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Mediating role
Hypocrisy, skepticism, and of CSR
reputation: the mediating role of
corporate social responsibility
Denni Arli
Labovitz School of Business and Economics,
Received 2 October 2018
University of Minnesota Duluth, Duluth, Minnesota, USA Revised 3 October 2018
Patrick van Esch 1 March 2019
28 April 2019
Department of Marketing, AUT Business School, 29 April 2019
Accepted 18 May 2019
Auckland University of Technology, Auckland, New Zealand
Gavin Northey
Department of Marketing, University of Auckland, Auckland, New Zealand
Michael S.W. Lee
University of Auckland, Auckland, New Zealand, and
Radu Dimitriu
Trinity Business School, Trinity College Dublin, Dublin, Ireland

Abstract
Purpose – The purpose of this paper is to examine the effect of corporate hypocrisy and consumer
skepticism on perceived corporate reputation. In addition, the effect of perceived corporate social
responsibility (CSR) in mediating the relationship between corporate hypocrisy and consumer skepticism
toward perceived corporate reputation.
Design/methodology/approach – An experimental design was employed to test the effects of corporate
hypocrisy and consumer skepticism on consumers’ perception of a firm’s corporate reputation, as well as the
role of perceived CSR as a causal mechanism. Analysis involved structural equation modeling (AMOS) to test
hypotheses. A convenience sample (n ¼ 837) was recruited from the USA and Australia to allow for any
national biases or brand familiarity effects and to ensure the results were robust and generalizable.
Findings – Corporate hypocrisy and consumers’ skepticism significantly influences perceived CSR and
corporate reputation. Furthermore, a consumer’s level of perceived CSR acts as a causal mechanism,
mediating the relationship between corporate hypocrisy and skepticism on perceived corporate reputation.
Practical implications – The importance of being transparent and honest toward consumers. When
companies are inconsistent in their CSR activities, it increases consumers’ skepticism toward the brand.
Nonetheless, CSR has a positive influence on the consumers’ perception of corporate reputation and this, in
turn, will positively influences consumers’ support for the firm.
Originality/value – The first empirical evidence that companies producing vices (such as beer) generate
lower expectations in the minds of the consumers, meaning there is less impact on brand reputation when
consumers feel the CSR does not fit with the brand image.
Keywords Corporate social responsibility, Corporate reputation, Consumer skepticism,
Consumer support, Corporate hypocrisy, Pro-social
Paper type Research paper

Introduction
Many firms report having some sort of corporate social responsibility (CSR) program, yet
frequent scandals highlight the hypocrisy of some corporations. For example, McDonald’s has
committed to reducing unhealthy trans-fats in their food products, however, the fat content in
its products still varies across countries, indicating inconsistency and hypocrisy (Stender et al.,
2006). Another example, Volkswagen admitted to circumventing emission controls despite Marketing Intelligence & Planning
having excellent CSR programs. As mass media and social media converge, it has become © Emerald Publishing Limited
0263-4503
easier to catch, and report, companies being socially irresponsible. Following a scandal, DOI 10.1108/MIP-10-2018-0434
MIP companies who acknowledge the problem and launch a program to repair the damage are
more likely to recover their corporate image (Greyser, 2009). However, consumers receiving
conflicting information about a company’s CSR involvement will become more skeptical of the
company (Vanhamme and Grobben, 2009). Consequently, it will be harder for such companies
to recover their corporate reputation. However, research investigating the impact of corporate
hypocrisy and skepticism is still limited (Skarmeas and Leonidou, 2013). Hence, the purpose of
this study is, first, to investigate the effect of corporate hypocrisy and consumer skepticism on
perceived CSR and second, to explore the effect of perceived CSR in mediating the relationship
between corporate hypocrisy and consumer skepticism toward corporate reputation and
consumer support. As such, the paper begins with a review of prior research to support the
development of a conceptual model and hypotheses. It then includes with a section detailing
methodology and analyses, followed by results and a general discussion including theoretical
and managerial implications.

