Clustering consumers according to their attitudes on corporate social responsibility. Aikaterini I. Vassilikopoulou and George J.

Transcription

1 Int. J. Business Governance and Ethics, Vol. 1, No. 4, Clustering consumers according to their attitudes on corporate social responsibility Aikaterini I. Vassilikopoulou and George J. Siomkos Athens University of Economics and Business Department of Business Administration 76, Patission str., Athens, , Greece John Mylonakis* 10 Nikiforou str. Glyfada, , Athens, Greece *Corresponding author Abstract: This paper examines the consumer attitudes towards corporate social responsibility. Analysing a sample of 341 consumers, it was found that consumers have overall great expectations and a positive attitude concerning corporate social responsibility. They believe that corporate social responsibility is an important issue in business and are willing to reward socially responsible companies and punish socially irresponsible firms via their buying behaviour. Consumers who had a positive or very positive attitude towards socially responsible companies were segmented in terms of behavioural factors. The study proposes three distinct socially responsible consumer types in terms of attitudes towards corporate social responsibility: These are the Ambitious, Fanatic and Passive socially responsible consumers. A complete profile of each cluster is presented. Keywords: cluster analysis; consumer attitudes; corporate social responsibility. Reference to this paper should be made as follows: Vassilikopoulou, A.I., Siomkos, G.J. and Mylonakis, J. (2005) Clustering consumers according to their attitudes on corporate social responsibility, Int. J. Business Governance and Ethics, Vol. 1, No. 4, pp Biographical notes: Aikaterini Vassilikopoulou is a doctoral candidate in the Athens University of Economics and Business (AUEB). She holds a BSc in Business Administration from AUEB, an MSc in Economic Psychology from the University of Exeter and an MBA from the National Technical University of Athens and AUEB. Her research interests include: business ethics, corporate social responsibility and consumer behaviour. George J. Siomkos is a Professor of Marketing and Chairman of the Department of Business Administration, Athens University of Economics and Business (AUEB). His research and teaching interests include: consumer behaviour, strategic marketing and planning, crisis management, financial services marketing and strategic electronic marketing. He holds a BSc in marketing, an MBA in finance, an MSc in statistics and operations research and an MPhil and PhD in marketing and corporate strategy from New York University. He has published over 50 articles in academic journals and is the author of four marketing textbooks. Copyright 2005 Inderscience Enterprises Ltd.

2 318 A.I. Vassilikopoulou, G.J. Siomkos and J. Mylonakis John Mylonakis was visiting Professor of marketing at the Vrije Universiteit Bruxelles and at the Institute of Catholique des Haute Etudes Commerciales, as well as a board member of the International Board of Auditors in NATO, Brussels. He is also Tutor at the Hellenic Open University. He holds a PhD in marketing of financial services, an MA in international business and a BA in business administration. He has worked in the Finance sector for 20 years and for 18 years has taught in several universities in Athens and abroad. He has already published 36 papers in academic journals and 23 articles in marketing professional editions. He is the author of a textbook on Consumer Behaviour published by the Hellenic Open University. 1 Introduction The study of Ethics and Corporate Social Responsibility (CSR) has been crucial for businesses in order to survive and create profits in every business environment (Singhapakdi et al., 1995). Although CSR has been studied during the last years, a generally accepted definition does not exist (Carrigan and Attalla, 2001). Most definitions describe CSR as the incorporation of social and environmental interests into business operations and in its communication with its stakeholders (Chonko and Hunt, 1985). According to Hopkins (1997), CSR is the set of responsibilities the company has to its stakeholders. CSR is based on the improvement of the firms social image by implementing actions that are beyond the law and philanthropy (Singhapakdi et al., 1995). Ethics has a positive impact on companies as consumers make ethical judgements and, in the long-term, recognise ethical companies (Laczniak and Murphy, 1993). Thus, consumers are the most important stakeholders since they are interested much in ethics and reward ethical companies. However, as Murphy and Laczniak (1981) indicate, only 5% of the research studies on ethics and CSR focus on consumers. Creyer and Ross (1997) studied the impact of corporate behaviour on consumers intentions to buy a product or a service. The results demonstrated a great association between ethical behaviour and buying decisions. Ethical behaviour was expected from consumers who were willing to pay even more for an ethical product. On the other hand, when consumers value products as unethical, they are willing to pay for them at a price much lower than initially offered. This discount is considered by consumers as a punishment to the company for each unethical behaviour. Gelb (1995) also reports that consumers punish unethical products by rejecting or boycotting them. Marketing ethics theories report personal characteristics as determinants of ethical decision-making. Singhapakdi et al. (1995) demonstrated that demographic characteristics, e.g., gender and age, affect ethical decision-making. Moreover, Karande et al. (2000) incorporate gender and age in their research models as control variables. Several studies have shown gender differences in attitudes towards ethics and CSR, while others report no significant differences. A few studies report that females tend to exhibit more ethical intentions, while other studies found mixed or non-significant results concerning gender effects. Singhapakdi (1999) investigated the perceived importance of ethics and ethical decisions in marketing, using a sample of 453 respondents. He found that female

