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Contribution of corporate social responsibility on SMEs' performance in an

emerging market – the mediating roles of brand trust and brand loyalty

Article  in  International Journal of Emerging Markets · July 2021

DOI: 10.1108/IJOEM-12-2020-1516

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Thanh Tiep Le Huan Quang

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Contribution of corporate social Contribution of

corporate
responsibility on SMEs’ social
responsibility
performance in an emerging
market – the mediating roles of
brand trust and brand loyalty Received 13 December 2020
Revised 2 April 2021
11 May 2021
Tiep Le Thanh Accepted 20 June 2021
Ho Chi Minh City University of Economics and Finance, Ho Chi Minh City, Vietnam
Huan Quang Ngo
School of Management, University of Economics Ho Chi Minh City,
Ho Chi Minh City, Vietnam, and
Leonardo Aureliano-Silva
ILMA University, Pakistan and ESPM, Brazil, S~ao Paulo, Brazil

Abstract
Purpose – The purpose of this paper is to evaluate the role of corporate social responsibility (CSR) on small
and medium-size enterprises’ (SMEs’) performance by exploring the role of mediating variables such as brand
trust (BT) and brand loyalty (BL) in the context of an emerging market.
Design/methodology/approach – Based on a extend literature review on CSR, BT and BL studies, the
authors evaluate the impact of those construct on SMEs’ performance in an emerging market. The paper
follows a quantitative approach. In total, 247 responses were collected from 300 samples. The Smart Partial
Least Squares SEM (version) was used to analyze the data of the SMEs of Vietnam in the year 2020.
Findings – The findings revealed significant and positive relationships among the variables in the model,
such as CSR and firm performance (FP), CSR and BT, CSR and BL, as well as the mediating effect of BT and BL
between CSR and firm performance.
Research limitations/implications – First, the sample was composed of small business from different
segments, thus the respondents’ perspective about CSR can differ according the impact of the business on
society. Therefore, future studies could address businesses from a single segment to get a deeper
understanding of their knowledge and involvement with CSR. Second, a cross-cultural study in emerging
countries can be a rich venue for future research. Third, this study was developed through a quantitative
approach; thus, the future research can apply qualitative approach or mixed methods to extend the study
findings.
Practical implications – Managerial level of firm should prioritize noneconomic-related CSR; however, those
will ultimately drive financial indicators of FP. The result is reasonable because firm simultaneously keeps
committed with its stakeholders by delivering the committed qualification, transparency in operation and
consistency in communication, environment respect, employee development and social welfare integrated
directly into business activities. Those will result in creating love, trust and admiration from stakeholder,
customers for brand and firms will get their engagement and support in many ways. This implication suggests
that firm should incorporate CSR strategy into their core business activities and practice properly toward its
stakeholders.
Social implications – This study contributes to the CSR literature in emerging context by shedding light on
the roles of CSR in FP with the mediation roles of BT and BL. Most CSR studies focused on Western context as
developed economy, thus less attention has been paid for emerging economy. While there is increasing interest
CSR in Vietnam, traditional culture and its distinctive economic and political structure has had a great influence
on CSR in Vietnam. Thus, this study is important and meaningful for business practitioners, investors,
shareholders and policymakers toward sustainable development for firms and Vietnam as a whole.
Originality/value – To the best of the authors’ knowledge, this is the first study that explores the mediating
role of BT and BL between CSR and FP for SMEs. The findings of this study may be of great implications to International Journal of Emerging
entrepreneurs, top management with respect to strategic perspectives to drive their businesses and to improve Markets
© Emerald Publishing Limited
their FP in a sustainable direction in contexts of emerging markets. In addition, this finding may be of great 1746-8809
interest to motive SMEs’ managers to engage with CSR actions where those businesses are situated during and DOI 10.1108/IJOEM-12-2020-1516
IJOEM after the COVID-19 pandemic. By that understanding, Government may consider for policy reforms/
innovation/groundbreaking to leverage businesses to promote their strengths toward sustainable development
in the new economic settings. The findings of this study may be of significant contribution to SMEs in Vietnam
and in others in emerging economies.
Keywords Corporate social responsibility, Brand trust, Brand loyalty, SMEs’ performance
Paper type Research paper

