Christian Homburg, iVlarcel Stier!

, & Torsten Bornemann

Corporate Social Responsibility in

Business-to-Business iViarkets: How
Organizational Customers Account
for Supplier Corporate Sociai
Responsibiiity Engagement
Despite the high relevance of corporate social responsibility (CSR) in current business practice and the
considerable research on CSR outcomes in consumer markets, investigations of its influence on organizational
business relationships are scarce. Relying on instrumental stakeholder theory, the authors develop and empirically
test a framework of the influence of a supplier's CSR engagement on organizational customer outcomes. Findings
from an examination of 200 cross-industry supplier-customer dyads reveal positive effects of two facets of a
supplier's CSR efforts on customer loyalty through distinct mechanisms. Business practice GSR fosters customers'
trust, whereas philanthropic CSR strengthens customer-company identification. The authors distinguish a
supplier's actual GSR engagement and customers' perception of these GSR activities. In addition, they consider
central contingency factors reflecting uncertainty and dependence in business-to-business relationships that
determine the effectiveness of GSR.

Keywords: business-to-business marketing, corporate social responsibility, customer-company identification,

supplier-customer relationships, trust

T
he notion of corporate social responsibility (CSR) has the CSR concept from the broader notion of sustainability,
gained momentum and is currently of strategic impor- which refers to a general guiding principle for society that
tance for many companies. Among Fortune 500 com- particularly highlights intergenerational aspects (Schwartz
panies, as many as 90% have explicit CSR initiatives, more and Carroll 2008).
than half publish a separate annual CSR report, and most Research in marketing and related fields echoes the
have senior executives responsible for CSR (Luo and Bhat- managerial focus on CSR, as the literature overview in Table
tacharya 2009; McKinsey & Company 2009). We define 1 shows. This overview differentiates studies from supplier
CSR as a firm's voluntary consideration of stakeholder con- versus customer perspectives and distinguishes findings from
cerns both within and outside its business operations business-to-consumer (B2C) versus business-to-business
(Aguilera et al. 2007; Godfrey, Merrill, and Hansen 2009). (B2B) contexts. It is evident that several studies—all in a
We consider the stakeholder concept because it "personal- B2C context—have established a link between a firm's
izes social ... responsibilities by delineating the specific CSR activities and important consumer outcomes such as
groups or persons business should consider in its CSR ori- firm and product evaluations, satisfaction, and loyalty (e.g.,
entation" (Carroll 1991, p. 43). Moreover, our focus on Bhattacharya and Sen 2004; Brown and Dacin 1997; Licht-
firms' concrete stakeholder-directed activities differentiates enstein, Drumwright, and Braig 2004).
In practice, however, CSR also is an issue in B2B indus-
Christian Homburg is Professor of Business Administration and Marketing tries because these companies are often at the forefront of
and Chairman of the Department of Marketing, University of Mannheim, and engaging in CSR. For example, in 2011, the chemical com-
Professorial Fellow, Department of Management and Marketing, University pany BASF invested €48.7 million solely for CSR activi-
of Melbourne (e-mail: [email protected]). Marcel Stierl is ties outside its business operations in the form of philan-
Postdoctoral Researcher, Department of Marketing, University of Mannheim
(e-mail: [email protected]). Torsten Bornemann is Pro- thropic involvement (BASF 2012). An article discussing
fessor of Business Administration and Marketing, Institute of Business this issue in Marketing News proclaimed that "CSR pro-
Administration, University of Stuttgart (e-mail: torsten.bornemann@bwi. grams are vital for B2B companies" (Levy 2010, p. 1).
uni-stuttgart.de). The authors thank the three anonymous JM reviewers Despite acknowledgments of CSR's importance in busi-
for their constructive comments during the review process and the Mar- ness practice, research addressing CSR activities in a B2B
keting Science Institute for financial support of this research. Steven
Brown served as area editor for this article. environment is scarce. Existing research in the B2B realm
has typically focused on how firms implement CSR issues

© 2013, American Marketing Association Journal of Marketing

ISSN: 0022-2429 (print), 1547-7185 (electronic) 54 Vol. 77 (November 2013), 54-72
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Corporate Social Responsibility in Business-to-Business Markets / 55

within their business operations (see Table 1). In addition, whereas philanthropic CSR creates an expressive customer
research from a B2B customer perspective has examined benefit by increasing customer-company identification
antecedents of a firm's CSR orientation by studying "pur- (research gap 4). Fifth, we advance research by identifying
chasing social responsibility" (e.g.. Carter and Jennings contingency factors that reflect sources of uncertainty and
2004). However, researchers have neglected to study the dependence in B2B relationships, and we examine how
effects of a supplier's CSR efforts on organizational cus- these contingencies influence the effectiveness of CSR in
tomer outcomes. A meta-analysis by Vaaland, Heide, and generating favorable customer outcomes (research gap 5).
Gr0nhaug (2008, p. 947) confirms this observation, stating
that "whereas CSR is an issue in relation to all business
partners, the empirical studies focus on consumer marketing Conceptual Framework and
and consumer responses, thereby excluding B2B marketing." Hypothesis Development
Another consideration is that although organizational
buying is a firm activity, individuals ultimately make the Instrumental Stakeholder Theory
decisions. Therefore, as in consumer buying decisions, per- Stakeholder theory regards the firm as a nexus of stakehold-
sonal values and intangible attributes may be influential in ers, commonly defined as groups or individuals who can
business purchasing decisions (Drumwright 1994). Although affect or are affected by the achievement of the firm's goals
findings from B2C research may thus be transferable to (Freeman 1984). Depending on the ground for examining a
some degree to the B2B sphere, considerable differences firm's stakeholders, we can differentiate three approaches
separate organizational buyers and consumers, mainly due (Jones 1995):
to three central characteristics of organizational buying.
•The descriptive approach proposes an examination of firm-
First, because B2B buyers often must justify their decisions stakeholder relationships to provide an understanding of how
to other organizational members, those involved try to thefirmdeals with different stakeholders.
rationalize their actions (Bunn 1993). Second, because a •The normative approach proposes an examination of firm-
firm's own business operations depend on the supplier's stakeholder relationships to discem stakeholders' interests
reliability, severe organizational consequences can result and offer guidance on how to account for them using moral
from choosing the "wrong" business partner, making uncer- or philosophical principles.
tainty reduction particularly important (Mitchell 1995). •The instrumental approach also proposes an examination of
Third, because organizational customers put greater empha- firm-stakeholder relationships to discem stakeholders' inter-
sis on establishing long-term supplier relationships, reliabil- ests. However, in contrast to the normative approach, the
ity of the supplier is a key factor (Mitchell 1995). Although instrumental approach involves the organizational perfor-
these characteristics create an environment in which CSR mance consequences that stem from accounting for these
interests.
may function differently than in a B2C context, marketing
academia offers little guidance regarding the effectiveness The distinctive aspect of the instrumental approach to
and design of CSR activities in B2B markets. stakeholder theory is that it explicitly suggests linking
Against this background, our study makes five key con- stakeholder-directed activities (means) to corporate perfor-
tributions to marketing research. First, in contrast to previ- mance outcomes (ends) (Donaldson and Preston 1995;
ous empirical studies that have examined consumer reac- Freeman 1999). To enhance performance, the instrumental
tions, this investigation focuses on customer outcomes in approach holds that stakeholder-directed activities must
the B2B context. We demonstrate that CSR engagement create benefits that stakeholders value (Bhattacharya,
also has positive effects in that area, thus providing B2B Korschun, and Sen 2009; Jones 1995).
companies with a justification for an active commitment to The objective of the current research is to examine the
CSR-related issues (research gap 1 in Table 1). Second, extent to which a supplier's stakeholder-directed activities
whereas previous studies have focused on either the sup- in the form of CSR engagement create customer benefits
plier or the customer side, this study integrates the two per- that ultimately enhance customer loyalty. Specifically, we
spectives and examines suppliers' CSR activities, cus- establish trust and customer-company identification as cen-
tomers' perceptions of these activities, and psychological tral customer benefits arising from a supplier's CSR activi-
and behavioral outcomes such as customer loyalty (research ties. By considering the aforementioned application areas,
gap 2). our study thus follows an instrumental perspective. An in-
Third, we conceptually and empirically distinguish two depth analysis of the mechanisms underlying CSR effects
facets of a firm's CSR efforts: business practice CSR from an instrumental perspective is warranted, because a
engagement and philanthropic CSR engagement (research recent meta-analysis by Aguinis and Glavas (2012) con-
gap 3). Fourth, from this differentiation, we identify distinct cludes that firms primarily engage in CSR-related activities
benefit mechanisms for each of the CSR facets, thereby for reasons such as enhanced market performance. In the
addressing an important research gap: "there remains a following subsection, we derive each variable of our frame-
dearth of research looking at the psychological mechanisms work in detail (see Figure 1).
through which stakeholders interpret and react to a com-
pany's CSR activities" (Bhattacharya, Korschun, and Sen CSR Engagement and CSR Reputation
2009, p. 258). Drawing on instrumental stakeholder and Although scholars argue that CSR may include several
social exchange theory, we show that business practice CSR facets (Bamett 2007; Maignan and Ferrell 2004), marketing
creates an instrumental customer benefit by increasing trust. research has almost exclusively relied on one global

