VIETNAM NATIONAL UNIVERSITY, HANOI
VIETNAM JAPAN UNIVERSITY
-----------------------

NGO THANH THANH HUYEN

IMPACT OF CORPORATE SOCIAL
RESPONSIBILITY ON CUSTOMER
LOYALTY BEHAVIORS: EVIDENCE
FROM VIETNAM

MASTER'S THESIS
BUSINESS ADMINISTRATION

Hanoi, 2020


VIETNAM NATIONAL UNIVERSITY, HANOI
VIETNAM JAPAN UNIVERSITY
------------------------

NGO THANH THANH HUYEN

IMPACT OF CORPORATE SOCIAL
RESPONSIBILITY ON CUSTOMER
LOYALTY BEHAVIORS: EVIDENCE
FROM VIETNAM

MAJOR: BUSINESS ADMINISTRATION
CODE: 8340101.1

RESEARCH SUPERVISORS:
Prof. TOHRU INOUE
Dr. TRAN THI BICH HANH
Hanoi, 2020


ACKNOWLEDGEMENT
To finish the process of researching and complete this graduation project, there are no
words to express my gratitude to Professor. Tohru Inoue and Dr. Tran Thi Bich Hanh
who accompanied me and guided me directly during this time. Thank you for not
hesitating to help me a lot, from topic suggestions to how to do the topic even though
you are very busy with your task. Without your help, I could not to get very useful advice
and could not go in the right direction. I would like to choose this moment in order to
acknowledge their contribution gratefully.
On this occasion, I am very impatient for showing my appreciation to all staffs at
Vietnam Japan University- Vietnam National University in particular for creating
conditions and time for me during the course. Especially, I am extremely grateful to Mrs.
Nguyen Thi Huong for giving me needed information and answered all my questions
during the period of working on this project.
Besides, my family, relatives and friends are very worthy to receive thanks from the
bottom of my heart for always stood by and encouraged me to finish the graduation thesis
and all participants who help me complete my survey.
Lastly, I am so grateful for great learning environment and opportunities that Vietnam
Japan University and Yokohama National University have brought for me. Thanks to
these, I have improved myself a lot.
Sincerely,

Ngo Thanh Thanh Huyen



ABSTRACT

The study investigated how corporate social responsibility (CSR) performance including
towards society, environment and stakeholders affect brand likeability and relational
switching cost. Concurrently, the relationship between brand likeability and relational
switching cost and customer loyalty behaviors including word-of-mouth and repurchase
intention. The study’s sample size is 212 responses from Vietnamese respondents. The
hypotheses are tested by regression analysis through SPSS software. The findings show
CSR practice affects brand likeability and relational switching cost. However, the effect
is different in term of degree. When looking into the relationship between CSR
dimensions and brand likeability, CSR towards stakeholders is a more significant
predictor than others while CSR towards environment and society are supposed to have
more remarkable impact on relational switching cost. Additionally, brand likeability and
relational switching cost positively affect word of mouth and repurchase intention. Brand
likeability has more significant influence on word of mouth while both brand likeability
and relational switching cost affect nearly equally repurchase intention.


TABLE OF CONTENTS
CHAPTER 1: INTRODUCTION .............................................................................. 1
1.1.

Background and necessary of the research .................................................. 1

1.2.

The research objectives ................................................................................. 3

1.3.


Research questions ........................................................................................ 3

1.4.

Research scope ............................................................................................... 3

1.5.

Research structure ........................................................................................ 4

CHAPTER 2: LITERATURE REVIEW AND HYPOTHESIS DEVELOPMENT 5
2.1

Corporate social responsibility (CSR) .......................................................... 5

2.2

Customer loyalty behaviors ........................................................................ 11

2.3

CSR performance and brand likeability. ................................................... 12

2.4

CSR performance and relational switching cost ........................................ 16

2.5

Brand likeability on Word-of-mouth and Repurchase intention. ............. 19


2.6

Relational switching cost on Word-of-mouth and Repurchase intention. 20

CHAPTER 3: RESEARCH METHODOLOGY .................................................... 23
3.1

Research design ........................................................................................... 23

3.2

Sampling ...................................................................................................... 24

3.3

Data collection process ................................................................................ 25

3.4

Questionnaire design ................................................................................... 25

3.5

Data analysis ................................................................................................ 28

CHAPTER 4: DATA PRESENTATION AND FINDINGS ................................... 31
4.1

Data description .......................................................................................... 31


4.2

Reliability analysis ....................................................................................... 35