1. Introduction
Corporate social responsibility (CSR) is an important issue that companies need to be engaged
in for satisfying the expected benefits of stakeholders in different ways and staying a well-
functioning and sustained economic unit (Matten, 2015; Dawit et al., 2020). Large companies
have addressed this issue (Adel et al., 2019), but small businesses (SMEs) lack in those
practices (Sundstr€om et al., 2020), especially in emerging economy (Ansu-Mensah et al., 2021).
It is estimated that there are 400m small and medium-size enterprises (SMEs) around the
world (National Action Plan on Business and Human Rights, 2020). These SMEs are
responsible for moving the economy and generate approximately 36,300bn of US$ per year
(The World Bank Group, 2020). For example, in Vietnam, there are around 518,000 SMEs
(Tuan, 2020), Brazil has around 11.5m SMEs (OECD, 2018) and Russia has around 6.2m SMEs
(OECD, 2020).
Business is expected to conduct CSR as a prerequisite for sustainable development for
firm, economy and society (Abdelhalim and Amani, 2019). CSR and sustainable development
are two common terms that attract high attentions from academics and managers around the
world. It is important to highlight that sustainable development is not only an economic, but
also an ecological and even a social demand. Sustainable development is becoming a central
need of the world economy, especially in emerging countries. To achieve sustainable
development, it is necessary to ensure balance and harmony between economic growth and
environmental protection with social development. To address such issues, the present study
focuses on delivering a holistic concept of CSR and its strategic influence on generating
values for sustainable development of businesses, society and the economy of the country
considering the role of SMEs in emerging countries.
These issues require more comprehensive coordination and efforts from academicians,
market participants and policymakers. When competition is increasingly fierce, demands
from customers are increasingly high and society has a stricter outlook on businesses. The
businesses that want to join the big playing field must equip themselves with new
competitive advantages. Accordingly, CSR is considered as a strategic tool to help businesses
create a competitive advantage for sustainable development (Abdelhalim and Amani, 2019)
and makes it differentiated from its competitors (El-Garaihy et al., 2014).
CSR has been considered an essential part of managerial and administrative sciences in
recent decades (Pino et al., 2016) and has become one of the most important issues in both
academic research and managerial practices (Youn et al., 2018). According to Ghaderi et al.
(2019) and Maqbool and Zameer (2018), CSR has increasingly attracting interests of firm’s
stakeholders in the recent decades. CSR is known as a major factor in firm’s success (Maqbool
and Zameer, 2018) by bringing advantages to a firm by better consumer evaluations of the
company’s image and abilities, establishment of brand recognition and the brand’s impact
enhancing the brand value, decreasing expenditures of advertising and operational costs and
attracting talents and investors (Li et al., 2015).
Therefore, CSR has many advantages for companies, among which are increased loyalty,
trust, positive brand attitude and combating negative publicity (Sen et al., 2006). On the
marketing point of view, CSR initiatives are very important in improving customer sympathy
for the brand, which leads to emotional attachment, trust and loyalty to the brand emotionally
leading to making a purchase decision, or other decisions that benefit the firm in different
ways such as investment or referral to others. Brand is very powerful in terms of Contribution of
differentiation one from others and identification of product or service of a particular corporate
manufacturer (Moon et al., 2015).
CSR is very popular in developed countries, and large corporations around the world have
social
integrated CSR into their core businesses. However, there is little empirical research on the responsibility
nature and extent of CSR in developing countries regarding small business (Sifa and
Tshiunza, 2020). Most studies on CSR have focused on Western countries rather than Asian
countries and literature appears inconsistent in research results (Han et al., 2016), which may
be explained by the different given context (Cavaco and Crifo, 2014). Additionally, CSR
outcomes appeared to be affected by different economic settings (Munro et al., 2018).
Furthermore, “Social and environmental practices are grossly neglected in SMEs more
specifically in emerging markets” (Das et al., 2020, p. 1). In Vietnam, from the perception point
of view, CSR is incompletely perceived as it must be, for instance, most SMEs considered CSR
activities as charity-related. Moreover, the core business force in Vietnam economy is SMEs
with lack of resources and capabilities for proper CSR implementation (Long, 2015).
Considering the research gap and the crucial roles of SMEs in a country’s economy,
particularly in the new given context in Vietnam where competitive pressure increases due to
the pace of global integration, authors found that a comprehensive study about the
relationship between CSR and firm performance taking the new given context is of high
priority; importantly, the model is integrated with brand trust (BT) and brand loyalty (BL)
mediating between this relationship to be novelty. Filling this gap will be important not only
for SMEs in Vietnam but also for SMEs in other developing markets with similar condition
setting like Vietnam (Das et al., 2020).
Deliverable potentially includes (1) comprehensive concept of CSR of small and medium
enterprises (SMEs) in emerging market and its importance to the realization of the firm’s
goals and firm’s performance; (2) multidimensional concepts of BT, BL and how they
associate together in creating values for firms and its different stakeholders as a whole in
emerging market; (3) roles of CSR in improving BT, BL and firm’s performance; (4) roles of
CSR in achieving competitive advantage for sustainable development; (5) categories of
business stakeholders and the importance of properly identifying business stakeholders for
proper CSR initiatives and strategic plan.
To that effect, the main purpose of this paper is to evaluate the role of CSR on SMEs’
performance by exploring the mediating role of BT and BL between CSR and firm’s
performance in the context of an emerging country.
The structure of study is composed of major parts including introduction; literature
review and hypotheses development; research model; research design and methodology;
results and discussion; conclusion; limitation and future studies.

2. Literature review and hypotheses development

2.1 Corporate social responsibility and brand trust
CSR is of the fundamental importance to BT (Fandos-Roig et al., 2021). Ahn and Kwon (2020)
argued that CSR activities can lead to increased customer trust on brand. In addition, Dzupina
et al. (2019) found that CSR creates connection between customers and brands by increasing
brand credibility through CSR practices. While Moon et al. (2015) assert that consumers tend
to associate with an organization by two reasons, which are either organization capacities to
produce quality products or organization engagement in CSR. These are considered as
corporate associations that shape consumers’ attitudes toward products and brands of the
corporation. As a result, firm that takes CSR properly will benefit back with consumers trust
on brand and products that lead to association with organization.
According to Brown and Dacin (1997), “a company’s socially responsible initiatives
provide information about its character and values that helps in building trust in the
IJOEM company”. CSR as activities is understood as corporate efforts for society to protect and
improve the welfare of the whole society along with protecting the interests of the company,
thereby building trust in consumers (Sen and Bhattacharya, 2001).
Moreover, Morgan and Hunt (1994) determined that the values shared by the company with
the consumers greatly effect on consumer trust. CSR’s initiatives facilitate communication
between organization and consumers, which is useful for increasing overall trust toward firm
by consumers (Brown and Dacin, 1997; Martinez and del Bosque, 2013).
In addition, Pivato et al. (2008) defined that trust is perceived as the first output of CSR
activities of firm and the direct result of CSR practices. Yu and Choi (2014) implied that trust
acts as mediator about the relationship between CSR and personnel behavior and attitudes.
Therefore, in this relationship, trust is formed in accordance with the beliefs, spirits and
consumer expectations of the company together with the company’s reputation that gives
CSR a key position, to the extent that the firm’s CSR activities can significantly enhance the
firm’s image that drives consumer’s trust in brand (Servera-Frances and Arteaga-Moreno,
2015). Based on the above studies, the first hypothesis is presented:
H1. CSR has a positive relationship with BT.

