Exploring the influence of CSR activities on consumer trust,

brand loyalty, and overall brand equity

Daoud Jerab1

Abstract
This article examines the impact of Corporate Social Responsibility (CSR) on brand perception.
By analyzing various CSR activities and their influence on consumer attitudes and behaviors, the
paper aims to provide a comprehensive understanding of how CSR initiatives can enhance brand
equity, trust, and loyalty. The study employs a mixed-methods approach, including quantitative
surveys and qualitative case studies, to explore the multifaceted relationship between CSR and
brand perception.

Keywords: Corporate Social Responsibility, CSR, Brand Perception, Brand Equity, Consumer
Behavior, Trust, Loyalty

1. Introduction to Corporate Social Responsibility (CSR) and its Importance in Business

In recent decades, the importance of corporate social responsibility (CSR) has rapidly grown
among businesses and brands. In modern society, the concept of CSR plays a significant role in
each company’s actions, plans, and strategies in influencing consumers and stakeholders. CSR
can be portrayed as a crucial and imperative element that affects how businesses operate and
how different stakeholders relate to those businesses (Peltola, 2014). CSR initiatives usually tend
to improve a brand’s reputation and the perceptions consumers have of that brand. Previous
literature has investigated how CSR activities affect consumer behavior regarding various
metrics such as purchase intention, trust, brand image, and loyalty. With the rise of globalization,
corporations have been increasingly criticized for their unethical practices, and the demand for
CSR activities has significantly increased. Nevertheless, many brands still struggle to see the
value of CSR in terms of investment returns and have difficulty adopting CSR strategies.
Moreover, CSR can be seen as an approach that, when properly applied, could increase customer
loyalty and trust toward a brand. This essay will strive to illuminate the relationship between
CSR activities and the consumer factors of trust, loyalty, and overall brand equity. Furthermore,
this essay will demonstrate that, despite CSR activities not having a direct effect on brand equity,
they still influence brand equity through the mediators of consumer trust and consumer loyalty.
In today’s world, the economy is growing rapidly, but so are the unethical practices of many
businesses. Therefore, it is important to have a system of rules and practices in which businesses
operate that fosters ethicality. Furthermore, CSR can be seen as a system of rules or an approach
that would benefit society as a whole, but it is important to note the economic growth that CSR
could foster. A properly executed CSR strategy could enhance a brand’s reputation, consumer
perceptions of the brand, and consumer loyalty to the brand.

1
PhD Scholar, Istanbul University, Institute of Social Sciences, Department of Business Management and Organization, Avcılar Campus 34850,
Istanbul-Turkey e-mail:daoud.jerab@aaup.edu ; daoud.jerab@gmail.com

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1.1. Definition and Concept of CSR

Business is increasingly viewed as a social instrument responsible for serving a broader set of
stakeholders. While the free market system remains the most efficient way to generate wealth,
there is a growing expectation for business to also share that wealth and its benefits more widely,
at least as far as it is practically possible. In response to these expectations, the term corporate
social responsibility (CSR) has gained prominence throughout the nineties and beyond. CSR has
been described as the phenomenon of the nineties as many multinational companies have
embraced it. However, CSR is a multifaceted term that requires clear definition (Sharif, 2012).

In the literature CSR is interpreted in many different ways. On one end of the spectrum, CSR is
basically philanthropic engagement where a business, in addition to its profit motive, takes on
some social obligations. This interpretation tends to describe CSR as a program or initiative that
is separate from the core business operations. However, CSR is also widely viewed as a need to
embed social responsibility into the core business strategy. In this interpretation, CSR is more
about social obligation as an integral part of doing business rather than about ethical obligation.
CSR also encompasses anything and everything that involves the ethical, social, and
environmental consideration in business practices. This interpretation is very broad and vague.
CSR could consist anything from community activities to environmental initiatives to ethical
trading or gender discrimination.

Regardless of the interpretation, CSR is strongly influenced by the expectations of different

stakeholders. The social responsibility of businesses is to the stakeholders – those groups without
whose contributions the business would cease to exist. In other words, a corporation is
accountable to its stakeholders. Traditionally, the stakeholders of a corporation are the
shareholders, employees, creditors, suppliers, customers, and the community. However, there
have been growing interests in establishing broader social contracts between business and other
social groups/constituencies such as non-governmental organizations, activist groups, and the
media.

According to stakeholder theory, the agenda of CSR is shaped by the stakeholders, and the
corporations are expected to respond to those agendas. Generally speaking, stakeholders expect
business to act responsibly in accordance with the broader social values. Social responsibility
could involve compliance with the law, ethical conduct, public disclosure, and an avoidance of
actions that could adversely affect stakeholder interests. CSR initiatives could either be
regulatory or voluntary in nature. Most of the early environmental initiatives were compliance
driven, regulatory CSR. On the other hand, the recent spate of social code of conducts represents
a more voluntary approach to CSR.

