Communicating the business case of corporate social responsibility : acknowledging self-serving motives as part of ones’ marketing strategy to increase credibility

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Communicating the Business Case of Corporate Social Responsibility

Acknowledging Self-Serving Motives as part of ones’ Marketing Strategy to increase Credibility

Anya Zebregs – 6078699 Thesis – Final Version January 29th, 2016

MSc. Business Administration – Marketing track

University of Amsterdam, Faculty of Economics and Business Supervisor: Lars Moratis

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Statement of Originality

This document is written by student Anya Zebregs who declares to take full responsibility for the contents of this document

I declare that the text and the work presented in this document is original and that no sources other than those mentioned in the text and its references have been used in creating it. The faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents.

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Abstract

Corporate Social Responsibility (CSR) has been a widely used strategy, whereby companies engage in social and environmental actions. It’s often used from a business case perspective; to gain economic benefits for the company. This study examines whether

communicating the business case of CSR, self-serving direct motive (e.g. getting more profit) or self-serving indirect motive (e.g. creating a better image), can lead to more credibility and whether three moderators, corporate reputation, prior CSR beliefs, and perceived honesty of the message influence this relationship. The research was conducted in a sector characterized by high level of public distrust, the financial industry. Data was collected using a survey. The results showed that communicating self-serving motives (e.g. profit or image) increased perceived credibility. Moreover, this effect was stronger for the indirect self-serving motive (image) than for the direct self-serving motive (profit). Further, prior CSR beliefs only functioned as moderator when participants had to form an opinion of a bank other than ING; for ING customers prior CSR beliefs were not of influence. Lastly, corporate reputation was not found as a moderator but appeared to mediate the relationship between self-serving motives and perceived credibility.

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1. Introduction

Seven years after the financial crises started in 2008, the financial sector hasn’t fully recovered. Banks are spending a great amount of money attempting to increase their image and credibility, using a strategy that many view as illogical (Ogrizek, 2002; Poolthong and Mandhachitara, 2009; Truscott et al, 2009; in Pérez, A., and Rodríquez del Bosque, 2013).

1.1. The Corporate Social Responsibility Paradox

The strategy banks are using is Corporate Social Responsibility (CSR), a concept

whereby companies integrate social and environmental concerns in their business operations and in the interaction with their stakeholders on a voluntary basis. CSR entails actions above a company’s legal obligations towards society and the environment (McWilliams and Siegel, 2001; Öberseder,, Schlegelmilch, and Gruber, 2011; European Commission, 2011). The banking industry has been one of the most prominent investors in CSR, even though trust and belief in the financial sector is at an all-time low (Trusctott et al, 2009; in Pérez, A., and Rodríquez del Bosque, 2013). Only 51% of people have trust in the financial sector (Edelman Trust Barometer, 2014).

A global change in environmental sustainability and the rise of societal problems has led to an increase in demand of responsible companies (Walker and Wan, 2011). Companies are now expected to not only make a profit, but to contribute to social and environmental issues. These expectations are detailed in figure 1, which shows that 81% of people believe the role of business in society should at least support larger issues (e.g. donations, play a role in community), with 61% beliefs corporations should also advocate for change (e.g. change the way of operation to align with greater social needs; in yforyouth.org, 2013). Similar results have been found; 80% of the Americans believe that companies have an obligation to support good causes (Oldenberg, 2001; in Szykman, 2004).

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7 (source, www.yforyouth.org)

Figure 1.

Belief about Role of Business in Society

However, although many people believe that companies are obligated to participate in CSR, one would expect the use of CSR would be anything but a source of distrust.

Unfortunately this is not the truth. An example of the paradox is shown in figure 2; 72% of people claimed to be very interested in learning about corporations’ CSR initiatives, only 38% of respondents found the social and environmental claims that companies made to be credible (globescan.com, 2012).

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(source, www.globescan.com)

Figure 2.

The Credibility Gap of CSR communications

Further, two thirds of Americans believe that companies exaggerate their CSR reports for the natural environment, resulting in less trust about the companies’ CSR claims (Katz, 2008). Alarmingly, many people believe that greenwashing, the successful use of false CSR claims, is often used to improve a company’s competitive standing (Pope and Waeraas, 2015; Walker and Wan, 2011). Corporate greenwashing thus refers to the idea that a company deliberately frames its activities as ‘green’ in order to look better. When greenwashing is expected, suspicion is evoked with low credibility as result (Laufer, 2003). The profusion of CSR claims, creates difficulties for consumers to distinguish between firms claiming CSR and firms taking advantage of the false CSR trend (Parguel, Benoît-Moreau and Larceneux, 2015). Often, the truth about CSR use is not completely known and associated with a gap between falsehood and reality (Vos, 2009). Since it cannot be controlled how companies use CSR, people assume that the CSR use is (in)correct and (not) accurate. Therefore in this research perceived credibility is used to describe possible acceptable use of CSR.

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1.2. CSR Motives and perceived Credibility

The perceived credibility of a company’s CSR activities relates to the company’s motive. According to Becker-Olsen and Hill (2005) two of the most common motives are self-serving (e.g. profits) or other-serving motives (e.g. assist community). Moreover a mixed motive was associated with a more positive view of the company than a single motive (Ellen, Webb and Mohr, 2006).

To ensure that a company’s CSR claims result in high credibility, the company must be perceived as honest. Honesty has been found to be an important determinant of credibility of a company. When a firm acknowledges its motive and is honest about the benefits (e.g. higher profit) of CSR, the skepticism of CSR claims was reduced (Forehand and Grier, 2003; Yoon, Gürhan-Canli and Schwarz, 2006). To date, there has only been one study that has estimated the effect of honesty in industries where distrust is high. Vries, Terwel, Ellemers and Daamen (2013) found that companies in the energy sector gained more positive attitudes when they acknowledged the self-serving aspect of their motive.

It should be taken into account that companies have existing reputations towards consumers. The reputation of a company may determine its future actions. Consumers

attribute more skepticism towards a company’s actions when a company has a bad reputation. It’s harder for a company with a bad reputation to communicate good deeds because they are not trusted by the public. On the other hand, it’s easier for a company with a favorable reputation to be trusted when they claim to do good for society, because this is expected and believable (Elving, 2010; Rim and Song, 2013). Thus, the company’s reputation serves as a frame of reference that is used to interpret the CSR communication (Bae & Cameron, 2006).

Consumers also have opinions regarding CSR. When consumers are interested in CSR activities the use of CSR has a positive influence on consumers’ purchase intentions.

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10 are motivated to access the CSR information (Sen and Bhattacharya, 2001; Bhattacharya and Sen, 2004; Klein and Dawar, 2004).

