RESEARCH PROPOSAL

Corporate Social Responsibility and Customer Purchasing Intentions

Proposal submitted By,

Name - S.S.Jaan

Reg. No - 104075

Course: MGT 4246 Industrial Training & Dissertation

Academic Supervisor: Dr. H.M.A. Herath

Semester II, 4thYear

DEPARTMENT OF BUSINESS MANAGEMENT

FACULTY OF BUSINESS STUDIES & FINANCE

WAYAMBA UNIVERSITY OF SRI LANKA

 Table of content…

1. Introduction…………………………………………………. 1-5

1.1 Background of the Study

1.2 Problem Statement

1.3 Research questions

1.4 Purpose of the Study

1.5 Objectives of the Study

1.6 Significance of the Study

1.7 Limitations of the study

2. Literature review……………………………………………..5-8

3. Methodology…………………………………………………..9-10

3.1 Conceptualization

3.2 Statement of hypotheses

3.3 Operationalization

4. Study design……………………………………………………11

4.1 Approach to Data Gathering

4.2 Sample& sampling techniques

4.3 Data gathering techniques & Data analysis

5. Time Frame for Research……………………………………..12

6. References………………………………………………………13
 1. Introduction

1.1 Background of the Study

Corporate Social Responsibility (CSR) signifies a corporate practice which aims

toachieve the two divergent objectives of profit maximization and social
wellbeingsimultaneously.It has been responsible for propelling organizations, totransform
the way they do business by focusing upon the responsibilities that theyowe to all their
stakeholders.Corporate social responsibility(CSR)remains a broad, complex and
continually evolving concept that encompasses a variety of ideas and practices.Majority
of firms believe that they should pay attention to their social andenvironmental
responsibilities.The familiarity with the term CSR, involvement andthe regularityof CSR
activities undertakenwerehigh in medium size firms than in smaller onesAll industries
indicates that the motivation factor for adapting CSR is to improve firm’sreputation,
employee motivation and to improve economic performance while ethical and moral
reason reserves the least importance as a motivating factor for CSR.The main barriers
were lack of moneyand attitude of no benefit in short run.

Business organizations have obligations to their society such as to increase in societal

expectations of business, a reduction in the power and scope of government,
globalization, heightened media reach, the greater spread of democracy, and a series of
corporate scandals that have undermined confidence in the integrity of corporations,
financial institutions and markets . As a result management may choose to implement the
concept of CSR even though it pays off.

Increased sales are often seen as the ultimate effect of corporate programs which include
sponsorships, promotions, advertising, and social responsibility. The basis of a purchase
intention is a positive and favorable attitude toward product.

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 1.2 Problem Statement

In order to achieve long run growth in 21st century, companies face the challenge of
sustainability in competitive environment. Therefore every organization is not only focus
on earning profit but also take interest on social responsibility, because consumers are
increasingly makes purchase on the basis of a firm’s role in the society (Forte and
Lamont, 1991).
Social responsibility plays a central role in the business environment and as companies
have attempted to become more responsible in terms of the economic, environmental and
social wellbeing of the societies in which they operate. As a result, the concept of social
responsibility has grown and spread dramatically during the recent decade in the business
world (NilanthiRatnayake, 2007). A company which is socially responsible, research told
the 88% of consumers are more likely to buy from that company (Smith, 1996). Because
people or consumers like those company which fulfill the social need of people. Company
image come from the combination of a person’s trust, feelings and impressions about a
company (Van Rekom, 1997)
Some argue that CSR is merely window-dressing, or an attempt to pre-empt the role of
governments as a watchdog over powerful multinational corporations. Political
sociologists became interested in CSR in the context of theories of globalization, neo-
liberalism, and late capitalism. Corporate Social Responsibility or CSR has become the
buzz-word today among corporate circles, and several companies, chambers and
associations are racing to get their teeth into it. Even a new Society for CSR has been
launched. And in addition, a corporate citizenship awards contest. Environmental impact
of company activities, ethical sourcing and business practices, and managing reputational
risk are all now recognized as affecting the future plans and performance of a company.

Customer’s willingness to purchase the company’s products increases by CSR programs

(Brown and Dacin 1997). In fact when company’s ethical behavior exceed from customer
expectation will be positive correlate with purchase intention of customer ( Creyer and
Ross 1997).

Therefore this study will investigate the relationship between of Corporate Social
Responsibility and Customer purchase Intention

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 1.3 Research Questions

 What are the expectations of top management by engaging Corporate Social

Responsibility projects?

