UNIVERSITEIT VAN AMSTERDAM
“Uniting contradictive powers: CSR and Luxury Brands.
A consumers perception on how factors of the CSR strategy of a luxury brand affect the corporate image.”
Master Thesis
submitted by Eirini Maria Papaioannou on the 3rd
of February 2017 at Graduate School of Communication
Supervisor: dhr. dr. P.Verhoeven Master Communication Science
Abstract
This study follows the concepts of CSR strategies of luxury brands and the corporate image. Regarding the CSR strategies some of the main factors are being closer examined as well as their effect on the corporate image of luxury brands. The main factors that are the topic of this paper are fit, motivation and timing. Additionally, direct and indirect relationships with other factors such as skepticism and awareness are also investigated. Through a street survey, it was found that the fit of the CSR strategy applied is highly and positively related to the corporate image of luxury brands. Furthermore, CSR in the luxury sector is proven to be less important than in other sectors for luxury consumers. Intrinsic motivation is creating more favorable attributions compared to extrinsic and proactive strategies are preferred to reactive ones. However, the effect of skepticism and awareness to the relationship of motivation and the corporate image could not be indicated. These findings underline the shift towards a
sustainable luxury sector and the importance of fit for the CSR strategies that aim to a better corporate image.
Introduction
The world is at a stage where a sustainable mindset does no longer seem like a choice but a necessity, because of societal and environmental as well as economic reasons (Cervellon & Shammas, 2013). Correspondingly, whereas all the business industries as well as the luxury industry are tending to produce more and faster while trying to decrease costs, Corporate Social Responsibility (CSR) seems to be taking a stand (Werther & Chandler 2005). “Swarovski polishes brand image with sparkly new CSR Web site”
(https://www.luxurydaily.com/swarovski-polishes-brand-image-with-sparkly-new-csr-web-site/) is one of the many luxury online magazine titles, which indicate that the CSR trend is taking over the luxury industry with the purpose of the amelioration of the luxury brands’ corporate image (Du, Bhattacharya & Sen, 2010).
This phenomenon is an effect of the demand for “sustainable luxury” which is rising by stakeholders who are concerned, thus pushing brands to shift focus towards more
conscious production methods (Kapferer, 2010). Nonetheless, it is further implied that the shift is not easy nor fast paced because of the oxymoron connection between luxury and sustainability. In addition to that, the transparency in corporate responsible activities and in the motivation behind it is very often absent causing the matter to be more complex (Coombs & Holladay, 2013).
Corporate Social Responsibility is broadly defined as ‘a commitment to improve well-being through discretionary business practices and contributions of corporate resources’ (Kotler & Lee, 2004, p.3). In essence, the application of CSR strategies can carry important benefits on both the company itself as well as the general well being (Newell & Frynas, 2007). Furthermore the engagement of a business in such activities is a way of differentiation from its competition as it influences its corporate image and reputation (Visser, 2008).
Reciprocally, CSR seems to be a catalyst between the dialogue of companies and their stakeholders in all industries (Berger et al, 2007).
However, in order to gain these benefits, one of the most important steps is to earn the trust of a company’s stakeholders (Morsing, 2006). With the purpose of that, the type of responsible activities as well as the way they are communicated is critical (Dahl & Persson, 2008). Specifically, it is very important that the stakeholder group of consumers is informed about benevolent actions in the right way (Schrader, Hansen & Halbes, 2006). Moreover, regarding the luxury industry, Dubois and Duquesne (1993) support that ‘the analysis of the relationship between consumers and luxury brands is the key to an improved understanding of such a market’. Subsequently this would offer insights for the amelioration of the
communication between them and hence facilitate the obtainment of the rewards. Moreover, luxury brands are differentiated from other brands because they hold special attributes in addition to the functional ones, such as psychological traits (Vigneron & Johnson, 2004). Furthermore, luxury is connected with scarcity, exclusiveness and high prices and thus offers prestige to its consumers (Husic & Cicic, 2009). Therefore it attracts those who seek for emotional value from their purchases (Kapferer, 1997). That leads the communication about CSR in the luxury industry to be more complicated (Davies, Lee & Ahonkhai, 2012).
Despite the general economic crisis, the luxury consumer group is growing
consistently (Chandon, Laurent & Valette-Florence, 2016). Its value growth remained 7% annually during 1995-2013 and it is predicted that it will be 9% annually for the next 5 years (Bain & Co, 2014). Therefore, the luxury consumers are proven to be an important
stakeholder group whose power is rising (Kapferer, 2012). In fact, the evolution of the wider consumption of luxury leads to the extension of this luxury consumer group (Dubois & Laurent, 1998) and thus also makes it’s power and demands grow (Kapferer, 2012).
Since there is not a lot of research on consumer perceptions regarding CSR, and more specifically on the ones of luxury consumers that is a highly valued and impactful group audience, the results of this study will lead to useful insights that will fill in a gap in the existing literature. The further assessment and understanding of the perception of this consumer group in relation to CSR strategies and the corporate image will be a valuable contribution to the CSR and luxury business literature, the communication between luxury corporations and its stakeholder group of consumers, the corporate luxury image and branding as well as provide essential managerial implications. In order to investigate the way CSR communication of luxury brands affects the corporate image perception among the luxury consumers, certain factors and their relationship to the corporate image will be examined.
With all this in mind, the following research question came up: “What factors of the CSR strategy of a luxury brand affect its corporate image and to what extent?”
Theoretical Framework
CSR and Corporate Image
According to Carroll (1979), “the social responsibility of business encompasses the economic, legal, ethical, and discretionary expectations that society has of organizations at a given point in time” (p. 500). In many cases, companies’ conscious initiatives have made an impact on big societal and environmental issues (Blowfield, M., 2007). Furthermore, socially responsible actions are also recognized as a 'hard' commercial factor, linked directly to profits and brand value (Gupta & Sharma, 2009). Furthermore, CSR has been acknowledged as one of the most important factors in shaping corporate image while the corporate image is proven to be a determinative factor in the success of an organization (Worcester, 2009).