Literature review
Corporate social responsibility
CSR is a set of context-specific organizational actions and policies companies will use to
influence their “triple bottom line” that includes economic, social and environmental
performance metrics (Aguinis, 2011). Organizations will integrate social responsibility into
their corporate DNA and enact CSR activities to create a distinct competitive advantage in
their particular industries (Falck and Heblich, 2007). From this comes economic advantages,
given that organizations investing in CSR have been shown to lose one-third less
capitalization compared with similar organizations that do not invest in CSR (Voliotis et al.,
2016). Additional benefits include goodwill and moral capital, which in turn may encourage
stakeholders to be more forgiving (e.g. benefit of the doubt) toward the organization in the
instance of a negative event (Godfrey et al., 2009).
An organization’s motivation for CSR can influence a consumer’s prosocial behavior to
extend beyond the traditional consumer-brand dyad (Mantovani et al., 2017). However, this
is dependent on how the consumer perceives the firm’s motivation in the first place.
Unfortunately, corporate irresponsibility is not uncommon as organizations appear to be
socially responsible from an external perspective yet, internally, maintain irresponsible
standards, systems and processes. As a result, a type of “deceptive manipulation” emerges
(Siano et al., 2017). This corporate hypocrisy then influences both the consumers’ belief
about the organization and attitude toward the organization (Arli et al., 2017).
The image fit of an organization influences CSR perception and is a cue that is often used
to evaluate brand credibility and brand motivations (Bigné et al., 2012). When associated
with a specific social cause, brands/organizations suffering from perceptions of “not
credible” should focus on image fit that incorporates both their online image, as well as their
humane orientation. Featherman et al. (2010) suggest that for organizations providing
e-service, corporate credibility built on CSR activities reduces the perceived negative impact
of privacy risk. In terms of advertisements, consumers with higher humane orientation led
to higher evaluations of the overall advertisement, as well as perceptions of the brand/
organization as being more socially responsible (Diehl et al., 2016).
In other research, Gond et al. (2017) identify forces, motives and predictors of why people
engage in CSR either proactively (e.g. willingly) or reactively (e.g. unwillingly). Donia and Sirsly
(2016) argue that CSR extends beyond traditional macro-level research with an emerging focus
including “genuine CSR” (e.g. substantive) and “green-washing” (e.g. symbolic CSR).
Consumers need to identify and understand the intention of an organization’s CSR activities
and how these intentions are formed (Ellen et al., 2006). Consumers who care about particular
social issues form positive impressions and trust an organization when the CSR activities align
with their own personal beliefs and preferences (Pivato et al., 2008).
 Consequently, Fombrun (2005) suggests organizations should use CSR activities to Mediating role
enhance their corporate reputation. The reasoning is that CSR activities will increase of CSR
consumer trust in the brand, and it is this increased trust that results in increased brand
reputation and lower levels of perceived hypocrisy (Duffy et al., 2017). Organizations who
use CSR activities to strengthen their overall corporate reputation enjoy additional benefits
such as increases in competitive advantage, consumer perception of quality, goodwill,
prevention of negative consumer perceptions, improved reputation and success in business
activities (Melo and Garrido‐Morgado, 2012).
Shim and Yang (2016) also suggest that CSR is an important way for organizations to
build brand sincerity, consumer purchase intentions, goodwill, improved reputation, salient
beliefs about the organization, as well as recover from a crisis (Lin-Hi and Blumberg, 2018).
Although CSR activities can be difficult to manage, they must be implemented judiciously to
avoid consumer skepticism (Lii and Lee, 2012).
However, even though consumers reward organizations who practice CSR, the success of
those CSR activities may sometimes be hindered by an underlying level of skepticism
(Alhouti et al., 2016), which leads consumers to question the authenticity of some CSR
programs. It is no longer enough for organizations to just state their commitment to CSR,
customers must perceive it as a part of the organization’s overall strategy.
In a CSR context, corporate hypocrisy refers to consumers’ ethical judgment of an
organization’s prosocial and philanthropic endeavors (Shim and Yang, 2016), in relation to
the belief that a firm claims to be something that it is not. Corporate hypocrisy can
negatively influence consumer attitudes toward an organization, which ultimately leads to
feelings of betrayal and avoidance because the hypocritical characteristics of the
organization nullify the distinct characteristics of the organization (Wagner et al., 2009).
When they consider the organization to be trustworthy, consumers perceive there to be less
risk and in turn, collect less product information when making purchase decisions (Arli
et al., 2018). Therefore, in a CSR context, consumers need to trust the relationship between
the organization and its connection with social causes; this is critical for the organization to
avoid being labeled hypocritical and minimize consumer skepticism (Alcañiz et al., 2010).

