Impact of CSR on Customer Satisfaction Mediated Employee Ethical Behaviour in Malaysia

Introduction

Corporate social responsibility is a field that has attracted attention of many researchers for many years. Different researchers have investigated the role of CSR in creating sustainable businesses. In Malaysia the aspect of CSR is today gaining attention of many researches. Despite the relevance of CSR, companies are still struggling to introduce CRS into their business since it takes a longer period of time to create paying-off for the companies. The government in countries like Malaysia has tried to improve the awareness and initiatives meant to improve CSR among Malaysian companies. CSR has also been reported to be a social responsibility. The companies that have embraced CSR have reported sustainable businesses. Even though studies have been done in Malaysia context, there is a limitation of studies done to investigate the relationship between CSR and customer satisfaction. The prime purpose of the present study is to investigate the impact of corporate social responsibility (CSR) on the customer satisfaction mediated employee ethical behaviour in Malaysia. Findings of this study is expected to be applied to customer satisfaction through ethical sales behaviour on customer commitment, trust and loyalty.

Research Aims

The aim of this study to investigate the impact of corporate social responsibility (CSR) on the customer satisfaction mediated employee ethical behaviour in Malaysia. CSR, which include legal, economic, ethical and philanthropy of CSR.

Research Objective:

  • To examine the impact of CSR on CS mediated by EEB
  • To investigate the impact of Legal CSR on CS mediated by EEB
  • To investigate the impact of economic CSR on CS mediated by EEB
  • To examine the impact of ethical CSR on CS mediated by EEB
  • To investigate the impact of philanthropy CSR on CS mediated by EEB

Research Question:

  • What is the impact of CSR on CS mediated by EEB?
  • What is the impact of legal CSR on CS mediated by EEB?
  • What is the impact of economic CSR on CS mediated by EEB?
  • What is the impact of ethical CSR on CS mediated by EEB?
  • What is the impact of philanthropy CSR on CS mediated by EEB?
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Chapter 2: Literature Review

Empirical Review

CSR definition

CSR has been conceptualized as a conjoint set of ethical and legal commitments and obligations to stakeholders at the national and national level. According to WBCSD, the obligations and commitments stem from the impact generated from organizations through their social labor and activities, and human rights and environmental issues. Supporting this view, Valor and De la Cuesta opined that CSR implies the organizations’ integration and recognition of environmental and social concerns in their operations which lead to entrepreneurial activities and practices that include those concerns.

Valor and De la Cuesta identifies four key ideas related to CSR. First, CSR is related to morals and ethical behaviours. CSR encompasses a conjoint set of ethical and legal commitments and obligations. Third, CSR involves admitting the consequences of the organization’s activities and performance to groups and shareholders, and admitting that organizational effectiveness demands more than maximization of profit. Lastly, CSR concerns environmental, labour, human rights and social fields.

Definition: Customer satisfaction (CS)

Customer satisfaction (CS) has been defined variously as referring to customers’ overall assessment or evaluation of the experience of consuming and buying a product overtime. According to Yi customer satisfaction can be determined by customers’ previous experience and its confirmation. Yi further opined that customer satisfaction plays a critical role in creating previous expectations and reputation.

CSR and CS

Studies have suggested several ways through CSR may predict greater CS. According to Bhattacharya and Sen and others, strong record of CSR by an organization creates a context that favorably and positively boosts consumers’ positive attitude and evaluation towards it.  Other argue that perceived value created through CSR is an antecedent that promotes CS and that CSR can increase the perceived value of the company. In another similar study, Luo and Bhattacharya  indicated that customers may derive higher satisfaction and better perceived value from products that are produced by an organization is socially responsible. Other studies have suggested that CSR demonstrates that the company values fairness and equity and it may increase levels of CS through employee training, product improvement and ethical treatment of customers. CSR is also believed to appeal to consumers’ multidimensionality as an economic being, as well as a member of a community, country, and family. It is also argued that CSR also influences on CS and impact on CR.

Elsewhere, Tan and Komaran observed that economic responsibility of CSR may have a positive influence on the decision of customers to purchase. In this case, customers depend on the economic responsibility of the CSR to make a decision to purchase. Also, economic CSR has been positively linked to the level of trust that may cause retention and customer satisfaction. A recent study conducted in this fielf reported that there is a relationship between economic and customer satisfaction or retention. This study identified the economic CSR like the fairness in price and hoe it was linked to the level of satisfaction and retention of customers. The quality of a given service or product has been found to have positive impacts on customer satisfaction. Studies son the quality of the product have defined the product quality as the level to which the product meets the reliability, conformance, performance, durability and perceived quality as considered by the customer. Haghighi et al., reported a strong relationship between quality of the product or service and level of satisfaction of the customers. Same findings were reported by Zhao, Lu, and Chai who reported that the improved quality of the product sold by a company will influence customer satisfaction positively. In this case, evidence has shown that an improved level of service quality will be associated positively with satisfaction of customers causing positive feedback to he company.

Another factor that affects Economic CSR is the operation efficiency. Operational efficiency is measured by considering the amount of waiting time cost efficiency, and fast responses. Similar to other variables, operational efficiency has been reported to be positively linked to customer satisfaction. These studies also reported that the reliability of the procedures for complaints was a positive factor in determining customer satisfaction.

Sample

In addition to operational efficiency, shareholders level of wealth is a crucial factor in Economic CSR. Onlari and Rotchanakitumnuai mentioned that shareholders wealth lead to more wealth maximization activities in the organization, hence creating a high satisfaction of customers. Similarly McDonald and Thiele reported that sharing of profits with employees would facilitate customer satisfaction.

Studies conducted on legal CSR have reported no relationship between compliance with regulations and customer satisfaction. Exploring legal dimension as part of CSR reports a significant role of legal responsibilities of the CSR to the satisfaction of customers.  Other studies sin the field have reported that when a company complies with the laws governing consumer protection, such a company is likely to provide higher customer satisfaction. This is so because many consumers will believe a company that is in good times with the law. In addition, labelling the items as a variable of Legal CSR was reported to have a positive correlation with customer satisfaction. Customers will show high level of trust as well as confidence when companies acts as per the legal regulations set to have the consumers privacy protected. Nareeman and Hassan reported a negative relationship between legal CSR and customer satisfaction.

Lee et al reported that an organization that follows ethical practices tend to have improved satisfaction of customers. Galbreath reported that attributes such as fairness, honesty, and integrity among the staff were reported to describe the ethical responsibility of CSR dimension. Fairness refers to the service offered to the customer and it is linked to the loyalty and satisfaction of the customers. When the front desk embraces ethical behaviour, they tend to create a high satisfaction level among customers. Alrubaiee showed a positive relationship between ethical CSR and customer satisfaction. In this case, a brand that fulfils all promises made will facilitate the satisfaction of customers. Also practices of fair trade, including green labelling have been linked to customer satisfaction since they make the customer see sustainability of the products.

Nareeman and Hassan investigated philanthropy CSR and found out that the dimension of CSR had huge effects on the satisfaction of customers.  The dimension of philanthropy, such as charitable contributions, donations, marketing activities related to a given cause, were reported to have a positive correlation with customer satisfaction. Other findings indicate that community development activities done by organizations have a positive relationship with customer satisfaction. While some studies show a positive correlation between charitable contribution and customer satisfaction, other studies like that of Levi et al show that the consumers gave philanthropic activities a low rank hence showing low satisfaction levels of the customers.

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Impact of CSR on Customer Satisfaction Mediated Employee Ethical Behaviour in Malaysia