The impact of a corporate ethical transgression on emotional consumer response.
A distinction between related and unrelated ethical transgressions and the initial CSR reputation.
Name: Jessie Helmond Student number: 10642005 Date of submission: 17-02-2015 Version: Final Master Thesis Track: Marketing
First supervisor: M. Vock Second supervisor: F. Slisser
Statement of originality
This document is written by Student Jessie Helmond 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
Present research aimed to provide insights in differences in emotional consumer response towards corporate ethical transgressions. It is examined whether differences in the initial CSR reputation of the company (i.e. positive, negative or no CSR reputation) and the type of ethical transgression (i.e. related, unrelated environmental pollution, unrelated animal abuse) impact emotional consumer response towards corporate ethical transgressions. Results indicate that overall, companies with an initial negative CSR reputation are evaluated more negatively than companies with an initial positive CSR reputation. In addition, consumers exhibited the highest negative emotions towards related ethical transgressions, committed by companies with a positive CSR reputation; this effect is mediated by hypocrisy. For companies with a negative CSR reputation, unrelated ethical transgressions evoked a more negative emotional response. However, this research found no significant effects for the mediating role of expectancy in the negative CSR condition.
Keywords: CSR reputation, corporate ethical transgression, emotional consumer response, hypocrisy, expectancy.
Table of content
1. Introduction ... 6
Theoretical and Managerial contribution ... 9
2. Literature review and hypotheses development ... 11
2.1 Defining corporate ethical transgressions ... 13
2.2 The influence of corporate ethical transgressions on consumer response ... 15
2.3 Initial CSR reputation ... 18
2.4 The type of corporate ethical transgression ... 25
2.5 Conceptual model ... 31 3. Method ... 32 3.1 Research design ... 32 3.2 Measures ... 32 3.2.1 Dependent variables ... 32 3.2.2 Independent variables ... 33 3.2.3 Others ... 34 3.3 Pre-test ... 35
3.3.1 Corporate ethical transgressions ... 35
3.3.2 CSR reputation ... 37
3.4 Data collection and participants ... 38
4. Results ... 40
4.1 Reliability analysis ... 40
4.2 Correlation ... 40
4.3 Hypothesis testing ... 46
4.4 Additional analyses ... 56
5. Conclusion and discussion ... 59
5.1 Conclusion and discussion of the results ... 59
5.2 Implications ... 65
5.2.1 Theoretical implications ... 65
5.2.2 Managerial implications ... 66
5.3 Limitations and future research ... 69
Appendix ... 76
A. Pre-test CSR reputation English ... 76
B. Manipulations CSR reputation Dutch ... 77
C. Pre-test 1 transgressions English ... 79
D. Pre-test 2 transgressions Dutch ... 82
E. Final Questionnaire Dutch version ... 84
F. Results of the pre-tests ... 103
G. Results of the manipulation check in final questionnaire ... 104
H. Results of the hypotheses testing ... 105
I. Means for the additional analysis attitude and boycotting intentions per CSR condition ... 111
J. Results of the additional analyses for dependent variables Attitude and Boycotting intentions ... 111
1. Introduction
Recently, companies are under increasing pressure with regard to operate businesses in a social responsive manner (Kim, 2014). Nowadays, consumers are more aware of corporate ethical transgressions through mass-media coverage, which reveals
irresponsible business activities (Wagner, Lutz & Weitz, 2009). This trend has ensured that companies communicate their corporate social responsibility (CSR) activities increasingly (Vanhamme, Swaen, Berens & Janssen, 2014). While companies are developing and communicating their CSR activities more, messages disclosing unethical business behaviour are reported. Fashion retailer H&M is for example mainly focussing their CSR activities on protecting human rights. The company claims: “Our business touches the lives of millions of people around the world. We believe every single one of those interactions should be guided by mutual respect, integrity, transparency and honesty. When it comes to making ethical
business decisions, we are committed to respecting human rights, taking a clear stand against any form of corruption and embracing diversity and inclusion” (H&M, 2015).
Contrary to this message, on December 15th in 2012, The Guardian published an
article, which reported that H&M bought cotton in Uzbekistan. Here, children from the age of nine are forced to pick cotton and as a result, H&M was accused of child labour (Doward, 2012). Overall, the firm claims to act responsible with regard to human rights, while it previously engaged in the opposite behaviour. Accordingly, the corporate ethical transgression is related to the firm’s desired CSR reputation content wise, namely; human right issues. Latter example illustrates the dichotomy between stated CSR business practices and actual CSR business behaviour (Wagner et al., 2009).
put emphasis on one CSR topic in particular, which is aimed to build their CSR reputation. For example, for consumers H&M is especially known for their CSR focus on protecting human rights. Besides this, H&M is also concerned with other CSR activities such as global warming and animal welfare, however, consumers might be less aware of these activities. Hence, if H&M commits a transgression with regard to global warming, the corporate ethical transgression is unrelated to the CSR reputation of the company in the domain of human rights. Overall, companies can both commit related ethical transgressions as well as unrelated ethical transgressions. The aforementioned leads to the following question: what would consumers evaluate as worse; H&M in the news because of an ethical transgression concerning child labour (i.e. CSR reputation), or because of an ethical transgression with regard to global warming (unrelated to their CSR reputation)? In particular, the type of corporate ethical transgression, in terms of whether it is related or unrelated to the CSR reputation, may moderate the relationship between corporate ethical
transgressions and emotional consumer response. The increasing sensitivity of consumers and the negative CSR messages appearing in the media, urge for more insights in the effect of CSR messages concerning corporate ethical transgressions on emotional consumer response.
Besides the type of corporate ethical transgressions, the valence of the initial CSR reputation of the firm (i.e. positive, negative or no CSR reputation) may idem influence the relationship between corporate ethical transgressions and consumers’ emotional response. Many companies are focussing on CSR activities and numerous succeeded in establishing a positive CSR reputation. However, some companies possess a negative CSR reputation due to transgressions occurred earlier or did not establish a CSR reputation at all. Emotional consumer response will possibly differ
between corporate ethical transgressions committed by companies with an initial positive CSR reputation compared to companies with an initial negative CSR
reputation or no CSR reputation. Consumers’ negative emotional response towards a corporate ethical transgression might for instance be stronger for companies with an initial positive CSR reputation, an initial negative CSR reputation or no CSR
reputation at all. Because of the increasingly occurring corporate ethical
transgressions (Wagner et al., 2009), it is of importance to investigate how both companies with an initial positive and negative CSR reputation impact emotional consumer response after committing a corporate ethical transgression. Since emotions are a key driver of actual consumer behaviour, present research focuses on this initial phase.
Additionally, it is assumed that the type of transgression and the initial CSR reputation of a company interact. The degree in which a related or an unrelated transgression is more or less of impact on emotional consumer response, might depend on the company’s initial CSR reputation. This can be illustrated as follows; is it worse for a company with a positive CSR reputation concerning human rights, if it turns out that their labour conditions are not as integer as stated (related to CSR reputation)? Or, if it turns out that the company has a bad influence on the environment (unrelated to CSR reputation)? Thereby, how does this relate to companies with an initial negative CSR reputation or no CSR reputation at all?
