Corporate Social Responsibility and Consumer Psychology: A Competitive Advantage

Abstract

In this post-COVID era, consumer presence is felt more than ever, especially in the corporate world. Consumers should embrace the more positive and distinctive identity of a company that engages in corporate social responsibility, which bound companies to focus more on their moral, ethical, and social obligations beyond their economic interests. Consumers are more likely to act favorably toward a company that has acted to benefit its customers as opposed to just delivering quality products. Recent research finds that CSR can reduce anger and negative word-of-mouth following service failures and increase behavioral loyalty along with a favorable attitude and intrinsic motivation to facilitate the brand. These findings suggest the role of company involvement (donating funds, providing/developing corporate capabilities), and their precise structure, such as cause-related marketing, corporate social marketing, corporate philanthropy, and socially responsible business practices, are required. In this chapter, we will try to understand the impact of CSR on consumer behavior. Also explore the science of consumerism by exploring the key areas of consumer psychology and its relationship with the perceived corporate value, trust, and commitment, which, in turn, results in an increase in satisfaction, loyalty, and consumer well-being.

1. Introduction

The topic of corporate social responsibility is widely searched in the fields of business, consumer psychology, and marketing. These days, CSR is seen as a strategic instrument to help the company reach its financial goals and build wealth. Consumers today understand the importance of corporate social responsibility and ethics in business. In light of this, businesses now have greater obligations, and to attract and retain customers, they are working harder to promote the welfare of society and the environment. Businesses and enterprises benefit from this as a competitive edge. As a result, implementing corporate social responsibility is a crucial marketing strategy that offers businesses a competitive edge [1].

It implies a company’s societal, moral, and ethical responsibilities in addition to its financial ones [2]. Corporate social responsibility is a broad term that can take various forms, depending on the business and industry. Businesses may help society while enhancing their brands by participating in CSR initiatives, such as working voluntarily for the general public and providing charity services.

To come under the umbrella of CSR, a firm must be accountable to its investors and to itself. Businesses that participate in CSR initiatives frequently should grow enough to contribute to the community. As a result, big businesses usually employ CSR as a strategy. Ultimately, a firm that enjoys greater success and visibility in the market has an equally great obligation to set the norm for ethical behavior among its competitors and the industry as a whole [3].

In the current study, multiple written sources were used to collect the data to respond to the research questions. “What is the relationship between companies’ corporate social responsibility and consumers’ behavior? How do companies with good CSR practices have a competitive advantage in comparison to their competitors, especially concerning their use of different CSR dimensions? Investigating the relationship between CSR and customer behavior, such as their attitude, motivation, emotions, and perceptions, can be done effectively using multiple case study designs under a qualitative research paradigm [4].

2. Literature review

2.1 History and evolution of corporate social responsibility (CSR)

The growing public concern about social inequality, climate change, and ethical business practices is progressively giving rise to corporate social responsibility (CSR) in today’s business setting. In addition to generating a profit, CSR may also be defined as a corporation’s responsibility/duty to anticipate and have a significant positive impact on society, work culture, and the environment [5]. It was back in the twentieth century that businesses began to engage in charitable activities and philanthropy paving the way for CSR.

From 1950 to 1960, the notion of social responsibility was a key consideration due to the emergence of social and environmental movements. Later, during the social and ethical responsibilities of the 1970 to 1980 business world, the idea of “corporate citizenship started gaining prominence.” This era shifted the focus of corporate stakeholders toward creating shared value and sustainability during the 1990s and 2000s [6, 7].

In the contemporary world, across all sectors, CSR has emerged as a cornerstone for diverse businesses that are aiming to build strong working connections with different communities, employees, and customers, by prioritizing their needs and concerns to positively impact society and the environment [7]. To know the concept of CSR, early philanthropy, social responsibility, and corporate citizen should be probed for details.

2.2 Engaging in CSR-ways and means

To know the concept of CSR in detail, the early philanthropy, social responsibility, and corporate citizenship should be probed first.

2.2.1 Early philanthropy

The initial form of CSE can be seen as largely highlighting charitable giving activities and philanthropy. Earlier in the twentieth century, John D. Rockefeller and Andrew Carnegie funded charitable causes to support education, healthcare, and the arts. Carnegie libraries, which provided free access to books and other educational resources for the public, was the most notable charity activity by Andrew Carnegie [7, 8]. Later in 1919, he had funded the construction of over 2500 libraries across the world before his death. On the other hand, Rockefeller Sr. aimed to promote public health and medical research by establishing the Rockefeller Foundation in 1913 [8, 9]. This foundation was the first in the world to fund the development of research into diseases in modern medicine, such as yellow fever and malaria, along with supporting the progression of public health programs globally. This early focus on philanthropy and charitable led to the basis of a more comprehensive approach to corporate responsibility that emerged in later decades [9]. We can say that presently, CSR incorporates diverse activities ranging from ethical business practices to environmental sustainability across all sectors.

