UNIVERSITY OF GHANA CORPORATE SOCIAL RESPONSIBILITY AND CUSTOMER-BASED BRAND EQUITY: TOWARDS THE OPERATIONALIZATION OF A FRAMEWORK IN THE MOBILE TELECOMMUNICATION SERVICES SECTOR BY PRINCE KODUA (10073461) A THESIS SUBMITTED TO THE DEPARTMENT OF MARKETING AND ENTREPRENEURSHIP, UNIVERSITY OF GHANA BUSINESS SCHOOL, UNIVERSITY OF GHANA, LEGON IN PARTIAL FULFILMENT OF THE REQUIREMENT FOR THE AWARD OF A DOCTOR OF PHILOSOPHY IN MARKETING JULY, 2015 University of Ghana http://ugspace.ug.edu.gh i DECLARATION I do hereby declare that this work is the result of my own research and has not been presented by anyone for any academic award in this or any other university. All references used in the work have been fully acknowledged. I bear sole responsibility for any shortcomings. ……………………………........ ………………… PRINCE KODUA DATE (10073461) University of Ghana http://ugspace.ug.edu.gh ii CERTIFICATION We do certify that this thesis was supervised in accordance with procedures laid down by the University ……………………………………. ………………… ASSOCIATE PROFESSOR BEDMAN NARTEH DATE (SUPERVISOR) ………………………………….... ………………….. ASSOCIATE PROFESSOR CHARLES BLANKSON DATE (SUPERVISOR) ……………………………………… ………………….. PROFESSOR ROBERT E. HINSON DATE (SUPERVISOR) University of Ghana http://ugspace.ug.edu.gh iii DEDICATION This work is dedicated to my family: My sweet and supporting wife, Comfort Boateng, Principal Nursing Officer of the Children Emergency Ward of the Paediatrics Unit, Korle-Bu Teaching Hospital. To my lovely children Sesinam (Princess), Elikem (Prince), Eyiram (Precious), and my baby last, Elorm (Philip-Victor). My prayer is for God to let you do better than I have done. I am eternally grateful to my mum, Salome Degle and my dad, Prince Tweneboah Kodua for giving me the gift of education. To my siblings Johnny, Ama, Kujo, Afua, Esi and Martin, I say thank you all. University of Ghana http://ugspace.ug.edu.gh iv ACKNOWLEDGEMENT I am indebted to my supervisors, Prof. Bedman Narteh, Head, Department of Marketing and Entrepreneurship, University of Ghana Business School, Prof. Charles Blankson of the University of North Texas, USA, and Prof. Robert Ebo Hinson of the Department of Marketing and Entrepreneurship, University of Ghana Business School. To these supervisors, I say: Words cannot fully express how I feel about your enormous assistance and genuine dedication throughout this academic journey for a terminal degree. What else can I say than to say: GOD RICHLY BLESS YOU ALL! I am also grateful to my former lecturers Dr. Adelaide Kastner, Dr. Buame, and Prof. Buatsi for their mentorship and encouragement. I owe my lectureship to you all and may the good Lord continue to bless you all. I equally appreciate the assistance of other faculty members of the department of Marketing and Entrepreneurship. I also thank Ms Salome Adofoli, Secretary, Department of Marketing and Entrepreneurship, University of Ghana, Priscilla Mensah and Janet Adusei, my Teaching Assistants, Ms. Olivia Akosua Kpodoe, Assistant Librarian, University of Ghana, Efua Falconer of MTN, George Donkor of Vodafon, and Jacob Plange Rhuda of Expresso, Elma Marsela Essuon, and Deborah Tayo Akakpo of Tigo, Yaw Antwi Boadu of Airtel and also to Kayode Ogundana of Glo for assisting me in various ways. I cannot end without acknowledging my brother, Philip Kingsley Asimah, Head of Media, Spring of Joy Ministry International for his moral support. University of Ghana http://ugspace.ug.edu.gh v ABSTRACT Corporate social responsibility (CSR) is becoming a tool for competitive positioning. It is the basis for brand choice among other advantages and therefore described as a strategic tool in marketing. In-spite of these observations, there appears to be a paucity of studies, linking CSR to brand equity or Customer-Based Brand Equity (CBBE). This study therefore ascertains the role of various types of CSR initiatives in building CBBE dimensions. A conceptual framework was developed based on a review of extant literature to depict the relationships among the study variables. Using a mixed methodology, the quantitative part purposively surveyed 500 mobile telecommunications subscribers, which was analysed using Descriptive Statistics, Confirmatory Factor Analysis and Structural Equation Modelling. The results suggest that in general, Corporate Philanthropy is the most important type of CSR initiative pursued by the mobile telecommunications companies in Ghana and is also the most important tool for creating brand awareness and loyalty. For enhanced brand image and quality perceptions among customers, the results suggest that Cause-Related Marketing is the types of CSR that holds the greatest potential among the six types of CSR initiatives that firms pursue. Insights from the second part of the study, which is based on qualitative in- depth interviews of six managers each from the six mobile telecommunications companies in Ghana, is to a greater extent consistent with the quantitative findings. The qualitative study further suggests that for CSR to enhance CBBE dimensions among customers, firms ought to pursue CSR initiatives that are valuable to customers and communicated in a strategic manner. Thus, in taking strategic view of CSR, firms need to pursue effectively the core mandate of delivering customer satisfaction whiles leveraging on CSR for enhanced marketplace competitiveness. In terms of contribution, this study is the first to bring CSR and Customer-Based Brand Equity dimensions together using a mixed method and situating it within the context of Ghana which is one of the developing Sub-Saharan African countries. University of Ghana http://ugspace.ug.edu.gh vi TABLE OF CONTENTS CONTENT PAGE DECLARATION…………………………………………………………………………..…..i CERTIFICATION………………………………………………………………………....….ii DEDICATION…………………………………………………………………………….….iii ACKNOWLEDGEMENT…………………………………………………………..…..……iv ABSTRACT………………………………………………………………………….………..v TABLE OF CONTENTS………………………………………………………….………….vi LIST OF TABLES……………………………………………………………………......…xiii LIST OF FIGURES…………………………………………………………………..……...xiv CHAPTER ONE: INTRODUCTION TO THE STUDY 1.0 Introduction………………………………………………………………………… …1 1.1 Background of the Study………………………………………………………………1 1.2 Statement of the Problem……………………………………………………………...4 1.3 Objectives of the Study………………………………………………………………..7 1.4 Research Questions……………………………………………………………………7 1.5 Theoretical Fields……………………………………………………………………...8 1.5.1 Corporate Social Responsibility (CSR)…………………………………………….….8 1.5.2 The Concept of Customer-Based Brand Equity………………………………….…..17 1.5.3 The Concept of Customer Perceived Value……………………………………….…21 1.6 Significance of the Study…………………………………………………….……...23 1.7 Organization of the Study……………………………………………………………24 1.8 Chapter Summary…………………………………………………………………….26 University of Ghana http://ugspace.ug.edu.gh vii CHAPTER TWO: THE CONCEPT OF CORPORATE SOCIAL RESPONSIBILITY 2.0 Introduction…………………………………………………………………………..27 2.1 Business Ethics and CSR…………………………………………………………….27 2.2 The Meaning of Business Ethics……………………………………………………..28 2.3 The Meaning of CSR…………………………………………………………………29 2.4 The Debate on the Purpose of Business……………………………………………. .32 2.4.1 The Profit Maximization Philosophy………………………………………………...32 2.4.2 The Social Responsibility Philosophy………………………………………………..32 2.4.3 Linking Profit Maximization and Social Responsibility Philosophies……………....33 2.5 Why Firms Engage in CSR…………………………………………………………..35 2.6 Types of CSR Initiatives and their Potential Benefits……………………………….41 2.6.1 Cause Promotions as a Type of CSR Initiative………………………………………41 2.6.2 Cause-Related Marketing as a Type of CSR Initiative………………………………43 2.6.3 Corporate Social Marketing as a Type of CSR Initiative……………………………45 2.6.4 Corporate Philanthropy as a Type of CSR Initiative…………………………………47 2.6.5 Community Volunteering as a Type of CSR Initiative………………………………49 2.6.6 Socially Responsible Business Practices as a Type of CSR Initiative………………50 2.7 Theories Explaining Why Firms Engage in CSR……………………………………52 2.7.1 The Stakeholder Theory of CSR …………………………………………………….53 2.7.2 The Legitimacy Theory of CSR……………………………………………………...59 2.7.3 The Organizational Identity Theory of CSR …………………………………….…..61 2.8 CSR Communication…………………………………………………………………64 2.8.1 Intrinsic and Extrinsic Attribution of CSR Communication ………………..............64 2.8.2 Message Content of CSR Communication……………………………………….…..67 2.8.3 Channels for CSR Communication…………………………………………………..70 University of Ghana http://ugspace.ug.edu.gh viii 2.8.4 Company-Specific Factors Moderating Effective CSR Communication…………….71 2.8.5 Stakeholder-Specific Factors Moderating Effective CSR Communication………….73 2.9 Chapter Summary………………………………………………………………...……77 CHAPTER THREE: THE CONCEPT OF CUSTOMER-BASED BRAND EQUITY 3.0 Introduction……………………………………………………………………………78 3.1 The Origin of Branding………………………………………………………………78 3.2 The Role of Branding………………………………………………………………...81 3.3 The Definition of Brand Equity………………………………………………………82 3.4 The Concept of Customer-Based Brand Equity……………………………………...85 3.5 Brand Equity Perspectives…………………………………………………………...87 3.5.1 Brand Equity Perspective of This Study……………………………………………..89 3.6 Dimensions of Customer-Based Brand Equity………………………………………90 3.6.1 Brand Awareness as a Dimension of CBBE ………………………………………..90 3.6.2 Brand Associations/Brand Image as a Dimension of CBBE ……………………..…91 3.6.3 Perceived Quality as a Dimension of CBBE…………………………………….…..94 3.6.4 Brand Loyalty as a Dimension of CBBE………………………….…………………95 3.6.5 Relationships among CBBE Dimensions…………………………………………….97 3.7 Measuring Customer-Based Brand Equity…………………………………………..98 3.7.1 Measuring Brand Equity at the Consumer-Level……………………………………98 3.7.2 Measuring Brand Equity at the Company-Level…………………………………….98 3.7.3 The Financial Measure of Brand Equity…………………………………………….99 3.7.4 Customer Equity versus Brand Equity………………………………………………99 3.8 Models of Brand Equity Measurement…………………………………………….100 3.9 Research Questions and Potential Contributions…………………………………..102 University of Ghana http://ugspace.ug.edu.gh ix 3.10 Chapter Summary…………………………………………………………………...103 CHAPTER FOUR: THE CONCEPT OF CUSTOMER-PERCEIVED VALUE 4.0 Introduction…………………………………………………………………………104 4.1 Customer-Perceived Value as a Marketing Tool…………………………………...104 4.1.1 The Importance of Value in Relationships………………………………………….107 4.2 Theoretical Issues of Perceived Value……………………………………………..108 4.2.1 Domain of Perceived Value……………………………….………………………..108 4.2.2 Scope of Customer-Perceived Value……………………………………………….108 4.2.3 Drivers of Customer-Perceived Value……………………………………………..110 4.3 Some Key Issues in Perceived Value Framework…………………………………110 4.4 Chapter Summary………………………………………………………………….114 CHAPTER FIVE: CONCEPTUAL FRAMEWORK 5.0 Introduction…………………………………………………………………………115 5.1 Overview of Conceptual Framework……………………………………………….116 5.2 Assumptions Underlying CSR –CBBE Framework ………….…………………….117 5.2.1 The Concept of CSR and its Dimensions…………………………………………...118 5.2.2 Customer-Based Brand Equity and its Dimensions………………………………...118 5.2.3 The Moderating Role of Customer Perceived Value on CSR and CBBE………….121 5.3 Chapter Summary……………………………………………………………….…..122 University of Ghana http://ugspace.ug.edu.gh x CHAPTER SIX: CONTEXT OF THE STUDY 6.0 Introduction…………………………………………………………………………123 6.1 The Concept of Service……………………………………………………………..123 6.1.1 Broad Categorization of Services in Ghana……………………………………..…125 6.2 Performance of the Services Sector and Its Sub- Sectors…………………………..125 6.3 Information and Communication Technology (ICT) Services…………………..….128 6.4 Overview of Telecommunication in Ghana………………………………………...132 6.4.1 Regulatory Environment and Policy Objectives of the Telecom Sector…………...132 6.5 Chapter Summary……………………………………….