56 / Journal of Marketing, November 2013

 FIGURE 1
Conceptual Framework

Supplier Firm Data Customer Firm Data

Business practice Business practice

Trust
CSR engagement CSR reputation

Customer loyalty

Philanthropic CSR Philanthropic Customer-company

engagement CSR reputation identification

H3-H,

• CSR awareness (+) Market-related uncertainty (+) Control Variables

Competition intensity (-) Competition intensity (+) Product quality
• Extrinsic CSR Product importance (+) Value for money
attribution (-) Relationship extendedness (-) CSR orientation (+) Brand strength
CSR orientation (+) Length of business
relationship
Personal relationship with
sales representative

Notes: The solid lines indicate the main effects; dotted lines indicate paths that we included in the empirical model to control for further effects
that were not the focus of the study.

catchall construct (e.g., Lichtenstein, Drumwright, and also Aguilera et al. 2007; Godfrey, Merrill, and Hansen
Braig 2004; Wagner, Lutz, and Weitz 2009). Extending this 2009; Peloza and Shang 2011).
view, we differentiate two facets of CSR on the basis of Accordingly, we distinguish two facets of CSR. We
stakeholder theory. refer to a firm's CSR engagement targeted at primary stake-
A key tenet of stakeholder theory is the distinction holders as "business practice CSR engagement." This facet
between primary and secondary stakeholders (Freeman involves CSR activities within a firm's core business opera-
1984). Primary stakeholders are those who engage in mar- tions targeted at stakeholders with whom market exchange
ket exchange with the firm and "without whose continuing exists (i.e., employees and customers) and corresponds to
participation the corporation cannot survive" (Clarkson Carroll's (1991) ethical obligations. In contrast, "philan-
1995, p. 106). Among the primary stakeholders, customers thropic CSR engagement" refers to CSR activities targeted
(representing the selling market) and employees (represent- at philanthropic interaction with the community and non-
ing the labor market) are considered most critical, because profit organizations, which are secondary stakeholders out-
"stakeholder research indicates [that] the treatment of cus- side a firm's core business operations (Carroll 1991).
tomers and employees has the most influence on firm per- In addition to making this substantial distinction, we
formance" (Maignan, Ferrell, and Ferrell 2005, p. 958; see also differentiate the supplier and the customer perspectives
also Berman et al. 1999). In contrast, secondary stakehold- and examine how the supplier's CSR engagement is actu-
ers are "those who influence or affect, or are influenced or ally perceived by its customers (Sen, Bhattacharya, and
affected by, the corporation, but are not engaged in transac- Korschun 2006). Positive customer perceptions of CSR
tions with the corporation" (Clarkson 1995, p. 107). Exam- activities are essential in creating customer benefits (Peloza
ples of secondary stakeholders are the community and non- and Shang 2011). We refer to the customer perception of a
profit institutions (Lankoski 2009). firm's CSR engagement as "CSR reputation" (Wagner,
Similarly, conceptual research in the CSR domain Lutz, and Weitz 2009) and conceptualize it consistently
argues that "the essence of CSR and what it really refers to with CSR engagement. Thus, business practice CSR reputa-
are the ethical and philanthropic obligations of the corpora- tion refers to a customer's perception of a firm's CSR
tion" (Carroll and Shabana 2010, p. 90). Whereas the ethi- engagement regarding primary stakeholders with whom
cal aspect refers to the consideration of societal and ethical market exchange exists, whereas philanthropic CSR reputa-
norms in everyday business, the philanthropic aspect tion refers to a customer's perception of a firm's CSR
includes activities promoting human welfare and goodwill engagement regarding secondary stakeholders. We expect
outside the firm's business operations (Carroll 1991; see that strong CSR engagement in either domain should lead