2.2.1.1 Social responsibility emerges

The environmental and social movements began to rise in the 1950s and 1960s, which, thus, impacted the concept of social responsibility. Ralph Nader and Rachel Carson were prominent figures along with other influential authors and activists who emphasized greater corporate responsibility [10]. Meanwhile, an American consumer advocate and activist, Ralph Nader published a book, “Unsafe at Any Speed” in 1965, which was successful in sparking an outcry in public when he criticized the automotive industry that failing to prioritize its consumers’ safety [11, 12]. This straightforward criticism led to the establishment of the National Traffic and Motor Vehicle Safety Act in 1966, which took serious initiative to set significant safety standards for vehicles along with establishing a regulatory agency to oversee the automotive industry. Consequently, his novel work embarked on public awareness related to the accountability of businesses for their actions and played a pivotal model in shaping the idea of corporate responsibility [12, 13].

In America, with the publishing of a book called, “Silent Spring” in 1962, Rachel Carson [14, 15], an environmental activist, as well as marine biologist, raised concerns by inspiring contemporary environmental movements about the environmental influence of pesticides and other chemicals. This initiative further created public awareness stressing that businessmen should take responsibility for their impact on the environment; consequently, businesses started evolving higher standards of accountability and transparency in their dealings, which, in later decades, became foundations for the more comprehensive approach to corporate responsibility [16].

2.2.1.2 Corporate citizenship

From the literature, it is affirmed that the period of social and ethical responsibilities of businesses from the 1970s to the 1980s was marked by the concept of “corporate citizen” with an increase in public awareness regarding the impact of corporate activities on society and the environment [6, 7, 17]. The significant leaders were Ben & Jerry’s and The Body Shop who propagated the notion that businesses sought to create a positive impact on society and the environment through their products and operations. Ben & Jerry’s, as an ice cream company in 1978, fostered a strong commitment to social responsibility [18]. Ben Cohen and Jerry Greenfield, the company’s founders, came up with a belief that businesses have a moral duty to shed a positive impact on society by implying a range of initiatives, such as paying their workers a living wage, donating a portion of their earned profits to charity and sourcing ingredients from local farmers [18, 19, 20]. In 1976, with the establishment of a British cosmetics and skincare company known as “The Body Shop,” the founder Anita Roddick, tried her level best to create a positive impact on society and the environment through opposing animal testing, assisting fair trade practices, and incorporating ingredients from sustainable sources [21, 22, 23].

This is how these businesses helped to shape the influence of corporate citizenship by demonstrating that while being financially successful the businesses can take responsibility for their impact on society and the environment [7]. Further, with the focus on climate change and the interconnection of environmental, social, and economic determinants, the timeline of 1990 and 2000 faced a significant shift in sustainability and creating shared value for all stakeholders, including communities, suppliers, employees, customers, and the environment [22]. The business strategy of Patagonia is one such example, which is a vocal advocate for environmental protection and has taken strong positions on issues, such as climate change and public lands. Here, the efforts of Unilever [23], a consumer goods company cannot be set aside, which commits to zero net deforestation and a goal of sourcing 100% of its agricultural raw materials sustainably. For example, the company provides a line of concentrated laundry detergents that uses less water and packaging than traditional detergents.

Today, businesses are increasingly expected to take a leadership role in addressing social and environmental challenges, and those that fail to do so may face reputational and financial risks.

3. Psychosocial approaches to CSR

CSR maintains pluralism by including a diversity of practices, policies, and processes influenced by eight other interdisciplinary fields namely history, politics, economics, philosophy, sociology, and psychology [24]. Organizational psychology provides extensive research on the psychological foundations of CSR and individuals’ real-time experiences who are involved in CSR practices. Though these two pathways focus majorly on the individual, however, it also investigates the micro-foundations of CSR by understanding the person’s interactions and actions underlying any practices related to CSR [25]. Today, the interest in delving into perception, evaluation, and reaction to CSR in the workplace has become the core of psychological research in organizational and industrial psychology, which makes the psychological micro-foundations of CSR a recognizable field of study in the last few years. Considering the above discussion, it is necessary to discuss the key psychosocial approaches concerning CSR [26].