1.2. Evolution of CSR in Business

Scholarly discourse, regulatory frameworks, and corporate practices often view Corporate Social
Responsibility (CSR) through the lens of historical development. Initial academic deliberations
on business’s societal responsibilities occurred in the 1930s. However, CSR’s growth and
significance in contemporary commerce is more apparent, having expanded dramatically in size
and importance. It is particularly important to consider how CSR has shifted from an exotic

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concern to a more familiar business preoccupation over the past fifty years. Similarly, how CSR
policies might change in the future is an important consideration. The growing significance of
CSR is reflected in an increase in the number of CSR initiatives and the breadth of activities
considered to constitute CSR (Shelton, 2014). It is also evident in a perceptible shift in the types
of CSR initiatives businesses are more likely to invest in. At one time, activities aimed at
employee engagement would have been a company’s most significant quantitative CSR
investment. However, more recent analyses indicate that this is now outweighed by investments
in media-related CSR activities. Historically pivotal moments in CSR’s evolution are selected. In
each case, the regulatory and societal context is explained as it pertains to corporate behavior. A
consideration of the societal context necessarily includes an examination of consumer behavior
and expectations as this has a particularly significant influence on corporate behavior. There are
milestones in contemporary CSR’s evolution. Globalization and the rise of technology are
pivotal to many of these developments and have radically altered the manner in which
corporations do business. They have also altered consumer perceptions of corporate practices
and expectations regarding corporate behavior. In particular, they have shaped a consumer class
that is more informed and demanding concerning corporate action. Sustainable development
emerges as a fundamental tenet of CSR. Ultimately, it will be claimed that a prudent corporate
response must comprise a narrow understanding of CSR and business practice, generally. This
understanding must take account of society’s developmental needs and the necessity to achieve
balance across these needs, particularly amongst the more affluent and lesser developed
societies.

2. Theoretical Framework for Understanding CSR Impact on Consumer Behavior

To properly analyze how and why CSR activities affect consumers’ thoughts, feelings, and
behavior toward the brand, a theoretical framework is needed to better understand the connection
between companies’ CSR activities and consumer responses. CSR is considered to have a strong
impact on brand equity, but CSR itself is a broad term that can includes a wide range of activities
addressing many different social issues ( (Wang et al., 2017) ). Therefore, theoretical constructs
are needed to establish more precise how and why some CSR activities might generate equity-
building outcomes while other CSR activities fail to do so.

Two theories will be used to examine consumer motivation: social identity theory and
stakeholder theory. Social identity theory explains how individuals categorize themselves and
others into groups, which results in in-group favoritism and out-group discrimination ( (Paruzel
et al., 2020) ). As people draw their identity from various social groups, the desire to maintain a
positive social identity leads to behaviors that protect the in-group’s distinctiveness and status.
This theory has been widely applied in the CSR context to address how companies’ CSR
activities affect employee attitudes and behaviors.

Applying social identity theory in the CSR context to consumers, it can be argued that consumers
categorize companies as socially responsible or irresponsible based on their CSR activities,
which in turn affects consumers’ beliefs, feelings, and behaviors toward a company. One such
effect is that CSR practices result in improved consumer attitudes toward the brand, which is at
the heart of CSR’s effect on brand equity.

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In summary, two theoretical frameworks, social identity theory and stakeholder theory, are
applied to help clarify the how and why consumers become aware of a company’s CSR activities
and how this awareness affects their perceptions of the company. These frameworks shape the
questions this paper seeks to answer and help provide guidance in the analysis. Establishing a
theoretical framework contributes to the understanding of the topic at an academic level, and
using the theoretical frameworks also helps businesses to better recognize how CSR impacts
brand equity, which can be beneficial on a practical level.

2.1. Social Identity Theory

As a fundamental theory in social psychology, Social Identity Theory has been widely
acknowledged and adopted by marketing researchers to examine group behavior and in-group
favoritism driven by social identities. According to this theory, part of an individual’s self-
concept is derived from perceived membership in social groups, such as nationality, religion, and
brands. Having a social identity means that an individual categorizes himself or herself, and is
categorized by others, as a member of one or more social groups, which also leads to the
comparison of these groups with other groups in order to establish their relative status. Social
identity is formed and maintained through a continuum of cognitive and emotional processes,
including categorization, social comparison, and individual enhancement. Individuals tend to
favor in-groups and discriminate against out-groups in order to maintain their self-esteem.
Brands can be regarded as social groups, and consumers may identify with certain brands that are
in accordance with their personal values, social identities, and relevant group membership. In
this case, brand preference and loyalty arise from social identity needs, rather than from purely
functional needs. Corporate social responsibility (CSR) is anticipated to affect consumers’ group
identity formation towards the corporation, because CSR efforts often signal that the corporation
cares about consumers’ interests, values, and relevant social norms. If consumers believe that
they share the same values and identity with the corporation, they will tend to group with the
corporation (Paruzel et al., 2020). Hence, they may demonstrate loyalty to the corporation and its
brands.

In the context of Social Identity Theory, the influence of corporate social initiatives on the
formation of consumers’ group identities towards the corporation is further scrutinized and
critically evaluated. Because CSR initiatives generally involve social concerns that affect various
social groups, consumers are expected to identify with the corporation as an in-group when they
perceive social responsibility as an essential characteristic of the group. As a result, the desire for
group membership leads to compliance with the group, and to enhancing emotional ties and
loyalty towards it. This identification process may be reinforced by the effective communication
of CSR activities, which makes consumers more aware of the social responsibility exercised by
the corporation and relevant group memberships. Empirical studies are designed and conducted
to explore such effects and to examine the robustness of these impacts. The findings show that
consumers who are more aware of a corporation’s social responsibility would be more likely to
identify with it as an in-group, which enhances their loyalty towards the corporation and its
brands. These insights from Social Identity Theory provide useful implications for marketers on
how to leverage consumer identity in their CSR strategies, and highlight the psychological ties
that can be created between brands and consumers through the adoption of CSR initiatives.

