Page 1 of 17

Journal for Studies in Management and Planning

Available at http://edupediapublications.org/journals/index.php/JSMaP/

ISSN: 2395-0463

Volume 03 Issue 02

February 2017

Available online: http://edupediapublications.org/journals/index.php/JSMaP/ P a g e | 101

Impact of Consumer Trust on Loyalty and Corporate

Reputation: Mediating Effect of Perceived CSR

Nadia Zubair Ahmed Khan & Aizza Anwar

1MS Scholar, Freelance Researcher, Wapda town, phase 1,Block A, H.no:200/A, Multan Pakistan

Tel: 0092-334-6129313

Corresponding Author Email: nadiakhan96@gmail.com

2

Lecturer, School of Professional Advancements, University of Management and Technology Lahore,

Pakistan

Email: aizza.anwar@umt.edu.pk

Abstract

Corporate Social Responsibility (CSR) has

increasingly attracting and flattering its

importance more day by day in the world of

leading business corporations. The

following research study was conducted to

verify the contact and an effect of the CSR

related issues on consumer loyalty and also

its rising interest in creating and building

corporate reputation. Though many

previous studies have discussed the effect of

CSR on consumer loyalty but it was never

enough for testing and discussing the effect

on corporate reputation. A conceptual

framework is developed to test the

prediction of Perceived CSR towards the

customers and the company that mediates

the relationship between consumer trust and

consumer loyalty in the chain stores of

pharmaceutical context. The research at the

similar time will repeat and check the

relationship between consumer trust and

consumer loyalty; also the relationship

between consumer trust and corporate

reputation. The generated results support

the conceptual framework, apart from the

mediating effect of the Perceived CSR

towards Consumer Loyalty. Particularly it

was noted that with Perceived CSR directing

towards the company has a strong effect

between Consumer Trust and Corporate

Reputation than the Consumer Trust and

Consumer Loyalty relationship.

Key words: Corporate Social Responsibility

(CSR), Socially accountable, Competing

edge, Consumer Retention, CSR related

programs, environmental concern,

constructive effect, Reshaping CSR

Introduction

Twenty first century is the said to be the era

of technologies and unlimited competitions

waiting for every organization to deal with.

In such tough and complex environment

many organizations are struggling to fulfill

the needs of the present customers at hand

and to fabricate the sustainable and strong

elongated associations‟ abundance of

resources are assigned in designing the

strategies that will help in satisfying

customer requirements and expectations.

In doing so scholars and professionals are

amazingly attempting to realize the motive

and purpose of satisfaction level of

customers in terms of their loyalty and trust.

With respect to knowing the certain trust

and loyalty levels, marketers and managers

keenly wants to raise the purchase intention

of the customer by retaining and ultimately

will have a cross effect on the organization‟s

extensive productivity by viable growth.

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Journal for Studies in Management and Planning

Available at http://edupediapublications.org/journals/index.php/JSMaP/

ISSN: 2395-0463

Volume 03 Issue 02

February 2017

Available online: http://edupediapublications.org/journals/index.php/JSMaP/ P a g e | 102

Pinpointing the relation between customer

trust, loyalty and retention is not good

enough to measure the strength and long

term productivity. There is still a lot of room

for improvement. By looking as many

directions and dimensions of these factors

that directly affects the organization‟s image

and reputation, one main leading and

popular factor that has become the most

integral part of many organizations is

Corporate Social Responsibility (CSR).

Scholars and researchers highlighted the

depth and significance of Corporate Social

Responsibility (CSR) when it comes to

dealing with the procedures and functions of

decision making linking with consumers‟

interests. Apparently environmental

concerns turn out to be more and more

admired and accepted by many

organizations around the globe. In building

corporate reputation and image the factor of

CSR is identified and observed as the

critical part of the organization. In return

facilitate the organization with competing

edge and discrimination by underlining the

attainment of the selected strategy ultimately

to organization accomplishment.

During the last decade, the connections

between the CSR and the activities of

marketing strategies have been analyzed as

one of the mounting importance. Most

organizations have used CSR programs and

strategies and embedded them in their

functional and corporate levels that craft the

corporate image positive to the customers

and to build an optimistic associations with

retained consumers and also to attract new

customers and the stakeholders by dealing

social interests of the customers.