………………………….134 CHAPTER SEVEN: RESEARCH METHODOLOGY 7.0 Introduction…………………………………………………………………………135 7.1 Philosophical Foundation…………………………………………………………...135 7.2 Methodological Approach…………………………………………………………..139 7.3 Research Design………………………………………………………………….…142 7.3.1 The purpose of the Study…………………………………………………………..144 7.3.2 Type of Investigation…………………………………………………………….…144 7.3.3 Extent of Researcher interference……………………………………………….....145 7.3.4 Study Setting…………………………………………………………………… …146 7.3.5 Measurements and Measures……………………………………………………….146 7.3.6 Sampling Design……………………………………………………………………148 7.3.7 Unit of Analysis………………………………………………………….…………153 7.3.8 Time Horizon…………………………………………………………….…………154 7.3.9 Data Collection Method…………………………………………………….………155 7.3.10 Research Instruments……………………………………………………………….158 University of Ghana http://ugspace.ug.edu.gh xi 7.4. Chapter Summary…………………………………………………………………...160 CHAPTER EIGHT: ANALYSIS AND DISCUSSION OF FINDINGS 8.0 Introduction……………………………………………………………………..….161 8.1 Demographic Characteristics of Respondents……………………………….…..…162 8.2 Descriptive Statistics………………………………………………………….….…164 8.2.1 Reliability of the Measurement Variables…………………………………….….…166 8.3 Structural Model……………….……………………………………………….…..168 8.3.1 Test for Moderation………………………………………………………………...172 8.4 Understanding the Nature and Importance of CSR…………………………….…..175 8.4.1 Assessing the General Benefits of CSR…………………………………………….178 8.5 Relationship between CSR and the Dimensions of CBBE……………………...….181 8.5.1 The Role of CSR in Creating Brand Awareness………………………………...….181 8.5.2 The Role of CSR in Creating Brand Association/Image……………………………184 8.5.3 The Role of CSR in Creating Quality Perception………………………………..…186 8.5.4 The Role of CSR in Building Brand Loyalty………………………………………190 8.6 Key Strategies for Communicating CSR………………………………………...…192 8.7 Chapter Summary……………………………………………………….…………..196 CHAPTER NINE: SUMMARY, IMPLICATIONS, AND CONCLUSIONS 9.0 Introduction…………………………………………………………………………197 9.1 Summary…………………………………………………………………………....197 9.1.1 The Core Objectives and Context of the Study………………………………….…197 9.1.2 Highlights of Key Concepts of the Study………………………………….……….199 9.1.3 Highlights of Key Findings…………………………………………………………204 University of Ghana http://ugspace.ug.edu.gh xii 9.2 Contribution of the Study…………………………………………………………..205 9.3 Theoretical and Managerial Contributions …………………………………………208 9.3.1 Theoretical Contributions……………………………………………………….…..208 9.3.2 Managerial Contributions…………………………………………………….…..…211 9.4 Conclusions…………………………………………………………………………214 9.5 Limitations and Future Research Direction…………………………………………217 BIBLIOGRAPHY………………………………………………………………………….220 APPENDIX……………………………………………………………………….………..259 APPENDIX I: Customer Questionnaire……………………………………260 APPENDIX II: Interview Protocol for Management……………………..…268 University of Ghana http://ugspace.ug.edu.gh xiii LIST OF TABLES Table 2.1: Various Definition of CSR………………………………..………………….31 Table 6:1 Sectoral Contribution to GDP by the Services Sector, 2008 – 2012, Based on Gross Domestic Product in Current Prices………………….….126 Table 6: 2 Real Growth Rates of Service Sector and Sub- Sectors At 2006 Constant Prices, 2008-2012 (%)………………………………………………………127 Table: 6:3 Mobile Phone Subscriber Base and Market Share per Operator, 2008-20012…………………………………………………………………130 Table 6: 4 Fixed Telephone Subscriber Base per Operator, 208-2012……………...…131 Table 6.5 Overall Performance of the Information Communication Technology Service Sub Sector, 2006-2012……………………….……….131 Table 7.1 Elements of Worldviews and Implication for Practice……………………..139 Table 8.1 Profile of Respondents…………………………………………………..….163 Table 8.2 Descriptive Statistics………………………………………………......……165 Table 8.3 CFA Results for Final Measurement Model.........................................…...167 Table 8.4 Structural Model Assessment Results…………..………….………….……170 Table 8.5 The Moderating Effects of Customer Perceived Value……………….……174 University of Ghana http://ugspace.ug.edu.gh xiv LIST OF FIGURES Figure 1.1 Thesis Outline……………………………………………………….………..25 Figure 3.1 Brand Equity Diagramme…………………………………………………….89 Figure 5.1 CSR - CBBE Conceptual Framework….........................................................116 Figure: 7.1 The Four Levels for Developing Research Design……………………........136 Figure 7.2 A Framework for Organising the Research Process…………………..……143 Figure 7.3 A Six-Step Procedure for Drawing a Sample……………………….………149 University of Ghana http://ugspace.ug.edu.gh 1 CHAPTER ONE INTRODUCTION TO THE STUDY 1.0 INTRODUCTION This chapter provides a background to the study by first discussing the subject of corporate social responsibility (CSR) and how it relates to the achievement of customer-based brand equity (CBBE). The problem that the study seeks to address is stated and the key objectives enumerated to guide the entire study. The chapter provides some insight into the various management philosophies and concepts on which the study is anchored. The chapter provides an outlook of how the study is organized. 1.1 BACKGROUND OF THE STUDY Over the past decade, marketing scholarship has witnessed a proliferation of studies into corporate social responsibility (CSR) and branding (Maignan et al., 2005; Keller, 2003; Aaker, 1996). CSR, is premised on the general expectation of businesses to contribute to the general welfare of the communities in which they operate and the world as a whole. This position is important for marketing literature because businesses do not exist in a vacuum; they are part of a social system. The very purpose of business requires prudent organizations to be interested in evaluating how marketing decisions impact on society and the environment (Bhattacharya and Sen, 2009; Falck and Heblich, 2007). The concept of CSR thus refers to all activities undertaken by organizations that are not required by law but done with the view to protecting the welfare of various stakeholders in society and the environment in general (Dahlsrud 2008; Falck and Heblich, 2007; Buhmann, 2006; Carrol 2004; Moir 2001; WBCSD, 1999). CSR can thus be said to be a broad concept as it can logically include all actions of the firm that holds some benefits to society in general. In the marketing literature University of Ghana http://ugspace.ug.edu.gh http://www.journals.marketingpower.com/action/doSearch?action=runSearch&type=advanced&result=true&prevSearch=%2Bauthorsfield%3A%28bhattacharya%2C+c.+b.%29 http://www.journals.marketingpower.com/action/doSearch?action=runSearch&type=advanced&result=true&prevSearch=%2Bauthorsfield%3A%28sen%2C+sankar%29 2 for instance, CSR has been described and positioned as a strategic tool for marketing; a competitive tool which is increasingly becoming a major determinant of brand choice especially in the advanced economies. Again, it has been argued that the lack of CSR can threaten the long-term profit making goal and hence the very survival of the company (Kotler and Lee, 2005). Bhattacharya et al., (2008, 2009), asserts that CSR actions offer firms inimitable upper hand in enhancing their brand equity in a competitive business environment. Another argument put forward by Trudel and Cotte (2009) is that consumers are more likely to pay higher prices for products and services from companies perceived as socially responsible. This is to say a firm‟s CSR engagements have the potential of creating customer- based brand equity for the firm. According to Keller (1993; 2003) customer-based brand equity include the dimensions of brand awareness, perceived quality, brand image or association and brand loyalty. The realization of the strategic importance of CSR as a brand building tool (McDonald and Lai, 2011; Bhattacharya et al., 2008) is increasingly becoming a common knowledge among marketing practitioners and scholars (Maon et al., 2009). It is thus expected that prudent marketers will understand and harness the intricate relationship between CSR and customer- based brand equity. This is because marketing management and CSR activities are arguably about building brand equity to satisfy the interest of customers and other key stakeholders (Kotler and Lee, 2005; Maignam et al., 2005). Building brand equity (BE) presents firms with a host of benefits including sales growth, profitability and market share. This may explain why scholarly contributions have increased on the subject of BE in terms of empirical and theoretical models (see: Keller, 1993; Aaker and Joachimsthaler, 2000; Farquhar, 1989). Most of these scholarships on BE generally consider “branding effects” in relation to consumer knowledge (CK) about a given brand and how this acquired knowledge affects consumer behaviour (Shocker et al., 1994; Aaker 1991). Keller (1993), writes that CBBE is University of Ghana http://ugspace.ug.edu.gh 3 “the differential effect that brand knowledge has on customer response to marketing of that brand”. The knowledge that the consumer holds about the brand is thus considered pivotal in the discussion of CBBE. CBBE is primarily achieved through the creative deployment of the elements of the marketing mix (Kotler, 2003). Notwithstanding, scholars have also highlighted the potential of CSR in eliciting favourable responses from target customers (Hoeffler and Keller, 2002; Keller, 1993). The pursuance of CBBE is thus considered a critical marketing decision as it borders on firm competitiveness, survival and profitability (Fry and Polonsky, 2004; Vargo and Lusch, 2004; Kotler and Lee, 2005). Despite the documented marketing importance of the concepts of CSR and CBBE in the marketing literature, there appears to be a paucity of scholarly works addressing the impact of CSR on CBBE. This brings to the fore the need to ascertain the role of CSR in the four key dimensions of CBBE comprising brand awareness, brand image/associations, perceived quality, and brand loyalty as conceptualized by Keller (1993), and re-echoed in the works of Fayrene and Lee (2011). It is worth mentioning that the need to measure the relationship of CSR in CBBE is due to the fact that the pursuit of CSR requires the deployment of firm‟s financial and non-financial resources. There is need to measure the interrelationship between CSR and CBBE because CSR is increasingly becoming a major component of marketing management activity among today‟s businesses (Hinson and Kodua, 2012; McDonald, and Lai, 2011; Ofori and Hinson, 2007). It is against this mounting expectation on firms to exhibit tenets of social responsibility (Bhattacharya and Sen, 2008; Ofori and Hinson, 2007; Carroll, 2004,), and the need to ascertain how CSR impacts on the dimensions of CBBE that has given the impetus for this study. University of Ghana http://ugspace.ug.edu.gh 4 1.2 STATEMENT OF THE PROBLEM The phenomenon of firms delivering on economic, socio-cultural and environmental concerns of society beyond the basic requirements of law (Buhmann, 2006) is what has come to be known as corporate social responsibility (CSR). Evidence of the importance of the subject can arguably be traced to the growing body of literature in recent times (see Hinson and Kodua, 2012; Kotler and Lee, 2005; Luo and Bhattacharya, 2009; Ofori and Hinson, 2007; Dahlsrud, 2008; Falck and Heblich, 2007; Buhmann, 2006; WBCSD, 1999; Carroll, 2004; Fry and Polonsky, 2004). A consolidation of reasons given by scholars on the importance of the concept of CSR is traceable to the observation that CSR presents six key advantages to the firm (Kotler and Lee, 2005). CSR has the potential to contribute to increase sales and market share, strengthening of brand positioning, enhancing corporate image and clout, increasing the ability to attract, motivate, and retain employees, decreasing operating costs, and increasing appeal to investors (Kotler and Lee, 2005; Luo and Bhattacharya 2006, 2009; Fry and Polonsky, 2004). The growing importance of CSR is due to the fact that there is a social contract between the firm and the society for the collective