2.2 CSR and brand loyalty

Lu et al. (2020) defined that CSR initiatives and implementation have positive relationship on
BL. As a result, it will beneficially return company, which helps enhance competitive
advantage for company to stay competitive against its competitors. Sharma and Jain (2019)
determined that people are more likely to respond to a relevant brand for some good reasons.
The consumer’s idea of a firm depends on consumers’ perceptions of brand including brand
performance and brand equity whose components included BL. Moreover, BL is considered
the input of brand performance that has a positive effect on the overall performance of the
business (Irshad et al., 2017). In order to succeed in achieving BL in the current period,
businesses must pay attention to building and maintaining customer loyalty, with CSR
proven a useful tool in this regard (Fandos-Roig et al., 2021). According to Singh and Saini
(2016), consumer loyalty expresses consumers’ desire to use a firm’s brand, product or
services over time. While Kotler et al. (2018) defined that the “repeat-buying behavior” of
consumers is perceived as a sign of brand loyalty. In addition, Akbari et al. (2019) defined that
CSR has significant impact on BL. Accordingly, if the customer is satisfied with the selected
brands, they will eventually want to repeat their services and products and eventually
become loyal customers (Martinez and del Bosque 2013). Further, Aurier and N’goala (2010)
defined that CSR has positive significant impact on customer retention and loyalty that lead
to commercially related benefits and enhance firm performance in overall.
Based on the above studies, the second hypothesis is presented:
H2. CSR has a positive relationship with BL.

2.3 Brand trust and brand loyalty

BT is crucial for obtaining customer loyalty toward the brand (Fandos-Roig et al., 2021).
Additionally, Chinomona (2016) defined that BT and BL have a significant relationship. This
relationship is determined as the direct influence of BT on BL. According to Agustin and
Singh (2005), trust reduces the uncertainty in an environment in which consumers feel
especially vulnerable because they know they can rely on the trusted brand. When a brand is
able to continue to satisfy a customer’s best interests and expectations, the customer is likely
to trust the brand. For example, the customer will deduce whether the brand is functionally
trustworthy, the quality is trustworthy or the brand is safe before they consider trusting the
brand (Bart et al., 2005). Therefore, BT is a result of a customer’s thoughtful and careful
process of a brand and can be seen as the lever of its credibility (Chaudhuri and Holbrook, Contribution of
2001). In turn, this can reinforce repeat consumer buying behavior and ultimately lead to BL corporate
and future buying behavior (Delgado-Ballester et al., 2003). Therefore, a trustworthy brand is
a brand that always holds its promise of value to customers through outstanding
social
performance, thus ensuring customer BL in the process (Chiou and Droge, 2006). Therefore, it responsibility
can be said that the higher the customer’s BT level, the higher the customer’s BL.
Based on the above studies, the third hypothesis is presented:
H3. BT has a positive relationship with BL.

2.4 Brand loyalty and firm performance

According to Muzammal and Arif (2017), BL of customer is perceived critical for firm’s
survival and firm’s sustainable development in competitive global markets. Oliver (1999)
determined that BL of customer is one of important drivers of firm’s performance that
associated with quality of service or product; customer trust; perceived price (Pasha and
Waleed, 2016); brand’s reliability and socially responsibility (Khuong and Dai, 2016);
satisfaction and switching barriers (Shafei et al., 2016). In addition, according to G€
urlek et al.
(2017), the concept of BL of customer is defined as a deep commitment to repurchase of a
preferred product or service in the future, thereby causing repeated purchasing of same
brand despite the situation and the marketing effort that is likely to cause a conversion
behavior (Oliver, 1999). Customer loyalty helps reduce costs, increase revenues and positively
affect businesses (Dowling and Uncles, 1997; Yang and Peterson, 2004).
Based on the above studies, the fourth hypothesis is presented:
H4. BL has a positive relationship with firm’s performance (FP) while mediates the
relationship between CSR and FP.

2.5 Brand trust and firm performance

According to Becerra and Badrinarayanan (2013), BT drives purchase intentions and positive
referrals that in turn positively affects FP. Trust affects every aspect of business operation.
Trust perceived helps businesses save time and money to maintain relationships with
partners and customers that contribute to making business operation more convenient and
efficient. In addition, Becerra and Korgaonkar (2011); Chaudhuri and Holbrook (2001, 2002)
and Delgado-Ballester et al. (2003) defined that customer trust of brand positively impacts on
consumers’ behavior in support of the brand regardless of the condition. Moreover, according
to Chaudhuri and Holbrook (2001, 2002), Delgado-Ballester et al. (2003), BT positively
influences consumers’ attitudes and brand-related behaviors including purchases, attitudinal
and behavioral loyalty, perceptions of brand value, brand commitment and brand referrals,
which are perceived as driving factors of firm financial performance and nonfinancial
performance. Besides that, Becerra and Korgaonkar (2011) found that BT helps increase in
consumers’ purchase and repurchase intentions. When brands are trusted, consumers are
more likely to engage in risky and difficult behaviors in favor of the brand, such as positive
branding and purchases that are positively associated with FP.
Based on the above studies, the fifth hypothesis is presented:
H5. BT has a positive relationship with FP while mediating the relationship between CSR
and FP.

2.6 CSR and firm performance

According to Ghaderi et al. (2019), good CSR performance can bring benefits to firm in the
sense of creating competitive advantages and differentiate the firm from its competitors that
IJOEM will enhance FP. In theory, many studies identified the positive significant effect of CSR on FP
(Kao et al., 2018). According to (Tahir et al., 2021), CSR and financial performance have
positive significant relationship. The basic premise is that CSR improves financial
performance by improving a firm’s relationships with its key stakeholder groups (Dawit
et al., 2020). This improvement is reflected in costs and revenue. On the cost point of view,
improved relationship helps to improve trust between the two sides, this will lead to a decline
in transaction cost and certain risks. On the revenue point of view, as stakeholder
relationships improved, it will bring in new customers through its overall relationships and
new investment opportunities, enabling a firm to charge premium prices (Barnett, 2008).
In fact, literature studies with controversial findings of relationships between CSR and
firm’s performance exist. Han et al. (2016) found that the relationships between CSR
individual measure and firm financial performance are different. In particular, environmental
responsibility performance represents U curve relationship with FP, governance
responsibility performance appears as inverse U curve relationship with FP while social
responsibility performance was not statistically found to have any significant evidence of a
relationship with FP. The empirical findings were divided into opposing groups, whereas the
first one found a positive relationship between CSR performance and FP (Dawit et al., 2020).
On the contrary, the second group found a negative relationship between CSR performance
and FP (Fisher-Vanden and Thorburn, 2011) while the remaining group argued from a
neutral point of view that this relationship is negative or positive depending on the level of
CSR (Brammer and Millington, 2008) or no relationship found between CSR and FP (Aupperle
et al., 1985). In Vietnam, a study of Long (2015) found that CSR activities have a positive
impact on FP. Theoretically, the practical melding of CSR and stakeholder theories remains
arguably embedded in the instrumental approach to stakeholder theory that posits CSR
activities will lead to financial gains (Jones, 1995).
Based on the above literature discussion, the hypothesis of the relationship between CSR
and FP for SMEs in the current given context in Vietnam is proposed as follows:
H6. CSR has a positive relationship with FP.

