Asia Pacific Journal of Marketing and Logistics

CSR and consumer behavioral responses: the role of customer-company

identification
Mobin Fatma, Imran Khan, Zillur Rahman,
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APJML
30,2
460
Received 23 January 2017
Revised 10 May 2017
31 August 2017
Accepted 5 September 2017
Downloaded by North South University At 23:53 22 October 2018 (PT)
Asia Pacific Journal of Marketing
and Logistics
Vol. 30 No. 2, 2018
pp. 460-477
© Emerald Publishing Limited
1355-5855
DOI 10.1108/APJML-01-2017-0017
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/1355-5855.htm
CSR and consumer behavioral
responses: the role of
customer-company identification
Mobin Fatma and Imran Khan
University of Petroleum and Energy Studies, Dehradun, India, and
Zillur Rahman
Indian Institute of Technology Roorkee, Roorkee, India
Abstract
Purpose – The purpose of this paper is to examine the influence of perceived CSR and its influence on
customer satisfaction and loyalty in the hotel industry.
Design/methodology/approach – Personal surveys of hotel guests were carried out in three metropolitan
cities of India. The survey resulted in 327 valid responses which were further analyzed. To test the proposed
model, structural equation modeling was applied.
Findings – The findings show that consumer perception of CSR activities positively influences consumer
identification with the company, and identification positively results in customer satisfaction and loyalty.
Research limitations/implications – Findings of the study have important implications for hospitality
companies as they suggest that hotel managers should invest more in socially responsible initiatives since
consumers tend to support those firms that are perceived as socially responsible by developing a sense of
loyalty towards them.
Originality/value – This study provides a comprehensive framework that integrates social identity and
social exchange perspectives towards building customer satisfaction and loyalty.
Keywords Customer satisfaction, Corporate social responsibility, C-C identification
Paper type Research paper
1. Introduction
The hospitality industry has become one of the largest industries having 120 million
employees and generating revenue of US$ 400-500 billion worldwide (Fatma et al., 2016a).
The industry has been offering various benefits to the social, cultural, and economic
environments through generation of employment and development of infrastructure and
cultural heritage (Yang et al., 2012; Bohdanowicz and Zientara, 2009). Nevertheless, this
industry has also produced a negative impact also, for example, environmental
degradation (Pereira-Moliner et al., 2012), unethical labor practices and growing rate of
prostitution (Frangialli, 2002), in order to satisfy the needs of tourists (Prud’homme and
Raymond, 2013). A sustainable development approach may be understood as one that is
viable and minimizes the environmental hazardous activities (Barr, 2003). In India,
tourism accounts for 6.8 percent of the gross domestic product (GDP) and is the third
largest foreign exchange earner in the country. The tourism and hospitality sector
contribution to the GDP was US$ 44.2 billion in the year 2015 (World Travel and
Tourism Council, 2015). The tourism and hospitality sector is among the top fifteen
sectors in India that attract the highest foreign direct investment (FDI). During the
period April 2000-February 2015, this sector attracted around US$ 7,862.08
(approx. 529259.11 INR) millions of FDI, according to data released by the Department
of Industrial Policy and Promotion (2015-2016) annual report.
Hotel consumers have become more aware about the CSR practices today (Fatma et al.,
2016a) and socially responsible practices play a vital role in their decision to select a hotel
(Tzschentke et al., 2008); social and environmental issues such as climate change, natural
disasters, value degradation and financial crises in developing nations form part of
 consumer awareness. To appear responsible and sensitive to social and environmental CSR and
issues, and achieve customer satisfaction and loyalty, hospitality companies may decide consumer
to implement sustainable development practices in their operations (Martinez and behavioral
del Bosque, 2013; Fatma and Rahman, 2017). Increased awareness among consumers about
CSR activities puts pressure on companies to be socially responsible that is key reason responses
behind organizations adopting CSR initiatives (Bohdanowicz, 2006). By engaging in
sustainable development practices, hotels companies intend to “promote and practice 461
energy efficiency, conservation, and recycling while at the same time providing hotel
consumers with a sustainable, clean and healthy product” (Millar and Baloglu, 2011).
CSR practices followed by organizations also affect consumer satisfaction (Gao and
Mattila, 2014) and brand loyalty (Lai et al., 2010). Customer satisfaction and brand loyalty
have assumed more importance for hospitality companies because of rising customer
expectations (Han et al., 2011), declining marketing share (So et al., 2013) and competitive
business environment (Kandampully and Suhartanto, 2000). Firms in the hospitality
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industry focus on satisfying and retaining customers because satisfied customers are more
likely to remain loyal to the firm, pay premium prices and speak positively about the firm
to others (Harris and Goode, 2004). Customer satisfaction has been directly related to
profitability of the company (Lee and Heo, 2009). Thus, it is only logical to evaluate the
aspects that are more directly related to the profitability of the company, for instance
customer loyalty and satisfactory experience (Brady et al., 2002). Previous studies have
shown that a mere 5 percent increase in customer loyalty can result in a 25 percent increase
in company profit (Reichheld and Sasser, 1990). However, inculcating loyalty among
customers represents a big challenge to hotels since switching hotels is very common
among consumers (Nemec, 2010).
In order to establish a loyal customer base, hotels seek to develop long term relationships
with customers by best fulfilling their expectations (Han and Back, 2008). Previous research
presents many perspectives on customer loyalty in context of hotel services (He et al., 2012).
For instance, several studies have largely focused on examining social exchange variables
such as satisfaction (Gao and Mattila, 2014), and trust (Choi and La, 2013) and brand
evaluation (So et al., 2013) to understand the loyalty in context of hotel services. However,
little research attention has been given to social identification with regard to customer
loyalty, and such identification has not been included in the holistic perspective
(which includes attitudinal and behavioral aspects) towards customer loyalty. Thus, in order
to better understand customer loyalty, an approach that integrates social exchange and
social identification variables is warranted (He et al., 2012). Bhattacharya and Sen (2003)
suggested that social identity perspective could be a useful way to understand the
relationship between companies and their stakeholders. The concept of customer-company
identification originates from the social identity theory, and can lead to a variety of
consumer outcomes, including customer loyalty (He et al., 2012). Despite the increasing
importance of this concept, its influence on the development of customer loyalty remains
relatively unexplored (So et al., 2013).
Previous studies have suggested that the nature and level of CSR activities vary across
industries (McWilliams et al., 2006; Brammer and Pavelin, 2006; Godfrey et al., 2010).
Several previous studies have examined the effect of CSR on customer attitudes and
behavior in various industry settings, and produced mixed results (see e.g. Poolthong, and
Mandhachitara, 2009; Sen and Bhattacharya, 2001; Gurhan-Canli and Batra, 2004;
Fatma and Rahman, 2015). Such contradictory findings fail to help hotel practitioners in
deciding whether and how to engage in CSR activities, and how to integrate CSR with
marketing strategies aimed at strengthening customer loyalty towards the firm. In order to
address this gap in literature, the present study examines the effect of CSR on customer
loyalty through customer identification with the company in context of the hotel industry.
 APJML Findings not only contribute to existing CSR literature, but also provide insights into
30,2 customer behavior that may help managements of hotels in formulating strategies
concerning CSR activities directed at achieving customer satisfaction and loyalty.

