CHAPTER ONE
INTRODUCTION
- BACKGROUND OF STUDY
As a high-profile notion that has strategic importance to many companies, the study of corporate social responsibility has been the object of much research in recent decades (Luo and Bhattacharya, 2006). In its broad sense corporate social responsibility can be defined as firm’s activities and status related to its obligations toward its stakeholders and society at large (Brown and Dacin, 1997; Sen and Bhattacharya, 2001).
The main motive behind corporate social responsibility CSR is the enormous potential benefits that firms can derive when they are perceived as being socially responsible by their stakeholders (Tian, Wang, and Yang, 2011). Among this stakeholder group, consumers deserve special attention because, as also suggested by Bhattacharya and Sen (2004), CSR programs have a significant influence on customerrelated outcomes. Motivated by the importance of CSR in practice, many researchers have investigated the potential effect that CSR has on consumer behavior and responses, such as product responses (e.g., Berens et al., 2005; Brown and Dacin, 1997), customer satisfaction (e.g., Carvalho et al., 2010; He and Li, 2011; Luo and Bhattacharya, 2006) or customer loyalty (e.g., Lee et al., 2012; Marin et al., 2009; Salmones et al., 2005, Stanaland et al., 2011).
In today’s competitive market environment, corporate social responsibility (CSR) represents a high-profile notion that has strategic importance to many companies. As many as 90% of the Fortune 500 companies now have explicit CSR initiatives (Kotler and Lee 2004; Lichtenstein, Drumwright, and Bridgette 2004). According to a recent special report in BusinessWeek (Berner 2005, p. 72), large companies disclosed substantial investments in CSR initiatives (i.e., Target’s donation of $107.8 million in CSR represents 3.6% of its pretax profits, General Motors’s donation of $51.2 million represents 2.7% of its pretax profits, General Mills’s donation of $60.3 million represents 3.2% of its pretax profits, Merck’s donation of $921 million represents 11.3% of its pretax profits, and Hospital Corporation of America’s donation of $926 million represents 43.3% of its pretax profits). By dedicating ever-increasing amounts to cash donations, in-kind contributions, cause marketing, and employee volunteerism programs, companies are acting on the premise that CSR is not merely the “right thing to do” but also “the smart thing to do” (Smith 2003, p. 52). Importantly, along with increasing media coverage of CSR issues, companies themselves are also taking direct and visible steps to communicate their CSR initiatives to various stakeholders, including consumers. A decade ago, Drumwright (1996) observed that advertising with a social dimension was on the rise. The trend seems to continue. Many companies, including the likes of Target and WalMart, have funded large national ad campaigns promoting their good works. The October 2005 issue of InStyle magazine alone carried more than 25 “cause” advertisements. Indeed, consumers seem to be taking notice; whereas in 1993, only 26% of people surveyed by Cone Communications could name a company as a strong corporate citizen, by 2004, the percentage surged to as high as 80% (Berner 2005).
Motivated, in part, by this mounting importance of CSR in practice, several marketing studies have found that social responsibility programs have a significant influence on several customer-related outcomes (Bhattacharya and Sen 2004). More specifically, on the basis of lab experiments, CSR is reported to affect, either directly or indirectly, consumer product responses (Brown 1998; Brown and Dacin 1997), customer–company identification (Sen and Bhattacharya 2001), customer donations to nonprofit organizations (Lichtenstein, Drumwright, and Bridgette 2004), and, more recently, customers’ product attitude (Berens, Van Riel, and Van Bruggen 2005)
Although this stream of research has contributed a great deal of insight, there is still a limited understanding of whether and how CSR affects financial outcomes of the firm, such as its market value. Yet it is important to evaluate CSR’s impact on market value (i.e., stock-based firm performance) because a firm’s financial health is the ultimate test for the success or failure of any strategic initiative. Moreover, prior laboratory studies and anecdotal examples are yet to be complemented with a large-scale analysis using secondary data. Indeed, Brown and Dacin (1997, p. 80) urgently call for research on “how societally oriented activities might bring about positive outcomes for the firm.” Echoing this, Berens, Van Riel, and Van Bruggen (2005) energetically call for research efforts that directly link CSR to stock market performance.