Present study attempts to gain insights in when and why corporate ethical transgressions are most or least harmful for a company. Specifically, the present study will focus on the following research question:
“What is the influence of corporate ethical transgressions on consumers’ negative emotional response and do the initial CSR reputation and the type of transgression (related/unrelated to the reputation) moderate this relationship?”
The aim of this study is to enhance knowledge on (1) different types of corporate ethical transgressions and consumers’ emotional response towards them, and (2) the influence of the company’s prior CSR reputation on emotional consumer responses towards corporate ethical transgressions. In order to accomplish this, different scenarios will be applied in a questionnaire.
Theoretical and Managerial contribution
This research will contribute to scientific research in several ways. First, this research is relevant considering that little is known about consumer reactions towards
corporate ethical transgressions. The studies of Vanhamme et al. (2014), Grappi, Romani and Bagozzi (2013), Effron and Monin (2010), Wagner et al. (2009), and Yoon, Gürhan-Canli and Schwarz (2006), raised attention with regard to corporate ethical transgressions and CSR reputation. Some studies only focussed on companies with a negative CSR reputation (Yoon et al., 2006) or a positive CSR reputation (Effron & Monin, 2010), while others only focussed on related transgressions (Wagner et al., 2009) or unrelated transgressions (Vanhamme et al., 2014). Altogether, none of these studies investigated the combination of both types of corporate ethical transgressions (related and unrelated) and the initial CSR reputation of the company (i.e. positive, negative or no CSR reputation). This lack of attention is significant, because corporate ethical transgressions can have a huge impact on the firm’s reputation and consequently, its profit (Vanhamme et al., 2014). Present study
is the first that will combine these effects in order to investigate the influence of corporate ethical transgressions on emotional consumer response.
Second, present research will shed new light on the topic of corporate ethical transgressions by explaining the effects of a company’s initial CSR reputation and the type of transgression on consumers’ emotional response by combining the theory of expectancy and the principle of ‘hypocrisy’. In their research, Effron and Monin (2010) have clarified differences in observers’ reactions to related and unrelated transgressions, for actors with an initial positive reputation by means of the ‘hypocrisy principle’. Present research will further elaborate on this principle by focussing on a company – consumer interaction. Additionally, by integrating the expectancy theory in order to explain emotional consumer response to companies with an initial negative CSR reputation.
This study will further contribute to managerial knowledge by providing insight in when which types of ethical transgressions are most harmful. Hence, managers will be able to minimize reputational damage and consequently, the impact on their profit. Companies are increasingly focussing on multiple CSR activities and the growing complexity of supply chains make it hard for managers to monitor production processes (Wagner et al., 2009). The insights of this study could help managers to find ways to deal with corporate ethical transgressions in terms of decisions about the focus of their CSR reputation. Furthermore, insights in the
influence of the initial CSR reputation will make managers more alert of the impact of their transgression on the consumer’s emotional response. Emotions are an important indicator of actual behaviour (Yoon et al., 2006). Since negative emotions can impact consumers’ buying behaviour and word of mouth, it is important for managers to gain
knowledge with regard to how emotions are influenced by ethical transgressions and the prior CSR reputation of a company.
Possibly, companies with an initial positive or negative CSR reputation in particular, need to avoid ethical transgressions within a certain domain, because hereby more harm is done to consumers, which will negatively influence reputation and sales.
In the first section, relevant literature with regard to corporate ethical
transgressions and consumer responses to these transgressions are discussed. Next, it is discussed how consumers respond to positive and negative CSR reputations and how these prior reputations might influence consumers’ responses to transgressions. Lastly, the issues with regard to related versus unrelated ethical transgressions are elaborated. After the literature review follows the research methods, results,
discussion and conclusion and final, the theoretical and managerial implications and future research directions are reported.
2. Literature review and hypotheses development
Much prior research investigated when and why CSR activities have a positive effect on consumers (e.g. Brown & Dansin, 1997; Sen & Bhattacharya, 2001; Du,
Bhattacharya and Sen, 2007; Creyer & Ross, 1997). However, less attention has been paid to consumer reactions towards corporate ethical transgressions.
To my knowledge only Yoon et al. (2006) studied the effect of CSR activities on companies with bad reputations so far. However, their study focussed on how (positive) CSR activities influence companies with a negative CSR reputation but does not examine negative CSR activities (corporate ethical transgressions) and how this affects companies with a positive versus negative CSR reputation.
Wagner et al., (2009) did examine the effect of negative CSR messages. They examined the influence of corporate hypocrisy as a result of inconsistent CSR
messages (i.e. positive versus negative CSR messages in the same domain, the environment). In other words, they studied related ethical transgressions, but they did not consider the effect of unrelated ethical transgressions.
Effron and Monin (2010) did examine the role of both related and unrelated ethical transgressions. However, their research only focused on actors with an initial positive reputation, but did not investigate actors with a negative reputation.
Moreover, their study is focused on a personal level instead of a business context. Grappi et al. (2013) studied how ethical transgressions affect negative consumer emotions by means of word of mouth and protest behaviour. In other words, they investigated consumer response to corporate irresponsible behaviour in general. However, they did not take the prior CSR reputation of the company into account.
Lastly, Vanhamme et al. (2014) examined the effect of social irresponsibility and put emphasis on CSR communication campaigns, specifically on the source in which the CSR communication appears. Their study is focussed on the influence of the prior CSR reputation and unrelated transgressions, but they did not consider the influence of related versus unrelated transgressions.
Overall, none of these previous studies examined the influence of both related and unrelated ethical transgressions in combination with the initial CSR reputation of a company on emotional consumer response. Present study attempts to contribute to the literature by combining these elements in one research framework.
2.1 Defining corporate ethical transgressions
As mentioned previously, nowadays companies are increasingly focussing on multiple CSR activities and the complexity of supply chains is growing. Therefore, monitoring production processes and preventing transgressions has become harder (Wagner et al., 2009). As a result, the increase in globalizing firms is causing a rise in reported unethical corporate behaviour (Wagner et al., 2009). For example,
companies might engage in unethical behaviour such as child labour or environmental pollution (Vanhamme et al., 2014). The growth of media attention regarding
corporate ethical transgressions makes consumers more aware of these transgressions (Wagner et al, 2009). For this reason, the importance to investigate how consumers respond if they are aware of a company’s both positive and negative CSR behaviour is growing.
