The Impact Of Corporate Social Responsibility On The Customer Loyalty In The Retail

Sector- A Case of Morrisons

Chapter 1: Introduction

1.1  Background to the research problem

Corporate Social Responsibility is considered as one of the essential approaches of the business firms to develop sustainability by delivering environmental, social and economic benefits. Apart from gaining profitability, companies have the tendency to provide effective benefits to the greater community (Lee, 2016). Chehimi et al. (2012) again defined CSR as the process that is followed by companies to manage their businesses in order to produce an “overall” positive impact on the society. However, Grayson and Hodges (2017) viewed CSR as a “form of investment” and defined it as the mechanism of the companies for differentiating product or service in order to gain profit. Torugsa et al. (2012) stated that CSR is the business philosophy that helps the firm to maintain legal and ethical competencies in the soceity in order to provide benefits to the stakeholders. Moreover, Wu et al. (2015) defined CSR as the management concept of the firms for reducing various damaging effects on the “environment”  by integrating different activities in their business operations. On the other hand, business firms are socially accountable to both internal stakeholders including the employees and also the external stakeholders including the customers. Therefore, it is highly crucial for the companies to enhance the perceived value of the customers by executing various CSR activities, which can thereby have major impact on the customer loyalty.

Due to the high effects of globalization, retailers are facing major competitions in the market and therefore these companies are highly focused on implementing different innovative and socially responsible business strategies and approaches (Guchait et al. 2011). Adaptation of these particular approaches are thereby significant to enhance the competitive advantages of the retail companies. Previously, pricing strategy was only considered as the suitable approach of the retailers to enhance the competitive advantages and to retain customers. It has been observed that in 2021, 77% of the retail customers are likely to purchase services or products from the companies, which are committed to implement different CSR activities (Grieshaber, 2021). It can be mentioned that implementation of CSR activities has positive impacts on strengthening the retail brands and develop a synergy for the enhancement of brand with the marketing process of the companies. It is thereby necessary for the retailers to understand the response and the perceptions of the customers regarding CSR activities at the time of implementing the CSR activities.

In UK, rather than focusing on the price of a particular product or service, customers have the tendency to focus on the corporate reputation of a company in order to assess that product or service. CSR activities thereby create a positive perception of the customers regarding the products or services (Guchait et al. 2011). Along with the criteria like quality and price of the products and services, therefore, the development of the customer’s perception through the implementation of CSR activities also drives the purchasing decision of the customers. This enhances the customer loyalty and it can be mentioned that CSR activities of a firm influences the response of the customers towards the products or services.

On the other hand, there are certain studies, which highlight that retail companies face different barriers in adopting the CSR activities and these thereby have negative impacts on the customer loyalty. It is highly significant for the retail companies to implement suitable marketing strategies in order to communicate the CSR activities to the stakeholders including the customer, employees and others (Chaudary et al. 2016). Lack of awareness among the stakeholders regarding the activities can hinder the companies from driving the support of the customers that thereby can affect the customer loyalty. It is essential for the retail firms to ensure that the interests and the needs of the customers are highly addressed through the CSR activities and further can create values for them (Lee, 2016).

Morrisons is one of the leading  retail firm in UK that has the major vision to enhance the economic, social and environmental sustainability by incorporating CSR activities (Moroze, 2021). Moreover, as per the goals of the company, it is highly dedicated to address the global challenges in a suitable manner by aligning to its business strategy.Moreover, the CSR programme of Morrisons is highly focused on the business strategies, which are effective for its customers, suppliers, employees and other stakeholders. However, retail companies in UK face major challenges in adapting suitable CSR activities to reduce the environmental footprints, which thereby impact the health and wellbeing of the customers (Twiddy, 2017). Due to the evolving demands of the customers regarding the eco-friendly products, Morrisons is highly committed to focus on its marketing strategies, which can thereby be effective to raise awareness of its CSR activities among the customers (Moroze, 2021).

Therefore, based on the case of Morrisons, this study will be focusing on the perceptions and views of the customers regarding the Corporate Social Responsibilities of a firm in the era of globalization. Through the entire study and the literature review, the research will be aimed to understand the impact of the CSR activities of the retail companies like Morrisons on the enhancement of consumer loyalty. Moreover, this research will analyse the role of the retailers in executing suitable marketing strategies for promoting CSR activities. This research can further be suitable for the retailers like Morrisons to determine the importance of the brand awareness in influencing customer loyalty.

1.2  Research Aims and Objectives

The aim of this study is to assess the impact of Corporate Social Responsibility on the customer loyalty of Morrisons in the retail sector of UK.

This study will be focusing on the customer’s perspective on the targeted issues and will emphasize on these four major objectives:

• To assess the impact of CSR activities on the customer loyalty
• To investigate the effect of CSR activities in influencing the purchase behaviour of the customer towards the products of the retail firms in UK.
• To determine the approaches of Morrisons in promoting customer awareness of its CSR activities.
• To recommend Morrisons and other retail sectors of UK about different strategies of promoting the CSR activities among the customers for enhancing customer loyalty.

