Are we fashionably late to care?

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Are we fashionably late to care?

The influence of consumers’ CSR perception on the purchase

intention of luxury goods moderated by different branding strategies

Master thesis

Author: Matea Makelja S3796450 Supervisor: Prof. Dr. Tilo Halaszovich

Co-assessor: Dr. R.W. de Vries Faculty of Economics and Business,

University of Groningen

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Abstract

The purpose of this research is to establish a relationship between consumers’ CSR perception and the intent to purchase luxury goods with the moderating effect of different preferences in differently branded goods. The main reason why this research was conducted is to answer the literature gap where CSR was measured in one or two dimensions. In this research three dimensions of CSR were implemented in order to find out if different dimensions are perceived equally, and if that perception influence intention to purchase. Accordingly, there is a lack of research that puts CSR and luxury goods into relation with each other. In order to test the hypothesis, multiple linear regression with moderation was conducted. The analysis did not support the proposed hypothesis, but some of the managerial implications were taken out.

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Acknowledgment

I would like to use this opportunity to pay my special regards to my supervisor Prof. Dr. Tilo Halaszovich for all the patience, availability and advice during this process. Writing this thesis has been a big challenge for me, and I would not be able to finish it without his guidance and expertise.

Also, I would like to express my gratitude to all the RUG professors and staff that I met during my stay here. Thank you for teaching me patience, endurance and that hard work always pays off.

I would also like to thank my parents, sister and grandparents for their constant support and understanding which helped me to achieve not only success in academic area, but also in other aspects of life. Thank you for believing in me even when I didn’t believe in myself. Finally, I must express my gratitude to all my friends here in Groningen and back home - for your patience, help and support. Every single one of you is so special to me and I am beyond lucky to know and have you. I am looking forward to everything that the future holds.

Sincerely,

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List of tables and figures

Table 1 Sample description ... 28

Table 2 Country of origin ... 29

Table 3 Factor loadings ... 33

Table 4 Correlation table ... 35

Table 5 Regression table ... 38

Figure 1 The pyramid of CSR (Carroll 1991, p.42) ... 11

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1 Introduction

Living in a world where with a simple click on a smartphone any information is available in less than a second, it is hard not to see all happenings in the world today. Thus, it is not a surprise that everyone heard about the horrible accident in Bangladesh couple of years ago, where more than thousands of factory workers lost their lives. Those people worked in an old, illegally built textile factory for an average of 60$ per month (Forbes, 2016). Everyone remembers the fire that killed more than 300 workers in a textile factory in Pakistan, as workers were not able to leave the building in time due to poor safety measures and highly emphasized cost reduction targets during construction. Fashion industry has been criticized not only for ignoring humanity within the production process, but also for having a negative impact on the environment. Moreover, the fashion industry is the second largest water consumer of all industries, and it releases 10% of all global carbon emission (The world bank, 2019).

All these unfortunate events put a high dose of pressure on fashion conglomerates. Besides pollution, luxury conglomerates have been criticized for using real leather including high involvement of animal cruelty (Lo and Ha-Brookshire, 2018) and consumers started to boycott luxury brands (Davies, Lee, & Ahonkhai, 2011). In order to enhance their reputation, most fashion multinational enterprises (MNEs) have implemented various forms of corporate social responsibility (CSR) in their business activities. The majority of big companies publish CSR annual reports in order to enhance the importance of doing CSR and inform the public about their achievements in CSR area to enhance their reputation. As the CEO of Kering, François-Henri Pinault said: “The luxury business does not escape the logic that human beings and the planet should be protected together. On the contrary, it should play an important part in achieving that goal, as a model and leader" (Castro 2000). Fionda and Moore (2009) believe that luxury conglomerates need to create strategic long-term sustainability goals in order to reduce criticism.

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As CSR is having an impact on various business areas and multiple factors of life, defining CSR is ought to be rather difficult. For the purpose of this research the definition from McWilliams and Siegel (2001, p.117) will be introduced, “Further some social good beyond the interest of the firm and that which is required by law”.

As established before, luxury conglomerates are not an exception when it comes to implementing CSR activities. The concept of the term luxury is also challenging to define, since “Luxury for one may just be ordinary to another” (Phau and Prendergast 2000, p.123), and it is a subjective and multidimensional construct (Wiedmann, Hennings and Siebels, 2007). Multiple scholars established different consumer motivations for conducting a luxury purchase. Some of the consumers like to buy expensive goods to impress others (Bagheri, 2014), to demonstrate superiority of their status (Packard, 1959), or because of the quality and tradition of the luxury product itself (Lo and Ha-Brookshire, 2018).

As mentioned, there are different factors that influence the motivation and willingness to purchase luxury goods. Such factors are included by the company within their brand management and therefore essential for the establishment of the luxurious product itself. In order to answer customers’ demand for luxury products that will satisfy their needs and requirements, luxury brands often offer different types of branded goods. When it comes to differently branded goods, some luxury companies produce their products in respect with conspicuously and inconspicuously type of branding. Brad conspicuousness is the way of branding luxury goods where brand draws attention to luxury goods, it can be achieved by displaying a big logo or using loud and strong colors while designing (Janssen, Vanhamme, Leblanc, 2017, p.168). On the opposite, inconspicuously branded goods have low visual prominence and use quiet and discreet signals in their design (Han et al., 2010).

Research states that differently branded goods are purchased with different intentions and goals. It is interesting to observe why consumers are buying certain branded luxury goods and what they want to achieve with that purchase and how different types of consumers perceive the relevance of CSR. This research is conducted in order to answer the research question: “Does CSR perception of consumers influence the purchasing decision, and does it depend on

preference in differently branded luxury goods”? In order to answer this question, the research

was conducted, and data was collected through the survey.

