Consumers’ Perception of Corporate Social Responsibility:

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(1)Consumers’ Perception of Corporate Social Responsibility: A Cross-Cultural Analysis between the UK and India. A dissertation presented by. Claudia Anna Cierpial (B3062741 / S2657791). to. Newcastle University and the University of Groningen in partial fulfilment of the requirements for the degrees of. MA Advanced International Business Management. MSc International Business and Management. at. at the. Newcastle University. University of Groningen. Supervisor: Dr. Emmalinde Roelofse. Supervisor: Dr. R.W. de Vries. 8 January 2015 Word Count: 14915.

(2) Abstract This research investigates UK and Indian consumers’ willingness to support socially responsible corporations, their propensity to punish firms for bad corporate social behaviour and examines their evaluations of economic, legal, ethical and philanthropic responsibilities of the firm. Indian consumers appear to be more willing to support socially responsible corporations than consumers in the UK. However, UK consumers seem more likely to punish firms for bad corporate behaviour than consumers in India. This research provides evidence that UK consumers value legal and ethical responsibilities of the firm, whereas for Indian consumers economic and philanthropic responsibilities are more important. These findings show that consumers’ perception of CSR differs greatly in both countries, suggesting that the concept of CSR in developing countries cannot be compared to its typical manifestation in the developed world. The nature of these findings calls for further academic research on the nature of CSR across nations and offers firms insights about socially responsible behaviour.. ii.

(3) Acknowledgements First and foremost, I would like to thank my supervisors Dr. Emmalinde Roelofse from Newcastle University and Dr. Rudi W. de Vries from the University of Groningen for their guidance, patience and valuable support during the last few months. Their help and feedback have made this dissertation possible.. I’m grateful to my mother, Renate Budniok-Cierpial, for her constant, emotional support during all stages of my dissertation. Also, I would like to thank my father Radoslaw Cierpial, who taught me to complete my studies with ambition and dedication.. Finally, special thanks go to the several individuals who helped in distributing my questionnaire in India and the UK. Without their help my research would not have been possible.. Last, I would like to thank all participants in the UK and India who gave their time to complete my questionnaire.. I dedicate this dissertation to Laika.. iii.

(4) Table of contents Abstract ..................................................................................................................................... ii Acknowledgements .................................................................................................................. iii Table of contents...................................................................................................................... iv Abbreviations ........................................................................................................................... vi List of figures .......................................................................................................................... vii List of tables ........................................................................................................................... viii. 1. Introduction .......................................................................................................................... 1 1.1 Background ...................................................................................................................... 1 1.2 Problem identification and research gap ......................................................................... 2 1.3 Research question ............................................................................................................ 2 1.4 Structure of dissertation ................................................................................................... 3 2. Theoretical framework and hypotheses ............................................................................. 5 2.1 Corporate social responsibility ........................................................................................ 5 2.1.1 Evolution of CSR ..................................................................................................................5 2.1.2 Carroll’s conceptual model ...................................................................................................8 2.1.3 Defining CSR ......................................................................................................................11. 2.2 Stakeholder theory ......................................................................................................... 12 2.2.1 Concept of stakeholder theory .............................................................................................12 2.2.2 Stakeholder theory and CSR ...............................................................................................14 2.2.3 Consumers and CSR ............................................................................................................15. 2.3 CSR in developed and developing countries ................................................................. 17 2.3.1 CSR in developed countries ................................................................................................17 2.3.1.1 Conceptualisation of CSR in developed countries ......................................................17 2.3.1.2 CSR in the UK.............................................................................................................18 2.3.2 CSR in developing countries ...............................................................................................19 2.3.2.1 Conceptualisation of CSR in developing countries.....................................................19 2.3.2.2 CSR in India ................................................................................................................21 2.3.3 Cross-cultural comparison ...................................................................................................23 2.3.3.1 Hofstede’s dimensions ................................................................................................23 2.3.3.2 Hofstede and CSR .......................................................................................................25. 2.4 Hypotheses..................................................................................................................... 25 2.4.1 CSR Support in general .......................................................................................................25 2.4.2 Punishment of bad corporate behaviour ..............................................................................25 2.4.3 Dimensions ............................................................................................................... 26 iv.

(5) 3. Methodology ....................................................................................................................... 29 3.1 Research design ............................................................................................................. 29 3.2 Questionnaire development ........................................................................................... 29 3.3 Questionnaire design ..................................................................................................... 30 3.4 Population and sample ................................................................................................... 32 3.5 Data collection ............................................................................................................... 32 3.6 Data analysis .................................................................................................................. 33 4. Analysis and results ............................................................................................................ 34 4.1 Demographics ................................................................................................................ 34 4.2 Analysis of definition of CSR ....................................................................................... 36 4.3 Analysis of Hypotheses ................................................................................................. 39 4.3.1 Hypothesis 1: Analysis of CSR support in general .............................................................39 4.3.2 Hypothesis 2: Analysis of punishment of bad corporate behaviour ....................................40 4.3.3 Hypotheses 3 and 4: Differentiation of CSR responsibilities .............................................40 4.3.4 Hypothesis 5: Economic responsibilities in the UK ............................................................42 4.3.5 Hypothesis 6: Economic responsibilities in India ...............................................................42 4.3.6 Hypothesis 7: Legal, ethical and philanthropic responsibilities in the UK .........................42 4.3.7 Hypothesis 8: Legal, ethical and philanthropic responsibilities in India ............................43. 5. Discussion ............................................................................................................................ 45 5.1 Theme A: Definition of CSR ......................................................................................... 45 5.2 Theme B: CSR support in general ................................................................................. 45 5.3 Theme C: Punishment of bad corporate behaviour ....................................................... 46 5.4 Theme D: Dimensions ................................................................................................... 47 5.5 Main research question .................................................................................................. 50 6. Conclusion ........................................................................................................................... 51 6.1 Limitations and future research ..................................................................................... 51 6.2 Implications ................................................................................................................... 52 6.3 Concluding remarks ....................................................................................................... 52 Bibliography ........................................................................................................................... 53 Appendix A: Results from SPSS ........................................................................................... 62 Appendix B: Questionnaire ................................................................................................... 71 Appendix C: Results of questionnaire .................................................................................. 77 v.

(6) Abbreviations BSR. Business for Social Responsibility. CED. Committee for Economic Development. CSP. Corporate social performance. CSR. Corporate social responsibility. CVS. Chinese value survey. MNC. Multi-national corporation. NGO. Non-governmental organisation. STI. Stanford Research Institute. UK. United Kingdom. US. United States. vi.

