Management Decision

Emerald Article: Understanding the influence of corporate social responsibility on corporate identity, image, and firm performance Sebastian Arendt, Malte Brettel

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To cite this document: Sebastian Arendt, Malte Brettel, (2010),"Understanding the influence of corporate social responsibility on corporate identity, image, and firm performance", Management Decision, Vol. 48 Iss: 10 pp. 1469 - 1492 Permanent link to this document: http://dx.doi.org/10.1108/00251741011090289 Downloaded on: 16-10-2012 References: This document contains references to 97 other documents Citations: This document has been cited by 17 other documents To copy this document: [email protected]

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Understanding the inuence of corporate social responsibility on corporate identity, image, and rm performance
Sebastian Arendt and Malte Brettel
Center for Entrepreneurship, RWTH Aachen University, Aachen, Germany
Abstract
Purpose The aim of this paper is to examine the effects of corporate social responsibility (CSR) on corporate identity, image and rm performance in a multi-industry setting, in order to support evidence that the effects of CSR differ in different industry settings. Design/methodology/approach The study, based on pre-existing CSR scales, was tested using data collected from a sample of 389 European companies. Hypotheses are based on the examination of the moderating effects of CSR using a group comparison method. Findings Contingency models show that CSR triggers the corporate-image-building process and that its relationship to company success varies signicantly based on company size, industry and marketing budget. Research limitations/implications This research was conducted within a specic region in the EU and as such these ndings may or may not be generalized to other regions like Asia or the USA. In addition, the secondary data of the study did not include stakeholders other than customers and suppliers, suggesting that further analysis of the model should be made using data from additional stakeholders. Practical implications Previous research has shown mixed results from companies efforts in the eld of CSR. This paper triggers practitioners discussion about the ability to pursue CSR, depending on their size, industry, and marketing budget, and helps them to set the right focus for their CSR efforts. Originality/value The study enriches the body of empirical research on CSR and provides support for research investigating under which conditions CSR is most effective. It is the rst to analyze samples from different industries in this context. Keywords Social responsibility, Philanthropy, Corporate identity, Corporate image Paper type Research paper

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1. Introduction With estimated spending on charitable giving reaching $310 billion in the US alone (Giving USA Foundation, 2008), corporate social responsibility (CSR) has become a mainstream topic, rising to a corporate priority in management and marketing (Franklin, 2008). The question of how CSR affects customers and other stakeholders perceptions and how it affects the companys reputation, corporate identity, image, and organizational success has become one of the key topics at the intersection of sustainability and marketing research (Bhattacharya et al., 2009; Sen et al., 2006; Smith, 2003). While the creation of a strong reputation and image has been recognized as an important factor in the success or failure of virtually all major organizations for some time (Worcester, 2009; see special issue of Management Decision 2009 for an overview),

Management Decision Vol. 48 No. 10, 2010 pp. 1469-1492 q Emerald Group Publishing Limited 0025-1747 DOI 10.1108/00251741011090289

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CSR has only recently been acknowledged as one of the most important factors in determining corporate reputation (Worcester, 2009). While a strong corporate reputation can provide a competitive advantage (Balmer, 2009), stakeholders are becoming skeptical about rms reasons for engaging in CSR (Vlachos et al., 2009), making it more difcult for researchers and practitioners to understand the specic consequences and effects of engaging in CSR activities (Maignan and Ralston, 2002). From a stakeholder perspective, CSR can be seen as a support to worthy causes, but it can also be seen as a marketing practice with the purpose of increasing visibility rather than of create social impact (Luo and Bhattacharya, 2006). Stakeholders wonder whether the CSR is really altruistic or just another marketing ploy to increase prots, albeit indirectly. To address these inconclusive perspectives on CSR, we investigate the role of CSR in the corporate-identity-building process of a company, arguing that corporate identity management as an organizational marketing process is more effective in terms of stakeholders perception of corporate image attractiveness and identication when CIM is augmented by strong CSR. This study follows previous research on stakeholder identication (Sen et al., 2006; Bhattacharya et al., 2009) and CSR (Thompson et al., 2010; Lichtenstein et al., 2004) and advances knowledge based on a t-analysis of the specic conditions (i.e. CSR and different industry settings, company sizes, marketing budgets) under which CSR is particularly instrumental to corporate image attractiveness, stakeholder-company identication, and rm performance. While multiple studies draw the link between favorable corporate identity and superior business performance (Margulies, 1977; Brown, 1995; Bharadwaj and Menon, 1993), the unequivocally positive effects of CSR in academic research are at odds with the evidence in the real-world marketplace (Sen et al., 2006; for an overview see Stanwick and Stanwick, 1998). Thus, despite the growing body of literature, there is a paucity of empirical research that examines the effect of CSR on companies corporate image and stakeholder identication, as well as company success (Brown and Dacin, 1997; Sen and Bhattacharya, 2001; Drumwright, 1996). In addition, there remains a signicant gap in the testing and application of the relationship between corporate image, company performance and CSR in multi-industry contexts, such as for companies of different sizes, from different industries, and with different marketing budgets (Dutton et al., 1994; Vlachos et al., 2009). Researchers and practitioners tend to promote the one best CSR approach for a standardized organization, regardless of size, special industry characteristics and marketing budget the last of which is equally important as we go through an expanded period of recession and slow economic growth. Our study expands existing research in three ways: rst, we address the gap in previous research regarding the effects of CSR on the relationships between corporate identity, image, identication, and company success (Chahal and Sharma, 2006; Jahdi and Acikdilli, 2009; Smith, 2003). Second, we answer the call for empirical research by Sen et al. (2006) and Sen and Bhattacharya (2001), for which a clear understanding of CSR in the corporate identity-management process and its impact on company performance is a key prerequisite. Since CSR clearly has the potential to benet the rm in myriad ways, Sen et al. (2006) called for future research [to] investigate the contingent conditions under which these internal outcomes and behavioral intentions may be differentially affected by CSR initiatives (Sen et al., 2006, p. 164). Third, by