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2 Literature review and hypothesis development

2.1 CSR

2.1.1 CSR timeframe

The concept of corporate socially responsible activities might seem like a newly arisen concept taking into consideration all the happenings in the modern world today, but the concept of CSR has been extremely popular within scientific in the business area. The concept itself enjoys a rich history in business literature (Carroll, 1991). Nowadays, this concept is extremely popular since the process of globalization has been criticized for pointing out inequality of labor force (Bouquet and Deutsch, 2008), climate changes and poverty (Kolk and van Tulder, 2010). These days it is hard to find any MNE without CSR activity incorporated in their mission, vision and business plan. Although, the general understanding of what is to be considered socially responsible and its corresponding activities, is difficult to incorporate within one single definition (Runhaar and Lafferty, 2009).

Various scholars had tried to define corporate socially responsible activities in order to understand their measurement, their influence on financial performance and more.

In his article, where he linked all previous work on CSR to make the concept more understanding, Carroll (1991) calls Howard R. Bowen “The father of corporate social responsibly” (Carroll, 1991, p. 270). Bowen is known as one of the first scientist who defined the concept of CSR in 1953 in his publication Social Responsibilities of the Businessman. He set grounds by defining CSR as: “Obligation of businessmen to pursue those policies, to make those decisions, or to follow those lines of action which are desirable in terms of the objectives and values of our society” (p.6.), explaining that a businessman, while making decisions, needs to take into consideration how those decisions will have an effect on society.

During the 1960s scientists had tried to define concepts of CSR more detailed, but still follow Bowen’s work. Despite, Davis (1960) argued that the concept of CSR is not clearly defined, and that CSR needs to be explained in a managerial context. One of the biggest contributions of his research was introducing the “Iron law of responsibility” to the literature, explaining that “Social responsibilities approximately equal with their [businessman] social power” (Davis, 1960, p. 73).

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some groundbreaking arguments. One of the most noticeable novelty is including groups of stakeholders into the CSR definition. “Instead of striving only for larger profits for its stakeholders, a responsible enterprise also takes into account employees, suppliers, dealers, local communities and the nation” (Johnson 1971. p.50). He enhanced the importance of taking care about other business aspects despite sole profit orientation. The other very important point that he made in his research is that CSR could be a helpful tool to maximize profits in a long-term perspective. Lastly, he introduced “Lexicographic view of social responsibility”, explaining that MNEs are focusing on CSR after they reached their main goal-profit.

During the 1980s the most significant work on the CSR topic was from Thomas M. Jones. He argued that a company needs to implement CSR activities voluntarily, and not because they are facing pressure from law or shareholders. He defines CSR as an “Obligation to constituent groups in society other than stockholders and beyond that prescribed by law and union contract” (Jones, 1980, p.59).

One of the most noticeable contribution to the CSR theory in the 1990s was brought by Donna J. Wood. She represented a three-dimension model based on previous work of Carroll (1991) and Wartick and Cochran (1985).

Taking into consideration the interest of scientists in the field of CSR and all definitions and models that have been proposed during the past few years, it is safe to say that there is no unique definition of CSR and that the implementation process of CSR activities is perceived differently from company to company.

2.1.2 CSR today

Despite the fact that CSR studies have a rich history in literature, there is no generally accepted definition of CSR, what kind of activities it includes, how it is measured and what it implies if a company wants to be socially responsible. To resolve this issue, scientists focused on social responsibility concepts, motivation, activity types and performance effects (Jamali, 2010; McWilliams and Siegel, 2001; McWilliams, Siegel and Wright, 2006). Multiple researches came to a conclusion that there is a various number of reasons why a corporation is involved in CSR, some of them can be to avoid negative publicity (Sprinkle and Maines, 2010) or to boost reputation (Bansal and Roth, 2000; Maignan and McAlister, 2003).

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compromising ethical norms, doing what is morally or ethically expected, understanding that corporate integrity and ethical behavior go beyond compliance with law and regulations (Carroll, 1991 p.41). The final component of Carroll’s responsibility pyramid is philanthropic responsibility. In order to be philanthropically responsible, a company needs to behave like a proper corporate citizen assuming involvement into the community development. He argues that philanthropy is highly appreciated and demanded but it is not as important as other components of the pyramid. Some of the components include doing business in line with philanthropic expectation of the society, to assist the fine and performing arts, to embrace employees to participate in charitable activities in their communities, to provide help to educational institutions and to enhance quality of life within the community (Carroll, 1991 p.41).

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In addition to the theories introduced, it is important to mention three different approaches to CSR: Global CSR approach, local CSR approach and transnational CSR approach (Filatotchev and Stahl, 2015). They are explaining ways of how corporations are dealing with local and global pressures to implement CSR. If a company is emphasizing on a global CSR approach it indicates that there is a CSR consistency in every country where they are doing business. Perks of carrying out a global CSR approach are consistency in decision making and parity of the rules. A negative impact of carrying out a global CSR strategy is that shareholders can get offended for not respecting local circumstances and it can result in cultural arrogance (Filatotchev and Stahl, 2015). Further, a local CSR approach is when a corporation is ignoring global consistency and implementing CSR activities in line with local values and norms. Benefits of local approach is that CSR is created in order to build trust and goodwill encompassed by local stakeholders and it has benefits of a local approach includes CSR being created in order to build trust and goodwill encompassed by local stakeholders and it has a higher level of flexibility than the global CSR approach. The downside of implementing a local CSR approach is the difficulty to find a boundary of what is considered rightful. Thus, it makes it much harder to define what is morally acceptable. Furthermore, it entails the difficulty to create a consistency in creating rules and norms (Filatotchev and Stahl, 2015). Lastly, the transnational CSR approach is a combination of the first two approaches and is characterized as having a defined guide for CSR decision making, but at the same time it allows managers of subsidiaries to modify and adapt it according to local needs. Enforcing a transnational CSR approach can result in a higher level of CSR performance in a headquarter and/or subsidiary but may also result in higher implementation costs (Filatotchev and Stahl, 2015).

