Luxury and CSR: Can it work? The effect of CSR-fit and luxury on purchase intentions

Graduate School of Communication

University of Amsterdam

Master Thesis

Communication Science: Corporate Communication

Luxury and CSR: Can it work? The effect of CSR-fit and luxury on

purchase intentions

Sylvie Hlobilová

Student number: 11827610

Supervisor: Dr James Slevin

Date of submission: 28-06-2019

Abstract

The alliance between doing good and doing business has merged and gave rise to Corporate Social Responsibility (CSR) programs. Players in the luxury sector took an interest in this area, despite being among the slower adapters. The current research investigates how the right CSR campaigns can help increase purchase intentions of the public and inspect whether purchase intentions are higher if CSR campaigns are congruent with company values. Also, the aim was to see whether skepticism and luxury brand presence play a role in shaping overall purchase intentions. A survey-embedded experiment was administered to help answer the following research question:

How does CSR fit (low and high) influence purchase intentions of the public and what role does skepticism and the presence of a luxury brand play?

The findings confirm that customers are more likely to purchase when they see a campaign with a high CSR fit as opposed to when it is low. However, contrary to previous research, CSR fit does not play a role when it comes to skepticism but it was found that when the level of skepticim is low, the purchase intentions are higher. Therefore, companies should try to minimize skeptical attitudes in order to increase their profits. Furthermore, it was found that there was no significant moderation effect of the presence of a luxury brand on purchase intentions. Despite this, companies should pay attention to the fit of the CSR collaboration nonetheless as that alone has a significant effect on purchase intentions. Importantly, it was salient in this study that a control variable attitude played a significant role in consumer’s purchase intentions as well as their skepticism level. Companies would certainly benefit if they acknowledged the importance of consumer attitudes and strive to improve and heighten positive feelings towards a brand so they can reduce skepticism and in turn that can aid in increasing purchase intentions. This research contributes to existing research on CSR and

luxury and aims to inform managers on the importance of a good CSR campaign collaboration.

Introduction

Nowadays, consumers’ desire is not only on purchasing products or services from companies, consumers have taken an interest in knowing what companies can do for society, specifically, what they can give back to it (Elving, 2013). This is due to a shift in

understanding the active role consumers play in the discourse between companies and consumers, consumers are no longer seen as passive recipients without power (McQuail, 2010). A new perception of morality has emerged, especially in the Western society, where the focus shifted towards unraveling how businesses can take on responsibilities that used to be solely tackled by the government (Schmeltz, 2012). The boundaries became blurred between doing good and doing business: the alliance between the two became more

prominent (ibid) and ethics expanded into the core of company management (Křižanová & Gajanová, 2016).

The first problem that will be tackled in this study is CSR fit. The term to summarize activities or programs that deal with social aid or environmental issues provided by

corporations is Corporate Social Responsibility (CSR). CSR is the commitment a company has on reducing any harmful effects and improving the well-being of society in the long run (Mohr, Webb and Harris, 2001; Kotler and Lee, 2005). There is constant pressure for companies to engage in CSR activities but also to maintain a balance with being profitable, which is a primary goal of corporations (Mohr, Webb and Harris, 2001). Moreover, a specific attribute of CSR, namely CSR fit, is important to discuss. It refers to how a company matches with a particular CSR campaign (Elving, 2013). When the fit is incongruent and low,

problems may arise and lead to negative attitudes from consumers and other stakeholders (Du et al., 2010).

The second problem, or rather sub problem of the first, that is important to address in this research deals with the industry type and CSR involvement. The implementation of CSR itself may differ between industries and some may adapt CSR strategies faster than others. The luxury industry is said to be “CSR silent” (Olšanová et al., 2018), because the majority of the players there do not take a proactive approach in building and communicating sustainable strategies (Kapferer and Michaut-Denizeau, 2014). Many luxury companies have launched CSR campaigns; however, they are regarded as elitist, attention-seeking and may be regarded skeptically and judged by consumers negatively (Kathuria, 2013; Torelli et al., 2012; Wong and Dhanesh, 2016; Wong and Dhanesh, 2017). This creates a Luxury-CSR paradox. Due to the rising expectations of consumers with regards to CSR initiatives, it is important that luxury companies do not fall behind and contribute to society without alienating customers.

With regards to the research problem presented above, the aim of this study is to address how the right CSR campaigns can help increase purchase intentions of the public and inspect whether purchase intentions are higher if CSR campaigns are congruent with company values. Also, the aim is to see whether skepticism and luxury brand presence play a role in shaping overall purchase intentions. The research question is as follows:

How does CSR fit (low and high) influence purchase intentions of the public and what role does skepticism and the presence of a luxury brand play?

In order to help answer the research question, a quantitative approach was selected, namely a survey-embedded experiment. This design was selected because the author expects causality to take place and experiments are known to be adequate for this type of research (Freedman, 2009). However, not only the specific research design will help to tackle the problem. There are also some academic and practical suggestions that can help to contribute to the solution.

often focused on other aspects of the luxury industry, namely counterfeiting (Phau et al., 2009; Koay, 2018; Ngo et al., 2018), brand positioning (Yann et al., 2009; Massara et al., 2018) as well as symbolism behind luxury (Turunen & Leipämaa-Leskinen, 2015; Hung et al., 2011). This research can help managers in the luxury sector to find the correct CSR campaign in order to push sales forward, knowing they struggle to do so. Due to the

increasing pressure for companies to participate in CSR activities, as well as skepticism from consumers, it is necessary that a correct CSR fit for the company is used so that CSR efforts are not used in vain and can actually be used as a complement rather than as an arbitrary and damaging element of the company strategy. This research also contributes to the existing research on CSR and luxury (Janssen et al., 2014; Kapferer, 2015; Wong & Dhanesh, 2016; Wong and Dhanesh, 2017) by focusing specifically on the CSR fit, skepticism and purchase intentions, which has not been explored before to the author’s knowledge.

