CSR

 Literature review:

One may describe Corporate Social Responsibility (CSR) as an approach to decision making which includes both social and environmental factors[1].CSR comply  that companies do not only have single objective of profitability, but they also have objectives of adding environmental and social value to society[2]. In an influential article, Carroll (1979) presented corporate social responsibility as a construct that "encompasses the economic, legal, ethical, and discretionary expectations that society has of organizations at a given point in time." In his definition, Carroll argued that most of the companies hold those responsibilities not only for the sake of their own company but for the sake of society as well. This means that organizations by their very existence can be viewed as entering into a social contract that obligates the corporation to take the interests of society into consideration when making decisions[3].

Marketplace polls (e.g. Dawkins, 2003) and academic research (e.g. Sen & Bhattacharya, 2001) suggest consumers increasingly expect business to go beyond delivering economic outcomes and also contribute to society's welfare and sustainability by being socially-responsible, and will support them if they do so. It is therefore thought that pro-social marketing initiatives, such as CSR claims, can become a market differentiating strategy[4], build brand equity[5], and lead to customer loyalty and other positive post purchase outcomes[6].

One broad framework used to categorize CSR initiatives includes actions under the domains of employee relations and diversity programs, ethical materials sourcing, product design, marketing programs, the environment, human rights, and corporate governance[7].

When it comes to social responsibility, a consumer need can be a product/service that not only meet personal needs but to improves social welfare as well. It has to be noted that not every consumer experiences this need. The recognition of this need depends on personal moral views, also called as ethical obligation, and whether or not this obligation forms an essential part to one’s self-identity[8] .

The sources of information greatly influence a consumer perception of effectiveness. For example, mass media often focuses on the drama regarding a social issue (e.g. the harm inflicted) than on the solutions (reasons why it happened and possible strategies to solve it). It reduces the consumer’s believe of change. On the other hand, information coming from formal sources (e.g. university classes), informal sources (NGOs, seminars, campaigns, magazines etc) can be more educational and empowering for consumers and might increase the perceived self-efficacy[9].

In addition, consumers might buy responsibly if they have knowledge about a company’s impact on social welfare. However, studies have shown consumers face difficulties in finding this information. Also, this is due to that fact that ethical and social attributes of a product are often acceptable attributes, which cannot be judged before, during or after product use due to lack of knowledge, expertise and the height of difficulty.

Experimentally, it has been shown that consumer knowledge of a firm's CSR initiatives may lead to a higher appraisal of the company and a more positive evaluation of the company's product[10].

Consumers course of action related to information can depend on their involvement with a product or a brand. If a consumer has a strong commitment to a brand, he/she is able to show more resistance to negative information and might have difficulty remembering ethical attributes of a product.

Consumers will only buy responsibly if these products can perform at least as good as the irresponsible products. Another factor influencing the purchase decision is the price of a socially responsible product. The additional costs resulting from responsible producing processes are often passed on to the consumer by charging a premium price[11]. Reports have shown that consumers are willing to pay a higher price for a socially responsible product. However, this happen as long as they have a budget for it. If their income cannot support responsible purchasing, consumers will buy competing products with a lower price. Other factors that have an influence on a consumer’s purchase behavior are travelling a distance to buy the product and spending too much time locating the product in the store.

After seeking information and taking into account the alternatives, consumers make the decision to choose a socially responsible product. As mentioned before, it is hard to judge the ethical attributes of a product. That is why it is important for companies to raise awareness and provide information about their CSR developments and their impact of improving social welfare.

It is commonly discussed that Pakistan is a country that is still lacking in CSR practices among companies. The general perception about the corporate sector in Pakistan is that they are blood-sucking leeches who don’t really care about anything but their own selfish interests (profit). You will find various terrible episodes of corporate wrong doing. From irresponsible advertising to companies exploiting their monopolistic position, to a complete ignorance of customer relationship management, the corporate horror stories in Pakistan are in abundant[12].

The corporate sector in Pakistan has come a long way from its early days of politicized, self-promotional advertising covered as CSR. Now there have been certain organizations that have taken the lead and must be appreciated for their efforts in contributing to the society and people of Pakistan.  Some of the leading companies in Pakistan who took initiatives in CSR practices include Unilever, NBP, PSO, Askari Commercial Bank and Siemens etc.

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[1] (Fagbemi, 2011)

[2] (Mirfazli, 2008)

[3] (Drumwright, 2001)

[4] (McWilliams & Siegel, 2001)

[5] (Hoeffler & Keller, 2002)

[6] (Bhattacharya and Sen, 2003)

[7] (Kinder, Lydenberg, Domini & Co. Inc., 2006)

[8] (Valor, 2008)

[9] (Valor, 2008)

[10] (Brown & Dacin, 1997)

[11] (Valor, 2008)

[12] (Triple Bottom-Line)