Consumer social responses to CSR initiatives versus corporate abilities

Percy Marquina Feldman and Arturo Z. Vasquez-Parraga

lica Business School, Ponticia Universidad Cato lica del Peru , Lima, Peru CENTRUM Cato
Abstract Purpose Consumer responses to corporate social responsibility (CSR) initiatives when compared to consumer responses to corporate abilities (CA) have been elusory. Relevant empirical research on the subject shows unclear results. The objective of this research is to examine key antecedents to consumer social responses (CnSR), in particular, the comparative effects of CSR initiatives and CA in the consumer purchasing behavior. Design/methodology/approach A choice-based conjoint model was applied to quota consumer samples from two disparate countries (USA and Peru) in the shoe industry. Findings The results demonstrate that some CSR initiatives, such as companies environmental commitments, along with some CA, such as product quality, signicantly explain the nature of consumer responses and a trade-off effect on consumers willingness to pay for a product. The differences between the two countries, and those expected for gender and age, strengthen the relationships tested. Practical implications Implications for CSR policies, limitations of the ndings, and considerations for future research supplement the contribution. Originality/value Trade-off measures between traditional product features, that depend on CA, and CSR product features, that depend on CSR initiatives, are used to show why consumers prefer CSR products to other products. Keywords Consumer social responses, Corporate social responsibility, Corporate abilities, Willingness to pay, Choice-based conjoint model, Social responsibility, Corporate strategy Paper type Research paper

An executive summary for managers and executive readers can be found at the end of this article.

Introduction
Research on corporate social responsibility (CSR) may be at a mature stage, but consumer responses to CSR initiatives are not. Results from surveys exploring or testing the relationship between consumer responses to CSR actions generate controversy. On the one hand, some surveys report a positive relationship exists between a companys CSR actions and consumers reaction to that company and its products (Bhattacharya and Sen, 2004; Brown and Dacin, 1997; Carvalho et al., 2010; Creyer and Ross, 1997; Ellen et al., 2006; Smith and Langford, 2009). On the other hand, other research indicates the relationship between a companys CSR actions and consumers reactions is not always direct and evident, suggesting numerous factors for the effects of a rms CSR activities on consumer purchase intentions (Boulstridge and Carrigan, 2000; Carrigan and Attalla, 2001; Ellen et al., 2000; Maignan and Ferrell, 2004; Valor, 2008). Controversy exists about what is relevant and what is not in explanations about why consumers intend to buy products having CSR features and why they actually buy them (Arredondo et al., 2010; Devinney et al., 2006). Auger et al. (2003) attempt to clarify the controversy by noting
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deciencies in some studies like those that rank the importance of CSR issues but avoid using trade-off measures between traditional product features and CSR product features. Without trade-off measures, results may not show why consumers prefer CSR products to other products. Consumers preferences for CSR products, when not compared with other preferences, may not allow consumers actual purchasing behavior to be claried (Fan, 2005). The research and practical consequences of establishing a clear link between CSR actions and consumers responses to such actions are many. A positive link between CSR and consumer patronage spurs companies to devote greater energies and resources to CSR initiatives (Mittal, 2008), shifting the debate about CSR from whether to how (Bhattacharya and Sen, 2004). Moreover, supporting CSR activities affects not only purchase and loyalty motives, but also, consumers evaluations of a company (Sen and Bhattacharya, 2001). In addition, it affects more immediate outcomes such as word-of-mouth, resilience to negative company information and consumers awareness, attitudes and attributions about why companies are engaging in CSR initiatives. It also affects secondary outcomes such as partner relationships and the cause or social issue at the core of a companys CSR efforts (Bhattacharya and Sen, 2004). The purpose of this study is to re-examine key antecedents to consumer social responses (CnSR) in order to establish a clear link between CSR actions and consumers responses to such actions. The key antecedents belong to CSR initiatives, or the inuence of CSR, in contrast to the corporate abilities (CA) being used. In addition, the trade-off effects of CSR and CA on consumer choices are captured using a measure of consumers purchasing intentions, that is, consumers willingness to pay (WTP) for the product. A literature review of trends found in CnSR to CSR actions is rst presented followed by a compact theoretical framework 100

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for CSR and CA. A model and research hypotheses are derived from the literature review. The research design, measurement, data gathering and analysis procedures and sample is presented next, followed by an account of the results obtained and a discussion of the empirical ndings. The conclusions, limitations of the research performed and ideas for future research are addressed last.

