THE ANALYSIS OF THE RELATIONSHIP BETWEEN CORPORATE SOCIAL RESPONSIBILITY AND CUSTOMER LOYALTY (CASE STUDY: CUSTOMERS OF TEJARAT BANK)

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1 Pinnacle Research Journals 43 THE ANALYSIS OF THE RELATIONSHIP BETWEEN CORPORATE SOCIAL RESPONSIBILITY AND CUSTOMER LOYALTY (CASE STUDY: CUSTOMERS OF TEJARAT BANK) MOHAMMAD JAMSHIDIAN*, MEHRAN AHMADI FARSANI**, EBRAHIM AMINI*** * Master Student of Management, Department of Management, university of Isfahan, Iran ** Master Student of Management, Department of Management, university of Isfahan, Iran *** Master Student of Management, Department of Management, university of Isfahan, Iran ABSTRACT The study of corporate social responsibility has been the object of much research in recent decades, although there is a need to continue investigating its benefits as a marketing tool. The main purpose of this research is to examine the impact of perceived corporate social responsibility (CSR) on customer loyalty among customers of tejarat bank in iran. The research method is a descriptive survey. The statistical population consists of Customers the of tejarat bank in isfahan. The sample included 280 customers, which were selected randomly. Data have been collected by a researcher-developed questionnaire and sampling has been done through census and analyzed using SPSS and PLS. The validity of the instrument was achieved through content validity and the reliability through Cronbach Alpha and composite reliability. It was concluded that the corporate social responsibility variable and three dimensions has an efficient role in customer loyalty. KEYWORDS: corporate social responsibility, customer loyalty INTRODUCTION In the recent decades, new cultural values emerged due to Awareness of interdependent between organizations, environment and social. People understand that organizational actions resulted to benefit and Loss for social and environment. Therefore, assigned a much attention to

2 Pinnacle Research Journals 44 development effect of organizations in environment. On other words, social and people expect that receive more benefits of organizations and benefits be fair. The concept of corporate social responsibility has been the object of much research in recent decades, and researchers have adopted varying perspectives. Initially, the concept was exclusively associated with economic aspects, understood as the firm s obligation to maximise shareholder value (Zenisek, 1979). Scholars and practitioners are increasingly focusing their attention on Corporate Social Responsibility, because of its significant impact on organization s economic and financial performance (Luo & Bhattacharya, 2008). Companies are increasingly incorporating social responsibility as an important aspect of corporate management (Swaen & Chumpitaz, 2008). Corporate social responsibility refers to the obligations that companies have to integrate environmental and social parameters into their modus operandi and long-term development policies (Swaen & Chumpitaz, 2008, p. 7; Persais, 2002). Increasingly, society expects businesses to have an obligation to the society in which they are located, to the people theyemploy, and their customers, beyond their traditional bottom-line and narrow shareholder concerns (Carroll, 1979; Maignan, Ferrell, & Hult, 1999). Corporate social responsibility (CSR) is also known as social responsibility. Corporate Social Responsibility has gained much attention in recent years. The importance of CSR practices in sustainable business is inevitable throughout the world.csr has been gaining its popularity throughout the world, nationally and internationally. Inter-connected events and its impact around the world are increasing the importance of Corporate Social Responsibility in order to build sustainable business, which needs healthy economies, market and communities (ASOCIO, 2004, p.2). LITERATURE REVIEW 1.Corporate Social Responsibility Corporate social responsibility refers to a firm s moral, ethical and social obligations beyond its own economic interests (Brown and Dacin 1997;). As CSR gains strategic importance in the eyes of senior management, companies are engaging in a wide range of CSR programs including environmental sustainability, community support, causerelated marketing, and employee enablement. Corporate social responsibility has been defined by various authors in different ways. Mohr et al., (2001) defined social responsibility as both avoiding harm and doing well. Deetz (2003( stated CSR actions as being reactive to the needs of the community. Mohr, Webb and Harris (2001) has defined CSR as a company s commitment to minimizing or eliminating any harmful effects and maximizing its longrun beneficial impact on society. However the basic essence of these definitions is same that the organizations are undertaking CSR activities for producing hygienic products, consciousness for better environment, social awareness of leading issues, treating employees fairly, and philanthropic activities to achieve sustainability in the business markets. Corporate social responsibility should be understood as a broad concept, since it takes in the whole set philosophical and normative issues relating to the role of business in society (Maignan

