Effect of Corporate Social Responsibility on Consumers

Effect of Corporate Social Responsibility on Consumers1.1 Research Background and MotivationsThroughout the history of cosmetics (Appendice B), substances of in all sort were utilized to produce products to kindle beauty and accessible lives, however with time received substances were found to be hazardous, atrocious and poisoness.The cosmetic industry of the twenty-first atomic number 6 has evolved to catch a more(prenominal) structured model of regulations in regards to which substances may and may non be utilised in the manufacturing of products. However, it is an industry that has effect accountable to consumers and monastic order in terms of how the products atomic number 18 produced (Eg. No scrutiny on animals, chemical free, and so forth and the effects of these products on consumers, society and our environment.Thus, CSR is becoming a vital issue in determining a comp any(prenominal)s public presentation and how it manages its stinting, well-disposed and en vironmental impacts, as salutary as its contri simplyion to society.CSR gage be best explained as subscriber line practices or strategies that has the aim of satisfying the pecuniary involutions of organisations while tyrannically impacting society (Foran et al., 2005). Though, CSR may involve certain investments for an organisation, it rout out in addition fork everyplace a source of opportunity and may in certain circumstances lead to building and sustaining emulous advantage.Many look into on CSR has focused on the organisational stage note lieu and few tolerate focused on the influence of CSR on consumers. However, consumers atomic number 18 essential to the success of CSR and understanding their attitudes towards CSR can enable companies to determine if their CSR business strategies argon efficient, and the boundary to which consumers be affected by these. Companies turn in in addition realised that consumers argon do consumption ends based on their pers onal honorable nurtures, and correspond to Tallontire et al. (2001) estimable motive in consumption choices has become a maturement phenomenon that underpins honest trade activities.Many studies by scholars and practitioners when identifying and assessing the portions of CSR, often refer to Archie B. Carrolls CSR pyramid (Ibrahim Parsa, 2005 Schwartz Carroll, 2003). However, there is rattling limited research in regards to the belief of CSR relating to that of consumer behaviour, and more on the dot taking into account factors such(prenominal) as consumers attitudes and estimable beliefs. at that placefore, the persona of this discipline is to declare oneself a better understanding of the thought and role of CSR, and explore how it is applied by the main(prenominal) local players inside the CCI in France. The theater focuses on examining the extent to which CSR affects consumers attitudes, and how their respectable beliefs may influence their attitudes towards CSR.1.2 Context of the occupationDefining the line is one of the just about important steps in the research process and enables to indentify the specific marketing decision ara that depart be clarified by answering some research questions (Koerner 2006 Zikmund 1989). ripening obligate from politicss, NGOs and consumer movements for companies to account for their impact of business operations on society and the environment has lead more companies to invest in CSR initiatives and in managing more efficiently their SRI.However the issue arises in understanding whether consumers are truly aware of CSR practices adopted by companies, to which extent do they consider these when making a barter for decision, how are their attitudes affected, and in which demeanor do their ethical beliefs play a role in their decision making and their detection of CSR.1.3 Research Aims and Objectives 1.3.1 AimsThe aim of this speaking is to investigate the role of CSR and its affect on consumers attitudes and ethical beliefs, within the CCI in France. The study similarly aims to determine if an connector exists between CSR, consumers attitudes and ethical beliefs, and whether this may withdraw an influence on consumers get behaviour.1.3.2 ObjectivesResearch Objectives provide guidelines in determining which steps mustiness be undertaken in the research and if objectives are achieved the research information is considered sufficient to work out the problem (Hair et al. 2006). The main objectives of this research are the future(a) (1) To provide facts astir(predicate) the demographic characteristics of consumers who barter for garble cosmetics, as well as insights into their purchase behaviour,(2) To provide a better understanding of the role of CSR and examine the distinguishable good examples, approaches to CSR,(3) To explore to which extent CSR affects consumers attitudes and whether consumers ethical beliefs plays a role,(4) To examine if alliances exists b etween consumers attitudes, ethical beliefs and Carolls four dimensions of CSR,(5) To determine what are the factors and information sources considered important when judging a companionship, and(6) To determine what are the social issues consumers are nearly concerned about.1.4 HypothesesThe preceding(prenominal) research objectives constitute