Literature review
Consumer social responses Consumer reactions, consumer responses, consumer product responses, consumer attributions to CSR, consumer awareness of CSR, consumer understanding of CSR, consumer social responsibility, and socially responsible consumer behavior are some of the terms referring to a similar content called CnSR. Consumers respond to many stimuli produced by marketers, sellers and other allied agencies. Yet, CnSR refer to responses due to social causes such as care for the environment, societal welfare, and ethical responsibility on both sides of the transaction. These consumers are called socially conscious consumers (Anderson and Cunningham, 1972; Auger et al., 2006; Mayer, 1976), socially responsible consumers (Mohr et al., 2001; Webster, 1975) or ethical consumers (Crane and Matten, 2004). Consumer responses to corporate initiatives that attempt to reach certain goals or outcomes have been evaluated and reported often in the context of corporate decision making, planning and controlling. CnSR to CSR initiatives and/or CA to lead, innovate or produce value have also been evaluated but to a much lesser extent. In reviewing the literature on how CnSR were evaluated and the outcomes of such evaluations, six trends are identied. First, company CSR actions inuence consumers reactions to that company and its products (Brown and Dacin, 1997). Often consumers include companies CSR standings in their evaluations of company brands and products, brand choice and brand recommendations (Bhattacharya and Sen, 2004). Negative information about companies CSR practices often generates negative evaluations of those companies products (Biehal and Sheinin, 2007; Marin and Ruiz, 2007). Conversely, positive views of companies CSR practices favor consumer identication with the company and better product evaluations as a result (Bhattacharya and Sen, 2003). Empirical studies have shown some positive outcomes in two countries. The stated importance of social responsibility to purchase decisions rose from 24 percent in 1997 to 38 percent in 2003 in the UK, whereas in the USA, eight out of ten people trust in a company that supports social causes, which represents a 21 percent increase since 1987 (Dawkins, 2004). In another study, 86 percent of American people would switch from one brand to another of the same price and quality if the latter brand was associated with a social cause (Cone LLC, 2004). The relationship between company CSR practices and consumers responses to such practices is often positive, as reported in previous literature (Beckmann, 2007). In turn, consumers perceptions of CSR have a positive and signicant inuence on customers attitudes and behavioral intentions (Guchait et al., 2011). Second, specic company strategies are found to include CSR actions in order to attract and retain customers. For instance, product category is used to moderate the 101

relationship between consumers awareness and trust of companies CSR and their responses to CSR (Tian et al., 2012). Retailer CSR actions have an effect on shopping perceptions and evaluations for town shopping centers (Oppewal et al., 2006). Negative retailer practices lead to consumers perceptions of corporate social irresponsibility (Wagner et al., 2008). For example, CSR product shoppers of cotton apparel goods are willing to pay more for such products (Ha-Brookshire and Norum, 2011). Similarly, Brazilian consumers would be willing to pay an extra fee for products from corporations that follow CSR practices (Carvalho et al., 2010), and Vietnamese businesses are interested in building a growing group of ethical consumers who, in turn, help reinforce CSR actions that will enhance their businesses in the end (Huong, 2010). Third, consumers use trade-off criteria between CSR product features and traditional product features such as price, quality, convenience and lack of information (Pomering and Dolnicar, 2009), corporate brand dominance (Berens et al., 2005) or product quality. The importance of such traditional features is balanced against a companys specic CSR actions, consumers personal support for CSR issues, and consumers general beliefs about CSR (Arredondo et al., 2010; Pomering and Dolnicar, 2009; Sen and Bhattacharya, 2001). Other traditional factors considered include the presence and magnitude of the price and performance trade-offs (Barone et al., 2000), geographic distance from the nearest shop, age, awareness of CSR criteria, consumption habits and membership of volunteer associations (Becchetti and Rosati, 2007), nature of the product, price, and individuals reactions to personal costs and rewards (Belk et al., 2005). Fourth, consumers evaluations of company CSR may be linked to their perspectives of how responsible a company is in relevant areas such as economic, legal, ethical, and philanthropic (Ramasamy and Yeung, 2009). Similarly, consumers take into account companies motivations before becoming involved in CSR programs. For instance, consumers manifest positive reactions to companies showing social motivation and negative reactions to companies motivated by prot alone (Becker-Olsen et al., 2006). Some consumers regard companies favorably when they buy stock in companies that make efforts to pursue CSR strategies with a combination of values-driven (other-centered) and strategic (self-centered) attributions (Ellen et al., 2006; Vlachos et al., 2009). Other consumers include in their evaluations: . economic circumstances, type of political and governmental institutions, and cultural norms in the society in which consumers live (Devinney et al., 2006); . involvement, certainty, perceived consumer effectiveness, and perceived availability (Vermeir and Verbeke, 2006); and . n, a and Leo type of product and aspect of CSR (Aran 2005). Fifth, consumers evaluations of the t between companies CSR activities and consumers characteristics (like life styles) or interests (like values) positively affect consumers perceptions of companies CSR activities (Lee et al., 2011). Similarly, consumers motivations to support company CSR programs are often related to consumers characteristics and attitudes. These include:

Consumer social responses to CSR initiatives versus corporate abilities Percy Marquina Feldman and Arturo Z. Vasquez-Parraga
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consumers intrinsic and extrinsic values and religiosity (Ramasamy et al., 2010); consumers perceived ethicality (Brunk, 2010; Shea, 2010); consumers responses to enterprises ethical behaviors (Deng, 2012); CSR consumers tendency to consume ethical products (Bui, 2011); consumers sensitivity towards human rights issues, in particular political rights (Puncheva-Michelotti et al., 2010); and consumers reactions to cause-related marketing efforts based on the causes a company supports (Ellen et al., 2000).

