Corporate Social ResponsibilityAnd Its Effects On Customer BehaviorAn experimental study on how different types of CSR activities impact customer loyalty, purchase intentions and word of mouth within the retail industry.Universiteit MaastrichtFaculty of Economics and Business AdministrationHeike Mesarosch (i526096)International Business Strategic MarketingMaster ThesisSupervised by Thomas KringsMaastricht, November 2008EXECUTIVE SUMMARYCorporatesocialresponsibility(CSR)isthemanifestationoftheideathatacompanyisan integralpartofsocietyandthereforehastoacknowledgeresponsibilitytoallofits stakeholders.WithCSRactivitiescompaniescannotonlysupportabroadrangeofgood causesindifferentfieldsofsocialandenvironmentalissues,buttheycanalsopositively influence customer behavior. CSR was found to positively affect customer attitudes, product evaluation,purchasebehavior,wordofmouth,andloyalty.However,notallresearchers confirm these positive relationships. Missing links are attributed to extraneous influences that underminethepositiveeffectsofCSRonbehavior.Thekeyinfluenceisattributedtothe CSRactivityitself.ThisstudyaimstoshedlightonwhetherthetypeofCSRactivity employedactuallyinfluencesthebehavioraloutcome.Therebyitisconcentratedonthree customer behaviors of major importance (i.e. loyalty, word of mouth and purchase intentions) andonanindustrythatischaracterizedbyclosecustomercontactandthusdependenton customer behaviors: the retail industry. The study examines if all types of CSR activities lead topositivecustomerbehaviorandwhichtypehasthemostimpactonwhichelementof customer behavior. Additionally, it is explored if the effects of the different types differ across demographic groups. In order to be able to analyze the differences in effectiveness between CSR activities, first of all a valid classification of CSR activities is needed. Based on thorough researchofCSRactivitiesappliedinpractice,thestudydevelopsanewtaxonomyofCSR activitiesbasedontwodimensionswithtwo levels: direct vs. indirect customer involvement and external vs. internal company engagement. Accordingly, four different CSR types evolve: Good Deed For Sale (Type 1), Good Produces Good (Type 2), Distant Benefactor (Type 3) and Sustainable On The Inside (Type 4). An experiment set in the fashion industry is created withfourscenarios, each representing one CSR type. In an online survey 219 respondents arerandomlyassignedtoonescenario.Usingone-wayANCOVAthetypesaretestedfor differences in effect on word of mouth, purchase intention and loyalty while controlling for the extraneous influences of perceived fit, perceived sincerity and personal support of the good cause.Theresultsindicatethatforpurchaseintentionandloyalty,thetypeofCSRisnot decidinginthisstudy:Thefourtypesdonotsubstantiallydifferintheireffecthowever,a tendencyisobservable:Type1alwaysscoreshighestwithapositiveeffectonallthree behavioral outcomes. For word of mouth, Type 1 (Good Deed For Sale) is even significantly differentfromtheothertypesinitspositiveinfluence.However,therearenodifferencesin responsesacrossdemographicgroups.Asanimplication,managersareadvisedto implement a type 1 activity if they intend to leverage customers recommendation behavior. For theorists, the taxonomy is a first step to a commonly understood basis of classifying CSR activities.Further,thefindingsconfirmthatatleastcertainbehavioraloutcomesare susceptibletothetypeofCSRactivity.Futureresearchshouldaddresstheexplorationof other outcomes and of further extraneous factors that influence CSRs effectiveness.TABLE OF CONTENTS1. INTRODUCTION............................................................................................................... 12. LITERATURE REVIEW..................................................................................................... 92.1 Corporate Social Responsibility A Definition ............................................................. 92.2 CSR in Marketing........................................................................................................112.2.1 CSR and customer responses..............................................................................132.2.1.1 Attitude ..........................................................................................................132.2.1.2 Product and Company Evaluation..................................................................142.2.1.3 Purchase Behavior.........................................................................................152.2.1.4 Loyalty ...........................................................................................................162.2.1.5 Word-of-mouth...............................................................................................172.2.2 Moderating Influences on Customer Behavior ......................................................182.2.2.1 Product Quality and Price ..............................................................................182.2.2.2 Skepticism / Perceived Sincerity ....................................................................182.2.2.3 Perceived Fit between Company and Good Cause........................................192.2.2.4 Consumer-Company Identification.................................................................192.2.2.5 Personal Support of the Good Cause.............................................................192.2.2.6 Perceived Personal Affect ..............................................................................192.3 CSR Initiatives ............................................................................................................212.4 Taxonomy...................................................................................................................222.4.1 Taxonomy A Definition.......................................................................................222.4.2 The Development of a Taxonomy of CSR Activities..............................................242.4.3 The Types of CSR Activities .................................................................................272.4.3.1 Good Deed For Sale (Type 1) ........................................................................272.4.3.2 Good Produces Good (Type 2) ......................................................................282.4.3.3 Distant Benefactor (Type 3) ...........................................................................292.4.3.4 Sustainable On The Inside (Type 4)...............................................................302.5 Model ..........................................................................................................................323. RESEARCH DESIGN.......................................................................................................333.1 The Research Setting .................................................................................................333.2 The Experiment ..........................................................................................................343.3 The Questionnaire ......................................................................................................353.4 The Measures.............................................................................................................373.4.1 Measuring Loyalty and Underlying Constructs......................................................373.4.1.1 Measuring Purchase Intention........................................................................383.4.1.2 Measuring Word of Mouth..............................................................................383.4.1.3 Measuring Attitudinal Loyalty .........................................................................393.4.1.4 Measuring Propensity to be Loyal ..................................................................393.4.2 Controlling Extraneous Variables..........................................................................403.4.2.1 Measuring Personal Support of the Good Cause ...........................................403.4.2.2 Measuring Perceived Sincerity.......................................................................413.4.2.3 Measuring Perceived Fit between Company and Good Cause ......................413.4.2.4 Controlling Product Quality and Price.............................................................413.4.2.5 Controlling Consumer-Company Identification ...............................................423.4.2.6 Controlling Perceived Personal Affect ............................................................423.4.3 Demographics ......................................................................................................453.5 Conducting the Research............................................................................................453.6 The Sample ................................................................................................................463.7 Data Preparation.........................................................................................................473.8 Reliability and Validity of the Scales............................................................................484. RESULTS AND DISCUSSION.........................................................................................514.1 Preliminary Tests ........................................................................................................514.1.1 Normality..............................................................................................................514.1.2 Linearity................................................................................................................514.1.3 Homogeneity of Variance .....................................................................................514.1.4 Homogeneity of Regression Slopes......................................................................524.1.5 Reliability of Covariates ........................................................................................524.1.6 Correlations among the Covariates ......................................................................524.2 Analysis of Covariance ...............................................................................................524.2.1 The Effectiveness of the CSR Activities on Loyalty. ..............................................534.2.2 The Effectiveness of the CSR Activities on Word of Mouth...................................544.2.3 The Effectiveness of the CSR Activities on Purchase Intention.............................564.2.4 The Influence of Demographics on Behavioral Outcomes ....................................574.3 Discussion ..................................................................................................................574.3.1 The Impact of the Different Types of CSR Activities .............................................584.3.2 The Impact of the Covariates................................................................................594.3.3 The Impact of Demographic Groups.....................................................................605. CONCLUSION .................................................................................................................625.1 