UNIVERSITY OF FINANCE AND ADMINISTRATION
Faculty of Economic Studies
Field of Study: Marketing Communication
Follow-up master´s study programme in the full-time form
Darina Khomenko
Corporate social responsibility and its role in the public relations
DIPLOMA THESIS
Prague 2020
Final Thesis Supervisor: Vadim Semenenko, Ph.D., MBA
Acknowledgements
First of all, I would like to thank my supervisor for his significant support, important and relevant information provided, always instant feedback, whenever and whatever I asked, and his great patience. It was a pleasure and an honour to cooperate with him throughout the whole process of writing the Diploma Thesis.
Secondly, I would like to express my gratitude to my parents, who gave me this opportunity and supported my decision to do a Master's degree.
Declaration
I hereby declare that I have compiled this final thesis on my own and all the quoted literature as well as other sources used in the thesis are listed in the bibliography. The electronic copy of the thesis is identical with the hard-bound copy. I approve that this diploma thesis is published pursuant to Section 47b Act No.111/1998 Coll., on Higher Education and on the amendment and modification of other acts (the Higher Education Act), as amended.
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Abstracts
The following Diploma Thesis provides a general overview of the Corporate Social Responsibility (CSR) concept and related discipline – Public Relations (PR). In this paper, the main definitions, principles, mechanisms, and models of the CSR concept are observed. The research provides the findings on the positive interrelation between CSR and PR programs illustrated by examples of the companies of different business fields.
The survey conducted in the practical part was managed to test hypotheses raised. The survey results contributed to examine social attitudes towards CSR practices implementing by companies of the chosen business field.
The research conclusion was made according to the findings obtained based on theoretical and practical data.
Abstrakt
Diplomová práce poskytuje obecný přehled o konceptu sociální odpovědnosti firem (CSR) a související disciplíně - vztahy s veřejností (PR). V této práci jsou sledovány hlavní definice, principy, mechanismy a modely konceptu CSR. Výzkum poskytuje zjištění o pozitivním vzájemném vztahu mezi programy CSR a PR prokázanými příklady společností z různých oborů podnikání.
Průzkum provedený v praktické části se podařilo vyzkoušet vznesené hypotézy. Výsledky průzkumu přispěly k prozkoumání sociálních postojů k praktikám CSR prováděným společnostmi ve vybrané oblasti podnikání.
Závěr výzkumu byl učiněn na základě poznatků získaných na základě teoretických a praktických údajů.
Keywords
Corporate Social Responsibility (CSR), Public Relations (PR), corporate reputation, corporate communications, sustainable development, brand management, responsibilities, society, stakeholders, corporate social marketing, consumer demands, environment, socially-responsible brands, CSR impact on consumers’ choice
Klíčová slova
Společenská odpovědnost firem (CSR), vztahy s veřejností (PR), pověst organizace, firemní komunikace, udržitelný rozvoj, řízení značky, odpovědnosti, společnost, zúčastněné strany, korporátní sociální marketing, požadavky spotřebitelů, životní prostředí, sociálně odpovědné značky, vliv CSR na výběr spotřebitelů
Table of Contents
ACKNOWLEDGMENTS ...... 2
DECLARATION ...... 3
ABSTRACTS ...... 4
KEYWORDS ...... 5
TABLE OF CONTENTS ...... 6
INTRODUCTION ...... 8
CHAPTER 1. LITERATURE REVIEW
1.1. Definition and main stages of CSR theory development ...... 11 1.2. Principles and models of CSR in the system of corporate communications ...... 19 1.3. Social-related marketing as a mechanism of CSR implementation: its specificities and the value in brand management ...... 31 1.4. PR-communications and CSR: the role in positive reputation building ...... 38
CHAPTER 2. RESEARCH METHODOLOGY
2.1. Analysis method ...... 47 2.2. Data collection ...... 48 2.3. Data analysis ...... 49 2.4. Validity of research ...... 50
CHAPTER 3. CONTENT ANALYSIS
3.1. L’OCCITANE ...... 51 3.2. Vichy ...... 53 3.3. Clarins ...... 54 3.4. Kiehl’s ...... 57 3.5. Weleda ...... 58 3.6. Conclusion ...... 62
CHAPTER 4. DISCUSSION OF SURVEY RESULTS
4.1. General overview ...... 64 4.2. Decision-making factors ...... 65 4.3. Consumer profile ...... 69 4.4. Impact of CSR on consumers’ attitudes towards purchasing ...... 74
CHAPTER 5. SUMMARY OF FINDINGS ...... 78
Limitations and recommendadions for futher research ...... 81
CONCLUSION ...... 82
BIBLIOGRAPHY ...... 85
INDEX OF APPENDICES ...... 92
A. Questionnaire ...... 93 B. List of brands ...... 97 C. Socially-resoinsible skincare cosmetic brands ...... 98
Introduction
In the modern environment market players face increasing competition causing product differentiation complications. For this reason, the need for emotional impact is crucial. Companies have to be able to identify and meet the needs and, what is more important, the issues consumers care about and be ready to provide support at resolving the problems.
Nowadays, the number of people not indifferent to social and environmental issues is raising. They actively participate in movements for social changes and environment protection, vote for providing better living conditions. Consumers are becoming to be more socially-responsible and make purchasing decisions seriously: a set of factors influencing customers' attitudes to products or brands is changing. Therefore, the way a company or brand implements socially-responsible policy starts to be important for a customer. These circumstances formed the aim of this research - to analyse the corporate social responsibility concept and review its development tendency in the system of corporate communications.
Corporate Social Responsibility (hereinafter CSR) is a voluntary activity of commercial organizations aimed to improve the life quality of society and stakeholders. The key attribute of the CSR concept is that each company has responsibilities before society and the world, which go beyond the corporate interests and legal regulations. Meanwhile, the integration of CSR principles into the company's activity is based on the need to search effective non-financial risk management methods, including social and ecological risks.
The main preconditions of CSR rapid development are movements of various non- commercial organizations and social groups criticizing business operations; refusal to buy the goods of irresponsible companies; active trade-union movement. Simultaneously, the tightening of environmental and labour legislation can be observed.
Recently, the CSR principles have started to be considered more in-depth by scientists and business managers. Despite that social responsibility is actively implemented by the business all over the world, it has various definitions, which 8
complicate its theoretical conceptualization. It can be explained by innovativeness and active development of the CSR concept. Primarily, as a principle of management, CSR generates interests among professionals in the fields of marketing, corporate communications, and public relations (hereinafter PR). At the moment, when care for the environment and social responsibility gains momentum, the research on the interrelation between consumers’ social activity and corporate communication strategies is becoming very important.
According to global research on CSR conducted by Nielsen Media Research (2018), 61% of consumers are ready to buy overpriced goods provided by companies integrating and implementing CSR practices. In comparison, the number in 2014 was 38%. The willingness to pay for concern about society and ecology express 66% of consumers. The records of the audit show the influence of CSR on sales growth: sales turnover of companies applying sustainable development techniques increased by 10% on the average in 2018, while companies, which do not implement CSR principles, demonstrated the rise only by 1%.
This fact proves that companies, which realize CSR principles and take actions to improve society and the environment, are more preferable for consumers' choice. At the same time, consumers can be skeptical about the brands, which do not inspire trust or unconvincing. Thus, the brands confront the necessity to comply with new demands not only by applying CSR principles in the business activity but also by convincing the target audience of a company's socially-responsible position.
PR is a strategical communication tool complementing corporate image-creating and developing positive connotations between the brand and its target groups. These factors are crucial for the business to thrive and be successful in today's competitive environment. One of the elements that are important in getting a competitive advantage is to become a socially-responsible entity since the moral and ethical nature of CSR phenomenon has particular significance for people nowadays.
The aims of CSR and PR are interdependent and coherent due to similar functions, objectives, and communication demands. Both disciplines contribute to reputation building, establishing and managing social relations, and reducing the company's risks. Nevertheless, there are controversies and criticism related to these two
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concepts. Therefore, the following research questions arise, which will be covered in the theoretical part of the current thesis:
- what are the distinctive features of CSR?
- what are the principles and models of CSR?
- what are the mechanisms of CSR strategy implementation?
- does CSR affect the company’ reputation and brand perception?
- what advantages does CSR bring to a company?
- are there financial benefits from conducting CSR programs?
Also, the following hypotheses raised will be examined in the practical part of the current research:
H1: Brand messages about CSR activities positively influence consumers' brand perception;
H2: Socially-responsible brands are the most purchased.
The theoretical basis of this work consists in the research of scientific papers on corporate sustainable development, CSR and PR concepts. Different approaches to the concepts will be studied in the academic writings of world-known scientists such as Howard Bowen (Social Responsibilities of the Businessman,1953), Milton Friedman (The Social Responsibility of Business Is to Increase Profits, 1970), Ed Freeman (Corporate Governance: A Stakeholder Interpretation, 1990), Philip Kotler (Social Marketing: An Approach to Planned Social Change, 1971), Archie Carroll (Corporate social responsibility: a three-domain approach, 1979) and many others. Also, up-to-date articles and books of modern theoreticians and practitioners, including specialized online resources will be researched.
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Chapter 1. Literature Review
1.1. Definition and main stages of CSR theory development
The topic of Corporate Social Responsibility (hereinafter CSR) is vital and popular in the scientific community, business and political elite nowadays. Sustainable business development is inextricably linked to social progress and stable improvement of society. In today's environment, society expresses an interest in the outcomes of the business activity and in the way this activity is being implemented: how natural resources are allocated, how labour force is used, what impact business has on regional development, etc. Taking into consideration the fundamental importance of the business for public welfare, society makes greater demands regarding doing business in a socially appropriate way (Bortree, 2014).
Under the circumstances of frequent economic fluctuations, the interest in exploring the CSR concept has significantly increased, including questions on the interconnection of CSR and innovations. Therefore, the need for conducting socially responsible policy is derived not only by authorities and officials but also at the behest of the consumers’ market (Ameer & Othman, 2012, p.61-79).
Various definitions of CSR are observed in the modern international business practice that allows to interpret the “corporate social responsibility” term. Consider definitions given by authoritative organizations expertise in CSR questions in different countries (Crane & Glozer, 2016).
The European Commission (EC) considers CSR as a concept representing a company's voluntary decision to participate in the public improvement and environmental protection processes.
International Business Leaders Forum (IBLF) interprets CSR as the stimulation of responsibility in the business ethics field, which benefits both the business and society. Furthermore, it conduces to social, economic and ecological development through increasing the positive effect of the business on society and to negative effect decrease.
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From the standpoint of the World Business Council for Sustainable Development (WBCSD), CSR is a concept allowing the business to follow the sustainable development in human resources management as well as to improve local communities and the whole society.
World Bank Institute considers that CSR refers to the directions connected with the key values of a company, which are legitimate, takes into account the interests of various parties (people, society, environment) and the focus of the business on sustainable development.
International Management Association (AIB) explains the definition of CSR as a voluntary contribution of the business to the development of social, ecological and economic sectors associated with companies’ operations.
In the above-mentioned definitions, several common points are observed. First, it is a focus on a voluntary and conscious initiative. This means that CSR cannot be mandatory as in this case its main significance does not exist. There should be highlighted the intention to take part in social life – a condition, without that an implementation of social responsibility programs is a fictitious action not oriented to long-term investments regarding the interests of stakeholders and the whole society. Therefore, CSR implies a willingness of a company to take responsibility for its actions and their consequences, implementing actions to participate in the life of society within the level of its influence (Dahlsrud, 2006, p.10-13).
It can be noted that CSR is quite a broad term linked to the social activities of companies. The companies not only follow the rules and produce high-quality products but voluntarily accomplish additional responsibilities related to society.
Considering the history of CSR theory development, it should be noticed that it has a long evolutionary process. The professional business ethics was a prototype of CSR that was based on the need of society to protect itself from various undesirable consequences of some professional activities’ forms (Marrewijk, 2003, p.95-105).
The foundations of CSR principles could be referred to as the beginning of the 19th century when the labor movement was started (Wartick & Cochran, 1985, p.758- 769). One of the first official definitions of the CSR concept was proposed in 1953 by William Bowen, an American scientist and author of the same name monography 12
that made him well-known as a “Father of Corporate Social Responsibility”. The author was the first who stressed that the business is a part of society and it is responsible to it. For William Bowen, a concept of business social responsibility was about “making decisions, following the policy and pursuing the line of behavior that would be desirable for the purposes and values of society”.
This approach implies the existence of a social contract that could reconcile the behavior of businessmen with the key values and aims of society (Sacconi, 2004, p.77-96). Contract terms can vary depending on the defined country and evolve. Nevertheless, a social contract continues to be a foundation of business legitimacy. In other words, society guarantees the freedom of enterprise in case entrepreneurs consider the expectations of society while doing the business (Bowen, 1953).
Bowen’s concept also includes acceptance of the business and its representatives as moral agents able not only to perceive and consider social values but to actively participate in their creation process. Also, Bowen noted that social responsibility covers the business activity and, simultaneously, brings significant social and economic advantages to society on the whole (Bowen, 1953).
Approximately in the same period, there were published several papers on business social responsibility theory written by Peter Drucker known by his research in the management philosophy. The author contended that to be socially responsible and to manage social impacts, management has to have a humanistic component, through which a company influences the environment, foreseeing consequences of taking managerial decisions (Wartick & Cochran, 1985).
Peter Drucker supposed that to become socially responsible, the business is obliged to establish a well-work business process, provide its smooth operations, take part in a realization of social programs, and receive profits. Social problems have to be turned to economic opportunities and advantages (new production capacities, staff competence, well-paid jobs and wealth). In other words, social responsibility has to be converted to new opportunities through business activity (Wartick & Cochran, 1985).
The ideas of William Bowen and Peter Drucker were elaborated by some other researchers and scientists among which the most popular were papers of Keith Davis, 13
Joseph McGuire, Archie Carroll, Prakash Sethi, Robert Blomstrom, and Milton Freedman.
Above mentioned scientists established the foundations of the modern CSR theory during the period between 1950-1970.
Keith Davis was the first scientist distinguished a company’s economic activity and business social responsibility in 1960 (Davis, 1960, p.70-76). Keith Davis considered the definition of the business social responsibility as the actions and decisions of a company lying outside of direct economic interest. It can be said that in the 1960s the idea that the business does not operate and develop independently was generated; implementing its functions becomes a very significant part of the social environment and often has a direct influence on its development. As a result, society, in turn, makes demands to the business, which it cannot ignore. If both parties follow a mutual interest, it can lead to a long-term positive economic effect.
Together with Robert Blomstrom, Keith Davis defined the CSR term as obligations of people making decisions to undertake actions directed not only to serve their interests but also to protect and multiply the public wealth (Wartick & Cochran, 1985).
Another scientist, Joseph McGuire, considered CSR as social responsibility, which goes beyond economic and legal responsibilities (McGuire, 1964).
Prakash Sethi pointed out that CSR conduces towards creating a new level of corporative behavior, in which social norms, values, and expectations prevail.
Simultaneously, Richard Eells and Clarence Walton considered this concept as a complex of problems emerging as a result of active business actions in social or ethical scopes. Firstly, this conclusion is relevant for such business fields as the tobacco or oil industry, where the damage caused by business operations is harmful to society and the environment and can be seen very clearly (Eells & Walton, 1961).