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2.2. Stakeholder Theory

Stakeholder Theory examines the relationship between organizations and the wide array of
groups that have a stake in them. A stakeholder is defined as “any group or individual who can
affect or is affected by the achievement of an organization’s objectives.” In the case of
corporations, it is argued that organizations have obligations to not only their shareholders, but
also to a number of other groups including employees, customers, suppliers, and the broader
community. These obligations are often created and maintained through various types of
contracts, both formal and informal. There is an inherent tension in these relationships; which
can be either value-neutral or value-detracting (Pérez Ruiz et al., 2017).

The central concern of stakeholder theory is the implications that an organization’s stakeholder
contracts have upon the perceptions of, and satisfaction among, the organization’s stakeholders.
More specifically, it suggests that an organization’s stakeholder contracts will impact the amount
of value created for its stakeholders, and that an increase (or decrease) in value for a particular
stakeholder will be reflected in that stakeholder’s perceptions of, and satisfaction with, the
organization. In the context of corporations, this means that as an organization’s stakeholder
contracts create greater (or lesser) value for its shareholders, those shareholders will be more (or
less) satisfied with, and thus more (or less) likely to engage in further economic exchange with,
the organization (Sharif, 2012). In this sense, fulfilling the expectations of an organization’s
stakeholders will enhance that organization’s brand loyalty. Similarly, if an organization’s
stakeholder contracts create more (or less) value for a particular group of consumers, those
consumers will be more (or less) likely to trust that organization, and thus be more (or less)
likely to purchase its products or services. Therefore, it is suggested that fulfilling the
expectations of an organization’s consumers will enhance that organization’s consumer trust.

CSR planning is most successful when there is an open dialogue with stakeholders about their
interests, expectations, and concerns. In fact, many organizations choose to conduct stakeholder
dialogues as part of their CSR planning process. Agencies that take part in said dialogues
consistently stress the importance of transparency, meaning that organizations must
communicate openly about their CSR strategies and activities to build credibility and trust with
stakeholders. Stakeholders may have differing views of what CSR means, particularly across
cultural and industry contexts. Thus, organizations should not assume stakeholders share their
understanding of CSR. By conducting assessment processes to better understand stakeholders’
views of CSR, and how their expectations are or are not being met, organizations can more
effectively align their CSR efforts with stakeholder interests. Ultimately, this can improve
relationships with stakeholders and enhance brand equity. The insights provided by Stakeholder
Theory enhance the understanding of how CSR activities influence brand equity, consumer trust,
and brand loyalty across consumers with different backgrounds.

3. Research Methodologies for Studying CSR Impact on Consumer Trust, Brand Loyalty,
and Brand Equity

The impact of corporate social responsibility (CSR) on consumer trust, brand loyalty, and brand
equity is a significant area of research in contemporary marketing and business studies. This
section outlines various research methodologies that can be employed to explore these issues.

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Given the complexities of consumer responses to CSR activities, it is imperative to select
appropriate research methods to accurately measure the desired research metrics. For studying
the impact of CSR on consumer trust, brand loyalty, and brand equity, both quantitative and
qualitative approaches can be considered. Quantitative methods like surveys, experiments, and
case studies are effective in generating numerical data that can provide robust empirical evidence
of CSR's effects on consumer behavior. These methods are particularly useful in measuring the
impact of CSR on consumer trust, although they can also assess effects on brand loyalty and
brand equity (Theofilou & Jerofejeva, 2010). On the other hand, qualitative methods such as
interviews, case studies, and focus groups generate textual data that can provide in-depth insights
into consumer perceptions, feelings, and attitudes toward CSR. These methods can highlight how
CSR activities influence consumer trust, brand loyalty, and brand equity, but are more
challenging to generalize across a larger consumer population (Green & Peloza, 2010).
Therefore, a mixed-methods approach that combines quantitative and qualitative methods is
necessary to gain a comprehensive understanding of consumer behaviors related to CSR
activities.

Ethical considerations must also be taken into account when conducting research regarding CSR
and its impact on consumer behavior. Given that CSR is often linked to ethical practices,
researchers need to consider how the research design and process could affect the ethical
implications of CSR on the research participants. For example, survey questions that ask
consumers to evaluate a company's CSR activities could mislead participants, creating the
impression that the company has engaged in CSR activities when it has not. This could be
particularly problematic for companies that have no CSR activities, as participants would base
their evaluations on hypothetical actions rather than actual CSR investments. Also, the wording
of qualitative interview questions regarding the impact of CSR on brand loyalty could imply that
CSR has an effect, disregarding other potential influences on brand loyalty. These
methodological considerations will frame the subsequent empirical qualitative and quantitative
studies examining the impact of CSR on consumer trust, brand loyalty, and brand equity.