CSR has been an important topic in literature as well as for corporations. Banks are attempting to gain a positive image by using CSR. The reputation of the financial sector may influence the use of CSR. In a sector with great distrust, the use of CSR, which may also evoke distrust, is questionable. Moreover, greenwashing often occurs in industries lacking trust or with ‘for profit’ reputations, such as energy companies and the banking industry (Terwel et al., 2009; Spangler and Pomper, 2011; in Vries, et al., 2013). In these industries that lack such trust, a communication plan for the use of CSR would be a helpful solution. Transparent and honest communication can decrease consumers’ feelings of skepticism regarding a company’s motivations of CSR use. To date, research is lacking on whether the acknowledgement of self-serving motives can affect consumers skepticism in the banking industry. This leads to the following research question; “Does communicating the business case of Corporate Social Responsibility, direct self-serving or indirect self-serving, increase perceived CSR credibility in the financial sector; and is this relationship moderated by perceived honesty, corporate reputation and prior CSR beliefs?”

To answer this research question a quantitative research method is used. Data is collected by using an experimental survey design, which was filled in by 100 participants. Furthermore the research was a cross-sectional, explanatory research method using a between groups design.

1.3. Academic and Practical Relevance

The present research complements to current academic research because so far no research has looked at the difference between self-serving motives (e.g. profit and image). Therefore this study contributes to research by Becker-Olsen and Hill (2005) and Ellen et al.,

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11 (2006) who used a distinction between self-serving, other-serving and mixed motives.

Moreover no research has been conducted examining the influence of three moderators that are expected to have a strong effect on the way a company’s credibility is perceived. Further, the financial industry, a for-profit industry lacking trust, is used to assess whether

acknowledgement of self-serving motives is beneficial or not. Only the research of Vries et al. (2013) has studied a for-profit industry with lack of trust in combination with the

communication of CSR motives; this while lots of profitable companies have problems using CSR as part of their marketing strategy. Another contribution of this research is that it is quantitative, which could explain ways to effectively communicate CSR to reduce the credibility gap; much research to date has been qualitative.

This study also has practical relevance. The research could provide clarity in marketing regarding the use of CSR as a strategy to improve a corporate image. Moreover, this research distinguishes between customers and consumers. Marketers should differentiate between those two in using CSR as a marketing strategy because the two groups are different in their attribution process. Further, this research could provide directions for communicating CSR use to consumers in profitable industries that lack trust.

1.4. Reader’s Guide

By answering the research question this master’s thesis will begin by examining the variables that play an important role in the CSR process. First, corporate motives are discussed. Second, the relationship between perceived credibility and CSR is examined. Third, the three expected moderators (corporate reputation, perceived honest communication and prior CSR beliefs), and the expected influence on the relationship of perceived self-serving motives and perceived CSR credibility are explained. These variables will be explained in chapter two. Chapter three outlines the research method and data collection.

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12 Results based on the collected data from the survey are discussed in chapter four. Finally, the conclusions and implications of the results are discussed in chapter five, together with some limitations of the present study.

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2. Literature Review

This chapter discusses the most relevant findings from current literature. The findings will lead to the hypotheses that will be tested. This chapter begins with explaining the corporate motives of CSR use. Then, perceived credibility and its relationship with CSR is examined. Following this, the three expected moderators are discussed. Lastly, the conceptual model developed from the findings is shown.

2.1.Corporate Motives

There exists an unresolved paradox of CSR. Consumers are demanding more CSR from corporations (Walker and Wan, 2011), but also have skepticism and distrust about

corporations use of CSR (Katz, 2008; globescan.com, 2012). Corporate motivations of CSR use play an important role. The way a company communicates its motive is important for consumers’ evaluations of the company. Consumers evaluations of companies differ, even when they are in the same industry and support similar CSR activities (Yoon, Gürhan-Canli and Schwarz, 2006). As a result, open communication has become an increasing trend and an independent corporate task (Morsing, 2003).

2.1.1. What is the Business Case of CSR

It is important for people to understand corporate motivations of CSR use when determining how to evaluate a corporation. Often the business case of CSR, meaning the use of CSR for economic benefit, is thought to be the most important factor in the profit sector to use CSR and has also been researched more often (Podnar and Golob, 2007). Corporate philanthropy, the opposite of the business case, is often evaluated more positively by

consumers compared to purely economic, profit-oriented behavior (Podnar and Golob, 2007). The business case is often used as a justification for CSR activities within

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14 beneficial. It refers to the business justification and rationale, the specific benefits to

businesses in an economic and financial sense that would come from CSR activities (Carroll and Shabana, 2010). The researchers concluded that a positive effect of CSR on financial performance is only possible when firms pursue CSR activities with support of their stakeholders. Legitimacy is also related to CSR (Carroll and Shabana, 2010). Corporations engage in CSR activities to show that they are legitimate and to increase their reputation. Legitimacy is then part of the business case when looking at the long term, indirect self-serving effect of CSR. Porter and Kramer (2006) also found a broad understanding on how to gain advantages from CSR: the interrelationship between a corporation and society must be understood. The researchers decided to change CSR to corporate social integration. They believe it should not simply be about results or philanthropic contributions; social

responsibility should be about building shared value by companies. Further, literature on the business case of CSR has mixed evidence of whether CSR practices are actually profitable and under which conditions a corporation’s efforts can benefit society (Margolis and Walsh, 2003). In a meta-analysis of Orlitzky, Schmidt and Rynes (2003), the influence of corporate social performance (CSP) on corporate financial performance (CFP) was researched and found to have a positive relationship. From all this research, it is clear that the business case of CSR mainly focuses on benefits for the company (financial performance). The question remains: how do consumers perceive the benefits of CSR use for companies? And what are the perceived motives?

2.1.2. Attribution Theory

When corporations incorporate CSR as a strategy, either for the good of society, self-interest or both, consumers will infer motives as well. However, intent of the company is not always apparent to the consumer. This is especially true when it is not clear what a

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15 company’s benefit of their CSR campaign is, or when a campaign conflicts with what

consumers already believe about the company (Szykman, 2004). This triggers an attribution process, in which consumers assign intentions towards the companies actions, which in turn guide consumer behavior (Forehand and Grier, 2003). Consumer attributions of intent are also applicable to explain the development of skepticism towards CSR (Drumwright and Murphy, 2001; Klein and Dawar, 2004). Most firms promote CSR campaigns as those that benefit society. However, consumers may attempt to investigate the ulterior motives of the firm. Consumers therefore divide motives into two categories: factual and perceived motives. These motives may be perceived as similar or different. Moreover, individuals have been found to attribute two primary types of motives to firms. First, motives that focus on benefiting society are public/other-serving motives. Secondly, motives that focus on benefitting the firm itself are categorized as firm/self-serving motives.

