The Significance of CSR in the Pursuit of Business Excellence and Competitiveness: Evidence from the Greek Supermarket Industry

Abstract

A primary management concern when CSR is used as a tool to build business excellence is whether it will result in a discernible influence on the competitiveness of firms. This concern is more pronounced in the hypercompetitive, customer-centric grocery industry. Despite the existing body of research, no study has combined CSR’s effects on competitiveness and business excellence into a model. The current study proposes and validates a data-driven conceptual model that aims to assess whether the integration of CSR into supermarkets’ (S/Ms’) business excellence practices can enhance their competitiveness. Relationships among the validated constructs were examined using structural equation modeling. Findings indicated that the competitiveness of supermarkets can be enhanced by incorporating CSR into the process of pursuing business excellence, but CSR may be deprioritized in favor of more pressing performance-related issues. Large S/M firms could mentor and advocate for smaller stores and encourage CSR integration through government initiatives.

1. Introduction

Social responsibility as a business concept has established an important foothold in various industries in many parts of the world. Corporate social responsibility (CSR) has become an essential part of competitive strategy [1,2] and the business excellence mindset [3,4].

Porter and Kramer [5,6] advocated for integrating CSR into a firm’s strategy and targeting social and environmental contributions that provide clear business benefits. However, advancing CSR practices may be challenging due to industrial and firm-specific barriers [7]. Many owners and leaders, especially those of small firms, are skeptical about investing in CSR due to the disadvantages and costs [8,9] it may impose on the structure of their resources and operational processes. Even if firms have the knowledge and means to allocate resources to carry out CSR best practices, balancing societal and environmental objectives with economic performance can prove to be a major challenge [10].

A key driver in achieving this balance is maintaining or increasing a company’s competitiveness through the contribution of CSR in the process of reaching excellence [1,11,12]. Although the process of business excellence is not considered a strategy per se, it is the mechanism through which the successful implementation of a strategy can be achieved [13,14]. The two constructs are interwoven, and therefore, integrating CSR into the processes and operations of pursuing business excellence can be a major step for a company to integrate CSR into its strategy.

Companies in the customer-centric supermarket and grocery store industry, which is characterized by low profit margins and many small and medium-sized businesses, face a unique challenge in striking a balance between CSR goals and economic responsibilities [15].

According to the European Commission, “the food and drink sector contributes to some 23% of global resource use, 18% of greenhouse gas emissions, and 31% of acidifying emissions”[16]. Supermarkets have extraordinary and excessive dominance in the global food chain [17], with sales exceeding USD 1.38 trillion worldwide in 2021 [18]. Consumer demands for socially responsible behavior target them as the last nodes in the food value chain, which puts pressure on the other parts of the food and beverage value chain. Therefore, supermarkets have the responsibility to demonstrate good corporate citizenship through corporate social responsibility [17] and managerial commitment [19] to view social responsibility programs as integral to shaping business practices that enhance the company’s operations rather than as supplements [6,20].

The impact of CSR on firm competitiveness has been a major management question, with numerous studies confirming its contribution to various sectors and industries [21,22]. Although grocery retailers allocate resources towards CSR to improve their competitiveness [23], there is limited research on the industry and a lack of studies on the contributions of CSR in the supermarket sector [24].

From a strategic perspective, a primary management concern when CSR is used as a tool to build business excellence is whether it will have a positive impact on the competitiveness of supermarkets. Despite studies on the influence of CSR on competitiveness and its contribution to business excellence, no study has integrated both influences into a model, suggesting that companies that integrate CSR principles into their ongoing business practices in pursuit of excellence can increase CSR’s contribution to competitiveness.

Using a marketing strategy lens, this study proposes a model showing aspects that influence CSR’s contribution to competitiveness in the customer-driven sector of supermarkets, with a focus on Greece. In particular, the study seeks to understand how integrating CSR into the pursuit of business excellence affects supermarkets’ competitiveness, considering the importance of non-financial variables and outcomes such as customer and employee satisfaction, product and service quality, brand perception, and overall business performance.

To achieve its goal, the study addresses three research questions: (1) What is the impact of integrating CSR into ongoing business practices on supermarkets’ competitiveness, particularly in terms of enhancing business excellence and meeting societal and environmental objectives while maintaining competitiveness? (2) What are the primary barriers and incentives for supermarkets in Greece to invest in CSR activities and integrate them into their strategic operations? (3) To what extent do CSR award prizes influence supermarkets’ willingness to invest in CSR actions and their overall competitiveness? Drawing on existing theory and empirical evidence, a conceptual framework was established, serving as the foundation for developing a survey instrument. This instrument was then distributed to gather data from a randomly selected sample of 311 supermarkets. A structural equation model was performed to test hypothesized relationships among the extracted and validated factors. The model’s empirical validation will show that implementing CSR improves competitiveness, suggesting that managers should integrate CSR into the fabric of their businesses rather than treat it as a mere ancillary project. The findings have practical implications for supermarket managers, policymakers, and educators, offering guidance on promoting CSR adoption and enhancing competitiveness. Overall, the study targets a diverse audience, including academic researchers, practicing managers and executives, policymakers and government officials, industry associations, and advocacy groups, as well as students and educators.

The rest of the article follows this structure: It begins with a theoretical background section that discusses the competitive nature of the supermarket industry, emphasizing non-financial indicators like customer satisfaction and corporate social responsibility (CSR). It explores marketing literature, CSR definitions, and the relationship between CSR, financial performance, and intangible resources. It then transitions into the conceptual framework and introduces a model illustrating CSR’s contribution to competitiveness and business excellence, addressing factors like CSR award prizes, willingness to invest in CSR, and the lack of CSR knowledge. Following this, the methodology section details the research approach, data collection methods, and findings from exploratory and confirmatory factor analyses, along with structural equation modeling. Lastly, the discussion section interprets the results, discusses implications for the supermarket industry, addresses limitations, and suggests avenues for further research. The article ends with the conclusion section, which summarizes the main findings and discusses their broader significance.