2.7 CSR-related studies

Table 1 summarizes the previous CSR-related studies:

2.8 Theories
Table 2 summarizes the theories that this study based on:

3. Research model
The research model of this study is proposed as Figure 1 based on the above literature review.
This model is used to explore the relationships between CSR and FP with the mediating roles
of BT and BL. This model consists of CSR as independent variable, BT and BL as mediators
and FP as dependent variable; those constructs are presented in Table 3.
This research model is useful for SMEs to strengthen the social ties with customers,
society and stakeholders, thus enhancing their performance. Although previous studies were
done on the relationship of CSR and FP, however, no consensus has been reached so far if CSR
leads to higher financial performance (Cavaco and Crifo, 2014). Such confusing results may be
explained by the complementarity or substitutability of different CSR measures (Cavaco and
Crifo, 2014) and in different economic settings. Furthermore, study with integration of BT and
BL as mediation between the relationship of CSR and FP for SMEs in an emerging economy,
Vietnam, remained not found yet.
Authors Context Methodology Findings
Contribution of
corporate
Deepak Sardana (1) India Structural (1) CSR “environmental social
et al. (2020) (2) Emerging economy equation sustainability practices” positively
(3) Manufacturing firms modelling (SEM) significantly impact on firm responsibility
performance
Lu et al. (2020) (1) Pakistan Structural (1) CSR initiatives positively
(2) Online customers of equation significantly impact brand loyalty
luxury goods modelling (SEM) and brand image those help firm to
distinguish one from others
Abdelhalim and (1) Egypt (1) Qualitative (1) CSR potentially help firm achieve
Amani (2019) analysis sustainable development, with
(2) Case studies needed supports and institutional
framework
Yang and (1) China Panel-based (1) The relationship between CSR and
Peterson (2004) (2) Pharmaceutical firms regression firm performance is positive and
analysis significant
(2) Among CSR dimensions, CSR
toward environment influences the
most, followed by CSR toward
customers, suppliers and employees
while shareholders and social
dimensions have least influence
Shekar and (1) India Regression CSR practices positively significantly
Kumaran (2019) (2) IT industry analysis impact on firm performances
He et al. (2020) (1) China Multiple The relationship between CSR
regression practices and firm performance is
analysis positive and significant
Local characters are crucial
importantly plays an important role
in this relationship
Mahmood et al. (1) Pakistan Panel data (1) The relationship between CSR and
(2020) (2) Manufacturing firms analysis firm financial performance is positive
(2) Competitive advantage mediates
this relation
Liu et al. (2020) (1) China þ Manufacturing Regression model (1) The relationship between and firm
firms performance is positive
Bastic et al. (1) Slovenia Structural (1) CSR toward customers and CSR
(2020) equation modeling towards natural environment
(SEM) positively associate with firm
performance Table 1.
Stojanovic et al. (1) Europe Structural (1) CSR positively impacts on firm Relevant studies in the
(2020) (2) Post-transitional equation modeling performance with employee loyalty domain of CSR and
countries (SEM) mediates in this relation firm’s performance

Source Theory Definition and brief explanation

Garriga and CSR theory “Presents four dimensions related to profits, political
Mele (2004) performance, social demands and ethical values”
Padgett and Resource-based view “Resource-based theory (RBV) is related to CSR in the sense
Galan (2010) theory that they can provide a competitive advantage”
Jones (1995) Stakeholder theory The practical combination of CSR and stakeholder theory Table 2.
that “CSR activities will result in financial gain” Previous theories
Chacko (1997) Continuous Utilize internal and external resources, conditions for related to this research
competitiveness theory sustained competitiveness for firms and nation context
IJOEM H1 H5
Brand Trust
(BT)

Corporate Social H3
Firm Performance
Responsibility
H6 (FP)
(CSR)

Figure 1. H2 Brand Loyalty

Model of impact of CSR H4
on firm’s performance (BL)