Theoretical Implications ..............................................................................................635.2 Practical Implications ..................................................................................................645.3 Limitations and Future Research ................................................................................656. REFERENCE LIST...........................................................................................................697. APPENDIX.......................................................................................................................78INTRODUCTION11. INTRODUCTIONThesafetyofchildrenaswellasthecontinuoustrustoftheirparentsarethetwomost important principles a toy company strives for. However, in the case of the worlds largest toy company,Mattel,customersconfidencewasseverelyshakenwhenin2007Mattel announced that a range of its toys are posing a serious health hazard to children. It turned outthatMattelfirstofallmadesevereconstructionanddesignmistakesandseconddidknowingly not control the safety and quality standards of their Chinese production partners. Theproducedtoysincludedhazardouspaintandlittlemagnetsthatcouldeasilybe swallowedbysmallchildren(www.focus.de).Thousandsofthesedangeroustoyswere broughttomarketbecauseMattelmissedtoreacttothegrievancesontime.Whenthe severe shortcomings on quality became public, Mattel was forced to start several callbacks, in particular of large parts of the Fisher-Price series and Barbie dolls. In total, more than 20 million Mattel products were retrieved from the market. Not only did the trust parents had in Mattel deteriorate dramatically with disastrous consequences for Mattels image, but also did Mattelincurheavylosses.TheBarbiebrandalonenotedalossof$46.6millioninthefirst quarterof2008duetostagnatingrevenuesandthedrasticadditionalcostsoftherecall (www.focus.de).TherecentexampleofMattelshowsimpressivelyhowirresponsiblebehaviorcanharma companyssuccess.Mattelhasnotbeenthefirstcompanysufferingfromtremendous damagestothecorporateimage.Alreadyinthe1990s,forexample,thefamouscaseof Nikessweatshopsdrewtheattentionofthepublictowardssociallyirresponsiblecompany politics.In1997,anauditbyErnst&YoungassignedbyNikeInc.leakedtothepublic.It revealedthatNikeletproduceitsfootwearandapparelinAsianfactorieswhereworkers wereexploitedorhadtoworkunderunacceptableconditions(Hammond,1997).Nikes unethicalbehaviorledtoseverenegativerepercussionsforthefirm.Especiallyasnotonly social activists heavily criticized Nikes immoral behavior publicly, exerting intense pressure (...)ontheathleticgiant[and] forcing it to take a long hard lookat corporate responsibility (Zadek,2004,p.125).Morestrikingly,therewasanimmensepublicoutcryinwestern societiesingeneralandamongNikescustomersinparticular.Stilltoday,socialactivists reportaboutNikes(in)actionsconcerningtheirproduction policies (www.info-center.tv) and call consumers to boycott Nike for its unethical behavior (www.stopnikesweatshops.org).Both examples show that a company is never an isolated institution for itself but is part of the environmentitoperatesin.Infact,acompanyisalwaysanactiveandinfluentialpartof societyandshouldthereforeactresponsiblyforthesakeofitsstakeholdersandnotat INTRODUCTION2least for its own benefits. This perception is called corporate social responsibility (CSR) and isnowadaysamuch-discussedtopicinbusinesscontexts.TheEuropeanCommission defines CSR as "a concept whereby companies integrate social and environmental concerns intheirbusinessoperationsandintheirinteractionwiththeirstakeholdersonavoluntary basis"(http://ec.europa.eu).CSRissupposedtobringbenefitstovariousstakeholder groups.Asaconsequence,stakeholdersmightestablishapositivebehaviortowardsthe firm, which in turn can result in benefits for the firm again. As Creyer and Ross (1997) proved thiscertainlyholdsforoneofthemostimportantstakeholdergroups,namelycustomers: customersexpectacompanytobesociallyresponsibleandmostcrucialarewillingto reward ethical behavior. Indeed,asteadilygrowinggroupofconsumershasbeenstartingtolookforsocially responsiblecompaniesfromwhichtobuysustainableproducts.Theseconsumersare said tobesophisticatedandenvironmentallyandsociallyconscious(Forster,2007).Thenew type of consumer poses a growing target group as already the Cone Corporate Citizen Study showed: In 2004, 80% of the U.S. citizens stated that corporate support of causes wins their trust a 21% increase compared to 1997 (www.coneinc.com). Furthermore, a recent study by Alloy Media+Marketing (2006) confirms the emerging trend towards social consciousness amongcustomersasitrevealedthat24%oftheU.S.college students bought a product in the antecedent year because they considered the brand as socially aware (Seckler, 2006). In 2007,aLOHAS(LifestyleofHealthandSustainability)studyinvestigatedconsumerhabits and attitudes in the U.S. and 8 countries of the EU (Germany, Netherlands, Belgium, France, Spain, Portugal, Great Britain and Italy). It revealed that 14.5% of the population (49 million people)oftheEuropeancountriesand13%oftheU.S.Americanpopulation(40million people)areLOHASsupporters(www.fundh.de).Thepercentageofconsumersthatlive according to the so-called lifestyle of health and sustainability are estimated to grow to 15% in Germany and 30% in the USA in 2008 (Forster, 2007). Hence, in two of the worlds biggest consumer markets, the U.S. and Europe, a significant percentage of customers is apparently thinking in new ways towards more sustainability of companies and products. This evolution has grave implications for the business strategies of global companies.Duetothechangingconsumersalone,CSRiscertainlyanissueofimportanceinevery industry.However,insomeindustriestheneedtoadoptaCSR-strategyisevenmore apparent than in others. For one reason, some industries are naturally involved with sensitive issues just based on the business they are in. For instance, the oil industry obviously has a specialresponsibilitytowardstheenvironmentwhereasthetobaccoindustryhasaspecial responsibility towards society and especially the youth. Other industries, however, just gain a INTRODUCTION3highlevelofpublicattentionthroughthemediaandareverymuchintheawarenessof consumers. This has certainly been the case for the fashion industry through Nikes case in the 1990s. As a result, consumers today know that due to globalization and the consequent needtocutcosts mostfashioncompaniesworldwidehaveoutsourcedtheirproductionto developmentcountries.Andthatthisoftenhappensunderquestionableconditionschild labor,dumpingwagesandinhumanworkingconditionsarejustsomeexamplesofsocial irresponsibility in the apparel production. Above that, the methods of the manufacturing and supplyofrawmaterialsarealsoissuesoftencriticized.Themainfactorsare(unfair)trade conditionswithcottonfarmers(Kleinewiese,2007)andthetreatmentofcottonwith pesticidesthatareharmfultotheenvironment(www.icac.org).Manyfashioncompanies today are aware of the special situation of their industry that is involved with many issues that requirethedevelopmentofCSRpolicies.Furthermore,thecompanieshaveacknowledged theurgentneedtoadaptstrategiesaccordingtothedemandsofthe changing consumers. The opinion of a consumer is of great significance for a fashion company as a consumer only buys,wearsandrecommendsabrandedapparelifhisattitudetowardsthecompanyis positive. There are numerous examples of fashion companies that successfully communicate their commitment. American Apparel, for instance, suggests already with its slogan Made in DowntownL.A.itssocialcontribution:Theyproduceapparelintheirhomecountrywhere theypaytheirfactoryworkersaboveindustry-averageandoffertheiremployeesadditional benefitslikeprivatehealthinsurance(Hendley,2002).Afterasweatshopscandalinthe 1990s,LeviStrauss&Co.hasstartedcooperatingwithunionsandactivistsinorderto improveworkingconditionsinitsfactories(Colwell,2002).Sincethen,LeviStrauss&Co. hasengagedincommunitysupport,environmentalfriendlyapparelproduction(partlywith organiccotton)andmanymoresocialissues,liketheRedTabFoundation (www.levistrauss.com). Levi Strauss & Co. is obviously aware of the fact that consumers pay attentiontothecompanyssocialengagementandthatsocialactivistscloselymonitorthe companysactivities.Consequently,thecompanytriestocommunicatethatittakesitsrole as a corporate citizen very seriously.Clearly,thosecompaniesdonotaimtobecomeidealcorporatecitizensmerelyoutof altruism but also in order to receive benefits in return. CSR can be a competitive advantage asitinfluencescustomersandtheirbehaviorinapositiveway,whichleadstobeneficial outcomesforthecompanyintheend.Inthefashionindustry,threefacetsofcustomer behaviorareofparticularrelevanceandhenceadesiredoutcomeofCSRactivities.What thesebehaviorsareandwhyCSRisanefficienttoolforafashioncompanytoenhance these behaviors is described below.INTRODUCTION4LoyaltyThe fashion industry is competitive and fast-moving. Hence, in order to survive and prosper, it is crucial for a company to build a stable customer base that stays loyal in a fast-changing environment. Loyalty is not just a matter of repeated purchases but also of a personally held beliefaboutabrandorproduct(Oliver,1999).Especiallyinfashionitiscrucialthat customerstrustandbelieveinabrandandthecompanybehinditasconsumerspublicly show their support for a brand when wearing branded apparel. They would not wear a brand if they would not feel loyal or at least positive towards it. CSR is expected to enhance loyalty (Pirschetal.2007).However,ithastobeconsideredthatloyaltyisanoutcomeofthe consumer-companyidentificationconcept(BhattacharyaandSen,2004,p.19)whichisin turninfluencedbythepersonalsupportoftheCSRissue.Thus,proposedly,onlytheCSR initiatives that fit the target group find customers personal support and can trigger consumer-company identification and thus leverage loyal behavior.Purchase IntentionFor a fashion company, as for any other company, the purchase intentions of customers are of utmost importance for two reasons. First of all, they potentially create sales and profits and areaprecursorofbehavioralloyalty(ChaudhuriandHolbrook,2001)thatenhancescash flowsandsecureslongtermsurvival(JacobyandChestnut,1978).Second, purchase intentions are also an indication of positive experiences the customer has made and thus a signalforacompanythatcustomersperceivetheirproductsasfavorable(Guptaand Zeithaml, 2005). In order to positively influence their customers purchase behavior, a fashion companycanuseCSRasanefficienttool.CSRcanleveragepurchasebehavior(Creyer andRoss,1997),especiallywhenthecustomerpersonallysupportstheCSRissue (Bhattacharya and Sen, 2004; Carrigan and Attalla, 2001) and perceives the CSR activity as sincere (Bronn and Vrioni, 2001; Yoon et al., 2006) and the fit between the good cause and the company as high (Bhattacharya and Sen, 2004). Word of MouthOne of the key behavioral outcomes of positive CSR activities is consumers willingness to talkpositivelyaboutthesociallyresponsiblecompany(BhattacharyaandSen2004,p.20). For a fashion company word of mouth (WOM) is indeed especially important. This is due to the fact that by choosing an apparel brand consumers often rely on what their peers buy