Research questions:

The aim and the research objectives are thereby essential to focus on these certain research questions:

• What is the impact of CSR activities on the customer loyalty?
• What is the effect of CSR Activities of the retail firms in UK in influencing the purchasing behaviour of the customers towards the products?
• What are the approaches of Morrisons in promoting customer awareness of its CSR activities?
• What are the different recommended strategies of promoting CSR activities in retail sector of UK among the customers for enhancing customer loyalty?

1.3  Outline of Methodology

Research methodology is highly focused on discussing about various research philosophies and research approaches, which are justified and relevant for this particular study. Deductive research approach will be discussed in the study to determine the appropriate approach based on the research topic. On the other hand, apart from the research strategy, the methodology will also determine the research methods, data collection methods and data analysis, which have been used to conduct this research.

It can be mentioned that as the study is majorly focused on the perception or experience of the customers regarding the CSR activities of Morrisons, therefore, qualitative research method has been effective for this study. Qualitative research including the secondary research method has been suitable to analyse the existing information on the perception of the customers of UK regarding the CSR activities of the retail firms including Morrisons and therefore this method has helped the researcher to explore the strategies, which can be taken by the retailers in UK to adopt or promote CSR activities for enhancing customer loyalty.

Research Significance

Although, there are certain academics studies based on the importance of CSR activities for the profitability and customer retention of the retail firms, the process of the retail companies in developing customer loyalty through CSR activities has been under-studied (Kolk and Lenfant, 2013). Therefore, this needs to be significantly determined as this can help retail firms in UK to create value for the customers and increase customer loyalty. This particular topic is thereby highly significant for the retailers to determine their roles in enhancing awareness among the customers regarding their CSR activities. This research has explored that implementation of CSR activities by the retail sectors are significant to change the perception of the customers regarding the particular products or services in a positive manner. Therefore, it can be mentioned that through this research, retailers of UK can understand the strategic role of Morrisons in communicating with the customers to promote its CSR activities.

Even though, research on CSR provides insights of the relationship between CSR and customer loyalty, there is only one study that has empiracally proposed certain strategies, which can be used by the retailers in promoting CSR activities among the customer for enhancing customer loyalty (Twiddy, 2017). In this sense, this study will address the major influence of CSR activities on driving the purchasing behaviour of the customers as certain empirical studies showed that it is the tendency of the customers in UK to analyse the reputation of a particular brand based on its CSR activities at the time of purchasing the products. Therefore, study based on Morrison’s CSR strategies and its impact on customer loyalty can motivate the retailers of UK to implement those strategies in future.

Moreover, this present research will be effective to bridge the limitations of the previous research studies in providing suitable insights of the impacts of CSR in the development of customer loyalty in retail sector of UK.

1.4  Dissertation Structure

Chapter 1- Introduction

In this chapter, an overview of the topic of the research has been provided. This chapter introduces the aim of the research, the research questions and the major objectives of research. On the other hand, the context of the research topic has been explained in this chapter that thereby also focuses on the significance of the research.

Chapter 2: Literature Review

This chapter has been based on certain essential themes, which interpret the significance of CSR activities for the retail companies in developing customer perception about the products and services. In this study, the correlation between the current research and the previous research studies have been majorly highlighted. Moreover, this chapter also focus on the limitations or gaps of the previous research studies, which the current research has aimed to address.

Chapter 3: Research Methodology

As per the need of the research study, this chapter has focused on the research approach and philosophy, which have been significant for this study. This chapter explained the appropriate research methodology, data collection methods, data analysis methods, which have been used in this research study for justifying the findings of the research. Moreover, this chapter also determined the limitations of this current research.

Chapter 4: Results and Analysis

This chapter has particularly focused on the research outcomes based on the analysis of the collected data through thematic analysis and survey. Moreover, as per the statistical analysis of the response of the participants in the survey the research hypothesis has been tested.

Chapter 5: Discussion

The findings of the research have been discussed in details in this chapter. Moreover, the outcomes of the research have also been compared with the literature review section.

Chapter 6: Conclusion, limitations and recommendations

This chapter is based on the interpretations of the research outcomes and its findings. Based on this interpretation, this current research has been compared with different contemporary studies based on the research topic. Moreover, this chapter has illustrated the accomplishment of the research objectives by further determining the implications and the limitations of the research. Based on the implications, recommendations have been provided in this chapter for future research studies

Chapter 2 : Literature Review

2.1 Chapter Overview

This chapter will illustrate the Corporate Social Responsibilities and its significance in enhancing the customer loyalty in the retail industry. The past and the current research studies will be focused in this chapter for determining various CSR activities, which are implemented by the retail sectors to influence the buying behavior of the customers. Furthermore, this chapter will also define customer loyalty and its significance in the growth of the retail firms. In addition, different barriers or challenges of adopting CSR in the retail firms will be discussed in the chapter, as this can be beneficial to determine the effects of these barriers on the customer loyalty. This chapter will thereby lead to an understanding of the shift on the customer loyalty based on the CSR activities of the retail companies. On the other hand, analysis of different perspectives and theortical framework on CSR and customer loyalty in this chapter have major contributions in highlighting the role of the retailers in promoting the CSR activities for changing the perception of the customers regarding the particular products or services of the firms that thereby can enhance customer loyalty. Finally, this chapter highlights some frameworks, which can confirm the needs for CSR activities in the retail firms for developing customer loyalty. Moreover, based on the discussed variables including CSR and customer loyalty, the hypotheses to be tested  in this research study will be presented along with the conceptual model in this chapter.

