Corporate Social Responsibility Activities that Influence Customer Loyalty of SMEs

Peter K Turyakira

doi:10.5539/ijbm.v13n6p255

Abstract

Businesses are increasingly required to address the demands of key stakeholders, in addition to those of shareholders. There is an increasing role of corporate social responsibility (CSR) to large businesses and small and medium enterprises (SMEs) alike. However, research to support the degree of the application of CSR activities to SMEs with respect to customer loyalty is limited. The purpose of this study was to examine the selected CSR activities that impact the customer loyalty of SMEs. A self-administered questionnaire was distributed to selected SMEs in Kampala District, while Structural Equation Modeling was utilised to determine the influence of independent variables on the dependent variable. The study findings revealed that the selected CSR activities (Society-oriented CSR activities, Market-oriented CSR activities and Environmental-oriented CSR activities) positively influence the Customer loyalty of SMEs.

Highlights

Small and medium enterprises (SMEs) are seen as critical for economic growth of many countries globally (Ayanda & Laraba, 2011, p. 200; Bellihi & Bazi, 2015, p. 340)
An item initially anticipated to measure Society-oriented corporate social responsibility (CSR) factors loaded on Environmental-oriented CSR factors (SCA1)
The study results revealed significant correlations between the CSR activities and Customer loyalty of small and medium enterprises (SMEs)

Summary

Introduction

Small and medium enterprises (SMEs) are seen as critical for economic growth of many countries globally (Ayanda & Laraba, 2011, p. 200; Bellihi & Bazi, 2015, p. 340). SMEs have increasingly gained wide recognition by creating employment opportunities, income generation, poverty reduction and improving standards of living of people especially in developing countries Businesses can adopt CSR activities to influence the behaviours of consumers to achieve customer loyalty Businesses which embrace the concept of CSR are likely to attract customers and influence their loyalty to develop positive attitudes towards their products, gaining better financial performance and positive publicity SMEs can participate in CSR activities as a way to generate customer loyalty The notion of CSR has been well investigated in large organisations over the years (Adapa & Rindfleish, 2013, p. 82), few studies have been conducted in the domain of SMEs (Adapa & Rindfleish, 2013, p. 82; Castejón & López, 2016, p. 21)

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