Impact of corporate social responsibility on customer loyalty behaviors evidence from vietnam

VIETNAM NATIONAL UNIVERSITY, HANOI VIETNAM JAPAN UNIVERSITY - NGO THANH THANH HUYEN IMPACT OF CORPORATE SOCIAL RESPONSIBILITY ON CUSTOMER LOYALTY BEHAVIORS: EVIDENCE FROM VIETNAM MASTER'S THESIS BUSINESS ADMINISTRATION Hanoi, 2020 VIETNAM NATIONAL UNIVERSITY, HANOI VIETNAM JAPAN UNIVERSITY NGO THANH THANH HUYEN IMPACT OF CORPORATE SOCIAL RESPONSIBILITY ON CUSTOMER LOYALTY BEHAVIORS: EVIDENCE FROM VIETNAM MAJOR: BUSINESS ADMINISTRATION CODE: 8340101.1 RESEARCH SUPERVISORS: Prof TOHRU INOUE Dr TRAN THI BICH HANH Hanoi, 2020 ACKNOWLEDGEMENT To finish the process of researching and complete this graduation project, there are no words to express my gratitude to Professor Tohru Inoue and Dr Tran Thi Bich Hanh who accompanied me and guided me directly during this time Thank you for not hesitating to help me a lot, from topic suggestions to how to the topic even though you are very busy with your task Without your help, I could not to get very useful advice and could not go in the right direction I would like to choose this moment in order to acknowledge their contribution gratefully On this occasion, I am very impatient for showing my appreciation to all staffs at Vietnam Japan University- Vietnam National University in particular for creating conditions and time for me during the course Especially, I am extremely grateful to Mrs Nguyen Thi Huong for giving me needed information and answered all my questions during the period of working on this project Besides, my family, relatives and friends are very worthy to receive thanks from the bottom of my heart for always stood by and encouraged me to finish the graduation thesis and all participants who help me complete my survey Lastly, I am so grateful for great learning environment and opportunities that Vietnam Japan University and Yokohama National University have brought for me Thanks to these, I have improved myself a lot Sincerely, Ngo Thanh Thanh Huyen ABSTRACT The study investigated how corporate social responsibility (CSR) performance including towards society, environment and stakeholders affect brand likeability and relational switching cost Concurrently, the relationship between brand likeability and relational switching cost and customer loyalty behaviors including word-of-mouth and repurchase intention The study’s sample size is 212 responses from Vietnamese respondents The hypotheses are tested by regression analysis through SPSS software The findings show CSR practice affects brand likeability and relational switching cost However, the effect is different in term of degree When looking into the relationship between CSR dimensions and brand likeability, CSR towards stakeholders is a more significant predictor than others while CSR towards environment and society are supposed to have more remarkable impact on relational switching cost Additionally, brand likeability and relational switching cost positively affect word of mouth and repurchase intention Brand likeability has more significant influence on word of mouth while both brand likeability and relational switching cost affect nearly equally repurchase intention TABLE OF CONTENTS CHAPTER 1: INTRODUCTION 1.1 Background and necessary of the research 1.2 The research objectives 1.3 Research questions 1.4 Research scope 1.5 Research structure CHAPTER 2: LITERATURE REVIEW AND HYPOTHESIS DEVELOPMENT 2.1 Corporate social responsibility (CSR) 2.2 Customer loyalty behaviors 11 2.3 CSR performance and brand likeability 12 2.4 CSR performance and relational