3 Clustering consumers according to their attitudes 319 marketing professionals were more likely to have ethical intentions than their male counterparts. Singhapakdi et al. (2001) also report that women, compared to men, perceive ethics and CSR as being more important. On the other hand, Singhapakdi and Vitell (1991) found that gender is not an important factor in a professional s perceptions of an ethical problem. Robin and Hunt (1997) found no significant differences between males and females in terms of ethical sensitivity. Moreover, Loe et al. (2000) argue that there is no significant difference between males and females in ethics. Since the greatest proportion of research studies argue that gender has an impact on ethics and CSR, the first hypothesis could be expressed as follows: H1: Gender is an important factor in consumers attitudes to corporate social responsibility. Women are expected to have a more positive attitude towards CSR as compared to men. Age also influences individuals ethical decisions. Many studies have shown a positive relationship between age and ethical sensitivity. According to Singhapakdi et al. (1999), older people are more sensitive to ethical problems. Terpstra et al. (1993) argue that people become more ethical as they get older. Prior et al. (2002) showed a relationship between respondents age and their responses concerning ethics. The highest percentage of the under 25-year-old consumers strongly disagreed with the statement I would refuse to work on a project that I considered to be unethical. The older age groups disagreed less. Thus, a positive relationship between consumers age and their attitude towards CSR would be expected. H2: There is a positive relationship between consumer s age and his attitudes towards CSR. Elder consumers are expected to have a more positive attitude towards CSR. Apart from age and gender, there are no research studies to investigate the relationship between other demographic characteristics, e.g., education, income or professional status. The only study, which examined attitudes towards ethics in relation to educational background, is that of Chonko and Hunt (1985). They found that employees having a business or social science education background were more likely to see ethical problems than those who had a technical education background. Taking into consideration that elder consumers tend to have a more positive attitude towards CSR, according to the literature, it can be hypothesised that a positive relationship between educational level and attitudes towards CSR exists as consumers are more educated as they get older. H3: There is a positive relationship between consumer s education and his attitudes towards CSR. Higher-educated consumers (those who possess a university degree or have completed some postgraduate studies) are expected to have a more positive attitude towards CSR.

4 320 A.I. Vassilikopoulou, G.J. Siomkos and J. Mylonakis Furthermore, this paper attempts to investigate possible relationships between attitudes, CSR, personal income and job position. Such demographic characteristics have not been incorporated in past research studies concerning ethics and CSR. H4: There is a positive relationship between income and consumers attitudes towards CSR. Consumers who have a high income are expected to have a more positive attitude to CSR. H5: Job position is a determinant factor in consumers attitudes to CSR. Consumers attitudes towards CSR are expected to differ significantly across different types of job positions. The main objective of this paper is twofold: 1 To investigate the impact that demographic characteristics have on attitudes towards CSR. 2 To segment the socially responsible consumers, so as to describe precisely their profile. 2 Research methodology In order to measure attitudes towards CSR, a data collection instrument consisting of an exhaustive list of 27 items was developed based on a thorough qualitative research (focus groups) and on conclusions of previous research studies. The items collected constituted the basis for the questionnaire construction. The 27-item questionnaire was developed to measure the following statements: Desire to reward a socially responsible firm via buying behaviour. Desire to punish a socially irresponsible firm via buying behaviour. Expectations concerning corporate social responsibility in today s society. Importance of corporate social responsibility. Belief regarding whether consumers are those who bear the costs of CSR. More than half of the items were adopted from Creyer and Ross (1997), who studied the impact of business ethics on purchase intention and constructed a scale composed of the first four statements used in this paper. The items which compose the third statement, as well as, three more items concerning the importance and expectations respectively were taken from Abdul Rashid and Saadiatul s (2002) study, which measured management attitudes towards corporate social responsibility in Malaysia. Four items were added by the researchers based on the qualitative research. Responses to the items were measured on a five-point Likert scale in which one indicated Strongly disagree and five indicated Strongly agree. The score for each construct was extracted by averaging the total score in the appropriate items.