(7) List of figures Figure 2: The pyramid of corporate social responsibility ........................................................ 10 Figure 3: Three types of stakeholder theory............................................................................. 13 Figure 4: Stakeholder view of the firm .................................................................................... 13 Figure 5: Drivers of CSR in developing countries ................................................................... 19 Figure 7: Cultural comparison between the UK and India....................................................... 26 Figure 8: Questionnaire design ................................................................................................ 30 Figure 9: Gender distribution of UK and Indian respondents .................................................. 34 Figure 11: Distribution of education among UK and Indian respondents ............................... 35 Figure 12: Occupation of UK and Indian respondents ............................................................. 36 Figure 13: UK and Indian perspective on CSR ........................................................................ 38 Figure 14: Punishment of bad corporate behaviour (UK and India) ........................................ 40 Figure 15: Importance of the four social responsibilities (UK and India) ............................... 43 Figure 16: Introduction text...................................................................................................... 71 Figure 17: Question 2 ............................................................................................................... 72 Figure 18: Questions 3, 4 and 5................................................................................................ 73 Figure 19: Question 6 ............................................................................................................... 74 Figure 20: Questions 7, 8, 9, 10 and 11.................................................................................... 75 Figure 21: Questions 12 and 13................................................................................................ 76. vii.

(8) List of tables Table 1: Evolution of CSR in India .......................................................................................... 22 Table 2: UK and Indian consumers' categories in regard to CSR ............................................ 37 Table 3: Cronbach’s alpha for the four responsibilites ............................................................ 41 Table 4: Results for H1-H8 ...................................................................................................... 44 Table 5: T-Test for Hypotheses 1 ............................................................................................. 62 Table 6: Chi-square test for Hypotheses 2 ............................................................................... 62 Table 7: Cronbach's alpha for economic responsibility (UK) .................................................. 63 Table 8: Cronbach's alpha for economic responsibility (India) ............................................... 63 Table 9: Cronbach's alpha for legal responsibility (UK).......................................................... 64 Table 10: Cronbach's alpha for legal responsibilty (India) ...................................................... 64 Table 11: Cronbach’s alpha for ethical responsibility (UK) .................................................... 65 Table 12: Cronbach's alpha for ethical responsibilty (India) ................................................... 65 Table 13: Cronbach's alpha for philanthropic responsibility (UK) .......................................... 66 Table 14: Cronbach's alpha for philanthropic responsibility (India)........................................ 66 Table 15: Paired samples t test for the UK............................................................................... 67 Table 16: Paired Samples t test for India ................................................................................. 68 Table 17: Mean values for the economic responsibility (UK and India) ................................. 69 Table 18: Mean values for the legal responsibility (UK and India) ......................................... 69 Table 19: Mean values for the ethical responsibility (UK and India) ...................................... 70 Table 20: Mean values for the philanthropic responsibility (UK and India) ........................... 70 Table 21: Results for Question 2: UK ...................................................................................... 77 Table 22: Results for Question 2: India ................................................................................... 78 Table 23: Results for Question 3 .............................................................................................. 79 Table 24: Results for Question 5 .............................................................................................. 79 Table 25: Results for Question 6 (Part 1) ................................................................................. 80 Table 26: Results for Question 6 (Part 2) ................................................................................. 81 Table 27: Results for Question 8 .............................................................................................. 81 Table 28: Results for Question 9 .............................................................................................. 81 Table 29: Results for Question 10 ............................................................................................ 82 Table 30: Results for Question 11 ............................................................................................ 82 Table 31: Results for Question 12 ............................................................................................ 82 Table 32: Results for Question 13 ............................................................................................ 82. viii.

(9) 1. Introduction The introduction chapter provides background information on corporate social responsibility and identifies the research gap. Additionally, the research question and structure of the dissertation are presented.. 1.1 Background Corporate social responsibility (CSR) has made its mark as an important area in business research. Literature on CSR dates back to the 1940s, when Berle & Means (1948) addressed the incorporation of voting rights for greater transparency and accountability for all shareholders of a company. Nowadays, CSR increasingly receives attention from researchers, managers and the public. Especially the academic field of consumers’ CSR perception has experienced a meaningful growth (Beckman, 2007; Bhattacharya & Sen, 2004). However, most academic research on CSR was conducted in developed countries. Therefore, CSR has often been approached from a Western world perspective, even though the integration of CSR into business practices can be found worldwide. For example, CSR in India has had a long and distinguished history, which can be traced back to the 1850s (Sundar, 2000). Thus, this dissertation will examine and compare consumers’ perception of CSR in developed and developing countries. However, developed and developing countries cannot be generalised, since there are significant differences between regions (e.g. Africa, Latin America, Asia) and between countries within regions. Therefore, consumers’ perceptions of CSR in the developed world will be examined by specifically addressing consumers in the UK. The UK’s history in regard to CSR dates back to the 1600s (Robins, 2006). Since then, it has acquired a leading role in CSR due to many factors; for example, the UK appointed the first CSR Minister in 2000 in order to coordinate CSR across the country (Idowu, 2011). Today, the UK is home to some of the word’s leading thinkers, practitioners and campaigners of CSR (Ward & Smith, 2006). In order to analyse consumers’ perception of CSR in the developing world, a special focus will be drawn to India. The reason for choosing India for this study is its current development in the field of CSR. In 2013, India has become the first country in the world to mandate CSR by law (Chhabra, 2014). Many companies are now required to spend at least 2% of their average net-profits on CSR activities (PWC, 2013). This current development makes India a central key player in order to examine CSR.. 1.

(10) 1.2 Problem identification and research gap It has already been mentioned that the concept of CSR has experienced an extensive research from a developed country perspective. Above all, Carroll (1971, 1991) has significantly contributed to research on CSR. Carroll’s (1991) conceptual model is widely used among researchers until today. It consists of four social responsibilities: economic, legal, ethical and philanthropic responsibilities, with decreasing importance in that order. However, Carroll’s (1991) conceptual model has been developed in a US American context, which suggests that it cannot be generalised around all developed countries. In the literature, there is evidence that his concept might be challenged when applied to a European context (e.g. Crane & Matten, 2007). Additionally, Carroll’s (1979, 1991) conceptual model has been developed over 30 years ago, suggesting that the importance and order of the four social responsibilities might have changed. Therefore, this dissertation contributes to Carroll’s (1991) theory by investigating and exploring it from a modern point of view and applying it to a European context. Furthermore, researchers have proposed that CSR in developed countries has to be treated separately from the developing world (Visser, 2008). Most importantly, Visser (2008) has adapted Carroll’s (1991) conceptual model to a developing country context, suggesting that philanthropic responsibilities are far more important than in the developed world. However, Visser’s (2008) model has only been developed from a theoretical point of view. Therefore, this research addresses the need for Visser’s (2008) model to be further examined.. 1.3 Research question In order to examine consumers’ perception of CSR and linking it to Carroll’s (1991) conceptual model and Visser’s (2008) adapted model for developing countries, the following research question will be answered: To what extent does consumers’ perception of CSR in the UK differ from India and how can these differences be explained? In particular, consumers’ perception of CSR is examined by addressing four themes: (A) definition of CSR, (B) CSR support in general, (C) punishment of bad corporate behaviour and (D) dimensions. Accordingly, the following sub-questions have been developed: Theme A: Definition of CSR 2.

