Does doing good drive firm performance?

(1)

Does doing good drive firm performance?

The effects of Corporate Social Responsibility and Marketing Strategies on Firm Performance in the beer industry.

Author: Thijs Blankestijn Student number: S4138929 E-mail: t.blankestijn@student.rug.nl

Supervisor: P.J. Marques Morgado

Faculty of Economics and Business University of Groningen

Duisenberg Building, Nettelbosje 2, 9747 AE Groningen Netherlands

P.O. Box 800, 9700 AV Groningen, The Netherlands

http://www.rug.nl/feb

(2)

Abstract

The beer industry is controlled by large firms such as Heineken and Anheuser-Busch InBev, this industry is facing heavy competitive pressure. They must rely on knowledge and capabilities that can provide them a competitive advantage. Traditionally firms are viewed as establishments that should only seek profit maximisation. However, over the past years many studies have argued with this statement. It is said that firms also have economic, ethical, legal and philanthropic responsibilities. Over the previous years the call for firms to engulf in sustainable activities has increased. This study focuses on Corporate Social Responsibility and how firms can

communicate their efforts. The aim of this study is to determine if Corporate Social Responsibility can be used by firms to improve its performance within the beer industry.

(4)

1. Introduction

Firms like Heineken and Anheuser-Busch InBev (AB InBev) are big players within the beer industry. Heineken is active in 190 countries (Heineken, 2020) and AB InBev is active in more than 150 countries (AB InBev, 2020). Large firms dominate the beer market, more than 50% of the market is owned by the four largest firms (Marketline, 2020). As you can imagine, firms operating in dynamic global markets like Heineken and Ab InBev in the beer industry are facing heavy competitive pressure. Firms that face heavy competitive pressure must rely on

competencies that can provide them a competitive advantage. There are many theories written about resources or competencies that can contribute to a firm’s competitive advantage, such as human capital (Coff & Raffiee, 2015), marketing strategies (_{Hooley, Lynch, Brooksbank &} Shepherd, 1988) _{and Corporate Social Responsibility (CSR). This paper focuses on marketing} strategies and Corporate Social Responsibility.

There are many different marketing strategies that can be used to reach out to consumers. Firms seek for the most efficient marketing strategy within their industry or market, to maximise their profits (Samiee & Chirapanda, 2019). Since firms have to deal with differences in demographics and culture, there is no best practice marketing strategy available. The right marketing strategy depends on the firm’s goal, industry and market they are operating in (Hussain, 2019). In this paper we try to address which marketing strategy suits firms in the beer industry, who try to address their CSR activities.

(5)

firms also have economic, ethical, legal and philanthropic responsibilities (Carroll, 1991). Over the past years the call for firms to incorporate in sustainable activities has increased.

Market-based and resource-based frameworks are being used to investigate how firms within the beer industry can generate a competitive advantage, from an external and internal view. First of all, Porter’s (1981) five forces will be used to help understand the profitability and attractiveness of the beer industry. Besides Porter’s view regarding the beer and industry market, Barney’s (1991) VRIO-Framework will be used to analyse the resources and competencies of the biggest firms within the beer industry.

(6)

2. The beer industry

There are a lot of companies active in the beverage industry, such as Coca Cola, Heineken and AB InBev. This research paper focuses on the beer industry.

The beer and cider market is defined as the retail sale of beer and cider. The beer segment consists of different kinds of beer, such as ale, dark beer, flavoured beer and lager. These types of beer are divided in lager (beer) and craft beer. The cider segment consists of apple cider, pear cider, flavoured cider and seasonal ciders. As of 2018, the total beer and cider market had a value of $595,748 million and is expected to grow by a compound annual growth rate (CAGR) of 3.4% in the period 2018-2023 (Marketline, 2020). The market of lager is by far the largest market in the beer industry with a share of 79,5%, however the market for craft beer (18,3%) is facing a higher CAGR than the overall market of beer and cider, reporting an expected CAGR of 8.0% until 2025 and is expected to acquire an increase in market share in the future (Deshmukh, 2019). Because cider is such a small component in terms of revenue in this market, this paper will only take the beer market into account.

(7)

To get a better overview of the competition within the beer industry, the seven biggest companies in terms of revenue are listed in table 1.

Table 1: _{7 biggest beer firms in the world (Conway, 2019).}

(8)

3. Marketing Strategies

Firms that operate in global markets, face the difficult task of adapting their marketing strategies towards its local consumers. Choosing the most efficient marketing strategy is important to secure a significant position in the market. Emerging markets require other marketing strategies than developed markets, because emerging markets can lack resources such as international experience and the availability of relevant information (Samiee & Chirapanda, 2019). Over the past years, firms have changed their marketing strategies. Where mass marketing once was dominating, this strategy’s profitability and efficiency has now been questioned and firms recognise that markets are more segmented. As a result of these developments, there is not a specific marketing strategy that can lead to increased revenues or a competitive advantage. The most efficient and profitable marketing strategy depends on a firm’s goal, the industry and the market it is operating in (Hussain, 2019). In this paragraph we will discuss some marketing strategies and address which strategy is most relevant for this paper.

(9)

3.1 Social marketing

There are many papers that write about how consumer behavior can be influenced. Tools for influencing the behavior of consumers can be industry specific. An important factor on the marketing side of consumer behavior, is providing outputs that consumers value, such as experience, values and social behavior (Pandey & Verma, 2015). This side of marketing can be defined as social marketing strategies. The main achievement of social marketing should not be directly related to generating and maximising profits, but to the enhancement of public goodwill. Social marketing can ultimately lead to higher firm profitability, but distinguishes itself from aggressive marketing campaigns by gradually influencing the consumer (Mayasari, 2012). _Forms of social incentives to create public goodwill are related to how well a firm is behaving and is giving back to the society. Firms can influence this by donating to charities or maintaining quality customer services (Teh et al., 2019).