Present study is focused on corporate ethical transgressions, however; a clear definition of this expression is not yet uniform in the current literature. The following studies do provide some understanding with regard to its meaning. The researchers Lange and Washburn (2012, p.300) describe irresponsible corporate behaviour as:
“simply the opposite side of the responsibility coin—that is, the failure to act responsibly”. Moreover, Grappi et al. (2013) make a distinction between ethical
transgressions and social transgressions. An ethical transgression entails: “Harm done
to other people, such as workers or consumers, that arises because the corporate wrongdoer is seen to violate the freedom or human dignity of these individuals”
(Grappi et al., 2013, p.1815). For instance, a company that harms consumers or employees. A social transgression occurs when “A corporation harms a community in
some way, violating norms or expectations of respect of, and loyalty to the
child labour in the cotton plantations in Uzbekistan, as mentioned previously in the H&M example. Lastly, Effron and Monin (2010) maintain a simplistic description and expound a transgression as a moral violation.
Overall, present study defines a corporate ethical transgression as: a moral violation committed by a company, whereby harm is done to others (e.g. people, animals or the environment). This can include the violation of norms, expectations of respect and loyalty to the community, employees and nature. The term moral displays the actions and behaviours in a social context that are seen as correct and desirable. Examples of corporate ethical transgressions are the abuse of child labour, pollution of the environment, or animal abuse.
Moreover, as stated previously, there are different types of corporate ethical transgressions, which can occur in different domains. The transgression can for instance be related to the natural environment or to working conditions of employees and consumers may evaluate transgressions in one domain worse than transgressions in another domain. Correspondingly, Wagner, Bicen and Hall (2008) identified a knowledge gap concerning that little is known about consumers’ perceptions of corporate social irresponsibility in the retail domain. They state that there is no theoretical conceptualization and valid measurement scale that captures this. Their research examines which business activities lead to consumer perceptions of
corporate irresponsibility. Wagner et al. (2008) identified 14 different corporate social irresponsibility factors of which consumers ranked employee discrimination, local working conditions and societal rules the highest. High rankings indicate consumer perceptions of very irresponsible behaviour. Three patterns are found during the evaluation of the 14 domains. Firstly, the corporate actions that are ranked highest and are evaluated as most irresponsible all relate to illegal corporate actions. Secondly,
after illegal corporate actions follow corporate actions related to common ethical concerns as shown by mass media (e.g. the natural environment and employee wages). Lastly, the domains that are ranked lowest partially relate to consumers’ own responsibilities and are evaluated least irresponsible. In short, consumers evaluated corporate actions concerning illegal activities as most irresponsible, followed by common ethical concerns. Actions that partly relate to the consumer’s own
responsibilities are evaluated as less irresponsible. Additionally, Wagner et al. (2008) found a gender difference, which demonstrated that female concerns regarding social responsibility of retailers were higher than male concerns throughout all analyses. They further revealed that the older respondents get, the more they tend to regard certain corporate behaviours as socially irresponsible. The following section will further elaborate on consumer response to corporate ethical transgressions.
2.2 The influence of corporate ethical transgressions on consumer response
Literature with regard to the effect of corporate ethical transgressions on consumer response is rising (e.g. Vanhamme, et al., 2014; Grappi et al., 2013; Wagner et al., 2009; Yoon, et al., 2006). In particular, these studies concern consumer response in terms of consumer’s evaluations (Yoon et al., 2006), attitudes (Wagner et al., 2009; Vanhamme et al., 2014), and emotions and virtues (Grappi et al., 2013). Additionally, Effron and Monin (2010) investigated the effect of transgressions on condemnation, based on individuals instead of a business context.
The abovementioned studies showed that corporate ethical transgressions negatively affect consumers’ evaluation, emotions, perceptions and attitude towards the firm. These negative consumer reactions can harm companies if consumers subsequently actively engage in negative word of mouth, complaining or other forms
of protest behaviour (Grappi et al., 2013).
Wagner et al. (2009) state that exposure to CSR information determines CSR beliefs and subsequently, general attitude towards the company. Shweder (2002) likewise, investigated transgressions and focused on beliefs. Although the research is on an individual level, the results provide some interesting insights. He proposes that people treat their moral beliefs as scientific facts: readily observable and objective facts about the world. Mullen and Nadler (2008) state that due to this objective perception, people are motivated to defend their moral beliefs and feel justified to do so, therefore, consumer reactions to transgressions are mostly expressed by means of negative outrage. This has a negative and punishing effect on the transgressor.
Since emotions are a key driver of intentions and subsequently of word of mouth and actual consumer behaviour (Grappi et al., 2013), it is significant to gain further knowledge about the effects of corporate ethical transgressions specifically on consumer’s negative emotional response. To my knowledge, the research of Grappi et al. (2013) is one of a kind in examining the influence of corporate ethical
transgressions on consumer’s emotions and subsequently consumer behaviour. In particular, the research examines the influence of two distinct types of transgressions. Namely: an ethical transgression, which concerns child labour and a social
transgression, which is focused on a community crisis. The researchers specifically investigate three classes of consumer response: negative emotions, negative word of mouth and protest behaviour. Word-of-mouth, can be described as the expression of distaste or disapproval concerning corporate ethical transgressions and protest behaviours are actions against the concerning corporation with the aim to stop them from continuation of the harmful actions. Grappi et al. (2013) based their study on psychological research, which states that ethical transgressions evoke negative
emotional reactions in people. The emotions contempt, anger and disgust were found to emerge in response to ethical and social harm done by corporations (Rozin,
Lowery, Imada & Haidt, 1999) and are used to measure negative consumer response. Specifically, the researchers examined the mediating role of three moral emotions: contempt anger and disgust and the moderating role of other-regarding virtues. Moreover, other-regarded virtues can be described as: “the propensity of persons to act rightly in situations calling for moral responses” (Grappi et al., 2013, p.1816). It is proposed that virtues translate felt emotional arousal into attempt to punish the
transgressor or make them stop from continuing their harmful behaviour. Their findings show that the impact of felt emotions is regulated by the virtues consumers hold.
Latter research has shed more light on consumers’ emotional response to corporate ethical transgressions. However, since companies focus on multiple CSR activities, they can act very well on some domains and very poorly on others.
Additionally, nowadays consumers are not only exposed to negative information but also to conflicting information. On one hand, companies promise emphasizing social responsibility while, on the other hand, mass media reveals irresponsible corporate behaviour (Wagner, 2008). In order to address how this conflicting information and accumulation of negative reports influences consumer behaviour, current research will focus on the first step of attitude formation, namely, emotional consumer response.
Emotions are previously defined by Bagozzi et al. (1999) as: ‘A mental state of readiness that arises from cognitive appraisals of events or thoughts; has a
phenomenological tone; is accompanied by physiological processes; is often expressed physically (e.g. in gestures, posture, facial features); and may result in
specific actions to affirm or cope with the emotion, depending on its nature and meaning for the person having it.’ (Bagozzi et al., 1999, p. 184). Moreover, emotions can be divided into positive or negative emotions. This distinction between positive and negative emotions is important in present research since it is expected that corporate ethical transgressions will, to a greater or lesser extent, evoke a negative emotional response. Izard (1971) proposed 10 basic emotions: anger, contempt, disgust, distress, fear, guilt, interest, joy, shame and surprise. Hereof, contempt, anger and disgust are negative emotions, evoked by violation of moral standards. Dube and Menon (2000) proposed that more intense other-attributed negative emotions would have a negative impact on satisfaction.
