Impact of CSR Authenticity on Brand Advocacy: The Mediating Role of Brand Equity

Abstract

Since authenticity reduces the inherent tension between pro-sociality and profit-seeking as well as contradictory demands from multiple stakeholders, it appears to be relevant for corporate social responsibility (CSR) judgment. The aim of this study is to examine the consumer perception of CSR authenticity and its influence on brand equity and brand advocacy in the banking sector. Additionally, this study looks into the role of brand equity as a mediator between CSR authenticity and brand advocacy. A survey method was used to collect the data. In this study, CFA and structural equation modeling with AMOS were utilized to evaluate the measurement properties and to uncover relevant correlations. The results also show that brand advocacy is better predicted to take into account the mediating role of brand equity between CSR authenticity and brand advocacy. As a result, this study adds to the body of knowledge and has significant use for managers, practitioners, and specialists. The proposed model can be used by practitioners to evaluate their CSR initiatives objectively and determine how well each one aligns with their overall goals and business objectives in order to create more successful strategies. The current study adds to the limited theoretical and empirical understanding of the connection between CSR authenticity and customer responses.

1. Introduction

The value of CSR and what corporations can do for society cannot be disputed. However, CSR is essential for addressing global issues and boosting company success. CSR, which businesses have long been aware of, is the most crucial standard business practice that organizations must follow if they want to survive in a chaotic and competitive economic climate [1,2]. From a marketing standpoint, CSR has the potential to be a productive promotional strategy that enhances customer behavior and brand perception. Beyond sales, CSR has benefits as well. Initiatives focused on CSR have a substantial impact on stakeholder and customer expectations, which improve business performance. To benefit from such endeavors, businesses engage in a variety of corporate social responsibility (CSR) activities. Customers typically reward businesses with favorable word-of-mouth, loyalty, and trust for their CSR engagement [3,4]. However, unethical behavior could harm a company’s reputation [5,6]. These actions should be sincere and must be in line with the firm’s basic beliefs to avoid customer suspicion of company CSR activity; this is known as “CSR authenticity”. Authenticity is the assessment of how sincere, true, and real something is [7]. It has been recognized as one of the essential ideas in modern existence [8]. It is especially pertinent to how consumers assess whether a company’s CSR efforts are genuine or not. However, inauthentic assessments cause the organization to lose its reputation. An authentic evaluation can offer a method to explain how CSR operations might achieve desired social and environmental benefits [9]. Authenticity is described as “the perception of a company’s CSR initiatives as a genuine and honest manifestation of the company’s ideas and behavior toward a society that transcends beyond legal requirements” in the context of corporate social responsibility [10] (p. 1243). This inherent contradiction makes customers skeptical about the real reason companies participate in these activities, which encourages them to find out how trustworthy, sincere, and legitimate the business is. It is crucial to comprehend how customers generate such judgments, given the importance of a successful outcome and the anticipated impact that authenticity may play in determining what organizations may accomplish through CSR activities. By illustrating how CSR authenticity influences consumer brand advocacy behavior through the mediator of brand equity, the current study intends to close this research gap. Understanding how CSR and brand advocacy are related is essential to comprehend how people are aware of CSR, and the results may inspire them to participate in CSR initiatives. This study attributes brand equity using a brand management viewpoint, which eventually increases brand advocacy. Brand equity improves information processing to allow clients to make purchasing decisions with assurance and a high sense of self-worth [11]. CSR is regarded as a way to advance brand equity by cultivating a favorable perception in the eyes of the consumer. Brand performance and brand equity may be impacted by consumers’ impressions of CSR efforts. However, a more thorough research model for confirming the mediation role of equity in the relationship between CSR authenticity and brand advocacy has not yet been created. This study highlights how crucial CSR authenticity is for brand equity and brand advocacy by outlining how a company manager can better understand and comprehend the function of CSR authenticity and how to create effective communication strategies. The current study examines the mediation role of brand equity in the link between CSR authenticity and brand advocacy in an effort to fill the aforementioned research gaps. Our research focuses more particularly on the effects of CSR authenticity and brand equity as well as the role of brand equity as a mediator between CSR authenticity and brand advocacy.