(11) How do UK and Indian consumers understand the implication of CSR? Theme B: CSR Support in general To what extent does consumers’ support of CSR in general differ between the UK and India? Theme C: Punishment of bad corporate behaviour To what extent do consumers from the UK and India differ in regard to punishing bad corporate social behaviour? Theme D: Dimensions How does consumers’ perception in the UK differ to India in regard to (1) economic, (2) legal, (3) ethical and (4) philanthropic responsibilities?. 1.4 Structure of dissertation In order to answer the research question, the dissertation is structured as follows: In the first part, the theoretical framework examines the development of CSR literature in general by explicitly highlighting its evolution, definition and the importance of Carroll’s (1991) framework.. Figure 1: Structure of Dissertation. 3.

(12) Additionally, a special focus is drawn to the consumer by examining stakeholder theory and presenting the current state of research on consumers in regard to CSR. This is followed by a conceptualisation of CSR in the developed and developing world in regard to the UK and India. In order to provide a cross-cultural analysis, Hofstede’s (1991) framework is introduced and linked to research on CSR. In the end, the hypotheses are presented and explained. Second, the methodology of this dissertation is presented. Research design, questionnaire, sample, data collection and data analysis are discussed. Third, the results for the four themes (A-D) are analysed. The research question is answered and results from the analysis are being discussed. Last, the limitations of this research are evaluated, suggestions for future research are proposed and implications are presented. The structure of the dissertation is shown in Figure 1.. 4.

(13) 2. Theoretical framework and hypotheses In this chapter, studies on CSR, stakeholder theory in CSR study and the conceptualisation of CSR in developed and developing countries are discussed. Additionally, research on crosscultural comparison is presented and the hypotheses are introduced.. 2.1 Corporate social responsibility 2.1.1 Evolution of CSR The concept and definition of corporate social responsibility has a long and varied history (Carroll, 1999). The business community’s concern for society has always been prominent and can be traced back for centuries (Carroll, 2008). Nevertheless, CSR has mainly risen in the second half of the twentieth century. The increasing number of articles in leading business journals and journals that have been dedicated to the area of CSR provide extensive evidence to this effect (Ramasay & Yeung, 2009). According to Carroll (1999), the developmental history of the CSR construct is generally divided into four phases, which include a phase of rise and extension in the 1950s, a further expansion in the 1960s and 1970s, a full-fledged proliferation during the 1980s and 1990s and a period of empirical research during the 21st century. Research on CSR can be traced back to the 1940s, when Berle & Means (1948) addressed greater transparency and accountability for all shareholders of a company. However, prior to 1950, social responsible business behaviour was not a widespread practice, even though there is evidence that some degree of social responsibility was being taken on by companies (Carroll, 2008). Carroll (2008) mentions several initiatives in which entrepreneurs and business owners used their personal assets in order to support social causes and projects. Nevertheless, the first academic literature on CSR started to appear after 1950 with Bowen (1953) being one of the first authors to publish significant CSR literature. His book ‘Social Responsibilities of the Businessman’ (Bowen, 1953) presented the first explicit definition of CSR and provided a comprehensive discussion of social responsibility and business ethics at that time. Bowen defined the CSR of businesses as “The obligations 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 the society” (Bowen, 1953, p.6). William C. Frederick stated that CSR of the 1950s was characterised by three core ideas, which included the idea that business managers should have the role of trustees of public interest, balance competing claims to the 5.

(14) resources of the corporation and see philanthropy as a manifestation of business support and good cause (Frederick, 2006). Nevertheless, the CSR approach during the 1950s was rather theoretical than practical. Bowen (1953) has been ahead of his time by calling for specific management and organisational changes and suggesting changes in the composition of boards of directors, greater representation of the social viewpoint in management and social education of business managers. However, there has not been much evidence that his ideas have been implemented during that time, since the corporations of the 1950s did not have many CSR activities, apart from philanthropy (Carroll, 2008). The 1960s were marked by important authors such as William C. Frederick (1960), Keith Davis (1960) and Clarence Walton (1967), who significantly contributed to CSR literature. For example, Davis (1960) attempted to justify socially responsible decision making by asserting the long-term benefits of socially responsible decisions. Nevertheless, Carroll (2008) stated that the 1960s have been similar to the 1950s in regard to the application of theoretical CSR approaches, since CSR has not been widely put into practice by corporations. From a theoretical point of view, however, CSR experienced a significant growth in attempts to formalise and precisely define the meaning of CSR (Carroll, 2008). The 1970s mark an important period for CSR and have been labelled as a period of CSR acceleration (Carroll, 2008). Carroll (2008) sees the Committee for Economic Development (CED) as one of the main contributors of CSR during that time. The CED’s publication ‘Social Responsibilities of Business Corporations’ (Committee for Economic Development, 1971) addresses the importance of responsible management that should embrace a vision and leadership that helps develop a broader social role for corporations. Additionally, the CED reports that businesses were faced with a significant change between the relationship of business and society, which was characterised by growing responsibilities of businesses towards society (Committee for Economic Development, 1971). Since businesspeople and educators composed the CED, it reflected “an important practitioner view of the changing social contract between business and society and businesses’ newly emerging social responsibilities” (Carroll, 2008, p.29). Apart from the CED, more important contributors of the 1970s were Morrell Heald (1970), George Steiner (1971), Harold Johnson (1971) and Richard Eels & Clarence Walton (1974). Johnson (1971) stated that CSR was necessary for corporations in order to balance multiple interests of stakeholders, employees, local communities or suppliers to ensure the 6.

(15) achievement of long-run profit maximisation and multiple goals in general. Steiner (1971) supported his view by emphasising the importance of a long-term managerial focus. These authors provided a managerial approach to CSR, which addressed the application of traditional management functions to deal with CSR issues (Carroll, 2008). At the end of the 1970s, Carroll proposed his widely used framework consisting of four categories relating to a firm’s economic, legal, ethical, and discretionary obligations (Carroll, 1979). In later writings, Carroll referred to the discretionary dimension as philanthropic, since this term was seen as a more accurate description for organisational practices (Carroll, 1991). A detailed description of Carroll’s (1979) framework can be found in Chapter 2.1.2. In general, it can be said that the 1970s had a strong focus on the definitional aspect of CSR, with academics trying to formulate new or refined definitions (Carroll, 2008). The 1980s mark a period of “alternative or complementary concepts and themes such as corporate social responsiveness, corporate social performance, public policy, business ethics, and stakeholder theory/management to mention a few” (Carroll, 2008, p. 34). Important contributors are authors such as Thomas M. Jones (1980), Peter Drucker (1984) and Edwin M. Epstein (1987). Jones (1980) stated that corporate behaviour should be judged by the process by which it is reached, rather than by the decisions that have actually been realised. Hence, he put emphasis on a perspective that sees CSR as a process instead of a set of outcomes (Jones, 1980). Furthermore, the 1980s are the period with an increasing focus of research on the relationship between corporate social responsibility and firm profitability (Carroll, 2008). Drucker (1984) was the first to suggest that social opportunities could be converted into opportunities for businesses. In particular, he stated that social issues could be turned into economic opportunities, benefits and wealth (Drucker, 1984). The 1990s are similar to the 1980s as to the fact that they have a strong focus on concepts complementary to CSR. The CSR concept was seen as a basis for other complementary concepts and themes that embraced CSR thinking, such as corporate social performance (CSP), stakeholder theory, business ethics, sustainability and corporate citizenship (Carroll, 2008). According to Carroll (2008), one of the most significant contributions to the CSR debate of the 1990s was the creation of a non-profit organisation called Business for Social Responsibility (BSR) in 1992, which is still active today. The BSR’s role is to integrate sustainability into businesses’ strategy and operations and to promote collaboration among companies and their stakeholders for sustainable progress (BSR, 2014). The BSR defines 7.