2. Literature review
The concept of CSR is broad (Mohr et al., 2001), elusive (Smith and Langford, 2009), and still
462 evolving (Cochran, 2007). Many conceptualizations of CSR have emerged in literature, but
result in a lack of commonly accepted definition (Gatti et al., 2012). Bowen (1953) was the
first who defined the concept of CSR as the obligation “to pursue those policies, to
make those decisions, or to follow those lines of action which are desirable in terms of the
objectives and values of our society” (p. 6) in his book, Social Responsibilities of Businessmen.
LaterKeith Davis (1960) suggested that the business social responsibility refers to the
“decisions and action taken for reasons at least partially beyond the firm’s direct economic
or technical interest” (p. 70). At about the same time, Eells and Walton (1961) shows the
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concern for the broader social system. In 2000, European Commission view defines CSR as a
“concept whereby companies integrate social and environmental concerns in their
business operations and in their interactions with their stakeholders on a voluntary basis”
(Commission of the European Communities, 2006, p. 5). This concept has also been
interchangeably used with the other terms also such as corporate social responsiveness
(Wartick and Cochran, 1985), corporate sustainability, and ethics (Vaaland et al., 2008) and
corporate citizenship (Maignan, 2001). Over the period of time, the importance of CSR has
been acknowledged by several firms all over the world (Luo and Bhattacharya, 2006).
In the industrial and business context, several studies have examined the association
between CSR with various outcomes. Previous studies show that CSR influences consumer
product responses (Brown and Dacin, 1997), C-C identification (Sen and Bhattacharya, 2001),
positive word of mouth (Price et al., 1987), company evaluation (Marin et al., 2009) and
improves financial performance (Luo and Bhattacharya, 2006). Although CSR has been
linked to various consumer responses, both theoretically and empirically (Fatma et al.,
2016b), the understanding of the different paths that link CSR to loyalty remains limited.
Thus, a sequential approach explaining the pathways that link CSR with customer loyalty
will be helpful for hotels in implementing practices that enhance customer loyalty. CSR has
been incorporated by hospitality firms in their business practices in various forms such as
green practices, community involvement and employee relations (Holcomb et al., 2007).
The concept has received much attention in hospitality and tourism literature and
many authors have discussed its potential benefits (Bohdanowicz and Zientara, 2008;
McGehee et al., 2009). However, the effects of perceived CSR on consumer behavioral
outcomes through mediating path in the hospitality industry remain unexplored.