4.3

Exploratory factor analysis (EFA) ............................................................. 36

4.3.1

EFA of CSR scale .................................................................................. 36

4.3.2

EFA of Brand Likeability scale ............................................................. 39

4.3.3

EFA of Relational Switching cost scale ................................................. 41


4.3.4

EFA of WOM scale ................................................................................ 42

4.3.5

EFA of Repurchase Intention scale ....................................................... 43


4.4

Regression analysis results .......................................................................... 44

CHAPTER 5: RESULT DISCUSSION ................................................................... 49
5.1

Result discussion.......................................................................................... 49

5.2

Contributions of the research ..................................................................... 52

5.2.1

Theoretical contribution ........................................................................ 52

5.2.2

Practical contribution ............................................................................ 53

5.3

Limitations and future research direction ................................................. 55

REFERENCE ........................................................................................................... 57


LIST OF TABLES
Table 3.1: Measurement items ................................................................................. 26

Table 3.2: Likert scale for Agreement extent .......................................................... 28
Table 4.1: Descriptive Statistics of 212 respondents ............................................... 31
Table 4.2: Samples’ demographic data ................................................................... 32
Table 4.3: Summary of retailing companies ............................................................ 34
Table 4.4: Reliability statistic of all scales ............................................................... 36
Table 4.5: EFA for CSR scale – 1st test .................................................................... 36
Table 4.6: Rotated components matrix for CSR scale - 1st test ............................. 37
Table 4.7: EFA for CSR scale – 2nd test ................................................................... 38
Table 4.8: Rotated components matrix for CSR scale - 2nd test ............................ 38
Table 4.9: EFA for Brand Likeability scale ............................................................ 39
Table 4.10: Component matrix for Brand Likeability scale ................................... 40
Table 4.11: EFA for Relational Switching cost scale .............................................. 41
Table 4.12: Component matrix for Relational Switching Cost scale ..................... 41
Table 4.13: EFA for WOM scale ............................................................................. 42
Table 4.14: Component matrix for WOM scale ...................................................... 42
Table 4.15: EFA for Repurchase Intention scale .................................................... 43
Table 4.16: Component matrix for Repurchase Intention ..................................... 43
Table 4.17: Correlations ........................................................................................... 45
Table 4.18: Collinearity Statistics ............................................................................ 45
Table 4.19: Regression analysis coefficients ............................................................ 46


LIST OF FIGURES
Figure 2.1: Proposed theoretical model ................................................................... 22
Figure 3.1: Research process proposed by the author ............................................ 23
Figure 4.3: Retailing companies distribution .......................................................... 34


CHAPTER 1:
1.1.


INTRODUCTION

Background and necessary of the research

Retailing alluded to direct sale of goods to the ultimate consumers who do not
commercialize or reselling. In the other words, these products or services are just for
their own use. There are many different types of retailing organizations such as
independent stores, conjoint retailers, hypermarkets, chain stores or shopping malls.
Retailing activities could be directly related many environmental issues such as “energy
and water consumption, waste, the volume of packaging, land use, and transportation,
the use of chemicals by suppliers and offering genetically modified food” (Martinuzzi,
et al., 2011). Additionally, retailing is an intensely competitive market. Therefore,
maintaining repurchase behavior of customers is very important to retailing companies.
Especially in the case that costs of attracting and getting new customer are estimated to
6 times as big as retaining the existing ones (Huddleston, et al., 2004). Moreover,
customer loyalty can benefit firms by an increase in loyal customers’ spending and
appealing potential customers through oral communication among people (Curasi &
Kennedy, 2002). At the same time, customers are believed to be unlikely to purchase
products or service which has low or unacceptable corporate social performance
(Castaldo & Perrini, 2004) and they expect the brand they are going to buy product or
service to meet some certain minimum level of social performance as well (Meijer &
Schuyt, 2005). In this case, CSR is considered as integral value when customers make
purchase decision. In other words, retailing companies are supposed to implement their
social responsibilities as a corporate citizen so that they can create their positive public
image and opinion (Jones, et al., 2007) besides their purpose of economic gain.
Vietnamese retailing industry has been thriven consecutively and impressively over the
recent years (McKinsey & Company, 2019) .This is so fascinating an emerging market
that the flock of foreign investors would like to jump into. According to Vietnamese