Hypothesis development
Corporate hypocrisy
The direct effect of a bad reputation increases the suspicion level toward a corporation’s CSR
message and when there is a gap between assertions and performance, customers may perceive
the corporation as hypocritical. Thus, hypocrisy is attributed to both corporations and brands
when consumers believe they claim to be something that they are not. We hypothesize:
H1. Perceived corporate hypocrisy will negatively influence perceived CSR.
Wagner et al. (2009) suggest CSR behaviors are often contradictory to an organization’s stated
standards of social responsibility and, when such standards precede conflicting observed
behaviors, this leads to increased levels of perceived hypocrisy. CSR attribution refers to
consumer perceptions about the motives underlying an organization’s CSR actions. When self-
interested motives are believed to drive an organization’s CSR, they negatively affect consumer
perceptions of CSR (Homburg et al., 2013). For instance, when an alcohol company invests in a
responsible drink driving campaign, or when a fast food company implements a fitness
initiative. Moreover, CSR activities that are split by visible (e.g. directed at customers) and
credible (e.g. directed at community) orientations may have negative effects, causing a
persuasive perception that the organization’s CSR motives are self-benefiting. We hypothesize:
H2. Perceived corporate hypocrisy will negatively influence perceived corporate
reputation.
MIP Consumer skepticism
In a marketing environment, skepticism has been identified as one of two constructs, along
with cynicism, that determines an individual’s response to a firm’s messages or
communications. As a result, skepticism can have a powerful effect on marketplace
dynamics, because it can make consumers doubt what a firm is saying (Brønn and Vrioni,
2001). This is particularly pertinent in the case of CSR, given the use of advertising to
communicate a firm’s CSR activities creates an information-processing climate that
exacerbates the potential for skepticism (Pomering and Johnson, 2009). As a result, any
skepticism generated has the potential to have broad negative consequences on a firm’s
reputation (Elving, 2013). In addition, the skepticism can increase the likelihood for
consumer brand boycotts, greater levels of distrust and outrage (Lindenmeier et al., 2012).
Moreover, skepticism has the potential to increase the perceived level of corporate hypocrisy
as well as consumers’ perception of a firm’s corporate social irresponsibility (Lange and
Washburn, 2012). We propose the following hypotheses:
H3. Corporate skepticism will negatively influence perceived CSR.
H4. Corporate skepticism will negatively influence perceived corporate reputation.

Perceived CSR and corporate reputation

Consumers’ perception of corporate reputation is influenced by an organization’s marketing
ability in terms of branding, communication and ongoing reputation building activities
(Stanaland et al., 2011). CSR activities drive consumer attitudes and behaviors toward
employment seeking, investment and purchase intent as well as influencing consumer
commitment to the organization (Kim et al., 2010).
Green and Peloza (2011) suggest that there is a consistent level of positive support for
CSR by consumers, yet the mechanisms for such determinations are unknown and on a
basic level, the definition of CSR is not clearly defined. CSR manifests itself based on
consumer perceived values: emotional, social, functional, goodwill (Chernev and Blair, 2015)
and motivations (Sen et al., 2016). An emerging literature focuses on CSR fit in terms of how
stakeholders perceive, evaluate and support an organization’s CSR activities. de Jong and
van der Meer (2017) identify six different types of fit: employees, environmental impact,
geographical location, production processes, products and services and suppliers and
propose that organizations need to be familiar with, and communicate the necessary CSR fit
to influence consumer support. A corporate reputation built on CSR can then lead to
increases in brand equity (Lai et al., 2010).
Prior studies have empirically elucidated the relationship between CSR and corporate
reputation (Brickley et al., 2002). CSR initiatives are used to differentiate an organization’s
products/services by creating a positive brand image, thus safeguarding the organization’s
reputation. Overall, CSR activities signal attractive features to consumers and can be seen as
a strategic investment in both reputation building and reputation maintenance (Hsu, 2012).
We hypothesize:
H5. Perceived CSR will positively influence perceived corporate reputation.
H6. Perceived corporate reputation will positively influence consumers’ support.

