Are customers willing to pay for corporate social responsibility? A study of individual-specific mediators

Abstract

The objective of this study is to identify, specify, and examine variables that mediate the link between customers’ perceived level of corporate social responsibility (CSR) and their willingness to pay (WTP) premiums for CSR. Drawing on several consumer behaviour theories including perceived value theory, corporate identity theory, and theory of planned behaviour, theoretical and alternative models were proposed. Subsequently, a survey was administered to 212 users of shipping services in Singapore. Thereafter, the proposed models were analysed and compared using structural equation modelling. The link between CSR and WTP for CSR was found to be indirect and mediated by personal factors including customer satisfaction, customer loyalty, and CSR beliefs. Practising CSR in conjunction with service quality results in greater customer satisfaction. However, customer satisfaction is a necessary but insufficient condition for WTP for CSR. Instead, the effect of customer satisfaction on WTP for CSR is channelled via customers’ CSR beliefs and loyalty. This study contributes to consumer behaviour theories by providing a better understanding of the lagging and immediate predictors of WTP for CSR. The results also draw important implications for the management of CSR activities and pricing of services.