Bachelor thesis Author:

Institute for management Jesper Andersen Drescher

Bscb(sustainability) Student ID: 300545

Supervisor:

Mai Skjøtt Linneberg

How consumers’ attributions of firm motives for engaging

in CSR affects their willingness to pay

Aarhus School of Business & Social Sciences, Aarhus Universitet

Summer 2012

Abstract:

The concept of corporate social responsibility (CSR) has existed for quite some time now, however,

the topic has never been more relevant than within the last couple of decades. Modern day techno-

logical advances like the internet have meant that irresponsible company behaviour more and more

often is revealed, meanwhile businesses are increasingly expected to contribute to the solution to

society’ problems from several sides. As noted by Freeman (1984) one of these groups calling for

corporate involvement is the consumers. Todays’ consumers do not only care with the more tradi-

tional purchase criteria like price and quality, they are also concerned with aspects such as the sus-

tainability of the product and the working conditions of the employees producing it, however, how

do consumers perceive the motivations of companies for engaging in CSR, and how do these differ-

ent perception affect their willingness to pay?

The purpose of this thesis is to investigate how consumers’ motivational attributions affect their

willingness to pay for CSR-initiatives. The research is based on a qualitative approach and uses the

four classifications of Ellen et al. (2006) to differentiate between different motivational attributions.

These different attributions are the following: values-driven attributions, stakeholder-driven attribu-

tion, strategically-driven attributions and egoistically-driven attributions, and it was anticipated that

values-driven attributions and strategically-driven attributions would show a positive impact on the

willingness to pay, while the opposite would be the case for the remaining two attributions.

The results of the thesis showed support of the four classifications mentioned above, however, it

was only possible to find statistical significant effects on the respondents’ willingness to pay for the

two attributions: values-driven and strategically-driven. Both of these effects were positive as ex-

pected, but the results for the other two attributions did not display any statistical significance.

Contents:

1. Introduction ...................................................................................................................................1

1.1 Problem statement....................................................................................................................3

1.2 Methodology of the thesis .......................................................................................................3

1.3 Structure of the thesis .............................................................................................................4

2. Method ............................................................................................................................................5

2.1 The methodical background of this thesis .............................................................................6

2.2 Quantitative analysis ...............................................................................................................7

2.2 The stimulus ...........................................................................................................................10

3. Theory............................................................................................................................................11

3.1 What is Corporate Social Responsibility ............................................................................ 12

3.2 The nature of CSR goods...................................................................................................... 16

3.3 CSR and the consumer.......................................................................................................... 18

3.3.1 The S-O-R framework..................................................................................................... 18

3.3.2 Consumer attributions for Corporate Social Responsibility programs............................ 19

3.4 Willingness to pay and CSR................................................................................................. 23

3.5 Generation of hypotheses ..................................................................................................... 26

4. Analysis......................................................................................................................................... 28

4.1 Analysis of the control variables.......................................................................................... 28

4.2 Factor analysis....................................................................................................................... 29

4.3 Theoretical consequences of the results............................................................................... 32

4.4 Multiple linear regression model......................................................................................... 33

5. Discussion..................................................................................................................................... 36

5.1 The effect of consumers’ motivational attributions of CSR on their willingness to pay 36

5.2 The relationship between sex and the willingness to pay for CSR.................................... 37

5.3 How income affects consumers’ willingness to pay for CSR............................................. 38

6. Conclusion.................................................................................................................................... 38

References ....................................................................................................................................... 40

Figure index:

Figure 1.3.1 – Structure of the thesis……………………………………………..………………14

Figure 3.1.1 – Carroll’s pyramid of CSR……………………………………………………...…13

Figure 3.3.1.1 – How CSR affects consumer attitudes……………………………………..……19

Figure 4.2.1 – The initial rotated component matrix……………………………………………31

Figure 4.2.2 – The final rotated component matrix…………………………………………..…32

Figure 4.4.1 – Coefficients of the initial multiple regression analysis……………………..……35

Figure 4.4.2 – Coefficients of the final multiple regression analysis……………………………36

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1. Introduction

Corporate Social Responsibility (Here forth referred to as CSR) has been one of the buzzwords of

the business world throughout the last few decades. The subject has attracted attention from many

of the leading scientists within the area of business (Sen & Bhattacharya, 2006; Kramer & Porter,

2006; Carroll, 1991; Freeman, 1984), who have tried to shed light on different aspects of the con-

cept. Most of the big MNCs of the world have also, to a still increasing extent, tried to incorporate

CSR into their business practices, in an attempt to capture additional value.

In order to better understand what has driven this sudden emergence of CSR one may turn to the

book “Embedded sustainability”, by Laszlo and Zhexembayeva (2011). Although sustainability is

only one of the ways companies can engage in CSR among many, the three drivers of sustainability

as described in this book can also help to explain what has caused the increased focus on CSR as a

whole. The three drivers identified by Laszlo and Zhexembayeva (2011) are as follows: The declin-

ing stock of resources, the concept of radical transparency and increasing expectations on compa-

nies from multiple sides. While the first driver is specifically addressed to the issue of sustainabil-

ity, the two remaining drivers are also appropriate for the purpose of understanding the rise of CSR

in general, therefore these two drivers will be explained more in detail below:

- The second driver of sustainability, as identified by Laszlo and Zhexembayeva (2011), is radical

transparency. This concept should be understood in the sense that an ever increasing amount of in-

formation is today available on any company or product, and the array of impacts it has throughout

its entire life cycle. This development is of course enabled by the rapid progress in information

technology in recent times, namely the internet and the more current innovations such as

smartphones, which has enabled anyone to access any piece of information at any time with just the

click of a finger.

- The third driver of sustainability is increasing expectations, and this is what companies are faced

with today from every possible direction. These expectations come from both investors, legislators

and also even from within the company itself, namely its employees. However, none of these pres-

sures is higher than the one, businesses today is met with from their customers (Laszlo and Zhex-

embayeva, 2011). Consumers today are not only concerned with traditional purchase criteria like

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price and quality, more and more emphasis is instead being put on alternative criteria such as the

sustainability of the product, the working conditions of the employees producing it and possible

donations to charities tied to the purchase of the product.

It is easy to see that there is a reciprocal relationship between these two mentioned drivers. The rad-

ical transparency has meant that consumers are confronted with the irresponsible behaviours of

businesses on a daily basis, making them aware of these practices, and thus also giving them the

possibility to express their expectations in respect to these behaviours, both orally but not least

through their purchase behaviour. On the other hand the large increase in the amount of available

information is only made possible, because some people feel that their expectations have not been

met. Their disappointment then spurs them on to share this information with others, for example by

making the information available online. However, although the modern means of communication

has meant that the pressure for responsible corporate behaviour has never been higher than it is to-

day, the realisation that attention must be paid to the opinions of different groups with an economic

stake in the company is not entirely new.