Once consumers attribute a motive, judgements are made, which is known as the ‘halo effect’. A halo effect is the ‘bias’ that spills over to another measure (Thorndike, 1920; in Klein and Dawar, 2004). CSR influences brand evaluations directly. The impact is through consumers that view a company’s CSR as important in decision making. This suggests that only people that care about CSR are motivated to access the information and make

judgements. Then, the insurance role of CSR only works for consumers for whom CSR is an important decision criterion. This finding aligns with that of Sen and Bhattacharaya (2001), who found that only individuals supportive of CSR reacted to positive CSR information. Moreover, positive associations may be useful in reducing the risk of damage to brand evaluations when negative events occur. Further, a negative corporate CSR image has a greater negative impact on attributions than a positive CSR image. This again shows the importance of the attribution process in developing an opinion.

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2.1.3. Self-serving motives

That consumers look at firm’s attributions about the use of CSR in a more complex way than was thought before is described in Becker-Olsen and Hill (2005) who divided how consumers examine a firm’s CSR use into two primary motives: self-serving (e.g. profit-making) or other-serving (e.g. helping the community and philanthropic activities). Ellen et al. (2006) also found that attributions could be viewed as self-centered, divided into a positive strategic view (e.g. increasing customer-base and sales), or a negative egotistic view (e.g. pocketing donations). Additionally, attributions can be categorized into other-centered attributions. This can be positive, value-driven (e.g. designed to help others), or negative and stakeholder-driven (e.g. responding to market changes in a non-proactive way). Furthermore, attributions can be mixed, including both the self-centered and other-centered categories. This has been found to result in more positive responses to firms than when just one motive is attributed to their CSR use. Therefore, when participants attribute a company’s CSR use as a combination of other-serving and self-serving motives, companies will be rated more

positively. This creates evidence that communicating a mixed strategy of CSR use may be most beneficial to a company.

How do consumers perceive a company’s motive that supports CSR? A study by Kim and Lee (2012) examined how consumers attribute two possible contradictory motives. The researchers used a distinction between other-serving motives and self-serving motives. The research was conducted in socially stigmatized industries of McDonalds and Miller Brewing. It was found that when consumers attributed both high other-serving and high self-serving motives to a company’s CSRs, they found the company to be trustworthy. This adds to the positive effect of a mixed motive. Furthermore, regardless of the level of a company’s self-serving motive, when consumers believe that the company is sincere in other-self-serving CSR activities, more positive views of the company were found. Again, this shows that there is no

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17 zero-sum of having either an other-serving or self-serving motive of CSR. Hiding a

company’s self-serving motive might be unnecessary and perceived as insincere. Rather, convincing customers of the company’s sincere and honest other-serving motive may be important.

Research from Newman and Cain (2015) takes this stance even further. In their research, charitable actions done for self-interest were evaluated as worse than self-interest behavior with no charitable actions at all. There seems to be an important distinction between charity and profitability. People critique charity efforts that also provide personal gains. The researchers concluded that actions that produce both charitable and personable benefits will be evaluated as worse than equivalent self-interest behaviors that produce no charitable benefit. The researchers call this the ‘tainted-altruistic effect.’ The effect seems to be related to the availability of counterfactuals, in which people consider both behaviors when

charitable and selfish behaviors are available. In this effect, individuals do not consider chartable behavior when only selfish behavior is available, resulting in the possibility of viewing CSR as solely self-serving.

The business case has been a widely discussed topic and corporations don’t always acknowledge the self-serving motive of CSR when communicating about their strategy. It would be interesting to find out how consumers would react to the self-serving motives in an industry facing public distrust (e.g. financial industry). Moreover, the difference between two self-serving motives, direct self-serving (e.g. profit) and indirect self-serving (e.g. image) has not been examined often. The business case is known for its economic beneficial view. One would expect profit motives to be more negatively attributed than image motives. Image would not directly be involved with money, distracting the attribution process from a completely profitable view. This would be more closely related to the mixed motive, which has been found to result in positive attributions. The legitimacy motive of CSR will not be

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18 part of this research. It is an abstract and complex concept with an unclear operationalization. It has been shown to consist of multiple motives that all together form a legitimate view of a company (Bronn and Vidaver-Cohen, 2009). Further, as seen from above, profit and image are clearly understood by participants and have been shown to be of influence in the attribution process.

2.2. Perceived CSR credibility

According to Goldsmith, Lafferty and Newell (2000), corporate credibility contributes to the overall reputation of a firm. Corporate credibility describes how consumers evaluate the company’s honesty, expertise and the believability of intentions and communications. Additionally, corporate credibility holds that a company can be relied to do what it promises. In the research of Goldsmith et al. (2000), it was found that the credibility of a company influenced attitudes towards the advertisement, the brand and purchase intent.

Most firms promote their use of CSR for the benefit of society, even though consumers are aware that firms have ulterior motives. This leads to more distrust form consumers. Corporate credibility is the opposite of distrust, arriving from a disbelief of marketing actions. Skepticism about marketing actions can increase distrust and therefore lower credibility (Webb and Mohr, 1998; in Forehand and Grier, 2003). Furthermore Fein (1996) argued that suspicion encouraged individuals to have multiple, plausible rival hypotheses about the motives and honesty of an entity’s behavior.

For credibility to be high, corporations do not want consumers to think the company uses greenwashing. Research by Yoon et al. (2006) found that CSR campaigns are most successful and credible when suspicion is low. They also found that CSR campaigns backfire when suspicion is high. Thus, to achieve high credibility it’s important for a corporation to consider how to communicate actions. Research by Becker-Olsen and Hill (2005) found that

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19 when a firm is motivated by firm-centered interests, there is not a reduction in perceived corporate credibility. This result was found when the social initiatives and corporate

objectives aligned. This finding was consistent with Forehand and Grier’s research (2003; in Becker-Olsen and Hill, 2005), who stated that skepticism is not driven simply by a firm being profit motivated. They argue that skepticism is driven by a discrepancy between saying one thing and doing another. Here, using CSR for profitable reasons doesn’t result in negative attitudes from consumers. This shows that there are opportunities in communicating the profit motive of CSR and achieving high credibility. Moreover, mixed motives were rated as

positive, combining self-serving motives and other-serving motives. Hiding self-serving motives created suspicion, because companies are then thought to be engaged in

greenwashing (Ellen et al., 2006; Kim and Lee, 2012).

When consumers have pre-existing views about the financial sector, the result is not as positive. Therefore communicating as a bank to be other-serving evokes suspicion, that results in low credibility. After all, denying a self-serving motive as a profitable business might not be strategic, since consumer understanding should not be underestimated. Kim and Lee (2012) found that even activist who were highly engaged with the supported CSR

message evaluated the company more positively when they attributed both self-serving and other-serving motives to a company’s CSR message. This aligns with the research of Ellen, Mohr and Webb (2002), which found that is it not necessary for a company to be completely altruistic, or other-motivated. When corporate profit opportunities of CSR where apparent, consumers had more positive evaluations when the firm acknowledged this. This suggest that for some companies it may be possible to be more profit-driven when using CSR. Findings of Szykman (2004) also support this; companies don’t need to be completely altruistic or other-serving in their motives of CSR, especially when they are part of a profit industry. It is therefore expected that in an industry with a goal for profit, communicating self-serving

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20 motives could increase credibility. Consumers would not be suspicious if companies are transparent with their goals and motives of CSR use.