good and survival. As long as this interdependence between the firm and society exist, the interest in CSR will remain important among marketing scholars and practitioners. Prudent firms aspire to imbibe fully the tenets of CSR as such firms are of the conviction that the adoption of societal marketing concept in business invariably enhances customer-based brand equity (Keller, 1993). Scholars have accordingly discussed customer-based brand equity especially in relation to how to build, measure, and manage brand equity (see: Fayrene and Lee, 2011; Keller, 2003; Washburn and Plank, 2002; Vazquez et al., 2002). University of Ghana http://ugspace.ug.edu.gh 5 In-spite of the link between CSR and CBBE, extant literature has mostly overlooked the interrelationship between the two concepts. Also, literature on the subject of CSR and CBBE has mostly originated from Anglo-Saxon countries-mainly the U.S. and the U.K (Maignan and Ferrell, 2004; Matten & Moon, 2008; Keller, 1993; Aaker, 1991; Kotler and Lee, 2005; Hoeffler and Keller, 2002; Fayrene and Lee, 2011). Again, the international scope of corporate activities today, and the growing importance of CSR makes it imperative to ascertain the relationship between CSR and CBBE especially in developing country contexts like Ghana. Moreover, the few available literature from Ghana and developing country contexts did not link the concept of CSR to CBBE (see: Hinson and Kodua, 2012, Ofori and Hinson, 2007). These scholarships were mostly concerned about CSR practices of local and foreign firm in various societies. The CSR – CBBE gap in the literature has been rightly observed by Sen and Bhattacharya (2001) when they noted that there is little known about the effects of CSR on consumer activities despite increasing emphasis on CSR in the marketplace. Similarly, other scholars have investigated issues pertaining to firm CSR practices but with marginal emphasis on customers, who are critical sources of firms‟ profitability and growth and for that matter brand equity (Maon et al., 2009; Kotler and Lee, 2005; Kim and Kim, 2003; Kapferer, 1997; Keller, 1993). Notwithstanding the increasing knowledge among academics and practitioners of the growing influence of CSR in marketing there is still scarcity of scholarship on the link between CSR and CBBE (Wagner et al., 2009). For instance, Maignan and Ferrell (2004) reveal that customers tend to favour or reward CSR oriented firms. As a stakeholder group, customers in particular, are susceptible to a firm‟s CSR engagements (Bharttacharya and Sen, 2004). However, extant literature does not fully explain, let alone predict the marketing outcome of CSR initiatives among customers. The question then is how do customers, as a University of Ghana http://ugspace.ug.edu.gh 6 stakeholder group interpret and react to firms‟ CSR initiatives? This question brings to mind the need to find out the role of firms‟ CSR in building CBBE for the firm (Keller, 1993; Rajasekar and Nalina, 2008; Pappu et al., 2005; Lassar et al., 1995; Netemeyer et al., 2004; Kamakura and Russell, 1993; and Vazqueez et al., 2002). It is important to mention that the need to bridge the scholarly gap between CSR and CBBE is in keeping with the knowledge that, marketing management is essentially about building brands to satisfy customer needs and eventually create value for the firm (Kotler, 2003; Keller, 1993). It follows logically then, that firms‟ CSR engagements, impact brand strength, favourability and uniqueness (Keller, 1993) and brand value. Thus, everything the firm does or does not do, can serve to enhance or detract respectively, from brand equity. In the context of marketing, the 7Ps framework of product, price, place, promotion, people, process, physical evidence serves as the main tool for gaining CBBE (i.e., brand awareness, brand association/image, perceived quality, and brand loyalty). Notwithstanding this traditional framework, review of extant literature suggest the potential in CSR (Luo and Bhattacharya, 2006, 2009; Dahlsrud, 2008; Falck and Heblich, 2007; Buhmann, 2006), as a tool for achieving CBBE hence the need for further investigation into the subject (Kotler and Lee, 2005; Keller, 2003; Keller, 1993, 1998, Kapferer, 1997). To this end, the study is aimed at the development of a framework that is the composite of CSR and CBBE. University of Ghana http://ugspace.ug.edu.gh 7 1.3 OBJECTIVES OF THE STUDY The study is guided by three interrelated objectives: 1. To ascertain the role of corporate social responsibility initiatives in building customer-based brand equity dimensions in the mobile telecommunications services sector. 2. To understand the relationship between corporate social responsibility and customer- based brand equity in the mobile telecommunications services sector. 3. To develop a conceptual framework encapsulating the strategic role of corporate social responsibility in building customer-based brand equity in the mobile telecommunications services sector. To achieve the objectives above, the services sector serves as the study context. In addition, the study will be guided by questions on the relationship between CSR and CBBE dimensions as put forward by Keller (1993). To that end, the study is interested in the role of CSR in customer brand awareness, customer perception of brand quality, brand image/association; and brand loyalty. 1.4 RESEARCH QUESTIONS Essentially, the research question is aimed at ascertaining the nature of the relationship between CSR and CBBE dimensions and also to gauge the importance of CSR in building various dimensions of CBBE. This will require the study to ascertain how CSR influence the building of CBBE from the perspective of both the firm and the customer. In this regard, the study will also explore the congruence between the firm and customer on the relationship University of Ghana http://ugspace.ug.edu.gh 8 between CSR and CBBE. Six research questions are stated to guide the study towards the achievement of the study objectives: 1. What is the importance of CSR initiatives in building Customer-based brand equity? 2. What is the relationship between CSR and the dimensions of CBBE which includes brand awareness, brand image or association, perceived brand quality and brand loyalty? 3. How can the relationship between CSR and customer-based brand equity be described? 1.5 THEORETICAL FIELDS The study is anchored on three key concepts. These are Corporate Social Responsibility (CSR) reviewed in Chapter Two, Customer-Based Brand Equity (CBBE) in Chapter Three, and Customer Perceived Value (CPV) in Chapter Four. These literature review chapters provide the literature foundation for the development of a conceptual framework later in Chapter Five. The literature foundations are discussed next. 1.5.1 CORPORATE SOCIAL RESPONSIBILITY The Meaning of the Concept of CSR CSR has become a global business discourse and has a wide stream of interest evidenced in the multiplicity of conceptualization it has received from various scholars. According to World Business Council for Sustainable Development, “CSR is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as the local community and society at large”. To Carroll (2004), CSR encompasses the economic, legal, ethical, and discretionary University of Ghana http://ugspace.ug.edu.gh 9 (philanthropic) expectations that society has of organizations at a given point in time. CSR has benefited from numerous definitions in an attempt to explain the phenomenon and to delineate its boundaries. For example Frederick (1997) describes CSR by saying that “corporations should have an obligation to constituent groups in society other than shareholders and beyond what the law or union contract prescribes”. Conceptualizing along the same line is Wood (1991), who communicated the CSR idea in terms of interrelationship when he said “business and society are interwoven”. In essence society and business are not mutually exclusive from each other but depend on each other for survival. Steiner and Steiner (2000) recognize this relationship between a firm and the society in which it operates. Steiner‟s argument is that firms are free to pursue wealth, which is their primary occupation but must be done in such a way that society does not suffer any harm, and must also be able to improve upon the assets of society both within the short and the long term. According to McWilliam and Siegel (2001), a firm should not only abide by the law but must act in furtherance of the good of society. This idea is taken up by Buhmann (2006), who claims that CSR is generally conceptualised as “doing more than what is required by law”. Thus, businesses are expected to be liable to people, communities, institutions, and the environment. This rational seems to explain why Ofori and Hinson (2007) citing Bowen (1953) reiterated the notion that “businesses exist at the pleasure of society and that their behaviour and methods must fall within the guidelines set by society”. In taking decisions therefore, organizations are expected not only to be interested in the economic profit, but should also pursue other issues of importance to society in general. In the opinion of McWilliams and Siegel (2001) therefore, businesses need to pursue other social objects in addition to profit maximization. University of Ghana http://ugspace.ug.edu.gh 10 Rationale for Pursuing CSR Extant literature suggests that firms experience various bottom-line benefits for pursuing social responsibility objectives. In this regard, Murray and Vogel (1997) concluded that multiple programmes of socially responsible business practices led to improved attitudes towards the firm. It has also been shown by Sen and Bhattacharya (2001) that CSR activities by firms enhance how consumers evaluate such firms. Generally, scholars and advocates of CSR have argued that customers who are exposed to a firm‟s CSR activities develop stronger attitudes and purchase intentions than those who were not exposed (Sen et al., 2006; Wigley, 2008). In other words customer exposure or knowledge of firm CSR initiatives is likely to create customer-based brand equity in terms of brand awareness, brand associations/image, perceived quality and brand loyalty (Keller, 1993). Kotler and Lee (2005) grouped the value or equity of CSR in terms of six key bottom-line benefits which are increased sales and market share, strengthened brand positioning, enhanced corporate image and clout, increased ability to attract, motivate, and retain employees, decreased operating costs, and increased appeal to investors. CSR Initiatives Kotler and Lee (2005) identified six major initiative options that a company may pursue as its corporate social responsibility. One of such initiatives is Cause promotion where a company supports social causes through promotional sponsorship(s). This kind of promotion may come in the form of the company providing resources in support of a given social cause or concern (Matten and Moon, 2008; Kotler and Lee, 2005; Moir, 2001). There is also another CSR initiative known as Cause-related marketing which refers to the case whereby a company makes contribution(s) or donation of a percentage of revenues to a specific cause based on the product sales or usage (Business for Social Responsibility, 2004; Maignan and Ferrell, University of Ghana http://ugspace.ug.edu.gh 11 2004). Corporate Social Marketing is also another type of CSR initiative which is usually aimed at supporting behaviour change campaigns. Corporate social marketing efforts may lead to the development and or implementation of social marketing strategies or campaign in areas such as the environment, community well-being, public health and safety among others (Brown and Dacin, 1997). A fourth type of CSR initiative is Corporate Philanthropy which involves a company making direct contributions to a charity or