Corporate Social Responsibility in Business-to-Business Markets / 57

to a positive CSR reputation with regard to the correspond- Although they have not developed these paths empiri-
ing facet as perceived by the customer. cally, researchers discussing effects of a company's CSR-
Furthermore, we examine under which conditions cus- related activities with a focus on employees have also sug-
tomer perceptions most closely correspond to the firm's gested similar mechanisms. For example. Turban and
actual engagement. As contingency factors, we incorporate Greening (1997) argue that CSR-related activities may sig-
CSR awareness and extrinsic CSR attribution. Whereas nal good working conditions and promote an enhanced self-
CSR awareness refers to customers' awareness of a sup- concept. In a similar vein. Aguilera et al. (2007) differenti-
plier's cumulative CSR engagement (Sen, Bhattacharya, ate an instrumental mechanism that enables stakeholders to
and Korschun 2006), CSR attribution describes "attribu- "more accurately foretell an organization's actions" (p.
tions consumers make about the motives underlying a com- 841), a relational mechanism that addresses stakeholders'
pany's CSR actions" (Du, Bhattacharya, and Sen 2007, p. "psychological need for belongingness" (p. 842), and a
226). We specifically include extrinsic CSR attribution morality-based mechanism in which "the concem is shifted
because it refers to customers' perception that only self- from what serves one's economic self-interest or group
interested motives drive a firm's CSR engagement. We standing to what one views as ethically appropriate" (p.
expect CSR awareness to positively moderate the effect of 842). Whereas the first two mechanisms are akin to the
CSR engagement on CSR reputation, whereas we assume trust- and identification-based paths that we develop from a
extrinsic CSR attribution to negatively moderate this effect managerial viewpoint, the latter is related to the normative
(see Figure 1). approach, which is not the focus of our study.
In the following subsections, we delineate how these
Customer Benefits from Suppliers' CSR: mechanisms serve to maintain and facilitate exchanges
Combining Stakeholder and Exchange Theory between suppliers and organizational customers. In particu-
Instrumental stakeholder theory holds that a company's lar, we deduce how business practice CSR creates an instru-
stakeholder activities lead to improved customer-company mental customer benefit by increasing trust in the supplier
relationships only when these activities result in customer and how philanthropic CSR creates an expressive customer
benefits (Bhattacharya, Korschun, and Sen 2009). Applica- benefit by increasing customer-company identification.
tions of this theory, however, "usually stop short of explor- Trust as an instrumental benefit. Exchange relationships
ing specific links between cause (i.e., stakeholder manage- often exhibit information asymmetry, or a perceived "lack
ment) and effect (i.e., corporate performance) in detail" of information about the motivations of others and the qual-
(Donaldson and Preston 1995, p. 71). Aguinis and Glavas's ity of what is exchanged" (Kollock 1994, p. 317). In busi-
(2012) recent meta-analytic review echoes this void and ness relationships with information asymmetry on the cus-
notes that organizational theories such as stakeholder theory tomer side, uncertainty reduction is critical because
provide little insight into the processes underlying CSR customers' own business depends on the supplier's reliabil-
effects. ity and integrity (Mitchell 1995). In this regard, instrumen-
The stakeholder marketing concept introduced by Huit et tal stakeholder theory posits that company-stakeholder
al. (2011) integrates stakeholder theory (which focuses on relationships are governed by sets of explicit and implicit
the addressees of a firm's actions) with key notions of social contracts (McGuire, Sundgren, and Schneeweiss 1988).
exchange theory (which focuses on the processes under- Reviewing this literature. Wood and Jones (1995, p. 242)
lying exchange relationships) to explain how marketing note that it becomes clear that "through all this talk of con-
activities typically lead to beneficial company-stakeholder tracts implicit and explicit,... the key variable is the degree
relationships. Applied to our context, their tenet that "stake- of trust in the stakeholder relationship."
holder exchange must be facilitated and maintained to cre- In line with research on organizational relationships in
ate long run value relationships" (Huit et al. 2011, p. 59) general (Caldwell and Clapham 2003; Greenwood and Van
calls for an identification of processes by which CSR facili- Buren 2010) and business-to-business relationships in par-
tates enduring customer-company exchange. ticular (Doney and Cannon 1997; Kumar, Scheer, and
Social exchange theory particularly emphasizes trust as Steenkamp 1995), we define trust as comprising the cus-
"the critical social exchange mediator" (Cropanzano and tomer's expectancy that the supplier organization is compe-
Mitchell 2005, p. 886) because it reduces problems that tent and can be relied on (referred to as reliability or credi-
may arise from power or information asymmetries between bility) and the belief that the supplier organization has
two parties (Cook, Cheshire, and Gerbasi 2006). Extending beneficial intentions and motives (referred to as integrity or
this classical social exchange perspective, Lawler, Thye, benevolence). Drawing on social exchange theory, we posit
and Yoon (2000) argue that enduring relationships can be that trust constitutes an instrumental benefit for customers
the result of both a trust-based, "instrumental" path that by reducing exchange uncertainty and lowering the transac-
facilitates exchange by reducing uncertainty and an tion costs associated with reaching, adapting, and enforcing
"expressive" path that arises if one actor becomes an object mutually satisfying agreements (Kollock 1994).
of attachment for the other actor (see also Van Knippenberg Central to the instrumental value of trust within
and Sleebos 2006). Such identification with the exchange exchange relationships is the assumption "that it is easier to
partner results from a need to maintain positive self-images trust when prediction is possible and when a trustor has the
based on shared systems of meaning and ethics (Flynn ability to anticipate the behavior of a trustee" (Huemer
2005). 2004, p. 253). To enhance predictability, information eco-

58 / Journal of Marketing, November 2013

nomics proposes that the trustee (in this case, the supplier Although customer-company identification can arise
firm) can implement a signal to convey unobservable orga- from several causes, CSR research has established a favor-
nizational attributes indicating its trustworthiness to the able CSR reputation as one of the main identification dri-
trustor (the customer) (Connelly et al. 2011). We argue that vers (Lichtenstein, Drumwright, and Braig 2004). This
a strong CSR reputation can serve as such a signal for posi- influence occurs because "it is a company's actions in the
tive company characteristics. In particular, researchers pro- CSR domain ... that truly reveal its values, soul, or charac-
pose that "support of CSR creates a reputation that a firm is ter, comprising the company's identity" (Du, Bhattacharya,
reliable and honest" (McWiUiams and Siegel 2001, p. 120) and Sen 2007, p. 225). If the individual buying agent per-
and indicates "benevolence and integrity" (Bhattacharya, ceives the values reflected by a supplier's CSR activities to
Korschun, and Sen 2009, p. 264), all of which are vital ele- be congruent with his or her own values, identification with
ments of trust. the company increases (Sen, Bhattacharya, and Korschun
Acknowledging the two facets of CSR, we postulate 2006).
that from a customer's perspective, business practice CSR We argue that philanthropic CSR reputation in particu-
reputation in particular should serve as an indicator for a lar can trigger customer-company identification because
supplier's trustworthiness. According to signaling theory, this CSR facet addresses community stakeholders. In con-
high "signal fit"—that is, the extent to which a signal corre- trast to stakeholders with whom market exchange exists,
sponds with the unobservable signaler characteristic—is community stakeholders mainly have claims that are nor-
critical to the effectiveness of an informational cue (Con- matively legitimate, but they lack the urgency and power to
nelly et al. 2011). This tenet aligns with trust research, assert those claims. Compared with business practice CSR,
which argues that a person makes trust generalizations by philanthropic CSR activities are "more likely to be viewed as
observing the partner's behavior in comparable contexts voluntary acts of social beneficence ... and thus provide evi-
(Blois 1999). Because customers primarily search for sig- dence of an 'other-regarding' orientation by the firm's man-
nals of a supplier's reliability and integrity toward business agers" (Godfrey, Merrill, and Hansen 2009, p. 429). There-
partners, the supplier's business practice CSR reputation fore, CSR targeting community stakeholders should provide
should contain a high signal fit and, thus, a high signaling an expressive benefit by increasing customer-company
value for trustworthiness toward customers. identification.

H,: Suppliers' business practice CSR reputation is positively H2: Suppliers' philanthropic CSR reputation is positively
related to customers' trust. related to customer-company identification.

Customer-company identification as an expressive Customer Loyalty as the Outcome of Trust and

benefit. In addition to facilitating exchange through trust Customer-Company identification
building, CSR may also foster identification. Identification Instrumental stakeholder theory holds that the primary goal
with an organization arises from a comparison of personal of CSR is the creation of long-term, mutually beneficial
values with organizational values and results in a state of relationships with stakeholders (Bhattacharya, Korschun,
self-categorization (Hogg and Terry 2000), thus providing and Sen 2009). Therefore, this study examines customer
an expressive benefit by fulfilling people's self-definitional loyalty as the key outcome variable. In line with Zeithaml,
needs (Lawler, Thye, and Yoon 2000). Stakeholder research Berry, and Parasuraman (1996), we define customer loyalty
has addressed concepts such as belongingness mainly in the as encompassing the expressed preference for a company
context of organization-employee relationships (e.g.. Tur- (positive word of mouth), the intention to continue to pur-
ban and Greening 1997), but stakeholder theorists also call chase from it (repurchase intention), and the intention to
for "a greater understanding of the circumstances under increase business with it (cross-buying intention).
which extemal stakeholders will conceive of themselves as In marketing research, positive effects of trust on cus-
organizational members" (Scott and Lane 2000, p. 56). tomer loyalty grounded on uncertainty reduction are well
Our research examines the concept of customer-company established (Doney and Cannon 1997). Similarly, social
identification, which we define as a customer's psychological exchange theorists argue that it is natural "to restrict one's
attachment to a supplier company based on an overlap of transactions to those who have shown themselves to be trust-
the customer's self-concept with his or her perception of the worthy" (Kollock 1994, p. 318). Likewise, theoretical and
attributes defining the supplier company (Bhattacharya and empirical support exists for a positive effect of customer-
Sen 2003). Researchers have studied the self-definitional company identification on customer loyalty, because "being
role of customer-company identification primarily in B2C loyal validates and reinforces the feeling of belongingness
contexts. For example, Homburg, Wieseke, and Hoyer to the company" (Homburg, Wieseke, and Hoyer 2009, p.
(2009) show that in addition to providing customer satisfac- 43; see also Ahearne, Bhattacharya, and Gruen 2005).
tion, customer-company identification serves as an addi- Because these links are well established, we do not develop
tional mediator within the service-profit chain. Theories of hypotheses for them.
managerial and organizational cognition and bounded ratio- In addition, although it is not the focus of our study, we
nality, however, have posited that personal values may also consider the effect of trust on customer-company identifi-
influence people in organizational buying decisions cation. Research based on social exchange theory views
(Drumwright 1994). trust in an organization as a key precursor of organizational