or recommend to them. Especially young people consider it important which brands their friends wearorconsiderascool(GrantandStephen,2005).Eventually,WOMcanimprovethe imageofabrandandthusalsoleveragepurchaseintentions.Itisadvisableforafashion companytoemployCSRasanefficienttoolinpromotingabrandasCSRpositively INTRODUCTION5influences word of mouth. However, it is proposed that certain types of CSR might enhance word of mouth more than others (Bhattacharya and Sen, 2004). Also in theory, CSR has long been a relevant topic. The academic discussion on CSR can be tracedbackintothe1950swhereCSRasanoverallconstructwasmainlyrelevantin managementliterature(Carroll,1999).Sincethe1970sCSRsimpactondifferent stakeholdershasbeenstudied.ResearchinthisfieldstartedwithexaminationsofCSRs influenceonshareholdersandemployees(GavinandMaynard,1975)butgraduallyledto researchontherelationshipbetweenCSRandcustomersandhencebecamearelevant topic for marketing scholars, too. The most significant studies in this field evolved in the late 1990sandfocusedontherelationshipsbetweenCSRactivitiesanddifferentfacetsof customerbehavior.CSRwasfoundtoinfluenceattitude(Becker-Olsenetal.2006;Folkes andKamins,1999),productandcompanyevaluations(BrownandDacin,1997;Senand Bhattacharya,2001),purchaseintention(BhattacharyaandSen,2004;Boulstridgeand Carrigan,2000;CarriganandAttalla,2001),willingnesstopay(CreyerandRoss,1997), loyalty(Bhattacharya and Sen, 2004; Pirsch et al., 2007) and word of mouth (Bhattacharya andSen,2004).DuringthesestudiestheneedemergedtolearnmoreaboutwhichCSR strategies have an impact on customers. Authors found that it does matter what kind of CSR activity a company chooses and that not all CSR activities influence customer behavior in the samewayortothesameamount:Alreadyin1997,CreyerandRosssaidthatfurther insights are needed under which circumstances customers care about ethics the most. Later, SenandBhattacharya(2001)concludedthatmanagersmaywanttoresearchavarietyof CSR initiatives and select those that enjoy the highest and most widespread support among the companys key consumer segments (p.238). Boulstridge and Carrigan (2000) claim that onlyaCSRactivitythatimpactspersonallyupontheconsumerwouldinfluencepurchasing behavior.Theysuggestthatfurtherresearchonthissubjectmayproducesomeuseful insights and provide guidance to business on how to best plan corporate behavior for most impactonconsumers(BoulstridgeandCarrigan,2000,p.365).Similarly,Carriganand Attalla (2001) found low interest of consumers in social issues and no influence on purchase behavior. However, when exploring the reasons for this the authors found that respondents cared only about certain kinds of social issues. Some issues did matter to them enough to affect purchase behavior. Respondents stated they would be willing to pay a premium price andactivelysearchforasociallyresponsibleproducedproduct(p.569).Thisisobviously contradictivetowhatwassaidbeforebytherespondentsandcallsforcloserinvestigation. Further the authors find that young consumers seem to find animals more sympathetic than people, while other consumer groups may champion different issues. This is something else INTRODUCTION6that future research should investigate as it has important implications for the ethical profile of any company and its products (p.571).In conclusion, CSR does have a positive impact on customer behavior, however this impact is not consistently proven across different studies. Researchers assume the reason for this to lie in the CSR activity itself. In general, CSR activities are an under-researched topic. Thus far, just one attempt was made to classify CSR activities for subsequent analysis (Pirsch et al.,2007).However,aclassificationofCSRactivitiesisindispensablewhenwantingto exploretheireffectsandmostimportantlytheirdifferences.Apparently,thereisagapin literaturewhenitcomestothequestionwhichtypesofCSRactivitiesexistandwhichof themaremostinfluentialoncustomerbehaviorandhencebringthemostbenefittoa company.Ananswertothisquestionwouldnotonlycontributetoacademicresearchbut also facilitate efficient decision making for managers. The study at hand intends to examine differenttypesofCSRactivitiesinrelationshipwiththreeofthemostcrucialbehavioral outcomes,i.e.loyalty,purchaseintentionsandwordofmouth,inthecontextoftheretail industry.Characteristicfortheretailindustryisaclosecustomercontact.Thus,adirect influence on customer behavior is desirable and given the right strategies possible. CSR canbeoneofthesestrategiestopositivelyimpactcustomers.Thus,CSRisespeciallyfor theretailindustryanimportantissue.Consequently,insummarythisstudyproposesthe following as the central problem statement: HowdodifferenttypesofCSRactivitiesimpactcustomerloyalty,purchaseintentionsand word of mouth in the retail industry?Inordertosolvethisquestion,firstofallavalidclassificationofCSRactivitiesisneeded. ThestudydevelopsanewtaxonomyofCSRactivitiesbasedontwodimensionsthateach havetwolevels:directvs.indirectcustomerinvolvementandexternalvs. internal company engagement.Accordingly,fourdifferenttypesevolve:GoodDeedFor Sale (Type 1), Good Produces Good (Type 2), Distant Benefactor (Type 3) and Sustainable On The Inside (Type 4). The taxonomy is easy to implement and hence useful in practice but also in theory since it mightdeliveracommonlyunderstoodbasisforfurtherresearch.Itwillbethecoreofthis researchtofindoutifCSRindeedaffectswordofmouth,purchaseintentionandloyalty positively, and if all four types of CSR activities lead to the desired behavioral outcomes or if there are differences in their effectiveness. It is also explored which type has the most impact on which element of customer behavior. For example, a certain type might be most suitable to enhance word of mouth, while in order to leverage purchase intention another type is most appropriate. In order to test for differences, an experiment with four scenarios is developed. INTRODUCTION7Each scenario represents one type of CSR activity. Respondents are randomly assigned to onescenario.Finally,one-wayANCOVAisusedtoanalyzethedifferencesbetweenthe types(i.e.scenarios)onthebehavioraloutcomes.Additionally,itistestedwhichtypesof CSR activity appeal to which customer segments within the retail industry (i.e. demographic groupsacrossage,gender,educationandincome).Maybesomecustomersonlyreactto directCSRactivitiesthataffectthempersonally(likeforexampleclothingmadeoforganic cottonwhichguaranteesthattheyarewearingchemical-freefabricontheirskin),whereas othercustomersmighttendtoreactmorestronglytocompany-internalCSRactivities(like extraordinary positive treatment of employees) because they render them a higher credibility. As mentioned before, the field of CSR in customer behavior research is still relatively young andmanyofthefirststudiesarebasedonexploratoryresearch.Oftenstudiesproduce opposing results. However, CSR is becoming a crucial topic in practice: First of all, because consumersmoreandmoreexpectcompaniestoengageinCSR(CreyerandRoss,1997; Foster,2007)andsecondbecausemanagersincreasinglyseethepotentialofCSRasa competitiveadvantage(Pohle,2008).Thus,itisessentialtoknowhowCSRoperates. Consequently,marketingtheoryhasthetask,ifnottheresponsibility,tofullyinvestigate CSRseffectsoncustomerbehaviorandhowitcanbesuccessfullyimplementedasa marketing tool. This is where this study is positioned: It intends to clarify how CSR influences customer behavior. Marketing researchers asked for the identification of CSR activities that are most effective for companies when using CSR to positively influence customer behavior (Carrigan and Attalla, 2001; Boulstridge and Carrigan, 2000). The study at hand attempts to close this gap in marketing literature and to increase the understanding of CSR activities as an important marketing tool.CSRdoesnotonlyhaverelevanceformarketingtheoristsbutalsoformarketing practitioners.Oftenacompanyisengagedinsupportingseveralgoodcausesandhence mostly also in performing different types of CSR activities. When promoting a certain cause though,managersfacethechallengetodecidewhatkindofCSRactivitytointegrateinto marketingstrategy.Agoodcausecanbesupportedindifferentways,forexamplethe customercanbeinvolveddirectlyorindirectly,theengagementofthecompanycanbe internalorexternal to the organization. In order to use CSR as a successful marketing tool when communicating with its customers, a company has to know which CSR activity is most effectiveininfluencingcustomerbehavior.WhenitcomestoCSRactivitiesdirectedat customersitiscertainthatonesizedoesnotfitall(BhattacharyaandSen,2004,p.10). Different customers are responsive to different types of CSR activities. Therefore, this study develops a taxonomy classifying all possible CSR activities into four different types and tests INTRODUCTION8the effectiveness of the four different types on customer behavior in general and on certain customergroupsinparticular(e.g.customersegmentsbasedonageandgender).The resultsofthestudyhelpmanagersdecidewhichCSRactivitytoimplementandto consequentlycommunicatetotheirenvironment.Thisdecisionmightalsodependonthe characteristics of the customer base a company has. It is important for managers to ensure that a CSR activity has the desired impact on customers otherwise they risk that resources arebeingwasted.Besides,asuccessfulCSRstrategyleadstoactualpaybackforthe company. When a company engages in CSR it does this also for its own benefit as the role of a benefactor alone is simply not the function of a business. However, as an outcome of the companys engagement, three parties are positively affected (Bhattacharya and Sen, 2004), whichequals a win-win situation: First of all, the good cause receives financial support and publicattention.Second,thecustomerssenseofwell-beingisenhancedandoften customersdirectlybenefitfromCSRbasedproducts(e.g.organicfood,clothesoforganic cotton etc.). Third, CSR positively effects customer behavior by increasing loyalty and word ofmouthengagementandenhancingpurchasebehavior.Thisisinturnbeneficialforthe focal company. Eventually, the overall beneficiary is society.The remainder of this thesis consists of four further chapters. First, a literature review gives a detailedoverviewofCSRasarelevanttopicinabusinesscontext.Thehistorical developmentandCSRsdiversedefinitionsareexamined.Aparticularfocusliesonthe meaningofCSRinmarketing.TherebythemostcrucialresearchofCSRinrelationto customerbehaviorisreviewed.CustomerresponsestoCSRandinfluencingfactorson CSRseffectsareintroducedandtheroleofCSRinitiativesinthiscontextisdiscussed. Especiallyforthestudyathand,ataxonomyofCSRactivitiesisdevelopedthatis consideredtobuildthebasistosolvetheresearchproblem.Subsequently,according hypothesesarederived.Thesubsequentchapterillustratestheresearchdesign.A questionnaireforanonlinesurveyhasbeendevelopedtocollecttherequireddata.The measures employed, the execution of the research and the profile of the actual sample are specified.Next,thehypothesesaretestedthroughaccordingstatisticaltestswhoseresults areintroducedandexplainedinaseparatechapter.Finally,theconclusionsummarizes relevant implications of the results in a theoretical and managerial context and gives direction for future research on CSR activities.LITERATURE