1


General Statistics Office, in 2019, retailing sales of goods reached nearly USD $ 162
billion, accounting for 75.9% of the total and increasing by 12.7% compared to 2018. In
2018, retailing sales Vietnam's goods were estimated at nearly 143 billion USD which
increased by 12.4% over the previous year. In 2017, it was nearly 130 billion USD which
increased by 10.9%. In 2016, retailing sales reached about USD 118 billion, increasing
by 10.2% compared to USD 110 billion of 2015. Along with the impressive growth rate,
the fact that the Vietnamese retailing market fully opened to allow foreign enterprises to
invest 100% capital since January 11, 2015 and the signing of a series of new generation
of Free Trade Agreements have led to fierce competition between retail supermarket
systems in Vietnam market with the arrival of many large enterprises from abroad such
as Lotte, K Mart , Central Group, Aeon, , Auchan, Family Mart or Circle K. Therefore,
maintaining repurchase behavior of customers and efforts to differentiate itself from
others are very important to retailing companies in Vietnam now. In the current context
of Vietnam, many businesses are not paying attention to their social responsibility, which
includes frauds in business, production of poor quality goods or intentionally causing
environmental pollution have made many customers annoyed (Hoang, 2019). Whereas,
customers are believed to be unlikely to purchase products or service which has low
corporate social performance (Meijer & Schuyt, 2005). Therefore, executing social
responsibilities is an effective marketing tool and an indispensable condition for retailing
companies in Vietnam in term of creating positive opinion (Jones, et al., 2007) and
meeting customers’ certain minimum level of social engagement (Meijer & Schuyt,
2005) which in turn can help them increase loyal customers’ spending, appeal potential
consumers through WOM communication (Curasi & Kennedy, 2002) and make
themselves become more outstanding relative to their competitors (Porter & Kramer,
2007) through enhancing customer loyalty (Martínez & Bosque, 2013).
Additionally, CSR has gotten lots of attention from researchers and become a main topic
in customer behavior literature (Amatulli, et al., 2018). In addition to literature which


2


explained the direct influence of CSR on customer behaviors, many researchers made
their effort to explain the effect of CSR initiatives on customer behaviors through many
different routes such as the enhancement of satisfaction, valuation of service,
identification, trust, corporate image, reputation, commitment, perceived value or social
media engagement. However, the impact of CSR on “brand likeability” and “relational
switching cost” and ultimately on customer loyalty behaviors are underexplored.
Therefore, exploring these relationships is essential and is going to be conducted in this
research.
1.2.

The research objectives

The research aims at exploring the chain effect of CSR on brand likeability as well as
relational switching cost and ultimately on customer loyalty behaviors. Also, the study
provides the Vietnamese companies with managerial implication.
1.3.

Research questions

The thesis is answering the questions as follows:
1. How significant do CSR dimensions (environment, society, stakeholders) affects
brand likeability which in turn impacts on customer loyalty behaviors (word of
mouth and repurchase intention) ?
2. How significant do CSR dimensions (environment, society, stakeholders) impact
on relational switching cost which in turn impacts on customer loyalty behaviors
(word of mouth and repurchase intention) ?

1.4.

Research scope

The research focuses on CSR dimensions (environment, society, stakeholders) and
customer loyalty behaviors ( word of mouth and repurchase intention) in Vietnamese
context. Also, the sample was collected in Hanoi, the capital of Vietnam in the period
from the end of 2019 to 2020.

3


1.5.

Research structure

This study will be split into five parts as follows:
-

Chapter 1: Introduction
 The general overview of research including necessity, objectives, questions
and scope are briefly presented.

-

Chapter 2: Literature review and hypothesis development
 The theoretical framework will be presented in detail by displaying the
fundamental concept and explaining the relationship of key variables. From
that, the hypothesis will be developed.


-

Chapter 3: Research methodology
 Data collection and analysis plan as well as questionnaire designing is about
to be shown.

-

Chapter 4: Data presentation and findings


Data description will be shown. Also, the results of data analysis and
hypothesis test that are taken from SPSS software will be presented.

-

Chapter 5: Discussions and conclusion
 Answers for the questions which are mentioned in chapter 1 will be revealed.
Besides, the findings will be discussed and from that some suggestions are
about to be shown. Moreover, limitations as well as future research direction
are being mentioned.