Based on the ideas of Joseph McGuire and Prakash Sethi, Archie Carroll described CSR as a concept that has to conform to economic, ethical, legal expectations, which society defines as the most important in the certain period. This approach was named
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“integrated approach” and became the most prevalent and determinant for the CSR theory researching (Carroll, 1979, p.495-505).
According to Archie Carroll’s theory, the social responsibility of the business can be presented as a 4-level pyramid (Fig.1).
Figure.1. Components of a company’s social responsibility by Archie Carroll.
4 • Philantropic responsibility
3 • Ethical responsibility • Legal 2 responsibility •Economic 1 responsibility
Source: Own elaboration based on Carroll, 1979.
The base of the pyramid is economic responsibility, which is determined by the main function of a company as a producer of goods and services allowing to satisfy market demands and to make a profit (Carroll, 1991, p.39-48).
Another level of Carroll’s pyramid is a legal responsibility. The legal responsibility implicates following to the existing legislation and congruence of the business and its operations to the expectations of society written in the state legal regulations.
The third level is an ethical responsibility. This means that society expects businesses to follow the rules, despite these rules or regulations are not written and provided in the law, although they exist among the moral and ethical norms.
The fourth level is a philanthropic responsibility. This type of responsibility stimulates the business towards actions, which contribute to sustainability and improvement of the life-level of society through voluntary participation in social programs (Carroll, 1991, p.39-48).
During the CSR theory development process, three main approaches to its interpretation appeared (Fig.2).
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Figure.2. Approaches to the CSR theory.
Approaches to the CSR theory
The theory of corporative egoism
The theory of corporative altruism
The theory of rational egoism
Source: Own elaboration based on Gillis & Spring, 2001.
The first approach, named classical, was proposed in 1971 by Nobel Prize Laureate, Milton Friedman (Friedman, 1970, p.88-91). The main point of his theory is that “if a company pays taxes, sets appropriate wage rates, follows the safe working conditions and environmental protection rules then such company follows the fair business practice, hence, this company is socially responsible”. Later this theory was named – the theory of corporative egoism.
According to Friedman's opinion, there is only one social responsibility of the business and its aim is to use its resources and energy to increase a profit (Marinetto, 1999, p.1-18). It has to be done within the existing rules and regulations. Business is not socially responsible itself but the person who runs it. Therefore, if the person aims to do something good, he has to do it with his resources and money. Milton Friedman claimed that the business does not have to fight poverty as it is a governmental responsibility. The business has to earn money within the legal framework for its stakeholders and clients, and its main responsibility is to pay taxes to the government which redistributes it to social programs. This means that by increasing its profit the company increases the amount of social payments (Gillis & Spring, 2001, p.23-26).
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The main disadvantage of the classical approach is time constraints. In a short-term period, a company has additional expenditures, while in a long-term period it benefits from that its image is getting better and the relationships with the local community are progressing (Gillis & Spring, 2001, p.23-26).
The second approach called the theory of corporative altruism is the opposite of Friedman’s theory. The theory of corporative altruism was developed by the Committee on Economic Development. Its main idea is that business has to care for its profitability and simultaneously contribute to the problem-solving process of society, improve the level of people’s lives around, and to keep the environment on a high standard level. Profitable companies should donate money for social welfare, finance public needs, and demands (Aras & Crowther, 2011). Companies cannot operate separately from society since they are open systems and actively promote laws, governmental decisions, provide sponsorship to the political parties and social movements.
The third approach is called the theory of rational egoism. According to the third approach, there is a must of social investments and social programs to guarantee a positive social environment for the employees and the business activity field, which, in turn, creates circumstances for a company’s stable profit (Coombs & Holladay, 2012).
Thereby, according to the rational egoism theory, socially responsible business is the business able to reduce the loss and receive profit in a long-term period; a company spends money on social programs in a short-term period, so that it will gain yield in the future as the process of creating a positive social environment is being established.
Therefore, despite the keen interest of researchers, theoreticians and practitioners to the questions of social responsibility, there is still no unified approach to its understanding. For instance, more and more authors currently lean towards the conception of stakeholders. The conception of stakeholders proves the importance to consider the interests of agents involved in a company’s activity (Werther & Chandler, 2011). The “stakeholders” term means “interested parties” or “co- participants”, and groups of people, without which support a company cannot exist.
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Among the groups of stakeholders, who are influenced by the business, and who, in turn, influence a company’s success, six main groups can be defined: shareholders, employees, consumers, suppliers and other business partners, local citizens, ecological situation. Other groups of stakeholders that indirectly influence the business but closely related to the main ones include governmental authorities (all levels), some non-governmental ecological organizations, labor unions and representatives of workers' collectives, families, banks, and other creditors, future generations.
Various approaches mentioned above do not exhaust all the scientific surveys in this field of study. To summarize, the evolution process of the CSR theory has a long development history, which is observed in various definitions of the theory and its multifactorial aspect defining its content.
Thereby, investigation of the CSR theory development frames an understanding of the main vital features of this practice evolving, even though there are different definitions and approaches to its explanation and further practical implementation.
In the next subchapter forms, principles, and models of CSR implementation in the system of corporate communications will be observed.
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1.2. Principles and models of CSR in the system of corporate communications
To define which forms of CSR directions a company aims to conduct, it has to focus on the character of its business activity first. It is an important point since CSR has to reconcile with a strategy, a company’s management system, and to penetrate all the business processes. In other words, it is crucial to examine a company’s practice within the framework of core business and CSR activity, and then to decide how it can be done more usefully for society, without environmental damage (Elving, 2013, p.277-292).
Moreover, the interests of stakeholders, such as clients, employees, shareholders, business partners, and authorities have to be surveyed. The reason is that the opinion of the most vital stakeholders is a very valuable source of information, and these opinions have to be taken into consideration during the process of deciding on prominent CSR directions (Pirsch & Gupta, 2006, p.314-326).
According to the Guidance on Social Responsibility released in November 2010 by the International Organization for Standardization and named ISO 26000, current main topics of social responsibility analysis are human rights; labor practices; the environment; fair business practices; issues, related to consumers; participation in the life of societies and their development.
Each topic consists of the most critical issues, the solution of which must be sought by a company. For instance, among fair business practices fair competition, respect for property rights, countering corruption are noted, etc. The main activities within this topic are CSR principles promotion through conducting training courses and conferences, assistance to public political processes to develop a governmental strategy related to social responsibility principles, etc.
Other important issues are sustainable consumption that includes recyclable packaging, respect for the physical integrity of animals and avoidance of violence to them; submitting relevant, scientifically credible and verifiable information about sociological and ecological factors related to the production of goods and services, etc. (Kim & Ferguson, 2014).
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Thus, common forms of CSR directions relevant today are:
• human rights protection, including cultural, social, economic rights;
• protection of defenseless groups, such as women, children;
• labor practices, i.e. respectable work conditions, protection and safety, workplace training;
• the environment, its protection from the pollution and sustainable usage of natural resources, recovery of natural habitats;
• issues, related to consumers, including fair marketing practices, protection of consumers’ health and their education.
Some companies try to be effective within the all common forms of CSR directions while others put an accent on one or two directions of social responsibility or even refuse to take any kind of responsibility to society (Kim & Ferguson, 2014).
Business activities in the framework of social responsibility have voluntarily character. Nevertheless, implementing socially responsible practices can benefit a company as capitalization and business attractiveness increase, stability strengthens, etc. (Fig.3)
Figure.3. Benefits from the implementation of socially-responsible practices.
Benefits Staff utinity strengthening
Capitalization increase
Investments attractiveness increase
Enlarging the opportunities of employees engagement, motivation, and rewards Sales growth
Brand awareness increase
Stable positive reputation
Production costs reduction
Source: Own elaboration based on Kim & Ferguson, 2014. 20
There are specific indicators characterizing CSR and defining its performance (Fig.4).
Figure.4. Performance indicators of Corporate Social Responsibility.
Economics • quality product production • stuff development contribution • voluntary retirement benefits Ecology • fraction used for recycling • energy saving • emission reduction • rational use of energy and fresh water • environmental mitigation initiatives Social sphere • medical insurance • the level of industrial injuries • cases of discrimination • cooperation with authorities in the field of socially significant objectives
Source: Own elaboration based on Kim & Ferguson, 2014.
Social responsibility yields benefits to a company and society in case it is integrated into a company’s strategy, while a company is ready to allocate resources to socially responsible activity and knows, how efficiently report on CSR achievements to society (Chandler & Werther, 2013). Since all the internal business processes are involved in the CSR system, this system has to be a part of corporate strategy. Raising attention from the internal and external environment, a company is capable to increase its price in a long-term perspective.
Turning to social responsibility implementation, a company aims a maximum increase in contribution to sustainable development. Framing of socially responsible business is a complicated task requiring a complex approach to be solved (Chandler & Werther, 2013).
Currently, there is no certain set of rules to which social responsibility has to follow. Nevertheless, scientists continue to research this field and make their contributions.
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Fundamental principles of CSR are enshrined in the State Standard – ISO 26000, 2010 named the Guidance on Social Responsibility (Source: iso.org). According to this standard, the CSR must meet the following principles:
• the principle of accountability;
• the principle of transparency;
• the principle of ethical behavior;
• the principle of respect of stakeholders’ interests;
• the principle of respect for the sovereignty of the law;
• the principle of respect for international behavioral rules and regulations;
• the principle of respect for human rights.
Consider each principle mentioned above in more detail (Haski-Leventhal, 2018).
The principle of accountability implies that a company has to be accountable for its impact on economics, society, and the environment. A company should accept relevant criticism, take responsibility and react to it.
The principle of transparency signifies that a company must provide transparency of its activity and operations, which have an impact on society and the environment. It is obligatory to reveal business politics, decisions, and activity to which a company is responsible for. This type of information must be relevant, reasonable, and justified. Above all, it is particularly important to provide this information in a way that all the stakeholders can have a possibility to estimate precisely the impact of a company’s decision-making process and activity on their interests.
The principle of ethical behavior implies that the behavior of a company has to be based on such values as honesty, justice, and conscientiousness. These values are about caring for people, animals, and the environment, along with responding to the impact that activity and decisions of a company make on the interests of stakeholders.
The principle of respect of stakeholders’ interests means a company must respect, take into consideration and react to the interests of stakeholders while doing business. Despite business objectives can be limited by the interests of an owner, 22
members, clients, and principals, there are other individuals, who also can have rights, requisitions, and certain interests, which have to be considered.
The principle of respect for the law sovereignty is based on the obligation of business to follow the existing legislation. This means that a company has to do some steps to be informed about laws and regulations, which are applicable to the company’s activity. Moreover, a company must inform its employees about the responsibility of laws’ non-abidance, and taking of respective measures.
The principle of respect for the sovereignty of the law also complies that all the people are equal before the law and none of the individuals or organizations is above the law; the government obeys the law as well.
The principle of respect for international behavioral rules and regulations is that a company must follow international behavioral rules at the same time with following the principle of respect for the sovereignty of the law.
One of the most important principles is the principle of respect for human rights and approval of these rules' importance. There are two fundamental categories of human rights:
• civil and political rights;
• economic, social and cultural rights.
Compliance with these principles is the basis to establish and develop socially responsible business (Haski-Leventhal, 2018).
The principles, proposed by Milton Friedman, deserve to be considered more in- depth (Friedman, 1970). Below mentioned principles develop a social conscience about responsibility to stakeholders:
• permanent stakeholders’ interest tracking;
• acceptance of the fact that stakeholders are “real people, who have names, faces, personal values and with whom might be complicated to deal”;
• search for solutions, which simultaneously satisfy several groups of stakeholders;
• involvement into intensive interaction with stakeholders;
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• voluntarism philosophy, which means an intention to manage mutual relations with stakeholders rather than delegate it to the government;
• upbuilding of efforts, which are directed to the understanding of stakeholders’ demands by means of marketing segmentation tools;
• conduct of negotiations with primary and secondary stakeholders;
• continuous modification of business processes aimed to maintain optimization of relationships with stakeholders;
• accomplishment of promises given to stakeholders.
The realization of principles described by Milton Friedman contributes towards effective cooperation between business and all stakeholders.
One more theory about CSR principles that should be considered was proposed by Ed Freeman, who based his theory on Friedman’s research. Freeman’s CSR theory is currently used and its elements are partially included in ISO 26000.
According to this theory, the main principles of CSR are (Freeman, 1984):
• the principle of the system aimed to provide effective implementation of CSR functions in the system of shared management;
• the principle of complexity aimed to coordinate a company’s activity in three dimensions of sustainable development: economic, social, and ecological;
• the principle of integration aimed to consolidate CSR directions in the main tendencies of a company’s activity on one hand, and the responsibility before society and individual stakeholders on the other hand;
• the principle of accountability before stakeholders and society, conformity to responsibilities and existing standards;
• the principle of targeting aimed to accomplish certain responsibilities with respect to the targeted individual;
• the principle of innovative activity, which means constant improvement and development of the environment through technological modernization tools.
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Overall, it should be noted that the principles, rules, and norms of socially responsible businesses are not regulated legislatively while they are referred to in regulations, particularly in ISO 26000 standard, which can be defined as a ‘code of business’ responsible behavior’. ISO 26000 standard provides an understanding of social responsibility and the actions a company should undertake to perform in a socially responsible manner.
Concerning models of CSR concept implementation, currently, there is no unified approach to distinguish forms of social responsibility realization. Nevertheless, CSR can be differentiated by three main directions within the system of corporate communications: external, internal and combined one (Haski-Leventhal, 2018).
In the framework of the external approach, CSR is signified by relation to local community development and society as a whole. The internal approach shows the relation of the CSR activity to the company’s shareholders, employees, and human resources. The third, combined approach, simultaneously integrates the relation to internal and external stakeholders (Tab.1).
Table 1. Classification of CSR realization models within the framework of business activity.
Models of CSR realization Types (elements) of CSR realization
1. Internal approach
1.1. Stuff development and • Qualification level improvement; support • Providing professional career growth;
• Availability of social package for employees;
• Creating leisure conditions for employees and their families, etc.
1.2. Health care and safe working • Labor protection and safety precautions; conditions • Providing sanitary and hygienic working conditions;
• Medical service for staff;
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• Prevention of occupational diseases, etc.
1.3. Socially-responsible • Reorganization of operational processes; restructuration • Economic-justified job cuts, etc.
2. External approach
2.1. Environmental protection • Environmental pollution prevention; and resource efficiency • Resource use consumption saving;
• Actions by reuse and recycle waste, etc.
2.2. Development of local • Support of socially vulnerable populations; communities • Sponsorship local educational, sport and cultural organizations and events;
• Participating in charity events, etc.
2.3. Development of fair business • Transparency policy; practice • Voluntary accomplishment of programs for business activities limitation;
• Programs for cooperation with local authorities, consumer associations, and public organizations;
3. Combined approach
3.1. Production quality increase There can be various types of CSR realization and growth in production within this approach. capacity
3.2. Wage fund growth
3.3. Creation of additional jobs
Source: Own elaboration based on Haski-Leventhal, 2018.
