The moderating effect of Perceived External Prestige in the relationship between Perceived Corporate Social Responsibility Activities and employee behavior

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Thesis

L. (Lisa) Bakker

Executive Master in Business Studies – Track Leadership

30-06-2015

Supervisor: mw. dr. C.T. (Corine) Boon

The moderating effect of Perceived External Prestige in the relationship

between Perceived Corporate Social Responsibility Activities

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Abstract

The focus of this paper is on the internal effects of Corporate Social Responsibility (CSR)

within an organization and more specific on the perspective of employees. Organizational

Identification (OI) and Turnover Intentions (TI) are two behavior styles which were

investigated in this study. The study was carried out in Dutch insurance company with almost

3000 employees. It was expected that when employees feel that if the organization participate

in CSR activities, they identify more with the organization (Lichtenstein, Drumwright &

Braig, 2004) and are less likely to leave (Abrams et al., 1998). Referring to existing literature,

the direct relationships between Perceived CSR Activities (PCSRA) and these employee

behaviors are ambiguous which implicates that these relationships can be moderated by

another factor. To investigate this matter more explicitly the moderating effect of Perceived

External Prestige (PEP) was included in this study. “PEP is the way in which employees

believe outsiders see their organization” (Herrbach & Mignonac, 2004). It was expected in this study that when employees feel that the outside world recognizes the importance of CSR

activities within the organization, the relationship between PCSRA and OI and PCSR and TI

will be reinforced. The results of the current study showed partial support for the hypotheses.

A significant effect on the relationship between PCSRA and OI was found. However for the

other formulated hypotheses no significant relationships were found. This paper contains a

literature review where existing theory will be outlined, a results chapter where the outcomes

of the current study are presented and a discussion chapter where theoretical implications,

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1. Introduction

Corporate Social Responsibility (CSR) is not a fashion word anymore. More and more

organizations take this subject matter seriously and use CSR activities in their internal and

external strategic decisions (Lee, Song, Lee, Lee, & Bernhard, 2013; De Roeck & Delobbe,

2012; Mueller, Hattrup, Spiess, & Lin-Hi, 2012). Wartick and Cochran (1985) explain that

CSR is part of a broader construct which is defined as corporate social performance. It entails

“the totality of a firm’s efforts to meet changing societal conditions” (Wartick and Cochran, 1985, p. 758).

An evident example is Unilever. The organization successfully implemented the principle of

´shared value´ which can be defined as “policies and operating practices that enhance the

competiveness of a company while simultaneously advancing the economic and social

conditions in the communities in which it operates” (Porter & Kramer, 2011, p. 6). Unilever

used their societal impact to reduce environmental pollution and at the same time decrease

costs for the organization. Furthermore, Unilever educates not only its own employees but

also its suppliers about environmental issues and individual contributions towards this. They

used their societal role as a company in order to create impact on environmental and societal

issues. Unilever managed to create a competitive advantage through implementing the shared

value principle. One example of Unilever is project Shakti, which benefits Indian villages,

where distribution centers are run by female entrepreneurs which live in poor conditions.

Unilever provides microcredits and training to this group of people and provide them with a

higher income and give them better access to Unilever’s hygiene products. This last

advantage helps Unilever to access a consumer market which is initially harder to reach.

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7 profits but also benefit society. It is not about firm performance versus societal value but more

about combining these elements and thus creating shared value.

Since organizations embrace this matter collectively, there is a growing interest in the

literature concerning CSR within companies. McWilliams and Siegel (2001, p. 117) define

CSR as “actions that appear to further some social good, beyond the interests of the firm and

that which is required by law”. It is related to ethical and moral issues concerning corporate

decision-making and behavior (Branco & Rodrigues, 2006) and it implies that businesses

should dig deeper in their reasons for existing. Moreover, external pressures move CSR

activities up in the agendas of senior management. These two factors create room for scholars

to investigate the effects of CSR activities on organizational performance, internal as well as

external.

There are various advantages of incorporating CSR in an organization. According to Branco

and Rodrigues (2006), organizations that invest in CSR activities develop new resources and

capabilities such as increased know-how and therefore create a strong corporate culture.

These aspects in turn, can be a source of competitive advantage to a firm. This perspective

refers to theory of Boxall and Purcell (2012) who define the resource-based view. The

resource-based view entails that the internal resources of an organization are the most

important source for competitive advantage. The importance of involving employees in CSR

activities of the firm is explicitly stated in the literature. Employees’ positive perceptions of

CSR within an organization can create favorable employee attitudes and behavior, which, in

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8 Aguinis and Glavas (2012) state that however the focus of CSR activities within a company

has always been on external factors for example corporate reputation (Branco &Rodrigues,

2006), now the focus shifts towards a more internal approach which means that the effects of

CSR on the organization itself becomes more important. This paper focusses on the internal

effects of CSR within an organization and more specific on the perspective of employees.

Since companies are becoming increasingly concerned with CSR, the importance of the role

of employees regarding CSR should be closer examined (Uusi-Rauva & Nurkka, 2010). The

authors emphasize that employees are not only important stakeholders since they can be used

as communicators but they are “also producers and users of environmental knowledge in organizations” (Uusi-Rauva & Nurkka, 2010, p. 300). Lee et al. (2013) explain that

employees play a crucial role since they interact directly with costumers and therefore can

influence customer´s experiences with the organization. The perceptions of employees about

CSR activities within an organization are therefore an essential factor to investigate.