Theoretical Framework The link between CSR Fit and Purchase Intentions

Corporate Social Responsibility (CSR) can be defined as “a commitment to improve societal well-being through discretionary business practices and contributions of corporate resources” (Kotler and Lee, 2005). As companies are a part of society, they naturally have obligations for the society (Elving, 2013). It is common for companies, when involved in CSR activities, to announce them to the world (ibid). Nowadays, the concept of CSR is important for organizations to employ as it creates intangible assets, which are not easily replicable by competitors and it can strengthen the firm’s competitive advantage in the market (Arrigo, 2013). CSR strategies have become an essential aspect of corporate marketing

strategies with the aim of enhancing corporate identities in companies (Hildebrand et al., 2011; Powell, 2011). Engaging in CSR related activities can help companies be seen in a

positive light and create favorable stakeholder attitudes (Du et al., 2010). It can also lead to higher purchase intentions, seeking employment, investing in the company and increase positive attitudes towards the company in general (Du et al., 2010; Sen and Bhattacharya, 2001). There are great opportunities for companies especially in the long run if they employ CSR initiatives as it leads to building a strong corporate image and maintains good

relationships with external and internal stakeholders (Du et al., 2010).

CSR activities are likely to be noticed and judged by many stakeholders (customers, investors etc.) and if they are successful, the firm will reap many benefits but if they aren’t, the unsuccessful firms will be regarded as bad corporate citizens (Du et al., 2010). There has been a lot of debate in academia on the topic of CSR and the fit of the company (Elving, 2013). Despite a lot of discussion about what “fit” means, researchers have not agreed on one definitive meaning of what “fit” entails (Nan and Heo, 2007). Even though there is no

consensus on fit, it can be argued that its explanation lies in cognitive assumptions (Nan and Heo, 2007). Varadarajan and Menon (1998) have defined these cognitive assumptions in their research by stating that fit is the link between a CSR strategy and the company business (which includes their products, image positioning and target audience).

Organizations have to make important decisions when it comes to the specific kind of CSR activities they want to take part in (Sen and Bhattacharya 2001; Bhattacharya and Sen 2004). A favorable CSR campaign can lead to heightened loyalty and turn consumers into brand ambassadors that engage in positive word of mouth, pay a price premium and are more resistant to believe and be influenced by negative company news (Du et al., 2010). Therefore, a congruence between the fit of the social issue and the company’s business is essential (Du at al., 2010). This means that stakeholders expect that companies support causes which are somehow related to the core values of the organization. Findings by Ellen and colleagues (2006) show that consumers respond best to CSR campaigns that include elements of both,

intrinsic (genuine concern for the cause) and extrinsic (profit-driven) motivations of the company. Consumers are not passive and simplistic humans and they can react negatively to either only extrinsic motives or intrinsic motives, while a combination of both of them makes companies look more genuine and less dishonest (Du et al., 2010). Furthermore, it is

important to note that many studies show that low-fit CSR campaigns with an emphasis on intrinsic values lead to negative attitudes from customers and firms (Simmons and Becker-Olsen, 2002; Speed and Thompson, 2000; Sen and Bhattacharya, 2001).

The term “fit” has usually positive connotations (Elving, 2013) and it can be explained by the associative network theory (Becker-Olsen et al., 2006). In order to make sense of the world, people cluster similar concepts and create chains of associations in existing structures. When an organization engages in a CSR activity and consumers see that the CSR fit matches with the company mission, values, expectations, associations and actions, then it is accepted by the consumer and further added to existing cognitive structures the consumer already has (Elving, 2013). However, the effect of fit differs in many studies (Elving, 2013). Sen and Bhattacharya (2001) found that fit leads to positive purchase intentions. This leads us to the first hypothesis:

H1: Campaigns with a high CSR fit result in higher purchase intentions compared to

campaigns with a low CSR fit.

Skepticism towards CSR Fit and the role of Purchase Intentions

Congruence is more accepted than dissonance, so when consumers find that there is a discrepancy between their expectations and given information (CSR campaign), they begin to act critically towards the company (Elving, 2013). They can quickly become suspicious of CSR motives of companies that intensively advertise their CSR intentions (Du et al., 2010).

This leads to us to next key challenge of CSR campaigns which is to reduce stakeholder skepticism (Du et al., 2010). Skepticism can be defined as the tendency toward disbelief (Obermiller and Spangenberg, 1998). The element of CSR is closely linked to skepticism: stakeholders are more inclined to be less skeptical if the firm’s CSR mission aligns with the company’s core values and is visible to both, internal and external stakeholders (Pollach, 2015). Research often relates skepticism to cynicism (Mohr et al., 1998), which can be characterized as distrust that takes place when evaluating other people’s motives based on their ego. Elving (2013) contributes to this discussion by suggesting that cynicism is a personality trait whereas skepticism may not always be evident and that cynical people react skeptically to social situations in general.

A theory that can be used to analyze skepticism is the attribution theory by Heider (1958), as explained in a paper by Elving (2013). Attribution theory tries to explain why people act the way they do and the reasons for their behavior, by attributing internal or external reasons for them (ibid). Consumers interpret CSR activities of an organization by attributing the motives for doing so to the company (Elving, 2013). Internal attributes lead consumers to focus on intrinsic values (non-profit driven values), while external attribution focuses on the external motives that include profit, elevating the company reputation and gaining trust and support from stakeholders (Foreh and Grier, 2003). External attributions made by consumers lead to higher skepticism levels due to lowered trust and honesty (Elving, 2003). The main issue for companies is that any first CSR initiatives will lead to a wave of suspicion from consumers, partly due to the element of surprise (Bae and Cameron, 2006). Fein (1996) explains that suspicion is a particular mindset individuals possess and because companies are profit-driven institutions, donating to a good cause leads to contradictions in consumer’s minds and therefore, strengthens feelings of suspicion. The CSR fit is an important factor in how successful a CSR campaign can be because it affects stakeholder’s

CSR attributions (Du et al., 2010). Low CSR fit leads to more skepticism, high fit leads to less skepticism (Elving, 2013).