2. Theoretical Background and Hypotheses

2.1. CSR Authenticity

Authenticity is described as “the perception of a company’s CSR actions as a genuine and true expression of the company’s beliefs and behavior toward a society that extends beyond legal requirements” in the context of corporate social responsibility [10] (p. 1243). Since authenticity reduces the inherent tension between doing good deeds and making money, as well as the conflicting demands of different stakeholders, it seems to be important for CSR evaluation [12]. Consumer suspicion regarding the real reason companies engage in such activities is a result of the inherent conflict in CSR, which pushes customers to find out how trustworthy, authentic, and honest the firm is. It is crucial to comprehend how customers generate such judgments given the importance of a successful outcome and the anticipated impact that authenticity may play in determining what organizations may accomplish through CSR activities. Due to its subjective and contextual nature, the authenticity definition and its impact on consumer assessments seem to be complicated. Different senses of authenticity appear to be exclusive to certain domains. It has even been suggested that the idea of authenticity is “socially constructed”, meaning that a person’s views and expectations of authenticity depend on the particular circumstance and setting. Accordingly, consumers may react differently to different CSR initiatives by the same company or industry or to the same CSR initiative when moved to a different context (i.e., company or industry) because they judge the authenticity of the initiatives differently. The authenticity of CSR has not received much attention in previous studies, and there is a paucity of empirical studies exploring whether or not customers perceive a company’s CSR actions as genuine, as well as how CSR efforts directly affect consumer reactions.

2.2. Brand Equity

Brand equity denotes the additional value or utility that a product receives from its brand name [13]. Financial approaches have included stock price movement and accounting-based value, while customer-related approaches have either been perceptual (such as brand association, perceived quality, and brand awareness) or behavioral (such as market behavior and brand loyalty) [14]. It is well acknowledged that perceptual measures alone cannot accurately forecast how the market will act [15]. Understanding the aims, mechanics, and overall consequences of marketing campaigns requires an understanding of the idea of brand equity [16,17]. Brand equity, according to Aaker [18], is a group of brand assets and liabilities associated with a brand, its name, and its symbol that raise or lower the value that a good or service offers to a business and/or to that business’s customers. Brand equity, according to Yoo and Donthu [19], refers to the consumer preference between a focal branded product and an unbranded product when both have the same degree of features. Therefore, brand equity creates value for customers and aids in the development of defendable competitive positions for companies that are difficult for rival brands to acquire. Building brand equity is a difficult process [20]. A brand is a company’s most significant strength and asset [21]. Despite being intangible, brand equity offers value to the business by encouraging customer loyalty, creating new opportunities, providing it with a competitive edge, increasing its negotiating power, and resulting in higher profitability [22].

2.3. Brand Advocacy

Brand advocacy can be seen as the degree to which someone actively promotes and supports a brand while ignoring those of other companies in the same product category [23]. This includes the consumer’s intent to try new items from the brand, their willingness to propagate positive rumors, and their fortitude in the face of adversity [24]. Consumers should be genuinely invested in and connected to a brand before they would advocate for and promote it. Positive brand advocacy from customers helps with the acceptance and adoption of new products [20]. Because it is viewed as coming from a less biased source, it may be the most persuasive information source for making some purchases [25]. Consumers frequently use word-of-mouth recommendations as a technique to alleviate their worry and the amount of information they have to comprehend [26]. When a consumer feels a connection to a brand, this connection may inspire the consumer to advocate for the brand by promoting it to others. Because it deals with forgiveness and giving another chance when something goes wrong, brand advocacy represents a step further in the aim to endorse a brand. As a reliable source of information, brand advocacy has a significant impact on purchase behavior, making it essential in the marketing of services. However, little research has examined the factors that influence brand advocacy in the banking industry, where it is defined as the degree to which customers actively support and recommend one bank over another bank brand.

