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Corporate Social Responsibility and its effects on Brand Trust

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Bachelor Thesis


Business Administration>General




Bachelorarbeit: Corporate Social Responsibility CSR is getting more and more attention in the business environment and the media (De Los Salmones et al., 2005; Pivato et al., 2008). However, Sen and Bhattacharya (2001) concluded that the impact of corporate social responsibility on consumer behavior and brand attitudes is limited. Although research does show that consumers are positively affected by corporate social responsibility (Ellen et al., 2006; Creyer & Ross, 1997). Delgado-Ballester and Munuera-Aleman (2004) also show that there is a limited analysis of brand trust from the consumer's perspective. Further research is needed on the impact of corporate social responsibility and brand trust. CSR can have a direct impact on brand trust, attracting the emotional aspects of consumers by making the brand or company appear caring and reliable, but more supporting evidence is needed. CSR is a powerful tool used by leaders in strategy. However, not all companies will achieve the same positive results. This is because the execution (leadership), support (employees) and utilization (marketing communication and branding related to the cause) of CSR activities are different in each organization (Brown, 1998; Sen and Bhattacharya, 2001) . This section includes definitions, strategy, leadership and financial performance related to corporate social responsibility. First, the definition of corporate social responsibility will be discussed. It is important to decide on a definition before completing the research to determine which areas contribute to corporate social responsibility. 2.2.1 Definition of CSR CSR is the concept of an organization that promotes, participates in, and initiates social projects to solve problems or concerns in the wider community. A broad definition, including multiple dimensions such as charity and stakeholders, is favored by academia (De Los Salmones et al., 2005; Godfrey & Hatch, 2006; Piercy & Lane, 2009). The definition of CSR has been evolving from the 1950s to the present. The literature after the 1980s has seldom defined and further researched corporate social responsibility (Carroll, 1999). Porter and Kramer (2002) described corporate social responsibility as a corporate philanthropy, which can be combined with economic benefits to provide a competitive advantage. Although, Godfrey and Hatch (2006) believe that socially responsible behaviors are not clearly related to the broader concept of CSR. Carroll (1999) studied a series of CSR definitions for decades. An original definition in the 1950s indicated that corporate social responsibility refers to businessmen’s policies or decisions that reflect social values ​​and goals. This definition includes businessmen or employees, who are also stakeholders. The definition studied by Carroll (1999) includes policy and decision-making, which is similar to business operations and strategy. In contrast, the early definition of CSR did not include all stakeholders. 2.2.2 Corporate strategic strategy is the long-term vision and goal of an organization. Corporate social responsibility may involve the long-term participation and support of organizations that need to be integrated into the strategy. The focus is on integrating corporate social responsibility into the company's corporate strategy (Cruz and Pedrozzo, 2009). Cruz and Pedrozo (2009) proposed three dimensions that must be addressed in order to successfully incorporate corporate social responsibility into the strategy. They are governance (including communication with stakeholders), ethics and learning (increasing awareness of corporate social responsibility and information). Cruz and Pedrozo (2009) also stated that there is very little research on corporate social responsibility and multinational companies. It is necessary to further investigate the impact of different organizational structures and the effectiveness of corporate social responsibility implementation. Having a flexible strategic process in implementing environmental-centric policies can help companies compete; business leaders need to be flexible in responding to different environmental conditions and proactively formulate policies (Dwyer, 2009). Godfrey, Merrill, and Hansen (2008) believe that corporate social responsibility may have insurance-like characteristics in terms of risk management. The company's good reputation from corporate social responsibility can help offset negative publicity and shareholder influence brought about by negative events, which means that it has less impact on the brand. Reputation is related to consumer attributes and has an impact on brand trust. Godfrey et al. (2008) It was found that the institutional CSR had a goodwill and a significant impact on stakeholders. Companies participating in CSR can be considered less risky and economically safer (Menz, 2010). Menz (2010) determined that the risk premium, or the expected monetary return of risky assets, is higher for companies with a sense of social responsibility under the same other conditions. Compared with credit ratings, investors are also less concerned about the risks of corporate social responsibility ratings. There are many factors that affect the ability to develop a competitive advantage (De Sousa Filho, Wanderley, Gomez, and Faranche, 2010; Sharp and Zaidman, 2009), which may include organizational values, stakeholder relationships, and management decisions; CSR can affect all These aspects. Can manage corporate social responsibility strategically in order to create a competitive advantage for the company. Sharp and Zaidman (2009) believe that CSR can be regarded as a reliable strategy to develop advantages. Quairel-Lanoizele ́e (2011) concluded that as long as the corporate social responsibility strategy cannot be imitated, one can obtain a competitive advantage and propose different corporate social responsibility strategies according to the type of competitive environment. Read Less