3 Pinnacle Research Journals 45 and Ferrell, 2001), all the moral obligations that maximise the positive impact of the firm on its social environment and minimise the negative impact (Pride and Ferrell, 1997). These definitions have arisen in the management literature and more specifically from the research into corporate social actions (Maignan et al., 1999). Of particular note is the Carroll s (1979, 1991) framework, one of the most widely accepted and used proposals to explain the construct (Wartick and Cochran, 1985; Burton et al., 2000). According to this model, firms have economic, legal, ethical and philanthropic obligations towards their environment, and these four dimensions make up corporate social responsibility. The Economical Dimension: The determinants of economic CSR are considered to be high quality and low cost, operational efficiency, and continuous profitability (Carroll, 1991). Some add job creation and price fairness (Galbreath, 2010; Onlaori and Rotchanakitumnuai, 2010). Legal responsibilities: Legal CSR is measured in terms of the consistency between organisation activities and the laws, regulation, or its fulfilment of legal obligations (Caroll, 1991). Ethical Dimension: Ethical CSR is determined in terms of the extent that an organization adjust themselves to emerging moral norms, degree of compromising ethical standards or norms, corporate citizenship behaviour accepted by society and the extent that an organization go beyond the legal and regulation requirements to maintain integrity of the organization (Carroll, 1991; Onlaori and Rotchanakitumnuai, 2010). The philanthropic Dimension: philanthropic CSR is measured by charitable activities undertaken by organisation and its involvement in developing the society to enhance the quality life (Caroll, 1991). 2. Customer Loyalty A customer s repeated purchases that are triggered by a supplier s activities can be referred to as a customer s loyalty (Hennig-Thurau, Gwinner & Gremler, 2002). Gummesson (2002) states that a loyal customer is important for a supplier because he or she is less price sensitive. Gummesson (2002) also states that it is essential for a supplier to continuously remind a customer to remain loyal. When having a loyal customer it is easier for the supplier to create additional sales on that specific customer (Blomqvist, Dahl, Haeger & Storbacka, 1999). A customer s loyalty is depending on different factors and the feeling of loyalty can change between markets regarding to the competitiveness (Blomqvist et al., 1999). Blomqvist et al. (1999) explain that in a strongly competitive market the customer has higher expectations of the supplier and it requires more for a customer to become loyal. On the contrary, in a less competitive market the customer has lower expectations and it requires less of a supplier in order to make a customer loyal (Blomqvist et al., 1999). A supplier needs to be aware of what kind of market it belongs to in order to make a calculation on how to make the customers loyal (Ibid.). It is currently accepted that loyalty includes two dimensions: attitudinal; and behavioural (Oliver, 1999; Zeithaml, 2000; Chaudhuri and Holbrook, 2001; Anderson and Srinivasan, 2003; Koo,

4 Pinnacle Research Journals ). Attitudinal loyalty indicates a higher-order, or long-term and psychological commitment of a customer to continue a relationship with a service provider (Czepiel and Gilmore, 1987; Caruana, 2002; Shankar et al., 2003). Behavioural loyalty is defined as repeat patronage, meaning the proportion of purchases of a specific brand (Neal, 1999; Koo, 2006). However action loyalty is too difficult to observe and measure, so research tends to employ the conative or behavioural intention to measure customer loyalty (Yang and Peterson, 2004). 3. Social corporation responsibility and the customers loyalty The effects of CSR on customer loyalty have been studied in a direct relationship. Customer loyalty is one of the most important consumer behaviors companies try to influence by using CSR as a marketing tool.to the extent that CSR improves a firm s reputation and consumers attribute possibly ihgher prices to higher costs associated with CSR rather than a profit motive, CSR perceptions may reduce the negative effect of price on loyalty. Thus, we expect CSR perception to positively moderate the effect of price. Contemporary review of CSR related literature indicates that well implemented CSR initiatives can improve consumer loyalty (Aasad, 2010; Saunders, 2006; Pakseresht, 2010). Garcia de los Salmones et al. (2005) measured the direct and indirect relationship between CSR and customer loyalty in the mobile telephone industry. The results revealed that there was no significant direct relation between the two variables. However, CSR appeared to have a significant influence on consumers' valuation services and since the overall service valuation turned out to have a strong positive correlation to customer loyalty, it was concluded that CSR indirectly influence customer loyalty (García de los Salmones et al., 2005). In a study conducted in 2007, Du et al. (2007) examine the moderating influence of the extent to which a brand's social initiatives are integrated into its competitive positioning on consumer reactions to CSR. The authors revealed that consumers tend to have more favorable beliefs and reward CSR brands to a greater extent, in terms of relational behaviors, such as loyalty and advocacy. The results showed that consumers of a brand are more likely to identify with the brand, be loyal to the brand, as well as engage in advocacy behaviors for the brand (i.e., willing to try new products, engage in favorable word-of-mouth) when it is a CSR brand than when it is not (Du et al., 2007). Economical Dimension Ethical Dimension Legal Dimension Corporate social responsibility customer loyalty attitudinal loyalty philanthropic Dimension Behavioral loyalty FIGURE 3: CONCEPTUAL MODEL OF THE RESEARCH