REVIEW92. LITERATURE REVIEWWith CSR activities a company can support a broad range of good causes in different fields of social and environmental issues. However, CSR activities do not simply differ in the good causetheysupport.Infact,itisproposedthatthemostsignificant factor that differentiates CSRactivitiesfromeachotheristhewayinwhichacompanyengagesinCSR.Thisis assumed to be deciding in how much effect CSR has on customers and their behavior. It is the aim of the study to extend existing marketing literature by examining how different types of CSR activities (i.e. Good Deed For Sale, Good Produces Good, Distant Benefactor and SustainableOnTheInside)impactcustomerbehavior(i.e.purchaseintention,loyaltyand wordofmouth).Theobjectiveofthischapterisfirsttorevealadetailedunderstandingof CSR(2.1)andtointroduceCSRsroleinamarketingcontext(2.2)withafocusonCSRs effectsoncustomerresponses.Basedonthis,CSRinitiatives(2.3)andtherelatedgapin researcharedescribed.Finally,CSRactivitiesareclassifiedintofournewtypeswhose potential effects on customer behavior are discussed (2.4).2.1 Corporate Social Responsibility A DefinitionThemeaningofCSRanditsimplicationsforglobalbusinessisacentraltheme for todays businessworld.ConsultingcompaniesemployexpertsforCSR,theEuropeanCommission issuedaspecialCSRdepartmentandmostcompaniesdevelopCSRstrategiesoratleast publish an annual social responsibility report. Nevertheless, business concern for society is notamodernideabutcanbetracedbackforcenturies.However, it was not always called CSR nor was it always clearly defined, its definition rather developed and changed over time. Theperceptionthatacompanyisanintegralpartofsocietyandhastoacknowledge responsibility towards its stakeholders has been manifested only over the last three decades. The very first beginnings towards this perception of CSR evolved at the beginning of the 20thcenturywhenCSRbecameacrucialtopicinbusinessmagazinesandacademicjournals. Fortunemagazine,forexample,conductedpollswithexecutivesonthetopicofsocial responsibilityofcompaniesalreadyinthe1940s (Carroll, 1999). Academic writing on CSR, however,startedonlyinthe1950s,whereCSRwasratherseenasageneralbusiness concept.CSRthenwasviewedasapureobligationacompanyhastofulfill.HowardR. BowenisdeemedtobetheFatherofCorporateSocialResponsibilityasheinitiated modern literature on CSR (Carroll, 1999). Bowen gave the first formal definition of CSR ever: CSRreferstotheobligationsofbusinessmentopursuethosepolitics,tomakethose decisions, or to follow those lines of action which are desirable in terms of the objectives and values of our society (Bowen, 1953, p.6). Clearly, this definition was rather vague in that it is notobviouswhatthetermssocietyordesirableobjectivesandvaluesincorporate.The understandingofCSRwasextendedinthe1960swheresocialresponsibilitywasseenas LITERATURE REVIEW10responsibilitiesafirmacknowledgesthatextendbeyondlegalandeconomicobligations. Examples would be engaging in politics, welfare of community, education, or employee well-being (Davis, 1967). Exerting social responsibility was seen as voluntary activities that create costtothefirmbutnotnecessarilyeconomicreturns(Walton,1967).Thus,social responsibilitywasnotconsideredasasourceforgeneratingprofit,butasamatterof morality. Still, the main responsibility of a company stayed economic to that time; a company was supposed to produce goods and services and sell them at a profit (Carroll, 1999). This perceptionisrootedinMiltonFriedmansstockholdertheory.HeclaimsthatCSRdoesnot go beyond the obligation towards stockholders, hence that there is one and only one social responsibility of business: to use its resources and engage in activities designed to increase itsprofitssolongasitstayswithintherulesofthegame(wherebyrulesofthegame means obeying the law) (Friedman, 1982, p.133). Parallel to Friedmans stockholder theory a contraryviewonsocialresponsibilitywasdevelopedbysomeacademics.AlreadyJohnson (1971)saidthatafirmisresponsibletosocietyandthattheentitiesincorporatedinthis societyareemployees,suppliers,dealers,localcommunitiesandthenation(p.50).This can be seen as a first approach to the stakeholder theory that was formulated and advanced by Freeman in the 1980s. Freeman described the firm as being responsible for its own well-being and that of its stakeholders, whereby stakeholders are entities and interests that are involved,eithervoluntarilyorinvoluntarily,intheoperationsofthefirm(Postetal.,2002, p.6).(IncontrarytoJohnsonsentitiesofsociety,Freemansstakeholdersalsoinclude customers.) A firm should coordinate the interests of different stakeholders and be guided by them rather than by its own economic interests (Evan and Freeman, 1988). AremarkablestatementbyJohnson(1971)onCSRwasthatitcouldserveasameanto create long-term profit for a corporation. It was the first time CSR was considered as being a potential benefit to a company itself. This thought was pushed further later on: In the 1980s moreandmoreresearchersexaminedtheimplicationsofCSRinpracticeandCSRs meaning for a company and its performance. To that time the consensus on the meaning of CSR was a strong emphasis on the voluntary character and the obligation towards a broad range of stakeholders (employees, suppliers, customers, communities) in congruence with Freemans stakeholder theory. Moreover, the core concepts of CSR began to be recast into alternativeconcepts,theories,modulesorthemes(Carroll,1999,p.284)likecorporate socialresponsiveness,corporatesocialperformance,publicpolicy,businessethics,or stakeholder management. Epstein (1987) argues that these concepts are all linked and even overlapandaresocloselyrelatedthattheypresentthesameprinciples.Duringthese discussions,eventuallythequestionaroseifafirmcanbesociallyresponsibleandatthe sametimeprofitable.Itwasindeedarguedthatsocialproblemscouldbeturnedinto LITERATURE REVIEW11economic opportunities (Carroll, 1999). First of all, this depends on how CSR is perceived. It caneitherbeseenasanethicalstanceorasabusinessstrategy(Wan-Jan,2006).Both perceptions incorporate the importance of shareholders and profitability. However, if CSR is considered as an ethical stance, profit is desirable to be able to exercise social responsibility at all because if the business does not prosper it is not capable of contributing to societys well-being.Thus,CSRisthegoalsetthatcanonlybeachievedbyacertaintool,namely profit.Ontheotherhand,whenCSRisviewedasastrategyandintegratedintooverall businessstrategyitworksasatoolthathelpsreachingacertaingoal,namelygenerating incremental profit (Wan-Jan, 2006). Thus, CSR as a business strategy is by definition able to translateintoprofits.StudiesoverthepastdecadeconfirmedthatCSRhasanimpacton company performance through positively impacting different stakeholders, mostly employees andconsumers.Bronnetal.(2001)confirmthisbysayingthatCSRrequiresinvestments andyieldsmeasurableoutcomes(p.207)andthatCSRcanbeleveragedtoacompetitive advantage.Also managers changed from seeing CSR as the fulfillment of an obligation to considering it asatool.AccordingtomanagerGeorgePohle(IBMGlobalBusinessService)andhis experience from practice, CSR can help generate (new) revenue streams, increase customer loyalty and market share and support development of new products and services. 68% of the executivesinterviewedinastudybytheIBMInstituteforBusinessValuein2008saythat they are using CSR activities to help generate revenue (www.ibm.com). CSR has become so vitalthatitisatopiceveninpoliticsandeconomics.Ithasbecomeunderstoodthat companieshavearesponsibilityinternallyandexternally.TheEuropeanCommission definesCSRasthefollowing:"Aconceptwherebycompaniesintegratesocialand environmentalconcernsintheirbusinessoperationsandintheirinteractionwiththeir stakeholdersonavoluntarybasis"(http://ec.europa.eu).Fromthisdefinitionitcanbe retrievedthatCSRshouldnotbeaseparatedconceptbutbeintegratedintobusiness strategyandintointeractionswith(internalandexternal)stakeholders.Again,thereisan emphasis on the fact that CSR is a voluntary engagement, thus reaching beyond legal and economic constraints and embracing all stakeholders and their needs (http://ec.europa.eu).2.2 CSR in MarketingTherehaslongbeena conflict about what a business purpose is: just generating profit for stockholders or accepting responsibility beyond economic obligations.Accordingly, research on CSR has changed over time. The first stream of research on CSR examined mainly the basicconceptofCSR,howitisdefinedandhowitcanbeappliedwithoutharmingthe company. Later on the perception slowly evolved that CSR is not something a business must LITERATURE REVIEW12do and does not merely create costs, but that CSR has the potential to create a competitive advantage and generate additional revenue. As a consequence, the focus of recent research studieshasbeenmainlyonperformanceoutcomesofCSRanditsimpactsincontextwith differentstakeholders(Carroll,1999).Thissectiongivesashortoverviewofliteratureon CSR with a focus on marketing research. CSR can influence customer behavior, which has positiveconsequencesforthesociallyresponsiblecompany.Thedifferentbehavioral outcomes of CSR and the influences that moderate these outcomes are discussed and form the foundation for the basic assumptions of this study.CSRisappliedinmanybusinessfunctions,suchasqualitymanagement,marketing, communication,finance,humanresourcemanagementandreporting(Marrewijk,2003) thereby focusing on different stakeholders. For instance, CSR in marketing is focusing on the customer,whereasinfinancethefocusisonstockholdersandinhumanresourcesonthe companysemployees.Asaconsequence,researchonCSRbecamemorespecificby starting to concentrate on the particular business functions. CSRs effects and consequences inthecontextofemployeesandtheirperformancewereamongthefirstsubjectstobe studied.OneoftheearliestandmostsignificantstudiesrevealedimplicationsofCSRfor employeeexpectationsandsatisfaction:GavinandMaynard(1975)demonstratedalink betweenemployeeperformanceandacompanyssocialcommitment.Employeeswho perceive a company as behaving socially responsible perceive the company also to be fair. Asthiswouldalsomeanfairrewardsfortheirworkemployeesperceiveasocially responsiblefirmasbeneficialforthemselves,whichinturnleadstosatisfactionwiththeir workandthustomuchhighermotivation.Inconclusion,acompanysCSReffortsleadto benefitsforthecompanyitself,namelytobettercompanyperformancethroughoptimal employeeperformance.Theauthorsalreadyaskifasimilarrelationshipcanbeexpected betweenCSRandcustomers:Withthegrowthofconsumerism,canorganizationsexpect adverse impacts from customers should they fail to meet their social obligations? (Gavin and Maynard,1975,p.386)EventhoughalreadythenacademicsassumedCSRtoimpact customersaswell,researchinthisfieldevolvedmuchlater,namelyinthe1980s.Ofmost interest hereby are the accomplishments in the field of marketing where also the research on CSR- customer relationships is rooted. One of the earlier, vital studies concerning CSR in the contextofmarketingwasconductedbyRobinandReidenbach(1987).Theauthors demonstrate a very limited perspective on CSR as they regard social responsibility mainly as staying within legal constraints and neglect potential benefits. They propose an approach to integratesocialconceptsintomarketingstrategywithouthavingdisadvantagesforthe company.ThepotentialofCSRasaninfluentialmarketing tool or a competitive advantage wasnotconsideredatthatstage.However,theauthorsdoclaimthatthecompanyimage LITERATURE REVIEW13couldbenegativelyimpactedifacompanybehavesunethically.Thus,itisthefirststep towardstheexplorationofthevariousimpactsofCSR,forexamplewithimageasthe transmitter of CSR influencing customers. The authors conclude the article with the questionIs it possible for marketers to behave ethically in a competitive world and both survive and prosper?