including variables such as industry, company size, and marketing spending, this study is the rst to assess CSR and corporate marketing issues in a multi-industry setting, which supports executives need for tailor-made, cost-effective CSR (Warhurst, 2008). 2. Conceptual background 2.1 CSR and marketing CSR is regarded as a means for improving the quality of life or well-being of society (i.e. the philanthropic dimension of CSR, see Carroll, 1991, p. 42) and obeying societys codication of right and wrong (i.e. the legal dimension of CSR, see Carroll, 1991, p. 42). Based on their review of the recent status of the theory of CSR applied to the marketing context, Vaaland et al. (2008) dene CSR as management of stakeholder concern for responsible and irresponsible acts related to environmental, ethical and social phenomena in a way that creates corporate benet (Vaaland et al., 2008, p. 931). Our research follows the more specic conceptualization of CSR by Lichtenstein et al. (2004), who dene CSR as a rms commitment to contributing parts of its prots to nonprot organizations and charitable causes. In marketing research, CSR is seen as a standardized concept that is applied and communicated rigorously across industries and company sizes (Maignan and Ferrell, 2004). However, this broad conceptualization of CSR often breeds public cynicism and suspicion (Porter and Kramer, 2007) with consumers suspecting rms of greenwashing (Reuters, 2008) and questioning rms underlying motives (Ellen et al., 2006). Although some research indicates that communicating about CSR activities does not necessarily reect positively on a company (Sen and Bhattacharya, 2001), others support the approach of cause-related marketing as a means to improve corporate performance and simultaneously help worthy causes based on compassionate grounds (Varadarajan and Menon, 1988). However, adopting such policies requires communication with the stakeholders, not only to convince them that the company is serious about its CSR strategies, but also to ensure that those strategies contribute to the corporate image and brand equity ( Jahdi and Acikdilli, 2009). Since empirical research has found links between CSR and corporate identity, CSR has been included in excellence models impacting company reputation and corporate image (Cornelius et al., 2007). More companies than ever are attempting to leverage CSR associations, with CSR reports lling web pages and brochures (Snider et al., 2003), although, not surprisingly, with mixed success in improving rms reputations and nancial success in the marketplace (Sen et al., 2006). Despite fast-growing research in the eld of CSR and its measurable output on company performance, inconsistencies remain related to how and under which conditions CSR leads to improved performance and competitive advantages (Vlachos et al., 2009; Zairi and Peters, 2002). Table I depicts an overview of current empirical research in the eld of CSR, CIM, and rm performance. 2.2 Corporate identity management A sizable body of research, including research and publications from the eld of visual/graphic design, organizational studies, and marketing addresses the topic of corporate identity, image, and branding of business organizations (for comprehensive literature overviews see Brown et al., 2006). Balmer (2008) discusses ve principal

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Authors Secondary data Field data (consumers) N/A Organizational resources and capabilities Ethics teaching, ethical behavior CSR CSR perceptions New product quality information CSR Consumer perceptions of CSR actions CSR Firm-idiosyncratic risk

Luo and Bhattacharya (2009) Vlachos et al. (2009) Repeat patronage/ recommendation intentions N/A

Worcester (2009)

Corporate responsibility, corporate image Aragon-Correa and Proactive environmental Rubio-Lopez (2007) strategies and org. capabilities Cornelius et al. CSR, CI in business (2007) schools Website content analysis Secondary data Field data (consumers) Field data (MBA students) Secondary data

Luo and Bhattacharya (2006) Lichtenstein et al. (2004)

Sen and Bhattacharya (2001) McWilliams and Siegel (2000)

Table I. Literature overview: empirical research CSR, CIM, and rm performance Methodology Independent Variables Dependent Moderating Advertising, R&D Consumer trust, service quality N/A N/A Proactive corporate environmental strategy, competitive advantage Communication and visual identity, behavior, corporate culture, market conditions Market value N/A Descriptive statistics Secondary data Customer satisfaction, corporate ability N/A Customer donations, corporate benets, C-C identication Purchase intention, company evaluation Corporate social/nancial performance CSR information, CSR support, CSR domain, CSR beliefs Size, risk, industry (continued )

Subject

Corporate social performance and company risk Relationship CSR and consumer actions

CSR and the mediating role of customer satisfaction Consumer reactions to CSR activities