This results in the following hypothesis:

H1: There is a positive relationship between perceived self-serving motives and perceived CSR credibility.

H2: There is a stronger positive relationship between indirect self-serving motive and perceived CSR credibility than direct self-serving motive and perceived CSR credibility.

2.3. Corporate Reputation

Prior expectations and reputation of a company have a strong effect on consumers’ interpretations of CSR (Rim and Song, 2013). When a company has a favorable reputation, it is easier to act in other-serving CSR motives. This is because it is more accepted and

believable for the company to be engaged in CSR. However, the public is likely to be more suspicious of a company’s motives when the company has a negative reputation, such as the financial sector. This makes the communication of good deeds more challenging (Rim and Song, 2013). Research by Elving (2012) had similar findings: respondents indicated more skepticism when a company had a bad reputation. Other research showed that corporate charitable giving was seen as self-serving when a company had a bad reputation, but viewed as other-serving when they had a good reputation. In this way, the company’s reputation serves as a frame of reference for interpreting CSR communication (Bae and Cameron, 2006). Research by Kim (2011) showed that corporate reputation moderated the effect of perceived CSR credibility; honest motives were more severely downgraded for a firm with negative reputation who engaged in high congruence CSR, than a company with a positive reputation. Kim and Lee (2012) even broadened the research by looking at the previous perceptions held by consumers. The researchers used two companies in socially stigmatized

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21 industries for this study (e.g. McDonalds and Miller Brewing). The researchers found that consumers did not attribute more self-serving motive towards the company’s CSR solely because of a high correlation between company’s main business and CSR choice. The high correlation between a social issue and the corporations main business didn’t determine the attribution process, reputation did (Kim and Lee, 2012). This also confirms other research, that consumers’ previous perceptions of the company play a role in selecting a salient motive. Therefore it is expected that the more positive a firm’s reputation the easier to communicate a motive, which results in less skepticism and higher credibility.

This leads to the following hypothesis:

H3: The positive relationship between perceived self-serving motive and perceived CSR credibility is moderated by corporate reputation, so that this relationship is stronger when corporate reputation is positive and weaker when corporate reputation is negative.

2.4. Perceived honesty of the communicated motive

For firms in a profitable industry, self-serving motives might have a positive influence on credibility. This is because suspicion is low and greenwashing is not attributed towards the company. The perceived honesty of the message send is therefore important. Communicating the message consists of being honest about ulterior motives. Research by Forehand and Grier (2003) found that honesty is even more important than sending a ‘good’ message to the public. When a firm acknowledges and is honest about its motive, it generates a more

positive feeling. The researchers also found that firm-serving attributions lower evaluation of the firm only when they are inconsistent with the firm’s expressed motives. When self-serving motives are consistent with a company profile (e.g. profitable companies), evaluation of the firm will be positive.

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22 The negative effect of consumer skepticism regarding a firm’s motives can be

inhibited by public acknowledgment of the strategic benefit to the firm. When marketers are honest about the benefits of CSR, the skepticism of CSR was inhibited and credibility is increased. This was also found in Yoon, et al. (2006), who examined the perceived sincerity of a company’s motives in determining the success of CSR campaigns. It was found that CSR activities improved a company’s image when consumers attributed sincere motives, harm a company’s image when motives are insincere and are ineffective when motives are

ambiguous.

As discussed earlier, industries with a profitable image or with lack of distrust are more targeted to be using greenwashing. Vries et al. (2013) conducted research in the energy sector, an industry that lacks trust. When the energy company was open about their economic benefits of CSR use, the company was viewed as honest, and not to be greenwashing.

Participants in this study viewed the energy company to be using greenwashing when the company communicated other-serving motives. This effect diminished when the company also communicated economic benefits. Honesty about the self-serving motive of gaining more profit was thus perceived as more positive.

Honesty about CSR use as self-serving motive can thus take away the suspicion of a company’s greenwashing, resulting in higher credibility. This is especially important in industries that have low trust or for where CSR use is contradictory of their usual business.

A note should be made that consumers will never be able to know the entire truth of a company’s motive. Consumers can never verify if a bank is holding on to the promises made to the public. Therefore, perceived honest communication will be used. It is expected that the greater the perceived honesty of a company’s communicated motive, the less

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23 When a company honestly communicates and acknowledges that they are self-serving and using CSR for profit reasons, CSR credibility is increased.

This lead to the following hypothesis:

H4: The positive relationship between perceived self-serving motive and perceived CSR credibility is moderated by perceived honesty of the CSR motive. The relationship is stronger for high levels of perceived honesty and weaker for low levels of perceived honesty.

2.5. Prior CSR beliefs

As described above, corporate reputation serves as a frame of reference that is used to interpret a company’s behavior. Corporate reputation is not the only frame of reference; CSR itself could also be a frame of reference. CSR was found to have a positive effect on

consumer’s purchase intentions only when consumers were interested in CSR activities (Bhattacharya and Sen, 2004). All consumers were found to react to negative CSR

information, but only those supportive of CSR reacted to positive CSR information (Sen and Bhattacharya, 2001; Oberseder, Schlegelmilch and Gruber, 2011). Furthermore, the impact of attribution was found to be larger when consumers reported a company’s CSR use as an important factor. A positive CSR belief reduces the risk of damage whereas a company would have larger loss when consumers have negative prior CSR expectations (Klein and Dawar, 2004). Therefore, consumers who care about CSR are motivated to access CSR information and to make further attributions. It is also expected that people with positive CSR beliefs are more willing to forgive. As seen earlier in the attribution process; CSR functions like an insurance policy: positive prior beliefs diminish negative effects on the company. Thus, it’s expected that the influence of prior beliefs on the relationship between perceived CSR motive and perceived CSR credibility is more positive when prior beliefs are positive. When individuals have positive prior beliefs it is more accepted for banks to use a

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self-24 serving motive in communicating CSR. However, when individuals have negative prior beliefs, they don’t find the communication of CSR credible. CSR therefore works as an halo effect, in which the prior beliefs spill over in evaluation.

This results into the following hypothesis:

H5: The positive relationship between perceived self-serving motive and perceived CSR credibility is moderated by prior CSR beliefs. This relationship is stronger for positive levels of CSR beliefs and weaker for negative levels of CSR beliefs

2.6. Conceptual Model

In the prior section, five hypotheses were established. The expected influence of self-serving motive on perceived CSR credibility and the moderators, corporate reputation, perceived honesty of the message and prior CSR beliefs are shown graphically in figure 3.