4. Research design and methodology

Based on the literature review, it appears that the gap and a response for a holistic research on
the impact of CSR on FP including the mediating role of BT and BL for SMEs in the context of
developing economy were demanded. Therefore, this research focuses on filling this gap
and need.
The theoretical framework of this study is principally adopted in the relevant theories of
stakeholder theory (Freeman, 1984) that identified stakeholders as “any group or individual
who can affect or is affected by the achievement of the firm’s objectives” and suggested idea
that investing time and resources in addressing the stakeholders’ interests is a justifiable
managerial activity; resource advantage theory (Hunt and Morgan, 1995) as an approach of
the process of competition in market-based economies that competition involves a constant
struggle between companies for competitive advantage for superior financial performance;
sustainability vision theory (Kantabutra, 2020) that an effective sustainability vision should
be directed to stakeholders, increasing stakeholder satisfaction, including owners,
shareholders, customers, organizational members, the environment and surrounding
communities.
This study follows a quantitative approach to measure the relationships of variables of the
research model. To this end, the questionnaire covers constructs such as CSR, BT, BL and FP.
The construct of questionnaire includes three parts. The first part is for respondent’s
information. The second part is for closed-ended interview questions to collect data for
analysis for this study. The third part is for opened-ended interview questions to collect the
expert’s insights into the current situation of CSR of SMEs in Vietnam, the awareness of
firm’s executives on CSR and suggestions for improvement to CSR performance for SMEs in
Vietnam. To assure the content validation and the correct measurement of the constructs, the
questionnaire was validated by 45 experts from management fields (Malhotra et al., 2017).
The expected outcome of this phase is the final questionnaire, which is suitable with research
context for quantitative research performance. The questionnaire was built using seven
Likert-scale point, which indicates that the point ranges from 1 (strongly disagree) ascending
to 7 (strongly agree).
The primary data was collected by survey using questionnaire with initial sample size of
300, for the use of partial least squares (PLS). The sample size should be calculated 5–10 times
more than the defined items in the study (Hair et al., 2019). This study has totally 22 items,
thus a needed size of sample should be 220. However, authors decided to initially proceed with
300 samples at the simple method of collecting random probability samples just in case of the
missing responses or unsatisfied responses occurred. Survey subjects include experts, firms’
executives and management levels in the South of Vietnam, with no age limit for respondents.
Constructs Items Description References
Contribution of
corporate
Corporate social CSR1 Products offered by firm meet the Benavides-Velasco et al. (2014), social
responsibility (CSR) demand of function of the target users Swaen and Chumpitaz (2008),
or address an existing problem of Longo et al. (2005), Turker (2009), responsibility
society Abaeian et al. (2014), Ahmad and
CSR2 Products provided by firm used eco- Seet (2009), Hoque (2004), McKnight
friendly material resources or et al. (2002), Mayer et al. (1995),
renewable resources Chaudhuri and Holbrook (2001),
CSR3 Products quality is consistent with (2002), Ganesh et al. (2000), Selnes
firm stated commitment (1993), Morgan and Hunt (1994)
CSR4 Products’ information is being
addressed to the users at a consistent
and transparent manner basis
CSR5 Products provided does not involve
child labor during manufacturing
process
CSR6 Product provided by firm is overall
safe for the users
CSR7 Products sold by firm has fund to
charity activities
CSR8 Firm has particular plan on human
resource development
Firm’s performance FP1 Growth of revenue
(FP) FP2 Growth of profitability
FP3 Increased return of asset (ROA)
FP4 Growth of market shares
Brand trust (BT) BT1 Brand is perceived honest
BT2 Brand is perceived safe
BT3 Brand is perceived trustworthy
BT4 Customers reply on brand
BT5 Customers feel overall secure about the
brand
Brand loyalty (BL) BL1 Repurchase intention decided by
customers, consumers on the existing
products
BL2 Continue support of customers,
consumers by purchasing making
decision for the new products offered
by firm
BL3 Willingness of referrals of brand’s
products in customer’s relationships
BL4 Customer’s desire to maintain
established relationship with the
brand
BL5 Customer’s intention to represent the Table 3.
brand Constructs

More specifically, experts those were respondents to the survey of this study are business
consultants and advisors for SMEs who are extensively experienced and knowledgeable of
business strategic management in different business characteristics and economic context
settings. Importantly, they have market insights and strategic perception of the world
economic outlooks that are of great importance and most priority to SMEs in the current
given context of Vietnam where global integration increases competitive pressures. SMEs
were identified based on the most used criterion, which is the number of employees for which
IJOEM an enterprise registered less than 250 employees identified as SME (IFC, 2009). Further, the
survey participants excluded customer side for BT and BL because of the numbers of
reasons: (1) the overall aim of this study is to intensively understand the impact of CSR of FP
for SMEs, where BT and BL assumed to mediate this relationship from the corporate
management perspectives, not particularly studied customer behaviors; (2) the selected
enterprises for this survey appear to be good at building brand and managing relationship
with customers through the implementation of periodic survey for measuring the customer
mind-set with respect to their brand as a value stage of the brand value chain (Keller, 2013).
Therefore, it is satisfactorily answerable for BT and BL-related questions in this survey.
The survey was implemented by distributing questionnaires to the target respondents
through email and direct delivery. The collected questionnaires were screened and the
satisfied questionnaires were selected. As a result, there were 247 that met the specification as
indicated criteria. The data analysis was performed using the Smart PLS following the
instructions of Hair et al. (2019).

5. Assessment of measurement and structural model

Table 4 summarizes sample characteristics of this study; those are all SMEs determined on
the number of employee basis (IFC, 2009) and those randomly selected represent the
population.

5.1 Assessing reliability of the scale

Reliability assessment is to check the consistency levels between multiple measurements of a
variable (Hair et al., 2010). This study assesses the consistency of the entire scale and its
overall reliability of each factor of productivity values by simultaneously using Cronbach’s
alpha and composite reliability indexes. Table 5 shows that Cronbach’s alpha coefficient of all

Index n 5 247 Intensity (%)

Gender
Male 125 50.60
Female 122 49.40
Age
40–45 years 98 39.68
46–50 years 84 34.00
51 years above 65 26.32
Education
Bachelor 116 46.96
Master 72 29.15
Above 59 23.89
Years of working for the company
1–5 years 35 14.17
6–10 years 124 50.20
Above 10 years 88 35.63
Size
30–50 employees 80 32.39
Table 4. 51–100 employees 115 46.56
Sample characteristics 100–200 employees 52 21.05
variables and all composite reliability values are greater than 0.8; those confirm that the Contribution of
reliability of this scale is good and acceptable (Hair et al., 2016). corporate
In addition, the indicator reliability was checked by assessing outer loading’ results.
Table 6 shows the results of outer loading where all values are greater than 0.7; those confirm
social
that all individual indicators are reliable. responsibility

5.2 Convergent validity

According to Fornell and Larcker (1981), the convergence value is used to illustrate the full
convergence of the measurement items on their respective structures. Table 7 summarizes
AVE values that are greater than 0.5 and external loading factors that are all greater than 0.7;

Variables Cronbach’s alpha Composite reliability

BL 0.840 0.886 Table 5.

BT 0.857 0.897 Cronbach’s alpha and
CSR 0.939 0.949 composite reliability
FP 0.833 0.889 results

Variables BL BT CSR FP

BL1 0.732
BL2 0.750
BL3 0.760
BL4 0.813
BL5 0.844
BT1 0.764
BT2 0.768
BT3 0.820
BT4 0.832
BT5 0.800
CSR1 0.815
CSR2 0.840
CSR3 0.890
CSR4 0.842
CSR5 0.805
CSR6 0.826
CSR7 0.847
CSR8 0.830
FP1 0.781
FP2 0.859 Table 6.
FP3 0.841 Results of outer
FP4 0.782 loading

Variables External loading factors AVE

BL 0.732–0.844 0.610
BT 0.764–0.832 0.636
CSR 0.805–0.890 0.701 Table 7.
FP 0.781–0.859 0.667 Convergent validity
IJOEM those confirm that the observed variables are focused on the research concept that it is
involved in or convergent validity is supported (Hair et al., 2010).