Studies into skepticism have found that when consumers perceive too much

skepticism in a campaign, there is a strong influence on purchase intentions (Becker-Olsen et al., 2006; Ellen et al., 2006). If consumers doubt CSR initiatives and attribute solely external motives (for profit reasons), the willingness to purchase significantly decreases (Elving, 2013). As an extension of hypothesis 1, the following hypotheses (H1a and H1b) have been formulated:

H1a: The effect of H1 is mediated through skepticism.

H1b: A high CSR fit results in a lower skepticism level that subsequently leads to higher

purchase intentions.

CSR Fit related to Skepticism and Purchase Intentions with a focus on the presence of a Luxury brand

Firms in the apparel industry have been often criticized in the media for violating labor rights and employing cheap illegal labor strategies (Arrigo, 2013). Examples repeatedly come from the luxury industry and include the upscale British label Burberry and the scandal that involved destroying unsold clothing, accessories and cosmetics (BBC, 2018). Luxury items are said to be desirable but not necessities to survive (Heine and Pham, 2011). Not everyone has the same definition of luxury, it may differ based on consumer’s own

experiences as well as their socio-demographic background (Chevalier and Mazzalovo, 2012). However, there are some characteristics of luxury that are congruent among researchers, such as scarcity and limited availability (Dubois and Paternault, 1995; Kapferer, 2015), excellent quality, high price, aesthetics, extraordinariness and ancestral heritage (Heine, 2012).

Several studies point out the fact that consumers don’t see a connection between CSR fit and luxury (Janssen et al., 2017). Firstly, they are skeptical due to the differing values of both notions. A so-called Luxury-CSR paradox may appear, which refers to the opposing values held by luxury brands and what CSR stands for (Kathuria, 2013). CSR is about self-transcendent values such as equality, modesty and universalism, while luxury brands are focused on self-enhancement values such as elitism, hedonism and extravagance (Kathuria, 2013; Torelli et al., 2012; Wong and Dhanesh, 2016, Wong and Dhanesh, 2017). Torelli and colleagues (2012) found that customers respond less positively when a luxury brand promotes CSR activities as compared to when it doesn’t. Also, research by Davies et al. (2012) shows CSR initiatives are not a priority for customers and don’t affect their luxury purchase intentions which may be due to low awareness of CSR practices in general (Pomering and Dolnicar, 2009). A possibility for luxury companies is to communicate CSR practices more clearly, bring more awareness and inform customers (Janssen et al., 2014).

In fact, many luxury companies have already engaged successfully in various CSR activities: the Italian fashion house Gucci joined the anti-gun movement after a mass shooting in Florida in 2018 and donated $500,000 to a non-profit called March For Our Lives

(Fernandez, 2018). Cartier partnered up with UNICEF in 2014 and donated $6.7 million and supported access to clean water and education in China, India and Madagascar to thousands of children (UNICEF, 2019). More recently, luxury conglomerates, LVMH and Kering have announced that they will donate €300 million for restoration of the Notre-Dame cathedral that was heavily damaged by fire in April 2019 (Guilbault, 2019).

Moreover, Janssen et al. (2014) argue that when luxury products clearly envision important properties such as scarcity and endurance (e.g. diamonds or jewelry), perception’s rapidly change and people do not feel as if there is such a visible disharmony between CRS fit and luxury, they become less skeptical. According to Verhallen and Robben (1994), there are

two factors to scarcity: popularity and limited supply. Luxury products may be popular but the importance is on limited supply, as opposed to more affordable, value goods (Janssen et al., 2014), which are the main differences between the two. As luxury is associated with tradition, craftsmanship, quality materials and timelessness (Janssen et al. 2014; Kapferer 1998; Kapferer and Bastien 2009; Vigneron and Johnson 2004), it can be linked to CSR because both possess conservation values (Schwartz, 1992). Furthermore, these authors claim that a more rare, scarce luxury product as compared to a value product gives a better

impression of fit with CSR and lessens negative associations and skepticism of consumers. Not only is the fit of CSR important for companies (Elving, 2013), how consumers view a firm has an impact on the decision to purchase (Brady, 2003). Also, the price

customers pay is an important factor in purchase decisions (Scitovzsky, 1944). Purchasing a luxury product may lead consumers to feel guilty but when they associate it with a good deed it may significantly change and lessen their sense of guilt (Hagtvedt and Patrick, 2016). It is important to note that the focus should shift from luxury brands and CSR initiatives to how to invest and carry out those initiatives as a luxury brand in the first place so it makes sense to the public and increases CSR fit (Janssen et al., 2014). A good example would be a shoe company TOMS whom states that with each purchase, they donate a pair to a child in Africa (TOMS, 2019). Moreover, Ho et al., (2016) describe in their research that due to

globalization, the luxury industry has experienced enormous growth in recent years. However, they also mention that due to the promising economic environment, luxury companies are faced with the ever-changing perception of consumers and the question whether high priced luxury products are really worth the money and valuable enough to purchase. Their findings showed that CSR initiatives have a significant influence on purchase intentions (Ho et al., 2016). Based on these results, the following hypothesis was constructed:

H2: A high CSR fit results in a lower skepticism level compared to a low CSR fit and this

effect is stronger when people are exposed to a luxury brand as opposed to a value brand.