Mediating variable
Organizations pay increasing attention to how consumers react to their CSR activities, yet
despite such efforts, it remains unclear how consumers perceive the relationships between
corporate hypocrisy, consumer skepticism and perceived CSR. Moreover, there are little
to no tools to aid in the measurement of identifying shortcomings in communication
(Zhang and Mattila, 2015), engagement and ultimately consumers’ perceptions of CSR Mediating role
(Öberseder et al., 2013). Peloza et al. (2015) suggest that inference making occurs when of CSR
taking a multidimensional view of CSR, and in such instances, extant research provides
mixed findings on the relationship between CSR and organizational performance
(Bai and Chang, 2015). Perception critically depends on the consumers’ CSR attributions
and when consumers evaluate products marketed by organizations with a strong CSR
reputation, the perceived organizational benefits include customer loyalty and willingness
to pay (Habel et al., 2016).
Perceptions of CSR can contribute to positive organizational orientation and perceived
objective performance by activating consumers’ social identification processes (Korschun
et al., 2014). Consumers identify organizations when their CSR activities are supported both
internally (e.g. both employees’ and management support CSR) and externally (other
stakeholders supporting the CSR activities). These effects are enhanced as consumers feel
that CSR is an important part of their self-concept, which influences their perceptions of the
relationship(s) between corporate reputation, corporate hypocrisy, corporate skepticism and
CSR. This leads to the following hypotheses (Figure 1):
H7. Perceived CSR will mediate the relationship between corporate hypocrisy and
perceived corporate reputation.
H8. Perceived CSR will mediate the relationship between consumer skepticism and
perceived corporate reputation.

Methodology
Design
We employed a cross-sectional design in which participants were exposed to advertisements
previously used in campaigns by both Microsoft and Anheuser-Busch. Microsoft is considered
to have very high levels of CSR reputation, and recently launched a program called “Tech
Talent for Good,” which encourages their employees to volunteer in the community. The
second campaign was sourced from Anheuser-Busch, which launched a CSR campaign to
raise awareness about drink-driving prevention. Beer companies have been criticized due to
the nature of their products. There is clear evidence of the health problems associated with
alcohol consumption, such as heart damage, weaker immune system, increased risk of cancer

H7, H8

Perceived
CSR

H1 H5

Corporate
Hypocrisy H2
Perceived
H6 Consumers’
H3 Corporate
Support
Reputation
H4

Consumer
Figure 1.
Skepticism
Conceptual framework
MIP and much more (National Institute of Alcohol Abuse and Alcoholism, 2017). Hence, beer
companies aim to develop a positive image among consumers through various CSR activities.
After being shown both CSR banner campaigns, participants were asked a series of
questions to rate their perception of the relevant company’s CSR practices. The questions
embedded within our study test our hypotheses to determine the relationship between
independent variables: corporate hypocrisy, consumer skepticism and perceived corporate
reputation; and consumer support of a company (e.g. dependent variable), as well as explore
potential mediation effects of perceived CSR.

Data collection
Surveys were distributed to students from a large public university in Australia. We utilized
a paper-based survey to collect responses from participants. In addition, to enhance
generalizability in a contemporary western context, surveys were also distributed to
students from a small, liberal arts college in the USA. For the US sample, we utilized an
electronic-based survey to collect responses from participants. The final number of
participants across both Australia and the USA was 837 respondents (48 percent male;
52 percent female; and 46 percent aged 18–24 years old).

Measures
We adapted the following scales from previous research: corporate hypocrisy, consumer
skepticism, perceived corporate reputation, perceived CSR and consumers’ support and
evaluation of business responsibility. Table I summarizes the scale items used in this study.

Reliability
Using structural equation modeling (AMOS), we ran a confirmatory factor analysis on the
measures. The fit of the models was well above the recommended values. The study
calculated Cronbach’s α for each key variable to test for internal reliability and assessed the
convergent validity by determining whether factor loadings were greater than 0.50 and
statistically significant ( p ⩽ 0.05). Values below the threshold of 0.60 indicate unsatisfactory
internal consistency (Malhotra and Birks, 2007). Confidence intervals around the correlation
estimates between any two constructs were all significantly different from one (Anderson
and Gerbing, 1988). To assess discriminant validity among the constructs, we compared the
average variance extracted (AVE) values for each construct with the squared correlation
estimates of paired measured constructs in the model (Fornell and Larcker, 1981).
The AVE ranged from: consumers’ support and evaluation of business responsibilities
( MICROSOFT ¼ 0.55; ANHEUSERBUSCH ¼ 0.55), perceived CSR ( MICROSOFT ¼ 0.56;
ANHEUSERBUSCH ¼ 0.62), consumers skepticism (MICROSOFT ¼ 0.62; ANHEUSERBUSCH ¼ 0.72),
corporate hypocrisy (MICROSOFT ¼ 0.63; ANHEUSERBUSCH ¼ 0.64) to perceived corporate
reputation (MICROSOFT ¼ 0.65; ANHEUSERBUSCH ¼ 0.75).
The study calculated composite reliability (CR) values and compared them with a
threshold benchmark of 0.60 (Bagozzi and Yi, 1988). The CR of this study ranged from:
corporate hypocrisy ( MICROSOFT ¼ 0.79; ANHEUSERBUSCH ¼ 0.80), perceived CSR
( MICROSOFT ¼ 0.84; ANHEUSERBUSCH ¼ 0.86), business responsibilities (MICROSOFT ¼ 0.85;
ANHEUSERBUSCH ¼ 0.85), consumers’ support and evaluation of perceived corporate
reputation ( MICROSOFT ¼ 0.85; ANHEUSERBUSCH ¼ 0.90) to consumers’ skepticism
(MICROSOFT ¼ 0.86; ANHEUSERBUSCH ¼ 0.91). The variance extracted was tested and the
AVE for each factor was higher than the square of the correlation coefficient with each of
the other factors (Table II). Thus, the test confirms the measurement model’s discriminant
validity (Fornell and Larcker, 1981).
 Conv. val./Fact. loading
Mediating role
Anheuser- of CSR
Factor (seven-point Likert scales, 1 ¼ strongly disagree; 7 ¼ strongly agree) Microsoft Busch

