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Literature review

Customer awareness and corporate social responsibility



As per the definition of Sims (2003) corporate social responsibility is the continual commitments
by businesses to contribute for the economic development of the region where they operate, and
putting efforts for the improvement of standards of employees and society.
Since CSR activities have significant impact on the value enhancement of an organization
(Servaes and Tamayo 2013); Organizations need to create customer awareness about the firms
CSR performances through proper advertisement. Consumers purchase decisions are influenced
by the intensity of advertisements regarding CSR benefits (Brown and Dacin 1997). In this
regard different researches suggest different consumer behaviors towards the CSR activities.
Most of the customers prefer to buy goods from the firms who are more engaged in CSR.
Furthermore, there are few customers who are willing to pay higher prices for the products
offered by SCR engaged firms (Servaes and Tamayo 2013). Baron (2001) deduced that
organizations practices for social responsibility positively affect the demand of its products
which consequently leads to profit maximization.
As far as customers awareness regarding CSR is concerned, organizations CSR initiatives must
be communicated properly to their potential customers. McWilliams and Siegel (2001) suggested
that the correlation between organizations social initiatives and advertisement is positive and
organizations need to put maximum efforts to highlight their CSR differentiations. Similarly,
Schuler and Cording (2006) inferred that the awareness of customers regarding firms CSR
initiatives is the key factor to get positive response and rewards of CSR activities. Above
mentioned all authors suggested that companies need to emphasis on increasing the awareness
level of CSR activities in order to make it profitable strategic investment.
Furthermore, Servaes and Tamayo (2013) argued that the information environment of the firm is
enhanced by advertisement which leads to increase the awareness among customers that helps
organization to spread information about itself, its products, practices and CSR initiatives. These
practices of increasing customer awareness towards corporate social performance of the firm
increases demand of social responsible behavior in return (Servaes and Tamayo 2013).
On the other hand, Schuler and Cording (2006) highlighted another phenomena that firms prior
reputation should be concerned in this regard. They aligned CSR information of the firm with
their previous image. Schuler and Cording (2006) suggested if the firm has good image in past,
its position is strong in order to create positive socially responsible information. In contrast,
organizations having poor reputation in past may face difficulty to impress their customers by
CSR activities. Similarly, Barnett (2007) argued that customers responses against CSR activities
vary from case to case. Results of the same CSR activity from different organizations may be
opposite because of the prior reputation of the organization.


References:
Barnett, ML 2007, Stakeholder influence capacity and the variability of financial returns to corporate
social responsibility, Academy of Management Review, vol. 32, no. 3, pp. 794816.

Baron, DP 2001, Private politics, corporate social responsibility, and integrated strategy, Journal of
Economic Management Strategy, vol. 10, no. 1, pp.745.

Berman, SL, Wicks AC, Kotha S & Jones TM 1999, Does stakeholder orientation matter? The
relationship between stakeholder management models and firm financial performance, The academy of
management journal, vol. 42, no. 5, pp. 488-506.

Brown, TJ & Dacin, PA 1997, The company and the product: Corporate associations and consumer
product responses, Journal Marketing, vol. 61, no. 3, pp. 6884.

McWilliams, A & Siegel D 2001, Corporate social responsibility: A theory of the firm perspective,
Academy of Management Review, vol. 25, no. 1, pp.117127.

Schuler, DA & Cording, M 2006, A corporate social performance corporate financial performance
behavioral model for consumers, Academy of Management Review, vol. 31, no. 3, pp.540558.

Servaes, H & Tamayo, A 2013, 'The impact of corporate social responsibility on firm value: the role of
customer awareness, Management Science, vol. 59, no. 5, pp. 10451061

Sims, RR 2003, Ethics and corporate social responsibility, Greenwood, USA