Since science cannot provide a unified approach for social responsibility implementation, researchers continue proposing their models. Each idea pursues its
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own views and has certain algorithms of realization. Anyhow, under present circumstances, the business has to choose, whether it is ready to be socially responsible, sustainable developing, and competitive, or not (Simpson & Taylor, 2013).
Research findings carried out in the USA and Europe at the beginning of the 21st century have shown that models CSR models can be also classified into two groups – open and hidden (Crane & Matten, 2019). The open model characterizes the behavioral line of a company taking responsibility for resolving problems society is interested in. Generally, these issues address strategies, programs, voluntary lines of behavior, relevant to a company’s activity. The hidden CSR model includes specific values, norms, and rules considered as mandatory requirements by the public, political, and economic interests.
It is important to know that business in the USA is based on the maximum entities' freedom and most public sectors are self-regulated. The USA differs in that the government has a minimal influence on the private sector. For this reason, in American society mechanisms of companies’ participation in society social support were developed. For instance, there is a large number of corporate funds, implementing decisions on social issues through business structures.
The CSR processes in the USA go far beyond legislation requirements with the companies own initiative, while in Europe companies do not use open behavioral model and limit the responsibility before society (Crane, Matten, Glozer & Spence, 2019). The difference between the philanthropic activity of the USA and Europe can be explained by payment of taxes, wherein the USA social responsibility is defined by the level of support to a company by local communities, meanwhile, in Europe, the high level of social protection is provided through tax burden increase. In many European countries socially important questions, such as compulsory medical insurance or employees’ health protection are defined in the legislation, which is a distinctive feature of the European system. Andrew Crane and Dirk Matten distinguished the difference between open and hidden models by four criteria: economic, legal, ethical responsibilities, and philanthropic one. The comparison of American and European models can be observed below (Tab.2).
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Table 2. The comparison of the CSR models by Andrew Crane and Dirk Matten.
Indicators American model European model
Responsibility in Model is aimed to comply with Corporate behavior is the field of advanced principles of regulated by the law economics corporative management, (minimum wage, extra work decent salaries, and consumer regulation, etc.) protection
Responsibility in Company’s behavioral rules Rules of business behavior the field of are confirmed by law, are clearly elaborated legislation however, not on the high standard level
Responsibility in There is a prevalence of locals’ Optimal balance of high taxes the field of ethics support and high level of government social protection
Responsibility in Model is directed to various Redistribution of high taxes the field of social fields and implemented on charity; responsibility for philanthropy through different charitable funding all social areas funds remains with the government
Source: Own elaboration based on Crane & Matten, 2019.
Thus, the USA gives an example of CSR implementing with minimal government intervention, whereas in Europe collective endeavor is mainly regulated by norms, patterns, and rules of certain countries.
The idea of philanthropy is widely applied by American companies and not limited by several social fields (cultural, educational, etc.), whereas in European countries heavy tax burden became the reason that the responsibility for financing various social fields is mostly delegated to the government (Crane & Matten, 2019).
In general, state regulations of many CSR aspects in Europe significantly exceed the American system. This is an important factor while comparing advertising campaigns of the USA and European countries.
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The main topics which are used in the advertising messages within the open model, can be:
1. Company’s environmental friendliness.
2. Reliability and stability.
3. Humanity.
The European (hidden) model links socially-responsible activity with business goals’ achievements and defines it as a part of a company's added value-creating. In the framework of the hidden model, all initiatives funded by a company relate only to profit gaining and product realization. The most preferable targets for the investments among the hidden model are the development of stuff, education, science, and municipal entities; the environment protection; programs on the company's activity improvement in order to comply with international industry standards.
Therefore, the main messages used to create communications within the framework of the European model, can be:
1. Transparency.
2. Management and stability.
3. Attention and responsibility.
4. Reliability.
Assessing the socially-responsible behavior of a company, the European form is much more attractive as it can be evaluated and measured. Both the American and European models benefit the corporate image, reputation, confidence and loyalty- building, and supportive publicity in mass media as well.
Large-scale industrial companies, which achieved a certain sustainability level and do not have to concentrate all the efforts and resources they have on decisions to survive on the market, mostly use the European model. This form implies an economic rationale for social initiatives and their application to the company's strategic development. The whole activity of a company must reflect its socially-
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responsible behavior. In doing so, various efficiency control mechanisms of funds invested are developed.
Both models have own advantages and disadvantages. That is why in practice very rarely a company applying only one of them can be observed. Generally, both forms of socially responsible behavior are being entered, where one is prevalent.
Considering CSR forms and models, it can be concluded that by adaptation of the business model to certain conditions of business activity, society, and a country it is possible to create a behavioral line of marketing communication with potential and existing stakeholders and consumers. Furthermore, the business has to follow certain norms, principles, and rules to become socially-responsible. Despite that sometimes it is complicated for the business to balance its financial goals with socially responsible behavior, eventually, it is the right way towards establishing good relationships with consumers, maintaining a stable reputation, getting a competitive advantage, and profitable business.
In the next chapter an important instrument of the CSR implementation within corporate communications, which is social-related marketing, and the role it has for building a corporate brand image will be reviewed.
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1.3. Social-related marketing as a mechanism of CSR implementation: its specificities and the value in brand management
Nowadays, a wide range of goods and services can be observed, hence, greater importance for consumers has not only the product but the producer-company and brand position as well. Consumers are prone to buy goods and services that could satisfy their physical needs and give a sense of social importance, cohesion with other people. Socially-responsible behavior of a company starts to be interpreted as an ability to survive, the possibility of economic security, involvement in social problem-solving that influences positively social opinion. Managers of large companies are beginning to understand that direct realization of the corporate social policy evokes a wide public resonance and ensures the corporate reputation in the eyes of potential clients, partners, and investors (Colleoni, 2013, p.228-248).
Undoubtedly, it has an impact on brand perception. To some extent, the activity of a company defines the state of social life while shaping general attitudes, life goals. Thereby, it carries out ethical leadership functions concerning society. At the same time, business activity becomes a bridge that provides full integration of society. Social life fields, such as sport, science, education, art do not have full-fledged development without support of the business world.
Brands are the main products of industry persistently existing in consumers' minds (Buckingham, 2014). They are purchased for prices that exceed the estimated cost of direct product and assets of an organization in general. The special characteristic of a brand as a product is that the whole company's activity is based on creating and maintaining relationships with consumers through embedding an emotional component into each contact and, hence, on the development of stable brand awareness and loyalty.
Growing competitive pressure forces commercial organizations to devote greater attention to the quality of goods and services, deployment of recent scientific innovations, increase of service quality, etc. Companies face the global problem that after engagement and retention of consumers they have to develop relationships with them, which means the establishment of a long-term partnership that is beneficial for both parties of market relations. 31
This tendency is relevant for both international and small local companies. Companies, which attach importance to build such a connection with consumers, spend fewer efforts on keeping their market share and receive high returns.
The goal of today's marketing is the application of communication technologies, which create in consumers' minds an image of an organization as a vital and demanded entity on the market and for society (Percy, 2018). Currently, this issue is considered by many marketing specialists all over the world. The speed of progress is increasing together with the growth of pace that forces companies to make changes in their business activity, become flexible on the market, and adapt to challenging macro-environment. In such strict conditions, it is important for companies to save the target audience, taking into consideration regular evolving communications with consumers.
Some researchers stress the downgrading effectiveness of currently common marketing technologies and the decline in consumers' interest. For that reason, companies must concentrate on methods of non-traditional and innovative marketing as social-related (cause-related) or socially-responsible marketing that is a mechanism of CSR implementation. Social-related marketing (hereinafter SRM) is a relatively new and promising area allowing not only to strengthen the positions of marketing in a modern world but also to enlarge the range of problem, which can be solved through a marketing approach (Adkins, 2012).
The social marketing term was first used in 1971. It designated an attempt to apply marketing principles and its techniques to contribute to social problem-solving and social ideas implementation via social activities. That was the time when social problem-solving started to become a significant part of companies' activity (Ewing, 2012, p.28-53).
Philip Kotler was one of the first scientists who defined the meaning of SRM. He stated that the greater accent has to be made on the principle of consumer orientation (Kotler, 1982, p.717). The scientist highlighted the focus on target groups. The research object within this concept is creation, implementation, and control over programs' realization, which are aimed to reach recognition and shift of defined target groups' opinions on social ideas, missions, and certain activities in a positive
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direction. Philip Kotler built an understanding of SRM as the marketing of ideas that was further elaborated by other scientists. For instance, Manfred Bruhn and Jorg Tilmes stated that willingness to social problem-solving and the company's ability to initiate activities in the social-related marketing field are much more important than formal criteria of an organization.
Overall, SRM means mutually beneficial cooperation of the business and various non-profit organizations. Frequently it is implemented in the following way: a company states that it plans to redistribute a part of the money from selling goods on social needs, in doing so a company stimulates customers to become a part of this initiative by doing a purchase. Hence, SRM is a mechanism to harmonize the needs and interests of consumers, companies, and society (File & Prince, 1998, p.1529- 1539).
Despite SRM definitions vary, its essence remains the same:
• it is a standalone discipline in marketing field; • it benefits to the whole society and target groups; • it is based on principles and techniques of commercial marketing, particularly, on marketing-mix strategies, named 4P.
Key attributes of SRM are:
• orientation towards vulnerable segments of society; • propagation of social problems, emphasis on social issues; • fund-raising for solving these issues.
Mostly, the ultimate purpose of SRM is to improve the life quality of individuals and the whole society (Bennett, 2002, p.41-59).
As was mentioned above, SRM applies mechanisms of commercial marketing, however, it considerably differs from classical marketing approaches (Hoek & Gendall, 2008). The main specificities of SRM are as follows:
1. SRM is distinct from commercial marketing, primarily, by its purposes. The aim of a commercial organization is profit-making and marketing strategy helps to achieve it, whereas social-related marketing is a new concept of social responsibility for all society members. SRM purposes to change the behavior of large social groups 33
to reach a social harmony. This type of marketing allows to demonstrate the attractiveness of the market and to “sell” the product or service, even if it is an abstract idea or behavior model, etc.
2. Social-related marketing is a quite broader concept than commercial marketing as it is intended to influence ideation and behavior-changing contrary to commercial marketing, which mainly has an impact on tangible goods and services. For this reason, social-related marketing usually is less effective than the commercial one.
3. A company requires resources to implement social marketing projects. Unfortunately, not all companies are capable to cover the expenses of social marketing from the revenues. Hence, they are compelled to raise the required funds, for instance, through donations, grants, subsidies, various social programs providing a perpetual flow of resources. Thus, the companies applying SRM techniques confront two interrelated tasks:
• efforts to raise the required funds; • use of raised funds in conformity with objectives of a social marketing project.
The raised funds’ usage in conformity with objectives means that companies have to deal with two public groups while managing social marketing projects: investors and clients. Besides, third parties can be also interested in the project results, for example, companies involved in a health insurance activity, politics, former clients, and mass media as well. Implementing commercial marketing projects, marketing specialists do not deal with such many groups influencing the company's activity.
4. To succeed in the commercial activity, a company has to follow the key rule that “the client is always right”. However, this rule is not always applicable when it comes to social-related marketing. Therefore, often clients’ wishes and expectations contradict the objectives of a social marketing project.
5. In the commercial marketing field, competitors are other companies providing the same goods and services, whereas competition in social marketing is the current or preferred behavior of the target group or benefits related to such behavior. Furthermore, non-profit, governmental organizations and other commercial companies aiming at solving such issues, also can be competitors. 34
The concept of SRM takes an important place nowadays in the framework of the development and practice of marketing theory. During the last years, a growing number of companies have been engaged in social problems. Many business representatives point out that it is not enough to only make a product and promote it to the market. If a company aims to have a strong business reputation, reliable and trusted brand, it has to be able to solve social-related issues, using, inter alia, the social marketing tool (Hastings & Domegan, 2018).
Within the current market situation, only a strong brand can ensure sustainability and success to a company. A brand that has important capital. From the western researchers' point of view, the company's value consists of two components: tangible assets (approximately 40%) and intangible assets (around 60%) which fall on brand and company's marketing activity. Some researchers name intangible assets as “brand's consumer capital”. For instance, Keller based his model on a hypothesis that the power of a brand lies in consumers' knowledge, feelings, and perception about a brand, hence, what cumulative experience they have gained over time (Hastings & Domegan, 2018).
To summarize, the brand’s power is that it lives in consumers' minds. The mission of marketing specialists while building a strong brand is to be convinced that consumers obtain the desired experience about product or service, as well as their positive thoughts, feelings, visions, convictions, opinions are linked to the brand. This implies that a well-planned and executed marketing campaign can evoke and ensure important brand associations among consumers, stakeholders, and third parties.
Most international companies concerning about brand reputation and social image are engaged in charitable activity. The advantage of such promotional activity is achieving approval from different groups at low financial costs, human and time recourses. If the campaign is properly organized and the object of charity is chosen right, a company can create a forceful information occasion that increases the number of mentions and references in the media. The outcome of such social activity positively affects a company's image as people tend to think that companies implementing non-commercial programs in the public interest are prosperous and successful. Therefore, the number of companies valued social branding have considerably increased recently (Morsing & Beckmann, 2006). 35
Social branding is another CSR communication mechanism in the framework of public relations practice (Baker, 2018). The strategy implies that a company takes social responsibility or some mission before society. As a rule, social branding programs are being implemented as an integrated program approach related to the main marketing strategy of a company.
Managing social branding, a company can position itself as an active society entity that participates in social life. Such behavior makes people trust the company and the words it says because it is not enough to give promises - it is important to be accountable for the words. For example, when Volvo stated that it produces the safest cars and automotive equipment, the statement was accompanied by the production of the Lifepaint. The Lifepaint is a colorless retro-reflective paint to secure cyclists while on the road. In doing so, Volvo assumes that “the best way to survive an accident - is not to crash”.
The strongest and trusted international brands achieved their positions because they were capable to establish an emotional connection with consumers, as Coca Cola became a symbol of happiness and later - of New Year, Dove took a stand for natural beauty and Starbucks makes “fair coffee”.
The time advertising sells the product is a thing of the past; nowadays, advertising sells the idea. People buy goods or services considering not only the price, quality, and physical characteristics - they buy the idea, part of which they want to be (Adi & Grigore and Crowther, 2015).
Social branding is closely linked to brand strategy, thus, “good things” must not be one-time action or philanthropy for “conscience clearing” - the brand must live them.
Generally, social branding methods undertake the following tasks:
• allow to create a positive brand image in the customers' eyes; • contribute to maintaining relations with authorities and social institutes; • differentiate a company from competitors; • form brand value in consumers' minds; • give self-satisfaction feeling to consumers and contribute to community establishment around the brand.
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At present, companies go ahead and begin using technologies of corporate social marketing in addition to traditional social marketing concepts (Grayson, 2017, p.55- 115). Corporate social marketing (hereinafter CSM) aims to use those marketing initiatives, which can be exposed to non-commercial objectives related to social wealth and realized through the company's or partners' resources. One of the key factors that led to CSM growth is the understanding that consumers' perceptions about the company and its role in society have a significant influence on brand power and its capital. There are six ways through which CSM influence the brand:
• creating awareness about a brand; • brand image improving; • confidence-building towards brand; • establishing a sense of belonging to the brand community; • increasing consumers' engagement.
