Chinese Consumers’ Perceptionof Corporate Social Responsibility (Csr) Essay

Journal of Business Ethics (2009) 88:119–132 DOI 10. 1007/s10551-008-9825-x O Springer 2008 Chinese Consumers’ Perception of Corporate Social Responsibility (CSR) Bala Ramasamy Mathew Yeung ABSTRACT. The findings of this article increase our understanding of corporate social responsibility from the consumers’ perspective in a Chinese setting. Based on primary data collected via a self-administered survey in Shanghai and Hong Kong and results of similar studies conducted in Europe and the United States, we provide evidence to show that Chinese consumers are more supportive of CSR.We also show that Carroll’s pyramid of responsibilities can be applied in China. We evaluated the importance placed by Chinese consumers on the four responsibilities of firms – economic, legal, ethical and philanthropic – and find that economic responsibilities are most important while philanthropic responsibilities are of least importance.

The nature of these differences is important for firms intending to use corporate social responsibility for strategic purposes. KEY WORDS: corporate social responsibility, China, Hong Kong, Chinese consumersIntroduction CSR has made its mark as an important area in business literature. The increasing number of articles in leading business journals and dedicated journals to the area provide ample evidence to this effect. At the same time, the social responsibility of businesses is also gaining popularity among other stakeholders. For instance, the 2006 Cone Millenial Cause Study found that 61% of the millenials (those born between 1979 and 2001) feel that it is their responsibility to make the world a better place, while 78% believe that companies have a responsibility to join them in their efforts (www. oneinc.

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com). The popular talent show, American Idol, showcased poverty in Africa in its 2007 season, and called for participation of its viewers (individuals and businesses) to help eradicate it. In a recent survey by McKinsey, 89% of consumers surveyed believed that companies should balance their obligations to their shareholders with their contribution to the broader common good, while only 48% of the 4063 consumers surveyed in China, France, Germany, the UK, India, Japan and the US feel that companies are making any meaningful contribution to the cause (Bonini et al. , 2007a).

In the 1980s and 1990s, CSR literature focused on the corporation’s engagement in social responsibilities from a business perspective (Margolis and Walsh, 2001). Since the late 1990s and particularly in this decade, research that focuses on an important stakeholder and driver of CSR – the consumer – has been increasing (Brown and Dacin, 1997; Marin and Ruiz, 2007; Mohr and Webb, 2005; Sen and Bhattacharya, 2001). Although these and other studies highlight the role of CSR in the consumer’s evaluation of a company and their decisions to purchase its products, there is a tendency for the focus to be on American and European consumers.

Apart from the cross country survey by McKinsey cited above, we are unaware of any academic study that has considered CSR from an Asian consumers’ perspective, let alone from China. By exploring consumers’ perception of CSR in two Chinese cities, this study attempts to provide some preliminary insights into the attitude of Chinese consumers vis` a-vis CSR. We use Maignan (2001) as the springboard to our study as it considers consumers’ perception of CSR in two European countries and the United States.In this study, we focus on two Chinese cities at different stages of economic development, namely Shanghai and Hong Kong. Based on primary data collected from these cities, as well as that of Maignan (2001) we provide insights into the following questions: (1) To what extent are Chinese consumers willing to support ? rms that are socially 120 Bala Ramasamy and Mathew Yeung do…Social responsibility goes one step further.

It is a ? rm’s acceptance of a social obligation beyond the requirement of the law. responsible in their purchasing decisions? 2) How, why and to what extent are there variations in this support among the Chinese compared to their Western counterparts? (3) Are Chinese consumers able to differentiate between the various responsibilities of businesses as laid out by Carrol (1979)? In particular, are the underlying factors/measures of CSR found in Western countries, i. e. economic, legal, ethical and philanthropic responsibilities apply to Chinese consumers? (4) How and why does the relative importance among these factors in China differ from the Western context? The ? dings and implications of this study is important not only to Chinese businesses as they wrestle with CSR as a strategic component of business, but also to Western businesses as they plough large amounts of investments into China to take advantage of the burgeoning consumer market.

The next section provides an overview of the literature on CSR and the consumer’s perspective in particular. In the third section, we explain the data and methodology used in this article. Next section provides the results of our analysis while ? fth section discusses these results.We end the article by providing some implications for businesses and limitations of the study. Literature review CSR: de? nitional issues After several decades of research on CSR, McWilliams et al. (2006, p. 8) still concluded that ‘‘…there is a no strong consensus on a de? nition for CSR’’.

The evolution of the de? nition becomes clear when one considers several de? nitions by past researchers. McGuire (1963, p. 144) for example stated that: …the idea of social responsibility supposes that the corporation has not only economic and legal obligations, but also certain responsibilities to society which extend beyond these obligations.Davies (1973, p. 313) went further to state that: …social responsibility begins where the law ends. A ? rm is not being socially responsible if it merely complies with the minimum requirement of the law, because this is what any good citizen would These and other de? nitions are presented within Carroll’s (1979, 1999) framework and have been operationalized by many researchers (Crane and Matten, 2004; Maignan, 2001).

