Internal Corporate Responsibility as a Legitimacy Strategy for Branding and Employee Retention: A Perspective of Higher Education Institutions

Abstract

Branding activities provide space to create internal culture, processes and a kind of organizational system which allows employees to use their abilities to their maximum. Internal corporate social responsibility (CSR) activities of an organization increase employee commitment, which ultimately enhances employee retention. There is a need to explore internal branding in relation to internal CSR for the sake of managing employee retention. Therefore, the study empirically examines the underlying associations among internal branding, employee retention and internal CSR. The data are collected from higher education institutions operating in the city of Lahore, Pakistan. The sample size was 377 faculties belonging to both private and public sector higher education institutions. The analysis is based on variance-based structural equation modeling (PLS-SEM). The findings reveal that the internal branding practices have a significant impact on employee’s intention to stay within the organization, and intrasample analysis suggests few comprehensible variations with respect to private and public academic institutions. The research article also provides insights to faculty, academic entrepreneurs and marketers, especially those belonging to developing countries and facing issues of branding and employee retention.

1. Introduction

The significance of employee retention and engagement cannot be denied while encountering the current environmental instability. Competent and engaged human resources are part and parcel of attaining an organization’s strategic objectives. Ali et al. [1] suggested that the pursuance of corporate social responsibility enables organizations to realize their strategic objectives. The biggest challenge that organizations are facing today is the retention of their efficient employees [2]. Corporate social responsibility improves the financial output of the enterprise because of factors such as reputation and conviction of the stakeholders. Al Mamun and Hasan [3] considered human resources as a key strategic function, holding the responsibility of retention of the human capital. Organizations invest in human resource development activities enormously by providing diverse training and challenging work encounters, but still, employee retention is considered to be the most critical job for human resource departments. The relationship between an organization and its employees is most likely to be given and take in which both sides try to satisfy each other desires [4]. Researchers argue that internal stakeholders’ marketing is as important as stakeholders outside the organization, i.e., customers [5], and it is professed as a prerequisite to provide a competitive edge by warranting excellence in customers [6].

The notion of internal branding emphasizes how the employee in the organization comprehend the brand affiliation and ensure satisfaction to its customers and other stakeholders in the external environment [7]. Internal corporate social responsibility (CSR) is productive for the organizations as it contains employee communication, succession planning, counseling about their retirement and termination, retrenchment, security, employee equity and performance appraisal [8]. Pukkeeree et al. [9] conducted a cross-sectional study and advocated that positive thinking significantly moderates employee engagement with respect to innovative work attitude and behavior. When organizations considered their employees as important stakeholders and generous citizens of their community, it will increase their satisfaction level and ultimately decrease their desire to quit the organization [10]. Al Mamun and Hasan [3] found that when efficient employees leave the organizations, it not only increase the training and hiring cost of new employees but also decreases the confidence level in existing employees. Internal CSR is the research area that needs to be researched within diverse cultural contexts. In higher education institutions, the faculty members are involved in the branding initiatives of the university and liable for the respective institutional brand [11].

This research aims to empirically test the moderating effect of internal CSR in Pakistan. It can be operationalized that branding inside the organization is the empowerment of the employees by crafting of facade picture in their minds and engaging them to deliver outcomes according to the brand’s promises for customer satisfaction. Various factors that include internal communication, training programs, benefit plans, induction programs and leadership style of top management help to create the image, and it is not a job of a sole person or a department. It is a cross-functional task that requires that this kind of responsibility should be passed on to the decision-making group and integration of the functions of the human resources and marketing department. The given connection appears rational as these departments are involved in both employee and customer engagement. Thus, this imperative concept of internal branding is intended to be studied in this study for investigating its influence on retention of the employee.