CSR programs are more and vastly adapted

by many environmental concern

organizations on the rising confirmations

about the consumers are agreeable to pay

enticement to those organizations that care

and act for the environmental concerns.

(Brown & Dacin, 1997), (Creyer & Ross,

1997), (Ellen, Mohr, & Webb, 2000),

(Nelson, 2004), (Sen & Bhattacharya, 2001).

Like organizations that are morally good and

responsible in terms of social issues, in

providing contribution to non-profit

organizations, and who supports a worthy

and generous aim, consumers are inclined to

pay a premium cost to such organizations.

(Creyer & Ross, 1997), (Smith & Alcorn,

1991). The thought of socially accountable

deeds is considered to be one of the better

and then the best method as it provokes the

optimistic end results for the organizational

business practices is largely admired.

Although there exist the need of

examination and further investigation that

depicts the probable affect of social

responsibility in marketing point of view

(Maignan et al., 1999).

Considering these thoughts about the

ongoing job intends to progress in the

systematic learning of the impact of social

responsibility with respect to loyalty of

consumer. Having this concept in brains, we

quibble to say the consumer loyalty is

increased and progresses by CSR through

many ways. Also CSR simultaneously

increases and develop the image and

reputation of the organization which is

considered as a crucial preliminary of

consumer loyalty. Further we can fight to

say that CSR might promote the customers

to consider that the organization is

compassionate and generous towards them

in growing trust as an preliminary of loyalty.

An additional endeavor is concerned in

terms of CSR is the provenance of generous

and caring objectives to organizations. Last

but not the least we can argue that CSR has

the major and straight impact on the

customer loyalty that increasingly mounting

the sources such as the propensity of the

consumers to see the CSR as hard to

reinstate the CSR factor with another one.

Page 3 of 17

Journal for Studies in Management and Planning

Available at http://edupediapublications.org/journals/index.php/JSMaP/

ISSN: 2395-0463

Volume 03 Issue 02

February 2017

Available online: http://edupediapublications.org/journals/index.php/JSMaP/ P a g e | 103

Therefore, customer loyalty should be

developed usually by CSR.

In this study, we will try to explore the main

subject related with customer loyalty,

corporate reputation and consumer trust in

building the extended relationship. At first,

the connection between the customer trust

and consumer loyalty will be tested.

Secondly, the focus will be the Perceived

CSR towards organization and the

association of customer trust and loyalty.

Due to the rising significance of the CSR

factor in modern life style, particularly in

consumers‟ priority it has become the most

crucial part of organization. It is normally

concurred that having a perceived

significance of CSR in consumers‟

perceptions, CSR will have a predictable

moderating influence in the associations of

customer trust and loyalty. And finally, the

study will also check the associations

between customer trust and corporate

reputation having a moderating impact of

perceived CSR that will simultaneously

effect both consumer loyalty and corporate

reputation.

Literature Review

Virvilaite and Daubaraite (2011) highlighted

the importance of Corporate Social

Responsibility (CSR) in building Corporate

Image in covering the aspects of corporate

identity associated with the organization.

Corporate Image is hard to understand due

to being complex and composite concept

having relation between CSR and Corporate

Image (CI). The more the respondents are

prone towards the importance of CSR, the

more he willing to believe that society does

the same at large. CSR has a positive effect

on in forming and building Corporate Image

which can be notice from different

phenomena. But not one of the demographic

attributes agrees on consumer‟s attitudes and

beliefs towards the Corporate Image. CSR

has became admired and widely

acknowledged process and recognized on a

global level and in doing so to magnetize

Corporate Image as well. More than ten

years, CSR has been growing gradually

becoming a compulsory part of any

organization who wish to pursue

profitability and greater social values. CSR

is connected to the well being of the society

, building and promote relationships ,

healthy and careful environment for

employees in terms of safety issues. CSR is

a practice that not just enhances Corporate

Image but also boost the corporate

reputation and level of trust by intentional

and mandatory.

