Saudi Consumers Perceptions and Reactions - Research Proposal Example

Saudi Consumers Perceptions and Reactions Abstract In this proposal, the researcher has provided brief idea of the selected research topic “Saudi Consumers perceptions and reactions to companies CSR (corporate social responsibility) initiatives”. Research questions and background of the research has also been discussed in this proposal and in suitable cases, the researcher has taken help of research works of previous researchers to validate the argument. Theoretical framework and hypothesis are also developed in the light of existing literature while in some cases the researcher has used practical examples to justify the points. The researcher has found that very few researchers conducted research on Saudi consumer’s perception regarding CSR initiatives of companies hence researcher has the scope to fulfil the gap in the literature by conducting research on the topic. Probable research methodology and timeline of the research work has also been discussed in the proposal while understanding significance of the research will be another pivotal aspect of this paper. Chapter 1: Introduction/Background In the last 50 years, the world has become increasingly global and the business world has seen development of various management concepts such as corporate social responsibility (CSR), stakeholder theory, corporate governance, corporate ethics etc. Nalband and Al-Amri (2013) pointed out that legitimacy has become key mantra for success for corporate in the last 15 years. Research work of Nalband and Al-Amri (2013) reveals the fact that theoretical focus of the scholars are shifting from strategic management issues to legitimacy and good stewardship for companies. Stakeholders and shareholders are also demanding for good stewardship for directors in the organisations and integration is taking place in global capital markets. In such context, Nalband and Al-Amri (2013) has conjecturally pointed out that importance of CSR has been re-invented by companies in the last couple of years. In the changing world, CSR has two dimensions, 1- governments are encouraging companies to improve corporate governance practices and ensure ethical policy makings in order to raise capital collection from domestic and foreign investors and 2- companies are trying to increase social welfare & stewardship activities not only to provide social good to unprivileged sections of the society but also to improve brand image among external stakeholders such as customers. Nalband and Al-Amri (2013) found that Practice of corporate social responsibility (CSR) is quickly getting acceptance among organizations Saudi Arabia but for most customers, CSR is not more than a management jargon. Nalband and Al-Amri (2013, p. 285) stated that “Nobody in Saudi Arabia, I think still to this very day, can clearly tell the difference between charity or philanthropy and CSR.” Surprising fact is that, although Nalband and Al-Amri (2013) raised question on the understanding level of Saudi consumers regarding CSR initiatives of companies but till date, very few researchers have conducted research on the topic. Hence, significant amount of research scope exist for researchers to conduct research on the topic named as “Saudi Consumers perceptions and reactions to companies CSR (corporate social responsibility) initiatives.” Apart from research work of Nalband and Al-Amri (2013), limited number of researchers has conducted research on Saudi consumer’s perception regarding CSR initiatives of companies. Hence, the researcher has decided to mitigate the gap in the literature by conducting research on the topic. The definition of CSR is pretty much blurred among Saudi Arabian business leaders and most of them have the myopia that CSR is nothing more than philanthropic activities. In Saudi Arabia, business environment is directed by Muslim belief system and in Muslim belief system; capable individuals should provide Zakat or provide financial and non-financial support to unprivileged section of the society. However, in real cases, Muslim belief system might not be able to address all the aspects of CSR initiatives of companies. Nalband and Al-Amri (2013) also pointed out that there are companies which prefer to embrace the concept of sadaqa rather than accepting westernized concepts like CSR. In sadaqa, companies and rich individuals are encouraged for voluntary giving of their wealth to develop healthcare system or provide education to minority & unprivileged sections of the society. For example, in 2012, $130 million donation was made by Saudi Arabian people in order to support cyclone-hit people in Bangladesh (Nalband and Al-Amri, 2013). Due to integration of Muslim belief system, Saudi Arabian companies might not like to advertise their social & philanthropic activities in the name of CSR in order to create good image among customers (Foreign Affairs, 2009). In such context, the question should not be “whether CSR is