Compared to other conceptualization of CSR, Carroll’s framework is broad enough to consider other concepts of CSR including corporate citizenship (Carroll, 1998) and stakeholder theory (Carroll, 2004).For Carroll, the responsibilities of a business encompass four dimensions – economic, legal, ethical and philanthropic activities. Economic responsibilities refer to the production of goods and services demanded by the market and to be pro? table. This is the fundamental responsibility.

In a developing country context, ful? ll this responsibility results in the creation of jobs and income (UNIDO, 2002). Legal responsibilities refer to ful? lling the economic responsibility within the boundaries set by the legal system of the country.This may include compliance with various legal requirements including workers safety, environmental standards and tax laws. Ethical responsibilities are to do what is right, just and fair and to avoid harm to nature and people. Ethics takes responsibility to another level in that compliance goes beyond the legal requirements (Garriga and Mele, 2004). Finally, the philanthropic responsibility is to contribute to society and improve the general quality of life.

In developing countries, philanthropic activities in the form of donations are equated to CSR (Crane and Matten, 2004).However, addressing important issues faced by society like poverty and HIV/AIDS should also be considered in this category as well. These responsibilities are typi? ed in a pyramid form with the more basic responsibilities (economic and legal) at the base, while more advanced responsibilities (ethical and philanthropic) are at the pinnacle. The pyramid analogy also implies that the basic responsibilities support the more advanced ones. For corporate stakeholders, i. e. managers and shareholders, the building blocks of CSR as described above provides an understanding of the various degrees of involvement in society.Indeed, Chinese Consumers’ Perception of CSR Carroll’s de? nition has been operationalized in empirical studies that used managers as their unit of analysis (Aupperle et al.

, 1985; Maignan and Ferrel, 2000; Pinkston and Carroll, 1994). 121 Consumer perspectives of CSR Freeman’s (1984) stakeholder theory makes clear that businesses are responsible to various groups of protagonists within the society. These stakeholders are said to have a ‘‘claim, ownership, rights, or interests in a corporation and its activities, past, present, or future’’ (Clarkson, 1995, p. 106).Like Maignan (2001), we are interested in what could be the largest stakeholder group, i. e. the consumer.

Speci? cally, we consider the Chinese consumers’ perception of the four responsibilities of ? rms as laid out by Carroll. At the outset, we should differentiate between ‘‘socially responsible consumption’’ and consumer perception of CSR. The former refers to a consumer behaviour that is ‘‘perceived to have a positive or less negative impact on the physical environment and/or the use of purchasing power to express social concerns’’ (Francois-Lecompte and Roberts, 2006, p. 52).The latter refers to the ability of the consumer to ‘‘differentiate between corporate economic responsibilities on the one hand and corporate legal, ethical, and philanthropic responsibilities on the other hand’’ (Maignan, 2001, p.

65). In other words, while the former deals with social responsibility of the consumer’s actions and/or inactions, the latter deals with the importance the consumer puts on companies that are socially responsible. If the consumer considers the non economic responsibilities of companies to be important, they might support the company by exercising their socially responsible consumption in favour of the company.In this article, we emphasize the consumer’s perception of CSR, i.

e. the latter. Do consumers care about CSR? Auger et al. (2007) explain that a combination of more product choices, wealth, education and brand consciousness on the one hand, and the increasing availability of ethical products on the other, result in a more socially conscious consumer. In a MORI survey of 12,000 consumers across 12 European countries in 2000, 70% of consumers stated that a company’s commitment to social responsibility is important when buying a product or service, while one in ? e people were willing to pay more for products that were socially and environmentally responsible (www.

csreurope. org). Creyer and Ross’s (1997) survey of 280 parents also concluded that a company’s ethicality is factor which is considered when purchasing decisions are made and ? rms which are ethical would be rewarded with higher prices and those with lower ethical standards would be punished with lower prices. A more recent study by Page and Fearn (2005) is less convincing.

Using a large consumer sample in the UK, US and Japan, they ? d that consumers do care about corporate behaviours, but this is not the primary concern when they are shopping. Apart from price and quality, consumers are concern for how they are treated. They are also less willing to sacri? ce basic functional features of goods and services for socially acceptable characteristics of the product (Auger et al. 2003). This is particularly true if the social initiatives of the ? rm are not aligned to its corporate objectives, i. e. a low ? t (Becker-Olsen et al. , 2006).

Others are even more skeptical.The Centre for Corporate Citizenship at Boston College report that, ‘‘…too often, businesses and social activists take consumer surveys at face value, believing that if people say they would like to purchase socially responsible goods, they will follow through when it comes time to make the purchase’’ (www. bcccc. net).

They point to Starbucks and its fair trade coffee, which since its launch in 2001, has seen demand remaining relatively ? at. Furthermore, the size of fair trade activities at about 1–2% of the market hardly makes an impact.In order to correct the social desirability response bias, several experimental studies have been conducted. These include Creyer and Ross (1997), Brown and Dacin (1997) and Murray and Vogel (1997). Mohr et al.