Consumer reactions to CSR activities

CSR and performance

Authors Experimental Business performance Behavioral intentions Levels of institutional actions Corporate citizenship Organizational/personal factors Socially activist investment CSR Size of the rm, level of protability, emission amount CSR Public CSR announcements Economic performance CSR

Subject

Methodology

Independent

Variables Dependent Moderating

Handelman and Arnold (1999) Maignan et al. (1999)

Marketing actions and social dimensions Role of corporate citizenship

Employee commitment, customer loyalty Perceived moral intensity, personal moral philosophies N/A N/A N/A N/A N/A

Singhapakdi et al. (1999)

Teoh et al. (1999) Field data, secondary data Secondary data Field data (consumers) Secondary data

Perceived relevance of CSR to marketing managers Legislative/shareholder pressure on performance Institutional shareholding, company valuation Company reputation index, return on equity Corporate social performance Corporate/product evaluation Abnormal company returns

Field data (marketing executives) Field data (marketing professionals) Secondary data

Karake (1998)

Stanwick and Stanwick (1998)

Brown and Dacin (1997) Posnikoff (1997)

CSR, company reputation index, return on equity Relationship single factors on corporate social performance Consumer reactions to CSR activities Effect of CSR announcements on rms returns

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Table I.

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schools of thought relating to identity and identication which are characterized as corporate identity, communicated corporate identication, stakeholder corporate identication, stakeholder cultural identication, and envisioned identities and identications. Corporate identity deals with the impressions, image, and personality that an organization presents to its stakeholders (Schmitt and Pan, 1994), in order to differentiate itself and create a unique position in the environment in which it operates (Simoes and Dibb, 2008). The objective of corporate identity management (CIM) is to establish a favorable reputation with an organizations stakeholders, which the stakeholders then translate into a propensity to buy the organizations product or services, to work for the organization or to invest in it (Balmer, 1995; van Riel, 1995). While the identity of a company may vary across stakeholder groups, Simoes et al. (2005) suggest that there is a common internal platform for identity management that reects consistent messages about the organization so that a reputable corporate image is transmitted across audiences. Since the notion of corporate identity is linked to a range of related concepts that we refer to as external determinants of corporate image such as reputation and branding, for our purpose CIM comprises the internal efforts by which a company works to identify itself (Kotler, 1997). 2.3 External corporate image and stakeholder identication While CIM focuses on the aspects of how a rm manages its identity, managers and academics are also concerned with how external stakeholders view the corporation, variously dened in the theoretical literature as corporate associations (Ellen et al., 2006), corporate identication (Bhattacharya and Sen, 2003), corporate brand (Ind, 2000), corporate reputation (Weiss et al., 1999), and corporate image (Zinkhan et al., 2001). Based on an organizations unique characteristics (Esch et al., 2004), the corporate image or brand is the net result of all experiences, impressions, beliefs, feelings, and knowledge that people have acquired related to a company (Worcester, 2009). We dene corporate image attractiveness as the attractiveness of the corporate image as perceived by its various audiences (Bhattacharya and Sen, 2003) and stakeholder-company identication as the degree to which stakeholders feel a sense of connection to a company (Einwiller, 2006). We chose a CIM model based on Simoes et al. (2005) and Balmer (2008) as part of our theoretical framework. An internally controlled reputation-building process is a prerequisite for acquiring a favorable corporate image (Fombrun, 1996; Simoes and Dibb, 2008). Therefore, drawing on the CIM model, we argue that an internally controlled and managed corporate identity directly affects corporate image attractiveness and stakeholder-identication, and thus stakeholders perceptions of the corporation. 3. Derivation of hypotheses Despite the apparent potential of CSR to drive company-favoring outcomes, like improved corporate image attractiveness, stakeholder-company identication, or performance, the impact of CSR is anything but guaranteed. According to Bhattacharya et al. (2009):
It is becoming increasingly clear that in order to explain and predict the outcomes of CSR activity with any degree of certainty, we need a more precise understanding of the underlying processes that drive those returns (Bhattacharya et al., 2009, p. 258).