3.2 Promotional marketing

(10)

3.3 Social Media marketing

Social media is widely used by billions of people around the world. Social media strategies can be used by firms, to reach a huge audience from many different countries. Firms can use social media to create brand loyalty among its customers. The popularity of this marketing strategy is that it requires relatively low investment costs and has the potential to reach a big audience (Appel, Grewel, Hadi & Stephen, 2019).

The paper recognises that there are many other marketing strategies, such as niche marketing, direct marketing and seasonal marketing.

(11)

4. Corporate Social Responsibility

Corporate Social Responsibility (CSR) has grown in the past decades and plays an important role in the social perception of organizations, since it does not only affect the perceptions, but also the behavior of individuals towards organizations (Hawn & Shea, 2019). Most papers describe CSR as a concept where organizations integrate social and environmental problems into their business operations (Tencati, Misani & Castaldo, 2020). “Being” a socially responsible organization, does not only mean abiding the rules, but going beyond this. Organizations can achieve this by

investing in human capital, the environment and their relations with stakeholders (Commission of the European Communities, 2001). CSR is about organizations having a set of values and managing operations to have a positive impact on society (Freisleben, 2011).

Tangible assets only account to 20% of the market value of a firm, compared to 83% in 1975, where intangible assets such as human capital, stakeholder relations and reputation account for the remaining 80%. This calls for more data provided by firms than just financial data

(12)

Company ESG Laggard Moderate ESG Leader Grade

Heineken - Corporate Governance - Packaging material & waste

- Product safety & quality - Health & Safety

- Water Stress - Product Carbon Footprint

A

AB InBev AB InBev is not a laggard in any of the key issues in the beer industry.

- Corporate Governance - Packaging Material & Waste - Product Safety & Quality - Health & Safety

- Product Carbon Footprint

- Water Stress

AA

Asahi Group Holdings

- Health & Safety - Corporate Governance - Packaging Material & Waste - Product Safety & Quality - Product Carbon Footprint - Water Stress

The Asahi group is not a leader in one of the key issues in the beer industry.

BB

Kirin Holdings Kirin Holdings is not a laggard in any of the key issues in the beer industry.

- Product Safety & Quality - Water Stress

- Health & Safety

- Product Carbon Footprint - Packaging Material & Waste - Corporate Governance

A

Molson Coors Brewing - Corporate Governance

- Packaging Material & Waste - Product Safety & Quality

- Water Stress - Health & Safety - Product Carbon Footprint

A

Carlsberg Group Carlsberg is not a laggard in any of the key issues.

- Water Stress - Health & Safety

- Packaging Material & Waste - Product Carbon Footprint

- Corporate Governance - Product Safety & Quality

AA

Thai Beverage

No Information No Information No Information

N/A

(13)

4.1 Common factors for ESG Leaders

By analysing these ESG-Ratings, we can see that water stress, corporate governance and product safety & quality are common factors for ESG leaders within the beer industry. Those factors are highly valued in the beer industry and firms that actively engage their activities towards these factors are more likely to be seen as a corporate social responsible firm.

Table 3: _{Common factors for ESG-Leaders}

Of the six available firms, only the Asahi Group is not a leader in the beer industry regarding ESG key issues. Studies claim that firms that score high(er) on ESG ratings are more competitive than their rivals, this competitive advantage can be related to a better use of resources, better innovation management or the use of human capital. High rated ESG companies tend to be better at developing long term orientated plans as well (_{Giese, Lee, Melas, Nagy & Nishikawa, 2019).} This paper will further elaborate why the factors water stress, corporate governance and product quality & safety are viewed as important factors within the beer industry and why these firms can really make a difference on these matters.

Water Stress

More than 90% of beer consists of water. Inefficient use of water can lead to more wastewater and increase quality water scarcity around the world. Firms that engage in activities to reduce their water usage, comply with goal 6 of the sustainability program of the UN, which states: ”_{Ensure availability and sustainable management of water and sanitation for all by 2030 (SDG,} 2020).” Firms that take incentives to act behind this goal and are on track of reaching 100% reusable water by 2030 can be viewed as ESG leaders on this subject. The Asahi Group is taking incentives towards 100% reusable water as of 2050 and although they do recognise the

(14)

stress incentives in this firm are viewed as moderate (Asahi Group, 2019). Heineken is viewed as an ESG leader on this matter and is on track of reaching 100% reusable water by 2030. Besides the goal of 100% reusable water, Heineken is also focusing on ensuring good quality of water and reducing their waste. As of 2019, 97% of Heineken’s wastewater is being treated before being discharged into surface water (Heineken, 2019). Water stress is an important matter within the beer industry, because they use high volumes of water and taking incentives to reduce water use and waste can help achieving the UN SDG goals.

Corporate Governance

Corporate governance is the combination of rules, laws and processes by which firms are operated. Clear corporate governance enables different stakeholders to get a more detailed view of a firm. Corporate governance takes social and environmental needs into consideration and can help firms contribute to sustainable development by doing good and reducing its potential to cause harm (Scherer & Voegtlin, 2020). The Carlsberg Group is an ESG-Leader on this matter, they follow the Danish code of corporate governance and provide a detailed report on whether they comply or do not comply with the recommendations and give reasoning for both (Carlsberg, 2020a) they also mention corporate governance as an important aspect of their firm in its annual report (Carlsberg, 2020). In comparison, Molson Coors provide limited insight on how they comply with the recommendations of good corporate governance (Molson Coors, 2020a). Thus, good use of corporate governance is related to the insight firms provide to their different

stakeholders and not only by highlighting what they do good, but also how they are currently lacking in areas.