Perceived corporate reputation (Brown, 1995; Ganesan, 1994)

The company has a reputation for being honest 0.80 0.86
The company has a reputation for being reliable 0.81 0.83
The company has a reputation for being trustworthy 0.80 0.90
Perceived corporate social responsibility (Maignan, 2001)
The company is committed to well-defined ethics principles 0.79 0.80
The company ensures that their employees act in a legal manner 0.74 0.69
The company plans for their long-term success as well as society’s 0.74 0.86
The company plays a role in our society that goes beyond the mere generation
of profits 0.73 0.78
Corporate hypocrisy (Wagner et al., 2009)
… acts hypocritically 0.77 0.74
What … says and does are two different things 0.85 0.89
… pretends to be something that is not 0.87 0.78
Consumers skepticism (r) (Donavan et al., 2004)
It is doubtless that … is a socially responsible company 0.71 0.86
It is certain that … is concerned to improve the well-being of society 0.82 0.85
It is sure that … follows high ethical standards 0.82 0.84
It is unquestionable … acts in a socially responsible way 0.78 0.84
Consumers’ support and evaluation of business responsibilities (Maignan, 2001)
I would pay more to buy products from a socially responsible company 0.78 0.78
I consider the ethical reputation of businesses when I shop 0.79 0.79
I avoid buying products from companies that have engaged in immoral actions 0.64 0.64
I would pay more to buy products from companies that show care for the well-being
of our society 0.81 0.81
If the price and quality of two products are the same. I would buy from a firm that Table I.
has a socially responsible reputation 0.66 0.66 Confirmatory factor
Note: r, reverse coded analysis

Microsoft|Anheuser-Busch Mean SD 1 2 3 4 5

1. Perceived corporate reputation 3.65| 0.70| 0.65|0.75

3.31 0.68
2. Perceived corporate social 3.61| 0.72| 0.69**| 0.56|0.62
responsibility 3.31 0.67 0.74**
3. Corporate hypocrisy 2.61| 0.85| −0.18**| −0.15**| 0.63|0.64
2.92 0.08 −0.11** −0.11**
4. Consumer skepticism 3.42| 0.79| 0.64**| 0.71**| −0.07**| 0.62|
3.17 0.77 0.69** 0.73** −0.11** 0.72
5. Consumers’ support and evaluation of 3.75| 0.77| 0.20**| 0.25**| 0.05**| 0.18**| 0.55|
business responsibilities 3.75 0.77 06** 0.13** 0.09** 0.08** 0.55
Notes: Values below the diagonal are bivariate correlations between the constructs, italic diagonal elements Table II.
represent the average variance extracted (AVEs) for the relevant construct. **p ¼ 0.00 Discriminant validity

Mediation analysis
This test establishes whether statistically significant results exist for mediation by CSR on the
relationship between corporate hypocrisy and consumer skepticism on perceived corporate
reputation. Two separate bias-corrected bootstrap analyses with mediators (i.e. perceived
corporate reputation) were conducted using a series of multiple regression analyses
MIP (Zhao et al., 2010). A bootstrap test resamples the data to estimate standard errors and to
derive a confidence interval with the bootstrapped sampling distribution. The bias-corrected
confidence interval is useful as it considers the non-normal distribution of mediation effects
and produces more accurate Type 1 error rates (Lau and Cheung, 2012). Only direct effects
between the mediator and independent variable and between the mediator and dependent
variable were established prior to assessment of mediation. A mediating effect is considered
significant if the 95% confidence intervals do not bracket 0.