H1+H2

H3

H4

H5

Figure 3. Conceptual Model Perceived direct or indirect self-serving Motive Perceived CSR Credibility Corporate Reputation

Perceived honesty of the communicated motive

Prior CSR beliefs

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3. Method

This chapter represents information about the research that was conducted. The research used a quantitative research approach. Data were collected using an experimental survey design. The experimental design was used because the independent variable was manipulated to see the different effects of two self-serving motives on the dependent variable perceived credibility. A survey was chosen because it has been one of the most common research methods in behavioral sciences (Saunders and Lewis, 2012). Further, it has been used to examine participants attitudes, beliefs, attributions, opinions and preferences. This study measured the perception of the participants about the communication of self-serving motives, their beliefs about CSR in general, attitudes about ING’s reputation and their opinion about the perceived honesty and credibility of the message send.

The following paragraph will first look at the characteristics of the participants. Afterwards, the measurements of the variables included in the questionnaire will be discussed. Last, the statistical procedure used will be outlined.

3.1. Participants

The sample consisted of 104 participants. From the 104 participants 92 completed the survey (response rate of 88,5%). From 4 people data was not useful since there were no answers given, but 8 people filled in almost all questions. Taking all 100 responses together (Mean age = 29,5; SD age = 10,6; age range: 20-61), 68% was female. The sample covered a broad range of backgrounds (Full-time job = 26%, part-time job = 12%, master’s degree WO = 41%, bachelor’s degree WO = 14%, HBO = 6%).

Furthermore the participants were equally divided between conditions (Condition 1 = 11%, condition 2 = 14 %, condition 3 = 10%, condition 4 = 14%, condition 5 = 14%, condition 6 = 12%, condition 7 = 13%, condition 8 = 12%).

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3.2. Measurements of variables

The questionnaire asked respondents about their age (ratio variable), gender (nominal variable) and occupation (nominal variable). The other constructs used 7-point Likert scales (1 = totally disagree, 7= totally agree). The last question was which bank the participants were with. For the full questionnaire see the appendix.

The banking industry was selected because the industry faces lots of skepticism and distrust. Furthermore the sector invests great amounts of money in CSR as a strategic tool to create a better image and increase credibility. This while CSR has also been found to be a source of distrust. The ING bank is used as an example because ING is one of the most famous banks in Holland. Furthermore they have had lots of negative publicity in the news, especially concerning money problems and high wages for employees. It was expected that ING would have a profitable reputation, thus having a dominant self-serving motive. Further, it was expected that many people from the sample were with ING, because the sample

contains many students. Important is that the research is about dominant self-serving motive. ING does have mixed motives but the focus is on profit.

Prior Beliefs of CSR

Questions about prior beliefs of CSR will be measured using self-developed questions. As seen from the literature review, prior beliefs of CSR play an important role in the attribution process. People’s pre attitudes and beliefs about CSR could determine the way they will look at a company’s CSR use (Klein and Dawar, 2004; Azjen, 1991). People that already hold strong negative beliefs are more difficult to convince of good intentions than people holding neutral and positive beliefs. It is therefore important to find out what people think of CSR. Four questions were asked, an example of an item is “Do you prefer a company to use CSR” (1= no preference, 5= very strongly prefer).

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Reputation

To measure reputation of ING, the reputation Quotient Model (RQ), developed by Fombrun, Gardberg and Sever (2000; Cronbach’s α= .84) was used. The scale was adapted by changing the word ‘company’ into ‘ING’. Participants had to fill in 21 questions. An example of an item is “I have a good feeling about ING’. A 7-point Likert scale was used (1 = totally disagree, 7= totally agree).

Conditions

After questions about CSR in general and reputation of ING, participants received general background information about ING and were informed about ING’s CSR activities.

Participants either read a story about ING and its’ direct self-serving motive (e.g. profit) or indirect self-serving motive (e.g. image)

Furthermore participants read how ING communicated their CSR use to consumers; for profit reasons only (self-direct), image reasons only (self-indirect), other-serving (society reasons only) or mixed reasons (self-beneficial and society). This resulted in 8 conditions (condition 1 = direct motive plus direct communicated motive, condition 2 = direct motive plus indirect communicated motive, condition 3 = direct motive plus mixed communicated motive, condition 4 = direct motive plus other communicated motive, condition 5 = indirect motive plus direct communicated, condition 6 = indirect motive plus indirect communicated motive, condition 7 = indirect motive plus mixed communicated motive, condition 8 = indirect motive plus other communicated motive).

Perceived honesty

After having read the information about ING’s CSR use and communication, participants were asked to fill in questions about their perceived honesty of the communicated CSR motive. The questions used, were from the questionnaire by Vries et al. (2013; Cronbach’s α= .83 for greenwashing questions and Cronbach’s α= .79 for suspicion questions). Three items

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28 measured perceived greenwashing, an example is “ING has an hidden agenda”. I added, “I think ING is honest about their communicated motive” to the questionnaire. Furthermore, four items measured suspicion; an example is “ING invests in CSR because they intend to get more publicity”. I added, “ING wants to gain more profit” to the questionnaire. To answer the questions a 7-point Likert scale was used (1 = totally disagree, 7= totally agree).

Perceived credibility

Next, the participants had to fill in questions about perceived CSR credibility. This was measured using 8 questions from Newell and Goldsmith’s perceived credibility scale, (2001; Cronbach’s α=.84-.92). I adapted the scale by changing the ‘XYZ Corporation’ into ‘ING’. An example is “ING has great CSR expertise”. For all questions a 7-point Likert scale was used (1 = totally disagree, 7= totally agree). Two items were reverse coded, meaning that a relatively low score indicated higher levels of perceived credibility.

Control variables

Results of the study will be controlled for gender, age, occupation and bank. These items were included in first part of the survey and bank was asked at the last part of the survey.

3.3. Statistical procedure

Using an online survey in Qualtrics data were collected. Survey administration started on October 19th and ended on November 11th. To perform the statistical analysis, the Statistical software Package for Social Sciences was used (SPSS). The research was quantitative, using an experimental survey design.

After recoding the reverse coded items, skewness and kurtosis were assessed. Looking at the normality distribution with skewness and kurtosis between -1 and 1; the scores for the reputation scale were normally distributed. The scores for the CSR beliefs scale were normally distributed according to the skewness; two items had higher kurtosis than 1.

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29 Perceived honesty items were normally distributed. Only three items had an extreme positive kurtosis. Perceived credibility items were normally distributed. Since the scales used are validated scales from other researchers, the items will be part of the analysis for now but other analysis (e.g. factor analysis) will be needed to see if those items will be used for further research. The next part included scale reliabilities, descriptive and factor analysis. Afterwards, computed means were developed and the correlation matrix could be analyzed. Furthermore manipulation checks were done. From this it was decided to reduce eight conditions into two conditions. The two conditions used were direct self-serving (e.g. profit) and indirect self-serving (e.g. image), and resulted from the first manipulation in which people read about ING’s use of CSR for profit or image reasons.

