CLARO M.

RECTO ACADEMY OF ADVANCED STUDIES

“HOW CSR LEADS TO CORPORATE BRAND EQUITY: MEDIATING

MECHANISMS OF CORPORATE BRAND CREDIBILITY AND REPUTATION

A Case
Submitted to the Faculty of the
Claro M. Recto Academy of Advanced Studies
Lyceum of the Philippines University Cavite

In Partial Fulfillment
of the Requirements of the Degree
Master in International Hospitality Management

SARA ALI
EUSEBIO F. FALGUERA
EVANGELINE ORTIZ
MYRA D. RETUERMA
JENNY B. UNICO

February 2019

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Introduction

Modern conditions for the development of market relations are characterized by a

significant increase in globalization, which causes the liberalization of capital flows and

significantly increases competition in world markets. In order to successfully operate and

continue its development in this or that market, the company must actively fight for

customer loyalty.

A well-thought-out and well-established system of Corporate Social

Responsibility (CSR) allows companies not only to make a positive contribution to social

well-being and environmental stability, but also contributes to increasing the

effectiveness and stability of business. Proper implementation of CSR is one of the most

important steps in the formation of a positive image of the company by all stakeholders.

Increasing customer loyalty and increasing brand value are some of the motivations for

companies to implement social activities.

Thus, the implementation of a competent policy in the field of corporate social

responsibility leads to an increase in such a component of the company's business

reputation as the loyalty of its stakeholders. In turn, this indicator can serve as a basis for

the formation of competitive advantages that are so necessary for any company,

regardless of the scope of its activities.

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Overview of the Case

Corporate Social Responsibility (CSR) is of growing interest, and more

companies are investing much greater efforts in CSR initiatives. And CSR activities not

only obtaining favorable consumer awareness, attitude, and a sense of attachment but also

by building positive corporate image and good reputation in the long run. However, a key

distinction between CSR initiatives and other marketing mix attributes is that the

company, the consumers and even the focal social issues all benefit from CSR.

Companies invest in CSR initiatives to create positive moral capital and to support a

company’s idiosyncratic intangible assets such as credibility and reputation. And

consumers do not want a company to take advantage of its relationships with them nor do

they want to feel cheated due to egoistic CSR motivations. In particular, the company’s

CSR activities are considered to create a trusting relationship between the company and

the consumers in the global market. Conceptual model of the direct and indirect

relationships between CSR and corporate marketing outcomes and focus on the

importance of brand credibility, reputation and brand equity as outcomes.

CSR activities is a behavior that can be explained through resource-based perspective

(RBP) when such activities are expected to influence a corporation’s business benefits.

Companies retain resources that are considered “basic constitutive elements out of which

firms transform inputs into outputs, or generate services”. The notion of RBP is that a

company generates sustainable competitive advantages by controlling and manipulating

these resources.

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The effect of CSR on corporate brand credibility refers to the credibility of a

company’s brand as a signal, which is the extent to which consumers believe in the

company’s trustworthiness and expertise. CSR activities convince consumers that a

company produces a higher quality product because they signal greater management

competency. The effect of CSR on corporate reputation is a valuable intangible asset for

a company. Corporate reputation is a result of a company’s management actions and

behavior, and CSR engagement can be the most effective action to gain a competitive

advantage. The effect of CSR on corporate brand equity refers to the total utility or value

added to a product by virtue of the brand. Consumers should perceive brand

differentiation in the product or service category in order to create brand equity, and a

meaningful brand differentiation comes from brand value components.

Statement of the Problems

1. What is the effect of CSR to Corporate brand equity?

2. Is there significant effect of CSR to corporate reputation?

3. Is there a positive relationship to corporate brand credibility?

4. What are the significance and positive relationship between corporate social

responsibility activities and corporate reputation?

5. What are the sustainable CSR activities which lead to brand recognition and

subsequently to Brand Equity?

6. How corporate reputation mediates the relationship between corporate social

responsibility and brand equity?