Referring to the literature, there are numerous employee behaviors which are investigated as

consequences of CSR activities of the firm. Most scholars have investigated employee

commitment (Brammer, Millington, & Rayton, 2007; Shen Zhu, 2011; Singhapakdi, Lee,

Sirgy & Senasu, 2015) and job satisfaction (Valentine & Fleischmann, 2008) in relation to

CSR activities. These studies are related to social identity theory. However, there is a

substantial difference between commitment and social identity towards the firm

(organizational identity). Organizational identity refers to the individuals´ self-definition

whereas commitment does not (Ashford & Mael, 1989). Organizational identity is the set of

beliefs about what is most core, enduring, and distinctive about an organization (Albert &

Whetten, 1985). It entails the way employees feel connected towards the actions of the

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9 Since CSR is closely related to societal matters, it can be interesting to therefore investigate

constructs which are related to social identity (‘what is important to me?’) and take this back

to the organization.

This study investigates the construct Organizational Identification in relation to CSR activities

of a firm. Organizational Identification is concerned with the question “Who am I in relation

to the organization?” (Pratt, 1998). It is expected that when employees feel that if the organization participate in CSR activities, they can identify more with the organization

(Lichtenstein et al., 2004).

In another study of Abrams, Ando and Hinkle (1998) they found out that when employees

experience that a firm actively engage in CSR activities, employees are less likely to leave the

organization. However the literature is conflicting about the role of CSR in influencing the

turnover intentions of employees. The effects of CSR on organizational identification of

employees are, on the other hand, evident (Farooq, Farooq & Jasimuddin, 2014).

For this reason, turnover intentions of employees in relation to Perceived CSR Activities of

the organization are taken into this study as well. Together with Organizational Identification,

Turnover Intentions, is the dependent variable in the conceptual model.

Since the direct relationship between Perceived CSR Activities and these employee behaviors

are ambiguous it implicates that this relationship can be moderated by another factor.

Numerous scholars address the importance to investigate the relationship between CSR and

employee behavior further. Different contexts should be further investigated and different

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10 2012; Farooq et al., 2014; Mueller et al., 2012). Referring to the literature, what seems to go

hand in hand with organizational identification is the relationship with Perceived External

Prestige (PEP). To investigate this matter more explicitly the moderating effect of (PEP) is

included in this study. PEP is the way in which employees believe outsiders see their

organization (Herrbach & Mignonac, 2004; Kim et al., 2010). It is expected in this study that

PEP strengthen the relationship between CSR activities and Organizational Identification in a

positive way and Turnover Intentions in a negative way.

This research project is designed to further examine the moderating effect of Perceived

External Prestige (PEP) in the relationship between perceived Corporate Social Responsibility

Activities (PCSRA) and organizational Identification (OI) and Turnover Intentions (TI) of

employees.

Research question

What is the role of Perceived External Prestige in the relationship between Perceived

Corporate Social Responsibility Activities and Organizational Identification and Turnover

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2. Literature review

In this section a more detailed clarification will be given for the subjects stated in the

introduction. It is expected that Perceived External Prestige (PEP) has a positive reinforcing

effect on the relationship between Perceived CSR Activities (PCSRA) and Organizational

Identification (OI) of employees and a negative reinforcing effect on the relationship between

PCSRA and Turnover Intentions (TI) of employees. These constructs are being discussed in

the following chapter. Firstly, theoretical contributions of PCSRA within an organization are

illustrated, followed by the importance of the dependent variables: OI and TI. Finally a

chapter which expand on the moderating effect of PEP is being described to complete the

literature review.

2.1 Perceived Corporate Social Responsibility Activities (PCSRA)

As mentioned in the introduction, employees are seen as essential (internal) stakeholders. This

group is of great importance for organizations since they can be a source for competitive

advantage (Boxall & Purcell, 2012). This study build on this theory that employees can be a

source of competitive advantage. Therefore it is vital to further study the effects on

organizational aspects on employee perceptions.

Several studies already attempted to study the perceptions of employees on Human Resource

Management (HRM) practices. Since HRM practices are used to influence employee

behavior, the theory of HRM practices are used as a guide line to explain CSR and

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12 Wright and Nishii (2007) builds on a model of different levels of analysis for HRM practices.

The intended HRM practices are designed by top management and is the outcome of an HRM

strategy. The actual HRM practices are the HRM practices that are being implemented by

line-managers. According to the authors, there is always a gap between intended and actual

HRM practices caused by political, institutional, or rational factors. The next level of analysis,

the individual level, are the perceived HRM practices by employees. At this level, even more

variance can occur as every individual employee is unique and thus can interpret matters

subjectively. This fact is important since perceived HRM practices create reactions of

employees which at the end impacts organizational performance positively or negatively.

“There is within-organization variance in the way that employees react to perceived HRM practices, and that this represents true variance, that when examined explicitly, can enrich

Strategic HRM research” (Wright & Nishii, 2007, p. 18). Summarizing, when HRM practices

are designed it does not implicate that intended HRM practices are interpreted the same by

employees. Moreover, research has demonstrated that the perceptions of employees of HRM

are more predictable than intended or actual practices. For this reason, the focus lies on

perceptions of employees.

Perceived CSR activities are the perceptions of employees about the company’s identity on

important societal matters (Brown & Dacin, 1997). Examples are employee perceptions on

how the company is involved in helping nonprofits, or how the company is perceived as

social responsible by employees. Moreover, it is about what kind of position the organization

takes in society according to its employees. Building on the study of Wright and Nishii

(2007), perceived CSR activities of employees correspondingly create employee reactions. It

is therefore a way to influence positive employee behavior within an organization and thus

can be interpreted as a HRM practice. Studies suggest that employees’ perceptions on CSR

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13 2008). They found out that perceived CSR plays a mediating role between ethics programs of

the organization (intended) and job satisfaction (employee reaction). Moreover, Kim et al.

