CSR in the luxury industry
Whether and how product-cause fit influences the
effectiveness of a luxury brand’s CSR initiatives
mediated by consumer skepticism.
Willem-Alexander Franssen 11085622 MSc: Business Administration Marketing Thesis supervisor: Mw. Dr. M. Vock
Statement of Originality
This document is written by Student Willem-Alexander Franssen 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.
Abstract
The luxury industry is lagging behind in the field of corporate social responsibility (CSR). This research aims to add to the literature about CSR in the luxury industry. In this paper, it will be investigated to what extent a high versus low product-cause fit influences the effectiveness of a luxury brand’s CSR initiatives. Effectiveness is measured in terms of consumers’ attitudes towards the brand. Moreover, consumer skepticism is assumed to play an important role. The results show no significant effect of luxury CSR and product-cause fit on attitudes towards the brand. However, as expected, consumer skepticism does have a significant relation with attitudes towards the brand.
Table of Contents
INTRODUCTION 5
LITERATURE REVIEW 8
1. DEFINING CSR 8
a. Why companies engage in CSR 8
2. CSR AND THE LUXURY INDUSTRY 10
a. Defining luxury 10 b. Luxury CSR 11 c. Brand concepts 13 3. FIT 16 a. Defining Fit 16 b. Congruence theory 17 c. Schema Theory 18 d. Attribution Theory 18 e. Skepticism 20 METHODOLOGY 25
1. DESIGN, STIMULI AND PROCEDURE 25
2. MANIPULATION CHECKS 27 3. MEASURES 28 a. Sample 29 RESULTS 30 1. RELIABILITY CHECKS 30 2. DESCRIPTIVE STATISTICS 32 3. TESTING HYPOTHESES 33 4. ADDITIONAL RESULTS 37 DISCUSSION 40
LIST OF TABLES & FIGURES 43
REFERENCES 44
APPENDICES 48
Appendix A: Contrasts 48
Appendix B: Treatments in the final survey 49
Appendix C: Pre-test treatments 50
Appendix D: measures 51
Introduction
The global luxury industry is changing in the 21st century. The mindset of luxury consumers has evolved and brands have to evolve with them. An important aspect of this change is the consumer’s sensitivity to corporate social responsibility (CSR). In general, consumers have more positive attitudes towards companies that engage in CSR (Sen and Bhattacharya, 2001). From a survey of UK and US consumers, The Future Laboratory found that luxury consumers want to have a meaningful human connection with brands (Luxury futures 2015, the future laboratory, 2015). The luxury business cannot stay behind in the field of CSR. Nowadays, the question isn’t whether companies should invest in CSR, it’s how to invest in CSR (Smith, 2003).
However, there appears to be a contradiction in terms between luxury and social responsibility. Because luxury brands are associated with "perfection" and “exclusion” their meaning may conflict with the meanings of “altruism” and “self-transcendence” associated with CSR (Torelli et al., 2011). Moreover, Szykman et al. (2004) argue that CSR can backfire for luxury brands because it might raise suspicion.
Nevertheless, many luxury brands are now starting to engage in CSR. From my own desk research in which the websites of major luxury firms were examined it can be concluded that many luxury brands engage in initiatives that have a low fit with their products. Louis Vuitton, a manufacturer of high-end luggage and accessories, for example collaborates with Unicef in the
"#MakeAPromise"-campaign. They work together to help children at risk or exposed to conflicts, diseases or natural disasters (LouisVuitton.com, 2016). This charity has no clear link to the Louis Vuitton products, so it can be considered as a low fit (Lafferty, 2007).
For non-luxury goods most research suggests that a high product-cause fit is better perceived by consumers because it is easier to process in the mind of the consumers and because of its influence on attributions about company motives. A high level of fit between the company and the cause makes people believe that the company is getting involved because of a desire to help and for strategic reasons (Ellen et al., 2006). However, there is little or no comparable research in the luxury sector. Given the particular characteristics of the luxury sector, there might be different dynamics that play a role. This research aims to provide more insight into the specific case of collaborations between a luxury brand and a cause, particularly with regards to high or low fit. This study suggests that a high fit may cause more skepticism in a luxury CSR setting.
This study aims to answer the following research question: To what extent does a high versus low company-cause fit influence the effectiveness of a luxury brand’s CSR initiatives in terms of consumers’ attitudes towards the company? Is this relationship mediated by consumer skepticism?
The research question is particularly relevant because the field of CSR for luxury brands is relatively unknown. The theoretical contribution of this study is the
luxury goods. More specifically this research adds to the literature about company-cause fit, which has focused mainly on non-luxury brands until now. This research answers the question whether product-cause fit, or functional fit plays a different role in the luxury industry compared to non-luxury industries. Moreover, this research also aims to add to literature on luxury brands.
Furthermore, this study can contribute to practice because many luxury brands are trying to figure out the optimal strategy when it comes to CSR. As demonstrated earlier, CSR is becoming increasingly important for luxury firms. This study will help those firms in deciding what kind of CSR program they should initiate. Should managers select a cause with a high fit or rather a low fit? How to avoid or limit customer skepticism?
In the following section a comprehensive literature review will be given. First CSR will be carefully defined. A careful definition of fit will be given. Next, the specific context of the luxury industry will be explained. Aspects like brand concepts and company-cause fit will be introduced. Furthermore consumer skepticism toward CSR will be discussed in greater detail and its effects on attitudes towards the brand will be analyzed.
Literature Review
1. Defining CSR
In recent years CSR has become an important aspect of a company’s management. To begin this literature review, a comprehensive definition of CSR is given. The OECD (2016) defines CSR as positive contributions that multinational enterprises can make to economics, environmental and social progress and to minimize the difficulties to which their various operations may give rise. The European Commission (2001) on the other hand defines CSR as: “not only fulfilling legal expectations, but also going beyond compliance and investing “more” into human capital, the environment and the relations with stakeholders” (p8).