important in context to Saudi Arabian companies or not” rather the question should be are these companies ready to segregate CSR from philanthropic activities? It is evident from the above discussion that significant amount confusion exists regarding the meaning of CSR among both consumers and companies in Saudi Arabia. In such context, it will be challenging for the researcher to understand perceptions of Saudi consumers regarding CSR initiatives of companies. In order to address these challenges and fulfilling the gap in the literature, the researcher has designed this research papers. Research problem and questions has been elaborated in the following section. Chapter 2: Research Problem and Research Questions It has been already stated that the researcher will focus only on consumer perspective of CSR in context to Saudi Arabia in this paper. Although, significant amount of confusion exist regarding CSR among business leaders in Saudi Arabia but understanding their dilemma is beyond the scope of this paper. Problem statement for this paper can be defined as “understanding Saudi Consumers perceptions and reactions to companies CSR (corporate social responsibility) initiatives.” On the basis of this problem statement, following research questions can be derived; What does CSR mean to Saudi Consumers and what criteria they use to evaluate CSR activities of companies? What are the important parameters considered by Saudi consumers for ensuring success of CSR initiatives of companies? How CSR initiatives can influence trust, loyalty and perceived quality of Saudi Arabian consumers towards a particular brand? How CSR initiatives of companies can increase satisfaction of Saudi Arabian consumers toward a particular brand. Chapter 3: Literature Review 3.1 Defining CSR Pedersen (2010 and 2006) pointed out that, although, CSR has gained importance among companies for last couple of years but significant amount of confusion exist among scholars regarding the meaning of the term. Hence, high level of heterogeneity exists among modern day scholars regarding the definition of CSR. Fifka (2009) also suggested that meaning or definition of CSR has become increasingly blurred due to involvement of multimodal perspectives of the concept. According to Fifka (2009), although Howard Bowen used the term “corporate citizenship” in the year 1953 but for the last 50 years, definition of CSR is entangled between the terms like business ethics, stakeholder management and corporate stewardship. In such environment of ambiguity regarding the definition of CSR, Okoye (2009) and Turker (2009) defined CSR as the initiatives taken by companies in order to improve quality of life of members of society and ensuring environment sustainability. However, Ogrizek (2002, p. 216) pointed out that scope of CSR is ‘‘much broader than charitable activities, philanthropy and community involvement.’’ Schwartz and Carroll (2008) supported the argument of Ogrizek (2002) and pointed out that companies can conduct CSR activities in different manners such as, 1- reducing greenhouse gas emission from their value chain, 2- increasing use of renewable energies in operation, 3- developing schools and hospitals for unprivileged members of society in the locality of operation, 4- taking care of the interest of value chain partners such as farmers, 5- developing local community or taking measures to eradicate social hurdles for stakeholders etc. Schwartz and Carroll (2008) also pointed out that companies need to think about fulfilling economic, ethical, discretionary and legal expectations of stakeholders through CSR initiatives. 3.2 Modern Theories of CSR After going through the literature of CSR that has been published in last 50 years, the researcher has found two conceptualizations of CSR such as , 1- social concern of companies and 2- expectation of society members or stakeholders. In case of social concern, Podnar and Golob (2007) and Vaaland, Heide and Grønhaug (2008) pointed out that companies conduct market research in order to find probable scopes for conducting CSR initiatives which can provide benefits to society. Ullah and Jamali (2010) pointed out that companies are also showing concern about environmental impact of their operation while they argued that it is not possible for companies to meet all the expectations of society. Ullah and Jamali (2010) pointed out that companies run business in order to earn revenue and with the earned revenue, companies provide benefits to internal stakeholders and shareholders, in such context, using the revenue to satisfy all the expectation of society might create cash crunch for companies. Then, there will be no difference between running a business and doing charity for society. Despite such arguments, Vaaland, Heide and Grønhaug (2008) noted the fact that companies are putting significant importance on meeting the expectations of society through CSR initiatives. Modern theories regarding CSR initiatives of companies can be summarized