Extant theory premises indicate that CSR may serve as a moderator of the link between performance driver and performance outcome (Vlachos et al., 2009; e.g. Handelman and Arnold, 1999) and that corporate image affects organizational performance (Fombrun and Shanley, 1990) in terms of increased customer loyalty and consumption (Bhattacharya and Sen, 2003). Table II depicts an overview of the current stage of empirical research in this eld. There is also evidence to support the notion that a corporate reputation that is perceived as attractive by its stakeholders gives an organization a competitive advantage (for an overview see van Riel and Balmer, 1997). Therefore, our overall premise is that, in a multi-industry sample[1], CSR has a positive impact on corporate identity initiatives and their effect on the corporate image attractiveness and stakeholder-company identication, supporting the current state of marketing research (Neville et al., 2005). Figure 1 summarizes our complete research model. Based on the mixed results of performance-driver and performanceoutcome-relationship in the eld of CSR stated above, we hypothesize that in a multi-industry sample, CSR initiatives have a positive moderating effect on the relationships of CIM to corporate image attractiveness and stakeholder-company identication, but no impact on the company success measures of performance or competitive advantage: H1a. CSR initiatives have a positive moderating effect on the relationships of CIM to corporate image attractiveness and stakeholder-company identication. While there is vast agreement on the positive effects of CSR on image and identication, positive effects of CSR on nancial performance in academic research are somewhat at odds with the evidence in the real-world marketplace (Sen et al., 2006; for an overview see Stanwick and Stanwick, 1998). We therefore follow: H1b. CSR initiatives have no impact on company success measures. We rene H1 by arguing that the moderating results of CSR must be assessed in terms of different industry settings, company sizes, and marketing budgets in order to explore how CSRs effects on image, identication, and performance differs based on these categories. Studies of corporate identity signify the important role that the nature of the industry plays in shaping an organizations identity (Melewar and Jenkins, 2002), because the ability to promote a corporate identity differs across industries (Alessandri and Alessandri, 2004). This is also true for CSR activities, where research shows that the service sector tends to show more positive effects from CSR activities (Calabrese and Lancioni, 2008), than product-based industries do (Jackson and Parsa, 2009). Thus, we hypothesize that the strengthening effects of CSR on CIM and the corporate image and their effect on company success differ based on the organization is product- or service-based: H2. CSR initiatives have a stronger positive impact on CIM and company success in service rather than product-based industries. Brand management ndings also reveal signicant differences between small and large organizations along nine out of ten brand management and identity dimensions (Berthon et al., 2008). Furthermore, in the eld of business ethics, researchers acknowledge that the CSR programs of other company types are not properly

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Indicator loadings and construct reliability for reective constructs Construct: MVD Mission and value dissemination (based on Simoes et al., 2005) There is total agreement on our mission across all levels and business areas All employees are committed to achieving the companys goals There is a clear concept of who we are and where we are going Companys values and mission are regularly communicated to employees Employees view themselves as partners in charting the direction of the company We do have a well-dened mission Managers periodically discuss corporate mission and values All employees are aware of the relevant values Cronbachs Alpha AVE Construct: CII Consistent image implementation (based on Simoes et al., 2005) Our company name is part of our image Our corporate symbols (logo, slogan, colors/visual style, signage) are constituents of our image Much of our marketing is geared to projecting a specic image Our employees and staff understand symbols (or visual branding) of our company Employees are dressed in a manner to project the company image Merchandising and brochures are an important part of our company marketing Cronbachs Alpha AVE Construct: VII Visual identity implementation (based on Simoes et al., 2005) Our company name is part of our image Our corporate symbols are constituents of our image Much of our marketing is geared to projecting a specic image Our employees and staff understand symbols (or visual branding) of our company Cronbachs Alpha AVE Construct: corporate image attractiveness (based on Bhattacharya et al., 2003) I like what company x stands for, Company x has an attractive identity I recognize myself in company x, My sense of who I am matches my sense of company x Company x has a distinctive identity, Company x stands out from its competitors Company x is a rst-class, high-quality company I feel like I know very well what this company stands for Its difcult to get a clear sense of what this company stands for from its actions Cronbachs Alpha AVE Construct: stakeholder company identication (based on Bhattacharya et al., 2003) I think about the company x often My interactions with company x make me an important player in the organization I am loyal to the products company x makes I often talk favorably about company x and its products to my friends and colleagues I try to get my friends and family to buy company xs products I forgive company x when it makes mistakes I feel I have a right to tell company x what it should do Cronbachs Alpha AVE

Loading 0.73 0.65 0.79 0.80 0.61 0.80 0.69 0.81 0.91 0.60 0.57 0.62 0.68 0.74 0.66 0.60 0.81 0.53 0.62 0.76 0.90 0.69 0.81 0.65 0.74 0.73 0.60 0.83 0.78 0.52 0.87 0.59 0.69 0.50 0.64 0.80 0.82 0.82 0.71 0.84 0.51 (continued )

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Table II. Measurement scales

Indicator loadings and construct reliability for reective constructs Construct: Performance (based on Brettel 2005) In the last three years, in comparison with our most important competitors, we are satised with . . . . . . the achieved customer satisfaction . . . the value enhancement for our customers . . . with the level of customer loyalty . . . with the number of new customers . . . with the growth of our company . . . with the success of our products and services . . . with the forecast of operating results in the next couple of years Cronbachs Alpha AVE Construct: competitive advantage (based on Brettel, 2005) We have strategic advantages in comparison with our competitors We have a high market share Our EBIT is higher than the industry average Our ROI is higher than the industry average Our average operating margin is higher than the industry average We are in total more successful than the competition Cronbachs Alpha AVE Construct: corporate social responsibility (based on Lichtenstein 2004) Company x is committed to using a portion of its prots to help nonprots Company x gives back to the communities in which it does business Company x integrates charitable contributions into its business activities Company x is involved in corporate giving Cronbachs Alpha AVE

Loading

Corporate social responsibility

0.76 0.70 0.71 0.70 0.64 0.71 0.73 0.86 0.58 0.30 0.50 0.93 0.95 0.96 0.73 0.89 0.64 0.71 0.76 0.77 0.73 0.84 0.66

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Table II.