Sixth, consumers who receive communication about company CSR activities increase their CSR awareness, which in turn, generates positive attitudes towards buying products from CSR companies (Pomering and Dolnicar, 2009; Sen et al., 2006). Consumers showing a high level of awareness and trust in companies CSR are more likely to transform a good CSR record into positive corporate evaluation, product association, and purchase intention (Tian et al., 2012, p. 197). What consumers know about a company can inuence their evaluations of products introduced by the company and different types of corporate associations (such as those with CSR) can have important but different inuences on company and product evaluations (Brown and Dacin, 1997 p. 68). However, despite the positive effect of CSR on consumer products and company evaluations, in some studies, the inuence of CSR on purchase intentions is limited, as only a few consumers mention CSR as a factor affecting their purchases on a regular basis (Mohr et al., 2001). In a similar study, consumers beliefs about the virtues of CSR are found to be inconsistent with their buying behavior, and a companys reputation for social responsibility is not usually the most important factor in the consumers purchase decisions. The results are, in many cases, contradictory and identify numerous factors affecting whether a companys CSR activities translate into consumer purchases (Arredondo et al., 2010). No doubt, consumers take CSR product features into consideration, but they are not interested in sacricing functionality for a cause (Auger et al., 2006, p. 35). Consequently, further investigation about CSRs consequences on consumer perceptions and those apparent contradictory results is needed (Marin and Ruiz, 2007). The lessons learned from the trends and relationships noted above are twofold. First, companies CSR programs and practices have an impact on consumers responses to companies and their products. Second, companies CSR initiatives can generate consumer purchase intentions and secure WTP when consumers take into account companies motivations for becoming involved in CSR programs or increase their CSR awareness as a result of communication about companies CSR initiatives. Thus, the rationale for this study in proposing an examination of companies CSR initiatives, such as companies environmental commitments, along with some CA, such as product quality, is to explain their effects in terms of consumer responses and trade-off effects on consumers WTP for the products. 102

Corporate social responsibility CSR is currently dened as an establishments obligation to maximize its positive impact and minimize its negative effects in being a contributing member to society, with concern for societys long-term needs and wants (Lantos, 2001, p. 600). The initial CSR concept, when generated in the 19th century (1880), was linked to the social consequences of the Industrial Revolution (Fernandez, 2005; Smith, 2003). CSR is now linked to the social consequences of commerce, business and marketing and thus aims at mitigating and limiting the negative consequences while enhancing and augmenting the positive consequences of commerce, business and marketing. Current business practice has adopted a denition of CSR along the same lines. For instance, the ISO 26000 International Standard (2010, p. 3) denes social responsibility as [the] responsibility of an organization for the impacts of its decisions and activities on society and the environment, through transparent and ethical behaviour. Overall, CSR aims at developing closer links with customers and greater awareness of their needs, enhancing brand value and reputations, increasing staff commitment and involvement, enhancing a rms capacity to innovate, securing long-term return on investments, improving nancial performance, reducing operating costs, and reaching long-term sustainability of the company (Jones et al., 2005). Although many frameworks exist to conceptualize and operationalize CSR, a three dimensional framework is adopted that captures the main features of CSR and contributes parsimony to the research. The three general attitude-based dimensions are: 1 human responsibility; 2 environmental responsibility; and 3 product responsibility (Anselmsson and Johansson, 2007). These dimensions are in line with three of the six core subjects expressing responsible behavior proposed by the ISO 26000 (2010): human rights assessed through conditions of work (sub-clause 6.4.4), protection of the environment (subclause 6.5.6), and labor practices in wealth and income creation (sub-clause 6.8.7). Thus, these dimensions guide this research when operationalizing CSR. Corporate abilities CA are dened as the companys expertise in producing and delivering products and services (Brown and Dacin, 1997 p. 68) and the abstract dimensions that may summarize a number of different attributes of a company (Berens, 2004, p. 56). These attributes refer to manufacturing expertise, product quality, a companys customer orientation, a rms innovativeness, a rms research and development, employee expertise, and after-sales service (Gupta, 2002). Although many frameworks exist to conceptualize and operationalize CA, three key attributes dening the companys expertise in producing and delivering products and services are adopted: product quality, technological innovation, and leadership in the industry. Because price is taken into account when product quality is examined to balance basic strategies of price versus value in strategic decisions by most companies (Hunt, 2000), price is also adopted as an independent variable.

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Consequently, a model is generated in which three CSR dimensions and three CA attributes, in addition to price, inuence CnSR (see Figure 1). CSR and CA are conceptualized and operationalized separately in this research so that a comparison of the separate effects of each set can be performed and a contrast between social factors (CSR) and economic factors (CA) can be examined. This is done despite a suggestion by Deng (2012) for using both constructs, CSR and CA, as one construct on the basis that a company can both have social responsibility and produce high-quality inexpensive products (Deng, 2012, p. 18) and the social responsibility behavior of a rm should be paid out of its resources (Deng, 2012, p. 19). Proposition 1. CSR initiatives have a direct and signicant impact on CnSR H1. H2. H3. A companys environmental commitment positively affects CnSR. Corporate giving to worthy causes positively affects CnSR. A companys good labor practices positively affect CnSR.

McFadden (2001, p. 361) expresses it: The individual chooses the option yielding the greatest realization of utility. Yet, other consumers seek satisfaction based on other than economic values, like social values. This research attempts to obtain a trade-off measure of preference between CSR and CA factors using WTP, despite the measure being hypothetical (Voelckner, 2006).

