The conceptual model of perceived corporate social responsibility, corporate image and customer loyalty in Vietnams aviation industry

ABSTRACT:

Corporate social responsibility (CSR) has become an essential concept in business as CSR activities affect the corporate image and the customer loyalty. Although previous studies examine the relationships among CSR activities, the corporate image and the customer loyalty, there are few studies that approach these relationships from a holistic stakeholder perspective, particularly in Vietnamese aviation industry. This paper is to develop a conceptual model to explain the impacts of perceived corporate social responsibility on corporate image and customer loyalty from the stakeholder-based viewpoint in the airline industry of Vietnam. Dimensions of CSR including shareholders, customers, employees, suppliers, environment, society and regulatory authorities are examined in this conceptual model. According to the proposed model, the CSR dimensions may have positive influence on corporate image and customer loyalty.

Keywords: aviation industry, corporate image, corporate social responsibility, customer loyalty, stakeholder-based approach.

1. Introduction

In the recent years, Vietnamese aviation industry has grown rapidly and become one of the five markets with remarkable growth in size [20]. However, the COVID-19 pandemic has seriously damaged the industry. All carriers are currently operating at less than 50% of their capacity and licensing for new airlines is postponed until 2022. To gradually restore their business operations, the carriers are striving to attract passengers to reuse their service. In the current context, building corporate image and maintaining customer loyalty through the application of effective business strategies are crucial to airline success [2].

Many studies argue that corporate social responsibility (hereinafter referred to as CSR) is an important business practice to make a business stand out from its competitors [42]. In aviation industry, regulatory authorities require airlines to behave responsibly not only towards customers and employees but also towards other stakeholders [8]. Despite the positive effects on competitive advantages and customer behavior, research in aviation industry investigating the influence of CSR on corporate image and customer loyalty has received insufficient attention of scholars [41]. After scrutinizing literature sources, few studies have been identified. Cho et al. (2017) encompassed Carrolls CSR dimensions and safety to examine the influence of CSR on corporate image, passenger trust and behavioral intentions [7]. S. S. Lee & et al. (2019) constructed a CSR framework by integrating economic, legal and philanthropic dimensions together with environmental responsibility [28]. Other researchers chose to focus on the effect of individual environmental dimension [16-17] or examined CSR with some key areas including business operations, workplace, community and customers [23] or safety, consumer rights, environmental protection and social participation [2]. Park (2019) explored the effect of economic, social and environmental responsibilities on customer attitude and corporate reputation in Korean aviation industry [38].

In the previous studies, the researchers investigated the influence of CSR on corporate image and customer behavior within fundamental framework in which CSR was constructed based on sustainability aspects or Carrolls CSR pyramid framework modified with airline-specific issues or focused on some particular dimensions. Despite the fact that the stakeholder theory has important implications in building business strategies (Sen & Bhattacharya, 2001) [51], there has been no research on the topic based on a comprehensive stakeholder-based viewpoint in aviation industry. Therefore, a scientific approach in which CSR is constructed, taking in account of a wide range of CSR dimensions of shareholders, customers, employees, suppliers, regulatory authorities, society and environment from customers perception is needed to fill the gap. As the result, the main objective of this study is to provide a conceptual model that can help to explain the relationship between customer-based perceived CSR, corporate image and customer loyalty in airline industry of a developing country.

2. Literature review and hypothesis development

2.1. Corporate Social Responsibility

So far, even though there has been no generally accepted concept of CSR [9], CSR is commonly measured in terms of three multidimensional approaches [33]. The most popular approach proposed by Carroll refers to four dimensions including economic, legal, ethical and philanthropic categories [3]. According to Carroll (1991), businesses should simultaneously earn profit, comply with law, behave ethically and contribute to community prosperity [4]. The sustainable development approach measures CSR on three criteria of contributing to economic, social and environmental growth [47]. The stakeholder theory approach proposed by Freeman et al., (2010) [14] defining CSR as creating shared value for all stakeholders in the society has been considered as a crucial philosophy in building business strategies [44]. Among various stakeholder groups, customers should receive greater care as they are not only concerned with product quality but also pay attention to corporate attitude towards other stakeholders [37] and they tend to favor and be loyal to the thoughtful and kind businesses that behave responsibly toward stakeholders [32]. Since customers are the key stakeholder, the current study builds the conceptual framework for the impact of customers' perceptions of airline responsibility towards various stakeholders on the shaping of perceived corporate image and customer loyalty.

2.2. Corporate Image

Corporate image is the impression of a customer about a business determined by the corporate activities towards various stakeholders [5]. Corporate image is formed through a procedure whereby the customer processes his/her experiences with the business. It is the result of an accumulated progression in which the customer contrasts the business characteristics. Corporate image is a complex and dynamic category. Under the impact of social events, businesses must frequently refresh their image to adapt to the changes in public value [26].