Conceptual framework

Method Research design

In addition to the theoretical material discussed previously, in order to answer the research question, an online experimental survey has been administered. This is a suitable method because we want to infer a causal effect between the variables (Freedman, 2009). We are interested in the effects of CSR fit (High fit and Low fit) and the Presence/Absence of a Luxury brand on Purchase intentions of the public. The following variables were examined: the independent variable CSR fit (high, low); the dependent variable Purchase intentions; the moderator Luxury brand (present, absent: value brand) and the mediator Skepticism.

The experiment has a 2 (CSR fit: High and Low) x 2 (Luxury brand: Absent/Present) design. This makes it a between-subjects design. These two independent variables were

manipulated and as an outcome resulted in four experimental conditions. Participants were randomly assigned to one of the four conditions via Qualtrics software. They were either exposed to a campaign of a luxury brand with a high CSR fit or a low CSR fit or they saw a campaign of a value brand with a high CSR fit or a low CSR fit.

Table 1. Diagram of the number of participants in each of the four conditions

Luxury brand Value brand

High fit N=36 N=35

Low fit N=31 N=37

Sample

A convenience sample was used to answer the research question and hypotheses, and this form of nonprobability sampling focuses on data gathering based on proximity to the researcher, availability and the willingness to participate in the research (Etikan, 2016). The platforms to reach participants were via social media channels like Facebook and Whatsapp. It is important to mention that a snowballing effect took place as the researcher asked

participants to further distribute the survey. The minimum age for participation was 18, all younger respondents were not allowed to participate. There was no compensation for participation involved. In total, 141 respondents started the survey. However, not all

questions were completed, so data from 2 respondents was marked as missing and incomplete and analyses were conducted with a sample of 139 respondents. On average, participants were 26.56 years of age (SD= 6.79) and 70.5% were female. When it comes to occupation, 50.4% of respondents classified as having a Bachelor’s degree. The sample was rather international, as respondents came from 30 countries, however, most of them resided in the Czech Republic (N=55) which is also the researcher’s home country.

Stimuli

In this experiment, a fictious Italian fashion brand was created named “Viamonte”. This company manufactures children’s clothing. The reason for choosing a fictional brand is in order to avoid prior bias from participants which could be heightened (in a positive or a negative way) if a well-known fashion brand was selected. An Italian sounding name was created because Italy and especially Milan is known worldwide as one of the most significant fashion cities. Besides a description of Viamonte, the fashion campaign features a photo of two children (girl and boy) with a logo created by the researcher of Viamonte in the center. This image was downloaded from the internet and features unknown children.

There are two non-profit organizations featured in this study, namely “Room to Read” and “Corruption Watch”. Both non-profits are existing organizations but they are not very well known among the general public (as opposed to large non-profit organizations like UNICEF). Room to Read was selected to represent a high CSR fit campaign because it focuses on providing quality education to children in Africa. On the other hand, Corruption Watch was chosen to be the low CSR fit campaign because it has nothing to do with children and specializes in fighting against corruption. See Appendix IV for the whole survey and Appendix III for the stimuli.

The moderator variable ‘Luxury brand’ was measured on a nominal level, with two levels: luxury brand present and absent (also referred to as value brand). Participants either saw a description of Viamonte as a luxury or as a value brand.

The independent variable CSR fit is a dichotomous categorical variable with two levels: high/low. The participants were either shown the campaign of Viamonte as donating money from sales to Room to Read (a high CSR fit collaboration) or to Corruption Watch (a low CSR fit collaboration).

Procedure Pre-test

A pre-test was conducted in order to see if the given manipulations were executed correctly. Further details about the pretest may be accessed in the Appendices, namely in Appendix II. The manipulations were executed successfully so no changes needed to be made to the experimental design of the survey.

Actual experiment

Data gathering took place between the 7th of May until the 18th of May, 2019. The questionnaire began with an informed consent and a brief description of the aim of the research: “collaborations between fashion brands and non-profit organizations”. When the participants agreed to participate, the survey took around 5-8 minutes to fill in. Firstly,

participants were presented with a description of Viamonte and then asked to click through to see a collaboration between Viamonte and a charity. After, participants were asked questions about Viamonte as a brand as well as the collaboration. Then, participants were asked to indicate their opinion on various questions. At last, they were asked to fill in demographics, such as gender, age, education level and nationality and also if they had children. Finally, they were debriefed and responses were recorded.

Measures

Purchase intentions. They are the buying objections a consumer has when it comes to a specific product or a brand. Purchase intentions were measured on a 5-item 7- point Likert scales (1= strongly disagree, 7= strongly agree) adapted from Chadran & Morwitz (2005) and Dodds et al. (1991), which were found and employed in Plotkina and Munzel (2016) research

(see Appendix I for all the measures). An exploratory factor analysis with Oblimin rotation indicated that the scale was unidimensional and explained 88.29% of the variance. The reliability of the scale was high (Cronbach’s α = .97). Therefore, the items were used to make a mean scale (M=3.17, SD=1.55).

Skepticism can be defined as an inclination towards negative thinking or disbelief (Obermiller & Spangenberg, 1998). Skepticism was measured on a 4-item 7-point Likert scales (1=strongly disagree, 7=strongly agree) adapted from Skarmeas and Leonidou (2013). This variable was recoded so that lower scores would indicate lower levels of skepticism and higher scores would indicate higher levels of skepticism (e.g. Viamonte is a socially

responsible brand: 1=strongly agree, 7= strongly disagree). An exploratory factor analysis with Oblimin rotation indicated that the scale was unidimensional and explained 82.57% of the variance. The reliability of the scale was high (Cronbach’s α = .93). The items were used to construct a mean scale (M=3.92, SD=1.26).