Next, an independent samples t-test was conducted to test hypothesis H1 and H2. To test the three moderation effects, PROCESS Regression Analysis in SPSS was used developed by Andrew F. Hayes. Using model 1, with one independent, one dependent and one moderator, resulted in three analyses; each analysis testing one hypothesis.

Next, Split File was used to separate the data into people who are customers of ING and people who are with another bank. The PROCESS Regression for the three moderators was done for the ING group as well as for the non-ING group. Afterwards mediation effects were assessed for the entire group of participants.

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4. Results

In this chapter the results are explained. First the reliabilities and factor analysis will be discussed. Subsequently the results of the correlation analysis will be outlined, as well as the results of the manipulation check. Next, the direct effects of the analysis are explained, followed by the moderator effects. Moreover, differences between the ING-group and non-ING group are explained. Lastly, mediation effects are discussed.

4.1. Reliability analysis

For the prior CSR beliefs scale, high reliability was found, with Cronbach’s Alpha = .814. The corrected item-total correlations indicate that all the items have a good correlation with the total score of the scale (all above .30). Also, none of the items would substantially affect reliability if they were deleted.

The items scale to test Reputation had high reliability, with Cronbach’s Alpha = .939. The corrected item-total correlations indicate that almost all the items have a good correlation with the total score of the scale (all above .30). Only question 18, “ING looks like it allows risk investment” had a low corrected item correlation of .121. If the item is deleted the Cronbach’s Alpha will go up till .944, a small difference of .005. In the next part factor analysis will be analyzed, then there will be decided if R18 will be kept in the analysis. Also, none of the other items would substantially affect reliability if they were deleted.

The perceived honesty scale had low reliability, with Cronbach’s Alpha = .606. The corrected item-total correlations indicate that most the items have a good correlation with the total score of the scale (all above .30). Only question 4, “I think ING is honest about their communicated motive” showed a negative corrected item correlation of -.296. If item deleted the Cronbach’s Alpha was raised to .749. Also, none of the items would substantially affect

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31 reliability if they were deleted. Therefore the item H4 will be deleted, especially since the item was added to the original scale by Vries et al. (2013).

For perceived credibility, high reliability was found, with Cronbach’s Alpha = .867. The corrected item-total correlations indicate that all the items have a good correlation with the total score of the scale (all above .30). Also, none of the items would substantially affect reliability if they were deleted.

An overview of the reliabilities is presented in table 2 together with the descriptive and correlations.

4.2. Factor analysis

A principal axis factoring analysis (PAF) was conducted on the scales. The Kaiser– Meyer–Olkin measure verified the sampling adequacy for the analysis, KMO = .800.

Bartlett’s test of sphericity χ² (780) = 2519.383, p < .001, indicated that correlations between items were sufficiently large for PAF. An initial analysis was run to obtain eigenvalues for each component in the data. Nine components had eigenvalues over Kaiser’s criterion of 1 and four components had eigenvalues over 2 and in combination explained 49,26% of the variance. In agreement with Kaiser's criterion, examination of the scree plot revealed a levelling off after the fourth factor. Thus, four factors were retained and rotated with a Oblimin with Kaiser normalization rotation. Table 1 shows the factor loadings after rotation. The items that cluster on the same factors suggest that factor 1 represents Reputation with 19 items, factor 2 represents perceived Credibility with 4 items, factor 3 represents prior CSR feelings with 4 items and factor 4 represents perceived Honesty with 6 items. As the results suggest, reputation item R18 “ING looks like it allows risk investment” does not load on any of the scales. As seen in the reliability analysis this item had a very low corrected total item correlation of .121. Therefore this item will not be used in further analysis. Furthermore two

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32 items of the honesty scale, H6 “ING invests in CSR because they want to have a positive image” and H7 “ING invests in CSR because they want to gain more profit” don’t load on any factor. This is probably due to the content of those items. The items could also function as a control question instead of being part of the honesty scale. The items could also imply confusion because the items distinct the two main conditions of the self-serving motives and therefore relate to the conditions and not to the honesty construct. It is decided to leave H6 and H7 out of the analysis. Looking at the credibility scale the last four questions can also be related to the honesty scale (“I trust ING”; “ING makes trustful claims”; “ING is honest”; “I do not believe what ING tells me”). The content of the items are related to trust and honesty and therefore could be divided into multiple scales (e.g. honesty, reputation and credibility). In the literature a difference between honesty and credibility was made, less honesty led to less credibility and higher perceived honesty led to more perceived credibility. As seen in the factor analysis expertise is more related to credibility whereas trust is also related to honesty and reputation. Therefore C5 and C6 are left out of the analysis because they load on three factors. Furthermore C7 and C8 will be used as part of the honesty scale because the factor loading is highest on the honesty construct and the content relates to honesty.

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Item

Rotated Factor Loadings

Reputation Credibility CSR Honesty

CSR is _.008 _-.123 _.720 _-.051

CSR use is _.169 _-.265 _.725 _.079

Do you prefer a company to use CSR _-.195 _-.086 _.682 _.136

Do you like CSR _-.128 _-.088 _.661 _.094

I have a good feeling about ING _.512 _.383 _-.042 _-.235

I admire and respect ING _.574 _.341 _.018 _-.159

I trust ING _.527 _.290 _.135 _-.265

ING stands behind its products and services _.458

.165 .144 -.183 ING develops innovative products and services _.644 _.253 _-.085 _.099 ING offers high quality products and services _.758

-.007 -.013 -.058 ING offers products and services that are good

value for money .659 .028 .045 -.103

ING has excellent leadership _.736

-.064 .138 -.004 ING has a clear vision for its future _.735 _.050 _.045 _.013 ING recognizes and takes advantage of market

opportunities .754 -.102 -.209 .110

ING is well managed _.840

-.208 .001 .056 ING looks like a good company to work for _.640 _.010 _-.083 _-.169 ING looks like a company that would have good

employees .752 -.089 .044 -.016

ING supports good causes _.452 _.321 _.144 _-.117

ING is an environmentally responsible company _.444 _.215 _.177 _-.163 ING maintains high standards in the way it

treats people .568 .013 .256 -.148

ING has a strong record of profitability _.547 _-.180 _-.044 _-.048 ING looks like it allows risk investment _.043 _.003 _.242 _-.068 ING tends to outperform its competitors _.507 _.124 _-.102 _.235 ING looks like a company with strong prospects

for the future .645 .253 -.086 .167

I think ING aims to improve its reputation by presenting itself as an environmentally friendly

and socially responsible company -.018 .263 .174 .395 ING has an hidden agenda

-.011 -.036 -.102 .568 I think ING pretends to be more environmentally

friendly and socially responsible than it actually is

-.042 -.099 -.032 .651 ING invests in CSR because they think

consumers expect the company to do that .031 .118 .105 .315 ING invests in CSR because they want to have

a positive image -.060 .328 .271 .224

ING invests in CSR because they want to gain

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ING invests in CSR because they hope to get

more clients .013 .194 .297 .484

ING invests in CSR because they intend to get

more publicity .167 .233 .156 .503

ING has a great amount of experience with CSR

.033 .824 -.171 .105

ING is skilled in their CSR use _.077 _.872 _-.161 _.068

ING has great CSR expertise

.024 .853 -.172 .097

ING has not much experience with CSR _-.064 _.719 _-.102 _-.085

I trust ING _.414 _.415 _.174 _-.404

ING makes trustful claims _.292 _.440 _.111 _-.436

ING is honest _.153 _.289 _.232 _-.688

I do not believe what ING tells me _.238 _.262 _.140 _-.459

Eigenvalues 12.1 3.89 3.28 2.32

% of variance 29.19 8.49 6.67 4.61

Note: N=100; factor loadings over .40 appear in bold

Table 1

Exploratory Factor Analysis for CSR feelings, Reputation, Perceived Honesty and Perceived Credibility, rotated component matrix