A company that successfully executes CSM programs purposes unique distinctive advantage creation. It can be achieved through brand image improvement and differentiation from competitors by building strong emotional relationships with consumers. Moreover, CSM programs can increase the Goodwill rate that allows to avoid criticism and withstand negative impact occurring as a result of unexpected circumstances.
To conclude this section, it should be noted that social innovations within CSR strategies allow companies to demonstrate their social position. Meanwhile, these strategies are becoming an important marketing tool that makes a company distinct, provides new product and business paths’ development, tracks changes, builds an emotional bridge between the brand and consumers, thereby contributing to the loyalty growth. Nevertheless, it should be remembered that social-related marketing as any other type of marketing is primarily directed to get financial benefits as well as other intangible benefits.
The fourth chapter will cover the implementation of PR and CSR practices. There will be described the interconnection between CSR and PR, development directions, practical examples, and benefits from mutual practical implementation for corporate reputation.
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1.4. PR-communications and CSR: the role in positive reputation building
The rapid development of the global economy places on the agenda new questions on interrelations and communication techniques between the business and society. One of the most relevant and discussed topics is social responsibility and business society's reputation. In that regard, the following tendency is apparent: companies aim to build a competitive strategy based on a positive image in the framework of PR-communications. A positive reputation is achieved as a result of social responsibilities implementation (Chandler & Werther, 2005, p.317).
PR is an integral part of a company's operations. It is focused on establishing, maintaining, and developing of contacts between a company and society, identifying mutual interests, and reaching a common understanding (Fombrun & Gardberg, 2000, p.30). Through the use of PR-communications techniques, the dialogue between a company and society is being established. The main purpose of this dialogue is the mutual benefits for both parties. The interest of a profit-seeking organization is in gaining public confidence and, as a result, shaping a positive reputation that ensures a stable company's position on the market in the long-term perspective.
According to the opinions of PR and marketing specialists, CSR is the linchpin of PR communications, which are directed to creating a positive reputation (Fombrun & Gardberg, 2000, p.13-17). Hence, PR departments face issues to develop complex programs for increasing companies' social activity: setting of intra-corporate standards, formulation of mission and company's principles, philanthropy, sponsorship, environmental protection, and other actions are among such complex programs.
Western scientists and public figures have started to discuss the questions on corporate reputation and CSR since the second half of the last century (Mason, 1960). Various conferences, discussions, published books, and scientific papers point at increasing interest in intangible assets management aspects among theoreticians and practitioners. However, the problem of CSR's impact on sustainable reputation development is still investigated. 38
Some issue-related questions were described in research papers of Stephen Brammer and Stephen Pavelin, who proposed the scheme of interconnection between CSR and the positive reputation building process (Brammer & Pavelin, 2004, p.704-713). According to the classical model of Charles Fombrun and Michael Shanley, the reputation is a set of opinions about a company that appears in the minds of the general public within a specified period; corporate reputation creating occurs in the consciousness of auditory (Fombrun & Shanley, 1990, p.235). The modern definition is complemented by specific indicators influencing public views and reading as follows: the reputation is a consolidated perception of a company that is based on evaluation of financial, social, and ecological indicators a company achieves within a certain period (Barnett, Jermier & Lafferty, 2006, p.34). Thus, corporate reputation directly depends on the auditory and is built based on three factors: social responsibility, sustainable business development, and financial efficiency (Fig.5).
Figure.5. The elements of corporate reputation.
Financial efficiency
Sustainable Social business responsibility development
Corporate reputation
Source: Own elaboration based on Barnett, Jermier & Lafferty, 2006.
Presently, corporate social policy is the main vector of reputation development. The corporate social policy influences the position of a company in reputational ranks and on the stock market. The CSR activities are mainly directed to gain the trust of the general public since its opinion is crucial. Furthermore, the opinion of the general public can significantly destroy the intangible assets of a company, which are accumulated over the years. Certainly, it is important to take into consideration the specificities of different target groups. However, the structure of the target groups is
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not permanent. For this reason, companies regularly have to assess over, what target group is more relevant and important currently. The general public is a constant element of a strategy on a positive reputation building.
It should be clarified, particularly, it is relevant to large international holdings characterized by a high activity level in professional and social fields, and to companies that need CSR programs owing to the character of their business activity. Among them:
• industrial enterprises, which negatively influence the ecology; • producers and distributors of goods, causing addiction, such as tobacco, and alcohol;
Tobacco companies are among the leaders by the investments into socially important events. For instance, several years ago, one cigarette manufacturer together with the University of London donated 3 million U.S. dollars to organize The Centre of Corporate Social Responsibility (Anderson, Hastings & MacFadyen, 2002). Another example is the British American Tobacco company that donated 15,2 million pounds on charity. The campaign included urban educational and entertainment projects and campaigns on AIDS and cancer response.
• manufacturers of food products, around which can be observed debates on the use of transgenic organisms;
Very often companies of the fast-food industry are subject to criticism. The most known example is McDonald's that is regularly criticized. Despite that fast food has been considered as harmful to people's health by numerous researching and scientific experiments, the McDonald's continue to spend huge amounts of money to create an image of a socially responsible company.
• pharmaceutical companies and bio-chemical production;
Novartis, one of the largest biotechnological companies in the world, is accused of commercial implementation of genetically modified plants and animals, the production of toxic pesticides, which are harmful to the health of people, etc. Nevertheless, due to the strong structured social position, Novartis has the reputation of a fair producer of high-quality pharmaceutical products. In 2006, Novartis
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invested 755 million U.S. dollars into medical programs, which targeted 33,6 million patients all over the world. The social activity of a company has resulted in its position among 50 the most expensive brands according to the rating of Business Week magazine. Furthermore, Novartis was recognized as one of the twenty-five most respected companies around the world and took an important position in Fortune's magazine rates.
• touristic companies, which cause harm to the unique nature of small countries and exploit the beauty of preserves and pristine environment.
Different non-commercial organizations acting on behalf of society make greater demands to the above-mentioned types of business activities. Such non-commercial organizations can be international and regional communities, professional labor unions, activists of public or ecological movements (for instance, Green Peace), various industrial associations and many others. The directions of the social and ecological policy of a company, its public positions, ethical principles, and level of responsibility to all the subjects a company involve, are crucial for such organizations. Hence, this explains the need for introducing CSR programs in the PR-strategy of a company. Neglecting of CSR programs implementing will not let to achieve the necessary reputation level.
International practice proves that CSR is beyond modern tendencies and maintains a strong presence in the corporate strategies of big brand names (Coulter, Hetherington & Kritski, 2005). Nowadays, CSR includes a wide range of activities. CSR is considered as a process of elaboration and implementation of programs, which are based on the value-centered approach and directed to collaboration between the business and non-profit-seeking organizations with the purpose of mutual receipt of benefits.
Presently, a range of objective reasons occurs, which compels to consider the social policy of a company, while assessing its reputation (Asscher, 2005). Firstly, modern studies testify that the level of confidence in the business from the public side is steadily decreasing (in some cases it is relevant to entire industries). Secondly, the increasing interest in companies' ethical principles and politics can be noted. People want to know, what a company believes in, which moral and ethical laws it follows.
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Thirdly, many non-governmental entities have elaborated different strategies allowing them to identify the disadvantages and weak sides of companies to make this information publicly available. Generally, they accomplish it by taking part in the anti-globalization movement or certain social programs. Fourthly, companies confirm that corporate reputation is mainly built as a result of recognition by non- commercial organizations. The opinion of non-commercial institutes can significantly affect the situation on the stock market. Fifthly, the economic and industrial growth is inevitably linked to an increase of negatively tuned groups, who care about environmental problems. Therefore, companies take responsibility for protecting the environment from direct and collateral products of their activities.
Unfortunately, the practice proves that some companies are quite distant from conforming to the business managing standards. Very often PR-managers are not able to cover all the operational areas of a company. In the framework of CSR policy, they consider the following corporate issues:
• recruitment and staff management; • human rights protection; • staff-management relations; • training courses; • corporate management policy; • the ecology; • health and security; • corruption and bribery; • standards and rules of working behavior; • relations with consumers; • competition; • taxation; • intellectual-property; • business transparency and providing relevant information.
Each issue has to be resolved in accordance with the main corporate strategy. In this case, the achievement of a harmonic and stable reputation of a socially-responsible company can be obtained. 42
However, several questions arise: what can happen if CSR activity is underestimated; to which consequences it may lead regarding the corporate reputation and a company in general. Various examples of world-known brands can be used to answer these questions. In 1992, Nike was exposed and blamed for use of child labor in its factories, long working hours, and toxic glue. The reputation and credibility of Nike were undermined, it was criticized by public organizations. Consequently, it faced a loss of sales and profit. In order to remedy the situation, Nike undertook a range of rather aggressive PR-campaigns that did not improve its position. Besides, Nike persuaded the White House to organize the Supervisory Commission, which can certify the clothes made in “white factories”. In February 1999, there was announced the development of the Fair Labor Association. Student organizations perceived this information as a governmental action to create PR-undercover for Nike. They claimed for authorities to inspect Nike's factories. It took a long time to recover from the incident since Nike lost significant market share. Moreover, the products of Nike still do not have a sufficient customer market in some countries, for example, in Great Britain. Decrease of reputation, direct and indirect loss, waste of time and money to managing conflict - it is the retribution for the irresponsible behavior concerning labor norms.
Led by non-commercial organizations, society frequently expresses discontent publicly by organizing boycotts, which are a serious threat to corporate reputation. The boycotts can have a local character or expand the frontiers into international protests, that happened to Procter & Gamble company. The American producer of consumer goods has been blamed for a long period for the animals' abuse during testing and experimenting (every year 50 thousand animals die) and disruption of the eco-balance. To struggle the abuser, an English association for protecting the rights of animals, the Uncaged, organized mass boycotts and protests. In 2006 there were carried out more than 130 protests in more than 35 countries around the world. Every third Saturday of May is indicated as a Global Boycott P & G Day for animal- welfare advocates. The hazard and, simultaneously, the efficiency of such events is in the persuading force they have. The people organizing protests and boycotts, reject the goods produced by an irresponsible company. At the same time, they persuade other people to follow them, who, in turn, often do it unconsciously. Hence, the
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consequences are obvious: sales decrease and the company’s economic deterioration are observed (Simpson & Taylor, 2013).
Numerous historical examples of various international corporations prove that neglect of CSR principles has bad consequences for a company's reputation and sustainable development. Wide public resonance forces companies to consider the social consequences of their activities.
Five conditions, which contribute to effective CSR practical implementation, can be defined:
1) Code and statute creation, which provide a detailed description of corporate behavior standards, principles of doing the business, the philosophy, mission, and company's objectives.
2) Elaboration and accomplishment of CSR programs in conformity with international standards. It is important to target the maximum number of stakeholders and pay particular attention to social problems, especially to which occurrence is related to a company's activity. For instance, the scope of work to maintain the reputation of a socially-responsible company in the oil and gas sector requires considerable efforts. In 2004, American oil giant ExxonMobil spent more than 2,9 billion U.S. dollars on ecological management. Furthermore, the company annually sponsors educational and informational projects, provide the hospitals all around the world with medical equipment and medications, and support the World Health Organization (WHO) and the United Nations Children's Fund (UNICEF) to eradicate the causes of child mortality.
3) Development of models on risk management, which could help to prevent possible mistakes and protect the company's reputation in case of a crisis.
4) Use of different channels and communication methods for prompt notification to society about a company's non-core activities.
5) Constant monitoring of social events for estimating their efficiency and improving reputation management.
Regarding the last point, some issues are noticed (Baker, 2018). There is an impossibility to analyze the economic efficiency of defined CSR programs and
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determine, how PR-campaigns affected share prices. Despite that fact, there are various qualitative and quantitative methods, which prove the reputation value of a socially-responsible company and its impact on commercial success.
The main finding is that a corporate reputation based on CSR policy results in a range of economic benefit outcomes. The development and further realization of CSR programs in the framework of PR-communications lead to measurable results - financial performance indicators growth. As an element of intangible assets, which often exceed tangible assets in percentage terms (for instance, in such companies as Coca-Cola, IBM, British Petroleum), the positive reputation improves a company's position on the market.
To manage reputational capital, numerous measurement models were elaborated. These models’ development is based on market research, monitoring, questioning of corporate auditory (qualitative characteristics), and statistical analysis (quantitative analysis). The results measures are used to form different reputational ratings, to conduct specialized studies. Nevertheless, it is necessary to critically review such analytical information: to understand, how properly the research was conducted, which characteristics formed the research basis, which segment of auditory was interviewed, etc.
Currently, the most influential ratings proving a company's CSR position are the Harris Poll Reputation Quotient (RQ) and the Global RepTrak™ Pulse (conducted by the Reputation Institute). The data demonstrates the level of a company's engagement in social life since it is based on the opinions of the general public.
According to the data provided by the Global RepTrak 100 (Source: Reputation Institute, 2019), the 10 most reputable worldwide corporations of 2019 are Rolex (Switzerland), LEGO (Denmark), Walt Disney (the USA), Adidas Group (Germany), Microsoft (the USA), Sony (Japan), Canon (Japan), Michelin (France), Netflix (the USA), Bosch (Germany).
Certain academic researches show the correlation between the socially-responsible business and positive financial performance indicators. According to the Business and Society Review research (Source: Blackwell Synergy, 2017) conducted in 300 international companies, the average market value indicators of the companies, 45
which publicly undertook the responsibility to follow ethic code, two times exceeded the indicators in comparison with the companies that did not take social responsibilities. The Harvard University analysts identified that the socially- responsible policy of a company directed to the interests of society, allows to increase growth performance up 4 times, compared to the companies, which follow only shareholders' interests and demands.
Another testimony of productivity and quality of labor growth is presented in the research of the Medistat Group and the American Productivity and Quality Center (APQC). The analysis of 15 worldwide corporations proved that the implementation of CSR principles in the fields of ecologic management and human resources policy lead to productivity increase and decrease in industrial errors, manufacturing defects, and related costs. For instance, financial loss related to staff dissatisfaction (truancy, resignations etc.), reduced by 30%.
The largest international consulting company Deloitte supported by CSR Europe and Euronext surveyed 388 investment fund managers and financial analysts of 9 European countries. The research results demonstrated the direct relationship between non-financial risks decline due to CSR and the company's shareholder value rise. According to the survey, 79% of specialists in the finance and investments sector agree that corporate management on social and ecological risks has a positive impact on a company's market value in the long-term perspective. Furthermore, 95% of them predict that companies will voluntarily introduce CSR programs into business their practice.
Testimonies and research analysis results, described in the theoretical chapter prove the economic advantages of CSR implementation. Various techniques in the framework of the mutual application of PR and CSR benefit to a company’s brand awareness, credibility, reputation growth, and furthermore, sales and profit increase. Companies, which use such methods, work for a long-term perspective, they apply modern innovations to be successful not only today but tomorrow as well. Therefore, the positive role of having the reputation of a socially-responsible company is undeniably proved.
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Chapter 2. Research Methodology
2.1. Analysis method
Current research formed two hypotheses to be examined:
H1: Brand messages about CSR activities positively influence consumers' brand perception;
H2: Socially-responsible brands are the most purchased.