In order to enhance the international ranking of the higher education institutions of Pakistan, the Higher Education Commission persuade them to pursue CSR activities, sustainable development goals and internal branding. The study intends to propose a mechanism to unearth the connection of internal branding for retention of employees in the presence of internal CSR for the excellence of higher education institutions. The next section depicts the theoretical framework and the relevant literature review. Research methodology and data analysis are conducted in the third and fourth sections. The discussion and conclusion sections elaborate on the theoretical and practical implications for academia and offer future research directions for prospective researchers.

2. Literature Review and Theoretical Framework

Foster et al. [7] propose that internal branding may help organizations to attract and retain the required human capital with a competitive advantage. It certifies congruent attitudes for organizational brand value and assists in progressive brand value communication from internal stakeholders to other stakeholders, most specifically customers [12]. Herrera and Heras-Rosas [13] contends that the commercial aspects that may impact organization performance are related to business orientation, knowledge transmission, and the pursuance of innovation. For the exhibition of brand value in an organization’s responsibilities via its employees, internal branding has played a major role [14]. Internal branding activities contain well-organized training and education program for employees to inculcating branding values in their minds [15]. Induction programs help employees in the reinforcement of citizenship behavior and brand identification [16]. Internal branding activities also facilitate employee retention and person-organization fit [17,18]. Ayrom and Tumer [19] empirically explored the influence of internal branding on employees’ turnover intention and recommended branding mechanisms that enable smooth correspondence and meetings.

Internal branding asks for the employee competency to transmit the company’s viewpoint and to the marketplace [17]. The function of internal branding is not limited to inculcate brand values within employees and making the organization an attractive place to work [20,21]. Saleem and Iglesias [22] conclude in their study that for a successful implementation of internal branding activities, supportive organizational culture is very important. It ensures the collective work systems of employees for the augmentation of brand image. Employees channelize their synergies for converting the brand ideology into brand reality. It is evident that the high turnover increases the workload of remaining employees, increases their anxiety and eventually, even greater turnover [23]. Internal branding persuades employees to recognize themselves with the organization, and thus, efforts should be undertaken to enable shared passion among personnel with respect to the organizational commitment [24].

According to Lee, Seo, and Sharma [25], CSR, as an internal perspective of the organizations, increases employee commitment, which ultimately reduces turnover. Farooq, Rupp, and Farooq [26] explained that internal CSR relates to those activities dedicated to the conservancy of internal stakeholders, including employees. Fizzah et al. [27] studied the effectiveness of CSR activities in Asia and came up with the view that the importance of CSR is well-established worldwide. On the other hand, the conceptualization of CSR is conflicting due to differences in economic, social and cultural factors in different countries. Moreover, internal CSR activities vary from organization to organization as some take it as an aspect of career opportunity, employee health and safety, work–life balance policy and organizational justice. Internal CSR is important for the organizations as these activities increase employee engagement in the organization, but for the continuous growth of an enterprise, employees’ retention and organizational adaptability is imperative [24]. CSR should be organized in a cohesive manner with communal programs, and legitimacy can be enhanced through CSR implementation for SMEs and establishing social contract [28].

Kim, Rhou, Uysal, and Kwon [4] identified that internal CSR activities and positive working conditions both contribute to attract and retain talented employees and also help to improve their identification and commitment with the organization. Previous research has pointed out few factors that may affect employee’s perception of a particular organization, before or after joining it. These factors include job-related attributes, corporate reputation and internal CSR, which can affect both job and organizational levels [1]. Many researchers proposed that high-level CSR activities may have resulted in high employee retention due to two reasons. First, organizations that are highly engaged in CSR may have a pro-social status that attracts more potential employees who are a good fit for the organization and have the prospective of a long-term stay within the organization. Second, internal CSR activities may increase meaningfulness for employees, both in work and at work, and that can decrease their intention to leave the organization [27,29]. These two reasons provide the basis for expecting that the organizations having higher internal CSR definitely have a lower turnover rate. The conceptual framework directing our research is represented in Figure 1, and it comprises three latent variables, namely, internal branding, internal CSR, and employee retention. On the basis of literature review, our study investigates the following two hypotheses:

Hypothesis 1 (H1).