4.3. Correlation Analysis

An overview of the descriptive statistics, correlations and scale reliabilities is presented in table 2. As seen from the table a significant negative correlation between reputation and age was found (r = -.214, p < .05), this could mean that the older one is the less one is vulnerable to the influence of a company’s reputation. Furthermore a positive correlation was found between honesty and gender (r = .240, p < .05), being a man or woman could result in different levels of finding honesty important. Also a positive correlation was found between credibility and reputation (r = .370, p < .01), meaning that a higher score on one of those factors results in higher score of the other factor, the factors interrelate. Moreover a positive correlation between credibility and honesty (r = .320, p < .01) was found, leading to a higher score on both constructs when one construct increases. This adds to the factor analysis in which some of the items loaded on both the credibility construct as well as on the honesty construct. Lastly, a negative correlation was found between bank and reputation (r = -.311, p

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35 < .01), depending on whether one evaluates one’s own bank or another, results in less or more influence of reputation. Since correlations are used, nothing can be concluded regarding which variable causes the other to change. The direction of the effects found is unclear.

Variables Nr of Items M SD 1 2 3 4 5 6 7 8 1 Gender 1 1.69 0.47 - 2 Age 1 29.4 6 10.5 5 -.143 - 3 Occupatio n 1 6.33 1.30 -.022 .384** - 4 CSR 4 4.06 0.61 .195 .012 .177 (.81) 5 Reputation 20 4.58 0.84 .096 -.214* -.047 -.079 (.94) 6 Honesty 9 5.09 0.54 .240* -.118 .056 .161 .190 (.75) 7 Credibility 8 4.20 0.62 -.04 -.018 -.084 -.156 .370** .320** (.87) 8 Bank 1 1.87 0.98 .196 -.039 .137 .088 -.311** -.035 -.180 -

**Correlation is significant at the 0.01 level (2-tailed) *Correlation is significant at the 0.05 level (2-tailed)

Table 2

Means, Standard Deviations, Correlations and Reliabilities

4.4. Manipulation Check

The first manipulation check related to whether people read a story about ING’s self-serving direct (e.g. profit) or self-self-serving indirect (e.g. image) motive. 49 people participated in the direct self-serving condition and 53 participated in the indirect self-serving motive. Of the 49 people in the profit condition, 16 filled in profit, 15 filled in image, 16 filled in mixed. Of the 53 people in the image condition, 26 filled in image and 18 filled in mixed.

Looking at different banks, 43 participants are with ING, 23 are with Rabobank, 20 are with ABN. It would be interesting to see if there is a difference between participants who are with ING compared to non-ING. Of the people who are with ING and read about profit reasons (16); 4 said profit, 6 said image and 5 said mixed, meaning that 11 people denied the profit motive after reading about the profit motive. From the people who are with ING and read about image (28), 16 said image, and 10 said mixed.

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36 It was thus found that in the image condition; image and mixed are recognized whereas in the profit condition three options are found. Apparently when nothing directed towards profitable reasons, no profitable thoughts came up. More importantly even when the text was about the profit motive, mixed motive and other motive were filled in as much as profitable reasons.

This result was also found in the second manipulation check of the communicated motive. None of the people in the communicated profit motive filled in the correct answer; 11 people in the profit-profit condition and 14 people in the image-profit condition filled in other answers instead of the clearly communicated profit reason. Almost all the other

communicated motives were answered correctly; apparently recognizing profitable reasons was ignored or denied.

In the further analysis, bank will be controlled for. Since the influence of bank could change the results, another analysis will be done separating ING customers and non-ING customers.

4.5. Direct Effects

An independent sample T-test was run to determine whether there is a positive relationship between perceived self-serving motives and perceived CSR credibility. Furthermore the difference between direct self-serving motive and indirect self-serving motive and the influence on CSR credibility was analyzed. There were 48 people in the self-direct condition and 48 people in the inself-direct self-serving motive condition. There was homogeneity of variances, as assessed by Levene’s test for equality of variances (p = .375). There was a higher credibility found for the indirect self-serving motive (M = 4.36, SD = 0.54) than direct self-serving motive (M = 4.05, SD = 0.65). This was a statistically

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37 H2 were supported. A positive relationship was found between perceived self-serving

motives and CSR credibility. Furthermore, the relationship between indirect self-serving motive and perceived credibility is stronger than the relationship between direct self-serving motive and perceived credibility.

Condition M SD N Direct 4.06 0.65 48 Indirect 4.36 0.54 48 Total 8.42 1.19 96 Table 3

Descriptive statistics independent samples T-test

4.6. Moderator Effects

First, the influence of reputation was tested. Although the total model summary was significant according to the R-Square = .17, F(3,92) = 6.37, p<.01, no effect of reputation on the relationship between self-serving motives and CSR credibility was found. Therefore H3 was not supported.

Second, the influence of honesty was tested. The model summary was significant according to the R-Square = .26, F(3,92) = 5.94, p < .01. No effect of honesty was found on the relationship between self-serving motive and CSR credibility. Therefore H4 was not supported.

Third, the influence of prior CSR beliefs was tested. The model summary was significant according to the R-Square = .10, F(3,92) = 3.27, p < .01, but no effect of CSR beliefs was found. Therefore H5 was not supported.

This does not mean that there is no effect of the moderators on the relationship between self-serving motive and perceived credibility. Looking at the effect sizes, for Reputation R = .41, Honesty R = .40, CSR beliefs R = .31, a medium effect is found. One could expect the

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38 results to be significant with more participants used. To test this the results were doubled and tripled, but H3, H4 and H5 were still not supported.

So far, bank has been a control variable. As seen in the manipulation checks and the correlation analysis, bank could have an effect. People with ING reported no profit reasons, even though the text was about the profit motive of CSR. The regression analysis was conducted for an ING group of participants and a non-ING group of participants to see whether there is a difference for both groups.