in the following manner; Table 1: Summary of Recent Development in CSR Literature Scholar Theoretical Perspectives Argument Baron (2001) Theory of the firm Companies use CSR to create positive image in front of shareholders and attract socially responsible consumers. Companies also publish report about their CSR initiatives in order to generate brand awareness among external stakeholders and raise investment collection. Hence, CSR has become social marketing & strategic initiatives for companies. Feddersen and Gilligan (2001) Theory of the firm Activists and NGOs can influence the consumer perception towards CSR initiatives of companies by reducing information asymmetry. McWilliams, Siegel and Wright (2006) Resource based view CSR initiatives should be integrated with political and economic objectives of companies in order to provide them sustainable competitive advantage. Waldman, Siegel and Javidan (2006) Strategic leadership Intellectually stimulating CEOs have the ability to perform CSR initiatives in better manner and they can also influence the perception of stakeholders towards the brand through CSR initiatives. (Source: Darrag and E-Bassiouny, 2013) 3.3 Consumer Perception Regarding CSR Activities Can CSR initiatives influence perceived quality, customer satisfaction, customer loyalty, customer brand trust? Well, throughout the research paper, the researcher will try to try to find answers to these questions. 3.3.1 Perceived quality of customers & CSR Initiatives Hoeffler and Keller (2002) found positive association between perceived qualities of brands among consumers and CSR initiatives of the company promoting the brand. Sheth and Babiak (2010) also supported the fact that CSR initiatives of companies can create positive vibe among customers and the customers start believing the fact that intention of the company is not only to earn profits rather the company is putting effort to improve quality of life. Yoo, Donthu and Lee (2000) defined brand equity as collection of elements like perceived quality, brand associations, recognition and brand loyalty. However, the researcher has not found any single research on CSR which has extensively focused on any one aspect. Ricks (2005) and Maignan and Ferrell (2004) partially tried to define how CSR initiatives can influence brand perception among consumers but no researchers tried to understand how CSR activities can influence perceived quality of brands among Saudi Arabian consumers. In this research paper, the researcher will try to answer this question and find relationship between quality of brands among Saudi Arabian consumers and dimensions CSR initiatives of companies. 3.3.2 Customer Satisfaction & Loyalty and CSR Initiatives Ricks (2005) created generic versus specific category for CSR initiatives and stated that wrongly communicated CSR initiatives might be seem as altruistic or self interested initiatives by consumers. In case of conditional CSR activities, companies ask customers to purchase more products and help the company to earn revenues so the company can put certain portion of the revenue into philanthropic activities. In case of unconditional CSR initiatives, companies do not put any condition for customers and integrate CSR initiatives in the mission statement (Pedersen, 2006). Careful consideration of the research work of Mohr and Webb (2005) reveals the fact that there is hardly any relationship between customer satisfaction and CSR initiatives of companies. According to them, environment sustainability activities of companies might create positive brand image of the company among socially and environmentally responsible customer groups but such positive brand image might not generate satisfactions. Practical examples are also supporting their arguments. For example, Divine Chocolate (2009) is a fair-trade confectionary company which provides financial and non-financial resource supports to farmers in Africa to harvest cocoa been in 100% natural manner. Such information might provide satisfaction to consumers who are concerned about quality of life of farmers but satisfaction of common consumers will only be driven by quality of the product. Same is the case for brand loyalty because Ricks (2005) failed to find any significant relationship between CSR initiatives increasing brand loyalty among consumers. However, Sheth and Babiak (2010) found that brand loyalty of customers might be influenced by providing information about CSR initiatives of the company. Except, the research work of Hoeffler and Keller (2002) and Sheth and Babiak (2010), no researcher has succeeded to find satisfactory answers regarding how CSR initiatives of companies can influence brand loyalty or trust of consumers toward a particular brand. Pirsch, Gupta and Grau (2007) conducted exploratory research on the topic and came to the conclusion that CSR initiatives might create positive effect on corporate associations but they cannot influence purchase intention, brand loyalty or