By all means, CSR’s importance both for the societal well-being and the corporate success has been rising consistently (Bhattacharya & Sen, 2004). Forthwith, companies have
been devoting significant efforts and amounts to various socially conscious actions. Notably, according to Ven (2008) the benefits from organizational CSR investments will loose in value if they are not communicated in the appropriate way to each stakeholder group. It is here worth mentioning that the expectations of each stakeholder group differ and thus makes it complicated to address them all at once (Morsing & Schultz, 2006)
Luxury Industry and Corporate Image
The definition of luxury is complex and subjective depending on the social context (Nueno & Quelch, 1998). There have been various definitions of luxury from academics (Tynan, McKechnie & Chhuon, 2010). Firstly its derivative luxuria, means extravagance and it defines sensuality, splendor and pomp (Yeoman & McMahon-Beattie, 2006). Conjointly, according to Kapferer (1997), luxury means beauty and adds an artistic side to functional items while being a reference of good taste. According to Tynan et al (2010) luxury is represented by brands that stand for products that are “high quality, expensive and
non-essential products and services that appear to be rare, exclusive, prestigious, and authentic and offer high levels of symbolic and emotional/hedonic values through customer experiences”.
Moreover, luxury stands for greater quality, a high price, is stylish and comes from a brand with a strong image that is connected to an exclusive lifestyle (Corbellini & Saviolo, 2014). Hereafter, the stakeholder group of luxury consumers is defined as the group that is looking for the “sense of distinction” by purchasing luxury goods (Bourdieu, 1984).
In a social context, luxury states class and taste while in a personal context, luxury offers individual pleasure such as self-esteem and satisfaction (Kathuria, 2013). Likewise, according to the analysis of Amatulli & Guido (2009), there are two main categories of
reasons for choosing luxury brands: external motivation, which is social and interpersonal and internal motivation, which is subjective and reserved. On the one hand, external motivation is
triggered by the seeking of prestige and status, while on the other hand internal motivation consists of the desire to please ones emotions, lifestyle and self-image.
Furthermore, the corporate image is the customers’ perception of an organization, which derives from the experience and general impressions of the brand (Andreassen, 2001). It is further implied that together with the corporate identity, which is what a brand chooses to portray, they create the representation of an organization. Cogently, when choosing a certain brand, consumers are also choosing based on the corporate image and identity of the company (Harris & de Chernatony, 2001). Specifically, according to Vickers and Renand (as cited by Tynan et al., 2010) luxury is mainly perceived as a symbol of personal and social identity. In the sense that it provides an image of how one perceives himself and how one wants to be perceived by society. In other words, since luxury aims to provide its consumers with a higher image either towards the society or towards themselves the pursuance of luxury brands is principally based on the corporate image (Kapferer, 2010).
Luxury Today
Furthermore, according to economic theory, when the income increases the luxury consumption increases (Hamilton & Tilman, 1983). To put it differently, it is widely believed that luxury is mainly consumed by the upper income classes (Husic, & Cicic, 2009).
Nevertheless, the main role model in the media, which promotes self-indulgence in addition to status and recognition as one of the greatest achievements, cause the aspiration for luxury to overpower the ability to afford it (Dubois and Duquesne, 1993). That is to say that the consumption of luxury seems to also be becoming a goal of the middle class that strives to lead a luxury lifestyle. This change of the cliché that luxury consumers are only the very wealthy, towards a wider luxury consumer group is called the democratization of luxury (Yun & Dhanesh, 2016). Traditionally, luxury consumers are attributed to be an elite group of the “happy few” as cited by (Husic & Cicic, 2009; Twitchell, 2001). Nowadays, the desire to
posses luxury is a broader and makes the middle class that cannot practically afford it,
endeavor to access it and thus renames the luxury consumers as “the happy many” (Dubois & Laurent, 1998).
Furthermore, according to Dubois and Duquesne (1993), if the prices of luxury products would go lower, they would lose their rarity and exclusivity characteristics.
Therefore the prices in the luxury market remain high in the name of exclusivity, despite their expanded clientele (Chadha and Husband, 2006). Nevertheless, when consumers feel guilty for self- indulging in luxury consumption, they might seek for a higher cause as a justification to indulge, which can be offered by brands through their engagement in social actions
(Hagtvedt & Patrick, 2016).
In cause of the democratization of the luxury market, the luxury brands are urged to meet demands of the new luxury consumers, which seem to be beyond the social and personal identity rationale, especially the social and environmental consciousness (Yun & Dhanesh, 2016). With all this in mind, it is hypothesized that:
(H1): Supporting the social goals of a luxury brand is more importantly ranked as a reason to purchase luxury compared to prestige.
Luxury Consumers and CSR
Regarding particularly the stakeholder group of luxury consumers it is implied that they have been less interested in CSR as an attribute of a luxury brand compared to other group of consumers for non luxury products (Davies, Lee & Ahonkhai, 2012). In effect, contrastingly to the overall positive responses of stakeholders and more specifically the ones of regular consumers on sustainable strategies (Bhattacharya & Sen, 2004), CSR actions seem to be less effective on luxury brands. Thus (H2) derives: The importance of CSR in general is
higher than the importance of CSR for luxury brands.
Moreover, the corporate image of a brand consists of the concepts that are related with it by consumers, defined as “unique, abstract meanings associated with brands” (Park et al., 1986). Torelli, Monga and Kaikati (2012) propose that luxury brands have a self-enhancement brand concept, which means dominance over resources and people, implying a feeling of self-empowerment when consuming luxury products. In contrast, it further argued that CSR is attributed to self-transcendence values, which refers to brand concepts based on altruism. Another indication of the conflicting values between sustainability and luxury is that
corporate luxury branding aims to create a dream concept (Corbellini & Saviolo, 2009) while CSR is based on confrontation with reality (Kathuria, 2013).
All in all, these indications confirm the challenges in the luxury sector to communicate the sustainable actions especially in a way that doesn’t cause contradictions on the brand image (Kathuria, 2013) and thus confuses its stakeholders.
Stakeholder Theory, CSR and Luxury Consumers
According to the stakeholder theory, in order to gain the most of the business practices, the key is to make the main stakeholders feeling identified to the corporate image (Roberts, 1992). According to Dutton et al. (1994) identification occurs when the image of the corporation fits the image that the stakeholders want to have, in personal and societal means. It is further implied that addressing the priorities and requests of each group is essential in order to achieve that. This also applies to CSR strategies, where identification ensues customized communication towards each stakeholder group (Brown & Forster, 2013).