5.3 Discriminant validity

According to Fornell and Larcker (1981), the distinction is satisfied when the square root of
AVE of each structure in the research model is greater than all the internal correlation values
of the remaining structures. Table 8 shows that the square root of AVE values is greater than
the interconstruct correlation, so the discriminatory test of research concepts is satisfied.
Therefore, it can be concluded that the distinctiveness of the research concepts is determined
satisfactorily.
Additionally, HTMT was assessed to reaffirm the discriminant validity of the
measurement model. Table 9 shows that HTMT values are all less than 0.85 so
discriminant validity is supported (Kline, 2011).

5.4 Evaluation of structural model

According to Falk and Miller’s (1992), the model is called good when the R2 index is greater
than 0.1. Table 10 shows the results that both R2 values and R2 adjusted values are greater
than 0.1. Therefore, the structural model is confirmed satisfactory.
Model of fit was analyzed to determine its fitness and its validity by assessing SRMR
indices. Table 11 summarizes the model-of-fit indices with full name, the acceptance
thresholds and results. Overall, it can be concluded that this model is fit and valid.
Path coefficients of variables are summarized in Table 12. It appears that the impact
weight of CSR on BT appears strongest (þ0.373) against that of CSR on others such as BL
(þ0.283) and FP (þ0.187). Additionally, the impact weight of BT on BL is highest of all
(þ0.459), followed by that of BL on FP (þ0.299) and BL on FP (þ0.246). Results show that all
direct and indirect paths are statistically significant; therefore partial moderation of BT and
BL was confirmed to be established in this research model (Wood et al., 2008).

Variables BL BT CSR FP

BL 0.781
Table 8. BT 0.565 0.798
Fornell and Larcker CSR 0.454 0.373 0.837
criteria FP 0.573 0.485 0.415 0.817

Variables BL BT CSR

Table 9. BT 0.658
Heterotrait–Monotrait CSR 0.500 0.411
results FP 0.611 0.569 0.459

Variables R2 R2 adjusted

BL 0.388 0.383
Table 10. BT 0.139 0.136
R square values FP 0.353 0.345
 Figure 2 is the analysis result of the research model of this study. Contribution of
VIF (variance inflation factor) was assessed for checking multicollinearity. Table 13 corporate
shows VIF values that are smaller than 10 so it can be concluded that there is no
multicollinearity problem among variables of the research model (Hair et al., 2009).
social
Further, the significance of path coefficient analysis was conducted using bootstrap responsibility
method using 999 emulators. According to Efron and Tibshirani (1993), bootstrapping
assigns measures of accuracy (bias, variance, confidence intervals, prediction error, etc.) to
sample estimates. The bootstrapping result shows that the statistical value t > 1.96 and
P-value < 5%, which confirm hypotheses of this research model. Thus, the research model of
this study and research data are determined to be suitable; also, hypotheses of this study are
confirmed to be accepted. Figure 3 and Table 14 present the results of bootstrapping.

Model-of-fit Acceptance
indices Full name thresholds Values Concluded

SRMR (Standardized root mean squared residual 0.00 < value < 0.08 0.059 Good fit
approximation (Hu and Bentler, Table 11.
1999) Model-fit analysis

Variables BL BT FP

BL 0.299
BT 0.459 0.246 Table 12.
CSR 0.283 0.373 0.187 Path coefficient

BT1 BT2 BT3 BT4 BT5

0.820 0.832
0.764 0.768 0.800

0.139
CSR1

CSR2 BT
0.815 0.373 0.246
CSR3 FP1
0.840
0.890 0.459 0.781
CSR4 FP2
0.842 0.859
0.805 0.187 0.353
CSR5 0.826
0.841 FP3
0.847 0.782
CSR6 CSR FP FP4
0.830 0.283 0.299
CSR7

CSR8
0.388

BL Figure 2.
0.732 0.813 0.844
0.750 0.760 Result analysis of
research model
BL1 BL2 BL3 BL4 BL5
IJOEM Results confirmed that CSR has a positive and significant relationship with BT
(þ373; <0.05); therefore H1 is accepted. This finding supported the previous studies of
Martinez and del Bosque (2013), Brown and Dacin (1997). Interestingly, CSR’s initiatives
facilitate communication between organization and consumers that benefit firm in increasing

Variables VIF values Variables VIF values Variables VIF values

BL1 1.576 BT4 2.168 CSR7 3.079

BL2 1.633 BT5 1.936 CSR8 2.681
BL3 1.620 CSR1 2.491 FP1 1.612
BL4 2.010 CSR2 3.133 FP2 2.006
BL5 2.117 CSR3 3.607 FP3 2.027
Table 13. BT1 1.611 CSR4 3.002 FP4 1.674
Variance inflation BT2 1.655 CSR5 2.611
factors values (VIF) BT3 2.095 CSR6 3.187

BT1 BT2 BT3 BT4 BT5

29.664 37.832 31.840

25.151 20.568

CSR1

CSR2 BT
27.009 0.373 (0.000) 0.246 (0.014)
CSR3 24.056 FP1
60.100 0.459 (0.000) 21.355
CSR4 FP2
39.268 44.040
28.357 0.187 (0.085)
CSR5 27.366
24.507 15.092 FP3
CSR6 33.977 CSR FP FP4
33.390 0.283 (0.000) 0.299 (0.003)
CSR7

CSR8

BL
18.480 20.129 39.060
16.282 33.690
Figure 3.
Bootstrapping’s results
BL1 BL2 BL3 BL4 BL5

