts that the CSR programs have on corporate image:

Customer trust mediates the association between economic CSR and corporate Image .

Customer trust mediates the association between legal CSR and corporate Image .

Customer trust mediates the association between ethical CSR and corporate Image .

Customer trust mediates the association between philanthropic CSR and corporate Image .

3. Methodology

Sample and procedure.

This study focuses on two of the most well-known hotels situated in Pakistan. A total of 300 hotel customers staying in Peshawar and Islamabad cities were selected. Close-ended self-administered questionnaires were circulated amongst the customers. Instead of requesting respondents merely whether they approve an opinion statement, the research paper used Likert scale items, in which the customers were requested how strongly they approve or disapprove with it, typically on a 7-point measure from 1 (=strongly disagree) to 7 (=strongly agree), with 4 demonstrating a neutral category.

A pretest will be conducted by a sample of 50 customers located in Peshawar city. Corporate social responsibility will be assessed by items recommended by [ 10 ] however, the items to measure Corporate image was applied from Chowdhury et al [ 72 ] and Kim et al [ 10 ] research study. Furthermore, McKnight et al [ 46 ] methodology was used to measure customer trust. The questionnaire is shared in the Appendix A . The hypothesis of this study will be tested using a structural equation model.

4. Data Analysis

Partial least squares (PLS) measurement was conducted using two measures. In the preliminary phase, the reliability and validity evaluation was conducted, whereas, in the next phase, the path coefficients and the structural model’s explanatory power were analyzed and evaluated. The purpose of the two phases mentioned was to verify the construct’s reliability and validity, including checking the relation among the constructs [ 73 , 74 ]. PLS has been applied and deemed as the finest tool for demonstrating the causal collaboration among constructs and consequently can handle model measurement items and construct variables simultaneously [ 75 ]. Moreover, because PLS uses simpler factors to measure the randomness and normality of the variables, it is found to be perfect for reviewing the association among constructs in the distribution of the irregular results. It also shares the advantages of assessing prediction models possessing dynamic qualities [ 76 ]. PLS was therefore considered to be more appropriate for this study as compared to other SEM analysis methodologies to assess the relations between construct variables, eradicate measurement errors, and prevent collinearity.

4.1. Convergent and Discriminant Validity

The associated external model measurements contained the internal consistency of every measurement item, the convergent validity, reliability, and differentiating validity of each layout. Employing an applicable loading of queries, the reliability of the results was analyzed. Factor loading’s threshold value of individual reliability was considered to be 0.6 [ 77 ]. Individual reliabilities were based on this threshold value. All the observed variables in the study adhered to the criteria and went through the elimination process. Table 1 shows the composite reliability of each construct. The composite reliability (CR) values of all the variables were found to be higher than 0.7 [ 78 ] and suggested that the construct was adequate.

Convergent validity.

The factor loading, composite reliability, and the average variance extracted AVE factors for all construct variables were studied. A construct would be considered to possess an acceptable convergent validity if its related indicators were possessing values greater than 0.5 [ 79 ]. Table 1 reveals that the AVEs in this analysis is between 0.591 and 0.835 for hypothetical construct variables, suggesting that there is substantial convergence.

Discriminatory validity was utilized as a measurement to analyze the discrimination among different constructs and items. According to the results demonstrated in Table 2 , the factor loading of each item exceeds the factor loading of other constructs, hence indicating possessing a fair discriminant validity [ 80 ].

Standardized factor loadings and cross-loadings of the outer model.

Note 1: ECO CSR, Economic CSR; ETHI CSR, Ethical CSR; LEG CSR, Legal CSR; PHI CSR, Philanthropic CSR; EXP, Expertise trust; INT, Integrity trust; SOC, Social Benevolence; CI, Corporate Image.

The quality assessment of the model was done by measuring the Goodness of Fit ( GOF ), which was analyzed using Tenenhaus et al. [ 81 ] proposed model, calculated as follows:

Corresponding to the above-mentioned formula AVE is measuring the average variance, while R square is the coefficient of determination. According to the outcome, the GOF is 0.711, which achieves the 0.28 cut-off standards for a large impact size [ 82 ].

Furthermore, standardized root mean square residual (SRMR) is characterized as the distinction between the studied relationship and the framework indicated relationship matrix. Hence, it lets evaluating the mean of the differences among studied and anticipated relationships as an indisputable scale of model fit standard. Consequently, if the model has an SRMR value of less than 0.08 it has a good model fit [ 83 ]. Henseler et al. [ 84 ] propose the standardized root mean square residual as a GOF gauge for PLS-SEM, which can be utilized to prevent model error. Additionally, Bentler-Bonett Normed Fit Index (NFI) is a phased gauge of GOF for a research model that is not influenced by the model’s number of factors. The Normed Fit Index is the difference of 1 and Chi 2 divided by the model’s Chi 2 . Thus, the Normed Fit Index scores values between the range of 0 and 1. Normed Fit Index values exceeding 0.9 normally signify a satisfactory fit. According to the findings of smart PLS, the value of SRMR and NFI were 0.034 and 0.951, respectively. Given that SRMR < 0.08 and NFI > 0.90 the model is significant.

4.2. Empirical Results

The hypothesis of this study was analyzed by using the internal PLS model. The path coefficients are the direction and power of the correlation among the constructs that signify cause and effect among the assessed latent and variables. Furthermore, the model’s analytical capability can be demonstrated by the value of the R square. The degree of all the path coefficients was analyzed by using the bootstrapping approach. Re-sampling the data was used to improve the estimated limit value [ 85 ]. Consequently, this approach was adopted by the research study to examine the significance among variables. The findings of the study were divided into two models; model A of the study analyzed the relationship between CSR and corporate image without the mediating effect of customer trust, while model B integrated customer trust as a mediating variable.

According to the findings of model (A) highlighted in Table 3 , and Figure 2 , legal, ethical, and philanthropical responsibilities of CSR were all found to have a positive influence on the corporate image supporting H1b (β= 0.589, t-value= 7.805), H1c (β= 0.120, t-value= 2.191), and H1d (β= 0.159, t-value= 2.304), while not supporting H1a (β= 0.010, t-value=0.297), indicating that economic responsibility has no significant relationship with corporate image.

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Results of the inner model A. Note: *** p -value < 0.001, * p -value < 0.05.

Hypotheses results for model A.

According to the findings of Model B highlighted in Table 4 , and Figure 3 , economic, legal, and philanthropical responsibilities of CSR were all found to have a positive influence on the corporate image supporting H1a (β= 0.293, t-value=6.80), H1b (β= 0.394, t-value=6.198), and H1c (β= 0.106, t-value=2.332), while not supporting H1d (β= 0.091, t-value=1.323), indicating that philanthropic responsibility has no significant relationship with corporate image. According to the statistical results, the relationship between CSR and corporate image has an incremental significance by including customer trust as a mediator.

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Results of the inner model B. Note: *** p -value < 0.001, * p -value < 0.05.

Hypotheses results for Model B.