Heal and Garret (2005) call CSR a program of actions taken in order to reduce externalized costs or to avoid distributional conflicts. Most of these definitions are very broad and can be interpreted in different ways. Something that’s consistent over various definitions is the fact that CSR is not about profit maximization and shareholder supremacy but about voluntarily doing good for society (Beltratti, 2004). For the purpose of this study CSR will simply be defined as follows: a company voluntarily supporting one or more social causes and improving society for its stakeholders.
a. Why companies engage in CSR
CSR can serve different goals for companies. Research by Heal and Garret (2004) shows that CSR can be a tool for risk management. Specifically
reputational risk can be limited by supporting social causes. Moreover, CSR can create brand equity and contribute to the maintenance of relationships that are vital to long-term company profitability.
In a marketing context positive product and brand evaluations and recommendations are considered the major performance benefits of CSR (Brown & Dacin, 1997; Drumwright, 1994; Handelman & Arnold, 1999; Osterhus, 1997; Sen & Bhattacharya, 2001). These positive evaluations can be explained by the so-called ‘Halo effect of CSR’. The Halo effect refers to a bias occurring when a measure spills over to another measure (Thorndike, 1920). Beckwith & Lehmann (1975) illustrate the halo effect with the following example: the beliefs a consumer holds about the performance of a Porsche may spill over onto beliefs about its reliability and inversely an overall attitude towards a brand might spill over onto the assessment of specific attributes of that brand. In the context of CSR, positive attitudes towards a CSR initiative might spill over onto the brand in the mind of the consumer. A meaning transfer occurs from the cause to the company. Companies engaging heavily in CSR as a marketing tool rely on this effect to improve brand evaluations.
However, CSR doesn’t only entail positive consequences for companies. Claims of responsible behavior by corporations often lack credibility and are perceived as green washing or window-dressing (Crane, 2000). Ellen et al. (2006) show that perceived corporate motives behind the CSR campaign play a major role in a customer’s evaluation. Companies thus need to make sure their CSR initiatives
aren’t perceived as egoistic and merely a reaction to stakeholder expectations. Forehand and Grier (2003) added to the literature that consumers have negative evaluations of a firm if they detect firm-serving motives behind CSR initiatives that are inconsistent with the stated motives. One of the main reasons for this result is that consumers don’t want to be deceived. Finally, it has been shown that cause-related marketing campaigns are more successful when they are perceived as long-term commitments of the company (Van den Brink, Odekerken-Schröder and Pauwels, 2006). Although CSR has become common practice in many industries, CSR efforts are often experimental efforts requiring a steep learning curve (Berger et al., 2004). It is very important that managers who want to implement a CSR program keep these general results in mind.
However, there are some other obstacles for the luxury industry in particular. Often, companies trying to make use of CSR fail to span the boundaries between the cause and the company. These boundaries are particularly challenging in the luxury industry. In the next section, the luxury industry and its specific characteristics will be introduced.
2. CSR and the luxury industry
a. Defining luxury
To start the analysis of CSR in the luxury industry, a short introduction is given to define the concept of luxury. Kapferer (1998) notes that there is some confusion about the definition of luxury. This is due to its idiosyncratic nature. Indeed, what is luxurious to one may just be ordinary to the other (Phau and Prendergast
(2000). Despite the lack of consensus an important characteristic of luxury products is their scarcity or limited availability (Catry, 2003). Scarcity enhances the perceived value of products and their desirability.
In sum, the most complete definition is probably the one proposed by Kapferer and Bastien (2012). They argue that luxury involves objects or services with the following characteristics: needlessly expensive, one can live without them; no functional argument can justify the price. Moreover luxury products give a feeling of privilege, rare quality, hedonistic experience and conspicuousness. Already from these characteristics, a contradiction in terms between luxury and CSR becomes apparent. On the one hand, luxury is associated with personal elevation and conspicuousness, while CSR on the other hand is associated with altruism and self-transcendence (Torelli et al., 2012).
b. Luxury CSR
Research into the specific case of CSR in the luxury industry is very limited. Nevertheless, the fact remains that many luxury brands have initiated their own CSR campaigns in recent years (Janssen et al. , 2013). The following paragraphs discuss the most important results in the literature about CSR and luxury.
First, Davies et al. (2012) suggest that consumers may not be responsive to luxury brands’ CSR initiatives because the consumer doesn’t consider social and altruistic factors when buying a luxury product. After all, it has been shown that
purchases (Nia and Zaichhkowsky, 2000). Therefore it is likely that customers have different ideas about ethics between regular and aspirational luxury purchases (Davies et al., 2012). Ethics doesn’t rank high in the priority list of luxury buyers. Prestige, self-image and convenience are higher up the list (Davies et al., 2012). Therefore, consumers aren’t inclined to buy ethical luxury products. This result shows that not all results from the literature about CSR can be generalized for CSR in the luxury industry.
Janssen et al. (2013) extended the literature on luxury CSR by investigating how two important, defining characteristics of luxury products affect consumers’ perception of the fit between luxury and CSR. The two factors investigated are scarcity and ephemerality (the fact that goods are short-lived) of luxury products. Scarcity is important for luxury products because over diffused products gradually lose their luxury character (Dubois and Paternault 1995). Janssen et al. (2013) show that both scarcity and ephemerality influence consumers’ perceptions of the fit between CSR and luxury products. Janssen et al. (2013) conclude that a scarce luxury product is perceived as more socially responsible when the product is enduring compared to when it is ephemeral. In turn, this leads to more positive attitudes towards the enduring product. Hence whether consumers accept responsible luxury also depends on the specific characteristics of the advertised product.