Overall, previous research showed that corporate ethical transgressions evoke a negative consumer response. However, the extent to which consumers will
experience negative emotional arousal may vary among companies. A factor that possibly influences this is the initial CSR reputation of a company. The next section will elaborate on how the initial CSR reputation could influence emotional consumer response towards corporate ethical transgressions.
2.3 Initial CSR reputation
The extent to which consumers are negatively emotional aroused in response to corporate ethical transgressions might be affected by the initial CSR reputation of the company (i.e. positive, negative or no CSR reputation). To illustrate this: the Swedish multinational H&M was accused of the abuse of animals for the production of Angora wool clothing in 2013 (Fildes, 2013). This incident was shocking because H&M’s past commitments were focussed on establishing an environmental friendly
positive CSR reputation shifted towards a negative CSR reputation. If H&M would subsequently get involved in another transgression, the influence hereof might evoke a less negative emotional consumer response because consumers would perceive this second transgression as less surprising.
Most previous research that investigated the effect of corporate ethical
transgressions on consumer response is focussed on companies with an initial positive CSR reputation (Sen & Bhattachayra, 2001). However, limited knowledge exists concerning consumer’s emotional response to ethical transgressions specifically focussed on companies with a negative CSR reputation. Therefore, it is relevant to further investigate the effect of corporate ethical transgressions on companies with an initial negative CSR reputation in comparison with companies with an initial positive CSR reputation.
To my knowledge, only Yoon et al. (2006) investigated the influence of CSR activities on companies with a negative reputation. They found that when a company with a negative CSR reputation claims to be serving public benefits while the fit between the CSR activity and the firm is high, this would negatively impact the evaluation of the company. For instance, a tobacco company has an initial negative CSR reputation because their main business relates to smoking, which causes cancer. Thus, if a tobacco company would donate money to a cancer foundation, this would be perceived as a firm-serving benefit instead of a sincere CSR activity (Yoon et al., 2006). This negative evaluation arises due to suspicion of insincere motives of the concerning company. Based on the theory of suspicion and attribution a key-factor in this research is scepticism (Fein, Hilton & Miller, 1990). When a company engages in CSR activities with high benefit salience (firm-serving benefits), as in the latter tobacco example, consumers will evaluate the company more negatively because
fighting cancer contradicts the health consequences of the tobacco’s main business (Yoon et al., 2006). Consumers can become sceptic about the true motives of the company, which might engage in CSR activities only to improve its image. When this occurs, CSR activities of the company are ineffective and may backfire (Yoon et al., 2006). As a result, the reputation will be damaged and will possibly be worse than when the company did not engage in CSR activities at all.
In short: The research of Yoon et al. (2006) is focussed on companies with negative reputations and found that when a company with an initial negative CSR reputation supports a type of cause that is related to the CSR reputation of the firm, consumers will evaluate the company more negatively because firm-serving benefits are perceived higher. Overall, Yoon et al. (2006) investigated the effect of CSR activities of companies with a negative CSR reputation. However, the main focus of the current study concerns the effects of corporate social irresponsibility. Thus, an important question still remains unanswered: what will be the role of a company’s initial CSR reputation when consumers are informed about a corporate ethical transgression? As mentioned earlier, consumer’s emotional response to corporate ethical transgressions will possibly differ when the transgressor either has a positive, negative or no initial CSR reputation.
Researchers Vanhamme et al. (2014) do highlight the importance of the effects of corporate ethical transgressions. It is expected that when a company commits an ethical transgression, this will negatively affect the consumer’s attitude towards the company (Vanhamme et al., 2014). However, ex ante communication about CSR activities of the company might influence consumers’ attitude towards the ethical transgression. Moreover, Vanhamme et al. (2014) specifically investigated how ex ante communication about CSR activities can provoke a decrease or increase
in consumers’ attitude after accusation of irresponsible behaviour. Their research is only focused on situations in which ex ante CSR communication and allocation domains are unrelated. Companies with an initial negative CSR reputation might be able to inhibit the negative effects of accusation by ex ante communication. Namely, when a company communicates about his CSR activities, it might be that this works as a protection against accusation. The results indicate that ex ante CSR
communication will worsen consumers’ attitudes towards the company when the source of the communication is a third-party. For example, when the CSR information is communicated through the media. However, when the company controls the
communication itself, a buffering effect occurs, in other words: consumers’ negative attitude towards the company decreased. This can be explained by means of
consumer’s persuasion knowledge. Namely, because consumers don’t expect to be persuaded by third party sources, little persuasion knowledge is activated during exposure to CSR communication. Subsequent accusation strongly activates persuasion knowledge because the ex ante CSR communication now seems inappropriate and misleading. On the other hand, consumers perceive company-controlled information as a persuasion attempt and thus the subsequent accusation of irresponsible behaviour is not so surprising. Consumers do not perceive dishonesty and the evaluation of the company is based on the positive ex ante CSR
communication, which results in a buffering effect.
Besides Vanhamme et al. (2014), also Eisingerich, Rubera, Seifert and Bhardwaj (2011) underpin their research by means of the buffering theory. This theory suggests that CSR can serve as a buffer to minimize the effects of the reported unethical corporate behaviour. Their research is focused on the service industry. It investigates the relative effectiveness of CSR activities in strengthening consumers’
resistance to negative information in comparison with traditional marketing measures, including customer orientation and service quality orientation. Specifically, it is stated that when a company has an initial positive CSR reputation, this positive reputation might serve as a buffer against negative information about the unethical corporate behaviour. Consequently, the consumer’s negative response might be less strong when a company with a positive CSR reputation is accused of an ethical
transgression. Eisingerich et al. (2011) state that negative information will not diminish the consumer's general view of the company because of 2 mechanisms: goodwill and self-identification. The first points out that a positive CSR reputation functions as a buffer because CSR may signal a firm’s good intentions of greater goodwill with consumers and various stakeholders. The latter indicates that
consumers possibly hold stronger positive attitudes towards socially responsible firms that care about the community and that they easier identify themselves with these firms. The results of the study by Eisingerich et al. (2011), demonstrate that CSR shields firms from negative information about CSR practices, but not if this
information is related to firms’ core service offerings. In other words, companies with a positive CSR reputation will benefit from this reputation as long as the transgression does not concern their main CSR focus.
Overall, the study of Eisingerich et al. (2011) showed that CSR acts as a buffer for negative information (e.g. corporate ethical transgressions) only when this information is unrelated to the CSR reputation of the company. However, since the study of Eisingerich et al. (2011) is focused on the service industry, it is important to test whether these results still hold when focusing on the retail industry. Therefore, present research examines the effect of negative information in the form of corporate ethical transgressions, related or unrelated to the initial CSR reputation, however,
focused on the retail industry. Moreover, based on the expectancy theory it is suggested that a contrary result of the buffering effect will occur in response to corporate ethical transgressions, as described more elaborately below.