The economic, legal, and philanthropic responsibilities of CSR influence customer trust, therefore H2a (β = 0.076, t-value = 1.936), H2b (β = 0.272, t-value = 3.627), and H2d (β = 0.471, t-value = 5.753) are supported. Ethical responsibility in CSR is not found to have an influence on corporate image (β = 0.085, t-value = 1.249); thus, H2d is not supported. Furthermore, customer trust was also found to have a significant impact on corporate image (β = 0.178, t-value = 3.504).

This study applied activity theory by Kofod-Petersen & Cassens [ 86 ] and the indirect effects as indicated in Table 5 , generated by Smart pls to test the mediation results. According to the results shown in Table 5 , customer trust fully mediates the relationship between economic and legal CSR with corporate image, while it partially mediates ethical and philanthropic CSRs’ relationship with corporate image.

Hypotheses and Mediating effects.

5. Discussion

This study is linked to the success of the hospitality marketing strategy; hence, it was imperative to perform an in-depth examination of the corporate image of the hotel. This study provides the framework to describe how the hotel’s corporate image and customers’ trust can be impacted by the four dimensions of corporate social responsibility. This framework will support other scholars in the hotel industry to comprehend customers’ conduct built on their experiences of multidimensional CSR initiatives, corporate image, and customer trust.

With the growth of corporate social influence, CSR initiatives have been considered as a crucial component for a company’s management. There is a requirement to recognize customers’ opinions of CSR behaviors for potential corporate profitability. Consequently, this research examines the impact of multidimensional corporate social responsibility initiatives on corporate image. The findings revealed persuasive evidence stating customers’ viewpoints regarding the CSR initiatives of a company could encourage their trust in the company. Each of the CSR constructs was found to have a significant impact on corporate image except, philanthropic CSR. The results of this study are somewhat similar to the study by Kim et al. [ 87 ]. According to their findings, ethical, economic, philanthropic, and legal responsibility, influenced corporate image and customer’s citizenship behavior. The outcomes are also consistent with the generally recognized belief [ 15 , 88 ] that CSR significantly impacts the corporate image. However, in terms of the insignificant relationship of philanthropic CSR and CI, this study’s results are somewhat similar to the research study by Park et al. [ 15 ]. According to their study, a company’s ethical responsibilities did not have a significant impact on the CI of the company. This study delivers empirical inferences for businesses by validating the result of CSR initiatives as a principal factor in developing customers’ trust as an organizational objective in the hotel business. It implies that the higher a company is understood to be involved in behaviors such as establishing a reasonable pricing strategy and generating jobs, the greater its corporate image is perceived by the customers. Additionally, companies’ voluntary endeavors in favor of ecological sustainability and civil rights generate a positive attitude and a decent image. Furthermore, customers tend to have a constructive image of a business that conforms with rules and laws. Finally, a company requires to meet the expectation of the customers, perceiving the company to be a decent representative of society by partaking in or supporting social wellbeing. The outcomes indicate that to reinforce the corporate image, companies must give more consideration to the economic, legal, and ethical dimensions of corporate social responsibility.

According to the results, all CSR constructs had a significant impact on customer trust, except ethical responsibility. The research outcomes are consistent with the previous studies in the framework of customers’ environmental activities [ 48 ] concerning the constructive influence of customers’ corporate social responsibility experiences on their trust. When customers consider that a hotel worries about the outcomes of its functions on the environment and the community, they deem the hotel as a benevolent business, and they will trust it more. A study by Shafieizadeh & Tao [ 66 ] examined the impact of customers’ views of a restaurant menu that comprises local food knowledge and its fundamental mechanism. The outcomes revealed that assessments of menu information influenced customers’ views regarding the restaurant’s openness and CSR initiatives significantly and additionally affected customers’ trust significantly, but indirectly, via perceived corporate social responsibility actions. However, the insignificant relationship of ethical responsibility and trust was not found to be similar with other research studies. Previous researches found ethical responsibility to be in a significant relationship with customer trust [ 54 , 89 ].

Furthermore, the results of this study showed a positive and significant relationship between corporate image and customer trust. A study by Triatmanto et al. [ 60 ] revealed how the experiences and beliefs of hotel management in East Java enhance the corporate image as a marketing strategy of a hotel. Managers of the hospitality industry were selected as research respondents for this study. The findings demonstrated that the hotel management should comprehend the hotel’s corporate image to maintain customers’ trust in the hotel. Corresponding to the view of hotel management corporate image is exhibited by the trust presented by the hotel [ 90 , 91 ]. The managers in the hospitality industry also think that the hotel can acquire many guests if the customers trust the hotel. This implies that each hotel should be able to develop psychological recognition in the opinions of customers so that they can be driven to experience the same hotel again [ 64 ].

This research intended to build an enhanced understanding of the connection between corporate social responsibility and corporate image by contemplating a broader variety of CSR programs and the position of customer trust as a mediator between the relationship of corporate social responsibility and corporate image. Results showed that amongst the four types of CSR programs, the company’s activities of economic and legal responsibility were fully mediated by customer trust, while ethical and philanthropic responsibility were partially mediated by customer trust. These outcomes are somewhat similar to the studies of Jongchul et al.’s [ 92 ] and Yoon et al.’s [ 88 ], according to results customers have a tendency to attach intentions to the company’s philanthropic initiatives, and that a view of honesty and trustworthiness in the motivations results in a constructive company assessment.

6. Theoretical Implications

The research has the following theoretical implications. The first is that despite having theoretical assistance for the association of corporate social responsibility and corporate image in numerous service fields, little investigations have empirically examined the impacts of CSR’s four dimensions on corporate image and customers’ trust in association with the hotel service industry. This study is unique from earlier CSR research based on an assessment of the connection between CSR dimensions and corporate image to examine customers’ trust in the company. Moreover, the dimensional composition of hotel corporate social responsibility was verified by examining the range of validity and reliability. Furthermore, the corporate social responsibility scale was demonstrated to be efficient in calculating the customers’ attitude, trust, and perception regarding the service industry. Therefore, this scale might be utilized to describe additional variables, including customers’ pro-social conduct, loyalty, and post-purchase conduct. Hence, the findings of this research can assist to build innovative information and expand to subsequent studies [ 1 ].

This research indicates that a company’s corporate social responsibility initiatives affect the corporate image, which additionally affects the development of trust among customers and companies. Via the evaluation of the framework of CSR, customers’ trust and corporate image were observed to be vital to a workable relationship. This study can hence be a beginning point in examining the association between corporate social responsibility and corporate image in customers’ trust. It is assumed that customers recognize a company because its features are expressive, or parallel to their individual features or the features that they seek to possess. It is found that corporate social responsibility constantly plans a business’s philanthropical and considerate principles that underline the uniqueness or character of the company, therefore it could be utilized as a powerful instrument by companies to create convincing images that appeal to customers’ societal and emotional wants and encourage trust to a service company [ 3 , 93 ]. Certainly, the present research findings discovered that corporate social responsibility strengthens the customers’ identification with a business in addition to their trust in that business. This conclusion develops the opinion that the blend of both viewpoints proposes an additional combined and complete method to understand the path from corporate social responsibility to the loyalty of customers, therefore offering managers with an added insight regarding the role and value of corporate social responsibility in developing trustworthy associations with customers.