2.1 Customer identification with the company (C-C identification)

According to the social identity theory (Tajfel and Turner, 1979; Brewer, 1996), customers
tend to identify themselves with organizations on the basis of similar traits and values
shared by the organization (Mael and Ashforth, 1992). In order to satisfy the self-definitional
need, individuals go beyond their self-identity to form a social identity (Turner, 1985).
Social identity refers to the perception of the self with respect to a group while considering
the consequences of individual identification with that group (Mael and Ashforth, 1992).
C-C identification is a substrate of meaningful and deep rooted relationships that marketers
seek to develop with their customers (Bhattacharya and Sen, 2003). Turner (1985) stated
that individuals tend to attach themselves to groups which they perceive as distinctive and
socially responsible in order distinguish themselves from others. In a business context,
customers who identify with a company are more likely to support its products/services and
safeguard its reputation (Siu et al., 2014).
 2.2 CSR and C-C identification CSR and
C-C identification literature suggests that if self-identity of the consumer overlaps with consumer
company identity (in cases where the company is engaged in CSR activities), the consumer behavioral
identifies with the company (Sen and Bhattacharya, 2001). Thus, individuals aware of
companies’ socially responsible actions show higher levels of identification with them as responses
compared to those individuals who are not aware of such initiatives (Sen et al., 2006).
Thus, consumer perceived CSR strengthens consumers’ identification towards the 463
organization and instills within them a sense of belonging towards the organization
(Matute-Vallejo et al., 2011). Therefore, the following hypothesis is proposed:
H1. CSR is positively and directly related to C-C identification

2.3 C-C identification and satisfaction

According to the cognitive-affective model, customer satisfaction is achieved through
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cognitive and affective responses (del Bosque and San Martin, 2008). Identification may
serve as a psychological process that motivates satisfaction (Siu et al., 2014). Expectation
disconfirmation theory suggests that customers are likely to be satisfied with a company if
the actual performance of the products or services offered by the company exceeds their
expectations (Oliver, 1997). C-C identification results in a more favorable view towards the
company (He and Li, 2011); even if customer expectations are not met by the product or
services offered by the company, the consumer will remain less dissatisfied if C-C
identification is strong (Perez and del Bosque, 2015). As mentioned above, when company
performance meets or exceeds customer expectations, the result is satisfied customers with
strong company identification (Martinez and del Bosque, 2013). This further reinforces
customers’ emotional attachment to the company and helps in preserving their self-esteem
(Aquino and Reed II, 2002). It is more likely that customers with strong C-C identification
will be satisfied with the company (Bhattacharya and Sen, 2003). Hence, we propose the
following hypothesis:
H2. C-C identification is positively and directly related to customer satisfaction.

2.4 C-C identification and loyalty

C-C identification emotionally and psychologically attaches the customer to the company
(Bhattacharya and Sen, 2003) and positively results in customer loyalty (Marin et al., 2009).
In a customer-company relationship, commitment built through the identification process
results in stable and long term relationship with the company (Bhattacharya and Sen, 2003).
When customer identification with company is based on satisfaction of self-definitional
needs, the result is various favorable marketing outcomes (Bhattacharya and Sen, 2003;
Fatma et al., 2016b). Since customers tend to identify not only with products or services, but
also with the company, their loyalty may be gained even with minor changes during the
development of product and services (Bhattacharya and Sen, 2003). In hospitality literature,
the role of C-C identification has been discussed rather less. In the present study, we propose
C-C identification as a key mediating pathway to loyalty, and posit:
H3. C-C identification is positively and directly related to customer loyalty.

2.5 Customer satisfaction

Customer satisfaction is crucial to hospitality firms (Andaleeb and Conway, 2006).
Recent studies in hospitality literature indicate that hotels direct CSR strategy towards
building long term relationships with customers and achieving a competitive advantage
(Martinez and del Bosque, 2013). The cognitive-affective model provides a theoretical basis for
 APJML understanding the concept of customer satisfaction in service settings (del Bosque and
30,2 San Martin, 2008). The role of CSR in determining customer satisfaction has received little
attention in CSR literature (McDonald and Rundle-Thiele, 2008) despite the growing
importance of this construct in marketing literature (Fornell et al., 2006). Some studies have
suggested that involving in sustainable initiatives results in customer satisfaction
(Prud’homme and Raymond, 2013) and revisit intention (Berezan et al., 2013). Others state
464 that hotels should not inform consumers about their sustainable practices because consumers
perceive that in so doing, the firm has ulterior motives.