2.2 Corporate Social Responsibility

2.2.1 Notions of Corporate Social Responsibility

Corporate Social Responsibility can be defined as the concept that is adopted by the companies to undertake different policies and practices, which are highly intended to have an effective influence on the soceity (Cragg and Greenbaum, 2002). On the other hand, Dahlsrud (2008) defined CSR as the concept by which the companies integrate environmental and social concerns in their business operations and in their interactions with the stakeholder on “voluntary” basis. Rahman (2011) again defined that CSR is the continuing communitment by the firms to behave in ethical manner and contribute to economic development and also by improving the quality of life of the employees and the local community. Moreover, Cox (2008) defined CSR as the term in the corpoate sectors that is used by the firms to re-brand their core values and change the perception of the customers regarding their products or services. However, Heugens and Dentchev (2007) states CSR as the basic responsibility of the firms to mitigate different environment issues and integrate certain actions in their business operations for mitigating those issues. Chakraborty (2010) again said that CSR is a commitment of the firms for improving community-well being through different corporate resources and discretionary business practices.  Lapi?a et al. (2012) defined CSR as the philosophy by which companies have the tendency to create shared value for driving the innovation growth that has major impact on the global economy. Baumgartner (2014) considered CSR as the obligations of the companies to pursue different policies, which are desirable in terms of values of the society. However, Homer (2022) conceptualises CSR as the corporate status or cluster concept which overlaps with business ethics, corporate citizenship, corporate philanthropy, environmental responsibility and sustainability. There are certain studies, which demonstrated that companies owe a “duty” to the stakeholders and it is highly essential for the firms to increase the interest of the stakeholders in supporting various responsible business practices. Based on the study of Fandos-Roig et al. (2020), it has been determined that stakeholders including the consumers and the investors demand more information regarding the approaches of a firm in addressing the “risks” and “opportunuties” related to different environmental and social issues. However, Doane and Abasta-Vilaplana (2005) focused on the fact that the purpose and role of the companies are solely focused on the satisfaction and needs of the “shareholders” rather than “stakeholders”. This study thereby signifies the fact that implementation of CSR also leads to higher “shareholder” value in a company that can thereby improve the operating performance and also can strengthen the stakeholder interest to a great extent.  Based on this fact, it has been further argued that as an economic institution, companies have major responsibilities in implementing social services for creating a value for the society and also to enhance profitability for the further growth of the firm (Cragg and Greenbaum, 2002).

In the viewpoint of Tokoro (2007), the success of an organisation is not only dependent on the maximisation of the short-term profits by creating value for the stakeholders. It is thereby highly effective for the companies to provide an “ethical dimension” to the corporate activities by recognising their moral obligations towards the stakeholders.

In the past, many academics demonstrated that CSR of a company leads to high profit growth and based on the high profit margin of the firm, further activities on CSR are disclosed (Purnomo and Widianingsih, 2012). Some scholars revealed that it is also essential for a firm to operate effectively in the market by recognising its contribition towards environments and community (Stanisavljevi?, 2017). It can thereby be analysed that although the sustainability highly depends on the profitability of the company, it is also necessary for the firms to implement activities, which have social and environmental benefits.

On the other hand, Kercher (2007) claimed that the CSR activities are mostly aimed at the welfare of the external stakeholders including the customers and other local communities. This study indicates that CSR are the activities of business organisations for promoting and protecting social welfare beyound the “immediate” interests of the shareholders and the internal stakeholders like the employees. However, several studies belive that the concept of CSR is “multi-dimensional” which thereby related to diverse stakeholders of the firms including both the internal and external stakeholders (Adu-Gyamfi et al. 2021). CSR activities of a firm consider the cultural differences among the employees and therefore discovers various business opportunities in improving the skills of the staffs and in providing a favorble work environment to the employees. The two theories of CSR, Triple bottom line theory and Carrol’s Pyramid theory both have major relevance in determining the multifaceted behavior of a firm. According to Elkington (2013), CSR is multi-dimensional as the Triple bottom line theory states that a firm is not only focused on the environmental and social sustainability. This study also measured sustainability on the basis of economic sustainability of the firm. On the other hand, Carroll’s CSR pyramid also offers a conceptual framework for the firms, which are based on ethical, legal, economic, philanthropic and environmental responsibilities or obligations of the companies. Therefore, on this basis, CSR can also be considered as multidimensional as the companies are highly accountable to focus on these dimensions in order to create values for the stakeholders.

Stanisavljevi? (2017) revealed that apart from the employees, customers are also considered as the most valuable resources of a company, which have direct impact on the profitability of the company. Customers highly appreciate the participation of the companies in various humanitarian events, sponsership of local events, energey conservation campaigns and many others. Based on this concept, it can thereby be mentioned that in order to retain customers and create high customer loyalty, companies need to establish business strategies based on the CSR activities. This helps the firm to differtiate its products or services from other companies and change the perception of the customers regarding the socially responsible behavior of the companies (Fandos-Roig et al. 2020).