Consequently, it was feasible to evaluate factors that impact corporate social responsibility and corporate image. By the formation and confirmation of subfactors of corporate social responsibility and corporate image, it facilitates to comprehend the four types of CSR and corporate image dimensions that impact customers’ trust. A company’s economic, legal and ethical CSR have a major effect on the corporate image of that company. Corporate image has an impact on making a suggestion, and that suggestion has an impact on the creation of customers’ trust. This research improves the current information by demonstrating the mediation impact of customers’ trust on the association between economic and legal CSR, and corporate image. Once customers consider that a hotel is striving to be understandable to them, by offering comprehensive information regarding the hotel’s actions, they believe that it appreciates the expectations of its stakeholders, and hence the customers trust the hotel more.

7. Managerial Implications

The industrial and managerial implications of this research study are as follows. Hotels must try to enhance their corporate image, as the image is impacted by both the four dimensions of CSR and customers’ trust. Corporate social responsibility was found to have an effect on corporate image, and economic, legal, and ethical corporate social responsibility initiatives were found to have a significant impact on corporate image whereas philanthropic responsibilities had no significant impact on corporate image. Based on this conclusion, operators can concentrate on economic CSR to boost the corporate image and promote customers’ trust. Economic CSR initiatives produce profit via the delivery of attractive services. Customers wish for quality services at a satisfactory price. Firms can meet economic CSR initiatives by offering services much better than customers’ beliefs. A company’s economic initiatives mostly ignore the ecosystem or social responsibilities. Economic corporate social responsibility initiatives must hence be endorsed for profit-making purposes as a marketing strategy and an attractive answer to the social and ecological difficulties faced by a company. The hotel industry is engaged in organizing environmentally friendly marketing related to the ethical responsibilities to avoid pollution in the environment. Regarding legal responsibilities, the hotel industry must conform with sanitation and security procedures. Ethical and legal corporate social responsibility initiatives are considered to be vital, particularly in a competitive market. To satisfy philanthropic CSR, firms have maintained to organize charitable events or sponsor donations besides giving extra benefits to their employees. Businesses are now needed to engage with their society and give earnings back to society.

The results of this study can be utilized by employees to promote customers’ trust, which can be useful to businesses. Maintaining constructive connections with customers can assist a business. Businesses want optimistic communications with customers to boost customers’ trust. A business can build a community to accelerate the interaction between customers. Furthermore, if customers are paid with a souvenir or a coupon for their work and time, they may gain an emotional inclination to assist the business. As a consequence, customers will be extra loyal to the business.

Managers ought to be careful and tactical in using ethical and philanthropic responsibilities. Once a company performs philanthropic initiatives for a worthy reason, the company expects that customers consider a constructive acknowledgment regarding the company’s motivations. Though businesses must contemplate the optimistic impacts of corporate social responsibility on their employees with discretion, as they might also possess some detrimental adverse outcomes like the staffs’ inclination to engage in extra hard work and therefore result in labor dependence [ 94 ]. Accountable entrepreneurship is an enduring action and its initiation into the business delivers even greater advantages when there is an awareness for these initiatives [ 95 , 96 ].

This study made further practical contributions in offering hotels management understandings into the insight of corporate social responsibility dimensions and evaluating a hotel’s corporate social responsibility operations. Consequently, hotel commerce must signify the necessity of smart customers and society, alongside worldwide developments regarding environmental safety. A hotel can comprehend its competition by frequently assessing and evaluating its corporate social responsibility endeavors with other hotels. Moreover, corporate social responsibility initiatives would additionally help enable internal organizational marketing by keeping decent relationships with personnel [ 1 ]. Service managers need to concentrate on corporate image protection and take into attention the significance of a corporation’s image for their shareholders. More precisely, by skillfully controlling corporate image and corporate social responsibility as the prediction/interaction instrument of the company, they can encourage business relationships that may stimulate long-term relations and trust with customers [ 3 , 97 ].

8. Limitations and Future Research

This research has some shortcomings that have the possibility for potential research. The survey of this research was conducted in Pakistan; hence it has a shortage of representativeness and self-selection bias. To produce more generalized conclusions, the research survey can be done in numerous countries. Moreover, Pakistan is an emerging economy, future research can be conducted in developed economies and their results can be compared. Corporate image is an individual construct, therefore for a thorough investigation in the service perspective, several attitudinal and cognitive antecedents of corporate social responsibility should be considered for future potential research.

Furthermore, although Carroll’s four CSR dimensions have been used recently in the service industry research [ 98 , 99 ]. Carroll’s four corporate social responsibility dimension model has been extensively presented in the studies related to the hotel industry. Nevertheless, the hotel business varies from other businesses in conditions of stakeholders, customers, policies, organizational culture, and products due to its distinctive qualities that are indivisible, and intangible [ 100 ]. Additionally, the business neglects to indicate an expanding understanding of ecology, sustainability, renewable resource, and ecological safety [ 1 , 101 , 102 , 103 , 104 ]. Hence, future researchers can utilize the modified version of Carroll’s CSR model while studying the service industry

Finally, since customers can act as effective agenda planners via various online platforms, they can become key influencers in times of crisis. Hence, future researchers can target the impact of customers communication on the periods of pre and post-crisis situations related to CSR.

9. Conclusions

The purpose of this is to analyze the connection between CSR dimensions and corporate image to examine customers’ trust in an emerging economy, especially in times of crisis. This research empirically examines the relationships between a multi-dimensional set of corporate social responsibility (CSR) initiatives, numerous dimensions of customer trust, and corporate image in an emerging economy. It also analyzes the mediating effect of customer trust on the relationship between CSR and corporate image. The results revealed that economic, legal, and ethical CSR significantly impacted corporate image, while philanthropic CSR did not affect the corporate image. However, economic, legal, and philanthropic CSRs were found to be in a significant relationship with customer trust, while ethical CSR was not in a significant relationship with customer trust. Finally, customer trust fully mediated the relationship between economic and legal CSR with corporate image, whereas it partially mediated the relationship between ethical and philanthropic CSR.

Corporate Social Responsibility

  • The hotel improves the tourism industry.
  • The hotel generates employment through its operations.
  • The hotel strives to activate the local economy.
  • The hotel strives to achieve sustainable growth.
  • The hotel properly implements health and safety rules and regulations.
  • The hotel has established appropriate regulations for customers to abide by.
  • The hotel strives to abide by regulations related to its customers’ well-being.
  • The hotel has established ethical guidelines for business activities.
  • The hotel tries to become an ethically trustworthy company.
  • The hotel makes efforts to fairly treat customers.
  • The hotel participates in a variety of volunteer activities by starting the company’s volunteer group.
  • The hotel supports social welfare projects for the underprivileged.
  • The hotel supports education programs.