Luxury brand can be defined as a category of a product which is scarce and of limited availability (Dubois and Paternault, 1995; Kapferer, 2015) as well as high quality and price (Heine, 2012). Luxury brand (presence/absence) was measured on a 5-item scale 7-point Likert scale (1=strongly disagree, 7=strongly agree) adapted from Dubois et al. (2001). An exploratory factor analysis with Oblimin rotation indicated that the scale was unidimensional and explained 83.07% of the variance. The reliability of the scale was high (Cronbach’s α = .95). The items were used to make a mean scale (M=4.20, SD=2.01).

CSR Fit is the match between a company’s values and CSR activities (Elving, 2013). CSR fit (low/high) was measured on a 4 item, 5-point bipolar Likert scale (1= strongly disagree, 5= strongly agree) adapted from Bigné (2012). An exploratory factor analysis with Oblimin rotation indicated that the scale was unidimensional and explained 84.43% of the

variance. The reliability of the scale was high (Cronbach’s α = .94). The items were used to make a mean scale (M=2.94, SD=1.26).

Demographic variables and covariates

In this study, there were four demographic variables: gender (male/female/other), age, nationality and education (Elementary school, High school graduate degree, Vocational training, Bachelor degree, Master degree and Doctorate degree). In order to see if other variables might have a potential influence on the main variables, covariates like children, materialism and attitude towards the company were added. All can be seen in Appendix IV in the complete survey.

Firstly, to check if participants have children, the following question was added: “Do you have children?” (Yes: N=17, No: N= 122).

Secondly, to measure the degree of how materialistic participants are, a 4-item 5-point Likert scale was used (1= strongly disagree, 5= strongly agree) and adapted from an originally 18-item scale developed by Richins and Dawson (1992). The reason for choosing those 4 items is that they balance clearly statements about luxury and materialism (first two

statements) while at the same time target more general statements (last two) so that participant bias is avoided. An exploratory factor analysis with Oblimin rotation indicated that the scale was unidimensional and explained 51.20% of the variance. The reliability of the scale was moderately high (Cronbach’s α = .77). The items were used to make a mean scale (M=2.94, SD=0.89).

Lastly, to measure participants attitude towards the company, a 3-item, 5-point Likert scale was used (1= strongly disagree, 5= strongly agree) and adapted from MacKenzie & Lutz (1989). An exploratory factor analysis with Oblimin rotation indicated that the scale was unidimensional and explained 87.92% of the variance. The reliability of the scale was high (Cronbach’s α = .93). The items were used to make a mean scale (M=3.03, SD=1.04).

Results Manipulation checks

A manipulation check was carried out in order to see if the given manipulations were conducted correctly. If participants failed the manipulation check, they had to be excluded from the sample. There were two questions, one of them asked the participants to rate the luxury level of the Viamonte brand and the other asked participants to rate the collaboration.

An independent samples t-test was conducted with Stimulus (luxury vs value brand) as an independent variable, and the manipulation check as dependent variable. A significant effect of Stimulus on the manipulation check was found t (137) = 13.76, p <.001. Participants perceived the luxury brand as more luxurious (M= 5.78, SD= 1.19) as compared to the value brand (M=2.73, SD=1.41). This indicates that the manipulation of the Stimulus (luxury vs value brand) was successful.

Another independent samples t-test was conducted with Stimulus (CSR high vs low) as an independent variable, and the manipulation check as dependent variable. A significant effect of Stimulus on the manipulation check was found t (137) = 9.39, p <.001. Participants perceived the CSR fit as higher when they saw a high CSR fit campaign (M=3.71, SD=0.98) as compared to the low CSR fit campaign (M=2.14, SD=1.00). This indicates that the

manipulation of the Stimulus (CSR high vs low) was successful.

Randomization checks

It is necessary to check if participants differed in the two conditions (CSR high vs low) when it comes to age, attitude towards the company, materialism, gender, children,

nationality and education level. Independent samples t-tests and chi-square tests were conducted.

An independent samples t-test showed that participants’ mean age in the CSR Fit High condition (M=27.24 years, SD= 7.66) was not significantly different from participant’s mean age in the CSR Fit Low condition (M=25.85 years, SD=5.72), t (137) = 1.21, p= .230. This means that age was randomized between the groups successfully.

Another independent samples t-test was conducted to see if the variable attitude towards the company was successfully randomized. Participants that saw the High CSR Fit campaign (M=3.50, SD= 1.00) had significantly different attitudes towards the company than those that saw the Low CSR Fit campaign (M=2.55, SD= 1.00), t (137) = 5.94, p <.001. Therefore, the variable attitude needed to be included in further hypothesis testing as a covariate variable.

Another independent samples t-test was conducted to see if the variable materialism was successfully randomized. Participants that saw the High CSR Fit campaign (M=3.04, SD= 1.00) were not significantly more materialistic than participants that saw the Low CSR Fit campaign (M= 2.84, SD= 0.78), t (137) = 1.28, p= .201.

Besides the attitude variable, the remaining demographic variables and control

variables (children) did not differ between groups. The results of a chi-square test showed that men and women were equally spread across the two conditions, χ2 (1) = .522, p = .470. The conditions did not differ significantly when it comes to whether participants had children, χ2 (1) = 1.44, p = .230), where they came from; χ2 (29) = 31.11, p = .360 or what educational background they had; χ2 (3) = 3.98, p = .263. To conclude, we can say that participants were equally distributed when it comes to age, materialism, gender, children, nationality and education level.

A Pearson correlation matrix was created in order to see if any variables highly correlate. From Table 2 on the next page we can see that the correlation between attitude and purchase intentions is a moderately positive correlation and between attitude and CSR fit is a low positive correlation, so attitude clearly needs to be controlled for in further analyses.