5 Clustering consumers according to their attitudes 321 Data were collected by self-administered questionnaires. The final version of the questionnaire, after having been pre-tested on 34 consumers, was distributed to 349 consumers. 341 questionnaires were fully completed and were used for further analysis. 3 The sample Approximately 56% of the participants were men, while the greatest proportion (51.9%) were aged years old. The majority of the respondents possessed an undergraduate degree. Moreover, the respondents were roughly equally distributed concerning their personal income. 34% were employed in the private sector, whereas 18% worked in the public sector. Table 1 presents the detailed characteristics of the sample. Table 1 Demographic characteristics of the sample Demographics Percentages (%) Sex Male 55.7 Female 44.3 Age Education High-School 21.4 Undergraduate Degree 50.4 Graduate Degree 28.2 Income < > Job Student 16.4 Work in the private sector 46.3 Work in the public sector 18.2 Free Lancer/ entrepreneurs 8.2 Retired 6.7 Unemployed 1.8 Other 2.3

6 322 A.I. Vassilikopoulou, G.J. Siomkos and J. Mylonakis 4 Research results Internal consistency for the 27-item attitude scale was assessed using the alpha coefficient. The alpha coefficient was found to be The scale is internally consistent as an alpha value of 0.70 and anything higher is considered to be the criterion for demonstrating internal consistency (1999). Table 2 Summary of measures Measure Sample items Number of items Coefficient alpha Desire to reward a socially responsible firm via buying behaviour. Desire to punish a socially irresponsible firm via buying behaviour. Expectations concerning corporate social responsibility in today s society. Importance of corporate social responsibility. Belief regarding whether consumers are those who bear the costs of CSR. I would go several miles out of my way to buy from a company that I knew to be socially responsible I would pay more money for a product from a firm that I knew to be socially responsible I would boycott a product from a company that I knew to be extremely unethical I would reject a job offer in a company that I knew to be socially irresponsible I expect the firms that I deal with to act ethically at all times Firms have a responsibility not to ever act unethically I believe that CSR is a very important issue. I really care whether the companies whose products I buy have a reputation for unethical behaviour I believe that consumers are those who bear the costs of CSR The CSR costs are transferred to the consumer through a higher price Overall, consumers seem to have a positive attitude towards CSR. The graphical representation of the consumers attitudes towards CSR is presented in Figure 1 (where 1 = extremely negative attitude towards CSR and 5 = extremely positive attitude towards CSR ).

7 Clustering consumers according to their attitudes 323 Figure 1 Attitudes towards corporate social responsibility Std. Dev. =.44 Mean = 3.61 N = Attitudes toward CSR As Figure 1 shows, the majority of Greek consumers have a positive attitude towards CSR. More precisely, 73.3% of the respondents have a positive attitude, 16.7% have a very positive attitude, while only 0.3% have a negative attitude towards CSR (Table 3). Table 3 Attitudes towards CSR Frequency Valid percent (%) Negative Neutral Positive Very Positive Total From those who have a very positive attitude towards CSR, 56.1% are men. 42% belong to the age group and 40.4% belong to the age group. A considerable proportion (36.8%) of the respondents has completed postgraduate studies and 22.8% earn more than 2000 per month. Finally, 61.4% work in the private sector. Consumers are willing to reward a socially responsible company (mean = 3.62) and to punish an irresponsible firm via consumer behaviour. They, also, seem to have great expectations concerning CSR, which they perceive as a very important issue. However, respondents believe that consumers are the ones who bear the CSR costs (Table 3).