cause. It may include providing cash donations, offering grants, awarding scholarships, donating products, donating services, providing technical expertise, allowing the use of facilities and distribution channels, offering the use of equipment among others. It is important to mention that concerning CSR initiatives, corporate philanthropy is considered the most traditional and common of all corporate social initiatives. In this regard, it is thus expected that this type of initiative will dominate all the CSR initiatives of the companies being studied (Bhattacharya et al. 2009; Porter and Kramer, 2002). The fifth type of CSR initiative is called Community volunteering. Under this initiative the company provides volunteer services in the community. Typically, community volunteering is manifest in a company supporting and encouraging its employees, retailers, or agents to provide certain services such as volunteering their time and effort in support of a cause and or an organization in a given local community. Community volunteering may include activities such as cleaning gutters, or planting trees to prevent erosion (Kotler and Lee, 2005; Moir, 2001). The sixth type of CSR initiative is socially responsible business practice. This involves a company adopting and conducting discretionary business practices and investments that supports social causes such as a company‟s employees providing on-the-job training for high school interns (Du et al. 2010; Simmons, C.J. and Becker-Olsen, K.L. 2006; Kotler and Lee, 2005). University of Ghana http://ugspace.ug.edu.gh 12 Theories of CSR Based on the objectives of the study, three main theories are considered useful in explaining why firms engage in CSR. Brief descriptions of these theories are presented below: Stakeholder Theory According to Maon et al. (2009), the concept of stakeholders is central to CSR practice. Empirical investigations of the subject of CSR have yielded interesting perspectives of which stakeholder theory appears to be the most popular (see Reverte, 2009; Bhattacharya and Sen, 2009; Brickson, 2005; Carrol, 2004). Stakeholder theory has contributed to the understanding of CSR and provides a management tool to facilitate CSR. Stakeholders refer to those “groups and individuals who can affect, or are affected by the achievement of an organization‟s mission.” The whole thesis of stakeholder theory is that organizations should endeavour to take into consideration the needs, interests and influences of peoples and groups who either impact on or may be impacted by the policies and deeds (Frederick et al., 1992) of the organization. Stakeholders thus, are any group or individual who is affected by the achievements of the organization‟s objectives (Freeman, 1984). The crust of stakeholder theory is mainly about building long lasting beneficial relationship (Wilson, 2001). Other usefulness according to Luoma-aho (2007) is that stakeholders‟ assessment and expectations has a role to play in shaping an organization‟s reputation and giving it legitimacy. Fassin (2008) identified three types of firm‟s stakeholders whose needs must engage the attention of the firm. The real stakeholder group include shareholders, customers, employees, business partners, and communities. The stakewatchers- include employees and workers union, consumer associations, investor associations protecting the interest of shareholders; and activists watching the stake of the community and the environment. The stakekeepers- is another group who are removed from the active real stakeholders: the independent regulators, University of Ghana http://ugspace.ug.edu.gh 13 who have no stake in the firm but have influence and control. They impose regulations and constraints, while the firm has little reciprocal direct impact on them. Although a company may have several stakeholders, this study focuses on the customer stakeholder group in line with the study‟s objective which is to ascertain the relationship between CSR and customer- based brand equity. Legitimacy Theory of CSR CSR and legitimacy theory are two sides of the same coin. Scholarly contributions such as Moir, (2001) and Suchman (1995) explain that firms CSR initiatives are meant to do three interrelated things. The assertion from these scholars is that first, organizations embark on CSR to gain legitimacy. The second reason is to maintain legitimacy, and finally to achieve legitimacy, in a given market or society. Legitimacy theory states that organizations can only secure their existence if they are perceived as operating within the values and norms of the society. According to Farache and Parks (2010), legitimacy for the organization is based on the idea that there is a social contract between business and society in which society allows the company to operate as long as it behaves in accordance with society‟s norms and values. In other words, legitimacy is threatened when a company‟s behaviour is perceived as not in accordance with society‟s norms. Ferrel et al. (2002) stated that the objectives of companies‟ actions are to maximize the positive impact on stakeholders and minimize the negative impact. It is important to note that legitimacy theory on its own may not adequately explain CSR. It is thus critical to identify the seeming interdependence or the interrelationship between legitimacy and the stakeholder theory which are both necessary constructs for understanding CSR. In order to gain legitimacy therefore, a company may disclose its CSR activities to its University of Ghana http://ugspace.ug.edu.gh 14 stakeholders (Hinson et al., 2010). Thus, the pursuit of legitimacy would require a company to first engage in CSR. Secondly, the firm discloses the CSR information in order to portray a socially responsible image and thirdly receive a stamp of legitimacy from the targeted stakeholders. This is why Patten (1991) advised companies dealing directly with consumers to take issues of community involvement seriously. In support of this position Clarke and Gibson (1999) emphasised that CSR can be better understood as a means of reinforcing both reputation and legitimacy. They argued that CSR provides an opportunity to communicate to stakeholders the congruence of the organization with societal concerns. From the foregoing, it is reasonable to argue that CSR can lead to legitimacy for the firm; and that the achievement of legitimacy creates the basis for achieving customer-based brand equity (CBBE). Organizational Identity Theory of CSR Like the stakeholder and the legitimacy theories described above, organizational identity theory is considered useful in this study as it provides useful explanations on why firms practice CSR. Organizational identity describes firm culture, history, structure, characteristics, status, and reputation with competitors, customers, and society at large which is formulated and cemented over time (Brown et al. 2006; Scott and Lane 2000). It comprises both internal and self-reflective components as well as the external activities (Gioia et al. 2000), which provides a rich perspective about identity as the organizational response function. Identity also involves all that is central, distinctive, and enduring about a firm (Albert and Whetten 1985), conveyed through mission, vision, actions, and association of the firm‟s values and goals (Brickson 2005). Put simply, identity involves both how internal constituents and stakeholders see the firm and how external constituents and stakeholders see it (Gioia et al. 2010; Sen et al. 2006; Voss et al. 2006). According to organizational theory, firms also morph to reflect institutional preferences and socially desirable characteristics of University of Ghana http://ugspace.ug.edu.gh 15 competitors and other constituencies that they observe in the market place (Handelman and Arnold 1999). Driven by the external aspirational components of their identity, firms use isomorphic behaviour to attain legitimacy in the face of normative pressures (Grewal and Dharwadkar, 2002). Thus, consumers value companies and brands that exceed legal and social expectations (CSRwire 2009; Trudel and Cotte 2009). CSR Communication CSR communication is increasingly becoming an important element in strategic business communication. This position is informed by the realization that effective CSR communication holds enormous potential for building and maintaining favourable reputations and relationships with key stakeholders (Nielson and Thomsen, 2009; Morsing and Schultz, 2006; Cornelissen, 2004). Thus, messages about corporate and socially responsible initiatives are likely to evoke strong and often positive reactions among stakeholders. It follows therefore that the more companies expose their ethical and social ambitions, the more likely they are to attract critical stakeholder attention (Ashforth and Gibbs, 1990; Vallentin, 2001). Interestingly, scholarly works mentioning the potential business benefits of internal and external communication of CSR efforts are not in scarcity (Morsing and Schultz, 2006; Maignan et al. 1999). According to Brown and Dacin (1997), CSR initiatives are generally associated with positive corporate virtues that reflect companies‟ status and activities with respect to its perceived societal obligations among stakeholders. It is also useful to mention that although corporations are being encouraged to engage in CSR to build strong reputations, stakeholders are often reluctant to receive too much information about CSR engagements (Morsing, 2003). CSR messages have also attracted critical attention from stakeholders (Morsing and Schultz, 2006). The question then is how much focus should companies give to CSR communication? University of Ghana http://ugspace.ug.edu.gh 16 It has been suggested in the works of Nielson and Thomsen (2009); and also Brown and Dacin (1997) that focusing too intently on CSR communication has the likelihood of creating the impression among consumers that the company is trying to hide something. Again, CSR is generally associated with positive and good virtues. Thus, companies are inclined to communicate about their good deeds with the view to influencing public opinion and enhance their corporate reputation. The basic assumption is that stakeholders and in particular consumers expect substantial information about companies‟ actions on CSR (Morsing, et. al., 2003). It is reasonable therefore to expect companies to communicate CSR information in a conspicuous manner. As can be expected, there are contrary views on the need to communicate CSR initiatives. One is the suggestion that companies should downplay CSR in their communication strategy. Companies must therefore avoid the use of CSR as a highly visible element of marketing and public relation. To the contrary, some managers pursue CSR as a means of building brand reputation among target stakeholder groups. It has also been observed that stakeholders are not receptive to too much CSR information from companies (Morsing and Schultz, 2006; Maignan et al., 1999; Brown and Dacin 1997). This question then is “how much CSR information to communicate and the appropriate channels for such communications?” In the context of the study objectives, CSR communication is considered useful in achieving customer-based brand equity. CSR communication is given more detailed consideration under the literature review chapter. University of Ghana http://ugspace.ug.edu.gh 17 1.5.2 THE CONCEPT OF CUSTOMER-BASED BRAND EQUITY Meaning of Customer-Based Brand Equity Brands are arguably the most valuable assets in business. Hence, the enormous interest in brand equity studies (Fayrene and Lee, 2011; Keller, 2003; Hoeffler et al., 2002, Kapferer, 1997; Cobb-Walgren et al., 1995). In this study, brand equity is synonymous with CBBE and referred to as customer-based brand equity in line with Aaker (1991) and Keller (1993). Although