On the other hand, there are also characteristics of the CSR campaign that have an effect on consumer evaluations. Boenigk and Schurchardt (2013) analyze the
specific setting of cause-related marketing (CRM) campaigns with luxury firms. CRM refers to sales campaigns in which a specific proportion of the profits earned from sales of a firm’s products or services get donated to the charity. Boenigk and Schurchardt (2013) show that a CRM campaign works best when the donation magnitude is high and the price of the luxury offering is moderate. Both characteristics of the CRM campaign influence the purchase intentions of the consumers.
In sum, Davies et al. (2012) argue that CSR is not effective for luxury companies whereas Janssen et al. (2013) and Boenigk and Schurchardt (2013) have some contingencies for CSR to be effective. Janssen et al. (2013) gives contingencies on the side of the product and Boenigk and Schurchardt (2013) on the side of the CSR campaign. The following paragraph deals with another important aspect of luxury and CSR: brand concepts.
c. Brand concepts
Torelli et al. (2011) answer the question of whether there are some brand level factors that might influence the outcomes of CSR. Brand concepts are defined as abstract meanings associated with brands (Park et al. 1991). Torelli (2011) explains that a luxury brand such as Rolex has a brand concept, or abstract brand meaning of self-enhancement or perfection. This concept is associated with dominance over people and resources. A brand like Grolsch on the other hand is primarily associated with a conservation concept promoting tradition and protection of the status quo. A third brand concept is the openness concept,
referring to exciting and free-spirited brands (e.g. Apple iTunes). Finally there is the self-transcendence concept, which promotes prosocial brand associations. An example of a brand with a self-transcendence concept is TOMS.1
According to Chartrand et al. 2008), the brand concepts can automatically and unconsciously activate related motivations and goals in the mind of the consumer. For luxury brands, it is likely that dominance over people and resources are related motivations.
Similarly, CSR information activates abstract prosocial goals of protecting the welfare of all (Verplanken and Holland, 2002). Conflicting motivations triggered by brand concepts versus CSR can strongly affect brand perceptions (Torelli et al., 2011).
According to Torelli et al. (2011), brand concepts are an important moderator of CSR outcomes. Firms with certain brand concepts might not be able to use CSR in a beneficial way. The effect of brand concepts on CSR, however, is not a conscious process in the mind of the customer. Instead Torelli et al. (2011) find that nonconscious, fluency-based processes arise from the pairing of certain brand concepts with CSR.
1 TOMS is a shoe brand that matches every pair of shoes purchased with a new pair of
Participants in the study by Torelli et al. (2011) evaluated a familiar self-enhancement brand less favorably when CSR information was paired with the brand than when it wasn’t. The results of the study by Torelli (2011) show that CSR information reduces the consumer’s perceived value of luxury brands associated with the pursuit of “perfection”. For brands like Rolex or Lexus, CSR can thus lead to negative business outcomes. On the other hand, brands associated with openness or tradition weren’t harmed by CSR information. Because luxury brands are mostly associated with a self-enhancement concept, it is likely that a conflict between CSR and luxury will be apparent in this research. This conflict will not show in the case of a non-luxury brand engaging in CSR. Therefore, based on the study by Torelli et al. (2011), the following hypothesis is formulated:
H1: A luxury brand engaging in CSR is evaluated less favorably by consumers compared to a non-luxury brand engaging in the same CSR initiative.
In sum, even though Torelli et al. (2011) show an intrinsic incompatibility in combining luxury with CSR, Janssen et al. (2013) and Boenigk and Schurchardt (2013) among others suggest the combination can work. Following best practices when implementing the CSR initiative might alleviate the difficulties of luxury CSR. This research will aim to fill the research gap that still exists in the field of luxury CSR. In order to gain more insight into the specific effects that play a role, the next paragraph deals with an important concept in CSR literature, the company-cause fit.
3. Fit
a. Defining Fit
A well-known concept in the CSR literature is the fit or the similarity between the company and a cause. A CSR initiative that is closely related to the core business and activities of the company is considered a high-fit CSR (Sen and Bhattacharya, 2001). Lafferty (2007) defines fit as the degree of similarity and compatibility that consumers perceive between a social cause and brand.
A fit between a company and a cause can exist in many forms. Berger et al. (2004) identified nine dimensions of fit. Their analysis includes among others mission fit, resource fit, management fit, work force fit, product-cause fit, etc… Interestingly, Bigné et al. (2012) study the dual nature of company-cause fit. They identified two categories: functional fit and image fit. They argue that this distinction can explain the ambiguity in the literature about the effect of fit on consumer evaluations. Functional fit is similar to product-cause fit and determined on the basis of a comparison between product features and characteristics and intentions of the cause (Lafferty et al., 2004). Image fit on the other hand is based on similarities between the characteristics of the brand and the social cause’s image. In the paragraph about brand concepts as well as in the remainder of this section, it will become clear that luxury brands generally have a low image fit with social causes.
In this study, the focus is on the product-cause fit. This form of fit was chosen because it can be both high and low in a luxury context whereas image fit is
intrinsically low for luxury brands. Although the other dimensions of fit are very meaningful as well, the variable of interest in this study is the product-cause fit. For example, a shoe brand supporting a social cause that provides shoes and clothing to people in need is considered a high product-cause fit. Any company engaging in CSR that is closely related to the core product of the company achieves a high product-cause fit.