4


CHAPTER 2:

LITERATURE REVIEW AND HYPOTHESIS
DEVELOPMENT


2.1 Corporate social responsibility (CSR)
Corporate social responsibility is not really a new concept but it is still an academic and
management subject that receives a lot of growing attention (Maon, et al., 2010; Peloza
& Shang, 2011) since it was first mentioned by Sheodon (1923) in his work and first
formally defined by (Howard Bowen, 1953). CSR is defined as “the commitment of
business to contribute to sustainable economic development working with employees,
their families, the local community and society to improve their quality of life in ways
that are good for both business and good for development.” Moreover, there have been
37 definitions of CSR published (Dahlsrud, 2008) and a lot of research have been done
to bring a better understanding of CSR concept.
Although there are not any CSR definitions that are universally recognized (Freeman &
Hasnaoui, 2011), most defined CSR as multidimensional concept (Rowley & Berman,
2000). The most well-known CSR concept was introduced by Carroll (1991), which
suggested pyramid of CSR including economic, legal, ethical as well as philanthropic.
According to Carroll’s work (1991), he supposed that businesses initially need to fulfill
their economic responsibilities by providing the goods and services that customers
demand and earning acceptable profits because it is almost the basic condition for
businesses to perform their other responsibilities. Many authors accepted this definition
and some found out the positive relationship between economic CSR and customer
satisfaction (Akroush, 2012). Legal dimension of CSR referred to the corporates’
responsibilities of doing business within the framework of the law and regulations that
promulgated by the government (Carroll, 1991). There are some researches that
supported the positive link of legal CSR with customer satisfaction which led to an
increase in customer retention such as Nareeman and Hassan (2013). Carroll (1991)

5


supposed ethical dimension of CSR to be responsibilities including acknowledged
standards, norms or expectations in society. Most of the previous studies indicated that

the companies behaving ethically can improve the customers’ satisfaction and retention
(Galbreath, 2010; Hassan & Nareeman, 2013). According to Carroll & Shabana’s work
(2010), philanthropic dimension of CSR contains all activities of the companies in effort
to improve that the companies are good corporate citizen, which is society’s expectation.
Contributing to better community would make business become their preference (Jamali
& Mirshak, 2007). Lev, et al., (2010) revealed that firms involving in charitable
contribution would increase their customer retention.
Similarly, Maignan, et al., (1999) also considered CSR as multidimensional concept with
“economic, legal, ethical and discretionary” responsibilities of businesses toward their
stakeholders. Pinney (2001) simply regarded CSR as set of management practices which
organizations choose to minimize their negative impact on society. Among the many
different definitions of CSR, Mohr et al. (2001) grouped them into two major sorts
including CSR towards stakeholders which is based on multidimensional definitions and
CSR towards society relied on societal marketing principle. Specially, multidimensional
definitions describe most duties of companies towards their diversified stakeholders such
as owners, customers, employees or the community. Societal marketing concept was
defined as companies’ decision making that improves the well-being of both customers
and society (Kotler, 1991). Mohr et al. (2001) used this to define CSR at more abstract
level.
Faced with the constant increase in environmental issues that are supposed to be related
to the unethical business interests and human careless attitudes (Banyte, et al., 2010),
businesses are turning to try to integrate environmental consideration into their business
activities and consider this as a payback tool (Rashid, et al., 2015). Therefore, CSR
towards environment has been focused in numerous researchers’ studies recently (Mohr
& Webb, 2005; Dahlsrud, 2008; Liu, et al., 2014) beside these major classifications of
6


CSR from Mohr et al.’s work (2001) which are used in various researches (Maignan &
Ferrell, 2004; Maloni & Brown, 2006; Mandhachitara & Poolthong, 2011; Pomering &

Dolnicar, 2009). CSR toward environment is supposed to be visible and feasible in
business operations (Liu, et al., 2014). In the other words, it is easy for CSR toward
environment to be understood and recognized by media and consumers (Rahbar &
Wahid, 2011).
Therefore, this study chose to focus on studying three aspects of CSR including: society,
stakeholders and environment. There exist a number of researches that also have
concentrate on studying these three aspects of CSR environment (Liu, et al., 2014;
Mohammed & Al-Swidi, 2019; Dahlsrud, 2008).
Turker (2009) defined CSR toward society as activities contributing to well-being of
society. These activities contains “philanthropy, public welfare contributions, culture
promotion and sustainable development” (Liu, et al., 2014). Environmental CSR is
viewed as the companies’ contribution in balancing and improving environmental effects
without damaging economic performance in order to sustain their development
(Williamson, et al., 2006). It is supposed to include environmental pollution prevention,
energy conservation as well as green production or service provision. From stakeholders
viewpoint, Turker (2009) viewed CSR towards stakeholders as businesses’
responsibility which go beyond economic interest and have a positive influence over
their stakeholders including “owners, customers, employees or the community”.
Stakeholders activities comprise returns to investors, employee treatment, community
development, monitoring and influencing supplier behaviors (Liu, et al., 2014; Dahlsrud,
2008).
CSR practices was well-known as a factor that affects consumer responses which
determines the success of companies (Castro-Gonzalez, et al., 2019), especially when
customers are likely to ask for more than just a good quality or low price product from