(RobinandReidenbach,1987,p.56)Theanswerisgiveninthe1990sby numerous studies in the field of marketing. Even though some authors neglect that CSR has an effect on customers and their behavior, the general bottom line of the different research effortsisthatCSRindeedenhancescompanyperformancebyleveragingcustomer satisfaction,loyaltyandattitude,andeventuallyincreasingsales.Forinstance,Creyerand Ross (1997) were one of the first to find that ethical behavior is considered important during purchase decisions. In general, customers do expect ethical corporate behavior. They are on theonehandwillingtorewardethicalbehaviorbypayingapricepremiumandareonthe otherhandwillingtopunishunethicalbehaviorbypayinglowerprices(CreyerandRoss, 1997).Consequently,positiveCSRbenefitsthecompanysinceitcanleadtohigher revenues while unethical behavior harms it as it might force the company to decrease prices. However,theauthorssaythatfurtherinsightsareneededintounderwhichcircumstances customers care about ethics the most. 2.2.1 CSR and customer responsesNumerousstudieshaveattemptedtosolvethisquestionbyexaminingdifferentfacetsof customerbehaviorandtheirrelationshipwithCSR.Thefollowingsubsectionwillgivean overview of the most important findings. Thereby gaps in marketing literature concerning the effectivenessofCSRinitiativeswillbetracedandassumptionswillbedevelopedthatform the basis of this research.2.2.1.1 AttitudeBecker-Olsenetal.(2006)examinedthecircumstancesunderwhichCSRinitiatives embeddedinpromotionspositivelyinfluenceconsumerresponses(beliefs,attitudesand intentions). How a CSR-based promotion is perceived depends on three factors: consumers perceptionofthefitbetweentheproductandthepromotedgoodcause,theperceived corporatemotive(profit-orientedvs.other-oriented)andthetimingofthepromotion (proactivevs.reactive).TheauthorsfoundthatCSR-basedpromotions are only successful when they are not perceived as the reaction to a negative incident in the past (like a natural disasteroracorporatecrisisetc.)andthemotivesofthecompanyarenotperceivedas beingprofit-oriented.Further,theperceivedfitbetweenthegoodcauseandthepromoted producthastobehigh.Thus,CSRinpromotionscanundercertaincircumstancesenhanceattitude.AlsoFolkesandKamins(1999)wereabletoprovealinkbetweenCSR LITERATURE REVIEW14and customer attitude. (Un)ethical behavior of companies influences the forming of customer attitudes,andcustomerattitudeinfluencesthecustomerevaluationofthefirmorproduct. FolkesandKamins(1999)examinehowconsumersareinfluencedbyinformationabout firms ethical behaviors and product attribute information when forming attitudes towards the firm (p.243). Product attribute information plays definitely a larger role in influencing attitudes thaninformationaboutethicalbehavior.Informationaboutethicalbehaviorhasonlyan amplifying effect. If a product is superior customer attitude is enhanced far more towards an ethicallybehavingfirmthantowardsanunethicallybehavingfirm.Ethicalbehaviortakes influenceonproductevaluationandhenceattitudeevenwhentheactionlacksadirect impactonthecustomer(...),whentheunethicalactionislegal(...),[and]whenthereisno overtsocialpressure(p.257).However,ethicalbehaviorthatisperceivedtoberootedin extrinsic motives is not as favorably for the customer as ethical behavior for intrinsic motives. AlsoBhattacharyaandSen(2004)confirmthatcustomersvalueproactivesocialcompany behaviormorethandefensivesocialbehavior.Whenaproductsattributesareinferior though,informationaboutafirmsethicalbehaviorhardlyhasanimpactonproduct evaluation.Ingeneral,virtuousbehaviorisnotasubstituteforproductquality,nordoes superiorquality[totally]compensateforunethicalbehaviorininfluencingattitudestowards thefirm(FolkesandKamins,1999,p.257).Inamarketwhereproductscannotbe distinguished as their attributes are of equal quality, CSR can help to differentiate a product from its competitors since CSR can create a superior customer attitude towards a particular quality product and make it stand out from the mass (Folkes and Kamins, 1999).2.2.1.2 Product and Company EvaluationEarlier Brown and Dacin (1997) also tested CSRs effect on customer company evaluation likeFolkesandKamins(1999)howevernotinthecontextofcustomerattitudebutin conjunction with corporate associations. A consumer has certain associations with a firm and evaluatesthefirmaccordingly.Theseassociationsarebasedonmanyfactors,suchas personal preferences, attitudes, or former experience. By creating certain associations about acompanyatthecustomer,alsoCSRtakesinfluenceonconsumersresponsetoanew product (Brown and Dacin, 1997). Positive CSR associations lead to a positive evaluation of the company and consequently have a positive effect on product evaluation. Negative CSR associations(triggeredbyunethicalcompanybehavior),however,leadtoanegative corporateevaluationandanegativeproductevaluation(BrownandDacin,1997).Both, FolkesandKamins(1999)andBrownandDacin(1997)provethatbygivingthecustomer positiveCSRinformationpositivecustomerbehaviorcanbetriggeredwithpositive associationsaboutthecompanyasatransmitter.However,SenandBhattacharya(2001) found that CSRs impact on company evaluation is only positive if a person highly identifies LITERATURE REVIEW15withacompanyandgenerallysupportsthecompanysCSRdomain.Therebyconsumers companyevaluationsaremoresensitivetonegativeCSRinformationthanpositiveCSR information(p.238).ThissensitivitydependsmainlyoncustomerssupportofaCSR domain.Henceitisstronglyrecommendedthatmanagers(...)researchavarietyofCSR initiativesandselectthosethatenjoythehighestandmostwidespreadsupportamongthe companys key consumer segments (p.238). Sen and Bhattacharya (2001) were among the firsttosaythatnotallCSRinitiativeshaveasuccessfuleffectandthatithastobe investigatedwhichtypesofCSRinitiativesdeliverthedesiredoutput.Overall,marketers need to adopt a strategic perspective in making CSR decisions, aligning their CSR initiatives withnotonlythecompanysoverallstrategicthrustbutalsoitscompetitivepositioningand the positions of key stakeholder groups on alternative CSR issues (p.238).2.2.1.3 Purchase BehaviorOneofthemostcrucialcustomerresponsesforacompanyiscertainlypositivepurchase behaviorsincethispromisescontinuousgenerationofrevenuesandhenceprofits.Creyer andRoss(1997)sayCSRalwaysplaysarole in purchase decisions. They do not mention circumstancesunderwhichthatmightnothold.SenandBhattacharya(2001)putthisin perspective by saying that CSRs impact on purchase intention is only high when customers havehighbeliefsaboutthecompanysCSRdomain.However,thisisnottruewhena customerhastheperceptionthatacompanysCSR activity hurts the quality of the product (e.g. resources are invested in CSR instead in quality control). Also Boulstridge and Carrigan (2000) explored if there exists a link between responsible corporate behavior and purchase decision.Theirrespondentsbelievedthatcompanieshaveasocialresponsibilityandthat those companies who act ethically responsible earn a good reputation but that this does not influencepurchasebehaviorordecisionmakingatall.Purchasebehaviorwasrather influenced by price, cost/value, quality, and brand familiarity, whereas social issues were of very moderate importance. Interestingly, respondents accounted for this by saying that they didnotconsidertheseissuesastheyperceivethemtonotaffectthemdirectly(whichis contrary to the findings of Folkes and Kamins). But what would have been the consequence if the company behavior had concerned issues that customers had felt directly affected by? Sen and Bhattacharya (2001) claim that if a customer personally believes in the CSR domain acompanyisactiveinCSRcanpositivelyinfluencepurchaseintentions.Similarly, BoulstridgeandCarrigan(2000)statethatcorporatesociallyresponsiblebehaviorthat directlyimpactsconsumersmightaffecttheirpurchasingbehaviorbothnegativelyand positivelyandthatfurtherresearchshouldaddresswhichCSRstrategyleadstothemost impactoncustomers.InanotherattempttoclarifywhetherCSRhasbeneficial consequencesforafirmCarriganandAttalla(2001)askedconsumersiftheycaredabout LITERATURE REVIEW16socialresponsibilityandwhetherethicalissuesinfluencedtheirpurchasedecisions.In general,theresultsindicatedlowawarenessofconsumersinsocialissues.Apoorethical record of a company had no effect on purchase intentions, nor did CSR have an influence on purchase decision. Above that, consumers were not willing to boycott products of unethically behavingcompanies.However,whenexploringthereasonsforthistheauthorsfoundthat respondentscaredonlyaboutcertainkindsofsocialissues.Someissues(e.g.dolphins beingkilled)didmattertothemenoughtoaffectpurchase behavior (p.569). Interestingly, youngconsumersseemtofindanimalsmoresympatheticthanpeople,whileother consumer groups may champion different issues (p.571). Respondents stated they would be willingtopayapremiumpriceandactivelysearchforasociallyresponsibleproduced product. This is obviously contradictive to what was said before by the respondents and calls forcloserinvestigationbyfutureresearch.CarriganandAttalla(2001)assumethatonlya CSR-strategythatfitsthefirmstargetmarketencouragespositivecustomerbehavior.Itis importanttoattractconsumerswantingtomakeadifferenceinsocietythroughtheir purchasing(BronnandVrioni,2001,p.208).BasedonCarriganandAttallas(2001)and BoulstridgeandCarrigans(2000)claimthatitdependsonthecharacteristicsofaCSR activity whether purchase behavior is influenced, this study assumes the following:Assumption 1: Not all types of CSR initiatives impact purchase intentions. 