 Are consumers aware of specific organizational involvement in socially

responsible programs?

 What is the relationship between CSR activities and consumer perceptions of

organizational reputation?

 What is the relationship between CSR activities and consumer purchase

intentions?

1.4 Purpose of the study

 The purpose of this study is to investigate how consumers’ purchasing intentions

and behaviors are affected by CSR activities conducted by reputed organizations
in Sri Lanka.

1.5 Objectives of the study

 To study the relationship between Corporate Social Responsibilities and customer

purchase intentions
 To analyze the consumer reaction towards the purchase intention relates with the
Corporate Social Responsibilities
 To critically evaluate the effects or impacts of CSR projects on customer purchase
intention and assess the degree of customer influence and how much their
responses towards the CSR activities are important to the reputed companies in Sri
Lanka.
 To give possible recommendationson the relationship which exists between the
CSR and purchase intention and how much CSR activities caninfluence on the
customer intentions.

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 1.6 Significance of the study

Business organizations have obligations to their society such as to increase in societal

expectations of business, a reduction in the power and scope of government,
globalization, heightened media reach, the greater spread of democracy, and a series of
corporate scandals that have undermined confidence in the integrity of corporations,
financial institutions and markets . As a result management may choose to implement the
concept of CSR even though it pays off. Social reporting is not about getting more
publicity for the donations and sponsorships doled out by a company, though some Sri
Lankan companies believe that this is the sole purpose and focus.
Many organizations in Sri Lanka are doing good job towards social responsibility.
Several factors are being affected by CSR but this study focuses on purchase intention.
Finding will help the organizations’ marketing strategy to include the activity of CSR
towards society.
The results of this research may be relevant to decision maker, nationwide, giving them
criteria for the management of their corporate social initiative and characteristics for the
launching of products and social attributes in segmentation.

The insights of the Corporate social Responsibility gained from this study will be
interests to practitioners and significantly useful for the management to justify on CSR
implementation in their organizations. Companies and their stakeholders can devote
attention to enforce and further direction of their CSR practices. Government also can
establish regulations or shaping supporting policies in area of sustainable development.

1.7 Limitations of the study

i. The sample size is not enough to give the complete picture of the customers
in the country.
ii. Limited time and budget in the research process
iii. It is difficult to gather clear and unbiased information from customers. (this
affects the accuracy of the information)

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 iv. It is difficult to study all factors that influence the involvement in CSR
projects.
v. Sample results may not represent the whole population and the factors which
are not covered by the research may also affect to the overall conclusion.
vi. Specialized, knowledgeable human resource should be used in collecting data
so that, the data collection cost may increase.

2. Literature Review

Within a constantly evolving business era, firm have been investigating in different
alternatives to distinguish themselves as business leaders, increase profits, and improve
their overall standing in the community. These activities are undertaken for several
reasons, the most important of which is sustainable development. Sustainable
development has been defined as “growth that meets the needs of the present without
compromising the ability of future generations to meet their needs” (Sprungli, 2005).
While Reed (2001) define business sustainability as “business strategies that are intended
to add social and or environmental value to external stakeholders while increasing value
to shareholders”. Throughout the modern business development, corporation nowadays
has been devoted their understanding of business practice and the idea of businesses exist
for more than profit maximization. The general business trends nowadays, involve
economic and development and growth while maintaining health and functionality of
ecosystem, environment and community. The emergence principles of sustainable
development have an important impact on the concept of Corporate Social Responsibility
(CRS) resulting two significant contributions of sustainability concept: incorporating
environmental variable as one of the main social expectations to be covered under
sustainability and firm must satisfy not only the expectation of current society but also
those of future generation.

Companies are becoming more aware of the need to communicate who they are, what
they do, how what they do affects society and the environment, and their future intentions
and plans in not just generating profits but being more responsible to all stakeholders,
society and the environment. Stakeholder issues cover employee working conditions,

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maintaining policies of equality, diversity and human rights, protecting consumers as well
as the environment, and helping the local community.