perceived quality about the brand among customers. Due to such controversies, the researcher will test following hypotheses. Hypothesis 1: CSR initiatives of companies can influence perceived quality of the brand among Saudi consumers. Hypothesis 2: CSR initiatives of companies can trust and loyalty of Saudi Arabian consumers towards a particular brand. Hypothesis 3: CSR initiatives of companies can increase satisfaction of Saudi Arabian consumers toward a particular brand. Chapter 4: Theoretical Framework Nan and Heo (2007) and Pitta (2007) pointed out that perceived brand quality among consumers might be directed by various factors such as cost-benefits, reputation, previous using experience etc and in such context, CSR might influence perceived quality among consumers. Kayaman and Arasli (2007) found relationship between perceived quality, brand loyalty and customer satisfaction. On the basis of above arguments, the researcher has developed following theoretical framework for this research. Figure 1: Theoretical Framework Chapter 5: Research Methodology Creswell (2009) and Curwin and Slater (2008) pointed out that researcher should be flexible enough to switch to appropriate research methodology in order to address the research problems in comprehensive manner. It is evident from the literature review that there is significant amount of research gap in the topic and relationship between variables is not clearly defined. On the other hand, Saunders, Lewis and Thornhil (2007 and 2009) suggested that researchers should use exploratory research design in order to determine suitable research strategy for a research problem ambiguously defined. Due to ambiguity in relationship between research variables, the researcher will use pilot study as part of exploratory research design in order to evaluate feasibility of conducting research on the topic. Secondary data for the research will be collected from academic peer reviewed journals, books, company website data, print articles and online articles. For pilot study, the researcher will select 5 managers (preferably from marketing departments) from 5 listed manufacturing and service companies which are incorporating CSR initiatives in order to conduct exploratory interview regarding the justification of topic. Saudi Arabian business directory will be used to select these companies and the researcher will contact these managers through e-mail. Small sample of 10 Saudi Arabian consumers will be selected for pilot study or individual interview and preferably consumers of the five listed companies will be selected for pilot study. Based on the suggestion of respondents during pilot study, the researcher will address following research objectives; Exploring what consumers consider as CSR activities Proposing scale to measure consumers CSR perceptions Exploring their reactions to socially responsible corporate behaviour Result of pilot study will be used for designing the further research methodology. In the conclusive stage, the researcher will use Quota Sampling (in terms of gender, age, education and region) to select at least 2,000 Saudi Arabian consumers for conducting close ended sample survey (Robson, 2011). Close ended questions will be used to design the questionnaire while online survey method will be used in order to conduct the research within the resource limit of the researcher. The researcher will use social media communities to contact with respondent and Search Engine Optimization (SEO) techniques will be used collect contact details of respondents. Selecting Quota Sampling will help the researcher to define sample size non-probabilistically because each member in the population does not have equal chance of getting selected as respondents. Selecting Quota Sampling will help the researcher to reduce time and cost associated with sampling method and the researcher will use judgmental sampling in order to select respondents from Subsets. Chapter 6: Significance of Research  Findings of this paper will be used to fulfil the gap in the literature and define the role of CSR initiatives of companies in influencing perception of consumers. Another thing is that, literature is pretty scarce for CSR initiatives in context to Saudi Arabia; hence findings of the study can be used to provide basal plane for future researchers planning to conduct research on relationship between CSR initiatives and consumer perception towards the brand. From business perspectives, findings of the study might help marketers to decide their brand positioning strategy in context to CSR initiatives of their companies. Chapter 7: Timeline Year 1: Define the nature of research problem, identify analytics framework, and complete the first draft of literature review. Year 2: Empirical work (data collection) Year 3: Produce final write up of results, submit completed thesis  Reference List Baron, D., 2001. Private politics, corporate social responsibility and integrated strategy. Journal of Economics and Management Strategy, 10(1), pp. 7-45. Creswell J. W., 2009. Research design: Qualitative, quantitative, and mixed methods approaches. 