Ilkogretim Online - Elementary Education Online, 2020; Vol 19 (Issue 4): pp.

3123-3127
http://ilkogretim-online.org
doi: 10.17051/ilkonline.2020.04.764687

Impact of Corporate Social Responsibility on Consumer Behavior

Dr. Maneesha Kaushik, Associate Professor, Swami Keshvanand Institute of Technology, Management and
Gramothan, Jaipur, (SKIT, Jaipur)
Dr. Ravish Pandey, Assistant Professor, Swami Keshvanand Institute of Technology, Management and Gramothan,
Jaipur, (SKIT, Jaipur)

Abstract: The current study tries to find out relationship between corporate social responsibility and consumer
behaviour. The paper finds out how does corporate social responsibility affect a consumer's Purchase Decision or
decision making process. Today, consumer recognises the role of ethics and corporate social responsibility of
businesses. Thus, this context the responsibilities of the companies have increased and so they are working more
towards the society and the environment welfare to fetch more customers and become more customers loyal. This
works as a competitive advantage for the businesses and companies. Thus, fulfilling corporate social responsibility is
an important marketing tool which gives a competitive edge to the companies in the Indian market. It was found that
there are a few research researches on corporate social responsibility and its impact on consumers Purchase
Decision. The consumer is influenced by a product on various parameters like quality, quantity etc. but they are not
aware about the corporate social responsibility activities a company does. But now this is gradually taking a shift as
consumers are taking interest in the CSR activities of a business. Therefore, it is clear that innovative steps taken by
the company can create positive relationship between CSR activities and consumer decision making.

Key words: Consumers, behavior, Indian market, engagement, products, corporate social responsibility, CSR
disclosure, social responsibility, corporate social performance, emerging markets.

I. INTRODUCTION
Today, consumer recognises the role of ethics and corporate social responsibility of businesses. Thus, this
context the responsibilities of the companies have increased and so they are working more towards the
society and the environment welfare to fetch more customers and become more customers loyal. This
works as a competitive advantage for the businesses and companies.. A great deal of research has been
conducted in this area; however, it was found that there are a few research researches on corporate social
responsibility and its impact on consumers Purchase Decision. The consumer is influenced by a product
on various parameters like quality, quantity etc. but they are not aware about the corporate social
responsibility activities a company does. But now this is gradually taking a shift as consumers are taking
interest in the CSR activities of a business.. The paper finds out how does corporate social responsibility
affect a consumer's Purchase Decision or decision making process. It is indicated that ethical
responsibility and philanthropic responsibility are associated with consumer buying behavior. Making
consumers aware regarding the company’s CSR is very crucial. It helps in creating a strong and positive
picture of the company. But we should focus on doing rather than just advertising as it might go against
the strongly build image of the firm. Consumers feel mistrusted with deceptive advertising and can create
a negative ripple effect which may prove to be harmful for the company. Celebrity endorsement and
expert consultancy are a means which increases company’s credibility and reliability. But this tool is very
expensive. Such investments are worth too, as the market analyst’s use this endorsement contract to
evaluate the firm’s potential credibility, which further has an effect on its profits. To sum up, the impact of
these endorsements on the final returns looks affirmative to the level that it offsets the hiring cost of the
spokesperson. A study on celebrity endorsement in marketing reported that it produced 9.4 percent
higher consumer viewership than advertisements without them.

It is perplexing that, can crime prevention, covid prevention, charitable contributions or even the concept
of family planning be advertised and sold to consumers in a similar way as some firms sell soaps or
detergents? Several studies suggest that CSR activities undertaken by the companies are viewed as
services or ideas attempting to target a peculiar consumer segment. Often these companies attract
consumers with their product offerings in addition to attempting to satisfy some need or want. Explicitly
a clear understanding of consumer decision making process can help achieve affirmative outcomes for
these establishments.

3123| Maneesha Kaushik Impact of Corporate Social Responsibility on Consumer Behavior

For instance, fruits of spreading knowledge related to the causes and precautions against covid by some
hand wash or Sanitizer Company cannot be neglected currently. Some major undertakings of such CSR
activities may be to solicit consumer’s contribution to support social distancing and use of sanitizers to
control the spread of this pandemic.

Concept of Corporate social responsibility

Concept of Corporate social responsibility is a kind of self-regulation for private firms which aims at
contributing towards societal goal like voluntary activities which are followed by ethics. This includes
corporate ethics strategy comprising many laws in the organizations and further pushed outside as
industry wide undertakings. Present offers various challenges to the firms which are complicated in
nature. Expansion puts pressure on the existing resources and the level of productivity having serious
environmental effects. Today’s Consumers have high expectation from the private firms. The current
study tries to enquire if CSR have positive impact on the perception of the consumers. CSR endeavors to
shoulder the responsibility for the firms actions and affirmatively impact its stakeholders. Philanthropy
and cause-related marketing are at an all time high from the end of various companies. CSR initiatives are
undertaken by more than 80% of the fortune 500 companies. Current day market findings highlight
positive relationship between the firms CSR activities and consumers ’buying behavior.