5 Pinnacle Research Journals 47 RESEARCH HYPHOTHESES 1- There is a positive and significant relationship between Social corporation responsibility and the customers loyalty among the customers of tejarat bank. 2- There is a positive and significant relationship between the Economical Dimension of Social corporation responsibility and the customers loyalty among the customers of tejarat bank. 3- There is a positive and significant relationship between the Legal Dimension of Social corporation responsibility and the customers loyalty among the customers of tejarat bank. 4- There is a positive and significant relationship between the Ethical Dimension of Social corporation responsibility and the customers loyalty among the customers of tejarat bank. 5- There is a positive and significant relationship between the philanthropic Dimension of Social corporation responsibility and the customers loyalty among the customers of tejarat bank. METHODOLOGY Statistical population, includes Customer of saderat bank isfahan in iran. Therefore, 280 questionnaires were distributed among members of statistical community and the answers were analyzed using, SPSS and PLS Software. A data collection instrument has been a researcherdeveloped questionnaire in 5 degree of Likert scale. In order to evaluate the validity of the data achieved through instrument (questionnaire) readers, advisors, and experts, and also factor analysis is used. To get reliability coefficient before final implementation, a sample was randomly chosen and the questionnaire was conducted. Cronbach s alpha was assigned to be which is an evidence for reliability of the questionnaire. TABLE 1: RELIABILITY COEFFICIENT OF RESEARCH VARIABLES Feature Number of Questions Cronbach s Alpha Coefficient CSR Economical Dimension

6 Pinnacle Research Journals 48 Legal Dimension Ethical Dimension philanthropic Dimension tatal In table1 our research the reliability of the items is checked through Cronbach s alpha that is which shows that our research variables are reliable and there exists internal consistency between them. In Table 2 the composite reliability of each variable was examined and The coefficients for all variables above 0/7. TABLE 2: AVE VALUES AND COMPOSITE RELIABILITY variable Social corporation responsibility Economical Dimension Legal Dimension Ethical Dimension philanthropic Dimension AVE Composite reliability findings analysis Descriptive data This study attempts to understand the relationships among Perceived service quality, Customer value, satisfaction and. Table 3 Descriptive statistical data shows the relation to the customers participated to the research (n = 280). The social demographic qualification of the participants are as follows: 152 male (54.2 %) and 128 female (45.7%) participated to the research: TABLE 3: DEMOGRAPHIC QUALIFICATIONS OF PARTICIPANTS: GENDER 1.1. Gender 1.2. Frequency 1.3. (%) Male Female The educational background of the participants are; 112 people (% 40) diploma, 65 people (% 23) have Associate course, 86 people have b.sc degree (% 31) and 17 people (% 6) have m. sc degree:

7 Pinnacle Research Journals 49 Social corporation responsibility Economical Dimension Legal Dimension Ethical Dimension philanthropic Dimension TABLE 4: DEMOGRAPHIC QUALIFICATIONS OF PARTICIPANTS: EDUCATION Education Frequency (%) Diploma Associate course b.sc m. sc 35 6 The age classification of participants are; 92 people (% 32.8) are between 15-20; 73 people (% 26) are between 21-30; 66 people (% 23.5) are between 31-40, ; 31 people (% 11) are between and 18 people (% 6.4) are more than the age of 50: TABLE 5: DEMOGRAPHIC QUALIFICATIONS OF PARTICIPANTS: AGE Age Frequency (%) < < According to the indexes it can be concluded that the model have a relatively good fitness. Table 6 Correlation Between research variables was examined. For example, the correlation between two variables Social corporation responsibility and Economical Dimension is Which indicates a high correlation between these two variables. TABLE 6: CORRELATION BETWEEN RESEARCH VARIABLES Correlation Social corporation responsibility Economical Dimension