Kotler and Lee (2005) assert that there are five C’s in CSR that corporations must fulfill.
The first C stands for “conviction” this a about real improvement in business
performance. The second C means Commitment, which means “when we commit, we
deliver”, Communication means “we have committed to open, honest, and direct
communication with all the stakeholders. This integrates new tools of communication that
are used by corporations thatreinforce reciprocity in communication. The communication
discussed by Kotler and Lee is a two way process of communication and all stakeholders
are respected and addressed. Consistency is a process of continuous improvement. The
fifth “C” stands for credibility; it should beknown that the corporation ability to trust
their performance depends on the credibility of theireffort. Corporation should regularly
review and consider new or modified business practices towill improve the quality of life
and, at the same time, provide some net benefit to thecorporation, ideally financial,
operational relationshipbuilding, or marketing in nature. Thiscapture the open system
concept, that asserts that corporations should interact with theenvironment in order for it
to survive.

In addition, Kotler (2004) says that there are ranges of options for giving by corporate
responsibilities to their publics as follows;
 Providing cash donations

 Offering grants

 Awarding scholarships

 Donating products

 Donating services

 Providing expertise

 Allowing use of facilities and distribution of channels

 Offering the use of equipment

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Common Types of Corporate Social Responsibility Actions

1. Environmental Sustainability: Areas include recycling, waste management, water

management, using renewable energy sources, utilizing reusable resources, creating
'greener' supply chains, using digital technology instead of hard copies, developing
buildings according to Leadership in Energy and Environmental Design
(LEED)standards, etc. There is a business sector dedicated to specifically to
environmental sustainability consulting for businesses of any size to utilize. The highest
ranked sustainability consulting firm is Ernst & Young.

2. Community Involvement: This can include raising money for local charities,
supporting community volunteerism, sponsoring local events, employing people from a
community, supporting a community's economic growth, engaging in fair trade practices,
etc.[54]Starbucks is an example of a company that focuses on community involvement and
engagement; since these programs began the company has seen higher profits and greater
employee engagement.

3. Ethical Marketing Practices: Companies that ethically market to consumers are

placing a higher value on their customers and respecting them as people who are ends in
themselves. They do not try to manipulate or falsely advertise to potential consumers.
This is important for companies that want to be viewed as ethical.

Companies that have traditionally excelled in the historical reporting of their business
performance are now being compelled to focus on the future. Companies are becoming
more aware of the need to communicate who they are, what they do, how what they do
affects society and the environment, and their future intentions and plans in not just
generating profits but being more responsible to all stakeholders, society and the
environment. Stakeholder issues cover employee working conditions, maintaining
policies of equality, diversity and human rights, protecting consumers as well as the
environment, and helping the local community.

Customer Purchase Intention

Increased sales are often seen as the ultimate effect of corporate programs which include
sponsorship, promotions, advertising, and social responsibility. The basis of a purchase
intention is a positive and favorable attitude toward a product. According to Fishbein’s

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theory of reasoned action (Fishbein and Ajzen, 1975), a consumers’ purchase intention
serves as the mediator between their attitude toward a product and their actual purchasing
behavior. Consumer intentions have been used to investigate numerous variables
including satisfaction (LaBarbera and Mazursky, 1983; Oliva, Oliver and MacMillan,
1992; Oliver R.L., 1993), perceived value (e.g., Wood and Scheer, 1996), brand equity
(e.g., Keller, 1993; Srivastava and Shocker, 1991), and sponsorship recognition (Gwinner
and Swanson, 2003; Madrigal, 2001; Meenaghan, 1996, 1999).Gruber (1971) suggested
that intentions provide a link between consumers’ reactions to products and their
acquisition or use of the products. Thus, intention has been used in numerous studies as
an alternative measure to actual purchase behavior. Brown and Dacin (1997) found that
corporate associations, which include corporate ability and corporate social responsibility,
affected product evaluations through corporate evaluations. In their model, corporate
social responsibility (i.e. the character of a company with regard to social issues) has a
positive effect on corporate evaluation, and in turn, corporate evaluation positively
effected product/brand evaluation. They concluded that when a consumer identifies a
brand with a company, all the information stored in memory regarding the company may
influence the evaluation of the brand due to the association between the brand and the
company. Netemeyer et al. (2001) found that the organizational association of being a
“good corporate citizen” was related to willingness to pay a price premium for a brand
and brand purchase. Ricks (2005) using an experimental design noted that consumers
react positively to corporate philanthropy with no alternative intentions (e.g., reactive to a
negative corporate event). Bhattacharya and Sen (2003) argued that consumers who
identify with companies are more likely to be loyal to those companies, promote them to
others, and be resilient to negative information about them. They went on to propose that
consumers were likely to identify with a company that offers them a positive and
meaningful social identity. Mohr and Webb (2005) examined the influence of corporate
social responsibility and price on consumer responses. The authors created scenarios to
manipulate corporate social responsibility and price across two domains (environment
and philanthropy). Results from a national sample indicated that CSR in both domains
had a positive impact on evaluation of the company and purchase intent. Furthermore, in
the environmental domain corporate social responsibility affected purchase intent more
strongly than price did. The afore cited studies suggest an overall positive attitude toward
companies associating themselves with causes that benefit society, and companies using
their resources to benefit society is clearly related to the concept of CSR.
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 3. Methodology