R. Edward Freeman was the first to construct a framework that acknowledged the importance of

these different groups, which he chose to term stakeholders in his book “Strategic Management: A

Stakeholder Approach” (1984), as a reference to the word shareholders. Freeman defined the term

stakeholders as follows:

“Any group or individual who can affect or is affected by the achievement of the firm's objectives.”

(Freeman, 1984: 25)

The main stakeholders according to Freeman are the same as mentioned by Laszlo and Zhexemba-

yeva (2011) in relation to the concept of increasing expectations. This emphasizes that the influence

on companies from these different stakeholders is not entirely new, although their influence have

suddenly risen in recent times and will probably continue to do so in the years to come.

For the purpose of this thesis, the specific stakeholder that will be emphasized will be the costumer.

As already stated, this stakeholder group has an integral stake in the successfulness of any compa-

ny. Consumers have also shown to be specifically sensitive to companies’ CSR efforts in compari-

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son to other stakeholder groups (Bhattacharya and Sen, 2004), making them an obvious target for

CSR-initiatives.

While much previous research has been dedicated to prove a relationship between CSR and con-

sumers’ purchase decisions (Creyer and Ross, 1997; Brown and Dacin 1997), this thesis will go one

step further by investigating the relationship between consumers’ motivational attributions and their

willingness to pay for CSR-initiatives. By investigating this specific aspect of CSR, it might be pos-

sible to identify certain motivational attributions associated with a higher degree of willingness to

pay than others. Such knowledge can then be used to maximize the effect of future CSR-initiatives

by promoting specific motives on the expense of others.

1.1. Problem statement

The purpose of this thesis will be to examine how the motives consumers ascribe to companies’

CSR activities affect their willingness to pay for such initiatives. This problem will be sought an-

swered through a quantitative approach based on a typology of the different motivational attribu-

tions consumers hold. The individual questions sought answered are as follows:

- Which different motivational attributions do consumers hold?

- How do the motivational attributions discovered affect the consumers’ willingness to pay?

- How do other factors like sex, age and income affect consumers’ willingness to pay?

1.2 Methodology of the thesis

In order to answer the questions outlined in the problem statement above, this thesis will use a two-

fold approach. In the first part a theoretical framework for the field under study will be established.

This framework will then provide the necessary background for the empirical research in the second

part.

In the theoretical part of the thesis, the concept of CSR will be defined in detail by using the defini-

tion of Carroll. More specific aspects relevant in relation to the empirical part of the thesis will also

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be examined in this part. These aspects include the credence nature of CSR goods, which explains

why motivational attributions might have such a large influence on this specific product group, and

the use of willingness to pay studies, both in general and in relation to studies on CSR in particular,

and the theories behind this method. Most importantly, however, the theoretical part of this thesis

will help define a typology of the different motivational attributions consumers hold, in order to

form a foundation for the empirical work in the second part of this thesis. In relation to the ques-

tions mentioned in the problem statement, the theoretical part of this thesis will be concerned with

answering the first question.

The empirical part of this thesis will be concerned with two different statistical analyses, a factor

analysis and a multiple regression analysis. The factor analysis has the purpose of validating the

typology of different consumer attributions, as defined in the theoretical part of the thesis. Based on

the results of the factor analysis, a multiple regression analysis is carried out in order to detect any

significant differences in the willingness to pay across the different motivational attributions. The

multiple regression analysis will also contain the control variables mentioned in the problem state-

ment, in order to detect any differences in the willingness to pay across these variables. As this de-

scription illustrates, the empirical part of this thesis will answer the two last questions raised in the

problem statement.

1.3 Structure of the thesis

This thesis will be divided into 6 distinct sections: Introduction, Method, Theory, Data processing,

Discussion and Conclusion. For a graphic illustration of the structure of this thesis see figure 1.3.1:

1. 2. 3. 4. 5. 6.

Introduction Method Theory Data processing Discussion Conclusion

Figure 1.3.1 – Structure of the thesis

Section 1, the introduction, provides the reader with a preliminary overview of the field under in-

vestigation in this thesis while also setting out a demarcation of the applicability of the results gen-

erated. Furthermore, the problem statement will help to narrow down the more specific problems

sought answered through this thesis.

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Section 2 will examine the methodical basis of this thesis. Firstly the broad methodical background

will be established to form a basis. Hereafter follows a more comprehensive methodical analysis of

the specific elements of the quantitative work of the thesis namely the data collection in general and

its different elements in particular.

Section 3 establishes the theoretical backbone of this thesis. In this section it will be examined and

discussed in detail how the concept of CSR is defined. There will also be given an account of the

more specific nature of CSR-goods, which explains why consumers might take on a sceptical stance

towards these goods. Finally it will be investigated how the different attitudes consumers may hold

towards CSR-goods may affect their purchasing decisions. More precisely it will be examined how,

consumers’ different attributions of firm motives for involving in CSR will impact their willingness

to pay for such goods, and what these different motivational attributions might be.

Section 4 will deal with the statistical analysis of the quantitative data. Through this analysis it will

be attempted to produce statistical significant evidence for the hypotheses established in the afore-

mentioned section 3.

Section 5 will discuss the findings of section 4 both in their own right, but also in respect to the re-

sults of the already existing research.

In Section 6 a conclusion will be presented to this thesis. This section will also discuss how subse-

quent research might position itself in relation to the results of this thesis.

2. Method

In this section the methodical issues of the thesis will be discussed. In order to facilitate this discus-

sion, the actors view of research, as described by Arbnor and Bjerke (2009) will be used because

this research paradigm provides a useful framework for discussing the methodical problems of this

particular thesis. More specific methodical subjects relating to the elements of the questionnaire and

the stimulus employed in this thesis will also be discussed in this section.

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2.1 The methodical background of the thesis

The actors view of research is useful in explaining the methodical position of this thesis, because,

unlike the analytical view of research, the actors view does not perceive the world as consisting of a

set of objective facts. Instead, the actors view considers reality as a construction, in the sense that

facts are subjective, and reality is a construction created through discourse. In relation to the issue

under study, this paradigm helps to explain, how the same object, CSR, can be perceived in several

different ways, and result in different degrees of willingness to pay for this dependent on the indi-

vidual in question. This concept is named intentionality and explains how all interactions are driven

by underlying motivations and perceptions (Arbnor and Bjerke, 2009).