2. Theoretical Background

Three implicit premises underlie the current theoretical framework. First, considering the competitive nature of the supermarket industry, it is expected that a business’s strategic approach, which places emphasis on satisfying the needs and preferences of consumers, will be tightly linked to a marketing strategy that focuses on ensuring customer satisfaction. Second, this study acknowledges the supremacy of non-financial indicators in analyzing a firm’s competitiveness, particularly in the supermarket industry, which includes firms of various sizes. This study focuses on intangible factors that affect competitiveness, which include customer satisfaction, product and service quality, employee satisfaction, and outcomes like customer loyalty, brand equity, and shareholder returns. Third, the conceptual model shows managers’ opinions on intangible measurements related to CSR and marketing performance.

The marketing literature has recognized customer satisfaction as an essential part of company strategy and a firm’s competitiveness [25]. In the realm of CSR, customer satisfaction comprises a wide range of social stakeholders, including shareholders, customers, consumers, and citizens.

Despite its widespread use, CSR has been defined in a variety of ways [26,27], resulting in contradictory evidence of its effectiveness [28]. Definitions of CSR are based on their dimensions, which academics have defined, addressed, and investigated through normative or positivist perspectives [27]. CSR scholars address this complexity by confining its theoretical framework to a specific environment (e.g., business excellence and financial performance) and using associated constructs (customer satisfaction, brand loyalty, market shares, and profitability). In the same vein, CSR has been conceptualized as a strategic factor that enhances business competitiveness [5,29,30].

From the perspective of a marketing strategy that places a premium on customer needs, competitiveness can be measured by non-financial metrics attained relative to rival companies. Traditionally, financial measures such as productivity or return on assets have been used as indicators of competitiveness [31]. Studies have shown that there is conflicting evidence regarding the relationship between CSR and financial performance (FP) indicators and that CSR’s dimensions have a larger influence on non-financial performance than on financial performance [32]. Ref. [33] found that the firm’s intangible resources fully mediate the relationship between corporate responsibility and its financial performance. Furthermore, measurements of intangible resources are expected to be less dependent on the size of the company than those for tangible resources.

In the supermarket industry, intangible variables, including product and service quality, customer satisfaction, brand recognition, and loyalty, are vital to a firm’s competitiveness [34,35,36]. Consumers are the group that has been paying more attention to the studies of the CSR-FP relationship in recent years, as they are more receptive to CSR [37,38]. According to studies cited in the marketing literature, customer satisfaction is an important aspect of business strategy and a key driver of long-term profitability and market value [39].

While CSR initiatives are often associated with external stakeholder benefits, such as enhanced reputation and customer loyalty, their impact on internal stakeholders, particularly employees, is equally significant. Empirical research consistently demonstrates a positive association between CSR and employee satisfaction [40,41]. Employee satisfaction influences the profitability of a firm, service quality, consumer loyalty, and brand equity [42,43]. Satisfied employees, who are motivated and committed due to perceived CSR efforts, contribute positively to the firm’s competitive position [40] and financial performance [41].

There is a close connection between strategic CSR and stakeholder theory. Porter and Kramer [5] posit that CSR attains strategic status when a business incorporates its social impact into its overall strategy and incorporates a social element into its value proposition. Chandler and Werther [44] stated that the concept of strategic CSR entails the integration of a holistic CSR perspective into a company’s strategic planning and fundamental operations, thereby managing the organization in the best interest of a diverse range of stakeholders with the aim of attaining optimal economic and social value over a prolonged period. That is, for the CSR strategy to be successful, the company must satisfy its key stakeholders, adopt business practices to manage its resources and processes effectively, and simultaneously produce profits and achieve sustained performance. One of these practices that is intended to enhance business performance is the use of business excellence frameworks or models.

3. Conceptual Framework

This study’s conceptual framework is developed with the aim of illustrating how the contribution of CSR to competitiveness is affected when CSR is considered a core business function in the pursuit of excellence. The conceptual framework consists of the following interrelated constructs: contribution of CSR to firms’ competitiveness, contribution of CSR to business excellence, contribution of CSR award prizes, willingness to invest in CSR actions, estimation of costs and budgeting increases for CSR activities, contribution of management’s efficiency, the firm’s engagements in social and environmental activities and projects, and the company’s lack of CSR knowledge.

3.1. Contribution of CSR to Firms’ Competitiveness

While CSR has predominantly been considered within the framework of larger corporations [29], it also serves as a strategic instrument for augmenting the competitiveness of small and medium-sized enterprises [30], including supermarkets [17].

Customer satisfaction mediates the relationship between CSR and corporate performance [45,46], giving firms a competitive edge [12]. CSR efforts also improve brand perception and customer loyalty [47,48].

The extant literature provides clear evidence of the favorable effects of CSR on employees [49,50]. When CSR initiatives are focused on an organization’s internal operations, CSR performance creates a safe and supportive workplace, which raises employee satisfaction [49,51].

Part of internal CSR practices is to enhance the workplace environment through ethical employment and labor practices. According to feminist CSR theory, small enterprises’ internal stakeholders are employees and families [52]. Work–life balance (WLB) and childcare policies that support families improve employees’ mental health and job and life satisfaction [53]. Work–life balance initiatives can improve employee well-being, reduce absenteeism, and retain expertise, especially during economic downturns [54]. A family-friendly workplace increases job satisfaction and altruism [55]. WLB is a societal obligation and social responsibility to employees in the EU [56], whereas in the US, it has been linked to higher firm performance and competitive advantage [57,58].

3.2. Contribution of CSR to Business Excellence

There is a lack of surveys that analyze the viewpoints of managers regarding the extent to which the implementation of a specific BEM has facilitated the achievement of corporate sustainability goals [3]. Ivascu et al. [1] conducted a study that highlighted the significance of corporate social responsibility (CSR) and operational excellence in mediating the relationship between competitive strategies and performance in the banking industry. Alhih and Tambi [4] found that CSR practices have a major impact on business excellence and mediate between TQM and business excellence.

A business excellence strategy that integrates and emphasizes CSR will become increasingly ingrained in the work experience. Companies with concerns about this strategy’s costs should consider its potential for mutual benefit. This strategy can improve the firm’s reputation among external and internal stakeholders [59,60], increase employee engagement and satisfaction, and inspire them to perform well [61].