(16) CSR as a set of policies, practices and programs that are integrated into supply chains, business operations and decision-making processes through the company (Carroll, 2008). Additional characteristics of the CSR development in the 1990s are the significant expansion of philanthropy and the growing practical implementation of CSR principles in businesses’ processes. Carroll (2008) mentioned the appearance of specific companies that have dedicated their processes to CSR practices and therefore increased their CSR reputation. These companies include companies such as The Body Shop, Ben & Jerry’s and Esprit de Corp. (Carroll, 2008). In the 21st century, authors continued to develop the theoretical aspects and frameworks of CSR. For example, Mark S. Schwartz and Archie B. Carroll (2003) presented an alternative to Carroll’s (1979) four dimensions by developing a three-domain approach to CSR, which reduced Carroll’s (1979) four dimensions to economic, legal and ethical elements by merging the philanthropic with the ethical dimension. Nevertheless, the theoretical emphasis on the CSR concept from the previous decades has changed to an empirical research perspective in the 21st century (Carroll, 2008). Philip Kotler and Nancy Lee have considerably contributed to the CSR development with their book ‘Corporate social responsibility: Doing the most good for your company and your cause’ (Kotler & Lee, 2005), by specifically addressing CSR best practices. In particular, they presented 25 best practices they regarded as valuable in assisting companies with their CSR programs and initiatives (Kotler & Lee, 2005). In general, the CSR movement of the 21st century has been dynamic with variations around the globe. Carroll (2008) points out that these variations can be seen in differences of management practices and CSR commitment, since companies have been under different legal or regulatory pressures to adopt them. As of today, the development of CSR practices and theory continues. Globalisation has opened markets and linked economies and cultures, as well as empowered groups and individuals, which has led to demands for greater attention to be paid to issues such as human rights, environmental protection and labour standards – the aspects that form the basis for CSR (Gupta, 2014).. 2.1.2 Carroll’s conceptual model Carroll (1979) contributed to CSR theory with his conceptual model of corporate performance, which is widely used in CSR literature until the present day. He differentiated between four types of corporate social responsibilities: economic, legal, ethical and 8.

(17) discretionary1. According to Carroll (1979), these four categories are not mutually exclusive. They have always simultaneously existed for business organisations, even though the history of business suggests an early emphasis on economic aspects, which is followed by legal and then ethical and discretionary aspects (Carroll, 1979). Carroll (1979) emphasised that business must adress all categories of business performance in order to behave socially resonsible. The first social responsibility of business that Carroll (1979) adressed is economic responsibility. It is a business’ fundamental responsibility to make profit and to produce goods and services for the demand of society. For example, this includes creating jobs and new products, promote technological advancement and provide a return on investment to owners and shareholders (Carroll, 1979). The second category is legal responsibility and entails a business’ responsibility to obey the law and operate within the legal framework of society. Society expects a business to fulfil its economic aim within the framework of legal requirements and regulations (Carroll, 1979). However, laws attempt to define the limits of tolerable business behaviour, but they don’t address ethics nor do they legislate morality (Solomon, 1994). Therefore, Carroll’s (1979) third category is ethical responsibility, which embodies additional activities and behaviours that haven’t been defined by law, but are expected of businesses by society, such as the prevention of social harm. However, ethical responsibilities are among the most difficult for businesses to deal with, since there is ambiguity about how ethical behaviour can be defined (Carroll, 1979). The last category is discretionary responsibility, which implies that a business should support and improve the quality of society. Carroll (1979) stated that the discretionary category is the most difficult to specify, since society cannot provide a clear definition for businesses. Therefore, businesses have a wide scope in deciding on specific discretionary activities. For example, these might include philanthropic contributions, conducting in-house programs for drug abusers or providing day-care centres for working mothers (Carroll, 1979). In 1991, Carroll revised his conceptual model of corporate performance. As already mentioned, Carroll (1991) now referred to the discretionary dimension as philanthropic, since 1. In later writings, Carroll referred to the discretionary category as philanthropic (Carroll, 1991). 9.

(18) he considered this term as a more accurate description for organisational practices. Additionally, he organised the four categories of corporate social responsibilities in a pyramid construct (see Figure 2). In this pyramid, economic responsibilities are the foundation of CSR. They are followed by legal responsibilities, which means that businesses have to obey the law, since it is society's regulation of acceptable and unacceptable behaviour (Carroll, 1991). Next are ethical responsibilities, which imply that businesses have the obligation to do what is right, just and fair (Carroll, 1991). Last, philanthropic responsibilities address a business’ responsibility to be a good citizen, which is underlined by society’s expectation that business must contribute financial and human resources to society. In summary, economic and legal responsibilities are socially required, ethical responsibilities are socially expected and philanthropic responsibilities are socially desired (Windsor, 2001). Carroll (1991) stated that a business’ corporate social responsibilities entails a simultaneous fulfilment of the firm's economic, legal, ethical and philanthropic responsibilities by striving to make a profit, obey the law, be ethical and be a good corporate citizen at the same time.. Figure 2: The pyramid of corporate social responsibility (Carroll, 1991). 10.

(19) 2.1.3 Defining CSR Corporate Social Responsibility is defined in a variety of ways. Dahlsrud’s (2008) analysis of the 37 most used definitions provides an overview of the broad and diverse nature of CSR research. Dahlsrud (2008) showed that the five most common dimensions concerning the definition of CSR involve social, economic, voluntary and environmental elements, as well as the stakeholder. Matten & Moon (2008) saw CSR as internally complex with relatively open rules of application. They claimed that the term CSR is overlapping with other conceptions of business-society relations, which means that CSR has views from many disciplines, perspectives and ideologies. Overall, it has clearly been a dynamic phenomenon (Matten & Moon, 2008). The general lack of a clear CSR definition makes it hard to measure a company’s socially responsible behaviour. It can have different meanings to society than it has to companies, which might vary even more when looking across different country settings. Nevertheless, many researchers have investigated the term CSR in the last decades and provided several definitions. In the 1960s, McGuire (1963) proposed a definition that followed Bowen’s (1953) perception of CSR, which saw CSR as a voluntary concept. McGuire (1963) stated that “The idea of social responsibilities supposes that the corporation has not only economic and legal obligations, but also certain responsibilities to society which extend beyond these obligations” (p.144). Davis (1973) underlined the importance of voluntarism of CSR by expressing that “social responsibility begins where the law ends. A firm is not being socially responsible if it merely complies with the minimum requirement of the law, because this is what any good citizen would do” (p.313). These definitions are presented within Carroll’s (1979, 1991) framework and have been included by many researchers in the last couple of decades. Therefore, Carroll’s (1991) definition of CSR provides the foundation for this dissertation: “The total corporate social responsibility of business entails the simultaneous fulfilment of the firm’s economic, legal, ethical and philanthropic responsibilities. Stated in more pragmatic and managerial terms, the CSR firm should strive to make a profit, obey the law, be ethical, and be a good corporate citizen.” (Carroll, 1991, p. 43) A few decades later, Carroll’s (1991) definition of CSR has still been regarded as fundamental. For example, Holme’s & Watts’ (2000) definition stressed the importance of discretionary, ethical, legal and economic responsibilities. Holme & Watts (2000) stated that: “Corporate social responsibility is the continuing commitment by business to behave ethically 11.

