To What Extent Is Corporate Social Responsibility Beneficial to a Company’s Perance.docx

To What Extent Is Corporate Social Responsibility (CSR) Beneficial to a Companys Performance?An analysis of the correlation between Corporate Social Responsibility (CSR) and company performance from consumers perspectiveFrom both theoretical and managerial perspectives, there has been increasing concentration on business ethics in the 21st century in addition to profit generating. The concept of corporate social responsibility (CSR) thereby emerged, focusing on commercial success along with maintaining ethical, social and environmental values (Mousavi et al, 2013). After CSR moved from the ideology to concrete practice, many empirical studies have been trying to examine whether companies moral and socially responsible behaviors contribute to good performance (Lindgreen & Swaen, 2010). However, such correlation between CSR and company performance is rather complicated and controversial, due to various definitions of CSR and different methods to measure business entities performance. Therefore to be specific and straightforward, this article tries to examine CSRs positive effect on consumers trust, purchase intention, brand perception and overall satisfaction which play critical roles in determining performance, and concludes that generally CSR may benefit company performance to a relatively large extent.Corporations which demonstrate their commitment to CSR are much likely to obtain consumer trust. According to Pivato et al (2008), their empirical research in organic food retailing industry proved the hypothesis that consumers perception of retailers corporate social performance (CSP) is positively related to consumer trust. Under the precondition that consumers are capable enough to judge organic products and behaviors accord with CSR, the conclusion is quite persuasive. In addition to industry-level studies, Park et al (2014) further divided consumer trust into expertise, integrity and benevolence trust, and identified 4 aspects of CSR activities, namely economic, legal, ethical and philanthropic. It is stated that economic performance generates customer expertise trust, whereas legal and ethical CSR behaviors arouse integrity trust, and philanthropic CSR activities increase social benevolence trust in the corporation (Park, Lee & Kim, 2014). No matter how the relationship between CSR and customer trust is demonstrated, the connection does exist. And it is worth mentioning that customer trust could usually be regarded as the first step of corporations success.While customer trust serves as an important precondition of a companys success, their purchase intention will generate real revenue to firms, which is also positively affected by CSR in general. Sen and Bhattacharyas (2001) studied in depth the relationship between different CSR domains and purchase intention. Their findings show that firms CSR actions in major domains (e.g., labor relations & employee working conditions etc.) would have a solid and direct positive effect on consumers purchase intention, especially for those consumers with CSR-related beliefs. However, the results become complicated when internal mechanisms of such findings are reached. Under some particular conditions, there may be distorted buying intention for certain group of customers. Such distortion could lead to a CSR-induced decrease in the willingness to purchase high-quality goods (Sen & Bhattacharya, 2001). Considering the broader applicability of positive influence and its direct effect instead of indirect correlations, CSR still positively influences consumers buying intention, although the controversy has been taken into full consideration. The purchase intention will contribute to increase in sales revenue, which is a critical factor when judging the financial performance of a firm.The implementation of CSR could improve consumers brand perception, which is essential for business entities long-term success (Vikki, 2007), and increase brand equity as well. In one empirical investigation, Huber et al (2011) divided brand personality into 3 subdomains: reliability, attractiveness and creativity, with brand equity being analyzed from 5 subdomains: social image, trustworthiness, attachment, performance and value. Based on the results from correlation analyses, it is concluded that consumers regard socially engaged brands as reliable partners, thus develop more emotional attachment to them. This sort of perception leads to customers higher evaluation of brand value. Another group of data was collected so as to verify the “negativity effect”, which signifies the influence on consumers of brands social misconduct. The immediate effect of brands social misbehaviors is well exhibited, while the negative influence on brand personality might be found in the long term (Huber et al, 2011). However, since continuous reporting and further investigation usually last for months, the emergence of a scandal may eventually lead to disasters, as the negative perception within consumers minds is gradually intensified. Thus, considering the rewards on socially responsible behaviors and the negative impacts from misconducts, the executive team of corporations would well notice that CSR is undeniably beneficial to brand equity and company performance. It is believed that the market value of a firm, in addition to intangible factors such as brand image and loyalty, is equally important to measure company performance. In general, satisfying implementations of CSR would contribute to increase in market value, in which the connection is mediated by consumer satisfaction (Luo & Bhattacharya, 2006). The correlation chain of “CSR-Consumer Satisfaction-Market Value” suggests that CSR behaviors build a large number of satisfied customers whose satisfaction generates considerable revenues to firms (Luo & Bhattacharya, 2006). Other researches regarding the positive relationship between CSR activities and customer satisfaction (Bhattacharya & Sen, 2003), as well as customer satisfaction and stock price (Fornell et al, 2006) also enhanced the correlation chain presented above. However, given adequate adherence to CSR, some companies attained only a negligible increase in market value, even a downturn in performance. Researchers thereby conjectured that those companies attain institutional legitimacy (e.g., social responsibility) through CSR, but address less effort in quality improving, decision making and strategy adjusting, which eventually deducts their advantages in legitimacy (Luo and Bhattacharya, 2006). Thus it is not appropriate to use CSR as the scapegoat of incorrect operations. Despite the fact that unsuccessful management would deduct or even ruin the rewards provided by CSR, it is still quite distinct that CSR would create consumer satisfaction and thus increase corporations market value.It is obvious that CSR may be beneficial to company performance-both tangibly and intangibly, through consumers trust, purchase intention, brand perception and overall satisfaction that will be eventually translated to market value. Although under some circumstances or through some access presented above, the impact might be negative, a large extent of benefit is still observed. Such interpretation in consumers aspect reveals the benefit directly from financial performance, as well as indirectly from brand image, which is considered to be quite comprehensive. For corporations faced with a massive number of customers, the studies based on practical data would in return direct future operations and decision-making process. However, it is worth noticing that those researches still did not cover the firms of which the clients are mainly companies rather than individual consumers, and subjective responses and judgments might also be included in the process especially questionnaires are applied. Future studies may include broader types of business entities and pay special attention on respondents data. Yet until then, the evidence and examples presented here indicate that CSR may be beneficial to company performance to a relatively large extent. (1128 words)ReferencesBhattacharya, C. B., & Sen, S. (2003). Consumer-Company Identification: A Framework for Understanding Consumers Relationships with Companies. Journal of Marketing. 67(2), 76-88.Fornell, C., Mithas, S., Morgeson, F. V., III, & Krishnan, M. S. (2006). 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