There is a significant association between internal branding and employee retention.

Hypothesis 2 (H2).

Internal CSR moderates the linkage between internal branding and employee retention.

3. Research Methodology

For the sake of testing the model and examine the hypotheses, a survey was conducted for collecting the data from faculty members of 19 higher education institutions of Lahore, which includes academic employees from both public and private sector institutions. A convenience sampling method was used, and input data were collected by self-completion questionnaire. The data were collected from 19 higher educational institutions of Lahore, and among these, 8 universities were private sector, and the remaining 11 were under government administration. In this study, the number of items was 30 to measure the variables, so the sample size should be at least 300 [30]. To be on the safe side, a total of 450 self-administered questionnaires were distributed to the faculty members of the higher sector academia, and 377 filled-in questionnaires were attained after discarding the incomplete responses, which represents a healthy response rate of 84%. The issue of response bias was not significant as no substantial variation in the response rate was witnessed between the senior and junior faculty [31]. Structural equation modeling (PLS-SEM) was also executed for data analysis and exploring the defined theoretical framework. The demographic characteristics are given in

Table 1. Demographic characteristics.

Sample Characteristics		Frequency (n = 377)	Percent (%)
Gender
	Male	159	42.18
	Female	218	57.82
Age
	18–25	26	6.90
	26–33	255	67.64
	34–41	82	21.75
	>41	14	3.71
Education
	Master	20	5.31
	M.Phil.	252	66.84
	PhD	105	27.85
Seniority
	Lecture	207	54.91
	Assistant professor	140	37.14
	Associate professor	21	5.57
	Professor	9	2.39
Type of Organization
	Public	10	55.50
	Private	8	44.50

.

The demographic table shows that the percentage of male members was 42.18%, and the remaining 57.82% was female employees. Respondents who have age between 18 to 25 years were 6.90%, approximately more than half 67.64% of the faculty members were between 26 and 33 years old, and 21.75% were between 34 and 41, while the remaining 3.71% were aged above 41 years. In terms of qualification, 5.31% had obtained education to the master’s level, 66.64% were MSc./MPhil. 27.85% were qualified to Ph.D. level. Among 377 samples, 55.5% of responses were gathered from public sector organizations, and the remaining 44.50% belongs to the private sector. Most respondents were lecturers (54.91%), 37.14% were assistant professors, 5.57% were associate professors, and the remaining 2.39% were professors. The survey was carried out by the self-completion questionnaire. Since CSR does not mean the same to everyone, Appendix A displays few questions from the survey instrument and offers the context of what aspects of CSR this investigation is trying to capture.

The internal branding was evaluated through a 3-dimensional construct, which consists of internal correspondence, training and participation of employees in the branding process. These measurement items were adopted from the studies of Aurand et al. [15] and Punjaisri and Wilson [16]. The dependent variable employee retention was measured through intention to stay, which was adopted from Veloutsou and Panigyrakis [32]. The CSR scale was adapted from the Turker CSR development scale [33]. As the purpose of this study was to explore the employee’s prospects within the organization so, only a primary social employee scale was adopted for data collection. A 5-point Likert scale ranging from 1—“strongly disagree“ to 5—“strongly agree” was chosen to rate the responses.

4. Data Analysis and Findings

4.1. Assessment of Measurement Model

In smart-PLS, the variable internal branding was analyzed as a second-order construct by following the guidelines of Hair et al. [34], where it was suggested that the outer model, also named as measurement mode, was accessed for reliability and validity of the construct in the first estimate. Its result depicted that almost all loadings of outer variables should be above the critical threshold of 0.7 in their respective latent variables [35]. In the first step, the factor loading of all items was calculated, and values that were below 0.7 were excluded from further analysis, as these did not fit the stated criteria. The measurement model seems reliable as the findings show that Cronbach’s alpha values were greater than the terminal level of 0.7. Furthermore, all the constructs seem to be internally consistent, as we can see in the results of the composite reliability indexes that were higher than the standardized value of 0.7 [36]. It was also evident that all these constructs also fulfill convergent validity standards as the values were above 0.5 [37].