Discussing foundations of interdependence between CSR and PR in the theoretical chapter, research questions were covered and two hypotheses were partly studied and theoretically proved. Nevertheless, to review these hypotheses more in-depth, it was decided to do the research and conduct an online survey as it allows to reach many people.
In this research, qualitative and quantitative methods were applied. A qualitative method allows to interpret and analyze the texts and information, while a quantitative approach provides statistical modeling and reports correlation between studied numerical data. To test the hypotheses, it was either possible to apply qualitative or quantitative approach. Therefore, it was decided to practice a quantitative approach in the first part of the research to collect the data required and analyze it by applying a qualitative method further. One more reason is that CSR is a quite broad and controversial concept that complicates the survey and can provide preconceived opinions. This is more likely to happen using a qualitative approach like an interview since it requires direct contact with interviewed people. In contrast, a quantitative approach can be managed anonymously and give more precise results, because the participants are affected by neither internal nor external circumstances. The content analysis was done using a qualitative approach.
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2.2. Data collection
It was decided to review the hypotheses by the example of the skincare cosmetic industry since this business field is one of the most popular and interesting to be studied as skincare cosmetic companies communicate with customers differently. Moreover, findings prove that these companies are involved in CSR activities more than any other cosmetics industry that makes this sector more relevant for the current research.
Firstly, for better understanding the way, how skincare cosmetic companies communicate CSR to the public, a content analysis was presented. Content analysis was used to assess the text data given since it is a flexible method allows to emphasize the important characteristics of chosen subjects. The data was collected through content analysis made on 5 companies ranked among the most socially- responsible skincare cosmetic companies according to EcoVadis Ratings (Source: EcoVadis, 2020). These companies were chosen for research also due to the fact that the information about CSR strategies is available on their corporate websites, while not all CSR ranked companies share such information in open sources. It could suggest that some skincare cosmetic companies limit CSR communication with stakeholders. Nevertheless, chosen companies set successful examples of how the brand can promote CSR policies via corporate communications on social networks. In order to gain the information and data required, companies’ websites, sustainability reports, and other free web-sources were used.
Secondly, an online survey in the questionnaire form was conveyed. The research was done on companies operated in the skincare cosmetic industry in the Czech market. All the companies have a similar product portfolio, while business strategies and positioning are different that revealed consumers' motives towards purchase decision-making.
The questionnaire was created by Google Forms app and distributed to the respondents via social networks. Despite the fact that women are more prone to buy cosmetics in everyday life, it was decided not to limit the respondents and cover both gender groups. The interviewees were selected according to convenience sampling method, which is a type of non-probability sampling.
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The objective was to interview 150 respondents living in the Czech Republic, however, in total 127 people were questioned. Unfortunately, 5 questionnaires were not fully filled, so that it was not possible to include them into research. Hence, 122 questionnaires were analyzed. The proportion of men and women answered to questions was – 23 males (18,8%) and 99 females (81,2%). Apparently, it could be explained that skincare cosmetic products are mostly purchased and used by women than men, however, it does not show the bias of research since women are the main target group for skincare cosmetic companies.
The age-group that research covered was 16 – 45 years old people, where the average age of answered respondents was 25.
Since the survey was conducted in the Czech Republic, the majority of interviewees were presented by Czech, Slovak, Russian, Ukrainian, Kazakh, and EU citizens.
2.3. Data analysis
In the beginning, the content analysis of 5 skincare cosmetic companies’ websites was made. Content analysis was based on several research aspects. Primarily, the aim was to investigate, which information about CSR is provided on corporate websites, how it is defined, and which CSR directions are determined as the most vital. The same analysis was performed for each standalone company.
Thereafter, the findings were matched and compared to find out similarities and differences between the CSR activities the companies implement. Afterward, common prevailing CSR topics discussed by skincare cosmetic companies were highlighted.
Next, to evaluate survey results, all the answers were recorded into the Excel spreadsheet first, where they were compared and analyzed through specially-created formulas. The measurement system of answers asked was different for specific question groups. For some question groups, the respondents were asked to rate the answers on a scale from 1 to 5, where 1 is the negative and 5 is the positive rate, while some other questions required yes or no answer. The scores obtained on each question were matched with descriptive statistics.
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2.4. Validity of research
To ensure the reliability and validity of the research, a pre-test was conducted. The pre-test was done before the real questionnaire was sent to the respondents. This method was crucial to know, how interviewees perceive the questionnaire layout, structure, length, complexity, language, etc. Overall, 5 respondents took part in the pre-test under the author’s supervision. The respondents were young people aged 23- 27 with different socio-economic backgrounds. The testers fulfilled the questionnaire in the same way as it will be completed in the real survey. After that, the respondents were able to evaluate the questionnaire and give feedback on it.
First, it was revealed that not all the testers were aware of the CSR approach as they could not rate some statements. Therefore, it was decided to change the measurement system in some questions from the 5-point scale one to the yes-no system. Furthermore, the answer “don’t know” was included since this option was more likely to be chosen.
Secondly, the pre-test showed that the whole questionnaire time does not exceed 10 minutes, which is an important indicator for the respondents to fulfill the form completely. This factor decreases the probability of non-response, which leads to missing data. Moreover, questions in the form alternate in measurement system order that helps the respondents to be more attentive and precise.
Thirdly, the important aspect while questioning the respondents is social inconvenient. The face-to-face interview causes discomfort, timidity, indecision, etc. In this situation, the respondents may give irrelevant or fake answers under the current circumstances. For this reason, the survey was done in an online form to provide anonymity and security to the testers and further respondents.
Fourthly, after the feedback on the questionnaire was provided, several changes had to be made: some questions were re-written or elaborated to be easier to read and understand, others required to change answers or add more options, some rate systems were modified as well.
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Chapter 3. Content Analysis
This chapter describes the ways companies communicate CSR strategies to the public and provides the context for the following study. For this purpose, the content from the websites of 5 skincare cosmetic companies is detailed below.
3.1. L’OCCITANE
The brand L’OCCITANE was founded in 1976 by Olivier Baussan, who started his business from essential oils distillation and further selling in Provence, France. The company follows several CSR directions and stresses that social responsibility is more than just a philosophy for the company. The main values for L’OCCITANE are the environment and people, that is the reason, why the company adheres to the six important principles, directed to planet protection and people respective treatment.
• Respect for biodiversity
L’OCCITANE uses the ingredients derived through environmentally sound technologies. The ingredients’ production can be tracked to ensure that the plants are grown and harvested without any damage to the environment and biodiversity. Moreover, the company has developed supply chains, which protect local plant species and strive for no animal testing.
L’OCCITANE manages various social campaigns. For instance, the company created the first plantation for organic growing immortelle in Corsica, supported the almond planting resumption in Provence. Currently, the company works on the project on Provence lavender preservation, which is in danger of extinction because of the climate-changing process. Furthermore, L’OCCITANE plants multi-fence belts, does efforts to popularize local plants and protect old and rare varieties. The company aims to contribute to the protection of 1,000 plant varieties by the year 2025.
• Responsible purchasing
The brand has a team responsible for maintaining relationships with producers. The team aims to track the materials production process and supply chain sustainability. In the company’s purchasing policy three main aspects can be noted: sustainable
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ingredients (local producers support, organic ingredients usage, etc.), no biopiracy, and ethical business practices (UN Global Pact, labor and environmental rights, etc.). Moreover, L’OCCITANE plans to conclude the agreements on Fair Trade with all direct suppliers by the year 2025.
• Emission reduction
L’OCCITANE follows the certification process for ISO 14001 and provides recycling services in most of the brand’s shops and collaborates with TerraCycle on package utilization, which is complicated to recycle. The company sells cosmetics in removable packs and pursues the idea to create the maximum ecologically safe packaging. Therefore, the present company’s goal is to be able to produce all the tanks from recyclable plastic by the year 2025. Furthermore, L’OCCITANE aims to establish services on packaging recycling in all their shops.
• Respect for women’s rights
L’OCCITANE values gender equity, rights, and opportunities for women to achieve their goals. Due to the activity in Burkina Faso, the company helped women, who produce shea butter, to become more independent: L’OCCITANE Foundation supplied them with microcredits (€ 1,000,000 per year) in order to decrease illiteracy and educate their children. Every year the company donates money from sales to support women’s emancipation. These initiatives provided more autonomy to more than 7,000 women more and raised € 162,000 in 2013 for the construction of literacy centers. The ultimate corporate objective is to provide assistance to more than 26,000 women in the framework of socially-economic development by the year 2025.
• Care for vision
L’OCCITANE provides Braille script on all their brand packaging and funds programs on blindness prevention in developing countries. Together with NGO and UNICEF, the L’OCCITANE Foundation takes several measures to support blind and visually impaired people. The Foundation supplies Vitamin A additives and conducts ophthalmologic care and free eye test to people all around the world. More than 60,000 people have already taken part in this campaign, however, L’OCCITANE plans to increase this number up to 10,000,000 by the year 2025.
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• Social responsibility
Respectfulness is the value that is a pillar of L’OCCITANE social policy. The company purposes to develop human resources, thereby increasing the whole company’s growth. L’OCCITANE inspires employees to express their potential and career aspirations, allows to balance professional and private life, integrates disabled people into the work process, manages proactive actions to prevent accidents and ensure employees’ well-being, participates in the life of society through social projects, donation, funding, etc. One of the fundamental principles for L’OCCITANE is responsible relationships with the general public.
3.2. Vichy
French brand Vichy was founded by Prosper Aller in 1931. While producing cosmetic products, the company concerns not only about skincare but voluntarily abides socially-responsible principles of doing business and places special emphasis on environmental protection.
The intention of a company to apply CSR in the business practice becomes apparent in Vichy’s motto: “Socially-responsible beauty”. Corporate employees have been addressing equal attention to the questions on self-care and ecology for over 80 years now.
• Responsible selection of suppliers
Since Vichy adheres to socially-ecological responsibility, suppliers of the components are selected carefully. All the aspects of the procurement process are monitored: from the ingredient to the supplier. Furthermore, Vichy implements the Convention on Biological Diversity principles: it gives priority to renewable and eco- friendly components and sustainable chemical processes.
• Green formulas
Vichy reached the target of the biodegradable index of 91% for the products easily flushed with the water. The company assures that neither of the products contains microparticles.
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• Eco-packaging
Vichy took responsibility to protect the environment and reduce the negative impact of its packaging on the ecology without detriment to the safety and effectiveness of the products itself. For instance, the company utilizes recycled materials. It decreased environmental impact by using 25% recycled plastic in vials with single doses of aminexil and 10% recycled material in glass jars and bottles. All the product packs are FSC certified, which means that Vichy uses FSC cardboard to produce packs, thereby supporting responsible forest management with respect for people and nature.
• Eco-friendly production and distribution
Vichy aims to minimize environmental impact (CO2 emissions, water consumption, waste generation) up to 60% by the year 2022. These indicators demonstrate the level Vichy has already achieved:
o 57% less water consumption; o 51% less industrial waste (for each product); o 58% lower CO2 emissions (for each product). • Project Auverwatch
The main Vichy’s factory is located in the Auvergne region and complies with standards on international Environmental Management Systems (EMS), in particular ISO 14001, 50 001. Furthermore, the factory has zero carbon emissions since January 2017.
• Focus on thermal water
Thermal water is the most important resource for the company. For this reason, Vichy has started a collaboration with Project Auverwatch to provide environmental protection to preserve natural sources of thermal water.
3.3 Clarins
Clarins is the French high-end cosmetics producer, founded in 1954. Clarins links CSR to the responsible development and considers the environment as the most important business aspect. Under the current social, environmental and economic
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conditions, Clarins aims to increase its contribution to a better world. The company’s motivation to take part in CSR practices can be observed in its corporate slogan: “Do more, do better and derive pleasure from doing so”. The primary company’s goal is to be a good corporate citizen and behave ethically. Hence, Clarins formed the 10- stage approach to responsible development, which includes the following steps: ecological formulas development, biodiversity support, over-production restriction, supply chain management improvement, etc. Clarins plans to reach its objectives through certain CSR activities, such as:
• Eco-production
Clarins stressed the commitment to do more than safety regulations require and put an accent on customers’ safety. The company makes efforts in order to decrease the level of greenhouse gas emissions and balance natural resources’ usage. The company’s prime objective is to reduce emissions by 30% up to 2022. Some suggestions have been made to set examples of how it can be accomplished: water usage decrease, new types of product packaging creating, etc. It seems to be achievable since Clarins has already received several accreditations and certifications for production and product quality, premium laboratories, environmental responsibility (Ecocert, GLP).
• Ecological conception
According to various studies, product packaging causes greenhouse gas emissions. Since ecological conception is essential for Clarins, the company follows the biodiversity approach and manufactures products that have a low influence on the environment. For instance, Clarins refused to use plastic packaging in favor of a glass jar. Furthermore, the company uses recyclable materials and explores the new ways of stickers printing.
• Raw materials
In order to produce high-quality cosmetics, Clarins utilizes only raw plant ingredients from farms growing natural organics, and plants from local partners or the Fair Trade companies since they also support biodiversity. Fair Trade arrangement is an important aspect of Clarins’ business policy. For instance, the company usually donates 6% of the sale price from certain materials, which come 55
from African countries to cover the expenses of local crop yields projects. Moreover, Clarins funds some organizations (e.g. Jardin du Monde) aimed to develop new ingredients and improve the health of those parts of the population, which do not have an opportunity to use modern medicines but limited by the usage of natural medicinal herbs.
• HR management
The main purpose of Clarins is to share common corporate values and ideas about responsible development with all employees and stakeholders. The company appreciates and respects diversity, personal development and sets these values as a part of the HR strategy. Moreover, the company informs its employees about the corporate vision of CSR implementation. In order to realize the ideas raised, Clarins created a special training program for all new employees, which purposes to develop competencies in the following aspects: individual potential development, internal communication level improvement, teamwork management, corporate knowledge base creating, individual performance level strengthen. What is more important, every employee is taught to listen, respect, care, and respond to consumers’ questions, requests, and compliances, as well as the company’s management does the same concerning the employees that highlights the real concern and attention regarding the people around.
• Charity
Clarins manages social and environmental charitable events. The company emphasizes that from the beginning of their business activity, the concern about people and nature was set as a corporate strategy. It is proved by such rewards, awarded by Clarins, as “The Dynamic Women award” (to women, managing projects to improve the life-level of children around the world), “The Courtin Arthritis Foundation” (to scientists, trying to find the cure for arthritis), “Entincelle & Belle & Bien” (event dedicated to supporting women fighting cancer), “ClarinsMen environment”, “Alp Action” (event aimed to preserve the nature of Alpine Regions).
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3.4 Kiehl’s
Kiehl’s is the affiliated company of L’Oréal founded in 1851. The company manufactures skincare products from natural organic ingredients, however, there is no special page on the brand’s corporate website dedicated to CSR. Nevertheless, several topics on CSR initiatives were found on the website and further analyzed.
The main objective of the brand is to use green ingredients while producing high- quality products to serve customers and provide support to local communities, which represent the company’s clients. Hence, Kiehl’s aims to be a good corporate citizen simultaneously with economic motivation presence since the ultimate purpose of serving the clients is sales growth and profit increase.