2.4. CSR and Brand Equity

CSR is now more crucial than ever to businesses and their shareholders because brand equity is no longer consistent and can change in just a short period of time. To offer empirical support for the idea that CSR initiatives play a significant role in achieving brand equity, consumers must be able to meaningfully distinguish between various goods or services [27]; this difference is based on brand value [28]. It might be argued that brand equity is more valuable the more the customer’s expectations are met [18]. Additionally, [29] noted that a firm’s brand equity included a significant component related to its reputation as a result of CSR actions. According to Lai et al. [30], industrial brand performance and brand equity were influenced by consumers’ perceptions of businesses’ socially responsible efforts. Brand connections, attitudes, and identity are favorably correlated with CSR visibility and credibility, which, in turn, improves brand equity. Businesses with CSR practices and programs may be seen as having effective governance practices. In order to build brand equity, consumers must perceive brand differentiation in the product or service category; therefore, a meaningful brand differentiation results from the brand value component. The achievement of consumer expectations results in considerable brand equity. In a similar vein, a company’s socially conscious actions might contribute to its brand equity. This study, therefore, concludes that consumer perception of CSR initiatives may favorably affect brand equity. Therefore, we suggest the following:

Hypothesis 1.

Consumer perception of CSR authenticity positively and significantly influences the brand equity.

2.5. Brand Equity and Brand Advocacy

The brand’s equity can improve consumer responses, including advocacy behavior. According to [31], consumers who feel a connection to a brand are more likely to stick with it over the long term. They may try new goods from the brand, recommend it to others, and remain resolute in the face of unfavorable brand news. Building a strong brand with positive equity has a beneficial impact on how well businesses function by changing how people react to companies. In the evolving relationship between brands and their customers, advocacy is a major step forward [20]. A company may suffer if it neglects to cultivate and use brand advocates to its advantage [32]. Businesses with greater brand equity are also better able to expand their businesses [33]. One of the key explanations is that giving a new product a well-known brand name gives consumers a sense of familiarity and trust that effects their perception of the extension positively, even when they are unaware of it specifically. Innovative businesses interact with their clients and speak out for their needs. They gain the trust and loyalty of their customers as a result. Advocates actively disseminate suggestions [34]. Thus, we state the following:

Hypothesis 2.

Brand equity has a positive and significant influence on brand advocacy.

2.6. CSR Authenticity and Brand Advocacy

A company’s dedication to a variety of CSR initiatives might be viewed as a sign of how sincere its CSR efforts are [10]. Particularly, [35] pointed out that when consumers perceive genuine CSR, the entity gets consumer confidence and advantages, but the real CSR performance is governed by the identification of authenticity, claiming that false CSR can seriously harm the entity. Consumers respond favorably by positively rating the principles and beliefs of CSR as their view of its authenticity grows. Customers are more likely to promote or speak favorably about a firm based on its authentic CSR efforts even when they do not take CSR into account when forming transactional outcomes (such as purchase intention). Additionally, prior research shows that brand advocacy is influenced by consumers’ favorable attitudes toward CSR initiatives [33]. Additionally, when brand identity and core business strategy are founded in authentic CSR as opposed to non-CSR criteria such as quality and pricing, people participate in higher brand advocacy [34]. Kemp et al. [36] discovered that CSR results in brand advocacy in the healthcare industry as a result of consumers emotionally committing to and identifying with the brand. Customers will support a business and its initiatives if they believe that a company’s legitimacy is the cause of their positive feelings regarding its CSR efforts. Therefore, we hypothesize the following:

Hypothesis 3.

Consumer perception of CSR authenticity has a positive and significant influence on consumer brand advocacy behavior.