Table 2. Construct reliability and validity.

Constructs	Cronbach’s Alpha	Composite Reliability	Average Variance Extracted (AVE)
Employee retention	0.721	0.830	0.594
Internal branding	0.757	0.811	0.578
Internal CSR	0.714	0.815	0.594

portrays that all the variables were consistent, as the Cronbach’s alpha for employee retention was 0.721, internal branding was 0.757, and internal CSR was 0.714. Further, all the constructs demonstrated composite reliability indices of more than 0.8; the value for employee retention was 0.830, internal branding was 0.811 and internal CSR was 0.815. Moreover, the value of AVE for employee retention was 0.594, internal branding was 0.578, and internal CSR was 0.594.

4.2. Discriminant Validity

The Fornell–Larcker criterion is based on the assumption that the AVE’s square root values must be greater than the correlations’ maximum value [34]. According to

Table 3. Discriminant Validity.

Construct	Employee Retention	Internal Branding	Internal CSR
Employee retention	0.770
Internal branding	0.582	0.760
Internal CSR	0.666	0.729	0.771

of discriminant validity, the value of employee retention was 0.770, internal branding was 0.760, and internal CSR was 0.771. Hence, the obtained values fulfilled the stated criteria. Moreover, cross-loading values were greater than 0.710, which depicts that all items had adequate loading with their fundamental construct.

4.3. Result Analysis

The data analysis was done through variance-based structural equation modeling (PLS-SEM). As an initial step, for the inner model assessment and to check path coefficient significance level (beta), 5000 bootstrapping technique was employed. According to the rules proposed by Hair et al. [34], the t-values must be greater than the critical t-values. Moreover, these t-values were deployed to discover the proposed hypotheses. In this study, the critical t-value of 1.96 was taken at a 5% significance level. The result of the path coefficient is given in

Table 4. The implication of results.

Constructs Relationship	T Statistics	p Values
Internal branding > Employee retention	2.393	0.017
Internal branding > Internal CSR	29.694	0.000
Internal CSR > Employee retention	8.307	0.000
Moderating effect 1 > Employee retention	0.310	0.757

Note: level of significance is 0.05.

with a t-value greater than 1.96. The results of the variables were within the predefined threshold values except for the moderating effect, i.e., internal CSR.

Table 5. Hypotheses Testing.

		Beta	T	p	Decision
H1	Internal branding has a significant relationship with employee retention.	0.116	2.393	0.017	Supported
H2	Internal CSR moderates the impact of internal branding on employee retention.	−0.009	0.310	0.757	Not supported

depicts the significance of the results and construct’s relationship with each other. For internal branding and employee retention, the relationship was significant as the t-value was 2.393 and the p value was 0.017. The t-value obtained for the relationship of internal branding and internal CSR was 29.645 along with the p value of 0.000, and for internal CSR and employee retention, the t-value was 8.307, and p value was 0.000; these resulted also ensured the significance of the relationship between the constructs. The t-value for the moderating effect of employee retention was 0.310 with a p value of 0.757, as this relationship was insignificant because the p value was above 0.05. The R² value of employee retention showed that the proposed model explains 52.3% of the total variance in employee retention (ER) due to internal branding. A comprehensive demonstration of results derived from the conceptual framework is presented in Figure 2.

4.4. Hypotheses Testing

The path coefficient and t-values show the fluctuating level of significance and endorse the proposed hypothesized connotations that are part of our structural model. The values obtained in this study explain that the H2, which relates to the moderation effect of internal CSR between internal branding and employee retention, is not justified, but internal branding portrays a significant impact on employee’s intention to stay within the organization at p < 0.05 level. The summary of these hypotheses with results are elaborated in Table 5.