- STATEMENT OF THE PROBLEM
In keeping with contingent linkages between corporate social responsibility and consumer responses that prior researchers articulated (see, e.g., Bhattacharya and Sen 2004), we do not predict a simple, unconditional relationship between CSR and market value. This is because firms are not the same in executing, supporting, and exploiting corporate social responsibility initiatives in the marketplace and also corporate social responsibility on customer satisfaction (Brown 1998; Sen and Bhattacharya 2001).
Governments and civil organizations focuses on firms activities to provoke them to extent their commitment to social responsibility and to the need of their activities be within the social responsibility, which has made these corporate firms to reconsider the produced to the community and its suitability for their aspirations, as well as, desire satisfaction with them in order to achieve customers’ satisfaction.
Furthermore, many companies find that CSR results in negative financial returns because of the added costs of making extensive charitable contributions and the diverted attention from improving product quality that would have allowed them to better satisfy customer needs and wants (McGuire, Sundgund)
- AIMS AND OBJECTIVES CORPORATE SOCIAL RESPONSIBILITY ON CUSTOMER SATISFACTION
The main aim of the research is to examine corporate social responsibility on customer satisfaction. Other specific objectives include:
1. to determine the relationship between corporate social responsibility and customer satisfaction.
2. to examine the effect of corporate social responsibility on customer satisfaction of guinness Nig. Plc.
3. To identify the impact of social irresponsibility on customer’s satisfaction of Guinness Nig. plc
4. to determine factors that influences customer satisfaction
5. to identify challenges of corporate social responsibility on customer satisfaction of guinness Nig. Plc.
6. to proffer solution to the challenges of corporate social responsibility on customer satisfaction of guinness Nig. Plc.
- RESEARCH QUESTIONS
1. what is the relationship between corporate social responsibility and customer satisfaction?
2. what is the effect of corporate social responsibility on customer satisfaction of guinness Nig. Plc?
3. what is the impact of social irresponsibility on customer’s satisfaction of Guinness Nig. Plc?
4what are the factors that influences customer satisfaction?
5. what are the challenges of corporate social responsibility on customer satisfaction of guinness Nig. Plc?
6. what is the solution to the challenges of corporate social responsibility on customer satisfaction of guinness Nig. Plc?
- STATEMENT OF RESEARCH HYPOTHESIS
1. H0: there is no significant relationship between corporate social responsibility and customer satisfaction of guinness Nig. Plc.
2. H1: there is a significant relationship between corporate social responsibility and customer satisfaction of guinness Nig. Plc.
- SIGNIFICANCE OF STUDY
The findings of this study will benefit corporate organisations on the need for a proper combination of external corporate social responsibility initiatives and internal corporate abilities which can lead to synergistic returns and customer satisfaction.
Corporate firms through this study will understand that corporate social responsibility actually reduces customer satisfaction levels in firms with low innovativeness capability and, through this negative impact, harms firm market value and low returns.
The study will serve as a research tool for further research on the subject matter by other researchers.
- SCOPE OF STUDY
The scope of the study will cover corporate social responsibility on customer satisfaction. (a case study of Guinness Nig. Plc)
- LIMITATION OF STUDY
1. Financial constraint- Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).
2. Time constraint- The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.
- DEFINITION OF TERMS
Corporate social responsibility: Corporate social responsibility is a type of international private business self-regulation that aims to contribute to societal goals of a philanthropic, activist, or charitable nature by engaging in or supporting volunteering or ethically-oriented practices.
Customer satisfaction: Customer satisfaction is a term frequently used in marketing. It is a measure of how products and services supplied by a company meet or surpass customer expectation