3.1. Quantitative Research Methods

Quantitative research methods use a range of statistical tools and techniques to analyze
numerical data. This data is gathered from a sample of consumers who are asked to share their
opinions, attitudes, and behavior concerning a researched subject. Statistical analysis provides
information on emerging correlations or trends, which can support the strategic decision-making
process of a business. In the context of time and budget constraints, quantitative research usually
requires the use of surveys or questionnaires as the primary instruments for collecting large-scale
data on consumer attitudes towards corporate social responsibility (CSR) initiatives (Du et al.,
2022).

Using the same format for the questionnaires, a large sample of consumers can be assessed on
their views concerning CSR activities. The questions can be measured on a scale, identifying the
degree of agreement or disagreement with a given statement. This methodology enables
researchers to convert people’s attitudes into numerical form—that is, to quantify them. The
quantitative approach will reveal the degree to which consumers agree or disagree with certain
statements about CSR, as well as the trends that emerge in the sample population. The results

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will provide evidence explaining how CSR impacts consumer trust, brand loyalty, and, therefore,
overall brand equity.

Research design is about framing a blueprint for data collection, measurement, and analysis.
When using quantitative methodologies, it is critical to ensure that the research design will
maximize the validity and reliability of the research findings. Reliability is concerned with the
consistency of the measurements, while validity is about the accuracy of the measurements. In
order for the findings to be useful, they need to be generalizable to a larger population. One of
the main advantages of quantitative methods is that they are capable of producing findings that
are generalizable to a wider population. Nevertheless, there are challenges associated with the
validity and reliability of self-reported data. Consumers may provide biased responses—that is,
responses that do not genuinely reflect their beliefs or behavior. Research concerning this
problem reveals a variety of factors that can bias how participants respond to survey questions,
such as social desirability bias, positive response bias, naïveté bias, and acquirers’ bias.

3.2. Qualitative Research Methods

Qualitative research methods are an important means to understand consumer perception of

brands’ CSR activities. Qualitative research methods are designed to gather in-depth information
on what consumers want, feel, and think about brands’ CSR initiatives. Rather than looking at
statistical evidence, qualitative methods capture complex consumer narratives through spoken or
written text, or visual images (Erin Bass & Milosevec, 2016). These methods include in-depth
interviews and focus groups to investigate the CSR perception of selected individuals, or content
analysis of consumer-generated media to study wider context. Most notable among these
techniques is discussion group focus interviews, which can be an effective way to understand
consumer perception and build on the findings of quantitative research. Focus group interviews
allow researchers to capture consumer perspectives on CSR and brand equity in their own words
and understand the contextual background to these views. Such methods also allow for the
exploration of wider themes and patterns in consumers’ trust and loyalty towards brands, which
emerge from the CSR engagement. Meanwhile, at a time of social media proliferation,
consumer-generated narratives also provide a viable data source on CSR perception and brand
equity. As narrative data, blogs and online reviews can give voice to consumers and reveal how
CSR activities converge or diverge with the target audience’s expectations. While quantitative
methods can reveal the statistical significance of CSR activities on brand trust and loyalty,
qualitative research can provide contextual understanding on how these activities impact
consumer mindsets, which is useful for CSR strategy development. Furthermore, narrative data
enable researchers to investigate consumer perception without direct intrusion, as discussion
groups may bias consumer perspective as an artificial setting. The focus is on how qualitative
research methods can contribute to CSR and brand equity research, particularly at a time when
complex social issues necessitate deeper understanding of consumer sentiment. Ethnographies
and other qualitative methods have been seen as a natural fit for investigating the impact of CSR
initiatives on brand equity. However, much CSR research remains quantitatively driven, and this
is particularly the case in contemporary studies that utilize broader data sources. While such
studies provide important insights, they also tend to overlook the significance of qualitative
research methods and narrative data. These primarily focus on ethnographic studies, and
although qualitative methods are discussed, other approaches such as content analysis are not the

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main focus. In addition, while challenging, the complexities of interpreting qualitative data and
the need for a careful and rigorous approach are emphasized. Also acknowledged are the
difficulties in ensuring research quality and potential bias when the researcher is involved in data
interpretation.

4. Empirical Studies on CSR Influence on Consumer Trust

This section reviews empirical studies that explore the influence of corporate social
responsibility (CSR) initiatives on consumer trust. It synthesizes evidence across diverse
contexts and sectors, highlighting the significance of CSR in building consumer confidence in
firms. Cases are included that illustrate how successful CSR strategies have positively affected
brand reputation and trustworthiness in the eyes of consumers. In addition, some studies are
examined that find an impact of the transparent communication of CSR activities on consumer
perceptions, indicating that how a firm’s CSR strategy is communicated may either enhance or
inhibit consumer trust. Finally, the review discusses some factors that can enhance or diminish
the effectiveness of CSR initiatives in cultivating trust among consumers (Ezzahra Jiddi, 2023).