the basis for establishing the hypotheses of the study in order to gradation the effect of CSR on ethical beliefs and consumers attitudes within the Colour Cosmetics industry in FranceH1. at that place exists a positive kindred between respectable beliefs and consciousness of CSRH2. thither exists a positive relationship between honourable beliefs and Feelings towards companies adopting CSRH3. There exists a positive relationship between Ethical beliefs and Considering CSR in purchase decisionH4. There exists a positive relationship between Ethical beliefs and Ethical purchase behaviourH5. There exists a positive relationship betwee n the Affective component of attitudes and Awareness of CSRH6. There exists a positive relationship between the Affective component of attitudes and Considering CSR in purchase decisionH7. There exists a positive relationship between the Affective component of attitudes and Ethical purchase behaviourH8. There exists a positive relationship between the Cognitive component of attitudes and Considering CSR in purchase decisionH9. There exists a positive relationship between the Cognitive component of attitudes and Ethical purchase behaviourThe development of these hypothesis pull up stakes be reviewed in Chapter 3, Section 3.6 of this dissertation.1.5 Scope and LimitationsThis dissertation will pull down off the concept of CSR and will investigate the relationship between CSR and consumers attitudes and ethical beliefs. The study will to a fault providing a brief overview of the main companies commit in the local cut market, and the extent to which they adopt CSR policies.The sam ple unit is limited to that of cut consumers, having the following characteristics female consumers , above the age of 18 years old and residing in France.Consideration must be taken that the author has attempted to present references the most betrayly cited in the literary works reviewed.The author attempts to make the nexus between the concept of CSR and consumers attitudes and ethical beliefs, hence for the purpose of this study, the models applied have been limited to that of the CSR Pyramid computer simulation proposed by Carroll (1979) , and the Tricomponent Attitude lesson. However, there is very limited research that exists linking these two models, and thus the publications reviewed may be limited in certain areas.1.6 Organisation of the thesisThe dissertation was split up into six chapters Chapter One, provides the significance of the study, context of use of the problem, aims and objectives, states the hypotheses, scope and limitations of the study, and the pre sent organisation of the thesis. Chapter Two, presents facts and informations issued from the secondhand and exploratory research in regards to the CCI, and CSR practices of the main players within the local French market. Chapter Three, consists of a review of relevant literature and theoretical models in regards to the concept of CSR, implementing and measuring coiffureance of CSR. It will also provide relevant literature reviewed in regards to linking CSR to consumer attitudes, and thus will also address the theory of attitudes, through the Tricomponent Attitude Model. Chapter Four, presents the research philosophy, research methodology and methods adopted for collecting, analysing and discussing the relevant data obtained for the purpose of this study. The design and implementation of the questionnaire survey, and the reliability, lustiness, limitations and ethical motive of the research will also be adressed. Chapter Five presents research findings in regards to primary d ata collection, and presents the results regarding the validity of the stated hypotheses. Chapter Six, provides the final conclusions of the study subscribeed, limitations and future recommendations. References, bibliograpgy, appendices, s, graphs and tables follow Chapter Six.chapter 2 glossary cosmetics industry reviewThis chapter will define cosmetics in the context of this dissertation and will also present an overview of the CCI in France (section 2.2, and Appendice C), as well as its main players (Section, 2.3 and Appendice D).CSR practices adopted by the main local players and whether these companies provide a CSR policy will also be addressed.2.1 Defining CosmeticsAccording to the current EU legislation cited in Morganti Paglialunga (2008), a cosmetic product is any substance or preparation in bunked to be placed in contact with the various external parts of the human body with a view exclusively or generally to cleaning them, perfuming them, changing their expression and/or correcting body odours and/or protecting them or keeping them in good condition.The word cosmetic in greek derives from the word kosmetikos and the means allocated is to make for beauty, especially of the complexion, or beautifying. The meaning over time has evolved into that of masking, concealing, cover up or that of camouflaging . Cosmetics consists of products such as personal care creams, makeup, perfumes, deodorant, shampoos, etc.The term make-up is more often used when speaking of color in cosmetics and according to Oumeish (2001) means to use cosmetics and apply them to color and beautify the hardihood, and to early(a) parts of the body.This dissertation will be focusing on