2.1.3 Measuring CSR

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for human rights is measured, working conditions, working hours and if all employees are treated equally. The third one is the shareholder dimension focusing on providing sustainable growth and long-term success, open communication with shareholders, and investing capital correctly. The fourth dimension is the environmental domain, it addresses the topic as a reduction of energy consumption, waste prevention, and recycling. The fifth one is the societal domain, which includes factors as the rate of employing people with disabilities, number of donations to social facilities and investments in education programs. The sixth dimension is the customer domain including factors such as implementing fair sales practice, meeting quality standards and a possibility to file complains. The final and seventh dimension is the supplier domain addressing fair terms and conditions for suppliers, open communication and fair negotiation. This scale combines all factors that can influence consumers’ perception of a corporation’s CSR activities. For the purpose of this research only three domains of the concept will be added to the model: employee domain, environment domain and community.

2.2 Luxury purchase behavior

In order to continue with the model development, other variables need to be added. To get a better understanding of the concept, it is important to explain consumer buying behavior, purchase intention, meaning what luxury goods are and how they are perceived by customers, and which characteristics distinct luxury goods from other goods.

2.2.1 Consumer buying behavior

Kotler and Keller (2006) define consumer buying behavior as “The study of how individuals, groups, and organizations select, buy, use and dispose of goods, services, ideas or experiences to satisfy their need and wants” (p.173).

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also into subcultures which are group of people who has shared beliefs established on similar lifestyle (Kotler and Armstrong, 1991).

Another factor that can determine consumer buying behavior is the social factor. Kotler and Armstrong (1991) define social factors as all external factors that consumers are surrounded by (e.g. reference groups, family, roles and status). This means that the purchase behavior can be influenced by friends and family or nowadays social media. Corporations are interested in the buying behavior of reference groups, because members of the same social class have a tendency to have similar purchasing behaviors.

Personal factors can also have an influence on consumer buying behaviors. According to Kotler and Armstrong (1991), personal factors include: age and life cycle-stage, occupation, economic situation, lifestyle, personality and self-concept. Age and life-cycle stage play a big role in the buyer’s decision process, because people change their buying habits and taste in certain products over the years. The second biggest influencing factor is the consumer’s occupation. Occupation defines taste and interest in specific products and services. For instance, a fitness coach and a lawyer are unlikely to buy clothes for work at the same department since they look for differently designed product. The economic situation influences the behavior in a way where higher income results in higher demand of luxury goods (Ray and Kramer, 2006). Lifestyle is “Indicator of the individuality of taste and sense of style of the owner/consumer” (Featherstone, 1987, p.55), and it greatly influences the customer’s behavior. Another factor is personality and self-concept. “Personality [and self-concept] refers to the unique psychological characteristics that lead to relatively consistent and lasting responses to one’s own environment” (Kotler and Armstrong, 1991, p.141). When defining a brand, it can have its own personality which defines as a “Specific mix of human traits that may be attributed to a particular brand” (Kotler and Armstrong, 1991, p.141). Customers prefer brands whose personality matches their personality, which eventually results in development of a certain purchase behavior.

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their products and services in order to provide the best of it. Authors argue that learning is a process that appears in different experiences, and that the previous experiences, whether negative or positive, have an influence on purchasing behavior. Beliefs and attitudes are the last psychological factors of consumers’ buying decisions. “A belief is a descriptive thought that a person has about something” (Kotler and Armstrong, 1991, p.144) and attitude is a “person’s relatively consistent evaluations, feelings, and tendencies toward an object or idea” (Kotler and Armstrong, 1991, p.144). According to Mohr, Webb and Harris (2001), the more knowledge consumers have about CSR, the stronger a relationship between beliefs and behavior is. Taking all these explanations into consideration, it is safe to say that, for marketers, consumers’ beliefs and attitudes are the hardest to influence.

2.2.2 Purchase intention

There are various definitions of purchase intention in the literature. Purchase intention (PI) can be defined as “An individual’s conscious plan to make an effort to purchase a brand” (Spears and Singh, 2004. p.56). Gruber (1971) explain that the purchase intention can be a linked to a consumer’s attitude toward the brand and purchase behavior. This is in line with Fishbein (1975) who developed a theory called “A theory of reasoned action” where he argues that purchase intention can be a mediator among consumers’ attitudes towards making a purchase. Measuring purchase intention can be useful in predicting consumers’ purchase behavior, but it is important to keep in mind that not every purchase intention will result in a purchase since there is a various factor that have an influence (Wee et al. 2013).

2.2.3 The theory of planned behavior and social empathy theory

The theory of planned behavior is extensively used in consumer behavior research. The theory itself is an extension to the original theory of reasoned action (Ajzen and Fishbein, 1980; Fishbein and Ajzen, 1975). The theory of planned behavior is the first step in developing the first argument that CSR perception influences the purchase intention of luxury goods.

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(Ajzen,1991). The first determinant attitude toward behavior depends on the degree of appraisal, weather favorable or unfavorable, of the evaluated behavior (Ajzen, 1991,). The second one is the subjective norm which depends on the social pressure to perform the behavior, or in other cases, the pressure not to perform it (Ajzen, 1991, p.188). The last determinant is the degree of perceived behavioral control, which could be defined as a perceived difficulty or ease of performing that behavior (Ajzen, 1991, p.188). Kotler and Armstrong (1991) establish that attitude, as part of psychological factors, can influence consumers’ buying behavior and Ajzen (1991) argues that “The stronger the intention to engage in a behavior, the more likely should be its performance” (p.181).

Nowadays, some CSR activities are regulated by law. Furthermore, some companies are more engaged in CSR activities than others and are willing to do more than required by regulations. One of the reasons why companies are engaged in CSR can be explained by the empathy theory. The concept of empathy was introduced by Batson and Shawn (1991), who define empathy as an emotional response that is consistent with the perceived welfare of another being. Putting yourself in other persons’ position can draw a better picture and understanding of the situation and which might result in some action (Gerdes and Segal, 2009). In their research, Islam, Ali and Asad (2019) explained that employees with higher level of empathy have greater influence on companies CSR activities. Also, it is stated that external stakeholders evaluate organizations that perform better in social responsibilities as compared to irresponsible organization (Brammer et al., 2014).

Concluding this, it can be argued that consumer’s attitude toward CSR can influence the purchase behavior of luxury good.

2.3 Luxury goods and purchase behavior

2.3.1 The concept of luxury

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and cultural surroundings of the consumers, and different perceptions of the same luxury brands.