Contrary to the arguments of Eisingerich et al. (2011), present research suggests that consumers will not expect companies with a positive CSR reputation to be accused of an ethical transgression due to certain expectations of a company based on past commitment to act socially responsible. Moreover, a corporate ethical
transgression can violate the consumers’ expectancies in an organization-public relationship (Kim, 2014). Expectancy can be defined as “an enduring pattern of
anticipated verbal and nonverbal behaviours that are influenced by individual, relational, and contextual factors” (Burgoon, 1986; in Kim, 2014). The expectancy
theory suggests that when people’s expectancies are negatively violated, they will evaluate the violator more negatively (Afifi & Metts, 1998). Moreover, violations vary in the degree to which they are unexpected (Burgoon & Hale, 1988). When behaviours are highly unexpected, they are far from the expected range of behaviours (Afifi & Metts, 1998). Because consumers don’t expect a company with an initial positive CSR reputation to act unethical, the transgression will be perceived as highly unexpected and subsequently the negative influence of a corporate ethical
transgression on their emotional response might be very strong. Contrary, when a company has a negative CSR reputation and is previously accused of an ethical transgression, the expectation of socially responsible behaviour will not be as high as when the company would have had a positive CSR reputation. Now, the news of another accusation might be less of a surprise. Consequently, the effect of the
corporate ethical transgression on negative consumer response might be weaker. From this reasoning it is expected that:
Hypothesis 1: When a company has a positive CSR reputation, a corporate ethical transgression will lead to a more negative emotional consumer response than when the initial CSR reputation is negative.
However, when a company has no CSR reputation or a consumer is not previously exposed to CSR information about the company, it is suggested that the negative emotional response will be lower than when the CSR reputation is positive. When consumers do not have any previous behaviour to refer to, they might refer to general norms and values, which are applicable to all companies in general. Thus, consumers will hold a “standard” amount of expectations. Moreover, when the consumer is exposed to information about the ethical transgression this violation of “standard” expectancies will lead to a negative emotional response however, this will not be exceptionally surprising because no high expectancy violation occurs. Thus, it is proposed that:
Hypothesis 2: When a company has a positive CSR reputation, a corporate ethical transgression will lead to a more negative emotional consumer response than when the company has no initial CSR reputation.
On the other hand, it is expected that the negative emotional response will be higher when the company has no CSR reputation than when it has a negative CSR
reputation. This is assumed because, when a company has a negative CSR reputation, the consumer doesn’t hold any expectations with regard to socially responsible behaviour anymore. Therefore, another accusation won’t be very surprising.
Additionally, when a company has no CSR reputation it may still be a surprise, however, less of a surprise than when the CSR reputation is positive. This reasoning leads to the following hypothesis:
Hypothesis 3: When a company has no CSR reputation, a corporate ethical transgression will lead to a more negative emotional consumer response than when the initial CSR reputation is negative.
2.4 The type of corporate ethical transgression
As shortly discussed in the introduction section, transgressions can be related or unrelated to the reputation of the company. Moreover, transgressions can occur in different domains whereof Wagner et al. (2008) identified 14 of these domains
wherein retail business practices causes harm according to the consumer. An example follows to clarify a related versus an unrelated ethical transgression. Imagine: a company is especially focussed on establishing good working conditions for their employees. Subsequently the same company is in the news because of bad labour conditions. Here, the ethical transgression is related to the CSR reputation of the company. When the company is subsequently in the news because of environmental pollution, the ethical transgression is unrelated to the CSR reputation of the company because it does not concern the social domain but the environment. Likewise,
different forms of unrelated ethical transgressions exist.
The study of Wagner et al. (2009) is also concerned with the influence of corporate ethical transgressions on consumer response. They pinpoint the importance of related ethical transgressions. Specifically, they emphasize the mechanism of corporate hypocrisy, which can be defined as “the belief that a firm claims to be
something that it is not” (Wagner, Lutz & Weitz, 2009, P.79). This concept is focused
on inconsistent CSR information (i.e. both positive and negative CSR information), where the corporate ethical transgression is related to the CSR reputation (in the same CSR domain). In this case, the company states to act socially responsible with regard to a specific topic and subsequently engages in the opposite behaviour. This corporate hypocrisy can be considered as lying. As expected, the study reveals that corporate hypocrisy damages consumers’ attitude towards the firm.
The study of Wagner et al. (2009) is a positive first step towards closing the gap in investigating consumers’ responses to corporate ethical transgressions (negative CSR information). However, their study only considers CSR information that is related to the CSR reputation. Thus, what if the information about corporate ethical transgressions is unrelated to the core CSR reputation of the company? Additionally, to gain further insights in consumer reactions to related and unrelated corporate ethical transgressions, it is of importance to investigate the effect of the previously discussed initial CSR reputation on this relationship. In order to address these questions, it is relevant to review previous research by Effron and Monin (2010).
Effron and Monin (2010) examined the role of both related and unrelated transgressions and focussed on actors with an initial positive reputation. Even tough their research is based on a personal level instead of on companies; their results provide some relevant insights. The researchers investigated whether an actor’s prior good deeds make observers more willing to excuse his or her subsequent morally dubious behaviour. Translating this to the present research, which is focussed on a business context, their study might help to understand whether a company’s initial positive CSR reputation makes consumers more willing to excuse the corporate
ethical transgression. A central concept in their research is licencing, which can be described as “a decrease in condemnation when the target had performed good deeds compared to when he had not” (Effron & Monin, 2010: p.1623). Effron & Monin (2010) make a distinction between blatant and ambiguous transgression, wherein blatant transgressions occur when the actor’s behaviour clearly represents a moral violation. These blatant transgressions correspond to the type of transgressions the present study focuses on.
Moreover, Effron & Monin (2010) integrated different theories for same domain and different domain good deeds to explain why licensing does or does not occur with regard to blatant transgressions. First, the theory of moral credits is applied to explain why licensing occurs when good deeds are in a different domain as the transgression. A central aspect in this theory is licensing via balance. The researchers argue that observers can behave as if actors had a moral bank account: good deeds would represent moral credits and bad deeds represent moral debits. When applying this model to present research, consumers would license ethical transgressions committed by a company as long as the company would have moral credits on his bank account to balance out the transgression. Consequently, consumers will be less likely to say that the transgression is inexcusable (Effron & Monin, 2010). Second, the theory of hypocrisy is integrated to explain why licensing occurs when blatant transgressions are in the same domain as the prior good deeds. This theory of hypocrisy suggests that “saying one thing, but doing another” elicits negative
attributions about the prior good behaviour, resulting in less sincere and more selfish evaluation of this behaviour (Effron & Monin, 2010). Consequently, consumers may perceive same domain blatant transgressions as hypocrite and may be reluctant to license. Thus, no licensing effect is expected with regard to same domain good deeds.
The results show, as predicted, that only unrelated transgressions (e.g. different domain bad deeds) are excused and hence licensed by a positive reputation, whereas related transgressions (e.g. same domain bad deeds) appeared hypocritical and suppressed licensing.