Corporate Social Responsibility in Business-to-Business Markets / 59

identification (Lavelle, Rupp, and Brockner 2007). Empiri- sections, we derive hypotheses on the moderating effects of
cal evidence from diverse contexts supports this rationale these context factors.
(e.g.. De Cremer, Van Dijke, and Bos 2006), and Keh and Effect of market-related uncertainty on the business
Xie (2009) provide empirical support for this link for cus- practice CSR reputation-trust link. Under conditions of
tomers in a B2B context. high market-related uncertainty, buyers must cope with a
Moderating Effects rapidly changing market environment (Aldrich 1979). To
reduce the associated risk perceptions, decision makers
We expect that the strength of the effects of the two facets look for signals that indicate a trustworthy business partner
of CSR on trust and customer-company identification is (Connelly, Ketchen, and Slater 2010). In support of this
context dependent. Social exchange theory discusses depen- notion, research examining the concern for reputation in
dence and uncertainty as central context factors affecting social exchanges has argued that this concern depends on
exchange relationships (Cook, Cheshire, and Gerbasi 2006; the degree of uncertainty, "with situations characterized by
Oliver 1990). Whereas dependence arises from one party's a high degree of uncertainty ... leading to a greater concern
potential to exercise power or control over another organi- for reputation" (Kollock 1994, p. 320). Because CSR can be
zation or its resources, uncertainty develops from "a lack of regarded as an "informational signal upon which stakehold-
perfect knowledge about environmental fluctuations, avail- ers base their assessments ... under conditions of incomplete
ability of exchange partners, and available rates of information" (Klein and Dawar 2004; Orlitzky, Schmidt,
exchange in an interorganizational field" (Oliver 1990, p. and Rynes 2003, p. 407), business practice CSR reputation
246). Cannon and Perreault (1999, p. 444) substantiate is likely to be more important as a signal for trust when
these key contingencies in the context of industrial market-related uncertainty is high.
buyer-seller relationships, arguing that "uncertainty or
dependence may be rooted in external characteristics of the H3: Market-related uncertainty positively moderates the rela-
tionship between suppliers' business practice CSR reputa-
supply market or in internal, situational factors."
tion and customers' trust.
Market-related uncertainty refers to the degree of sup-
ply market dynamism and incorporates aspects such as Effect of competitive intensity on the links between CSR
rapidly evolving technologies and frequently changing reputation and (a) trust and (b) customer—company identifi-
prices, whereas competitive intensity refers to the degree to cation. A central tenet of social exchange theory is that an
which customers have alternative sources of supply and are increase in an actor's alternatives decreases dependence on
thus less dependent on a particular supplier (Cannon and others (Cook, Cheshire, and Gerbasi 2006). In highly
Perreault 1999). In addition to such market-related aspects, competitive markets, customers are less dependent on a par-
the product itself may also constitute a source of uncer- ticular supplier because they can choose from alternative
tainty in B2B markets: if critical parts do not meet a cus- sources to meet their needs (Cannon and Perreault 1999).
tomer's required quality standard, the customer's own busi- Under such conditions, the role of trust as a mechanism that
ness operations are negatively affected. Thus, product mitigates opportunism may be less relevant (Doney and
Cannon 1997). Consequently, the relationship between
importance refers to a product's strategic importance for the
business practice CSR and customers' trust may be weaker
customer's business (Cannon and Perreault 1999).
when competitive intensity on the supplier side is high.
Another key aspect of social exchange theory that deter-
mines uncertainty and dependence is the temporal organiza- H4a: Competitive intensity negatively moderates the relation-
tion of exchanges. In particular, repeated exchanges ship between suppliers' business practice CSR reputation
between actors decrease the uncertainty associated with a and customers' trust.
single transaction (Kollock 1994). In a buyer-seller context, In addition to reducing customer dependence on a par-
this aspect is referred to as relationship extendedness, ticular supplier, high levels of competitive intensity often
which is the degree to which the relationship is a relational lead to perceived equalization regarding the quality of prod-
(as opposed to discrete) exchange relationship that is ucts and services of different suppliers. This equalization
expected to continue into the future (Heide and Miner then complicates differentiation based on aspects related to
1992). In addition to examining these exchange-related the core offering. In such an environment, "CSR may be a
moderators, we study the importance the customer com- popular means of achieving differentiation" (McWilliams
pany generally attaches to CSR-related issues. Business-to- and Siegel 2001, p. 119). As we have argued, trust, as a
consumer research has identified consumers' personal sup- benefit arising from business practice CSR engagement,
port of CSR as an important moderator of CSR effects (Sen may be less suited to creating a differentiation benefit under
and Bhattacharya 2001). However, scholars have also conditions of high competitive intensity. Instead, "it is pos-
begun to acknowledge the significance of CSR-related sible to differentiate a product based on some ethical quality
issues in the context of organizational buying (Carter and or aspect, if the consumer ... values the particular strategy
Jennings 2004; see Table 1). We continue this research and of CSR that a firm intends to follow" (Van de Ven and
include the customer company's CSR orientation—referring Jeurissen 2005, p. 313). In support of this notion, investiga-
to a company's values, standards of ethical behavior, and tors argue that firms may use philanthropic engagement as a
commitment to CSR—as a customer-related contingency means for differentiation in highly competitive markets
(Banerjee, Iyer, and Kashyap 2003). In the following sub- (Zhang et al. 2010). Because organizational purchasing may