Consumer trust in a brand is viewed as an essential ingredient for successful long-term

relationships with consumers. Thus, the demand for brands that are seen as trustworthy has
increased among consumers, especially in regard to firms’ efforts to behave socially responsibly.
CSR is generally considered a means to build consumer trust towards a brand. However,
empirical evidence shows that the formative process of consumer trust in a brand concerning
CSR practices is anything but straightforward. It is complex, nuanced, and context-dependent. In
this respect, there is considerable variation in how consumers form their trust in a brand applying
particular CSR practices, across different brands, types of CSR practices, industries, and
consumer groups. This review aims to fill this gap by analyzing the empirical evidence on the
influence of CSR practices in forming consumer trust in a brand. Insights from this review
provide companies with guidance on best practices in executing CSR strategies effectively. CSR
is a business strategy that aims to meet societal expectations of firm behavior. CSR practices
encompass a wide range of activities, including charity donations, employee volunteerism,
environmentally friendly operations, and fair trade supply chains.

4.1. Case Study 1: Company X's CSR Initiatives and Consumer Trust

Company X is a medium-sized enterprise operating in the consumer goods market. Holding

significant market shares across multiple European markets, the company places great
importance on brand trust and loyalty. In 2021, Company X's board of directors aimed to
operationalize its initial CSR strategy, with a specific focus on the marketplace and consumer-
related initiatives. As a crucial first step, the company sought to establish a clear understanding
of the current consumer trust landscape, particularly in relation to competitive brands, as well as
the role of CSR activities in shaping trust. To address these objectives, a qualitative case study
was conducted, involving in-depth interviews with ten key stakeholders, including both internal
personnel and external consumer representatives.

The case study revealed that Company X's CSR activities were predominantly reactive, primarily
driven by compliance needs rather than proactive efforts to build trust. Nonetheless, consumers

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perceived several CSR initiatives as trust-enhancing, particularly those directed at safeguarding
product safety, preventing miscommunication risks, and addressing empathy concerns. Prior to
the CSR initiatives, consumer trust towards Company X was comparatively lower than that of
competitive brands. Nevertheless, trust levels were relatively high in terms of brand credibility
and reliability. Importantly, the case study underscored that the most significant trust gains
realized through actively promoting CSR were closely linked to the alignment of consumer
values and company practices. Although the case company and competitive brands engaged in
trust-enhancing CSR initiatives, Company X faced challenges in effectively communicating its
CSR activities to consumers (Peltola, 2014).

The findings contribute to the understanding of how marketplace-related CSR activities can
enhance trust and provide companies with insights into relevant trust aspects and considerations
for CSR initiatives. As consumers become more skeptical regarding corporate motives and
actions, trust is increasingly viewed as a key determinant for successful company operations.
Despite this need, there is limited research on how companies can build trust through actively
planning, monitoring, and implementing initiatives. Acknowledging the significant role of CSR
in contemporary business, the chosen focus is on trust-related considerations for social
responsibility, particularly in the marketplace context. With strict legal definitions, CSR often
extends beyond the scope of mere compliance with society's minimum expectations (Sharif,
2012).

5. Empirical Studies on CSR Influence on Brand Loyalty

Despite growing research interest, consumer brand loyalty concerning CSR initiatives is still
poorly understood. Prior to reading this thesis, it was assumed that consumers become brand
loyal if their values and mission align with the brand's. Testing this idea is important since it
helps understand how loyalty is fostered and delineates CSR's role in broader marketing strategy.
It will contribute to the existing body of academic research on CSR and brand loyalty and public
discussion on responsibility in the corporate world.

A study comparing Finnish and Polish cosmetics consumers indicates that brand loyalty is
indeed affected by consumer’s perceived CSR. However, cosmetics was a poor choice of
industry to look at this phenomenon, owing to several unexpected results. It was also found that
brand loyalty is a complex mixture of several influencing factors, aside from consumer's
perceived CSR (Kämäräinen, 2019).

The objective is to examine how CSR's influences affect brand loyalty among consumers. This is
done through the analysis of several empirical studies on the subject, taking into account their
findings and shortcomings. This provides a thorough overview of the topic that can be of help to
further research, as it highlights the gaps in knowledge and potential variables in the experiment
design. In addition, it demonstrates how the knowledge gathered can be applied in practice when
planning CSR actions to enhance brand loyalty.

Various empirical studies are analyzed to present the state of research on the subject and to
highlight its most significant findings. This indicates that CSR's influence on brand loyalty has
been studied in many industries from fast food to telecommunications. Most often the conclusion

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is that CSR affects consumer loyalty positively and directly, but there are also many unexpected
results.

5.1. Case Study 2: Company Y's CSR Initiatives and Brand Loyalty

Company Y is an internationally recognized company tracing its roots back to the late 1800s in
Europe. The company specializes in chemical manufacturing for various industries, notably the
food and beverage sector. With its brand presence in over 70 countries and a workforce
exceeding 6,000 employees, it is among the leading global manufacturers of food preservatives
and additives. Since its inception, Company Y’s mission has prioritized health, safety, and
environmental protection. Supporting this mission and acknowledging growing consumer
expectations of responsible corporate behavior, the company has significantly broadened its
corporate social responsibility (CSR) initiatives.