7


companies (Bhattacharya & Sen, 2004). In other words, social and environmental
standards are increasingly being considered by customers when making purchasing

decision (Knox & Maklan, 2004). Customers, nowadays, expect organizations to offer
superior products or services and contribute to improving societal issues in addition to
the task of economy development (Polychronidou, et al., 2014). Therefore, many
organizations have been increasingly conscious of CSR’s magnitude (Hemingway &
Maclagan, 2004) and thus enhance its CSR initiatives. Also, CSR has gotten lots of
attention from researchers and become a main topic in customer behavior literature
(Amatulli, et al., 2018).
Many literature indicates that CSR can have direct or indirect impact on customer
behaviors in nature. In addition to literature which explained the direct influence of CSR
on customer behaviors, many researchers made their effort to explain the effect of CSR
initiatives on customer behaviors through many different routes such as the enhancement
of satisfaction, valuation of service, identification, trust, corporate image, reputation,
commitment, perceived value or social media engagement. Among them, many
researchers focused on cognitive aspects to explain the way that CSR efforts have impact
on customer behaviors. For example, in empirical survey with 203 Islamic banks in
Bahrain, Mostafa & ElSahn, (2016) showed that CSR association drives customers
identify themselves with the banks based on their cognitive evaluation, which is then
positively related to customer loyalty. Similarly, Pérez, et al., (2013) revealed similar
relationship between CSR activities and customer identification with the company in
empirical study with sample of 781 financial services users. Besides, Gürlek, et al.,
(2017) contended that CSR activities can create positive corporate image which is
“primary antecedent of perception” (Kasliwal, et al., 2017) based on its effect on
customer’s assessment and opinion, which in turn contribute to customer loyalty.
Additionally, “satisfaction” defined as customers’ overall appraisal of commodities and
services relying on customers’ previous experience with them is also found as a factor

8


which are positively influenced by companies’ CSR activities (Pérez & Rodríguez-delBosque, 2015; Martínez & Bosque, 2013; Barcelos, et al., 2015). Moreover, “trust”

which is defined as belief of customers about the products or services regarding the
company’s appropriate or good characteristics, goals or policies is believed to be linked
with CSR initiatives (Kennedy, et al., 2001; Swaen & C., 2018). There are several
researchers even supported the role as a mediator of “trust” in CSR initiatives’
association with customer loyalty such as (Choi & La, 2013; Barcelos, et al., 2015) .
In addition to cognitive aspect, emotional aspect was found to be positively affected by
companies’ CSR efforts. Being supported by previous literatures proving the effect of
CSR activities on customer emotion (Pérez & Bosque, 2015) as well as the effect of
emotion on buying decision (Wang & WU, 2016), Castro-Gonzalez, et al., (2019) proved
the exist of CSR performance’s association with admiration that is then linked to
customer advocacy behaviors. They supposed that the company performs CSR activities
which is likely to associated with a heartfelt drive customer feel warm because customers
tend to think CSR activities as something company do beyond their profit and try to
contribute to society. That finally leads them to experience moral emotions, namely,
admiration which make them willingly purchase products or service of the companies.
Moreover, following the trend of companies in integrating CSR activities into their
business strategy to obtain advantages from branding (Hoeffler & Keller, 2002), several
scholars make an attempt to scrutinize the link of CSR performance with results of
branding strategy. For example, Ho (2017) revealed CSR activities positively affect
customer’s brand love which in turn contributes to consumer behavioral intentions
including repurchase intention as well as willingly paying a premium price. Besides,
with a convenience sample of 243 responders in China, (Liu, et al., 2014) found that
CSR towards stakeholders impact brand preference the most in comparison with one
towards society and environment.