3.3. Contribution of CSR Award Prizes

Awards can lead companies that have failed to distinguish themselves to accelerate their efforts with further actions to gain the recognition they believe they deserve [62]. Studies have shown that CSR awards can create both intangible and tangible benefits for firms [63,64] when effectively communicated [64,65].

Business Excellence Awards are often seen as a means through which a company might achieve a competitive edge when operating in a highly competitive industry [66]. Firms that witnessed competitors’ winning CSR awards undertake more CSR activities in the post-award period than the pre-award period [67]. Ref. [64] found that competitors’ CSR awards may motivate non-winners to invest in CSR.

It follows that awards can influence the willingness of companies to adopt CSR practices. However, the direction (positive or negative) of this influence is not entirely clear, especially for small companies, primarily due to the implied costs associated with winning awards and the budgetary limitations they often face. According to Gallus and Frey [68], awards can discourage companies that do not excel, as they give up the effort to distinguish themselves. Shi et al. [69] argued that firms that fail to distinguish themselves are driven to destructive actions.

3.4. Willingness to Invest in CSR Actions

A company’s willingness to engage in CSR is a key aspect of creating a competitive industry [70]. According to ISO 26,000, “the essential characteristic of social responsibility is the willingness of an organization to incorporate social and environmental considerations in its decision-making”[71]. Although small businesses are unable to have an ISO certification, many of them engage in CSR, often without realizing it [72].

Despite consumers’ increasing willingness to pay more for healthier and more sustainable products [73], firms’ reluctance to engage in CSR has been identified as a barrier to CSR implementation and commitment, mainly due to the costs arising from the required processes [74,75].

The owner or management is responsible for formulating and executing CSR initiatives and evaluating the feasibility of allocating resources towards CSR endeavors [76]. Additionally, they determine whether to improve the CSR orientation and implementation of their company [76,77], thereby showing their willingness and commitment towards CSR.

The significance that a corporation places on CSR can be manifested through its determination to allocate resources towards or abstain from investing in CSR during periods of economic recession [78]. Recession-era CSR initiatives when resources are more restricted may stand out as more genuine demonstrations of social responsibility and consumer stewardship [79].

3.5. Estimation of Costs and Budgeting Increases for CSR Activities

Despite acknowledging the significance of corporate social responsibility (CSR), a company will evaluate the expenses linked to its investment. A low cost–benefit ratio may make CSR practices unsuitable for gaining a competitive edge [19]. A key factor in achieving corporate success is proper cost management. Most organizations emphasize cost reduction and performance improvement across all operations to maximize cost-effectiveness and financial efficiency [80]. Financial health and CSR project costs affect managers’ willingness to invest in CSR [19,74]. The expense associated with implementing CSR is frequently deemed exorbitant, particularly in cases where SMEs are deficient in financial capital [9,76,81] and when the primary economic priority is often survival [26].

The Euromonitor survey [82] found that high CSR costs and limited budgets are the biggest barriers to engaging in more sustainable practices. The return on investment in CSR is industry-specific. Unlike in the energy, apparel, and forest industries, improved financial performance in the food business does not lead to CSR project investment despite a reciprocal contribution [83]. Furthermore, the perceived efficacy of internal motivation to engage in CSR as a cost-cutting measure appears to be less compelling to managers of small firms [84]. Therefore, increased supermarket budget investment because of higher performance is not indicative of future CSR spending.

3.6. CSR’s Efficacy

Existing literature examines the efficacy of CSR in terms of its impact on the internal (e.g., employees and working environment) and external (e.g., community and customers) business environments [1,85]. In the current study, CSR programs’ efficacy is optimized through communication campaigns and managers’ opinions of CSR’s impact on business excellence. Advertising, publicity, social media platforms, and website reporting are effective ways to communicate the company’s CSR message to stakeholders [86,87]. CSR awareness enhances customers’, employees’, and investors’ opinions and attitudes towards the company that performs CSR initiatives [88], which can boost its competitiveness [89].

Successful management efforts towards excellence are crucial to maximizing the quality of products and services, stakeholders’ satisfaction, and firm performance [90]. As (p.165, [91]) pointed out, “Successful implementation of BE is a long-term endeavor that needs ongoing commitment and persistence”.

3.7. The Firm’s Engagements in Social and Environmental Activities and Projects

There are fundamental CSR challenges that all firms, regardless of size, must address. These include creating a safe and positive working environment that supports diversity [92], distributing wealth equitably, protecting the environment [93], strengthening community relationships [94], and doing business with integrity and ethical standards [95].

The authors of the present study conducted desk research to document the CSR practices of supermarkets in Greece through a thorough examination of pertinent CSR reports accessible on the internet and posted on their respective official websites. Findings revealed that only three of the six large supermarkets, which hold over 80% of market sales, adopt international CSR frameworks and standards. The common CSR efforts that the Greek supermarkets share irrespective of their size are towards community (charitable donations, donations in kind, local regeneration, volunteerism), participating in ecological projects (recycling, energy and waste management, pollution control), and employee well-being (WLB). The contribution of employee volunteering, such as blood donation, was found to be substantial in the overall CSR endeavors.

Greek supermarkets demonstrate a notable level of effectiveness in their CS endeavors pertaining to their workforce. Nevertheless, only the two multinational corporations have presented explicit proof of possessing established protocols that prohibit discriminatory practices and endorse equal employment opportunities. Incorporating CSR into one’s employment has been shown to have positive effects on both firms and employees in terms of employee motivation, skill development, employee satisfaction, and work engagement [96,97].

3.8. Lack of CSR Knowledge

The lack of CSR knowledge has been considered an important barrier to implementing CSR practices, especially for SME [81,82,98]. The current international frameworks and standards that provide guidance for businesses in the adoption and implementation of CSR practices are primarily geared towards large enterprises [99]. Small, locally owned supermarkets are often thought to have limited CSR knowledge and focus on healthier products and charitable donations to address social and economic issues in their communities.

The notion of CSR is subject to evolution and dynamism in tandem with the changes in economies and societies [100], thereby rendering its conceptualization a challenging task. Also, CSR is a complex and multifaceted concept, posing a challenge for proprietors and managers of numerous SMEs to comprehend it and evaluate its efficacy in their enterprises. This, in turn, can influence their willingness to adopt CSR initiatives [75].