Product quality & safety

(15)

5. Theoretical Framework

Two different theoretical frameworks will be used to look at the beer industry from different angles. The first theoretical framework that will be used is Porter’s five forces model to give an idea of the industry’s profitability and competitive pressure. The second theoretical framework is the VRIO framework to evaluate the resources and capabilities of firms.

5.1 Five forces of Porter

Porter (1981) developed the market based view, in which external factors determine the profitability of an industry. From this view the five forces of Porter have been developed. This framework indicates that a firm’s competitive advantage is rooted in the attractiveness of the industry and its market position (Sing, Charan & Chattopadhyay, 2019). Porter’s five forces model focuses on five different factors (_{Azadi & Rahimzadeh, 2012): (1) the threat of new} entrants, (2) the bargaining power of suppliers, (3) bargaining power of buyers, (4) threat of substitute products and (5) competitive rivalry. This paragraph applies the five forces of Porter to the beer industry.

5.1.1 Threat of new entrants

The threat of new entrants in the beer industry is low. Over the past years, the market has been mainly dominated by large firms. In 2013, the four biggest firms in the beer industry accounted for a combined market share of 47.5% (Marketline, 2014). In the following years, this market share only increased. In 2018, the four biggest firms reported a combined market share of 50.1% (Marketline, 2020).

(16)

can charge a premium price on their products and increase margins to make up for the high investment costs, because they often produce high quality crafts (Marketline, 2020). From 2014 to 2019 the amount of craft breweries in the U.S. have more than doubled, the U.S. registered an amount of 4,014 breweries in 2014 and 8,386 breweries in 2019 (Brewers Association, 2020). However, when a firm is willing to enter the mass market to compete on a global level, entry barriers increase. Firms will face higher investment costs for large scale production, and profit margins decrease. The overall threat of new entrants is moderate, over the past years the beer industry saw a reasonable growth in new breweries. However, these are mainly small breweries. To compete in the mass-market of the beer industry, firms face higher entry barriers. Since this paper focuses on the global beer market and not on the threat of new entrants on a smaller scale, we can conclude that there is a low threat of new entrants that are able to compete with the large firms.

5.1.2 Bargaining power of suppliers

For the production of beer products, hop is needed. Traditionally, beer companies bought hop from independent producers. However, increased resources of the biggest firms resulted in some sort of vertical integration (Marketline, 2019). Vertical integration within the beer industry can be used by firms who are willing to own or control its suppliers, which benefits firms to reduce costs and increase (production) efficiencies (_{Khurshid, Park & Chan, 2020). Owning or}

(17)

5.1.3 Bargaining power of buyers

Table 4 gives an overview of the main channels where firms sell their beer. The most significant sales channels are On Trade and Hypermarket & Supermarkets. Accounting for respectively 58.1% and 25.2% in 2018. The on trade channel includes outlets such as pubs, hotels, restaurants and clubs (Hartziotis Trade, 2016). There are a lot of firms operating in the on trade or

hospitality industry. As of the first quarter of 2020, the Netherlands counted 61.775 hospitality firms (Bluiminck, 2020).

Table 4: _{Sales channels within the beer industry (Marketline, 2020).}

A big amount of buyers suggests that these buyers do not have a lot of power, since the firms are not relying on one (or a few) buyer(s). Another indicator which can be used to determine the power of buyers is related to the switching costs of buyers. Switching costs arise when buyers are able to switch to similar products or other brands. The buyer’s power increases when

switching costs are low. Within the beer industry, buyers can easily switch to other brands, since beer is relatively cheap (_{Nie, Wang, Chen & Yang, 2018). Based on the fact that lots of buyers} suggest a weak power of buyers and low switching costs suggest a high power, we can conclude that the power of buyers is moderate.

5.1.4 Threat of substitute products

(18)

regions like Asia. However, locally brewed beer brands are much cheaper alternatives than Heineken. Also there is a lot of supply regarding different lager and craft beer brands. Jumbo, the Dutch supermarket chain, offers a range of 393 different beer brands or tastes (Jumbo, n.d.). The Netherlands also has 370 breweries as of 2017 and this number is expected to grow (CBS, 2017). However, those facts are all related to the beer industry. Firms face the (big) risk of consumers switching to other brands within this industry. If we take a look at other alcoholic beverages, we see that alternatives for beer are spirits and wine. Spirits and wine can differ heavily in Alcohol By Volume (ABV) percentage and taste from beer (Marketline, 2020). Because of a very different taste and ABV percentage, the expectation that consumers substitute beer for wine and spirits is low. Although switching costs are low, consumers are not likely to switch to substitute products such as wine and spirits, therefore the threat of substitutes is low.

