“Do trust and corporate social responsibility activities affect purchase intentions? An examination using structural equation modeling”

Organizations place great value on corporate social responsibility (CSR), as it has been found to influence customer attitudes and intentions. This study analyzed the impact of CSR on consumers’ purchase intentions. The significance of this study arises from the fact that all progressive companies are increasing their expenditure on CSR activities. In this study, purchase intention was considered as a dependent variable, while trust, ethical, and legal CSR activities were the independent variables. Data for the study was collected from 210 randomly chosen respondents from amongst consum- ers of Delhi and National Capital Region of India. The data, analyzed using Structural Equation Modeling, found that trust, ethics, and legal CSR activities directly impacted consumer purchase intentions. These results indicate that legal factors do not significantly influence the corporate decision on spending on CSR activities. On the other hand, ethical factors and trust factors significantly influence the corporate decision on expenditure on CSR activities. The findings highlight companies’ requirements to be conscious of their social image. Probable limitations of the study could include sample size and the number of variables chosen.


INTRODUCTION
Corporate social responsibility (CSR) has gained widespread attention in India since it became mandatory in April 2014 by amendment of the Companies Act. Companies are expected to involve in and contribute to the development of society. This has made companies enhance their expenditure in education, healthcare, training, women empowerment, and rural development (Poddar et al., 2019). CSR is also considered as an essential contributing factor for sustainable development (Kolk, 2016). CSR businesses can contribute to the growth, happiness, and prosperity of the society. CSR helps business organizations to differentiate themselves through generating competitive advantage (Peloza & Shang, 2011). Competitive advantages would, in turn, create value for the company and its consumers. Such companies pay concerted attention to creating value for all their stakeholders. Consumers being the most important stakeholder, the value created for them is a strong determinant that trigger buying decisions (Xu et al., 2014). Multiple shreds of evidence exist to prove that consumers prefer companies that spend on CSR activities, be socially conscious, and engage in social development (Lee & Lee, 2015;Parsa et al., 2015;Ramasamy & Yeung, 2009). Perceived brand image and social acceptance are higher for socially responsive companies (Kim, 2019). Socially responsive organizations have been found to elicit positive responses and retention from consumers. This, in turn, has a direct impact on organizational profitability. However there are contrary views, also found in the literature. For instance, Fatma and Rahman (2016) found that consumers are more concerned about their economic benefits and are rarely influenced by the organization's social concern. They focus on personal services and will prefer to buy products that can satisfy them. Vaaland Terje I. et al. (2008) also found that customers do not consider CSR activities while making a purchase decision. Thus, there is a need to look into this aspect objectively.
Multiple studies about CSR have been done in the western world about the impact of CSR on consumer buying preferences, e.g. Salmones  ). This paper intends to bridge this gap by addressing the question: "Do consumers prefer companies that spend more on the CSR activities"? Based on this, the study's main objective is to measure CSR activities' impact on consumer buying intention. The result of the study will facilitate in estimating the possibility of marketing returns from CSR expenditure.

LITERATURE REVIEW AND HYPOTHESES
Research interest in CSR has attracted widespread attention in recent days (Naushad & Malik, 2015;Simionescu, 2015 CSR is a double-edged sword that simultaneously safeguards an organization from the community's negative impacts while maximizing the positive effects (Pinney, 2001). CSR has acquired importance as an effective business strategy (Luo & Bhattacharya, 2006). Its utility is to help build a competitive position among peers, expand the business, and retain customers (Albus, 2012). CSR has also been found to increase financial performance and profitability. Caroll (1979) considers CSR to encompass expectations associated with economic, legal, ethical, and philanthropic aspects. According to Nicolaides (2018), CSR is built on the edifice of ethical and legal philanthropic activities. All the internal operations and dealings with stakeholders, including employees, are ethical and responsible. Any unfair treatment of stakeholders needs to be avoided (Carroll, 1991). All material information needs to be disclosed to the customers in every transaction. Customers need to have product choices and must have the possibility of product comparison. Based on the review, it is hypothesized that "Ethical aspects have a positive relationship with the purchase intention."

Legal CSR activities
Companies must utilize available opportunities to grow and expand at a rapid pace. However, this needs to be within the framework of rules and regulations. Voluntary compliance with all laws and regulations of the land brings a positive image of the organization to the consumers. Business organizations need to comply with all laws of the land (Carroll, 1991). Consumers incline towards goods and services of organizations that comply with rules and regulations. CSR is a predisposition on the organization's part to continue its activities beyond mere legal obligations (Servera-Francés & Arteaga-Moreno, 2015).
Compliance with all rules and regulations, and beyond them, positively impacts consumers' minds and directly impacts purchase intentions (Lee & Lee, 2015). Organizations pursuing economic goals based on the local legal framework will positively influence consumers and society (Lee & Lee, 2015;Mulaessa & Wang, 2017). Firms sensitive to the laws and fair in business transmits are a positive message to the consumers. This influences the firm's image and the resultant purchase intention of consumers. In general, the legal aspects of CSR positively affect purchase intentions. Based on these, it is hypothesized that "Legal aspects have a positive relationship with the purchase intention."