benchmarked against those of large multinational rms (Spence and Rutherfoord, 2003). Small rms are likely to be owner managed, which provides greater scope for individual beliefs and moral decision-making than larger rms are likely to demonstrate. For most small and medium enterprises (SMEs), CSR is a norm to act upon rather than a corporate strategy based on tools, programs, and initiatives (Spence and Rutherfoord, 2003). Studies that are focused on CSR and sustainability issues, cannot generalize their ndings to both large and small rms, since they tend to underestimate the differences in the relationships smaller companies have with stakeholders from those of larger organizations (Fassin, 2008; Graaand et al., 2003; Jenkins, 2009). Therefore, we hypothesize, that the strengthening effects of CSR on CIM and the corporate image and their effect on company success differ based on whether the organization size is large or small: H3. CSR initiatives have a stronger positive impact on CIM and company success in smaller rather than in larger rms. In addition to the effects of organizational size and industry type, the size of the corporate marketing budget is central to questions related to the strengthening effects

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Figure 1. Overview of the research model

of CSR on CIM and its effect on corporate image attractiveness, stakeholder-company identication, and performance. The literature shows signicant moderating effects of nancial resources on the effectiveness of corporate communications effectiveness and corporate identity (Dolphin, 2003). The nancial resources available for marketing can substantially inuence a rms corporate identity activities and may act as a moderator between the corporate identity and corporate brand relationships (Alessandri and Alessandri, 2004). Firms with excess resources are more likely to invest them in marketing (Shoham and Feigenbaum, 1999) and marketing is often the rst line that a nancially strapped rm cuts. Therefore, CSR efforts may be considered a luxury such that only nancially robust companies see themselves as able to afford them. This reasoning suggests that in a rm with limited nancial resources, CSR as an investment may act as a moderator in strengthening the effects of CIM initiatives and its outcomes. Therefore, we hypothesize that CSR also strengthens the impact of CIM on the corporate image and its effect on company success, when the corporate marketing budget is rather small than large: H4. CSR initiatives have a stronger positive impact on CIM and company success for smaller rather than larger corporate marketing budgets. 4. Methodology 4.1 Sampling frame and data collection procedure The studys hypotheses were tested using data collected from a survey of 4,000 companies that are members of the German and Austrian Chamber for Industry and Commerce. We collected information from an online and ofine questionnaire that was sent to the CEOs of the corresponding companies because of their overview of the corporate identity and CSR decisions as well as the success measures. Between August and October 2009, we received 381 qualied answers. The sample comprises a good ratio between business-to-business and business-to-consumer rms with a mixed

industry background in product- and service-based industries (see Table III for a detailed composition of our sample). The development of the survey instrument started with in-depth face-to-face interviews with marketing experts in large and medium sized enterprises. This phase involved semi-structured discussions that were largely exploratory in nature and designed to supplement the existing literature in constructing the draft questionnaire. We then asked a group of academics to review the draft questionnaire to identify questions for which there was a source of possible bias. Through this feedback, we eliminated or modied some of the initial survey items, and added others to the revised instrument. Figure 2 summarizes the empirical research process used. 4.2 Tests for potential biases A comparison of differences in the mean values of the responding and non-responding companies based on sales revenues, company age, number of employees, and performance did not reveal any signicant non-response bias. The sample consisted of respondents who were likely to be knowledgeable about the issues under study, since 69 percent of respondents were managing directors, 21 percent were senior executives, and 10 percent marketing managers or other. For the dependent variables of corporate image attractiveness and stakeholder-company identication, multiple informants have been used (Kumar et al., 1993). We collected customer and supplier surveys at 80 of the 381 companies to check the validity of external corporate image attractiveness
% Firm size (number of employees) ,5 5-25 25-50 50-100 100-300 300-500 . 500 Industry Production Service Corporate marketing spend (% of sales) ,1 1-2 3-5 5-10 10-15 15-30 . 30 Position of respondents Managing director Senior management Other 11 30 21 16 13 4 5 45 55 7 28 14 24 15 9 3 69 21 10

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Table III. Composition of sample

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Figure 2. Empirical research process

and stakeholder-company identication; T-tests on these constructs showed that there is no signicant difference at the 0.05 level between the responses from corporate CEOs and those from customers and suppliers. For the inner aspects of corporate identity, we relied on data from a single survey respondent from each company, so we took special steps in the design of our questionnaire to minimize the possibility of common method variance (Podsakoff et al., 2003). First, we used multiple-item scales to measure our constructs and scattered questions pertaining to the independent and dependent variables throughout the questionnaire. Second, we conducted Harmans single-factor test and found that no single factor or a general factor accounted for the majority of the variance in the measures (Podsakoff and Organ, 1986). Third, we analyzed the effects of a single unmeasured latent method factor added to our measurement model by loading all items originating from the same informant onto both the method variable and its respective latent variable (Podsakoff et al., 2003). We then compared the