The author of this thesis also agrees with the position of the researcher, as described by the actors

view. According to this view, the researcher is considered as a co-creator of the knowledge created

through the dialectic relationship between the researcher and the subjects under investigation

(Arbnor and Bjerke, 2009). This understanding also brings with it the implication, that there is no

such things as an objective research framework, and that the preconceived attitudes of the research-

er will have an impact on the results of the thesis.

Another implication of this view is that the process of researching will also have a transformative

effect on the object under investigation, meaning that the true object of the research can never actu-

ally be observed. In relation to research in the field of CSR, this has shown to result in a social de-

sirability bias (Öberseder et al. 2011). This biases causes the respondents to feel morally obligated

to declare a higher willingness to pay for CSR than what is actually the case. This bias also explains

why much research on CSR has shown a positive relationship between purchase decisions and CSR,

while real purchase data has shown that the good intentions are seldom backed in reality. The au-

thor acknowledges that this thesis will also suffer under this bias, however, the purpose of this the-

sis is to measure differences between different motivational attributions, rather than to prove that

CSR actually leads to an increased willingness to pay. For this reason it is expected that the effect

of this social desirability bias will be the same for all of the different motivational attributions, and

that the results will thus be valid.

The recognition of reality as a subjective social construction also brings with it the acknowledge-

ment, that the applicability of the results of this thesis is limited. For this reason the results of this

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thesis will only be considered applicable to Danish consumers. Extending the applicability of re-

search on the relationship between consumers and CSR beyond the population among which the

research has been done can be problematic, because differences in how CSR is perceived can vary

greatly. This has been shown by Dutta et al. (2008) who found that differences existed in the will-

ingness to pay for green initiatives between American and Indian consumers. The problem is further

emphasized by the contradicting findings of respectively Kang et al. (2012) and Manaktola and

Jauhari (2007), who performed similar studies on individuals’ willingness to pay for green initia-

tives in the hotel industry in different countries, which resulted in contradictory results.

As a last consequence of the methodical position of this thesis, it has been chosen to include a stim-

ulus in the research design. Since the actors view considers reality as being formed through dis-

course (Arbnor and Bjerke, 2009), the inclusion of a stimulus should help facilitate this process.

This approach has the advantages of reducing the level of abstraction, and gives the interviewee

more thorough information on the specific CSR-initiative to decide on. However, there are also dis-

advantages to this method. One shortcoming is the inherent information bias, which exists when the

experimental setting of the study uses fictitious CSR-initiatives, and provides the interviewees with

artificial awareness for the specific CSR-initiative. Such extensive knowledge is often not present in

actual purchase situations, and therefore the research does not capture the full effect of CSR on con-

sumers’ buying behaviour (Öberseder et al. 2011).

2.2 Quantitative analysis

The quantitative analysis of this thesis will be based on the use of a questionnaire. The main pur-

pose of this questionnaire will be to solicit the respondents about their motivational attributions of

firm motives and their willingness to pay for a given CSR-initiative, a stimulus, however, there

have also been included a number of control variables in the questionnaire.

The population under investigation in this thesis is the Danish population in general. For this reason

the questionnaire will be handed out at a highroad cafeteria by Randers. By choosing this specific

location it is believed that a representative proportion of the Danish population can be sampled. By

using this specific location it is also made possible to approach respondents in a purchase situation,

which should enhance the ability of respondents to familiarize themselves with the topic of this the-

8

sis. A possible disadvantage of the chosen location is the risk of increasing the social desirability

bias, as earlier discussed, by respondents’ affecting the answers of one another. To minimize this

bias, it has been decided that only possible respondents, who are unaccompanied, will be ap-

proached.

The main hypothesis of this thesis, that consumers’ willingness to pay for CSR-initiatives is de-

pendent on their attributions of company motives, has previously been explored by Ellen et al.

(2006). Due to this precedence the 15 questions relating to this subject have been borrowed from

their research on the subject, which should ensure the validity of the questions. It has, however,

been necessary to translate the original English version of the questions into Danish. To ensure that

such a translation has retained its original meaning and is understandable, the author has made use

of a pilot study conducted on 4 persons at the location for the distribution of the other question-

naires. This pilot study did only cause minor changes in the questionnaire. These changes can be

found in appendix 1 and 2 containing respectively the original and the final questionnaire. In the

final questionnaire each question relating to the motivational attributions of the respondent, will be

asked through the use of a 5-point Likert scale ranging from “Strongly agree” to “Strongly disa-

gree”.

Lastly, it is worth mentioning that one of the original 16 questions of Ellen et al. (2006) has been

omitted from the questionnaire. Due to the nature of the stimulus produced for this thesis, question

10 of the questionnaire made by Ellen et al. (2006) has been omitted. The English wording of this

question is as follows:

“They (the company engaging in the CSR-initiative) are taking advantage of the non-profit organi-

zation to help their own business”

(Ellen et al. 2006: 153)

Since the stimulus produced for this thesis does not describe any type of charitable contributions

being made to any non-profit organization this question has been deemed irrelevant.

As a supplement to the questions relating to consumers’ attributions of company motivations, a set

of control questions have been included in the questionnaire as well. These control questions will

9

elicit the age, gender and income of the respondents. The reason for including these control varia-

bles is mainly for the purpose of controlling the representativeness of the sample, however, the con-

trol variables will also be included in the multiple regression model in section 4. For this reason the

theoretical background for including these control variables in this thesis, and the expected relation-

ship between consumers’ willingness to pay for CSR-initiatives and these different variables, will

be undergone in section 3.5.

The question relating to income will be using a 6-point Likert scale with the intervals: less than

100.000 DKK, 100.000-199.999 DKK, 200.000-299.999 DKK, 300.000-399.999 DKK, 400.000-

499.999 DKK And more than 500.000 DKK. This scale uses the same intervals as are being used by

“Statistikbanken”, and should be able to encourage a higher response rate from the respondents than

if the question had been of a more specific nature. Specific questions relating to individuals’ income

do also tend to be connected to an uncertainty bias, because people seldom know their exact in-

come, therefore the use of intervals can also aid by reducing this bias.