Fit has been studied extensively in CSR literature (although not in a luxury context). However, studies about the effect of fit on attitudes towards the brand are far from univocal. Fit is said to influence how much thought people give to a relationship, whether these thoughts are positive or negative and how the two objects are evaluated (Becker-Olsen, Cudmore & Hill, 2006). In the following section, different theories predicting the effects of fit will be discussed. These underlying theories can explain differences in the effects of fit hypothesized in different studies.
b. Congruence theory
On the one hand congruence theory suggests that high fit has a positive effect on attitudes towards the brand and purchase intentions. This suggests that stakeholders have more appreciation for CSR initiatives if they follow naturally from the core business of the organization (de Jong, van der Meer, 2015). The positive effect of fit on attitudes towards the brand is based on congruence theory, which suggests that a high fit relationship can be stored and retrieved more easily from memory (Rifon et al., 2004). Because a high fit is a congruent
relation, it will be easy for customers to relate to it (Becker-Olsen et al., 2006). This will result in the customer being less critical towards the message (Ellen et al., 2006).
c. Schema Theory
On the other hand there is Schema theory, which contradicts congruence theory in arguing that low fit or incongruence leads the consumer to form more thoughts about a relation and thus recall the relation more easily (Rifon et al., 2004). A mismatch between two items causes more inferences in the brain, in turn leading to the development of stronger and larger schema (Rifon et al., 2004). According to this theory, low fit will be remembered more easily and thus yield better evaluations of the company.
d. Attribution Theory
Finally and most importantly, attribution theory is very influential in CSR research. Ellen et al. (2006) build on attribution theory, which talks about consumers’ interpretations of a firm’s actions. People make attributions about the reason why the company engages in CSR. These perceived corporate motives are important determinants of CSR success. The perception of selfish corporate motives behind a CSR campaign has a negative effect on the evaluations of the company (Barone, Norman and Miyazaki, 2007). Ellen et al. (2006) analyzed consumers’ attributions and found that corporate motives perceived by the customer influence attitudes and purchase intentions towards the brand.
In contrast to previous research, Ellen et al. (2006) find that individuals are likely to have multiple rival hypotheses about the motives behind a company’s behavior (Fein, 1996). Ellen et al. (2006) show that there is a complex range of motives: strategic, egoistic, values-driven and stakeholder-driven. When it comes to self-centered motives, consumers distinguish between strategic and egoistic motives. Ellen et al. (2006) show that consumers react positively to the first and negatively to the second. Similarly others-centered motives are divided into values-driven, which are perceived positively, and stakeholder-driven, which are viewed negatively. Responses to a firm engaging in CSR were most positive when the motives consumers attributed to the company were both strategic and values-driven.
Ellen et al. (2006) found that attributions about corporate motives mediate the relationship between characteristics of the offer such as company-cause fit and the purchase intent of the consumer. According to Ellen et al. (2006), a high fit between a company’ core business and a non-profit leads consumers to believe that the company is motivated by the desire to help others while doing its business. Hence, the consumer doesn’t perceive the company as egoistic, but instead as strategic, in turn leading to a higher purchase intent. This study shows that high fit CSR initiatives lead consumers to make values– and strategic-driven attributions whereas low fit CSR leads to egoistic and stakeholder-driven attributions.
Most extant research thus provides evidence that higher levels of fit will enhance the evaluations of CSR initiatives (Barone et al. 2007). However, in practice many brands including many luxury brands often engage in CSR initiatives that are unrelated to the core business of the firm and have a low fit (Brown and Dacin, 1997). A possible explanation for this discrepancy between theory and practice is the fact that most CSR research has been conducted in sectors different from the luxury industry. Ellen et al. (2006), for example, conducted their research in the case of a gas station engaging in CSR. This is of course widely remote from a luxury setting and hence not generalizable. It is important to know what kind of company sponsors a CSR message (Szykman et al., 2004). This study will be the first that investigates the effect of product-cause fit on consumer attitudes towards the brand in the specific case of the luxury business. This makes it particularly interesting.
The next paragraph introduces consumer skepticism about CSR. This will prove to play an important role in the formation of attitudes towards luxury brands engaging in CSR.
e. Skepticism
As stated previously, Ellen et al. (2006) showed that attributions about corporate motives are an important antecedent for attitudes towards the brand. Yoon et al. (2006) argue that companies engaging in CSR rely on a naïve business theory in assuming that consumers take the CSR program at face value and make positive attributions to the company. According to Yoon et al. (2006) companies count on
the following naïve reasoning by their customers: “those who do good things are good people and those who do bad things are bad people” (p1). However, consumers don’t make such simplistic trait attributions when they become suspicious of the motives underlying a certain behavior. Although it is true that consumers generally have a positive attitude toward corporate social programs, consumers may become suspicious and discredit both the message and the sponsor (Szykman et al., 2004). Particularly in cases where consumers cannot easily infer a motive behind a company’s actions, suspicion and skepticism may arise. This could be the case in a luxury context, where consumers feel a certain incompatibility between luxury and CSR (Torelli et al., 2011).
Often, consumers are very skeptical towards CSR initiatives. Similarly to Ellen et al. (2006), who showed that consumer attributions about corporate motives mediate the relationship between offer characteristics and firm outcomes, the second hypothesis introduces skepticism as a mediator in the research model. In a sense, skepticism will serve as a summary of the perceived intentions behind a CSR campaign. Therefore the following is hypothesized:
H2: Consumer skepticism mediates the relation between luxury CSR and attitudes towards the brand.
From previous findings in different sectors high product-cause fit is expected to have a positive effect on attributions and attitudes towards the brand (Ellen et al., 2006). However, the companies used to study the effects of fit have been very remote from the luxury sector. In the case of a luxury company it is expected that
other factors play a role. The trustworthiness and credibility of the company are important (Yoon et al., 2006). The conflict between the company’s objectives and the CSR message can increase consumer skepticism.
As stated earlier, this study examines the relationship of product-cause fit with the charity and attitudes towards the brand. From previous findings in different sectors, high product-cause fit is expected to have a positive effect on attributions and attitudes towards the brand (Ellen et al., 2006). However, the companies used to study the effects of fit have been very remote from the luxury sector. In the case of a luxury brand, it is expected that other factors play a role. As will be demonstrated in the following section, trustworthiness, credibility, conflicting motives and image fit can be very important.