2.7. The Mediating Role of Brand Equity

When a certain brand has added value for its customers, those customers are then anticipated to respond favorably to the brand’s marketing initiatives. Additionally, empirical data indicates that consumer advocacy behavior increases with brand equity [30]. The level of brand equity that the brand has built up may act as a mediator in the relationship between CSR authenticity and brand advocacy. We propose that brand equity will only be likely to influence brand advocacy if consumers believe that a company’s CSR efforts are genuine. Thus, we state the following:

Hypothesis 4.

Brand equity mediates the positive and significant influence on the path relationship between CSR authenticity and consumer brand advocacy behavior.

The conceptual framework is shown in Figure 1.

3. Research Design

This study’s context is appropriately provided by the Indian banking sector. In India, CSR became mandatory for businesses making five crores of rupees in profit annually when the law changed in 2013. Banks were ordered by the Reserve Bank of India (RBI) to fully incorporate CSR and sustainable practices. The government’s decision to make practically all Indian banks’ CSR spending mandatory led to the widespread adoption of CSR initiatives by banks. Indian banks are now investing a sizable sum of money in CSR initiatives. Above all, the banking industry now accounts for the majority of global investments in CSR initiatives. Indian banks now provide funds to initiatives that benefit the local community and address environmental and social issues. Banks have started to spend more on CSR initiatives and take an active role as investors in these endeavors. With both online and offline communication channels, they are informing their stakeholders about their CSR initiatives. With programs such as microcredit schemes, financial inclusion, easy access to credit for the underprivileged, socially responsible banking, and many more, banks began putting CSR into practice. A survey is given to the respondents from the public and commercial sector banks to obtain the data. A total of 15 combined branches from 3 significant retail banks were selected. Bank customers who were above 18 years of age and in charge of some financial matters at the time of the study were included among the respondents. This made sure that the information gathered from the respondents was pertinent because they had sufficient experience with the bank. To choose the survey participants, a non-probabilistic method combining convenience and quota sampling was used. Age- and gender-based multi-stage sampling were utilized to choose the sample in order to guarantee sample representativeness. Our sample was representative of the socio-demographic features of the population thanks to the age and gender quotas. The analysis of the data involved 338 completed surveys in total. Some of the responses were eliminated because the answers were either missing or insufficient. In all, 39% of respondents were female, while 65% were male. The age range of the respondents was 18 to 65 years, with 41.30 percent of them lying between 40 and 65 years of age. More than 30.13 percent of consumers had finished intermediate-level coursework, 48% were graduates, and 14.45% held master’s degrees, according to their educational backgrounds as shown in

Table 1. Sample demographics.

Demographic Variable	Sample (n)	Percentage (%)
Gender
Male	220	65.08
Female	118	34.91
Age
18–35	114	33.72
36–50	128	37.86
51–65	68	20.11
66 and above	28	8.28
Education
High school and less	29	8.57
Intermediate	51	15.08
Graduate	127	37.57
Master’s and above	131	38.75
Total	338

.

Scale Items

For measuring the constructs, the current study used items from an existing scale. The study’s scale items were all valid and reliable. The CSR authenticity was measured using three items taken from the study of [37]. Brand equity was measured with the four items taken from the study of [19]. Brand advocacy was measured with the three items and taken from the work of [38,39,40]. All the scale items were anchored on a seven-point Likert scale (1 = strongly disagree, 7 = strongly agree). The description of the scale items is given in Appendix A.

4. Results and Analysis

Anderson and Gerbing’s [41] two-stage method was used to analyze the data. First, a confirmatory factor analysis (CFA) was used to examine the measurement tool’s psychometric properties. After that, structural equation modeling (SEM) procedures with the maximum likelihood approach were used to examine the structural relationships between the proposed variables through AMOS 22.0.

Measurement Results

The validity and reliability of the scales were examined prior to the conceptual model analysis, and the results are summarized in

Table 2. CFA results.