Corporate Image (CI)

  • I think the hotel emphasizes the rights of customers.
  • I have good impressions of the hotel.
  • In my opinion, the hotel has a good image in the minds of consumers.
  • I think the service value provided by the hotel is high.
  • I think the employees are very friendly.
  • The appearance of the hotel is appealing.
  • The area around the hotel is clean.
  • The hotel is located in a nice area.
  • The prices at the hotel are fair.
  • I obtain value for my money at the hotel.

Consumer Trust

  • The hotel performs its role of providing hoteling services very well.
  • Overall, the hotel is a capable and proficient hoteling services provider.
  • In general, the hotel is deeply knowledgeable about customer care.
  • The hotel is truthful in its dealings with me.
  • I would characterize the hotel as honest.
  • The hotel would keep its commitments.
  • The hotel is sincere and genuine.
  • I believe that the hotel would act in my best interest.
  • If I required help, the hotel would do its best to help me.
  • The hotel is interested in my well-being, not just its own.

Author Contributions

Conceptualization, C.-C.C.; Formal analysis, A.K., T.H., A.R. and Y.-T.C.; Investigation, A.K.; Methodology, C.-C.C., A.K., A.R. and Y.-T.C.; Supervision, T.H., S.-C.C. and O.S.; Validation, A.R. and Y.-T.C.; Writing—original draft, A.K., C.-C.C., S.-C.C., O.S., A.R., T.H. and Y.-T.C.; Writing—review & editing, A.K., C.-C.C., S.-C.C., A.R., O.S., T.H. and Y.-T.C. All authors have read and agreed to the published version of the manuscript.

This research received no external funding.

Informed Consent Statement

Informed consent was obtained from all subjects involved in the study.

Conflicts of Interest

The authors declare no conflict of interest.

Publisher’s Note: MDPI stays neutral with regard to jurisdictional claims in published maps and institutional affiliations.

ORIGINAL RESEARCH article

The impact of corporate social responsibility performance feedback on corporate social responsibility performance.

\r\nJae-Eun Lee

  • 1 Department of International Trade, Sunchon National University, Suncheon, South Korea
  • 2 Department of Global Business, Hanshin University, Osan, South Korea

This study empirically analyzes how corporate social responsibility (CSR) performance feedback impacts CSR performance, focusing on the performance feedback perspective of behavioral theory of the firm (BTOF). By performing generalized least squares (GLS) regression analysis based on Korean company data from 2012 to 2019, we presented evidence that positive social and historical performance feedback had a positive effect on CSR performance. Our results provide evidence that firms with higher social and historical CSR performance than CSR aspiration may have higher CSR performance than those that do not.

Introduction

Corporate social responsibility (CSR) can be defined as a firm’s core strategy for voluntarily reflecting social and environmental concerns in the operation of the business to interact with various stakeholders ( Wang et al., 2018 , p. 68). CSR has attracted scholarly attention, and CSR has increased gradually owing to the growing, recent perception that sustainability is crucial for a firm’s long-term growth and survival ( Bahta et al., 2021 ). Many researchers and managers are prioritizing CSR to create a sustainable competitive advantage ( Lee and Lee, 2019 ; Kim and Kim, 2020 ; Matten and Moon, 2020 ). However, the degree and pattern of CSR activities performed by firms vary greatly among firms, and CSR performance due to CSR activities also vary greatly from firm to firm. Therefore, many scholars have attempted to identify corporate decisions to participate in CSR activities and determinants of CSR performance ( Kim and Kim, 2020 ; Yuan et al., 2020 ; Ben-Amar et al., 2021 ). The previous studies have stressed that firms participate in CSR activities to increase stakeholder value based on the stakeholder theory, arguing that firm CSR performance is eventually related to the financial firm performance ( Hillman and Keim, 2001 ; Kim et al., 2019 ). Conversely, based on the trade-off theory, other scholars emphasize that CSR activities negatively affect financial performance as they force firms to spend unnecessary money and eventually worsen profitability ( McWilliams and Siegel, 2001 ; Moore, 2001 ; López et al., 2007 ).

Meanwhile, many scholars in the field of organizational theory and strategic management have used the performance feedback perspective based on the behavioral theory of the firm (hereafter, BTOF), which has been presented as a major theoretical basis for explaining corporate performance ( Cyert and March, 1963 ). From the BTOF aspect, the difference between a firm’s actual performance and aspiration level of performance, that is, attainment discrepancy, affects firm strategy or behavior ( Cyert and March, 1963 ). Attainment discrepancy is crucial in the performance feedback model of the BTOF. Moreover, the performance feedback model is considered to evaluate one’s performance based on the level of performance that firms aspire to Cyert and March (1963) and Alessandri and Pattit (2014) . Essentially, based on the actual firm performance compared and evaluated based on the performance of the aspiration level, the CEO determines the effectiveness of the current firm strategy ( Audia and Greve, 2006 ; Lu and Wong, 2019 ). Applying these discussions to the CSR context, the strategic behaviors that firms can choose may vary depending on whether CSR performance is high or low compared to aspiration level. However, previous studies that have sufficiently discussed this are scarce. Additionally, the difference between CSR aspiration level and actual CSR performance, that is, the effect of attainment discrepancy on CSR performance, remains unclear.

As Nason et al. (2018) highlighted the discussion on social performance feedback compared to financial performance feedback is lacking and attempts to examine how a firm’s strategic behavior changes according to corporate non-financial social performance feedback have been relatively insufficient. Few studies have attempted to apply the performance feedback perspective of BTOF to the CSR context ( Arora and Dharwadkar, 2011 ). For example, Arora and Dharwadkar (2011) found that attainment discrepancy moderates the relationship between corporate governance and CSR based on the BTOF perspective. However, in the study of Arora and Dharwadkar (2011) , since attainment discrepancy was measured based on the financial performance, there is a big difference from our study that measures attainment discrepancy based on the CSR performance. Additionally, Xu and Zeng (2020) are similar to this study in that it investigates the relationship between CSR’s attainment discrepancy and CSR performance, not financial performance. However, their study considers only the social corporate social performance (CSP) aspiration level, while ours study includes both social and historical CSP aspiration levels.

To fill this research gap, this study investigates the impact of CSR performance feedback on future CSR performance. We present the following research questions. First, how does positive CSR performance feedback (positive attainment discrepancy wherein CSR performance exceeds CSR aspiration levels) affect future CSR performance? Second, how does negative CSR performance feedback (negative attainment discrepancy in which CSR performance is below CSR aspiration levels) affect future CSR performance?

Theoretical Background and Hypothesis Development

Performance feedback and corporate social responsibility performance.