In conclusion, the research of Effron and Monin (2010) might illustrate that related transgressions have a higher negative impact on consumer response than unrelated transgression. However, they only considered a positive CSR reputation and did not take an initial negative or no CSR reputation into account. Moreover, the fact remains that their research was on an individual level and to make any inferences with regard to their results; it is of importance to investigate the effect of the initial CSR reputation in a business context.
In line with Wagner (2009) and Effron and Monin (2010) it is expected that when a company has an initial positive CSR reputation and subsequently commits and ethical transgression, which is related to the CSR reputation of the company,
consumers might perceive this as hypocrite. A key construct in the principle of hypocrisy is inconsistency. In related transgressions, companies state to act socially responsible and subsequently engage in the opposite behaviour. In other words, companies’ actions are inconsistent with their statements. Since people have a general distaste for inconsistency, this subsequently leads to negative arousal (Effron & Monin, 2010). Thus, related transgressions will evoke perceptions of hypocrisy. In addition, consumers will evaluate hypocrite companies as insincere and selfish (Effron & Monin 2010). On the other hand, hypocrisy should be less pronounced in unrelated transgressions, since the corporate ethical transgression is not directly linked to the same domain. Therefore, unrelated transgressions will possibly evoke a lower level of negative emotional response than related ethical transgressions. Based
on this discussion, it is proposed that:
Hypothesis 4: When the initial CSR reputation of the company is positive, a
related corporate ethical transgression will lead to a more negative emotional consumer response than an unrelated corporate ethical transgression.
Hypothesis 5: This effect is mediated by hypocrisy.
However, different outcomes are expected when a company has an initial negative CSR reputation. Referring back to the expectancy theory, consumers have fewer expectations of companies with negative CSR reputations in comparison with
companies with positive CSR reputations. Therefore, corporate ethical transgressions committed by companies with negative CSR reputations will violate consumers’ expectancies less, as suggested in hypothesis 1. Although, when making a distinction between the impact of related versus unrelated ethical transgressions, it could be that related ethical transgressions committed by companies with a negative CSR
reputation won’t be so surprising and do not violate expectancies because the transgression lies within the same domain. However, this might differ when a company with a negative CSR reputation additionally commits an ethical
transgression that is unrelated to the CSR reputation of the company. Because the corporate ethical transgression is committed in a different domain, consumers will be more surprised about this. Accordingly, as stated by the expectancy theory, more violated expectancies will lead to a more negative evaluation of the violator. Consequently, an unrelated ethical transgression might evoke a stronger negative emotional consumer response than a related transgression. This reasoning leads to the following hypothesis:
Hypothesis 6: When the initial reputation of the company is negative, an
unrelated corporate ethical transgression will lead to a more negative
emotional consumer response than a related corporate ethical transgression.
2.5 Conceptual model Figure 1. Conceptual model
Figure 2. Mediation for the positive CSR reputation condition
3. Method
This chapter will present the research methods and will provide an overview of the conducted research, which was established to test the conceptual framework. It will define the nature of the research approach that is used and additionally, information about the experimental manipulations, measures and data collection is provided.
3.1 Research design
Present research attempts to determine the relationship between initial CSR reputation and emotional consumer response by employing a deductive approach. Data is
obtained by administering a questionnaire and uses a survey in order to investigate the research question. Within the survey strategy, the survey design is a frequently used technique concerning data collection (Field, 2009). One of the advantages of this design is that it allows the collection of large amounts of data and that it has a relatively low response time. Specifically, current research is a survey-based
experiment with different scenarios in order to test the hypothesis. The design is a 3 (related/unrelated environmental pollution/unrelated animal abuse transgression) x 3 (positive/negative/no CSR reputation) between-subjects design.
3.2 Measures
3.2.1 Dependent variables
Participants responded to a 7-point Likert scale (1 = Strongly disagree, 7 = Strongly agree) to measure the construct emotional consumer response. Here fore, items of a previous study by Grappi et al. (2013) are used. Respondents had to rate the degree to which they experienced the emotions contempt, anger and disgust, after having read about the company.
In order to measure expectancy violation, respondents had to rate to which extent the company’s behaviour was expected or not on a 7-point Likert scale (1= completely expected, 7= completely unexpected). Measures are based on research by Afifi and Metts (1998).
Perceived hypocrisy is captured by using a reflective multi-items measure.
Items for this construct are based on the study of Wagner et al. (2009) and were modified to fit the purpose of the current study, leading to the following question: In my opinion Fashion Loft: (1) Acts hypocritically, (2) Pretends to be something that it is not, (3) Keeps it promises. Refer to Appendix E for the full questionnaire.
3.2.2 Independent variables CSR Reputation
Respondents were randomly assigned to the positive, negative or no CSR condition. In the positive CSR condition, a fictitious fashion company Fashion Loft, was described as the industry leader when it comes to socially responsible business practices. Contrarily, in the negative CSR condition, Fashion Loft was displayed as the industry laggard when it comes to socially responsible business practices (for an overview; see Appendix A). Specifically, both CSR reputation conditions were in the social domain, focussing on the working conditions of employees. In the no CSR condition, respondents were simply not exposed to any CSR information. Hereafter, a manipulation check of CSR reputation was conducted in order to make sure that the reputation was actually perceived as intended. Measures of this scale are based on research by Wagner et al. (2009). Respondents reported their opinion about fashion loft on a 7-point Likert scale (1 = completely disagree, 7 = completely agree) answering the following: In my opinion Fashion Loft (1) is a socially responsible
company, (2) is concerned to improve the well being of society, (3) follows high ethical standards.
Type of transgression
Subsequently, three different scenarios have been conducted whereby each scenario illustrated a different ethical transgression (related, unrelated environmental pollution, unrelated animal abuse transgression). The scenarios of the corporate ethical
transgressions are based on CSR contexts that are commonly used in prior research and were identified based on a pre-test: a social crisis, environmental crisis or an animal crisis (Wagner et al., 2009). Participants were randomly assigned to each condition. In Scenario 1, Fashion Loft commits an ethical transgression with regard to sweatshop labour. Because the ethical transgression is in the social domain, this is an indirect contradiction with the CSR reputation of Fashion Loft and therefore it indicated a related ethical transgression. In scenario 2 and 3, Fashion Loft commits a transgression with regard to environmental pollution or animal abuse. Because the ethical transgressions are in another than the social domain, this indicated unrelated corporate ethical transgressions. In all different scenarios was Fashion Loft the fictitious company. This way, respondents were not previously exposed to the company, were free from previously formed attitudes, which will therefore not influence the results of the study.
3.2.3 Others
Control variables age, education and gender were included in the questionnaire because they could possibly influence consumers’ emotional response towards a corporate ethical transgression.
Multiple additional dependent variables were included in the questionnaire in order to investigate differences in effects from the independent variables. The
dependent variable attitude is measured through 4 questions by which respondents had to rate on a 7-point Likert scale to what extent they experienced positive or negative feelings towards the company. Items of this measure are based on research by Wagner et al. (2009).