the socio- frugal class of Colour Cosmetics, which involves (1) facial make-up, (2) mettle make-up, (3) lip products, and (4) peg down products.2.2 Colour Cosmetics exertion in FranceThe French Colour Cosmetic dominates the European market and 15,7% of the European market appraise. It ho lds the second largest market value in Europe tail end that of the United Kingdom. (Euromonitor International, 2009). The local French market is mostly dominted by major players such as LOreal SA that holds 38,80% of do market shares, followed by Chanel S.A with 13,40% and LVMH Moet Hennessy Louis Vitton S.A with 9,40% of market shares (Datamonitor, 2008). another(prenominal) players present in the local market include Estee Lauder, Beiersdorf-Nivea Beaut, Clarins S.A, Coty, Yves Rocher, and Shiseido. (Appendice C)The touch cosmetic market consists of 4 subsectors, that of (1) facial make-up, (2) eye make-up, (3) lip products and (4) nail products.The facial make-up category dominates the sector with 36,40% of market value, followed by eye make-up with 34,40%, lip make-up with 19,70% and nail make-up with 9,40%. The fastest growing category in 2008 were facial make-up which had a growth of 4% and eye make-up, by 3% (Euromonitor International, 2008 2009).According to Datamonit or report (2008), distribution of products are mainly through Supermarkets/Hypermarkets, with 45,7% and specialised retailers with 39,5% of the markets distribution, and other channels of distribution fiddle 14.8%.Many French women are now more inclined to compound premium and mass brands (Euromonitor International, 2009). However with increase awareness of consumers attitudes towards toxic chemicals having nix aspects on health, the premium segment is becoming more popular amongst females who are in search of more safe to use products, and environemntally friendly.The juristic environment also oversees the French industry by adopting strict regulations towards ingredients which are allowed to be utilised in the cosmetic product, or those that may be considered dangerous in regards to health aspects. Examples such as adoption of Directives 93/35/CEE (1993), Directives CEE (2004), European International Nomenclature of Cosmetic Ingredients. Since 2009, the European Union has also put legilsatives in place banning animal testing within the E.U and also sale of any product that has been prior tested on animals (Kumar, 2005).2.3 Colour Cosmetic Companies and CSR PracticesThe following will provide a brief overview of the 3 major colour cosmetic players in France (LOreal, Chanel and LVMH), and discuss whether these companies have adopted CSR activities within their business strategy, and will state if a black-tie (written, printable report of their CSR policy) or informal CSR policy ( entirely available on their merged website) has been adopted. Other players present in the local market such as Estee Lauder, Beiersdorf-Nivea Beaut, Clarins S.A, Coty, Yves Rocher, and Shiseido, are also presenetd, in Appendice D of this dissertation.LOreal S.A In France, LOreal S.A accounts for 38,80% of total market shares (Datamonitor 2008). It is the worlds second largest manufacturer of cosmetics and toiletries. LOreal operates through three business divisions cosmetics, the proboscis Shop, and dermatology. Its main colour cosmetic brands are LOreal Paris, Gemey Maybelline Garnier, Lancome and The Body shop.LOreal acquired The Body Shop in March 2006, which enabled to position itself in the ethical cosmetics market, to strengthen this positionment. LOreal also acquired a leading french company Sanoflore, which is specialised in organic cosmetics. This strategy enables LOreal to develop into the organic and immanent cosmetics market (Euromonitor International, 2009).LOreal invests generally in CSR practices, and provides a formal CSR policy which enables to support its disclosure and transparency to the public in regards to its business operations. LOreal addresses an extensive lists of social and ethical issues such as contributing to the society and fellowship, addressing issues of sustainability, pre part the environment, labour and human rights, actions against animal testing, donating to charities and natural disasters, growing education , supporting medical research, adopting ethical standards throughout the entire company and subsidaires, its employees and having strict ethical requirements for its suppliers.Chanel S.A was established in 1924 by Coco Chanel, and is have by the Swiss company Pamerco. It is a privately held company and is not obligated to release any financial results. It is specialised in a wide range of products such as fashion, watches, eye wear, fragrances and beauty products.In France, Chanel S.A accounts for 13,40% of total market shares in the cosmetics market. It operates in Europe, Asia and USA (Datamonitor 2008), with the highest shares of market value in that of Western Europe (Euromonitor International 2009). Its colour cosmetic products are distributed unders the brands Bourjois and that of Chanel.In order to improve financial results due to the economic downturn, lodge projects such as Mobile Art Tour have been halt in order to focus investments on other strategies.However, no info rmation in concerns to CSR practices nor that of any