• Green ingredients, responsible packaging, and manufacturing
Kiehl’s uses green formulas to produce products from naturally derived ingredients, such as lavender, calendula, vitamin C, etc. Moreover, the company utilizes recyclable packaging to decrease corporate expenses and the level of environmental damage.
• Charity
The brand is engaged in several charitable activities: environmental protection, AIDS prevention, research, and education, the well-being of children. Kiehl’s funds the “Lower East Side Girls Club” dedicated to providing educational programs on arts, science, health, and literacy for girls and young women to strengthen their level of leadership and contribute to the world’s improvement. The company also supports the “Waterkeeper Alliance”, which is invested from the company’s sale profit. Furthermore, Kiehl’s raised € 85,000 for “amfAR” (The Foundation for AIDS Research) to finance AIDS global epidemic research. Moreover, the Better Initiative collaboration with John Legend in the Rare Earth Cleansing Masque creation brought company € 250,000, which were transferred to “JPF Eco Systems” to recover New Orleans.
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3.5 Weleda
Weleda was developed of a small pharmaceutical laboratory, created at the first anthroposophic medicine clinic in Switzerland. The founders of the company were the doctor from the Netherlands – Ita Wegman, scientist, philosopher, and researcher – Rudolf Steiner, and chemist from Munich – Oscar Schmiedel. These three outstanding people formed anthroposophic medicine in 1920, which is the integrative approach that consolidates academic science achievements with Steiner’s spiritual views on men and nature. Weleda’s business activity is based on the philosophical concept and anthroposophic values to this day.
Presently, Weleda is a worldwide leader in holistic natural cosmetics and anthroposophic pharmaceuticals production. The core values for the company are biodynamic farming, responsible behavior with respect to employees and shareholders, eco-friendly and rational production process, natural cosmetics and medicines. The ultimate company’s goal is to protect and recover human health.
There are 7 principles Weleda abides to preserve social welfare, the environment, and protect the planet on the whole:
1) Responsible relationships with clients, partners, and suppliers;
2) The partnership between management and employees;
3) Quality control;
4) Combination of science and philosophy in R&D;
5) High ecological standards;
6) The ethical approach to doing business;
7) Cultural diversity as a motivating force.
To position itself as a socially-responsible company, Weleda emphasized 3 directions of sustainable development to follow: an ecological, social, and economic.
• Environmental rationality
Weleda’s responsibilities on environmental protection include questions on biodiversity preservation, raw materials purchasing, natural resources and eco-
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packaging usage, water consumption reduction, waste emissions and greenhouse gas emissions decrease.
o Raw materials rational use
Weleda uses approximately 1,000 ingredient types to produce natural cosmetic and medical products. The company knows that methods of raw materials’ extraction significantly influence biodiversity. Simultaneously, it understands that only pristine eco-systems can provide high-quality soil and conditions to produce required raw materials. Hence, 78% of being used plants Weleda acquires from certified organic and biodynamic farming or natural vegetation areas, which are under control.
o Sustainable use of natural resources
The production process requires water and energy consumption. Weleda upholds the principles of respect for these important resources and permanently improves the production process. For instance, the condensate that is pushed into the water circulation system is used repeatedly. The water consumption level per kilogram of production was decreased by 25% in 2017. Another example is energy consumption that also was reduced due to cooling and ventilation systems’ optimization, industrial and office space decrease, proper utilization of machinery equipment and other measures on efficiency growth. Concurrently, Weleda is increasing renewable energy use.
o Sustainable Beauty Award
In 2013 Weleda was awarded the Sustainable Beauty Award by Organic Motor in the category of «Industry leader. Sustainable development» for holistic and environmentally rational business-model. In 2016 two more awards in the «Sustainable leadership» and «Green formula» categories were received.
o Biodynamic farming
Weleda has own biodynamic technique to grow medicinal plants, which is traditional: stockbreeding, agriculture, seed farming, and landscape management are implemented according to anthroposophic principles. Weleda introduced the biodynamic approach to produce high-quality raw materials into all company’s
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gardens around Europe and the world, thereby renewing and preserving the ground and its numerous living organisms: from germs to wild animals.
o Eco-packaging
In 2012 Weleda set up the interdepartmental team to work on a new packaging project. It has resulted in the following innovations: recyclable materials use; a switch from metal plating to colour printing; use of tanks and boxes, approved by the Forest Stewardship Council (FSC). Moreover, Weleda currently considers the shift from traditional blue glass jars to eco-plastic, which is easier to recycle and less expensive to transport.
• Social rationality
Weleda takes responsibility for working places and people involved in the production process. The quest for social responsibility implementation helps people and companies to positively influence development, business, and society on the whole. As a socially-oriented company, Weleda pays attention to security, personal development, and the health of employees, suppliers, and partners. It ensures minimal social standards, fair prices, and long-term relationships.
o Ethics
In October 2011 Weleda became a member of the Union for Ethical Bio Trade (UEBT), which is a non-commercial organization setting international standards on rational purchasing and resources use. Due to the membership in the UEBT, Weleda proved the principles of ethical business management and took responsibility for the application of the UEBT standards for the purchase of the raw materials.
o Communities, partners, and shareholders
Weleda maintains good relationships and cooperates with various communities and organizations in different countries. Furthermore, the company collaborates with local partners, whose employees regularly attend advanced training and receive fair remuneration. For instance, such collaborations include cooperative society in Morocco producing high-quality argan oil for Weleda body-care products, family business in Mexico manufacturing sesame oil for different face and body care- product lines, and Spanish cooperative specializing in almond oil production.
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o Work-life balance
Sustainable social development and social rationality are defined by Weleda as “taking responsibility for corporate employees”. The program “Leadership is the core” was set up in 2013 to introduce mandatory management standards and leadership support; all the company’s managers finished this program in 2016. Moreover, Weleda operates support services and kindergartens in Germany and France to maintain a work-life balance level.
o Young Talents Program
Weleda conducts professional training programs for employees and cooperates with different universities to teach them new skills. Students participate in various joint visits, international educational activities, seminars on anthroposophism, and additional education. In 2013, the daughter company was established by German students aimed to obtain knowledge about all management processes required to start a company and production. For example, they created a new version of Weleda soap, which is already sold in Germany.
• Ethical economics
Sustainable economic development is based on ethical principles, innovations, investments, and rational financial policy using available resources. Weleda is highly engaged in investment and sponsorship activities: the company annually invests in social and ecological rationality promotion. For instance, in 2016, € 2,900,000 were transferred to donations and similar contributions, of which € 1,600,000 were donated to the School of Spiritual Science in Dornach, and € 500,000 were invested to medical and nursing training at the Anthroposophic Medicine Clinic in Arlesheim, Switzerland.
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3.6. Conclusion
The information described above proves that skincare cosmetic companies actively use their corporate websites to communicate on CSR topics with their potential and real clients, suppliers, partners, and other stakeholders. Nevertheless, it should be noted that they do it in a different way and manner, while some companies stand aside and prefer not to reveal information on CSR activities they manage on their corporate websites. Overall, companies discussed above have approximately the same topics and issues they consider.
Firstly, the topic discussed by each company is a philanthropy. All the companies provide support to various organizations, social and public associations, scientific communities, etc. Some companies have a special foundation to cover donations, e.g. the L’OCCITANE Foundation, while others fund money without an existent foundation system. Another point is the way companies contribute to supporting. The main approach companies apply to provide support is donations and financial contributions. At the same time, another important method is training and specialized educational programs convening. These programs can be dedicated to both internal employees and external target groups. Furthermore, companies conduct effective collaborations with famous people, like Kiehl’s did, to raise more money on charitable events, or establish special awards for outstanding achievements as in the case with Clarins.
Secondly, the environmental protection issue is set as an important aspect of all companies’ corporate social strategy. The above-mentioned companies take following steps to make a contribution to environment and biodiversity questions: CO2 and greenhouse gas emissions decrease, energy and water consumption reduction, etc. These steps are accomplished through raw materials use, eco- packaging, and innovative business practices development. Most companies stress that eco-packaging innovation is the most powerful tool to protect the environment and actively apply this method in their production processes, which is called eco- conception. Next, companies, like L’OCCITANE, try to reconstruct brand shops and make them more environmentally-friendly for their customers and implement
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responsible purchasing policy by concluding Fair Trade agreements and proper supply chain management.
Thirdly, companies undertake some actions to engage employees in CSR strategy realization. Clarins provides a special training program for new employees to enhance their knowledge about social responsibility policy and teach them to be attentive to environmental and social issues, doing the same in their regard. Weleda carries out social rationality policy aimed to secure safe work conditions, career development, and work-life balance for internal employees as well as fair prices and good relationships with suppliers and partners. Standalone Young Talent Program of Weleda proves the commitment to care for the employees and pay attention to cultural diversity.
Fourthly, companies have a common policy on local communities’ life improvement. Almost all investigated brands try to contribute to social groups to whom they sell the products. For instance, L’OCCTIANE formed responsible purchasing and biopiracy policies and implements ethical business practices; Clarins, Vichy, and Weleda are members of the Fair Trade program.
To conclude, content analysis of websites revealed the following CSR topics considered by skincare cosmetic companies:
• Environment protection; • Raw ingredients use; • Energy sources and use; • Waste management and recycling; • Product innovation; • Cruelty-free; • Human rights; • HR management; • Philanthropy; • Customer health and safety;
Identified CSR questions will be included in the questionnaire, which is described in the next chapter.
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Chapter 4. Discussion of Survey Results
4.1. General overview
Overall, the questionnaire form included 10 specialized questions and a personal information block (Appendix A). Within the first question, the respondents were asked about the skincare cosmetic brands they prefer most. The total number of brands mentioned was 64 as some of the answers featured several brand names (Appendix B). Also, survey revealed that following skincare cosmetic brands are the most popular among the respondents: Academie, Avene, Bioderma, Caudalie, Clarins, Clinique, Chanel, Elemis, Estee Lauder, Kiehl’s, L’Oreal, La Roche Posay, Lancome, Lush, Neutrogena, Nivea, Nuxe, Payot, Rituals, Sensai, Sesderma, Vichy. It must be pointed out that 19 of 22 brands are engaged in CSR activity and share this information on their corporate websites and social networks. The research showed that the CSR commitments followed by the above-mentioned skincare cosmetic companies are similar to the ones considered in the Content Analysis chapter. Hence, it can be concluded that most of the skincare cosmetic companies abide roughly identical CSR policies varied by the number of socially-responsible activities companies implement.
The second question provided the data on how often the respondents purchase skincare cosmetic products. The numbers on the Fig.6. show that 48% of the respondents do monthly purchasing or even several times per month – 29%, while a smaller number of interviewees buy care cosmetics only once in three (11%) or six months (5%). The rest do the shopping for skincare cosmetic products no more than one time per year or less than once a year. It, therefore, follows that the respondents, taken part in the survey, are the users and frequent buyers of skincare cosmetic products.
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Figure.6. Purchasing frequency.
Several times per month 4%3% Once in a month 5% 29% 11% Every three months
Every six months
One time per year
Less than one time per 48% year
Source: Own elaboration on the base of survey results.
Another point to be emphasized is that women tend to purchase skincare cosmetic products quite more frequently than men. The average purchasing period of women is every one or three months, whereas for men this period is once in six months or per year. It can be explained the type of the chosen industry, in which women are the main target segment for sellers.
The third general question was set to know whether the respondents are aware of the CSR concept. It became apparent that the vast majority of the respondents knew what the CSR concept is (89%), while only 11% of them were not familiarized with the concept. This could prove that the survey’s results are credible and can disclose relevant information for the study.
4.2. Decision-making factors
Within the fourth question, the respondents were asked to indicate the factors influence their purchasing decisions. There were 9 factors to be rated, among which only some were related to the CSR concept. The following table describes the results obtained on the fourth question. The measurement system used was a 5-scale, where 1 is not relevant, and 5 is very relevant. The numbers in the table represent the
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number of people agreed to the factor given and the percentage of the total number of respondents.
Table 3. Factors influencing purchasing behavior.
Factors / Scores 1 2 3 4 5
Product price 0 6 19 53 44 (4,9%) (15,5%) (43,4%) (36,2%)
Product quality 0 0 2 2 118 (1,7%) (1,7%) (96,6%)
Product characteristics 2 2 11 25 82 (1,7%) (1,7%) (9%) (20,4%) (67,2%)
Product packaging 6 8 48 45 15 (recyclable/no) (4,9%) (6,5%) (39,3%) (36,8%) (12,5%)
Brand image 6 10 36 42 28 (4,9%) (8,1%) (29,5%) (34,6%) (22,9%)
Eco-friendliness 3 12 39 37 31 (2,4%) (9,8%) (32%) (30,4%) (25,4%)
Ingredients (natural, bio/no) 7 (6%) 9 18 45 43 (7,3%) (14,9%) (36,8%) (35%)
Personal experience 0 4 11 (9%) 42 65 (3,2%) (34,6%) (53,2%)
Relevant recommendations 14 19 38 29 22 (11,5%) (15,5%) (31,2%) (23,8%) (18%)
Source: Own elaboration on the base of survey results.
The table above shows that options proposed are relevant for the respondents, who are regular buyers of skincare cosmetic products. Consider each factor more in- depth.
The price was indicated as one of the most important factors by the respondents. Today, there are many various skincare cosmetic brands existed on the market.
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Moreover, the most brands offer similar product lines, but they charge different prices on the goods they sell. For this reason, customers have an opportunity to compare and assess the items they are interested in and come to a decision that suits them better.
Product quality was chosen as the crucial factor among provided ones as 118 of 122 respondents pointed it to be important. Nowadays, skincare cosmetic companies face increasing competition and attempt to produce high-quality products for their clients. They apply up-to-date innovations and technologies to create distinctive goods and sustain high production standards since product quality is the key to establish and maintain successful long-term relationships with customers.
Another factor that was valued as relevant in the decision-making process is product characteristics. As was mentioned previously, today’s consumers can choose skincare cosmetic products according to their needs, demands, and financial opportunities. Therefore, they use this option to find the necessary skincare cosmetic products according to characteristics required to fulfil their expectations better. Hence, this factor is the central for buyers to do a purchase.
The product packaging factor can be associated with the CSR concept since recyclable and no-recyclable packaging types were underlined in question. It has to be highlighted that almost half of the respondents highly rated this factor. It demonstrates that consumers tend to care for the environment and the world we live in. Furthermore, it could be assumed that consumers expect and require the same from their favourite brands as it is the companies who are responsible for product packaging. Currently, there can be observed an increase in the number of people, who are not indifferent to environmental issues, which explains the percentage received through the survey.
The brand image also has an impact on the decision-making process. Buying skincare cosmetic products, customers usually have some perceptions about the brand. In the subchapters 1.3. and 1.4. of the current thesis, the positive ratio between a company’s image and reputation on the one side and relationships with consumers and sales growth on the other side was proved. Thus, it can be reconfirmed that skincare cosmetic brands that lead fair and transparent business policy and have a
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good reputation in the eyes of consumers are more purchased and trusted ones, and simultaneously increase brand awareness.