2.2.1.4 LoyaltyLoyaltyisadeeplyheldcommitmenttorebuyorrepatronizeapreferredproduct/service consistentlyinthefuture,therebycausingrepetitivesame-brandorsamebrand-set purchasing, despite situational influences and marketing efforts having the potential to cause switching behavior (Oliver, 1999, p.34). As this definition shows, loyalty is not just a matter ofrepeatedpurchasebutalsoofapersonallyheldbeliefaboutabrandorproduct. Researchersdistinguishbetweenbehavioralloyalty(consistentrepurchase)andattitudinal loyalty(apsychologicalcommitmentcombinedwithpositivebeliefs,feelingsandintentions towardstheproduct)(JacobyandChestnut,1978).Behavioralloyaltyincorporates,for instance,repeat-purchasefrequencyorrelativevolumeofpurchasingwhereasattitudinal loyaltyincludessuchfactorsasrepurchaseintentions,intendtorecommendtoothers, likelihoodofswitchingorlikelihoodofbuyingmore(GuptaandZeithaml,2005).Thesetwo loyalty dimensions can appear separately (i.e. someone can just have a loyal attitude or just showaloyalbehavior).Trueloyalty,however,incorporatesboth,consistentattitudesand behaviorsandiscalledintentionalloyalty(Day,1969).Thedriversofloyaltyaremanifold. Oliver (1999) argues that loyalty is driven by a combination of perceived product superiority, personaldeterminismandsocialbonding.Satisfactioncanbeadriver,too,howevereven thoughallloyalcustomersaresatisfied,satisfactioninturndoesnotalwaystranslateinto LITERATURE REVIEW17loyalbehavior(Oliver,1999).Dependingontheloyaltydimensions,thedriversofcourse differ.Behavioralloyalty,forinstance,canalsobedrivenbyacertaindependencyonthe product(e.g.lackofalternatives),whereasattitudinalloyaltyisdrivenbyapositiveattitude andcommitmenttowardsthebrandorproduct(ChaudhuriandHolbrook,2001).Loyalty inducesbeneficialoutcomesforacompany.Loyalcustomersexpresspreferencefora companyoverothers,bycontinuingtopurchasefromitorbyincreasingbusiness with it in the future (Zeithaml et al., 1996, p.34). Loyalty can also translate into engagement in word-of-mouthcommunication(Reichheld,2003).Thus,customerloyaltyisindeedaworthwhile objective,andCSRcanbeextremelyhelpfulinachievingit(Pirschetal.,2007).CSR activities have a positive impact on customer attitude (Becker-Olsen et al., 2006; Folkes and Kamins,1999).Apositiveattitude,inturn,isadriverofloyalty(ChaudhuriandHolbrook, 2001).AlsoBhattacharyaandSen(2004)finda positive relationship between a companys CSR activities and customer loyalty towards this company. However, they see the reason for thisrelationshipinthefactthatsuchloyaltyisanoutcomeoftheconsumer-company identification concept (p.19). In other words, customers buy from a company because they identify with and are convinced of it based on their CSR engagement. A respondent said: If you keep supporting what your customers believe in they keep coming back (Bhattacharya andSen,2004,p.19).Akeyconditionfortheconsumer-companyidentificationisthe customersupportofthesocialissue(BhattacharyaandSen,2004).Proposedly,onlythe CSRinitiativesthatfitthetargetgroupfindcustomerspersonalsupportandcantrigger consumer-company identification. Thus, this study makes the following assumption:Assumption 2: Not all types of CSR initiatives impact loyalty.2.2.1.5 Word of mouth (WOM)There is a general consensus in marketing literature on the fact that WOM has an impact on consumerproductresponse(Keininghametal.,2007).WOMplaysanimportantrolein purchase decisions (Bayus, 1985) and in product judgments (Herr et al. 1991). The drivers of WOMareloyalty(Reichheld,2003)andsatisfaction(Andersonetal.,2004).WOMalso influencesafirmsprofitabilityasitenhancescashflowsbyreducingacquisitioncost,and acceleratescashflowsbyenhancingfastermarketpenetration(Andersonetal.,2004). Reichheld (2003) even says WOM is not just an indicator of profitability but also a measure for growth. WOM can be stimulated by marketing activities (Bayus, 1985). This leads to the thought that also CSR activities might be able to stimulate WOM. Indeed, Bhattacharya and Sen(2004)foundthatWOMisoneofthekeybehavioraloutcomesofpositiveCSR activities(p.20).Intheirstudyevenpeoplewhothemselvesdidnotconsideracompanys CSRactivitiesduringpurchasedecisionrecommendedsociallyresponsiblecompaniesto their friends. Often CSR activities lack influence, as customers do not even know about them LITERATURE REVIEW18(Carrigan and Attalla, 2001). Through WOM, however, the awareness of a companys CSR commitment among customers can be increased. WOM can help creating a basis on which CSRsimpactcanunfold.Inthefaceofdecreasingproductdifferentiationandheightened competition,CSRinitiativesareaninnovativeandless-imitablemeansofstrengthening customer relationships (Bhattacharya and Sen, 2004, p.11) and thus companies should also concentrate on relational outcomes of CSR like WOM. Thereby it is assumed that one driver of WOM in this context is individual identification with an organization and that certain types ofCSRmightenhanceanindividualsidentificationwithanorganizationmorethanothers. Consequently, this study makes the following assumption: Assumption 3: Not all types of CSR initiatives impact word of mouth.2.2.2 Moderating Influences on Customer BehaviorDuringresearchontherelationshipbetweenCSRactivitiesandcustomerbehaviorseveral moderating factors have been discovered that either strengthen or weaken CSRs impact on customer behavior. The most crucial moderators are described below.2.2.2.1 Product Quality and PriceBefore a customer considers a companys CSR activities, price and quality of a product are hisprioritiesduringpurchasedecisions(BoulstridgeandCarrigan,2000).Ifthequality of a product is poor even a convincing CSR-strategy cannot neutralize this negative effect on the customer (Folkes and Kamins, 1999). Further, product quality must not be perceived to suffer from a companys CSR commitment (Sen and Bhattacharya, 2001). The price also has to be appropriate, however, if the CSR activity is extremely appealing to the customer he will even pay a price premium (Creyer and Ross, 1997).2.2.2.2 Skepticism / Perceived SincerityIf customers skepticism is high the positive influence of CSR on customers associations and attitude is undermined. (Bronn and Vrioni, 2001). Thus, firms have to pursue CSR strategies thatareperceivedasbeingauthenticandnotjustasbeingameremarketingstrategyto attractcustomers.ThecorporatemotivethatdrivesacompanysCSRstrategyshouldbe intrinsic(FolkesandKamins,1999)andnotbeprofit-oriented(Becker-Olsenetal.2006). ThenCSRcanalsoenhancecompanyreputation(BronnandVrioni,2001).Yoonetal. (2006)supportthisviewbysayingthattheperceivedsincerity,whichcanbeseenasa closely related construct to skepticism, is deciding for the effectiveness of CSR activities. IfperceivedsincerityishighCSR improves company image, whereas if perceived sincerity is ambiguous CSR has no effect and if the CSR activity appears insincere to the customer CSR even has a detrimental effect on image. Sincerity can be moderated by the reputation of the LITERATURE REVIEW19companyandtheperceivedfitbetweenthecompanyandthesupportedgoodcause (Bhattacharya and Sen, 2004).2.2.2.3 Perceived Fit between Company and Good CauseIfthecustomerperceivesthatthecharacterofthesupportedgoodcauseisinlinewitha companys philosophy and image, literature calls this a high perceived fit. A high perceived fit strengthensCSRspositiveeffecton purchase behavior (Bhattacharyaand Sen, 2004) and on attitude (Becker-Olsen et al. 2006).2.2.2.4 Consumer-Company IdentificationCSRactivitiesarelinkedtoconsumer-companyidentificationintwoways.First,CSR activitiesthatfitwiththetargetcustomerscanenhancecustomer-companyidentification (Bhattacharya and Sen, 2004). If a company chooses CSR activities that are supported by its customers,thesewillidentifywiththecompanysphilosophyandconsequentlyfeel connected to the company. Second, the degree to which a customer can identify himself in general with a company influences CSRs degree of impact on attitudes, intentions (Becker-Olsenetal.2006)wordofmouthandloyalty(BhattacharyaandSen,2004).Themorea customer can identify, the more responsive he is to CSR.2.2.2.5 Personal Support of the Good CauseConsumerssupportoftheCSRissuesemergedasoneofthekeymoderatorsoftheir reactions to a companys CSR efforts; the more supportive the customers were of the CSR issue,themorepositivetheoutcomes(BhattacharyaandSen,2004,p.18).Customers personalsupportmoderatesCSRsimpactonpurchaseintention(SenandBhattacharya, 2001). If a customer is supportive of the CSR domain, his purchase behavior and attitude is positivelyaffected(BhattacharyaandSen,2004)andsoishiswillingnesstopayaprice premium(BhattacharyaandSen,2004;CarriganandAttalla,2001).Themoreacustomer supportsthecompanysCSRdomainthemorehecanidentifywiththecompany(Senand Bhattacharya,2001),whichfinallyleadstoincreasedloyaltyandintentiontorecommend (Bhattacharya and Sen, 2004). Furthermore, the customer will actively search for the socially responsible companys product (Carrigan and Attalla, 2001).2.2.2.6 Perceived Personal AffectBoulstridge and Carrigan (2000) believe that CSR plays a greater role in purchase decisions if customers perceive to be directly affected by the companys CSR activity. LITERATURE REVIEW20Table 1: Overview of the most significant literature concerning CSR and its effects.Author(s) Construct examinedContext Major findingsBecker-Olsen et al.(2006)Attitude CSR-based promotions CSR enhances customer attitude if perceived fit between company and good cause is high, perceived corporate motive is not profit-oriented and timing is proactive.Bhattacharya and Sen (2004)Loyalty CSR and its internal and external outcomesThe positive relationship between CSR and customer loyalty is driven by customer-company-identification and personal support of the good cause.Word of MouthCSR and its internal and external outcomesPositive CSR leads to positive WOM.Customer-company-identification is assumed to be a driver of WOM.Boulstridge and Carrigan(2000)Purchase BehaviorCorporate behavior and its influence on consumersA relationship between CSR and purchase behavior is not found but an effect is assumed if perceived personal affect is high.Bronn and Vrioni(2001)Company imageCSR as a marketing tool The positive relationship between CSR and company reputation is moderated by skepticism.Attitude CSR as a marketing tool Positive CSR leads to positive customer attitudes.Brown and Dacin(1997)Product and Company EvaluationCorporate associations Positive CSR leads to positive corporate associations, which in turn leads to positive product evaluation.Carrigan and Attalla(2001)Purchase BehaviorEffect of good and bad ethical conduct on consumers purchase behaviorCSRs impact on purchase intentions is not proven but it is assumed that CSR has an effect if it fits the target market.Creyer and Ross(1997)Purchase BehaviorConsumers and business ethicsCSR influences purchase decisions. Customers reward ethical and punish unethical behavior.Folkes and Kamins(1997)Attitude Product evaluation Positive CSR leads to positive product evaluation, which in turn leads to positive customer attitude. Pirsch et al.(2007)Customer BehaviorDifferences in CSR programsDepending on the program, CSR has an effect on loyalty, intention to purchase, skepticism, and attitude.Sen and Bhattacharya (2001)Product and Company EvaluationModerating influences on CSR (company and individual specific factors)Customer-company-identification and personal support of the good cause moderate the positive relationship between CSR and product and company evaluation.Purchase BehaviorModerating influences on CSR (company and individual specific factors)Personal support of the good cause moderates the positive relationship between CSR and purchase intention.Yoon et al.