60 / Journai of Marketing, November 2013

also be influenced by personal values (Dmmwright 1994), purchasing department, CSR issues are more likely to play
firms may achieve differentiation by supporting social an important role, either formally or informally, through
causes, thus increasing customer-company identification. people acting according to the organization's values (Carter
and Jennings 2004). Therefore, we expect that, due to
H41,: Competitive intensity positively moderates the relation-
ship between suppliers' philanthropic CSR reputation increased sensibility toward a supplier's CSR reputation, a
and customer-company identification. customer company's CSR orientation should positively
affect both the instrumental and the expressive mechanism.
Effect of product importance on the business practice
CSR reputation-trust link. When a product is strategically H7: The strength of customer companies' CSR orientation posi-
important for a customer, the adverse consequences of buy- tively moderates the relationship between suppliers' (a)
business practice CSR reputation and customers' trust and
ing substandard products can be substantial and may even (b) philanthropic CSR reputation and customer-company
lead to production downtimes. The magnitude of adverse identification.
consequences of buying an inappropriate product and the
uncertainty of whether a product or service will meet cer-
tain performance requirements both contribute to cus- Methodology
tomers' risk perceptions (Bettman 1973). Thus, we expect
that perceived risk is greater for products that are essential Data Collection and Sample
for a firm's own business operations (Mitchell 1995). To The study's unit of analysis is a supplier-customer relation-
reduce this uncertainty, customers search more intensely for ship. We collected dyadic data on such relationships by sur-
cues signaling suppliers' trustworthiness (Bunn 1993). veying purchasing managers from the customer firm and
H5: Product importance positively moderates the relationship the respective marketing/sales contact from the supplier
between suppliers' business practice CSR reputation and firm. To gather the necessary data, we collaborated with a
customers' trust. market research institute that obtained contact information
Effect of relationship extendedness on the business for purchasing managers working in a range of B2B indus-
practice CSR reputation-trust link. Both the firm's repeated tries (n = 2,100 companies). We sent questionnaires to these
interaction with an exchange partner as well as the reputa- purchasing managers and asked them to consider a business
tion that results from its behavior in related contexts consti- relationship in which a particular product is purchased and
tute the primary paths leading to trust (Blois 1999; Kollock then to complete the questionnaire with regard to this spe-
1994). Hj posits that a supplier's business practice CSR cific supplier. We received usable responses from 372 com-
reputation should increase customers' trust. However, the panies that also provided contact information of the supplier
reputational path leading to trust may be less important if representative (a response rate of 17.70%). Subsequently, we
the exchange relationship between supplier and customer contacted these supplier key informants and asked them to fiU
consists of repeated transactions that are expected to con- out a questionnaire regarding general firm characteristics
tinue into the future (Heide and Miner 1992). This result is and their firm's CSR activities, resulting in 200 usable sup-
expected because "when actors repeatedly exchange plier responses (a response rate of 53.80%). The following
resources, they should learn more about one another, find analyses are based on these 200 matched supplier-customer
each other more predictable, and infer that they have similar dyads. Table 2 presents the composition of the sample.
orientations to the exchange task" (Lawler, Thye, and Yoon
Measure Development
2000, p. 621). Consequently, uncertainty decreases and cus-
tomers engaged in extended relationships do not need to To develop appropriate measures for our study, we applied
investigate the supplier's conduct in related contexts. standard psychometric scale development procedures. All
Therefore, signaling trust by building a positive business measures are based on existing scales, a review of the lit-
practice CSR reputation should be less important. erature, and interviews with practitioners. We used a reflec-
tive measurement approach and seven-point rating scales
H5: The extendedness of the business relationship negatively for all multi-item constructs (Jarvis, MacKenzie, and Pod-
moderates the relationship between suppliers' business
sakoff 2003). In line with prior research (Banerjee, Iyer, and
practice CSR reputation and customers' trust.
Kashyap 2003; Maignan, Ferrell, and Huit 1999), we
Effect of a customer company's CSR orientation on the obtained suppliers' CSR engagement from the respective
links between CSR reputation and (a) trust and (b) customer- supplier key informant. We measured business practice
company identification. Companies with a strong CSR ori- CSR engagement with five items covering the key stake-
entation emphasize CSR issues within their organizational holders with whom market exchange exists (i.e., customers
culture, possibly as a result of their top managers' commit- and employees), including an item that captures a com-
ment to such issues or because the issues have high rele- pany's overall conduct within its business operations
vance in their customers' industry (Drumwright 1994). (Lankoski 2009; Wagner, Lutz, and Weitz 2009). We mea-
Over time, this orientation becomes "fused and internalized sured philanthropic CSR engagement using four items cov-
within the corporate values and beliefs" (Banerjee, Iyer, and ering activities toward the community and nonprofit institu-
Kashyap 2003, p. 111). As a consequence, we expect a tions (Lichtenstein, Drumwright, and Braig 2004). We
greater awareness of and sensibility toward CSR issues in applied a reflective measurement approach to these CSR
companies with a strong CSR orientation. In such a firm's constructs because we regard the indicators for each CSR

Corporate Social Responsibility in Business-to-Business Markets / 61

 TABLE 2
Sample Connposition
Customer Firm % Supplier Firm %
Industry industry
Machine building 18 Machine building 17
Retailing 16 Printing and paper 11
Logistics 8 Chemicals 10
Chemicals 7 Electronics 9
Automotive industry 7 Automotive suppliers 9
Building and construction 7 Building and construction 7
Pharmaceuticals 6 Food and stimulants 6
Utilities 4 Media 6
Communication, software 4 Logistics 5
Media 4 Communication, software 5
Financial Services 3 Utilities 5
Other (food, textiles, etc.) 16 Financial services 5
Other 5
Position of Respondents Position of Respondents
Employee, operative purchasing 6 General management responsibility 30
Employee, strategic purchasing 15 Head of marketing 28
Head of business unit 23 Head of sales 36
Head of purchasing 22 Other 6
General management responsibility 25
Other 9
Number of Employees at the Firm Number of Empioyees at the Firm
<50 24 <50 5
50-99 31 50-99 9
100-499 25 100-499 54
500-999 9 500-999 12
1,000-5,000 6 1,000-5,000 13
>5,000 5 >5,000 7
Annual Revenue of the Firm Annuai Revenue of the Firm
<$10 million 32 <$10 million 9
$10 million-$24 million 22 $10 million-$24 million 17
$25 million-$49 million 15 $25 million-$49 million 23
$50 million-$99 million 7 $50 million-$99 million 22
$100 million-$499 million 12 $100 million-$499 million 17
$500 million-$1 billion 3 $500 million-$1 billion 3
>$1 billion 9 >$1 billion 9

facet as reflections of a firm's general concem for responsi- To reflect important contingency factors in B2B relation-
bly engaging with the respective stakeholders (Jarvis, ships, we included mcirket-related uncertainty, competition
MacKenzie, and Podsakoff 2003).' We also included one intensity, product importance, relationship extendedness, CSR
item assessing respondents' self-reported knowledge about awareness, extrinsic CSR attribution, and customers' CSR
the firm's CSR activities. All respondents exhibited a high orientation as moderator variables and assessed them with
degree of knowledge (M = 5.41). existing scales. Finally, we controlled for several variables
We measured CSR reputation, trust, customer-company that have been shown to influence trust, customer-company
identification, and customer loyalty at the customer firm. identification, and customer loyalty. In particular, we
We measured the two facets of CSR reputation analogously included product quality, value for money, brand strength,
to the two facets of CSR engagement. We measured trust length of business relationship, and personal relationship
with four items capturing credibility and benevolence with the marketing/sales person. The Appendix contains a
(Doney and Cannon 1997; Kumar, Scheer, and Steenkamp list of all scales with item reliabilities and sources.
1995) and measured customer-company identification with
five items (Homburg, Wieseke, and Hoyer 2009). Consis- Measurement Reliability and Validity
tent with the multifaceted definition of prior researchers
We assessed reliability and validity for each measure
(Zeithaml, Berry, and Parasuraman 1996), we measured
using confirmatory factor analysis. Overall, our scales
customer loyalty with four items.
exhibit desirable psychometric properties: for all constructs,
the values for composite reliability, average variance
iFoUowing a suggestion by an anonymous reviewer, we assessed
the robustness of our findings by also employing a formative mea- extracted, and Cronbach's a surpass the recommended
surement approach for CSR engagement and CSR reputation. We thresholds (see Table 3; Bagozzi and Yi 2012). In addition,
converted the indicators into an arithmetic index to obtain formative most item reliabilities are above the recommended value
measures (Ulaga and Eggert 2006). All results remained stable. (see the Appendix). The most notable exception is one item