Bigné et al. (2012) argue that a low image fit, such as for example a champagne brand and the red cross, reduces altruistic attributions and brand credibility. Building on Torelli et al. (2011) and Bigné et al. (2012), it is safe to assume that a luxury brand has an intrinsic low image fit with a social cause because the brand concept is conflicting. For a brand with low credibility due to a low image fit, consumers are highly skeptical of the CSR initiative. This might lead consumers to think the company is deceiving them (Forehand and Grier, 2003). When consumers feel they are being deceived, Yoon et al. (2006) show that high fit causes increased salience of firm-serving benefits, which leads to skepticism and in turn to lower attitudes towards the brand.
Drumwright (1996) among others cautioned companies about pursuing CSR initiatives that are too closely related to the core business of the company. Drumwright (1996) argues that a high fit might result in perceptions that the company is exploiting the cause. This result is consistent with Forehand and Grier (2003). They argue that high fit can result in more skepticism because for a company with a bad reputation, a high fit CSR initiative can be perceived as opportunistic and solely firm serving. This occurs because increased company-cause fit increases the ease with which consumers can make egoistic attributions to the firm. Consumers then think CSR is just a profit-maximizing strategy (Yoon, Gürhan-Canli and Schwarz, 2006). Whereas low fit CSR could be considered as more altruistic or others-serving (Forehand and Grier, 2003).
Moreover, the trustworthiness and credibility of the company also play a role (e.g., Campbell & Kirmani, 2000). For example, a brewery can be a very respectable company in its own domain, where it has a clear motive, selling beer. However, when promoting a message stating, “don’t drink and drive”, consumers become suspicious because the message is viewed as incompatible with the goal of the sponsor (Szykman et al., 2004). In this case, a high product-cause fit also has a negative effect on the attitude towards the brand and a lower product-cause fit would have been better for the company. The incompatibility between the product and the cause raises even more suspicion. If the brewery would communicate another, unrelated CSR campaign, it wouldn’t raise suspicion because the message isn’t conflicting. Low fit CSR will have a better effect than a
Similarly, a luxury shoe brand has a clear motive: to sell exclusive and needlessly expensive shoes to a limited target group of very wealthy customers. This motive can be conflicting with a social cause, thus the image fit is probably low. Even though this shoe brand might be very respectable and trustworthy, it might raise suspicion when it communicates a high fit CSR program. In this situation, the research by Forehand and Grier (2003) is particularly relevant because a luxury brand can be compared with a company with a bad reputation. They argue that high fit between the company and the cause increases the prominence of firm-serving benefits.
Hence the following hypothesis:
H3: The effect of luxury CSR on attitudes towards the brand is moderated by the functional fit between the company and the cause.
H3a: For a luxury brand, a high functional fit CSR leads to lower evaluations than a low functional fit.
H3b: For a non-luxury brand, high functional fit is expected to yield higher evaluations of the brand.
Functional Fit
Methodology
1. Design, stimuli and procedure
To answer the research question and to test the hypotheses described above, an experimental vignette study will be used. The advantage of a vignette study is that this methodology combines the high external validity of traditional surveys with the high internal validity of classic experiments (Atzmüller and Steiner, 2010). Using a vignette study makes it easy to manipulate the independent variables using written scenarios and convenient to measure the dependent variable in the survey. Since the research question contains two independent variables, the hypotheses were tested in a 2 x 2 (luxury vs non-luxury x high functional fit vs low functional fit) between-subjects experimental design. The stimuli can be found in Appendix A. Survey software platform Qualtrics was used to collect the data.
On the one hand, participants were presented with carefully constructed written scenarios about a fictitious shoe brand during this study. The choice to work with a non-existing brand, “Riton”, was made to avoid prior knowledge and attitudes biasing the results. Furthermore, a shoe brand was chosen for two reasons. Firstly, because shoe brands generally aren’t socially stigmatized brands (contrarily to eg. Oil and gas companies). This is important because socially stigmatized brands are perceived negatively when connected to social causes (Dean, 2002). Secondly, a shoe brand was chosen because it is likely that many people have been exposed to both luxury and non-luxury shoe brands in their
scenarios (luxury and non-luxury) are very similar to each other. The only real difference is that the luxury treatment contains luxury key words that are based on the definition of luxury and on an article by Fraser (2014). Some examples of luxury key words used in this study are: prestige, tailored, timeless, exclusive, limited, desirable, scarce, … Moreover, the price is an important determinant of luxury. To make sure that the vignettes have the intended effect on the participants a pre-test will be conducted to measure the perceived luxury value of both treatments.
On the other hand, the charities presented to the participants are real charities, however both are relatively unknown. Using real charities adds credibility and makes the treatment more realistic. Nevertheless, neither one of the charities have a very strong brand equity in Europe, which makes it unlikely that pre-existing attitudes bias the results. Working with written descriptions of the charity enabled the researcher to make the descriptions very similar to each other. The only thing that’s different is the functional domain in which the charities operate. The high functional fit charity is “Soles4Souls”, a non-profit organization committed to fighting poverty through the collection and distribution of shoes. Whereas the low functional fit charity is the Global Water Initiative, which works to improve water management policies, research, investment and knowledge resources for sustainable agricultural production and improved food security. Clearly the second charity is not related to the functional domain in which the company operates. The form of support offered to the charity is the same in both
2. Manipulation checks
A pre-test was conducted to ensure that the written treatments had the desired effect on participants. The stimuli designed for each of the four treatments were presented to the respondents in a short questionnaire. Appendix C shows the stimuli that were presented to the respondents in the pre-test. The pre-test was a within-subjects questionnaire that was completed by 30 participants. All treatments were showed to every respondent. Luxury was measured using a two-item, seven-point Likert scale used by Vanhamme et al. (2014) to measure scarcity supplemented with another two items asking directly for the perceived luxury and desirability of the brand. Analysis showed a mean of 3.79 for the non-luxury stimulus and a mean of 5.20 for the non-luxury stimulus with standard deviations of 0.10. These results indicate that there is a significantly different perception of luxury between the two stimuli. Furthermore, functional fit between the brand and the charities was measured using a five-item, seven-point Likert scale used by Bigné et al. (2002). The means were 3.99 for the low-fit charity and 4.77 for the high-fit charity stimulus. Standard deviations were 0.11, indicating again a highly significant difference in functional fit between the two charities. These results give the necessary confidence in the stimuli. Before posting the final questionnaire, some changes were made to the treatments to make them more similar to each other. The changes can be seen in Appendix B, which contains the treatments that were posted in the final survey. The survey was a between-subjects experiment design.