Path of Original Sample SD T Statistics (jO/ CI- CI-

variables sample (O) mean (M) (STDEV) STDEVj) 2.5% 97.5% p values

BL → FP 0.299 0.302 0.101 2.945 0.093 0.501 0.003

BT → BL 0.459 0.467 0.075 6.118 0.314 0.607 0.000
BT → FP 0.246 0.242 0.100 2.467 0.027 0.435 0.014
CSR → BL 0.283 0.282 0.080 3.536 0.118 0.438 0.000
Table 14. CSR → BT 0.373 0.371 0.076 4.940 0.228 0.524 0.000
Bootstrapping’s results CSR → FP 0.187 0.191 0.088 2.114 0.012 0.369 0.035
overall trust toward firm by consumers and that, CSR activities can significantly enhance the Contribution of
firm’s image that drives consumer’s trust in brand (Servera-Frances and Arteaga-Moreno, corporate
2015; Morgan and Hunt, 1994).
Results confirmed that CSR has a positive and significant relationship with BL; so H2 is
social
accepted (þ0.283; <0.05). This finding indicates that better CSR performance helps promote responsibility
BL from customers that supported the previous studies of Sharma and Jain (2019), Fandos-
Roig et al. (2021), Lu et al. (2020). Importantly, CSR disclosure was highlighted by experts as
its important role in communicating about the environmental and social performance of
company (Gamerschlag et al., 2011) that is important to make people understand and attach,
thereby creating loyalty.
The relationship between BT and BL was confirmed significant and positive; thus H3 is
supported (þ0.459; <0.05). This finding supported the previous findings of Chinomona
(2016), Chiou and Droge (2006), Chaudhuri and Holbrook (2001). Importantly, when a
customer perceives a brand honest, safe, trustworthy and feels secured about the brand, trust
will be formed, thereby creating loyalty.
Results confirmed that BL significantly positively related to FP while BL partially
mediates the relationship between CSR and FP; thus H4 is supported (þ0.299; <0.05 and
þ0.187; <0.05). This finding supported the previous studies of Loosemore and Lim (2018),
Irshad et al. (2017), Pasha and Waleed (2016). Importantly, BL can benefit FP by reducing costs
and increasing revenues (Dowling and Uncles, 1997) and accessing financial resources (Yang
and Peterson, 2004).
The relationship between BT and FP was confirmed positively significant,
simultaneously partially mediating role of BT between CSR and FP, thus H5 is supported
(þ0.246; <0.05 and þ0.187; <0.05). The finding indicates that BT drives purchase intentions
and positive referrals that in turn positively affects FP (Becerra and Badrinarayanan, 2013);
customer trust of brand positively impacts on consumers’ behavior in support of the brand in
relation to repurchase decision and referrals (Becerra and Korgaonkar, 2011; Chaudhuri and
Holbrook, 2001, 2002); those are crucial to improve FP.
Results confirmed that CSR has a positive and significant relationship with FP, directly
and indirectly; so H6 is accepted (þ0.187; <0.05). The statistical results show that the direct
relationship of CSR to FP is weaker than the indirect relationship through BT and BL. The
findings indicate that proper implementation of CSR can benefit firms in many ways such as
improving firm’s image and firm’s reputation; those are associated with brand dimensions
toward trust and loyalty. This will result in enabling firm to retain the existing customers for
continuing business, spread to new customers for growth and enhance competitiveness for
expansion prospect in the new marketplaces. More importantly, those will drive FP toward
sustainable development. Results supported previous studies of Ghaderi et al. (2019), Kao
et al. (2018) that CSR performance improves FP and DiSegni et al. (2015), Fandos-Roig et al.
(2021), Loosemore and Lim (2018) with mediating roles of BT and BL.