(2001) tend to conclude that experiments tend to show that evaluation of products and companies as well as purchase intentions depend on the amount and nature of CSR information provided. A higher-than-average social responsibility (for example, donating more extensively) provide more striking results. The experiments also tend to emphasize the negative impact of unethical behaviours of ? rms. 122Bala Ramasamy and Mathew Yeung One may conclude from these studies that culture has an in? uence on perceptions and behaviour towards CSR, but the nature of the relationship is left to interpretation. Economic and social development dimensions The degree of economic and social development mitigates consumers’ perceptions of CSR. The level of economic development in? uences the extent of CSR awareness and the degree to which consumers demand for CSR from ? rms. In a comparative study between CSR in Malaysia and Singapore, Ramasamy and Hung (2004) point to the level of economic development for a higher awareness level in Singapore.In developing countries where average income is low, consumers may under-estimate their role in the market.

For instance, an AC Nielsen study in Indonesia found that CSR was recognized by only 29% of respondents, but 81% believed that social responsibility among corporations is important (The Jakarta Post, 14 May, 2007). However, an in-depth study of CSR by Kemp (2001) clearly highlights that a lack of social welfare system in Indonesia means that workers depend on their salaries as the sole source of income leading them to accept substandard working environment and environmental degradation as ‘‘fate’’.In such situations, consumers may tend to emphasize the economic responsibility of businesses, as this will secure jobs and income.

Thus, in developing countries, there is a tendency to rely on government to exert pressures on businesses for being socially responsible rather than by using the consumption dollar. Evidence for this can be found in World Value Survey. As shown in Table I below, there is generally a greater degree of trust in government than in major companies for most developing countries compared to their developed counterparts.

In this regard, the legal responsibilities of businesses could become important aspect of CSR as well. There may be a tendency for consumers to relate CSR to a ? rm’s philanthropic activities. In Asia, philanthropy is ingrained in religious ideology (Sood and Arora, 2006). As countries pursue economic development, income inequalities increase. The rich are expected to share their wealth with the needy in order to obtain ‘‘inner peace’’ (Sharma and Talwar, 2005). However, with the emergence of a large middle class, the demands by consumers on ? rmsDifferences in consumers’ perception of CSR across countries Cultural dimensions Previous research tends to af? rm that there is a cultural dimension to consumers’ perception of CSR. Katz et al.

(2001, p. 166) go as far to state that, ‘‘…culture-based tendencies shape a nation’s expectation of corporate social conduct. ’’ Using Hofstede’s four cultural dimension and ? ve social issues (consumerism, environment, treatment of employees, government involvement in society and the role of business in community affairs). Katz et al. argue that the demands of stakeholders on these issues would depend on the cultural setting in a country.For instance, countries that are low in power distance, uncertainty avoidance and masculinity indices but high on the individualism index would tend to have a high degree of consumer activism. Consumers in these countries would expect more product information from ? rms and emphasize the importance of quality, service and people. However, Katz et al.

tends to assume that countries that are more individualistic and low in power distance are more economically developed which in turn in? uence their perception of social issues. In this regard, it is dif? cult to say if it is culture or economic development that in? ences perception. Williams and Zinkin (2006) also use the Hofstede dimensions, but focus on the propensity of consumers punishing bad behaviours of corporations. Using data from GlobeScan CSR Monitor survey of consumers from 30 countries, they ? nd that countries which are lower in the power distance index, long term orientation index and uncertainty avoidance index, but high in the individualism and masculinity index are more likely to punish corporate irresponsible behaviour. Maignan’s (2001) survey of consumers’ perception of CSR in Germany, France and the US also shows some differences which could be related to culture.She ? nds that French and German consumers tend to rate economic responsibilities of ? rms lower than the Americans.

In fact, legal and ethical responsibilities were rated more important by the Europeans and this pre-occupation is linked to the communitarian dimension. On the other hand, the individualistic nature of the Americans is responsible for the emphasis on economic responsibilities of ? rms. Chinese Consumers’ Perception of CSR TABLE I Trust in government and major companies, selected countries Year 2001 Indonesia 2001 Vietnam 2001 China 2001 India 2000 Japan 1999 US 2000 Spain 1999 France 23 1999 UK Trust in government Yes 50. 4 No 45. 8 Trust in major companies Yes 44. 5 No 50.

3 96. 9 2. 1 42.

5 48. 3 95. 2 3. 2 42. 3 34 48. 5 37.

9 32. 2 38. 1 25.

4 68. 2 25. 3 63. 5 37. 3 61. 3 52. 7 44. 8 42.

9 54. 1 41. 3 52.

6 n. a. n. a. 45. 2 49. 7 n. a.

n. a. 34. 8 51. 9 Source: World Value Survey (www. worldvaluesurvey. org).

beyond philanthropy could also be realized (British Council et al. , 2002). This takes place as a result of more access to education by the masses, as well as an increased realization of the power to penalize businesses through market actions.

Consumers’ expectations of the role of business in society could also vary according to the level of institutional development in the country. When the rule of law is ambiguous, as is the case in many developing countries (Transparency International, 2006), consumers may expect businesses to be responsible and adhere to rules voluntarily. However, one could also argue that consumers realize that rampant corrupt practices are facts of life, and so are more forgiving if businesses are less than ethical. Data and methodology Our investigations to ? d answers to the question posed earlier were based on data generated by means of a self administered questionnaire, with mainly closed ended questions. The questionnaire relied heavily on the one developed by Maignan (2001) so that comparisons could be undertaken. As explained in Maignan (2001), the construction of the instrument was based on Aupperle et al. (1985) and Maignan and Ferrel (2000).