The eco-friendliness factor is supposed to be important as well according to the answers obtained. Eco-friendly companies are becoming very successful nowadays, especially in the skincare cosmetic industry that is proved by the brands chosen as the most favorite ones throughout the survey. As was mentioned before, 19 of 22 skincare cosmetic companies picked by the respondents are involved in CSR activity extensively. Individual consumers also strive for environmental protection, green initiatives, social improvement, human rights, and sustainable development. Hence, most of them are prone to buy skincare cosmetic products from socially-responsible brands. For this reason, socially-responsible and eco brands rapidly increase their reputation for the commitment to the environment and society, and their power to foster sustainable practices in the eco-cosmetic industry. Therefore, socially- responsible and eco brands enlarge their market share and engage new customers by contributing to the better world. As a result, top skincare cosmetic brands are eco- friendly brands with strong marketplace power.
It has to be stressed that the vast majority of the respondents consider product ingredients carefully. It is obvious that the greener and safer ingredients work better and with less harm for health. Furthermore, the findings prove that the respondents concern about product quality and characteristics, and they are ready to pay more to receive higher results, despite eco-products are more expensive (will be described further). This is why the respondents give priority to bio ingredients in skincare cosmetic products. This factor is also referred to the CSR concept.
The personal experience factor was highly rated by the respondents. Undoubtedly, dissatisfaction in product, quality or results can significantly shift consumer buying behavior. However, it can be caused by various circumstances: producer’s responsibility, customer’s mistake, wrong selected product, etc. Nevertheless, this factor influences the purchasing decision as well.
The last presented factor is the recommendations. According to the numbers, the respondents pay attention to reviews, references, and feedbacks about skincare cosmetic products, however, it is not a decisive factor to do a purchase.
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To sum up, CSR related topics are relevant for the respondents in the decision- making process along with non-CSR associated factors.
4.3. Consumer profile
The current subchapter provides information on consumers’ perceptions about CSR activities. The findings are required to test the first hypothesis that has been raised and know whether a brand’s messages about CSR activities positively influence consumers’ perceptions and significance of CSR questions for them respectively. In other terms, the main aim of this subchapter is to value how consumers of skincare cosmetic products are socially-oriented.
Social-value orientation
In order to assess respondents’ social value orientation, they were asked to evaluate given statements within the fifth question. The following chart demonstrates the results obtained (Fig.7).
Figure.7. Statements' evaluation results.
I want my preffered care-cosmetic brand to make contributions to social 81% 7%12% and environmental improvement
The care-cosmetic brand I prefer most implements socially-responsible 65% 7% 28% activities Yes No Care-cosmetic companies should Do not know familiarize their customers with CSR 75% 2%23% they manage more actively
Socially-responsible care-cosmetic brands share information on their activities in open sources and it is not 51% 24% 25% complicated to find it
Source: Own elaboration on the base of survey results.
The results show that the respondents are not indifferent to CSR policies their favorite skincare cosmetic brand undertakes. As can be seen from the graph above, 69
almost all the respondents (81%) stated that they want to be aware that the skincare cosmetic brand they prefer most contributes towards social and environmental improvement and development. Furthermore, roughly one-half of the respondents (65%) know socially-responsible activities their preferred brands implement. It testifies to the fact that consumers are curious about the skincare cosmetic brands they chose and study them in detail that is also proven by the third statement since the vast majority of the respondents (75%) stated that companies should communicate about CSR practices they apply more actively. However, the findings indicate the opinion of respondents was divided on the CSR information issue. It was found that approximately half of the respondents can easily find the information about the company’s CSR activity in open sources, while 24% pointed out that this information is difficult to be found, which implies that CSR information cannot reach them. Moreover, 25% of the respondents did not search this information in open sources, nevertheless, some respondents noted that their favorite brands usually insert such intel on the product packaging or they get the information from influencers, hence, they do not search for information on CSR activities on their own, but investigate it through the passive approach. Overall, it can be concluded that a significant number of respondents search for information about companies’ CSR activity occasionally.
Information channels
Through the eighth question, there was acquired the data on channels applied by the respondents to gain information about CSR practices of skincare cosmetic brands. The graph below displays the most important channels rated by the respondents.
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Figure.8. Communication channels.
Family or friends 15%
Salesmen in shopping centers 25%
Influencers or famous people 90%
Information provided on the packaging 68%
TV programs and commercials 29%
Press media 32%
Social networks 92%
Corporate website 85%
0% 20% 40% 60% 80% 100%
Source: Own elaboration on the base of survey results.
The column-chart demonstrates that three main information channels used by the respondents are social networks (92%), corporate websites (85%), and influencers or famous people (90%). This stems from the digital age. Nowadays, every second person uses several social networks (Instagram, Facebook, YouTube, Twitter, etc.) on a daily basis, the Internet has become the most popular source of information for modern society. Furthermore, in the contemporary world influencers and celebrities are the main advertising and information drivers. Also, more and more people prefer online shopping to traditional one, therefore, they spend time searching and matching information on companies’ websites, where they find the information on CSR activities either. That is the reason why many companies use corporate websites or social networks to communicate with consumers.
The next important information source is product packaging. As was mentioned previously, some respondents do not seek for the information on CSR purposefully but discover it on a product pack. It has to be highlighted that modern skincare cosmetic companies put information labels about eco-certification, licenses, and other CSR testimonies they have on a product box. Furthermore, they try to emphasize active botanical or harmless ingredients a product contains to convince
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potential customers in the brand’s socially-environmental commitment, that, undoubtedly, influence costumers’ purchasing decision.
Other information channels are less popular among the respondents that is explained by the growth of digital information as was mentioned previously, which is confirmed by the fact that up-to-date digital platforms and techniques are the most popular among skincare cosmetic companies to reach and engage the public. Nevertheless, older consumers still receive information from the press, TV programs, and social environment.
Attitudes to socio-environmental questions
The sixth question was set to the respondents to measure their attitudes toward social and ecological issues. They were asked to choose which CSR activities skincare cosmetic brands have to undertake that revealed the socio-environmental problems relevant for the respondents. The graph shows the importance of given factors according to the respondents’ answers.
Figure.9. Importance of CSR related issues measured by the respondents.
Diversity policy support 12%
Employees’ rights and health protection 11%
Human rights protection 23%
Philanthropic activity 29%
Environment protection 91%
Natural ingredients usage 88%
No testing on animals 92%
Eco-friendly manufacturing 73%
0% 20% 40% 60% 80% 100%
Source: Own elaboration on the base of survey results.
The main issues the respondents found important are environment protection (91%), no animal testing (92%), natural ingredients usage (88%), and eco-friendly 72
production and distribution (73%). Apparently, these questions are relevant for the respondents since they highly influence modern life and the world we live in. All these issues are closely connected to the social standard of living and have a crucial impact on the quality of life. Consequently, they were commended by a great number of respondents.
On the contrary, the least important problems for the respondents are charity (29%), protection of human and employees’ rights (23% and 11% respectively), and diversity support (12%). There is evidently the reason why these issues are less severe for the respondents - not all the consumers are directly impacted by positive outcomes of these CSR policies. Consumers are not affected by improvements in diversity support or employees’ rights policies in case they happen in a company they do not work in; do not receive charitable aid if they do not belong to a certain social group, etc. Therefore, the respondents accorded priority to other CSR issues.
Awareness of socially-responsible skincare cosmetic brands
To know how deep the respondents are familiar with socially-responsible skincare cosmetic brands, they were asked to name them if they know any (seventh question). Results show that more than 71% of the respondents were able to indicate at least one socially-responsible skincare cosmetic company (Appendix 3). Moreover, around 52% were able to describe some CSR activities these skincare cosmetic brands implement.
The findings show that the most well-known socially-responsible brands are about the most favorite ones according to the respondents’ answers from the first question, namely Avene, Bioderma, Biotherm, Caudalie, Clarins, Clinique, Chanel, Kiehl’s, L’Oreal, La Roche Posay, Lancome, Lush, Nivea, Organic Shop, Payot, Rituals, The Body Shop, Urtekram, Vichy, Weleda. Mostly, the respondents named similar brand names. It may be assumed, that these skincare cosmetic companies have more effective CSR communication policies to be promoted.
It has to be mentioned that social networks, influencers, and corporate websites were highlighted as the main channels among the respondents to get information about socially-responsible skincare cosmetic brands that confirms the results discussed in 73
the previous subpart. Other information sources mentioned by the respondents are information on packaging, leaflets, targeted advertising, unskippable ads on YouTube, beauty-bloggers, word-of-mouth, informational blocks on online store websites.
4.4. Impact of CSR on consumers’ attitudes towards purchasing
This subpart considers answers on questions number 9 and 10, which were asked to assess the impact CSR has on consumers’ intentions regarding opting for a skincare cosmetic brand.
In the ninth question, the respondents were asked to rate given statements on a 5- point scale, where 1 - completely disagree and 5 - completely agree on the point. The following table explains results gained.
Table 4. Results gained on the ninth question.
Statement / Scores 1 2 3 4 5
I do encourage skincare 0 0 3 (2,5%) 10 109 cosmetic brands that (8,2%) (89,3%) contribute to world improvement
I advise my friends and 13 19 41 27 22 family to purchase skincare (10,6%) (15,7%) (33,6%) (22,1%) (18%) cosmetic products of brands that are socially-responsible
Information about socially- 3 11 (9%) 11 (9%) 48 49 responsible behavior of a (2,5%) (39,3%) (40,2%) brand positively influences my motivation towards purchasing decision
I am prone to purchase 7 12 12 48 43 eco/bio/vegan skincare (5,7%) (9,8%) (9,8%) (39%%) (35,7%)
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cosmetic products despite they are costly
I can easily refuse to buy a 5 (4%) 5 (4%) 18 48 46 brand if it does not act in a (14,8%) (39%) (38,2%) socially-responsible way, even it is my favorite one
If the brand I prefer acts in a 4 5 (4%) 5 (4%) 53 55 socially-irresponsible (3,2%) (43,6%) (45,2%) manner, it will lose my credibility
Source: Own elaboration on the base of survey results.
Obviously, almost all the respondents stated that they want their favorite skincare cosmetic brands to make contributions to the better world (89,3%). Consumers understand current social and environmental issues and struggle against such problems as carbon emissions or global warming, women rights or diversity support, etc. Studies found that 90% of millennials tend to choose eco-friendly companies to non-sustainable brands. Another research investigated that this is millennials are the main target group of modern skincare cosmetic companies. Hence, implementing green initiatives is a great benefit for these companies to engage the target audience and maintain long-term relationships with them. Millennials are the biggest consumer group nowadays known as the green generation. Therefore, companies have to do something for the environment and society to retain market share and be successful.
Besides, approximately 80% of the respondents noted they are influenced by information about brands’ socially-responsible behavior while deciding on a purchase. This percentage confirms that consumers consider CSR factors along with other ones. Furthermore, the vast majority pointed out they could stop buying a brand if it is socially-irresponsible, and it will lead to a loss of confidence to a brand. There were several latest scandals surrounding skincare cosmetic companies which undermined the credibility of such popular brands companies as Coreana Cosmetics, The Ordinary, Kanebo, Mixit, and others. Some of them disappeared from the beauty 75
market or did rebranding, while others still exist, however, they do not receive costumers’ support as can be seen from the results of the first question. Due to the digital age, it is complicated to hide illegal or irresponsible policies that brands lead, consequently, most consumers are aware of CSR actions of companies and affected by them.
Moreover, roughly 85% of the respondents confirmed their commitment to buy skincare products from botanical ingredients. Previously, there was considered the product price factor influences purchasing decisions. Nevertheless, despite the expensive price, the respondents prefer to buy eco and green products. It can be explained by the chosen industry. Nonetheless, it was also mentioned earlier that there are many skincare cosmetic brands on the market charge various price on the products. Although eco products are more expensive than non-botanical items, it is possible to afford green ones due to different price policies.
The last statement to be considered is advice on socially-responsible brands given to family or friends. The numbers show that the opinions of the respondents seemed divided. Apparently, advice on this issue is not as relevant as opinion on product quality, characteristics, etc. It could be assumed that the respondents usually advise certain products guided by other factors.
The findings on the tenth question revealed reasons the respondents may refuse to buy skincare products. The answers obtained correlate with ones received on the sixth question (Fig.10).
Figure.10. Reasons to refuse to buy a brand.
Company makes products from unnatural or hazardous ingredients 92%
Company does harmful actions to the environment and society 95%
Company does tests on animals 82%
Company harms employees 53%
0 20 40 60 80 100
Source: Own elaboration on the base of survey results. 76
The graph shows the direct relation between CSR issues the respondents found important within the sixth question and the reasons cause refusal to buy a brand. The main reason the respondents emphasized is the usage of unnatural ingredients (92%); a similar percentage of 88% was received on an identical issue. Irresponsible behavior to the environment and society was rated with 95%, which is roughly the same percentage got on a corresponding issue (91%). Testing on animals (82%) and causing harm to employees (53%) reasons also correlate roughly the same – 92% and 23% respectively.
Overall, it seems that given reasons are important for the respondents and may cause changes in purchasing behavior. Other reasons the respondents highlighted as important are misleading information, price changing, poor product quality, no effect, allergic reaction, expectations are not met, shipping conditions.
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Chapter 5. Summary of Findings
The research showed that skincare cosmetic companies are highly engaged in CSR activity. The Content Analysis disclosed following CSR issues actively promoted by skincare cosmetic brands on their corporate websites: environmental protection, cruelty-free, human and employees’ rights protection, diversity policy support, philanthropy, raw ingredients use, waste management and recycling, product innovation, Fair Tarde, etc. It has to be mentioned that all skincare cosmetic companies have similar CSR policies to manage, hence, they have roughly identical intentions and motivations. On the one hand, each company aims to be a good corporate citizen and a friend of the society. On the other hand, every brand pursues the strategy of profit-maximizing by leading CSR activities.
It can be assumed that skincare cosmetic companies voluntarily abide the responsibilities, which is a distinctive feature of the CSR concept. It can be examined by Archie Carroll’s model application: each skincare cosmetic brand wants to be successful and receive high profits; companies aim to be ethical, therefore, they are engaged in Fair Trade policy, responsible selection of suppliers, eco-conceptions and ethical economics; to express their social intentions, brands implement charitable activity; the legal responsibility is observed in companies’ law abidance and fair practices conduction. This proves that Carroll’s model is applicable to the skincare cosmetic industry.
Also, the chosen industry appeared relevant to test the hypotheses raised since the survey revealed consumers’ intentions and motives towards purchasing.
Firstly, the survey discovered the favorite brands the respondents indicated. It has to be highlighted that 19 of 22 named brands implement CSR activity and communicate on this topic with customers. Furthermore, more than half of the overall mentioned brands (roughly 73%) are engaged in CSR policy and promote their commitments to the public. It testifies that socially-responsible brands within the skincare cosmetic industry are the most purchased. Also, it can be assumed that messages about CSR practices are perceived by potential consumers and have an impact on their decision-
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making process since 89% of the respondents stated they are familiar with the CSR concept and 51% search for information about brands’ social responsibility.
Secondly, the analysis revealed that 75% of the respondents asserted they are aware of socially-responsible skincare cosmetic brands, furthermore, 65% know which CSR activities these brands implement. This confirms that CSR communication reaches consumers. Moreover, it suggests that the main communication ways companies use to direct information are chosen properly (social networks, corporate websites, beauty-bloggers and influencers, media, etc.).