Table 2. Pearson Correlation Matrix

**Significant at 0.01 level *Significant at 0.05 level

Hypothesis Testing

To test the main hypothesis, an independent samples t-test was conducted, with CSR fit as the independent variable and purchase intentions as the dependent variable. Participants that saw the campaign with a High CSR fit were significantly more likely to purchase

Viamonte clothing (M= 3.52, SD= 1.73) than those that saw the campaign with a Low CSR fit (M=2.81, SD=1.27), t (137) = 2.75, p=.007. This result supports H1.

To test hypothesis H1a and H1b, a mediation analysis was conducted using Model 4 of PROCESS. For 95% confidence intervals, five thousand bootstrap samples were used. The model consisted of CSR fit as the independent variable, skepticism as the mediator, purchase intentions as the dependent variable and attitude as the covariate. Contrary to the result in the previous analysis, with the other variables in place, CSR fit seemed not to have a significant effect on purchase intentions (b= -0.37, p= .078, BCI [-0.78, 0.04]). However, skepticism had a significant effect on purchase intentions (b = -0.30, p= .004, BCI [-0.50, -0.10]). This means

Purchase Intentions CSR Fit Materialism .20* .11 Children .03 .10 Attitude .70** .45**

that a lower skepticism level leads to higher purchase intentions. Furthermore, we can see that CSR fit did not have a significant effect on skepticism (b =- 0.11, p= .531, BCI [-0.45, 0.23]). This means that the expected effect of a high CSR fit is not mediated through skepticism. Therefore, we reject H1a and accept H1b only.

The covariate attitude had a significant effect on purchase intentions (b = 0.87, p < .001, BCI [0.61, 1.13]) as well as on skepticism (b = -0.83, p < .001, BCI [-0.99, 0.66]). A positive attitude towards Viamonte leads to a lower level of skepticism as well to higher purchase intentions. This means that attitude plays a major role when it comes to skepticism of consumers and purchase intentions. The indirect effect of CSR fit on purchase intentions was not significant, the confidence interval in the bootstrap included zero (Indirect effect= 0.66, boot SE= 0.17, BCI [0.34, 1.00], so a full mediation effect is not present.

Interestingly though, when covariate attitude is taken out of the model, there is a full mediation effect present. The expected effect of a high CSR fit is mediated through

skepticism (b= -0.87, p < .001, BCI [-1.28, -0.49]) and a lower skepticism level results in higher purchase intentions of customers (b=-0.74, p < .001, BCI [-0.92, -0.56]). The results are displayed in Table 3 below. But since it is necessary to control for attitudes, it was decided to stick with the main analysis above.

Table 3. Output for PROCESS Model 4

***p < .001

In order to test the moderated mediation, Model 7 from the SPSS macro PROCESS was employed. For 95% confidence intervals, five thousand bootstrap samples were used. The

Antecedents Skepticism Purchase intentions

b p BCI b p BCI CSR fit -0.87 .000*** -1.28, -0.49 - - - Skepticism - - - -0.74 .000*** -0.92, -0.56

model consisted of CSR fit as the independent variable, luxury brand as the moderator, skepticism as the mediator and purchase intentions as the dependent variable. Attitudes were included as a covariate.

As we can see from Table 4 below, there was no significant interaction effect between CSR fit and the presence of a luxury company towards skepticism (b = -0.03, p =.921, BCI [-0.64, 0.58]). Therefore, the moderated effect of luxury that was assumed in H2 is rejected. It is important to note that the covariate attitude had a significant effect on both skepticism (b=-0.84, p < .001, BCI [-1.00, -0.67]) and purchase intentions (b=0.87, p < .001, BCI [0.61, 1.13]).

In the moderated mediation, the effect was not significant, the confidence interval in the bootstrap included zero (Index of moderated mediation= 0.01, boot SE= 0.10, BCI [-0.17, 0.25].

Table 4. Output for PROCESS Model 7

Note: Attitude was included as control variable in this model. ***p < .001

Antecedents Skepticism Purchase intentions

b p BCI b p BCI Attitude -0.83 .000*** -0.99, -0.66 0.87 .000*** 0.61, 1.13 CSR fit -0.11 .531 -0.45, 0.23 -0.37 .078 -0.78, 0.04 Skepticism - - - -0.30 .004*** -0.50, -0.10 Luxury -0.10 .648 -0.54, 0.34 - - - CSR fit * Luxury -0.03 .921 -0.64, 0.58 - - - R2 = .00 F (1, 134) = 0.10 p = .921 - - - - - - - - -

Conclusion

The problem addressed in this study deals with CSR fit. CSR fit is an attribute of CSR, which focuses on the match between a company and a collaboration with a non-profit

organization, supporting a good cause. A complication arises when this fit is incongruent, as research claims that this may lead to problems and provoke negative reactions from

stakeholders. The sub problem deals with the industry type and CSR involvement.

Specifically, the luxury sector, as they have been slower adapters (Olšanová et al., 2018) to the CSR trend compared to other industries. Despite this slow start, luxury companies have launched CSR campaigns that have led to some negative reception from consumers (Kathuria, 2013; Torelli et al., 2012; Wong and Dhanesh, 2016, Wong and Dhanesh, 2017) and

contributed to the so-called CSR-Luxury paradox.

The aim of this research was to address how the right CSR campaigns can help increase purchase intentions and inspect if the public is more likely to buy from a company when the CSR initiative is congruent with the company values. Also, the aim was to see whether skepticism and luxury brand presence played a role in shaping overall purchase intentions. The research question was as follows:

How does CSR fit (low and high) influence purchase intentions of the public and what role does skepticism and the presence of a luxury brand play?

In order to answer the research question, a quantitative approach took place, where a survey-embedded experiment was administered. There have been numerous studies conducted when it comes to CSR campaigns of organizations and their fit. Generally speaking, when a CSR fit is high, it is beneficial for the organization and can lead to positive reception from customers and in turn, affect positively purchase intentions (Sen and Bhattacharya, 2001).