One of the main theories explaining firm CSR performance is the perspective of performance feedback of BTOF. In the BTOF perspective, organizations form levels of aspiration for their goals and choose courses of their actions that can help them to achieve that level of aspiration ( Cyert and March, 1963 ; Kotiloglu et al., 2020 ). The BTOF emphasizes organizational processes such as performance evaluation, search, and decision-making ( Cyert and March, 1963 ; Greve, 2003 ). Considering performance feedback from the BTOF, as organizations are considered a goal-directed system ( Chen and Miller, 2007 ) using simple decision-making rules to change their activities, the firm will evaluate their performance based on aspiration levels and respond differently depending on whether performance is higher or lower ( Cyert and March, 1963 ; Greve, 2003 ). According to the perspective of performance feedback, aspiration levels are the reference point for evaluating the organizational performance ( Kotiloglu et al., 2020 ). In other words, the aspiration level becomes the criterion for decision makers to judge satisfaction and dissatisfaction with their strategic results ( Simon, 1955 ). By evaluating one’s performance using aspiration level as a reference point, organizations that recognize its success or failure can change the direction and scope of organizational search to enhance performance ( Greve, 2003 ). Aspiration level can be divided into the historical and social aspiration levels. The former is formed through past experience organizational experience and latter through comparison with the reference group ( Cyert and March, 1963 ; Greve, 1998 ). Historical aspiration (HA) level considers the organization’s past experience as a major reference point, mainly by comparing current performance with the organization’s past performance ( Greve, 2003 ). Conversely, the social aspiration level is determined by comparing the performance of the reference group with that of the firm. Studies have emphasized that both historical and social aspiration level should be considered ( Bromiley, 1991 ; Greve, 1998 ). Hence, this study considers both historical and social aspiration levels. The decision maker determines the type of search, such as problemistic or slack search, through the process of comparing aspiration level and one’s performance. If firm performance does not reach the aspiration level, this signals the decision maker that a problem has occurred in the current organization and prompts a problemistic search that makes efforts to compensate for the current performance that falls short of expectations. In this problemistic search process, decision makers make decisions to take more risks and actively solve problems. Conversely, if a firm’s performance exceeds its aspiration level, decision makers feel no need to change because they see the current situation as profitable and tend to maintain or wait and monitor the current situation ( Cyert and March, 1963 ). When a firm’s performance exceeds its aspiration level, it conducts slack search even if it conducts search, and firms hope that the current situation will be maintained ( Cyert and March, 1963 ; Greve, 2003 ). We attempt to apply this discussion to the CSR context in this study. In this study, CSR performance feedback was considered a major antecedent factor in CSR performance as decision makers can make different decisions related to CSR depending on whether a firm’s CSR performance is high (positive) or low (negative) compare with their CRS aspiration level.

Research Hypotheses

In this study, the difference in the CSR performance compared to the CSR aspiration level of a firm (positive or negative attainment discrepancy) influences the firm’s strategy or behaviors related to CSR according to the BTOF’s performance feedback perspective. Particularly, when a firm’s CSR performance is low compared to CSR aspiration level (negative CSR performance feedback), firm decision-makers may recognize low CSR performance as an important problem and conduct problemistic search to improve it ( Zhong and Ren, 2021 ). Here, CSR aspiration level can be divided into historical and social CSR aspiration level. Decision makers with bounded rationality can make appropriate decisions by comparing past and present CSR performance. Hence, this CSR aspiration level can consider the historical CSR aspiration level. Additionally, decision makers with bounded rationality can make CSR-related decisions by comparing the CSR performance of their reference groups with their CSR performance. Hence, the CSR aspiration level simultaneously becomes the social CSR aspiration level. Many previous studies emphasize that negative performance feedback generates the problemistic search ( Cyert and March, 1963 ). The problemistic search can be considered a solution for firms having lower performance relative to aspiration level ( Iyer and Miller, 2008 ; Posen et al., 2018 ; Choi J. et al., 2019 ). In addition, performance below the aspiration level tends to cause firms to solve problems faced by encouraging more innovative activities ( Lu and Wong, 2019 ). If the CSR performance is low as compared to the CSR aspiration levels, firms may be threatened with legitimacy for CSR, and the need to secure legitimate CSR for sustainable growth and survival increases ( DiMaggio and Powell, 1983 ; Du and Vieira, 2012 ). Receiving negative performance feedback may reduce external stakeholders’ trust in the corporate decision makers. Additionally, receiving negative feedback can further strengthen external pressure requiring stakeholders to achieve their goals, limiting management autonomy ( Arora and Dharwadkar, 2011 ). Therefore, receiving negative CSR performance feedback may motivate firms to spend more CSR costs to minimize the negative impact and restore legitimacy and trust from stakeholders. In the end, the negative CSR performance feedback could have a positive effect on CSR performance ( Park, 2007 ; Kim et al., 2015 ; Xu and Zeng, 2020 ). Hence, the following hypothesis was derived.

H1 : Negative CSR performance feedback (in that as CSR performance falls below CSR aspiration level) is positively related to CSR performance.

Conversely, according to the performance feedback perspective of BTOF, when a firm’s financial performance exceeds aspiration level, decision-makers feel no need to change because they see the current situation as profits ( Lu and Fang, 2013 ). As firms have already achieved their high level of financial performance they aspire to, decision-makers are unaware of the need for additional search to take additional risks and further enhance financial performance ( Audia et al., 2000 ). Managers do not perceive their financial performance as a problem if their financial performance exceeds their aspiration level. Hence, even if they conduct a search, they will attempt to maintain the current situation by mainly conducting a slack search. These conservative tendencies of decision-makers have been confirmed in many previous studies. For example, Greve (1998) emphasized that as a result of conducting an empirical analysis on the US radio industry, if firm performance is higher than the aspiration level, the probability of strategic change becomes exceedingly lower. Basically, when financial performance is generally higher than the aspiration level, firms will tend to maintain the phenomenon without making additional efforts to improve financial performance ( Lucas et al., 2018 ). However, considering that CSR requires fulfilling a non-financial aspect of a firm, a slightly different discussion is possible in the CSR context. CSR needs to consider a wide range of stakeholders who have relationships with firms as it goes beyond the general responsibility that firms must legally comply with and includes ethical and moral responsibilities. When firm CSR performance is high compared to the CSR aspiration level, stakeholders related to the firm can show trust in firm decision makers. This provides decision makers with more discretion over resource allocation ( Arora and Dharwadkar, 2011 ). If firm decision makers are satisfied with the current situation and reduce the budget or expenditure required for CSR activities, stakeholders may doubt the authenticity of the activities. As CSR is related to the perceptions of various stakeholders, including consumers, even if CSR performance is higher than CSR aspiration levels, firm decision makers can have a positive impact on CSR performance by continuously spending CSR costs to ensure legitimacy without reducing CSR commitment. This argument can also be confirmed in the previous empirical studies. Xu and Zeng (2020) conducted empirical analysis on Japanese companies in anticipation of a negative impact on philanthropic/environmental expenditure if they performed higher than the level of philanthropic/environmental aspirations of firms. However, owing to empirical analysis, and contrary to the authors’ expectations, empirical analysis results were presented wherein positive attainment discrepancy in corporate philanthropic/environmental performance had positive effect on philanthropic/environmental expenditure, respectively. Additionally, when a slack search is performed compared to a problematic search, slack resources will likely be formed because of the additional room for resource utilization. Firms with abundant organizational slack resources can enable more experimentation and organizational change than those that do not ( March, 1981 ). If a firm receives positive CSR performance feedback, it can secure authenticity and legitimacy for CSR activities from stakeholders, including consumers, and can perform more experimental and active CSR activities to strengthen their positive corporate image. Therefore, positive CSR performance feedback could have a positive effect on CSR performance. We propose the following hypothesis:

H2 : Positive CSR performance feedback (in that as CSR performance rises above CSR aspiration level) is positively related to CSR performance.