4. Research Methods

The objective of this study is to develop a research instrument that can effectively assess the conceptual framework. Subsequently, a data-driven conceptual model will be derived from the instrument, which will be used as a basis for formulating and empirically testing the research hypotheses.

The approach employed for the empirical construction of the instrument relied on studies conducted by specialists in scale development [101,102]. The research progressed through five distinct phases. The initial phase encompassed the processes of generating items, assessing the content and face validity of the scale, and conducting pretesting of the questionnaire. The second phase encompassed three key components: sampling, a pilot study, and the primary survey. The third phase encompassed the purification and validation of the scale. During the fourth stage, the conceptual model and related hypotheses were developed. The final stage encompassed the specification and estimation of the structural equation model (SEM).

Two experts conducted face and content validation on the initial set of fifty construct-specific items. The process yielded an overall total of 42 items (Appendix A), which were then refined by pretesting the questionnaire on a purposive sample of 12 firms.

Sampling and Data

The sample frame comprised 2285 independent supermarkets and 2492 chain supermarkets. A sample size of 329 independent SMs was considered representative, as shown in the table by (p. 608, [103]). Out of the total of twenty S/M chains, five of them contribute approximately 80% of the market revenues. A total of 344 companies were included in the sample, as it was determined that fifteen firms sufficiently represented the S/M chains.

Based on the pilot survey’s response rate (62%), unused questionnaires (4.6%), and the 350-questionnaire goal, a decision was made to distribute 600 questionnaires. For data gathering, non-proportional stratified random sampling was applied. Local chambers and websites were consulted to locate S/M’s in the capitals and important cities of Greece’s thirteen geographical regions. A list of S/M’s was compiled for each city, and participants were chosen at random. The number of questionnaires distributed to the supermarkets in the cities was based on the population size of each region rather than the total number of S/M’s (“non-proportional sampling”) present in each region.

Due to the widespread distribution of the study’s units, a web-based survey was conducted using Google Forms to gather data from businesses. Businesses were contacted via phone to inform them about the upcoming survey, ask for their consent to participate in it, and verify their email address before sending out the email invitation. Participants were also given the option of filling out the questionnaire through phone interviews. After the first contact, 86% consented to take part in the research. The remaining percentage was made up of new contacts for S/Ms found on the initial list. The targeted sample received an email invitation with a link to the online questionnaire and informed consent.

For S/M chains, 14 questionnaires were completed using face-to-face interviews and after consultation with company management. The total number of completed questionnaires collected was 346; 311 were deemed usable for the purposes of the research, as 9 questionnaires returned blanks, and 26 displayed a strong pattern in their responses.

The responders’ profiles show that most of them are top managers or owners (92%), have a higher education (65%), and are well experienced (82%). The majority of the sample firms are sole proprietorships (54.3%). Almost 25% are limited-by-shares companies (S.A.s); 14.5% are partnerships (GPs); and only 5.1% are limited liability companies (LLCs). Three firms were classified as multinationals. The sample businesses employ an average of 271 individuals, with 2001 serving as the average year of establishment. When questioned about their firm’s position in the S/M sector, 55.0% of respondents stated that it maintains a competitive position, while 5.3% stated it is in the lead. The remaining 39.7% of respondents believed that their company lagged behind the competition.

Figure 1 illustrates the theoretical framework examined in the study. The framework delineates the influencing mechanism of CSR’s contribution to business excellence and its contribution to competitiveness while also considering the role of other factors expected to influence this relationship.

5. Results

5.1. EFA Results

A common factor analysis was performed on the initial pool of 42 items based on the theoretical constructs. Only two of the five cost-related items formed a factor; therefore, they were excluded from the subsequent analysis. Nevertheless, given their theoretical importance for CSR adoption, the cost items were considered potential covariates in the specification process of the structural equation model. Through repeated factor analysis with the direct oblimin rotation technique, six factors were extracted, incorporating 32 items with factor loadings over 0.5 (

Table 1. EFA results.

Items	Factors
	1	2	3	4	5	6
1. CSR contributes to the recognition of my company’s brand (BrandCSR).	0.908
2. CSR contributes to the satisfaction of my company’s customers (SatCuCSR).	0.838
3. CSR contributes to the pursuit of business excellence (BECSR).	0.836
4. CSR contributes positively to my company’s performance indicators (qualitative and/or quantitative) (PERFCSR)	0.809
5. CSR enhances my company’s ability to give back to society (SocCSR).	0.779
6. CSR contributes to the satisfaction of my company’s employees (SatEmCSR).	0.714
7. Employee participation in sports activities (e.g., marathons, etc.) for charity purposes (EmPCharSp).		0.929
8. Providing assistance to employees (other than financial benefits) that helps to balance their private and professional lives (e.g., a nursery in the company, etc.) (WLBCSR).		0.915
9. The voluntary blood donation of my company’s employees (EmPVBD).		0.886
10. My company’s participation in major international ecological projects (PInEcoPr).		0.853
11. The recruiting of job seekers from vulnerable communities (disabled persons, refugees, immigrants, etc.) (RecVSG).		0.830
12. Environmental initiatives within the context of my company’s operations (EnvInit).		0.812
13. Financial support for the activities of ecological groups (FSEcoG).		0.803
14. The financial support of various activities of the local community (culture, sports, etc.) (FSLocCom)		0.694
15. My company has been awarded at the European level for the CSR practises it implements (AwEur).			0.922
16. My company has been awarded at the national level for the CSR practises it implements (AwNat).			0.804
17. My company has been awarded at the local level for the CSR practises it implements (AwLoc).			0.742
18. My company has been awarded at a global level for the CSR practises it implements (AwGlob).			0.683
19. My company’s CSR initiatives are publicized and advertised (PromCSR).			0.566	.
20. Do you think your company contributes to employee satisfaction (EmSat)?				0.862
21. Do you think your company contributes to customer satisfaction (CuSat)?				0.848
22. Do you believe that your company, by adopting CSR strategies, provides products and/or services of excellent quality (CSRStrQual)?				0.677
23. Do you believe that the CSR practises you implement in your company are able to make it competitive (CSRComp)?				0.614
24. Do the CSR practises of your company push all employees to continuous improvement (CSREmImp)?				0.597
25. Based on the CSR practises implemented by my company, our customers consider it a model company on the way to business excellence (CSRCuBE).					0.900
26. Based on the CSR practises implemented by my Company, our employees feel proud and believe that we are heading towards business excellence (CSREmBE).					0.811
27. The implementation of CSR strategies has made a major contribution to the business excellence of my company (CSRStBE)					0.718
28. My company evaluates and measures the results of the CSR practises it implements (CSRReMeas).					0.704
29. CSR practises reduce the cost of operations in my company (CSRCostRed)					0.508
30. Do you believe that implementing CSR practises in your company is necessary, even during an economic downturn (CSRNecDown)?						0.697
31. Do you believe that your company should commit resources (money, manpower) to environmental protection, charitable purposes, and societal advancement (CommRes)?						0.603
32. There is still potential for improvement in my company’s implementation of CSR practises (PotImpCSR).						0.590
K-M-O Measure:	0.907
Bartlett’s Test of Sphericity (sig):	0.000
Eigen Value:	10.990	5.284	2.827	1.664	1329	1.001
Cumulative% of Variance	33.338	49.03	56.787	60.969	64.070	66.131