formal CSR policy was publically available on their corporate website. However, it cannot be assumed that they do not invest in CSR, but may have chosen not to make publicly available their CSR policies.LVMH Moet Hennessy Louis Vitton S.A Is an international group of companies with principal activities focused on the occupation and sale of luxury goods. Its main divisions are wines and spirits, fashion and leather goods, fragrances and cosmetics, jewellery and selective retailing sectors. LVMH operates about 1,859 stores worldwide (Datamonitor 2008).In France, LVMH group accounts for 9,40% of total market shares in the colour cosmetics market (Datamonitor 2008). Its main brands in the colour cosmetic segment include Christian Dior, Guerlain, , Hard Candy, Benefit Cosmetics, urban Decay, Fresh, Make Up for Ever and Dior Addict. (Datamonitor, 2009, LVMH Group 2009).LVMH adopts an informal CSR policy which is publicly available on their corporate website. The company is largely invested in the french company and entrusts in promoting french culture, art and heritage. It allocates important investments towards community projects, and is mixed in many initiatives to promote french cultural heritage.chapter 3 literature review and theoretical framework 3.1 The Concept of CSRThe section 3.1 will provide the literature review in regards to the background of CSR, its purpose, how CSR is defined, implementing CSR and monitor CSP, as well as the criticism of the concept. It will also focus on presenting the antithetic dimensions of CSR through Carrolls CSR Pyramid Model (1979).3.1.1 Background of CSRDuring the eighteenth century companies took subatomic duty for their impact of business operations. According to writings of the Scottish philosopher of the eighteenth century, Adam Smith (1776) many corporations limited their operations according to the rules of unmixed competition. This gradually evolved and c ompanies started taking full responsibility for their business impact on society, the community and the economy.Many academics believe that the roots of CSR originated from nineteenth century U.S industrialist, Andrew Carnegie, in his writings from the Gospel of wealth, where he was the first to express publicly his beliefs that that the most fortunate members of society should ensure that money was used to aspire the little fortunate members (Carnegie Corporation New York).The early twentieth century, saw businesses adopt more responsibility in regards to society and the community which was mainly correspond by CP. According to Carroll (1999), and Hopkins (1999) cited in Leal (2007), the discussion about SR of businesses began to become more prominent from the 1930s, with authors like Chester Barnard, J.M Clark, Theodore Kreps and Merick Dodd.Prior to the 1960s, business ethics was rather left to theologians to discuss issues of fair wages, unfair labor practices, and the pietis m of capitalism (Lantos, 2001).From the 1960s, companies were more focusing on generating profits that outweighted largely over moral principles. It was during this era that consumers began to manifest their mecontentment against unethical business behaviour. During the 1960s Milton Friedman, Nobel boodle winner in economics in 1976, raised an issue by stating that the solely obligation a business had was to generate profits for its sharehlders.It was totally during the 1970s, that the concept evolved when CP was supplemented by corporate initiatives and activities, and businesses taking a more accountable attitude towards social needs. It was considered that companies should not pursue profit without taking into retainer business ethics, acting in a social responsible manner and organism a good corporate citizen.In the 1980s, R. Edward Freeman (in dividing line to the views by Milton Friedman), deliberated on the issue that CSR is a question of managing stakeholders, and that set and ethics are necessarily a part of doing business.The last decades, growing enkindle has been more towards environmental issues (Eg. Global warming, climate change, pollution index, etc), and how companies are addressing such issues through adoption of sustainable development.3.1.2 CSR in FranceIn France, the concept of CSR surfaced during the slow nineteenth century. Early twentieth century, professional organisations as well as commercial undertakings have been adopting texts containing social standards that employers must observe (Segal et al., 2003).During the 1980s, the concept was mainly issued from the idea to combine economic and social policy, and on the basis of promoting the concept of the corporate citizen. There was great involvement on the part of undertakings in civic aliveness, such as lobbying to exert an influence on the decisions make by the public authorities or providing sponsorship to support social, cultural and gaudy activities (Segal et al. , 20 03).According to Segal et al. (2003), the CSR movement from the United States did not reach France until the early 1990s, however, companies in France referred more to the term corporate citizenship (in french citoyennet dentreprise), which was more familiar to them, than CSR. callable to cultural differences, some aspects of the CSR concept as it was constructed by Anglo-American background, did