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Article

CSR Influence on Brand Image and Consumer Word of Mouth: Mediating Role of Brand Trust

by
Imran Khan
* and
Mobin Fatma
Department of Marketing, College of Business Administration, Prince Sultan University, Riyadh 12435, Saudi Arabia
*
Author to whom correspondence should be addressed.
Sustainability 2023, 15(4), 3409; https://doi.org/10.3390/su15043409
Submission received: 16 January 2023 / Revised: 6 February 2023 / Accepted: 9 February 2023 / Published: 13 February 2023
(This article belongs to the Special Issue Marketing Innovation and Consumer Values in Sustainable Business Strategy)
Browse Figure
Versions Notes

Abstract

:
The current study aims to empirically explore consumer perceptions of corporate social responsibility (CSR) programs and their effects on brand image, brand trust, and positive consumer word of mouth in the context of Indian banking. A non-random sample technique was used, and 328 valid responses were obtained for the study. Confirmatory factor analysis (CFA) and structural equation modeling (SEM) were used to analyze the proposed model. According to the study’s findings, consumer perception of CSR positively, significantly, and directly affects brand trust. In the association between CSR and brand image and consumer word of mouth, brand trust has a partial mediating effect. By identifying links between CSR, brand image, and word of mouth by using consumer trust as a crucial mediator, this study aims to advance existing knowledge. As a result, this research adds to the body of CSR literature and investigates CSR’s various implications for marketing outcomes.

1. Introduction

Corporate social responsibility (CSR) has progressively gained recognition as an effective strategic marketing tool in recent years. There are two reasons for the growing interest in CSR. On the one hand, customers demand more from businesses than merely a high-quality item at a reasonable price, and when evaluating similar products, they choose well-known brands. On the other hand, by concentrating on non-economic aspects, a corporation may gain competitive advantages. CSR may contribute to enhancing brand perception and encouraging positive consumer word of mouth, which might make it a substantial source of competitive advantages [1,2]. Consumers are concerned about CSR and have high expectations for businesses to uphold social and ethical obligations [3].
According to previous studies, consumers are curious about how businesses manage CSR activities [4]. As a result, marketers began placing more value on CSR programs [5]. The company’s aggressive marketing approach may have caused the change in brand image, or it may have been a reaction to a shift in the social and marketing environment. The difficulties that other businesses (such as Nike child labor conflicts) encounter when the reputations of their brands are questioned should be considered. In order to achieve a sustainable competitive advantage from the perspective of their target consumers, businesses have paid close attention to CSR strategies. The fierce competition in today’s service market environment has influenced consumers to have great scrutiny for and skepticism of brand image and brand trust [6]. Companies are more likely to effectively manage the relationship between shifts in public attitude and their impact on the brand image if they manage their brands proactively, in accordance with changing societal norms, and take into consideration larger stakeholder objectives. In the last few decades, CSR has emerged as a complex, multifaceted notion comprising many responsibilities, which become central to complex decision-making. Within the spectrum of CSR, it is asserted that trust plays an important role in consumer responses that affect many business activities.
The concern for sustainability and CSR is growing in popularity, and many academics have conducted an increasing number of studies pertaining to these ideas. Given that, based on the findings of our longitudinal analysis, CSR is a necessary step before achieving sustainability; the crucial question is how CSR and consumer responses are related. Despite the strategic importance of CSR, previous researchers have raised questions regarding the impact of CSR on various consumer responses [7]. Although there is substantial research on consumer responses to CSR [8,9], there is still a gap in our understanding of the complex impact of CSR on brand image and positive consumer word of mouth [10]. Based on data from Indian bank customers, we analyze the direct and indirect relationships between CSR, brand image, and positive consumer word of mouth by introducing brand trust as a mediator. Brand trust is crucial because it boosts consumers’ responses, including purchasing intentions, favorable attitudes, and advocacy behavior, and also lessens the impact of unfavorable customer reviews [11]. CSR involvement by a business is viewed as an excellent marketing strategy to build a trustworthy relationship with customers [12]. In order to link consumer perception of CSR with brand image and favorable consumer word of mouth, we added brand trust as a mediating variable. This fills the aforementioned gaps in the existing literature. The current study aims to empirically explore consumer perceptions of CSR programs and their effects on brand image, brand trust, and positive consumer word of mouth in the context of Indian banking.
The study’s remaining sections are organized as follows: The following section presents the theoretical foundation of the study and the formulation of the hypotheses. Next, a description of the research methodology employed in the study is presented, followed by the findings and analysis. The discussion presents the results of the study, its theoretical contribution, and its managerial implication. The article ends with the conclusion of the study.