The H1 is supported as the association between internal branding and employee retention was positively significant with values of β = 0.116; t-value = 2.393; p = 0.017. The H2 was not supported in the current study (β = −0.009; t-value = 0.3610; p = 0.757) as the t-values and level of significance were not near the critical values. Hence, it depicts that internal CSR had a negative moderation effect between internal branding and employee retention.

4.5. Goodness of Fit (GoF) Index

Goodness of Fit (GoF) was calculated by following the guidelines of Henseler, Hubona, and Ray (2016) [38] to explore the theoretical framework of the current study. According to researchers Henseler et al. (2016) [38], if the GoF value was equal to 0.1 or below, then it will be considered as GoF small; if it is equal to 0.25, but above 0.1, then it will be GoF medium, but in the case of equal or greater than 0.36 than it will be considered as GoF large. The goodness of fit (GoF) index of 0.626 suggests acceptable model fitness as depicted in

Table 6. Goodness of fit (GoF) calculation.

Latent Constructs	Average Variance Extracted (AVE)	R2
Employee retention	0.594	0.533
Internal branding	0.578
Internal CSR	0.594	0.531
Average scores	0.588	0.532
AVE × R2	0.313
$\mathrm{GoF}=\sqrt{(AVE\times {\mathrm{R}}_2)}$	0.559

Criteria: GoF small = 0.1; GoF medium = 0.25; GoF large = 0.36.

.

5. Discussion: Internal Corporate Responsibility and Open Innovation

The data were collected in both public and private sectors from higher educational institutions based in Lahore. This article is based upon the investigation of impact variables like internal branding (independent variable) on employee retention (dependent variable) in the presence of a moderator (Internal CSR). Internal branding is considered an important ingredient for the retention of employees, and internal CSR also affects the relationship between these variables. The study also endorses the contention that policymakers, academic entrepreneurs, and managers should not go for “one size fits all” CSR policies [1]. This study was conducted in the context of Pakistan and after the data collection and using different statistical tools. It is inferred that internal branding plays a significant role in employee retention, which is in line with the previous literature Ayrom and Tumer [19] and Du Preez and Bendixen [39]. The internal CSR demonstrated a negative impact as a moderator variable, and the reason may be that employees seek attention in the organization and want to be considered as an important part of an organization. In order to retain potential employees, it is important for organizations that they make their internal branding process stronger and engage employees with appropriate skills and incentives for high job performance. The CSR is not found to be a significant determinant of employee retention, and it is imperative to look for the inferences of this result. Since the focal region of the investigation is developing economy, the employees are more concerned with extrinsic benefits than the intrinsic factors such as CSR. The academicians, specifically belonging to the private sector, might be more interested in internal branding than CSR. Moreover, there might be unawareness of the notion of CSR among employees.

It is proposed that organizations should concentrate on employees’ satisfaction and citizenship behavior for the sake of employees’ retention for a longer period of time and stronger effect of internal CSR. Hence, organizations can improve their standards and decrease their cost of recruitment through these ways. The ambitions of faculty members do differ as per the level of designation or seniority. For instance, the assistant professors may be more inclined towards publication, whereas lectures might be primarily concerned with teaching endeavors. This study also highlights the concerns of the members and intra-sample differences with respect to private and public sectors. In the context of Pakistan, the concern about retention differs widely in the private and public sectors of higher education institutions. Our findings suggest that faculty members with shorter tenure are more responsive to internal branding, and this is in consonance with the study of Dechawatanapaisal [24]. This can be attributed to the institutional framework in place in those sectors. The private sector employees are either on contract or tenured, so they are more prone to switching. On the contrary, the public sector faculty members are generally offered permanent positions, such as BPS (basic pay scale) or TTS (tenured track system). It is pertinent to mention that the few results deviate from the primary results, for example, the cases of Lahore School of Economics and Lahore University of Management Studies. These outliers are found to be high payer institutions, and thus, employee retention and pursuance of CSR activities are understandable. This deviation concurs with the study of Punjaisri and Wilson [16], in which they suggested that the efficacy of internal branding may not be persistent across all personnel equally. Lastly, the study further suggests that the accomplishment of social enterprises depends on the degree of their pursuance of open innovation, which is in line with the findings by Yun et al. [40]. Branding activities provide space to create internal culture, and culture plays a pivotal role in enhancing the dynamics of open innovation. In the academic environment, it is imperative to conquer the cultural and institutional barriers, specifically in the public sector. The bureaucratic dealings prevalent in the public sector may restrict them from executing collaborations with external stakeholders [41]. The collaborative aspect of open innovation offers an ideal way to resolve the societal problems of today’s dynamic world, special the post-pandemic environment [42].