In order to define concept of luxury more clear, various scholars tried to establish which characteristic distinct luxury products from non- luxury ones. Ward and Chiari (2008) gave an explanation that luxury products can be anything that is not a bare necessity in a consumer’s life. According to Shukla et al. (2009), functionality is the reason why non-luxury goods are purchased by consumers and when it comes to luxury goods, they purchase them because owning a luxury item gives them a symbolic value. In the literature, luxury goods are divided into four categories: fashion, perfumes/cosmetics, wines/spirits and watches/jewelry (Fionda and Moore, 2009), where 42% worth of sales belong to the luxury fashion industry (Fionda and Moore, 2009).

Only a few scientists (Kapferer 1998; Eastman et al., 1999; Phau and Prendergast 2000; and Dubois et al., 2001) focus their research on developing the scale in order to evaluate luxury brands. Vigneron and Johnson (1999) developed the five-dimensions scale of factors which describes luxury brands with respect to: conspicuousness, uniqueness, quality, hedonism and extended self. They divided those five factors into two groups: non-personal-oriented perceptions and personal-oriented perceptions to enhance the importance of factors for brand development. Later in their research they extended the initial five-dimension scale with more subdimensions (Vigneron and Johnson, 2004). Kapferer (1998) developed a scale to measure luxury which divides three different factors that measure luxury, namely creativity, renown and elitism.

2.3.2 Conspicuously and inconspicuously branded luxury goods

As mentioned before, luxury goods are not only purchased because of the functionality of the product, but to satisfy psychological and functional needs. Nia and Zaichkowsky (2000), establish that psychological benefit is a main motive for consumers to engage in luxury goods consumption. Luxury goods are often purchased because of status, belonging to a certain group or personal satisfaction. For members of lower social classes, owning a luxury item represent a way of being accepted and seen as a member of higher classes (Truong, 2010).

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status search is a key motive for the luxury goods consumption. Some consumers desperately search for status, which is why they engage in buying fake products (Marticotte and Arcand, 2017). The interest in such products grows along with power and popularity of the brand it represents (Koh et al., 2009). In contrast to previous research, some scholars argue that consumers with low need for status prefer to buy luxury goods that only a few can recognize. In that way, they associate with their own kind and avoid gauche luxury consumption (Han et al. 2010).

As it was mention before, there are all different factors that influence the motivation to buy luxury goods. Some consumers purchase luxury goods for status, some for belonging to a higher class, while others try to avoid being sorted in the first group. As expected, those different consumer groups do not have similar taste when it comes to luxury goods, but they all buy products from the same brands.

In 1899, Veblen set a ground by introducing to the theory concept on conspicuous consumption. Explaining that the purpose of conspicuous consumption is nothing more than to send a message about having a high income and comfortable lifestyle. Later, various scholars build upon his theory, and conspicuousness and inconspicuousness strategies were developed. Luxury brands have the freedom to choose whatever strategy they want. Nowadays, multiple brands choose to implement both strategies to attract customers with different preferences and needs.

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in their design (Han et al., 2010). They also argue that wealthy consumers with a low need for status want to associate with their own kind and pay a premium for quiet goods. Consumers agree that brand inconspicuousness strategy is giving them an opportunity to express themselves through goods and to stand up from the mass (Aaker, 1997; Escalas and Bettman, 2005). This also means to own high quality products made by a luxury brand with long tradition (Lo and Ha-Brookshire, 2018), and to express different aspects of themselves (Escalas and Bettman, 2005).

The brand has the freedom to choose which strategy to pursue in creating luxury goods. It is important to mention that choosing one strategy does not mean that they are not allowed to implement the other one as well. In postmodern society, consumers acquire luxury products for both conspicuous and inconspicuous reasons (Atwal and Williams, 2009). For example, Gucci and Louis Vuitton adopted a dual strategy to satisfy the needs of customers. Some of the Louis Vuitton products are full of logos and designed in notable colors, while other products are designed in a way that brand mark appears only decently inside of the product (C. Janssen et al., 2017). Understanding and analyzing these two theories can be extremely useful to managers in luxury MNEs, so that they can predict purchasing trends and adjust their business strategy to it.

2.4 Hypothesis development

There is a lot of debate in academic circles about the influence of CSR and intention to purchase luxury goods. Multiple researches have been conducted in order to find out if there is a relationship between CSR and luxury goods, and if the consumers care about CSR when purchasing luxury goods. It’s safe to say that luxury business may differentiate from other businesses because luxury purchase is a blessed moment (Davies et al. 2012), it’s connected with hedonism (Hagtvedt and Patrick 2009) and success (Mandel et al. 2006) so the question “why would luxury goods consumers even care about CSR when the luxury goods purchase is associated with sobriety and equity” arises. (Cristini et al.,2012). On the other hand, there is public pressure on luxury conglomerates to implement CSR activities because of the bad reputation and accidents associated with criticism for using real leather (e.g., Victoria Beckham), racism (e.g., Dolce and Gabbana) and numerous other factors.

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Michaut-Denizeau, 2014). Davies et al., (2012) stated that, when it comes to luxury goods, ethical consideration does not play a big role in consumers’ purchase decision, and that consumers intent to ignore it (Ehrich and Irwin, 2005). While on one hand some authors argue that consumers do not perceive CSR enough because of the lack information on CSR activities (Bray et al. 2011), others say that brands are taking a lot of risk while communicating CSR activities to the public, because consumers assume that when a brand is communicating CSR activities, something isn’t right with the brand (Torelli et al. 2012). Some authors believe that the brand’s engagement in CSR activities ruins the quality of the products (Achabou and Dekhili, 2013).