6. Discussion
The purpose of this paper was to evaluate the role of CSR on SMEs’ performance by exploring
the mediating role of BT and BL on the FP. Therefore, this study extends the knowledge
exploring the mediating role of BT and BL on the FP in the context of SMEs.
Based on previous studies on CSR (Lu et al., 2020; Fandos-Roig et al., 2021; Moon et al.,
2015), BT (Chinomona, 2016; Agustin and Singh, 2005), BL (Muzammal and Arif, 2017; G€ urlek
et al., 2017) and FP (Ghaderi et al., 2019; Dawit et al., 2020), a model was theorized and
empirically tested through six hypotheses.
The first hypothesis, CSR has a positive relationship with BT, was supported and
corroborates the importance of investing in this aspect of business to enhance the BT (Ahn
IJOEM and Kwon, 2020; Dzupina et al., 2019). From this perspective, not only employees but also
customers will be positively influenced toward CSR company actions. The second
assumption, CSR has a positive relationship with BL, was also supported. This means that
investing on CSR enhances the individuals’ BL. From the point of view of employees, it is
means to reduce the turnover of staff members, and from the customers’ view, it reinforces the
repurchases of products.
The third hypothesis posits that BT has a positive relationship with BL. This finding
supports the studies of Ledikwe (2020) and Huang (2017). Enhancing BT is important to
consolidate the ties among company, employees and customers as well Chinomona (2016).
In the fourth hypothesis, we affirmed that BL has a positive relationship with FP while
mediating the relationship between CSR and FP. In general, brand has been shown as one of
the most valuable attributes that a company can have (Mahabubur et al., 2019; Bedman, 2018).
Our findings support the importance of investing on BL to continuously improve the FP.
The fifth hypothesis sustains that BT has a positive relationship with FP while mediating
the relationship between CSR and FP. In the same line as BT, companies have to invest in
their corporate brand as well as their brand portfolio in benefit of improving their
performance (Mousa et al., 2021; Honarmandi et al., 2019). In sum, the mediating role of BT
influences the FP and can contribute to the competitive advantage of a company.
The sixth hypothesis, CSR has a positive relationship with FP, was supported.
Fundamentally, this assumption gives support to the whole model and must be the first
step that a company must consider when engaged with CSR to improve their performance.
The six hypothesis corroborated in the study supports the sustainability vision theory of
Kantabutra (2020) and stakeholders’ theory of Freeman (1984). Importantly, Vietnam is in the
early stages of implementing multilateral free trade agreements such as EVFTA with
developed countries, Europe, those are ahead of Vietnam in CSR awareness and practices.
They perceive CSR as a strategic element in their business. While SMEs in Vietnam still have
many limitations in CSR access, awareness and practices so to join the new game with them,
SMEs in Vietnam must have a spectacular change accordingly. The finding implied that by
properly practicing CSR, firm keeps commitment to its stakeholders by providing the right
qualification, transparency in operation and communication, environment respect, employee
development and engages social welfare directly into business activities. This will in turn
improve relationship between firm and its stakeholders that will result in increasing their
love, their trust and their admiration for brand. Consequently, it will increase BT and BT to
progressively improve FP.
Additionally, our research contributes to micro-level research in CSR by evolving
multidimensional measure of CSR based on the perspective of four categories of CSR
dimensions presented by Turker (2009) for SMEs in emerging economy. Although CSR is
very popular concept, however, to comprehensively understand its concept and its
dimensions remains controversial as it depends on different economic settings. This
finding helps solve the current issue of SMEs in Vietnam with respect to perceptions of CSR
components. Commonly, SMEs in Vietnam perceived CSR likely as philanthropy-oriented
instead of multidimensional measures as this study. Consequently, this could possibly falsify
the outputs of CSR implementation that would in turn bias CSR strategy and implementation
in the future.
Finally, this study contributes to the CSR literature in emerging context by shedding light
on the roles of CSR in FP with the mediating roles of BT and BL. Most existing CSR studies
focused on Western context as developed economy, thus less attention has been paid for
emerging markets (Alon et al., 2010), such as Vietnam. By considering the important role of
SMEs in emerging economy as Vietnam, this finding helps address this needy problem where
CSR comprehensiveness has increasingly perceived its importance in improving FP in the
new context of Vietnam as aforementioned. Thus, this study may be necessary for business
practitioners, investors, shareholders and policymakers toward sustainable development for Contribution of
SMEs and Vietnam economy as a whole. corporate
social
6.1 Theoretical and managerial implications responsibility
Our study contributes to the extant literature in three main ways. First, we extend the
literature on the roles of CSR in FP with mediation of brand dimensions by integrating BT
and BL mediated between CSR and FP relationship that remained scarce in current literature,
particularly in emerging economy as Vietnam.
The results of our study have important implications for the implementation of CSR in
organizations, specifically SMEs in emerging economy as Vietnam. First, our findings
suggest that the corporate focus strategy must be inclusive of CSR strategic planning and
investment; accordingly, all activities and actions must be consistent toward environment
and society, not aiming for short-term profitable benefits. This implication helps address the
cognitive issue that exists in most SMEs in Vietnam, whereas firms’ owners and investors
mostly see CSR as a cost not as an investment; therefore they mainly expect direct economic
gains from CSR in short term. This mind-set deviates CSR strategy and initiatives in many
ways. Consequently, it prevents firm from achieving the worthy values from CSR practices;
those are critical for improving FP in a sustainable manner. Second, in the new given context
of Vietnam where competition pressure increases due to the global integration pace, the
managerial level of firms must look broader on CSR about its components, its strategic
importance for long-term strategic plan in the new age, the era of global integration. CSR is no
longer just an outbreak of charity but a true voluntary responsibility for the whole
environment and society, firms’ stakeholders. It is critically important, is the guideline for all
consistent actions toward sustainable development through promoting brand values, trust
and loyalty to stay competitive. This supports the sustainability vision theory of Kantabutra
(2020) and resource advantage theory of Hunt and Morgan (1995).

7. Conclusion
Overall, the originality of this study focuses on the three major significances including (1)
deliverable of this study proposed a latest model for SMEs in emerging economy, aiming not
only Vietnam but other developing countries with similar economic conditions to Vietnam; (2)
the study context focused on emerging economy where demand for CSR comprehensiveness
is in a proper manner for sustainability, especially in the high competition pressure.
Specifically, in the context that series of international free trade agreements have come into
effect, most worth mentioning are European Vietnam Free Trade Agreement (EVFTA),
Trans-Pacific Partnership Agreement (TPP); those are big deals in the economic-trade sector
between an emerging economy and developed economy. This opens up both opportunities
and challenges for businesses around the world, especially SMEs as a core force of the
national economy as aforementioned. However, the disproportionate capacity of firms puts
additional pressure on firms in developing countries, SMEs in particular. Thus, the finding of
this study can be of great importance for business practitioners, particularly SMEs, to drive
business in a sustainable manner in the new given context; (3) deliverable of this study
discloses the partial mediation effect of BT and BL between CSR and FP. The findings
contributed that CSR performance positively effects the trust of customers for brand and the
loyalty of customers for brand and those progressively effect firm performance. Thus, a
better CSR performance, a higher trust by customers for brand, a higher customer loyalty for
brand and a higher performance for firm. Thus, for SMEs properly practicing CSR, the
stakeholder’s love for the brand increases and improves stakeholder’s trust for the brand.
This will result in increasing BT and BL from stakeholders, which will in turn improve FP.
IJOEM 8. Limitation and future studies
This study presents limitations as happening in any scientific investigation. First, the sample
was composed of SMEs from different segments, thus the respondents’ perspective about
CRS could differ according to the impact of the business on society. Therefore, future studies
could address businesses from a single segment to get a deeper understanding of their
knowledge and involvement with CSR.
Second, this study was conducted in the south area of Vietnam. Future research on a cross-
cultural approach can be a rich venue. Third, this study was developed through a
quantitative approach. To get a better picture of CRS and its impact on corporate brand and
FP, future research can apply qualitative approach or mixed methods to extend our findings.
Fourth, the survey respondents were exclusively composed of top executives, managers and
experts. Thus, future studies could consider the mediating role of BT and BL with customers
engaged with social causes to advance in the topic of CSR, BT, BL from the customer
perspective.

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About the authors

Dr. Tiep Le Thanh has got PhD in Business Administration, is working at Ho Chi Minh City University
of Economics and Finance, Vietnam, as a part-time lecturer. His major research areas are Corporate
Social Responsibility (CSR) related, Corporate Governance, Renewable Energy and Sustainability
related. Tiep Le Thanh is the corresponding author and can be contacted at: tieplt@uef.edu.vn
Dr. Huan Quang Ngo is a Dean of School of Management at University of Economics Ho Chi Minh
City, Vietnam. His major research areas are Corporate Governance and Finance related, Corporate Social
Responsibility (CSR) related, Sustainability related.
Prof. Dr. Leonardo Aureliano-Silva is researcher and professor at ILMA University, Pakistan, and
ESPM, Brazil.

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