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Goals, Purpose and Significance of the Article/Paper

Goals

The main goal of the study is to examine a conceptual model of the direct and

indirect relationships between Social Responsibility (CSR) and corporate marketing

outcomes. It will specifically focus on the significance of (1) brand credibility, (2)

reputation, and (3) brand equity as outcomes.

Purpose

The purpose of the study is to conduct an investigation on the relationship among

social responsibility (CSR), corporate brand credibility, corporate brand equity and

corporate reputation by the use of conceptual models. It is expected to result in enhancing

corporate reputation and brand equity in a competitive market situation. In this study, the

researchers proposed a core theoretical construct that mainly explain various CSR

outcomes by the use of such concepts. Specifically, the concept of moral capital as

intangible assets. In addition, the study examines the relationship between CSR and the

corporate brand equity is fully and double-mediated by corporate brand credibility and

corporate reputation. Other studies have suggested that CSR directly influences some

factors in the business, the multi-step mediation analysis in this study

clearly addresses the mediating effect of brand credibility and corporate reputation,

respectively. Showing the two variables sequentially mediate. It only implies that

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corporate brand credibility is a crucial variable in explaining this mediating mechanism,

which cannot be solely explained by corporate reputation.

Significance

The significance of this study is that it will benefit not only those who are in the

corporate world but also the potential decision makers that will be deciding

organizational decisions. Besides, this study would validate the importance of building up

credibility in business and also imply important opportunities for its strategic

management. CSR enhances a consumers perception of corporate marketing performance

mainly brand credibility, reputation, and brand equity. Hence, the corporate brand or

marketing manager should pay attention to the CSR activities and those ventures that

may be involved.

Major Points of Agreement

Corporate Social Responsibility (CSR) plays a very important role in

organizational performance. CSR activities are not only to create favorable consumer

awareness but also by building positive corporate image and good reputation.

1. We recognize that Corporate Social Responsibility is positively related to

corporate brand credibility. Brand credibility means brand’s integrity or brand reliability.

Consumers not only care about their consumption experience, but also taking into

consideration its stakeholders. Consumers find the identity of a company more appealing

and trustworthy when it is similar to their own set of beliefs and preferences. CSR can

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make a favorable impression on consumer who are susceptible to the social issues those

CSR initiative address.

2. Corporate Social Responsibility has positive impact on organizations reputation.

Consumers relay on company’s reputation to judge its products and services. CSR

initiative is one of the company’s strategies for creating a good reputation and establish

positive image.

3. We believed that Corporate Social Responsibility is one of the most effective

factors in marketing.

Major Points of Disagreement

1. Corporate Social Responsibility initiative motivation should be more on genuine

concern for society rather than just from the company’s desire to improve its image. and

looking at it as one of Marketing Strategy.

Conclusions

Brand loyalty; brand awareness; brand association and brand satisfaction enhance

the relationship among the CSR, corporate reputation and brand equity, because all of

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these variables create competitive advantage for the company. In some studies buyers of

consumer goods, shopping goods and luxury goods are loyal only with those firms whose

reputation and equity matches the perceived criteria regarding CSR activities in their

minds. If the companies have introduced the social welfare projects in the domain of CSR

which are not appealing the customer individual social responsibility criteria, customers

will not proceed in the buying process of that company products. But those companies

have most loyal customer who are doing right things, invest in the community projects

through different ways like creating employment opportunities, education and formed

different foundations in order to facilitate the community in fulfilling their basic needs.

Brand management plays critical role in the customer related literature. Some brands

have not gained positive image in the market only due to some basic elements missing in

the formation of the brand. So if companies develop their CSR strategies and invest their

CSR funds in accordance with the social responsibilities of their individual buyers desires

through advertising; then in the result sympathy creates in the minds of customers for

their products which results in company positive reputation which later ends at brand

equity. Therefore, from a strategic point of view firm build a competitive advantage over

a short span of time that leads brand equity and its outcomes, the strategic point is

corporate association which includes the corporate social responsibility and personal

social responsibility in same direction.

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Recommendations

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