One last question relating to consumers’ increased willingness to pay will be included in the ques-

tionnaire. For the purpose of the later statistical manipulation, this variable will serve as the de-

pendent variable. This question will be asked by using a 6-point Likert scale with the response op-

tions: 0%, 1-5%, 6-10%, 11-15%, 16-20% and more than 20%. This same scale is also employed by

Kang et al. (2012). The choice of eliciting consumers’ willingness to pay extra for a new CSR-

initiative rather than their intention to switch from their currently preferred brand, as is done by

Ellen et al. (2006) e.g. boils down to two considerations. The first consideration is that by using this

approach, any bias deriving from consumers’ possible emotional attachment to their current pre-

ferred brand is omitted. The second reason for using the willingness to pay is due to the fact that the

author of this thesis considers this approach as being a more nuanced tool than simply eliciting con-

sumers of their willingness to switch. With this approach it is possible to have several discrete lev-

els of an increased willingness to pay, rather than the mere dichotomous outcome that results, from

presenting respondents with a yes or no question. Thus the use of willingness to pay makes it possi-

ble to distinct between consumers with vague preferences for CSR and consumers with far stronger

preferences for CSR, which is otherwise not possible when using the other approach. One issue

related to this approach is that CSR does necessarily not have to come at a premium price (Laszlo

10

and Zhexembayeva, 2011). However, to be able to infer on differences in consumers’ propensity to

buy CSR goods, some parameter must be established.

2.3 The stimulus

As already mentioned, it has been considered necessary to include the use of a stimulus in the ques-

tionnaire design. This is consisted with the approach employed by Ellen et al. (2006), Araña and

León (2009), Brown and Dacin (1997) and Becker-Olsen et al. (2006). In section 3.1 of the thesis,

the concept of CSR is elaborated on, and from this section it becomes clear that CSR is a very broad

concept containing such different aspects as economic, legal, ethical and philanthropic responsibili-

ties of companies (Carroll, 1991). By supplying the respondents with a stimulus, they are given a

common frame of reference to reflect upon when answering the questionnaire, which should ensure

a higher degree of agreement in respect to the questionnaire used in this thesis.

The specific example being used in this thesis is the recent CO2-offsetting initiative that Royal-

Unibrew’s “Egekilde” brand has engaged in. In the stimulus the respondents are presented with a

press release Royal-Unibrew issued in relation to the promotion of this new initiative. For the pur-

pose of this thesis, the name of the product has been changed from “Egekilde” to “Spring Water” in

order to eliminate any type of bias relating from any perceptions the respondents may already hold

about the “Egekilde” brand. Such use of a hypothetical firm has also previously been applied in the

field of research on consumers and CSR (Brown and Dacin, 1997).

There are numerous reasons for choosing the specific stimulus for the purpose of this thesis. Firstly,

by using marketing material on a real CSR-initiative and changing the name of the brand, it was

possible to present respondents with very authentic information, which could otherwise not have

been made available for the respondents. The second reason for choosing this stimulus is grounded

in the findings of Araña and León (2009), who found that the management of environmental quality

was more important to consumers, than other types of CSR initiatives, such as involvement in cul-

tural and social activities. Thirdly, the use of a brand of spring water as a stimulus, due to its proper-

ties of being a hedonic, luxury good of superior quality, should be able to produce a higher willing-

ness to pay. This is explained by the concept of affect-based complementarity (Strahilevitz and My-

ers, 1998; Strahilevitz, 1999), which proposes that emotions of guilt or pleasure can be alleviated by

11

supporting CSR-initiatives. Finally, the initiative that Royal-Unibrew has started is considered as

having a high fit with the product, which is recommended by Hoeffler and Keller (2002), because

this approach should have the advantage of leading consumers to transfer more positive sentiments

to the company from the cause. There is no empirical evidence proving this relationship, however,

Becker-Olsen et al. (2006) found that a low-fit can have the opposite effect of reducing the effec-

tiveness of the initiative, and even cause consumers to punish the company because the CSR-

campaign is considered as being insincere.

The result of the considerations behind the choice of the stimulus is that the stimulus is expected to

produce a high degree of sentiments on behalf of the respondent. This should further promote a high

willingness to pay, which secures a strong foundation for making statistical inferences on the effects

of consumers’ motivational attributions on their willingness to pay for CSR-initiatives.

As is the case with the questionnaire, the stimulus was also subject to a pilot study. This resulted in

a couple of alterations to the stimulus, for example one of the original press releases was omitted

from the stimulus, to reduce the time required for the respondents to answer the questionnaire. The

original stimulus and the final stimulus presented to the respondents can be found in appendix 3 and

4, where the alterations are also shortly discussed.

3. Theory

In this section the relevant theories for this thesis will be covered. Firstly the concept of CSR will

be defined. For this purpose the seminal articles of Carroll will be used, since these provide a com-

prehensive examination of CSR and all of the forms it might take. After this the nature of CSR

goods will be discussed. CSR goods fall under a category called credence goods because consumers

have little chance to evaluate the honesty of the claims made by companies, this is also the reason

why consumers’ motivational attributions might have an impact on their willingness to pay for such

goods. Thirdly the relationship between CSR and the consumer will be investigated. The underlying

mechanism will be explained using the S-O-R framework of Bagozzi (1983) while the framework

of Ellen et al. (2006) is clarified for the purpose of shedding some light on the different motivations

consumers might attribute to companies’ CSR efforts. In the fourth part of this section the concept

12

behind the use of willingness to pay-questions is discussed in order to determine the appropriateness

of this concept for this thesis. Finally the hypotheses sought validated in section 4, the analysis, will

be described together with the expected relationships of these different variables.

3.1 What is Corporate Social Responsibility?

Although the emphasis on CSR in the realm of business has never been bigger than it is today, the

concept is still very ambiguous. What is in fact encompassed in CSR and what is left out? To an-

swer this question this thesis will use the four-part definition of CSR published in 1979 by Carroll.

This definition of CSR is based on a thorough review of the existing definitions of CSR at the time

it was conceived, and it has been widely used in academic research since its publication (Carroll

and Shabana, 2010). Carroll defines his four-part model, which has also been known as the pyramid

of CSR (Carroll, 1991), in the following way:

“The social responsibility of business encompasses the economic, legal, ethical, and discretionary

expectations that society has of organizations at a given point in time.”

(Carroll, 1979: 500)

In this section each of the four different aspects of CSR in Carroll’s model will be described, and it

will be discussed how this thesis will apply Carroll’s definition.

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Figure 3.1.1 – Carroll’s pyramid of CSR, Carroll (1991)

Economic responsibilities:

The fundamental social responsibility of business, according to Carroll (1979), is to be profitable.

The historical role of business is to produce the goods needed and wanted by society and their abil-

ity to make a profit while doing this, indicates their ability to fulfil this basic responsibility (Carroll,

1991). The economic responsibility of business must be considered to precede the other social re-

sponsibilities in Carroll’s model, because if this responsibility is not fulfilled any considerations in

relation to the other areas becomes indifferent, since the existence of the company is threatened

(Carroll, 1991).