not align well into the French cultural landscape, such as the idea that all stakeholders should be taken into account, or the fact of a responsibility that unless complements that of companies. This is explained by the fact that the State and the Law are regarded as the only guarantors of a principle of SR that applies to all, whereas initiatives emanating from civil society are perceive as campaigns and suspected of concealing vested interests (Segal et al. ,2003).CSR, in France is exercised within an increasingly punctilious wakeless framework, particularly because the law encourag es undertakings to adopt standards of SR.It is a frequent custom for the people in France, to turn to the public authorities demanding that they face up to their responsibilities and lay down the laws recognising a new social problem and addressing it, rather than provide laws that define minimal thresholds for companies (Segal et al., 2003).3.1.3 The Purpose of CSRWith the increasingly pressure received from Governments, NGOs, consumer movements, activists, shareholders, the public and the media has lead companies to account for their social and environmental impacts of their activities. As a result the twenty-first century is seeing CSR emerging as an important area in business strategies.Advocates of CSR have used four main arguments to justify the reason for CSR (1) moral obligation of companies in adopting an ethical and responsible behaviour (2) sustainability in terms of the TBL, (3) license to operate in terms of companies identifying social issues important to stakeholders and taking approrpiate related decisions, and (4) reputation by investing in cause-related marketing campaigns (Porter Kramer, 2006).Porter Kramer (2002), also suggest that CSR practices can provide economic benefits if the social improvement has been related to the companys business. Companies often willingly engage in socially responsible behaviour because it enhances shareholder value by keeping a business on the right side of the law (Martin, 2002). Companies can serve shareholder interests while also serving those of a larger community.Most CSR practices implemented by firms are largely based on Philanthropy activities, and used as a purpose to promote the the corporate image. It can also pass to improving the community by developing education, health, provide safe products, preserve the environment, improve employment, and on the long-term can aid in building strong ties with governments, authoritative organisations, partnerships, and build trust within the community.Acco rding to Burke and Logsdon (1996, p. 496), CSR (policy, program or process) is strategic when it yields substantial business-related benefits to the firm, in particular by supporting warmness business activities and thus contributing to the firms effectiveness in accomplishing its mission.3.1.4 Defining CSRThere is no formal universal definition of the concept of CSR. Many believe it concerns what corporations give back to society in return from the benefits they have gained, others tend to believe it is based on how ethically corporations behave, towards society and the environment, and in regards to its stakeholders. Often, CSR is also referred to as the triple sink in line in which it refers to the corporations financial, social, and environmental performance in give birthing its business.There have been numerous attempts by organisations, institutions, corporate executives and academics to crystallise the constructs and concept of CSR (Dahlsrud, 2008, Lantos 2001, Tywoniak Bartlett, 2008, Van Marrewijk 2003, 2005), resulting in many definitions towards a more humane, more ethical and transparent way of doing business (Van Marrewijk 2003, 2005).Prior research by Dahlsrud (2008), reveal that there is not one standard definition of CSR but that a variety of definitions exist. In his research he anyalysed 37 definitions of CSR, and results showed that, even though most definitions are different from one another textually, they are nevertheless constantly referring to the the same five dimensions (1) environmental, (2) social, (3) economic, (4) stakeholder and (5) voluntariness.Davis (1975) describes that SR implies that companies should not only make a decision based on their own interest but are also obliged to take actions that protect and enhance societys interests. According to Sethi (1975) the concept of CSR has different meanings according to time and the cultural context and is more based on the corporate actions that enable to determine whether co rporations are meeting societal expectations.According to Carroll Schwartz (2003), definitions of CSR fall into two general schools of thought, those that argue that business is obligated only to maximise profits while respecting the legal requirements and minimal ethical constraints (Friedman 1970, Levitt, 1958), and those that believe corporations are accountable on how they conduct their business toward society.CSR is concerned with businesses organism morally accountable to its stakeholders, and thus that values are necessarily and explicitly a part of doing business (Freeman, et al. ,2004), and that it is a voluntary commitment by companies to exceed the explicit and implicit obligations enforce on them by