2. Theoretical Background and Hypothesis Development

Businesses participate in CSR initiatives because they believe that by doing so, society as a whole and their customers will reward them. The social contract rationale, which maintains that businesses have an ethical and moral obligation to do good for society, is the foundation of the instrumental approach to stakeholder theory. CSR engagement is the process by which businesses identify and publicize the CSR-related activities in which they are engaging in order to produce business results. CSR, as defined in the Green Paper issued by the European Commission in July 2001, “is a concept, whereby companies voluntarily integrate social, environmental, and ethical concerns into their operations and interactions with stakeholders to contribute to a cleaner environment and a better society” (Commission of the European Communities, 2001, p. 6) [13]. The definition of CSR engagement used in this study is based on the Sampaio et al. [14] approach. It is a broad term that covers all company reactions to social and environmental issues, as well as their justifications for putting such measures into place. Academics encourage businesses to practice CSR and sustainability in order to be responsible and sustainable. Additionally, as both CSR and sustainability are regarded as bases of action in the corporate sector, these decisions must be in alignment with the needs of the client. The value of CSR participation is becoming more and more evident in the literature. Building trust has been proven to require the traits of honesty, justice, and goodness. CSR initiatives produce favorable opinions by demonstrating the company’s ethics and values to customers [15]. As companies believed to be involved in CSR are likely to be regarded as “trustees” who act in the interests of all stakeholders, including customers, the signaling theory states that the positive signals could result in an increase in customer trust. Brand trust is defined as “the willingness of the average consumer to rely on the ability of the brand to perform its stated function” [16] (p. 82).
Positive WOM refers to the positive feedback that customers are eager to spread about a business [17]. It is commonly known that WOM plays a positive role in attracting new customers [18,19]. More specifically, it has been demonstrated that WOM has an impact on attitudes, awareness, perceptions, expectations, behavior intention, and actual purchasing behavior in both offline and online environments [20]. WOM is, therefore, crucial for businesses [21], especially those that can use positive WOM to boost the effectiveness of their marketing and promotions [22]. According to Anderson [23] (p. 6), word of mouth refers to “informal communications between private parties concerning evaluations of goods and services rather than formal complaints to firms and/or personnel.” Through direct brand interaction, exposure to advertising and promotion, packaging, and even observation of the types of individuals who use the brand and the occasions and places in which it is utilized, the consumer constructs the brand image. Consumers generate subjective judgments about how well various brands operate across a range of functional and non-functional features by using brands which they consider to be essential for assessment reasons. These arbitrary judgments are organized by the consumer into a brief impression of the brand that will affect their purchasing decisions.
CSR initiatives are viewed as pro-social corporate activities that advance both the interests of the company and the welfare of society as a whole, fostering consumer trust [24,25]. Customers have a high level of trust in businesses that they believe to be socially responsible [26]. A company’s socially and ethically responsible initiatives reveal information about the company’s personality and ideals that aid in fostering customer trust [27]. According to [28], ethical standards should be taken into account while making strategic decisions by businesses in order to foster stakeholder confidence. According to this point of view, [29] (p. 5) claimed that one of the most direct results of a company’s social performance was consumer trust in its ethical standards, which had a substantial impact on how consumers reacted to CSR [30]. Therefore, we propose the following hypothesis:
H1. 
CSR has a positive and significant influence on brand trust.
Morgan and Hunt [31] state that trust is a significant variable in the formation of an enduring desire to maintain a long-term relationship with a brand. Strong customer focus and a focus on developing consumer-valued innovation can boost brand image. A good brand image is a key driver of brand equity, which is referred to herein as improved brand trust, brand loyalty, and brand commitment [32,33]. A strong brand image encourages consumers to trust the quality of the products they are buying, helps them make decisions, and allows them to feel at ease while doing so [34]. Brand equity can be acquired during the process of building a brand’s image [8]. When differentiating a product on the basis of tangible attributes is challenging, brand equity derived from the brand image is even more crucial. Last but not least, customers’ positive perceptions of a brand are a sign of a high level of trust in that brand. In reality, brand trust is the primary factor influencing brand image, as it is thought to be the route leading to certain marketing benefits and outcomes [35,36]. Thus, we state:
H2. 
Brand trust has a positive and significant influence on brand image.
According to Morgan and Hunt [31], trust is said to be a key component of all long-term relationships and is the main motivator for favorable word of mouth. Although the relationship between brand trust and word of mouth has not yet been studied, some academics have theorized that trust directly influences consumers’ positive word of mouth [29,37]. Positive WOM, in both offline and online environments, is one of the main goals of current marketing initiatives due to the growing impact of peer evaluations and recommendations on consumers’ purchasing decisions [22]. Research has not yet fully explained how brand trust encourages consumers’ positive word of mouth, despite the fact that WOM is a result of brand trust. Thus, we state the following hypothesis:
H3. 
Brand trust has a positive and significant influence on positive word of mouth.