2.6 CSR and customer satisfaction

Luo and Bhattacharya (2006) found a direct and positive relationship between the
companies CSR activities and customer. Previous studies in the hospitality context support
an existence of positive relationship between CSR and customer satisfaction (Martinez and
del Bosque, 2013). Hence, we propose the following hypothesis:
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H4. CSR is positively and directly related to customer satisfaction.

2.7 Customer loyalty

Customer loyalty and how it can be developed has become important to hotels (Levy and
Park, 2011) because the customer is a crucial asset for the company that directly affects its
financial performance (Edvardsson et al., 2000). There is considerable debate in literature
regarding the definition of the conceptual domain of customer loyalty in the hospitality
sector (So et al., 2013). Oliver (1999, p. 34) defines this concept as “a deeply held commitment
to re-buy or re-patronize a preferred product or service consistently in the future, thereby
causing repetitive same brand or same brand-set purchasing, despite situational influences
and marketing efforts having the potential to cause switching behavior”. To begin with, the
conceptual domain of loyalty needs an incorporation of the different structures of loyalty
-attitudinal and behavioral (Cohen et al., 2014). The behavioral aspect of loyalty is related to
the repeat purchase made by the consumer within a specific time period. It is noteworthy
that repeat purchases can be made either due to a lack of alternatives, or due to satisfaction.
If a customer is loyal to a company even after not being satisfied with the services or
products of the company, such loyalty is known as “spurious loyalty” or “no loyalty”
(Dick and Basu, 1994). Attitudinal loyalty is related to the emotional and favorable
evaluation of the company that generates real loyalty. This type of loyalty results in positive
word of mouth and long term relationship with the company (Perez and del Bosque, 2015).
Previous studies in hospitality literature have evaluated customer loyalty on the basis of
attitudinal approach (Han and Back, 2008). Hence, researchers have called for examination
of both attitudinal and behavioral loyalties in hospitality firms (Han et al., 2011). Mason et al.
(2006) stated, “there is no general agreement on what creates loyalty to a hotel”. Although
the link between CSR and customer loyalty has been explored both theoretically and
empirically (Perez and del Bosque, 2015), there is still a need for an alternative pathway that
links CSR to loyalty. A comprehensive framework that explains the different ways in which
CSR connects to loyalty through the mediation of certain constructs will be helpful to
hospitality companies in implementing activities that enhance customer satisfaction and
build loyalty.

2.8 CSR and customer loyalty

Researchers have claimed that consumers are willing to pay more to the company with a
socially responsible image (Ross et al., 1991; Mohr and Webb, 2005). Fry et al. (1982) stated
that firms with a socially responsible image can differentiate their brand from others and
 increase customer loyalty. This shows that individuals value the company’s efforts in CSR and
donating to NGOs, energy conservation, supporting art and culture, etc. which may result consumer
in long term relationships with the company and enhanced loyalty (Maignan et al., 1999). behavioral
The present study empirically examines the relationship CSR and customer loyalty, and
posits the following hypothesis: responses
H5. CSR is positively and directly related to customer loyalty.
465
2.9 Customer satisfaction and loyalty
The concepts of customer satisfaction and loyalty are highly correlated (Hur et al., 2013),
although they are distinct concepts (Oliver, 1999). If a customer is satisfied with the products
or services of a company, he or she will be inclined to repurchase the products or services
repeatedly, and finally become loyal to a brand (Martinez et al., 2014). Previous studies have
suggested that customer satisfaction has a positive impact on customer retention, customer
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maintenance, share of purchases, and service usage, and is considered one of the main
antecedents of loyalty (Leverin and Liljander, 2006; Aurier and N’Goala, 2010). Thus, the
following hypothesis is proposed (Figure 1):
H6. Customer satisfaction is directly and positively related to loyalty.

3. Method
3.1 Sample and data collection
The data were collected through a personal survey using a structured questionnaire during
January-March, 2015. Respondents included hotel guests who had stayed in four and five
star hotels at least once during the last 12 months. These hotels were located in three
metropolitan cities of India, namely Delhi, Mumbai and Chennai. These cities are home to
people from various socio-cultural backgrounds which should help in generalizing the
findings of the study in an Indian context. Non-probabilistic sampling procedure has been
employed (Trespalacios et al., 2005). Data collection was done with the help of university
students studying Marketing. They were briefed about the research objectives and design.
The questionnaire items were reviewed and analyzed before distributing to participants.
Respondents were assured of confidentiality of information they provided. The data
collection team was available to answer any questions participants had while answering the
survey. The respondents seemed to be aware of the CSR phenomenon and related issues.
A possible reason behind this may be the fact that over the past few years, hotels have been
indulging in a range of CSR activities – from environmentally friendly practices to making
donations to charities for community welfare. For example, the ITC hotel chain has
pioneered the concept of LEED (Leadership in Energy and Environmental Design)
certifications on environmental sustainability to meet two thirds of their energy
requirement. A few hotels in Mumbai also partnered with Youth Career Initiative to
provide training to the youth and the underprivileged section of society. The hotel industry

Satisfaction
H4
H2
C-C
CSR H1 H6
identification
H3
H5 Figure 1.
Loyalty Hypothesized model
 APJML is also supporting the Ministry of Tourism’s ambitious “Hunar se Rozgar Tak” Program
30,2 which aims at developing skills of underprivileged youth. Programmes and initiatives like
the ones mentioned above help in increasing awareness about which organizations are
engaged in what kind of CSR activities.