switching cost 16 2.5 Brand likeability on Word-of-mouth and Repurchase intention 19 2.6 Relational switching cost on Word-of-mouth and Repurchase intention 20 CHAPTER 3: RESEARCH METHODOLOGY 23 3.1 Research design 23 3.2 Sampling 24 3.3 Data collection process 25 3.4 Questionnaire design 25 3.5 Data analysis 28 CHAPTER 4: DATA PRESENTATION AND FINDINGS 31 4.1 Data description 31 4.2 Reliability analysis 35 4.3 Exploratory factor analysis (EFA) 36 4.3.1 EFA of CSR scale 36 4.3.2 EFA of Brand Likeability scale 39 4.3.3 EFA of Relational Switching cost scale 41 4.3.4 EFA of WOM scale 42 4.3.5 EFA of Repurchase Intention scale 43 4.4 Regression analysis results 44 CHAPTER 5: RESULT DISCUSSION 49 5.1 Result discussion 49 5.2 Contributions of the research 52 5.2.1 Theoretical contribution 52 5.2.2 Practical contribution 53 5.3 Limitations and future research direction 55 REFERENCE 57 LIST OF TABLES Table 3.1: Measurement items 26 Table 3.2: Likert scale for Agreement extent 28 Table 4.1: Descriptive Statistics of 212 respondents 31 Table 4.2: Samples’ demographic data 32 Table 4.3: Summary of retailing companies 34 Table 4.4: Reliability statistic of all scales 36 Table 4.5: EFA for CSR scale – 1st test 36 Table 4.6: Rotated components matrix for CSR scale - 1st test 37 Table 4.7: EFA for CSR scale – 2nd test 38 Table 4.8: Rotated components matrix for CSR scale - 2nd test 38 Table 4.9: EFA for Brand Likeability scale 39 Table 4.10: Component matrix for Brand Likeability scale 40 Table 4.11: EFA for Relational Switching cost scale 41 Table 4.12: Component matrix for Relational Switching Cost scale 41 Table 4.13: EFA for WOM scale 42 Table 4.14: Component matrix for WOM scale 42 Table 4.15: EFA for Repurchase Intention scale 43 Table 4.16: Component matrix for Repurchase Intention 43 Table 4.17: Correlations 45 Table 4.18: Collinearity Statistics 45 Table 4.19: Regression analysis coefficients 46 LIST OF FIGURES Figure 2.1: Proposed theoretical model 22 Figure 3.1: Research process proposed by the author 23 Figure 4.3: Retailing companies distribution 34 CHAPTER 1: 1.1 INTRODUCTION Background and necessary of the research Retailing alluded to direct sale of goods to the ultimate consumers who not commercialize or reselling In the other words, these products or services are just for their own use There are many different types of retailing organizations such as independent stores, conjoint retailers, hypermarkets, chain stores or shopping malls Retailing activities could be directly related many environmental issues such as “energy and water consumption, waste, the volume of packaging, land use, and transportation, the use of chemicals by suppliers and offering genetically modified food” (Martinuzzi, et al., 2011) Additionally, retailing is an intensely competitive market Therefore, maintaining repurchase behavior of customers is very important to retailing companies Especially in the case that costs of attracting and getting new customer are estimated to times as big as retaining the existing ones (Huddleston, et al., 2004) Moreover, customer loyalty can benefit firms by an increase in loyal customers’ spending and appealing potential customers through oral communication among people (Curasi & Kennedy, 2002) At the same time, customers are believed to be unlikely to purchase products or service which has low or unacceptable corporate social performance (Castaldo & Perrini, 2004) and they expect the brand they are going to buy product or service to meet some certain minimum level of social performance as well (Meijer & Schuyt, 2005) In this case, CSR