(2006)Company imageConsumer perceptions of a companys motives for CSRThe positive relationship between CSR and company reputation is moderated by perceived sincerity.LITERATURE REVIEW212.3 CSR InitiativesSo far, research on different CSR initiatives is very limited. CSR has mainly been used and examined as a holistic approach. However, as previously elaborated, just developing a CSR strategyisnotenough.Atleastnotifcustomerbehaviorissupposedtobeinfluenced. WhethercustomersreactonCSRornotdependsonthetypeofCSRinitiativeemployed (BoulstridgeandCarrigan,2000;CarriganandAttalla,2001;Pirschetal.,2007;Senand Bhattacharya,2001).For a company it is highly desirable that customers react positively to itsCSR-strategyandthealignedCSRinitiatives.Firstofall,becausevaluableresources havebeenemployedtoengageinCSRandsecondbecausepositivecustomerreactions wouldmeandesirableresponseslikepositivebeliefsandattitudes,positiveevaluations, positivepurchasebehavioretc.Alltheseresponsescouldeventuallyenhancecompany performance through more loyal customers, positive word-of-mouth and higher sales. Thus, it is of the utmost importance that future research sheds light on the different effects of different CSRinitiatives.Inordertodoso,thisstudyproposesataxonomyofCSRactivitiesand investigates the impacts of the different types on customers, so that in the future CSR can be used as an adequate tool. There has been just one recent attempt to classify CSR initiatives. Pirsch et al. (2007) argue thatCSRprogramscanfallalongacontinuumbetweentwoendpoints:Institutionalized programsandPromotionalprograms(p.125).Theauthorsexaminetheeffectsofthetwo endpoints and find that they foster different customer responses and that both lower the level of skepticism (which, according to Bronn and Vrioni (2001), moderates the impact of CSR on customers).Sevencategoriesofpossiblesocialoperationsareusedtoevaluatea companys CSR profile (community involvement, corporate governance, employee diversity, overallemployeerelations,environmentalpolicies,humanrightspositions,andproduct evaluation).ACSRprogramisconsideredasinstitutionalizedifithaspolicieswithinallseven categories and as promotional if it concentrates on only few categories. The research results of Pirsch et al. (2007) were that Institutional CSR programs have a greater effect on consumer loyalty, intention to purchase, consumer skepticism (...) and on attitude toward the companythandoPromotionalCSRprograms(p.134).Nevertheless,theused categorization of CSR programs is questionable for several reasons. Just the two extremes ofthecontinuumwerestudied.However,inpracticetherehardlyissomethingasthe institutionalizedprogram.Itisimprobablethatacompanyactuallyfulfilsallcategoriesand evenifitdoesitwouldbedifficulttocommunicatethattothecustomer.Oftencompanies concentrate on specific issues they communicate to their customers (otherwise the customer suffers from an information overload which rather complicates forming an opinion (Carrigan andAttalla,2001)).Second,theauthorsdonotinvestigatewhathappenstoprogramsthat engageinthreeorfourcategories.Whatwouldbetheeffectthen?Abovethat,itisLITERATURE REVIEW22questionableifthesevencategoriesproposedreallycoverallpotentialCSRinitiativesa companycanengagein.Forexample,thereisnocategorywherethefundingofcharity organizations(likeforinstanceAIDSfundsorglobalorganizationsforanimalprotection) wouldfitin.Furthermore,theusedclassificationdoesnotdifferentiateiftheCSRprogram approachesacustomerdirectlyorindirectly.However,thismakesadifferencewhenit comes to purchase intentions: if a customer is directly affected, for example through certain productfeatures,e.g.healthyingredients,hispurchaseintentionisassumedtobehigher than when he is only indirectly affected by a CSR activity (Boulstridge ad Carrigan, 2000). In conclusion,theclassificationofPirschetal.(2007)hasseveralmajordrawbacks.Overall, theirstudydoesnotdeliversufficientresultstosolvetheproblemofwhichCSRinitiatives work best. Thus, further research on this subject is urgently needed. This study attempts to close this gap by classifying CSR initiatives in an innovative way as described below and by subsequently testing their impact on customer behavior.2.4 TaxonomyIn the following, first a short definition of the concept of a taxonomy in general will be given. Afterthat,criteriawillbeintroducedthatdefineagoodtaxonomy.Then,explicitlyforthe studyathand,anewtaxonomywillbedevelopedthatclassifiesCSRactivitiesintofour distinct types. The quality of the taxonomy will be proven by checking its accordance with the criteriadescribedbefore.Subsequently,eachofthefourtypes is introduced and according hypotheses are developed.2.4.1 Taxonomy A DefinitionThetermtaxonomyisoftenusedinterchangeablywiththetermstypologyorclassification. However,bydefinitionslightdifferencesexist.Classificationisageneraltermmeaningthe generalprocessofgroupingentitiesbysimilarity(Bailey,1994,p.4)onthebasisofone (unidimensional)ormorefixeddimensions(multidimensional).Thesedimensionscanbea continuumordichotomized(e.g.thedimensionmotivationcouldbedichotomizedas motivated/unmotivated).Typologyisanothertermforclassification.Comparedtoaclassification,however,atypologyisalwaysmultidimensionalandconceptualandis generally characterized by labels or names in their cells (Bailey, 1994, p.4). Taxonomy has thesamemeaningastypologyandcanbeusedasasynonym.Thereonlyexistsone exception,namelywhenthetermtaxonomyisusedtodescribetheoverallprocedureof developingaclassification.However,inthecontextof this study the term taxonomy stands for the actual classification system and hence has the same meaning as the term typology.LITERATURE REVIEW23Taxonomies are a dominant and elaborated technique in the field of the sciences of biology andchemistrywheretheyemergedfirst.However,theyareextremelyrelevantnotonlyin thesecontextsbutinalmosteveryscientificdisciplineasperhapsthemostimportantand basic step in conducting any form of scientific inquiry involves the ordering, classification, or other grouping of the objects or phenomena under investigation (Carper and Snizek, 1980, p.65). Thus, taxonomies are a relevant method in business research, too. Taxonomies pose numerous advantages as a research tool. For instance, taxonomies include a wide array or even a definitive array of types. Hence, they allow a researcher to ascertain quickly how a particulartypescoresonaparticulardimensionandwhichtypesarecontiguoustoa particulartype(Bailey,1994,p.12).Throughataxonomydatamassescanbecondensed into few types and be made easier to analyze (Bailey, 1994). Also Carper and Snizek (1980) reinforce that a taxonomy would allow large amounts of information (...) to be collapsed into moreconvenientcategoriesthatwouldthenbeeasiertoprocess,storeandcomprehend (p.73). Furthermore, a taxonomy helps to detect similarities. All cases belonging to one type (scoringequallyonthedimensionsdeployed)sharecertainsimilarities.Knowingthishelps analyzingthem.Inthesameway,ataxonomyisusefultodetectdifferences,whichhelps avoidingtreatingtwocasesthesamewaywhentheyareactuallydifferent(belongingto differenttypes)andrequiredifferenttreatment.Ataxonomyallowsfastandeasy comparisons between types and above that allows the inventory and management of types. Thus, it provides researchers with opportunity to locate any case and to know what types are available for research (Bailey, 1994). Onebasicsecrettosuccessfulclassification(...)istheabilitytoascertainthekeyor fundamentalcharacteristicsonwhichtheclassificationistobebased(Bailey,1994,p.2). Thesefundamentalcharacteristicsordimensionsataxonomyisbasedondefinethe characteristicsofthedifferenttypes,i.e.thedifferentcells.Alltypeshavedifferent dimensionalcharacteristics.Empiricalcasescanbeallocatedtoatypebasedonmatching dimensionalcharacteristics.Itisagreatchallengetodefinetherightdimensionsfora taxonomyandfindadequateempiricalcasesforeachcell,astheredoesnotexistany specific method for this. Bailey (1994) argues that it should be relied on prior knowledge and theoreticalguidance(p.2)andthatcareandforesightgenerallyresultinsuccessful typologies (p.16). If the dimensions are well chosen the resulting taxonomy should be able tofulfillthreefundamentalcriteriathatjudgethequalityofataxonomy.Thesecriteriaare comprehensiveness(everycaseneedstobeincluded),mutualexclusivity(eachcasecan, according to the chosen characteristics, only belong to one type) and explicitness (the basis forbuildingthetypologyisclearandtraceable)(Speed,1993).Inordertoevaluatethe qualityofataxonomynexttothethreeclassicalcriteria,Speed(1993)proposedfour LITERATURE REVIEW24additionalcriteria.Firstofall,hereferstomeaningfulnessinthesenseofmanagerial relevanceandresearchexcellence.Second,hesuggeststoevaluateataxonomyonits usefulness, i.e. whether it focuses on an important or a rather trivial concept and on whether it allows the detection of new concepts. With his third criterion, parsimony, he argues that the typeswithinthetaxonomymustnotbetoofewotherwisethegroupsmightnotdiffer significantly enough from each other. Fourth, the taxonomy has to add value to the research. Ataxonomythatfulfillsallcriteriaisunderstoodasbeingaverygoodandreliable classification.2.4.2 The Development of a Taxonomy of CSR ActivitiesA company can translate its social engagement into numerous CSR activities. A CSR activity isaninitiativetakenbyacompanytosupportacertain good cause. In this study, the term CSRactivityincorporatesratherasingletypeofactionsupportingagoodcausethana combinationofactionsorprograms.Forinstance,ifthesupportedgoodcausewouldbe environment protection, the term CSR activity would here not mean all activities a company engages in to support environment protection, but the single action the company undertakes. In other words, buying one square meter of rain forest for every unit sold is a CSR activity for itself,whereasthedonationthesamecompanygiveseveryyeartoWWFtoprotect endangeredareasofrainforestfromuprootingisalsoaCSRactivityforitself.ACSR program, on the other hand, consists of all these single CSR activities.The purpose of the study at hand is to find out which types of CSR activities the ideal CSR program should consist of, whereby the ideal form in this case is the one to which customers aremostresponsive.Therefore,itisnecessarytogetanoverviewofthedifferentCSR activitiesacompanycanemployandtodeterminewhatdifferenttypesofCSRactivities exist.Thedifferenttypesmirrorthedifferentapproachesacompanycantaketosupport socialissues.HavingexaminedexistingCSRactivitiesthatarecurrentlyorwererecently employedbycompaniesintheretailindustry,twofactorsemergedtobeespecially conspicuous. First, looking at the companys role in a CSR activity it can be observed that it iseitheractivelyinvolvedintheCSRactivityasitverymuchconcernsitsowninternal organizational policies (such as employment or manufacturing practices) or that it plays the more passive role of a donator to good causes that go beyond company-related issues (such assupportingcharitiesfinancially).AnexampleforactiveinvolvementwouldbeAmerican Apparel,whoisknownforfairemploymentpolicies.AmericanApparelstillproducesinits homecountryandhencecreatesjobsdomestically.Thecompanypaysitsfactoryworkers aboveindustry-averageandoffersitsemployeesadditionalbenefitslikeprivatehealth insurance(Hendley,2002).HugoBoss,ontheotherhand,isanexampleforpassive engagement.Thecompanyacknowledgesitssocialresponsibilitybyestablishinga LITERATURE REVIEW25partnershipwithUnicefwhereHugoBosssupportstheprojectSchoolsforAfrica (http://group.hugoboss.com).Second,customersareofcoursealwaysapartofaCSR activityaswell,asitisaimedatcustomersandintendedtotriggerpositivereactionsfrom them.However,companiesdifferinhowfartheyinvolvecustomersintheirCSRactivities. Somedonotinvolvethemintheactivityitselfbutonlycommunicatetheactivityandits beneficial consequences to them (as would be the case with companies donating to charities