Method
A description of the research design, measurement, data gathering and analysis, and sample characteristics follow. Research design This investigation is exploratory in character and uses a binary experimental design based on a choice-based conjoint model (CBC model) in order to measure consumer responses to CSR initiatives and CA and a trade-off effect in consumers purchasing intentions as reected by their WTP for companies socially responsible actions. The CBC model is based on a probabilistic choice theory named random utility theory (McFadden, 2001) and is consistent with neoclassical economics. When the perceived stimuli are interpreted as levels of satisfaction, or utility, this can be understood as a model for economic choice in which the individual chooses the option yielding the greatest realization of utility. This model of choice behavior allows estimation of separate marginal values for each attribute of total values for any particular collection on attribute levels (Lancsar and Savage, 2004). Researchers can also estimate the marginal rate of substitution, or trade-offs, respondents are willing to make between any two attributes, which are nancial indicators of WTP (Kanninen, 2002). This approach requires a representative sample of consumers to make choices in simulated situations derived from realistic variations of actual product offerings, according to the foreseen experimental design. The CBC model has several advantages for this research when compared to conventional surveys. First, it allows an estimation of the preferences of individuals for attributes or characteristics of products that are currently nonexistent in , 2003) and quantify the WTP the market (Merino-Castello for socially desirable products (Auger et al., 2006). It reveals consumers social responsible preferences by forcing them to trade-off social features of products against CA or traditional utilitarian features. In contrast, traditional survey methods use simple rating scales, which may overstate the importance of ethical purchase behavior, even in those who reveal themselves as supportive of social causes. Thus, an experimental methodology that more closely mimics a real purchase situation may be appropriate for this type of research (Auger and Devinney, 2007 p. 26). Second, the research design allows a researcher to probe whether beliefs (such as CnSR) and behaviors (such as CSR initiatives and CA) are connected (Hensher et al., 2005; Lancsar, 2002; Louviere et al., 2004). Third, the method makes possible a comparison between countries about the inuence of the CA and CSR attributes on consumer responses and a quantication of participants economics valuation or willingness-to-pay (WTP) for CA and CSR product attributes. Consequently, this research follows the process recommended to generate and set a discrete choice 103

Proposition 2. CA attributes have a direct and signicant impact on CnSR H4. H5. H6. H7. A companys leadership in the industry positively affects CnSR. A companys product quality positively affects CnSR. A companys technological innovation positively affects CnSR. A companys prices negatively affect CnSR.

Willingness to pay for the product CSR practices often justify consumers WTP higher prices for products made by CSR companies, switch brands to support companies that make donations to non-prot organizations, or buy products from a company simply because it supports charitable causes (Sen and Bhattacharya, 2001). In addition, WTP provides a measure that reects intention, a more denite consumer response than CnSR, an attitude, thus allowing for a better understanding of the links portrayed in the model. Thus, we include WTP for the product in the examination in order to compare the effects of CSR versus CA on CnSR. WTP can reect a trade-off between CSR initiatives and CA. The underlying rationale behind this attempt lies in the way consumers seek satisfaction, some on the basis of utility, or Figure 1 Conceptual framework

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experiment using the steps proposed by Verma et al. (2004): identication of determinant attributes, specication of attribute levels, and experimental design. The rst two steps are addressed with measurements and the last with data gathering and analysis. Measurement The rst step in implementing the discrete choice experiment was to identify the determinant attributes used in CSR and CA evaluations. Following Hensher et al. (2005), it was necessary to build a set of attributes as small as possible to make the experiment tractable but realistic. In addition, an end-point design (Louviere et al., 2004) was applied using the attribute levels at the extremes only. That is, each attribute would have only two levels at the two extremes of the attribute level range. These two levels are sufcient to estimate the linear effects of the attributes of choice and reect the upper and lower extreme for each attribute. The resultant design consists of six attributes (three CSR initiatives, and three CA attributes), no interactions, and two levels of price, which results in 16 choice tasks. To measure CSR initiatives, three types of widely applied initiatives that correspond to three general attitude-based dimensions were derived from the literature: 1 companies environmental commitment reecting environmental responsibility; 2 corporate giving to worthy causes reecting human responsibility; and 3 companies good labor practices reecting product responsibility. To measure CA, three company attributes were derived from the literature: 1 companies leadership in the industry; 2 companies technological innovation; and 3 companies product quality. The attribute of companies prices was added to contrast the effects of product quality. A CnSR to CSR and CA is dened as the conscious and deliberate choice to make certain consumption choices based on ethical principles. CnSR is measured using an experimental design following the CBC modeling. To estimate the variable WTP, a monetary valuation of CSR and CA attributes for the consumer is used. According to Louviere et al. (2004), consumers WTP can be estimated as follows: WTP MRS* k DP , where MRSk is the marginal rate of substitution between attribute k relative to price, and delta P represents the difference between the product prices levels presented to the respondents. The main objective of using this method is to obtain a monetary valuation of the CSR initiatives and CA attributes for the consumer samples in two countries. In order to make WTP comparable for consumers in both countries, WTP is expressed in percentage a terms relative to the minimum wage in Peru (Secretar General de la Comunidad Andina, 2012) and the USA (Bureau of Labor Statistics, 2011) in 2009 values. Data gathering and analysis The experimental design was applied for the measurement of consumer valuations of CSR initiatives and CA as implemented for athletic shoes, a product line characterized by a high degree of consumer involvement and one in which emotional criteria may dominate the moment of purchasing, 104