3.1 Social identity theory and CSR

In individual-level CSR, the social identity theory is a profound theory that aims to explain those organizational mechanisms and identifications that are responsible for the impact of CSR on employee characteristics of identification, including salience, distinctiveness, and prestige [27, 28]. This theory explains how an employee perceives his identification with the company, which leads to job satisfaction and commitment. The growing research trends in organizational identification posit the process in which the relationship of an employee toward their employer determines the nature of work performance, psychological well-being, and overall health [28]. Research conducted in 2020 on Chinese listed companies determined the relationship between CSR and social identity theory by establishing the fact that a company exhibiting good CSR performance in society by taking all initiatives to improve corporate innovation is praised and largely recognized by society. On the other side, in contrast to that, less corporate innovation can be predicted in companies with no engagement in CSR practices. The findings of the study were more markedly obvious in high technology-intensive (that depend more on the social identity of external stakeholders, as well as external knowledge) and poor CSR performance industries. Companies performing CSR consider it as an obligation, while organizations with a weak CSR atmosphere represent altruistic behavior engaging in CSR. Thus, organizations with low CSR environments are in dire need of being acknowledged by society largely when they engage themselves in CSR practices [29].

Self-categorizing processes are the fundamental principles of this theory. According to social identity theory, individuals classify themselves and others based on their age, gender, profession, and others in the form of in-group and out-group members [30]. This (random) social attribution creates a feeling of belongingness. Applying this theory to the corporate sector, employees prefer to work for socially responsible companies. Keeping this social attribute in view, employees strive for ethical companies because positively valued group memberships enhance their self-esteem. This internal CSR leads to an increase in the pride in an individual’s organizational identification, which, thus, impacts further outcomes, such as job satisfaction and commitment [29, 30, 31, 32, 33].

3.2 Self-determination theory and CSR

In the psychology of well-being, self-determination is a significant concept that has been explored over time by different researchers. According to it, an individual possesses the ability to make free choices that manage his own life [34]. A person is not in control of others rather he can grow, and change on three basic innate psychological needs, internal motivation, extrinsic motivation, and positive feedback. To achieve psychological growth, individuals need to feel autonomy, competence, and connection to be self-determined. Here, “social support” acts as a key indicator in an individual’s life, which defines his role as a proactive or passive growth seeker [35]. Relating self-determination theory with CSR would define the role of an employee as self-determined and motivated if he has a sense of purpose, which facilitates their experience and meaningfulness, which increases employee engagement and job performance [36].

A study [37] conducted in India collected responses from 387 full-time employees working in luxury hotels. The analysis depicted that their CSR participation by the employees positively affected their sense of purpose, self-determination, and motivation in their job and their experienced meaningfulness, which subsequently affected significant engagement on the part of employees. Also, social support plays an integral part, which can convert a boring task into a meaningful assignment. This study proposed a model that the job performance of employees can be enhanced if they are motivated and find meaning in their work.

The contemporary challenges and unstable business environment have forced business groups to reorganize and improve their procedures to remain competitive. The previous literature accepts the fact that those business organizations that lacked creativity and innovation are far beyond the competition [38]. To meet this need, organizations need employees who are highly creative and determined to innovate their operations, products, methods, and processes and overrun their competitors. This could not be possible until an employee is autonomous, which is regarded as the freedom and independence given to the employees to form their workplace environment better so that they can deliver to an enterprise to the best of their ability [39]. A study by Li et al. [40] proposed that there exists a significant relationship between employee innovation and workplace autonomy. The data depicted from the SME sector revealed that the more self-determined the employees are, the more innovation and autonomy can be seen in the workplace and vice versa. The study shows that an autonomous workplace is a flourishing motivation and growing incentive for employees at the given workplace and therefore, autonomous employees prefer to control their work rather than control others [40].

3.3 Basic psychological need theory (BPNT) and CSR

BPNT postulates that the level of frustration and satisfaction with psychological needs determines a functioning human being. This theory focuses on the basic three needs, including autonomy, relatedness, and competency. Autonomy endorses a person’s willingness and a sense of integrity where one’s feelings, actions, and thoughts are well-aligned, authentic, and self-endorsed [41]. When a person is satisfied with this basic need, then his actions are completely aligned with his willingness to perform a task. If that person feels frustrated, then delving into conflict and pressure leads to unwanted direction [42]. The other basic psychological need, relatedness refers to the feelings of care, bonding, affection, and warmth, which is a level of satisfaction that one obtains by flourishing connection with others and when one experiences the feeling of being significant to others. Loneliness, frustration, social alienation, and a sense of exclusion come if this need is not fulfilled. On the other hand, competence is concerned with the human experience of mastery, skill, and effectiveness [43]. If this need is met, the individual actively finds himself engaged in experiences, activities, and opportunities that extend his expertise, knowledge, proficiency, learning, and skills. Similarly, if this basic need is not met then the person suffers from failure and helplessness. Hence, these three basic components serve as integral forces in development, wellness, progression, and adjustment across cultures, while deprivation leads to malfunctioning and risk of maladjustment [44].