Latent Variable	Measured Variables	Factor Loading	Cronbach Alpha
CSR Authenticity	CSRA1	0.86	0.935
	CSRA2	0.96
	CSRA3	0.91
Brand Equity	BE1	0.82	0.939
	BE2	0.86
	BE3	0.96
	BE4	0.94
Brand Advocacy	BA1	0.85	0.928
	BA2	0.96
	BA3	0.90

. First, we used confirmatory factor analysis to conduct the measurement model test. The model fit indices NFI (0.957), GFI (1.000), CFI (0.978), and RMSEA (0.05) were within acceptable limits. For all of the constructs, the Cronbach alpha coefficient values were more than the minimum threshold of 0.70. The composite reliability and average variance extracted values reached the minimum cut-off of 0.70 and 0.50, respectively, in accordance with the advice given by [42], suggesting convergent validity. Discriminant validity is confirmed as the average variance from two standardized constructs was greater than the squared correlation between the two constructs (see

Table 3. Discriminant validity.

	CR	AVE	CSR Authenticity	Brand Equity	Brand Advocacy
CSR Authenticity	0.937	0.833	0.913
Brand Equity	0.939	0.794	0.351	0.891
Brand Advocacy	0.932	0.820	0.186	0.215	0.906

CR: composite reliability, AVE: average variance extracted.

) [43].

Second, the SEM with maximum likelihood estimation was estimated to examine the hypothesized links between the variables through direct effects after validating the model’s validity and reliability. The SEM fits the data reasonably well (χ² = 70.275, p < 0.01, df = 32; GFI = 0.961, CFI = 0.988, RMSEA = 0.06). The structural model is observed in order to estimate the potential links between constructs. The computed path coefficient values empirically confirmed all of the direct effects in our proposed model at a significance level of 0.05 as shown in

Table 4. SEM Results.

Hypothesis	Path Coefficient	t Value	p Value	Results
H1	0.35	6.468	0.005	Supported
H2	0.17	2.863	0.005	Supported
H3	0.13	2.102	0.005	Supported

. In the path relationship, all of the direct hypotheses are determined to be significant. The findings imply that customer perception of CSR authenticity has a favorable and significant impact on brand equity (β = 0.35, t = 6.468), supporting Hypothesis 1. H2 is supported by the positive and substantial path association between brand equity and brand advocacy (β = 0.17, t = 2.863). H3 argues that brand advocacy and CSR authenticity have a direct and positive link. The evidence is significant (β = 0.13, t = 2.102), supporting Hypothesis H3.

For the purpose of verifying the indirect, direct, and total estimations of path coefficients, the bootstrapping approach was used with 5000 samples at 95% confidence intervals. For investigating an indirect impact or mediation effect, bootstrapping is a non-parametric method based on resampling with replacement. The results support H4 by validating full mediation for brand equity in the path from CSR authenticity to brand advocacy. If there is not a zero between the lower and upper bounds of the 95% confidence interval, the mediation effect is considered significant. H4 is supported by the finding that brand equity has a substantial impact on the relationship between CSR authenticity and brand advocacy (β = 0.062, p = 0.05). We may infer that brand equity mediates the association between CSR authenticity and brand advocacy since there is no zero between the lower and upper bounds of the confidence intervals ([L = 0.020; U = 0.113]). As a result, partial mediation is seen.

5. Discussion, Theoretical Contribution, and Managerial Implications

Due to favorable consumer responses, businesses participate in a variety of CSR programs since it improves their relationships with their stakeholders. However, not all CSR initiatives benefit customers, as people tend to question businesses’ motivations for taking part in CSR initiatives. The current study adds to what little is known about the connection between CSR authenticity and customer responses, both conceptually and empirically. CSR initiatives and their authenticity are a fast-growing aspect of brand management. Understanding how CSR initiatives and activities are seen by stakeholders is so crucial. Many researchers stated the importance of creating sincere CSR efforts as a way to improve a brand’s reputation and worth. The results support the assertion made by [43] that CSR activities that participants perceive as authentic can boost brand equity. Additionally, they support the findings of [44] and support the idea that CSR messaging can evoke strong brand reactions. According to the research, brand equity serves as a potent mediator on the way from CSR authenticity to brand advocacy. The findings suggest that CSR authenticity can aid in the development of a moral, enduring, and trustworthy image, hence, enhancing perceived brand advocacy. Furthermore, strong CSR communications can raise client awareness. When a company succeeds in building lasting brand equity, it may maintain its good name and motivate clients to practice advocacy behavior. By examining the connections between brand equity and brand advocacy and CSR authenticity, we add to the body of the literature on CSR.