Top management have to face many challenges such as social audits, corporate social reporting and triple
bottom line, which are very fruitful for the firms. Unlike the western countries not much of research has
been undertaken in the Indian markets to understand this relationship, only the law of contributing 2% of
the profits to CSR activities has been formulated by the government with very less monitoring tough. The
paper posits to investigate the relationship between CSR initiatives and of Indian consumer decision
making. We shall explore the concern weather Indian consumers consider any firms CSR before using its
services or its products.

Major Elements involved in CSR

1. Enabling Environment.

For providing a good environment the firms have to inculcate an entrepreneurial set up which will create
an enabling environment and lead to the transformation of the whole organization.

2. Corporate Purpose

Firms have to ensure that the mission and values includes social value generation and fulfilling social
responsibilities.

3. Value Creation and the Double Return.

Firms have to ensure creating value by providing good returns to its stakeholders by advancing various
social agendas. The firms must be concerned with the increase of both the social capital as well as the
economic capital.

Consumer Trust

Trust is a very important element in business sector. Trust is consequential from the motives,
characteristics, and intentions of the exchange partners and the evaluation, assumptions, and prediction
by the consumers as to the promised outcomes of the company (Cannon &Doney, 1997). According to
Swean & Chumpitaz (2008) Trust has three main aspects related to perceived credibility, perceived truth,
and perceived benevolence.

Concept of Consusrem Purchase Intention (PI) and Impact of Purchase Intention and CSR

According to Espejel et al. buying intention is a forecast of consumer behavior towards a future purchase
decision. Optimistic consumer attitudes towards a firms’s image, and product evaluation may be
influenced by their CSR initiatives. Many researches reflects a positive relationship between firms CSR
activities and consumer’’s peception. When consumers approve of certain CSR initiatives, they are
classified as ethical consumers. (Auger et al., 2010). Accordingly, ethical consumption can be defined as
the deliberate and conscious choice for consumption considering some personal and moral beliefs.

3124| Maneesha Kaushik Impact of Corporate Social Responsibility on Consumer Behavior

Conssumers are willing to pay for the luxury of social consciousness. It looks like there exists some clear
cut trends in general management ethical consumption. Though, most of the published empirical research
regarding this relationship comes from the developed countries. Even then various researches highlight
that consumer perception for CSR varies from culture to culture.

Inter-Relationship between CSR activities and Trust among the consumers

CSR is taken to be very crucial for increasing the trust of the consumers a firm as it improves consumer
welfare. CSR activities have a positive impact on customer’s level of trust. Customer purchase intention
can be weighted by a company’s CSR activities as it decreases the level of uncertainty involved in the
activities. Morgan and Hunt (1994) claimed that the affect of customers trust is derived from existing
values that customers and the company share with each other. Thus, customers trust can be defined as
joint beliefs, regarding whether certain kinds of behaviors, goals and policies are significant or not. A firm
can be benefitted by CSR initiatives and can have the advantage of customer loyalty, positive attitude for
the brand, increased customer trust, improved profits. And better purchase intention

Psychological factors influencing consumer’s purchasing decision

There are four important psychological factors which influences a person’s purchase decision which is
mentioned below:
Perception
Learning
Beliefs and attitudes
Motivation

Consumer Behavior towards CSR in India

India has the world’s richest tradition of CSR. Though the term CSR is comparatively new, the concept
itself dates back to over a hundred years. Hinduism and CSR are like merchants of the Hindu religion that
teaches us to charity, making houses for the needy, building places of worship etc. Dharmada in Hinduism
pursues that the businessmen charge certain amount from the purchaser which is used for philanthropy.
Sikhs pursue daashaant. In India, CSR has developed in various phases, for instance socially responsible
production, engaging the community fruitfully and socially responsible employee relations. Its evolution
can be divided in four phases: Phase1 (1850 - 1914) Phase2 (1910 - 1960) Phase3 (1950 - 1990) Phase 4
(1980 onwards). Complete philanthropy and charity throughout the industrialization; businesses are only
pledged to the managers and the owners. CSR is seen as a social development amidst the struggle of
Independence where the businesses are pledged to the managers, owners, and employees.CSR during the
“mixed economy paradigm”; where the businesses are responsible to owners, managers and other target
environments also. When we talk about CSR amidst this globalised world, we can see it is in a perplexed
state where the businesses are pledged to the owners, managers, other target environments and the
public at large.

Purpose of the Study

The study highlighted that only good governance and the new company act is not enough for firms to just
invest in CSR projects and meet the 2 per cent norm, but they need to understand whether CSR is looked
at strategically. The study will contribute to building a body of knowledge in literature for further
research. Secondly, the outcome of the research will also serve as a reference resource for other
researchers to investigate further into areas that this study will not cover. It will also contribute slightly
to the stakeholders understanding of the effect of CSR on consumer purchasing decision of Indian market.