BPNT has been operationalized in diverse corporate contexts where the prime objective is to seek how employees tend to show higher levels of satisfaction with their job performance if their basic psychological needs are met at a socially responsible organization [45]. These basic psychological needs represent an employee’s intrinsic motivation where he strives to find meaning and identification with the organization to maintain his competence, integrity, health, and growth [46], so a work environment incorporating CSR can, in turn, foster favorable employee attitudinal and behavioral outcomes. Fulfillment of basic psychological needs not only improves the work quality of employees but subsequently also enriches their quality of life through a wide range of means [47]. Thus, the satisfaction of basic psychological needs of employees correlates with their optimal functioning, including their happiness, behavior, and attitudes, whereas unsatisfaction can result in maladaptive behaviors, which hampers an employee’s sense of flourishing and potential [48].

The importance of basic psychological needs in the corporate sector can be endorsed by a study (2019) that uncovers the mediating role of BPNT in the relationship between employees’ life satisfaction and job performance. The findings revealed that employees showed relatedness more with the workplace, which is known for its social engagement and responsibility because this can positively contribute to their self-esteem [49, 50]. This concept can be applied to customer’s integrity toward a business or a product, if their basic needs are met by any product then their relatedness and integrity with that brand increase over time. When a customer’s preference is met, it leads to the customer’s autonomy with the product; if a customer feels capable of interacting effectively with a marketing environment, such as providing feedback and getting acknowledged, it enhances the customer’s competence; lastly, the customer’s need for relatedness is met when a customer is cared for his needs and relates to the company [50].

4. Consumer psychology

The specific field of consumer psychology examines how our attitudes, perceptions, feelings, and ideas affect the products and services we purchase and how we interact with them. According to the American Psychological Association, it “employs theoretical psychological approaches to understanding consumers.” Formally, it is the study of people, groups, or organizations and the methods they employ to choose, safeguard, utilize, and discard goods, experiences, or concepts to meet requirements, as well as the effects that these methods have on society and consumers [51].

Generally, the subject of consumer behavior comes under the domain of industrial-organizational psychology also named the psychology of consumer behavior or the psychology of marketing. Consumer psychologists research [52] a range of subjects, such as:

• The methods by which customers select organizations, goods, and services.

• The cognitive and affective processes involved in consumer decision-making.

• How culture, media, friends, and family influence purchasing decisions.

• How consumers prioritize one product over another.

• How individual characteristics and personal circumstances influence people’s purchasing decisions.

• Strategies that marketers can use to connect with their target customers.

With the growing concerns of the corporate world regarding their social responsibility, consumers are starting to rely on their purchasing decisions on a company’s corporate social responsibility (CSR) practices, which ultimately affect communities directly or indirectly. Those organizations that are actively engaging in CSR activities have more positive brand recognition and customer evaluations [53].

To determine how consumers’ behavioral loyalty toward different grocery shops is affected by their CSR initiatives, Ailawadi et al. [54] conducted a study using the sharing of wallet (SOW) data. Their main finding was that SOW is directly impacted by CSR perceptions. Due to globalization and access to the latest technology, consumers are today better educated in their decisions and appreciate the efforts done by business owners for the well-being of customers [54].

According to other studies, corporate social responsibility (CSR) can boost behavioral loyalty, a positive attitude, and an intrinsic drive to support a brand while also reducing resentment and bad word-of-mouth following service mishaps [55]. Despite these studies, it is also observed that real-world buying criteria, such as product quality, price, selection, convenience, etc., have a greater influence on decisions than perceptions solely connected to corporate social responsibility [56].

5. The science of consumer behavior

A consumer is any person who buys products and services from the market for their use. The conduct of consumers under various conditions is referred to as consumer behavior. Nonetheless, the discipline is defined differently by different people. How customers behave when looking for, buying, using, assessing, utilizing, and disposing of goods, services, and concepts is defined as consumer behavior [57].

Louden and Bitta define it as “the decision-making process and physical activity that people engage in when assessing, purchasing, utilizing, or discarding goods and services.” “Every man is a consumer, and ought to be a producer,” said Ralph Waldo Emerson. He needs to be wealthy since he is expensive by the constitution [51].