3.2 Measures
466 Existing well-established scales were taken to measure the proposed variables in our model.
All the items were measured on a seven-point Likert scale with measures ranging
from strongly disagree to strongly agree (1 ¼ strongly disagree, 7 ¼ strongly agree).
The questionnaire was pre-tested with 50 university students to identify ambiguous and
unclear items. CSR association was measured with a three item scale taken from the study of
Wagner et al. (2009). C-C identification was measured with a four item scale taken from
the study of Mael and Ashforth (1992). Customer satisfaction was measured using a
four item scale taken from the study of Cronin et al. (2000). Loyalty was measured with
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a four item scale adapted from the study of Zeithaml et al. (1996), Sirdeshmukh et al. (2002).
These items measured both behavioral and attitudinal components of loyalty. The scale
items used in the study are shown in Table AI.

4. Results and analysis

Of the 350 questionnaires distributed, 327 valid responses were received, yielding
a response rate of 93.4 percent. In total, 59.02 percent of respondents were male. In all,
35.47 percent respondents fell in the age range of 41-50 years. 36.08 percent of the
participants were post graduate, and 50.76 percent of all respondents had monthly incomes
above Rs. 50,000 (Table I).

4.1 Assessment of measures

Before testing the proposed theoretical model, psychometric properties of the scales were
analyzed. For this purpose, first order confirmatory factor analysis was implemented.
Results showed an adequate model fit. All the fit indices were in acceptable ranges as
shown in Table II. The reliability of the scale was evaluated by Cronbach’s α and average
variance extracted (AVE). In all cases, the value of Cronbach’s alpha is above 0.80 and
AVE is above 0.5, meeting the recommended values (Hair et al., 2011). All the items loaded

Characteristics Sample %

Age (Years) 18-24 28 8.56

25-30 36 11.00
31-40 91 27.82
41-50 116 35.47
50 and above 56 17.12
Gender Male 193 59.02
Female 134 40.97
Education High school and below 77 23.54
Graduation 89 27.21
Post-graduation 118 36.08
None 43 13.14
Income o 10,000/(below $156) 19 5.81
10,000-30,000 ($156-$468) 28 8.56
31,000-50,000 ($484-$780) 65 19.87
Table I. W 50,000/(Above $780) 166 50.76
Sample description None 49 14.98
 Construct Item Standardized loadings AVE CR
CSR and
consumer
CSR CSR1 0.889 0.851 0.945 behavioral
CSR2 0.956
CSR3 0.922 responses
C-C identification CCI1 0.845 0.521 0.809
CCI2 0.569
CCI3 0.812 467
CCI4 0.623
Satisfaction SATS1 0.921 0.540 0.819
SATS2 0.788
SATS3 0.632
SATS4 0.541
Loyalty LOY1 0.912 0.532 0.816
LOY2 0.654
LOY3 0.599
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LOY4 0.714
Table II.
Model fit indices ¼ χ2 ¼ 146.34(59) χ2/df ¼ 2.480, GFI ¼ 9.899, NFI ¼ 0.923, CFI ¼ 0.943, RMSEA ¼ 0.6 Measurement results

significantly on their respective factors and the standardized lambda coefficient

was above 0.5 providing evidence of convergent validity (Steenkamp and van Trijp, 1991).
The discriminant validity of the model was evaluated by comparing the square root of
AVE of each construct with the inter-construct correlation. And, it was confirmed since
the AVE was greater than the squared correlation with the other construct (Fornell and
Larcker, 1981) (Tables II and III).