Additionally, boycotting intentions were measured by means of a 7-point Likert scale (1= Very likely, 7= Very unlikely). Respondents had to report on several questions to which degree they would intentionally boycott the company Fashion Loft. Measures of this construct are based on research by Grappi et al. (2013).
3.3 Pre-test
3.3.1 Corporate ethical transgressions
To assess the effectiveness of the transgression manipulation, a pre-test was conducted among 28 respondents. Originally, five transgression-scenarios were created. The pre-test assessed whether all five transgression-scenarios were
considered to be credible and realistic and whether perceived ethicality, harmfulness and responsibility were equally high in all conditions. Results of a small pre-test (N=28) revealed that two of the five scenarios (based on a community crisis and a health care scandal) were not comparable in terms of perceived harmfulness (F=3.91, p=.03), credibility (F=2.87, p=.04) and realism (F=4.30, p=.01). Perceived ethicality (F=.98, p=.43) and responsibility (F=.80, p=.53) were comparable among all 5 transgression conditions. Table 1 shows that both the unrelated community
transgression and the semi-related health care transgression scored reasonably low on realism and credibility. This indicates that participants evaluated these transgression
manipulations as less credible and realistic as the other transgressions. Therefore, these were excluded from the final questionnaire which eventually consisted of three different scenario’s: one related transgression manipulation focussed on working conditions of employees, one unrelated transgression manipulation focussed on animal abuse and another unrelated transgression manipulation focussed on environmental pollution (see Appendix C and D). Moreover, a few minor adjustments were made to increase the perceived ethicality, harmfulness and responsibility for the unrelated transgression focussed on animal abuse. Finally, participants exhibited more equal perceptions of ethicality (F=.82, p=.50), perceived harmfulness (F=1.87, p=.17), perceived responsibility (F=1.60, p=.22) credibility (F=.64, p=.60) and realism (F=.35, p=.79) among the three remaining transgression conditions (related, unrelated environment and unrelated animal) in the final
questionnaire. See Table 1 and 2 for an overview of the means per transgression in pre-test one and two.
Table 1.Mean scores and standard deviations of pre-test 1 per transgression scenario.
Related Social Unrelated Environment Unrelated Animal Unrelated Community Semi-related Health care N 7 8 7 6 6 Perceived ethicality 2.00 (1.02) 1.92 (0.75) 2,48 (0.86) 2.56 (0.75) 2.56 (0.80) Harmfulness 5.29 (1.70) 5,88 (0.35) 4.43 (1.51) 4.33 (1.51) 3.50 (1.38) Perceived responsibility 5.00 (1.14) 5.00 (0.76) 4.43 (1.27) 4.83 (1.47) 4.67 (1.21) Realism 5.29 (1.60) 6.00 (0.75) 5.14 (0.69) 3.33 (1.51) 4.00 (1.90) Credibility 5.14 (1.57) 5.50 (0.75) 4.29 (1.70) 3.17 (1.47) 3.83 (1.72)
Table 2. Mean scores and standard deviations of pre-test 2 per transgression scenario. Related Social Unrelated Environment Unrelated Animal Unrelated Community N 7 5 5 6 Perceived ethicality 2.05 (0.44) 1.80 (0.77) 1.67 (0.75) 2.28 (0.83) Perceived harmfulness 5.00 (2.00) 5.80 (1.10) 6.00 (0.49) 4.17 (4.44) Perceived responsibility 5.71 (.75) 5.40 (1.67) 5.80 (0.71) 4.17 (1.33) Realism 4.86 (1.86) 5.00 (1.87) 5.60 (1.94) 5.67 (0.51) Credibility 5.86 (0.69) 5.20 (2.05) 5.20 (2.07) 5.33 (1.21) 3.3.2 CSR reputation
To test whether the positive and negative CSR conditions were perceived as such, another pre-test was conducted. Respondents had to report whether they perceived the company Fashion Loft as socially responsible, concerned to improve the well being of society and following high ethical standards. The results indicated that the means for each CSR reputation condition differ significantly (F=203.11, p=.00). Specifically, all respondents perceived both the positive CSR condition (M= 5.86) and the negative CSR condition (M= 1.53) as intended.
Since the questionnaire contains elements of questionnaires from previous research, the pre-test was conducted in English. However, since some pre-test respondents reported to have difficulties with the English questionnaire, we have modified it to Dutch following the translation – back translation principle. Herein, one research collaborator translated the questionnaire from English to Dutch.
Subsequently, another collaborator translated the Dutch version back to English. After adjustment of minor differences between the questionnaires, it was ready for use.
3.4 Data collection and participants
The questionnaire was developed with the online survey system Qualtrics and snowball sampling is used to recruit respondents from the general population. A link was used to e-mail members of my social network. Subsequently, I requested these respondents after their participation, to further distribute the questionnaire to their social network. All participants visited the survey website in order to complete the questionnaire.
Multiple versions of questionnaires were conducted, each representing a different type of CSR reputation and corporate ethical transgression. Participants were randomly assigned to each of the nine conditions (see Table 3).
Table 3. Distribution of the frequency of participants per condition (N).
Related Unrelated Animal abuse Unrelated Environment Total Positive CSR reputation 29 33 31 93 No CSR reputation 41 36 40 117 Negative CSR reputation 35 34 41 110
The questionnaire was organized as follows: first, a general introduction about the survey was showed. Hereafter, respondents were exposed to general information about the fictitious company Fashion Loft. Fashion Loft was described as one of the world’s largest fashion chains, operating on 53 markets and in possession of an online web shop. The collections include a wide range of clothing, varying from party collections to functional sportswear, for men, women, teenagers and children. Next, respondents were exposed to one of the three CSR conditions (positive, negative or no
CSR reputation) in combination with one of the three transgression types (related, unrelated animal, unrelated environment). Hereafter, participants responded to the dependent variables measures. The questionnaire ended with demographic questions.
The sample size of 320 respondents was not evenly distributed between males and females. 199 females (62.2%) and 120 males (37.5%) filled in the questionnaire. Two respondents did not report their age. Overall, 216 respondents were in the age group between 15 and 24 years old (67.9%), 80 respondents between 25 and 34 years old (25.2%), 8 respondents between 35 and 44 years old (2.5%), 9 between 45 and 54 years old (2.8%) and 5 respondents between 55 and 64 years old (1.6%).
Most respondents were highly educated; 38.9% studied at the University of Applied Science (‘HBO’), 23.8% had a University bachelor’s degree and 13.9% a University master degree. 17.4% of the respondents finished high school and 5.1% studied at MBO level. Furthermore, all respondents had the Dutch nationality.
4. Results
This chapter provides an overview of the results of the data analysis wherein the hypotheses are tested and the results are presented. First, reliability and correlation analyses were conducted. Hereafter, hypothesis 1, 2 and 3 were tested using an ANOVA analysis. This is followed by a two-way ANOVA and two one-way ANOVAs in order to test hypothesis 4 and 6. Lastly, mediation analyses were conducted in order to test hypothesis 5 and 7 using Hayes’ computational tool PROCESS for SPSS (Hayes, 2012a).