The stakeholder group of consumers is one of the most important and has various
demands from corporations. To emphasize, Freeman (1984) considers consumers as a core and immediate stakeholder group with great influence on the organizations. They are a special
pressure and stakeholder group because they have no responsibility towards the corporations but only seek for satisfaction of their own needs, wants and desires (Fitchett, 2005).
Regarding their expectations from the CSR strategies, some of them are the improvement of working conditions for the employees, the respect of the environment and the defeat of poverty (Elliot, & Freeman, 2004). In particular, luxury consumers are showing rising interest in issues such as eco-awareness, intelligence, healthy and ethical lifestyles (Yeoman, 2011).
Nevertheless, according to Davies et al (2010) the success of socially responsible businesses is not only based upon the demands of an ethical consumer but also on a ‘planned and systematic education and marketing initiative that will enable the attraction of consumers’ interest on CSR actions.’ It is implied that luxury management should not only depend on stakeholder expectations but also initiate a new wave of ethical luxury and raise interest by communicating it appropriately. In the purpose of that, based on the stakeholder theory, an integrated understanding of what creates a favorable and identifiable image, could lead to a deeper comprehension on when, how, through which channels and for whom specific CSR initiatives work on luxury consumers. Indicating and examining the factors that could generate the identification of luxury consumers with a sustainable corporate image seems to be the first step in setting the ground for ethical luxury either by stakeholder demand or by companies establishment as a role model.
Factors
According to Becker-Olsen, Cudmore & Hill (2006), the most important factors on the stakeholders group of consumers affecting their perception caused by CSR are the fit of the strategy the motivation behind it and it’s timing.
The first factor that is going to be examined is the fit of the socially responsible actions by meaning the perceived link between a cause and the company’s product, brand image, position, and target market (Varadarajan & Menon, 1988). In essence, the perceived
CSR fit from a consumer perception is the extent to which a cause is relevant to the attributes of the consumers to the product and the brand in general. It indicates (a) the amount of attention from the consumers that is paid to the relation of the cause and the marketing characteristics of the product (Foreh & Grier, 2003); (b) Whether the thoughts are positive or negative (Foreh & Grier, 2003). Furthermore, it is generally proven that CSR actions that are high-fit have a more positive impact on consumer perception regarding the corporate image than low fit ones (Bigné-Alcañiz, et al, 2009; Nan & Heo, 2007).Thus the following
hypothesis derived:
(H3): The higher the fit of the social actions of a luxury brand, the more positive the corporate image is.
The perceived motivation of the company is also an important factor, and is
categorized in intrinsic and extrinsic motives. Generally, perceived motivation comprises of the connotations by the consumers regarding the purpose of certain CSR activities (Sen, Bhattacharya & Korschun, 2006). Specifically, intrinsic motives are the ones that lead to actions because they are inherently interesting or enjoyable, and extrinsic motivation leads to actions that result to a separable outcome (Ryan, & Deci, 2000). In other words, intrinsic values include genuinely concerned, core-engaged motives and don’t include business-related motives. Whereas, extrinsic values derive from business motives and aim to gain profits from their CSR actions. Therefore, it is argued that extrinsic motives leave less favorable
impressions on stakeholders than intrinsic and therefore lead to negative associations towards the brand’s image (Du, Bhattacharya, & Sen, 2010). This leads to Hypothesis 3:
(H4): Intrinsic motives behind a CSR strategy have a more positive effect on luxury consumers compared to extrinsic motives towards the corporate image of a luxury brand.
Moving forward, according to Pomering and Dolnicar (2009), consumers in general, show low awareness of companies’ CSR and their motivation. In particular, the awareness seems to be even lower in the case of luxury brands (Davies, Lee & Ahonkhai, 2012). Additionally, it is proven that positive attributes will not be created form a CSR strategy without adequate information about it (Öberseder, Schlegelmilch & Gruber, 2011). Simply put, even if a brand is engaging in socially beneficial actions, when the consumers do not know about it or do not know enough about it, it will not positively affect their perception of the corporate image. It is thus implied that more communication about luxury brands’ CSR efforts and their motivation would increase consumers’ awareness of the social and
environmental impact of luxury brands and enhance a favorable image (Janssen, et al, 2014). In accordance to that, raising awareness through publicity and transparency of the motivation behind their strategies can lead to a more favorable image of the corporation
(Du,Bhattacharya & Sen, 2010). With all this in mind, it is hypothesized that the level of awareness has interaction effects on the relationship between on the perceived motivation and the corporate image of the company:
(H5a): As the value of awareness regarding intrinsic motivation increases, the relationship between extrinsic motivation and the corporate image increases.
(H6a): As the value of awareness regarding extrinsic motivation increases, the relationship between extrinsic motivation and the corporate image increase.
Another key point is what Vlachos et al (2009) proved, that skepticism is raised when companies engage in CSR without being completely transparent about it. Skepticism is generally believed to be an individual’s tendency to be critical, suspicious and to doubt (Forehand & Grier, 2003). In particular, according to Fein, Hilton and Miller (1990) being suspicious “refers to the belief that an actor's behavior reflects a motive that the actor wants hidden from the target of his or her behavior” (as cited by Skarmeas & Leonidou, 2013,
p.1832) Additionally, it seems that skepticism seems to affect the corporate image in relation to the perceived motivation of the CSR strategies (Skarmeas & Leonidou,2013). Considering all the above, awareness and skepticism moderate in opposing directions the relationship between the motivation and the corporate image depending also on the type of motivation. According to that, it is hypothesized that:
(H5b): As the value of skepticism regarding intrinsic motivation increases, the relationship between intrinsic motivation and the corporate image decreases.
(H6b): As the value of skepticism regarding extrinsic motivation increases, the relationship between intrinsic motivation and the corporate image decreases.