Results
Direct effect – Microsoft
The results shown in Table III indicate the hypothesized structure model fitted the data well
for Microsoft: χ2/df (162) ¼ 445.19; CFI ¼ 0.96; TLI ¼ 0.95; NNFI ¼ 0.94; RMSEA ¼ 0.04;
SRMR ¼ 0.04. The results showed that corporate hypocrisy significantly influence perceived
CSR (β ¼ –0.09, po0.00). Therefore, H1MICROSOFT is supported. Furthermore, corporate
hypocrisy significantly influenced perceived corporate reputation (β ¼ –0.05, po0.05). Hence,
H2MICROSOFT is supported.
In regard to consumer skepticism, the result indicated that lower skepticism (a higher
score) positively influenced perceived CSR (β ¼ 0.73, p o0.00). This means, the less the
consumer is skeptical about the company’s social responsibility, the more the consumer
perceives the company as being responsible. Therefore, H3MICROSOFT is supported.
However, consumer skepticism did not significantly influence perceived corporate
reputation for individuals. Hence, H4MICROSOFT is not supported.
Furthermore, perceived CSR was found to positively influence perceived corporate
reputation for respondents (β ¼ 0.83, p o0.00). Therefore, H5MICROSOFT is supported.
Finally, perceived corporate reputation positively influenced consumers’ support and
evaluation of a firms’ responsibility (β ¼ 0.30, p o0.00). Hence, H6MICROSOFT is supported.

Direct effect – Anheuser-Busch

The results shown in Table III suggest the hypothesized structure model fitted the data well
for Anheuser-Busch: χ 2/df (143) ¼ 483.88; CFI ¼ 0.96; TLI ¼ 0.95; NNFI ¼ 0.94;
RMSEA ¼ 0.05; SRMR ¼ 0.04. The results showed that corporate hypocrisy significantly
influence perceived CSR (β ¼ –0.09, p o0.00). Therefore, H1ANHEUSERBUSCH is supported.

Hypothesis Path Path coefficient p-value

H1MICROSOFT Corporate hypocrisy→Perceived CSR −0.09 0.00

H2MICROSOFT Corporate hypocrisy→Perceived corporate reputation −0.05 0.05
H3MICROSOFT Consumer skepticism→Perceived CSR 0.73 0.00
H4MICROSOFT Corporate skepticism→Perceived corporate reputation 0.07 0.36
H5MICROSOFT Perceived CSR→Perceived corporate reputation 0.83 0.00
H6MICROSOFT Perceived corporate reputation→Consumers’ support 0.30 0.00
H1ANHEUSERBUSCH Corporate hypocrisy→Perceived CSR −0.09 0.00
H2ANHEUSERBUSCH Corporate hypocrisy→Perceived corporate reputation −0.00 0.93
H3ANHEUSERBUSCH Consumer skepticism→Perceived CSR 0.84 0.00
H4ANHEUSERBUSCH Corporate skepticism→Perceived corporate reputation 0.40 0.00
H5ANHEUSERBUSCH Perceived CSR→Perceived corporate reputation 0.37 0.00
H6ANHEUSERBUSCH Perceived corporate reputation→Consumers’ support 0.11 0.01
Mediating effect Lower Upper
H7MICROSOFT Hypocrisy→Perceived CSR→Reputation −0.14 −0.03
Table III. H8MICROSOFT Skepticism→Perceived CSR→Reputation 0.49 0.84
Structural model H7ANHEUSERBUSCH Hypocrisy→Perceived CSR→Reputation −0.06 −0.01
results H8ANHEUSERBUSCH Skepticism→Perceived CSR→Reputation 0.23 0.44
However, corporate hypocrisy did not significantly influence perceived corporate reputation Mediating role
for individuals. Hence, H2ANHEUSERBUSCH is not supported. Lack of consumer skepticism (high of CSR
scores) positively influenced both perceived CSR and perceived corporate reputation (β ¼ 0.84,
po0.00; β ¼ 0.40, po0.00). Hence, H3ANHEUSERBUSCH and H4ANHEUSERBUSCH are supported.
Furthermore, the analysis showed that perceived CSR positively influenced perceived
corporate reputation (β ¼ 0.37, po0.00). Hence, H5ANHEUSERBUSCH is supported. Finally,
perceived corporate reputation positively influenced consumers’ support and evaluation of a
firms’ responsibility (β ¼ 0.11, po0.05). Therefore, H6ANHEUSERBUSCH is supported.

