Exploring corporate citizenship and purchase intention

Exploring corporate citizenship and purchase intention: mediating effects of brand trust and corporate identification Yuan Hui Tsai1,Sheng-Wuu Joe2,Chieh-Peng Lin3,Chou-Kang Chiu*,4andKuei-Tzu Shen31.Department of Finance,Chihlee Institute of Technology,New Taipei City,Taiwan2.Department of Business Administration,Vanung University,Chung-Li City,Taiwan3.Institute of Business&Management,National Chiao Tung University,Taipei,Taiwan4.Master Program of Business Administration,National Taichung University of Education,Taichung City,TaiwanCorporate citizenship represents various organizational activities and status related to the organization’s societal and stakeholder obligations.This study developsfive different dimensions of corporate citizenship and examines the relationship between thefive dimensions and purchase intention by including two key mediators.In the proposed model of this study,purchase intention is indirectly affected by economic,legal,ethical, general philanthropic,and strategic philanthropic citizenship via the mediation of corporate identification and brand trust.Empirical testing using a survey of353consumers from various industries confirms most of our hypothesized st,managerial implications for corporate leaders and limitations of ourfindings are discussed in depth.IntroductionA growing interest for corporate citizenship is appar-ent in both practice and research,discussing how business corporations integrate social demands into their operations to lift consumers’purchase inten-tion.It is important to assess consumers’purchase intention from a perspective of corporate citizenship because such citizenship contains most of the impor-tant issues consumers always put emphasis on. Corporate citizenship is defined as a company’s self-regulated management of its business activities and influences to advance a social agenda beyond that required by law(Lin2010;Lin et al.2010).Although corporate social responsibility(CSR),defined as a firm’s obligation to respond to the externalities created by market actions(Husted&Allen2006),is often regarded to have a similar meaning as that of corporate citizenship(Valor2005),they are different in that corporate citizenship is a result of the inclu-sion of CSR ideas into the global corporate strategy. Following previous literature,this study focuses on corporate citizenship that represents a descriptive conceptualization of what does happen,rather than a normative conceptualization of what should happen(Matten&Crane2005).Corporate citizen-ship represents organizational activities and status related to the organization’s societal and stakeholder*Corresponding author©2014The AuthorsBusiness Ethics:A European Review©2014John Wiley&Sons Ltd,9600Garsington Road, Oxford OX42DQ,UK and350Main St,Malden,MA02148,USA doi:10.1111/beer.12073361(or consumer)obligations(Luo&Bhattacharya 2006).A growing interest for corporate citizenship is apparent in both practice and research,presenting how business corporations incorporate social demands into their operations,what benefits the cor-porations may expect,and how the corporations appropriately play the social role of business in a long run(Maignan&Ferrell2001;Matten&Crane 2005).Corporate citizenship entails a‘negative injunction’to avoid potential harms(or social inju-ries)and correct activities that might unexpectedly injure others(Simon et al.1983:p.87).Corporate citizenship is more than just raising customer value from a marketing perspective,and such citizenship is focused and obtained by manyfirms even if they might not benefit from the citizenship(i.e.irrelevant to customer value)(Lantos2001).Examples of selling or marketing benefits from corporate citizen-ship for business organizations may result in the ability to charge a premium price for a product,to obtain a good business image,and to foster custom-ers’trust and identification(e.g.Maignan&Ferrell 2001;David et al.2005;Carmeli et al.2007;Vlachos et al.2009).Corporate citizenship refers to the moral obliga-tions that maximize the positive influence of the organization on its social environment(e.g.environ-mental protection,social charities,etc.)and mini-mize the negative influence(Berens et al.2005;de los Salmones et al.2005).Previous literature has indi-cated that corporate citizenship perceived by con-sumers is critical during the communication between the customers and their product or service providers (Sen&Bhattacharya2001;Becker-Olsen et al.2006). When communicating with customers to boost their purchase intention,business corporations apply dif-ferent methods and strategies to present their product or service by,for example,associating their product or service with their particular corporate citizenship image.This is understandable,because customers’different types of associations with a company’s corporate citizenship often generate dif-ferent influences on their evaluation(e.g.trust and identification)(Sen&Bhattacharya2001;Berens et al.2005,2007),consequently