Research Methods

Sample and data.

In this study, we matched the Korea Economic Justice Research Institute (KEJI) index and firm-level information to those firms selected in the top 200 selected by the KEJI ( Oh et al., 2019 ). Data were collected from archival data sources such as KIS-Value, TS2000, DART as an electronic disclosure system, and KEJI for KEJI index. Our initial sample was obtained from KEJI for 2012 to 2019 and merged these firms with financial data using KIS-Value and TS2000. Our final dataset comprises 1091 observations for 8 years of publicly listed firms on Korea Stock Exchange (KSE) from 2012 to 2019. We employed a 1-year lagged structure between dependent and independent variables and control variables to avoid any reverse causality ( Oh et al., 2019 ).

Variables and Measurement

Dependent variable.

CSR performance was measured in various ways in previous studies, using scores announced by specific organizations ( Jung and Kim, 2016 ; Jeong et al., 2018 ) or the donation amount or donation ratios ( Choi Y. K. et al., 2019 ; Wang et al., 2021 ). Following earlier studies ( Jung and Kim, 2016 ; Chang et al., 2017 ; Jeong et al., 2018 ; Oh et al., 2019 ), as the proxy for the social corporate responsibility performance for this study, we used the KEJI index, which is announced annually. The KEJI index is one of the representative CSR performance indicators used in Korean studies ( Oh et al., 2019 ) and is similar to the index such as Kinder, Lydenberg which evaluate the CSR index of S&P 500 ( Jung and Kim, 2016 ).

Since 1991, the KEJI has developed its own evaluation model. CSR performance is quantitatively calculated using accounting information data for KOSPI-listed companies. KEJI has evaluated various aspects and characteristics for selecting the 200 largest companies in Korea ( Jung and Kim, 2016 ). The KEJI index consists of six criteria with a total score of 100 points: soundness (25 points), fairness (20 points), contribution to social service (15 points), consumer protection satisfaction (15 points), environmental protection satisfaction (10 points), and employee satisfaction (15 points). Until 2011, contribution to economic development was included in the KEJI index. However, in 2012, the corresponding item was removed from the index. This study measured the CSR performance as the dependent variable by using the total score of KEJI ( Jung and Kim, 2016 ; Jeong et al., 2018 ; Oh et al., 2019 ).

Independent Variables

Corporate social responsibility performance feedback: We analyzed CSR performance feedback using CSR performance instead of corporate financial performance to measure corporate CSR performance feedback ( Xu and Zeng, 2020 ; Wang et al., 2021 ). The amount of donation was widely used to proxy CSR performance in earlier studies ( Choi Y. K. et al., 2019 ; Wang et al., 2021 ), we used each firm’s donation amount to measure CSR performance aspiration. In this study, performance feedback was classified into two types, HA level and social aspiration level. Both effects were analyzed accordingly ( Manzaneque et al., 2020 ).

Social aspiration (SA) was measured as the average donation expenditure of firms in the same industry except for the focal firm based on two-digit level of the KSIC codes ( Greve, 2003 ; Manzaneque et al., 2020 ; Xu and Zeng, 2020 ; Ye et al., 2021 ). Following previous studies ( Manzaneque et al., 2020 ; Ye et al., 2021 ), HA was measured by the difference between a firm’s CSR performance and past aspiration level and is measured as each firm’s amount of donation in year t-1.

Based on the previous research on the performance feedback formulas ( Xu and Zeng, 2020 ), we measured the positive CSR performance feedback and negative CSR performance feedback for both social and historical CSR performance feedback.

Positive CSR Performance Feedback i

=CSR Performance i − Aspiration i if CSR Performance i > Aspiration i

= 0 if CSR Performance i ≤ Aspiration i

Negative CSR Performance Feedback i

= Aspiration i − CSR Performance i if CSR Performance i < Aspiration i

= 0 if CSR Performance i ≥ Aspiration i

; where i = focal firm

Control Variables

We controlled for firm- and industry-level factors that could affect a CSR. Generally, large-size firms receive most of the social attention, increasing stakeholder pressure, and imposing high expectations for socially responsible behavior ( Xu and Zeng, 2020 ). Therefore, in this study, firm size was included as a control variable, and firm size was measured as a log value of total sales ( Attig et al., 2016 ; Chang et al., 2017 ; Xu and Zeng, 2020 ).

The previous studies have reported that firm age has a positive or negative relationship with corporate CSR performance ( Chang et al., 2017 ). Hence, to control for the age of the firm, we included firm age as the control variable by measuring the number of years since the firm establishment ( Xu and Zeng, 2020 ).

The previous studies argued that firm financial status has great influence on the CSR performance ( Chang et al., 2017 ). Therefore, return on asset (ROA), a representative measure of firm financial performance, was included as a control variable ( Xu and Zeng, 2020 ). ROA was measured by dividing net income by total assets ( Chang et al., 2017 ; Jeong et al., 2018 ).

Slack influences the search behavior of the behavioral theory of the firm ( Greve, 2003 ; Chen, 2008 ). To control for the effect of potential slack on CSR performance of financial position, the debt-to-equity ratio of the firm was controlled ( Chen, 2008 ).

Tobin’s Q was included as a proxy for corporate value ( Jeong et al., 2018 ; Wang et al., 2021 ), and Tobin’s Q is a representative proxy for market value, reflecting the firm’s future profits ( Cho et al., 2019 ). Tobin’s Q was calculated as follows.

Since the degree of the internationalization of the firm acts as a pressure to improve corporate CSR ( Attig et al., 2016 ; Xu and Zeng, 2020 ), the degree of internationalization of a firm was included as a control variable. Hence, we measured the level of internationalization by the ratio of foreign to total sales (FSTS), the most representative indicator of the degree of the internationalization ( Attig et al., 2016 ).

In this study, the industry rivalry, the industry annual sales growth rate and the industry dummy were included in the analysis to control for industry differences owing to the different characteristics of each industry ( Chen, 2008 ). To control for the rivalry within an industry, the degree of competition within the industry was measured by a number of firms in each industry according to previous studies ( Lee et al., 2009 ; Ye et al., 2021 ). The industry dummy was controlled by making each industry a dummy variable based on the three-digit level (middle-level) of the KSIC code.

Statistical Analysis

Since data for this study are panel data, and both cross-sectional and time series analysis are required. Additionally, because of potential heteroskedasticity and serial correlation problem in panel data, generalized least squares (GLS) regression analysis is suitable for this study ( Lee et al., 2009 ; Wang et al., 2021 ). The Hausman Test was conducted to select an accurate analysis method. The analysis shows that the random-effect model was considered a more efficient estimating equation than fixed-effect model. Thus, we ran random-effects GLS regression to test our hypotheses.