2.3. Customer Loyalty

Customer loyalty is a customer's commitment to continue patronizing a product or service, regardless of marketing efforts to change his/her buying interests [36]. Customer loyalty is proven to have a strong impact on business profits [22] and it is also a primary objective for a business to survive and thrive and maintain its competitive advantage [25]. Customer loyalty consists of two categories: behavioral loyalty and attitudinal loyalty. The behavioral loyalty relates to repeated purchase while the attitudinal loyalty relates to the willingness to repurchase and recommend. The repurchase activities of behavioral loyalty may not necessarily arise from customer satisfaction with the products or services but because there are no alternatives in the market or the switching costs are too high, which makes the customers have no choice but continue buying the products. Such type of repurchase is fake loyalty and the customers may repurchase the products even though the business has a bad reputation. Attitudinal loyalty indicates that the customers highly evaluate and are psychologically attached to the business. Attitudinal loyalty induces positive word-of-mouth and closely relates to brand commitment [36].

2.4. The Relationship between Perceived CSR, Corporate Image and Customer Loyalty

In the current study, CSR is conceptualized in a stakeholder-based approach with seven CSR dimensions including shareholders, customers, employees, suppliers, environment, society and regulatory authorities. In this section, the author conducted a concise literature analysis for each CSR dimension with the focus on aviation industry to depict the hypotheses.

2.5. Shareholder Dimension

Shareholders are one of the most important stakeholders of all businesses. However, few scholars have considered this dimension when evaluating the impact of perceived CSR on corporate image and customer loyalty. Research in aviation industry found that the airlines being perceived responsible towards shareholders by investing capital effectively and earning profit could create pleasant feeling to passengers and are highly regarded as the airlines of wise choice [38-39]. Findings in banking, telecom and insurance sectors also evidenced that customers are willing to repurchase from profitable businesses and recommend the services to other customers [18, 27, 40, 46]. Considering these results, the following hypotheses are issued to be tested in Vietnamese aviation context:

H1a: Perceived CSR towards shareholders has a positive impact on corporate image.

H1b: Perceived CSR towards shareholders has a positive impact on customer loyalty.

2.6. Employee Dimension

Being responsible to employees is of great importance because employee satisfaction would result in better services and happier customers. In aviation industry, Southwest Airlines has earned its reputation for the superior service provided by well-treated workforce [31]. Research on 130 passengers of Central and Eastern European airline markets has also proven that treating ethically to employees by providing them with safe working environment would positively impact passenger loyalty [2]. The fact that a company is perceived as respecting employee rights by offering decent working condition, adequate salary and equal promotion opportunities has been affirmed to be positively correlated with corporate image [10, 15] and customer loyalty [30, 33, 40] in banking sector. Thus, the following hypotheses are proposed:

H2a: Perceived CSR towards employees has a positive impact on corporate image.

H2b: Perceived CSR towards employees has a positive impact on customer loyalty.

2.7. Customer Dimension

Customers are a key stakeholder of all businesses. Being responsible to passengers is the core determinant affecting customer loyalty in aviation industry [23]. Asatryan's study evidenced that passenger safety and respecting customer rights are crucial to create competitive advantages and customer loyalty [2]. Cho et al. (2017) & Song et al., (2019) demonstrated that an image of a friendly and thoughtful airline is positively impacted by the extent to which the airline is perceived as providing safety, accurate information and error-free services [7, 45]. Findings in Taiwan also proved that customer orientation makes up the most part of airline image and passenger patronage [6, 29]. Based on the previous research, the hypotheses are proposed:

H3a: Perceived CSR towards customers has a positive impact on corporate image.

H3b: Perceived CSR towards customers has a positive impact on customer loyalty.

2.8. Supplier Dimension

Even though suppliers are an important stakeholder, very few studies investigating the influence of supplier dimension could be found in CSR research. berseder et al., (2014) proposed that perceived CSR towards suppliers involves selecting suppliers carefully and treating them fairly [35]. Previous research evidenced that effective supplier relationship management would enhance corporate image [1, 12] and the lack of control over suppliers' operations would dent a long standing image and put businesses under negative public pressure [11, 19, 24]. Eßig & Grajczyk (2012) concluded that socially responsible procurement can enhance trustworthiness and boost reputation of airlines [13]. Considering all the above, the following research hypotheses are issued:

H4a: Perceived CSR towards suppliers has a positive impact on corporate image.

H4b: Perceived CSR towards suppliers has a positive impact on customer loyalty.

2.9. Regulatory Authority Dimension

Airlines are considered as representative image of a country and their activities are related to life safety and national security. Therefore, airlines must comply with regulations of various regulatory agencies including national civil aviation authority and international aviation conventions. Being perceived responsible towards regulatory authorities is viewed as an essential element of airline CSR. The airlines respecting and complying with national regulations and international aviation conventions when carrying out their business activities will impress customers as reliable service providers and generate customer loyalty [2, 23, 27, 34].  On the basis of the literature review, the current study proposes the following hypotheses:

H5a: Perceived CSR towards regulatory authorities has a positive impact on corporate image.