(20) and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large” (p.8). This shows that Carroll’s (1991) definition is an important and broad conceptualisation of CSR, which includes corporate citizenship and stakeholder theory at the same time.. 2.2 Stakeholder theory 2.2.1 Concept of stakeholder theory The concept of stakeholder theory owes its development to R. Edward Freeman, who has contributed to stakeholder theory in the 1980s with his book: ‘Strategic Management: A Stakeholder Approach’ (Freeman, 1984). According to Freeman (1984), the stakeholder concept can be traced back to the internal memorandum at the Stanford Research Institute (SRI) in 1963. The SRI defined stakeholders as those groups without whose support an organisation would cease to exist (Freeman, 1984). Since then, numerous researchers have contributed to the development of stakeholder theory. Donaldson & Preston (1995) claimed that one of the central problems in the development of stakeholder theory has been the confusion about its nature and scope. Therefore, Donaldson & Preston (1995) identified three types of stakeholder theory: descriptive & empirical, instrumental and normative (see Figure 3). The descriptive & empirical stakeholder theory type explains specific corporate characteristics and behaviours (Donaldson & Preston, 1995). Important contributors are authors such as Brenner & Cochran (1991) and Clarkson (1995). The instrumental type provides a framework that allows the identification of the presence or absence of connections between stakeholder management, as well as the achievement of corporate performance goals (Donaldson & Preston, 1995). Scholars such as Jones (1995), Jones & Wicks (1999) and Berman et al. (1999) have developed this approach. The normative stakeholder theory type, on the other hand, is an ethics-based theory, concerning the relationship between business and society and defining philosophically based moral obligations or philosophical guidelines towards stakeholders (Brickson, 2007). Freeman (1984) has stressed the fact that the modern organisation is impacted by a large set of forces. He states: “A stakeholder in an organisation is any group or individual who can affect or is affected by the achievement of the organisation’s objectives” (Freeman, 1984, p.46). He divided stakeholders into two groups: primary and secondary stakeholders. Primary stakeholders comprise stockholders, customers, employees, suppliers and management. These 12.

(21) Figure 3: Three types of stakeholder theory (adapted from Donaldson & Preston, 1995). stakeholders are essential, since organisations and businesses cannot survive without their continuing participation (Clarkson, 1995). Secondary stakeholders, on the other hand, are “those who influence or affect, or are influenced, by the corporation, but they are not engaged in transactions with the corporation and are not essential for its survival” (Clarkson, 1995, p.107). They include the local community, the media, the government, special interest groups and the general public. An overview of the variety of stakeholders can be found in Figure 4. In this research, the main focus is drawn on a specific group of primary stakeholders: consumers.. Figure 4: Stakeholder view of the firm (Freeman, 1984) 13.

(22) 2.2.2 Stakeholder theory and CSR CSR has been researched from different perspectives during the last decades, which can be divided into a shareholder and stakeholder approach to CSR. The shareholder approach implies that a manager’s responsibility is to only serve the interests of shareholders by using corporate resources in order to increase wealth and seek profits (Friedman, 1998). In contrast, the stakeholder approach goes further by suggesting that besides shareholders, it is also stakeholders that are being affected by businesses’ activities and need to be equally addressed by managers’ decisions (Werhane & Freeman, 1999). Foster & Jonker (2005) mentioned that even when a firm seeks to serve its shareholders as a primary concern, its success in doing so is likely to be affected by stakeholders. Hence, stakeholder theory offered a new way of approaching organisational responsibilities. It becomes obvious that the stakeholder perspective has become inescapable in the discussion and analysis of CSR. Matten et al. (2003) stated that stakeholder theory is “a necessary process in the operationalisation of corporate social responsibility, as a complimentary rather than conflicting body of literature” (p.111). Furthermore, Garriga & Melé (2004) showed that the majority of authors researching CSR have based their work on stakeholder theory. Nevertheless, it is Freeman & Velamuri (2006) that completely integrate the CSR debate into stakeholder theory by proposing to replace corporate social responsibility with an idea they call ‘company stakeholder responsibility’. Freeman & Velamuri (2006) argue that their new interpretation is able to capture the real purpose of CSR. Accordingly, the term ‘company’ signals that all forms of businesses, value creation and trade must be involved. The term ‘stakeholder’ captures the importance of stakeholder theory for CSR by suggesting that the main goal of CSR is to create value for key stakeholders and fulfil responsibilities to them (Freeman & Velamuri, 2006). Last, ‘responsibility’ captures the importance of ethics for businesses. Freeman & Velamuri (2006) argue that the integration of a stakeholder approach to business is ideally suited to integrate business, ethics and societal considerations and can be seen as a new capability for organisations to develop. In sum, stakeholder theory has led to a set of new insights for CSR academics and practitioners and puts emphasis on the fact that businesses must be seen as entities that operate at the centre of a network of interrelated stakeholders that create, sustain and enhance value-creating capacity (Post et al., 2002).. 14.

(23) 2.2.3 Consumers and CSR As already mentioned in Chapter 2.2.1, this research focuses on a specific group of primary stakeholders: consumers. In general, they are defined as those who purchase goods and/or services from the company (Haksver et al., 2004). In research, very little attention has been given to the extent to which consumers are willing to support CSR and punish irresponsible companies. The beginnings of research on consumer perspective on CSR can be traced back to the 1970s. Berkowitz & Lutterman (1968) have set the foundation for many academics researching the consumer and CSR debate by analysing people’s readiness to behave in a socially responsible manner and relating it to certain behaviours and attitudes. According to Beckman (2007), most studies at that time aimed to define consumer segments for CSR marketing by first focusing on demographic and later on socio-graphic and psychographic criteria (Anderson & Cunningham, 1972; Brooker, 1976; Kinnear & Taylor, 1973; Kinnear et al., 1974; Webster, 1975). However, results of these studies were often contradictory and inconclusive (Beckman, 2007). A second major research stream in the consumer and CSR debate, which can be traced back to the 1980s, investigated the antecedents of socially responsible behaviours such as recycling or buying of “green” products (Beckman, 2007). This stream led to a linkage with research variables such as knowledge management, motivation and financial incentives (Beckman, 2007). Nevertheless, Beckman (2007) stated that results were inconclusive in providing a link between environmentally responsible behaviour and environmental attitudes. A high number of consumer behaviour studies focuses on certain stages in the consumer decision-making process, which include (1) need recognition, (2) information search, (3) evaluation of alternatives (4) purchase, (5) post-purchase usage experiences and (6) disposal (Beckman, 2007). However, very few studies consider the whole spectrum of the CSR consumer decision-making process and mostly focus on only one or two stages. Additionally, many studies only address certain CSR activities and thus fail to give a whole picture of the consumer and CSR debate (Beckman, 2007). Hence, the significant question is whether consumers really care about CSR. Several studies have suggested that there is a positive relationship between a company’s CSR activities and consumers’ attitudes towards companies and their products (Bhattacharya & Sen, 2004; D'Astous & Legendre, 2009; Mohr et al., 2001; Smith, 2008). Mohr et al. (2001) mentioned 15.