Table 1 shows the descriptive statistics and correlation coefficients of our study. To test for multicollinearity, we calculated the variance inflation factor (VIF) ( Oh et al., 2019 ). The result shows that the VIF value was less than 2 in all models, indicating that there is no multicollinearity problem ( Chatterjee et al., 2000 ).

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Table 1. Descriptive statistics and correlations.

Table 2 shows the results of random effect GLS analysis performed for testing the hypothesis which anticipates the effect of performance feedback on CSR performance. Before examining the hypothesis test results, among the control variables, the variables confirmed to have a statistically significant influence on the CSR performance were firm size, slack, Tobin’s Q, industry sales growth, and industry rivalry.

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Table 2. Random effects GLS model (full sample).

According to Model 1 in Table 2 , firm size had a positive impact on CSR performance ( p ≤ 0.001). This implies that large-size firms receive most of the social attention, which, in turn, increases stakeholder pressure. Therefore, those firms are highly expected to exhibit socially responsible behavior (Choi et al., 2018; Xu and Zeng, 2020 ). The corporate value measured as Tobin’s Q was found to be a positive effect on the CSR performance ( p ≤ 0.05). This may attributable to visibility and can be explained as similar to the logic of the effect of the firm size on the CRS performance.

Conversely, firm slack resource was found to have a negative (-) impact on CSR performance ( p ≤ 0.01). As we measured the slack resource as a debt ratio, a high debt ratio may represent the perception of resource which, in turn, may discourage firms to invest in CSR towing to resource constraints. This result remains consistent with that of Attig et al. (2016) , wherein the negative relationship between slack and CSR performance and potential slack calculated as the ratio of total debt to total equity was demonstrated to represent that situation, as the more debt the firm has, the less money they can borrow. Also, the control variables for industry, among industry sales growth had a positive (+) effect on the CSR performance ( p ≤ 0.01). This result shows that the higher industry sales growth means firms in this industry participate more in CSR.

Hypothesis 1 predicted that negative CSR performance feedback in that CSR performance falling below CSR aspiration level is positively related to CSR performance. Hypothesis 2 predicted that positive CSR performance feedback in that as CSR performance rises above the CSR aspiration level is positively related to CSR performance. Our results in Model 2 of Table 2 showed that both positive social performance and historical performance feedbacks were confirmed to have a statistically significant positive effect on the CSR performance ( p ≤ 0.01 and p ≤ 0.01, respectively). However, both negative historical and social performance feedback are not statistically significant to CSR performance. Therefore, Hypothesis 1 was not supported, and Hypothesis 2 was supported.

Additional Analysis

We performed additional analysis to confirm our empirical results. The sample of this study includes both manufacturing and non-manufacturing industries because 200 companies with excellent CSR activities selected by the Economic Justice Research Institute were targeted. Considering the claims of previous studies that manufacturing is a core industry in Korea and the influence of CSR in manufacturing is stronger in manufacturing ( Chung et al., 2018 ), an additional analysis was conducted only on manufacturing to confirm the result of the entire sample.

Table 3 shows the results of testing the hypothesis by classifying samples of firms in the manufacturing industry. The results of analyzing only firms in the manufacturing industry showed that both the positive social performance feedback and the historical performance feedback had a positive (+) effect on the CSR performance ( p ≤ 0.01 and p ≤ 0.05, respectively).

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Table 3. Random effects GLS model (manufacturing industry).

Discussion and Conclusion

Considering the growing social interest in CSR, this study contributes to CSR literature by analyzing the CSR determinants from the BTOF perspective. Based on the perspective of the BTOF and RBV, this study empirically analyzed the CSR performance feedback on CSR performance. To test the hypotheses, we performed GLS regression analysis based on 2012–2019 Korean company data. We found that positive social and historical performance feedback had a positive effect on CSR performance. Our results showed that positive social and historical performance feedback have positive impact on the CSR performance. These results imply that the difference in CSR performance compared to a firm’s CSR aspiration level (positive or negative attainment discrepancy) influences the firm’s strategy or behavior related to CSR according to the performance feedback perspective of BTOF. Especially, if a firm receives positive CSR performance feedback, they increase their efforts in CSR activities to secure authenticity and legitimacy for CSR activities from stakeholders. This includes consumers and can perform more experimental and active CSR activities to strengthen their positive corporate image ( Jeong et al., 2018 ; Vogler and Eisenegger, 2021 ).

This study provides the following theoretical and empirical contributions to CSR and BTOF research fields. First, this study contributes to CSR literature by applying BTOF discussions to the CSR context by theorizing the performance feedback as the significant determinants to CSR performance and empirically testing the relationship between two variables. Specifically, this study showed that the strategic behaviors that firms choose may vary depending on whether CSR performance is high or low compared to aspiration level. Additionally, we examined both the historical and social aspirations of CSR performance feedback on CSR performance. By doing so, this research empirically confirms both the historical and social aspirations of CSR attainment on CSR performance.

Second, our study expands BTOF literature by examining the CSR aspiration of both historical and social aspiration level and its performance implication. According to a recent study, it is argued that it is not advisable to use a combination of the two variables because historical aspirations and social aspirations are fundamentally different in terms of their characteristics and influence ( Deb et al., 2019 ). The previous studies have not sufficiently addressed the effect of the CSR performance feedback and the difference between CSR aspiration level and actual CSR performance. Thus, we answer a recent call for more research examining the CSR performance feedback research. As Nason et al. (2018) highlighted the discussion on the social performance feedback compared to financial performance feedback is considerably lacking. Attempts to examine how a firm’s strategic behavior changes according to corporate non-financial social performance feedback have been relatively insufficient so far.

Despite the above-mentioned contributions, this study has several limitations as follows. First, as this study examined CSR aspiration level on the CSR performance of Korean firms, generalization in interpreting the results may be difficult. Therefore, future research should investigate whether this study’s results can be generalized to countries other than Korea. Particularly, as the degree of social interest by country in corporate CSR—along with the pressure received by firms—may vary, future research should examine the relationship between CSR aspiration based on the BTOF on CSR performance using a more diverse sample of countries. Second, the sample of this study is 200 companies with excellent CSR activities selected by the Economic Justice Research Institute. We used the sample that matched the KEJI index and firm-level information to those firms selected in the top 200 selected by KEJI, there may be a problem of a sample selection bias ( Oh et al., 2019 ). Third, CSR activities are related to the use of significant resources. The type of slack resource is highly likely to affect CSR results from the BTOF perspective ( Greve, 2003 ). Although this study could not consider the moderating role of these slack resources, analyzing the moderating role of various types of slack resources on this research context in future studies will be promising. Fourth, corporate reputation can be considered the strategic assets held by firms that are a source of a sustainable competitive advantage ( Wernerfelt, 1984 ; Barney, 1991 ; Roberts and Dowling, 2002 ; Eberl and Schwaiger, 2005 ), which, in turn, may have impact on CSR performance. Therefore, future research should examine the impact of corporate reputation on CSR performance. Finally, this study could not consider the impact of corporate governance as a control variable. Hence, we recommend exploring corporate governance as a control variable in future research.

Data Availability Statement

The raw data supporting the conclusions of this article will be made available by the authors, without undue reservation.