The Mediating Role of Brand Trust

The reputation of a business is a crucial asset that must be favorable and well-known, since it affects how customers perceive the business’ operations [38]. Therefore, CSR perceptions are essential for creating valuable material that fosters the development of a company’s image. Participating in CSR fosters a positive reputation [39]. According to [40], CSR serves as a tool to build both brand loyalty and brand image, but its impact on image is more significant. Numerous studies have shown that CSR and brand image are strongly correlated. A company participates in CSR initiatives at least in part to improve stakeholder perception of the business and enhance its reputation [41]. Engagement in CSR makes a company more visible [42], resulting in more interactions among stakeholders. However, because people have varying views on CSR, it can be difficult to forecast whether a company’s CSR efforts would generate positive or negative comments. Customers’ positive perceptions of the firm as a whole are shaped by CSR engagement, and these positive impressions have an impact on how customers evaluate the company’s goods and services. Customers are, therefore, more inclined to speak positively about a business’s CSR efforts as well as its goods and services, which increases positive word of mouth. Building moral capital should be the goal of CSR, according to Vo et al. [1], who emphasized the importance of using trust to measure the effectiveness of CSR. We predict that trust will play a mediating role in this relationship between customers’ perception of CSR and brand image and positive word of mouth.
H4. 
Brand trust mediates the positive relationship between CSR and (a) brand image and (b) positive word of mouth.
The proposed conceptual framework is shown in Figure 1.

3. Research Design

The data were collected through the survey method using a structured questionnaire. The respondents were contacted personally at the bank during working days. Respondents included individuals who had had a bank account for more than a year with that bank. Bank branches located in Delhi, the capital of India, were selected to reach out to the respondents. People from varied socio-cultural backgrounds reside in Delhi, which should aid in generalizing the results of the study. A non-probabilistic sampling technique was used. Before giving the questionnaire to the participants, it was checked and examined, and respondents’ consent was taken in order for them to participate in the survey. The respondents received assurance regarding the privacy of the data they gave. A total of 328 filled questionnaires were utilized for the analysis of the data. Some of the questionnaires were discarded as they had missing or incomplete responses. The final sample size for this study was 328. The sample can be described as follows. Of the sample, 37 percent of responders were female, while 63 percent were male. The respondents’ ages ranged from 18 to 65, with the majority (44.32 percent) falling between the ages of 40 and 65. In terms of educational background, more than 32.23 of consumers had completed intermediate-level coursework, 50% were graduates, and 14.45% held master’s degrees.

Scale Items

The present study utilized the existing scale items to measure the constructs. All scale items used in the study were reliable and validated. The 7-point Likert scale was used to collect the responses for each scale item. A description of the scale items used in the present study is given in the Appendix A. Consumer perception of CSR was measured using the four-item scale adapted from the work of [43] and [44]. Brand trust is measured with the four-item scale taken from the work of [31] and [45]. Brand image refers to the consumer’s overall impression of the brand and is measured using the three-item scale adapted from the work of [46]. Consumer word of mouth refers to the tendency to speak positively about the company or brand with others. The three-item scale is adapted to measure consumer word of mouth taken from the study of [47].

