CSR and corporate branding effect on brand loyalty: a study on Indian banking industry
| Date | 12 February 2018 |
| DOI | https://doi.org/10.1108/JPBM-05-2016-1194 |
| Pages | 57-78 |
| Published date | 12 February 2018 |
| Author | Suvendu Kumar Pratihari,Shigufta Hena Uzma |
| Subject Matter | Marketing,Product management,Brand management/equity |
CSR and corporate branding effect on brand
loyalty: a study on Indian banking industry
Suvendu Kumar Pratihari
National Institute of Technology Rourkela, Rourkela, India, and
Shigufta Hena Uzma
NIT Rourkela, Rourkela, India
Abstract
Purpose –The study aims to examine the effect of corporate social responsibility (CSR) on corporate branding (CB) and brand loyalty (BL) in
the Indian Banking industry. The study further intends to examine the direct and indirect effect of CSR on BL when CSR becomes an integral
part of CB.
Design/methodology/approach –A structured questionnaire using seven-point Likert’s scale is the instrument for data collectio n. Stratified
random sampling is used to collect the cross-sectional data from 430 savings bank customers in India. A new scale is developed and used to
measure the CB as a single construct. A multi-model path using structural equation modelling is used to test the hypotheses. Direct and indirect
model path analysis is used to examine the integrated effect of CSR and CB on BL.
Findings –The results of the study show that there is a significant impact of CSR components (economic, legal, ethical and philanthropic) on CB to
enhance customer BL. The study offers new insight into the relationship between CSR and BL by introducing CB as the mediating factor. However,
the relationship between “legal responsibility to CB”and “philanthropy responsibility to BL”demonstrate a negative coefficient in the path
analysis. Further, the result of the direct and indirect model path analysis confirms that customers’BL can be enhanced more ef ficiently when CSR
becomes an integral part of CB.
Practical implications –The strategic incorporation of CSR tools as an integral part of CB strategy can help the managers in the banking industry
to enhance their customers’BL. Besides economic and legal responsibilities, managers need to give more emphasis on the ethical and philanthropic
responsibilities as critical positioning tools to develop firm’s corporate brand followed by enhancing BL.
Originality/value –Scale development and validation of CB as a single construct is an original move in this study. Additionally, the study is a
pioneer to examine the direct and indirect effect of CSR on customers’BL using CB as a key mediating factor.
Keywords Banking, Corporate social responsibility, Brand loyalty, Corporate branding
Paper type Research paper
Introduction
Corporate branding (CB) is a holistic brand management
approach adopted by firms to construct a unique corporate
identity (Abratt and Kleyn, 2012;Pillai, 2012;So, 2013;
Balmer et al.,2017). The corporate brand is a distinct identity
type, having a life of its own (Balmer,1995, 2001a). Corporate
identity refers to the organisational characteristics that anchor
an organisation in a given period (Cornelissen et al.,2007;
Balmer, 2010a). Therefore, corporate identity provides a
foundation on which corporate brands are formed and closely
linked with the organisation (Balmer, 1995,2001a,2001b;
Balmer and Thomson, 2009). Since the mid-1990s,the notion
of corporate brand, as introduced by Balmer (1995) has
invariably been an avenue of a vital, ubiquitous and moreover,
as a global, strategicimperative and is a mainstream concern for
corporate marketing scholars (Balmer et al., 2017). Besides, it
is imperative that the ascendancy of CB has permanently
altered the comprehension of the brandscape by challenging
the traditional approaches and has given rise to become an
integral part of the corporate marketing philosophy (Balmer,
1998,2009,2011;Olins, 2000;Balmer and Greyser, 2003;
Balmer,2001a, 2010a). The evolution of CB further gained
popularity among the CB and marketing scholars (Balmer,
1998;Papasolomou and Vrontis, 2006;He, 2008;Tsai, 2008;
Balmer,2009, 2011;Powell, 2011;Balmer et al., 2017), which
is the prime rationality to undergothe study.
Hulberg (2006) explained “differentiation”,“transparency”
and “cost reduction”as the three most important reasons for
the increasing interest in CB from the perspective of the
functionalist, interpretive, radical humanist and radical
structural paradigm. As a result, various companies at the
national and multinational level are gradually moving towards
CB strategies (Kowalczyk and Pawlish, 2002;Lam et al.,
2013). According to Balmer (1995) and Hulberg(2006), there
are no universal rules for managing the corporate brand.
Nevertheless, the prevailingantecedents of the corporate brand
have been prolonged to investigate the CB constructs such as
corporate identity,organisational culture, corporate behaviour,
The current issue and full text archive of this journal is available on
Emerald Insight at: www.emeraldinsight.com/1061-0421.htm
Journal of Product & Brand Management
27/1 (2018) 57–78
© Emerald Publishing Limited [ISSN 1061-0421]
[DOI 10.1108/JPBM-05-2016-1194]
This study is supported by Indian Council of Social Science Research
(ICSSR), New Delhi as a part of awarding doctoral fellowship.
57
image, reputationand communication among others (Hulberg,
2006,Melewar et al.,2012). This evolution of corporate level
constructs can be witnessed in CB literature (Pillai, 2012;
Melewar et al.,2012;Balmeret al., 2017).