(2010) demonstrated that employees’ perceptions of the company identity about societal

matters has a positive relation with the employee-company identification which in turn

positively affects employee affective commitment. Another study of Rupp, Shao, Thornton

and Skarlicki (2013) showed that perceived CSR of employees positively affects employees’ Organizational Citizenship Behavior. The reason for why is can trigger positive employee

behavior is because of the fact that that positive perceptions on CSR can contribute to the

self-esteem of the employee and their social identification. It helps employees to forecast how

fairly they expect the organization will treat them.

The other way around: when employees feel that the organization does not undertake enough

effort in CSR activities, this indeed has negative effects on employee behavior since

employees do care about overall fair treatment by their organization (Rupp et al., 2013).

These aspects has close links to justice theory which implicates that “individuals care about

and react to (in)justice because unfair treatment violates moral and ethical norm” (Rupp et al., 2013 p. 898). Since Perceived CSR Activities of an organization can influence employee

behavior, HRM managers can benefit through this when creating and implementing HRM

practices. According to Nishii and Wright (2007) the contribution for explaining employee

behavior which result in organizational performance are the perceptions, and the differences

in perceptions.

Taken these studies into consideration, perceived CSR of employees can predict important

HRM outcomes since it creates employee reactions. Although outcomes of these studies may

seem evident, more research should be done to examine the relationship of perceived CSR on

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2.2 Organizational identity and Organizational Identification (OI)

Organizational identity and identification are important foundations for explaining

organizational behavior. According to Albert and Whetten (1985) organizational identity is

the way employees see their organization. It is about the central attributes of the organization,

how employees think their organization is unique (distinctive), and what is perceived by

employees to be enduring or continuing, regardless of objective changes in the organizational

environments (Albert & Whetten, 1985). According to Chen (2011) organizational identities

help employees make sense of what they do in relation to their understanding of what their

organization is. It provides clarity for employees and has close links with studies of social

identity. Social identity theory refers to “a fundamental part of who people think they are

(and who they are not) and is based on the groups they think they belong” (Tajfel, 1978).

Organizational identity can help clarify the relationship between employee and organization.

Organizations with employees who have a high organizational identity can improve the

organizational effectiveness and performance (Stimpert, Gustafson and Sarason, 1998). A

high fit between organization and employee generates desirable employee behavior and, as a

result, employees are more likely to show a supportive attitude towards the organization

(Ashforth & Mael, 1989) and “make decisions that are consistent with organizational

objectives” (Simon, 1997).

Organizational Identification builds on the base of organizational identity. Organizational

Identification is concerned with the question “Who am I in relation to the organization?”

(Pratt, 1998). Organizational Identification has a more individualistic approach and is all

about the self of the employee. According to Patchen’s (1970) identification theory,

Organizational Identification consists out of three components: (1) the way employees feel

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15 support for the organization; and (3) the perception of shared characteristics with other

employees. When people feel closely related to each other, or in this case, to an organization

it creates favorable attitudes and a feel of belonging to something. Moreover, multiple studies

found that Organizational Identification positively relates to employee performance (Riketta,

2005; van Knippenberg, 2000; van Knippenberg & van Schie, 2000) such as task and job

performance (Walumba, Avolio & Zhu, 2008; Weisekem Ahearne, Lam & von Dick, 2009)

and financial performance (Homburg, Wieseke & Hoyer, 2009). Understanding the way

employees perceive their organization and how they feel they belong to it does not only has

an important societal implication but also an organizational implication.

2.3 Perceived Corporate Social Responsibility activities and Organizational Identification

People compare themselves with organizations to which they feel a sense of belonging and

self-definition (Tajfel and Turner, 1985). In a study of Lichtenstein et al. (2004) they explain

that when an organization is perceived by its employees as socially desirable, they are likely

to believe that the company has an admirable trait which also reflects on their self-concept. In

a study of Rupp et al. (2013), the authors explain why CSR is important for employees. The

affiliation with the organization which is perceived as social responsible can help employees

who work there develop a stronger Organizational Identification. This is because CSR

provides information about how employees themselves might expect to be treated, valued,

and socialized within the organizational culture. Moreover, when employees perceive the

organization as socially responsible, they reflect these aspects as if this is something the

employee would be for him/herself. Additionally, research in this field has proven that the

perception of employees about the status and identity of the organization influence their

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16 of the firm (Farooq et al., 2014). However the relationship between Perceived CSR Activities

and employee´s Organizational Identification should be further examined in different contexts

and organizations.

It is expected that employees develop a stronger Organizational Identification when they

perceive that the organization participates actively in CSR and is, thus, more attractive.

Therefore the following hypothesis is developed:

H1: Perceived CSR Activities of employees is positively related to Organizational

Identification.

2.4 Turnover intentions (TI)

Examining Turnover Intentions of employees are of great interest for organizations. Gaining

insight about this matter could save money for recruitment matters, exit interviews and

administrative costs. Turnover Intentions of employees can be an important component of

organizational performance.

In the literature, there are multiple explanations for why people leave an organization.

Important attributions came from Chatman (1991) and O’Reilly, Chatman and Caldwell

(1991). These studies have demonstrated that it is important for employees to feel a

connection with the organization. According to Chatman (1991), the alignment between

individual values and the values of the organization can predict intentions to stay with the

organization.

According to traditional turnover theories, employees who actually quit their jobs go through

three different phases. First, the employee is dissatisfied about the job and this dissatisfying

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17 leaving the organization. Last, when the employee has alternatives to go he/she uses a

subjective expected utility (SEU) decision model in order to make the right decision.

However in the study of Lee, Mitchell, Wise and Fireman (1996) they demonstrated that not

all employees who quitted their jobs followed the three traditional phases. There are people

who voluntary left the organization before they found a new job. The authors explain that

individual preferences influence the prediction of Turnover Intentions. Mismatches among

values, goals and behavioral strategies are potent issues in the turnover process. This again

refers to the alignment between individual values and the values of the organization.