4.2 Hypothesis testing

To test the proposed causal relationship in the theoretical model, structural equation
modeling (SEM) has been applied. All the model fit indices of the structural model are in
acceptable ranges. χ2 value of the structural model is statistically significant (χ2 ¼ 196.21,
df ¼ 49, p ¼ 0.000). Because the χ2 value is generally significant in case of larger sample
sizes (above 200 cases), other indices such as GFI, NFI, CFI, and RMSEA have been used to
confirm model fit. All the other fit indices were also found within acceptable range
(GFI ¼ 0.932, CFI ¼ 0.971, NFI ¼ 0.951, RMSEA ¼ 0.6). Therefore, it is concluded that the
data set fit to the model well. The estimated path coefficient in the model is shown
in Figure 2. The path estimates were consistent with the hypotheses, and all hypotheses
were supported (H1-H6) as shown in Table IV.
H1 proposed a relation between consumer perception of CSR activities and C-C
identification; the relation was found statically significant ( β ¼ 0.29; p o0.05), supporting
H1. H2 hypothesized that consumer perception of CSR activities led to customer
satisfaction, and the relation was found statistically significant ( β ¼ 0.53; p o0.05). H3 was

Variables CSR C-C identification Satisfaction Loyalty

CSR 0.92
C-C identification 0.23 (0.08) 0.72
Satisfaction 0.13 (0.21) 0.42 (0.52) 0.73
Loyalty 0.26 (0.36) 0.39 (0.36) −0.71(0.46) 0.72 Table III.
Note: Main diagonals are square root of corresponding AVE, off diagonals are correlations, standard errors Inter constructs
appear in parentheses correlation
 APJML related to a path from C-C identification to consumer loyalty, and the relation was found
30,2 statistically significant (β ¼ 0.59; p o0.05). In order to examine whether C-C identification
mediated the link between CSR and satisfaction, and CSR and customer loyalty, mediation
analysis was conducted using SEM which allowed us to compare the different models for
measurement of variance. Three different models were analyzed to examine the existence of
the mediation effect between CSR and satisfaction, and CSR and loyalty.
468 To confirm the mediation effect, four conditions should be satisfied (Andrews et al., 2004):
first, the predictor variable (CSR) should significantly influence the mediating variable
(C-C identification. Second, the mediating variable (C-C identification) should significantly
influence the dependent variables (satisfaction). Third, the predictor variable (CSR) should
significantly influence the dependent variable (satisfaction). Fourth, the influence of
predictor variable (CSR) should not be significant in case of full mediation, or should be
lesser in strength in case of partial mediation after controlling the mediating variable
(C-C identification).
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Model 1 satisfies first two criteria. The predictor variable (CSR) significantly influences
the mediator variable (C-C identification) and mediator variable (C-C identification)
significantly influences the dependent variable (satisfaction). Model 2 was designed to
examine the third condition and results show that (CSR) significantly influenced customer
satisfaction (dependent variable). In model 3, CSR and C-C identification were taken as
predictor variable and satisfaction as dependent variable to determine whether the impact
of CSR on satisfaction was insignificant or less significant. The result showed that impact of
CSR and satisfaction become in significant after the inclusion of C-C identification thus it
shows that there is full mediation between CSR and satisfaction (Table V ).
H4 posits the relationship between CSR and satisfaction and was found statistically
significant (β ¼ 0.34, p o0.05), hence H4 is supported. The impact of CSR activities on
loyalty was found significant as hypothesized in H5 (β ¼ 0.74, p o0.05), therefore H5 is
supported. The link between satisfaction and loyalty was found positively significant,
supporting H6 (β ¼ 0.79, p o0.05). This finding is aligned with the previous finding which
indicates that satisfaction is a crucial antecedent to loyalty and significantly influences it
(Choi and La, 2013).

 = 0.34
Satisfaction
 = 0.53

CSR  = 0.29 C-C

identification  = 0.79
Figure 2.  = 0.59
Structural model with  = 0.74
path coefficient Loyalty

Hypothesized path Hypothesis Path coefficient t-value Contrast

CSR-C-C identification H1 0.29 4.13 Accepted

C-C identification – satisfaction H2 0.53 11.11 Accepted
C-C identification – loyalty H3 0.59 10.58 Accepted
CSR-satisfaction H4 0.34 7.96 Accepted
CSR-loyalty H5 0.74 11.79 Accepted
Table IV. Satisfaction-loyalty H6 0.79 11.93 Accepted
Path coefficients Note: p o0.05
 As mentioned with reference to mediation analysis above, four conditions must hold true for CSR and
mediation analysis. Model 1 was intended to examine whether the first two conditions were consumer
satisfied. Results indicated that predictor variable (CSR) significantly influenced the behavioral
mediator variable (C-C identification) and C-C identification (mediator) significantly
influenced customer loyalty (dependent variable). Model 2 examines the third condition and responses
the result shows that CSR (predictor variable) significantly affects customer loyalty
(dependent variable). Model 3 showed the existence of partial mediation effect in the 469
relationship between CSR and loyalty. Results are shown in Table VI.