8 324 A.I. Vassilikopoulou, G.J. Siomkos and J. Mylonakis Table 4 Descriptives of the five constructs Minimum Maximum Mean Reward Punish Importance ,55 Expectations Not bear costs In order to test the first hypothesis, a t-test was performed so as to discover gender differences in attitudes towards CSR. The difference in attitudes towards CSR between males and females is not significant (t = 0.005; df = 339; p > 0.05). Thus, H1 is not accepted. An ANOVA test was utilised in order to investigate the relationship between attitudes towards CSR across different age groups. Results show that elder consumers are more likely to have a positive attitude towards CSR. This difference is statistically significant (F = 8.748; df = 3; p < p ). Thus, H2 is accepted. On the other hand, differences between different education levels were found to be non-significant (F = 1.99; df = 2; p > 0.05), thus, H3 is not accepted. Those who have a higher income are more likely to have a positive attitude towards CSR. This difference was found to be significant (F = 3.150; df = 4; p < 0.05). Therefore, H4 is accepted. Finally, professions seem to play an important role concerning attitudes towards CSR. The differences among different jobs were found to be significant (F = 2.26; df = 6; p < 0.05). Free lancers/entrepreneurs seem to have the least positive attitudes towards CSR, while retired consumers expressed the most positive attitude among all job categories. 5 Segmenting the socially responsible market Three consumer categories may be distinguished: 1 Those having a very positive attitude towards CSR. 2 Those with a positive attitude towards CSR. 3 Those with a neutral attitude towards CSR. 19% of consumers who constitute the socially responsible buyers (i.e., consumers who have positive or very positive attitude towards CSR) were segmented into clusters. Factors related to the attitudes towards CSR (e.g., punishment, reward, importance, expectation, bear cost) were used in the analysis. Cluster analysis, also called segmentation analysis, seeks to identify homogenous subgroups of cases in a population. That is, a cluster identifies a set of groups, which both minimise within-group variation and maximise between-group variation. For the analysis, a quick clustering approach (k-means clustering) was used, with the options of three and four clusters. The choice of three clusters (24.6%, 39.6%, 35.8%) was preferred due to the greater number of discriminating between-cluster variables and the more sincere profile development.

9 Clustering consumers according to their attitudes 325 Discriminant analysis established the clusters precise selection (Wilks lambda = 0.137; df = 10; p < ), with 98.5% of the cases correctly classified (). Figure 2 Canonical discriminant functions 4 2 Function Cluster number of canonical analysis Group centroids Function 1 The power between the three clusters of the 27-item variables shows that the great majority of these variables can be used as between-clusters discriminating factors. The importance factor seems to be the most significant, followed by the willingness to punish and willingness to reward factors. The profiles of the three clusters are developed based on the cross-tabulation between the scores of the 27 statements and the cluster-membership variable. 5.1 Cluster 1 ambitious CSR consumers (24.6%) It is comprised of young, highly educated male consumers who exhibit the highest belief that consumers bear the costs of CSR as the businesses would pass these costs along through their products pricing structure. They also exhibit the second highest (after Cluster 2) expectations concerning corporate social responsibility in today s society and the second highest importance of corporate social responsibility. Their willingness to punish irresponsible or reward socially responsible companies via their buying behaviour is average, although they exhibit stronger intentions to boycott a product of a social irresponsible firm. Their education is of higher level (i.e., possess a degree or have completed graduate studies) and their income is average. The percentage of males among them is the second highest among all clusters. A great percentage of consumers belonging to this cluster are employed in the public sector. Overall, Cluster 1 is comprised of young consumers who have great expectations concerning CSR, as they believe that CSR is a very important issue for them and the entire society. However, they do not believe that consumers bear the costs of CSR.