Scope of the Study

1. CSR activities have become inseparable part of the firms’ strategic decisions because it improves he
stakeholders and companies relationship and promotes innovative actions.
2. CSR activities make a firm socially responsible. This increases employee’s motivation and helps in
strengthening the skill for managing the expectations of the stakeholders.

Implications of the Study

The Findings from the study highlights the importance of formulation of reports in an all-inclusive
manner and covering more of stakeholders and related issues. It also showcases the increased necessity

3125| Maneesha Kaushik Impact of Corporate Social Responsibility on Consumer Behavior

of maintain a balance amidst informative needs, thus averting concentrated structures. It was seen that
the firms with report high related to themes and reflects a comprehensive and balanced product, have a
better stakeholder network. And thus they achieve a superior corporate social performance.

Major CSR funding has gone for covid 19 relief when we talk about the current day situation. Let’s discuss
some of the companies Best Practices presently. According to a study by the Futurescape, Tata Chemicals
Ltd. is ranked number one, third year consecutively for sustainability and CSR practices in Responsible
Business Ranking 2019. The study follows the ESG framework (environment, social and governance) for
examining the corporate performance. The spending patterns on CSR are reviewed along with the
performance of the firm.

CSR activities undertaken by various companies of India

1. Vedanta Ltd.

Companies CSR initiatives includes spending of INR 309 crores in social investments. social investments
comprises of re-building anganwadi this ensuries good health and learning of children of rural regions ,
promotion of women’s empowerment and skilling.

2. Hindalco Industries Ltd.

Hindalco Industries Ltd.contributed INR 34.14 Cr, for supporting healthcare, education, sustainable
livelihood, and social reformation under their CSR campaign

3. TataChemicals

The company spends 37.81 crores on projects related to the development of the society which aims at
Enhancement of the quality of life of the people of the nation. Focus to Tata Chemicals corporate
philosophy for which they formed Tata Chemicals Society for Rural Development. From the time of
lockdown, they have distributed disinfectants, stitching masks, giving medical help and ensuring food
security to the communities it works with.

4. Infosys Ltd.

The company spends 360 crore rupees in covid relief activities as a part of its CSR activities which
includes facilities for quarantine bed setups. They undertake social development initiatives through the
Infosys Foundation.

5. BPCL

The company spends INR 4.27 crores in covid relief activities as a part of its CSR activities which includes
organization of ‘Swachhata Pakhwada 2020’ and distribution of special kits with dustbins, masks and
hand sanitizers to 400 families in villages. BPCL’s CSR philosophy also includes involving the creation and
maintenance of toilets, associated sanitation facilities, waste management initiatives leading to overall
health and hygiene for the communities.

II. SUGGESTIONS AND RECOMMENDATIONS

The current studies about perception of a consumer in the context of corporate social responsibility
activities which is based on the emotional, rational and individual judgement for a product. It was found
that there is a strong and positive relationship between CSR activities and a consumers purchase
decisions. CSR Activities play an important role in building of trust of a consumer in a company which
ultimately increase the creditability of a firm. The study is also supported by the findings by Kenning
(2008) that general and specific trust has an affirmative impact on the consumer buying behavior.
Government also plays a significant role in increasing the level of consumer awareness. This is done by
the government by enforcing policies related to CSR activities conducted by various firms. Government
organizations must market various schemes to increase consumer awareness towards the requirement
and vitality of CSR initiatives and not let it remain just paper work. It will facilitate the much needed
strong Indian consumer vision for seeing as to where are they right now, and where do they wish to be in

3126| Maneesha Kaushik Impact of Corporate Social Responsibility on Consumer Behavior

the next 10 years. Consumers must increasingly visualize CSR as an innovation rather than just
documentation.
III. CONCLUSION
The concept of corporate social responsibility has gained a lot of importance in the recent times and so it
has been a topic of research in lot of studies due to increased awareness about its significance in
companies and businesses. It has become an important element in business and academic world. There
is no doubt about the fact that corporate social responsibility activities have evolved a lot in the recent
time and it is made clear that there is a strong relationship with consumer decision making process and
corporate social responsibility activities. Many countries like UK,US, Sweden have realised the
importance of concept of corporate social responsibility and administers it mandate to have the corporate
spending reports. Even in Indian market it is a very substantial issue now. Post the enforcement of the
Companies Act-2013, it is approximated that more than 2,500 establishments came under the domain of
mandated CSR with the approximated budget of INR 15,000 crores. Thus we can say that the legislation
has proved to be a game-changer in strategic efforts towards CSR that impact the consumer’s choices.
This has furthered fresh investments and accountability of implementing CSR in India and the way it is
conceived by the consumers.

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