influencing purchase intention(e.g.Marin&Ruiz2007;Vlachos et al. 2009).This study proposes and examines corporate identification and brand trust as two key mediators between corporate citizenship and purchase inten-tion.In this study,brand trust refers to the willing-ness of the consumers to rely on a brand in which they have confidence toward the brand’s reliability, honesty,and altruism(Wang2002),whereas corpo-rate identification of consumers is defined as the extent to which the consumers use their relationship with a service corporation to satisfy their important self-definitional needs,such as identity similarity (Bhattacharya et al.1995;Grégoire&Fisher2006). Based on the preceding discussion,the research objective of this study is to explore the salient influ-ences that drive consumers’purchase intention and their mediating mechanisms.Although some studies have proposed corporate trust as a key determinant of consumers’purchase intention(Sirdeshmukh et al.2002),this study complements previous studies by examining brand trust that is actually more criti-cal than corporate trust in affecting purchase inten-tion for a particular product brand.Collectively, brand trust and corporate identification are both important for understanding consumers’purchase intention,because previous literaturefinds that com-panies with favorable reputations benefit from build-ing trust and identification among customers,which, in turn,positively influence behavioral intentions (Keh&Xie2009).According to a majority of previous studies,cor-porate citizenship is considered to include four dimensions:economic,legal,ethical,and philan-thropic citizenship(Schwartz&Carroll2003;Lin 2010;Lin et al.2010,2012a,2012b).Unfortunately, many academic studies have not sufficiently contrib-uted to our understanding of how corporate citizen-ship impacts consumers’purchase intention from the perspective of strategic corporate citizenship(e.g. Lantos2001;Husted&Allen2007).Successful stra-tegic management of corporate citizenship allows business corporations to take into account legitimate stakeholder claims,focusing and expanding work in those areas where a business competitive advantage can be created,while assigning an appropriate allo-cation of resources to meet social needs(Husted& Allen2007).Another benefit of successful corporate citizenship strategy is that it encourages business cor-porations to seek effective ways in which social action also leads to profit(Husted&Allen2007).In©2014The Authors Business Ethics:A European Review©2014John Wiley&Sons Ltd362other words,management should recognize that business organizations can make a contribution to a better quality of life through,for example,social action programs without sacrificing their business profits.Drawing upon previous literature,this study pro-posesfive dimensions of corporate citizenship,includ-ing economic citizenship,legal citizenship,ethical citizenship,general philanthropic citizenship,and strategic philanthropic citizenship.Economic citizen-ship is defined as the responsibilities of a corporation to produce goods or services that society wants and to sell them at fair prices;legal citizenship refers that a corporation should always obey the laws–the‘codi-fied ethics’;ethical citizenship is considered the responsibilities to‘embody the full scope of norms, standards,and expectations that reflect a belief of what consumers regard as fair,just,and in keeping with the respect for or the protection of consumers’moral rights’(Carroll&Buchholtz2003;Jia2004); general philanthropic citizenship is regarded as the responsibilities to participate in discretionary activi-ties(e.g.charity donations,volunteerism,etc.)that are not directly related to business operations at all (e.g.establishing independent charitable foundations for the discretionary activities);and strategic philan-thropic citizenship is defined as the synergistic use of organizational core competencies and resources to address key stakeholders’interests and to achieve both organizational and social benefits(e.g.reducing waste and saving energy during production) (McAlister&Ferrell2002).For the purpose of exploring in depth the influence of corporate citizenship from a strategic manage-ment viewpoint,this study further decomposes phil-anthropic citizenship(i.e.the fourth dimension)into two distinct constructs:general philanthropic citi-zenship and strategic philanthropic citizenship.It is important to differentiate general philanthropic citi-zenship from strategic philanthropic citizenship, because these two initiatives specifically differ in terms of employee involvement and the source of budget dollars(McAlister&Ferrell2002).Without learning general and strategic philanthropic citizen-ship in detail,management is unable to invest in appropriate philanthropic practices which contrib-ute to the long-term success of thefirm(Burke& Logsdon1996).Indeed,previous literature indicates that strategic philanthropic and business units have joined forces to increase their name