Abstract
Intense competition has in many markets decreased the prospects for differentiation in terms of technology and product/service quality. For this reason, CSR becomes an important attribute that can enhance a company's image. To win customers' loyalty in today's markets, companies have to focus on building and sustaining customer loyalty. Nowadays, organizations looking forward to achieving a sustainable competitive improvement based on focusing on a customer-oriented concept which will lead to customer satisfaction, trust and finally to customer loyalty. In this regard, CSR has become a valuable tool. This research, therefore, aims to investigate the direct effect of CSR on customer loyalty by observing the intervening influence of Perceived service quality and trust. In this research, it is proved CSR aspects namely business practice CSR which is related to primary stakeholders, such as customers and employees, and philanthropic CSR, which is related to secondary stakeholders, such as the community has a positive and significant effect on the customer loyalty. Moreover, perceived service quality and trust also serve as an intervener between CSR and Loyalty. Data collected from account holders of three main banks in Kenya. Structural equation modeling is examined by using PLS software. The findings of this study would help scholars in developing more CSR based loyalty models. These findings can also aid the service industry such as commercial banks in Kenya to better incorporate CSR initiatives in their strategic planning process
Highlights
Corporate Social Responsibility (CSR) has recently been a buzzword in business, politics, academia, nongovernmental organizations (NGOs) and other stakeholders (Frynas, 2009; Kathryn et al, 2013)
In this paper business practice CSR reputation was shown to have a positive relationship with perceived service quality and trust, which is consistent with many different empirical research studies (Berg et al, 2012; Choi and La, 2013; Homburg et al, 2013 and Mandhachitara and Poolthong, 2011)
This research was set out to investigate the importance of building up a CSR reputation, and how different CSR initiatives can contribute to the development of sustainable competitive advantage, loyalty and profitability of corporations in established and highly competitive markets
Summary
Corporate Social Responsibility (CSR) has recently been a buzzword in business, politics, academia, nongovernmental organizations (NGOs) and other stakeholders (Frynas, 2009; Kathryn et al, 2013). CSR is “the commitment of business to contribute to sustainable economic development, working with employees, customers, the local community and society at large to improve quality of life, in ways that are both good for business and good for development” (The World Bank (WB), 2003) It is an undertaking by companies and wealthy individuals that aim to improve the well-being of stakeholders, and not just pay attention to making profits only (Fredrick, 2006). We distinguish the level of contribution to loyalty between business practice CSR which is related to primary stakeholders, such as customers and employees, and philanthropic CSR, which is related to secondary stakeholders, such as the community The knowledge of such a distinction will help businesses better allocate their resources. Banks can refer to the research results in prioritizing their investment in monetary and human resources in the various areas of CSR, and determine how to integrate CSR into their corporate strategy in order to contribute to building their competitive advantages
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