Thirdly, factors having an impact on the respondents’ attitudes towards purchasing were investigated. The most important factors indicated by the respondents are product quality, product characteristics, product price, and previous experience. Nevertheless, factors related to the CSR concept also have a high percentage in comparison with the above-mentioned ones. The respondents consider in-depth such CSR factors as product ingredients (bio/eco), eco-friendliness of a brand, brand image, and product packaging (recyclable/not) among others. It must be emphasized that these factors have great importance for the respondents while purchasing skincare cosmetic products.
Fourthly, the social value orientation of the respondents was assessed. It became apparent that the respondents find CSR issues important and these questions have an influence on them. The respondents require their favorite brands to not do tests on animals (92%), protect the environment (91%), be eco-friendly (73%), use raw/natural ingredients while producing cosmetic products, and support employees. The same issues can force the respondents to refuse buying a product of a brand which socially-irresponsible. Hence, it seems that consumers pay attention not only to the product price and quality but equally on no product-related factors.
Fifthly, the findings showed that the vast majority of the respondents have already given priority to socially-responsible brands and around 85% buy eco skincare cosmetic products despite the price, and 81% expect from their favorite skincare cosmetic brand to implement a CSR strategy. Besides, 75% stated that brands have to promote CSR activity they manage more extensively and spread information about it more actively.
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Sixthly, the testimony that brands’ messages about CSR activities have a positive influence on consumers’ perception was gained. The figures obtained demonstrate that around 82% of the respondents affirmed that the information about the social responsibility of a brand positively influences their motivation towards purchasing decisions. Moreover, more than half of the respondents are ready to pay more for the skincare products of socially-responsible brands and can stop buying a brand if it harms society or environment. Overall, 89,3% encourage cosmetic brands which put efforts to improve the world we live in.
Therefore, there is evidence that the hypotheses raised are proved. It can be assumed that the results obtained depend on the chosen industry. Apparently, brands of the skincare cosmetic industry discovered that today’s consumers want to get more than just high-quality products and services: customers want to feel as if they spend money on a brand that contributes to world improvement. Also, USPs of a large number of modern skincare cosmetic brands are based on different socially- responsible activities. Hence, results testify that the most purchased brands within the skincare cosmetic industry are eco-friendly and socially responsible ones. These companies have larger market share and maintain better relationships with consumers.
Obviously, there are some issues that are not deeply counted by today’s consumers yet. These issues are related to human rights, diversity support, employees’ treatment, etc. However, there is an assumption that these problems are not extremely relevant for consumers of the chosen industry. Hence, there is a need for further research in other business fields.
Nevertheless, it can be concluded that CSR trend is spreading across the businesses of today and tomorrow. Most business leaders stress that CSR is crucial to business branding and corporate image. This is the reason the CSR concept is becoming popular in the modern world.
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Limitations and recommendations for further research
There are several limitations concerning the current research. The first limitation is that the research covered only the Czech Republic. Hence, the attitudes and lifestyles of the Czech Republic population were studied, represented by the most common nationalities living there. Therefore, further research should be conducted in other countries as well.
Another limitation is that the research was generalized mostly by younger respondents who were 23-32 aged. So, the lifestyle and habits of this age group were surveyed closer. However, it does not seem to be a bias for the research, since there was mentioned earlier that millennials are the main target group for the skincare cosmetic industry. Nevertheless, more detailed investigation of other age-groups is required.
Next limitation is the number of people participated in the survey. This number seems sufficient within the current research; however, the greater number could give more comprehensive results. Therefore, larger target groups have to be considered later on.
Also, only one business field was examined in this research, discussed from the consumers’ point of view. For this reason, it could be interesting to research other business industries also and do an interview with professionals to know important insights. Furthermore, opinions of other stakeholder groups (suppliers, shareholders, employees, etc.) have to be studied in further research on a similar study topic.
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Conclusion
The research has attempted to investigate the CSR concept and its role in building relationships with the public. It was underpinned by quantitative and qualitative analysis that was the survey conducted and content analysis.
Within the study, the following research questions were covered:
- definition and characteristics of CSR;
- principles and models of CSR;
- mechanisms of CSR implementation;
- impact of CSR on the company’ reputation and brand perception;
- advantages of CSR for a company;
- financial benefits from conducting CSR programs.
Overall, the results showed that the CSR concept development and new ways of business management are essential components of modern companies’ business activity. The insight into a required new role in social life and environment fosters aims creation that demand life improvement and mitigation of existing problems.
Effective advertising and marketing campaigns that use CSR messages to communicate with consumers are the tools for the company’s success on the market. The experience of world-known brands proves that if a company aims to communicate honestly and sincerely, emphasizing important human values and expectations of modern customers, it has to lead a socially-responsible business.
Budget redistribution and disbursement of funds for charitable projects, sport, science, education, and art fields sponsorship is a significant contribution to social life. The social activity of a brand evokes respect and interest in consumers’ minds. Furthermore, such social activity engages consumers into a brand’s social projects and drives them to participate in social campaigns. Therefore, it makes a consumer to trust the brand and follow its ideas and visions.
Corporate culture is also important to implement a company’s strategy. The management has to provide staff development, training courses, and other social events to unite employees; to manage social support policy concerning employees to 82
increase loyalty level. It is mirrored in working-process quality improvement, staff engagement in the company’s social projects, and spreading of positive information within society about the company that contributes to brand position strengthen.
Considering the results of the content analysis, there were revealed that the most popular skincare cosmetic companies actively promote CSR activities on their corporate websites and social networks that positively affects consumers’ attitudes about a brand. It was investigated that skincare cosmetic companies mostly manage the following CSR activities: environment protection, raw ingredients use, waste management and recycling, energy consumption decrease, product innovation, no animal testing, human rights protection, HR management, philanthropy, customer health, and safety. Moreover, most modern cosmetic companies include social values into their communication strategies that differentiates them from socially- irresponsible companies and benefits towards building a better reputation.
Furthermore, the survey on the chosen industry proved both hypotheses raised at the beginning of the current research. The numbers testify that corporate messages on CSR activity positively influence consumers’ perception of a skincare cosmetic brand, that is the first hypothesis issued was confirmed. The brands communicate on CSR differently, via various communication channels. Nevertheless, awareness about the social responsibility of a brand has an impact on consumers and makes them buy a brand. Therefore, it proved the second hypothesis that socially-responsible brands are the most purchased.
What is more important, modern customers value CSR related factors as approximately the same important as product quality, characteristics, price while deciding on a purchase. Moreover, the vast majority want their favourite skincare cosmetic brands to implement socially-responsible activities regarding society, employees, and the environment. Consumers consider such social issues as cruelty- free, environment protection, bio ingredients usage, and employees’ support to be important and may refuse to buy products of a brand that harms the world we live in. So, it explains the reason why top skincare cosmetic brand manage socially- responsible policy and actively promote it to the general public.
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Nevertheless, according to the findings obtained in the first chapter, it can be assumed that the CSR strategy implementation has a similar impact on consumers’ choice in other business fields as well. Currently, it is one of the key instruments to build, keep, and develop good relationships with stakeholders, and what is more crucial for the business – to increase profits and sales.
All in all, it has to be mentioned that each company can become socially responsible. However, in order to achieve such a position, a company has to do some changes in corporate strategy and gain the resources required. Despite it is not an easy and fast way, the benefits must be remembered. There are various examples of international companies having a great experience in building a socially-responsible and successful brand. Hence, companies aiming to become socially-responsible, can monitor the development process of such successful companies and adapt their experience to own business activity.
To conclude, corporate social responsibility is an essential part of public relations in today’s competitive environment. Corporate social responsibility helps a company to find common ground with consumers, develop positive attitudes regarding a brand, maintain mutual understanding, and retain long-term relationships.
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List of figures and tables
Figure 1. Components of a company’s social responsibility by Archie Carroll. Source: Own elaboration on the base of Carroll, 1979.
Figure 2. Approaches to the CSR theory. Source: Own elaboration on the base of Gillis & Spring, 2001.
Figure 3. Benefits from the implementation of socially-responsible practices. Source: Own elaboration on the base of Kim & Ferguson, 2014.
Figure 4. Performance indicators of CSR. Source: Own elaboration on the base of Kim & Ferguson, 2014.
Figure 5. The elements of corporate reputation. Source: Own elaboration on the base of Barnett, Jermier & Lafferty, 2006.
Figure 6. Purchasing frequency. Source: Own elaboration on the base of survey results.
Figure 7. Evaluation results. Source: Own elaboration on the base of survey results.
Figure 8. Communication channels. Source: Own elaboration on the base of survey results.
Figure 9. Importance of CSR related issues measured by the respondents.
Source: Own elaboration on the base of survey results.
Figure 10. Reasons to refuse to buy a brand. Source: Own elaboration on the base of survey results.
Table 1. Classification of CSR realization models within the framework of business activity. Source: Own elaboration on the base of Haski-Leventhal, 2018.
Table 2. The comparison of the CSR models by Andrew Crane and Dirk Matten. Source: Own elaboration on the base of Crane & Matten, 2019.
Table 3. Factors influencing purchasing behavior. Source: Own elaboration on the base of survey results.
Table 4. Results gained on the ninth question. Source: Own elaboration on the base of survey results.
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Index of Appendices
A. QUESTIONNAIRE
B. LIST OF SKINCARE COSMETIC BRANDS
C. SOCIALLY-RESPONSIBLE SKINCARE COSMETIC BRANDS
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Appendix A. Questionnaire
1. Which skincare cosmetic brands do you prefer most? Please, name them.
2. How often do you purchase skincare cosmetic products? (tick the right answer)
o Several times per month o Once in a month o Every three months o Every six months o One time per year o Less than one time per year
3. Do you know what the CSR (Corporate Social Responsibility) concept is?
4. How the following factors influence you while purchasing skincare cosmetic products? Please, rate them.
* (1 – not relevant; 5 – very relevant)
Product price 1 2 3 4 5
Product quality 1 2 3 4 5
Product characteristics 1 2 3 4 5
Product packaging (recyclable/no) 1 2 3 4 5
Brand image 1 2 3 4 5
Eco-friendliness 1 2 3 4 5
Ingredients (natural, bio/no) 1 2 3 4 5
Personal experience 1 2 3 4 5
Relevant recommendations 1 2 3 4 5
* Other non-mentioned factors ______
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5. Please, circle the answer that reflects your opinion on the given statement.
I want my preferred skincare cosmetic brand to make contributions to social and environmental improvement. yes no do not know
The skincare cosmetic brand I prefer most implements socially-responsible activities. yes no do not know
Skincare cosmetic companies should familiarize their customers with CSR they manage more actively. yes no do not know
Socially-responsible skincare cosmetic brands share information on their activities in open sources, and it is not complicated to find it. yes no do not know
6. Which actions do you consider as the most relevant to be implemented by skincare cosmetic companies? More than one answer is possible.
o Eco-friendly manufacturing and distribution o No testing on animals o Natural ingredients usage o Environment protection o Philanthropic activity o Human rights protection o Employees’ rights and health protection o Diversity policy support o Other non-mentioned actions ______
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7. Do you know any socially-responsible skincare cosmetic brand? If yes, name it.
Brand name:
Which socially-responsible actions this brand implements:
______
From which sources did you know this information:
8. Have you ever searched for information on socially-responsible skincare cosmetic companies? yes no do not remember
If yes, which sources did you use to get the information required? More than one answer is possible.
o Corporate website o Social networks o Press media o TV programs and commercials o Information provided on the packaging o Influencers or famous people o Salesmen in shopping centers o Family or friends o Other non-mentioned sources ______
9. Please, rate the statements below on a 5-point scale measurement system.
* (1 – completely disagree; 5 – completely agree)
I do encourage skincare cosmetic brands that contribute to world 1 2 3 4 5 improvement
I advise my friends and family to purchase skincare cosmetic 1 2 3 4 5 products of brands that are socially-responsible
Information about socially-responsible behavior of a brand 1 2 3 4 5 positively influences my motivation towards purchasing decision
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I am prone to purchase eco/bio/vegan skincare cosmetic products 1 2 3 4 5 despite they are costly
I can easily refuse to buy a brand if it does not act in a socially- 1 2 3 4 5 responsible way, even it is my favorite one
If the brand I prefer acts in a socially-irresponsible manner, it will 1 2 3 4 5 lose my credibility
10. Please, choose the reasons, which can affect your purchasing decision. More than one answer is possible.
I may refuse to purchase a skincare cosmetic product if a brand:
o Makes products from unnatural or hazardous ingredients o Does harmful actions to the environment and society o Does tests on animals o Harms employees o Other non-mentioned reasons ______
Please, provide your personal information.
o Sex: o Age: o Occupation: o Nationality:
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Appendix B. List of skincare cosmetic brands
• 3Lab • Eisenberg • Lush • Academie • Elemis • Lumene • A-Derma • Elizabeth • Missha • Ahava Arden • Mizon • Alcina • Estee Lauder • Natura Siberica • Avene • Eveline • Neutrogena • Avon Cosmetics • Nivea • Bielenda • Garnier • Nuxe • Bioderma • Givenchy • Organic Shop • Biotherm • Glam Glow • Payot • Caudalie • Guerlain • Revolution • CeraVe • House 99 Skincare • Rituals • Chanel • Kiehl’s • Saloos • Clarins • Klorane • Sebamed • Clinique • Korres • L’Occitane • Sensai • Cosrx • Sesderma • L’Oreal • Declare • Shiseido • La Mer • Dermacol • Soaphoria • Lab Series • Diadermine • Tom Ford • LaRoche-Posay • Dior • Uriage • Lancome • Dove • Vichy • Lavera • Ducray • Weleda
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Appendix C. Socially-responsible skincare cosmetic brands
Brand name CSR activities
Avene Charity, bioscience research, women rights protection, dermatitis foundation, cancer prevention and screening
Bioderma Bio and safe ingredients, no parabens, total traceability, supervision of experts
Biotherm Responsible consumption, eco-design, water consumption reduction, recyclable plastic
Caudalie Natural ingredients, parabens free, no testing in animals, mineral oils, no pollution, no perfumes, reforestation
Clarins Charity, social awards, plants protection
Clinique Women rights protection, literacy promoting, education, cancer foundation, children support
Chanel Women rights, gender equality
Kiehl’s Green ingredients, eco-packaging, charity
L’Oreal Diversity concept, women rights protection, health studies, charity, young talents program, protection for employees, Fair Trade, local communities support, no animal testing
La Roche Posay Renewable energy, geothermal program, recycled packaging, eco-friendly, water saving
Lancome Charity
Lush No animal testing, Fair Trade, eco-packaging, bio ingredients, charity
Nivea Diversity, women rights protection
Organic Shop Natural ingredients
Rituals Safe ingredients, cruelty free, limiting waste, charity, recyclable packaging
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The Body Shop No animal testing, charity, Fair Trade, supply chain management, environment protection, natural ingredients
Urtekram Cruelty-free, vegan, eco certification
Vichy Eco-friendly, natural ingredients, water saving and protection
Weleda Fair Trade, natural ingredients, recyclable packaging
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