Indeed, the findings from this research confirm that when customers are exposed to a campaign that has a high CSR fit, the intention to purchase is higher as opposed to when they see a campaign with a low CSR fit. This effect has been supported in other studies as well (Du et al., 2010; Elving, 2013). It simply makes more sense for customers to support a company that aligns with the values of the non-profit as opposed to an unexpected

collaboration. Companies should keep this in mind when creating collaborations with a CSR initiative involved, as this is clearly a key indicator of future success.

If there is a dissonance instead of a congruence present between a CSR initiative and a company, customers are not oblivious to it so they start to critically evaluate it, they become more skeptical (Elving, 2013). Despite there being research that supports this idea (e.g. Du et al., 2010), there was no such effect found in this study. The CSR fit did not seem to have an effect on skepticism as previously assumed (Pollach, 2015). There was no full mediation effect of CSR fit and skepticism on purchase intentions in the present study. Despite this, however, it was found that a lower skepticism level does lead to higher purchase intentions, which has been supported by multiple studies (Becker-Olsen et al., 2006; Ellen et al., 2006). From this we can conclude that skepticism acts as a tool that can lead to lower purchase intentions, so we may tie it to some useful managerial implications. Managers should try to minimize the risks customers may feel toward a company. CSR activities are here to stay and companies need to find good ways to incorporate them into their strategies. It is difficult to eliminate skepticism completely, as it is closely tied to cynicism and both are personality traits so it depends on the individual if they are by nature more skeptical or not (Elving, 2013). However, it may be a good idea to try to diminish skeptic attitudes as much as possible.

The current research brings new information and awareness to the linkage between CSR and luxury. The findings showed that the moderated effect of luxury was not supported.

Hence, consumers didn’t see a connection between CSR fit and luxury (Janssen et al., 2017). Simply, it wasn’t convincing enough for customers when they saw a CSR campaign to purchase from an expensive brand. However, despite some research claiming that this indeed is true and accurate (e.g. Torelli et al., 2012), these results are also contradictory to previous studies (Janssen et al., 2014) that claim that there is a link between CSR and luxury because of properties both share- conservation values (Kapferer 1998; Kapferer and Bastien 2009; Vigneron and Johnson 2004; Schwartz, 1992). Despite not proving that customers are more likely to purchase when a CSR campaign involves a luxury brand, it is important to note that when it comes to managerial implications, companies should pay attention to the fit of the CSR collaboration nonetheless as that alone has a significant effect on purchase intentions.

The findings of this research build on the topics that have been covered in CSR and luxury already, which mainly focused on cases like counterfeiting (Phau et al., 2009; Koay, 2018; Ngo et al., 2018), brand positioning (Yann et al., 2009; Massara et al., 2018) and symbolism behind luxury (Turunen & Leipämaa-Leskinen, 2015; Hung et al., 2011). Clearly, the subject of luxury and CSR requires further research in order to infer definite answers. However, it is important to state that no research has been done on customer’s purchase intentions in relation to luxury brands and how skepticism acts as a mediator in this process so this research aims to fill the gap in this area specifically.

Furthermore, this research yielded some other interesting findings. Namely, the fact that attitudes are an important factor to consider when it comes to purchase intentions and skepticism- they turned out to have an impact on both. One of the main triggers of purchase intentions are said to be specifically attitudes (Baker, 2001). Attitude was controlled for and held constant in this experiment because it failed the randomization check and due to numerous studies showed that skeptic consumers had negative attitudes towards a company with CSR initiatives and could influence the reception of consumers (Ashforth and Gibbs,

1990; Mohr et al., 1998). Overall, it would be useful if companies acknowledge the

importance of consumer attitudes and strive to improve and heighten positive feelings towards a brand so they can reduce skepticism and in turn that can aid in increasing purchase

intentions. This research found that a positive attitude towards the company leads to higher purchase intentions and also decreases the level of skepticism consumers might have which was also supported in research by Elving (2013). Companies may strive to create positive associations with the brand/company by eliminating any possible negative influences. As stated in the results section, a full mediation effect occurred when attitudes were taken out of the equation. Therefore, it is important to keep in mind just how influential and powerful attitudes of consumers can be.

Discussion

Despite not being able to accept all of the hypotheses proposed, only H1 and H1b, there is still room left that can be used to infer generalizability with regards to this study. This last chapter focuses on the limitations as well as suggestions for future research.

Firstly, we need to shed light on the sample that was used in this study (N=139), which was quite small to begin with and therefore difficult to generalize further. Also, not only is the sample on the smaller side, a convenience sample was used which is not a truly random sample because it relies on participants which are within the proximity of the researcher and which show willingness to participate (Etikan, 2016). Furthermore, the researcher asked participants to distribute the survey further, therefore a snowballing effect took place. This may pose as a threat to internal validity as the researcher may not know how much information was passed on to the participants from someone who has already

Another limitation worth discussion is the fact that the experimental research used a survey format. As with all types of research, there are always limitations to particular

methods. When it comes to surveys specifically, we may argue that the pros include low cost, large amount of data that can be collected and they are embedded in a realistic setting. There is no artificial environment like in a laboratory experiment and participants may fill out a survey from the comfort of their home, meaning it is high in ecological validity. However, there are of course drawbacks which mainly include survey fatigue- higher non-response participants due to the lack of attention which in turn can cause a threat to external validity.