standardized parameter estimates with and without the method variable and found that the signicance of the substantive relationship was not affected. According to our results, common method bias is not a concern. 4.3 Measures We followed Churchill (1979) in developing our measurement instrument based on established reective constructs whenever possible and used seven-point Likert scales. CSR, as a moderating construct, following Lichtenstein et al. (2004). The second-order construct of CIM follows the guidelines of organizational and marketing research, including ideas from graphic design (visual identity implementation), organizational studies (mission and value dissemination), and marketing perspectives (consistent image implementation) (Simoes et al., 2005). To measure the companies image attractiveness and stakeholder-company identity, we drew on the items of Bhattacharya and Sen (2003), condensing them into two separate reective constructs. Therefore, corporate image attractiveness depends on how similar the rm is to stakeholders own identity (identity similarity), its differentiation from its competitors (identity distinctiveness), its prestige (item identity prestige), its attractiveness as an identity per se (item identity attractiveness), the perception related to how well the companys identity is known, and the rms overall t (item identity knowledge and identity coherence). Similarly, stakeholders are more likely to perceive a companys image as attractive when they perceive it to be trustworthy (item identity trustworthiness). A comprehensive analysis of consumer-company identication, focusing on its constituents and consequences, served as a template for the reective measurement of stakeholder-company identication that highlighted the items of embeddedness, salience, product loyalty, company promotion, customer recruitment, resilience to negative information, and a strong claim on the company. Company success is a complex and multidimensional construct that is difcult to assess (Dess and Robinson, 1984). Therefore, we decided to measure rm success as both rm performance and competitive advantage so we could show the effects of corporate image attractiveness and stakeholder-company identication on company success more specically. Firm performance was measured using six items related to the respondents impression of company success relative to its largest competitors (a subjective performance measure, see Brettel et al., 2005, based on Pelham (1999) and et al. (1993)), while the construct of competitive advantage builds on Deshpande Schilke, 2007). The interpretation of subjective, relative performance data is easier and more accurate across diverse context factors, such as across industries (Covin and Slevin, 1989), and several studies illustrate the high correlation between subjective and objective performance indicators (e.g. Chandler and Hanks, 1993; Dess and Robinson, 1984). Table II displays the measurement scales described above. 4.4 Estimation approach For data analysis we chose structural equation modeling (SEM, Fornell and Bookstein, 1982), specically AMOS 17.0, an implementation of a covariance-based approach, since it clearly outperforms variance-based approaches in terms of parameter consistency and accuracy and enables us to assess the overall model quality (Reinartz reskog, 1973, 1979). We examined the moderating effects of CSR using a et al., 2009; Jo

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group comparison approach and estimated a SEM for each group and then tested the differences in path coefcients for signicance that would suggest the presence of a moderating effect. 5. Results 5.1 Evaluation of measurement results We assessed the reliability and validity of the measurement model using calculations of Cronbachs alpha (threshold 0.7) between 0.81 and 0.91 and AVE (threshold 0.5) between 0.51 and 0.66 (see Table IV for the correlations and summary statistics), indicating satisfactory reliability on the construct level (DeVellis, 2003). Complementing the expert interviews, we analyzed the discriminant validity for items and constructs and found that it exists on the construct level, since every construct shares more variance with its measures than with other constructs, and on the item level, since all items share more variance with their own constructs than with any other construct. The model quality assessment indicates a very good t of the model. Results reveal a chi-square/df value of 2.046, CFI of 0.900, TLI of 0.894, SRMR of 0.070 and an RMSEA of 0.052 (Hu et al., 1992; Hu, 1999). Based on this result, we proceed with hypothesis testing. 5.2 Structural model and moderation analyses For the multi-industry sample, the individual path estimates show mixed results for H1. H1a is not accepted since CSR activities have a strengthening moderating effect on the relationship between CIM and corporate image attractiveness but not on the relationship between CIM and company-stakeholder identication. H1b is accepted since there is no strengthening CSR effect on the link between CIM and company success measures. In a multi-industry sample, CSR strengthens the effect of CIM on corporate image attractiveness without showing an ongoing effect on company performance or companys competitive advantage. This result underscores the current state of marketing research, which is turning to the notion of corporate reputation as
Correlations 5

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Variables 1. 2. 3. 4. 5. 6. 7. 8. 9. MVB CII VII CIM CIA SCI Perf. Comp. Adv. CSR

1 0.78 0.63 0.01 0.05 2 0.01 0.13 0.19 0.22 0.22 5.2 1.2

2 0.73 0.03 0.08 0.01 0.10 0.16 0.22 0.14 5.4 1.1

0.81 0.36 0.37 0.08 0.07 0.20 0.24 5.7 1.2

0.62 0.19 0.11 0.23 0.29 0.25 NA NA

0.77 0.36 0.20 0.24 0.15 5.8 0.8

0.71 0.47 0.61 0.18 4.6 1.1

0.76 0.5 0.24 5.2 1.0

0.80 0.25 4.6 1.2

0.81 3.8 1.7

Table IV. Correlations and summary statistics

Summary statistics M SD

Note: Square root of average variance extracted (AVE) specied on diagonal in italic and correlations on off-diagonal