Further, timing is another key factor to the perception of the CSR strategies of luxury companies. Becker-Olsen et al (2006) refer to proactive and reactive CSR strategies. Reactive CSR strategies are the ones that take place as a reaction to disasters, crises or external
pressures, whereas proactive initiatives are the ones that try to prevent disasters, crises or external pressures. In contrast to Ellen et al (2000) who argued that the responses to reactive practices are more positive compared to proactive ones, Becker-Olsen et al. (2006) and Wagner et al. (2009) are opposing this statement. It is therefore hypothesized that:
(H7): Proactive CSR strategies of luxury brands are more positively rated than reactive CSR strategies.
Methodology Research Design
In order to assess the research question and hypotheses about luxury brands and the CSR strategy factors from a consumer perspective, a survey method was chosen. Moreover, the research unit is consumers and the research population is the luxury consumers. They are defined as the group of consumers that is looking for the “sense of distinction” through the purchasing of products and services that have high quality, are expensive and often non-essential (Bourdieu, 1984 & Tynan et al, 2010).
Specifically a street survey was conducted. The best way to gather the specific sample is in a natural environment in order to question the respondents while they are purchasing luxury goods. Thus it is facilitated to capture the most possibly genuine consumer’s
perception on luxury brands. Additionally, in this way high ecological validity is established (Bryman, 2015). H6b H5b H6a H5a Intrinsic Motivation Extrinsic Motivation Fit Timing Corporate Image Awareness Skepticism H2 CSR strategy factors:
Participants
In order to gather as many answers as possible within the timeframe provided, 600 people where approached with 196 actually agreeing to fill in a paper version of the questionnaire. The rest 404 of the people approached refused to participate. Thus approximately only one third of the people approached answered the questions. The determination of the sample size was targeted approximately at 200 for statistical reasons. After the completion of the questionnaires in the paper version, the data were manually put in the software Qualtrics in order to be able to assess and analyze it.
Sample and Data Collection
The gathering of the non-random sample took place in Athens because it is the biggest city in Greece and has 3,76 million of the total 10,78 million inhabitants. With this in mind, the sampling frame is luxury consumers in Greece. Three shopping locations around the city of Athens were chosen as the most luxurious to shop according to
(https://www.tripadvisor.com). In this way the luxury consumers can be represented as well as possible and thus establish the highest external validity achievable.
The questionnaire was piloted and edited in order to ensure clarity and diminish survey fatigue before starting the actual street survey to gather the sample (Walley et al, 2013). The final version of the questionnaire was distributed during the 16-30 of December 2016 with the assistance of 5 researchers. The confidentiality of the data and the anonymity of the participants were ensured.
The self-completion questionnaires were firstly given out to respondents in the luxury Mall of Athens “Golden Hall” (https://goldenhall.gr/gr/) . The researchers were standing at the center of the Mall, next to the information desk in order to have a good overview of the people coming out of the shops. There, 90 respondents filled in the questionnaires. Further,
questionnaires were handed out in the exclusive high-end customer based department store “Attica” (http://www.atticadps.gr/) where 72 responds were gathered. The researchers were standing at the stairs of the ground floor that lead towards the exit in order to approach as more people as possible that had already done their shopping. Lastly, responds from 34 luxury consumers were collected in the luxurious shopping street Voukourestiou. In this case the researchers were standing at the corners of Panepistimiou and Voukourestiou-Stadiou because most of the luxury stores are there.
In particular, the Golden Hall (Appendix A) is the biggest luxury mall in Athens and includes various high fashion stores with luxury brands such as Gianni Versace, Ermenegildo Zegna, Trussardi, Diane von Furstenberg and others.
Furthermore, Attica (Appendix A) is a renowned luxury department store chain. The specific department store that was chosen to locate respondents was the one in the center of Athens, which is the biggest in Greece. There, one can find luxury brands such as Bulgari, Dior, Hugo Boss and others.
Voukourestiou Street (Appendix A), which is the most expensive and luxurious street in Greece, is where the haute couture designer brands have their stores in the greek capital. Some examples are Prada, Versace and Dolce and Gabbana.
The criteria to fit in the sampling frame of Greek luxury consumers were entreated when a possible respondent was approached. The selection procedure was specific and simple (Appendix B): Every second person passing was approached. In addition to that, the
respondents ought to be holding at least one shopping bag. When groups where stopped only one person was given a questionnaire, the one holding the most shopping bags. In order to ensure gender variation after including two people of the same sex, the next one ought to be
from the other sex. In other words when two females in a row filled in the questionnaire the next one that was approached was a man and correspondingly. Additionally, under aged people were excluded from the research because they were unlikely to be consuming luxury products. In particular, the selected participants were kindly stopped and asked whether they have time and a good level of English, if are aged over 18 as well as if they like to purchase luxury brands. If that was the case they were given a questionnaire.
Operationalization and Analysis Methods
Through the questionnaire that measured the relevant variables it was intended to answer the proposed research question and investigate the hypotheses. In pursuance of the best measurement for the CSR factors of luxury brands that are affecting their corporate image, the variables: luxury consumption, importance of corporate image, importance of CSR in general, importance of CSR of luxury brands, purchasing rationale, intrinsic motivation, extrinsic motivation, fit, timing, awareness of motivation, skepticism, age, gender, education and income were operationalized into reliable scales. Hereafter it was aimed to explain the relationships with the total corporate image of luxury brands as well as between them.
Specifically, fit, extrinsic and intrinsic motivation, timing are the independent variables and corporate image is the dependent variable. Awareness and skepticism are the moderating variables.
In total the questionnaire consisted of 5 sections, 16 questions and 45 items (Appendix C). Primarily, for the purpose of clarity, definitions of the concepts were given before the questions needed.
In furtherance of proving the reliability of the scales, a Principal Component Analysis (PCA) was conducted, from which 6 factors were extracted, as well as reliability tests for each of the factors. Moreover, the data were screened for missing values, which occurred due to
administrative errors and recoded them accordingly. Before starting out the analysis some variables were computed into new ones in order to facilitate the analysis and the interpretation of the results. At this point the scales of the variables in each section are going to be described as well as their reliability.
