CSR AND GLOBAL BRAND REPUTATION

Brand reputation has been identified as increasingly important concept among researchers and practitioners (Veloutsou & Moutinho 2009). According to Bromley (2002), reputation in general is a socially shared impression, belief or attitude which is based on a degree of common interest and social interaction. Brand reputation itself is valuable since it has been stated that successful and profitable brands need a positive reputation (Herbig & Milewicz 1993). It is earned over time and created upon evaluations of the brand by various audiences, thus it is not just achieving the consumer satisfaction but a constant work of management (Veloutsou & Moutinho 2009).

A closely linked concept of brand image refers to a consumer perception of brand that is based on more visual or verbal expression of a brand that also brings psychological or emotional associations in the consumer’s mind (Sonnier & Ainslie 2011), i.e. brand image can be defined as ”the perceptions and beliefs held by consumers, as reflected in the associations held in consumer memory” (Kotler, Keller, Brady, Goodman & Hansen 2012, 965). Global brand reputation is then a consequence of managing brand and its image accordingly on global market. In practice, brand reputation is based on the produced marketing signals and organizational tactics supporting these signals (Herbig & Milewicz 1993). Thus, it can be comprehended as an output of the introduced brand identity, the company actions based on the brand promises, and the extent of consumer experience regarding the promises (Veloutsou & Moutinho 2009). Also, mixed signals can be harmful for the existing reputation because they break consistency of a brand (Veloutsou &

Moutinho 2009) while decreasing the brand’s reliability and credibility (Herbig & Milewicz 1993).

The relation between CSR and brand reputation within international business is not a completely new research angle, but it is neither sufficient enough due to lack of global angles in the previous studies. But global perspective is vital since at first global brands are expected to include in CSR (Polonsky & Jevons 2009). Within global brands CSR record can be anticipated, in particularly due to people’s (as consumers) beliefs that global firms have to contribute greater CSR whether they operate in developed or developing countries (Holt et al. 2004). Although it is not easy, since global brands have to create local CSR reputation and at the same time contribute global CSR reputation (Polonsky & Jevons 2009) so that they can compete with other global brands as well (Holt et al.

2004).

Moreover, Holt et al. (2004) have identified that social responsibility is part of the four dimensions that consumers may associate with global brands, and it was highly significant along with quality signal and global myth. Their research also brought up interesting categories of global consumer segments and their relation to GCSR. People as global citizens perceive the global success as a proof of quality and innovation, but they are concerned about companies’ responsible behavior that include in both social and environmental issues, whereas global dreamers’ segment admires global brands and it is not that concerned about CSR than the global citizens (Holt et al. 2004). On the contrary, Holt et al. (2004) have claimed that anti-global segment does not even believe in global brands, hence the anti-globals do not trust that global companies could follow CSR, while for global agnostics a global attribute of a brand does not signify, hence they evaluate local and global brands similarly.

Nonetheless, there are always people against the global companies and their brands but based on the data by Holt et al. (2004) the global citizen segment was the dominating segment (50 %). This especially highlights the importance of global corporate social responsibility and its philanthropic and environmental dimensions, since consumers are worried how transnational companies deal with the different social and environmental issues. Also, the trust of anti-globals could be earned by showing that global companies can manage their brands in a responsible way. Holt et al. (2004) have underlined that companies must invest in social activities if they want to persuade these sceptics, even though global companies might end up fighting with accusations of opportunism or greenwashing. Credibility comes from the actual benefits to the society and environment that global companies can create via their global CSR activities (Holt et al. 2004).

Torres et al. (2012) have brought up this global perspective as well and claimed that research focusing on CSR’s relation to global brands has been lacking, and the required global perspective is still current. Also, according to Werther and Chandler (2005), CSR can be perceived as an insurance against management failures when multinational companies and their competitive strategies concentrate on global brands. This insurance perspective is needed because of changing social expectations, affluence and globalization, while it is emphasized that corporate actions that defy these social expectations can even devastate the global brand image (Werther & Chandler 2005). Hence GCSR could be beneficial to the companies within international business.

Additionally, various researches have indicated that CSR activities can impact on different brand concepts. For instance, there is evidence based on 57 companies inside different industries and

countries stating that CSR towards several stakeholders (customers, shareholders, employees, supplier, and community) affects global brand equity positively (Torres et al. 2012). That effect was especially strong when global strategies were integrated with the need to fulfil the interests that local communities have, hence Torres et al. (2012) highlighted that it is important to know local communities when managing global brands. In addition to the effect on brand equity, Hur, Kim and Woo (2014) have showed that CSR impacts directly and positively on corporate brand credibility, and the corporate brand credibility mediates the relationship between CSR and corporate reputation, and the relationship between CSR and corporate brand equity. That is to say, corporate brand credibility and corporate reputation mediate the relationship between CSR and corporate brand equity, whereupon strategic CSR must specifically rely on the development of credibility and the customer-brand relationship together with creating positive brand image and brand equity (Hur et al. 2014).