(24) that most participants in their study expected a fairly high level of CSR, which indicates a significant relationship between CSR and consumer responses. D'Astous & Legendre (2009) showed that consumers developed favourable attitudes towards companies with socially responsible behaviour and their products. This is confirmed by Smith’s (2008) study, which found that up to 90% of consumers put emphasis on CSR in their purchase and consumption behaviours. In general, this shows that the consumer and CSR debate has led to a perspective that does not see CSR as a voluntary concept anymore. As already mentioned in chapter 2.1.1, scholars such as McGuire (1963) and Davis (1973) highlighted CSR as a voluntary concept, which involves all responsibilities that go beyond the legal and economic responsibilities of a firm. However, from a consumers’ perspective, CSR is no longer something a company can freely choose to integrate into its processes or not. According to Bhattacharya & Sen (2004), the debate about CSR is no longer about ‘whether’ a company should incorporate CSR into its activities, but rather about ‘how’ it should do this. This implies that CSR directly affects consumers’ intentions to purchase a company’s products. Nevertheless, authors such as Boulstridge & Carrigan (2000) highlight the fact that even though consumers care about CSR, it is difficult to assess whether they actually implement their CSR attitude into their purchase behaviour. This issue is referred to as the attitudebehaviour gap (Boulstridge & Carrigan, 2000). Roberts (1996) confirms that there are differences between what people say regarding their purchase behaviour and how they actually behave, since people don’t always buy what they claim to prefer. In sum, even though many authors have proven that CSR affects consumers’ attitude towards companies, Boulstridge & Carrigan (2000) have shown that consumers cannot be treated as a homogeneous group. On the one hand, there are groups of consumers that care about how companies behave; on the other hand, there are groups that don’t seem to be affected by CSR behaviours (Boulstridge & Carrigan, 2000). Therefore, the next chapter provides a crosscultural comparison between consumers from the UK and India in order to provide the basis for the empirical part of this research, which aims to explicitly assess differences concerning CSR perceptions between two groups: Consumers from a developed country (UK) and consumers from a developing country (India).. 16.

(25) 2.3 CSR in developed and developing countries The conceptualisation of CSR in developed and developing countries will be presented in the following chapter. As already mentioned, developing and developed countries cannot be generalised. Therefore, the CSR development in the UK and in India will be highlighted.. 2.3.1 CSR in developed countries 2.3.1.1 Conceptualisation of CSR in developed countries The concept of CSR, as it is mostly used in research today, has its roots in the Western world. The United States have led the development of CSR around the world with Carroll’s (1991) conceptual model being one of the most used and quoted models of CSR. As already mentioned in Chapter 2.1.2, Carroll’s (1991) conceptual model consists of four social responsibilities: economic, legal, ethical and philanthropic responsibilities, with decreasing importance in that order. Nevertheless, the CSR concept cannot be generalised around all developed countries. Crane & Matten (2007) highlight the CSR differences between Europe and the United States. In general, the European CSR approach is characterised by companies taking a rather development-oriented approach that focuses on creating a responsible business environment. Crane & Matten (2007) also state that in contrast to the USA, philanthropic responsibilities in Europe tend to be more compulsory by the legal framework. Furthermore, ethical responsibilities have a higher importance in Europe than in the USA. In regard to consumers’ CSR perception in developed countries, many researchers suggest a positive consumer CSR perception. To begin with, a variety of stakeholders are important when considering the CSR approach in the West, such as NGOs, employees, governments and consumers (see Chapter 2.2.1). According to Pratt et al., (2012), consumers are seen as the main CSR driver for Western companies. Requirements from Western consumers are strong and have increased competition between companies. CSR is seen as a way to increase positive attitude and loyalty towards the company and the brand (Bhattacharya & Sen, 2004). Nevertheless, it has already been shown that there are national and cultural differences in CSR perception between developed countries. Therefore, the next chapter will focus on the current state of CSR development and consumer research in the UK in order to pay attention to country specific factors that are important for this research.. 17.

(26) 2.3.1.2 CSR in the UK The UK has acquired a leading role in the field of CSR and has developed its important position in regard to CSR due to a many factors. The UK’s history dates back to the 1600s, when the English East India Company was established (Robins, 2006). The UK’s international positioning and colonial past, as well as its experiences of some of the earliest privatisation processes and the impacts of industrial revolution of the eighteenth century have brought the CSR development forward (Ward & Smith, 2006). Above all, industrial revolution led to the idea that companies should not only be judged by the size of their profit, but also on how they treat their employees and what impact they have on the environment (Visser & Tolhurst, 2010). During the 1970s, the UK government has contributed to CSR development by passing many Acts of Parliament such as the Equal Pay Act 1970, Health & Safety at Work Act 1974, Sex Discrimination Act 1975 and Race Relations Act 1976 (Idowu & Towler, 2004). The UK is the headquarter of a number of big accountancy firms, who have engaged in CSR development. The environmental NGO ‘community pioneering engagement’ with businesses is seen as an important driver of its CSR development (Ward & Smith, 2006). During the 21st century, the UK has actively engaged in several CSR-related initiatives. For example, the UK appointed the first CSR Minister in March 2000 (Idowu, 2011), who helped in coordinating CSR in the private sector and across the government. Today, British businesses have a far more reactive approach to CSR and are largely responding to stakeholders' needs (Grant Thornton, 2014). All these factors have worked collectively in favour of the UK to acquire a leading role in the field of CSR. Even though most academic research is principally based on UK and US viewpoints, research on consumers’ CSR perception from a UK perspective is rather limited, since most research in this field is US-dominated. A few studies have adopted an ethical approach to UK consumers’ CSR perceptions (e.g. Brunk, 2010; Carrigan & Attalla, 2001). For example, Brunk’s (2010) research provided a consumer perspective of corporate ethics from a European perspective by investigating consumers’ perceptions in Germany and the UK. Nevertheless, this dissertation is the first to address perceptions of UK consumers in regard to Carroll’s (1991) CSR dimensions and comparing them to consumers’ perceptions from a developing country.. 18.