The first section of the questionnaire was the filter section and aimed to measure the luxury consumption of the respondents, with two single itemed questions based on the
research of Husic and Cicic (2009). In the concept of luxury consumers all the consumers that purchase luxury brands at least every two months and spend more than 200 € on luxury brands every two months were included. In order to determine whether they actually are luxury consumers and thus fit the targeted sample population, the first question was
concerning specific frequencies of purchasing luxury brands while the second question was an open ended question about the sum spent on luxury goods.
The second section intended to measure the importance of the corporate image and the CSR of luxury and non luxury brands as well as the reasons for purchasing luxury, with four questions. Again based on Husic & Cicic (2009), a question of priority ranking on a scale 1-5 (1 was the lowest and 5 was the highest) was posed with the 5 most important reasons for purchasing luxury goods were examined. This question was incorporated in the questionnaire in order to assess the effect of the social goals of luxury brands on the corporate image that leads to purchase and investigate (H1). The importance of the corporate image was measured with one question on a numerical 1-10 scale. The importance of the engagement of brands generally in CSR was also measured with a question on a 1-10 scale. Correspondingly, the same question was posed but specifically about luxury brands in order to measure the importance of the engagement of luxury brands in CSR again on a 1-10 scale in order to assess (H2).
The third section was designed to measure the relationship of motivation, fit and timing to the corporate image of luxury brands with three questions. In order to measure fit of the CSR activities and the luxury brand, one question with 6 items was posed. The answer scale measuring fit wass a 1-7 likert scale in order to investigate (H2). Specifically, 1 stands for not at all important and 7 for extremely important. Examples of the items are as following: “The luxury brand is logically related to the social issue addressed” and “It was unexpected to see this luxury brand address a social issue like this”. Thus it was measured how important it is considered by luxury consumers that the CSR strategy of a luxury brand matches the general attributes they have to the brand. In this case, for the purpose of high reliability and because of cross loadings the item “The luxury brand is logically related to the social issue addressed” was excluded based on the PCA. Thus the 5 items were included in the PCA and comprised one factor: “Fit”. The Cronbach’s Alpha was α=.91 (N=194) which is very high.
The perceived motivation behind a luxury company’s strategy is measured with 8 items based on the research of Skarmeas & Leonidou, (2013). Half of them aimed to measure intrinsic motivation and the other half extrinsic motivation. The answer scale is a 1-7 likert scale. Specifically, 1 stands for not at all important and 7 for extremely important. One example of the intrinsic motivation items is as following: “The luxury company has a long-term interest in the society”. Also one example of the extrinsic motivation items is as following: “The luxury company hopes to increase its profits”. Thus the importance of the motivation that is assumed behind the CSR strategies according to the luxury consumers is measured. The PCA showed that the 4 intrinsically motivated items loaded in one factor: “Intrinsic motivtaion”. The reliability of the these items also proved to be very high with a Cronbach’s Alpha of α=.94 (N=196). Likewise, the PCA extracted one factor with the 4 items measuring extrinsic motivation: “Extrinsic motivation”. The reliability test that was conducted
(N= 193) resulted to a Cronbach Alpha of α=.96, again proving to be highly reliable. This question aimed to assess (H4).
In order to measure timing 4 items were used, 2 reactive and 2 proactive ones. The items were based on the research of Ellen, Mohr & Webb, (2000) and aim to address (H7). An example of a reactive item is: “If a luxury company would: address a disastrous incident that took place three months ago”. An example of a proactive item is: “If a luxury company would take action in preventing disastrous incidents”. Thus the importance of the CSR strategy addressing issues that already took place or preventing future issues is measured. Again, because of cross loadings and for the purpose of high reliability the item that was aimed to measured reactive strategies “A company addresses a disastrous incident that took place three months ago” was excluded based on the PCA. The three remaining items comprised a factor: “Timing”. Further, the reliability test on timing (N= 194) with 3 items showed a Cronbach Alpha of α=.83 which is high.
Further, the fourth section aimed to measure the relationship of awareness and
skepticism towards the corporate image of luxury brands and their interaction effects of other the relationships of the motivation towards the corporate image with 3 questions. The
importance of the Awareness of the motivation behind the CSR strategy of a luxury brand is firstly measured with one question on a numeric answer scale of 1-10. The importance of the Awareness regarding specific motivation is measured by another separate question with 4 intrinsic items and 4 extrinsic items. In order to measure awareness the same items are used as the ones to measure motivation. However in this question the motivation is publicly declared and the consumers are certainly aware of it. Thus the respondents express what the level of importance for them is when the motivation of the luxury brands is stated and not assumed. The PCA extracted one component including the 4 items that were measuring awareness on intrinsic motives: “Awareness of intrinsic motives”. The reliability test of these 4 items
showed a very high Cronbach’s Alpha of α= .96 (N= 196). This variable aims to assess (H5a) Similarly, the PCA showed another component that included the 4 items measuring the awareness of extrinsic motives: “Awareness of extrinsic motivation”. The Cronbach Alpha (N= 195) is again very high α= .96. That means that they both reach conventional standards for scale reliability. This variable aims to address (H6a).
Skepticism that is evoked by the motivation behind a luxury brand’s motivation is measured by 1 question with 4 statements and 8 items, 2 answer items for each statement. The scale is a 1-7 likert scale where 1 stands for strongly disagree and 7 for strongly agree.
Skepticism was measured by using the same intrinsic and extrinsic motivation statements based on Skarmeas & Leonidou, (2013) and aim to investigate (H5b) and (H6b). However, the respondents had to express their uncertainty of goodwill of the luxury brands based on the CSR strategies with the motivation as described in each statement. An example of an intrinsic statement is the following: “The luxury company is trying to give back something to the society”. An example of an extrinsic statement is as following: “The luxury company hopes to increase its profits”. Each of the statements had these two answer items: “I am uncertain that this company is concerned to improve the well-being of society” and “I am uncertain that this company follows high ethical standards”. The two answer items expressed the level of
agreement to skepticism caused by the motivation statements. Skepticism was not included in the PCA for statistical reasons because of the usage of the similar items in its measurement with the motivation variables. Reliability tests were run for Skepticism by intrinsic motives and Skepticism by extrinsic motives with 4 items each. The Cronbach’s Alpha for Skepticism by intrinsic motives was proven to be good, α=.70 (N= 194) and for Skepticism by extrinsic it was α=.81(N= 195) which is quite high.