recognition among consumers,increase marketing effectiveness, and foster synergy among business units(McAlister &Ferrell2002).Whereas some business corporations with good philanthropic citizenship have still encountered financial difficulties(e.g.low sales),we believe that the explanation for this decline lies in the premise for whether the corporations perform their philan-thropic citizenship from a strategic point of view. In other words,a reorientation of thefirm’s phil-anthropic citizenship may support itsfinancial interests as well as other stakeholders’interests in the society(Burke&Logsdon1996).Therefore, how to reorient corporations toward a more strate-gic philanthropic perspective is the key to inspiring more effective corporate citizenship activities,even-tually providing consumers’benefits.For that reason,this study proposes that corporate citizen-ship includefive dimensions:economic citizenship, legal citizenship,ethical citizenship,general philan-thropic citizenship,and strategic philanthropic citizenship.This study differs from previous research in two important ways.First,this study is a pioneer that proposesfive dimensions of corporate citizenship. Examining different dimensions of corporate citi-zenship is like opening up the black box of corpo-rate citizenship,because such citizenship does mean something,but not always the same thing,to every-body(Turker2009).These dimensions are relevant and important in the study of corporate citizenship because these dimensions can jointly provide a very clear instrumental stance(that corporations are capable of assuming economic responsibilities),a legal stance(that corporations are capable of assuming legal responsibilities),a philosophical and normative undertone(that these responsibilities should extend further than the mere generation of profit and upholding of the law),and is also based on the assumption that stakeholders do indeed have articulated expectations of morality and participa-tion in social affairs(Küskü&Zarkada-Fraser 2004).In terms of philanthropic citizenship,it is too arbitrary to conclude that there is one and only one kind of philanthropic citizenship without under-standing that such citizenship actually contains two©2014The AuthorsBusiness Ethics:A European Review©2014John Wiley&Sons Ltd363different traits(i.e.general and strategic traits).By empirically testingfive dimensions of corporate citi-zenship,this study complements previous literature by clearly indicating what corporate citizenship management should focus on so as to obtain high purchase intention.Second,while some research linking corporate citizenship to purchase intention has not examined the potential mediators(e.g.Ross et al.1991,1992; Mohr et al.2001),this study examines their mediat-ing mechanisms to complement previous research.It is too assertive to conclude that companies can obtain consumers’high purchase intention due to corporate citizenship without understanding the key mediators that actually drive their purchase inten-tion.Specifically,this study proposes brand trust and corporate identification as the mediators that have been partially supported by various theories and have exerted an influence on purchase intention (Wu&Tsai2007;Matzler et al.2008).For example, a survey in a previous study reveals that approxi-mately80%of consumers have greater trust in and identification with companies that support corpo-rate citizenship,and86%would switch their pur-chase to a CSR-related product when faced with a choice of equal product price and quality(Gupta& Pirsch2006).Hence,this study argues that in today’s era of unprecedented corporate influence and consumerism,companies that present and offer attractive,reliable social identities and associations to customers are likely to satisfy critical customers’self-definitional needs(Bhattacharya&Sen2003) and trustworthy experiences(e.g.Mohr&Webb 2005),consequently fostering consumers’purchase intention.Research model and development of hypothesesThis study proposes a model that examines the rela-tionship between corporate citizenship,purchase intention,and their mediators.In the model,pur-chase intention is indirectly influenced byfive dimensions of perceived corporate citizenship through the mediation of brand trust and corporate identification.Whereas general philanthropic citizenship of a firm is often demonstrated by its funding projects of charities or social welfare(e.g.purelyfinancial support for the external projects),strategic philan-thropic citizenship is presented by its embedding business efforts into its operation(e.g.contributions for internal production to improve society’s welfare). Our reconceptualization of these two kinds of citi-zenship is consistent with previous literature suggest-ing that research efforts should be redirected toward assessing whether corporate actions are in society’s interests(Matten&Crane2005).In this study,the differences between these two kinds of citizenship can be clearly recognized by consumers.Specifically, the former(i.e.general