is considered as integral value when customers make purchase decision In other words, retailing companies are supposed to implement their social responsibilities as a corporate citizen so that they can create their positive public image and opinion (Jones, et al., 2007) besides their purpose of economic gain Vietnamese retailing industry has been thriven consecutively and impressively over the recent years (McKinsey & Company, 2019) This is so fascinating an emerging market that the flock of foreign investors would like to jump into According to Vietnamese General Statistics Office, in 2019, retailing sales of goods reached nearly USD $ 162 billion, accounting for 75.9% of the total and increasing by 12.7% compared to 2018 In 2018, retailing sales Vietnam's goods were estimated at nearly 143 billion USD which increased by 12.4% over the previous year In 2017, it was nearly 130 billion USD which increased by 10.9% In 2016, retailing sales reached about USD 118 billion, increasing by 10.2% compared to USD 110 billion of 2015 Along with the impressive growth rate, the fact that the Vietnamese retailing market fully opened to allow foreign enterprises to invest 100% capital since January 11, 2015 and the signing of a series of new generation of Free Trade Agreements have led to fierce competition between retail supermarket systems in Vietnam market with the arrival of many large enterprises from abroad such as Lotte, K Mart , Central Group, Aeon, , Auchan, Family Mart or Circle K Therefore, maintaining repurchase behavior of customers and efforts to differentiate itself from others are very important to retailing companies in Vietnam now In the current context of Vietnam, many businesses are not paying attention to their social responsibility, which includes frauds in business, production of poor quality goods or intentionally causing environmental pollution have made many customers annoyed (Hoang, 2019) Whereas, customers are believed to be unlikely to purchase products or service which has low corporate social performance (Meijer & Schuyt, 2005) Therefore, executing social responsibilities is an effective marketing tool and an indispensable condition for retailing companies in Vietnam in term of creating positive opinion (Jones, et al., 2007) and meeting customers’ certain minimum level of social engagement (Meijer & Schuyt, 2005) which in turn can help them increase loyal customers’ spending, appeal potential consumers through WOM communication (Curasi & Kennedy, 2002) and make themselves become more outstanding relative to their competitors (Porter & Kramer, 2007) through enhancing customer loyalty (Martínez & Bosque, 2013) Additionally, CSR has gotten lots of attention from researchers and become a main topic in customer behavior literature (Amatulli, et al., 2018) In addition to literature which Item-Total Statistics Scale Mean Scale Corrected Cronbach's if Item Variance if Item-Total Alpha if Deleted Item Correlation Item Deleted Deleted WOM1 7.31 2.763 821 841 WOM2 7.32 2.797 809 851 WOM3 7.32 2.720 777 880 Repurchase Intention-RI scale Reliability Statistics Cronbach's N of Alpha Items 929 Item-Total Statistics Scale Mean Scale Corrected Cronbach's if Item Variance if Item-Total Alpha if Deleted Item Correlation Item Deleted Deleted RI1 7.72 2.865 857 893 RI2 7.70 2.998 824 920 RI3 7.65 2.846 880 875 80 APPENDIX EFA CSR scale-1st test KMO and Bartlett's Test Kaiser-Meyer-Olkin Measure of 931 Sampling Adequacy Approx Chi- 2512.4 Bartlett's Test of Square 91 Sphericity df 136 Sig .000 Total Variance Explained Compon Initial Eigenvalues ent