Corporate Social Responsibility: Consumer Behavior, Corporate Strategy, and Public Policy

By Kreng, Victor B.; Huang, May-Yao | Social Behavior and Personality: an international journal, May 2011 | Go to article overview

Corporate Social Responsibility: Consumer Behavior, Corporate Strategy, and Public Policy


Kreng, Victor B., Huang, May-Yao, Social Behavior and Personality: an international journal


Ferrell and Fraedrich (1997) described the development of US corporate ethics as falling into five stages: (1) corporate ethics before the 1960s; (2) social problems faced by corporations, 1960s and 1970s; (3) the emergence of corporate ethics, 1970s and 1980s; (4) the integration period, 1980s and 1990s, and (5) the systematization of ethics, from the 1990s. Since the 1960s, the social expectations of the public with regard to corporations have increased substantially. Carroll (1979) stated that corporate achievement is essential for evaluating a business, and that certain social criteria are also important. Keller (1998) defined corporate image as "the consumers' impression of the corporation itself, corporate product marketing, and the services provided by the corporation". Corporate image is thus the consumers' subjective overall assessment of the corporation. Some marketing experts believe that the role corporations play in the wider society will help build their corporate image. For instance, how a business deals with employees, investors, communities, and others will influence consumer perceptions of it.

Swasy (1990) observed that consumers want not only to understand a firm's product characteristics and marketing activities, but also to know about the corporation itself and their cognition will be built up from different sources of information. Denworth (1989) found that 71% of consumers have a good impression of a corporation if they have access to positive information about it. Corporate image is, thus, one of the elements making up brand name benefit, and, thus, firms seek to influence consumer perception of corporate image. Consumer understanding of what a firm thinks, says, and tends to do in relation to others (i.e., its sense-making process) is also likely to strengthen perception of corporate social responsibility (CSR; Basu & Palazzo, 2008).

Based on the notion of CSR, there is a systematic dynamic cause and effect relationship among consumers, corporate strategies, and public policies. In this article we use the system dynamics approach to clarify these relationships. We also aimed to enable consumers, corporations, and governments to make better decisions based on the perspective of CSR.

CORPORATE SOCIAL RESPONSIBILITY AND CONSUMER BEHAVIORS, CORPORATE STRATEGY, AND PUBLIC POLICY

Lantos (2001) examined the definitions of corporate social responsibility, and concluded that it is a social contract between corporations and society, based on long-term social demands and expectations. Keller (1998) defined CSR image as the consumers' associations arising from corporate activities related to public affairs, literature and arts, social welfare, and so on. CSR is, therefore, differentiated from fulfillment of a firm's core profit-making responsibility and from the social responsibilities of a government (Friedman, 1970).

Basu and Palazzo (2008) proposed three general principles of corporate social responsibility: stakeholder driven, performance driven, and motivation driven. These broader concepts can be reinterpreted as: a) consumer-behavior driven: treating all consumers equally, doing no harm to and being honest with stakeholders; b) corporate-strategy driven: establishment by an enterprise of a system that values a culture of ethics and support, internalizing the external demands into employee qualities; fulfilling missions within the enterprise, and acting as a societal model externally; c) public-policy driven: using resources authorized by societies efficiently, and creating additional value for societies.

CORPORATE PROFIT

Snell, Youndt, and Wright (1996) defined value as the ratio of benefits to costs. Therefore, value may be created and enhanced if costs can be reduced and greater benefits can be delivered to consumers. Human capital can also improve consumer benefits. For example, when knowledge workers improve manufacturing and service processes, they not only reduce the organization's costs, but also improve product reliability and consumer satisfaction (Garvin, 1993). …

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