The questionnaire attempts at developing measures of (1) consumers’ general support of socially responsible business and (2) consumers’ evaluation of CSR, in particular Carroll’s four components of responsibility.The instrument comprise 22 statements addressing the above two measures – a single statement to measure the overall social responsibility of businesses; ?ve statements measuring consumers’ support of responsible businesses; and a battery of 16 (four for each of Carroll’s components) statements that evaluates consumers’ perception of what businesses should do. The list of statements is provided in the Appendix 1. Respondents were asked to rate these statements on a 7-point scale. The questionnaire was translated into Chinese by the researchers with the assistance of professional translators.Translated versions were back-translated into English. Discrepancies were studied and amendments were made to ensure contextual clarity.

A pilot test was conducted involving 30 students from the two areas to gauge the applicability of the questionnaire in the local setting. Minor adjustments were observed and made. The changes were predominantly terms used in the local dialect. As a result, there were two sets of questionnaires – a Mainland Chinese version and a Hong Kong Chinese version. The questionnaire also included a list of demographic questions.

In order to ensure comparability with Maignan’s (2001) results, respondents to the questionnaire were limited to employees of banks and insurance companies. Maignan reasoned that ‘‘ consumers within a similar workplace environment seemed to provide some assurance of sample comparability in terms of social status, education and lifestyles’’ (p. 63). Banks and insurance companies’ employees may not represent a population, but provides a good subset of the middle income population. A total of 200 questionnaires were given to several contacts working in ? ancial institutions for circulation among their colleagues at all levels of the organization and in as many departments as possible.

They were also responsible 124 Bala Ramasamy and Mathew Yeung Results of analysis Consumer support of responsible businesses Consumer support of responsible businesses in the two Chinese cities were measured based on a ? veitem instrument as shown in Appendix 1. Each item provides a 7-point scale from 1 representing strongly disagree to 7 representing strongly agree. The resulting reliability coef? cients were: 0. 808 and 0. 847 for the Shanghai and Hong Kong samples, respectively.The averaged scales of the ? ve items are used to measure consumer support of responsible businesses (CS). The means and standard deviations of these average scales are 5.

574 (0. 951) and 5. 340 (0. 951) for Shanghai and Hong Kong, respectively.

An analysis of covariance (ANCOVA) was used to test the mean differences of CS among the two cities with gender, age and education entered as covariates. In other words, the test of hypothesis was strengthened by adjusting for the relationships between CS and these variables. Gender was not signi? cant; age and education were signi? cant at the 10% signi? ance level; the city factor was strongly signi? cant (F = 6. 070; df = 2; p = 0. 003), implying that the levels of CS are not the same among the two cities. A follow-up post-hoc LSD test revealed the following relationship: Hong Kong < China.

In other words, the levels of consumer support for responsible business in Hong Kong is signi? cantly lower than in China. for collecting and returning back to the researchers. Data collection in both cities was carried out simultaneously between January and March 2007. The size of our returned sample is comparable to those of Maignan (2001): Shanghai N = 136 and Hong Kong N = 121.The characteristics of the sample in terms of age, gender, education levels and occupation is provided in Table II. The sample characteristics of our Hong Kong respondents are quite similar in terms of age, gender and education to the ones in Maignan’s study. However, the Shanghai sample is relatively younger, more female and more educated. This may not re? ect the general population of China, but represent the growing middle income group which is de? ned as the well educated, white collar workers earning between 25,000 and 30,000 RMB per month, making up about 19% of the population (www.

hinaview. cn). Although previous research (Lam and Shi, 2007) has shown that age and gender had insigni? cant effect on ethical issues, the interpretation of results that follow for China need to consider the relative differences in the sample pro? le. TABLE II Pro? le of samples Shanghai Hong Kong N = 134 N = 121 Gender Age Male Female Min Mean Max Secondary (lower) Secondary (upper) Pre-university Higher education Degree Postgraduate Missing Senior Mgt Middle Mgt Junior Mgt Supervisor Clerk/Staff Unskilled labour Other Missing 51 83 1953 1978 1986 0. 00% 2. 24% 0. 00% 20.

15% 59. 70% 17. 1% 0.

00% 2. 99% 15. 67% 20. 15% 0. 00% 58. 21% 1. 49% 1. 49% 0.

00% 55 66 1952 1973 1988 1. 49% 30. 60% 5. 22% 9. 70% 30. 60% 11.

19% 1. 49% 3. 31% 18.

18% 20. 66% 7. 44% 33.

06% 1. 65% 13. 22% 2. 48% Education Consumer evaluation of the social responsibilities of businesses Respondents’ evaluation of CSR was based on their views of what they believe businesses must do. Sixteen items were employed – four each for every dimension of CSR – each on a 7-point scale from 1 representing strongly disagree to 7 representing strongly agree to the statement: ‘‘I believe that businesses must…’’.Although identical sets of factors were extracted for German, French and American consumers in the Maignan study, exploratory factor analyses on our samples revealed some strong crossloadings (>0. 55).