According to the outcomes of these different studies, it is clear that there are several reasons

for why employees leave the organization and there are also differences in the processes they

go through. The ambiguities in findings suggest that there can be other factors which reinforce

the Turnover Intentions of employees.

2.5 Perceived Corporate Social Responsibility Activities and Turnover Intentions

Nevertheless, according to Hollingworth and Valentine (2014, p. 635) “a firm that

demonstrates a commitment to social justice both externally (being socially responsible) and

internally (taking care of workers) is viewed favorably by employees, which creates a work

environment that encourages employees to bond with the organization”. The authors propose

that when employees feel that the organization invest in employees and treats them fair, and

thus is associated with organizational CSR activities, it could result in less intentions to leave

te organization. According to these authors, CSR activities of an organization contribute to

employee empowerment which in turn leads to increased employee involvement and personal

control. The results of their study were somewhat surprising; the authors found out that CSR

activities and Turnover Intentions correlate with each other but they could not demonstrate

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18 organizational commitment has a mediating effect between CSR activities of the firm and

Turnover Intentions of employees.

Riordan, Gatewood, and Bill (1997) investigated the effects of corporate image of the firm in

relation to Turnover Intentions of employees. The authors demonstrated that the way

employees see their organization (corporate image) has a direct negative relationship with

their intentions to leave. That is, employees who has a sense of self-association with the firm

manifest itself through favorable employee behavior.

It is expected that employees who perceive that the organization participates actively in CSR

and is, thus, more attractive are less likely to leave the organization. Therefore the following

hypothesis is developed:

H2: Perceived CSR Activities of employees is negatively related to Turnover Intentions (TI).

2.6 Perceived External Prestige (PEP)

As mentioned in the introduction, PEP refers to how employees believe outsiders see their

organization (Herrbach & Mignonac, 2004; Kim et al., 2010). According to the authors, PEP

is the way employees establish an image of their organization through their perception of how

outsiders see their firm. It has therefore a more external focus.

Referring to the literature, Organizational Identification and PEP are closely related to each

other. In earlier studies (e.g. Mael & Ashforth, 1992; Bhattacharya, Rao & Glynn, 1995) the

relationship between PEP and Organizational Identification was examined and several authors

found that PEP affects the Organizational Identification of employees. These constructs,

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19 Ashford and Mael (1989) stated that PEP facilitates the process of Organizational

Identification and thus leads to positive work outcomes. When employees experience a

favorable image of the firm from outsiders, it creates a better feeling of belongingness to the

organization for the employee.

Studies of De Roeck & Delobbe (2012) and Kim et al. (2010) describe the role of PEP and

Organizational Identification. Both studies argue that PEP positively influences

Organizational Identification and PEP has a mediating and moderating effect on the

relationship between CSR perceptions of employees and Organizational Identification. “The

results may be related to cultural factors associated with self-construal” (Kim et al., 2010, p.

564). Especially in countries with high collectivist cultures, PEP plays an important role

regarding Organizational Identification since people, or employees, want to meet expected

social standards.

This study investigates the moderating effect of PEP on CSR and Organizational

Identification. It is expected that the relationship between the CSR activities and

Organizational Identification of employees is reinforced by the fact of how these employees

experience outsiders see their organization as socially responsible. The more the employee

experience PEP the stronger the relationship between PCSRA and Organizational

Identification. As already discussed in the literature, employees who feel proud to be a

member of an organization which is socially valued by others are triggered to achieve a higher

degree of Organizational Identification (Dutton, Dukerich, & Harquail, 1994). Therefore the

following hypotheses is developed:

H3: PEP moderates the relationship between PCSRA and OI, such that the relationship

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20 PEP also has its influences on Turnover Intentions of employees. It is expected that the

relationship between the CSR activities and Turnover Intentions of employees is reinforced

by the fact of how these employees experience outsiders see their organization as socially

responsible. Riordan, Gatewood, and Bill (1997) concluded in their study that if the

perception of the employee is considered to be lowly regarded by external groups (a poor

corporate image), the turnover intentions of the employee is higher.

Therefore, the more the employee experience PEP, the stronger the relationship between

Perceived CSR Activities and Turnover Intentions and the less the employee is likely to leave

the organization. Studies propose that the more prestigious the firm is, the more employees

feel attached to the organization because they can incorporate their self-image in the

organization (Van Dick et al., 2004; Ashford & Mael, 1989). Employees who has a sense of

self-association with the firm (because of a higher PEP) manifest itself through less intentions

to leave because they feel more empowered by the organization. Therefore the following

hypotheses is developed:

H4: PEP moderates the relationship between PCSRA and TI, such that the relationship

between PCSRA and TI is stronger when PEP is high.

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3. Methods

3.1 Firm selection

To answer the research question and to test the hypotheses, data was collected from a Dutch

insurance company. The company meets two criteria for conducting the study here. Firstly,

the company started with an elaborate CSR program in 2012 and has now a varied pallet of

different CSR activities throughout the whole organization. This new aspect and direction of

the organization has attracted the attention of both employees as managers. The second

reason for choosing this firm to conduct the research is the societal function of the company.

The essence of insurance companies is covering risks of people. Simply put, saving money in

case of unexpected events and collectively sharing these risks within society. This aspect,

makes insurance companies a linkin pin for society. The responsibility factor of such

organizations to care for other people is high and it implies that employees working within

such an organization feel connected with the societal influence of the company.