The recognition of companies’ profit-making ability as the most fundamental social responsibility

of business is also a recognition of the view presented by Milton Friedman (1962). Friedman argued

that the sole responsibility of business was to maximize their stockholders’ wealth, however, he also

added that business had to do this while conforming to the fundamental rules of society, both legal

14

and ethical (Friedman, 1970). With this last statement Friedman acknowledges that business has

certain legal and ethical responsibilities, however, their prime responsibility is still to make a profit,

and Friedman’s view is certainly not reconcilable with the fourth dimension of Carroll’s model, the

philanthropic responsibility of company (Carroll, 1991).

Legal responsibilities:

When Carroll discusses the legal responsibilities of business, he refers to the “social contract” that

exists between society and business (Carroll, 1979). With this so-called “social contract” Carroll

means that while society has granted business the right to assume its productive role in the econom-

ic system, these rights comes with the responsibility on the part of business to comply with certain

ground rules laid down in the laws, be they anti-competitive laws or laws on employee rights. For

most people it is a truism that companies must conform to the legal responsibilities, as well as of

course the economic responsibilities, which society puts on business. This is also the reason why

many people do not consider these two first categories in Carroll’s model as parts of CSR (Carroll,

1999), however, the scandals in recent years relating to economic fraud and irregularities in big

public companies such as “Enron” and “Lehman Brothers” indicate that not all companies sees the

fulfilment of these two categories as truisms as well.

In relation to the other categories in Carroll’s model the legal responsibilities may be seen as “codi-

fied ethics” (Carroll, 1991), and in this way they help to describe the interaction and development

that exists between, and within, the different categories in Carroll’s model.

Ethical responsibilities:

The ethical responsibilities of business make up the next layer in Carroll’s pyramid of CSR. As ear-

lier stated the legal responsibilities constitute a type of “codified ethics” and this description may

also help shed some light on the nature of ethics. The ethical responsibilities of business are those

responsibilities that are yet to be codified in law, never-the-less they are already expected of busi-

nesses from their different stakeholders, or as Carroll puts it:

“Ethical responsibilities embody those standards, norms, or expectations that reflect a concern for

what consumers, employees, shareholders, and the community regard as fair, just, or in keeping

with the respect or protection of stakeholders' moral rights.”

15

(Carroll, 1991: 41)

As already indicated, the ethical responsibilities society lays upon business have, in many previous

occasions, been the driving force behind later legislation. This has been the case with environmental

issues, civil rights and the use of child labor (Carroll, 1991). In this sense the ethical expectations on

business may be seen as reflecting a higher standard than what is currently required by law, but of-

ten an indicator of future legislation. This is the rationale behind the claim that CSR can often be

seen as an “enlightened self-interest” (Kramer and Porter, 2006) for the companies willing to em-

brace it.

Discretionary responsibilities:

The last category in Carroll’s model is constituted by what Carroll refers to as the discretionary re-

sponsibilities of business, however, this latter category, has later been renamed as the philanthropic

responsibilities of business (Carroll and Shabana, 2010), which it will also be referred to here forth.

The philanthropic responsibilities of business distinguish themselves from the three other categories

by being of a much more voluntary nature. Unlike the other three categories, companies are not

perceived as unethical when they do not comply with these responsibilities; rather they are seen as

good corporate citizens if they do. This is, of course, dependent upon their ability to comply with

the economic, legal and ethical responsibilities foremost (Carroll, 1991). Given this description it

can be argued whether these philanthropic expectations can actually be defined as responsibilities

(Carroll, 1979), however, society’s desire for such philanthropic initiatives, be they contributions of

financial resources or employee hours to different causes or a whole third initiative, have only risen

in recent years (Carroll, 1991) and for many people this last category in Carroll’s model have be-

come synonymous with CSR.

When applying Carroll’s model it is important that one realizes that the categories should not be

seen as mutually exclusive, in fact the opposite is rather the case. For a company to be truly socially

responsible it has to embrace each of the four categories simultaneously. Neither is any category of

the model more or less important in order for the company to be socially responsible than any other

category. This means that the categories are not ordered in a continuum, rather they are ordered

according to their role in the evolution of importance (Carroll, 1979).

16

For the purpose of this thesis the focus will be on the latter category of Carroll’s model, the philan-

thropic responsibilities of business. This will especially show through the stimulus that the respond-

ents are presented to when they answer the questionnaire. The stimulus, as already described, cer-

tainly belongs to this latter category, which is underlined by the fact that no other Danish producer

of spring water has engaged in a similar CSR-initiative. The reason for choosing this focus is not

grounded in a refusal to acknowledge the justification of including the economical responsibilities

of companies, along with the two other categories of responsibilities, into the concept of CSR as

done by Carroll (1979), rather it is done to oblige to the fact that many do not consider the other

components of CSR as something companies are doing for society, but rather something they are

doing for themselves (Carroll, 1999).

3.2 The nature of CSR goods

One concern associated with CSR-related goods is how consumers can evaluate the verity of the

promises companies make when claiming that their goods are socially responsible. Unlike the pro-

cess of engineering additional attributes and new features to the product, the act of connecting the

purchase of a good to a CSR-initiative does not result in tangible differences to the product, which

justifies charging a price premium. An explanation, and a solution, to this problem are presented in

the literature on credence goods, which is a term defining a type of goods to which socially respon-

sible goods belong. Such goods are defined by Darby and Karni (1973) as containing the following

attributes:

“Credence qualities are those which, although worthwhile, cannot be evaluated in a normal use.

Instead the assessment of their values requires additional costly information”

(Darby and Karni, 1973: 68-69)

In other words this means that, for the normal consumer, it will be very difficult, if not impossible,

to establish the real value or quality of a credence good even after consummation (Hahn, 2004),

which is because the differentiation between ordinary goods and credence goods most often lies in

the production process (Roe and Sheldon, 2007).

17

In their seminal article investigating whether Fair Trade goods, certainly a type of goods belonging

under the umbrella of CSR, can be characterized as credence goods, Balineau and Dufeu (2010)

finds that Fair Trade goods holds all of the qualities necessary to be classified in this group. These

results help substantiate the claim that other types of socially responsible goods should also be clas-

sified as credence goods, while Balineau and Dufeu (2010) also put focus on another important as-

pect of credence goods, the information asymmetry associated with such goods.