6. Conclusions

The article portrays the inspiration of internal branding on employee retention along with the moderating role of internal CSR. For this purpose, the internal branding in the context of HEI’s was assessed in the light of given literature under the umbrella of internal marketing communication and human resource management. Internal branding is an important issue for Pakistan higher education institutions, and an overall conceptual model for branding is need of the hour, and a more empirical investigation is necessary to find out the real potentials of internal branding in the domain of the higher education sector. This article provides some evidence to suggest that internal branding influences employees’ intention to stay within the organizations, but the current study fails to report the importance of internal CSR as a moderator between internal branding and employee retention. Furthermore, these outcomes offer empirical evidence to the proposed connotation between variables except the internal CSR. The findings provide some implications for scholars as well as practitioners to understanding the significance of internal branding.

The context of CSR in a university setting is fascinating because universities are naturally socially oriented and not directly profit-oriented. This study provides empirical support to fill the literature gap in the context of academic perspective, and the outcomes of this study show that internal branding activities and employee retention have a positive relationship. It contributes to the human resource and marketing literature by addressing the moderating role of CSR activities with respect to the relationship between internal branding and employee retention. As far as pragmatic implications are concerned, the study offers insights for management and faculty of universities to pursue their objective of the international world ranking of the university. The universities are performing a handsome job in the research publications, but technology commercialization and new models of university-industry collaboration are required, such as triple helix framework and spin-off enterprises [43,44]. In this regard, the importance of internal branding and CSR from the perspective of academia offers strategic tactics to the academic entrepreneurs. Therefore, the university’s administration should take on CSR activities and internal branding to persuade a common consideration and sense of belongingness among the workforce in order to realize strategic objectives of employee retention. It is recommended that the development of CSR agendas should give considerations to the specific conditions and requirements of academia in order to accomplish a legitimacy maintenance strategy.

The primary limitation of this empirical examination is its design that is cross-sectional, as the data collection was done at a single point of time from different respondents, and the fundamental relationship among the variables is likely to be biased [45]. Hence, it is suggested that longitudinal designs should be deployed to check the validation of the relationship among the variables found in this study. Moreover, there is a possibility that the responses can be affected by social desirability response bias, as the self-completion questionnaire was used for this research [46]. Though few researchers claim that self-completion is the more appropriate option as it ensures subjectivity and behavioral judgment [47,48]. As the empirical evidence suggest that organizational culture facilitates the prospects of product innovation [49], the cultural dimentions of the service industry and academia should also be explored. For more valid and accurate results, it is suggested to use more types of techniques. Furthermore, our sample was representative of the educational institutions of the city of Lahore, Pakistan. The dynamics of other sectors, such as manufacturing firms or telecommunication, may be quite different, and thus caution should be undertaken while generalizing results to other sectors and geographical regions. Our study encourages future research related to the dynamic of CSR in different settings to better understand the external or institutional factors that may determine motivation and engagement. Hence, in this context, the replication of this study in different setting will be more valuable for the validity and generalizability of the present findings in another context.