The outcomes of CSR efforts in the banking industry are better understood as a result of the findings. The question of how CSR behavior directly affects performance is left unanswered by earlier empirical investigations [45], which show that the effects of CSR activities on business performance vary. In the current study, we also look into how brand equity influences the link between brand advocacy and CSR authenticity. Brand advocacy emphasizes the long-term, “relational” benefits of CSR that are significant in the relationship marketing context, making this addition to prior efforts crucial. This study contributes to the existing CSR literature. CSR is considered a significant incentive to encourage customers’ voluntary behavior. For instance, prior research on the subject shows that CSR can increase brand advocacy [46,47]. The existing research has not looked into whether varying levels of brand advocacy are prompted by CSR authenticity, though [48,49]. By integrating brand equity as a mediating variable in the links between CSR authenticity and brand advocacy, this study also made a significant contribution to the body of existing knowledge. The effects of CSR authenticity on consumers’ propensity to engage in certain voluntary activities, including brand advocacy, are examined in this study, which, as far as the authors are aware, is the first study to analyze and integrate all three variables in one mode.

Consumer perception of organizations’ CSR activities as genuine, believable, factual, and correct (i.e., authentic) is crucial for industry practitioners. This is due to the fact that customers frequently evaluate organizations’ actions in the public and economic arenas, including the sincerity with which they participate in CSR projects, in order to create a relationship with a brand. Therefore, it is important for managers who implement CSR activities to understand that if consumers perceive a lack of authenticity in CSR communication, it may prevent them from developing brand equity and favorable advocacy behavior. The findings have significant managerial ramifications for banks involved in CSR efforts. Building and maintaining ties with customers through authentic CSR efforts increase the likelihood of successful outcomes such as brand equity and brand advocacy. The association between CSR authenticity initiatives and consumer brand advocacy behavior is found to be mediated by brand equity. Companies anticipate that a variety of socially responsible efforts will increase brand equity. Our research gives managers essential information about the critical part that CSR authenticity plays in developing consumer–brand relationships. The results suggest that CSR projects should be evaluated using relationship marketing views, and that consumer CSR actions should be encouraged. When CSR initiatives are connected to a specific social issue, consumers are seen to perceive them as more authentic.

6. Conclusions

In the literature, there is some discussion on CSR authenticity; Alhouti et al., [10] pointed out the need for more empirical research in this area to advance our comprehension of how CSR authenticity might have an influence on various consumer behavioral outcomes. This study looked at the relationship between brand equity and brand advocacy and CSR authenticity. The findings agree with all three hypotheses. We discovered that brand equity serves as a partial mediator in the association between CSR authenticity and brand advocacy behavior. The studies found that brand equity and consumer brand advocacy are better predicted by CSR authenticity. The results also show that brand advocacy is better predicted to take into account the mediating role of brand equity between CSR authenticity and brand advocacy. As a result, this study adds to the body of knowledge and has significant use for managers, practitioners, and specialists. There are a few limitations to the current study. First, we chose bank customers in India to be used in this study, and respondents from large Indian cities were chosen. Because we used convenience sampling in a single industry, future research should make use of proper probability-based sample techniques to examine a variety of industries, product/service categories, and nationalities in order to assess how generalizable our results are. Second, future studies could replicate our findings in other nations, particularly those with significant cultural contrasts, as consumers from various cultural backgrounds frequently base their assessments of service providers on various criteria.