10 326 A.I. Vassilikopoulou, G.J. Siomkos and J. Mylonakis 5.2 Cluster 2 fanatic CSR consumers (39.6%) It is comprised of middle-aged, average educated consumers with high income who mainly work in the private sector. They exhibit the highest willingness to reward socially responsible firms and to punish irresponsible firms. They express the highest expectation concerning CSR and they exhibit the highest perceived importance of CSR, as well as, the highest score in the statement I would go several miles away in order to buy a product of a socially responsible firm and in the statement I would pay more for a product of a socially responsible firm. Moreover, consumers belonging to Cluster 2 are those who expressed the highest desire to work for a socially responsible firm. Nevertheless, they strongly believe that businesses pass CSR costs along to consumers. Overall, the second cluster is comprised of consumers aged 26 60, who strongly support corporate social responsibility and demonstrate powerful intentions to reward or punish a firm through their buying behaviour. 5.3 Cluster 3 passive CSR consumers (35.8%) It is comprised of consumers who would not easily boycott a social irresponsible firm s product. Generally, their intention to reward a socially responsible or punish a socially irresponsible firm is the lowest among the three clusters. They also exhibit the lowest expectations concerning CSR and the lowest perceived importance compared to consumers in Clusters 1 and 2. They are of average education, mainly free lancers of average income. Overall, Cluster 3 is comprised of consumers who passively react to CSR, with comparatively low expectations and low intentions to act towards purchasing a product of a social responsible firm. 6 Conclusion The basic discriminating factors between consumers who have a positive or a very positive attitude towards CSR and those who have a negative or very negative attitude towards CSR is age. Other important discriminating factors are income and employment status. Overall, consumers seem to have a positive attitude towards CSR. They believe that CSR is an important issue and they have high expectations concerning CSR. They are willing to reward socially responsible companies and punish socially irresponsible firms via their buying behaviour. Age was found to influence individuals attitudes towards CSR. Elder consumers were found to have a more positive attitude towards CSR. This is consistent with the works of Singhapakdi et al. (1999) and Terpstra et al. (1993), which support that individuals become more ethical as they get older. On the other hand, sex was not found to be an important factor discriminating attitudes towards CSR. This is in accordance with research conclusions by Singhapakdi and Vitell (1991), Robin and Hunt (1997) and Loe et al. (2000) who found no significant differences between male and females in ethical sensitivity. In addition, income and job category were found to be significant in forming consumers attitudes towards CSR. A first distinction could be made between the three subgroups:

11 Clustering consumers according to their attitudes Those who have a very positive attitude towards CSR. 2 Those who have a positive attitude towards CSR. 3 Those who have a neutral attitude towards CSR. Based on five attitude factors from the literature, an attempt was made to segment the consumers who constitute the socially responsible buyers (90% of the total sample; consumers who have positive or very positive attitude towards CSR). Three Clusters were identified: Ambitious, Fanatic and Passive Socially Responsible Consumers. It is apparent that stated awareness of CSR is very high among the respondents. CSR is important to consumers and socially responsible behaviour is expected by them. Consumers reported that they would reward socially responsible firms via their buying behaviour by expressing the intention that they would even pay more for a social responsible firm s products. On the other hand, consumers reported that they would punish socially irresponsible firms via buying behaviour, e.g., they would pay less for a socially irresponsible firm s product. These findings are consistent with the Creyer and Ross (1997) research findings. Respondents, also, reported that consumers bear the costs of CSR. This is also in line with Abdul Rashid and Saadiatul (2002) who found that 33.8% of Malaysian managers believe that businesses pass CSR costs along through its product pricing structure. These findings, also, have several business and marketing implications. Results suggest that consumers are concerned about CSR and they are willing to take actions to promote CSR. In other words, they are willing to pay more in order to buy a product of a socially responsible firm by paying a higher price. By this action, consumers could significantly affect corporate behaviour. In the same way, consumers could discourage irresponsible corporate behaviour by being only willing to pay lower prices for products manufactured and promoted by social irresponsible firms. As a result, companies could benefit from consumers attitude by informing consumers regarding their social responsible actions. In this way, CSR could not only benefit society but it could also benefit the firm. Different clusters could be approached and informed in different ways. For example, Fanatic CSR consumers are more likely to act towards a corporate CSR action than Passive CSR consumers. Ambitious CSR consumers are perhaps the easiest target group to approach since it is comprised of young consumers who have great expectations concerning CSR and do not believe much that they will bear the CSR costs. Ambitious CSR consumers could be potentially Fanatic or Passive CSR consumers, as they form the youngest cluster. From a societal perspective, Fanatic CSR consumers should be kept informed of questionable business practices since they are more willing than others to punish a socially irresponsible firm and boycott an irresponsible product. Consumers express their perceived importance and expectations concerning CSR. However, CSR actions are not specified. Future research could focus on different responsible corporate acts. Different CSR acts may lead to different consumer responses. Future research could also be directed to the dimensions along which CSR is evaluated by consumers. Finally, an opportunity exists for future research regarding the identification of other personal or behavioural factors which may influence consumers attitudes towards CSR (e.g., marital status, number of children, purchase behaviour, ways in which consumers get informed about CSR acts, etc.).

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