From the other point of view, a number of authors state that even when the CSR is not a main criterion in purchasing decision process, it can be a start of consumers identification with a brand, which can later result in an intention to purchase or the purchase itself (Hildebrand et al., 2011). Becker-Olsen et al., (2016) stressed that consumers are paying more and more attention to companies’ CSR activities and, in line with the findings, they engage in purchasing. It is well known that luxury is characterized with high quality, timeless products and know-how. These characteristics can bring to a conclusion that luxury production is more sustainable than production of fast fashion goods, which can result in consumer paying more attention to CSR activities (Claudio, 2007). Kapferer and Michaut (2015) stated in their research that although consumers established that they do not pay a lot of attention to CSR activities while purchasing luxury goods, they react negatively when they discover some negative actions of luxury MNEs, and they do have high expectations of luxury MNEs to respect certain CSR standards. If consumers notice that a brand is producing goods with no respect to CSR regulations, they start to boycott the brand and putting pressure on it in order to force them to change their way of doing business (Davies, Lee and Ahonkhai, 2012; Gardetti and Torres, 2014). Kapferer and Michaut (2015) also argue that nowadays, sustainability and respect to CSR are elements of quality that luxury consumers expect, and that importance of CSR will only increase in the future (Kudłak et al., 2018).

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between CSR and intention to purchase luxury goods in literature, while the existing ones are outdated and, as stated before, contradictory.

One of the most noticeable researches in this area is the one from Amatulli et al., (2018) where three experiments extending Carroll’s four-dimension model of CSR have been conducted, dividing it into two groups of external and internal dimensions. They argued that consumers pay more attention to companies’ external CSR activities which can increase consumers’ willingness to buy products. There is a gap in research because the CSR is measured on a two-dimension scale - external and internal – only. That research gap was used as a starting point of this research, as it was already mentioned in the CSR part, for the purpose of this research CSR scale from Öberseder et al. (2014) was adapted. Scale was developed as seven-dimension scale but for the purpose of this research only three seven-dimensions will be put into the model: environment, community and employee domain. Based on the theory of social empathy and the theory of planned behavior it can be proposed that consumer perception of CSR can influence intention to purchase. In order to answer research question thoroughly, the following hypothesis are proposed.

H1a: There is a positive relationship between a customer’s perception (of importance) of the community as a dimension of CSR and the intention to purchase luxury goods.

H1b: There is a positive relationship between a customer’s perception (of importance) of the employee as a dimension of CSR and the intention to purchase luxury goods.

H1c: There is a positive relationship between a customer’s perception (of importance) of environmental as a dimension of CSR and the intention to purchase luxury goods.

As it was established in previous paragraphs, consumers do have different motives to purchase luxury goods. Some of the consumers seek a status (Eastman et al., 1999) or to earn a certain reputation (O’ Cass and Frost, 2002). Some scholars argued that the majority of consumers looking to purchase luxury goods for status and society’s acceptance are engaged in conspicuous consumption (Han et al., 2010). As it was already mentioned, conspicuousness is a way of branding luxury items in order to attract attention and obviously state to which brand the item belongs.

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of classy, low key branding, where only a person with high knowledge of the brand can differentiate the luxury good (Ferraro et al. 2013).

With different motives to purchase luxury goods come different interpretations of the CSR activities and evaluation of the importance of those activities. Some of the latest studies explain that the luxury brands that implement inconspicuous branding strategies are more favorable by consumers than those that implement conspicuous branding strategy (Janssen et al., 2017). Furthermore, they hypothesize that different ways of branding products, as well as the consumers’ motives and motivation to buy differently branded luxury goods, can influence the CSR perception (Janssen et al., 2017). In order to establish the relation between consumers’ perception of the relevance of different levels of CSR, intention to purchase and different preferences in branding, the following hypotheses are proposed.

H2a: The relationship between a customer’s perception of the CSR/ community domain and intention to purchase luxury goods is moderated by a preference for conspicuously and inconspicuously branded goods, where that relationship is stronger when consumers prefer inconspicuously branded goods.

H2b: The relationship between a customer’s perception of CSR/ employee domain and intention to purchase luxury goods is moderated by preference for conspicuously and inconspicuously branded goods, where that relationship is stronger when consumers prefer inconspicuously branded goods.

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1

Figure 2 Conceptual model

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3 Methodology

3.1 Research design

In order to examine the relationship between CSR perception, preference for conspicuously/inconspicuously branded goods and the intention to purchase luxury products, quantitative research was conducted. As stated before (see page 20), few studies on this topic exist so far. Additional to pre-existing evidence, this investigation provides information on which domain of CSR influences purchase intention the most and how the relationship between different CSR domains and purchase intention is influenced by the preference for conspicuously/inconspicuously branded goods. Interest for CSR in the corporate world is rapidly growing. As Pohl and Tolhurst (2010) pointed out, CSR is becoming a main strategy in doing business. Furthermore, Achabou and Dekhili (2013), established that clients are more involved in responsible and sustainable behavior and soon they will dictate trends and demand from companies to act more consciously. In lines with these facts, this research might propose answers and solutions which corporations can take into the consideration while discussing business plans and strategies. In order to do so, a survey was conducted in a cross-sectional study design using the methodological approach described below.

3.2 Sample and data collection

To test proposed hypothesis the quantitative test was conducted. The data was collected via online survey which was sent out via social media and email as a link or QR code. Everyone with a link or QR code was be able to take a part in a survey. The sample consists of male and female respondents with different incomes, age and nationalities. In order to get as much as respondents as possible the survey was distributed in English language.

The period of the data collection was from 16th_{until 19}th_{of December. Due to the} short time period of data collection 175 respondents completed the survey. For unknown reason, 89 respondents did not finish survey and their answers were removed from final data.

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3.3 Variables

3.3.1 Independent variable

The independent variable in this research is the consumers’ perception of CSR which was measured using a short-version of a scale developed by Öberseder et al. (2014). The original questionnaire measures a consumers’ personal perception of how relevant CSR activities are with regard to seven different CSR dimensions. As the researches stated in their paper, dimensions are mutually independent and suitable to observe as an individual dimension. For the purpose of this research, only three dimensions have been included: employee dimension, environment dimension and community dimension (for overview of all domains and further explanations, please check chapter 2.1.3.). For each dimension five questions are introduced. Thereby, the participants are asked to report their opinion on a five-point Likert scale, where five means strongly agree and one strongly disagree.