philanthropism)has nothing to do with the direct sales of thefirm(e.g.charity concerts)for the only purpose of improving social welfare,while the latter(strategic philanthropism)is the production-oriented(or service-oriented)mani-festation for the purpose of improving society’s interests(e.g.through the quality service or product thefirm provides in the market).It is important to note that afirm’s original intention for general philanthropism is to do something purely for the good of the society without considering marketing benefits(even if the business might not benefit from this).In contrast,strategic philanthropism creates a win–win situation in which both the corporation and one or more stakeholder groups benefit(Lantos 2001).Given such intention,altruistic actions by a firm should be encouraged.All in all,the develop-ment of our hypotheses is justified in detail in the following.Identification with social entities plays a vital role when it comes to the development of people’s social identity(e.g.Tajfel&Turner1985).People develop social identity by establishing cognitive links between themselves and groups or organizations in society(Einwiller et al.2006).Corporate identifica-tion(i.e.afirm’s image identified by its consumers) is the main psychological substrate for a kind of deep,committed,and meaningful relationship that marketers are increasingly seeking to build with their consumers(Bhattacharya&Sen2003).Previ-ous literature has suggested a positive effect of cor-porate identification on purchase intention(e.g. Cornwell&Coote2005;Wu&Tsai2007).Rooted originally in social identity theory,corporate iden-©2014The Authors Business Ethics:A European Review©2014John Wiley&Sons Ltd364tification exerts influence on purchase intention and behavior,because consumers often go beyond their personal identity to develop a social identity with the hope of articulating their sense of self(Brewer 1991),and thus they may identify with companies that provide a good service or product(Scott& Lane2000).Identification causes consumers to become psychologically attached to and care about the business corporation(e.g.Bhattacharya&Sen 2003),which consequently strengthens their pur-chase intention.Some of the strongest consumer–company relationships occur when consumers identify with the business corporation that gratifies one or more of their own needs of self-identity(i.e. the extent to which aspects of an organization’s identity overlap with consumers’identities) (Bhattacharya&Sen2003).As consumers identify with a business corporation,their purchase inten-tion is often immune to minor variations in product (or service)formulation and thus extend to all the products and services provided by the corporation (e.g.Bhattacharya&Sen2003).Hypothesis1:Corporate identification is positivelyrelated to purchase intention. Similar to the positive effect of corporate identifi-cation on purchase intention,brand trust has also a positive effect on purchase intention,because such trust facilitates exchange relationships that are highly valued(Matzler et al.2008).Brands that make consumers happy,joyful,or affectionate elicit stronger purchase intention(Matzler et al.2008). Previous literature recognizes trust as a prerequisite for building customer relationship and consequently facilitating purchase intention(Bhattacharya&Sen 2003;Vlachos et al.2009).Particularly,brand trust that reduces uncertainty(e.g.high reliability)often leads to enhanced consumers’purchase intention and behavior(e.g.Chaudhuri&Holbrook2001). Purchase intention necessitates brand trust,because the presence of trust increases consumers’beliefs that brand sellers will not engage in opportunistic behav-ior(e.g.Gefen2000;McCole&Palmer2001). Many studies have similarly concluded that the higher the degree of consumer brand trust,the higher the degree of their purchase intention(Delgado-Ballester&Munuera-Alemán2001).Based on the above rationales about brand trust and corporate identification,this study develops the following hypotheses.Hypothesis2:Brand trust is positively related to pur-chase intention.Corporate identification is positively affected by corporate citizenship(e.g.Lichtenstein et al.2004). Previous research suggests that people’s identification with a company is based on their perceptions of its core values or defining characteristics(e.g.corporate citizenship)–that is,its perceived identity(Dutton et al.1994).This identity is shaped by the company’s mission,corporate self-regulation processes(e.g. Wood1991),activities and status related to the com-pany’s societal and stakeholder obligations(e.g.Luo &Bhattacharya2006),and,as do individual identi-ties,represent possible hierarchical constellations of characteristics or values(Scott&Lane2000)that are central to the company,distinctive from other com-panies,and relatively enduring over time(Albert& Whetten1985).This phenomenon suggests a positive relationship between perceived corporate citizenship and corporate identification.How thefive dimensions of