like fashion products as portrayed by the Foote, Cone, and Belding Grid (Vaughn, 1986). This product line was chosen mainly because it allows for the evaluation of environmental issues, working conditions and other traditional characteristics, in the same way as has been done in the past with respect to world famous sport brands. A binary discrete choice experiment was applied where the respondents were asked a series of hypothetical choice questions. Each experiment included a description of a two sets of alternative products (two types of athletic shoes) with different functional (CA) and social (CSR) attributes, and the respondents stated which one they would buy. Respondents had to address a set of 16 choice-tasks, with the attributes of the products varying to determine how a respondents choice changed when the attributes changed, as exemplied in Figure 2. The data was gathered following the proposed methodology, where each of the CSR and CA product attributes were components of the vector of observed variables from the utility function of each respondent. Then, the logit binomial model was estimated in order to calculate the parameter values, the standard deviations and the asymptotic statistics on the basis of several hundred observations. Finally, a utility function using the CBC model was estimated, specically a main effects model, using the athletic shoes data. The focus was to explore the inuence of the explanatory variables (CSR and CA attributes) on CnSR and the trade-off between CSR and CA factors using WTP. Sample Quota samples of adult consumers from two distant and different populations were drawn. The rst sample represents a multicultural population in a developed country, namely, the USA. The second represents a multiethnic population in a developing country, namely, Peru. The choice of such disparate samples was guided by previous research underscoring essential differences in those two worlds. Cross-cultural studies have revealed different outcomes when exploring consumer perceptions of CSR. For example, French and German respondents were more willing to support socially responsible corporations than were their USA counterparts (Maignan, 2001). English-speaking respondents Figure 2 Questionnaire example for the US sample

Consumer social responses to CSR initiatives versus corporate abilities Percy Marquina Feldman and Arturo Z. Vasquez-Parraga

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had a greater interest in the ethical and environmental practices of companies than their Spanish-speaking counterparts, although they were not as critical as the later ones when evaluating the available CSR activities information (Singh et al., 2008). In contrast, a study of university students in Spain, Portugal, Argentina and Chile found that CSR perceptions and their relevance as purchasing criteria were et al., 2005). neutral in general (Bigne Table I shows a prole of the two samples by gender and age groups. The gender groups are almost the same size in the American sample whereas males constitute two thirds of the Peruvian sample. Age groups are similar between young and mature adults in the Peruvian sample and concentrated on young adults in the American sample. The Chi-squared values are signicant in both cases at p , .001.

Results and discussion

Table II shows the results after testing the proposed hypotheses regarding the inuence of CSR and CA attributes on CnSR in both samples. All measured attributes have a signicant inuence on CnSR, meaning the probability of choosing an athletic shoe increases when the company shows some of the six CSR and CA attributes in its practice, but it decreases as the price of the athletic shoe increases. These results support the expected relationships as formulated in H1 through H7 for both countries. More specically, companies environmental commitments and product quality registered the highest inuence in both samples. The strength of the inuences of either CSR initiatives or CA attributes for CnSR is, however, somewhat different Table I Sample demographic characteristics
Variable Peru (n 5 119) 65.0 35.0 51.2 47.8 9.0 USA (n 5 118) 48.5 51.5 70.8 22.0 7.2

l2
274,347 *

Gender Males Females Age groups Young adults (20-29 years) Mature adults (30-49 years) Senior adults (50 years or more)
Notes: * p , 0:001

846,280 *

across samples. The impact of CSR initiatives on CnSR is stronger among American consumers, whereas the inuence of CA attributes on CnSR is higher among Peruvian consumers in support of previous ndings (Deng, 2012) in which some consumers responded positively to company social initiatives (like American consumers), and other consumers held an indifferent attitude to companies social behaviors, caring more about the products economic benets (such as product quality, price and shopping convenience, etc.) than about its social enhancements (like Peruvian consumers). In addition, one CSR initiative (a companys good labor practices) and one CA attribute (a companys leadership in the industry) do not affect CnSR among Peruvian consumers whereas they do among American consumers. The different levels of inuence in each sample are also reected in an overall Chow test for discrete models between the estimated parameters of the pooled sample and split samples for each country. The null hypothesis of no differences between the two samples was rejected because the parameters of the model estimates for the two countries were signicantly different: the likelihood-ratio test 28 67:07 at a p 2 value 0:001. As expected, following economic theory and in support of H7, the parameter for the price of athletic shoes is negative and signicant for the model, revealing that higher prices decrease the maximum utility individuals can obtain at a given income level. Furthermore, the intercept (constant) in the binary logit model measures inherent consumer preferences for buying athletic shoes not gathered by the independent variables of the model. It is signicant in both samples and measures the impact of all unobserved attributes and therefore provides an assessment of switching or choice inertia (Verma et al., 2004). In other words, consumers of athletic shoes would choose more often the option of neither of the two alternatives offered to them. Table III compares the results by gender groups and shows no meaningful differences from the results recorded in Table II. Nonetheless, Peruvian male consumers are somewhat inuenced by a companys leadership in the industry (p , 0:05) whereas Peruvian female consumers are not. Table IV compares the results by age groups (young, mature and senior) and reveals clear differences across samples among senior consumers. Whereas American old consumers recognize the inuence of all attributes (except one) on their CnSR, Peruvian old consumers do not, except for price. This

Table II CnSR to CSR and CA initiatives in both countries

Variables Companys environmental commitment Corporate giving to worthy causes Good labor practices Price Leadership in the industry Product quality Technological innovation Constant Notes: * p , 0:001 Peru Estimated coefcient B 1.135 0.525 0.075 2 1.132 0.186 1.585 0.749 2 1.503

p-value
* *

USA Estimated coefcient B 0.990 0.396 0.632 2 0.738 0.324 1.391 0.520 2 1.752

p-value
* * * * * * * *

0.316
*

0.013
* * *

105

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Table III CnSR to CSR and CA initiatives in both countries by gender