To sum up, the reliability of all the scales is proved to be high as can be seen on Table 1 and reaches the conventional standard for scale reliability, which is α= .60. Despite the sixth
factor having and Eigenvalue lower than one, it is also extracted in order to explain with different components the items for the variables of Awareness of intrinsic and extrinsic motivation and because it adds up to the total variance explained which is 85.66%.
Lastly, the fifth section included the measurement of basic demographics with 4 questions. One question regarding the gender of the respondents, one question regarding their age, another one about their income and the last one regarding their level of education.
In order to answer the Research Question and assess the hypotheses based on the drawn data, statistical analyses with the software SPSS were further conducted.
The analysis of the data started with univariate statistical tests in order to get an overview of the data. Next, a frequency test in order to get the results of the ranking for the luxury purchasing rationale and two paired sample t-tests. One t-test was conducted to compare the means of the importance of CSR in general and CSR of luxury products and the other one to compare the means of proactive and reactive timing CSR strategies. Further, the correlations between all variables were tested before a regression that was performed in order to see which factors predict the corporate image and to what extent. Lastly, two moderation tests were run with Process (Hayes, 2012) in order to see the interaction effects of awareness and skepticism on the relationship of intrinsic and extrinsic motives to corporate image. At this point of the investigation the analyses conducted and the results will be presented.
Results Sample
In this research, luxury consumers were questioned about the influence of fit, extrinsic and intrinsic motivation and timing regarding the CSR strategies of luxury brands, on the corporate image. Additionally, the interaction effects of awareness and skepticism on corporate image in relation with the intrinsic and extrinsic motivation were measured.
Before running the univariate statistical test gender was recoded into a dummy variable in order to facilitate its use in the analysis. The results with the basic features of the sample that was drawn are presented in the table:
Tables 1: Summary Gender, Age, Income and Education Variable Age M=34.53, SD=9.02 Gender % Female 58.67% Male 41.33% Education
Secondary school graduate 1.02% Bachelor’s degree or equivalent 35.20%
Master’s or MBA 58.16% Doctoral Degree 5.61% Income Less than 1,000 21.43% 1,000-2,000 57.65% 2,000-3,500 19.39% 3,500-5,000 1.53% N=196
Respondents were aged 21 to 63 years old (N=196), which includes the age group most luxury consumers belong to (Degen, 2009). It is worth mentioning that none of the respondents declared to have a monthly income above 5,000.
Concerning the filter questions which measured the luxury consumption, the results showed that all of the participants did fit the standard of this investigation: purchasing luxury brands at least every two months and spending at least 200 € every two months.
Table 2: Summary of luxury consumption
M SD
Frequency of purchasing luxury 3.64 /m .844 /m Amount of spending on luxury 624.23 € 348.27 €
Note: N=196
Correlations
After performing the Pearson correlation test for all the main variables with age, gender, income and education, the strength of the relationships between them was indicated. Based on the correlations of the age, gender, income and education with the corporate image (Table 3) none of them has a significant relationship to the corporate image.
Table 3: Correlations of Gender, Age, Income and Education with main variables
Gender Age Income Education
Corporate Image .05 .07 .12 .13 Extrinsic Motivation .07 -.07 -.07 .06 Intrinsic Motivation .04 -.05 -.18** -.17* Timing -.06 -.01 -.06 -.03 Fit .03 -.07 -.27 -.16* Awareness Intrinsic -.02 .02 -.06 .08 Awareness Extrinsic .14 .00 .02 .15* Skepticism Intrinsic .03 .04 -.03 -.00
Note: * p <.05. ** p <.01. *** p <.001.
N=196
Univariate Statistics (H1)
Firstly, frequency statistics tests were conducted in order to assess (H1): “Supporting the social goals of a luxury brand is ranked as a more important reason to purchase luxury than prestige”. In accordance to that, “supporting the social goals of a luxury brand” was ranked as 3rd, one position above “prestige”. Henceforth (H1) is supported.
Table 4: Summary of the ranking of the reasons for purchasing luxury
M SD N Final Ranking
Prestige 2.63 1.63 196 2
Exclusivity 2.17 1.07 196 1
Shopping and consuming experience
3.08 1.01 196 4
Quality 4.46 .82 196 5
Supporting the social goals of the brand
2.68 1.22 196 3
Note: 5 is the most important, 1 is the least important
Paired-sample t-test 1(H2)
In order to assess (H2): “The importance of CSR in general is higher than the
importance of CSR for luxury brands” the means of the two variables that were measured on 1-10 scales, were compared through a paired sample t-test. The results indicate that luxury
consumers think it is more important that brands in general are active in CSR (M = 6.70, SD = 1.39) than particularly luxury brands (M = 6.47, SD = 1.48), since 0 is not included in the CI and t (195)=5.60, p=.000, 95% CI [.152, .317]. (H4) is supported.
Table 5: Summary of corporate image, general awareness and importance of CSR
M SD N
Corporate Image 7.11 1.58 196
Importance of CSR in general 6.70 1.39 196
Importance of CSR in luxury brands 6.47 1.48 196
General Awareness of motivation 7.64 1.23 196
Paired Sample T-test 2 (H7)
The investigation of (H7): “Proactive CSR strategies are more positively rated than reactive CSR strategies” also took place through the comparison of the means with a paired sample t-test. In this case both concepts were measured on a 1-7 scale. The results indicate Proactive (M = 5.66, SD = 1.24) CSR strategies are more positively rated than Reactive (M = 4.71, SD = 1.34), since 0 is not included in the CI and t (193)=10.60, p=.00, 95% CI [1.12, -.77] ones and lead to the acceptance of (H7).
Paired sample T-test 3 (H4)
In order to investigate (H4): “Intrinsic motives behind a CSR strategy have a more positive effect on luxury consumers compared to extrinsic motives towards the corporate image of a luxury brand” a third paired sample t-test was run for the purpose of comparing the means between intrinsic and extrinsic motivation. The results indicate intrinsic motivation (M =4.98 , SD = .91) CSR strategies are more positively rated than Reactive (M = 3.76, SD = 1.26). Since 0 is not included in the CI and t (195)=-13.60, p=.00, 95% CI [-1.40, -1.05] (H3) is accepted.