62 / Journal of Marketing, November 2013

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Corporate Social Responsibiiity in Business-to-Business iViaricets / 63

of the competition intensity scale, with an item reliability of work with regard to all customer variables and included a
.28. However, on the basis of conceptual considerations, we common method factor that is uncorrelated with all other
have kept this item in the model. constructs and loads on every manifest variable (Podsakoff
In addition, the criterion proposed by Fomell and Larcker et al. 2003). This common method factor reflects the vari-
(1981) and the chi-square difference test (Bentler and Bonett ance common to all indicators. The path coefficients of the
1980) indicate no problems with respect to discriminant model reveal that the results remain stable even if such a
validity. Moreover, condition numbers (Cohen et al. 2003) common method factor is included, providing evidence that
and stability tests with subsamples of the data provide evi- our findings are not affected by common method bias.
dence that multicollinearity is not an issue. With regard to The results of SEM show strong support for the pro-
the measurement model, the global fit of the confirmatory posed main effects. Figure 2 depicts the standardized path
factor analysis containing all constructs of the main model coefficients. First, our results confirm the presumed posi-
is satisfactory (x^/d.f. = 1.57, confirmatory fit index = .94, tive relationships between a supplier's CSR engagement
Tucker-Lewis index = .93, root mean square error of and the corresponding facet of CSR reputation. Specifically,
approximation = .05). we find a positive effect of business practice CSR engage-
ment on business practice CSR reputation (yu = .28, p <
.01) as well as a positive effect of philanthropic CSR
Results engagement on philanthropic CSR reputation (Y22 = .38,
j5< .01). Remarkably, the two facets of CSR engagement do
Effects of Centrai Framework not influence the respective other CSR reputation facet (Y12 =
Main effects. To model the structural relationships put .01,/7>.l,andY,2 = .07,;7>.l).
forward in our framework, we employed structural equation With regard to the hypotheses, business practice CSR
modeling (SEM) using Mplus 6 modeling software. Global reputation has a positive effect on trust (ß3| = .32, p < .01,
fit measures indicate that the model acceptably represents R2 = .54), in support of H]. In accordance with H2, philan-
the underlying data (x^/d.f. = 1.71, confirmatory fit index = thropic CSR reputation positively affects customer-company
.92, Tucker-Lewis index = .91, root mean square error of identification (p42 = .15,/? < .02, R2 = .64). Notably, busi-
approximation - .06). To test for common method bias, we ness practice CSR reputation has no significant effect on
specified an SEM to analyze the causal chain of our frame- customer-company identification {^^ = .03, p > .1) and

FIGURE 2
Model Estimation for l\/lain Effects

Supplier Firm Data Customer Firm Data

ß„ = .061 (.07)

Business practice
CSR engagement

Philanthropic CSR Customer-company

engagement identification

Control Variables
• Product quality ^-¡ Y33 = 115 (.08); Y43 = .175 (.07)***; Y53 = .272 (.07)***
• Value for money ^ Y34 = .169 (.07)**; Y44 = .083 (.06); Y54 = .025 (.06)
• Brand strength i^ Y35 = - . 0 7 2 (.08); Y45 = - 0 3 3 (.07); Yss = .125 (.07)*
• Length of business relationship ç,, y¡^ = -.041 (.06); Y46 = .030 (.05); Ys6 = -1 ' 4 (.05)**
• Personal relationship with sales representative ^, Y37 = -553 (.06)***; Y47 = .163 (.07) **; Vj, = .166 (.07)*

*p<.10.
"p<.05.
***p<.01.
Notes: The solid lines indicate the main effects; dotted lines indicate paths that we included in the empirical model to control for further effects
that were not the focus of the study. Completely standardized coefficients are shown; standard errors are in parentheses.

64 / Journal of iVIariceting, November 2013

philanthropic CSR reputation has no significant effect on specifying any additional constraints (Marsh, Wen, and Hau
trust (p32 - -.02, p> .1), in support of the dual mechanism 2006). Analogous to the logic of moderated regression
we proposed in our framework. The absence of any cross- analysis, a moderating hypothesis is supported if the path
effects on both the antecedent and the outcome side of CSR coefficient of the latent interaction term is significant in the
reputation emphasizes the distinctness of the two CSR predicted direction. Our results provide support for most of
facets and indicates customers' ability to differentiate them. the moderator hypotheses (Table 4).
Consistent with previous studies, our results also show that Our data reveal a positive moderating effect of market-
trust fosters customer-company identification and that both related uncertainty on the link between business practice
constructs have positive effects on customer loyalty (see CSR reputation and trust ( Y = .16,p < .01), in support of H3.
Figure 2; R2 = .72). Moreover, we find partial support for the moderating effect
of competition intensity. Although we do not find a moder-
Mediation analysis. Our results also reveal that the
ating effect of competition intensity on the link between
effect of business practice CSR reputation on customer loy-
business practice CSR reputation and trust (y = .00,/? > .1),
alty is mediated by trust (ß = p3i x ß53 = .01, p < .07),
we find that philanthropic CSR reputation is more strongly
whereas customer-company identification mediates the
associated with customer-company identification if compe-
effect of philanthropic CSR reputation on loyalty (ß = %2 ^
tition intensity in the industry is high (y=.09,p<.l). Thus,
ß54 = .05, p < .04). These significant effects and the non-
the data confirm H41, but not H4a. Furthermore, our results
significance of the direct effects from business practice and
show a positive interaction effect between product impor-
philanthropic CSR reputation on loyalty (ßsi = .06, p > .1,
tance and business practice CSR reputation on trust (7= .16,
and ß52 = -.09,p> .1) suggest full mediation (Sobel 1982).
p < .01) and reflect that business practice CSR reputation is
These findings underscore the importance of considering
less strongly associated with trust in extended business rela-
customer benefits when studying effects of CSR on behav-
tionships (y = -.18,/? < .01). Thus, H5 and Hg are supported.
ioral outcomes.
Finally, although the data show a positive moderating
Moderating Effects effect of CSR orientation on the link between philanthropic
CSR reputation and customer-company identification (y =
To test our moderating hypotheses, we included latent inter-
.09, p < .05), we do not find a moderating effect of CSR ori-
actions between the moderator and the predictors as deter-
entation on the link between business practice CSR reputa-
minants of trust and customer-company identification in our
tion and trust (y = -.02, p > .1), providing support for Hyb
model. We created the interaction terms by relying on mean-
but not for Hy^. Moreover, all interactions for the respective
centered indicators that are products of the indicators of the
nonhypothesized paths are not significant.^
variables involved in the interaction (Marsh, Wen, and Hau
2006). For each moderator, we created two interaction terms, ^Several additional analyses provide evidence for the robustness
because our model considers two predictors with business of our findings. First, for each moderator, we estimated models
practice CSR reputation and philanthropic CSR reputation. based on subsamples with high and low values of each moderator
We then included the moderator and the two interaction (median split). The results validate all findings of the moderator
terms as additional antecedents to trust and customer- testing with the latent interaction approach. Second, both tests
involving the simultaneous examination of any two moderators
company identification in the SEM. In line with previous
and additional analyses including the remaining moderators as
research using the latent interaction approach (Homburg, control variables in an SEM reveal stable results. Third, multiple
Klarmann, and Schmitt 2010) and considering the large regression models that simultaneously include all interaction terms
number of paths to be estimated, we entered the moderators with either trust or customer-company identification as the depen-
one at a time and estimated the resulting model without dent variable likewise yield comparable results.

TABLE 4
Results of Hypotheses Testing for Moderating Effects
Predictor -> Dependent Variable

Moderator Hypothesis Predictor Moderator Interaction Support

Business Practice CSR Reputation -> Trust
Market-related uncertainty H3 .325*** -.054 .161***
Competition intensity .429*** -.136*** .000
Product importance H? .408*** .020 .155***
Relationship extendedness He .267*** -.073 -.181***
Customer's CSR orientation Hya .395*** -.067 -.022
Philanthropic CSR Reputation -^
Customer-Company identification
Competition intensity .159*** -.072 .088*
Customer's CSR orientation .155*** .127*** .094**
*p<.10.
**p<.05.
***p<.01.
Notes: Completely standardized coefficients are shown.