Table 1: Research Design High Functional Fit Low Functional Fit Luxury A B Non-Luxury C D 3. Measures
After having read the description of the brand and its CSR initiative, participants were asked to complete several items that measured the variables under investigation. Moreover, some demographic questions and questions related to the participant’s affinity with luxury and charities were added at the end of the survey.
The measures used for the variables under investigation are taken from previous research and slightly adapted to better match the purpose of this research. Appendix C shows the list of all items used. The dependent variable, attitude towards the brand was measured using five-item, seven-point Likert scales. This construct was taken from Spears and Singh (2004). The second variable measured is the image fit. For this variable, six items rated on semantic differential seven-point Likert scales based on Lafferty et al. (2004) were used. To check the quality of the vignettes presented to the participants again, functional fit was measured using a similar scale as image fit. A fourth important variable in this study is consumer skepticism. This variable was measured using a combination of two scales. On the one hand, a three-item seven-point Likert scale to measure the attribution of altruistic motivations by Becker-Olsen et al.
(2006). On the other hand, a four-item seven-point Likert scale for consumer skepticism developed by Skarmeas and Leonidou (2013).
a. Sample
The participants for this study were recruited within the network of the researcher through posts on social media. Moreover if possible a snowball sampling method was used in the sense that all respondents were asked to redirect the link to one or more of their friends. A part of the respondents was recruited in the library at the University of Amsterdam and another part in a local lunch café. A number of participants was also recruited using an online platform specifically meant for connecting researchers to survey respondents (www.prolific.ac). The total sample size contained 203 participants. Of this number, 83 were gathered within the social network of the researcher while 120 were reached using the platform prolific. The majority of respondents was between 18 and 25 years old and came from Western Europe (Belgium, Netherlands, U.K.). All respondents were invited to complete the survey and were randomly assigned to one of the four treatments. Table 2 shows the number of respondents that were assigned to each treatment.
Table 2: Frequencies
Low fit High Fit
Non-Luxury
44 50
Results
1. Reliability checks
To check whether the measures used in this study yield consistent findings, a reliability check was performed on all measurement scales. The following scales were tested: Attitude towards the brand, perceived image fit, skepticism, perceived luxury and perceived functional fit. The scale for attitudes towards the brand has high reliability, with Cronbach’s Alpha =0.865. The skepticism scale has a comparable Cronbach’s Alpha =0.832. The perceived luxury and perceived functional fit were measured as well in the final survey. The scales for perceived luxury and perceived functional fit have Cronbach’s Alphas of respectively 0.804 and 0.939 indicating high reliability. Because 0.7 is generally accepted as threshold for a high Cronbach’s alpha (Field, 2009), all of the measurement scales used in this study are highly reliable. Moreover, the corrected item-total correlations indicate that all the items have a good correlation with the total score of the scale (all are larger than 0.30). None of the items would substantially affect reliability if they were deleted. Given these highly reliable scales, constructs were computed as mean of all the items in a scale. (see table 3 for Cronbach’s alphas)
Table 3: Reliability of scales
Variable name Scale Cronbach's Alpha N of items Image fit IMF_tot 0.917 6
Luxury LUX_tot 0.804 4
Functional fit FunF_tot 0.939 6
Skepticism SKEP_tot 0.832 7
An exploratory factor analysis was conducted to check whether image fit and functional fit are different constructs. From table 4 it can be concluded that only one factor has an eigenvalue greater than 1, indicating that both image fit and functional fit are in fact explained by one variable. Therefore they can be considered as the same construct.
Table 4: Exploratory factor analysis Initial Eigenvalues Extraction Sums of Squared Loadings Rotation Sums of Squared Loadingsa Component Total % of Variance Cumulative % Total % of Variance Cumulativ e % Total 1 8.435 70.288 70.288 8.435 70.288 70.288 8.407 2 0.702 5.847 76.136 0.702 5.847 76.136 1.04 3 0.555 4.626 80.762 4 0.499 4.161 84.923 5 0.374 3.113 88.036 6 0.325 2.708 90.744 7 0.276 2.3 93.044 8 0.227 1.89 94.934 9 0.207 1.723 96.657 10 0.146 1.221 97.877 11 0.133 1.107 98.985 12 0.122 1.015 100
Extraction Method: Principal Component Analysis.
When components are correlated, sums of squared loadings cannot be added to obtain a total variance.
2. Descriptive statistics
In order to gain some insight into the distribution of the constructs, descriptive statistics were run. From table 5 it is clear that none of the constructs are significantly skewed or have a kurtosis that is too high to perform the necessary analyses. From this point on it is assumed that the constructs are normally distributed. Moreover, to give the reader some additional insight into the relationships between the variables, a full correlation matrix was computed (see table 6).
Table 5: Descriptive Statistics
Table 6: Correlation Matrix
Mean Std. Deviation
LuxText HF_Text ATT_tot FUNF_tot LUX_tot SKEP_tot Age
LuxText / HF_Text -0.027 / ATT_tot 4.8857 0.98481 -0.112 0.026 FUNF_tot 4.3957 1.21921 -.283** .316** .450** LUX_tot 4.5456 1.27065 .554** 0.048 .285** -0.01 SKEP_tot 4.0183 1.00397 0.135 -0.026 -.433** -.464** -0.066 Age -0.062 -0.05 0.067 0.04 -0.017 -0.049 Gender -0.058 0.057 0.045 0.023 -0.027 -0.07 0.127
N Minimum Maximum Mean Std. Deviation Skewness Kurtosis ATT_tot 203 2.2 7 4.8857 0.98481 -0.229 -0.035
IMF_tot 203 1 7 4.431 1.21433 -0.404 -0.315
SKEP_tot 203 1 7 4.0183 1.00397 -0.07 0.366
FUNF_tot 203 1.17 7 4.3957 1.21921 -0.293 -0.256
3. Testing hypotheses
To test the hypotheses in this research, a number of statistical analyses were conducted. This section explains the result one by one.