9


Based on the literature of CSR and its relationship with customer behavior, it is very
obvious that it has gotten a lot of attention from the researchers with many different

explanation about the route that CSR activities affect customer behavior. However, there
is still theoretical gap that need to be filled. It is the fact that the effect of CSR on
branding has gotten great attention recently with research of “brand love” (Ho, 2017) or
“brand preference” (Liu, et al., 2014). Nevertheless, those researches just focused on
understanding the effect from affect-based perspective, namely, emotion, rather than
examining the customers’ perceptions. “Brand likeability” which is perception-oriented
has not been fully examined in the relationship with CSR initiatives in order to bring
more various view of CSR-branding relationship. Besides, likeability is suggested to
appear in all phase of transaction and to be a precursor of brand love, brand preference
and other important outcomes such as satisfaction or favorable attitudes toward brand as
well (Nguyen, et al., 2013); so “how to increase the likelihood that firms are perceived
to be likeable” is very important question for firm’s managers. Therefore, exploring the
connection of CSR activities with “brand likeability” and the clout of “brand likeability”
on customer loyalty behaviors including word of mouth as well as repurchase intention
is extremely necessary because they are underexplored.
In addition, “relational switching cost” which is known as positive one among several
types of switching cost which is a barrier that makes customers “willing to stay” with
brands rather than other “have to stay” types of switching cost (Marcos, 2018) is also
believed to be linked to company’s CSR activities. The positive effects from a positive
like barrier “relational switching cost” are suggested to be “antecedents of customer
loyalty” (Blut, et al., 2015; Barroso & Picón, 2012; Ngo & Pavelková, 2017) . Although
there are many literature studying of “switching cost” in general and “relational
switching cost” in particular and their effects on customer loyalty and intention, few
literature focused on relational switching cost in relationship with CSR. Therefore it can

10


be said that a study of effect of CSR activities on relational switching cost which then
affects customer loyalty behaviors is essential.

2.2 Customer loyalty behaviors
Oliver (1997) defined loyalty as “ a deeply held commitment to rebuy or repatronize a
preferred product/service consistently in the future, thereby causing repetitive same
brand or same brandset purchasing, despite marketing efforts to cause ‘switching
behavior”. In addition, Dick and Basu (1994) defined customer loyalty as the link
between relative attitude and repeated purchase. However, the concept of customer
loyalty hasn’t got much consensus in spite of its popularity (Zhang and Bloemer, 2008).
For instance, some researches conceptualized customer loyalty by “behavioral,
attitudinal and integrated perspectives” (Dick and Basu, 1994; Homburg and Giering,
2001; Hur et al., 2012). Important to the this study, Fullerton (2003) and Zhang and
Bloemer (2009) constructed customer loyalty as essentially “behavioral intention” and
named “customer loyalty behaviors” which includes willing to pay, word of mouth
communication and repurchase intention. The study is going to focus on the two later
dimensions.
An actual customer behavior of buying the same brand more than one time can define
repurchase (Ibzan, et al., 2016). Intention is defined as a motivation of someone when
they wants to perform their behavior (Rezvani, et al., 2012). While repeated purchase is
considered as actual action, repurchase intention is explained as consumers’ decision of
continuing to purchase a product or service when it comes in handy (Keller, 2001).
Dodds, et al., (1991) insisted repurchase intention is representatives for consumers’
possibility of keeping on purchasing a product or service. Therefore, intention to
repurchase can be considered as customer loyalty.
Word-of-mouth (WOM) was defined by Söderlund (1998) as the extent to which
customers will share their consumption experience with their friends, relatives, and

11


colleagues consumption experience. Put another way, WOM is verbal communication
related to a product, service, organization or brand. There are 2 types of word-of-mouth

including positive and negative. The research focused on positive WOM which is
defined as “a desire to help the company, altruism, a desire to signal expertise to others
and product involvement” (Angelis, et al., 2012). WOM is widely accepted by customers
and they consider them as an important communication source. People enjoy talking
about their possibilities and experiences (Kelly, 2007). Also, when making purchase
decision, customers have more confidence in WOM communication rather than radio,
television, and publications (Cakim, 2010). There are between 50-70% of buying
decisions are affected by WOM (Sweeney, et al., 2008). Therefore, firms’ effort in
enhancing positive WOM is very vital not only since it can bring them more new
customers but only because it is like an express of their success in increasing the
customer loyalty.
2.3 CSR performance and brand likeability.
The concepts of brand love and brand preference have been getting lots of attention in
an academic and management subject recently. It is very easy to confuse brand likeability
with them because they “may have similar cognitive and some emotional elements”
(Nguyen, et al., 2013). However, while brand love contains multiple cognition, emotion
and behavior that are a mental prototype orientation (Batra, et al., 2012), Nguyen, et al.
(2013) regarded brand likeability as a less emotional and perception-oriented concept.
Whereas brand preference indicates a comparison among numerous brands, brand
likeability is less behavioral (Nguyen, et al., 2013). Customers have their own idea about
the company they like and dislike and their perceptions of likeability affect customers’
reaction to firms (Reysen, 2005). The brands that are liked by the customers would get
advantages and privilege which the disable brands would not (Nguyen, et al., 2013).
Therefore, it is very essential for the oranizations to understand the concept along with

12


divers of likeability so that they can raise the likelihood that customers would perceive
them as more likeable ones (Nguyen, et al., 2013).