5.1.5 Competitive rivalry

As mentioned before, the biggest four firms within the beer industry control more than 50% of the market. As you can imagine, firms of this size increase competition within an industry. To obtain such a huge share within this industry, firms tend to invest a lot in mass-market products. Mass-market production implies high fixed costs and lower profit margins, thus intensifying competitive rivalry. Besides investments in mass-market production, these firms invest a lot in brand management strategies. With the high amount of different brands and flavours within the beer industry, firms develop strategies to make their products more identifiable for the

(19)

Figure 2: _{Porter’s five forces applied to the beer industry.}

Overall we can say that the profitability and competitive pressure within the beer industry is moderate. The market is expected to grow and there is room to acquire some share in this

(20)

5.2 VRIO-Framework

The resource-based view (RBV) argues that when a firm’s resources are valuable, rare, hard to imitate, and non-substitutable across firms, they can be used to explain the differences in firm performance (Ruivo, Oliveira & Neto, 2015) and make it possible for organizations to create and maintain competitive advantages (Srivastava, Fahey & Christensen, 2001). Organizations can create a competitive advantage when they do not only own valuable, rare, inimitable and non-substitutable resources, but also capitalize their strategic actions towards those resources (Ketchen, Hult & Slater, 2007). Owning firm specific resources do not guarantee a competitive advantage, but the exploitation of it may generate competitive benefits (McDougall, Wagner & MacBryde, 2019). From this resource-based view, Barney (1991) developed the

VRIO-Framework. The VRIO-Framework can be used to evaluate a firm’s resources and capabilities. This paragraph discusses competencies or resources from the seven biggest firms and applies the VRIO-Framework to analyse whether they provide a competitive advantage in this industry.

(21)

5.2.1 Key Success Factors

This paragraph starts with identifying the core competencies of firms operating in the beer industry. To provide a clear overview, table 5 shows each core competency and which firm is a leader on that particular matter. The following paragraph will dive deeper into these different key success factors and will outline why firm X is a leader in a competency.

Competencies Brand/Image Global presence Technology / Innovation Customer Loyalty Partnerships Marketing & Sales

Who Heineken Heineken Kirin Group Heineken AB InBev AB InBev

Table 5: Core competencies of firms in the beer industry.

Brand/Image

Brand is useful to differentiate a firm or product from its competitors, as well as being important for future existence. Brands are even more important in a very competitive environment, to take advantage of growth opportunities, to increase the profitability of the firm and reduce the marketing costs. Brand image is creating a view of the product or firm with which consumers can identify themselves. Brand image has a significant role in purchasing behavior (Tan & Trang, 2019). Heineken has established themselves as a luxury brand all over the world. Heineken is the only beer brand that has successfully provided an image where consumers can identify themselves with. Heineken focuses on “The Heineken Experience” in all their

commercials.

Global Presence

(22)

over the world, making it the firm with the highest global presence within the beer industry. Carlsberg and AB InBev follow closely with a global presence in more than 150 markets. Colson Moors (25+), Kirin (40+), Asahi (60) and ThaiBeverage (90) are mainly operating in Asian or American regions, but are expanding their business activities overseas.

Technology/Innovation

An important asset to possess as a firm is an advanced R&D sector. R&D contributes to the development of firm specific assets and helps create a competitive advantage. To assess whether the R&D incentives of the firms are sufficient, we take a look into the investments of the firms in their R&D sector. The Kirin Group is the leader in R&D investments in the beer industry. As of 2019 the Kirin Group invested an amount of 58.1 billion japanese yen or approximately 495 million euros into their R&D sector. AB InBev is the only firm that comes even close to this amount of R&D investment. AB InBev spent 260 million euros on R&D. Carlsberg (6 million) and Asahi (20 million) are the only other two firms that disclose their R&D activities.

Customer Loyalty

Customer loyalty determines how likely your customers are willing to do business with you again or how likely they are to buy your products again. These sort of customers are called “repeat” customers. This type of customer is the most valuable customer to have as a firm. Firms spend a lot of money on loyalty programmes, which reflect a firm’s beliefs on positive,

long-term effect on consumer behavior (Van Berlo, Bloemer & Blazevic, 2014). This type of customer loyalty is not as present in the beer industry as it is for airlines for example. However, Heineken introduced the Heineken reward programme. With this programme, Heineken is one of a kind within the beer industry.

Partnerships

(23)

opened up extra markets and increased AB InBev's market share by a large margin, putting even more pressure on competitors (Bamber, 2019).

Marketing and Sales

(24)

6. Research design

This paper has been conducted from an interpretivism philosophy. This paper investigates how people from different regions are influenced by the CSR activities of firms and the awareness they have towards CSR activities. Based on these results, a view is provided with respect to the exploitation of a firm’s resources. To interpret the results, the researcher has to take on an empathic attitude. At first, a research question is formulated. The research question that we are trying to answer in this paper is:”_{How can Corporate Social Responsibility be used to increase} firm performance within the beer industry?”

The researcher identified some variables which might be important to help answering this question. “Corporate Social Responsibility” “Marketing Strategies” and “Firm Performance” are being further investigated and elaborated. Although there are many other variables that can be investigated, these variables are the most relevant for this paper. They can help address and understand how firms can address their CSR activities and how this affects firm performance. The method of data collection within this research paper, focuses on the use of academic papers to form an opinion on the research question. This is a form of secondary data collection. The researcher does not carry out any interviews or surveys himself, carrying out these activities is a form of primary data collection. The use of secondary data can be time efficient, but requires the researcher to take a critical view on the validity and reliability of the sources. To monitor the validity and reliability of this paper, publications of accredited researchers have been used and the paper tries to validate statements by analysing other scientific papers. These papers mainly focus on linking theories, such as firm performance, to a particular phenomena e.g. marketing. I think the use of existing theories and forming my own opinion on it is more reliable than

(25)

these subjects myself is not possible within the limited time frame and limited information about the firms and countries.