Variables Peru Companys environmental commitment Corporate giving to worthy causes Good labor practices Price Leadership in the industry Product quality Technological innovation Constant Notes: * p , 0:1; * * p , 0:05; * * * p , 0:001 1.146 * * * 0.551 * * * 0.230 * 2 1.153 * * * 0.131 1.584 * * * 0.713 * * * 2 1.539 * * * Female USA 1.109 * * * 0.501 * * * 0.660 * * * 2 0.783 * * * 0.433 * * * 1.483 * * * 0.569 * * * 2 1.978 * * * Peru 1.153 * * * 0.512 * * * 0.005 2 1.138 * * * 0.233 * * 1.617 * * * 0.779 * * * 2 1.522 * * * Male USA 0.891 * * * 0.318 * * * 0.608 * * * 2 0.707 * * * 0.230 * * * 1.329 * * * 0.491 * * * 2 1.577 * * *

Table IV CnSR to CSR and CA initiatives in both countries by age group

Age group 20-29 years old Variables Companys environmental commitment Corporate giving to worthy causes Good labor practices Price Leadership in the industry Product quality Technological innovation Constant Companys environmental commitment Corporate giving to worthy causes Good labor practices Price Leadership in the industry Product quality Technological innovation Constant Companys environmental commitment Corporate giving to worthy causes Good labor practices Price Leadership in the industry Product quality Technological innovation Constant Peru 1.107 * * * 0.512 * * * 0.021 2 1.175 * * * 0.309 * * 1.614 * * * 0.897 * * * 2 1.581 * * * 1.214 * * * 0.532 * * * 0.158 2 1.080 * * * 0.078 1.613 * * * 0.603 * * * 2 1.505 * * * 0.685 1.533 2 0.341 2 3.554 * * 0.528 1.146 1.223 2 0.254 USA 0.979 * * * 0.411 * * * 0.621 * * * 2 0.747 * * * 0.336 * * * 1.446 * * * 0.525 * * * 2 1.781 * * * 1.069 * * * 0.530 * * * 0.687 * * * 2 0.719 * * * 0.230 * 1.395 * * * 0.504 * * * 2 1.840 * * * 1.014 * * * 0.066 0.603 * * * 2 0.800 * * * 0.592 * * * 1.052 * * * 0.634 * * * 2 1.578 * * *

30-49 years old

50 years old onwards

Notes: * p , 0:1; * * p , 0:05; * * * p , 0:001

observation may reveal the state of progress in CSR practices in both countries; quite advanced in the USA and more recent in Peru. The result also reveals the lack of appreciation for good labor practices by all age groups in Peru, whereas good labor practice is a common concern for all ages in the USA. Table V reports the results of the effects of CSR and CA attributes on WTP that is estimated on the basis of coefcients from Table II. The numbers in Table V reect percentages of the corresponding minimum income in each country. The approach allows for the evaluation in monetary terms of the trade-offs that consumers can make between various CSR initiatives and CA attributes. Overall, CA attributes are slightly more valued than CSR initiatives in Peru, whereas they are the same in the USA, showing a partial 106

weakness of CSR initiatives to generate CnSR in Peru. Overall, a company product quality and environmental commitment are more valued and prompt more WTP in both countries.

Summary, conclusions and managerial implications

The central purpose of this research was to examine the inuence of CSR initiatives and CA attributes, plus price, in CnSR and WTP using samples from two distant consumer populations, one in the USA and another in Peru. The study involved seven factors (three CSR initiatives, three CA attributes and price) and two choice levels per factor, forcing

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Table V CnSR to CSR and CA initiatives in both countries, and their trade-off effects on WTP for the product
Willingness to pay Peru Variables Companys environmental commitment Corporate giving to worthy causes Good labor practices Leadership in the industry Product quality Technological innovation Per attribute 0.07 0.03 0.00 0.01 0.09 0.04 Per construct 0.10 Per attribute 0.03 0.01 0.02 0.01 0.04 0.01 USA Per construct 0.06

0.15

0.05

Notes: The number reects an acceptable percentage with respect to the minimum monthly payment; To estimate WTP, minimum monthly payments for both a General de la Comunidad Andina (2012) for Peru countries were obtained from the US Bureau of Labor Statistics (2011) for the USA and Secretar

respondents to make trade-offs, and allowing for measurement of the trade-offs they made. A discrete choice modeling approach and a binary logit cross-sectional experimental study were used to determine whether beliefs (CnSR) and behavior (CSR initiatives and CA attributes) are connected. Results of the research show most CSR initiatives and CA attributes considered are signicantly and positively related to CnSR in both countries. This means the probability of selecting an athletic shoe increases when there are CSR initiatives (a companys environmental commitment, a companys good labor practices, corporate giving to worthy causes) and CA attributes (a companys product quality, technological innovation, and leadership in the industry) present, although at different levels of strength for consumers in Peru and the USA. However, the probability of selecting an athletic shoe decreases as prices increase in both countries. In addition, respondents would be willing to pay higher prices for product quality and a companys environmental commitment in both countries. The impact of CSR initiatives on CnSR is stronger among American consumers, whereas the inuence of CA attributes on CnSR is higher among Peruvian consumers in support of previous ndings (Deng, 2012) in which some consumers responded positively to company social initiatives, whereas other consumers held an indifferent attitude to the companys social behavior, caring more about the products economic benets (such as product quality, price and shopping convenience) than about its social enhancements. Two attributes, product quality and companys environmental commitment, contribute to the consumers utility the most in both countries. Yet, two other attributes, a companys good labor practices (a CSR initiative) and a companys leadership in the industry (a CA attribute) do not affect CnSR among Peruvian consumers whereas they do among American consumers. An important contribution of the study is the empirical validation of the competing role of CA and CSR attributes on consumers behavior. Previous studies have generally found both types of associations inuence consumer behavior, although CA associations have shown a stronger effect than CSR associations in developed countries, mainly because CA attributes can contribute to raising the brand value and improving the nancial results through greater consumer WTP. This research shows a greater effect for CSR initiatives on CnSR among consumers in a developed country, and a contrasting greater inuence of CA attributes on CnSR 107