H1: A luxury brand engaging in CSR is evaluated less favorably by consumers compared to a non-luxury brand engaging in the same CSR initiative.
To test this first hypothesis, a one-way ANOVA was conducted with Luxury as independent variable and Attitudes towards the brand as dependent variable. From this analysis, there is no evidence in support of H1. Luxury CSR doesn’t have a significant effect on attitudes towards the brand (F = 1.341; p = 0.124). Table 5 shows the means and standard deviations for different luxury CSR treatments (0= Non-luxury; 1= Luxury). However, it is important to note that the differences are not significant at 0.05 level.
Table 7: Comparison of means (Lux/Non-lux)
LuxText Att_tot Mean N Std. Deviation 0 5.0043 94 0.88183 1 4.7835 109 1.05905 Total 4.8857 203 0.98481
To test the other hypotheses in this study, a moderated mediation model was tested using the Process macro written by Andrew F. Hayes (2012). The research model studied in this paper corresponds with model 7 from the process manual. A conditional indirect effect of luxury CSR on attitudes towards the brand
depends on the value of the moderator in this model. All relations that will be estimated are shown in figure 1: the statistical model. Both direct and indirect effects will be estimated in this model. Table 7 shows the results of this model.
Figure 1: Statistical Model
H2: Consumer skepticism mediates the relationship between luxury CSR and attitudes towards the brand.
This hypothesis can be tested by analysing relationship a1 and b1. From the data, no significant relationship a1 can be found (a1= 0.275; p = 0.183). However, the data does show a significant effect of skepticism on attitudes towards the brand. Relationship b1 is thus a significant negative relation (b1= -0.416; p = 0.000). In sum, there is no support for a mediation by skepticism of the
Luxury CSR Skepticism Functional fit Luxury CSR * Functional fit Attitudes a1 a2 a3 c1 b1
effect of luxury CSR on attitudes towards the brand even though, as expected, skepticism does have a significantly negative effect on attitudes.
H3: The effect of luxury CSR on attitudes towards the brand is moderated by the functional fit between the company and the cause.
H3a: For a luxury brand, a high functional fit CSR leads to lower evaluations than a low functional fit.
H3b: For a non-luxury brand, high functional fit is expected to yield higher evaluations of the brand.
After performing a 2-way ANOVA for the effect of both independent variables on attitudes, the following results were obtained:
Table 8: Univariate ANOVA output Dependent Variable = Attitudes Type III Sum of Squares df Mean Square F Sig.
Corrected Model 5.564a 5 1.113 1.152 0.334
Intercept 199.388 1 199.388 206.36 0 GEN 0.495 1 0.495 0.512 0.475 AGE 0.612 1 0.612 0.633 0.427 LuxText 2.309 1 2.309 2.39 0.124 HF_Text 0.044 1 0.044 0.045 0.832 LuxText * HF_Text 2.101 1 2.101 2.174 0.142 Error 190.344 197 0.966 Total 5041.56 203 Corrected Total 195.909 202
Table 9: Descriptives, ANOVA
LuxText HF_Text Mean Std. Deviation N
0 0 5.0864 0.85443 44 1 4.932 0.90766 50 Total 5.0043 0.88183 94 1 0 4.6741 1.01557 54 1 4.8909 1.0987 55 Total 4.7835 1.05905 109 Total 0 4.8592 0.96419 98 1 4.9105 1.00766 105 Total 4.8857 0.98481 203
Clearly, the model shows that the independent variables don’t have a significant overall effect on attitudes towards the brand. Table 8 also shows the means and standard deviations. Appendix E shows the plot of the univariate ANOVA. Even though the figure in Appendix E appears to show an interaction effect, this is not significant. Moreover, the R-squared of this model indicates that only 2.8% of the total variance in attitudes is explained by these independent variables. There is also no significant interaction effect between the two independent variables. This allows us to reject H3 both a and b. As an additional test, planned contrasts were computed. However, for neither of the independent variables, a significant contrast was obtained. (see Appendix A) High fit versus low fit doesn’t differ significantly within the luxury and non-luxury condition.
From the output of the moderated mediation model (table 7), it can be concluded that there is no significant interaction effect (a3 = -0.029 ; p = 0.921) between functional fit and luxury CSR on consumer skepticism. The effect of the
moderator. Moreover, there is no significant direct effec of functional fit on skepticism either (a2 = -0.026; p = 0.902). Hypothesis 4 can thus be rejected.
Table 10: Process Output
4. Additional Results
In this section some additional results that are of interest will be shown. Because the analysis of the moderated mediation model in Process didn’t yield many significant results, the analysis was run again but with different independent variables. To be precise, the manipulation checks for perceived luxury and perceived functional fit were used as independent variables. Because these scales have much more data points than the experimental conditions, it is assumed that results might be more meaningful.