The next section will thereby explore the three bottom line theory of CSR and its importance on the growth of a firm.

2.2.2 Importance of Triple Bottom Line Theory

Triple Bottom line is the accounting framework of Corporate Social Responsibility of a firm that incorporates three major performamce dimensions, which are social, environmental and financial performances (Isaksson, 2018). The overall economic impact of CSR is measured based on three key areas, which are “people”, “planet” and “profit”: However, the past research scholars and academics have offered varioius interpretations regarding this framework. Several studies have showed the differences in the priorities between one particular value ground and the other two areas.

These studies indicated that economic growth and the sustainability of a firm is based on one particular dimension of CSR that is majorly focused on the profitability of the firm. On the other hand, Mark-Herbert et al. (2010) referred Triple Bottom Line as the “process of transition” from an “old” to a “new” paradigm and each dimension in this framework reflects “implicit” corporate ambitions.

Globalisation and various other societal pressures have majorly triggered the “cultural revolution” in the business organisations (Kercher, 2007). Therefore, it has been important for the companies to be more flexible in adopting new market strategies for organisational growth. As per the previous studies, corporate businesses have the tendency to solely focus on their financial performances and consider profit as the standard “bottom line” for the sustainable development of the firm. However, Norman and MacDonald (2004) suggests that due to the increase in the market competition, companies are more focused on offering products or services, which are different from their competitors.

On the other hand, the concerns of the customers for the various environmental and social challenges are increasing globally and therefore, the environmental and community involvement of the firms influence the customer’s perceptions towards the companies (Stanisavljevi?, 2017). This recent study therefore indicates that value of social responsibilities highly benefits the stakeholders including the consumers, employees and the local communities. The social and environmental initiatives of a company thereby create “corporate philanthropy” that is highly effective to receive various financial support from the investors and other external stakeholders.

Various other academic studies suggested that for the integration of Triple Bottom Line approch, it is essential for the companies to broaden the basis of “performance evaluation” from a short-term based financial focus to a long term environmental, social and economic focus (Isaksson, 2018; Jamali et al. 2006; Elkington, 2013). Therefore, the sustainability performance of the firm is measured based on these areas and these can thereby bridge the gaps of TBL integration. Jamali et al. (2006) also revealed that rather than shareholders, stakeholders have the major ability to mobilise the resources of the organisations by exerting more pressure on the firms for balancing the three significant dimensions of TBL.

In the next section, Carroll’s Pyramid of Corporate Social Responsibility will be discussed to determine the past and current studies regarding the effective of CSR in meeting economic, ethical, legal and philanthropic needs of business. It can be mentioned that the threats of unsustainability arises on account of inappropriate assessment of environmental impact, social impact and economic aspect of a firm through the understanding of TBL theory. Therefore, discussion on Carroll’s pyramid can be effective to treat social responsibilitis as add-in to the core business activities of the firm. This can be suitable to determine that CSR is not seperable from the core business activities of the firms.

2.2.2  Carroll’s Pyramid of Corporate Social Responsibility

Carroll’s Pyramid of Corporate Social Responsibility is one of the effective frameworks, which help an organisation to determine various types of responsibilities. Four most essential types of responsibilities of an organisation are economic, legal, ethical and philanthropic responsibilities. In the viewpoint of Meynhardt and Gomez (2019), economic responsibility can be considered as the foundation or one of the key aspects of the pyramid or the model as it is the “fundamental” requirement for a business to maintain its sustainability. It can thereby be mentioned that as per the econommic responsibility of the companies, it is essential for them to provide services or products, which are highly needed by the consumers and other external stakeholders in order to gain profitability. On the other hand Purnamasari (2015) claimed that alongside stakeholders of a firm, shareholders also have certain expectations and they also demand a “reasonable” return of their investments. Therefore, the study aims to discuss that it is the responsibility of the companies to gain profit by serving the needs of the customers and by providing high quality products or services. Aguilera et al. (2006) also reveals that though CSR is more inclined towards the needs and the welfare of the stakeholders, companies have certain responsibilities towards the shareholders as they provide “financial security” to the company. Economic responsibility in CSR therefore, helps the firm to “survive” and “support” the soceity in the long term.