(27) 2.3.2 CSR in developing countries 2.3.2.1 Conceptualisation of CSR in developing countries According to Visser (2008), CSR in developing countries has to be treated separately from developed countries. First, Visser (2008) stated that developing countries are the most rapidly expanding and most lucrative markets for business. Second, social and environmental crises in these economies are often most acutely felt (Visser, 2008). Third, Visser (2008) claimed that globalisation, economic growth, investment and business activity possibly have the most dramatic social and environmental impacts in developing economies. Last, the challenges of CSR practising in developing countries are distinctively different from the ones in the developed world (Visser, 2008). Visser (2008) has identified ten major drivers for CSR in developing countries in order to provide a distinctive picture of how CSR is conceived, incentivised and practiced in these economies (see Figure 5). He divides his drivers into internal and external drivers. Internal drivers address the pressures from within the developing country, while external drivers have    . a global origin (Visser, 2008).. Political reform Cultural tradition. INTERNAL DRIVERS. Socio-economic priorities. . Crisis response Governance gaps. Market access Supply chain. International standardization Investment incentives. EXTERNAL DRIVERS. Stakeholder activism. Fig. 21.2 Drivers CSR in developing countries countries (Visser, 2008) Figure of 5: Drivers of CSR in developing. draws strongly on deep-rooted indigenous cultural traditions of philanthropy,. Visser (2008) addressed the issue of a Western world Indeed, bias regarding the conceptualisation of business ethics, and community embeddedness. some of these traditions go back to ancient times. For pyramid example, of Visser andwhich Macintosh ()presented recall thatin Chapter CSR. He referred Carroll’s (1991) CSR, has been the ethical condemnation of usurious business practices in developing countries. 2.1.2. Carroll’s (1991)Hinduism, conceptual model isIslam, almost baseddates on research in an American that practice Buddhism, andentirely Christianity back thousands of years. Frynas notes that ‘business practices based on scholars moral such as context, which has Similarly, rarely been used() in other national contexts. Nevertheless, principles were advocated by the Indian statesman and philosopher Kautilya in the. Crane & th Matten (2007) century BC’ (p.have ). applied Carroll’s (1991) pyramid to a European context, In a all Latin American context, quoted in Logsdon et al.(2008) () suggested concluding that levels of CSR play Sanborn a role in(), Europe. Therefore, Visser reminds us that ‘varied traditions of community self-help and solidarity stretch back to the region’s pre-Hispanic cultures, and include the mutual aid societies, trade unions and professional associations that emerged in the th and early th centuries’ (p. ). This is consistent with Logsdon et al.’s () myths of CSR in Mexico that need debunking: ‘One myth is that CSR in Mexico is new, another. 19.

(28) that Carroll’s (1991) conceptual model could be useful in order to analyse CSR in a developing country context. However, Visser (2008) suggested that the order of Carroll’s (1991) dimensions needed to be changed for developing countries. Visser (2008) stated that in developing countries, economic responsibilities are still seen as the most fundamental responsibilities of business. However, instead of being followed by legal and then ethical and philanthropic aspects, Visser (2008) concluded that in developing countries, philanthropy is given second highest priority, followed by legal and then ethical responsibilities. Carroll’s (1991) and Visser’s (2008) models are illustrated in Figure 6.. Figure 6: Carroll's pyramid in developed and developing countries (adapted from Carroll, 1991; Visser, 2008). Visser gives several reasons for his adaptation of Carroll’s (1991) conceptual model. Visser (2008) argued that developing countries have strong traditions of philanthropy and that it is seen as the most direct way to improve the prospects of the communities in which businesses operate. Furthermore, developing countries prioritise philanthropy, since they are generally still at an early stage of maturity in CSR, sometimes considering CSR as philanthropy (Visser, 2008). Legal responsibilities in developing countries have a lower priority than in developed countries, since the legal infrastructure in developing countries is not sufficiently developed and often lacks independence, resources or administrative efficiency (Visser, 2008). The last dimension for developing countries is ethical responsibilities, since these countries tend to have the least embeddedness of ethical responsibilities into their economies (Visser, 2008). In general, research on CSR in developing countries is still relatively underdeveloped and usually draws its focus on high profile incidents, branded companies and a few select 20.

(29) countries (Visser, 2008). This especially applies to research on consumers’ CSR perceptions from a developing country perspective. In the next chapter, the current state of CSR development and consumer research in India will be presented.. 2.3.2.2 CSR in India Visser’s (2008) model for developing countries provides a general view on CSR development in developing countries. In order to examine Visser’s (2008) model in detail, this study focuses particularly on India. The reason for choosing India for this study is its current development in the field of CSR. As already mentioned, India is the first country in the world to mandate corporate social responsibility by law (Chhabra, 2014). The inclusion of the CSR mandate under the Companies Act 2013 requires a minimum of 6,000 Indian companies to undertake CSR projects (PWC, 2013a). These companies are required to spend at least 2% of their average net-profits on CSR activities (PWC, 2013b). This current development makes India a central key player in order to examine CSR from a developing country perspective. Apart from India’s current development, CSR has had a long and distinguished history in India, which can be traced back to the 1850s (Sundar, 2000). CSR in India has traditionally been seen as a philanthropic activity, which became more strategic in nature than philanthropic over time (PWC, 2013a). The emergence of CSR in India can be linked to four distinct phases in the evolution of Indian business philanthropy (see Table 1). According to Sundar (2000), the first phase (1850 to 1914) took place during India’s industrialisation and was labelled by newly rich business families setting up institutions and trusts, which is seen as a Western form of philanthropy. The second phase (1914-1960) during India’s independence is marked by the industrialists and nationalists movement. After India’s independence, businesses took part in the creation of higher institutions and academies (Sundar, 2000). The third phase (1960-1980) is characterized by state-development, which led to an increase in government-led development and resulted in a decrease of business philanthropy. Nevertheless, this period suffered from increasing unemployment and social issues, which decreased profitability and led to a rise in businesses’ power and importance towards the 1980s (Sundar, 2000). During the 1980s and 1990s, India experienced economic independence, which was characterised by increased productivity and profitability of Indian businesses. The business philanthropy concept shifted to a strategic CSR approach, which has been integrated into businesses’ strategies with a focus on a multi stakeholder approach 21.

(30) (Sundar, 2000). The last phase can be expanded until 2013, since the development of CSR as a strategic business approach has continued until the Companies Act 2013. Due to the Companies Act 2013, a fifth phase needs to be added (see Table 1), because the introduction of mandatory CSR spending for firms has lead to a revolution in CSR, and hence will change India’s traditional way of approaching CSR in the future. Characteristics. Phase. Theme. Phase I. CSR in the form of charity and Philanthropy. •. CSR as social development during independence struggle. •. CSR under the “mixed- economy” paradigm. •. CSR as business approach. •. Indian firms and stakeholders began abandoning traditional philanthropic engagement and integrated CSR into a coherent and sustainable business strategy. CSR spending mandatory for sizable firms. •. India made CSR spending mandatory for firms having an annual turn over of $ 166 million and more or a net worth of $83 million and more or net profit of $ 833,333 and more to spend at least 2% of their average net profit over three previous years on CSR activities. (1850 to 1914). Phase II (1914-1960). Phase III (1960-1980). Phase IV (1980-2013). Phase V (2013 onwards). •. •. •. Determined by culture, religion, family tradition and industrialisation Business operations and CSR engagement were based mainly on corporate self-regulation Dominated by the country‘s struggle for independence and influenced fundamentally by Gandhi‘s theory of trusteeship with the aim to consolidate and amplify social development. During the struggle for independence, Indian businesses actively engaged in the reform process Shift from corporate self-regulation to strict legal and public regulation of business activities The public sector was seen as the prime mover of development. Table 1: Evolution of CSR in India (based on Sundar, 2000; Singh & Verma, 2014). Only a very few studies have focused on consumers’ CSR perception from an Indian perspective (e.g. Gupta & Hodges, 2012; Shergill, 2012). For example, Gupta & Hodges (2012) used a qualitative approach in order to explore perceptions of Indian consumers regarding CSR in the apparel industry and developed a conceptual framework that highlights relationships between factors that surfaced as important to CSR in the decision‐making process. Nevertheless, the CSR perception of Indian consumers in relation to specific CSR dimensions has not been researched before. Therefore, this research is the first to address consumers’ CSR perception from an Indian perspective.. 22.