). The six factors accounted for 66% of the total variance.

The first factor includes variables that relate to CSR’s contribution to major sources of firms’ competitiveness and is therefore titled CSR’s contribution to competitiveness (CSRCOM). The importance placed on social and environmental initiatives is reflected in the second factor (SOCENV), and corporate social responsibility (CSR) awards and marketing efforts to communicate CSR initiatives are related to the third factor (AWARDPU). The fourth factor was considered to reflect the effectiveness with which management implements a competitive strategy. It contains variables related to respondents’ beliefs on whether their companies contribute to key performance indicators that require effective management (MANAGEFF). The variables in the fifth factor represent the contribution of CSR to business excellence (CSRBE). The last factor includes three variables that reflect the willingness of companies to engage in CSR practices (WILLCSR).

5.2. CFA Results

While there was statistical significance for the measured variables in the latent constructs, the findings of the initial CFA did not provide enough evidence to draw a firm conclusion on the model’s goodness of fit (χ²/df-ratio = 3.04, CFI = 0.89, IFI = 0.80, and RMSEA = 0.081). To improve the model’s goodness of fit, the items “financial support to the local community” and “CSR practises reduce the cost of operations in my company” were excluded due to the low values of their respective Square Multiple Correlations (SMCs). As suggested by [104], when a variable’s SMC value is less than 0.40 and it is not highly correlated with any other latent variable, then it may be safely excluded as irrelevant to the model.

Construct validity is established if face, convergent, and discriminant validity are acceptable [105]. That is, if survey respondents comprehend each scale item (face validity), the constructs are discriminative due to their variance differences (discriminant validity), and the set of items meant to measure a factor converges on that factor with substantial factor loadings (convergent validity). Convergence validity is assessed through the two criteria of reliability, Cronbach’s alpha, and composite reliability (CR), as well as the measurement of the average variance extracted (AVE) [105]. Cronbach’s alpha and CR values over 0.60, and ideally 0.70, indicate the reliability of the construct’s measured variables [105,106].

For convergence validity, a construct’s average variance extracted (AVE) score should be higher than 0.5; otherwise, the items explain more of the errors than the variance of the construct [104]. To assess discriminant validity, the Fornel criterion was applied where AVE > MSV and AVE > ASV. MSV stands for maximum shared variance, and ASV stands for average shared variance. Examination of the discriminant validity of the model showed that the latent variable MANAGEFF did not meet the ASV < AVE criterion (0.56 to 0.54), meaning that it is likely that one or more of its measurable variables are associated with another or other latent variables. A substantial cross-loading of the item CSRComp led to the insufficient discriminant validity of MANAGEFF and therefore its removal from the latent variable.

The final CFA was conducted with 29 variables pertaining to six factors. The results of the CFA are presented in

Table 2. CFA Results.

Indicator		Construct	Estimate	S.E.	C.R.	p	AVE	MSV	ASV	CR
SatEmCSR	←	COMPCSR	1.000 (0.729)				0.683	0.591	0.574	0.928
SocCSR	←	COMPCSR	1.122 (0.826)	0.077	14.503	*** 1
PERFCSR	←	COMPCSR	1.284 (0.836)	0.087	14.686	***
BECSR	←	COMPCSR	1.414 (0.818)	0.099	14.344	***
SatCuCSR	←	COMPCSR	1.106 (0.819)	0.058	18.932	***
BrandCSR	←	COMPCSR	1.409 (0.894)	0.090	15.728	***
EnvInit	←	SOCENV	1.094 (0.742)	0.049	22.324	***	0.720	0.173	0.272	0.947
RecVSG	←	SOCENV	1.282 (0.799)	0.092	14.003	***
PInEcoPr	←	SOCENV	1.393 (0.861)	0.092	15.136	***
EmPVBD	←	SOCENV	1.572 (0.911)	0.098	16.051	***
WLBCSR	←	SOCENV	1.667 (0.928)	0.102	16.374	***
EmPCharSp	←	SOCENV	1.000 (0.718)			***
FSEcoG	←	SOCENV	1.598 (0.934)	0.097	16.471
PromCSR	←	AWARDPU	1.423 (0.719)	0.123	11.533	***	0.524	0.308	0.399	0.844
AwEur	←	AWARDPU	0.759 (0.678)	0.044	17.055	***
AwNat	←	AWARDPU	1.000 (0.736)
AwGlob	←	AWARDPU	0.568 (0.578)	0.052	10.839	***
AwLoc	←	AWARDPU	1.505 (0.865)	0.117	12.849	***
EmSat	←	MANAGEFF	1.000 (0.767)				0.543	0.468	0.478	0.826
CuSat	←	MANAGEFF	0.946 (0.760)	0.051	18.465	***
CSREmImp	←	MANAGEFF	1.052 (0.748)	0.090	11.747	***
CSRStrQual	←	MANAGEFF	0.925 (0.667)	0.087	10.619	***
CSRCuBE	←	CSRBE	1.000 (0.898)				0.619	0.307	0.564	0.865
CSREmBE	←	CSRBE	0.926 (0.836)	0.049	18.829	***
CSRStBE	←	CSRBE	0.799 (0.684)	0.058	13.721	***
CSRReMeas	←	CSRBE	0.776 (0.701)	0.054	14.245	***
CSRNecDown	←	WILLCSR	1.000 (0.745)				0.539	0.591	0.502	0.778
CommRes	←	WILLCSR	1.230 (0.757)	0.104	11.831	***
PotImpCSR	←	WILLCSR	1.131 (0.689)	0.104	10.891	***

¹ *** p value less than 0.001.