4.7. ING group vs. non-ING group

First, the regression analysis with the three moderators was done for the ING group. No effects of the moderators reputation, honesty and CSR beliefs were found, so the results are similar to the results from the entire database.

Second, the regression analysis with the three moderators was done for non-ING group. For both reputation and honesty the models were not significant and thus similar to the entire database. For prior CSR beliefs, the interaction effect of condition and CSR beliefs was significant. This means that hypothesis 5 is partially supported. The regression coefficient is B3 = -1.56 and is statistically different from zero, t (92) = -2.08, p < 0.05. Thus the effect of self-serving motive on perceived credibility depends on prior CSR beliefs for people who are not with ING. The interaction effect accounts for 8,5% of variance in the perceived

credibility. A closer inspection of the conditional effects indicates that the relationship between self-serving motive and perceived credibility is only significant when CSR beliefs are around 3.56 with effect = 0.79, SE = 0.35, CI: 0.08 to 1.50. When CSR beliefs are moderate to high it affects the relationship between self-serving motive and credibility. This slope is negative, meaning that the more a person values CSR; less credibility is found when

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39 self-serving motives are communicated by a bank that is not ones’ own bank. See table 4 for an overview. Model Summary R R-sq F df1 df2 P 0.37 0.1369 2.3263 3 44 0.0877 Model

Coeff. SE T P LLCI ULCI

int_1 -1.1558 0.557 -2.0751 0.0439 -2.2785 -0.0332

R-square increase due to

interaction(s):

R2-chng F df1 df2 P

int_1 0.0845 4.3059 1 44 0.0439

Conditional effects of X on Y at values of the moderator(s):

CSR Beliefs Effect SE T P 3.5593 0.7899 0.3522 2.2421 0.03 4.0573 0.2143 0.1991 1.0765 0.2876 4.5553 -0.3613 0.3302 -1.094 0.2795 Table 4

Moderation effect of CSR beliefs for non-ING participants

4.8. Mediation effects

To look for other explanations, mediation effects were assessed. For the factors bank, prior CSR beliefs and honesty no mediation was found.

For reputation full mediation was found. The indirect effect of 0.0934 means that the self-serving motives are estimated to differ by 0.093 when reputation of a company is important in perceiving credibility. This indirect effect is statistically different from zero, as revealed by 95% BC bootstrap confidence interval that is entirely above zero; from 0.018 to 0.239. The direct effect of self-serving motive c’= 0.2209, is the estimated difference between someone in the profit or image condition and the perceived credibility one experiences. This direct effect is not statistically different from zero, t = 1.856, p = 0.07, with a confidence interval

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40 from -0.016 to 0.457. The total effect of motive on perceived credibility is c = 0.314,

meaning that two people who differ in motive condition are estimated to differ by 0.314 in their perceived credibility of the company. The positive result means that the person in image condition perceives higher perceived credibility. The effect is statistically different from zero, t = 2.576, p = 0.012, and between 0.072 and 0.556 with 95% confidence interval. See table 5 for the statistics and figure 4 for the path model.

BC 95%

Coeff. SE P LLCI ULCI

A 0.369 0.1595 0.2228 0.0524 0.6856 B 0.253 0.0749 0.0011 0.1043 0.4017 C = total effect 0.3142 0.122 0.0116 0.72 0.5565 C' = direct effect 0.2209 0.119 0.0666 -0.0155 0.4572 indirect effect 0.0934 0.055 0.0175 0.2391 Note: N=96 Table 5

Mediation effect of reputation on the relationship between self-serving motive and perceived CSR credibility. Statistics of direct, indirect and total effect.

4.9. Adjusted Model Figure 4

Path model mediation

Note: N = 96. *p = not significant. **p = .07 ***p < .01

Significant Indirect effect of 0.0934 with confidence interval 0.0175 to 0.2391

Perceived CSR Credibility Self-Serving Motive Reputation B = 0.25*** A = 0.37* C’ = 0.22**

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5. Discussion and Conclusion

In this part the theoretical and practical implications of the results are discussed. Furthermore, some limitations of the research are explained and implications for future research will be given.

5.1.Theoretical and practical implications

From the results, it can be concluded that in an industry in which self-serving motives match the profitable image of a bank, communicating a self-serving motive of CSR increased perceived credibility. This research contributes to the literature of Ellen et al., (2002) and Szykman (2004). When a firm has obvious profit motives of CSR and is motivated by self-interest, acknowledging the self-serving motive is beneficial. This could serve as a starting point for marketers; hiding the self-serving motive or creating complicated messages to reduce the impact of the self-serving motive is not necessary. Further, this could reduce the perception of greenwashing by consumers, as presenting the CSR motive will not be different from the real motive. The way one presents CSR claims should be aligned with the real motive, resulting in fewer inferences by consumers. This study found that acknowledging the self-serving motive by openly communicating the CSR claims, leads to higher credibility in the banking industry.

This study also contributes to research by Becker-Olsen and Hill (2005), who found that the communication of self-serving motives is possible in an industry facing public distrust. This result was found when the social initiatives and corporate objectives were aligned. This study did not examine a fit between the social initiative and corporate objectives. However, self-serving motives did lead to higher credibility which could be associated with the fit between expectations consumers have of profitable organizations and the message sent by those organizations. For example, a non-business case motive could be seen as an implausible

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42 motive used by a for profit corporation. The communicated motive should be aligned with the profit motive, resulting in a fit between the profitable business and the communicated

business case motive of CSR. This also aligns with research by Newman and Cain (2015), who found that solely communicating a profit motive can have a positive effect because no further inferences about the company and its motives will be made.

This research also examined the differences in business case formulations (profit and image) and found different approaches. An indirect self-serving motive (e.g. image) was evaluated more positively than a direct self-serving motive (e.g. profit). Moreover, people who were ING customers did not recognize a direct self-serving motive. An explanation could be that people are loyal towards their bank and do not like the idea of their bank using CSR solely for profit reasons. People would protect the bank from being seen as a fully self-serving company; rather people would want their bank to be seen as good for society as well. Another explanation could be the use of cognitive dissonance (Festinger, 1962 in Greenwald and Ronis, 1978), in which people seek consistency between their thoughts or expectations and reality. When these are not in line with each other, dissonance is the result. People then become active in reducing this negative feeling. One way to do that is to ignore or deny any information that conflicts with existing beliefs. In this example, ignoring or denying that the bank would use CSR for profit reasons only. As a result the business case for customers is different than for consumers. For customers, image and mixed motives are relevant, whereas non-customers also consider economic benefits when attributing a motive. The business case for non-customers is thus a broader concept than for ones’ own customers. This could imply that the use of CSR as part of a marketing strategy is useful when trying to attract new customers, only when honest and transparent communication about the banks’ motives is provided. Potential customers will make inferences about all possible motives whereas for customers the profit reasons are less relevant in the attribution process.

Communicating the business case of corporate social responsibility : acknowledging self-serving motives as part of ones’ marketing strategy to increase credibility