Examining consumer psychology from all angles is crucial in comprehending consumer behavior. After World War II, a relatively new field of study of consumer behavior emerged. The buyers’ market has grown, and the sellers’ market has vanished. Due to this, the manufacturer’s focus shifted from the product to the customer with a particular emphasis on the latter’s behavior. It is a widely acknowledged reality that consumers now have influence over the strategic choices made by companies and that marketers have become more dynamic in recent times. The service sector is more promising than ever, and the business climate is more turbulent than ever. In this age of close competition, where the customer is king, an organization’s ability to succeed greatly depends on its ability to create a culture that upholds business ethics and achieves customer contentment. Therefore, it is crucial to comprehend changing consumer behavior to achieve customer satisfaction [58].

6. Theoretical background of consumer behavior

A customer’s inclinations toward certain items and marketing messages can be influenced by their personality or distinct psychological characteristics. Consumer psychologists now relate the classic psychological theories to explain why consumers make the purchases they do [59].

6.1 Freudian theory

Applied consumer research was greatly influenced by Freudian psychology, particularly in its formative years. The literature of Freud emphasizes the possible significance of unconscious motivations driving consumer purchasing. This viewpoint also raises the idea that the ego uses product symbols as a means of mediating between the superego’s prohibitions and the id’s desires. Motivational scientists made an effort to apply Freudian concepts to comprehend the underlying meanings of advertisements and products in the 1950s. For instance, after studying that people responded favorably to this potent animal iconography with overtly sexual overtones, Esso (now Exxon) urged customers to “Put a Tiger in Your Tank” for many years [60].

6.2 Jungian theory

The idea of the collective unconscious—a repository of memories derived from a person’s ancestry—was first presented by Freud’s student, Carl Jung. Archetypes—universally recognized concepts and patterns of behavior, including themes such as birth, death, and the devil—are formed by these common memories and are often depicted in myths, stories, and dreams. For instance, the “old wise man” and the “earth mother” are two archetypes that Jung and his adherents discovered, and these images are commonly used in marketing messages that feature characters such as wizards, venerated instructors, and even Mother Nature [60].

6.3 Trait theory

The main focus of trait theory is the quantitative assessment of personality traits or recognizable qualities that characterize an individual. Predominantly, these traits include innovativeness (i.e., the degree to which a person enjoys trying new things), materialism (i.e., the degree to which a person emphasizes acquiring and owning products), self-consciousness (i.e., the degree to which a person consciously monitors and controls the image of the self that is projected to others), need for cognition (i.e., the degree to which a person enjoys thinking about different possessions and, consequently, expends the necessary effort to process brand information), and self-monitoring (i.e. the extent to which an individual worries about the impression that their actions create on other people). Traits are an individual’s characteristics or inclination in a certain way. Consumer behavior can be defined by their traits and the corporate world uses them to make them satisfied [60].

7. Consumers decision-making process

Every day, public, commercial, and nonprofit sector organizations promote products, services, and ideas to consumers. How do consumers choose what to buy when there is such a wide range of messages? According to a positivist study, customers behave logically in a complicated, linear manner, following the procedure to choose the final product [58]. This involves:

• Problem recognition: Customers identify the need

• Information search: Go for market search

• Alternative evaluation: Explore and assess different options

• Choice (or purchase decision)

• Outcome evaluation (or post-purchase behavior)

It usually applies when you need to purchase something significant and weigh the dangers associated with money, relationships, and society [61]. However, for first-time small regular purchases, there are typically emotional, personal, and situational aspects that make this old decision-making model inapplicable.

There are circumstances in which this conventional cognitive decision-making procedure is not appropriate for all product categories. For example, while purchasing heavy machinery or a house, a customer must go through every step of the decision-making process, but what about routine household consumption or even impulsive buying? Therefore, according to Erasmus et al. [58], interpretivist scholars support a situational and subjective approach to consumer decision-making. An interpretive academic offered this straightforward strategy [58]:

• Person receives stimulus

• Person acts

McKinsey [61] advises using a circular approach to decision-making as opposed to the linear model mentioned above. McKinsey advises consumers to consider brands they are familiar with and actively seek online reviews and word-of-mouth recommendations from family and friends before making a purchase, as reported by research done on 20,000 consumers across three continents.

8. Psychological factors behind consumer behavior

Every day, consumers make decisions about what to buy. They look for a need to fulfill while planning to purchase any product. Multiple reasons could be the source of the urge. Below, given psychological factors can be the source of their consumption decision process. Entrepreneurs can make strategies based on these factors that can maximize the likelihood of a sale through their website or shop, as well as facilitate consumers in this whole process of purchase as part of their corporate social responsibility (CSR). According to a recent study, an astounding 66% of consumers are willing to pay more for goods and services from businesses that are committed to having a major and beneficial influence on the environment and society b. This is the only convincing data regarding how fidelity and customers pay for their efforts through CSR policies [62].