3.1 Conceptual Framework

Independent Variable Dependant Variable

CSR Customer Purchse Inention

Economic
Responsibilities Customer
Satisfaction

Legal
Responsibilities
Customer’s Trust

Ethical
Responsibilities

Customer Loyalty
Philanthropic
responsibilities

3.2 Statement of hypotheses

According to developed conceptual framework, the hypotheses relevant to each construct

are given below.

H1: Higher economic responsibilities increase the customer satisfaction

H2: Fulfilling Legal responsibilities increase the customer trust.

H3: Higher ethical responsibilities increase the customer loyalty.

H4: Involve in Philanthropic responsibilities positively affect to higher the customer

loyalty.

H5: Advanced CSR programs cause to increase the customer purchase intention.

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 3.3 Opertionalization

Concept Variable Indicators Measurement

Corporate Be profitable Economic  Clear financial  Financial

Social Responsibiliti reporting system statements
Responsibili es  Using updated  Annual
ty towards accounting reports
the firm systems  Auditors’
performance  Using Strategies reports
& Firms’  Annual
value Profit
Obey the Legal  Following labor  Act or
Law Responsibiliti standards Ordinance
es  Keep documents
 Fulfill every legal
needs

Be Ethical Ethical  Intention to  Code of

Responsibiliti maintain good Ethics
es ethical behavior  Number of
 Protecting human complaints
rights against the
 Following Green firm
environment
concept
Be a good Philanthropic  Providing cash  Percentage
corporate Responsibiliti donations of the value
citizen es  Offering grants of donations
 Awarding out of net
scholarships revenue
 Donating products
 Donating services
 Providing
expertise
 Allowing use of
facilities and
distribution of
channels

CSR Advanced  Purchase Intention  Revisits of
CSR customers
programs (Retention)

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 4. Study Design

4.1 Approach to data Gathering

Inductive Approach

To approach CSR from social and management view, researcher chooses to conduct a
Qualitative inductive research.

4.2 Sample & Sampling Procedure

The study will use the details from selected customers which are sampled based on the
random sampling. Also the study will use multiple case designs (Flick, 2002), and the
Purposive sampling (Silverman, 2005;Eisenhardt, 1989) was used to identify the case
study companies based on their CSR performance as indicated by awards won by the
companies and the reporting of CSR practices.

4.3 Data Gathering Techniques & Data Analysis

In this study, it will have to measure the customer purchase intention, so researcher has to
collect primary data from customers while collecting secondary data to collect
information about company profiles on the concept of CSR.

Therefore two main sources will be used to collect data:

Secondary data (i.e. consisting of company
Documentary evidence in the form of CSR reports and financial reports), and
Primary data (consisting of questionnaires, in-depth semi- structured interviews, i.e.,
SSI's.)

And data collects through questionnaire is designed to collect data on a five scale point
likert scale type measurement scale. These scales will enable the data to be converted in
to an interval scale for data analysis.

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 5. Time Frame for Research

Steps Weeks
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
Discussion with supervisor about
research topic and weaknesses of
research proposal
Collect and study more research
articles relates to topic
Analyze and take relevant exacts
Draft first chapter of
research(introduction)and
second chapter(Literature
Review)
Develop questionnaire
Fill questionnaire using data
Prepare data set
Draft third
chapter(Methodology)
Analyze the data set
Reach to conclusions,
recommendations and
suggestions
Complete the research
report(analyze,conclusion,recom
mendations,ane preferences)

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 5. References

1. Lecture notes
2. Web sites

http://en.wikipedia.org/wiki
www.businessdictionary.com

www.googlescolar.com

3. Books

Carroll, A.; A. Buchholtz (2006).Business and Society: Ethics and Stakeholder

Management, 6th ed. Mason, OH: Thomson/South-Western. ISBN 0-324-22581-4

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