Impact of CSR Practices on Customer Satisfaction and Retention: An Empirical Study on Foreign MNCs in Malaysia

Abstract

The main purpose of this research is to examine the impact of customer perception of corporate social responsibility (CSR) practices or initiatives undertaken by foreign multinational retailers in Malaysia on customer satisfaction and retention. A conceptual framework comprises of 4 elements (economic, legal, ethical and philanthropy) developed by Carroll (1991) is used to examine the CSR practices and its impact on customer satisfaction and retention. A multivariate likert-scale questionnaire (scale from 1-5) has been developed with two additional dimensions (customer satisfaction and retention). A sample of 101 respondents has been used to collect the data using convenience sampling method. Regression and correlation analysis is conducted using SPSS 21 on full version of data-set to generate the results of analysis. Regression beta coefficient and correlation coefficients were generated to test the hypotheses and to establish the causal effects of economic, ethical, legal, philanthropy on customer satisfaction and retention. Also this study examines the impact of customer satisfaction on customer intention to retain with the business. The results shows that there is a significant and positive impact of CSR dimensions of ethical, and philanthropy on both customer satisfaction and retention. The result also shows legal CSR positive and significant impact on customer intention to retain with the retailer. Also this research shows that economic CSR do not have a significant impact on both customer satisfaction and retention. This result is confirmed by correlation analysis as well except for economic CSR. Correlation analysis shows that the economic CSR positively and significantly correlated with both customer satisfaction and retention. Also this research found that there is significant and strong positive relationship between improved customer satisfaction and retention. This study concluded that improving customer perception of CSR practices such as legal, ethical and philanthropy CSR will improve both customer satisfaction and retention. Therefore managers working in retail sector should take initiatives to improve customer perception of CSR practices to enhance customer satisfaction and retention. Further research could be undertaken on different context or by increasing the sample size to test the economic dimension of CSR to confirm previous research findings.