However, Carroll (2016) figured out that, “Society has not only sanctioned businesses as economic entities, but it has also established the mininal ground rules under which businesses are expected to operate and function”. Therefore, it is implicated that organisations have the major responsibility to comply with the “codified ethics” or laws in order to operate fair business. Needle and Burns (2010) mentioned that it is essential for the companies to meet legal obligations in order to provide certain products or services. Based on this concept, several companies like The Body Shop, Amazon, Sephora and many others can be highlighted in this study which comply with the regulations based on anti animal-testing and therefore provides “cruelty-free” products to their customers. On the contrary, Scherer and Palazzo (2007) suggested that maintenance of legal responsibility is not highly sufficient for a firm to fulfill the “normative” expectations of the society. External stakeholders including the customers expect companies to operate their business in ethical manner. Utting (2000) also claimed that there are certain activities of a firm which are confided into legal aspects, however, the firm needs to embrace the activities based on ethical norms of the society. On the other hand, Kim (2017) highlightes apart from economic, legal and ethical responsibilities of a business, philanthropic responsibility highly embraces the discreyionary and voluntary activities of a firm. It can thereby be analysd that Corporate Philanthropy majorly fosters the engagement of the employees and helps the business to generate value for the customers. Therefore, this particular responsibility of a business is effective for enhancing positive reputation of the firm and helps it to develop long term relationship with the customers. It has been observed global companies are highly engaged in different forms of activities like providing monetary resources to the vulnerable communities, engaging employees in charitable groups and many others. However, Cetindamar (2007) believe that apart from the four major responsibilities of a firm, CSR also comprises of the environmental responsibilities. This also provide certain opportunities to the firm for cost saving, reducing business risk and improving reputation.

There are certain studies, which claim that though CSR activities are implemented by the companies to serve the needs of the community or different stakeholders, firms are solely focused on augmenting reputation for gaining profitability rather than focusing on “self-sacrificing” or any noble reason. Kim et al. (2020) reveals that among all the responsibilities of a business, economic and legal responsibilities are “required” and philanthropic and ethical responsibilities are “expected” or “desired” by the soceity. On this basis, it can be implicated that businesses are expected to contribute physical, financial, environmental and human resources to the soceity. However, the pyramid of CSR highly supports a capitalistic society and the companies are more focused on providing benefits to the shareholders by serving the needs of the stakeholders.

2.3 Customer loyalty

2.3.1 Significance of customer loyalty

Customer loyalty is the concept that determines the emotional relationship between the customers and a business firm (Gee et al. 2008). Purnamasari (2015) defined customer loyalty as the phenomenon by which, companies analyse the intention or the behavior of the customers to purchase the products of the firm on repeated manner. However, Dick and Basu (1994) claimed customer loyalty as the byproduct of the positive experience of the customers with the products and the services of the company. Kumar et al. (2004) also defined customer loyalty as one of the major competitive asset of an organisation that has major impact on the profitability of the business. According to Khan (2013), customer loyalty is an ongoing relationship between the company and the customer, manifesting the will of the customers in purchasing products from the company repeatedly. The long term relationship with the customers is a major challenge for the business firms and development of customer loyalty can thereby paves the way for the business to achieve sustainable competitive advantage. Therefore, the ultimate goal or aim of a firm is the enhanced satisfaction of the customers.

Berman (2006) defind customer loyalty as a measure of the likeliness of the customers to select a particular brand. However, this study determines that beyound customer satisfaction and customer loyalty, customer relationship management also plays a vital role in providing long term value to the customers. Certain past studies have implicated that CRM is an appropriate management strategy that helps the company to build effective relationship with its customers. According to the study of Mornay (2011), Customer relationship management influences and strengthens customer loyalty by enhancing communication with the customers and also by providing them with high quality products or services, which are based on their needs or demands.

Arori and Rugami (2020) defines customer loyalty as the devotion of the customer towards a particular product or service or a company. IŠORAIT? (2016) also states that customer loyalty is a “voluntary” user solution for a long time to establish relationships with the company. This study highlights that companies have the tendency of providing several customer loyalty schemes to the customers. Andreassen and Lindestad (1998) defines customer loyalty as the concept that is focused by the companies reveals to provide prducts and services to different customers at different price rate. It has been observed that the leading retail company, Amazon recently sold similar DVD movies to different customers to different prices in order to meet the needs of each customers and to enhance customer loyalty. Therefore, this can be considered as the “misuse” of customer loyalty as customers have been highly mistreated. Moreover, it can be implicated that the misuse of customer loyalty can devastate the marketing efforts of the company and therefore can lead to long-term failure.

In the next section, two major dimensions of customer loyalty will thereby be studied in order to conceptualise the different essential practices of the companies in developing customer loyalty.

2.3.2 Two dimensions of customer loyalty

Companies have the tendency to emphasis two major dimensions of customer loyalty, which are behavioral and attitudinal dimension. The behavior of the customers regarding the purchase of certain products or services highly depends on the approaches of the company towards selling its products and services. However, based on this particular approach, there are certain arguments raised by the past researchers. As per the viewpoint of Ordun (2015), customer loyalty is majorly defined based on the analysis of the buying pattern of the customers and there is high lack of interest regarding the motivation and commitment of the customers towards the company.

It has been argued that measurement of the behavioral dimension represents a “dynamic” buying pricess rather than depth understanding of the elements that enhances the buying decision of the customers (Hennig?Thurau, 2004). On this basis, it can be mentioned that, it is thereby essential for the companies to analyse and involve the attitude of the customers in order to determine the customer loyalty effectively. It can thereby be implictaed attitudinal dimension is more effective to determine the desire of the customers in continuing the relationship with a company.