Having dropped a few items with cross-loadings and low factor loadings, an identical set of factors as per Maignan (2001) emerged from Occupation Chinese Consumers’ Perception of CSR our samples. The varimax rotated component matrixes are reported in panel A of Table III. Bartlett’s test of sphericity was signi? cant at the 0. 001 level for the two samples which implies the presence of non-zero correlation among the 16 items.The overall measure of sampling adequacy (MSA) was above the cut-off point of 0. 5. Overall, these data satisfy the fundamental requirements for factor analysis (Hair et al. , 1998).

Across the two samples, the item statements were consistently regrouped into four factors: ECO, LEG, ETH and PHI, measuring the degree to which respondents believe that businesses must perform their functions in economical, legal, ethical and philanthropic manner, respectively. The reliability scores of all averaged scales of all factors for both samples are above the usual cut-off level of 0. 7 (see panel A of Table III).The resulting factors appear to be posi- 125 tively interrelated (see panel B of Table III for the correlation coef? cients among factors). Thus, collectively, the four factor model used by Maignan (2001) can be applied for the two Chinese cities in our study.

The correlation statistics reported in Table III (panel B) also highlights the relationships among the four types of CSR and the overall responsibility item included in the survey: ‘‘I believe that businesses must make efforts to behave in a socially responsibility manner. ’’ For the Hong Kong sample, all responsibility components were found to signi? antly correlate with the overall responsibility item. This implies that Hong Kong consumers consider all four types of responsibilities as part of social responsibility. In the Shanghai sample however, economic responsibilities do not correlate signi? cantly with the overall responsibility item.

TABLE III Factor and correlation analysis Shanghai LEG PHI ECO ETH ETH Hong Kong ECO PHI LEG Panel A: Factor analysis leg2 0. 862 0. 148 leg1 0. 818 0. 194 leg3 0. 685 0.

187 leg4 0. 677 0. 385 phi2 0. 13 0. 856 phi3 0. 293 0. 796 phi1 0.

281 0. 78 eco2 )0. 016 0. 054 eco1 )0. 136 )0. 02 eco3 0. 385 0.

05 eco4 0. 397 0. 18 eth2 0.

209 0. 309 eth1 0. 432 0. 243 eth4 0. 362 0. 42 CVE 22. 91 41.

442 Alpha 0. 834 0. 838 Panel B: Correlation analysis LEG 1 PHI 0. 564** 1 ECO 0. 216** 0. 241* ETH 0. 674** 0. 659** Overall 0.

181* 0. 392** 0. 026 0. 177 )0. 014 0. 018 0. 077 0. 069 0.

061 0. 895 0. 888 0. 674 0. 659 )0. 039 0.

107 0. 086 59. 622 0.

816 0. 239 0. 15 0. 285 0. 225 0. 193 0. 212 0. 348 )0.

107 )0. 067 0. 324 0.

324 0. 839 0. 738 0. 702 76. 645 0. 882 eth3 eth2 eth1 eth4 eco2 eco1 eco4 eco3 phi3 phi2 phi4 leg2 leg1 leg3 0.

867 0. 829 0. 783 0. 564 –0. 024 )0. 149 0. 303 0.

400 0. 250 0. 25 0.

328 0. 175 0. 152 0. 426 22. 542 0. 807 1 0. 259** 0. 649** 0.

561** 0. 329** 0. 002 0. 029 0. 056 0.

153 0. 861 0. 752 0. 710 0. 693 0. 039 0. 017 0.

161 0. 088 0. 298 0. 150 40. 153 0. 770 0. 314 0.

306 0. 303 0. 178 0. 014 0. 017 0. 097 0. 114 0.

862 0. 824 0. 716 0. 133 0. 320 0. 023 57.

258 0. 851 0. 155 0. 139 0.

278 0. 222 0. 180 )0.

037 0. 222 0. 225 0.

162 0. 027 0. 306 0. 853 0. 747 0. 674 72. 717 0. 786 1 0.

216** 0. 113 1 0. 309** ETH ECO PHI LEG Overall 1 0. 231* 0. 414** 0.

295** 1 0. 465** 0. 479** 1 0. 211* *, **, ***Refers to signi? cance at the 90, 95 and 99% level. 126Bala Ramasamy and Mathew Yeung examine the change in the R2 from Model A to Model B. In our case, the change in adjusted R2 shows how much explanatory power the selected CSR dimension adds to the nested model.

By entering the CSR dimension one at a time, we are able to compare the incremental explanatory powers of each dimension on the dependent variable. Results for the nested regression models are shown in Table IV. Similar to our previous results, Economic responsibilities appear insigni? cant in the Shanghai sample, while Philanthropic and Ethical responsibilities are very signi? cant. The change in adjusted R2 (last column) con? ms that Philanthropic and Ethical Responsibilities add signi? cant predictive power to the nested model, while Economic responsibilities add insigni? cant predictive power. For the Hong Kong sample, all four dimensions signi? cantly in? uence the degree of overall support for CSR.

We supplement our ? ndings from the descriptive statistics provided above with regression models. A multiple regression model that includes all four dimensions of CSR as predictors of the Overall Responsibility item was not possible due to serious multicollinearity problems. 1 We opted for the nested modelling strategy instead.