5. Discussion and implications

Findings of the study provide evidence of the relationship between consumer perception of
CSR activities and loyalty. The theory of social identification has been applied in several
studies by researchers in various contexts (e.g. Marin et al., 2009; Ahearne et al., 2005;
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Keh and Xie, 2009). However, despite the widely accepted importance of C-C identification in
business and industry, its influence on customer satisfaction and loyalty largely remains
unexplored in the context of the hotel industry except the few studies (e.g Martinez, and
del Bosque, 2016). Previous studies have focused on the direct effects of CSR on loyalty
(Mandhachitara and Poolthong, 2011), but have largely ignored the mediating effect of C-C
identification on loyalty. The present study addresses this gap by examining the influence
of consumer perception of CSR on customer satisfaction and loyalty through C-C
identification. Our study provides a comprehensive framework that integrates social
identity and social exchange perspectives towards building customer satisfaction and
loyalty. This study also adds to the empirical evidence supporting the direct effects of
perceived CSR on C-C identification (Marin et al., 2009) and satisfaction (Lee and Heo, 2009)
and loyalty (He and Li, 2011). The present paper further extends the work of Luo and
Bhattacharya (2006) by integrating the mediating role of C-C identification in the

Model χ2 Df χ2 diff (df diff ) GFI NFI CFI RMSEA

1 133.56 48 0.989 0.923 0.936 0.985 0.7
2 296.36 88 3.058 0.911 0.888 0.935 0.5
3 96.78 33 5.281 0.899 0.974 0.911 0.8
Full mediation
Table V.
Model l Model 2 Model 3
SEM results for the
CSR-C-C identification 0.786 – 0.931 mediation effect of C-C
C-C identification-satisfaction 0.821 – 0.881 identification on the
CSR-satisfaction – 0.439 −0.083 relationship between
Notes: CSR, corporate social responsibility. p o0.05 CSR and satisfaction

Model χ2 Df χ2 diff (df diff ) GFI NFI CFI RMSEA

1 99.89 48 8.833 0.888 0.936 0.911 0.6
2 88.68 88 2.054 0.971 0.921 0.922 0.3
3 78.81 33 0.889 0.981 0.947 0.978 0.7 Table VI.
Partial mediation SEM results for the
Model l Model 2 Model 3 mediation effect of C-C
CSR-C-C identification 0.88 – 0.89 identification on the
C-C identification-loyalty 0.91 – 0.72 relationship between
CSR-loyalty – 0.65 0.36 CSR and Loyalty
 APJML relationship between CSR and customer satisfaction. The finding of our study that CSR has
30,2 a positive and significant influence on customer satisfaction and loyalty is in line with
findings of previous studies (Brady et al., 2002).

5.1 Theoretical implications

The theoretical contribution of this study lies in demonstrating how a company’s socially
470 responsible reputation influences customer satisfaction, and ultimately, loyalty. This study
extends previous literature on perspectives of social identity by integrating the mediating
effect of social exchange variables. C-C identification was found to play a vital mediating
role in all the proposed relationships in this study. Consumer perception of CSR activities
helps in generating “moral capital” for the company which promotes customer identification
with the company, leading to customer satisfaction and loyalty. Customers are likely to
believe that companies engaged in socially responsible activities are sensitive to stakeholder
concerns, which contributes to the perceived integrity and credibility of the company.
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Customers are likely to relate more to a company with a socially responsible image as part of
their self enhancement. CSR activities facilitate long lasting relationships with customers
based on the trustworthiness of the company (Kennedy et al., 2001).

5.2 Managerial implications

Findings of this study can be used by practitioners in the hospitality industry to develop
satisfaction and loyalty among customers. Managers may acknowledge the fact that
perceived CSR has significant and positive influence on the various consumer behavioral
outcomes. Findings suggest that perceived CSR has a significant influence on customer
satisfaction, and in turn, satisfied customers become loyal to the firm. In addition, perceived
CSR enhances customer loyalty towards a firm (Roman, 2003). Thus, hotel managers should
invest more in socially responsible initiatives since consumers tend to support firms that are
perceived socially responsible.
Our findings suggest that companies can gain substantial benefits by integrating
socially responsible practices into their hotel operations. It is also important to highlight that
perceived CSR does not only directly influence customer satisfaction and loyalty, but also
indirectly affects these variables through C-C identification. Customers are likely to identify
with a firm if they find that the firm is in alignment with their own self-identity. The present
study has found that company image built around socially responsible practices leads to
customer identification with the company and results in long term company benefits.
Considering the relevance of the relationship between CSR and C-C identification, and C-C
identification and satisfaction and loyalty, a hotel should invest more in corporate identity
management. By managing corporate identity strategically, a hotels can enhance consumer
association towards the firm which in turn may enhance sense of belongingness and
identification (He and Li, 2011), and result in favorable attitudinal and behavioral responses
towards the hotel (Brown and Dacin, 1997). Therefore, a hotel should focus on developing a
CSR-based identity that resonates with customers. This way, hotels can reinforce marketing
strategy through making an investment in CSR initiatives that are perceived as valuable by
customers. It is noteworthy that while designing programs aimed at customer loyalty, hotel
should not only communicate the corporate identity, but also focus on building customer
identification with the brand. In the hospitality business, hotels can enhance customer
identification with the firm through inclusion of CSR images in their communication.