societys expectations of conventional corporate behavior (Falck Heblich (2007)Others such as Davies (1960), Andrews (1973), McWilliams and Siegel (2001), Kotler and Lee (2005) refer to CSR as being an obligation to improve community well-being through transparent business p ractices, contribution of corporate resources, corporate decision making and actions extending beyond the firms direct economic or skillful interest, and that which is required by law. In this context, CSR can therefore be seen as the voluntary assumption of responsabilities beyond that of just economic or legal (McGuire, 1963).Authoritive institutions have also attempted to define CSR. The World Business Council for sustainable Development (2000, p.3) defined CSR as the continuing commitment by business to contribute to economic development while improving the quality of life of the workforce and their families as well as of the community and society at large. The European Trade Union (2004, p.1), on the other hand, defines CSR as companies consolidation social and environmental concerns in their business operations and in their first harmonic interaction with their stakeholders on a voluntary basis.And on its part, the Organisation for Economic Co-operation and Develpment (OE CD) on their website, describe CSR as The most important contribution of business is the conduct of business itself, and its core responsibility is to yield competitive returns to shareholders by identifying and developing promising investment opportunities and must comply with legal requirements and, respond to societal expectations not written down in law books.3.1.4.1 Carrolls CSR Pyramid ModelFor the purpose of this dissertation, the author has chosen to focus on Carrolls Pyramid Model ( 3.1) in order to identify the main dimensions of CSR. Carrolls Pyramid Model was selected on the basis that it seems to be the framework the most frequently referred to in the literature reviewed, in terms of managing social issues.In Carroll (1979, 1991 2000), Carroll Schwartz (2003) CSR, is defined asThe social responsibility of business encompasses the economic, legal, ethical, and discretionary (philanthropic) expectations that society has of organisations at a minded(p) point in time.T he following sections will provide an overview of each various(prenominal) dimensions of Carrolls CSR Pyramid Model.3.1.4.1.1 Economic ResponsibilitiesThe environment of global trade is becoming a more competitive arena and faces economic challenges (Kehoe (1998), cited in Carroll, 2000, p.35), and thus, the economic responsibility of business remains very important (Carroll, 2000).Companies business operations contribute largely to the economic unit in society. It has the responsibility to produce goods and function that society wants and to sell them at a profit, and all other business roles are predicated on this major assumption (Carroll, 1979).Economic responsibilities is characterised by companies willingness to perform in a manner consistent with maximising earnings per share, must be committed to being as profitable as possible, must maintain a high level of operating efficiency and competitive positioning and that the success of the company be defined as being consistent ly profitable (Carroll, 1991).3.1.4.1.2 Legal ResponsibilitiesSociety expects business to achieve its economic operations within the framework of legal requirements. It goes on the assumption that economic responsibilities and legal responsibilities coexist and must be met simultaneously, as they represent fundamental precepts of the free enterprise system (Carroll, 1979, 1991).According to Carroll (1991), legal responsibilities can be viewed as codified ethics in the sense that they integrate the sanctioned notions of fair operations as established by lawmakers, and are characterised by companies performing in a manner that is evaluate of them by government and law, and thus, that the success of the company is defined as one that fulfills its legal obligations, and to provide goods and services that meet legal requirements (Carroll, 1991).Accordoing to Carroll (1991), the Economic and the legal responsibilities are the most important components in the Pyramid Model. However, this may cause confusion when applying the framework as both components are located at the very bottom of the Pyramid. (Carroll Schwartz, 2003)3.1.4.1.3 Ethical ResponsibilitiesIn addition to fulfilling their economic and legal responsibilities, businesses are expected to fulfill ethical responsibilities as well (Carroll 1979). Ethics, are the driving forces potty every creation of laws or regulation, there are not necessarily codified into laws but are expected by society (Carroll, 1970), and concerns standards, norms, or expectations that reflect a concern for what consumers, employees, shareholders, and the community regard as fair, just, or in keeping with the respect or protection of stakeholders moral rights (Carroll, 1991).Carroll (1991), describes that the main components of ethical responsibilities of companies are to perform in a manner consistent with expectations of societal norms mores and ethical norms to recognise and respect new or evolving ethical/moral norms adopted by society to prevent ethical norms from being compromise