(31) 2.3.3 Cross-cultural comparison 2.3.3.1 Hofstede’s dimensions Culture has been regarded as one of the most important elements in businesses’ ethical decision-making (Su, 2006). Many researchers recognised the impact of culture in ethical expectations (e.g. Schlegelmilch & Robertson, 1995; Kim & Kim, 2009). As social responsibility is related to ethics, CSR expectations and orientations should also vary according to culture. However, culture is a very difficult term to define. In 1952, Kroeber & Kluckhohn (1952) critically reviewed concepts and definitions of culture, which led to a list of 164 different definitions. Since then, many researchers have contributed to cultural research with new academic views, concepts and definitions. Geert Hofstede defines culture as: “the collective programming of the mind which distinguishes the members of one group or category of people from another” (Hofstede, 1991, p.5). In general, most scholars link the term culture to three elements: values, norms and artefacts. Values are seen as ideas that show what is considered to be important in life; norms consist of expectations of how people should behave in different situations; artefacts are tangibles that reflect culture’s values and norms (Spencer-Oatley, 2012). Many researchers have tried to conceptualise and operationalise culture in the last decades (Hofstede, 1980, 1991; Schwartz, 1994; Trompenaars & Hampden-Turner, 1997; House et al., 2004). Above all, Hofstede’s framework is the most widely used national cultural framework in many academic fields such as psychology, sociology, marketing or management studies (Steenkamp, 2001) and has led to an extensive research on cross-cultural measurement. In 1980, Hofstede developed his framework consisting of four dimensions known as (1) individualism-collectivism, (2) uncertainty avoidance, (3) power distance and (4) masculinity (Hofstede, 1980). Individualism-collectivism describes the relationships of individuals in each culture. Individualism refers to an emphasis on individual goals, individual rights, autonomy, selfreliance, achievement orientation, and competitiveness (Kulkarni et al., 2011). Collectivistic cultures are defined as “societies in which people from birth onwards are integrated into strong, cohesive in-groups, which throughout people's lifetime continue to protect them in exchange for unquestioning loyalty” (Hofstede, 1991, p.51). Uncertainty avoidance describes “The extent to which people feel threatened by uncertainty and ambiguity and try to avoid these situations” (Hofstede, 1991, p.113). In other words, this dimension describes people’s reluctance or willingness to move without clear rules or instructions. Power distance reflects the extent to which individuals within a country accept power inequality (Hofstede, 1991). It 23.

(32) influences hierarchy and relationships in organisational and family contexts. Masculinity addresses country differences in regard to their desirability for assertiveness and competitiveness versus modesty and caring (Hofstede, 1991). In masculine countries, values such as achievement and success dominate, whereas feminine countries put an emphasis on caring for others and quality of life. In the 1990s, a fifth dimension was added, known as (5) long-term orientation (Hofstede, 1991). Long-term orientation “stands for the fostering of virtues oriented towards future rewards, in particular perseverance and thrift (…). Short term orientation stands for the fostering of virtues related to the past and present, in particular respect for tradition, preservation of face, and fulfilling social obligations” (Hofstede, 1991, pp.261, 263). This dimension is also known as Confucian dynamism, because it was based on the results of a Chinese value survey (CVS) across 23 countries (Minkov & Hofstede, 2012). Almost 20 years later, Hofstede added a sixth dimension in the third edition of his famous book ‘Cultures and Organizations: Software of the Mind’ (Hofstede, 1991), which he called (6) indulgence-restraint (Hofstede et al., 2010). Indulgence-restraint addresses personal life control. Indulgence societies allow free gratification of human desires related to enjoying life and having fun, whereas restraint societies suppress gratification of needs and are characterised by strict norms (Hofstede et al., 2010). According to Smith et al. (1996), Hofstede’s framework is the most comprehensive and robust in regard to the number of national cultures samples. However, many authors have criticised Hofstede’s framework during the last decades. For example, Baskerville (2003) claimed that Hofstede’s dimensions are chosen from a Western point of view, which leads to an in-built Western bias. Other authors, such as Jones (2007), have highlighted the inability of Hofstede’s framework to be of any modern value, since Hofstede’s study might be too outdated to capture today’s rapidly changing global environment and internationalisation processes worldwide. Nevertheless, Soares et al. (2007) analysed Hofstede’s dimensions by comparing them to other approaches for culture conceptualisation. Soares et al. (2007) come to the conclusion that there is a high convergence across all approaches. Additionally, their research supports the theoretical relevance of Hofstede’s framework and justifies further use of his dimensions.. 24.

(33) 2.3.3.2 Hofstede and CSR Hofstede’s cultural dimension studies have been widely used in many cross-cultural studies in the academic field of CSR. Vitell et al.’s (2003) study used Hofstede’s framework to examine US marketers’ perceptions of the role of ethics and social responsibility. They came to the conclusion that low power distance, high uncertainty avoidance and high long-term orientation were positively related to perceived importance of ethics and social responsibility. A study by Moon & Franke (2000) investigated advertising practitioners’ perceptions and practices in Korea and the USA by using Hofstede’s dimensions. They found that high uncertainty avoidance led to less tolerance of unethical behaviour towards suppliers and customers. Maignan’s (2001) study applied Hofstede’s framework in order to examine consumers’ perceptions of CSR in France, Germany and the USA. They concluded that French and German consumers are more supportive of CSR than US consumers. In sum, the use of Hofstede’s framework in the academic field of CSR justifies the use of Hofstede’s dimensions as a foundation in this research.. 2.4 Hypotheses 2.4.1 CSR Support in general In Chapters 2.3, it has been shown that research on consumers’ CSR perception in both the UK and India is rather limited. Nevertheless, it has been mentioned that many researchers suggest a positive consumer CSR perception in developed countries, since consumers are seen as the main CSR driver for Western companies (see Chapter 2.3.1.1). Therefore, the following hypothesis is suggested: H1: Consumers in the UK will be more supportive of socially responsible businesses than Indian consumers.. 2.4.2 Punishment of bad corporate behaviour The effects of culture on consumers’ willingness to punish irresponsible corporate behaviour have been extensively researched by Williams & Zinkin (2008) by applying Hofstede’s framework to the punishment aspect of CSR. According to Williams & Zinkin (2008), respondents in countries with low scores on power distance, high individualism ratings, high. 25.

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