the vehicle through which socially responsible initiatives prove to be worthwhile for businesses (Neville et al., 2005). A positive reputation affects customers buying intentions and, in the context of CSR, positive reputation results in marginally higher price-earning ratios (Little and Little, 2000). Table IV depicts the results for the more ne-grained group comparisons. The overall sample was grouped into three subsamples according to the organizations size, its industry focus, and corporate marketing budget. After we conducted median-splits, these samples were again grouped into two subsamples, one with high CSR engagement and one with low CSR engagement. Looking into different industries, ndings support H2 and the different effects of CSR for product- and service-based companies. In the service industry, CSR strengthens the impact of stakeholder-company identication on performance, whereas in product-based industries, CSR strengthens the effect of corporate image attractiveness on competitive advantage. This means that CSR affects companies success in both types of industry, via increased image attractiveness (product-based industries) or stakeholder-company identication (service-based industries). As for the moderating aspect of company size, ndings are in agreement with H3. For smaller companies, CSR strengthens the effect of stakeholder-company on competitive advantage, and for larger companies CSR strengthens the impact of CIM on corporate image attractiveness and stakeholder-company identication, but does not affect the companys success measures. While CSR seems to have no effect in the case of high marketing budgets, ndings are in line with H4 in the case of low marketing budgets. As a moderator, CSR supports CIM and its effect on stakeholder-company identication so it can help companies with tighter marketing budgets increase marketing success. By contrast, organizations with larger marketing budgets should not focus on CSR to achieve marketing goals (Barone et al., 2000), but only as a means to long-run sustainability (Porter and Kramer, 2007). The results of hypothesis testing are presented in Table V. 6. Discussion 6.1 Theoretical implications Our work extends both the research stream on CIM in general and research on the role of CSR at the interface of marketing and rm performance in particular. More precisely, we underscore the relevance of CIM in achieving high levels of corporate image attractiveness, thereby showing CIMs ability to generate a competitive advantage and increase overall company performance. This study adds to the understanding of how and when CSR affects corporate image attractiveness, company-stakeholder identication and organizational success by showing that CSR effects on the relationship between CIM, external image and identity, and rm performance differ based on rm size, industry, and marketing budgets which seem to function as boundary conditions of the moderation effect. Our results reveal that the simple moderation effect (in a generalized industry sample) is signicant for the link between CIM and image attractiveness, which supports the current state of sustainability marketing research; however, once special industry settings are introduced to the framework, CSR tends to strengthen only some links to performance measures for small and large organizations, product and service organizations, and organizations with high and low marketing budgets. As such, the key contribution of

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Hypotheses Path Results of hypothesis testing H1: CSR as moderator H1a Corporate identity management ! Corporate image attractiveness Corporate identity management ! Stakeholdercompany-identication H1b Corporate image attractiveness ! performance Corporate image attractiveness ! Competitive advantage Stakeholder-company identication ! Performance Stakeholder-company identication ! Competitive advantage

Path coefcients CSR high CSR low Difference

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0.423 * * * 0.171 * * * 0.512 * * * 0.212 * * * 0.559 * * * 0.420 * * *

0.252 * 0.300 0.139

0.024 0.468 * * * 0.444 * * * 0.291 * * * 0.309 * * * 2 0.018 0.135 0.267 * * * 2 0.132

Table V. CSR and size, industry, marketing spend as moderators

Results of hypotheses testing H2-H4: comparison of size, industry, marketing spend samples with CSR as moderator Product industry H2 Corporate identity management ! Corporate image attractiveness 0.360 * * * 0.423 * * * 2 0.063 Corporate identity management ! Stakeholdercompany-identication 0.357 * * * 0.396 * * * 2 0.039 0.141 Corporate image attractiveness ! performance 0.596 * * * 0.455 * * * Corporate image attractiveness ! Competitive 0.134 * * advantage 0.802 * * * 0.668 * * * Stakeholder-company identication ! Performance 0.139 * * * 0.148 * * * 2 0.009 Stakeholder-company identication ! Competitive advantage 0.067 0.056 0.011 Service industry H2 Corporate identity management ! Corporate image 0.050 attractiveness 0.370 * * * 0.320 * * * Corporate identity management ! Stakeholder0.177 company-identication 0.318 * * * 0.141 0.042 Corporate image attractiveness ! performance 0.845 * * * 0.803 * * * Corporate image attractiveness ! Competitive advantage 0.083 0.020 0.063 0.286 * * Stakeholder-company identication ! Performance 0.650 * * * 0.364 * * * Stakeholder-company identication ! Competitive advantage 0.397 * * * 0.478 * * * 2 0.081 Small company size H3 Corporate identity management ! Corporate image attractiveness 0.422 * * * 0.483 * * * 2 0.061 Corporate identity management ! Stakeholder0.014 company-identication 0.362 * * * 0.348 * * * 0.077 Corporate image attractiveness ! performance 0.801 * * * 0.724 * * * Corporate image attractiveness ! Competitive advantage 0.490 * * * 0.746 * * * 2 0.256 Stakeholder-company identication ! Performance 0.206 * * * 0.300 * * * 2 0.94 Stakeholder-company identication ! Competitive 0.613 * * advantage 0.623 * * * 0.010 (continued )