Company Y’s CSR initiatives focus on two sets of activities: ensuring socially responsible and
sustainable sourcing of raw materials for its main products and undertaking philanthropical
activities aimed at enhancing community wellbeing. Company Y is committed to sourcing
materials only from suppliers upholding responsible and sustainable practices. For example,
nearly half of the company’s raw material for one of its main products comes from sugarcane,
which is sourced solely from suppliers certified by a globally recognized non-profit organization
that promotes sustainable sugarcane practices. The company has ultimately committed to
achieving 100% sustainable sourcing for its sugarcane-related products by 2020. On the other
hand, Company Y’s philanthropical projects primarily focus on enhancing drinking water quality
and accessibility in underserved communities across developing countries. The projects typically
involve the company’s partnership with local non-profit organizations for an annual water
education program providing communities free access to equipment for improving water quality
and hands-on training on its usage.

Since CSR has been proclaimed as a source of competitive advantage, brand loyalty, and brand
equity, it is essential to examine if CSR initiatives of Company Y effectively cultivate consumer
loyalty toward the brand. To assess this effect, consumer feedback on the company’s CSR
initiatives publicly reported in CSR progress updates over three years is analyzed. Additionally,
consumer loyalty metrics retrieved from third-party market intelligence databases are examined
for the same duration. Quantitative data on consumer loyalty toward Company Y’s brand
indicate an overall increasing tendency, with an evident spike since 2014, following the initiation
of the community goodwill enhancing CSR activities. Thus, these activities have a positive
impact on brand loyalty. Qualitative consumer insights suggest that Company Y’s commitment
to social causes resonates with its target audience, especially among younger generations, by
fostering emotional connections.

However, as pointed out by consumer marketers, challenges persist in the effective execution of
CSR initiatives and measuring their impact on brand loyalty. Nevertheless, this case study
reinforces the argument that effective CSR practices correlate with enhanced consumer loyalty
toward the brand. At a more practical level, the case highlights several applications for brands
seeking to improve consumer engagement through CSR efforts. First, CSR initiatives need to be
strategically aligned with the company’s core brand essence for an authentic image fit. Second, it

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is vital to focus on developing emotional connections with consumers through CSR efforts rather
than purely on the financial or business impact of the initiatives. Lastly, sponsorships and
partnerships with non-profit organizations for CSR initiatives can enhance credibility and
increase the chances for the efforts to become widely recognized. Ultimately, this analysis aims
to contribute to the wider academic discussion regarding the critical role of CSR in building
sustainable brand loyalty in competitive markets by providing brands considerations when
strategizing CSR plans (Kämäräinen, 2019).

6. Empirical Studies on CSR Influence on Brand Equity

Over the last decades, numerous empirical studies have investigated the influence of Corporate
Social Responsibility (CSR) practices on brand equity. While the term "brand equity" generally
addresses different issues, most empirical studies in this area primarily focus on perceptions of
brand value (Sharif, 2012). In this context, CSR engagement is perceived as a deliberate effort by
brands to enhance their brand value perception, thus increasing brand equity, either directly or
through a number of mediators. Directly, the engagement in CSR activities increases the overall
brand value perception and thus brand equity. Alternatively, it can influence a number of factors,
which in turn elevate the brand value perception and thus the brand equity.

Commonly cited key factors that CSR activities influence, thereby elevating brand equity, are
reputation (or credibility), customer loyalty, distinctiveness (or low perceived risk), and
consumer trust. Reputation is seen as the most common mediator between CSR and brand equity.
As reputed brands are perceived as having higher brand equity, positive CSR would thus
enhance the brand equity through maintained or elevated reputation. Similarly, customer loyalty
is often cited as a central determinant of brand equity. As CSR positively affects consumer
loyalty towards the brand, it is also seen as a prerequisite for enhanced brand equity. A less
frequently cited mediator is distinctiveness or lower perceived risk. CSR activities are suggested
to be more credible for stronger brands and thus reduce risk associated with them. Finally,
consumer trust has been identified as a critical mediator between CSR activities and brand
equity.

Brands leveraging CSR strategies effectively can charge premium prices for their products or
services and thus enhance their competitive advantage. However, it is important to note that
empirical studies most commonly exploring advantages of CSR tend to focus solely on one
brand or one industry class and the approaches are very much grounded in the particular case
studied. On the other hand, there are many challenges in quantifying the brand equity in the
context of CSR. This has to be carefully considered when interpreting the findings of the studies.
Empirical evidence presented illustrates how brands can enhance their market position through
investment in CSR. Overall, findings from these studies provide an interesting basis for
consideration of how CSR initiatives could be strategically employed in development of robust
brand equity, although a more cautious approach might be warranted regarding certain methods
and assumptions.

6.1. Case Study 3: Company Z's CSR Initiatives and Brand Equity

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Company Z is a top-tier brand in the sports apparel and footwear industry. The company has
made significant headway in enhancing its brand equity through deliberate corporate social
responsibility (CSR) initiatives. The company’s CSR strategy seeks to appeal to and engage
consumers more personally; actively involve consumers in the design and creation process; and
demonstrate ongoing commitment to sporting, environmental, and community issues. The
assessment is centred on the following CSR activities executed by Company Z in North
America: 1) The Wear Your Kicks program, which allowed consumers to donate gently used
sports shoes at retail locations to benefit children in need while receiving incentives towards a
new footwear purchase; 2) Environmental sustainability efforts, including a state-of-the-art
footwear manufacturing facility with a closed-loop water system and use of 100% recyclable
materials for packaging; and 3) Community outreach through grants and financial support for
non-profit organizations providing youth sporting opportunities and education (Sharif, 2012).