, along with the measurements associated with convergent validity (AVE), discriminant validity (AVE, MSV, and ASV), and composite reliability. The composite reliability (CR) values are greater than the acceptable value of 0.7 and also greater than the corresponding AVE values, which exceed the threshold value of 0.5, indicating the convergent validity of the variables in the factors. The values of MSV and ASV corresponding to the six latent variables (Table 2) are smaller than the corresponding AVEs, indicating the existence of discriminant validity. Therefore, the six latent variables in the model are interpreted by their respective measurable variables, which have reliable and shared information between them and can measure the factor to which they belong.

The estimates of the goodness-of-fit indices of the model have improved to the extent that the model’s ability to fit the data is considered reasonable. The AKAIKE criterion, which decreased from 1577.30 to 1217.94, confirmed the improvement. At 0.91, the CFI and IFI indices were both over the acceptable threshold of 0.90 [105], indicating that the initial CFA had been successfully revised. RMSEA dropped below the 0.08 threshold of an adequate fit to 0.077 [105,107], and χ²/df decreased from 3.04 to 2.82, below the cut-off value of 3.0 [105]. All coefficients contributed significantly to the formation of latent variables, as shown by their statistical significance (p < 0.01). Large, standardized weights (>0.5) are indicative of structural validity, as they suggest that all the measured variables are significantly associated with the factors to which they pertain [105]. As the coefficients are large, the measured variables are sensitive to changes in the factor. For instance, if a company’s competitiveness improves as a result of CSR (COMPCSR), then all of the other variables that make up that factor will also improve significantly. The covariances of the six latent variables were found to be statistically significant (p < 0.01), as were the error variances of the measurable variables (p < 0.01).

5.3. Conceptual Model and Hypotheses

Having assessed the structure of the data and confirmed its construct validity, a conceptual model was built to reflect the hypothesized relationships among the variables (Figure 2). The model specifies that the contribution of CSR to competitiveness (COMPCSR) is expected to be directly influenced by the contribution of CSR to business excellence (CSRBE), management’s effectiveness in improving competitiveness (MANAGEFF), and the company’s engagement in social and environmental activities and projects (SOCENV). Awards, including communication efforts (AWARDPU) and the willingness of firms to implement CSR practices (WILLCSR), are anticipated to have indirect effects on CSR’s contribution to competitiveness (COMPCSR). CSR budgeting increases (BudgetInc), estimation of costs for CSR activities (EvalCostCSR), and lack of CSR knowledge (KnowCSR) were included as covariates to provide support for the causal processes.

The following hypotheses are proposed:

H1a: 

CSR’s impact on the firm’s contribution to business excellence (CSRBE) improves when the company participates in social and environmental initiatives (SOCENV).

H1b: 

The participation of the corporation in social and environmental activities (SOCENV) enhances the contribution of CSR to competitiveness (COMPCSR).

H2a: 

By contributing to business excellence (CSRBE), CSR increases its contribution to the competitiveness of the company (COMPCSR).

H2b: 

CSR’s contribution to fostering business excellence (CSRBE) has an impact on CSR awards and communication efforts (AWARDPU).

H3a: 

CSR’s contribution to achieving business excellence (CSRBE) is dependent on how well the company’s management executes its chosen competitive strategy (MANAGEFF).

H3b: 

The CSR’s contribution to achieving business excellence (CSRBE) is dependent on the management’s effectiveness in implementing the competitive strategy (MANAGEFF).

H4a: 

The willingness to invest in CSR practices (WILLCSR) impacts the effectiveness of management in implementing the company’s competitive strategy (MANAGEFF).

H4b: 

The willingness to invest in CSR practices (WILLCSR) impacts the CSR’s contribution to business excellence (CSRBE).

H5: 

CSR awards and communication efforts (AWARDPU) affect the willingness to invest in CSR practices.

The model assumes as predetermined the impact of a firm’s willingness to invest in CSR practices (WILLCSR) on its engagement in CSR activities and projects (SOCENV), as well as the influence that this engagement has on CSR awards and communication efforts (AWARDPU).

5.4. SEM Results

A structural equation model was applied to the observed data in order to provide empirical support for the conceptual model and assess the hypotheses of the study. In Figure 3, the path diagram shows all the significant relationships between the latent variables and covariates, the standardized values of path coefficients and factor loadings, and the correlations between covariates. The values in bold italics indicate the SMCs for each latent variable. The SMC values indicate that the model explains 66% of the variance in CSR’s contribution to competitiveness and 56% of the variance in CSR’s contribution to business excellence. The goodness of fit measures (Figure 3) indicate that the overall fit of the model to the data can be considered reasonable (χ²/df = 2.62; CFI = 0.91; IFI = 0.91; RMSEA = 0.07).

As shown in

Table 3. Structural regression weights and their significance.

			Estimate	S.E.	C.R.	p
COMPCSR	←	CSRBE	0.523	0.070	7.445	*** 1
AWARDPU	←	CSRBE	0.488	0.072	6.789	***
COMPCSR	←	SOCENV	0.117	0.041	2.846	0.004
AWARDPU	←	SOCENV	0.205	0.051	4.019	***
CSRBE	←	SOCENV	0.155	0.065	2.397	0.017
COMPCSR	←	MANAGEFF	0.189	0.079	2.388	0.017
CSRBE	←	MANAGEFF	0.749	0.125	5.990	***
MANAGEFF	←	WILLCSR	1.057	0.127	8.332	***
CSRBE	←	WILLCSR	0.643	0.160	4.020	***
SOCENV	←	WILLCSR	0.424	0.143	2.957	0.003
WILLCSR	←	AWARDPU	−0.897	0.287	−3.125	0.002
WILLCSR	←	EvalCostCSR	0.119	0.055	2.146	0.032
CSRBE	←	EvalCostCSR	0.148	0.044	3.342	***
SOCENV	←	KnowCSR	0.133	0.041	3.264	0.001
WILLCSR	←	KnowCSR	0.245	0.053	4.607	***
SOCENV	←	BudgetInc	0.277	0.069	4.006	***
MANAGEFF	←	BudgetInc	−0.198	0.061	−3.263	0.001
WILLCSR	←	BudgetInc	0.153	0.079	1.932	0.053

¹ *** p value less than 0.001.