literature abounds on the concept of brand equity (BE), there are still challenges regarding a common meaning, content and measurement of BE. This position is articulated in the works of Vazquez et al. (2002), Keller (2003) and Washburn (2002). The concept of brand equity which Keller (1993) conceptualized as customer-based brand equity (CBBE) is yet to achieve universality in terms of meaning, content, and measurement. However, available conceptual works, according to Fayrene and Lee (2011) based on the argument put forward by Winters (1991), and Chaudhuri (1995) seem to agree that the term CBBE refers to the value that is added to a product by consumers‟ associations and perceptions of a given brand name. In other words, CBBE is an evaluation of how a firm‟s consumers respond to, or will respond to the marketing of a given brand (Keller, 1993 and Shocker et al., 1994). Although the meaning of BE is not widely divergent among scholars, one can group scholarly works on the subject into: (1) those who are influenced more from a marketing or customer- oriented perspective (Fayrene and Lee, 2011; Farquhar, 1989; Keller, 1993; Cobb-Walgren et al. 1995, van Osselaer & Alba 2000; Rao et al. 1999), and (2) those reflecting financial perspective (Farquhar et al. 1991; Simon & Sullivan 1990; Swait et al. 1993; Kapferer 1997). The financial perspective is concerned with evaluating the financial assets of the business. On the other hand, the marketing or customer-oriented perspective of brand equity is not an entirely new idea, but gained its popularity through the writings of Keller (1993), Shocker et University of Ghana http://ugspace.ug.edu.gh 18 al. (1994) among others. These scholars appear to have been largely influenced by the growing appreciation of the marketing concept or the customer-orientation philosophy in marketing. The latter is evidenced in Keller‟s (1993) definition which states “that CBBE is the differential effect of brand knowledge on consumer response to the marketing of the brand”. Brand knowledge “is the full set of brand associations linked to the brand in long-term consumer memory”. CBBE thus refers to the peculiar responses of consumers that are geared towards a brand because of prior knowledge and associations to the brand. For the purpose of this study, Keller‟s (1993) definition of CBBE is adopted in that several definitions in the extant literature explicitly or implicitly profess the same philosophy captured in Keller‟s (1993) conceptualization of CBBE. Following from Keller‟s (1993)‟s definition of CBBE, the study takes the view that CBBE refers to the “totality” of what consumers know about a given brand at a given point in time. The Dimensions of CBBE In the conceptualization of CBBE, brand awareness, brand association or image, perceived quality, and brand loyalty have been consolidated as the four key dimensions or measure of brand equity (Keller, 1993 and Aaker, 1991). These key dimensions which are the key conceptual foundation on the subject of CBBE are explained in detail in the literature review in Chapter Three. Below are brief descriptions of CBBE dimensions: Brand awareness: - The importance of brand awareness as a key element in the composition of CBBE or BE cannot be overemphasized (Mackay 2001, Keller, 2003; Agarwal and Rao, 1996; Krishnan, 1996; Aaker 1991; Keller, 1992; Kapferer 1991). According to Aaker (1991) University of Ghana http://ugspace.ug.edu.gh 19 brand awareness describes “the ability of a potential buyer to recognize or recall that a brand is a member of a certain product category”. Awareness is conceptualized and measured in terms of recall and recognition ( Aaker, 1991; Keller, 1993), top-of mind, brand dominance, brand knowledge and brand opinion (Aaker,1996) of a given brand as having certain associations that are in consumers‟ memory. According to Kotler and Lee (2005), these associations may be activated by such brand elements like brand name, symbol, logo, package, the company‟s CSR among many other marketing stimuli. To this end, brand awareness is considered a useful dimension in explaining the role of CSR in building CBBE. Brand associations/brand image: - Marketers see brand associations in terms of anything that is linked in memory to a given brand. Arguably, the importance of brand association as a concept lies in its linkage with consumer purchase decision and brand loyalty. Kotler and Keller (2006) describe brand association “as the totality of brand-related thoughts, feelings, perceptions, images, experiences, beliefs, and attitudes”. Brand associations thus represent what a brand means to customers (Aaker, 1991) that are stored in their memories. This is why it has been pointed out that any contact and or experiences or interaction between the consumer and a brand has the potential to “create, change, or reinforce certain favourable or unfavourable associations”. Keller (2003) has also pointed out that to achieve brand equity, managers need to ensure that consumers perceive the brand as unique, strong, and favourable. These brand related perceptions could emanate from a company‟s CSR. Thus, brand associations is considered important dimension in addressing the study objectives. Perceived quality: - In line with customer orientation philosophy to marketing, customer perceived quality has severally been identified as one of the key dimensions of CBBE (see Aaker 1991; Kapferer 1991; Kamakura and Russell 1991; Martin and Brown 1991; Feldwick University of Ghana http://ugspace.ug.edu.gh 20 1996). Extant literature suggests that quality is a multi-dimensional construct that depends on several factors which are subjected to consumer‟s judgement. This line of thinking is consistent with the marketing concept which requires firms to base their marketing decisions on consumer research. To that end the study seeks to ascertain the role and the extent to which perceived quality is attributable to perceived CSR. Brand loyalty: - Ascertaining the role of CSR in building brand loyalty is one of the sub objectives emanating from the key objective of the study. It is useful to mention that in a highly competitive market, customer loyalty holds the key to success and describes the level of attachment that a customer has towards a brand (Aaker, 1991; Grembler and Brown, 1996). Brand loyalty is considered the ultimate goal of marketing and therefore a core dimension of brand equity or customer-based brand equity (Fayrene and Lee, 2011). Loyalty is said to be a function of biased psychological process with respect to available alternative brands that is expressed over time by an individual or a group to repurchase such brands (Uddin, 2012). Having explained the concept of CSR and CBBE above, the next section focuses on the concept of Customer Perceived Value (CPV). The reasoning is that for CSR to lead to CBBE, customers ought to perceive value in a firm‟s CSR communication or message. University of Ghana http://ugspace.ug.edu.gh 21 1.5.3 THE CONCEPT OF CUSTOMER PERCEIVED VALUE The concept of customer value (CV) is considered useful in this study. This is because one can assume that CBBE can only be achieved where the customer perceives value in a given CSR initiative of the firm. Based on the study objectives, firm‟s CSR initiatives (e.g. philanthropic donations and cause sponsorship) can only create customer-based brand equity or value where the customer considers such initiatives as useful or valuable in relation to his/her biological and or physiological needs. The concept of CV is also considered critical to the understanding of the phenomenon of study because, today‟s marketplace is characterised by very demanding customers, global competition, and generally slow growth in many industries across many parts of the world. As has been observed by Woodruff (1997), past attempts by firms have largely looked internally within the organization for improvement, such as reflected by quality management, reengineering, downsizing, and restructuring. Over the years however, it is becoming increasingly obvious among marketing theorists and practitioners that the major source of competitive advantage emanates largely from an outward orientation towards customers. This thinking has necessitated the call on firms to focus their competitive strategies on delivering superior customer value (Woodruff, (1997). The concept of customer value has been defined as “the customer‟s overall assessment of the utility of a product based on perceptions of what is received and what is given” (Zeithaml, 1988, p. 14). It is worthy to mention that scholarly works on the concept of customer value have mainly been concerned with the perceived role of customer value in consumption contexts. For example, Zeithaml (1988) provided evidence highlighting the influential role of value, consumer purchase decision making process and consumer behaviour in general. According to the means-end model put forward by Zeithaml (1988), consumer perceived value is a direct antecedent of a purchase decision and a direct consequence of perceived University of Ghana http://ugspace.ug.edu.gh 22 service quality. Dodds et al. (1991) also conceptualized perceived value as a trade-off between perceived quality and perceived psychological as well as monetary sacrifice (also see Dodds and Monroe, 1985; Monroe and Chapman, 1987; Teas and Agarwal, 1997). Their model shows that perceived value is a direct antecedent of consumer purchase intention. More recently, Woodruff (1997) laid out a customer value hierarchy model in which customer value was viewed as a hierarchically structured construct at levels of consumption goals, consequences, and attributes. According to Woodruff, customer value resides in every stage of customers‟ expectancy-disconfirmation process. Slater (1997) and Parasuraman (1997) among other scholars have also recognised the importance of customer value in understanding consumer behaviour. From the foregoing, customer value describes the overall perception of the subjective merit of some activity or object regarding product utility considering all benefits and costs of consumption (Chen and Tsai, 2008; Lai, Griffin and Babin, 2009). From Kotler and Lee (2005) customer perceived value is measured as the difference between the total customer value and total customer costs. Typically total customer value may include bundle of product, service, personnel and image value. On the other hand total customer costs refer to bundle of monetary, time, energy, and psychic costs. According to Uddin (2012) customers usually estimate the expected perceived value and whether or not company‟s offer meets the expectations affect the customer satisfaction and behavioural intentions for repurchase. The factors affecting customer value include competencies, communication, promotional investments, and relational investments. Scholars have also observed the predictive role of perceived value in service quality and customer satisfaction (Hutchinson, Lai and Wang, 2009). Customer expectations and perceived performance of an offering are important University of Ghana http://ugspace.ug.edu.gh 23 predictors of perceived value and customer satisfaction (Chen, 2008; Chen and Tsai, 2008; Wu and Liang, 2009). 