8.1 Motivation

According to Hawkins and Mothersbaugh [63], motivation is an “energizing force” that stimulates particular behaviors and gives them meaning and direction. It can answer the question of “why” consumers engage in a specific manner. It can respond to the query of “why” customers act in a particular way [64].

This subject can be analyzed from a variety of perspectives, and numerous ideas attempt to explain why consumers are driven to buy products and services. Motivation is the driving cause of all purchasing behavior. It has three distinct features:

1. Direction

2. Effort

3. Persistence

See Figure 1: [65].

Figure 1.

Features of motivation [65].

Direction explains the goals that a person has for himself. Effort is the amount of energy a person puts into a task to accomplish their goal, while the length of time they are willing to give up accomplishing their goal is known as persistence. The discrepancy between the actual and desired state leads to a drive that activates the process of search. Marketers cash this state and artificially raise this conflict by using media celebrities and other real-life role models [66].

Motivation can be well explained by Maslow’s theory of Hierarchy of Needs. Maslow’s theory highlights how human needs can serve as the driving force behind consumerism [67]. Maslow started his theory by presenting the basic level motives based on the human basic survival needs such as hunger, thirst, sex, etc. He gradually moved to a higher level of motives after the satisfaction of basic motives. All basic motives are based on survival needs when these needs are fulfilled individuals move to the higher level which includes esteem and love needs and finally the level of self-actualization [68].

The theory of psychological motives developed by McGuire [69] also serves as the basis for characterizing human motivation. His research has aided marketers in their efforts to distinguish between motivations that might be present in situations influencing consumption.

8.2 Perception

The perception, learning, memory, motivations, personality, emotions, and attitudes of an individual are among the internal factors that affect consumers’ purchasing behavior [64]. When it comes to information processing and consumer decision-making, perception is crucial. Consumer exposure to and attention to marketing stimuli is the first step, and interpretation is the last. Perception comes when customers sense some feature of the product and attach meaning to that experience. This experience is interpreted differently from individual to individual and is influenced by unique biases, needs, and understandings [70].

The process of perceiving stimuli, converting them into meaningful information, and storing them is called information processing. The first step in the process is exposure, which is the instantaneous reaction of sense receptors (such as those for sight, smell, hearing, touch, etc.) to stimuli, such as advertising. While we process raw facts, perception is more concerned with the meaning that an individual gives to these feelings and what they learn from them [70]. Owing to the subjectivity of perception, the marketer must convey the message they want the consumer to understand clearly to prevent them from misinterpreting the advertisement. Through their general attitude toward the store, consumer perceptions of CSR and other store features can either directly or indirectly influence behavioral loyalty [71]. Further, research concluded that consumers’ perceptions of value and their level of trust in the organization are enhanced by CSR initiatives that target them as the primary stakeholders.

8.3 Emotions

Emotions are powerful and intense feelings that affect overt actions [72]. Since motivation and personality are intimately related to emotions, these are quite personal. A customer may experience good feelings such as enjoyment, enthusiasm, and contentment if their wants are met. Conversely, if their requirements are not met, they may experience negative emotions such as wrath, frustration, or annoyance.

Consumer happiness and brand loyalty are likely to increase when a brand creates advertising that evokes good emotions as emotions play a significant influence in product consumption. Research supports the notion that increased affect intensity has an impact on consumers who are deemed to be more emotional than others. This refers to having more powerful feelings that persuade a customer to notice a marketing appeal. Emotions induced by the surroundings, psychological adaptations, including dilation of the pupils and cognitive thought—the capacity for logical thought—are common components of emotional experiences [73]. The motivation behind consumer arousal and retail benefit is thought to be emotions. Research suggests that books, movies, music, and other forms of healthy emotional excitation are among the things that many consumers seek out [74]. Many firms on the market use memorable slogans and ad campaigns to try to elicit an emotional response from their target audience.

8.4 Attitude or belief system

According to physician Morris Fishbein, attitudes can be defined as “evaluations of people, objects, and ideas” [71]. Over time, assessments are formed that are unique to each person and their experiences. They are formed by perception, personality, motivation, and emotion, as was previously discussed. An individual’s attitude can be shaped by a variety of things such as friends, family, the media, coworkers, and so on are a few examples. It can explain how someone feels, thinks, and behaves in a setting, be it a workplace, a store, or a classroom. From a marketer’s perspective, attitudes are valuable because they may easily guide customers toward goods or services, they want without requiring a lot of mental effort [54].