4. Results and Analysis

To analyze the data, we used the CFA for the measurement model and SEM for the structural model. Testing the measurement model was the prerequisite for testing the SEM. The results of the measurement model showed a good model fit (χ2 = 167.67 (84), GFI= 0.937, CFI = 0.978, and NFI = 0.957, RMSEA = 0.05). The reliability of the scale was demonstrated by the fact that all of the constructs had Cronbach alpha coefficients above 0.6. The fact that the composite reliability of all the constructs was higher than 0.5 was another sign of the scale’s internal consistency (Table 1). The average extracted variance values for all the constructs that met the criteria of Hair et al. [48] (2019) for convergent validity varied from 0.6 to 0.8. Table 2 illustrates that for all constructs that met the criteria for discriminant validity, the square root of AVE was greater than their squared correlation [49] (Fornell and Larcker, 1981).
The estimation of the proposed linkages between constructs included the examination of the structural model. At a significance level of 0.05, the estimated path coefficient values empirically supported all of the direct effects in our suggested model. All the direct hypotheses in the path relationship were found significant (Table 3). The results suggest that consumer perception of CSR has a positive and significant impact on brand trust (β = 0.38, p ≤ 001); hence, H1 is supported. The path relationship between brand trust and brand image was found to be positive and significant (β = 0.27, p ≤ 001), supporting H2. H3 states the direct and positive relationship between brand trust and consumer positive word of mouth, and the findings were significant (β = 0.27, p ≤ 001), supporting H3.
We employed the SEM approach with 5000 bootstrap samples and a 95% confidence interval through AMOS 22.0 to investigate the mediating effect of brand trust. Estimates of the indirect influence were obtained using bootstrapping techniques, and confidence intervals were used to confirm the significance of the influence. If there a zero was not present between the lower and upper bounds of the 95% confidence interval, the mediation effect was considered significant. The results demonstrate that both direct and indirect influence are significant in the relationship between CSR to brand image (β = 0.104, p < 0.001, [L= 0.044; U = 0.186]); thus, partial mediation was observed since both direct and indirect significant effects were observed. Thus, H4a is supported. The findings demonstrate that both direct and indirect influence are significant to the relationship between CSR and word of mouth (β = 0.105, p < 0.001, [L = 0.046; U = 0.191]); thus, partial mediation was observed since both direct and indirect significant effects were observed. Thus, H4b is supported. Given that there was no zero between the confidence intervals’ lower and upper bounds, we can infer that brand trust mediates the link between CSR and word of mouth. Thus, partial mediation is observed.

5. Discussion and Implications

There has been an increased focus on CSR and sustainability due to societal concerns and demands for enterprises to be held accountable; businesses have stopped concentrating solely on financial gain and have started integrating them into their societal cultures. The current study examined the relationship between brand trust and customer perceptions of CSR. The hypothesis test’s findings confirmed that CSR has a positive impact on consumer trust in brands. In addition, we examined the impact of brand trust on brand image and consumer word of mouth. We examined how brand trust affected the link between CSR, brand image, and word of mouth. By identifying links between CSR, brand image, and word of mouth by using brand trust as a crucial mediator, this study aimed to advance our existing knowledge. Although CSR is one of the most efficient forms of marketing, little research has been conducted on how CSR affects marketing results. As a result, this research adds to the body of CSR literature and investigates CSR’s various implications on marketing outcomes. The theoretical model based on direct and indirect path linkages between CSR and brand image and word of mouth was first proposed and tested in this study. This study adds to the body of CSR literature by exploring the crucial role of trust, which was unrecognized in the Indian banking context. By committing to socially and environmentally responsible actions, businesses may bolster their financial sustainability. However, practically all of the literature that has addressed this topic so far has concentrated on developed economies. Analyzing the case of emerging economies such as India’s is extremely interesting, given that economic growth, production, and consumption patterns can lead to negative externalities such as income inequality, pollution, and the depletion of natural resources. It is crucial to understand how customers in emerging economies view and value businesses’ sustainable initiatives as consumers. Our findings are insightful because they demonstrate that, as is consistent with the body of literature, consumers in these economies have a favorable view of the CSR initiatives carried out by banking companies.
These findings imply that bank managers could accomplish some significant and desirable outcomes by concentrating on CSR initiatives, most notably by increasing brand trust among consumers. Given that consumers prefer to support and reward businesses that are seen as socially responsible by building trust towards them, these findings suggest that managers should invest more in socially responsible projects. These findings have significant managerial implications for organizations that currently engage in CSR activities and those that plan to do so. Through CSR initiatives, a firm is more likely to create and sustain relationships with its customers that will lead to beneficial outcomes, such as positive brand image and word of mouth marketing. It has been discovered that customer trust mediates the link between CSR efforts and marketing outcomes.