3.2 Sample

An online survey was used to obtain the necessary data. The survey was made in Qualtrics

which is a well-known program for designing surveys. When using a survey as a research

method, a larger number of respondents can be reach. A survey measures the perceptions and

behavior of employees which are necessary in order to answer the research question. Almost

3000 employees within the organization were asked to fill in an online survey. In order to

acquire a large number of respondents a digital survey was sent to employees throughout the

whole organization using simple random sampling. In this case each employee of the

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22 features that were asked in the survey to make sure that all groups are represented; these are

considered as control variables. The online survey was send by e-mail and the study was

announced on the internal intranet of the organization. The overall goal was to obtain a

respectable representation of the population within the organization; which is set on 200

respondents. It took about 15 minutes to complete the online survey.

A total of 501 respondents filled in the survey however 288 surveys returned complete. The

remaining 213 respondents did not complete the whole survey and seemed to log in and to

look at the questions but never filled in answers. The remaining 288 survey were used for this

study. The response rate was 10%. From the 288 respondents 70,14% were male and 29,86%

were female. The average age was 45 years. More detailed information about the sample size

and control variables is presented in Appendix B.

3.3 Research design

This study tries to determine the relationship between employee perceptions of CSR activities

(independent variable) and employee behavior (dependent variable). More specifically, the

study investigates the direct relationship as well as the moderating effect of PEP. Conducting

a survey is a method to answer the research question which has an explanatory character.

An online survey was designed to obtain relevant information to answer the research question.

The measures were adapted from existing literature and refined for the present study. A

5-point Likert-type scale was used (1=’strongly disagree’ and 5=’strongly agree’). These types

of data are interval data which implicates that the respondent should rank his or her opinion

about different statements. Moreover, for the control variables nominal (gender) and ratio

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23 ordinal a moderation analysis was be used to test the different hypotheses. Results were

analyzed by using a 0.05 significance level. Data was analyzed and reported in SPSS.

3.4 Measures

Different questions were asked in order to test the different hypotheses. The use of the 5-point

Likert scale helped to create structure in the survey. Respondents did not have to use different

scales when answering the questions, this saved time and also helped to prevent errors from

occurring.

Perceived CSR Activities

The questions and scales were based on the literature of Lichtenstein et al. (2004), Valentine

and Fleischman (2008) and Valentine and Godkin, (2009). Examples of questions “My

company is involved in corporate giving” and “My organization gives time, money and

resources to socially responsible causes”. The Cronbach’s alpha of this construct was 0.837.

Organizational Identification

The questions and scales were based on the literature from the literature of Mael and Ashford

(1992) and Bergami and Bagozzi (2000). One examples of the questions: “The successes of

my company are my successes”. The Cronbach’s alpha of this construct was 0.873.

Turnover Intentions

The questions that measured Turnover Intentions were based on the literature of , Chui and

Francesco (2003), Jenkins (1993) and Krausz, Koslowsky, Shalom and Elyakim (1995).

Examples of questions: “In the last few months, I have seriously thought about looking for a

new job” and “Presently, I am actively searching for another job”. The Cronbach’s alpha of this construct was 0.828.

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PEP

The questions that measured PEP were based on the literature of Kim et al. (2010) and

Riordan Riordan, Gatewood and Bill (1997. One example of a question: “People in my

community think highly of my company”. The Cronbach’s alpha of this construct was 0.866.

3.5 Control variables

The control variables included age, gender (1= female, 2=male), education

(1=MAVO/VMBO, 2=HAVO, 3=VWO, 4=HBO Bachelor, 5=WO Bachelor, 6=WO

Master/doctorate), years at the organization, years in current position, full-time basis

(1=full-time, 2=part-time), internal employee (1=internal, 2=external), permanent position

(1=permanent position, 2=temporary position), management function (1=yes, 2=no).

4. Results

4.1 Missing value analysis

As mentioned before, there were 501 reactions on the survey. A total of 288 respondents

completed the whole survey. The remaining 213 respondents did not complete the whole

survey and seemed to log in and to look at the questions but never filled in answers. For this

study the 288 respondents who did complete the survey are used in the results. For these 288

respondents a missing value analysis was used to detect any dropout patterns in the questions.

As seen in Appendix C, there was no particular question where respondents stopped

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25 these dropouts are spread throughout the whole survey. For this reason, all questions could be

used for the analysis.

4.2 Reliability testing

In order to test if the questions actually measured what it should supposed to measure, a

Cronbach’s alpha per construct was carried out. A Cronbach’s alpha measures the validity of a construct. Construct Validity is the degree to which an instrument measures the construct it

is intended to measure (Cronbach & Meehl, 1955). It is important that a construct is free from

any cultural differences between respondents and that persons with different characteristics or

knowledge can interpreted the questions the same. A Cronbach’s alpha helps to detect these validity outcomes per construct (see Appendix D). For Perceived CSR the Cronbach’s alpha

was 0.837, which means that the questions show a high internal consistency; the items are

closely related as a group. A reliability coefficient of 0.70 or higher is seen as acceptable in

most scientific research situations. To measure the Cronbach’s alpha for Organizational

Identification the last question of Bergami and Bagozzi (2000) had to be recoded since it was

a 7-point scale question and not a 5-point scale question like the rest. After recoding question

7 of Organizational Identification the Cronbach’s alpha for this construct was 0.873. The

Cronbach’s alpha for Turnover Intentions were 0.828 and for PEP 0.866. All constructs showed a high reliability coefficient. In appendix D, a summary of the findings of the

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4.3 Correlation analysis

In order to compute a correlation analysis for all variables the mean of all variables were

calculated using SPSS. Table 1 presents the correlation table of this study. Table 2 presents