As it has already been pointed at in the introduction to this chapter, consumers have little

knowledge on the verity of the claims made by producers of credence goods. This lack of

knowledge does, however, not apply to the producers of credence goods according to Darby and

Karni (1973). This is the so-called information asymmetry, which results in uncertainty on the side

of the consumer. According to Darby and Karni (1973) the consumer faces uncertainty because they

have difficulties in assessing their actual need for the credence good or service in question, as well

as difficulties in assessing whether the promises offered have actually been fulfilled. Balineau and

Dufeu (2010) have refined this proposal of Darby and Karni (1973) and coined two sources of con-

sumer uncertainty; uncertainty type 1 (UT-1) and uncertainty type 2 (UT2) which are defined as

follows:

“Uncertainty type one (UT1), which arises whenever the consumer is ‘unaware of the ability of a

good or service to satisfy a given want.”

(Balineau and Dufeu, 2010: 334)

And;

“Uncertainty type two (UT2), which emerges whenever the consumer cannot detect the quality of a

good or service”

(Balineau and Dufeu, 2010: 334)

The first uncertainty type, UT1, mainly applies to situations were a service is being provided, which

is underlined by the fact that Darby and Karni (1973) uses an analogy of a car repair when they ex-

plain this particular source of consumer uncertainty. For this reason Roe and Sheldon (2007) argues

that when the good in question is a tangible consumer good, which is differentiated by process at-

tributes, only the second uncertainty type, UT2, applies. Most socially responsible goods will fall

18

under this definition and therefore only UT2 is relevant when discussing the properties of credence

goods in relation to CSR.

One possible solution to reducing the uncertainty of consumers when buying socially responsible

goods is through the use of labelling (Roe and Sheldon, 2007). Examples of such labels are the dol-

phin-safe tuna labels, the marine stewardship council label and of course the Max Havelaar fair

trade label, which is being addressed by Balineau and Dufeu (2010). It is, however, questionable

whether such labels will ever be able to completely remove the uncertainty from the most sceptical

consumers, and therefore the consumer uncertainties relating to credence goods are something

companies need to pay attention to when engaging in CSR.

3.3 CSR and the consumer

This section is intended to give a thorough account on the relevant theories on consumer behaviour,

especially consumer behaviour in relation to CSR. The section will start with an account of the S-O-

R framework of Bagozzi (1983), which explains how different types of stimuli can affect consumer

attitudes. After this follows an investigation of the research relating to CSR and consumers’ motiva-

tional attributions. This account will look at the history of this research, while maintaining a focus

on the work of Ellen et al. (2006), which serves as the primary methodical source for this thesis.

3.3.1 The S-O-R framework

The Stimulus-Organism-Response (S-O-R) framework produced by Bagozzi (1983) can be very

helpful at explaining the effects of socially responsible goods on consumer behaviour (Lii and Lee,

2011). According to Bagozzi this framework conceptualizes consumer behaviour by creating a

common framework for three different constructs relating to consumer choice decisions:

- The stimulus consists of external determinants that can be divided into two groups: Managerially

controllable factors such as CSR initiatives, and environmental factors such as competition, regula-

tions and social pressure.

- Internal processes regulating choice, the organism, can be divided into cognitive processes such as

expectations, evaluations and decision rules, and affective processes such as motivation, needs and

attraction.

19

- The behaviours regulating choice, the response, are intentions to act, actual choices and the actual

outcomes and reactions to choice.

In relation to CSR the S-O-R model dictates that such initiatives will act as a stimulus, affecting the

internal processes regulating choice, the organism, of consumers, which will determine the response

of consumers, making them more prone to buy socially responsible goods. The S-O-R model is also

implicitly used by Webb and Mohr (1998) as it becomes evident from figure 1. In this specific ex-

ample the CRM campaign illustrates the stimulus, which leads to a change in company image, a

change in the organism. Finally this change, spurred on by the stimulus, leads to a change in pur-

chase behaviour, the response.

Figure 3.3.1.1 – How CSR affects consumer attitudes, Webb and Mohr (1998)

3.3.2 Consumer attributions for Corporate Socially Responsible programs

It becomes clear from the S-O-R framework that consumer purchasing decisions are guided by

complex internal processes, which is also acknowledged by Kang et al. (2012). This acknowledge-

ment makes it evident that the same stimulus will necessarily be able to affect different individuals

in different directions.

This perception is essential in relation to the work of Ellen et al. (2006), which focuses on the influ-

ence of consumers' attributions of motivations on purchase outcomes in response to CSR. However,

to be able to infer how different attributions of organizational motivations will impact purchase in-

tentions, it is necessary to first construct a typology of the range of attributions that consumers may

hold.

20

Most of the early research done in this field bases such a typology on a continuum of consumer at-

tributions ranging from purely egoistic and self-centered motives to purely altruistic and other-

centered motives (Webb and Mohr, 1998; Lichtenstein et al. 2004). This categorization is supported

by the findings of Drumwright (1996), who found that managers believed that consumers are sim-

plistic and bi-polar in their judgement of motivations for CSR, attributing it to serve either econom-

ic ends or a sincere interest in social concerns. The rationale behind this typology is that consumers

will hold more negative attitudes towards CSR the more prone they are to attribute the motivations

behind CSR as self-serving. Of course the opposite attribution, that companies involved in CSR are

purely others-serving, will lead to consumers having a more positive attitude towards CSR.

The research done by Ellen et al. (2006), however, suggests that this model of consumer attributions

may be too simplistic, as her initial research discovered:

“Those consumers who attributed both other-centered and self-centered motives reported more

positive responses to the firm than those who attributed either one or the other.”

(Ellen et al. 2006: 150)

As a response to these findings, which contradicted the original rationale behind the use of the con-

tinuum, Ellen et al. invented a different typology using 4 different types of attributions. This new

typology did not completely break with the concept of the continuum, rather it refined it. These 4

different newfound types of consumer attribution identified are located pairwise in each end of the

traditional continuum. In the other-centered end of the continuum lie the two attributions:

- Stakeholder-driven

- And values-driven

Consumers believing that companies’ motivations are stakeholder-driven tend to believe that com-

panies only agree to invest in CSR-initiatives as a means to satisfy stakeholder pressures, be they

employees, governments or, as it is the focus of this thesis, the consumers. On the contrary, con-

sumers, who attribute values-driven motivations to companies, tend to believe that companies en-

gage in CSR-initiatives due to a sincere desire to give something back to society as a whole, and

that the causes they have involved themselves in are causes, which they highly believe in (Ellen et

al. 2006).