among consumers in a developing country. A more mature consumer values CSR attributes the most or CSR attributes become a concern for mature consumers, for whom prot maximization is not necessarily in conict with social investment. As a consequence company offerings can enhance product quality at the same time CSR attributes such as environmental commitment and a companys good labor practices or corporate giving to worthy causes. Besides, rms that are able to provide successful combinations of CA initiatives and CSR attributes may not have to compete on price. The research results showed a signicant intercept, meaning consumers have a signicant switching barrier. Customers need to be offered some substantial value to switch or consider a new alternative. A well-considered combination of price, CA attributes and CSR initiatives can become powerful value proposals to overcome high consumer switching barriers. Of course, such combinations should privilege CA attributes for consumers in developing counties and CSR initiatives for consumers in developed countries, as suggested by the results obtained. Finally, the obtained results contribute to the understanding of business-to-consumer relationships within the framework of the selected product (athletic shoes), which according to the Foote, Cone, and Belding Grid (Vaughn, 1986) would be classied a fashion product. Using the results obtained in this research, business decision makers should supply the criteria needed for bundling and launching products with social attributes, managing corporate social initiatives, and contrasting the merits of using social attributes with the economic attributes in line with the CA of the company. In addition, they can help establish new advertisingcommunication policies, ones in which socially responsible attributes combine well with economic attributes so that both enhance a companys image and performance.

Limitations and future research

This research is limited by the number of factors identied and used to test CSR initiatives and CA attributes, although the limitation was imposed to gain necessary parsimony in the process. Other attributes can be explored, added or exchanged in new research. The research is also limited to the product line explored, athletic shoes, a product line characterized by a high degree of consumer involvement and one in which the emotional criteria may dominate the moment of purchasing, like fashion products. Other product

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lines that are less prone to emotions in the process of purchase or more rational products, like books, electronic products or travel services could also be explored. In addition, this research used consumer WTP to explore trade-offs between CSR and CA factors in consumer decisions. Other measures or procedures could be used to provide more insights into the outcomes of CSR and CA attributes when both sets are compared. Finally, new samples can be used to corroborate or reject the outcomes identied in a developed country context versus a developing country one. Because the comparative ndings of this research are somewhat new and perhaps controversial when contrasted to previous ndings, additional research is urgent to validate the results obtained and continue the exploration of the topic at higher levels of isomorphism.

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Review, Journal of Employee Relations, and Journal of Centrum Cathedra. His research interests include marketing, ethical consumption, social responsibility, strategy, and project evaluation. He is the Academic Director of CENTRUM and Director of the Peruvian Marketing Society. He was coordinator of the ISO 26000-CSR Peruvian committee, and an executive in managerial positions at academic institutions, multinational and local rms, and NGOs. Arturo Z. Vasquez-Parraga (PhD, Texas Tech University, and PhD, The University of Texas at Austin) is Professor of Marketing and International Business at the University of Texas-Pan American and Afliate Professor of CENTRUM lica Business School of the Ponticia Universidad Cato lica del Peru. He has published over 50 refereed Cato articles in journals such as the Journal of Marketing Research, Journal of Business Research, Journal of Business and Industrial Marketing, Journal of Consumer Marketing, Journal of Retailing and Consumer Services, International Journal of Services and Standards, Journal of Travel Research, Journal of Travel and Tourism Marketing, Journal of Academic Ethics, Journal of Euromarketing, and Health Marketing Quarterly. His research interests include marketing and business ethics, strategic marketing, customer loyalty, rm competitiveness, business strategies of Latin American companies in the USA, employment and labor relations, acculturation of Hispanic consumers, and competency-based learning methods. In addition to his regular teaching at UTPA, he teaches graduate courses in Peruvian, Chilean, Colombian and Mexican universities during the summer months, and trains executives and professionals using comprehensive workshops dedicated to ethics auditing, competency-based learning, and scientic research for journal publications. Arturo Z. VasquezParraga is the corresponding author and can be contacted at: avasquez@utpa.edu

Executive summary and implications for managers and executives

This summary has been provided to allow managers and executives a rapid appreciation of the content of this article. Those with a particular interest in the topic covered may then read the article in toto to take advantage of the more comprehensive description of the research undertaken and its results to get the full benets of the material present. Firms that behave in a socially responsible manner consider the impact of their decisions and operations on society and the environment. The aim is to accentuate the positive effects while keeping any negative consequences to a minimum. Evidence shows that corporate social responsibility (CSR) activities can benet performance, nancial well-being and reputation in various ways. Considerable research attention afforded to corporate social responsibility (CSR) has thoroughly explored the issue from a variety of angles. However, one area that warrants further investigation is the response of consumers to CSR initiatives. Different scholars have identied a population segment whose consumption behaviors are motivated by their desire to behave in an ethical or socially responsible manner. Their reactions to CSR activities have been termed consumer social responses (CnSR) and extant literature indicates the existence of certain trends: 110