Hypotheses Path Large company size H3 Corporate identity management ! Corporate image attractiveness Corporate identity management ! Stakeholdercompany-identication Corporate image attractiveness ! performance Corporate image attractiveness ! Competitive advantage Stakeholder-company identication ! Performance Stakeholder-company identication ! Competitive advantage Low marketing spend H4 Corporate identity management ! Corporate image attractiveness Corporate identity management ! Stakeholdercompany-identication Corporate image attractiveness ! performance Corporate image attractiveness ! Competitive advantage Stakeholder-company identication ! Performance Stakeholder-company identication ! Competitive advantage High marketing spend H4 Corporate identity management ! Corporate image attractiveness Corporate identity management ! Stakeholdercompany-identication Corporate image attractiveness ! performance Corporate image attractiveness ! Competitive advantage Stakeholder-company identication ! Performance Stakeholder-company identication ! Competitive advantage Notes: *p , 0.05; * *p , 0.01; * * *p , 0.001

Path coefcients CSR high CSR low Difference

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0.464 * * * 0.191 * * * 0.290 * * * 0.132 * * * 0.922 * * * 0.728 * * * 0.175 0.005 0.111

0.273 * * 0.158 * * 0.194

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0.545 * * * 2 0.370 0.350 * * * 2 0.345 0.046 0.065

0.338 * * * 0.268 * * * 0.305 * * * 0.104 0.725 * * * 0.641 * * *

0.070 0.201 * * 0.084

2 0.076 0.357 * * * 0.433 0.116 * * * 0.220 * * * 2 0.104 0.301 * * * 0.471 * * * 2 0.0170 0.337 * * * 0.465 * * * 2 0.128 0.351 * * * 0.498 * * * 2 0.147 0.085 0.778 * * * 0.693 * * * 0.161 0.337 * * * 0.176 0.098 0.179 * * * 2 0.081 0.302 * * * 0.182 0.120 Table V.

our work is the identication of industry and marketing characteristics that alter the effect of CSR as a facilitator of the direct links described above. 6.2 Managerial implications CSR is extremely useful in corporate identity-building because of its ability to facilitate corporate image attractiveness and thereby increase competitive advantage and overall company performance. Counter to recent anecdotal evidence from top management in the US and Europe, results from our empirical study show that the strengthening effect of CSR activities fosters signicantly different outcomes in different industry settings, company sizes and marketing budgets. CEOs and

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marketing managers should recognize that the outcome of CSR investments are dependent on the respective industry and organizational setting they are facing. The implications are that organizations in certain settings will be engaging more actively in CSR and ethical programs to ensure effectiveness of their CIM efforts. Larger, product based companys should keep in mind that CSR will help them to increase their image attractiveness, and as such are able to endorse image-building marketing activities. For smaller and especially service-based companies, CSR underpins the identication of stakeholders with the respective company. As such, marketing managers can facilitate CSR activities in order to engage closer with important stakeholders, such as customers. These ndings tend to support current management advice in the eld of the service industry, where CSR initiatives should not be used as a tool solely to improve the brand equity rather than to improve relationships with main stakeholders, since a boomerang effect is produced whereby the stakeholders pinpoint the CSR initiatives as one of the main reasons for their discontent with the service company (Calabrese and Lancioni, 2008, p. 107). For SMEs, stakeholders are often embedded within the companys social capital (Perrini, 2006). CSR thus proves to be as much or even more important for smaller companies, not as a mean of cause-related marketing but as a way of generating a competitive advantage in the marketplace. Regarding the size of the corporate marketing budget, CSR seems to especially support the effectiveness of smaller available budgets. In lean times, marketers have to make the most of limited resources (Halsall and Singer, 2003). As we go through the current expanded period of recession and slow economic growth, organizations must learn to do more with less. In the eld of marketing this means working with signicantly lower corporate marketing and branding budgets (CMO Council, 2009). CSR approaches function well in small corporate marketing budgets, so managers can restructure their marketing spending without diminishing their corporate brands presence for key stakeholders. 7. Limitations and avenues for further research The present research should be evaluated in light of its limitations, which point to potential avenues for future research: rst, given the nature of inuence mechanisms, other variables should be considered as boundary conditions of the link and inuences of CSR and marketing. Previous research on CSR has pointed out that corporations need to distinguish among ethical, altruistic and strategic forms of CSR (Lantos, 2001); for example, ethical CSR, grounded in the concept of ethical duties and responsibilities of a company, is rather mandatory and therefore might not increase corporate image attractiveness and identication signicantly. Second, since the present study focuses on the stakeholder view of the corporation, the next logical step may be to investigate differences and similarities of CSR effectiveness in various stakeholder groups such as investors and employees, to examine the specic relations between CSR approaches and stakeholder reactions (Bhattacharya et al., 2009). Third, the literature indicates that there are likely to be differences between the self-perception of company identity by the CEO and marketing managers compared to the views of their major stakeholders. Future studies could investigate how CSR and its effects are perceived by the company itself compared to the view of external stakeholders.

The purpose of this research was to shed light on the important mechanism at the interface of marketing and CSR. We hope our study will incent future research that further contributes to the understanding of the role of CSR.
Note 1. Multi-industry includes larger as well as smaller organizations, high and low marketing spending, service-based as well as product-based industries.

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