6. Conclusions

This research examined how customer perceptions of CSR impact corporate brand trust, brand image, and word of mouth. All three hypotheses were supported by the results. We found that in the relationship between customer perception of CSR, brand image, and word of mouth, brand trust plays a partial mediation role. Consumer perception of firms’ CSR programs has become a crucial instrument for establishing trust with customers. This shows that customers who have trust in the business engage in more voluntary behavior, speaking positively about the company with others. Apart from the significant contribution of this study, some limitations exist which can be avenues for future research: First, future studies might examine the effects of brand level (such as brand category and brand position in the marketplace) and consumer demographic variables to anticipate the relationship between consumer perception of CSR and corporate marketing outcomes. Second, to generalize the findings, future studies could test this model using samples from diverse contexts, such as various business subsectors. Third, future research may incorporate more social exchange variables, such as consumer commitment, brand love, and brand passion to create a more inclusive framework and offer more details on the origins and advantages of CSR.

Author Contributions

Conceptualization, I.K.; Methodology, I.K.; Formal analysis, I.K.; Writing—review & editing, I.K. and M.F.; Project administration, M.F. All authors have read and agreed to the published version of the manuscript.

Funding

This research received no external funding.

Institutional Review Board Statement

Not applicable.

Informed Consent Statement

Informed consent was obtained from all subjects involved in the study.

Data Availability Statement

Not applicable.

Acknowledgments

The authors would like to acknowledge the support of Prince Sultan University for paying the Article Processing Charges (APC) of this publication.

Conflicts of Interest

The authors declare no conflict of interest.

Appendix A

ConstructScale ItemSource
CSR“this bank is socially responsible”Brown and Dacin, [43] and Klein and Dawar [44]
“this bank contributes to the welfare of society”
“this bank contributes to the donation program”
“this bank doesn’t harm the environment”
Brand trust“I trust on the quality of this banking company”Morgan and Hunt, [31] and Sirdeshmukh et al., [45]
“is interested in its customers”
“is honest with its customers”
“make me feel a sense of security”
Brand image“This bank provides good value for money”Martinez and de Chernatony [46]
“The bank is interesting”
“There is a reason to associate with the bank instead of others”
“This bank is different from competing banks”
Positive word of mouthHow likely are you to say positive things about YOUR BANK to others?Choudhury, [47]
“How likely are you to recommend YOUR BANK to someone who seeks your advice?”
“How likely are you to encourage friends and relatives to do business with YOUR BANK?”

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Sustainability 15 03409 g001 550
Figure 1. Conceptual framework.
Figure 1. Conceptual framework.
Sustainability 15 03409 g001
Table
Table 1. CFA results.
Table 1. CFA results.
ConstructsScale ItemsFactor Loadingsα
CSRCSR10.730.847
CSR 20.81
CSR 30.78
CSR 40.74
Brand trustBT10.890.931
BT20.95
BT30.91
BT40.78
Brand imageBImage10.840.928
BImage20.93
BImage30.85
BImage40.90
Word of mouthWOM10.850.934
WOM20.96
WOM30.91
Table
Table 2. Discriminant validity.
Table 2. Discriminant validity.
CRAVECSRBimageBtrustWOM
CSR0.8480.5830.764
Bimage0.9320.7750.1680.880
Btrust0.9330.7790.2490.3090.882
WOM0.9350.8280.0270.1100.2740.910
CR Composite Reliability, AVE Average Variance Extracted.
Table
Table 3. SEM Results.
Table 3. SEM Results.
HypothesisPath Coefficientt ValueResults
H10.3834.102Supported
H20.2715.499Supported
H30.2744.874Supported
p-value < 0.001.
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Khan, I.; Fatma, M. CSR Influence on Brand Image and Consumer Word of Mouth: Mediating Role of Brand Trust. Sustainability 2023, 15, 3409. https://doi.org/10.3390/su15043409

AMA Style

Khan I, Fatma M. CSR Influence on Brand Image and Consumer Word of Mouth: Mediating Role of Brand Trust. Sustainability. 2023; 15(4):3409. https://doi.org/10.3390/su15043409

Chicago/Turabian Style

Khan, Imran, and Mobin Fatma. 2023. "CSR Influence on Brand Image and Consumer Word of Mouth: Mediating Role of Brand Trust" Sustainability 15, no. 4: 3409. https://doi.org/10.3390/su15043409

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