The paper uses a mix of qualitative and quantitative data. The first part of this paper uses theoretical concepts from other researchers to define different marketing strategies and what is meant with corporate social responsibility. Furthermore, the paper uses sustainability and annual reports of the seven biggest firms in the beer industry, to get a better understanding of its market competitiveness and its firm-specific resources. Both of the above are forms of qualitative data. The analysis part uses a mix of theories to substantiate its conclusions and surveys carried out by other researchers. Surveys are used to form an opinion on the effectiveness of CSR activities within the Asian culture. These quantitative and qualitative data are cross-sectional. The findings of other researchers are being used, however these findings may be outdated. Because of the limited time frame, there has not been tested whether opinions of consumers on matters such as CSR has been changed.

(26)

7. Analysis

This part of the paper focuses on connecting the different theories and frameworks provided in the previous paragraphs. Hypotheses regarding the Corporate Social Responsibility and Firm Performance will be formulated and discussed in this paragraph.

7.1 Different views on CSR in western countries and Asian

countries

The beer industry is mainly divided by firms that operate or have their origins in western

countries (Europe/USA) or in Asian countries. Analysis of the ESG-ratings, as shown in table 2, on the different firms show that market leaders operating on the Asian market score lower on average regarding CSR activities than western firms. This could indicate that Asian consumers do not value the CSR activities of firms as important as western consumers do, when buying products from firms. To analyse whether this is true, the following hypothesis has been formulated:

Hypothesis 1: Western consumers value CSR activities more than Asian consumers.

(27)

society. Firms can influence this by donating to charities or maintaining quality customer services (Teh et al., 2019). Western consumers do value CSR as an important decision making factor to buy products somewhere, however several studies state that the environmental CSR activities of firms are highly rated towards the purchasing intentions of consumers (Marquina & Morales, 2012) (_{Lerro, Caracciolo, Vecchio & Cembalo, 2018).}

The studies carried out by other researchers (Chang & Cheng, 2017) (Teh et al., 2019) show that Asian consumers are adjusting their purchasing behavior towards firms that engage in CSR activities. However, Asian consumers view environmental activities as less important or are not fully aware of the environmental issues and how it affects them. Based on these facts, we can reject the _{hypothesis 1. Asian consumers do attach value to CSR activities carried out by firms,} but rate legal and social concerns higher than environmental concerns.

7.2 CSR awareness

In the previous paragraph we stated that Asian consumers are less aware of the environmental issues and therefore do not value them as important factors for purchasing at a firm. Following this statement, the following hypothesis has been formulated:

Hypothesis 2: Awareness of social, environmental and legal concerns positively influence buyer behavior.

(28)

There is enough evidence to state that more awareness of a firm’s CSR activities leads to increased purchase intentions. However, the CSR incentives of firms are not always

communicated clearly with their consumers. Managers should try to communicate and expose their CSR activities carefully to their consumers to benefit from this. The most effective way for firms to communicate their CSR activities can be achieved by using a social marketing strategy.

7.3 Competitive advantage for firms in the beer industry

In the previous paragraphs we stated that Asian and western people attach value to CSR activities of firms and it does influence their buying behavior. Also, increased awareness of a firm's CSR activities positively influences purchase intentions of consumers. This leads us to the following hypothesis:

Hypothesis 3: Acting in a corporate social responsible way leads to competitive advantages for firms in the beer industry.

Numerous studies suggest that implementing CSR can lead to competitive advantages. These competitive advantages are acquired by channels such as brand recognition and social

identification by consumers (Cannon, Ling, Wang & Watanabe, 2019). CSR has a positive impact on the competitive advantage, reputation and customer satisfaction of a firm (Saeidi, Sofian, Saeidi, Saeidi & Saaeidi, 2015). However, acting in a corporate social responsible way does not directly lead to competitive advantages. Studies suggest that the awareness and exposure of CSR activities to consumers is an important factor to benefit from these activities (Wigley, 2008) (Lee & Shin, 2010).

(29)

8. Conceptual model

Figure 3: _{Conceptual model}

Hypothesis 1: Western consumers value CSR activities more than Asian consumers.

Hypothesis 2: Awareness of social, environmental and legal concerns positively influence buyer behavior.

(30)

9. Conclusions , Limitations & Future Research

Many papers focus on Corporate Social Responsibility or Firm Performance, however very little research is aimed towards the effects one has on another. Research that does focus on the effects of CSR on Firm Performance is mainly being investigated on a regional level, but never from a global view. This paper tries to address whether CSR incentives have an effect on the global performance of firms within the beer industry. From this missing piece of literature, I tried to answer the following question: ”How can Corporate Social Responsibility be used to increase firm performance within the beer industry?”

9.1 Conclusion

The beer industry is dominated by a few large firms. These firms participate in CSR activities in different ways. This paper has tried to identify and analyse the motives and benefits of CSR activities, where current research is lacking on this topic. And assess whether CSR activities can provide a competitive advantage within the beer industry.

(31)

From the results of this first hypothesis, we tried to build further upon the lacking awareness of Asian consumers towards CSR incentives, we tested if increased awareness has a positive influence on buying behavior of consumers. Therefore, we formulated the second

hypothesis:”Awareness of social, environmental and legal concerns positively influence buyer behavior.” Answering this hypothesis is important for understanding the relation between addressing CSR activities and how consumers react to this. Different research papers provide evidence of this statement and also mention that CSR activities that are closely related to the consumer influence buying behavior even more.

The third and final hypothesis can be used to answer the research question this paper has tried to address. Therefore, we have formulated the following hypothesis:“Acting in a corporate social responsible way leads to competitive advantages for firms in the beer industry.” This hypothesis is important for understanding the link between previous research carried out on CSR and firm performance and the research on firms within the beer industry in this research paper.