Likeability is described to be “a persuasion tactic and a scheme of self-presentation”
(Cialdini, 1993; Reysen, 2005) and is considered as multidimensional concept including
cognitive and affective elements (Alwitt, 1987). Attribution theory, “the study of the
causal interpretations that persons give to events in their environment” (Crittenden,
1983) is very helpful in defining “likeability”. That means it was supposed that when
people face or cope with an surprising or negative event, they tend to look for causal
interpretation for that event. The way people interpret that event can imply their thinking
and behavior. As the attribution concept’s suggestions, the likeability is expected to
occur when consumers have positive inference from firm’s activities (Nguyen, et al.,
2013). Once a positive assessment attaches to a firm, that firm will be found likeable and
vice versa. In order to make any inference about any firms, customers usually assess
firm’s profit and motives, past behavior and reputation (Cox, 2001; Campbell, 2007).
Therefore, building and maintaining good reputation can affect more positively inference
of customers towards firms, which increases brand likeability.
Besides, attractiveness model (McGuire, 1985) also provides insight in defining
likeability. The connection of customers’ negative or positive awareness of
attractiveness with likeable firm are found (Nguyen, et al., 2013) . This finding suggests
that firms improving their offerings’ attractiveness which may comprise “building
relationships with fair trade organizations, delivering green products, and supporting
charities” are well regarded by their customers. In addition, good reputation can be also
a kind of attractiveness (Nguyen, et al., 2013).
Many previous studies showed that CSR toward environment affects perception of
customer. Laroche, et al., (2001) revealed that people pursuing a more environmentally
friendly lifestyle would have high purchasing intention toward firms related to

13


environmental practices. Brown & Dacin (1997) believed that what customers know
about the companies would determine their belief and attitude toward the products of the

company. They suggested that when the customers consider CSR performance of the
companies as positive, they make positive inference of the companies’ business. Mohr
& Webb

(2005) showed that customers’ positive company evaluation and strong

purchase intention was impacted by the manufacturers who implement CSR towards
environment. Reputation could be one of criteria for customer to determine their
perception toward a company and its attractiveness (Nguyen, et al., 2013). A bank ’s
reputation for CSR activities, for example, environmental efforts, therefore, positively
affects customer’s liking towards it. (Rives, et al., 2009). A green brand image is
supposed to have a positive link with consumers’ satisfaction (Chen, 2010). It is very
obvious that consumers tend to like the companies which make donation for
environmental organizations (Nguyen, et al., 2013) because when firms support to these
activities, they can develop goodwill among customers which would generate likeability
effect. While Kucukusta, et al., (2013) found the CSR factors related to environment,
mission and vision could be predictor the visitors’ stay preference, Liu, et al. (2014)
contended that environmental CSR would yield more brand preference by customers. In
sum, with the support and evidence from the literature for the environmental CSR’s
positive association with brand likeability, the first hypothesis is defined as:
H1: CSR towards environment positively impacts brand likeability.
Daub & Ergenzinger (2005) supposed that several customers care many things rather
than just consumption experience. These consumers are tendentiously more contented
with the products of socially responsible companies (Luo & Bhattacharya, 2006) .
Therefore, firm’s CSR activities, in general, bring positive context for customer’s
perception and assessment about them (Luo & Bhattacharya, 2006). Especially, the firms
which integrates with social CSR also deeply impress their customer (Murray & Vogel,
1997) and enhance consumers’ evaluation (Henderson, 2007). Similarly, CSR activities
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intended to enhance social interests increase and enhance brand image (Singh, et al.,
2008) and brand association (Ricks, 2005). In support, there are various researchers
including Hassan & Nareeman (2013), Galbreath (2010) and Lee, et al., (2013) provided
the evidence proving that the businesses’ philanthropic activities which contribute to
community’s well-being could generate higher level of customer satisfaction. The
contribution to community’s well-being which are regarded as meeting community
expectation would drive the firm be its favor (Jamali & Mirshak, 2007; Wood, 2010). In
support, (Nguyen, et al., 2013) contended that customer is likely to like the companies
which involve in social activities such as supporting charity. With supportive evidence
from the literature, engaging in CSR towards society can make the firms become more
likeable. As a result, the hypothesis is:
H2: CSR towards society positively impacts brand likeability.
CSR activities that affects positively the firm’s stakeholders also have been studied
recently. CSR effort toward stakeholders can decrease customers’ skepticism and
increase customers’ trust towards firms (Vlachos, et al., 2008). Therefore, Creyer (1997)
indicated that the company’s CSR activities which are related to their stakeholders are
favored by the customers. This study also contended that CSR towards stakeholders is
also a very important factor determines customers’ purchase decision. Evaluation of CSR
efforts of firms in managing relationship with their stakeholders can be effective for
assessment of stakeholders’ satisfaction (Clarkson, 1995). Customer satisfaction is
regarded as a predictor of brand preference. Sen, et al., (2006) concluded consumers’
perception of businesses’ employee treatment and investment behavior are linked to
more positive responses. Liu, et al.,