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1 2 3 4 5 6 7 8 9 10 11 12 13 1. CSR Pearson Correlation 2. PEP Pearson Correlation ,409 ** 3. TI Pearson Correlation -,327 ** -,278** 4. OI Pearson Correlation ,437 ** ,366** -,453** 5. AGE Pearson Correlation -0,015 0,047 -,180 ** -0,003 6. GENDER Pearson Correlation -0,1 -0,004 0,084 -,147 * ,154* 7. EDUC Pearson Correlation -0,061 -,253 ** ,214** -,130* -,310** -0,008 8. YEAR_ORG Pearson Correlation -0,013 ,128 * -,266** 0,102 ,712** ,192** -,401** 9. YEAR_POS Pearson Correlation -,149 * -0,068 0,083 -,204** ,408** 0,066 -,214** ,364** 10. FULLTIME Pearson Correlation -0,074 -,123 * -0,016 -0,101 -0,025 -,383** 0,043 -0,016 0,1 11. INTERNAL Pearson Correlation 0,021 0,007 0,082 -0,059 -,219 ** -0,086 0,09 -,208** -,153* 0,094 12. PERMANENT Pearson Correlation 0,084 0,049 0,029 -0,026 -,369 ** -,144* ,161** -,324** -,214** 0,029 ,565** 13. MANAG Pearson Correlation -0,065 0,021 0,01 -,122 * -0,026 -0,04 -,183** 0,003 0,092 ,118* 0,067 0,102 n = 288. * p < 0.05, ** p < 0.01.

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Table 2: Mean and St. deviation Descriptive Statistics Mean Std. Deviation N CSR 3,7544 0,51296 285 PEP 2,6607 0,63399 281 TI 2,2567 0,91623 287 OI 3,2991 0,69169 286 AGE 45 10,30642 226 GENDER 1,7014 0,45845 288 EDUC 4,0732 1,54588 287 YEAR_POS 15,9803 11,49724 265 YEAR_FUNC 5,5176 5,90793 201 FULLTIME 1,2308 0,42206 286 INTERNAL 1,0523 0,22295 287 PERMANENT 1,0799 0,27155 288 MANAG 1,8258 0,37996 287

Looking at the table 1, CSR and OI shows that p < 0.05 (0.000) which indicates that these

variables are correlated with each other. For CSR and TI the table shows that p < 0.05 (0.000)

which indicates that these variables are also correlated with each other. They are negatively

correlated with each other since the Pearson correlation shows a negative correlation value.

In the correlation matrix PEP seems to have individual positive correlation with CSR

(p=0,000) and OI (p=0,000). However these effects says nothing about the kind of

relationship that PEP has on CSR and OI. Moreover, PEP seems to have an individual

positive correlation with CSR (p=0,000) and an individual negative correlation with TI

(p=0,000).

4.4 Control variables

There are some control variables which seem to have a correlation with the variables. It seems

that education has a negative correlation with PEP (p=0,000), a positive correlation with TI

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29 employee works in the organization has a positive correlation with PEP (p=0,040) and a

negative correlation with TI (p=0,000). In contrary, the amount of years an employee works

in current position seem to have a negative correlation with perceived CSR (p=0,035) and a

negative correlation with OI (p=0,004). Furthermore employees who work fulltime for the

organization has a negative correlation with PEP (p=0,040) and a management position seem

to correlate negatively with the employees’ OI (p=0,039).

Table 3: Hierarchical regression testing the moderating effect of PEP

Organizational Identification Turnover Intentions

β β β β

Step 1: Control variables

Age -0,455 -0,432 -0,263 -0,251 Gender (female=1) -0,530** -0,472** 0,418* 0,476* Education -0,328 -0,300 0,036 -0,045 Years in organization 0,538* 0,540* -0,444 -0,425 Years in function -0,221 -0,370 0,015 -0,047 Fulltime or Parttime 0,003 -0,183 0,197 -0,056 Management function -0,381* -0,372* 0,098 0,096

Step 2: Perceived CSR Activities 0,512** 0,660 -0,239 -0,011

Step 3: Perceived External Prestige 0,410 0,457

ΔR² 0,158* 0,010 0,034 0,013

ΔF 9,050* 0,637 1,46 0,485

R² 0,756 0,806 0,671 0,684

Adjusted R² 0,600 0,628 0,46 0,394

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30

4.5 Regression analysis and testing hypotheses

In order to understand the relationships between the different variables and to actually prove

these relationships a regression analysis was carried out. A regression analysis looks, on the

basis of the correlation of the independent variable and the dependent variable , for a

(predictive) link and is be used to test the hypotheses.In table 3 the results of the analyses are

demonstrated. The control variables are taken into account in the analyses, the results and the

effects of these control variables are also demonstrated in table 3.

H1: Employee perceptions of CSR Activities is positively related to OI.

In this case the dependent variable is OI and the independent variable is CSR. The regression

analysis tests if CSR (independent) has a relationship with OI (dependent). Looking at the

results in table 3 the regression analysis showed a significant effect of CSR on OI: β=0.512, p<0.01. Therefore hypotheses 1 is supported.

H2: Employee perceptions of CS Activities is negatively related to TI.

The dependent variable is TI and the independent variable is CSR. The regression analysis

tests if CSR (independent) has a relationship with TI (dependent). Looking at the results in

table 3 the regression analysis did not showed a significant (negative) effect of CSR on TI:

β= --0,239, p>0.05. However, when testing the direct relationship of CSR on TI, without taken the control variables into account, there is a significant relationship (β= -0,327 t=-5,808,

p<0.001, R²=0, 107, F= 33,73, p<0,001). The results of this analysis are demonstrated in table

4. However, since the analysis take the control variables into account, hypotheses 2 is not

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31

Table 4: the direct effect of CSR on TI

Model Summary

Model R R² Adjusted R² Std. Error of the Estimate

1 ,327a ,107 ,104 ,94554926

a. Predictors: (Constant), Zscore(Gem_CSR) ANOVAa

Model Sum of Squares df Mean² F Sig.