3.3.2 Moderating variable

The moderating variable for this research is the customer’s preference for conspicuously or inconspicuously branded goods. In the survey, two pictures of the same luxury brand, but branded in line with two strategies (conspicuous and inconspicuous branding) will be offered. By clicking on one of those two goods, the respondent indicates a preference which one he/she would be willing to purchase. In the survey, five different brands have been included with two very similar products that differ in their style of branding. For the analysis, they will be recoded into dummy variables whereby a preference in inconspicuously goods will equal 0, meaning that a preference in conspicuously goods will equal 1.

3.3.3 Dependent variable

To measure purchase intention, an adapted version of the scale developed by Shukla and Purani (2012) has been used. The scale consists of five questions whereby the respondent is asked to express how strongly he/she agrees with a given statements. The perception will be measured on a five-point Likert scale ranging from one strongly disagree to five strongly agree.

3.3.4 Control variables

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CSR activities while making a purchasing decision and that managers should take into consideration segmentation by gender while making strategies.

Variable age was found (Vassilikopoulou, Siomkos, and Mylonakis, 2005) to have a positive attitude towards CSR, which supports Terpstra et al., (1993) theory that individuals, within the age, become more ethical

The third control variable in this research is income, Dubois and Duquesne (1993) established that the richer a person is, the higher the chances are that this person will be engaged in luxury product consumption. The fourth control variable in nationality, since the research was conducted in the Netherlands, Dutch nationality was taken as a control variable.

Prior to data analysis, control variables were transferred into dummy variables. First variable gender is transferred whereby male gender was encoded as 1 and female gender was encoded as 0. Next, age was recoded into a dummy variable whereby an age between 30 and 49 years old was encoded as 1 and all other age groups were encoded as 0. The third control variable is income. Hereby, the value equals 1 if respondent earn 25 000-50 000 EUR per a year if a respondent earns less than 24 000EUR or more than 50 000 per a year, the value equals 0. The last control variable is country, since the research is conducted in the Netherlands2, if respondent is Dutch the value is equal to 1, and if the respondent belongs to another nationality, the value equals 0.

3.3.5 Statistical analysis

All data were analyzed using the statistics software SPSS 25 (IBM Corp, 2020). To begin with analysis, and to prepare variables for the next steps, reliability analysis, and factor analysis will be conducted. Later on, the Bivariate Pearson correlation between variables will be measured, and in order to support the proposed hypotheses, multiple regression analysis and multiple regression analysis with moderation will be conducted.

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4 Results

In the following chapter, the results of the data analysis are depicted. First, the sample and its characteristics will be described. After defining the sample, the results of the assumption-check for the multiple regression analysis are described. Afterwards, the results from the Pearson bivariate correlation will be depicted, also results from factor and reliability analysis. Followed by the results of the multiple regression analysis which has been conducted in order to test first three hypotheses. Finally, the results of the multiple regression analysis with moderation are depicted which was used to test last three hypotheses in the conceptual model.

4.1 Sample description

Total of 175 respondents completed the survey. For unknown reasons, 89 respondents did not finish survey and were thus excluded from the final data analysis. Thus, the final sample consists of N = 86 respondents. Of these, n = 59 were females (68,6%) and n = 27 were males (31,4%). All respondents belong to one of two age categories. A majority of n = 74 respondents (86%) was between 18 and 29 years old, while the remaining n = 12 (14%) respondents were in older than 30 and younger than 49 years old. There were no respondents younger than 18 and older than 49 years old.

A majority of n = 71 (82,56%) respondents has an income of 24 000 EUR or less per year while n = 12 respondents (13,95%) reported an annual income of 25 000 EUR to 50 000 EUR. Meanwhile, only n = 2 (2,33%) respondents reported an income higher than 51 000 EUR and lower than 70 000 EUR per year and only one (1,16%) respondent stated earnings more than 71 000 EUR per a year.

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4.2 Assumptions for multiple linear regression

After analyzing the sample characteristics, it is important to examine whether the data meets certain requirements for further data analysis. For multiple regression analysis, the assumptions (requirements) that need to be fulfilled include a sufficient sample size, homoscedasticity, and a normal distribution of the data as well as the absence of multicollinearity.

The first assumption that needs to be met is a sufficient sample size., With a sample size of N = 86 participants, this assumption was fulfilled in the present study since according to Stutely (2003) a number of N = 30 respondents is sufficient for parametric data analysis. The next assumption is the assumption of homoscedasticity, meaning that the variance of the residuals is constant. To meet this assumption, the multiple linear regression was conducted in SPSS. Secondly, when scatterplot of the residuals was observed, it can be safe to say that data does not have obvious pattern, hence, homoscedasticity can be assumed to be fulfilled.

The third assumption is normal distribution of the data. In order to meet this assumption, normal P-P plot were investigated, whereby the graph indicated that the requirement of normal distribution is fulfilled.

Finally, multicollinearity between the independent variables was tested. In order to meet the assumption of absent multicollinearity, it is important to establish that independent variables are not too highly correlated. Thereby, a correlation higher than 0.8 is considered to be problematic. This is, however, not an issue here since the highest correlation between independent variables was r=.591. Additionally, the VIF values were observed. In order to confirm the absence of multicollinearity, the VIF score needs to be lower than 10. The VIF values of independent variables environment (1.540), employee (1.797) and community (1.304) are lower than 10, indicating that it is safe to say that assumption of absence of multicollinearity is met.

4.3 Factor analysis

In order to conduct the multiple regression analysis and check correlations, first a factor analysis needs to be performed. The data base contains three independent variables which are measured with five factors.

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‘Meritorious’ (Field, 2000). Hence, this condition is fulfilled. Next, the correlation table is checked, it is important that the correlation of variables is below 0.9 (Hair et al. 2013), since correlation above 0.9 would mean that questions do measure same values, hence, they are not a good fit for analysis. Since the highest correlation between the five variables that measure community is .632, and the lowest is .356, the correlations are suitable for analysis and no variable is deleted. Next, observing the table showing the total variance explained, it was found that the first two factors explain 57,164% of the variance. Each additionally added factor explains less of the total variation. In the pattern matrix the lowest value is equal to .686, it is safe to say that all factors meet the criteria and are therefore suitable for the analysis. Finally, Cronbach’ alpha for this variable is equal to .803, all values higher than 0.7 meet assumptions (Kline, 1999). Thus, the internal consistency for this variable is sufficient.