Three essential components of attitudes are:

1. Affective

2. Behavioral

3. Cognitive

The ABC model of attitudes refers to these three elements. A consumer’s emotional response to an item and their feelings about it are related to affect. While the cognitive component explains the consumer’s views about the object, and finally the behavioral component concentrates on the consumer’s intent to respond to an object in a particular way [70].

Consumers’ attitudes determine the fate of many brands. Consumers’ strong sense of belongingness toward some companies due to their nature of consumer friendliness can pay back in the form of customer loyalty. The value of a company’s moral, ethical, and social responsibility supersedes its financial interests [3]. Comprehending consumer attitudes makes marketers aware of the need to incorporate consumer concerns into their advertising. Businesses are putting a lot of money into making their corporate social responsibility (CSR) activities more widely known to improve customer and consumer relations through employee empowerment, cause-related marketing, and community support programs [54].

As evidenced by many studies [52, 53, 54, 73, 74, 75], CSR has a beneficial impact on attitudes, and these attitudes are positively connected with behavior studies that have discovered a great deal of variety in how customers react to CSR. This could be attributed to several factors, including the degree to which customers personally support the initiative, their perception of the impact of corporate social responsibility (CSR) on a company’s capabilities, and their level of importance for other elements of the business’s core offering, such as service and price [3]. Additionally, studies have revealed that customers’ values for other store qualities, such as how much they are willing to search prices and differ [54, 75].

9. Corporate activities to engage customer loyalty

In the competitive contemporary world, businesses are constantly devising ways to gain the attention of customers by increasing their engagement through loyalty programs. To build brand loyalty, customer engagement is crucial as it allows customers to show their preferences and behaviors which pave the way for trending marketing strategies [76]. Different strategies such as communication through in-app notifications, social media, emails, interactions, referrals, and redemptions, monitoring customers’ repeat incentive purchases and retention rates, analyzing their feedback surveys to assess their level of loyalty and satisfaction, and determining customers’ lifetime value are a few of the initiatives, which help in evaluating the loyalty and engagement of customers [77]. This loyalty not only represents engagement but also helps in bringing more revenue. Those businesses that engage communities by hosting events to give a chance for member interaction, offering personalized deals, gamification, and gathering reviews and testimonials increase customer lifetime value [77, 78].

Studies found that successful customer loyalty engagement goes beyond just offering rewards and discounts rather than the clients’ engagement in consolidating community events, such as monthly meetups and workshops, to bring customers together and promote a sense of belonging [79]. For example, the Starbucks [77] reward program given to the research participants is one of its kind in which a tiered system offers earned points, personalized rewards, a mobile app for earned points tracking and redemption, exclusive events for member customers, encouraging referrals and social learning for gaining extra points. In the race to gain customer loyalty through CSR, the efforts of the Sephora Beauty [78] insider program should also be mentioned through which customers not only earn points on personalized purchases but also gain beauty tips on clients’ preferences regarding beauty products, open access to exclusive community-based events and receive birthday gifts. Amazon Prime presents the platform for exclusive deals, free shipping, music, TV shows and movies, and easy access to their magnificent sales events, such as Prime Day to increase client’s loyalty to the brand.

9.1 Environmental friendliness

According to a phenomenon known as the “automaticity” effect, social scientists have found that environmental cues can influence consumer behavior without requiring conscious cognition [80]. These cues could come from the corporate culture or CSR initiatives, which build up a stereotype that forces a customer to visit or avoid a store [81]. Like this, a customer may choose to shop at a store based only on its convenient location or exclusive offers, bypassing the complex cognitive process involved in forming a general attitude [82].

10. Relationship between CSR and consumer behavior

Many research analysts have investigated the relationship between corporate social responsibility and consumer behavior with special emphasis on different dimensions of CSR. Respondents in different countries presented different responses, regarding these dimensions, which reflect their customers’ unique style of behavior. By understanding customer preferences, a competitive edge in sale enhancement and consumer satisfaction can be attained.