1 Regression 30,158 1 30,158 33,731 ,000b

Residual 252,126 282 ,894

Total 282,284 283

a. Dependent Variable: Zscore(Gem_TI) b. Predictors: (Constant), Zscore(Gem_CSR)

Coefficientsa

Model

Unstandardized Coefficients Standardized Coefficients

t Sig.

B Std. Error β

1 (Constant) -,005 ,056 -,097 ,923

Zscore(Gem_

CSR) -,326 ,056 -,327 -5,808 ,000

a. Dependent Variable: Zscore(Gem_TI)

H3: PEP moderates the relationship between PCSRA and OI, such that the relationship between PCSRA and OI

is stronger when PEP is high.

The dependent variable is OI and the independent variable is CSR. In this case PEP is the

moderator which makes the regression analysis different. CSR and PEP are multiplied with

each other in the model to see if PEP strengthen the relationship with CSR and OI. Looking at

the results in table 3 the regression analysis shows that there is not a significant moderating

effect of PEP in the relationship between CSR and OI: β= 0.410, p> 0.001, ΔR²=0.10,

ΔF= 0.637, p<0,001. PEP does not significantly strengthen the relationship between CSR and OI. Therefore hypotheses 3 is not supported.

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32 H4: PEP moderates the relationship between PCSRA and TI, such that the relationship between PCSRA and TI

is stronger when PEP is high.

The dependent variable is TI, the independent variable is CSR and PEP is the moderator. CSR

and PEP are multiplied with each other in the model to see if PEP strengthen the relationship

with CSR and TI. Looking at the results in table 3 the regression analysis shows that there is

not a significant moderating effect of PEP on the relationship between CSR and TI: β= 0.457,

p> 0.001, ΔR²=0,013, ΔF= 0,485, p<0,001. PEP does not significantly strengthen the

relationship between CSR and TI. Therefore hypotheses 4 is not supported.

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33

5. Discussion

This research was carried out to investigate the internal effects of CSR activities on employee

behavior within an organization. The literature state that CSR activities are beneficial for

employees (and managers) since it can create favorable employee behavior, such as

commitment (Brammer et al., 2007; Shen Zhu, 2011; Singhapakdi et al., 2015) and job

satisfaction (Valentine & Fleischmann, 2008). This in turn can improve organizational

effectiveness and, in the end, organizational performance. As mentioned in the literature

review, Perceived CSR Activities can be used as a HR practice since it can predict, and thus

influence, employee behavior. In this study the direct effects of Perceived CSR Activities on

Organizational Identification and Turnover Intentions of employees were measured.

Moreover, the moderating effect of PEP was taken into this conceptual model to investigate if

this factor would reinforce these direct relationships.

Partial support for the hypothesized relationships were found. The direct effect of Perceived

CSR Activities and Organizational Identification was indeed supported by the proposed

results. However, the direct effect of Perceived CSR Activities and Turnover Intentions were

not supported by the results of the current study. Moreover, the moderating effect of PEP did

not show a significant effect on both the relationship between Perceived CSR Activities and

Organizational Identification and Perceived CSR Activities and Turnover Intentions. In the

following paragraphs a more detailed analysis of result implications follows, along with a

discussion of study limitations and proposed future directions.

5.1 Theoretical Implications

As mentioned in the literature review, people like to compare themselves with organizations

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34 go as far that employees even believe that any good actions of an organization reflects on

their self-concept (Lichtenstein et al., 2004). In the current study the direct effect of the

perceptions of employees on the CSR activities of the organization on their Organizational

Identification were significant. The findings are in line with results of comparable studies. It

implicates that the employees can identify themselves better with the organization if it will

pursue socially responsible activities. Understanding the aspects of Organizational

Identification is important to organizations. In a study of Ashford, Harrison and Corley (2008,

p.334) they state that “the concept of identity helps capture the essence of who people are and thus, why they do what they do – it is at the core of why people join organizations.

Identification matters because it is the process by which people come to define themselves,

communicate that definition to others, and use that definition to navigate their lives,

work-wise or other.” The current study also implicates that employees find CSR Activities of the organization important as they will change their employee behavior for the better (higher

Organizational Identification) if they perceive that the organization is more involved in

socially responsible activities. In a study of Rodrigo and Arenas (2008) they found out that

the reason why employees find this subject important is because of the fact that they have the

feeling that their contribution to society has a smaller impact compared with the social

contribution that the organization can make, and so they wish to make a social contribution is

satisfied through the organization. This makes that the Organizational Identification of the

employee is proportionate with the organization of being socially responsible. Organizations

can therefore use their CSR activities to actively influence positive employee behavior. It is

also underlines the statement that CSR is not only important for external parties, such as

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35 The relationship between Perceived CSR Activities and Turnover Intentions of employees

was not significantly supported by the current study. This could be due to the fact that,

although the survey was anonymous, the questions about Turnover Intentions were highly

personal and that employees were therefore more tend to answer these questions politically

correct. However, the formulated hypothesis in the current study was logical, since there is

support from the literature that various studies have found a relationship between CSR and

Turnover Intentions. When looking at the multiple studies regarding CSR activities of an

organization and employees’ intentions to quit there are still ambiguities in findings. In a

study of Bhattacharya, Sen and Korschun (2008) they found out that CSR negatively affects

employees’ intentions to quit. However in a study of Hollingworth and Valentine (2014) they

could not find a direct relationship between CSR activities of the firm and Turnover

Intentions of employees. In studies of Hansen, Dunford, Boss and Angermeier, (2011) they

found out that there are multiple reasons for why employees are less likely to leave the

organization when they perceive that the organization manifest itself as socially responsible.

Firstly, the way an organization is involved in CSR activities make employees aware of

ethical contributions of the organization and their values. Moreover, it gives the employee a

feeling that the organization is compassioned, it displays the feeling that it can be trusted and

that they understand their societal responsibilities. Secondly, CSR activities give employees

the feeling of pride and that being part of this, makes them less intended to quit their jobs.