Despite the increasing interest, an examination of literature
suggests that several important issues in the context of CB
remain largely unexplored, and several articles have debated
further research implications for corporate brand management
(Abratt and Kleyn, 2012;Fetscherin and Usunier, 2012;
Melewar et al., 2012;Balmeret al.,2017). While the formation
of a strong brand has been consideredas an imperative factor in
the success of an organisation, corporate social responsibility
(CSR) has recently been acknowledged as one of the most
emerging factors in enhancing the corporatebrand (Worcester,
2009;Hildebrand et al., 2011,Balmer et al., 2017). Besides, to
determine a company’s ability to face the competition, several
aspects, such as companyculture, corporate citizenship and the
social associations of the company have increasedtheir relative
importance (Dowling, 1994;Fombrun, 1996;Brown, 1998;
Porter and Kramer, 2006,2011a,2011b).The CB notion and
corporate marketing philosophy, as evident in the domain of
CSR, have witnessed a significant increase in the relationship
between the companies with the wider society beyond their
immediate stakeholders (Palazzo and Basu, 2008;Hildebrand
et al.,2011).
At this instance, we would like to explore one of the
central tensions of managing corporate brands with the
normative versus social constructionist approach as
highlighted by Melewar et al. (2012).Itisstillunclearhow
the tension between the two approaches should be managed.
Here, from the view of social constructionist approach of the
firm, we propose the involvement of CSR as an integral part
of their corporate level strategy, which helps them in
achieving competitive advantages (Lantos, 2001;Porter and
Kramer,2003, 2006;Piercy and Lane, 2009;Vallaster et al.,
2012;Perez and Bosque,2015a, 2015b). Further, it is
evident that the integration of CSR with the CB agenda
helps companies to overcome reputational issues, especially
in the financial and oil industries (Powell et al., 2009,2013;
Balmer, 2010b;Balmer et al., 2011;Powell, 2011;Vallaster
et al.,2012). Nevertheless, after reviewing the studies
(Podnar and Golob, 2007;Chabowski et al., 2011;Scharf
et al., 2012), the connection of CSR with marketing
indicates a comprehensible relationship with different
stakeholders in different economies and the industry
context. Additionally, customers have been emphasising on
the social aspect of corporate brands rather only focusing on
the functional and technical values of the product
(Papasolomou-Doukakis et al., 2005;Gugler and Shi, 2009;
Oberseder et al., 2013;Fatma and Rahman, 2015). In this
context, CSR has gain significance as a mainstream topic of
investigation in the domain of CB and marketing (Franklin,
2008;Hildebrand et al.,2011,Balmer et al., 2017).
While CSR is important in all spheres of an economy, it
seems to be pertinent in the financial sector (Balmer et al.,
2017) and attributable to the sensitivenessof customer trust in
building customer brand loyalty (BL) (Eldelman-Insight,
2012;Seibly, 2013;Gunesh and Geraldine, 2015). Given the
limited literature on the issue of customer perception towards
CSR from the bank’s perspective, various authors claim that
although banks practice variousCSR initiatives, there has been
limited investigation of bankingcustomers’perception towards
these initiatives (McDonaldand Rundle-Thiele, 2008;Gunesh
and Geraldine, 2015). Furthermore, although research on
customer BL has been found from a wider perspective such as
service quality, service attributes and service value, the
integrated relationship between CSR, corporate brand and
customer BL are still unexamined in emerging markets across
the globe (Chabowski et al., 2011;Abratt and Kleyn, 2012;
Cornelissen et al., 2012;Scharf et al., 2012;Gunesh and
Geraldine, 2015).
Additionally, there is a paucity of literature that has
examined the solitary effectof different components of CSR on
customer BL and the integrated effect of these CSR
components and CB on customer BL. The rationality of this
study is that the integrated effectis due to the increasing shift of
the customer from the functionalexpectations of the product to
the social aspect of the brand at the corporate level. The result
of this integrated examination in the context of banking sector
may further help the decision makers to understand what
means the different components of CSR have their impact
differently on CB initiatives and customer BL at a different
magnitude. Therefore, the proposed study aims to address the
gap between customer BL and CSR from the perspective of
CB. An attempt has been initiated to address this broad
objective by depicting the relationship among various
constructs such as CSR, CB and customer BL with empirical
evidence. The followingobjectives are defined in the paper:
to study the effect of CSR on customer BL;
to examine the effect of CB on customer BL;
to study the effect of CSR on CB; and
to evaluate the direct and indirect effect of CSR on
customer BL using CB as a mediating factor.
Based on the above conceptualisation, the structure of the
remaining part of the paper is as follows. The articlebegins with
an in-depth review of the literatureon CB, CSR and customers
BL with specific attention to Indian banking sector.
Subsequently, a hypothesised framework has been developed
based on the proposed relationship between CSR, CB and BL.
Research methodology and measures for construct reliability,
validity and hypotheses testing are then explained. A scale was
developed for measuring CB as a single construct, and the
hypotheses were empirically tested using structural equation
modelling (SEM). Managerial and academic implications are
also presented. Lastly, the conclusion with the limitations and
suggestionsfor future research are provided in the paper.
Literature review
Corporate branding
Balmer (1995,2001a,2008,2012a,2012b)andBalmer and
Gray (2003) conceptualise the bi-lateral relationship between
corporate identities and corporatebrand as fundamental to the
corporate brand notion. Based on the significanceof corporate
identity and CB, Balmer(2001a) stated:
A corporate brand involves the conscious decision by the senior
management to distill and make the known attributes of organisation’s
identity in the form of a clearly defined branding proposition.
According to Balmer and Gray (2003), corporate identity refers
to the distinct attributes of an organisation which addresses the
Indian banking industry
Suvendu Kumar Pratihari and Shigufta Hena Uzma
Journal of Product & Brand Management
Volume 27 · Number 1 · 2018 · 57–78
58
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