However, when discussing about consumer brands and consumers’ respond to CSR activities based on their prior perceptions of a specific brand, there can be also contradictory results. Torelli, Monga and Kaikati (2012) have found interesting results regarding to luxury brands. Their findings demonstrate that CSR image can have an opposite (negative) effect on a luxury brand associated with self-enhancement concept. But they admitted that there are luxury brands based on their high pricing that might not be associated strongly with self-enhancement concept, such as Patagonia, and because of that CSR may not conflict with them. And brands with openness and conservation are neither conflicted with CSR (Torelli et al. 2012).

Business-to-business (B2B) market are not excluded from this topic: according to Lai et al. (2010), CSR can be perceived as an antecedent to industrial brand equity, since it generates buyers’ positive brand awareness/association of the supplier’s products, enhances perceived quality of the products, creates brand loyalty, and results in as brand satisfaction. That is why Lai et al. (2010) have researched how CSR affects on brand performance via brand equity (including brand loyalty, perceived quality, brand awareness, brand association and brand satisfaction) among industrial companies. Their empirical results indicated that CSR affects industrial brand equity and brand performance positively. This is in line with Torres et al. (2012) findings concerning CSR’s positive effect on global brand equity. On the other hand, Wang, Chen, Yu and Hsiao’s (2015a) research demonstrated that there is no statistically significant relation between CSR and brand equity, but they explained this result by saying that within high-tech companies brand equity is not a mediator in the relationships between CSR and firm performance. Nonetheless, their research supported that

CSR and branding can improve company value and concerning more and more competitive high-tech industries it is valuable finding that highlights the importance of the two constructs: CSR and branding.

Global brand reputation angle is chosen as a specific research perspective because in general CSR is linked to higher overall reputation of a company (e.g. Brammer & Millington 2005; Hur et al. 2014;

Szőcs et al. 2016) and the company image can have an effect on its brand value and brand reputation (Harjoto & Salas 2017). Also, the societal perceptions and expectations towards companies and their products and brands tend to change in the course of time (Harjoto & Salas 2017), which is similar to an earlier statement of discussing CSR concept in general: it can vary in the course of time (Bortree et al. 2013; Hillenbrand et al. 2012; Sethi 1975). Hence it is interesting to find out how the global CSR activities might influence global brand reputation.

Referring to this specific brand reputation angle Harjoto and Salas (2017) have found results concerning global brands that one-, two- and three-year lagged CSR strengths have a positive effect on brand value level. CSR concerns as harmful actions of a company can negatively influence changes in brand value and brand ranking, whereas strategic CSR strengths can improve brand value while corporate social irresponsibility can have negative effect on the companies’ legitimacy which is the basis of reputation and hence affects changes in brand reputation negatively (Harjoto &

Salas 2017). Supporting the previous it has been shown that CSR can affect global brand value positively, even though the size and market-based performance indicated greater magnitude of impact (Melo & Galan 2010). Also, communication perspective has emphasized this positive effect of CSR on brand image: when CSR activities are communicated it enhances both purchase intentions and perceptions of the company or brand (Sen & Bhattacharya 2001).

Therefore, this thesis will bring the global perspective to brand management research while highlighting that global CSR can be beneficial also from global brand perspective and not only from the corporate performance viewpoint that is studied rather widely (e.g. Chen et al. 2015; Flammer 2015; Dijk & Holmén 2017; Luo & Bhattacharya 2006; Melo & Galan 2010; Saeidi et al. 2015). Of course, good reputation is interlinked with corporate performance and it can impact positively on financial performance because of its inimitable characteristics (Branco & Rodrigues 2006) resulting in that good global brand reputation can be linked to better corporate performance. But it only justifies the importance of the brand perspective when discussing potential CSR outcomes.

Additionally, the previous research has focused more on CSR without highlighting its global approach, hence this study will strengthen GCSR dimension and its beneficial brand outcomes.

And particularly it is valuable to have results concerning global philanthropic and environmental CSR, because e.g. Lai et al (2010) and Hur et al. (2014) have stated that different dimensions of CSR and their effect on corporate brand outcomes should be investigated more carefully. Also, as stated before, Holt et al. (2004) have identfied that both social and environmental responsibility matter within global brands. There are limited researches available focusing exactly on these two dimensions of CSR and their effect on global brand reputation that are crucial especially from future’s perspective. Khojastehpour and Johns (2014) have investigated the effect of environmental CSR (defined as climate responsibility and natural resource utilization) on corporate/brand reputation and also corporate profitability. They concluded their findings by underlining the importance of environmental CSR when companies aim to increase corporate/brand reputation and profitability, but concrete quantitative results are still lacking.

Furthermore, it is argued then that GCSR can pay off with global brands (Melo & Galan 2010), but results from different countries are also needed (Hur et al. 2014). Thus, this research angle and the following hypotheses can bring then concrete benefits to international business professionals by highlighting the marketing outcomes of CSR that also Hur et al. (2014) have considered really important. It helps managers with their global brands by maintaining global brand reputation inside increasingly competitive market environment, in which case brands are competing with many other brands while their differences are difficult to comprehend (Harjoto & Salas 2017).

H_9a: Global focus of charitable and philanthropic activity impacts positively on global brand reputation.

H_9b: Global focus of environmental sustainability activity impacts positively on global brand reputation.