Based on the two dimensions of customer loyalty, Shah et al. (2012) claims that the behavior of the customers reflects the current or past buying intentions of the customers and the attitude of the customers are highly effective for the survival of a firm as it indicates the future behavior of the customers. There are several past studies which have preferred to consider attitude as the “mental state” of the customers that reflects their affective and conginitive predispositions to maintain long term relationship with a particilar brand. It can be analysed that attitudinal dimension reveals the feelings or the thoughts of the customer regarding the products or services of a brand and, behavioral dimension reveals the actions or the buying decisions of the customers. Therefore, it can be indicated that companies have the responsibility to focus majorly on the attitudinal dimension as the intensity of customer attitudes highly represents a “key predictor” of their purchase behavior in future.

2.3.3 The Three R’s of customer loyalty

Rewards, Relevance and Recognition are the three major aspects, which help the companies to determine various elements of an effective and strong customer loyalty program. Creating and generating value for the customers are highly essential for the companies to enhnace customer satisfaction and customer loyalty, Therefore, Persaud and Azhar (2012) mentiones that offering tangible rewards involving discounts, coupons and other gifts to the customers improve the overall buying experience. On the other hand, it can be mentioned that the reward experience of the customers are personalised by relevance. Kim and Ahn, (2017) argues offering choices or rewards to the customers is not always effective for enhancing customer loyalty. It is thereby necessary for the firms to complement its brand by implementing different CSR activities including charity donations, human welfare and many others. Moreover, as suggested by Lewis (2004), it is also essential for the firm to enhance the “Relevance” of the customer loyalty program by determining the expectations of the customers from the brand through focus group interviews, surveys, customer service calls and many others. It can thereby be implicated that CSR has major positive impact on the customer loyalty and customer-centric brands are highly responsible to implement these activities for providing relevance to their customer loyalty programs.

However, Jalilvand et al. (2011) considers that Recognition is the most suitable elements in the three R’s of customer loyalty. The study concludes that it is essential for the brands to recognise the best customers. It can be analysed that firms aim to build a long-term relationship with the customers by recognising them specifically. Pitta et al. (2006) claims, recognition is highly necessaty in a customer loyalty program of a brand as it also fosters an emotional connection with the customers.  For instant, there are several global brands, which have the tendency to provide rewards and gifts to the customers based on their purchases in the past that is highly comparable in terms of “price”.

On contrast, Ballard (2008) proposed that “Not all loyal customers are profitable, and not all profitable customers are loyal”. This particular study thereby reveals that companies have the tendency to approach profitable customers for the customer loyalty program. However, this highly leads to the mismanagement of customer loyalty as profitable customers can be disloyal. Therefore, as per this research, it can be determined that providing valuable rewards and investing in short-term strategies for attracting the profitable customers  is ineffective for the increase of customer loyalty. As per the analysis of the past literatures, it can be further analysed that companies need to assess the commercial viability of offering a particular reward or implementing a strategy to a loyal customer base.

In the next part of this chapter, relationship between CSR and customer loyalty will be discussed based on several past and current research studies.

2.4 Relationship between CSR and customer loyalty

2.4.1 Impact of CSR activities on the customer loyalty in retail industry

Theorists have analysed different outcomes of CSR, which are favorable for the companies. There is a dearth of research study on the mechanism of driving the responses of the customers to CSR activity. However, there are several past researches, which have analysed different types of CSR activities highly influence the psychological purchasing behavior of the customers and thereby enhances customer loyalty. In the viewpoint of Servera-Francés and Piqueras-Tomás (2019), CSR is a set or proactiv managerial actions, which are implemented by the companies to identify and meet the needs of the customers. It can be implicated that the responsible behavior of the firms are majorly valued by the customers positively. Habel et al. (2016) shows that philanthropic responsibilities of a company increases the perceived value of the customer and therefore influences customer loyalty to a great extent. Trust and commitment are the two major variables, which measure the influence of CSR activities on the “strengthening” of the relationship between the end consumers and the company.

He and Lai (2014) implicates that there are certain obligations of the companies towards their stakeholders and companies need to seek a “structired form of dialogue” with the consumers by identifying their interests and subjective perception of the firm. On this basis, it can be mentioned that the perception of the customers regarding the companu responsibilities with regards to the environment, community development, sponsership and many other have significant impact on the loyalty. Salmones et al. (2005) shows that philanthropic dimension of Corporate Social Responsibility highly influences the customer loyalty in direct and indirect manner. This particular elememt or dimension of CSR influences the behavior of the customer through different set of variables including perceived value, commitment and trust with the customers. On the other hand, the study also reveals that legal and ethical dimensions of CSR influence loyalty indirectly through perceived value. These dimensions are effective to moderate the trust of the customers and thereby help in enhancing customer loyalty. On the other hand, it has been analysed that retail firms are highly obligated to enhance profit in order to achieve economic sustainability (Jung and Jin, 2016). Therefore, CSR highly focus on the customer experience to increase customer loyalty and thereby to meet the economic expectations of the company. Based on this, it can thereby be implicated that corporate image is one of the key elements of CSR that can enhance customer loyalty via perceived value. However, past researches have major limitations in determining the relationship between CSR and the attitudinal loyalty of the customers, though some of the researchers have showed that CSR has positive impact on customer satisfaction that further affects customer loyalty in retail sectors.