4.1 Reliability analysis
Reliability is used to check whether every item in the scale is measuring the same construct. To measure the scale’s internal consistency a Chronbach’s alpha was calculated. A Chronbach’s alpha of .7 or higher indicates a good internal consistency of the scale. Moreover, A Chronbach’s alpha of .6 indicates an acceptable level of reliability of the scale (Nunnally, 1978). Before measuring the internal consistency, some reversed formulated questions were recoded. The Chronbach’s alphas of the reliability per scale are reported in Table 3 and 4. No items were deleted from any of the scales since it did not improve Chronbach’s alpha by more than 0.05.
4.2 Correlation
A correlation matrix for the positive and negative CSR reputation condition is presented in Table 3 and 4, based on Pearson’s correlation coefficient r. Correlation coefficients give no indication of the direction of the causality, but gives information about the strength of the relationship between two variables (Field, 2009). A
correlation coefficient of -1 or +1 indicates that the variables are perfectly positive or negatively correlated. In the positive CSR condition, emotional consumer response towards a corporate ethical transgression is positively correlated with perceived hypocrisy. Moreover, perceived hypocrisy is positively correlated with the type of transgression. The control variable gender is negatively correlated with the type of transgression. This is due to coincidence since both variables are based on values of 0 and 1 and thereby, the respondents were randomly assigned to each condition.
Moreover, gender, age and educational level do not seem to influence the dependent variables. Therefore, these control variables are not included in the analyses. In the negative CSR condition, emotional consumer response towards a corporate ethical transgression is positively correlated with perceived hypocrisy and the type of transgression. Perceived hypocrisy is also negatively correlated with expectancy violation. The control variable education is negatively correlated with the type of transgression.
4.3 Manipulation check
The final questionnaire contained a manipulation check in order to check whether the respondents perceived Fashion Loft as ethical in the positive CSR reputation
manipulation and unethical in the negative CSR reputation manipulation. The results of the independent t-test showed that the positive and the negative CSR reputation condition differ significantly, t(201) = 16.36, p = .00. Specifically, respondents perceived Fashion Loft more ethical in the positive CSR reputation condition (M = 5.25, SD = 1.21) compared with the negative CSR reputation condition (M = 2.33, SD = 1.31).
Furthermore, it is assessed whether the information about Fashion Loft is perceived as credible and realistic. A higher score indicates a higher perception of
credibility and realism of the information about Fashion Loft. The results of the one-way ANOVA showed that perceived credibility does not significantly differ between the CSR conditions (F(2,316) = 1.65, p = .19). Overall, respondents reported that they perceived the information as highly credible (M = 5.04 SD = 1.32). However,
perceived realism does differ between the CSR conditions (F(2,316) = 3.22, p = .04). Specifically, multiple comparisons and post-hoc tests showed that respondents in the negative CSR reputation condition (M = 5.21, SD = 1.20), perceived the information about Fashion Loft slightly more realistic than respondents in the positive CSR reputation condition (M = 4.72, SD = 1.42) did. However, the respondents did
perceive the information about Fashion Loft as very realistic in general (M = 4.99, SD = 1.38).
Moreover, it was verified whether consumers correctly remembered which type of transgression scenario they were exposed to. Respondents had to indicate whether the subject of the news item they have read, dealt with; labour conditions, animal abuse or environmental pollution. It has been manually examined whether respondents in the related condition correctly indicated to be exposed to the subject labour conditions. Results show that all respondents in the related type of
transgression conditions, correctly reported to have been exposed to the subject labour conditions. Moreover, in the unrelated type of transgression condition focussing on the environment, ten out of twelve hundred respondents incorrectly attributed the subject of the news item to labour conditions instead of environmental pollution. Lastly, two out of hundred three respondents in the unrelated type of transgression condition focussing on animal abuse reported that they were exposed to the subject animal abuse. Except for two respondents, they believed the subject of the news item focussed on labour conditions. In general, the vast majority of respondents were
aware of the main subject of the news item. The respondents that were not able to answer correctly, all assumed that the news item subject focussed on labour conditions. This may be due to the CSR reputation information that did focus on labour conditions, to which the respondents were exposed earlier.
1. Emotional consumer response 5.12 1.11 (.71) 2. Expectancy violation 3.16 1.51 .056 (.72) 3. Perceived Hypocrisy 5.39 1.08 .426** -.034 (.65) 4. Type of Transgression 0.69 0.47 -.075 .079 -.207* - 5. Age 2.43 0.76 -.196 -.067 -.085 .050 - 6. Education 4.16 1.30 .040 -.015 .062 -.023 .138 - 7. Gender 1.37 0.49 -.037 .103 .104 -.208* .006 -.009 -
**. Correlation is significant at the 0.01 level (2-tailed) *. Correlation is significant at the 0.05 level (2-tailed).
Table 5.Means, standard deviations, correlations and reliability values for the negative CSR condition (N = 110)
Variables M SD 1 2 3 4 5 6 7
1. Emotional consumer response 5.39 1.04 (.71)
2. Expectancy violation 5.28 1.39 -.017 (.72) 3. Perceived Hypocrisy 4.47 1.28 .213* -.257** (.65) 4. Type of Transgression 0.68 0.47 .210* -.050 -.025 - 5. Age 2.46 0.79 .202* .155 .060 .105 - 6. Education 4.01 1.34 .145 .142 -.046 -.201* .197* - 7. Gender 1.39 0.49 -.137 -.063 -.053 -.027 .263** -023 -
**. Correlation is significant at the 0.01 level (2-tailed) *. Correlation is significant at the 0.05 level (2-tailed).
4.3 Hypothesis testing
In order to test hypothesis 1, 2 and 3, a one-way between subjects ANOVA was conducted to compare the effect of a company’s initial CSR reputation on emotional consumer response in the positive CSR reputation, no CSR reputation and negative CSR reputation conditions. A one-way ANOVA tests whether there are differences between the means of multiple groups (Field, 2009).
Levene’s test was non-significant for emotional response (p > 0.05), indicating that the variances are not significantly different.
The results of the one-way ANOVA indicated that there was a significant effect of the initial CSR reputation on emotional consumer response for the three conditions, F(2, 317) = 7.98, p < .05. Planned contrast and mean comparisons
revealed that the mean score for the positive CSR condition (M= 5.12, SD = 1.11) did not significantly differ (t = -1.77, p = .08) from the negative CSR condition (M = 5.39, SD = 1.04) on emotional consumer response. Therefore, hypothesis 1 is not confirmed.
However, the no CSR condition (M = 4.81, SD = 1.16) was significantly
Hypothesis 1: When a company has a positive CSR reputation, a corporate ethical transgression will lead to a more negative emotional consumer response than when the initial CSR reputation is negative.
Hypothesis 2: When a company has a positive CSR reputation, a corporate ethical transgression will lead to a more negative emotional consumer response than when the company has no initial CSR reputation.