Total % of Variance Extraction Sums of Rotation Sums of Squared Loadings Squared Loadings Cumul Tota ative l % 8.645 50.855 50.855 1.943 11.428 62.283 1.310 7.704 69.987 730 4.293 74.279 557 3.275 77.554 544 3.200 80.755 % of Cumul Tota % of Cumul Varia ative Varia ative nce % nce % 4.29 25.26 25.26 7 4.05 23.83 49.09 1 3.55 20.88 69.98 8.64 50.85 5 1.94 11.42 1.31 50.855 62.283 7.704 69.987 l 81 449 2.644 83.399 406 2.391 85.790 381 2.239 88.029 10 376 2.210 90.239 11 307 1.806 92.045 12 298 1.754 93.798 13 263 1.546 95.344 14 217 1.274 96.618 15 205 1.208 97.826 16 198 1.165 98.991 17 172 1.009 100.00 Extraction Method: Principal Component Analysis Rotated Component Matrixa Component ECSR3 836 ECSR4 829 ECSR6 813 ECSR1 801 ECSR2 716 ECSR5 692 StCSR4 793 StCSR2 790 StCSR3 787 StCSR6 763 82 StCSR1 745 StCSR5 640 453 SCSR4 761 SCSR2 756 SCSR3 737 SCSR1 715 SCSR5 709 CSR scale-2nd test KMO and Bartlett's Test Kaiser-Meyer-Olkin Measure of Sampling 926 Adequacy Approx Chi-Square 2290.75 Bartlett's Test of Sphericity df 120 Sig .000 Total Variance Explained Comp Initial Eigenvalues onent Tota % of l Varianc Extraction Sums of Rotation Sums of Squared Loadings Squared Loadings Cumula Total tive % e 8.06 1.88 % of Varianc Cumula Total tive % e % of Cumula Varianc tive % e 50.413 50.413 8.066 50.413 50.413 4.241 26.505 26.505 11.752 62.165 1.880 11.752 62.165 3.604 22.527 49.032 83 1.30 8.171 70.336 1.307 693 4.328 74.665 556 3.478 78.143 526 3.288 81.431 436 2.724 84.155 406 2.535 86.690 380 2.377 89.067 10 344 2.152 91.219 11 300 1.873 93.092 12 271 1.691 94.783 13 249 1.559 96.342 14 207 1.292 97.634 15 199 1.245 98.879 16 179 1.121 100.000 8.171 70.336 3.409 21.304 70.336 Extraction Method: Principal Component Analysis Rotated Component Matrixa Component ECSR3 838 ECSR4 830 ECSR6 817 ECSR1 803 ECSR2 715 ECSR5 689 StCSR3 798 StCSR4 789 84 StCSR2 787 StCSR6 769 StCSR1 734 SCSR4 769 SCSR2 760 SCSR3 737 SCSR1 719 SCSR5 711 Brand Likeability and Relational Switching Cost KMO and Bartlett's Test Kaiser-Meyer-Olkin Measure of Sampling Adequacy Approx ChiSquare Bartlett's Test of df Sphericity Sig Comp onent 880 1041.06 21 000 Total Variance Explained Initial Eigenvalues Extraction Sums of Rotation Sums of Squared Loadings Squared Loadings Tota % of Cumula Total % of Cumula Total % of Cumula l Varianc tive % Varianc tive % Varianc tive % e e e 4.57 65.314 65.314 4.572 65.314 65.314 3.179 45.409 45.409 1.02 14.606 79.920 1.022 14.606 79.920 2.416 34.511 79.920 419 5.988 85.907 308 4.404 90.312 272 3.879 94.191 85 228 3.264 97.454 178 2.546 100.000 Extraction Method: Principal Component Analysis Rotated Component Matrixa BL4 BL3 BL1 BL2 RSC3 RSC2 RSC1 Component 0.866 0.849 0.848 0.847 0.84 0.834 0.819 Word of Mouth-WOM scale KMO and Bartlett's Test Kaiser-Meyer-Olkin Measure of Sampling Adequacy Approx Chi-Square Bartlett's Test of Sphericity df Sig .749 394.194 000 86 Total Variance Explained Compone Initial Eigenvalues Extraction Sums of Squared nt Loadings Total % of Cumulative Variance % 2.502 83.404 83.404 285 9.483 92.888 213 7.112 100.000 Total 2.502 % of Cumulative Variance % 83.404 83.404 Extraction Method: Principal Component Analysis Component Matrixa Component WOM1 923 WOM2 917 WOM3 899 Repurchase Intention scale KMO and Bartlett's Test Kaiser-Meyer-Olkin Measure of Sampling Adequacy Approx Chi-Square Bartlett's Test of Sphericity df Sig .755 509.62 000 87 Total Variance Explained Compone Initial Eigenvalues Extraction Sums of Squared nt Loadings Total % of Cumulative Variance % 2.625 87.507 87.507 230 7.658 95.166 145 4.834 100.000 Total 2.625 % of Cumulative Variance % 87.507 87.507 Extraction Method: Principal Component Analysis Component Matrixa Component RI3 948 RI1 938 RI2 920 88 APPENDIX 4: REGRESSION ANALYSIS CSR dimensions and Brand Likeability Model Summaryb Mode R R l Adjusted R Std Error of Square 822a Square 676 the Estimate 672 DurbinWatson 42461 1.839 a Predictors: (Constant), STCSR, ECSR, SCSR b Dependent Variable: BL ANOVAa Model Sum of df Mean Squares Regressio n Residual Total F Sig Square 78.305 37.501 208 115.805 211 26.102 144.774 000b 180 a Dependent Variable: BL b Predictors: (Constant), STCSR, ECSR, SCSR Coefficientsa Model Unstandardized Standardiz t Coefficients ed Sig Collinearity Statistics Coefficien ts B Std Error Beta Toleran VIF ce 89 (Consta 431 171 SCSR 192 050 212 3.872 000 520 1.924 ECSR 116 044 132 2.620 009 612 1.634 STCSR 623 056 584 11.052 000 557 1.796 nt) 2.523 012 a Dependent Variable: BL CSR dimensions and Relational Switching Cost Model Summaryb Mode R l R Adjusted R Std Error of Square 646a Square 417 the Estimate 408 DurbinWatson 60408 1.984 a Predictors: (Constant), STCSR, ECSR, SCSR b Dependent Variable: RSC ANOVAa Model Sum of df Mean Squares Regressio n Residual Total F Sig Square 54.241 18.080 75.903 208 365 130.144 211 49.547 000b a Dependent Variable: RSC b Predictors: (Constant), STCSR, ECSR, SCSR 90 Coefficientsa Model Unstandardized Standardiz Coefficients ed t Sig Collinearity Statistics Coefficien ts B Std Beta Toleran Error (Consta 1.031 243 SCSR 338 070 ECSR 223 STCSR 180 nt) VIF ce 4.241 000 352 4.794 000 520 1.924 063 239 3.537 000 612 1.634 080 159 2.246 026 557 1.796 Brand Likeability, Relational Switching Cost and Word of Mouth Model Summaryb Model R 822a R Square Adjusted 676 R Std Error of Durbin- Square the Estimate Watson 673 46368 1.873 a Predictors: (Constant), RSC, BL b Dependent Variable: WOM 91 ANOVAa Model Sum of df Mean Square F Sig Squares Regression 93.712 46.856 Residual 44.936 209 215 Total 138.648 211 217.932 000b a Dependent Variable: WOM b Predictors: (Constant), RSC, BL Coefficientsa Model Unstandardized Standardi t Coefficients zed Sig Collinearity Statistics Coefficien ts B Std Beta Toleran VIF Error (Consta -.037 180 BL 710 055 649 12.927 000 615 1.625 RSC 251 052 243 4.841 000 615 1.625 nt) ce -.204 838 a Dependent Variable: WOM 92 Brand Likeability, Relational Switching Cost and Repurchase Intention Model Summaryb Model R 829a R Square Adjusted 688 R Std Error of Durbin- Square the Estimate Watson 685 46981 2.218 a Predictors: (Constant), RSC, BL b Dependent Variable: RI ANOVAa Model Sum of df Mean Square F Sig Squares Regression 101.733 50.866 Residual 46.131 209 221 Total 147.863 211 230.456 000b a Dependent Variable: RI b Predictors: (Constant), RSC, BL 93 Coefficientsa Model Unstandardized Standardize t Coefficients d Sig Collinearity Statistics Coefficient s B Std Error Beta Toleranc VIF e (Constan 034 183 BL 491 056 RSC 519 053 t) 187 852 434 8.821 000 615 1.625 487 9.882 000 615 1.625 a Dependent Variable: RI 94 .. .VIETNAM NATIONAL UNIVERSITY, HANOI VIETNAM JAPAN UNIVERSITY NGO THANH THANH HUYEN IMPACT OF CORPORATE SOCIAL RESPONSIBILITY ON CUSTOMER LOYALTY BEHAVIORS: EVIDENCE FROM VIETNAM. .. (word of mouth and repurchase intention) ? How significant CSR dimensions (environment, society, stakeholders) impact on relational switching cost which in turn impacts on customer loyalty behaviors. .. context of Vietnam, many businesses are not paying attention to their social responsibility, which includes frauds in business, production of poor quality goods or intentionally causing environmental