1.6 SIGNIFICANCE OF THE STUDY The study is significant in a number of ways. This section discusses the significance of the study from the theoretical and practical perspectives. First, merging the stream of research with theoretical developments in CSR and CBBE has been explored to a great extent in the context of the services sector. Literature reveals that scholarly work on the subject of CSR and CBBE abound. However, there is paucity of literature discussing the subject from a developing economy perspective (that is Ghana). Available literature mostly originates from Europe and the Americas. The study bridges an important theoretical gap as the relationship between CSR and CBBE is not only unclear but also under researched. To this end the study contributes to the literature by developing a framework that links the two concepts. Also, there appears to be difficulty finding works that directly seek to ascertain the importance of CSR in building CBBE as developed by Keller (1993) and Aaker (1991). Building on different research streams about CSR and CBBE, this study proposes a conceptual model for understanding the role of CSR in creating CBBE in the services sector. The study is also important as it sought to understand firms‟ perspective of CSR as a tool for achieving CBBE on one hand while at the same time gauging customer perspective on the subject. University of Ghana http://ugspace.ug.edu.gh 24 1.7 ORGANIZATION OF THE STUDY Fundamentally, the presentation of this thesis follows the structure of the doctoral thesis suggested by Perry (1998). The study proceeds by outlining the broad view of CSR and how it could impact on customer-based brand equity (CBBE) thereby highlighting, the focal issues of the study. The overall outline as well as organizational structure of this study is depicted in ten interrelated chapters captured in figure 1.1 below: University of Ghana http://ugspace.ug.edu.gh 25 Figure 1.1: Thesis Outline Chapter 3 Customer-Based Brand Equity Chapter 4 Customer Perceived Value Chapter 5 Conceptual Framework Chapter 7 Research Methodology Chapter 6 Context of the Study Chapter 2 Corporate Social Responsibility Chapter 1 Introduction to the Study Chapter 8 Analysis and Discussion of Findings Chapter 9 Summary, Conclusion and Recommendations University of Ghana http://ugspace.ug.edu.gh 26 1.8 CHAPTER SUMMARY Chapter one provides a general background to the entire study. A statement of the research objectives in the early part of the chapter provides the basis for enumerating the key research questions driving the entire thesis. This is followed by a description of the research problem motivating the study. On the basis of the foregoing the chapter then focus on providing initial insights on the theoretical gap on the impact of CSR in building customer-based brand equity. These theoretical fields and other related theories are briefly discussed to provide a snapshot and delimit the boundaries of the study. The chapter also highlights the significance of the study and ends by indicating how the entire thesis is organised in terms of chapter disposition. University of Ghana http://ugspace.ug.edu.gh 27 CHAPTER TWO THE CONCEPT OF CORPORATE SOCIAL RESPONSIBILITY 2.0 INTRODUCTION This chapter reviews extant literature on the broad concept of corporate social responsibility (CSR) as it relates to the objectives of the study. The meaning of CSR is explored through a review of various definitions and conceptualizations put forward by scholars, practitioners and institutions interested in the subject area. As a major debate in the extant literature, the chapter also reviews the major theoretical and the philosophical underpinnings of the concept as espoused by scholars. Various types of CSR initiatives and the argument for and against the adoption of CSR are also reviewed together with CSR communication and other relevant subtopics. 2.1 BUSINESS ETHICS AND CSR The subject of business ethics is sometimes referred to as if it is the same in meaning and scope as corporate social responsibility. It is important to mention that business ethics as indicated in Kotler and Lee (2005) is just one of the six broad aspects of corporate social responsibility or initiatives which include cause promotion, cause-related marketing, corporate social marketing, corporate philanthropy, community volunteering, and socially responsible business practices. It is important to recognise that business ethics can be subsumed under socially responsible business practices. University of Ghana http://ugspace.ug.edu.gh 28 2.2 THE MEANING OF BUSINESS ETHICS Business ethics according to Phatak, Bhagat and Kashlak (2005) can be defined as “the moral thinking and analysis by corporate decision-makers and other members regarding the motives and consequences of their decisions and actions”. In the opinion of Svensson and Wood (2003), business ethics depends on culture and time. Thus, the culture of the business environment defines what is acceptable and unacceptable. Ethics is influenced by traditions, values, and religion as well as individuals. Different cultures have different opinions in this regard and if there is no adaptation it will affect the company‟s success. The business time dimension will also affect what is accepted and unaccepted. What is considered ethical today might not turn out to be ethical tomorrow. Phatak et al. (2005) identified certain ethical dilemmas as bribery, child labour, and corruption that may confront businesses. International businesses in particular are usually confronted with different laws, norms, and regulations and their acceptance differ from country to country. It is becoming common for companies to have ethics programmes in the organization as part of their corporate social responsibility (Phatak et al., 2005). There are three levels of business ethics where societal expectations have a great impact on companies. The first level is the macro level that describes the ethical stance of the organization and the extent to which the organization exceeds the legal requirements that relates to stakeholders. The second level refers to the corporate social responsibility within the macro level where the primary interest is on how organizations exceed certain minimum requirements to live up to the ethical stance of the organization. The third level relates to the individual manager‟s level of authority and it is concerned primarily with the behaviour and actions of the individual such as how one behaves with integrity and whistle blowing. It is interesting to mention that the various levels of business ethics mentioned above can all be University of Ghana http://ugspace.ug.edu.gh 29 placed under the corporate social responsibility umbrella. This position is buttressed in the definition of CSR put forward by World Business Council for Sustainable Development (1999) which states that “CSR is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as the local community and society at large”. Carroll (2004), claims that CSR encompasses the economic, legal, ethical, and discretionary (philanthropic) expectations that society has of organizations at a given point in time. From the foregoing CSR definitions, it is evidently clear that the issue of ethics has been largely positioned as an element of CSR, which is more comprehensive and encompassing in dimension. In this study therefore, business ethics is considered an essential component of corporate social responsibility (Johnson et al. 2005). 2.3 THE MEANING OF CSR CSR is now well accepted in global business discourse. This position is based on the library of work available and the growing prominence of the subject of CSR and its ability to lend itself to different applications in different contexts; at different levels of intensity (Welford, 2005; Baughn et al., 2007; Matten and Moon, 2008). The subject of CSR seems to have evoked a wide stream of interest as evidenced in the multiplicity of conceptualization it has received from various scholars. Search for one universally acceptable definition of CSR can be a difficult pursuit and perhaps may not be too necessary given that most of the definitions seem to be saying the same thing in principle (see Table 2.1). For example, Frederick (1997, pp.48) noted that, “corporations should have an obligation to constituent groups in society other than shareholders and beyond what the law or union contract prescribes”. Conceptualizing along the same line is Wood (1991) who communicated the CSR idea in terms of interrelationship when he said “business and society are interwoven”. In essence, University of Ghana http://ugspace.ug.edu.gh 30 society and business are not mutually exclusive but depend on each other for survival. Steiner (2000) recognizes this relationship between a firm and the society in which it operates. The argument put forward is that firms are free to pursue wealth, which is the primary occupation of business but must be done in such a way that society does not suffer any harm, and must also be able to improve upon the assets of society both within the short and the long term. To McWilliams and Siegel (2001), firms should not only abide by the law but must act in furtherance of the good of society. The same idea is raised in the works of Buhmann (2006), where CSR is conceptualised as “doing more than what is required by law”. The World Business Council of Sustainable Development holds the view that, “CSR is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as the local community and society at large.” The definitions discussed shows that the stakeholder view of the firm appears to be more popular and generally acceptable to academics and practitioners across the globe in recent times (Holliday et al., 2002). A closer look at all the definitions in Table 2.1 focuses the stakeholder view of the firm. These definitions, are now so entrenched and popular at least in theory that Sloan‟s (1964) conceptualization of the firm as “a profit maximising entity has become oblivious. University of Ghana http://ugspace.ug.edu.gh 31 Table 2.1: Various Definitions of CSR Definition Source Definition of CSR World Business Council for Sustainable Development, 2000 Corporate social responsibility is the continuous commitment by business to contribute to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as the local community and society at large Khoury et al., 1999 Corporate social responsibility is the overall relationship of the corporation with all its stakeholders. These include customers, employees, communities, owners/ investors, government, suppliers a competitors. Elements of social responsibility include investment in community outreach, employee relations, creation and maintenance of employment, environmental stewardship and financial performance Business for Social Responsibility, 2003b Corporate social responsibility is achieving commercial success in ways that honour ethical values and respect people, communities and the natural environment Commission of the European Communities, 2003 CSR is the concept that an enterprise is accountable for its impact on all relevant stakeholders. It is the continuing commitment by business to behave fairly and responsibly and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large CSRWire, 2003 CSR is defined as the integration of business operations and values, whereby the interests of all stakeholders including investors, customers, employees and the environment are reflected in the company‟s policies and actions. Hopkins, 2003 CSR is concerned with treating the stakeholders of the firm ethically or in a responsible manner. „Ethically or responsible‟ means treating stakeholders in a manner deemed acceptable in civilized societies. Social includes economic responsibility. Stakeholders exist both within a firm and outside. The wider aim of social responsibility is to create higher and higher standards of living, while preserving the profitability of the corporation, for peoples both within and outside the corporation McWilliams and Siegel, 2001 Actions that appear to further some social good, beyond the interests of the firm and that which is required by law Piacentini et al., 2001 CSR is the voluntary assumption by companies of responsibilities beyond purely economic and legal responsibilities Andersen, 2003 We define corporate social responsibility broadly to be about extending the immediate interest from oneself to include one‟s fellow citizens and the society one is living in and is part of today, acting with respect for the future generation and nature Strategis, 2003 CSR is generally seen as the business contribution to sustainable development, which has been defined as development that meets the needs of the present without compromising the ability of future generations to meet their own needs, and is generally understood as focussing on how to achieve the integration of economic, environmental and social imperatives. Source: Author‟s own compilation, 2013 University of Ghana http://ugspace.ug.edu.gh 32 2.4 THE DEBATE ON THE PURPOSE OF BUSINESS There are two main lines of argument with regard to what the purpose of business is or should be in the marketing management literature. 