Correlations (H3):
In order to address (H3): “The higher the fit of the social actions of a luxury brand, the more positive the corporate image is” the correlation between fit and corporate image is investigated. The association between fit and corporate image is positive and weak (r=. 17,
p=. 02). Henceforth (H3) is confirmed.
Regression (Research Question)
At this point of the investigation the relationship of the corporate image with the intrinsic and extrinsic motives as well as fit and timing is estimated with the purpose of answering the proposed research question.
The regression model of the corporate image as the dependent variable and fit, intrinsic and extrinsic and timing as the independent variables is significant F(4, 34.051) = 3,617, p < .007. That means that this model can predict the importance of the corporate image based on the independent variables. However, the strength of the prediction, that indicates the accuracy, is very low (R2
= .07). Table 6: Regression Model Summary
dF F p
Regression 4 3.62 .007
Residual 191
Total 195
Extrinsic motivation b* = .59, t = .78, p = .439, 95% CI [.11, .26] and timing, b* = -11, t = -1.48, p = .139, 95% CI [-.66, .09], have a non-significant, association with the
importance of corporate image. Henceforth, extrinsic motivation and timing in this model are not good factors to predict the importance of the corporate image.
Intrinsic motivation, b* = -.19, t = -2.15, p = .033, 95% CI [.64, .03], and fit b* = .28, t = 3.39, p = .001, 95% CI [.18, .66] both have a weak significant association with the corporate image. Consequently intrinsic motivation and fit are good factors to predict the importance of the corporate image. Important to note is that for these effects mentioned the other
independent variables are held constant.
Table 7: Regression model to predict corporate image
b* b SE CILB CIUB Constant Corporate Image 8.43 1.13 Extrinsic Motivation .06 .74 .10 -.11 .26 Intrinsic Motivation -.19* -.33* .16* -.64* -.03* Timing Fit -.11 .28** -.28 .42** .19 .12** -.66 .18** .09 .66** Age R2 .07 F Note: * p <.05. ** p <.01. *** p <.001. N=196
There is relative homoscedasticity according to the scatterplot while the distribution is approaching normality based on the Histogram and the P-P plot. Additionally there is no sign of collinearity since all the VIF values of the independent variables are higher than 1.
Moderation 1, Intrinsic (H5a) and (H5b)
Forthwith the interaction effects of awareness and skepticism in the relationship of intrinsic motivation and the corporate image hypothesized will be tested.
In order to test (H5a): “As the value of awareness regarding intrinsic motivation increases, the relationship between intrinsic motivation and the corporate image increase” and (H5b): “As the value of skepticism regarding intrinsic motivation increases, the relationship between intrinsic motivation and the corporate image decreases”, a moderation analysis was conducted using Proccess (Hayes, 2012). Furthermore, model 2 of the program was used with 1.000 bootstrap samples to estimate the bias corrected bootstrap confidence intervals. Intrinsic motivation was the independent variable, corporate image the dependent variable and
awareness as well as skepticism as the moderators. The variables of fit and timing were controlled.
Although the model is proven to be significant r(7)=.28, p=.03, the results show a non-significant main effect (b= .09, t(7)=.79, p= .43). Therefore it can be assumed that neither the luxury consumers’ awareness of intrinsic motivation of the CSR strategies of luxury brands nor the skepticism by intrinsic motivation affects the rate of the corporate image. This finding is contradicting both hypotheses (H5a) and (H5b) henceforth leading to their rejection.
However, the relationship of the control variable fit towards the model is significant (b= .34,
t(7)=2.46, p= .02). Thus it is proven that fit does interact in the relationship between the
extrinsic motivation and the corporate image. Table 8: Moderation for Intrinsic
B p SE CILB CIUB
Constant 7.61* .00 1.20 5.25 9.97
Awareness .10 .48 .14 -.18 .38 Skepticism .24 .30 .23 -.21 .70 Fit .34** .02 .14 .07 .62 Timing -.34 .08 .19 -.71 .03 Note: * p <.05. ** p <.01. *** p <.001. N=196
Moderation 2, Extrinsic (H6a) and (H6b)
In this section the moderation effect of skepticism and awareness on the relationship of extrinsic motivation of luxury brands for CSR strategies and corporate image were tested.
In order to test (H6a): “As the value of awareness regarding extrinsic motivation increases, the relationship between extrinsic motivation and the corporate image increase” and (H5b): “As the value of skepticism regarding extrinsic motivation increases, the relationship between extrinsic motivation and the corporate image decreases” a second moderation test with Process (Hayes, 2012) was run. The analysis was run with extrinsic motivation as the independent variable, corporate image as the outcome variable and awareness as well as skepticism as the moderators. In addition, the variables of fit and timing were controlled. For this moderation analysis, again model 2 of the program was used with 1.000 bootstrap samples to estimate the bias corrected bootstrap confidence intervals.
Although the model is proven to be significant r(7)=.29, p=.02 this analysis also shows a non-significant main effect b= -.02, t=-.44, p= -.44. Contrary to the hypotheses there is no interaction effect of skepticism and awareness on the relationship of extrinsic motivation and corporate image. Henceforth (H5a) and (H5b) are rejected. However, the relationship of fit towards this model is also significant (b= .23, t=2.10, p= .04). This finding shows that fit does interact in the relationship between the extrinsic motivation and the corporate image. Table 9: Summary Moderation Extrinsic
B SE p CILL CILL Constant 8.23 1.06 .00 6.13 10.33 Extrinsic Motivation .24 .11 .83 -.20 .24 Awareness -.04 .09 .68 -.22 .14 Skepticism .41 .16 .01 .09 .73 Fit .23 .11 .04 .14 .45 Timing -.35 .19 .06 -.72 .12 Note: * p <.05. ** p <.01. *** p <.001. N=196
To sum up, as we can see from the results of the moderation analyses, when controlling for fit and timing no significant interaction of awareness and skepticism was indicated on the relationship of intrinsic motivation and corporate image nor on the relationship between extrinsic motivation and the corporate image. Whereas the control variable fit had significant interaction effect on both of the relationships tested.