Mediating effects – Microsoft

The analysis shows that perceived CSR mediates the relationship between corporate
hypocrisy and perceived corporate reputation (−0.14 to −0.03). Therefore, H7MICROSOFT is
supported. Moreover, perceived CSR mediates the relationship between consumer
skepticism and perceived corporate reputation for respondents (0.49–0.84). Hence,
H8MICROSOFT is supported.

Mediating effects – Anheuser-Busch

The results show that perceived CSR mediates the relationship between corporate hypocrisy
and perceived corporate reputation (−0.06 to −0.00). Therefore, H7ANHEUSERBUSCH is supported.
Furthermore, perceived CSR also mediates the relationship between consumer skepticism and
perceived corporate reputation (0.23–0.44). Hence, H8ANHEUSERBUSCH is supported.

Discussion and implications

The primary objective of this research was to examine how CSR activities influence a firm’s
corporate reputation and how this differs for firms in different product categories. For this
study, participants were shown advertisements representing two brands (Microsoft and
Anheuser-Busch). These brands were chosen because Microsoft has an established record
as a good corporate citizen, with a solid reputation for CSR activities (Adams, 2015). By
contrast, alcohol and beer manufacturers are viewed as poor corporate citizens (National
Institute of Alcohol Abuse and Alcoholism, 2017) producing products that cause a range of
health problems within the community. However, Anheuser-Busch, manufacturer of
Budweiser, recently ran a CSR campaign to raise awareness about drink-driving prevention.
For this reason, Budweiser was used as the focal “vice” brand.
For many firms, CSR is seen as a way to contribute to society, but also create value for the
firm by focusing on the “triple bottom line” (Aguinis, 2011). By doing this, they can generate
increased competitive advantage in the marketplace (Martí-Borbolla and Ortiz-Arango, 2017).
When consumers see this, it can make them feel more prosocial, but it depends on the
consumers’ interpretation of the firm’s motivations. Thus, some CSR is seen as “genuine” while
other CSR is seen as disingenuous (Donia and Sirsly, 2016). CSR activities that appear to be
genuine increase the level of trust a consumer feels, meaning lower levels of perceived hypocrisy
and greater brand reputation. However, this does not address whether the same effects are seen
for different types of firms. For example, is an alcohol brand, like Anheuser-Busch’s Budweiser,
evaluated by consumers in the same way as a software brand, such as Microsoft?
The overall results show distinct differences between companies that are seen to have a
positive (vs negative) CSR reputation, and these findings are in line with previous research.
When participants were shown a Microsoft advertisement promoting the firm’s CSR
activities, the viewers’ perception of Microsoft’s corporate hypocrisy negatively affected
perceived CSR and corporate reputation. Thus, when a company that produces (non-vice)
consumer products is thought to be hypocritical, it has a negative effect on company
reputation. By contrast, when participants were shown a Budweiser advertisement, the level
MIP of perceived corporate hypocrisy negatively influenced perceived CSR. However, despite
consumers perceiving Budweiser as being hypocritical, this did not have a negative impact
on brand reputation. Prior research (Arli et al., 2015) has suggested that companies
producing vices (beer/tobacco) generate lower expectations in the minds of the consumers.
The findings from the current research are certainly in line with the proposition by Arli et al.
(2015) and appear to be the first empirical evidence for this.
In the same way perceptions of corporate hypocrisy can influence consumer attitudes,
skepticism can make an individual doubt what a firm is communicating. This has the
potential to have broad negative consequences on a firm’s reputation (Elving, 2013). In
addition, skepticism can increase the likelihood for consumer brand boycotts, greater levels
of distrust and outrage. What is more, skepticism has the potential to increase the perceived
level of corporate hypocrisy as well as consumers’ perception of a firm’s corporate social
irresponsibility (Lange and Washburn, 2012). The findings from the current study
demonstrate it is both consumer skepticism and perceived hypocrisy that are determinants
of brand reputation, but it is the consumers’ evaluation of the firm’s CSR activities that acts
as the mechanism. In turn, it is the combined effects of skepticism and perceived hypocrisy
on corporate reputation, via perceptions of the firm’s CSR that acts as the determinant of
behavioral intent. The findings highlight the importance of being transparent and honest
toward consumers. When companies are inconsistent and dubious in their CSR activities, it
increases consumers’ skepticism toward the brand. Essentially, consumers will assess a
firm’s motives for engaging in CSR and this guides their overall brand evaluations.
While the findings might seem to throw shade across the concept of CSR, in general, the
results show CSR has a positive influence on the consumers’ perception of corporate
reputation. Effectively CSR reputation will precede consumers’ perception of a company’s
reputation. Therefore, managing CSR becomes critical, which will subsequently influence how
consumers perceive reputation. One example is car manufacturer Volkswagen, a company
still trying to restore its good name since the emission cheating scandal in 2015. Volkswagen’s
reputation was damaged due to failed CSR activity (e.g. reducing diesel emissions was the
CSR act meant to enhance corporate reputation). However, when their data were shown to be
false, their CSR failed, damaging their corporate reputation (Ewing and Boudette, 2017).
The current research also demonstrates perceived corporate reputation positively
influences consumers’ support for both companies. The results highlight the importance of
managing corporate reputation within society in a transparent and honest way. Companies
should elaborate on the motives behind each campaign and reveal the subsequent results of
the campaign through the reporting of clear measures that show the cost and revenue
impact of a campaign. For example, Microsoft has clearly identified that they have raised
more than $1bn in contributions for over 31,000 organizations (Carroll, 2016). Such effort
minimizes the negative effect of consumers’ skepticism in relation to CSR activities.
Furthermore, in terms of mediation, perceived CSR mediates the relationship between
hypocrisy and skepticism on perceived corporate reputation. In other words, company CSR can
intervene when consumers are being skeptical and distrustful toward a company’s reputation.
Without honesty and transparency, consumers will question every motive of the CSR
campaigns and perceive those CSR activities as being hypocritical and thereby damaging
corporate reputation. However, for Anheuser-Busch, perceived CSR also mediates the
relationship between hypocrisy on perceived corporate reputation. Their CSR are able to
mitigate the effect of hypocrisy on their reputation. Moreover, perceived CSR mediates the
relationship between skepticism and corporate reputation. When consumers love the brand,
they will subsequently develop a positive attitude toward the company’s CSR. Hence, from a
public policy point of view, this creates a set of challenges. These industries (e.g. beer
or tobacco) may be able to use CSR as a tactic to improve their reputation with the public
(even when perceived to be hypocritical) hence altering public perception toward the company.
Consumers, social marketers and public policy makers, in turn, need to ensure companies are Mediating role
held accountable for their CSR activities, particularly since the current research demonstrates of CSR
CSR’s effectiveness as a corporate reputation enhancement tactic (Van Esch, 2017).