Next section of this chapter will thereby focus on the different bariers of adopting CSR by the retail firms, which affect the customer loyalty.

2.4.1 Barriers of adopting CSR activities in retail industry and the effects of customer loyalty

Strategic Corporate Social Responsibility involves the “voluntary” practice of environmental and social activities, which highly satisfies the stakeholders and generate profit for the firm. Lee et al. (2016) showed that lack of resources, lack of willingness to pay for CSR and lack of strategic vision of the firms are some of the major barriers in the implementation of CSR. On the other hand, Ballard (2008) limited the research analysis on barrier that is related to trust. Moreover, Yuen and Lim (2016) mentioned that the firm-specific barriers are homogeneous factors and can be controlled and managed by the firm through change management and “transformation” of the culture and leadership of the organisation. It can be implicated that retail companies have the tendency to face budget constraints in implementing CSR that thereby have adverse impact on the retention of customers. On the other hand, Holtström et al. (2019) apart from the firm-specific barriers, external forces like the political lanscape and the competitive environment can also be considered as the potential barriers for the retail firms in adapting CSR activities.

Vives (2006) argued that, though involvement of shareholders is highly effective for the mitigation of the resource barriers of the firm, lack of strategic vision in this industry is highly attributed to the lack of the commitment of the management. It has been analysed that CSR need to be formalised and introduced by the senior managerial staffs by incorporating it to the mission, vision and objectives of the company. It has been observed that, in order to enhnace profitability and improve customer loyalty on short-term basis, retail firms have the tendency to address CSR at the “operational level” without integrating the activities in the strategic objectives.

On this basis, it can be mentioned as CSR pays-off in the “long run, the orientation of the retailers towards the “short-term” goals and profits are highly ineffective and thereby affects the customer loyalty. On the other hand, Ganesan et al. (2009) claims that customers have the tendency to asess the value proposition of the retail companies based on their involvement in the CSR activities. However, Peloza (2006) argued that customers are not highly willing to pay premium for the CSR and low stakeholder’s pressure is highly responsible for the less involvement of the firms in CSR activities.

Based on the analysis of these studies, this research will further focus on the research questions in order to develop certain theories. This is thereby beneficial for the retailers to determine the strategies, which can be used to reduce the barriers of adopting CSR and suppport the companies to enhance customer loyalty effectively.

Chapter 3: Methodology

3.1 Chapter overview

The specifies of the different methods of research have been detailed within this chapter. This chapter thereby aims to show the limitations and strategies, which can potentially be faced at the time of the study. Moreover, this section also elucidated the research methodologies for determining the accuract of the selected research method. It can be mentioned that the research methodology is effective for processing a research study and it involves the analysis of the effective research philosophy, research approach and research design. Therefore, methodology of a research is considered as the process of “identifying”, “selecting”, “operating” and “analysisng data regarding a particular research topic. The research question of the current study focused on the impact of CSR of Morrisons in UK on the customer loyalty. The question is stated below:

What are the strategies of Morrisons in impacting the customer loyalty by implementing CSR?

Therefore, this chapter will be focusing on the appropriate research method that can provide a suitable solution for this particular research question.

3.2 Research Philosophy and Justification

Research philosophy that has been adopted by the researcher for this study is interpretivism. As per the research of Chen et al. (2011), it is the tendency of the research paradign to guide the research analysis and research methods. It can be considered as the perceived knowledge and reality by the researcher. Interpretivism highly argues that knowledge and reality both are subjective and they are historically and culturally situated based on the lived experiences (Alharahsheh and Pius, 2020). Therefore, as per this particular research philosophy, interpreting past researches and oberving customer behaviors can be effective to comprehend the particular phenomenon in this current research. On the other hand, it can be mentioned that interpretivisim is majorly associated with the “philosophical” position of idealism that rejects the “objectivist” view. In this current research, the researchr have focused on this research philosophy to reflect various aspects of the research problems by deriving the real facts, which are related to the particular research topic.

On the other hand, the researcher has rejected positivism research philosophy for this research as this study highly needs rational reasoning. However, this particular research phiolosophy is used in the studies, which examines certain facts by considering the similar reality for each participants. Application of interpretivism is thereby effective for the researcher for reformulating the prior knowledge based on the outcomes of the research.

3.3 Research Purpose

Exploratory research has been applied by the researcher in this research in order to investigate the research question (Khan et al. 2011). It has been observed the research question of this particular research has not been previously studied in depth and therefore exploratory research is effective for the researcher for creating scope for future research. Therefore, the major aim of the researcher is to formulate the research problems and develop hypothesis for future studies. Due to the less existence of literatures on this topic, this research purpose has been selected by the researcher to understand the different strategies, which are used by the retail firms in UK in impacting customer loyalty through their CSR activities. Moreover, it can be mentioned that exploratory research is conducted at the early stage of a research project and the research aims to test the feasibility of “conducting” a more extensive study on the particular topic.