2.4.1 The Profit Maximization Philosophy One school of thought claims that “profit maximization” is and should be the overarching purpose or objective of business. This position was clearly articulated by two management scientist of the nineteen sixties (1960s). Freidman (1962, pp. 24) stated that “the business of business is business and the only social responsibility is to increase profit”. This argument was later supported by Sloan (1964, pp. 46) who argued that “the strategic aim of a business is to earn a return on capital, and if in any particular case the return in the long run is not satisfactory, then the deficiency should be corrected or the activity abandoned for more favourable one”. In other words firm activities should be aimed at profitability and the achievement of bottom line. Given the objectives of the study, the profit maximization philosophy of the purpose of business is considered appropriate and adopted accordingly. This position is adopted because firms operating under this philosophy are more likely to deliberately take actions to enhance their brand‟s equity. 2.4.2 The Social Responsibility Philosophy The second school of thought points out that the profit maximization argument is deficient as it cannot adequately explain the purpose of business in the real world. The actual market place is a network of interdependence where the actions or inactions of other stakeholders influence on organization in its pursuit of economic profit. A business organization is thus not an island unto itself because all organizations are part of a social system. The social responsibility philosophy of business which is generally referred to in the literature as the University of Ghana http://ugspace.ug.edu.gh 33 societal marketing concept or corporate social responsibility seeks the welfare of the society in the pursuit of business (Kotler, 2003; Kotler and Lee, 2005; Luo and Bhattacharya, 2009; McWilliams and Siegel, 2001). The concept dictates that a firm‟s actions and decisions must not only be aimed at providing customer satisfaction and profit but must also be concerned with the general welfare of society. It is interesting to note however, that preceding the profit maximization arguments, scholars had long theorized on CSR, when they argued that a firm‟s responsibility includes the maintenance of equitable and working balance among the various stakeholders. In other words, the organization should be liable to people, communities, institutions, and the environment. The concept of CSR is therefore not a new concept in this new millennium. What appears to be new is the increased emphasis (see: Martin et al., 2011; Paine et al., 2005) for social accountability; which is becoming the basis for competitive advantage (Reverte, 2009; Patten, 1991; Smith, 2003; Wood, 1991; Trudel and Cotte, 2009; Parasuraman, 1997); and companies are deploying it in very innovative ways (McDonald and Lai, 2011; Maignan et al., 2005; Bhattacharya and Korschun, 2008; Hinson et al., 2010). The debate on the two schools of thoughts on the purpose of business from the foregoing discussions may only be useful for theoretical purposes and not for practical application. It is thus, more useful to put companies on a continuum in order to gauge the extent to which a company is profit oriented or socially responsible. The section below discusses the link between profit maximization and the social responsibility philosophy. 2.4.3 Linking Profit Maximization and Social Responsibility Philosophies Although, the conceptualization of the purpose of business and for that matter “corporate responsibility” or corporate social responsibility” has been done from divergent views. The economic view of CSR means that CSR should lead to the maximization of returns for University of Ghana http://ugspace.ug.edu.gh 34 shareholders (Zenisek, 1979), while the socially responsibility philosophy advocates a comprehensive societal view where organizations must include the welfare of other stakeholders apart from the interest of shareholders (Brown and Dacin, 1997). Societal orientation in business arguably offers the most sustainable option for company survival in the long run. Operationalizing the societal marketing concept or the social responsibility concept will require of firms to maintain equitable working balance among the claims of all stakeholder groups. This is why Ofori and Hinson (2007) citing Bowen (1953) reiterated the notion that “businesses exist at the pleasure of society and that their behaviour and methods must fall within the guidelines set by society”. In the same vain, Cyert and March (1963) advised that in taking decisions organizations must not only be interested in the economic but should factor in issues of importance to society. The argument for the need for organizations to factor in general societal needs has gained popularity among managers. This is evidenced in the growing body of literature on CSR (see Branco and Rodriques, 2006; Bhattacharya and Sen, 2009; Falck and Heblich, 2007; Kotler and Lee, 2005; Wood, 1991). The question: “what is the purpose of business?” can also be answered by relying on the social contract theory or philosophy as originally advanced in governance and sociology literatures. Based on the social contract theory we can say that “business” cannot be completely divorced from “society”, and that they are intertwined, intricately woven together and that these two entities must necessarily depend on one another to achieve their objectives in the long run (Wood, 1991; Frederick, 1997). In other words, we can conclude our discussion by saying that there are two opposing arguments or philosophies about the purpose of business. University of Ghana http://ugspace.ug.edu.gh 35 These arguments are not new (McWilliams and Siegel, 2001). The arguments are that: (1) A business is set up to make profit and must therefore focus on its legitimate goal of making enough profit for its shareholders (Friedman, 1962; Sloan, 1964). (2) A business only holds society‟s property as a trustee and therefore should be managed in such a way as to accrue benefits to society (Buhmann, 2006; McWilliam and Siegel, 2001; Steiner, 2000). In other words, businesses should also pursue other socially oriented motives in addition to profit maximization. It is important to note from the preceding argument that neither of the two schools of thought on the purpose of business is without criticisms. The prudent stance is to place these opposing arguments on a continuum in order to be able to operationalize it in practice. Depending on which end an organization is drifted towards, we can say one is more socially responsible than the other; or more profit driven (profit maximization) than the other and vice versa. 2.5 WHY FIRMS ENGAGE IN CSR The relationship between consumer attitude and behaviour has been established in the marketing literature, but what is in short supply are studies demonstrating the extent of the relationship between attitude and behaviour on one side and CSR on the other (McDonald and Lai, 2011). Notwithstanding this observation, some studies have suggested that firms experience various bottom-line benefits for pursuing social responsibility objectives. Murray and Vogel (1997) for instance concluded that multiple programmes of socially responsible business practices led to improved attitudes towards the firm. It has also been revealed by Sen and Bhattacharya (2001) that CSR activities by firms enhance how consumers evaluate such firms. Generally, scholars and advocates of CSR have argued that customers who are exposed to a firm‟s CSR activities develop stronger attitudes and purchase intentions than those who University of Ghana http://ugspace.ug.edu.gh 36 were not exposed (Sen et al., 2006; Wigley, 2008). In other words customers who are exposed or have knowledge of a firm‟s CSR initiatives are likely to develop positive attitude towards the firm and its brand. This is to say that CSR initiatives of firms can enhance brand awareness, brand image, perceived brand quality, and brand loyalty among customers (Keller, 1993). Although extant literature has mentioned several benefits of corporate social responsibility, these benefits can broadly be grouped into six key bottom-line benefits. These benefits include: increased sales and market share, strengthened brand positioning, enhanced corporate image and clout, increased ability to attract, motivate, and retain employees, decreased operating costs, and increased appeal to investors and financial analysts (Kotler and Lee, 2005). These benefits are discussed below: CSR Increases Sales and Market Share Kotler and Lee (2005) report on an executive study by the 2000 Cone/Roper Cause Initiative Study which sought to ascertain the impact of cause initiatives from the corporate perspective. The study concluded that firms stand to enjoy certain benefits from associating themselves to a given cause or corporate social responsibility initiative (Brown and Dacin, 1997; Barone et al., 2000; Bhattacharya and Sen, 2004). The study by Cone/Roper (2000) according to Kotler and Lee (2005) offered very interesting statistics and observations as follows: - Eighty-four percent of those who were surveyed claim to have a more positive image of companies that engage in activities aimed at making the world a better place. - Seventy-eight percent of adults are more likely to buy a product associated with a cause they cared about. - Sixty-six percent of the respondents said they would switch brands to support a cause they cared about. University of Ghana http://ugspace.ug.edu.gh 37 - Sixty-two percent of the respondents said they would switch retail stores to support a cause. - Sixty-four percent are of the opinion that cause-related marketing should be a standard part of company‟s activities. - It was also observed that cause-related marketing activities had the strongest impact on people in higher education and income categories. From the above, it can be argued that there is some evidence to indicate that corporate involvement in social responsibility initiatives holds the potential of increasing brand preferences among consumers (Barone et al., 2000; Sen and Bhattacharya, 2001). This position is upheld by the 2002 Cone Corporate Citizenship Study. In the study 84 percent of Americans said “they would be likely to switch brands to one associated with a good cause, if price and quality are similar”. In other words involvement in corporate social initiatives increases the likelihood of brand preference among customers (Kotler and Lee, 2005). A classic example of company‟s corporate social responsibility initiatives potential to increase sales and market potential is captured in Kotler and Lee (2005, p.81) which reports on American Express campaign for the restoration of the Statue of Liberty as “Instead of just writing a cheque to help with the cause, American Express tried a new approach, and the marketing world was watching. The company pledged that every time cardholders used their cards, the company would make a contribution to a fund to restore the Statue of Liberty, as well as an additional contribution