H5b: Perceived CSR towards regulatory authorities has a positive impact on customer loyalty.

2.10. Environment Dimension

Environment is one of the most frequently analyzed CSR dimensions in aviation industry. Studies have shown that customers attitude towards an airline is tightly related to its green image [16]. Previous research evidenced that an environmentally friendly airline evokes a good image to the public [17, 28, 38] and helps strengthen the relationship with customers [2, 23]. Summarizing the results, the hypotheses are given:

H6a: Perceived CSR towards environment has a positive impact on corporate image

H6b: Perceived CSR towards environment has a positive impact on customer loyalty

2.11. Society Dimension

Society dimension emphasizes that being a good corporate citizen relates to actively making donations to improve living conditions of needy people, financing educational and cultural projects and encouraging employees to participate in social activities. Studies in aviation industry found that being perceived as philanthropic airlines would positively affect airline reputation [38] and volunteering activities would have positive influence on patronage commitment [23, 29]. Put together, these findings lead to the hypotheses:

H7a: Perceived CSR towards society has a positive impact on corporate image.

H7b: Perceived CSR towards society has a positive impact on customer loyalty.

2.12. Corporate Image and Customer Loyalty

Corporate image is a crucial factor that impacts marketing activities and could influence customers perception of the service provided. Previous studies have proven that corporate image is a competitive advantage and an antecedent of customer loyalty in service industry [32, 43]. Research in aviation industry affirmed that corporate image is closely and positively associated with customer loyalty [7, 21, 28]. Therefore, in this study, the author proposed the following hypothesis for the case of Vietnamese aviation industry:

H8: Corporate image has a positive impact on customer loyalty.

2.13. Conceptual Model of the Study

Based on the comprehensive literature review, the present study proposed the research model which conceptualizes the impact of perceived CSR on corporate image and customer loyalty presented in Figure 1. Future empirical studies may make use of the model.

Figure 1: Suggested research model3. Conclusion and Future Studies

Corporate social responsibility is becoming an increasingly popular topic among scholars and it is recognized as a valuable strategy to develop corporate image and enhance long-term relationship with customers. However, research on the relationship in the airline industry of developing country is still scarce, particularly a holistic customer-based approach, analyzing the relationship between main dimensions of perceived CSR with corporate image and customer loyalty. Thus, the present study contributed to the literature by discussing the relationship between seven CSR constituents (shareholders, customers, employees, suppliers, society, environment and regulatory authorities), corporate image and customer loyalty in Vietnamese airlines industry. Further empirical research is urged to be conducted to examine the proposed model and test the hypotheses. As the proposed conceptual model focused on the airline industry, further studies in other service sectors such as tourism and finance are needed to test the relationship.

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MÔ HÌNH KHÁI NIỆM MỐI QUAN HỆ GIỮA

TRÁCH NHIỆM XÃ HỘI CỦA DOANH NGHIỆP ĐỐI VỚI HÌNH ẢNH

DOANH NGHIỆP VÀ SỰ TRUNG THÀNH CỦA KHÁCH HÀNG

TRONG NGÀNH HÀNG KHÔNG VIỆT NAM

• HOÀNG ANH THƯ

Đại học Duy Tân

TÓM TẮT:

Trách nhiệm xã hội của doanh nghiệp (CSR) đã trở thành một khái niệm quan trọng trong kinh doanh trong bối cảnh các hoạt động CSR ảnh hưởng đến hình ảnh doanh nghiệp và lòng trung thành của khách hàng. Mặc dù các nghiên cứu trước đây đã thảo luận về mối quan hệ giữa các hoạt động CSR với hình ảnh doanh nghiệp và lòng trung thành của khách hàng nhưng có rất ít nghiên cứu tiếp cận vấn đề từ quan điểm tổng thể của các bên liên quan, đặc biệt là trong ngành Hàng không Việt Nam. Bài viết này nhằm mục đích phát triển một mô hình khái niệm để giải thích tác động của các hoạt động CSR đến hình ảnh doanh nghiệp và lòng trung thành của khách hàng theo quan điểm dựa trên các bên liên quan trong ngành Hàng không Việt Nam. Các khía cạnh của CSR bao gồm: cổ đông, khách hàng, nhân viên, nhà cung cấp, môi trường, xã hội và các cơ quan quản lý được xem xét trong mô hình khái niệm này. Theo mô hình đề xuất, các khía cạnh của CSR có thể ảnh hưởng tích cực đến hình ảnh doanh nghiệp và lòng trung thành của khách hàng.

Từ khoá: Ngành Hàng không, hình ảnh doanh nghiệp, trách nhiệm xã hội của doanh nghiệp, lòng trung thành của khách hàng, phương pháp tiếp cận dựa trên các bên liên quan.

[Tạp chí Công Thương - Các kết quả nghiên cứu khoa học và ứng dụng công nghệ, Số 23, tháng 9 năm 2020]