Next tested variable is Employee, the value of KMO test for this variable is .786 which corresponds to ‘Meritorious’ (Field, 2000). Hence, this condition is satisfied. Next, the correlation table was examined. Since the highest correlation between the five variables that measure community is .629, and the lowest is .268 which is suitable for the analysis so that no variable had to be deleted (Hair et al. 2013). The total variance explained is equal to 56.378% which means that first two variables explain more than 56% variance. Each additionally added factor explains less of the total variation. In the pattern matrix the lowest value is equal to .616, it is safe to say that all factors meet criteria and they are suitable for analysis. Finally, the Cronbach’ alpha for this variable is equal to .771, all values higher than 0.7 meet assumptions (Kline, 1999). Thus, the internal consistency for this variable is sufficient.

Third variable tested is variable Environment, the value of KMO test for this variable is .826 which corresponds to ‘Meritorious’ (Field, 2000). Hence, this condition is satisfied. Next observed table is correlation table. Since the higher correlation between five variables that measure community is .706, and the lowest is .513 which is suitable for analysis and no variable is deleted (Hair et al. 2013). From the total variance explained chart number of explains percentage of variance is equal to 68.279% which means that first two variables explain more than 68% variance. Each additionally added factor explains less of the total variation. In the pattern matrix the lowest value is equal to .753, it is safe to say that all factors meet criteria and they are suitable for analysis. Lastly, the Cronbach’ alpha for this variable is equal to .879, all values higher than 0.7 meet assumptions (Kline, 1999).

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MEASUREMENT ITEMS FACTOR LOADING VARIANCE EXPLAINED EIGENVALUE CRONBACH’S ALPHA COMMUNITY DOMAIN

Contribute to the economic development of the region

.686 57.164 % 2.858 .803 Create jobs for people in

the region

.795 Respect regional values,

customs, and culture

.811 Communicate openly and

honestly with local community

.740

Preserve jobs in the region .742

EMPLOYEE DOMAIN

Respect human rights of employees

.768 56.378% 2.819 .771 Treat employees equally .812

Develop, support and train employees

.785 Offer adequate

remuneration

.758 Flexible working hours for

employees .615 ENVIRONMENTAL DOMAIN Prevent waste .845 68.279% 3.414 .879 Recycle .873 Corporate environmental protection standards are higher than legal requirements

.753

Dispose of waste correctly .814 Reduce energy

consumption

.841

PURCHASE INTENTION

I purchase luxury goods accessories to show who I am

.735 56.961% 2.848 .803

I would buy a luxury good just because it has status

.809 I would pay more for a

luxury good if it has status

.827 Luxury good are important

to me because they make me feel more acceptable in my work circle

.760

Owning luxury good indicate a symbol of wealth

.627

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After meeting all assumptions in order to start an analysis, the next step will be taken.

4.4 Computing total scores

In order to continue the analysis, total scores were computed for the community domain, employee domain, environment domain and purchase intention under consideration of the factor loadings. Since all variables had sufficient values of factor loading (value no lower than 0.35, Field, 2009), no variable was excluded. For each of the three domains of CSR, new variables were established containing the mean values derived from the answers to the five items per scale, thus, the total score. The five items that measure the level of perception of CSR in the community domain were computed into one variable named Community. The five items that measure the level of CSR employee perception were computed into one variable called Employee. The five items that measure CSR perception of customers in the environmental domain were computed into one variable called Environment. Finally, the five items that measure customers' intention to purchase were computed into one variable named Purchase intention.

4.5 Correlation

In order to continue with the analysis and testing hypotheses, correlation analysis was conducted. Table 4 presents Bivariate Pearson correlation matrix which display information about correlations between variables. As chart shows, variable Employee has significant positive correlation with variable Community (r = .481, p < 0.01). Also, variable Community had s a significant positive correlation with variable Environment (r = .321, p < 0.01). Variable Environment also has a positive correlation with variable Employee (r = .591, p < 0.01). The correlation between variable Purchase intention and Employee is significantly negative ( r =

-.234, p < 0.05), as well as the correlation with variable Purchase intention and variable

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Table 4 Correlation table

4.6 Multiple regression analysis

To test hypotheses H1a, H1b and H1c, a multiple regression analysis was conducted. As mentioned earlier in section 4.2, all assumptions for the analysis were met.

In model 1, the influence of the control variables age, income, gender and country on the dependent variable purchase intention were tested. With R2 = .077 (R2adj = .031), the model showed a low goodness-of-fit meaning that only a small part of the variance in the dependent variable intention to purchase luxury goods was explained by the control variables (Cohen, 1988). Overall, the tested control variables did not significantly predict the consumers’ intention to purchase luxury goods (F (4,81) = 1.691; p = .169). Of all the variables included in the model, only income significantly predicted the intention to purchase luxury goods (β = .640, p = 0.028) in the sense that consumers with a higher income are more likely to have the intention to purchase luxury goods.

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goods. The variables Preferences (β = .858, p = 0.018) had a significant effect on the purchase intention of luxury goods.

Based on the results of the multiple linear regression in model 2, hypotheses H1a – H1c have to be rejected since there was no positive relationship between any of the predictors and the dependent variable.

4.7 Multiple regression analysis with moderation

After testing the first three hypotheses and establishing a relationship between them, the next three hypotheses (H2a, H2b, H2c) were tested. The multiple regression analysis with moderation was conducted. As was hypothesized, it is believed that preferences in differently branded luxury goods have an influence on a relationship between CSR and purchase intention of luxury goods. Consequently, the moderating effect in this conceptual model has customers' preferences in different branding luxury goods.