21

In the other end of the continuum, the self-centered end, lie the two attributions:

- Strategy-driven

- And egoistically-driven

Consumers, who are of the opinion that companies involvement in CSR-initiatives is due to strate-

gic motivations, are of the believe that companies do this for reasons such as to increase profits by

attracting new customers while better retaining old ones. Consumers, who on the other hand suspect

companies of engaging in CSR for egoistical reasons, perceive that companies do this for such rea-

sons as attracting publicity or even worse, that they do this for the purpose of pocketing the dona-

tions (Ellen et al. 2006)

The idea of breaking with the traditional use of a continuum to classify the motivational attributions

of consumers, and instead classify consumers according to a more diverse spectre of categories, as

done by Ellen et al. (2006) is, however, not entirely innovative. Instead, the categories of Ellen et al.

(2006) show certain similarities with the different classifications identified by Swanson (1995). In

her seminal article Swanson (1995) identifies three different types of motivations for firms to en-

gage in CSR: economical, positive duty and negative duty. Economic firm motives are based on

typical performance objectives. In other words, companies motivated by economic considerations

wish to increase their sales and profit. Certainly this category shares a great deal of similarities with

the category named strategic-driven attributions in the work of Ellen et al. (2006). The positive duty

category describes the instances where firms’ involvement in CSR is motivated by a sincere con-

cern for others, which is quite similar to the values-driven category in the work of Ellen et al. The

last category identified by Swanson (1995) is the negative duty category. Firms’ CSR-initiatives fall

into this category when they are motivated by a wish to not harm others. This definition reminds of

the stakeholder-driven motivations category identified by Ellen et al. (2005), because such consid-

erations often happen on the expense of lost profits and in relation to stakeholder pressures.

The fact that the categories identified by respectively Ellen et al. (2006) and Swanson (1995) shows

so many similarities help stress the fact that consumers’ motivational attributions may be much

more complex than the simplistic model of the continuum presumes. While Ellen et al. (2006) iden-

tified the different categories through interviews with consumers, the categories identified by Swan-

son (1995) are based on existing literature in the fields of management research and business ethics

research, and the point that they are so similar may help to dismiss the idea presented by Drum-

22

wright (1996) that consumers’ motivational attributions are simple and bi-polar. In fact, the differ-

ences between the categories of Swanson (1995) and Ellen et al. (2006) boils down to the last cate-

gory found by Ellen et al. (2006), the egoistically driven attributions. The presence of this latter

category in the research of Ellen et al. (2006) may be seen as an expression of a certain degree of

scepticism on the part of the consumer, a scepticism grounded in numerous examples of company

fraud and the very nature of the credence attributes which socially responsible goods contain (As

explained in the chapter 2.2 “The nature of CSR goods”).

That consumers’ motivational attributions are much more sophisticated than previously believed is,

in fact, the real innovative difference between the original continuum of consumer attributions and

the work of Ellen et al. (2006). Rather than believing that consumers will hold negative attitudes,

and a low willingness to pay, when they perceive companies as being self-serving when engaging in

CSR and more positive attitudes, and a high willingness to pay, when they perceive companies as

being driven by others-serving motivations, this new typology opens up for a more refined interpre-

tation of how consumers’ different motivational attributions may influence their willingness to pay

for CSR. While the traditional continuum would entail that for the four categories found by Ellen et

al. (2006) to be classified according to their implied willingness to pay, in ascending order, the

ranking would be: egoistically-driven → strategic-driven → stakeholder-driven → values-driven,

the results of the research of Ellen et al. (2006) differ something from this understanding. Rather

than this ranking they find that consumers attributing the motivations of firms engaging in CSR as

being strategic-driven display positive attitudes towards CSR and also a high willingness to pur-

chase from such a company. This finding is in agreement with the proposition of Whetten and

Mackey (2002) who suggest that strategic goals, such as gaining and retaining customers, have be-

come accepted practices by customers because they today are seen as integral components in the

sphere of business.

Contrary to what is the case with strategic motivational attributions, stakeholder-driven attributions

seem to have a negative effect on consumers’ attitudes towards CSR (Ellen et al. 2006). Such moti-

vations are not considered as being truly altruistic neither are they grounded in traditional corporate

goals such as increasing profits as strategic motivations and therefore they are not accepted to the

same extent by consumers. Therefore the relationship found by Ellen et al. (2006) is that consumers

attributing company motivations to strategic-driven or values-driven concerns display a more posi-

23

tive attitude towards companies engaging in CSR than consumers attributing company motivations

to egoistically-driven or stakeholder-driven concerns. This is also the relationship expected to be

found in the research of this thesis.

3.4 Willingness to pay and CSR

In order to measure the variances in different individuals’ sentiments towards CSR, this thesis will

use the willingness to pay as the method for measurement. This is a different method from the one

employed by Ellen et al. (2006) in their research on this same issue, however, the practice of gaug-

ing individuals’ willingness to pay has been widely used in an array of different studies, including

studies on the relationship between consumers and CSR. What the willingness to pay specifically is,

how it has been utilized in the body of research and what its shortcomings are, will be examined in

this section.

The willingness to pay is defined as:

“The amount that one or more persons are willing to pay for a good”

(Zerbe and Bellas, 2006: 8)

Given this definition it is evident that by eliciting consumers’ willingness to pay it is made possible

for the researcher to infer a monetary value on an individual’s utility of some specific object or

good. Due to the abovementioned property of willingness to pay-questions, it has been widely used

for a long time in the field of benefit-cost analyses (Zerbe and Bellas, 2006). By using willingness

to pay it is possible to infer the monetary benefits of a specific initiative e.g. a CSR-initiative, and

thereby also determine the range of monetary costs allowable in order to ensure the profitability of

the initiative.

For the purpose of this thesis the author is of the opinion, that by using the willingness to pay as a

measure to investigate consumers’ sentiments towards CSR, instead of their willingness to change

from their current preferred product as used by Ellen et al. (2006), a much more nuanced picture of

the differences that may exists between different motivational attributions to CSR-initiatives and

24

purchase intensions, can be produced. By using willingness to pay instead of the willingness to

change, it will be made possible to far better distinct between the strength of these sentiments that

consumers hold.

Previous studies on the relationship between CSR and consumers’ willingness to pay has been con-

ducted by Araña and León (2009), Kang et al. (2012), Creyer and Ross (1997) and Strahilevitz

(1999). Creyer and Ross (1997) found that consumers are willing to pay more for ethical firm be-

haviour and even more willing to punish unethical firm behaviour. The research of Kang et al.