orpayingfactoryworkersaboveaverage).Othercompaniesdirectlyaffectcustomerswith their CSR and make them a part of it. In 2008, for instance, H&M teamed up with some of the worlds most contemporary artists to produce a special Fashion Against AIDS collection where25%ofthesalespricearedonatedtoyouthHIV/AIDSawarenessprojects (http://projects.greatworks.se).SuchaCSRactivitygivesthecustomerthefeelingthathe himselfcandecidewhenandhowmuchtocontributetoagoodcause.Othercompanies involvetheircustomersdirectlybylettingthembenefitfromproductsthathaveahigher quality in terms of environmental friendliness, tolerance, or health benefits. For example, Levi Strauss & Co. engages in environmentally friendly apparel production and thereby also uses organic raw material. What the consumers receive from that in the end are jeans on the basis oforganiccottonandthegoodfeelingofwearingchemical-freefabricontheirskins (www.levistrauss.com). Basedon the examples above functioning as empirical cases, and according to logical and intuitiveconsiderations,twodimensionsfortheCSRactivitytaxonomyhaveevolved:the dimensionofcustomerinvolvement(whichcanbedirectorindirect)andthedimensionof company engagement (which can be firm-internal or firm-external). Inthefollowing,thequalityoftheproposeddimensionsischeckedbasedonthethree classicalcriteria(mutualexclusiveness,comprehensiveness,explicitness)andSpeeds (1993) additional criteria (meaningfulness, usefulness, parsimony, adding of value) described before. This way the quality of the resulting fourfold taxonomy can be guaranteed. First of all, sincethedimensionsaredichotomizedacasecanalwaysjustbeoneofthetwo opposing characteristics, i.e. a CSR activity cannot at the same time affect a consumer in its role as a customerdirectlyandindirectly.Thus,acasecanalwaysjustbelongtoonetype,which guaranteesmutualexclusiveness.Second,allCSRactivitiesnaturallyinvolvethecompany and the customer. The company is, of course, the initiator of its own CSR activities, whereas also the customer is always part of CSR as he is the one to be influenced by these activities. Consequently, as there is no CSR activity that does not involve both parties, the taxonomy is comprehensive.(Inthiscontext,ithastobementionedthatcompaniesandcustomersare not the only parties involved in a CSR activity. Lastly, there is a third party, namely the good cause itself that is also affected. CSR activities can create awareness and enhance peoples generalsupportforthegoodcauseintermsoftime,moneyandwordofmouth LITERATURE REVIEW26(BhattacharyaandSen,2004).However,thesupportedcauseitselfismerelytheaimofa CSR activity and compared to customer and company involvement does not account for theapproachthatshouldbeusedinordertoinfluencecustomerresponse.Duetothis, characteristicsofthesocialissuearenotincludedinthistaxonomy.)Third,thebasisfor buildingthetypologyisclearandtraceablesincethebasisincorporatesasimpleand obvious concept, namely the degree of involvement of the two parties being mainly affected byaCSRactivity.Thismeansthatitalsofulfillsthecriteriaofexplicitness.Inaddition,the dimensionschosenforthistaxonomyofferanothersignificantadvantage.Theyincorporate variables (e.g. degrees of customer and company involvement) that are known and easy to interpretandthatcanbecontrolledanddeterminedbythecompanyitself.Thetaxonomy doesnotincorporatedimensions(suchasperceivedfitbetweencompanyandcauseor customerspersonalsupportofthecause)thatcannotoronlyverydifficultlybecontrolled. ThepresentedclassificationisthefirsttaxonomyofCSRactivitiesinliterature.Itisan essentialbasisofthestudyathandthatinturnwillcloseanimportantgapinmarketing literatureandmightbecomethefoundationforfurtherresearch.Aboveitsacademic contribution, the taxonomy will pose a relevant tool for managers developing a CSR program. Thus,thetaxonomyfulfilsthecriterionofmeaningfulnessinaresearchandamanagerial context. Furthermore, as it will be the basis for testing an innovative model and the according hypotheses,itwillleadtonewinsightsandhencebeataxonomyofhighusefulness. AccordingtoSpeeds(1993)thirdcriterion,parsimony,thetypeswithinthetaxonomymust notbetoofew.Lookingatothertaxonomiesinthefieldofmarketing,fourtypesarea commonlyusedquantityoftypes.Sausenetal.(2002)developedafourfoldtaxonomyof strategicmarketorientation,Sawhneyetal.(2005)usedafourfoldtypologyofweb-based applicationsinthecustomerco-creationprocessandShih(2004)employedafourfold typology of different user types in the context of a use-diffusion model for innovations. Carper and Snizek (1980) examined the most frequently cited taxonomies in the field of organization theory. Thereby they introduced 14 taxonomies (1947-1977) out of which six used four types andfiveevenlessthanfourtypes.Thustheintroducedfourfoldtaxonomyshouldsatisfy Speeds(1993)criterion.Eventually,thetaxonomyalsofulfilsthelastcriterionofadding value to the research. The taxonomy at hand will lay the foundation for a model that will be abletoanswerthequestionposedbymarketingresearchers(i.e.BhattacharyaandSen, 2004;CarriganandAttalla,2001;BoulstridgeandCarrigan,2000;CreyerandRoss,1997) onwhichtypeofCSRactivityismosteffectiveininfluencingcustomerbehaviorandthus shouldbeemployed.Inconclusion,thetaxonomyofCSRactivitiesdoesnotonlyfulfillthe threeclassicalevaluationcriteriabutalsosatisfiesSpeedsadditionalcriteriaandcan consequently be considered of good quality.LITERATURE REVIEW27Figure 1: Taxonomy of CSR Activitiesdi r ectType 1Good Deed For SaleType 2Good Produces GoodCUSTOMER INVOLVEMENTi ndi r ectType 3Distant BenefactorType 4Sustainable On The Insideext er nal i nt er nalCOMPANY ENGAGEMENT2.4.3 The Types of CSR ActivitiesInthissubsection,thefourtypesofCSRactivitiesretrievedfromthenewtaxonomyabove areintroduced.Inchapter2.2.1(CSRandCustomerResponses)assumptionshavebeen madethatnotalltypesofCSRactivitieshavethesameeffectondifferentdesirable customer behaviors, i.e. loyalty, word of mouth and purchase intention. This study proposes that the four different types have a positive impact on these customer behaviors but that the degreeofthisimpactvariesbetweenthefourtypes.Theaccordinghypothesesare developed in the following.2.4.3.1 Good Deed For Sale (Type 1)ACSRactivitybelongingtotype1ischaracterizedbyexternalcompanyengagementbut directcustomerinvolvement.Thismeans,theCSRactivitydoesnotconcerninternal company policies but is related to external institutions, i.e. charity organizations, community work or other social projects. The company is merely a supporter of a charitable project that is initiated or co-created by an external partner. The customer, on the other hand, is directly affectedbytheCSRactivityandisconsequentlyawareofthesupportedcause.Direct involvement means that the product the customer uses is clearly affected by CSR or that the customercanactivelytakepartinaCSRactivity.Thus,inafigurativesensethecompany sellsagooddeedtothecustomer.Anexampleforatype1CSRactivitywouldbea companythatsupportsacharityprojectwithacertainpercentageofitssales,whichgives thecustomertheopportunitytodirectlyimpacttheamountofthedonationthroughthe quantity of units purchased. It is suggested that CSR activities belonging to type 1 influence customer behaviors positively. This assumption is based on two factors. First of all, the fact that the companys engagement is external might signal the customer that the company has a true concern for the supported good cause (Bronn and Vrioni, 2001; Yoon et al., 2006) and LITERATURE REVIEW28gainsnodirectbenefit.Thus,thecustomerfeelsthathedoesnotmerelysupportthe companywithitspurchase,recommendorloyaltyintention,butmostimportantlyrather servesagoodcauseandconsequentlymakesadifferenceforsociety.Thisthoughtmight increasetheconsumersmotivationtoreactuponatype1CSRactivity.Second,the customersdirectinvolvementleadstoincreasedawarenessofthecompanysCSR engagement. High awareness of a CSR activity is the ideal precondition if behavior is to be influenced (Folkes and Kamins, 1999). In more detail, this would mean the following for the customer behaviors in the focus of this study: First of all, when customers are convinced of a companybasedontheinformationtheyhaveaboutit,theybecomeloyal.Thisinformation theyreceivemaywellincludethecompanysCSRengagement.Thus,aconvincingCSR activitycanenhancecustomerloyalty(FolkesandKamins,1999;Pirschetal.,2007), especiallywhenthecustomersawarenessofitishigh.Consequently,thisstudyproposes the following:H1a:CSRActivityType1hasapositiveimpactonloyaltyandthisimpactdiffers from the impacts of the other types of CSR activities.A CSR activity can still lead to the intention to recommend the company to others even if no otherbehaviorisstimulatedatthecustomer(BhattacharyaandSen,2004).CSRactivities enhancewordofmouthespeciallyiftheawarenessatthecustomerishighwhichisthe case as the customer is directly affected by a type 1 CSR activity. Thus, it is proposed:H1b:CSRActivityType1hasapositiveimpact on word of mouth and this impact differs from the impacts of the other types of CSR activities.Further,ifcustomersfeeldirectlyaffectedCSRisassumedtoparticularlyimpactpurchase behavior (Boulstridge and Carrigan, 2000). Thus, it is proposed:H1c:CSRActivityType1hasapositiveimpactonpurchaseintentionandthis impact differs from the impacts of the other types of CSR activities.2.4.3.2 Good Produces Good (Type 2)ACSRactivitybelongingtotype2ischaracterizedbyinternalcompanyengagementand direct customer involvement. Thereby, the company has socially responsible internal policies infieldssuchasemployment,manufacturingorenvironmentpolicies.Thus,thecompany supportsagoodcauseindependentlythroughresponsibleandsustainablemanagement. The customer is directly affected by the companys social engagement in this case mostly throughtheproducts,asactiveparticipationininternalCSRactivitiesisratherrare.The companyhassustainableinternalpoliciesthatcreatesustainableoutputforthecustomer, LITERATURE REVIEW29hence good produces good. An example for a type 2 CSR activity would be a company that engages in environmentally sound production thereby abandoning chemistry. This results in products that are environmentally friendly and are not posing a hazard to customers health. It is assumed that customer behavior is positively influenced by a type 2 CSR activity as the customer is (again) personally affected and the CSR activity is company-internal. Next to the perceptiondescribedbeforethatexternalinvolvementevokesgreatercredibilityand customermotivation,thereisanoppositionaltheory:Externalengagementcouldalsobe perceivedasameremarketingstrategyasithasagreaterpublicityeffect.However,a companythatacknowledgesitssocialresponsibilitywithinitsinternalpoliciesmightbe perceived as motivated by intrinsic motives which is perceived as positive by the customer (FolkesandKamins,1999).Further,thecustomerknowsthatthecompanysproductsare created under CSR aspects that not only benefit the corporate employees or the environment butalsotheproductsandthusthecustomerhimself.Thisthoughtofaclosedchainof sinceresustainability,andofthepersonalbenefitforthecustomermightwakethe customers desire to support such a company. For the focal facets of customer behavior the following propositions are consequently made: As described in the previous section, a CSR