Ultimately, influencing the buying behavior of consumers can lead to competitive advantages. These advantages come in the form of brand recognition and customer identification. From this research paper, we can conclude that firms that participate in CSR activities can generate competitive advantages on the beer and cider market.

(32)

The theories used in this paper partially answer our research question, firms that do engage heavily in CSR activities and score high on the ESG-Ratings are likely to generate a competitive advantage, however there are other factors that come into play. Since a firm’s revenues and competitive advantage is not only generated by its CSR activities, it is hard to address how much of an effect these CSR activities have on increased revenues and competitive advantages. There is enough evidence that acting in a corporate social responsible way has an effect on these two, but no hard evidence on the size of its effect is available.

Marketing strategies have been well developed and there is hard evidence available that the use of social marketing strategies can help firms address their CSR activities towards their

consumers. However, with the availability of many marketing strategies and how broadly defined they are, there might be an absence of a best practice in this area. Currently, theories are lacking on this “best practice” marketing strategy for addressing CSR activities.

9.2 Limitations

This paper faces a few limitations which can influence the findings of it. By addressing them I hope to provide a different view for future research on this topic. These limitations build further upon the choices made in this paper.

There are a lot of papers that write about CSR and competitive advantage, however there are none that link those two concepts to firms in the beer industry on a global level. Overall, CSR can provide a competitive advantage, but it is not clear whether consumers attach value to CSR activities of a firm when they buy beer, since there is no research done on this subject among its consumers.

(33)

This paper looks on the competitive advantage CSR can create on a global level. However, there are a lot of cultural differences all over the world. What could work in country X might not work in country Y. Firms should assess per region or country how they can address their CSR

activities and what CSR activities consumers value the most. Also, the paper differentiates Asia and the western countries. There is no attention towards the Latin American, African and East European countries.

The surveys carried out by other researchers with respect to hypothesis 1 use relatively low sample sizes of 290 (Teh et al., 2019) and 195 respondents (Chang & Cheng, 2017) and only give insight into two Asian countries. To give a better indication of the purchase intentions of consumers or regions, a bigger sample should be used and more countries should be questioned.

The paper relies heavily on the use of literature written by other researchers. This type of data is more open for interpretation and therefore might influence the strength of this paper.

9.3 Future Research

Future research on this topic is necessary. CSR and Firm performance are broad concepts and to state that one might definitely work in an industry is hard to say. If firms are willing to

(34)

The absence of some financial data and sustainability reports can limit a researcher in its findings. Acquiring the right information can be a hard task to do. However, to get a more detailed view of a firm’s CSR activities and how it affects its performance, future research needs to have access to this kind of information.

This paper looks at the beer industry from a global view, however I think it is equally or even more important for firms to understand how different regions react to CSR activities of firms. Providing research on regional differences, can help firms understand foreign markets better and thus reducing its liability of foreignness.

(35)

References

AB InBev. (2020). _{Annual Report 2019 AB InBev . Retrieved from:}

https://www.ab-inbev.com/content/dam/abinbev/news-media/press-releases/2020/02/final-full-ab -inbev-annual-report/AB%20INBEV%20EN%20Full_Addendum.pdf

Appel, G., Grewal, L., Hadi, R., & Stephen, A. T. (2019). The future of social media in marketing. _{Journal of the Academy of Marketing Science, 48(1), 79–95.}

https://doi.org/10.1007/s11747-019-00695-1

Asahi Group. (2019). _{Asahi Group Annual report 2018. Retrieved from} https://www.asahigroup-holdings.com/en/ir/pdf/annual/2018_all.pdf

Azadi, S., & Rahimzadeh, E. (2012). Developing Marketing Strategy for Electronic Business by Using McCarthy’s Four Marketing Mix Model and Porter’s Five Competitive Forces. _EMAJ:

Emerging Markets Journal_{, 2(2), 46–58. https://doi.org/10.5195/emaj.2012.25}

Bamber, M. (2019). A New World Order for the Beer Industry: A Review of the Acquisition of SABMiller by Anheuser_{-Busch AB InBev. Accounting Perspectives, 18(2), 117–131.}

https://doi.org/10.1111/1911-3838.12197

Barney, J. (1991). Firm Resources and Sustained Competitive Advantage. _{Journal of}

Management_{, 17(1), 99–120. https://doi.org/10.1177/014920639101700108}

Bluiminck, N. (2020, April 14). Aantal horecabedrijven in Nederland: 61.775. Retrieved 26 April 2020, from

(36)

Braunerhjelm, P., & Halldin, T. (2019). Born globals – presence, performance and prospects.