for every new card application. The campaign generated $1.7 million in funds for “the lady,” a 27 percent increase in card usage, and a 10 percent jump in new card membership applications.” University of Ghana http://ugspace.ug.edu.gh 38 CSR Strengthens Brand Positioning Today‟s customers are not only concerned about the functional benefits of products but are also concerned with some emotional benefits or psychological needs (Kotler and Lee, 2005). These needs relate to “the emotional and psychological aspects of brand personality and image” (Schiffman and Kanuk, 2007; Kotler and Lee, 2005). This is to say that consumers expect marketing initiatives that contains larger amounts of “social content”. Kotler and Lee (2005) explained these marketing initiatives as any activity by a marketer that is geared towards making “tangible improvements to social welfare.” This assertion will mean that consumers are likely to rate high a company that undertakes visible and verifiable CSR initiative such as making philanthropic contributions (Du and Bhattacharya, 2007) in the area of say sanitation, education, and health than one that offers freebies on purchases. CSR Improves Corporate Image and Clout A company‟s image has impact on its relationship with various stakeholders including customers, policy makers, the local community, government agencies and policy makers (Brickson, 2005; Clarke and Gibson-Sweet, 1999; Bhattacharya and Sen, 2004; Brown and Dacin, 1997). This will mean that prudent companies will focus on activities that border on improving corporate image and clout. In view of the inherent potential of corporate social responsibility initiatives in terms of image, world acclaimed reports of entities such as Fortunes, The Council on Economic Priorities, Business for Social Responsibility, Business Ethics, the Global Reporting Initiative, Social Accountability 8000, the Interfaith Centre on Corporate Responsibility, the Keidanren Charter for Good Corporate Behaviour, the Caux Round Table among many others have held strongly to the view that corporate social responsibility can indeed improve corporate image and clout (Brown and Dacin, 1997). This is mainly due to the free publicity that these entities give to the deserving companies. University of Ghana http://ugspace.ug.edu.gh 39 Scholars have also pointed out that companies are likely to come under less scrutiny from government agencies where these companies have reputation of satisfying customer needs while also engaging in corporate social initiatives that are not required by law. According to Kotler and Lee (2005) and Bhattacharya and Sen (2004), a company‟s reputation in terms of social responsibility initiatives can influence community reaction in times of crisis. For instance, Melcom‟s strong reputation in the Ghanaian retail market might have contributed to some extent the sympathy the company received during a recent collapse of one of its shopping malls in Accra. CSR Increases Ability to Attract, Motivate, and Retain Employees Corporate social responsibility literature has drawn attention to the fact that, company‟s corporate social initiatives generally have positive impact on both current and prospective employees (see Bhattacharya et al., 2008; Bhattacharya and Sen, 2009; Kotler and Lee, 2005; McWilliams and Siegel, 2001; Fry and Polonsky, 2004; Falck and Heblich, 2007). The implication is that employees will prefer to work in companies with reputable records or image of social responsibility engagements and vice versa. Kotler and Lee (2005) reports that, in a survey by Net Impact, over fifty percent of the 2100 MBA students surveyed claimed that they would accept a lower salary in order to work for a socially responsible company. CSR Decreases Operating Cost Decreased operating cost is one objective that many companies pursue as competition intensifies and customers and stockholders demand value for their monies and investments respectively. Many companies, especially those in the advanced economies among other strategies have embraced the need to reduce waste, reuse materials, recycle, and conserve University of Ghana http://ugspace.ug.edu.gh 40 water and electricity in the entire value delivery system (Kotler and Lee, 2005). Interestingly, as companies take steps to reduce operating costs through these measures, they also get some residual or incidental benefits in the form of rebates and free publicity from supplies, regulators and other pressure groups (World Business Council for Sustainable Development, 2003). CSR Increases Firms’ Appeal to Investors and Financial Analysts To show how corporate social responsibility initiatives, is gaining currency in the investor and financial markets, Kotler and Lee (2005, p.17) quoted a Financial Times article of July 2003 written by Jane Fuller which reads: “It pains me to say this, but I am becoming less cynical about Corporate Social Responsibility. This is not because of the weight of words expended on this subject by companies, lobbyists, and politicians. It is because companies that are less exposed to social, environmental, and ethical risks are more highly values by the market… In other words, investors are already pricing in social, environmental, and ethical factors. This is not sentimental behaviour. It represents a cool appraisal of various costs.” The point here is that corporate social initiatives of companies have the potential of increasing stock prices or values. Engagement in corporate social initiatives is thus considered useful because of some evidence of a company‟s ability to attract new investors and reduce exposure to risk in the event of corporate or management crisis (Kotler and Lee, 2005). According to a report by Business for Social Responsibility (2004), companies perceived as engaging in ethical, social and environmental initiatives may have certain advantages in acquiring capital from some mutual funds and large pension funds (Kotler and Lee, 2005). It has also been revealed that companies that are generally acclaimed as socially University of Ghana http://ugspace.ug.edu.gh 41 responsible tend to achieve better financial results and vice versa. On the other hand, it has also been suggested that a company‟s stock prices falls at least in the short run, where the company and or its brand receives negative word of mouth advertising or damaging publicity due to unethical conducts. 2.6 TYPES OF CSR INITIATIVES AND THEIR POTENTIAL BENEFITS Corporate social initiatives “refer to major activities undertaken by a corporation to support social causes and to fulfil commitments to corporate social responsibility.” Kotler and Lee (2005) identified six major initiative options that a company may pursue as its corporate social responsibility. These initiatives which are discussed below include: cause promotions, cause-related marketing, corporate social marketing, corporate philanthropy, community volunteering, and socially responsible business practices. 2.6.1 Cause Promotions as a Type of CSR Initiative Under Cause Promotion, the company supports social causes through some promotional sponsorship (Kotler and Lee 2005). These kinds of promotion may come in the form of the company providing resources or contributing other resources of the company in support of a given social cause or concern. Cause promotions are considered useful among companies because of certain perceived benefits that may accrue to companies that engage in this kind of CSR initiative (Du et al. 2007; Fombrun et al. 2000; Lichtenstein et al. 2004; Sen and Bhattacharya 2001; Sen et al. 2006; Turban and Greening 1997). Cause Promotions has the inherent potential of building corporate reputation, it can be deplored strategically to support specific marketing objectives such as to increase brand awareness and to increase sales. For instance cause promotion can engender customer loyalty and convert customers into company or brand ambassadors and champions who engage in advocacy behaviours (Du et University of Ghana http://ugspace.ug.edu.gh 42 al. 2010) such as engaging positive word of mouth advertising, commitment and increase willingness to pay premium prices, and resilience to negative publicity about the company and its brand (Du et al. 2007). Cause promotions can also be used to build perceptions of good corporate citizenship among members of the community. A company engaged in cause promotions may also have the benefit of being able to attract and retaining motivated human resource (Sen et al. 2006). Notwithstanding the above benefits, cause sponsorships can pose certain challenges or concerns to the company (Bhattacharya et al. 2008; Du et al. 2007; Sen et al. 2006; Yoon et al. 2006; Kotler and Lee, 2005; Forehand and Grier 2003). First, consumers may have different perceptions as to the real intentions of the company. These customer scepticisms if not well addressed, can affect the brand‟s equity. Engaging in cause promotions can be financially expensive and also time consuming. For instance, the company may receive several requests for contributions from companies connected to the cause (Kotler and Lee, 2005). It may be difficult for companies to track total investments and return on promotional investments. This is especially the case where the investments have non- monetary components such as employee time. Unlike in the case of corporate social marketing, where the object is to achieve behaviour change, cause promotions are usually aimed at awareness creation “without a call to action” and, therefore difficult to gauge. Scholars have also argued that “visibility” for the corporation can get lost.” This may stem from the practice where the information and logos of the supporting or sponsoring companies all use one platform through the process of co- branding. Customers may suffer from confused branding as the co-branded platform may send confusing messages about the brand or company. Sometimes, the position of a company‟s name or logo on the platform can be a contributory factor to the loss of visibility. According to some scholars (Bhattacharya et al. 2008; Sen et al. 2006; Kotler and Lee, 2005) University of Ghana http://ugspace.ug.edu.gh 43 companies may find it difficult to benefit from cause promotions in terms of competitive advantage. They attributed the difficulty to the ease with which other competing companies can emulate such cause promotion initiatives. Although there are challenges to cause promotion, businesses can still benefit from such initiatives (Du et al. 2007) where certain conditions are met according to Kotler and Lee (2005). It is critical that companies focus on cause promotion issues that are in harmony with the company‟s brands, strategy, vision and values. The cause must be one that can engage the attention and commitment of management beyond the short term. Another critical factor is that, the cause should be one that can receive attention and publicity from the media and must also be considered valuable to both actual and potential customers. Kotler and Lee (2005) also advised on the need to develop a cause promotion plan that ensures strong partnerships and visibility for the sponsoring company‟s brands. Such a plan should also provide some criteria for assessing the objective(s) of the cause promotions. 2.6.2 Cause-Related Marketing as a Type of CSR Initiative Cause-related marketing (CRM) is gaining momentum over the years as a viable marketing tool for improving the performance of companies while contributing to worthy causes (Irwin et al. 2003; Barone et al. 2000; Barnes and Fitzgibbons, 1992; Drumwright, 1996). CRM refers to CSR initiative where a company makes contribution(s) or donation of a percentage of revenues to a specific cause based on the product sales or usage. Like cause promotion, cause-related marketing is also an undertaking to establish strong relationship with a