Limitations, future research and conclusion

This paper has several limitations. First, despite use of an international sample (Australia
and the USA) to enhance generalizability of findings, the paper only focuses on two specific
companies (i.e. Microsoft and Anheuser-Busch). Hence, the results may not be generalized
across other industries. Future research should compare and contrast other industries to
examine the effect of hypocrisy and skepticism toward company reputation and perceived
CSR and experimental studies may investigate the true effect of hypocrisy and skepticism
on consumer support. Moreover, in the context of the beer company, the study did not
investigate consumer drinking behavior. Consumers who are beer drinkers are more likely
to have a positive attitude toward the company. Future studies may separate the two and
investigate the impact of extant behavior on subsequent attitude.
Finally, as only one company from each industry was analyzed, the research may be
extended to additional companies within each industry (perhaps with varying degrees of
preexisting skepticism and hypocrisy); this would allow for more generalized results that
are industry specific in terms of how consumers perceive the relationship(s) between
corporate reputation, corporate hypocrisy, corporate skepticism and CSR.
In conclusion, the current research reasserts the positive effect of CSR perceptions on
corporate reputation. The relationship between CSR perception, skepticism, hypocrisy,
corporate reputation and consumer support are mostly similar across two different
industries. However, for Anheuser-Busch the effect of hypocrisy on corporate reputation
was less pronounced, particularly when CSR perceptions were favorable. This was an
interesting finding since it suggests that consumers may have lower expectations of certain
industries to begin with, which makes the use of CSR even more effective for those
industries (beer, and perhaps tobacco). Ironically, this also means that industries that are
more prosocial, have more to lose when consumers perceive them as being hypocritical.

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Corresponding author
Patrick van Esch can be contacted at: patrick.vanesch@aut.ac.nz

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