Moreover, a fictional brand called ‘Viamonte’ was created in order to avoid any prior bias. However, research shows that luxury has two main features- luxury for oneself and luxury for others, which means that it is crucial for luxury brands to be widely recognizable among a large population in order to create a dazzling desire for their products as opposed to just targeting those that can afford their products (Kapferer & Bastien, 2017). This limits external validity. We may argue that both options have their own limitations that come with them. A future improvement would be to use more familiar brands. Well-known luxury brands include brands like Burberry, Gucci or Chanel. The same principle applies to the less well-known non-profit organizations used in the research- perhaps larger corporations like UNICEF may produce a different result.

The current research focuses on purchase intentions but doesn’t consider variables like income which have been used as indicators in luxury studies previously (Kamal et al., 2013; Dubois and Duquesne, 1993). The amount of money people earn naturally determines if they can afford to splurge on luxuries or not. Moreover, income may not be the only variable with an effect on purchase intentions. Various studies conducted in the sphere of brand love indicate that consumers’ like or love of a brand can have a significant impact on their buying behavior (e.g. Batra et al. 2012). Consumers that are fond of a brand are willing to pay a price

premium due to the positive emotional attachment they have created with the brand,

especially when they know about the authenticity of the brand (e.g. emphasizing the vision of the founders) (ibid). In our case, in the description of Viamonte, there was a mention of the heritage but perhaps it wasn’t as significant for the participants because Viamonte was a fictional brand.

Another interesting factor to consider would be the fact that customers are drawn to domestic brands (Riivits-Arkonsuo & Leppiman, 2015). This means that Italian brands may have a more secure place in Italian consumers’ hearts as opposed to for example French brands, but interestingly enough, research by Kumar et al. (2009) found that local brands are perceived as lacking quality but high in emotional value. Due to the opposing opinions, more research is needed.

Moreover, the current research found no mediating effect between CSR fit, skepticism and purchase intentions, we may argue that other variables besides attitude explored in this study may have an impact on the relationship and could be explored further. Those may include for example reputation which has been found to be an important aspect in the CSR research (Elving, 2013).

Lastly, going back to the skepticism aspect discussed in the concluding section, we may argue that another limitation in this research is worth a mention. It has been confirmed by research in the past (e.g. Webb & Mohr, 1998) that if companies invest in building long-term relationships with non-profit organizations, those committed companies are much more likely to succeed in the long-run and decrease skeptic and cynical attitudes from consumers. The current research did not have a backstory on being involved with non-profits in the past, so it may be interesting to include this in future research. Also, the idea of fit may not be solely focused on one particular CSR campaign a company produces, but taken as an overall strategy or mission of an organization (Elving, 2013).

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Appendices Appendix I

Purchase Intentions Scale (Chadran & Morwitz, 2005 and Dodds et al. 1991 and accessed in Plotkina and Munzel, 2016 study) measured on a 5-item 7- point Likert scales.

Imagine you walk into a Viamonte store. How much do you agree with the following statements? (1= Strongly disagree, 7= Strongly agree)

It is highly probable that I will choose Viamonte clothing for my (future) children

1 2 3 4 5 6 7

It is very likely that I would seriously consider Viamonte clothing for my (future) children

1 2 3 4 5 6 7

high

If I were to make a decision I will most certainly purchase Viamonte clothing for my (future) children

1 2 3 4 5 6 7

It is highly probable I would suggest buying Viamonte clothing to others with children

1 2 3 4 5 6 7

Skepticism Scale (adapted from Skarmeas & Leonidou, 2013) measured on a 4-item 7-point Likert scales

Please indicate how much you agree or disagree with the following statements (1= Strongly disagree, 7=Strongly agree):

Viamonte is a socially responsible brand 1 2 3 4 5 6 7 Viamonte is concerned with improving the well-being of society 1 2 3 4 5 6 7 Viamonte follows high ethical standards 1 2 3 4 5 6 7 Viamonte acts in a socially responsible way 1 2 3 4 5 6 7

Luxury Scale (Manipulation check variable) (Dubois et al., 2001) measured on a 5-item 7-point Likert scale

After reading the information about Viamonte, to what extent do you believe the brand is…(1=Strongly disagree, 7= Strongly agree)

CSR-Fit Scale (Manipulation check variable) (Bigné 2012) measured on a 4-item 5-point A top quality brand 1 2 3 4 5 6 7

Represents luxury 1 2 3 4 5 6 7 A brand for the rich 1 2 3 4 5 6 7 A very expensive brand 1 2 3 4 5 6 7 Not mass produced 1 2 3 4 5 6 7

What do you think of the

collaboration between

Viamonte and the non-profit

organization?

Appendix II Pre-test

The sample consisted of 16 participants the researcher approached from her

surroundings via social media (Facebook and WhatsApp). Firstly, the participants were asked to read the stimuli material. Four people were in each condition. After that, they were asked to answer these two questions: “After reading the information about Viamonte, to what extent do you believe the brand is... “Answer options such as “represents luxury” were measured on a 5-item 7-point Likert scale ranging from 1=strongly disagree and 7= strongly agree. This scale was adapted from Dubois et al. (2001) because their 18-item scale measured many aspects of luxury brands and these specific items measured perceptions of luxury brands. Other luxury scales were not deemed appropriate due to the nature of the items, as many scales measured alternative aspects of luxury, mainly characteristics like hedonism, distinction, power or uniqueness (e.g. Vigneron and Johnsson, 1999).

The second question was as follows: “What do you think of the collaboration between Viamonte and the non-profit organization?” This manipulation was measured on a 4-item bipolar Likert scale adapted from Bigné (2012) and ranged from 1= strongly disagree, 5= strongly agree, with answer options, for example: “doesn’t fit together- fits together”. After this, participants were asked demographic questions regarding gender, age, level of education and nationality. 1. Doesn’t fit together 2 3 4 5. Fits together 1. Doesn’t make any sense 2 3 4 5. Makes a lot of sense 1. Is incompatible 2 3 4 5. Is compatible 1. Is meaningless 2 3 4 5. Is meaningful