About the authors

Percy Marquina Feldman (DBA, Maastricht School of lica del Management, and PhD, Ponticia Universidad Cato Peru) is a Professor of Marketing and Corporate Social lica Business School of Responsibility at CENTRUM Cato lica del Peru. He has the Ponticia Universidad Cato published books and cases on business and markets, and articles in journals, including the International Marketing

Consumer social responses to CSR initiatives versus corporate abilities Percy Marquina Feldman and Arturo Z. Vasquez-Parraga
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A tendency for consumers to evaluate a company and its brands and products based on how they perceive its CSR efforts. Empirical evidence exists to show that people will be willing to support rms that operate in socially responsible ways. Many organizations incorporate CSR activities into their strategies as an attempt to attract and retain customers. This might involve product category features to inuence consumer perception of and response to CSR. Consumer evaluation of a rm can depend on their perception of whether altruistic or prot motives drive its involvement with CSR initiatives. Equally important is how they consider its behavior with regard to different aspects that include economic, legal and ethical. Fit between an organizations CSR programs and characteristics of the consumer will inuence their evaluation. Lifestyle and values are especially important and include consumer perception of their own ethicality, compassion towards human rights issues, and connection with specic causes that the rm supports. Companies which communicate their CSR efforts increase consumer awareness of CSR and their trust in the rm. Such consumers thus become likelier to evaluate products more highly and consider making a purchase. Purchase decision making is determined by balancing CSR knowledge about a rm against traditional factors such as price, quality and convenience along with various other product and non-product related attributes.

The positive impact of CSR on consumer perceptions of companies and brands is conrmed in numerous studies. Nevertheless, many individuals state that the social responsibility of a rm is not necessarily the main determinant of their purchase behavior. Other factors are also regarded as important. Several researchers support the argument that consumer purchase decisions are often inuenced by corporate abilities (CA). These refer to a range of rm-related attributes including manufacturing expertise, product quality, innovativeness, customer orientation and after-sales service. The aim of the present study is to therefore consider the inuence of CSR efforts and CA factors and their relative effect upon consumer response and purchase behavior. As many consumers are seemingly prepared to pay more for ethically-produced goods, CSA and CA are also explored in relation to willingness to pay (WTP). The inclusion of this construct is driven by the belief that WTP signals intention and the knowledge that satisfaction to some consumers is measured in economic terms and to others in such as social values. Feldman and Vasquez-Parraga conduct an exploratory study involving adult consumers in the USA and Peru. The samples from these countries were respectively labeled as representing multicultural and multiethnic populations. Comparing subjects in developed and developing nations was driven by the knowledge that previous cross-cultural research had identied differences in how CSR is perceived. Experimental design is used with the aim being to identify which attributes are most preferred by respondents. The three widely applied CSR dimensions chosen for the study were

environmental responsibility, human responsibility and product responsibility. For CA, the selected attributed were the rms industry leadership, technological innovation and product quality. Hypothetical choice questions were asked with regard to athletic shoes. The product was selected because of high consumer involvement and relevance of environmental factors, working conditions and various traditional attributes. Two sets of athletic shoe products containing different CSR and CA features were used in the experiments with particular attention paid to how attribute changes impacted on consumer preference. Analysis revealed that: . In each nation, most of the CSR and CA attributes positively inuence CnSR. . Increasing the price reduces the likelihood of purchase in both countries. However, both samples indicated a willingness to pay extra for a quality product manufactured by a company committed towards the environment. . CSR initiatives more strongly inuence American respondents, whereas CA initiatives have a greater effect on consumers from Peru. . The CSR attribute good labor practices and the CA attribute industry leadership inuence CnSR among American respondents but not their Peruvian counterparts. . A consideration of WTP suggests that CSR has a greater impact on consumers in developed nations and CA on consumers in developing nations. . More mature consumers pay greater attention to CSR than to CA. With regard to the latter, the authors suggest targeting such consumers with high-quality products that also emphasize the rms commitment to various CSR issues such as fair labor practices and concern for the environment. They also point out that the right blend of CSR and CA initiatives can remove the need for a product to compete on price. The study identied consumer reluctance to switch to available alternatives. In the view of Feldman and VasquezParraga, companies can address this challenge with products incorporating a well considered combination of price, CA attributes and CSR initiatives. They point that such offerings should emphasize CSR initiatives for consumers from developed nations and CA attributes from those from developing nations. And by creating advertisements which highlight these effective attribute combinations, the image and performance of the rm can be enhanced too. Additional research might identify different CSR and CA attributes and ascertain their effect. Scope also exists to consider different product lines, including those whose purchase is less determined by emotions. Books, travel services or other more rational items might likewise be explored. Measures other than WTP could be utilized to assess the impact of CSR and CA attributes, while further comparison of developed and developing nations using new samples is advised. cis of the article Consumer social responses to CSR (A pre initiatives versus corporate abilities. Supplied by Marketing Consultants for Emerald.)

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