Company Z has effectively launched CSR initiatives that have a quantifiable and evident positive
effect on brand equity. The CSR activities under consideration have substantially enhanced
Company Z's brand equity, specifically in terms of awareness, loyalty, and overall positive
perception. Analysis of research findings reveals that a statistically significant correlation exists
between the CSR activities examined here and the corresponding brand equity metric.
Furthermore, Company Z has achieved key consumer familiarity and positive impression
thresholds in conjunction with these CSR activities, which are essential for maintaining robust
brand equity in a competitive marketplace. On the other hand, Company Z has faced challenges
in executing aspects of its CSR strategy, as well as difficulties in measuring CSR outcome
effects on brand equity. While these challenges may be applicable mostly to larger organizations,
several best practices elucidated herein may be of benefit to all organizations wanting to enhance
brand equity through CSR efforts.

7. The Mediating Role of Consumer Trust in the Relationship between CSR and Brand
Loyalty

Building brand loyalty among existing consumers is a key challenge for marketers, especially in
highly competitive markets where consumers can switch brands quickly. In this context,
cooperative social responsibility (CSR) activities can be an effective approach for marketers to
build consumer loyalty. However, the actual effect and process of CSR activities on brand
loyalty remain unclear and under-researched, particularly in the hotel and tourism industry.
While CSR efforts are intended to create a competitive advantage by enhancing consumer
loyalty, it is essential to understand how to achieve this goal.

Consumer trust is a crucial variable that influences consumer interpretation and response to CSR
initiatives. On the one hand, CSR strategies may be viewed as good faith efforts by companies to
enhance trust in the brand and, subsequently, loyalty to it. On the other hand, consumers may
perceive CSR strategies as mere promotional activities and, therefore, be more skeptical or
distrustful of the brand. Thus, understanding how to develop trust in an effective CSR approach
in building brand loyalty is crucial (Ezzahra Jiddi, 2023). It is proposed that consumer trust plays
a mediating role in the relationship between CSR activities and brand loyalty. CSR activities
create consumer trust in the brand, which enhances brand loyalty. This proposition is based on
the following grounds: First, CSR activities are expected to foster trust in that consumer

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perception of an effective company CSR strategy builds trust in the organization. Second, prior
studies show a positive and significant correlation between consumer trust in a brand and the
loyalty level. Third, despite recent efforts, trust is still difficult to measure, and therefore the
effects of trust on the loyalty are often inconclusive.

With a focus on the hotel industry, this study first explores how consumer perceptions of hotel
CSR activities influence hotel brand trust and how this trust affects brand loyalty. The study
further examines which types of CSR activities strengthen trust in the brand the most. The results
provide several implications for marketers. First, hotel brands should focus on building consumer
trust as a priority strategy to enhance brand loyalty, as consumer trust is the most critical aspect
of brand loyalty. For this reason, it is important to thoroughly understand how CSR initiatives
can build trust in the brand. Second, in planning CSR strategies, hotel companies must prioritize
moral CSR initiatives over legal CSR initiatives if the aim is to gain consumer trust. Finally, in
light of the recent criticism toward CSR initiatives, it is suggested that hotel companies strive for
transparency about their initiatives so that consumers can perceive the positive ethicality of the
CSR activities. Such transparency is needed to ensure that the CSR activities are genuinely
driven by ethical motives and not merely to gain economic ends.

8. The Mediating Role of Brand Loyalty in the Relationship between CSR and Brand
Equity

This section examines the mediating role of brand loyalty in the relationship between CSR and
brand equity. It is argued that brand loyalty is a vital link that magnifies how CSR initiatives
build overall brand value. According to this perspective, consumer commitment to a brand
means loyal consumers are likely to support brands with strong CSR commitments. This
consumer support then affects how these consumers perceive the brand’s value in comparison
with others. Several research studies have explored this mediation effect, revealing a strong
correlation between brand loyalty and increased brand equity (Jangyoung et al., 2011). Thus,
businesses attaining this double-edged sword are also likely to face obstacles, since CSR may
yield stronger loyalty than equity or vice versa. Although CSR loyalty keeps consumers attached
to a brand even when it misbehaves to some extent, it does not mean their departure from the
brand will be less damaging. In fact, a transfer from a socially responsible to a socially
irresponsible brand can be quite severe in terms of equity loss (Kim, 2017). When CSR activities
are generally perceived as a brand’s commitment rather than a series of well-planned initiatives,
systematic debates on these values become important for fostering both loyalty and equity at the
same time. As such, marketing strategies should focus on cultivating loyalty through CSR
programs rather than on brand equity, because the resulting transfer from loyalty to equity cannot
be assumed as a straightforward change. This means that, by emphasizing brand loyalty, the
upsides of CSR efforts can be accentuated. Therefore, CSR is more effectively introduced as a
foundation for loyalty than as a means for equity. Finally, these issues highlight how vital it is to
understand the dynamic relationships among these constructs in developing strategies to improve
brand equity.