International Business Review_{, 28(1), 60–73. https://doi.org/10.1016/j.ibusrev.2018.07.004}

Brewers Association. (2020, April 21). National Beer Sales & Production Data. Retrieved 25 April 2020, from _{https://www.brewersassociation.org/statistics-and-data/national-beer-stats/}

Carlsberg. (2020). _{Annual Report 2019. Retrieved from}

https://www.carlsberggroup.com/media/35966/carlsberg-as-annual-report-2019.pdf

Carlsberg. (2020a). _{Carlsberg Corporate Governance Report 2019. Retrieved from}

https://www.carlsberggroup.com/media/36093/2019-carlsberg-corporate-governance-report.pdf

Carroll, A. B. (1991). The pyramid of corporate social responsibility: Toward the moral management of organizational stakeholders. _{Business Horizons, 34(4), 39–48.}

https://doi.org/10.1016/0007-6813(91)90005-g

CBS. (2017, June 13). Aantal bierbrouwers meer dan verviervoudigd sinds 2007. Retrieved 23 April 2020, from

https://www.cbs.nl/nl-nl/nieuws/2017/24/aantal-bierbrouwers-meer-dan-verviervoudigd-sinds-20 07

Chang, L., & Cheng, J. (2017). _{Consumer Response to Corporate Social Responsibility (CSR) in}

China_{(Thesis). Retrieved from}

https://uu.diva-portal.org/smash/get/diva2:1134668/FULLTEXT01.pdf

Chong, A. Y. L., Ch’ng, E., Liu, M. J., & Li, B. (2015). Predicting consumer product demands via Big Data: the roles of online promotional marketing and online reviews. _{International}

Journal of Production Research_{, 55(17), 5142–5156.}

(37)

Coff, R., & Raffiee, J. (2015). Toward a Theory of Perceived Firm-Specific Human Capital.

Academy of Management Perspectives_{, 29(3), 326–341. https://doi.org/10.5465/amp.2014.0112}

Commission of the European Communities. (2001). _{GREEN PAPER: Promoting a European}

framework for Corporate Social Responsibility_{. Retrieved from}

https://ec.europa.eu/commission/presscorner/detail/en/DOC_01_9

Conway, J. (2019, November 12). Sales of the leading beer companies worldwide 2019. Retrieved 10 April 2020, from

https://www.statista.com/statistics/257670/sales-of-the-leading-beer-companies-worldwide/

Conway, J. (2020, April 1). Carlsberg’s marketing expenses worldwide 2007-2019. Retrieved 27 April 2020, from _{https://www.statista.com/statistics/957252/carlsberg-marketing-expenses/}

Czerwińska, T., & Kaźmierkiewicz, P. (2015). ESG Rating in Investment Risk Analysis of Companies Listed on the Public Market in Poland. _{Economic Notes, 44(2), 211–248.} https://doi.org/10.1111/ecno.12031

Deshmukh, R. (2019). _{Craft Beer Market. Retrieved from} https://www.alliedmarketresearch.com/craft-beer-market

Freisleben, G. (2011). Benefits & Burdens of CSR for SMEs. _{Financial Executive, 27(8), 53–56.} Retrieved from

http://web.b.ebscohost.com.proxy-ub.rug.nl/ehost/detail/detail?vid=13&sid=92e0e1c5-52a0-45c 1-a9bc-87e856abbde0%40sessionmgr101&bdata=JnNpdGU9ZWhvc3QtbGl2ZSZzY29wZT1za XRl#AN=66475696&db=buh

(38)

Giese, G., Lee, L., Melas, D., Nagy, Z., & Nishikawa, L. (2019). Foundations of ESG Investing: How ESG Affects Equity Valuation, Risk, and Performance. _{The Journal of Portfolio}

Management_{, 45(5), 69–83. https://doi.org/10.3905/jpm.2019.45.5.069}

Guttmann, A. (2019a, September 20). Anheuser-Busch InBev: ad spend in the U.S. 2009-2018. Retrieved 25 April 2020, from

https://www.statista.com/statistics/192158/us-ad-spending-of-anheuser-busch-inbev/

Guttmann, A. (2019b, September 26). Heineken: ad spend in the U.S. 2018. Retrieved 26 April 2020, from _{https://www.statista.com/statistics/308557/heineken-advertising-spending-usa/}

Harziotis Trade. (2016, September 9). Off Trade & On Trade. Retrieved 25 April 2020, from https://www.hartziotis.com.cy/cyprus-trading-operations/sales-marketing/off-trade-on-trade/

Heineken. (2020). _{Heineken Annual Report 2019. Retrieved from}

https://www.theheinekencompany.com/sites/theheinekencompany/files/Investors/financial-infor mation/results-reports-presentations/heineken-nv-hnv-2019-annual-report.pdf

Hooley, G. J., Lynch, J. E., Brooksbank, R. W., & Shepherd, J. (1988). Strategic market environments. _{Journal of Marketing Management, 4(2), 131–147.}

https://doi.org/10.1080/0267257x.1988.9964066

(39)

Jumbo. (n.d.). Jumbo bier. Retrieved 23 April 2020, from _{https://www.jumbo.com}

Kaplan, S. (2020). Beyond the Business Case for Social Responsibility. _{Academy of}

Management Discoveries_{, 6(1), 1–4. https://doi.org/10.5465/amd.2018.0220}

Ketchen Jr, D. J., Hult, G. T. M., & Slater, S. F. (2007). Toward Greater Understanding of Market Orientation and the Resource-Based View. _{Strategic Management Journal, 28(9),} 961–964.