In model 3, variable preference was tested as a moderator in relationship between a consumer’s personal perception on relevance of community CSR activities on purchase intention. With R2 = .247 (R2adj = .157), the model is significant with (F (9, 76) = 2.764, p < .007).

The variables Income (β = .634, p = 0.022) and Environment (β = -.420, p = 0.015) had a significant effect on the purchase intention of luxury goods. Tested variable Community did not show any significant relationship with variable Purchase intention moderated by variable preferences, hence, hypothesis H2a cannot be confirmed.

In model 4, variable preference was tested as a moderator in relationship between a consumer’s personal perception on relevance of environmental CSR activities on purchase intention. With R2_{= .247 (R}2_{adj = .158), the model is significant with (F (9,76) = 2.774, p <} .007). The variables Income (β = .636, p = 0.022) and Environment (β = -.406, p = 0.021) had a significant effect on the purchase intention of luxury goods. In the model, tested variable Environment with preference in luxury goods as a moderation did not show any significant effect on variable Intention to purchase. Hence, hypothesis H2b cannot be confirmed.

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Employee, moderated with variable Preference did not show any significant effect on variable Intention to purchase, hence, hypothesis H2c cannot be confirmed.

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5 Discussion

The main goal of this research was to establish the influence of consumers’ CSR perception on the intention to purchase luxury goods with the moderation of preferences in differently branded luxury goods.

In model 1, control variables were tested, where it resulted that only variable income has a positive significant effect on Purchase intention. The result can be explained that the higher the income of the consumer is, the higher are preferences to purchase luxury goods. This finding is in a line with the argument from Dubois and Duquesne (1993), who established that the richer the person is, the higher are chances that he/she will be engaged in luxury product consumption.

In model 2, variables Environment, Community, Employee and Preferences were tested to support hypotheses H1a, H1b, and H1c. The variable environment had a negative significant relationship with intention to purchase, while other CSR domains were not significant. This implies that consumers who are concerned about the environment are less likely to purchase luxury goods. Another significant relationship was a preference for luxury goods and intention to purchase. This finding explains that consumers in the first place are interested in purchasing luxury goods without taking into consideration the CSR activities of the company. This is in line with Achabou and Dekhili (2013) finding which explains that consumer does not perceive CSR activities compatible with luxury and that luxury goods were purchased for some other characteristics.

Other empirical evidence suggests that other hypotheses cannot be confirmed which can be explained that preferences inconspicuously and inconspicuously branded goods do not interact with proposed CSR dimensions. This might be because consumers’ lack of information on company’s CSR activities (Bray et al., 2011) or just the fact that purchasing luxury goods is a blessed moment (Davies et al. 2012) and that should not be ruined thinking about environmental pollution, child labor or animal suffering.

5.1 Managerial implication

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Firstly, this research test three different CSR domains proposed by Öberseder et al. (2014), instead of Carroll’s (1991) CSR pyramid, which is outdated and overused in CSR researches. This research explains that consumers do not value each CSR domain equally, therefore this finding can be a useful tool for developing the company’s business strategy. Secondly, the fact that consumers still purchase luxury goods because of the status and what its represent might be an opportunity for a company to make a change in communication of CSR activities and to raise awareness of all CSR projects that they are engaged in, they might bring extra value to the products.

Finally, research results show that consumers who are concerned about the environment are less likely to be engaged in the luxury goods purchase, which strategic managers need to take into consideration while making a business strategy.

5.2 Limitation and future research

Despite the possible contribution of this paper, limitations, and proposal for future research needs to be addressed in order to provide more answers in this research area. One of the limitations of this paper is the size of the sample, which theoretically is eligible for conducting research, for the future researches it is advised to have a bigger sample. Hence, future research should be taken with the same concept and scale but with a higher number of respondents.

Even though the three-level CSR domain scale is a novelty in this kind of research, for the future analysis it would be suggested to use the whole seven-domain scale developed by Öberseder et al., (2014) in order to establish which of seven domains is the most influential on luxury good purchase intention.

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6 Conclusion

This research was conducted to establish the relationship between consumers’ perception of CSR activities and purchase intention and to answer the research question “Does CSR

perception of consumers influence the purchasing decision, and does it depend on preference in differently branded luxury goods”?

The relationship between consumers’ perception of CSR and purchase intention of luxury goods wasn’t clear from previous studies. There is no unique definition of CSR and each company engage in CSR has different activities, also some companies prefer to engage CSR only to obtain minimum level established by law, while others pay more attention and put more energy and resources to it. Some consumers believe that if the company is engaged in CSR activities that they are hiding something, and that something is not good with the products while ignoring the fact that other companies are obtaining just a minimum level of it. This fact represent quite a challenge in measuring and defining the importance of CSR and reporting CSR to the public.

Other reason why is so hard to measure and establish a relationship between CSR and luxury goods might be consumers’ different perception of luxury, which can influence his needs and motivation to engage in one since the different type of consumer might perceive the same luxury good differently.

Next reason why is so challenging to define relationship can be the fact that different factors influence purchase behavior as cultural factors, social factors, personal factors, and psychological factors. All these factors need to be taken into consideration while making a business strategy.

To establish a relationship and make it more clear multiple analysis was conducted. To start with reliability analysis, and factor analysis were conducted. Later on, the Bivariate Pearson correlation between variables was measured, and to support the proposed hypotheses, multiple regression analysis and multiple regression analysis with moderation were conducted.

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purchasing luxury goods. Other tested variables age, nationality and gender did not show any significant effect on purchase intention. Testing variables Environment, Community, Preferences and Employee, only variable Environment was significantly correlated with intention to purchase, explaining that consumers who care more about companies' environmental CSR activities are less likely to engage in a luxury purchase. This finding is contrary to expectations, but it can be a valuable finding for companies’ strategic management. When the moderation effect of preferences in differently branded luxury goods was included in the model, the result did not change, hence, the hypothesis was not supported.

Even empirical evidence did not show results as expected, it was established that consumers differently perceive multiple dimensions of companies' CSR activities. It was established that the dimension environment has more influence than dimension community and employee. Also, it was established that consumers' preferences in branding goods do not have any effect on CSR perception of consumers.

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