Trust
Trust is an essential factor that influences consumers ( Therefore, in an attempt to testify the above discussion in the form of empirical evidence, the following research model can be proposed for this study (Figure 1). Figure 1 provides the accumulative hypothesized model for this study. The study is interested in determining whether the factors emerged from literature and discussed in the above section (which include, ethical and legal CSR activities and trust) will help shape the purchase intention of the sample taken for the study. The following hypotheses can be framed:

Data collection and analytical tools
Data was collected from a sample of 210 respondents via the Google survey form, Facebook, and Whatsapp. A convenience sampling method was adopted to collect data for the study. To analyze the data, statistical techniques, such as exploratory factor analysis (EFA), confirmatory factor analysis (CFA), and structural equation modeling (SEM), were used. EFA was used to determine the factors, and CFA was used to confirm the selected variables. SEM was used because it simultaneously checks all the study variables in the model (Chin, 1998).

DATA ANALYSIS AND RESULTS
IMB SPSS 23 and IBM AMOS 23 were used to analyze the data. Statistical Package for Social Sciences (SPSS) was used for the basic analysis. Exploratory factor analysis was used to reduce the number of items and determine the construct for the study. Further, confirmatory factor analysis was performed to analyze model fitness, composite reliability, average variance extracted, and discriminant analysis.   It is evident from Table 4 that legal factors do not significantly influence the corporate decision on expenditure on CSR activities because the p value is 0.110, which is more than .05. Therefore, null hypothesis is accepted. On the other hand, ethical factors significantly influence the corporate decision for expenditure on CSR activities because p value is 0.001, which is less than .05. Therefore, null hypothesis is rejected. Furthermore, Trust factors also significantly affect the corporate decisions for expenditure on CSR activities because p value is 0.000, which is less than .05, therefore, null hypothesis is rejected. Companies have realized that businesses will only grow when the society is prosperous, and people have the money to spend on the goods and services produced by the business organizations. Sustainable development is important for both organization and society. Companies take resources from the society in the raw material and other resources. Therefore, companies should give back to the society as well.
The Government of India obliged companies with a certain turnover and profitability to spend two percent of their profit. According to the Companies Act 2013, organizations with net worth of INR 500 or more or a turnover of INR 100 or more or net profit of INR 5 or more during any financial transaction must formulate a corporate social responsibility committee. CSR committee has to see whether Organization's CSR spending is in accordance with the law. This has revolutionized corporate spending in CSR activities. Companies mainly spend on education, employee training, health care and professional development in India. Education has been largely benefited by the organizations.
Nowadays, researchers investigate the influence of CSR activities on consumer buying behavior. This paper has taken ethical CSR, legal CSR and trust as independent variables and purchase intention as a dependent variable. Data analysis has outlined that ethical CSR activities influence the consumer purchase intention because every consumer prefers to purchase the products from companies that disclose all the information to their customers. Consumers can purchase quality products at low prices. Trust also influences the consumer's purchase intention. The hypothesis has proven that trust has a direct and positive impact on the consumer's purchase intention. Trust means that consumers are more likely to purchase from companies that they think are good and have good record of good business. . CSR activities create a positive image in the minds of consumers and consumer feel that the company is taking good care of its stakeholders. Companies need to formulate appropriate business strategies to cater to the needs of society and business. Companies investing in CSR can build a strong business and brand image that will facilitate in distinguishing themselves.
This study has some limitations. It has considered only three independent variables. Future studies can include other variables and examine their impact on consumers' purchase intentions. Future research can also explore the impact of CSR on the marketing and business activities, apart from purchase intention. The study was undertaken with a sample of 210. Future research can be undertaken with a larger cross-sectional sample.

CONCLUSION
The study was undertaken to find the relationship of certain CSR variables with purchase intentions. Ethical CSR activities and trust are found to have a direct and positive impact on the consumer purchase intentions. The results of the study are of interest to both companies and consumers, since both of them show considerable interest in corporate social responsibility practices. CSR practices will help companies to gain competitive advantages and easily distinguish themselves from competitors. CSR practices are expected to have a direct and positive impact on both employee productivity and consumer purchase intentions. CSR practices require organizations to operate in a socially conscious manner, giving due importance to human rights, environmental concern and social concern. This study was a moderate attempt to clarify the relationship between CSR variables and purchase intentions. It is hoped that this study will motivate other researchers to use the results of the present work.