Author Contributions

J-EL and YY contributed to conception and design of the study, and wrote the first draft of the manuscript. YY organized the database, performed the statistical analysis, and wrote “Research Methods” and “Discussion and Conclusion” sections of the manuscript. J-EL wrote “Introduction” and “Theoretical Background and Hypothesis Development” sections of the manuscript. Both authors contributed to manuscript revision, read, and approved the submitted version.

This work was supported by the Hanshin University Research Grant.

Conflict of Interest

The authors declare that the research was conducted in the absence of any commercial or financial relationships that could be construed as a potential conflict of interest.

Publisher’s Note

All claims expressed in this article are solely those of the authors and do not necessarily represent those of their affiliated organizations, or those of the publisher, the editors and the reviewers. Any product that may be evaluated in this article, or claim that may be made by its manufacturer, is not guaranteed or endorsed by the publisher.

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Keywords : performance feedback, aspiration, corporate social performance, behavioral theory of the firm (BTOF), CSR

Citation: Lee J-E and Yang YS (2022) The Impact of Corporate Social Responsibility Performance Feedback on Corporate Social Responsibility Performance. Front. Psychol. 13:893193. doi: 10.3389/fpsyg.2022.893193

Received: 10 March 2022; Accepted: 04 April 2022; Published: 18 May 2022.

Reviewed by:

Copyright © 2022 Lee and Yang. This is an open-access article distributed under the terms of the Creative Commons Attribution License (CC BY) . The use, distribution or reproduction in other forums is permitted, provided the original author(s) and the copyright owner(s) are credited and that the original publication in this journal is cited, in accordance with accepted academic practice. No use, distribution or reproduction is permitted which does not comply with these terms.

*Correspondence: Young Soo Yang, [email protected]

Disclaimer: All claims expressed in this article are solely those of the authors and do not necessarily represent those of their affiliated organizations, or those of the publisher, the editors and the reviewers. Any product that may be evaluated in this article or claim that may be made by its manufacturer is not guaranteed or endorsed by the publisher.

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Understanding CSR champions: a machine learning approach

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  • Published: 13 February 2024

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  • Alona Bilokha 1 ,
  • Mingying Cheng 1 ,
  • Mengchuan Fu 1 &
  • Iftekhar Hasan   ORCID: orcid.org/0000-0003-2469-0539 1 , 2 , 3  

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In this paper, we study champions of corporate social responsibility (CSR) performance among the U.S. publicly traded firms and their common characteristics by utilizing machine learning algorithms to identify predictors of firms’ CSR activity. We contribute to the CSR and leadership determinants literature by introducing the first comprehensive framework for analyzing the factors associated with corporate engagement with socially responsible behaviors by grouping all relevant predictors into four broad categories: corporate governance, managerial incentives, leadership, and firm characteristics. We find that strong corporate governance characteristics, as manifested in board member heterogeneity and managerial incentives, are the top predictors of CSR performance. Our results suggest policy implications for providing incentives and fostering characteristics conducive to firms “doing good.”

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corporate social responsibility research papers

In this paper, we use CSR and ESG terms interchangeably as prior literature has pointed out that the only difference between the two terms is that ESG includes a governance component explicitly while CSR implicitly includes it into social responsibility of the firm (Gillan, Koch, & Starks, 2021 ).

According to the search on Google Scholar platform conducted on 03/16/22.

We performed a robustness check by excluding all firms that were dropped during the sample period. Specifically, we define dropped companies as voluntarily delisted companies (companies delisted at the company’s request) and mandatory delisted companies (companies delisted by exchanges). We identify those firms using CRSP delisting codes. We screen out firms with delisting codes in 400 range (“liquidations”) and the 500 range (“dropped”), excluding firms with delisting codes of 501–503 (“stopped trading on current exchange to move to NYSE, AMEX, or NASDAQ”). During our sample period, 83 out of 9825 firm-year observations fall into this category. We drop those 83 observations and reconstruct the seven machine learning models. The out-of-sample model performance is consistent with the main results and is presented in Panel B Table 3A of Online Appendix.

As a robustness check, we conduct analysis on a subsample of firms that are not operating in the “sensitive” industries. Specifically, we follow Cho and Patten ( 2007 ) and define environmentally sensitive industries (ESI) as companies with a primary SIC code of 13xx (oil exploration), 26xx (paper), 28xx (chemical and allied products), 29xx (petroleum refining), or 33xx (metals). During our sample period, 1198 out of 9825 firm-year observations fall into this category. We redid the main analysis on the subsample excluding ESI companies and included the results in Online Appendix 5A. The results are consistent with our main results confirming that our analysis is not driven by only environmentally sensitive industries.

We acknowledge that ESG scores are available from multiple data providers and, according to a recent study by Berg, Koelbel, & Rigobon ( 2022 ) those scores are based on different measurement techniques that result in less than perfect correlation among them. Thus, our results are not expected to be exactly the same across all ESG scores from various sources, although we can reasonably expect some positive correlation. Our chosen ESG scores dataset (Refinitiv/Asset4) has several advantages. The Refinitiv/Asset4 has the most comprehensive coverage with roughly the largest 3,000 companies in U.S. and across more than 450 different ESG metrics (Amiraslani, Lins, Servaes, & Tamayo, 2022). This data has been used widely used in prior studies in the field (Albuquerque, Koskinen, Yang, & Zhang, 2020 ; Dorfleitner, Kreuzer, & Sparrer, 2020 ; Drempetic, Klein, & Zwergel, 2020 ; Havlinova & Kukacka, 2023 ). This makes it a good fit for our purposes to ensure the credibility of results and consistency with the prior literature.

Since the industry component is reflected in ESG scores, we do not control for the industry in constructing independent variable groups.

Diebold-Mariano statistics for each pair of models are calculated according to the following steps. First, gather the out-of-sample predictive error for both models. Second, compute the absolute values of these errors and the mean of the difference of these absolute values. Third, compute the covariogram for lag/lead length of the out-of-sample prediction errors for the vector of the differences of the absolute values of the predictive errors.

tenfold cross validation is applied when training each model.

For example, the first model that predicts ESG scores for firms in 2012 is trained using 2007–2011 as a training and validation set. We repeat this process annually till the testing set reaches the end of the sample period, the year 2018.

To make the plot clear, we normalize the feature importance of all variables so that the most important feature gets the value 1.

The model construction methods of different algorithms are very different, which also brings about their different dependence on each predictor. Out of the seven models we tested, OLS, PLS, Lasso, Ridge, and ENet are linear models, while MARS and XGBoost are nonlinear models. The results in Fig.  1 show that ESG performance is highly dependent on corporate governance across all models. Generally speaking, feature importance is more informative for models with better out-of-sample predictive performance. Since feature importance indicates how much each feature contributes to the model’s prediction, the feature importance in the model with the best performance (XGBoost in our case, as shown in the results in Table 3A) is the most instructive.

Additionally, to assess the explanatory power of the four groups of variables, we report the out-of-sample performance of models based on the subsets of variables in Online Appendix Table 4A.

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