Arendt and Brettel (2012) concluded that

CSR is one of the largest main stream topic

when it comes to culture and priority. It is

the key concept to maintain and sustain the

organization‟s performance and customer

beliefs and trust. CSR is also the source of

competitive edge for organization who is

dealt with. It is vital source to support the

cause that is creditable enough from

stakeholder‟s point of view but can be seen

as social impact clearly increasing the

marketing performance. In building and

creating a unique position to discriminate

from other organizations where they are

standing by showing their stakeholders the

Corporate Image, its reputation and thoughts

that are connected with corporate identity.

We can say that CI is a end result of the

people having all the experiences attained

and acquired related with their mind-set,

idea, awareness and information that they

have of organization.

Yuen (2007) emphasized that CSR is

important in business as well as when

observing customer reactions. The alarming

and rising significance of CSR in our own

daily routine, when particularly in the matter

of customers, having a apparent value of

CSR , it will apply a restrained effect on the

relation of customer‟s trust and loyalty at a

Page 4 of 17

Journal for Studies in Management and Planning

Available at http://edupediapublications.org/journals/index.php/JSMaP/

ISSN: 2395-0463

Volume 03 Issue 02

February 2017

Available online: http://edupediapublications.org/journals/index.php/JSMaP/ P a g e | 104

greater extent than expected. in return

customer loyalty and the intention of

purchasing power of the customer will be

raised by the involvement of the maintained

and uphold marketing developments.

Chiu and Hsu (2010) clearly stated that the

risk factors are increasing in our society day

by day due to complexity and technology of

twenty first century like the uncertainty

resources that are yet to be known and

identified to the people. As a resolver, CSR

has proven to be the source in helping to

prevent the occurrence of the upcoming

risks. It will be a threat or curse to the

corporate image if the organization does not

fulfill their social responsibilities. If they do

not, they have to face the loss of both social

responsibility and investment cost at a high

rate of risk. In situations like this, CSR act

as an agent to control when risk is higher. It

has a positive effect on Corporate Image,

helps in balancing the relationship between

itself and organization.

Raman, Lim and Nair (2012) pointed that

organizations are attempting and applying

CSR policies and practices as an integral

part of their system, to evaluate the

performance measures through ratings that

will identify the strength and longevity of

relationship between CSR and customer

loyalty. It is also an investment which will

lead the organization to its profitability and

providing a competitive edge in terms of

financial performance outcomes (higher

ranking). It has been a successful factor for

more than ten years, as opinion about CSR

has changed drastically.

Lenguyen (2011) reported the relationship

between the CSR and organization‟s

reputation and image. However no accurate

measures are defined to elaborate the

performance of business with respect to

CSR practices. Many believes that it is a

sign of maximizing profit and building good

relations by indulging in social activities that

proved to be a positive impact on both

organization and society‟s end. By keeping

these practices, organizations can build a

community that will reflect the strong

reputation and corporate image of the

organization. Through embedding of CSR

related programs and certain activities in

organization‟s processes and functions and

also with stakeholders can stress more on

the matters concerning environment

surroundings and competent capacity

methods for estimating the yield and

connection of its CSR tribulations.

Organizations can earn profit by linking its

employees and current customers, associates

in business and including if necessary the

non-profit companies, that as predicted in

near future the concerns of social and

environmental responsibilities will become a

discriminator and differentiator for the

customers selection and partiality. The rise

in people potential about environmental

hazards, can put even more stress to be more

concerned and flexible in taking further

caring actions.

Mohr et al (2001) realized the fact CSR is

one of those factors that not only provides a

competitive edge of increasing profitability

and creating a strong impact on it, but also

CSR is the way of adopting the path for

organization to be more specific and straight

forward when it comes to acting in

environmental concerns. Many of the

current companies lack the knowledge of

customers‟ requirements, needs and their

wants, including intentions of purchasing

and they lacking in their self of helping the

society. An academic point of view suggests

that consumers who are participative in

environmental activities are oppose to

conjecture that consumer‟s actions and

attitude depends on their self-centeredness.

It is observed from the research that

consumers having remarkable information

about environmental concerns and their