A survey was conducted in Australia based on the Australian model of Corporate Social Responsibility (CSR), which rated economic responsibility as the most preferred, after that legal, philanthropic, and ethical responsibility came categorically [83]. A similar trend was shown in the survey conducted in Malaysia where economic responsibility was still the utmost priority followed by philanthropic, legal, and ethical responsibilities [84]. many scholars agree that organizations should accomplish, endorse, and publicize corporate social responsibility due to their positive effect on consumer behavior [85]. Contradictory results were found about the impact of corporate social responsibility on consumer intentions. Research conducted by Sen and Bhattacharya [85] on consumer reaction revealed that corporate social responsibility directly affects consumer’s buying behavior. Many other studies have found that there is a 197 positive relation between an organization’s CSR activities and consumer’s buying intentions found that there is a significant relationship between corporate social responsibility and consumer responses [85]

A study conducted in France and Germany found that consumer regards legal responsibilities as more significant, tailed by ethical than philanthropic and at last economic responsibilities [86]. Another study done in Africa reported that economic responsibility was also given top importance. However, the second most valued responsibility was philanthropic followed by legal and, finally, ethical obligations [87]. The purpose of the study conducted in Pakistan was to determine whether consumers give thought to an organization’s corporate social responsibility (CSR) initiatives before making a purchase. Consumer behavior was found to be strongly positively correlated with all the CSR components; economic responsibility was deemed to be the most significant component, followed by philanthropic, legal, and ethical obligations [88]. The Korean study’s findings indicate that for Korean participants, ethical and philanthropic social responsibility (CSR) efforts had no noticeable effect on company reputation, while legal and economic CSR initiatives contributed positively to corporate reputation [89]. But the scenario changed by the findings of the research done in the time of COVID-19 show that being infected by COVID-19 increased participants’ sensitivity to ethical and philanthropic social responsibility (SR) but not to economic and legal SR [90].

Research done in Jordan studied the impact of an organization’s CSR activities on consumer purchase intention with the mediating effect of consumer engagement via social media. Results show that ethical responsibility has a positive significant impact on customer engagement (15%) and purchase intentions (35%). Subsequently, environmental responsibility has exerted a notably positive influence on consumer engagement, increasing it by 11%, and on purchase intentions, raising them by 18% (Table 1) [83, 84, 86, 87, 88, 89, 90, 91]. Meanwhile, philanthropic responsibility and economic responsibility have an insignificant effect on customer engagement. However, contrary to other research, economic and philanthropic responsibilities have no significant impact on consumer engagement with social media activities (Table 1) [91].

Authors	Region	Source	Position taken by respondents on CSR Dimensions
			Economic	Legal	Philanthropic	Ethical
Black [83]	Australia	Paper presented at the Conference on Monash University, Melbourne, Australia	1st	2nd	3rd	4th
Maignan [86]	France and Germany	Journal of Business Ethics	4th	1st	3rd	2nd
Visser [87]	Africa	Revisiting Carroll’s CSR pyramid: An African perspective. Copenhagen: Copenhagen Business School Press	1st	3rd	2nd	4th
Rahim et al. [84]	Malaysia	Asian Academy of Management Journal	1st	3rd	2nd	4th
Safi [88]	Pakistan	Information Management and Business Review	1st	3rd	2nd	4th
Park et al. [89]	Korea	Journal of Business Research	1st	1st	Insignificant effect	Insignificant effect
Stella et al. [90]	Italy	Management Decision	Insignificant effect	Insignificant effect	1st	1st
Haddad et al. [91]	Jordan	Sustainability	Insignificant effect	—	Insignificant effect	1st most significant

Table 1.

Consumers’ response to CSR dimensions in different regions of the world.

Based on the above literature synthesis and review [83, 84, 85, 86, 87, 88, 89, 90, 91] it can be stated that customers all around the world value the efforts of CSR initiatives taken by organizations, while the level of impact can differ globally and significantly.

11. Conclusion

The progression of corporate social responsibility (CSR) has been an extensive and complex journey, marked by key historical moments and people who have contributed to its growth and prominence over time. Early forms of CSR focused on philanthropy and charitable giving while the era of the 1960s gave rise to social and environmental movements, which emphasized the notion of corporate responsibility. Later in the 1980s, the concept of “corporate citizenship” emerged, endorsing social and ethical responsibilities and values including social justice and environmental sustainability.

In the contemporary world, the importance of CSR cannot be overstated. Those businesses that take leadership roles addressing social and environmental challenges promote employees’ and clients’ satisfaction by adding meaning, relatedness, and growth in their lives while those businesses that fail to do so may face reputational and financial risks.

12. Limitations and recommendations

The study evaluated the available research evidence regarding our primary question that how CSR practices are related to consumer behavior which gives the competitive edge to the companies.

Even though the relevant studies were explored but an additional number of researches should be added to answer the question in-depth. In this study, a multi-case study approach was used to address the question, which may not be enough to make generalizations.

Most of the assumptions and conclusions made in this study are based on the previous literature, and it is strongly recommended to conduct a latest research based on the relationship between CSR and consumer behavior. It is suggested to further explore the dynamics among consumers interplaying behind their choices regarding different dimensions of CSR.