Khurshid, F., Park, W., & Chan, F. T. S. (2020). The impact of competition on vertical integration: The role of technological niche width. _{Business Strategy and the Environment,}

29_{(3), 789–800. https://doi.org/10.1002/bse.2371}

Kirin Holdings. (2019). Kirin Report 2018. Retrieved from

https://www.kirinholdings.co.jp/english/ir/library/integrated/2018/

Lee, K., & Shin, D. (2010). Consumers’ responses to CSR activities: The linkage between increased awareness and purchase intention. _{Public Relations Review, 36(2), 193–195.} https://doi.org/10.1016/j.pubrev.2009.10.014

Lerro, M., Caracciolo, F., Vecchio, R., & Cembalo, L. (2018). Consumer’s Side of Corporate Social Responsibility: A Nonhypothetical Study. _{Journal of Consumer Affairs, 52(3), 689–710.} https://doi.org/10.1111/joca.12182

Liang, H., & Renneboog, L. (2017). On the Foundations of Corporate Social Responsibility. _The

(40)

Marketline. (2020). _{Marketline Industry Profile: Global Beer and Cider. Retrieved from}

http://web.a.ebscohost.com.proxy-ub.rug.nl/ehost/pdfviewer/pdfviewer?vid=7&sid=12748d21-6 a2f-447a-a134-6cc2bededf75%40sessionmgr4006

Marquina, P., & Morales, C. E. (2012). The influence of CSR on purchasing behaviour in Peru and Spain. _{International Marketing Review, 29(3), 299–312.}

https://doi.org/10.1108/02651331211229778

Mayasari, I. (2012). The Perspectives to Understand Social Marketing as an Approach in Influencing Consumer Behavior for Good. _{Gadjah Mada International Journal of Business,}

14_{(2), 163–182. https://doi.org/10.22146/gamaijb.5442}

MSCI. (n.d.). ESG Ratings. Retrieved 18 April 2020, from _{https://www.msci.com/esg-ratings} Molson Coors. (2020). _{Molson Coors yearly Report. Retrieved from}

https://ir.molsoncoors.com/news/press-release-details/2020/Molson-Coors-Reports-2019-Full-Ye ar-and-Fourth-Quarter-Results/default.aspx

Molson Coors. (2020a). Governance and Ethics | Molson Coors. Retrieved 25 June 2020, from https://www.molsoncoors.com/about/governance-and-ethics

Nie, P., Wang, C., Chen, Y., & Yang, Y. (2018). EFFECTS OF SWITCHING COSTS ON INNOVATIVE INVESTMENT. _{Technological and Economic Development of Economy, 24(3),} 933–949. _{https://doi.org/10.3846/tede.2018.1430}

Pandey, M., & Verma, R. (2015). Factors Influencing the Buying Behavior of Consumers Towards Organized Retail Stores in Jalandhar, Punjab. _{IUP Journal of Marketing Management,}

14_{(1), 51–65. Retrieved from}

(41)

Rodrigue, J., & Tan, Y. (2019). PRICE, PRODUCT QUALITY, AND EXPORTER

DYNAMICS: EVIDENCE FROM CHINA. _{International Economic Review, 60(4), 1911–1955.} https://doi.org/10.1111/iere.12410

Ruivo, P., Oliveira, T., & Neto, M. (2015). Using resource-based view theory to assess the value of ERP commercial-packages in SMEs. _{Computers in Industry, 73, 105–116.}

https://doi.org/10.1016/j.compind.2015.06.001

Samiee, S., & Chirapanda, S. (2019). International Marketing Strategy in Emerging-Market Exporting Firms. _{Journal of International Marketing, 27(1), 20–37.}

https://doi.org/10.1177/1069031x18812731

Scherer, A. G., & Voegtlin, C. (2020). Corporate Governance for Responsible Innovation: Approaches to Corporate Governance and Their Implications for Sustainable Development.

Academy of Management Perspectives_{, 34(2), 182–208. https://doi.org/10.5465/amp.2017.0175}

SDG. (2020). Goal 6: Sustainable Development Knowledge Platform. Retrieved 25 June 2020, from https://sustainabledevelopment.un.org/sdg6

Shea, C. T., & Hawn, O. V. (2019). Microfoundations of Corporate Social Responsibility and Irresponsibility. _{Academy of Management Journal, 62(5), 1609–1642.}

https://doi.org/10.5465/amj.2014.0795

(42)

Srivastava, R. K., Fahey, L., & Christensen, H. K. (2001). The resource-based view and marketing: The role of market-based assets in gaining competitive advantage. _{Journal of}

Management_{, 27(6), 777–802. https://doi.org/10.1177/014920630102700610}

Tan, T. L., & Trang, D. T. D. (2019). Factors Affecting Brand Image: The Case of Pepsodent in Da Nang, Vietnam. _{The IUP Journal of Brand Management, 16(2), 7–25. Retrieved from} http://web.b.ebscohost.com.proxy-ub.rug.nl/ehost/pdfviewer/pdfviewer?vid=9&sid=527bb98d-4 eea-4580-a026-045ebdb96463%40pdc-v-sessmgr01

Teh, B. H., Ong, T. S., Pang, L. T., Muhammad, H., & Ong, T. C. (2019). The Influence of Corporate Social Responsibility (CSR) Activities on Consumers’ Purchasing Behavior . _Jurnal

Pengurusan_{, 56, 1–20. Retrieved from}

http://web.b.ebscohost.com.proxy-ub.rug.nl/ehost/pdfviewer/pdfviewer?vid=4&sid=7ddb6ab9-1 a92-45fd-931c-91d26cd23d6d%40pdc-v-sessmgr03

Tencati, A., Misani, N., & Castaldo, S. (2020). A Qualified Account of Supererogation: Toward a Better Conceptualization of Corporate Social Responsibility. _{Business Ethics Quarterly, 30(2),} 250–272. _{https://doi.org/10.1017/beq.2019.33}

Thai Beverage. (2020). _{Thai Beverage Annual report 2019. Retrieved from} http://thaibev.listedcompany.com/misc/AR/20200110-thaibev-ar2019-en-01.pdf

Wigley, S. (2008). Gauging consumers’ responses to CSR activities: Does increased awareness make cents? _{Public Relations Review, 34(3), 306–308.}

(43)

Does doing good drive firm performance?