corporate citizenship positively influence corporate identification can be seen from various aspects,respectively.To begin with,corporate identification is positively affected by economic citizenship due to the fact that the neces-sary and foremost corporate citizenship of a business is economic in nature,because the business organi-zation is the basic economic unit in our society (Carroll1979)that takes care of its consumers (Turker2009).For example,the value of product or service distinctiveness(i.e.an economic trait)is an important characteristic of businessfirms from an identity attractiveness perspective(Bhattacharya& Sen2003).Cucka(2005)thinks that organizing quality and beneficial services(i.e.economic citizen-ship)to be both distinctive and relevant to the market is the way to make the service attractive and improve corporate identification(Wu&Tsai2007). Second,based on social identity theory,with a legally and ethically reliable base in relationships, consumers feel comfortable about those business corporations that provide a reliable product or service without breaking laws and ethics,resulting in©2014The AuthorsBusiness Ethics:A European Review©2014John Wiley&Sons Ltd365the strengthened influence of perceived legal and ethical citizenship on corporate identification.In fact,to be well identified by their consumers,most firms understand the need to be economically suc-cessful(i.e.economic citizenship)and the impor-tance of complying with laws and ethics within society(i.e.legal and ethical citizenship)(McAlister &Ferrell2002).For example,previous literature suggests that although many ethics programs focus on relationships with employees,suppliers,share-holders,and regulators,such programs may be even more important for customers that are key stake-holders helping establish thefirm’s reputation and identification(Ferrell2004).Finally,corporate citizenship actions,in the form of general philanthropy(e.g.discretionary charity donations)and strategic philanthropy(e.g.produc-tion based on environmental concern),associate the company with an image of responsiveness to the needs of the society it depends on for survival.There-fore,consumers who are aware of a company’s efforts at general and strategic philanthropy display higher levels of corporate identification than those who are not aware of such initiatives(Sen et al.2006;Marin et al.2009).For example,in the UK a number of charities or business organizations have undergone various repositioning exercises in an attempt to achieve differentiation from other organizations and obtain high levels of corporate identification in the society(Balmer&Gray1999).A well-known example of this was the identity change of the UK children’s charity organization,Dr Barnardo’s(Balmer&Gray 1999).Based on the above justifications,the hypoth-esis about perceived corporate citizenship and corpo-rate identification can be derived as below. Hypothesis3:Corporate citizenship including(a)eco-nomic citizenship,(b)legal citizenship,(c)ethical citizenship,(d)general phil-anthropic citizenship,and(e)strategicphilanthropic citizenship,is positivelyrelated to corporate identification. Corporate citizenship positively affects brand trust,because brand trust involves a calculative process based on the ability of an object or party(e.g. the brand provider)to meet its responsibilities(i.e. corporate citizenship)and on an estimation of the costs vs.rewards of staying in the relationship (Doney&Cannon1997;Chaudhuri&Holbrook 2001;Um2008).Previous research indicates that consumers’trust can be effectively fostered based on ‘the expectation of ethically justifiable behavior’(Hosmer1995:399).Sincefirms’involvement in cor-porate citizenship campaigns is considered an ethi-cally justifiable behavior(e.g.Godfrey2005;Vlachos et al.2009),consumers who perceive such corporate citizenship strongly are likely to yield strong trust toward the brand of thefirms.As brand trust repre-sents consumers’trust about the brand’s reliability, honesty,and altruism(Wang2002),corporate citi-zenship that is built upon the principles of reliability (Garriga&Melé2004;Mohr&Webb2005),honesty (McWilliams&Siegel2001;McWilliams et al.2006), and altruism(Lantos2001,2002)substantially affects the brand trust.How thefive dimensions of corporate citizenship positively influence brand trust can be explained from various angles,respectively.To begin with,pre-vious literature based on asymmetrical reciprocity and trust sheds light on brand communication and perception of brand trust,primarily in the relation-ships between corporations and consumers(e.g. Gustafsson2005).Brand trust can be obtained when the brand owner appears trustworthy in the eyes of consumers(Holt2002;Gustafsson2005).The corpo-ration that provides the product which society wants and sells to them at fair prices(i.e.economic citizen-ship),obeys the laws(i.e.legal citizenship)(e.g.Van den Brink et al.2006),and respects consumers’moral rights(i.e.ethical citizenship)(Gustafsson 2005)is likely to bring about trustworthiness