, all structural path unstandardized coefficients were found to be significant at the 5% level and consistent with the hypotheses of the study. In other words, the results fulfilled all the hypotheses of the research.

The results of the analysis unveiled an intricate network comprising both direct and indirect impacts among the variables (Figure 3). The first variable in this chain of influences is the model’s sole covariate-affected variable, willingness to invest in corporate social responsibility (WILLCSR). In particular, CSR knowledge exhibits the greatest impact (b = 0.59), with budgetary increases (b = 0.30) and the assessment of CSR costs (b = 0.22) following suit.

The variables CSRBE (0.39) and SOCENV (0.28) have significantly smaller influences on the variable representing management effectiveness (MANAGEFF) than the variable WILLCSR (b = 0.84). The substantial negative magnitude (b = −0.88) of the effect of AWARDPU on WILLCSR is notable, which appears to encase the network of effects in the model.

The dependent variable (COMPCSR) is determined by a lattice of effects consisting of three direct influences, with the largest one (b = 0.64) being caused by the contribution of CSR to business excellence (CSRBE), which is the primary concern of the current research. The other two influences on COMPCSR come from SOCENV (b = 0.13) and MANAGEFF (b = 0.18).

SOCENV and MANAGEFF are the sole variables in the model that have both a direct and indirect effect through CSRBE on COMPCSR. The total effect of SOCEVN on COMPCSR through CSRBE is 0.22 (0.13 + 0.64 × 0.14), while the corresponding total influence for MANAGEFF is 0.55 (0.18 + 0.64 × 0.58). Both variables receive an influence of comparable magnitude from the budgetary augmentation of firms (BudgetInc), albeit with opposing signs. Specifically, MANAGEFF is negatively affected, while SOCENV is positively affected.

The CSRBE variable, similar to COMPCSR, Is subject to the influence of three latent variables in the model. These influences come from MANAGEFF (b = 0.58), WILLCSR (b = 0.39), and SOCENV (b = 0.14). CSRBE is also influenced exogenously by the EvalCostCSR (b = 0.17).

Table 4. Standardized Total Effects (ΤΕ) on COMPCSR.

KnowCSR	EvalCostCSR	BudgetInc	AWARDPU	WILLCSR	CSRBE	MANAGEFF	SOCENV
0.272	0.153	0.041	−0.391	0.443	0.319	0.362	0.053

presents the total effects of the variables on the dependent variable (COMPeCSR) produced by the AMOS program.

All variables have a positive total effect on COMPCSR, except for AWARDPU, which shows a negative effect (TE = −0.39). The largest influence in terms of magnitude that COMPCSR receives comes from WILLCSR (TE = 0.44). While the direct effect of CSRBE on COMPCSR is comparatively large (b = 0.64), its total effect is halved (TE = 0.32). In contrast, the direct effect (0.18) of MANAGEFF on COMPCSR is half of its total effect (TE = 0.36). The importance that firms place on undertaking CSR activities (SOCENV) has a negligible total effect (TE = 0.05) on COMPCSR. The same applies to the covariate concerning budget growth. Between KNOWCSR and EvalCostCSR, the former has almost twice (TE = 0.27) as much total effect as the latter (TE = 0.15).

6. Discussion

This study intends to fill the void in the existing knowledge of CSR’s contribution to firm competitiveness by proposing a model exhibiting the factors that affect this contribution when CSR is integrated into the process of pursuing business excellence.

The study’s main finding is that the more value CSR adds to a company’s processes and operations (CSR’s contribution to BE), the higher the value that CSR adds to a company’s ability to compete (CSR’s contribution to competitiveness). This result is in line with the empirical findings of [1], where the fusion of CSR practices and operational excellence can enhance competitiveness.

In contrast to studies that suggest that CSR awards have an incentivizing effect [63,64], this research revealed a dampening direct effect (β = −0.88) on supermarkets’ willingness to invest in CSR activities (WILLCSR), which is consistent with findings by ref. [68]. This finding should be considered alongside the negative impact (β = −0.31) of CSR budget increases (BudgetInc) on effective management (MANAGEFF). Due to their limited financial resources, small and medium-sized supermarkets (SMS), which represent the majority of firms in this study’s sample, face challenges in allocating resources to CSR activities that do not directly impact key performance indicators such as customer and employee satisfaction (MANAGEFF), which yield immediate tangible benefits. This challenge is exacerbated by the recent recovery of the Greek economy from a severe debt crisis.

The findings also indicate that while a budget increase positively affects both companies’ willingness to engage in CSR activities (β = 0.30) and their cost estimation (r = 0.33), pursuing CSR awards does not necessarily motivate companies to undertake CSR activities. The pursuit of CSR awards and the effective communication of CSR initiatives (AWARDPU) may divert resources and attention away from core business objectives. Completing CSR award applications can be time-consuming and complex, affecting SMS’s core business operations and potentially discouraging their participation in competitions due to administrative burdens. Many SMSs may perceive the potential return on investment from CSR awards as insufficient relative to the effort and resources required to compete for them. Consequently, supermarkets may prioritize investments that yield more tangible and immediate returns, such as reducing the cost to serve per customer. Unlike larger corporations that may benefit from enhanced reputation and visibility through CSR awards, the perceived impact of such recognition on SM supermarkets’ bottom line may be limited, leading to a lower willingness to engage in CSR projects.

Additionally, the notably negative total indirect effect (β = −0.391) of CSR awards on the contribution of CSR to a firm’s competitiveness (CSRCOMP) highlights that allocating disproportionate resources to activities aimed at meeting award requirements may compromise supermarkets’ ability to remain competitive. In essence, CSR awards may encourage firms to prioritize activities that align with awarding bodies’ criteria rather than focusing on initiatives that genuinely enhance competitiveness.