3rd ed. California: Sage Publications. Curwin, J. and Slater, R., 2008. Quantitative methods for business decisions. 6th ed. Andover: Cengage Learning EMEA. Darrag, M. and E-Bassiouny, N., 2013. An introspect into the Islamic roots of CSR in the Middle East: the case of Savola Group in Egypt. Social Responsibility Journal, 9(3), pp. 362-378. Divine Chocolate., 2009. Annual Report 2008/09. [pdf] Available at: [Accessed 23 September 2013]. Feddersen, T. J. and Gilligan, T. W., 2001. Saints and markets: Activists and the supply of credence goods. Journal of Economics & Management Strategy, 10(1), pp. 149-171. Fifka, M., 2009. Towards a more business-oriented definition of corporate social responsibility: Discussing the core controversies of a well established concept. Journal of Science & Management, 2, pp. 312-21. Foreign Affairs., 2009. Saudi Arabia CSR. 88(5), pp. 1-6. Hoeffler, S. and Keller, K. L., 2002. Building brand equity through corporate societal marketing. Journal of Public Policy and Marketing, 21(1), pp. 78-89. Kayaman, R. and Arasli, H., 2007. Customer based brand equity: Evidence from the hotel industry. Managing Service Quality, 17(1), pp. 92-107. Maignan, I. and Ferrell, O. C., 2004. Corporate social responsibility and marketing: An integrative framework. Journal of the Academy of Marketing Science, 32(1), pp. 3-19. McWilliams, A., Siegel, D. S. and Wright, P. M., 2006. Corporate social responsibility: International perspectives. New York: Rensselaer Polytechnic Institute. Mohr, L. A. and Webb, D. J., 2005. The effects of corporate social responsibility and price on consumer responses. Journal of Consumer Affairs, 39, pp. 121-7. Nalband, N. A. and Al-Amri, M. S., 2013. Corporate social responsibility: Perception, practices and performance of listed companies of Kingdom of Saudi Arabia. Competitiveness Review: An International Business Journal, 23(3), pp. 284-295. Nan, X. and Heo, K., 2007. Consumer responses to corporate social responsibility (CSR) initiatives. Journal of Advertising, 36(2), pp. 63-74. Ogrizek, M., 2002. The effect of corporate social responsibility on the branding of financial services. Journal of Financial Services Marketing, 6(3), pp. 215-27. Okoye, A., 2009. Theorising corporate social responsibility as an essentially contested concept: Is a definition necessary? Journal of Business Ethics, 89, pp. 613-27. Pedersen, E. R., 2006. Making corporate social responsibility (CSR) operable: How companies translate stakeholder dialogue into practice. Business and Society Review, 111(2), pp. 137-64. Pedersen, E., 2010. Modelling CSR: How managers understand the responsibilities of business towards society. Journal of Business Ethics, 91, pp. 155-66. Pirsch, J., Gupta, S. and Grau, S. L., 2007. A framework for understanding corporate social responsibility programs as a continuum: An exploratory study. Journal of Business Ethics, 70(2), pp. 125-40. Pitta, D., 2007. Building brand equity and share of heart at Nassau Valley Vineyards. Journal of Product and Brand Management, 16(2), pp. 148-51. Podnar, K. and Golob, U., 2007. CSR expectations: the focus of corporate marketing. Corporate Communications: An International Journal, 12(4), pp. 326-340. Ricks, J. M., 2005. An assessment of strategic corporate philanthropy on perceptions of brand equity variables. Journal of Consumer Marketing, 22(2/3), pp. 121-34 Robson, C., 2011. Real world research. 3rd ed. Chichester: John Wiely and Sons Ltd, Publication. Saunders, M., Lewis, P. and Thornhil, A., 2007. Research methods for business students. 3rd ed. New Jersey: Pearson Education. Saunders, M., Lewis, P. and Thornhil, A., 2009. Research methods for business students. 4th ed. New Jersey: Pearson Education Schwartz, M. S. and Carroll, A. B., 2008. Integrating and unifying competing and complementary frameworks: The search for a common core in the business and society field. Business and Society, 47(2), pp. 148-86. Sheth, H. and Babiak, K., 2010. Beyond the game: Perceptions and practices of corporate social responsibility in the professional sport industry. Journal of Business Ethics, 91, pp. 433-50. Ullah, S. and Jamali, D., 2010. Institutional investors and corporate social responsibility: The role of Islamic financial institutions. International Review of Business Research Papers, 6(1), pp. 619-630. Vaaland, T. I., Heide, M. and Grønhaug, K., 2008. Corporate social responsibility: Investigating theory and research in the marketing context. European Journal of Marketing, 42(9/10), pp. 927-953. Waldman, D., Siegel, D. and Javidan, M., 2006. CEO transformational leadership and corporate social responsibility. Journal of Management Studies, 43(8), pp. 1703-1725. Yoo, B., Donthu, N. and Lee, S., 2000. An examination of selected marketing mix elements and brand equity. Journal of the Academy of Marketing Science, 28(2), pp. 195-211. Read More