Table 10: Model Summary of the two moderations
R R2 p Moderation 1-Intrinsic Moderation 2-Extrinsic .28 .29 .08 .08 .03 .02
In order to recapitulate the results of this research a final overview is presented: Table 11: Final overview of hypotheses status after analyses
Hypotheses Status
Discussion and Conclusion
The aim of this investigation was to answer the question “What factors of the CSR
strategy of a luxury brand affect its corporate image and to what extent?”. This is achieved
through 5 main findings of this paper.
Firstly, this study showed that for luxury consumers supporting the social goals of luxury brands is more important than prestige to luxury consumers as it was hypothesized and reason to purchase luxury than prestige.
H2 The importance of CSR in general is higher than the importance of CSR for luxury brands.
Supported
H3 The higher the fit of the social actions of a luxury brand, the more positive the corporate image is.
Supported
H4 Intrinsic motives behind a CSR strategy have a more positive effect on luxury consumers compared to extrinsic motives towards the corporate image of a luxury brand.
Supported
H5a As the value of awareness regarding intrinsic motivation increases, the relationship between intrinsic motivation and the corporate image increase.
Rejected
H5b As the value of skepticism regarding intrinsic motivation increases, the relationship between intrinsic motivation and the corporate image decreases.
Rejected
H6a As the value of awareness regarding extrinsic motivation increases, the relationship between extrinsic motivation and the corporate image increase.
Rejected
H6b As the value of skepticism regarding extrinsic motivation increases, the relationship between extrinsic motivation and the corporate image decreases.
Rejected
H7 Proactive CSR strategies of luxury brands are more positively rated than reactive CSR strategies.
in agreement with Yun and Dhanesh (2016) that the luxury consumers are now demanding from luxury brands to be more sustainable. Another finding of this study is that CSR strategies are held more important when concerning non luxury than for luxury products. These findings lead to the assumption that that although the shift to sustainable luxury might have started but is not be fast paced in accordance to Kapferer (2010). Additionally, it can be assumed through these findings that both the business and stakeholders side to take action and establish conscious activities further in the luxury sector in accordance to Davies et al (2010).
Furthermore, it is proven that the higher the fit of the CSR initiatives is to the luxury brand, the more positive affect it has on the corporate image. Additionally, highly interesting was that fit showed the most effect on the corporate image directly and indirectly. Thus it is highlighted that the fit of the CSR strategy has a big influence on the corporate image perceived by the luxury consumers. This finding is in agreement with the theory of fit and CSR (Bigné-Alcañiz, et al, 2009). It can be assumed that for luxury consumers’ positive attributions to the corporate image of luxury brands are generated when CSR activities are relevant to the brand in general. That also relates to the identification theory of Maignan and Ferrell (2004) and may be a result of easier identification with the CSR strategy when it matches the corporate image because it is then held as more important.
Another main finding of this research, as hypothesized intrinsic motives create more favorable associations for luxury consumers than extrinsic motives in agreement with Du et al (2010). Henceforth, luxury consumers seem to have different attributions regarding the
motivation of the company and when luxury brands seem to genuinely care about their social actions, luxury consumers have a more positive image of them.
Additionally, it was indicated that proactive CSR strategies create more positive attributes to the brand than reactive ones do as hypothesized. Hence it seems that luxury consumers care more about preventing future damages to the society and the environment
than to restoring the ones that already happened in accordance to Becker-Olsen et al. (2006) and Wagner et al. (2009)
In general, this study sheds light on some of the factors in a CSR strategy of a luxury brand that are important. With these findings, this study fills in an existing gap in literature of the luxury industry as well as the CSR literature. It expands research on the effect of CSR on the corporate image regarding luxury brands as well as on the rationale behind purchasing luxury.
Managerial Implications
In addition to the theoretical contribution of this research there a few important practical implications that should not be ignored. Generally, showing that a company is intrinsically motivated regarding CSR initiatives will lead more positive results. The next recommendation regarding the fit of the CSR strategy to the luxury brand attributes is to ensure the CSR strategy has the highest fit possible since luxury consumers seem to care more about these kind of actions. Lastly, brand managers should not react to crises but help
preventing them. This is to show that the more proactive the strategy, the more positive effect it will have.
Limitations
Nevertheless, this research is facing certain limitations. The first limitation is caused by the convenience sample that was drawn because of time and budget limitations. This might lead to a possible bias of the findings. In particular, all of the respondents were greek and the sample was taken from 3 different locations in Athens. Thus the best external validity
considering time and budget limitations was established. The second limitation was that the language of the questionnaire remained English regardless of the fact that the procedure took place in Greece. That is because the translation of the measurements would cause a decline to the measurement validity (Bryman, 2015). Additionally, although measures were taken in
order to establish gender variance, the female respondents are more than the male respondents because not all the people approached accepted to participate.
Future Research
Although this paper offered very valuable theoretical and practical findings, there are certain points where additional empirical elaboration would further enlighten the complicated relationship of CSR and the luxury industry.
The interaction effects between the relationship of specific motivation and the corporate image are not further enlightened by this investigation. The moderation of skepticism and awareness on these relationships was rejected based on the results. Thus it would be highly interesting to further research on other possible factors interacting on these relationships. Also, a cultural study on the factors and their importance would be valuable for scientific and managerial purposes. Additionally, an experimental investigation might provide a deeper understanding of the relationship between the motivation behind the CSR strategies and the corporate image.
To sum up, the assessment of the relationship between luxury consumers and CSR is of rising importance but is still in the beginning. In general it is important to gain more knowledge about it because it is seems to be crucial that ethical and responsible tactics are established and secured at the moment where the environmental, humanitarian and
economical crises are peeking. The luxury industry especially can have a big impact because it is one of the most powerful. Therefore the demand, attention and support from such an industry and its consumers in making more conscious business would indicate a step towards a better world.
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https://goldenhall.gr/gr/ http://www.atticadps.gr/
Appendix A
About Location Some of the Brands
Golden Hall Biggest luxury Mall in Athens
Kifisias 37A 15123 Marousi Athens
Gianfranco Ferre, Gianni Versace, Ermenegildo