5.3 The mediating role of C-C identification

This study examines the mediating effect of C-C identification in the relationships between
perceived CSR and satisfaction, and perceived CSR and loyalty. Theses finding are in line
 with those of previous studies in the service context (Gao and Mattila, 2014; Prud’homme CSR and
and Raymond, 2013). The results drawn from the present study, in hospitality context, consumer
establish the existence of the relationship between CSR and satisfaction with C-C behavioral
identification as mediator. Partial mediation by C-C identification was found in the
relationship between perceived CSR and loyalty. responses

5.4 Limitations and future research directions 471

This study considers customer satisfaction and loyalty as consumer behavioral outcomes.
Future research should include other outcome variables such as word of mouth with
satisfaction and loyalty to form a more comprehensive framework. Further, research may
focus on combining consumer intention and behavioral variables to get a deeper
understanding of this relationship. In addition, researchers may consider replicating this
study in other service settings and countries as consumers from different countries may
have different perceptions towards CSR and in turn, CSR may have different kind of
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influence on identification.

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Appendix

Dimensions Items Source

CSR1 CSR The hotel is concerned to improve the well-being of the society Wagner et al. (2009)
CSR2 CSR This hotel is socially responsible
CSR3 CSR This hotel company follows high ethical standards
SATS1 Satisfaction Offering exactly what I am looking for my accommodation Cronin et al. (2000)
SATS2 Satisfaction I like staying in this hotel
SATS3 Satisfaction Staying in this hotel makes me feel great
SATS4 Satisfaction My decision to buy this hotel service is good
LOY1 Loyalty I prefer to stay in this hotel company as my first choice as Zeithaml et al. (1996),
compared to other hotel brands Sirdeshmukh et al.
(2002)
LOY2 Loyalty I shall be continuing considering this one as my main hotel
brand in the next few years
LOY3 Loyalty I would recommend this hotel brand if someone asked my
advice
LOY4 Loyalty It would be costly in terms of time, money and effort to end
the relationship with this hotel brand
CCI1 Identification If someone criticize this company, it feels like a personal insult Mael and Ashforth
(1992)
CCI2 Identification When I talk about this company, I usually say “we” rather
than “they”
CCI3 Identification I am interested in what others think about this company
Table AI. CCI4 Identification When someone compliments this company, it feels like a
Measurement items personal compliment to me

About the authors

Mobin Fatma is an Assistant Professor at the University of Petroleum and Energy Studies, Dehradun,
India. She received a PhD Degree in Business Administration from the Indian Institute of Technology
Roorkee. Her area of interest is marketing, consumer behavior and corporate social responsibility
(CSR). She has published articles in international journals such as Journal of Retailing and Consumer
Services, International Journal of Bank Marketing, Management Research Review, International Review
of Public and Non Profit Marketing, Marketing Intelligence and Planning, Social Responsibility Journal,
International Strategic Management Review, among others. Mobin Fatma is the corresponding author
and can be contacted at: mobinfatimambd@gmail.com
 Imran Khan is an Assistant Professor at the University of Petroleum and Energy Studies, CSR and
Dehradun, India. He received a PhD Degree from the Department of Management Studies, Indian consumer
Institute of Technology Roorkee, Roorkee, India, in the area of brand experience. His research interests
are brand management, retailing and marketing research. He has published articles in international behavioral
journals such as Journal of Retailing and Consumer Services, International Journal of Bank Marketing, responses
The Marketing Review, among others. One of his papers has been accepted for publication in Cornell
Hospitality Quarterly.
Dr Zillur Rahman is an Associate Professor in the Department of Management Studies, Indian 477
Institute of Technology Roorkee, India. His areas of interest are marketing, sustainability, and strategic
management. Dr Rahman received the Emerald Literati Club Highly Commended Award in 2004 and
Highly Commended Award winner of the 2009 Emerald/AIMA Indian Management Research fund
award, and Highly Commended Runners Up for 2012 Emerald/IAM South Asia Management Research
Fund Award. One of his papers is in the Sciencedirect top 25 hottest article. He has published articles
in various international journals such as Management Decision, The TQM Journal, Journal of
International Consumer Marketing, Service Business: An International Journal, Journal of Services
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Marketing, International Journal of Productivity and Performance Management, International Journal

of Bank Marketing, International Journal of Quality & Reliability Management, Information Technology
for Development, Journal of Global Fashion Marketing, Tourism Management Perspectives.

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