8 Pinnacle Research Journals 50 T Statistics ( O/STERR ) Standard Error (STERR) Standard Deviation (STDEV) Sample Mean (M) Original Sample (O) Legal Dimension Ethical Dimension philanthropic Dimension Structural relationships in the conceptual model were tested with PLS. The maximum likelihood fitting function was used to estimated parameters. According to the indexes it can be concluded that the model have a relatively good fitness. TABLE 7: RESULTS OF THE BEST FITTING MODEL Hypothesis Dependent variable Independent variable SCR Economical Legal Ethical philanthropic loyalty loyalty loyalty loyalty loyalty Results

9 Pinnacle Research Journals 51 In the Table 8 research Hypothesis was examined. The Information about any hypothesis Included Beta, T and Result For each of the variables in research Hypothesis was examined. For example, in The first hypothesis, Beta is.215, T is and Hypothesis was Accepted: TABLE 8: ANALYZING THE HYPHOTHESES OF RESEARCH Hypothesis Independent variable Dependent variable Beta T Result 1 CSR Accepted 2 Economical Dimension Accepted not 3 Legal Dimension Accepted 4 Ethical Dimension Accepted 5 philanthropic Dimension Accepted 1 hypothesis: There is a positive and significant relationship between Social corporation responsibility and the customers loyalty among the customers of tejarat bank. As shown in table 8, since observed Beta is and T is and There is a positive and significant relationship between Social corporation responsibility and the customers loyalty among the customers of tejarat bank with 95% confidence. 2 hypotheses: There is a positive and significant relationship between the Economical Dimension of Social corporation responsibility and the customers loyalty among the customers of tejarat bank: As it is obvious in table 8,since observed Beta is and T is and There is not a positive and significant relationship between the Economical Dimension of Social corporation responsibility and the customers loyalty among the customers of tejarat bank with 95% confidence. 3 hypotheses: There is a positive and significant relationship between the Legal Dimension of Social corporation responsibility and the customers loyalty among the customers of tejarat bank: As it is shown it table 8, since observed Beta is and T is and There is a positive and significant relationship between the Legal Dimension of Social corporation responsibility and the customers loyalty among the customers of tejarat bank with 95% confidence. 4 hypotheses: There is a positive and significant relationship between the Ethical Dimension of Social corporation responsibility and the customers loyalty among the customers of tejarat bank:

10 Pinnacle Research Journals 52 According to results of table 8, since observed Beta is and T is and There is a positive and significant relationship between the Ethical Dimension of Social corporation responsibility and the customers loyalty among the customers of tejarat bank with 95% confidence. 5 hypotheses: There is a positive and significant relationship between the philanthropic Dimension of Social corporation responsibility and the customers loyalty among the customers of tejarat bank: As it is obvious from the results of table 8, since observed Beta is and T is and There is a positive and significant relationship between the philanthropic Dimension of Social corporation responsibility and the customers loyalty among the customers of tejarat bank with 95% confidence. CONCLUSION companies must be concerned about all impressions they create, fundamentally those related to marketing aspects, and develop a relational marketing strategy that favours the creation of switching costs. It is important to start off customer orientation that takes all aspects related to service quality into consideration; among those aspects we find corporate social responsibility. The perception of ethical and socially responsible behaviour brings about favourable associations that convert into a better evaluation of the service. The main purpose of this research is to examine the impact of perceived corporate social responsibility on customer loyalty among customers of tejarat bank in iran. The results of the current study have indicated this there is a direct and positive relationship between the social responsibility of the business and three dimensions comprise Legal, Ethical and philanthropic Dimension with customers loyalty. The current obtained results are alongside with the results of the study by Nito (2009), Carol (2008) and katler and Armstrong (2008) who state that the CSR, if practiced properly, could lead to the improvement of a special brand.based on the finding in this research, three recommendation presented: - Creation of an efficient feedback programme to collect views from customers on how best CSR projects can be implemented. - Creation of awareness among stakeholders on the role of CSR in enhancing corporate image and enhanced customer loyalty. - Empowerment of employees to take part in decision making processes for policies governing CSR. REFRENCES Anderson, R.E. and Srinivasan, S.S. (2003), "E-satisfaction and e-loyalty: a contingency framework,"psychology and Marketing, Vol. 20 No. 2, pp Asaad, A The role of brand equity in the effects of corporate social responsibility on consumer loyalty. Unpublished master's diss., Universiti Sains Malaysia, Malaysia.

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