(2014) showed that CSR endeavor towards

stakeholders such as customers and staffs can increase customers’ degree of preference.
Based on those previous studies related to CSR towards stakeholders’ positive link with
brand likeability, the third hypothesis is shown as:


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H3: CSR towards stakeholders positively impacts brand likeability.
2.4 CSR performance and relational switching cost
Due to the increasingly high competition and the decline in market growth rate,
protecting market share towards companies has become more important than ever.
Switching costs can be one of the effective strategy to create customer loyalty which
helps companies to maintain their market share against their competitors. In (1998),
Poster defined switching cost as the costs consumers incur once they migrate to another
products or service provider. Chen & Wang (2009) contended that switching costs could
be “the form of termination costs from the current service provider to joining costs with
the alternative service provider”.
Klemperer (1987) supposed that there were 3 kinds of switching cost including
“transaction, learning and contractual costs”. Transaction cost arises when customers
stop buying products or using services from a provider and find a new one. Learning cost
refers the cost of immigrating to a new brand after learning to use another brand.
Contractual cost is supposed to be the expense of losing programs for loyal customers
that they got from current brand such as “repeat-purchase coupons or frequent-flyer
program” (Klemperer, 1987).
In addition to those explicit cost, there exists implicit switching costs which are
psychological and emotional costs. Burnham, et al., (2003) divided switching costs into
3 kinds, in which these psychological and emotional costs are mentioned as relational
costs. Relational costs are “affective losses associated with breaking the bonds of
identification that have been formed before" (Burnham, et al., 2003). They could be
“with the people with whom the customer interacts” or “with the brand or company with
which a customer has associated” (Poster, 1980). In other words, the social bonds,
personal rapport and trust have been formed over a period of time between the brand and
the customer can become a huge psychological exit barrier. The customers would have


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to experience or incur emotional discomfort because of the loss of identity, the breaking
of bonds, the risk and the uncertainty that the termination of the current relationship
could bring.
According to social identity theory, people connect themselves with the multitude of
social categories that they feel familiar with through self-definition (Tajfel, 1981) .
Identification research drawing on “social identity theory” supposes people usually tend
to identify themselves with the organizations whose perceptions overlap with their
perception, reflect their self-concept and enhance their self-esteem as well (Tajfel &
Turner, 1985). Moreover, people also desire to differentiate themselves from others
(Tajfel & Turner, 1985). Hence, they are likely to find groups or organizations that are
distinctive to identify with. Meanwhile, CSR plays a transmitter-receiver role which
transmits distinctive values as well as bolsters company identities’ attractiveness (Sen,
et al., 2006). Thus, identification with the organizations engaged in CSR initiatives are
supposed to contribute to self-esteem of the customers. In support, firms’ CSR efforts
were found to increase customers’ perceptions of customer-company identification (Sen
and Bhattacharya, 2001; Lichtenstein et al., 2004). CSR actions related to environment
can contribute to the company’s distinctive characters (Bhattacharya & Sen, 2004),
which can drive the company more attractive in the customer’s eyes and then foster them
to form the identification with. Besides, customers consider the company to be doing
something good for environment on their behalf and thus, help them enhance their selfesteem and self-expression regarding their ethical and moral social image (Aquino &
Reed, 2002). Martínez & Bosque (2013) also revealed that CSR (including responsibility
towards environment) can impact positively C-C identification which enhance customer
loyalty. Moreover, customers usually have greater satisfaction and trust with products
which do not harm the environment (Balabanis, et al., 1998). The bonds of trust and
identification are formed over period of time towards organizations implementing
environmental CSR activities can increase discomfort and resistance toward switching


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