Also, supermarkets may perceive CSR awards as superficial or tokenistic acts that do not reflect a genuine commitment to social responsibility. In an era of increasing scrutiny and skepticism towards greenwashing and corporate hypocrisy, supermarkets may be hesitant to invest time and resources in pursuing CSR awards that do not align with their core values or business objectives.

Further, the current model highlights the importance of the willingness to invest in CSR as a crucial variable, given its comparatively substantial influence (β = 0.44) on the contribution of CSR to competitiveness (COMPCSR). The favorable (positive) impact of WILLCSR in the model suggests that it does not pose an impediment to the implementation of CSR actions, provided there are no budget constraints (β = 0.30), adequate knowledge of CSR (β = 0.59), and accurate estimations of costs associated with CSR projects (β = 0.22). These findings serve to expand upon Euromonitor’s survey results showing that a lack of knowledge of CSR and budgetary restrictions are the primary hurdles to CSR implementation. However, the negative effect of budget increases (BudgetInc) on management effectiveness (MANAGEFF) and its positive but negligible overall effect on the dependent variable (COMPCSR) suggest that CSR may not be a priority in the pursuit of enhancing competitiveness.

Overall, the study revealed that owners and managers of the firms in the Greek supermarket industry acknowledge the significance of CSR in the pursuit of business excellence and in enhancing the competitiveness of their firms. Theoretically, and given that business excellence practices can be viewed as the means of effectively putting a strategy into action, the study’s main finding supports the claim of Porter and Kramer [5] that CSR should be viewed as a strategic instrument that strengthens the competitiveness of the firm.

Supermarkets require incentives that do not involve substantial operational expenses, such as recognition through CSR awards and associated publicity. Addressing the constraints faced by small and medium-sized supermarkets requires a nuanced approach that acknowledges their diverse needs and priorities and provides tailored support and incentives to encourage meaningful CSR engagement. Major supermarket chains, which have the necessary organizational and financial resources to encourage smaller businesses to participate in collaborative CSR initiatives, can facilitate the provision of incentives. As a first step, this might entail the start of joint actions and then the investigation of alternative forms of collaboration like the sharing of technology and inputs or the provision of financing. The government can play a significant and directorial role by raising firms’ awareness of CSR, encouraging collaboration for joint CSR actions, passing supportive legislation, and facilitating access to finance.

6.1. Limitations and Further Research

The present investigation is limited to a singular nation and within a context that is specific to a particular industry. In order to enhance the external validity of the study, it is recommended that further investigations be conducted in countries with varying cultural backgrounds and CSR environments.

The absence of differentiation between supermarkets of varying sizes in the survey may potentially introduce bias into our results. To a certain degree, this constraint can be mitigated, as intangible sources of competitiveness are not commensurate with the scale of businesses. However, the incentives, challenges, and outcomes related to CSR adoption among firms of various sizes in the supermarket industry differ, underscoring the necessity for further investigation into the current framework with a focus on firm size.

Another limitation of the empirical part of the study is that the model does not differentiate firms based on their knowledge of CSR, thereby hindering the ability to detect and evaluate group-specific effects associated with CSR knowledge. For example, the effect of CSR awards on willingness to invest in CSR actions may be more pronounced for firms with higher levels of CSR awareness compared to those with lower levels of knowledge. Further research can include multigroup analysis to examine the invariance between the sub-groups of supermarkets according to whether they have knowledge of CSR. The analysis can be broadened to investigate the role of CSR’s contribution to business excellence as a mediator in the mechanisms that lead to enhanced competitiveness. This will serve to reinforce the significance of incorporating CSR into the core operations of businesses to enhance their competitiveness.

The present investigation is grounded in the outcomes of the extant literature regarding the significance of the factors delineated in the conceptual framework. The study could be bolstered with qualitative data gathered through interviews with managers and owners regarding the factors they believe influence their decision to incorporate CSR into their marketing strategy in order to increase their firms’ competitiveness.

Another limitation could be the lack of comparison across different industries, which restricts the generalizability of the findings. The current study has focused exclusively on supermarkets without considering how similar practices impact competitiveness in other retail sectors or industries. Future studies could explore how the integration of CSR practices varies across sectors and its differential impact on business excellence and competitiveness. Comparative research across industries would provide a broader understanding of the effectiveness of CSR integration strategies and their implications for competitiveness in various contexts. This could involve conducting comparative case studies or large-scale surveys across different industries to examine the nuances of CSR integration and its outcomes. Additionally, future research could delve deeper into specific factors that may influence the relationship between CSR, business excellence, and competitiveness in different industries. This could include examining industry-specific challenges, regulatory environments, consumer perceptions, and organizational capabilities that shape the effectiveness of CSR initiatives.

Finally, the study relies on the opinions of supermarket managers or owners rather than those of customers or staff, which is arguably more of a caveat than a constraint. There will almost certainly be substantial discrepancies in their assessments of indicators of competitiveness like customer and employee satisfaction and product and service quality.

6.2. Conclusions

Supermarkets occupy a pivotal position within the global food chain and must exhibit commendable corporate citizenship by adhering to the principles of corporate social responsibility (CSR). However, they often struggle to integrate CSR into their strategies due to costs and potential drawbacks.

Operating in a customer-centric industry with fierce competition, supermarkets need to uphold or enhance their competitiveness by means of corporate social responsibility (CSR) to reconcile economic performance with societal and environmental goals. From the standpoint of marketing strategy, this could be accomplished by incorporating CSR into the process of pursuing business excellence to add value to the intangible sources of competitiveness.

The current study has shown that supermarkets, by integrating CSR into the processes and operations of pursuing business excellence, will increase their competitiveness. Supermarkets are inclined to engage in CSR initiatives, but when they are struggling to make ends meet, CSR takes a back seat to more immediate performance concerns.

The negative effect the CSR awards have on the contribution of CSR to a firm’s competitiveness underscores the importance of critically evaluating the incentives driving CSR initiatives, as well as the potential trade-offs between external recognition and sustainable business performance.

Supermarkets need low-cost incentives. Major SM chains have the organizational and financial tools to encourage smaller companies to collaborate on CSR projects. The government can promote CSR awareness and collaboration among enterprises by easing regulations and financing.