On contrary, Descriptive research defines or describes a particular phenomenon and explanatory research explains the significance of a particular phenomenon. On the other hand, Mohajan (2018) mentioned that exploratory research aims to determine or explore the major aspects of an “under-researched” problem. This research thereby aims to explore the process of the retail companies in developing customer loyalty through CSR activities as this particular area has been “under-researched” in the past research studies. However, a descriptive research purpose is followed to define or descrive the topic at hand and therefore this particular design is not suitable for the current reseach as the research is not highly focused on systemactically describing a particular phenomenon or situation. Rather the focus is to explore the strategies, which can be used by the retailers in UK in promoting their CSR activities to enhance customer loyalty. It can be thereby analysed that explororaty research approach is taken by the researcher to explore the research questions, which have been previously researched widely. 

3.4 Research Method and Justification

Research method can be considered as an effective research tool that is relevant to collect, analyse and interpret the information based on the research topic. This study highly justified the use of certain research methods for producing the reseach methodology. The concept of CSR and its impact on the customer loyalty is evolving in the retail industry and can be considered as a new phenomenon. Based on this phenomenon, retail firms are shifting their focus from making “profits” to meeting “societal challenges”. Therefore, the current study aims to conduct and implement qualitative research by using the secondary data in order to explore the strategies of the retailers in implementing and promoting CSR for increasing the customer loyalty. This method can be thereby essential for findings the required implications. Previously, Pandey and Pandey (2021) also used Qualitative research method to enhance the awareness of different societal issues among the retailers in order to enable “deeper” understanding on this particular phenomenon of CSR and its impact on the retail business. However, this study has certain limitations to explore the strategies, which can be used by the retailers to promote the CSR activities for improving customer loyalty. Therefore, the qualitative research method has been used in the current research including the data exploratory analysis performed on different data collected from interview transcripts or other secondary sources. It can thereby be mentioned that research method has major significance in determining the influence of the research on the outcomes. Therefore, Secondary qualitative research method is the approach of the researcher that highly involves “relying” on the already existing data to find solutions to the research question or research problem.

3.5 Data collection method and justification

Data collection can be considered as highly crucial as it involves gathering effective information for enabling the researcher to analyse the research outcomes. According to Pandey and Pandey (2021), in qualitative research, the process of data collection involves semi-structured interview, observation, document study and focus group. In this current research, the researcher has used the “document study” proess by collecting secondary data from existing data sources. The researcher has chosen this particular data collection method in order to interpret the documents for recommending the strategies, which can be further used by Morrisons and other retailers for promoting CSR activities for increasing customer loyalty. Therefore, this method is effective in the qualitative research and has been applied in this research for analysing the “documented” past evidences, which figure the importance of CSR in the retail sectors of UK and this can be effective for the researcher to find solution to the research problem.

3.6 Data Analysis methods

Data analysis is the process of systematically “searching” and “analysisng” exisiting secondary data, interview transcripts for understanding certain phenomenon that is majorly related to the research topic. On the other hand, Thematic analysis is widely used in qualitative research for examining different themes within the collected data. Therefore, based on the secondary data, the research has assigned certain initial themes and then finalised the themes by analysing the data. This particular analysis process has been chosen by the researcher for interpreting the data by constructing several themes. This has been effective for the research to examine the themes on CSR and its relation with customer loyalty in UK retail sector and thereby the researcher has widely emphasised on the data interpretation to  find solution to the research questions.

3.7 Ethical considerations

It is one of the crucial elements in a reseaerch and the researchers are highly responsible for considering certain ethical concerns in qualitative research. Therefore, it is the responsibility of the researcher to maintain confidentiality, anonymity, informed consent while collecting primary data. However, as this current research is based on secondary qualitative research and involves the collection of certain existing secondary data, the “consent” of the study subjects need to be highly presumed by the researcher. Moreover, the researcher needs to protect the secondary data from external use for avoiding any damage of the data further.

Chapter 4: Results and Analysis

4.1 Chapter Overview

In the context of the current study, this particular section outlines The framework of Thematic Analysis. Certain past peer reviewd journals and articles have been used in this section. Most of these articles are based on the impact of CSR on the customer loyalty in retail sector of UK. There are few studies, which have focused on the barriers, which are faced by the retail companies in adopting CSR and the impacts of those barriers on the customer loyalty. Whereas two studies are inclined towards the “exploration” of the interrelationship between the implementation of CSR activities in the retail sector and the customer loyalty. On the othe hand, it can be mentioned that these secondary studies are effective to determine certain themes based on each key factor. The steps below have been provided to illustrate the data analysis framework:

Step 1: The research has profoundly organised the secondary data by getting familirised with them

Step 2: The researcher has generated certain initial themes based on the existing data

Step 3: The researcher has generated the final themes by accumulating and reviewing the initial themes.

Step 4: Therefore, the data has been analysed and reviewed based on the final themes.

Step 5: In this stage, the researcher has summarized the results or outcomes of the research by providing an insight of the findings from the themes.

4.2 Thematic Analysis

For thise section, overall data extraction based on 8 peer reviewed journals (secondary studies)  in this research have been mentioned.

Table 1: Data extraction

(Source: Self)

Review of the overall data

Development of themes and analysis

Table 2: Thematic Analysis

(Source: Self)

4.3 Summary of the findings

4.4 Conclusion

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