This feature has close links to their Organizational Identification. Even though there was not

enough evidence to support the proposed hypothesis, the results of the current study did go

towards the expected direction; a (weak) negative relationship between Perceived CSR

Activities and Turnover Intentions. Moreover, when looking at the regression analysis of the

current study, gender seem to play a significant role as control variable for explaining the

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36 organization can have positive effects on the willingness of employees to stick to their

organization even though the results could not find a significant relationship.

As mentioned earlier, the results of the current study could not find significant results for the

moderating effect of PEP on the relationship between Perceived CSR Activities and

Organizational Identity and between Perceived CSR Activities and Turnover Intentions.

Looking at the literature, there are multiple reasons for which why PEP did not show a

significant effect on both of the relationships. Kim et al. (2010) propose that PEP has a

reinforced effect on countries where collective cultures are more dominant. In that case,

people are more motivated to conform to social norms in which they believe that outsiders

think it is important. Referring this information back to where the current study is hold, the

Dutch culture has a more individualistic approach like most of the rest of West Europe. This

can be an explanation for why PEP has less impact on the constructed relationships stated in

the current study. Moreover, multiple studies have found significant direct effects of PEP on

Organizational Identification (Dutton et al., 1994, Fuller, Marler, Hester, Frey and Relyea,

2006), however the moderating effect of PEP on the relationship between CSR and

Organizational Identification is not that well embedded in the existing theory.

Another explanation for why did not play a significant role in this study could be that

employees believe that the organization´s reputation suffer from an inherent negative bias in

external stakeholders’ perceptions because of their persistent failure to meet stakeholders’

environmental expectations (Frynas, 2005). The organization in which the current study was

conducted struggles with a bad reputation since insurance companies introduced investment

insurances. These insurances offered high returns but appeared to be complex and relatively

expensive products. This occurrence caused a severe impact on the industry and its image; the

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37 are becoming insensitive of what outsiders think of the organization since the company

already suffers from a bad reputation. These two explanations could be the reason for why

there was no significant outcome of the moderating effect of PEP in the current study.

5.2 Practical implications

The outcomes of the current study can be used in various organizations. What seems to be the

common thread for organizations is that participating actively in CSR activities is not only

beneficial for external parties but also have positive effects on the internal organization. The

results in de current study suggest that the Perceived CSR Activities of the organization can

create favorable employee behavior, in this case Organizational Identification. Employees

who can identify with the organization, are more attached towards the organization which in

turn, leads to better overall performance of the organization. Although the current study could

not find significant evidence that Perceived CSR Activities contributes towards less intentions

to quit, the results did went in the right direction. It should be noted that there are several

reason for why people leave an organization. However, for an organization, being perceived

as socially responsible, seem to have a positive effects on employees since they it creates a

feeling of being proud to be part of it. Again, these features have strong relations with the

Organizational Identification of employees. Managers can use the CSR activities of the

organization as HRM practices since it can influence positive employee behavior. It is

therefore important to communicate these CSR activities correctly so employees’ perceptions

on these matters cannot be diffuse. What is also an important outcome of the current study

and can be useful for managers is that although the organization itself might find it very

important what external parties think of the organization (image and reputation), not all

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38 are working for. It seems that the amount of PEP an employee experience is influenced by

geographical factors and the kind of industry an employee is working in.

5.3 Strengths and limitations

The research design of this study has several advantages and disadvantages. A survey allows

the researcher to collect a larger amount of data than when it uses interviews. Making

conclusions about the subject and telling something about the population is therefore more

reliable. Since the questions are standardized it also allows the researcher to compare

respondents with each other. This factor is, on the other hand, also a limitation. Since the

questions are all standardized, it offers no elaborate answers from respondents which can be

useful in the research. Moreover, it is possible that respondents misinterpreted questions

which result in incomparable data. Furthermore, multiple subjects of the current study are

highly sensitive subjects, for example the questions about Turnover Intentions. It is possible

that the respondents answered politically correct even though the answers were anonymous.

Therefore the answers are likely to have a response bias. Another factor what should be taken

into consideration is the fact that this research was carried out in one organization. The

sample that was used can therefore be representable for the population within the

organization, however, a question mark rises if the sample size is representable for other

organization with different motives and cultures. Still, looking at the overall research design,

the sample size and the strategy for selecting the sample size (simple random sampling) make

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39

5.4 Future research

What could be interesting to investigating further is the role of PEP in the relationship

between CSR Activities and employee behavior in cultures where the collective groups are

more important. It would be interesting to see if PEP influences the relationship more. It can

then be used to make conclusions about the current study since the differences in outcomes

can then be related by cultural differences. What could help to understand the effects of CSR

Activities on employee behavior further is different types of research. For example, it would

be interesting to use of experiments in groups. This has a more qualitative approach and can

be helpful to investigate employee behavior in groups (group pressure).

What was not included in the current study is the relationship of Organizational Identification

on Turnover Intentions. Looking at the theory and what the current study suggests is studty

the mediating role of Organizational Identification in the relationship between Perceived CSR

Activities and Turnover Intentions further. Since the reasons why employees leave an

organization is because of the fact if they feel attached to the organization, this could be an

interesting perspective to investigate further.

5.5 Acknowledgements

I would like to thank Dr. Corine Boon for all her support and useful feedback during the

process of my thesis. Thank you Samira Kassttar, my beloved friend and colleague, for

standing next to me. Every step on the way. Moreover, I would like to take this opportunity to

thank my family for all the mental support during my 2,5 years of college. Especially Daan.

I know it was not always easy for you to live with a girlfriend who works and studies at the

same time. Thank you for all your patience and I can´t wait to start our new future when our

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40

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