The procedure involves testing the signi? cance of the change in adjusted R2 from a nested model in which only the demographic variables are included as independent variables, and a full model in which both demographic variables as well as a selected CSR dimension is included. For example, assume that two regression models are built. Model A regresses the Overall Responsibility item on Age, Edu (education), Inc (Income) and a Gender dummy.

Model B regresses the Overall Responsibility item on Age, Edu, Inc and Gender, and in addition, a selected CSR dimension, say PHI (philanthropic).Thus, Model B is the full model while Model A is nested in Model B. The goal is to TABLE IV Nested regression model results C Shanghai V = PHI V = LEG V = ECO V = ETH Hong Kong V = PHI V = LEG V = ECO V = ETH V Age )0. 021 0. 208 )0.

026 0. 152 )0. 025 0. 184 )0. 017 0. 360 )0.

035** 0. 012 )0. 036** 0. 019 )0. 034** 0. 016 )0. 039*** 0. 010 Edu Inc Gender Fit 0.

238a 0. 172b,*** 0. 101a 0. 029b,* 0. 066a 0. 013b 0.

148a 0. 098b,*** 0. 309a 0. 183b,*** 0.

165a 0. 039b,** 0. 185a 0. 066b,*** 0. 216a 0. 084b,*** Beta p-value Beta p-value Beta p-value Beta p-value Beta p-value Beta p-value Beta p-value Beta p-value . 863* 0.

095 4. 906*** 0. 009 5. 142*** 0.

006 3. 669* 0. 075 6. 629*** 0. 000 8. 141*** 0. 000 6. 910*** 0.

000 7. 984*** 0. 000 0. 419*** 0. 000 0. 179* 0. 052 0. 135 0.

195 0. 279*** 0. 000 0. 421*** 0.

000 0. 207** 0. 035 0. 356*** 0. 006 0. 289*** 0.

002 0. 299** 0. 020 0. 254* 0. 073 0. 233 0. 103 0. 281* 0.

062 )0. 079 0. 254 )0. 136** 0. 075 )0.

101 0. 158 )0. 112 0. 132 0. 033 0. 551 )0.

008 0. 892 )0. 006 0. 917 )0.

028 0. 642 )0. 005 0. 936 )0.

021 0. 760 0. 001 0.

988 )0. 049 0. 473 0. 224 0. 256 0.