Corporate Social Responsibility in Business-to-Business Markets / 65

 With respect to the additional (not explicitly hypothe- fit) and philanthropic CSR drives loyalty through customer-
sized) moderating effects on the relationships between a company identification (expressive customer benefit), thus
supplier's CSR engagement and the corresponding facet of revealing distinct benefit mechanisms. In so doing, we
CSR reputation, our results partially confirm the presumed respond to calls to examine the link between specific types
positive moderating impact of CSR awareness. Whereas of CSR and customer outcomes (Bamett 2007). By propos-
CSR awareness positively infiuences the relationship ing this mechanism involving two distinct CSR facets, we
between philanthropic CSR engagement and its correspond- consolidate studies arguing for an instrumental value of
ing CSR reputation facet (y = .13, p < .05), the data do not CSR actions (Klein and Dawar 2004; McWilliams and
confirm such an effect for the business practice CSR Siegel 2001) with studies highlighting the expressive conse-
domain (y = -.04, p > .1). A possible explanation for this quences of CSR (Lichtenstein, Drumwright, and Braig
partial nonfinding is that we used an overall measure of 2004).
CSR awareness instead of measuring customers' specific
Fourth, by integrating instrumental stakeholder theory
awareness of each CSR facet. In addition, extrinsic CSR
(which argues that stakeholder-oriented activities should
attribution negatively moderates the links between both
provide certain benefits to generate successful relation-
facets of CSR engagement and the corresponding CSR repu-
ships) with social exchange theory (which explains which
tation domain (ybusiness = --15, P < .\; yphilanthropk = --12,
benefits in particular may be relevant in exchange relation-
p < .1). This finding shows that extrinsic attributions about
ships), we also provide a theoretical framework for a simul-
a firm's CSR motives negatively affect customer percep-
taneous examination of distinct CSR consequences (Agui-
tions of suppliers' CSR engagement.
nis and Glavas 2012). Fifth, this study responds to calls to
identify the infiuence of moderator variables on the effec-
tiveness of CSR efforts (Bamett 2007). By adapting the
Discussion notion that uncertainty and dependence are central contin-
Research issues gencies in exchange relationships (Cannon and Perreault
1999) to CSR research, we derive conditions under which
Our research departs from previous studies on customer- different facets of CSR gain or lose infiuence in generating
related outcomes of CSR activities that focus on the B2C favorable customer outcomes. Overall, our research demon-
context. Due to the distinct decision-making behavior of strates that under conditions of high uncertainty and high
organizational buyers, findings regarding the impact of CSR dependence, the instrumental path of CSR is particularly
in a B2C context do not readily transfer to a B2B context. important.
However, CSR has great practical relevance in B2B indus-
tries, heightening the need to investigate whether CSR fosters
Manageriai impiicatlons
favorable organizational supplier-customer relationships.
In addressing this issue, our study contributes to prior Our results show that engaging in CSR-related activities is
marketing and CSR research in several ways. First, our a worthwhile endeavor for B2B firms. First, carefully tar-
research is the first to empirically demonstrate that CSR geted CSR activities can raise organizational customers'
engagement generates positive customer outcomes in orga- trust and identification, both of which foster customer loy-
nizational business relationships, thus addressing a central alty. Furthermore, representatives from both supplier and
research gap in the CSR literature (Vaaland, Heide, and customer companies expect the importance of CSR-related
Gr0nhaug 2008). Second, although prior conceptual frame- issues to increase. For the statement "The importance of
works link actual CSR engagement, stakeholders' CSR per- CSR in B2B relationships will increase in the next five
ception, and distinct stakeholder outcomes (e.g., Bhat- years," the average score on a seven-point rating scale was
tacharya, Korschun, and Sen 2009), empirical research has 5.18 (5.39) for respondents from supplier (customer) com-
primarily focused on examining isolated parts of this causal panies, confirming the managerial relevance of the topic.
chain (Vaaland, Heide, and Gr0nhaug 2008). The current Second, we advise managers to apply a fine-grained
study builds on and empirically tests prior conceptual work approach to the practice of CSR engagement. Our results
to develop a holistic framework that accounts for specifics demonstrate that suppliers' CSR efforts create distinct cus-
of the B2B context. In particular, whereas much previous tomer benefits (instrumental vs. expressive) depending on
research has manipulated a fictitious firm's CSR reputation the specific facet of CSR engagement. Thus, B2B managers
(Wagner, Lutz, and Weitz 2009), we demonstrate effects of should differentiate CSR engagement within their business
a firm's CSR engagement by studying actual business rela- operations targeted at stakeholders with whom market
tionships. Thus, by integrating the supplier and customer exchange exists (business practice CSR) and CSR engage-
perspectives, we answer calls "to paint a more externally ment outside their business operations addressing the com-
valid picture of the forces determining customer reactions munity (philanthropic CSR). However, our data reveal that
to CSR" (Du, Bhattacharya, and Sen 2007, p. 224). the majority of suppliers in our sample practice CSR man-
Third, most research in marketing has conceptualized agement rather nonspecifically, either engaging strongly in
CSR globally or designated one particular activity as CSR both CSR facets or exerting low effort toward both (see
(see Table 1). In line with stakeholder theory, we refine this Table 5), thus confirming anecdotal evidence of firms' non-
approach by deducing two distinct facets of CSR engage- strategic use of CSR (Levy 2010). Our results offer B2B
ment. We empirically show that business practice CSR drives managers clear guidelines for an effective CSR strategy. If
customer loyalty through trust (instrumental customer bene- the primary goal is to increase customers' trust, managers

66 / Journal of Marketing, November 2013

 TABLE 5 its effect on customer-company identification is stronger
Distribution of Companies with iHigh and Low for customers who exhibit high levels of CSR orientation.
Levels of CSR Engagement Regarding the Two In conclusion, our results suggest that suppliers in a
CSR Facets B2B context should systematically analyze their customers'
expectations with regard to CSR issues and compare these
Philanthropic CSR Engagement
expectations with their CSR reputation. Such an analysis
Low (%) High (%) and a consideration of factors determining the actual market
environment can help suppliers create a coherent CSR strat-
Business Practice
egy that accounts for the respective relevance and suitabil-
CSR Engagement
31 16.5 ity of business practice CSR engagement and philanthropic
Low
High 18.5 34 CSR engagement.
Notes: The distribution of the sampie in high and iow vaiues is Limitations and Areas for Further Research
based on median spiits with regard to the two facets of CSR
engagement. Our study is also subject to several limitations that provide
fruitful avenues for further research. First, we collected
should focus on business practice CSR engagement. If the cross-sectional data, which can hardly capture the dynamic
goal is to foster customer-company identification, man- nature of supplier-customer relationships. In particular,
agers should consider activities in the philanthropic CSR although our results indicate that CSR plays a stronger role
domain. in exchange relationships that are not yet fully established
A third implication involves the customer's perception and thus exhibit a low level of relationship extendedness,
of a supplier's CSR activities. Our dyadic data indicate that further research might investigate in greater detail the
B2B customers perceive different facets of CSR when they importance of CSR reputation in different relationship life
evaluate a supplier's CSR engagement. Thus, firms can cycle phases. Such an analysis would require a longitudinal
selectively influence their CSR reputation with positive study design.
engagement in the corresponding CSR facet. Important Second, although our dual conceptualization of CSR is
contingencies of this link are that managers must ensure based on stakeholder theory and is well established in man-
customers' awareness of these activities and, to avoid the agement research on CSR, other approaches are possible.
perception of "greenwashing," must ascertain that cus- Further research could examine effects of different CSR
tomers' CSR attributions with respect to the supplier's CSR conceptualizations and relate them to our findings. More-
engagement are positive. To achieve this aim, managers over, we did not explicitly assess customers' awareness of
should proactively include CSR issues in their business activities in the two domains we examined; however, we
strategy, engage in CSR continually, and communicate their believe that customers were capable of judging suppliers'
CSR efforts transparently. CSR engagement. Our objective was to assess customers'
In addition, B2B managers should consider the impact general perception of a supplier's cumulative CSR engage-
of several context factors that influence the effectiveness of ment for each CSR facet rather than their perception of a
CSR in generating favorable customer outcomes. For exam- single CSR initiative. Thus, we are confident that the cus-
ple, they should understand the prevailing level of market- tomers in our sample (who have, on average, a 15-year
related uncertainty as well as the strategic importance of business relationship with the supplier) have insight to dis-
their products to customers. In particular, B2B companies tinguish the two CSR facets. Furthermore, empirical evi-
acting in high-uncertainty markets and offering important dence, such as discriminant validity between the constructs
products should engage in business practice CSR. Our and the clear pattern of antecedents and outcomes of the
results show that in such an environment, business practice two facets of CSR, supports our notion. Nevertheless, fur-
CSR may foster customers' trust, which in turn increases ther research should measure customers' awareness of dif-
customer loyalty. At the same time, the effect of business ferent facets of suppliers' CSR.
practice CSR on customers' trust is weaker for extended Third, we included several contingency factors in our
exchange relationships that are relational (as opposed to analysis. However, because of the large number of paths to
discrete). Moreover, in strongly competitive market envi- be estimated, we could not test all moderators simultane-
ronments, customers can easily switch to altemative suppliers. ously. Despite several robustness checks, the results of the
Thus, fostering high levels of trust by engaging in business moderator testing should therefore be considered
practice CSR may be less relevant because customers depend exploratory rather than conclusive. Moreover, further
less on a particular supplier. Instead, increasing customer- research could address other potential moderators, such as
company identification by supporting social causes offers a the degree of CSR-related competition in the supplier mar-
more promising strategy to differentiate the firm and estab- ket and the fit between the supplier's business and its phil-
lish long-lasting relationships. Finally, B2B managers anthropic CSR engagement.
should analyze the CSR orientation of their customer base, Fourth, researchers may use our systematization of con-
because the principle of "socially responsible purchasing" text factors based on social exchange theory (which particu-
is growing (Carter and Jennings 2004). In particular, a sup- larly focuses on sources of uncertainty and dependence in
plier operating in a market in which customers are strongly exchange relationships) to derive and systemize contingen-
CSR oriented should engage in philanthropic CSR because cies in B2C contexts as well. For example, concerns about