in its brand.Consumers perceive strong social reciprocity from the corporation for its philanthropic actions–such as,for example,the discretionary sponsorship for social welfare(i.e.general philanthropic citizen-ship)and the convergence of branding and energy saving(i.e.strategic philanthropic citizenship)(e.g. Blumenthal&Bergstrom2003).Based on the above rationales,the hypothesis about perceived corporate citizenship and brand trust can be developed as below.Hypothesis4:Corporate citizenship including(a)economic citizenship,(b)legal citizen-ship,(c)ethical citizenship,(d)©2014The Authors Business Ethics:A European Review©2014John Wiley&Sons Ltd366general philanthropic citizenship,and(e)strategic philanthropic citizenship,is positively related to brand trust.In summary,based on the preceding hypotheses, this study contributes to the social psychology and business management literature by extending pur-chase intention models to considering the previously unexplored area offive corporate citizenship dimen-sions,by presenting an operationalization of corpo-rate identification and brand trust,and by empirically testing the complicated relationships among these factors.Without understanding different corporate citizenship dimensions and their mediators in depth, management will be incapable of leveraging resources to achieve long-run success of thefirm.As a whole, this research recommends the establishment of the value of corporate citizenship not only as a form of utilitarian marketing,but also as a form of social marketing.The investigations of the impact of corpo-rate citizenship on consumers in this study guide the development of corporate citizenship programs toward a prosperous direction of business sustainability.MethodsSubjects and proceduresThe research hypotheses proposed by this study were empirically tested using a survey of consumers of the largest telecommunication company in Taiwan.The consumers who work professionally across25large high-techfirms are randomly surveyed since working professionals often make up critical and beneficial market segmentations for telecommunications com-panies.More specifically,we surveyed the working professionals as our consumer subjects across high-tech industries because these subjects arefinancially independent,heavily count on C&C service(-puter and communication service),and have plentiful consuming experiences of using a variety of service provided by telecommunications companies(e.g.3G and WiFi packages).For that reason,this study can accurately measure their purchase intention and examine its formation process.On the contrary,if consumers who were notfinancially independent(e.g. students or housewives)were surveyed,their consum-ing experiences would be highly limited and thus their purchase intention may be inaccurately measured. This study invited senior managers working in our target companies to help conduct the survey.Of the 371questionnaires distributed,353usable question-naires were returned for a questionnaire response rate of95.15%.Our survey’s satisfactory response rate was mainly due to the full support of our sample firms in which their managersfirst helped distribute the questionnaires to employees expressing their voluntariness and then traced the status of returned questionnaires.In our sample,150participants were male(42.49%)and343participants had a bachelor’s degree or higher(97.17%).A total of83respondents in the survey were married(23.51%),while the remaining270respondents(76.49%)were not married.MeasuresThe constructs in this study were measured using 5-point Likert scales drawn and modified from previ-ous literature.Three steps were taken to prepare our measurement items.First,the English items originally from the literature were precisely translated into Chinese items which were then further refined,modi-fied,or dropped by a focus group of four persons familiar with corporate citizenship and consumer behavior,including three graduate students and one professor.Second,following the preparation of mea-surement items,this study performed a pilot test (prior to the actual survey)to assess the quality of our items to improve their wording or readability.Some inappropriate items were refined or removed from our questionnaire after the pilot test was analyzed using exploratory factor analysis with the promax oblique rotation.It is important to note that the subjects in the pilot test were consumers excluded from the subse-quent stly,the back-translation tips sum-marized by Reynolds et al.(1993)were adopted as a benchmark to assure the consistency between an English version questionnaire and a Chinese one by an outside professor who was not an author of this study.The outside professor confirmed a high degree of correspondence between the two questionnaires, suggesting that the translation process of this study did not substantially introduce artificial translation biases in the Chinese version of our questionnaire.©2014The AuthorsBusiness Ethics:A European Review©2014John Wiley&Sons Ltd367。