245 0. 263 0. 180 0. 415 0. 188 0. 389 )0. 199 0. 351 )0. 302 0. 197 )0. 73* 0. 093 )0. 250 0. 274 Notes: Dependent Variable = Overall Responsibility item. *, **, ***Refers to signi? cance at the 90, 95 and 99% level. a 2 R. b Changes in adjusted R2 from models with only demographic variables to models with a CSR dimension (V) and demographic variables. Chinese Consumers’ Perception of CSR CSR dimensions across and within countries A multivariate analysis of variance (MANOVA) was conducted to test the differences in the four dimensions of CSR between the two cities. Gender, age and education were entered as covariates for the same reasons described previously.The relevant multivariate test statistics2 show that collectively, respondents from the two cities have the same beliefs as to what businesses must do. Note that the results remains the same even when insigni? cant covariates are excluded. Subsequent ANCOVA and LSD posthoc tests were then performed to test the differences of each individual dimension (ECO, LEF, ETH and PHI) between the two samples. The results are reported in panel A of Table V. As expected, the results are consistent with the multivariate test statistics, showing no difference in any type of corporate social responsibility between the two cities.Similarly, an ANCOVA was conducted to test the differences among the four dimensions (both samples together) with gender, age, education and country factors entered as covariates. The differences among the dimensions are strongly signi? cant (F-test = 20. 42, p < 0. 001), implying that consumers expect businesses to perform a speci? c type of responsibility relatively more than others. Subsequent LSD posthoc tests were then conducted again to test the differences among the four dimensions for each city. 127 Results show signi? cant differences among the four dimensions.The statistical orders are reported in the last row of Table V. For both samples, economic responsibilities rank most important while philanthropic activities rank least important. Discussion Consumer support for socially responsible businesses Are Chinese consumers supportive of CSR? Our ? ndings provide an af? rmative answer to this question. The mean response of above 5 (out of 7) for both cities is an indication that CSR is important among Chinese consumers. Compared to the results found by Maignan (2001) for the West (4. 95, 5. 19 and 4. 0 for France, Germany and the US, respectively), our scores for Shanghai and Hong Kong are both higher. A direct comparison with previous results can be problematic since there is a time lag of about 7 years between Maignan’s survey and our own as well as some differences in the composition of the sample. Nevertheless, our results are consistent with the McKinsey (Bonini et al. , 2007b) survey which ? nds that Chinese consumers tend to consider companies to be more friendly, trustworthy, caring, generous and powerful and less deceitful, arrogant and greedy that their European counterparts.Thus, a greater degree of TABLE V Differences between cities and responsibilities Dependent Measures Univariate F-test (among countries) Shanghai Means Hong Kong Post-hoc LSD test Panel A: Univariate F-tests for differences in types of responsibilities among cities ECO 0. 007 (p = 0. 933) 5. 664 5. 664 5. 412 5. 364 LEG 0. 014 (p = 0. 907) ETH 0. 033 (p = 0. 856) 5. 169 5. 067 PHI 0. 393 (p = 0. 531) 4. 871 4. 986 Shanghai Panel B: Univariate F-tests for differences across responsibilities Univariate F-test (among factors) 13. 912 (0. 00) Post-hoc LSD Test PHI < ALL OTHERS; ETH < ECO Hong Kong CH CH CH CH = = = = HK HK HK HK 9. 467 (0. 000) PHI < ECO; ETH < ECO; LEG < ECO PHI < LEG 128 Bala Ramasamy and Mathew Yeung new concept (Zhou, 2006). Introduced initially by foreign enterprises, the involvement of the media, the state and the general public was low. At about the beginning of the century, several government departments started to pay more importance to CSR, particularly because there was a fear that CSR would be linked to trade activities.Since 2004, CSR has been actively promoted by the government among both state run and private enterprises as a means of promoting competitiveness. The involvement of the government, and the socialist past of China may explain the high consumer support for CSR in Shanghai compared to Hong Kong. In addition, rapid economic growth as a direct result of reform policies has resulted in a larger middle class population with increasing purchasing power. The growth in the purchasing budget can result in a more socially responsible consumption as consumers are able to make choices from various sellers.In the Chinese cultural context, the traditional saying, ‘one knows honor after getting rich’ (Lam and Hung, 2005) provides some justi? cation as to why there is an increasing demand for CSR among consumers in China. support among Chinese consumers for CSR compared to their western counterparts seems plausible. Although cultural orientation may be instrumental in the degree of consumer support of CSR, it argues in favour of Maignan’s (2001) view rather than those of Katz et al. (2001) and William and Zinkin (2006).In other words, the collective orientation of Chinese culture seems to be consistent with the support for CSR. The collective nature of Hong Kong and China can be seen from Geert Hofstede’s Cultural Dimension index (www. geert-hofstede. com). In particular, both Chinese regions scored low in Hofstede’s Individualism index when compared to their Western counterparts (see Appendix 2). The score of 20 for China is the lowest among Asian countries. The Communist ideology is said to have contributed to this. However, economic reforms over the last 30 years have in many ways changed the cultural orientation of the Chinese.Despite being a British colony and a market economy for a century, Hong Kong’s scores of 25 still re? ects a collective society. The marked difference in the individualism index between Chinese and western societies calls for greater co-operation between consumers and businesses in the former rather than through strong consumer activism as is common in the latter. The argument that consumer support for CSR is dependent on levels of economic development cannot be supported by our results. Shanghai, with the lower GDP per capita has the higher consumer support scores.Our results are consistent with those of Chapple and Moon (2005) which found that national economic performance was unable to explain the high degree of CSR penetration in India as opposed to more developed countries like Japan and Singapore. Although one could argue that the understanding of social issues is greater in developed economies, CSR issues have gain prominence even in emerging economies, particularly due to role of the mass media in increasing awareness. The mass media in China and Hong Kong have been highlighting CSR issues like the environment and working conditions more regularly over the last decade.For instance, CSR issues were raised in the National People’s Congress and the Chinese People’s Political Consultative Conference held in 2008 and received intense media attention (China Daily, 7 March 2008). Over the last 10 years, support towards CSR has improved considerably in China, despite being a Consumer evaluation of corporate social responsibilities Our result con? rms that Chinese consumers are able to differentiate among the economic, legal, ethical and philanthropic responsibilities of businesses, thus con? rming the use of Carroll’s CSR pyramid in a Chinese context.However, the nature of differentiation among these responsibilities seems more varied than Western consumers. First, although the support for the four responsibilities is above the neutral point, consumers in Shanghai do not consider economic responsibilities as a social responsibility of businesses. In this sense, Shanghai’s results are consistent with those found in the Maignan study of the West. In Hong Kong, there seems to be a general perception that all four components make up social responsibility. Thus, Hong