Corporate Social Responsibility in Business-to-Business Markets / 67

 the social acceptance of a certain product or product cate- investigate whether our dual mechanism of instrumental
gory may constitute an important source of uncertainty for and expressive benefits also holds for other groups' reac-
end consumers. Fifth, we focused on studying the effects of tions to a firm's CSR engagement, such as employees and
a firm's CSR efforts on customers. Further research could investors (Turban and Greening 1997).

APPENDIX
Measures, Items, and Item Reliabilities
Measures and Items item Reiiabilities
Business Practice CSR Engagements.«: (Lani<oski 2009; Wagner, Lutz, and Weitz 2009)
Our company follows employee-friendiy ruies and policies. .57
Our company provides working conditions that safeguard the health and safety of its employees. .52
Our company provides full and accurate information to all its customers. .42
Our company follows high ethical standards in its business operations. .61
Our company respects customer rights beyond the legal requirements. .41
Philanthropic CSR Engagement^c (Lichtenstein, Drumwright, and Braig 2004)
Our company gives back to the communities in which it does business. .42
Our company integrates charitable contributions into its business activities. .79
Local nonprofits benefit from our company's contributions. .71
Our company is involved in corporate giving. .86
Business Practice CSR Reputation>>.c (Lankosi^i 2009; Wagner, Lutz, and Weitz 2009)
Company X follows employee-friendly rules and policies. .65
Company X provides working conditions that safeguard the health and safety of its employees. .69
Company X provides full and accurate information to all its customers. .46
Company X follows high ethical standards in its business operations. .50
Company X respects customer rights beyond the legal requirements. .52
Philanthropic CSR Reputationt>'C (Lichtenstein, Drumwright, and Braig 2004)
Company X gives back to the communities in which it does business. .65
Company X integrates charitable contributions into its business activities. .80
Local nonprofits benefit from company X's contributions. .86
Company X is involved in corporate giving. .85
Trustb.c (Doney and Cannon 1997; Kumar, Scheer, and Steenkamp 1995)
We believe the information company X provides us. .76
Company X is trustworthy. .89
When making important decisions company X considers our welfare as well as its own. .66
When we share our problem with the supplier, we know that it will respond to us with understanding. .45
Customer-Company identificationti,c (Homburg, Wieseke, and Hoyer 2009)
I strongly identify with company X. .72
I feel good to be a customer of company X. .80
I like to tell others that I am a customer of company X. .70
I feel attached to company X. .68
Company X shares my values. "57
Customer Loyaity^.c (Zeithaml, Berry, and Parasuraman 1996)
We consider company X as our first choice for the purchase of such products and services. .68
We intend to stay loyal to company X. ^66
We intend to do more business with company X in the future. .44
We say positive things about company X to other people (e.g., customers, business partners). .51
CSR Awarenessb.c (DU, Bhattacharya, and Sen 2007; Sen, Bhattacharya, and Korschun 2006)
I have good knowledge about the engagement in CSR of company X. .93
I learn often about the engagement in CSR of company X. .95
I can easily evaluate the engagement in CSR of company X. .91
Extrinsic CSR Attribution^.c (DU, Bhattacharya, and Sen 2007)
I think company X engages in CSR because it feels...
...competitive pressures to engage in such activities. .68
...customer pressures to engage in such activities. .91
...societal pressures to engage in such activities. .63
Market-Related Uncertaintya.c (Cannon and Perreauit 1999; Jaworski and Kohli 1993)
Prices for this product are volatile. .38
The market for our product is dynamic. .78
The technology in our industry is changing rapidly. .38
Relationship Extendedness^^.c (Heide and Miner 1992)
The business relationship with the company can be better described as a "cooperative effort"
rather tban an "arm's length negotiation." .69
Our companies have a close business relationship. .73
We expect the relationship with our supplier to last a long time. .43

68/Journal of Mari(eting, November 2013

 APPENDIX
Continued
Measures and Items Item Reliabilities
Importance of Product^.c (Cannon and Perreault 1999)
This pro(duct has an irreplaceable function in our production processes. .60
This pro(duct is of high importance to our own product. .88
This product is essential for the functioning of our own product. .73
CSR Orientationb.c (Banerjee, Iyer, and Kashyap 2003)
Our firm has a clear policy statement urging CSR awareness in every area of operations. .74
CSR is a high priority activity in our firm. .83
At our firm, we make a concerted effort to make every employee understand the importance of CSR. .81
Competition Intensitya-c (Jaworski and Kohli 1993)
Competition in this business is severe. .28
One hears of new competitive moves almost every day. .67
Intensive marketing activities are a hallmark of our industry. .78
Anything that one competitor can offer, others can match readily. .52
Product Qualityb>d
How do you evaluate the product quality of company X compared to its competition? N.A.e
Value for Moneyb-d
How do you evaluate the value for money-ratio of company X compared to its competition? N.A.e
Brand Strength^.d
How do you evaluate the strength of company X's brands compared to its competition
N.A.e
(e.g., with regard to awareness, emotionality, quality signals)?
Length of Business Relationship))
For how many years have you been a customer at company X?
Personal Relationship with Marketing/Sales Représentative^.«:
I have a good relationship with the marketing/sales representative of company X. .52
The marketing/sales representative of company X and I get along well. .64
The marketing/sales representative of company X connects with me on a personal level. .38
^Measured at supplier firm.
^Measured at customer firm.
^Measured on a seven-point scale (1 = "strongly disagree," and 7 = "strongly agree").
tíMeasured on a seven-point scale (1 = "much lower," and 7 = "much higher").
^Construct measured through single indicator; item reliabilities cannot be computed.
Notes: N.A. = not applicable.

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