From table 12 it can be concluded that the model using the manipulation checks for luxury and functional fit (LUX_tot and FUNF_tot) as independent variables yields more significant relations than the previously tested model. Firstly, the R-squared, indicating the percentage of variance explained in both attitudes
Antecedent Skepticism Attitudes
Coeff SE p Coeff SE p LuxText a1 0.2745 0.2055 0.1832 c1 -0.4159 0.0634 0.4245 HF_Text a2 -0.0262 0.2118 0.9018 . . . LuxText*HF_Text a3 -0.0288 0.2894 0.921 . . . Gender -0.1183 0.1463 0.4199 0.0126 0.1273 0.9212 Age -0.0329 0.0685 0.6312 0.0396 0.0609 0.5155 SKEP_tot . . . b1 -0.4159 0.0634 0 R-squared = 0.0238 R-squared = 0.1927
towards the brand and skepticism is much higher (26% and 23% respectively). Moreover, it is now clear that the perceived luxury has a significantly positive effect on attitudes towards the brand. This result is quite surprising because it contradicts H1. Higher perceived luxury thus leads to higher attitudes towards the brand. Another surprising difference with the previous model that was tested is the significance of effect a2. The perceived functional fit between the company and the cause has a significant negative direct effect on skepticism (a2 = -0.393; p = 0.029). This is an effect that wasn’t hypothesized in the model, but it shows that a higher functional fit leads to lower skepticism towards the brand. The interaction effect between functional fit and luxury CSR that was hypothesized is still insignificant in this model.
Table 11: Process Output - manipulation checks as IV
Model Summary: DV= Attitudes
R R-sq MSE p
.5068 .2569 .7353 .0000
Dependent Variable = Attitudes
Model coeff se p constant 5.3766 .4494 .0000 SKEP_tot -.4049 .0604 .0000 LUX_tot .2009 .0476 .0000 GEN .0323 .1221 .7918 AGE .0463 .0583 .4287
Model Summary; DV = Skepticism
R R-sq MSE p
.4743 .2250 .8010 .0000
Dependent Variable = Skepticism
Model coeff se p constant 6.2659 .8302 .0000 LUX_tot -.0694 .1712 .6858 FUNF_tot -.3933 .1789 .0291 int_1 .0027 .0373 .9430 GEN -.1162 .1289 .3684 AGE -.0229 .0609 .7068
Discussion
This research was aimed at investigating to what extent a high versus low product-cause fit influences the effectiveness of a luxury brand’s CSR initiatives in terms of consumers’ attitudes towards the company. In general, it cannot be concluded that luxury CSR has a significant effect on attitudes towards the brand, nor that there is an interaction effect with product-cause fit.
Firstly the results aren’t in line with Torelli et al. (2011) who argue that luxury CSR leads to lower evaluations of the brand than non-luxury CSR. From the analysis conducted in this experiment, there was no significant effect of luxury CSR on attitudes towards the brand.
Because the researcher chose to work with a non-existing luxury brand presented in written scenarios, pre-existing knowledge was ruled out. This can be an advantage, but it proved to be a limitation as well. For a luxury brand, reputation, image and brand equity are the most important parts of the brand. Luxury is all about being recognizable and well-known. Therefore the presentation of a non-existing luxury brand in a written text might not be enough to arouse the brand concepts identified by Torelli et al. (2011). This might be one of the reasons why luxury CSR doesn’t have a significant effect on attitudes towards the brand.
Moreover, according to this study, consumer skepticism doesn’t mediate the relation between luxury CSR and attitudes towards the brand. However, there is
Skepticism isn’t related to luxury CSR according to this study. This is inconsistent with other literature about CSR, which states that consumers’ attributions about CSR serve as mediators with attitudes towards the brand (oa. Ellen et al., 2006).
The expected moderation effect of functional fit wasn’t recognizable in the data either. There are multiple possible interpretations of this result. Either functional fit has a comparable effect on attitudes towards the brand as in a non-luxury context. However, the fact that a non-existing brand was used might also be the reason for this absence of result. The mechanism of increased suspicion aroused by the combination of a high product-cause fit and a low so-called image fit, might not work for unknown brands. Probably, the image of the brand is not conveyed strong enough to have an interaction effect with luxury and an impact on suspicion and skepticism.
In conclusion, the findings of this study aren’t supporting the hypothesized conceptual model. However, this study does offer support for the hypothesis that consumer skepticism does have a significantly negative relationship with attitudes towards the brand. This supports earlier research by Forehand and Grier (2003).
As a contribution to practice, the most important finding in this study is the confirmation of the hypothesis that consumer skepticism has a significantly negative effect on attitudes towards the brand. Therefore, managers should try to set up credible CSR initiatives that don’t cause consumers to be skeptical.
To summarize, there are some limitations to this research. Firstly the fact that a non-existing, unknown luxury brand was used in the study probably makes the effects weaker and makes the study less realistic. Further research could thus address these issues for real brands because the reputation and image of a real luxury brand are likely to play a major role. Secondly, it was a limitation that the measurement scales for functional fit and image fit turned out to be explained by only one factor. This didn’t allow the researcher to distinguish between the two concepts in this study. The setup of an online experiment proved to be a limitation as well. Even though the manipulation checks of the treatments were significant, it is not sure whether they made enough impression on the respondents.
This study thus doesn’t show strong new results related to luxury CSR and product-cause fit. However, it can still contribute to the literature by pointing out the lack of research in the field. The literature review in this paper provides an overview of what has been studied related to luxury CSR. There are still some questions worth asking in the field of Luxury CSR.
List of Tables & Figures
TABLE 1: RESEARCH DESIGN ... 28 TABLE 2: FREQUENCIES ... 29 TABLE 3: RELIABILITY OF SCALES ... 30 TABLE 4: EXPLORATORY FACTOR ANALYSIS ... 31 TABLE 5: DESCRIPTIVE STATISTICS ... 32 TABLE 6: CORRELATION MATRIX ... 32 TABLE 7: COMPARISON OF MEANS (LUX/NON-LUX) ... 33 TABLE 8: UNIVARIATE ANOVA OUTPUT ... 35 TABLE 9: DESCRIPTIVES, ANOVA ... 36 TABLE 10: PROCESS OUTPUT ... 37 TABLE 11: PROCESS OUTPUT - MANIPULATION CHECKS AS IV ... 38 FIGURE 1: STATISTICAL MODEL ... 34References
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