Kong consumers may relate efforts at maximizing pro? s and decreasing costs to job protection and/or increased income among employees. However, in Shanghai, there may be an ‘‘us and them’’ attitude where economic performance is seen to bene? t only employers. This may be the result of Chinese Consumers’ Perception of CSR China’s transition to a market economy which has resulted in large income inequalities. The emergence of an elitist entrepreneurial group who are owners of businesses – well connected, well to do – may have created an environment where economic objectives is perceived to bene? t only a minority and not the general consuming population.Second, our post hoc and LSD tests show that economic responsibilities are considered to be the most important responsibility of the ? rm from a consumer perspective. In this regard, Chinese consumers are consistent in their evaluation and more similar to their American counterparts. Maignan (2001) points to the individualistic ideology among American consumers, but this may not explain our results among Chinese consumers. The pragmatic approach among the Chinese to protect their own ‘‘rice bowl’’ by emphasizing economic responsibilities is perhaps a more reasonable explanation.Thus, one could generalize and state that Chinese consumers consider economic responsibilities of a ? rm from a broader perspective, i. e. not merely pro? t maximization. The fact that companies create jobs and in some cases, provides housing and meals to their employees, could explain the degree of importance that consumers put on economic responsibilities. It is also interesting to note that philanthropic activities are least important both in Shanghai and Hong Kong, although this may be the most common form of CSR.In a survey of good CSR practices in Hong Kong for example, 7 out 10 companies were found to support their communities through employee volunteering, cash donations and donations in kind (Mahtani and Leo, 2007). In another survey involving 890 companies in China, it was found that most companies equate CSR with charitable activities (China Daily, 27 October 2006). Philanthropic activities may be less complicated and might receive media attention, but it is clear that the expectation by consumers and the actions by businesses are clearly divergent.In general, our results for both Chinese cities tend to be quite different from the European ones, despite both communities being more communitarian in their cultures. Economic progress and wealth is relatively new to China. In fact, Hong Kong is among the ? rst territories to experience rapid economic growth in Asia (circa 1970s). China’s economic reform went into full force only in the early 1990s. Thus, one could argue that Chinese consumers do 129 agree that economic responsibilities take priority, but not at the expense of other responsibilities.Implications and limitations Three important implications for businesses stand out from our results. First, consumer perception of businesses’ responsibilities are so varied that one common CSR strategy across the entire Greater China is not practical. Comparing just two cities within the region result in distinct perception among consumers. Multinationals need to adapt their strategies to suit the needs in each location. In Hong Kong, economic performance can be highlighted as good CSR practice but not necessarily in Shanghai. A good balance in the reporting of economic and other CSR practices is required.Second, despite having high expectation of businesses in general, there is also good support from consumers for good CSR practices and products. Chinese consumers are willing to reward such behaviour. Thus, businesses should not underestimate the Chinese consumer just because they may not be vocal in their demand. In this regard, CSR practices need not be considered purely as costs. Though the Chinese consumer market is relatively new, there is willingness on their part to pay for good CSR practices. Third, purely philanthropic efforts may not be suf? ient to be on the good side of consumers. While philanthropic activities are important and seen as part of social responsibility, other dimensions like ethics need to be given more urgent attention. We suggest that companies highlight their contribution to their shareholders, employees and other stakeholders. Similarly, emphasizing an ethical approach to business, such as embedding these into the company’s mission or motto, might be appropriate. Like Maignan (2001), our study also suffers from a small sample bias. Thus, the above implications have to be seen within a limited erspective. In particular, the sample suffers from two limitations. First, the sample came from the ? nancial sectors in Shanghai and Hong Kong. As a result, our results need not represent the general consumer population. Our sample is perhaps more educated and richer than the general public. Thus, the degree of awareness of CSR and the willingness to exercise consumer sovereignty might be higher than the average person. It is more 130 Bala Ramasamy and Mathew Yeung I would pay more to buy products from companies that show care for the well-being of our society.If the price and quality of two products are the same, I would buy from a ? rm that has a socially responsible reputation. I believe that businesses must: Maximize pro? ts. Control their production costs strictly. Plan for their long term success. Always improve economic performance. Ensure that their employees act within the standards de? ned by the law. Refrain from putting aside their contractual obligations. Refrain from bending the law even this helps improve performance. Always submit to the principles de? ned by the regulatory system.Permit ethical concerns to negatively affect economic performance. Ensure that the respect of ethical principles has priority over economic performance. Be committed to well-de? ned ethical principles. Avoid compromising ethical standards in order to achieve corporate goals. Help solve social problems. Participate in the management of public affairs. Allocate some of their resource to philanthropic activities. Play a role in our society that goes beyond the mere generation of pro? ts. likely that our sample is representative of the middle income subset within their respective cities.Secondly, there is a tendency for consumer intent to differ from their actual behaviour at the marketplace. For instance, though consumers may say that they are willing to pay more for goods and services produced by CSR active ? rms, whether they will behave in such a manner is still doubtful. Further research which simulates actual market place behaviour among Chinese consumers is necessary. Future studies need to extend the sample to include other regions in Greater China including Taiwan and inland Chinese cities. Notes In some cases the correlation coef? ients between the CSR dimensions were above 0. 6. 2 MANOVA results: Pillai’s Trace = 0. 005, Wilks’ Lambda = 0. 995, Hotelling’s Trace = 0. 005, Roy’s Largest Root = 0. 005. 1 Appendix 1 Consumers’ support and evaluation of business responsibilities I believe that businesses must make efforts to behave in a socially responsible manner. I would pay more to buy products from a socially responsible company. I consider the ethical reputation of businesses when I shop. I avoid buying products from companies that have engaged in immoral actions.Appendix 2 Hofstede’s cultural indices Power distance China Hong Kong France Germany United States 80 68 68 35 40 Individualism Masculinity Uncertainty avoidance 30 29 86 65 46 Long term orientation 20 25 71 67 91 66 57 43 66 62 118 96 31 29 Source: www. geert-hofstede. com. Chinese Consumers’ Perception of CSR References Auger, P. , T. M. Devinney and J. J. 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China E-mail: [email protected] edu Mathew Yeung School of Business, Open University of Hong Kong, 30 Good Shepherd Street, Homantin, Kowloon, Hong Kong E-mail: [email protected] edu. hk Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.