9. Practical Implications for Businesses in Implementing CSR Strategies

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This section offers practical implications and suggestions for businesses aiming to adopt
corporate social responsibility (CSR) strategies that effectively foster consumer trust, brand
loyalty, and overall brand equity (Sharif, 2012). First and foremost, it is vital for organizations to
ensure that their CSR activities are in line with their core organizational values and mission. A
well-defined mission statement serves as a compass for organizations, guiding their CSR
strategies and actions. As such, organizations should reassess their mission statement and the
underlying values it encompasses before considering CSR initiatives. It is equally important for
businesses to engage with different stakeholder groups to better understand their expectations
regarding CSR activities and to identify potential areas for CSR implementation. Greater
transparency regarding CSR activities can help organizations gain a more thorough
understanding of stakeholder expectations while building trust and credibility.

One key finding of this research is that although businesses may implement CSR activities,
consumers may be unaware of these initiatives unless they are clearly communicated. As such, it
is crucial for organizations to measure the impact of their CSR initiatives on consumer behavior,
allowing them to fine-tune their CSR strategies over time. Businesses need to recognize the
importance of communication in conveying CSR efforts to consumers effectively. In this regard,
it is necessary for organizations to showcase their commitment to CSR by emphasizing the
narrative behind their CSR activities and engaging in thoughtful storytelling that highlights not
only the initiatives themselves but also the motivation behind them. Furthermore, businesses
should avoid the common pitfall of assuming that CSR will be automatically noticed by
consumers. Instead, proactively communicating CSR efforts is essential to prevent consumers
from attributing CSR activities to rival organizations. This research has also identified potential
pitfalls and common mistakes that businesses may make when implementing CSR strategies,
which can help companies avoid some of the more common errors. By providing actionable
recommendations, this section serves as a practical guide for organizations seeking to harness
CSR as a means of cultivating a competitive advantage.

10. Challenges and Limitations in Measuring the Impact of CSR on Consumer Behavior

Challenges and limitations in examining the impact of CSR activities on consumer behavior are
summarized and discussed, focusing on studies that investigate the influence of CSR on
consumer trust, brand loyalty, and brand equity. It is inherently complex to measure the impact
of any chosen activity on consumer behavior, as activities such as trust and loyalty are more
abstract than behavior itself. Quantitative approaches are especially challenging since numerical
values can be assigned only to very concrete measures. Consequently, the difficulties of
designing an effective measurement model with regard to trust and loyalty are examined in
detail. Even if an effect can be statistically established, it is relevant to determine the sequence of
events. In relation to CSR activities, this means that it is necessary to ensure that consumer
behavior changes as a result of CSR activities, and not as a result of other factors such as
marketing or public relations efforts. A discussion of methodological issues; critiquing common
approaches in the literature, such as the use of a single model or multiple models with variations
in the implementation of the same model, and highlighting sample bias in studies focusing on a
single country. Furthermore, it is discussed how consumer perceptions of CSR can be influenced
by external factors such as changes in economic conditions. It is also important to consider that
different consumers may interpret the same CSR initiative in different ways, which complicates

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the measuring of outcomes (Green & Peloza, 2010). In such cases, even though aggregate
measures may indicate that CSR initiatives are beneficial, it is still possible that some consumer
groups perceive them negatively. Consequently, CSR initiatives cannot be relied upon to
improve brand equity across the board. Some recommendations are provided for researchers and
practitioners that might facilitate a more accurate examination of the impact of CSR initiatives
on consumer behavior and support the idea that a multi-faceted approach is needed when
measuring the impact of CSR (Barki, 2009).

11. Future Research Directions and Emerging Trends in CSR and Consumer Behavior

With the increasing societal focus on corporate social responsibility (CSR), particularly among
younger and more informed consumers, it is questioned how research into CSR's impact on
consumer behavior can keep pace with changing expectations. It is argued that topics such as the
role of digital activism, transparency vs. greenwashing, and sustainability in mature vs. emerging
markets merit further research. It is suggested that while some trends may fade, others will have
a longer-lasting impact, and researchers should consider the effects of societal changes, such as
demographics and shifting consumer preferences (Du et al., 2022).

Technology is both a challenge and an opportunity, and research should examine how companies
can better use it to communicate their CSR efforts to consumers. CSR is often considered a
multifaceted construct; therefore, research employing an interdisciplinary approach – including
psychology, sociology, and communication – could be fruitful. To stimulate scholars, some gaps
in current research are identified, and a roadmap is provided for those interested in the dynamics
of CSR's impact on consumer behavior. CSR is a relevant research topic, and efforts should be
made to understand how it is evolving and will shape consumer behavior in the future.

Recommendations
 Develop Authentic CSR Strategies: Companies should develop CSR initiatives that align
with their core values and business goals.
 Engage Stakeholders: Actively involve stakeholders, including employees, customers,
and the community, in CSR activities to ensure relevance and impact.
 Communicate CSR Efforts: Transparently communicate CSR efforts and outcomes to
build trust and credibility with consumers.
 Measure Impact: Regularly assess the impact of CSR initiatives on brand perception and
make necessary adjustments to enhance effectiveness.
 Focus on Long-Term Goals: Prioritize long-term sustainability and social impact over
short-term gains in CSR planning.

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