(2012) supported the findings of Creyer and Ross (1997) for the hotel industry in particular, while

the research of Strahilevitz (1999) supported the conclusion of the work of Creyer and Ross (1997)

and further found a significant relationship between consumers’ willingness to pay for CSR-related

goods and the type of good concerned. Namely, Strahilevitz (1999) found that consumers tend to

have a higher willingness to pay for more frivolous products than with practical products as men-

tioned in section 2.3. Combined, the results of these studies serve to show, that the method of using

willingness to pay questions in the sphere of research on the relationship between CSR and con-

sumers is viable, and has previously been used to show a significant relationship between the two

objects.

The method of eliciting individuals’ willingness to pay is, however, by no means perfect. The re-

search of Miller et al. (2011) offers an insight into the applicability of the willingness to pay-

method by comparing the accuracy of different methods of eliciting consumers’ willingness to pay

with real purchase data. The research of Miller et al. (2011) uses four of the most applied approach-

es to measure willingness to pay, which can be catalogued in a 2 by 2 matrix ordered by two differ-

ent dimensions: hypothetical-actual and direct-indirect.

The two direct approaches are the hypothetical open-ended approach (OE) and Becker, DeGroot,

Marschak’s incentive-compatible mechanism (BDM) which uses an actual approach. The hypothet-

ical approach, which is the approach being utilized in this thesis as well as by Kang et al. (2012)

and Creyer and Ross (1997), is the simplest approach of the four approaches (Miller et al. 2011).

Here the respondents are only asked to name their willingness to pay for a given product. The BDM

method adds a twist to the OE method by holding respondents responsible to their stated willing-

ness to pay. After the respondents have stated their willingness to pay, a random price for the prod-

25

uct is determined, and if the price is lower than their stated willingness to pay, then they are then

obligated to purchase the item in question (Miller et al. 2011).

The two in-direct approaches are the hypothetical choice-based-conjoint (CBC), which is being

used by Araña and León (2009) as well as by Strahilevitz (1999), and the actual incentive-

compatible choice-based-conjoint (ICBC). These methods use choice sets where respondents are

presented with different sets of products holding various attributes and at different prices. The re-

spondents are then asked to choose “right here” and “right now” the product which they prefer, and

their choices are then used to compute their willingness to pay for any given product holding some

specific combination of the different attributes in question (Miller et al. 2011). The difference be-

tween these two approaches is that the ICBC-method, just like the BDM-method, makes use of a

buying-obligation, holding respondents responsible to their stated willingness to pay for the stimuli

in question.

Both the hypothetical- and the actual approaches are, however, linked to biases. The hypothetical

approaches suffer from what is known as a hypothetical-bias (Miller et al. 2011), where respondents

are prone to state a too high willingness to pay for the stimuli, due to the lack of consequences for

this action. This hypothetical-bias may be specifically severe in relation to this thesis due to the

social desirability-bias (Öberseder et al. 2011) associated with research on CSR-related goods. On

the contrary, the approaches utilizing the actual-method, where respondents are obligated to buy the

stimuli, should the actual price be equal to or lower than their stated willingness to pay, could suffer

from another bias. When the product is more expensive and infrequently purchased a strategic un-

derbidding-bias may exist. Under such a scenario an incentive-aligned approach, such as BDM and

ICBC, may lead respondents to state a lower willingness to pay than the one, which they are actual-

ly willing to pay, had they been sincerely interested in the product in question. In this case a hypo-

thetical approach might produce a result closer to that produced be real buying data.

Finally, the results of Miller et al. (2011) suggests that even though incentive-aligned approaches to

eliciting respondents’ willingness to pay seem to produce the results most comparable to the find-

ings of real buying data, the results found by using the OE method does not prove to be statistically

different from real buying data in most cases. Also, the OE method, which is being used in this the-

26

sis, produces significantly better results than the CBC method, which is being used by Araña and

León (2009) and Strahilevitz (1999).

3.5 Generation of hypotheses

In this section the different hypothesises of this thesis will be presented. The theoretical foundation

for the main hypothesis relating to consumers’ motivational attribution and their willingness to pay

for CSR-initiatives has been examined in the abovementioned theory section. The theoretical foun-

dation for the control variables will be elaborated on shortly in this section and hypothesises about

their relationship with consumers’ willingness to pay for CSR-initiatives will be made.

The main purpose of this thesis will be to investigate how the motivational attributions of different

consumers affect their willingness to pay for CSR-initiatives. The theoretical basis for this hypothe-

sis is found in the qualitative works of Ellen et al. (2006). In this research four different types of

consumer attributions are identified. These four motivational attributions are, as previously men-

tioned, stakeholder-driven motivations, values-driven motivations, strategy-driven motivations and

egoistically-driven motivations and they are found to have a significant impact on consumers’ will-

ingness to shift brand – in the case of the stimulus employed by Ellen et al. (2006), the brand of gas

station one prefers to use. In this thesis the focus will rather be on consumers’ willingness to pay for

CSR-initiatives. Creyer and Ross (1997) has previously found empirical evidence for a positive

relationship between consumers’ concern for environmental issues and a willingness to pay, there-

fore it is hypothesised that the results of this research will resemble the findings of Ellen et al.

(2006) despite this change in the dependent variable.

Hypothesis 1: The willingness to pay in response to CSR-initiatives will be higher

when motivational attributions are (a) values driven or (b) strategic and lower when

motivational attributions are (c) egoistic or (d) stakeholder driven.

The questionnaire, that the respondents of this thesis answer, contains three control variables. The

first of these control variables is the gender of the respondent. Previous research has been done on

the subject of the relationship between gender and a willingness to pay for CSR-initiatives, howev-

er, the results of this research has not produced a clear conclusion. The research of Dietz et al.

27

(2002) shows that women tend to score higher on the value of altruism, which is closely related to

environmentalism. This result is supported by the research of Blocker and Eckberg (1997) although

the statistical evidence is weak. Contrary to these results, Kang et al. (2012) found the opposite rela-

tionship that men show higher willingness to pay for green initiatives, when researching consumers’

willingness to pay a premium for green initiatives in the hotel industry. A possible explanation for

the relationship found by Kang et al. (2012) is presented in the research of Grønhøj and Ölander

(2007). Here it is found that men are more inclined to be responsible for the green outside practices

of a household such as waste disposal, while women more often a responsible for the green buying

habits. Therefore, since the stimulus used in this research is related to the buying habits of the re-

spondents, the author of this thesis expects female respondents to show a higher willingness to pay

for CSR-initiatives than male respondents.

Hypothesis 2: The willingness to pay in response to CSR-initiatives will be higher

when the respondent is (a) female than when the respondent is (b) male.

It seems intuitively correct that a positive relationship between the income of consumers and their

willingness to pay for CSR-initiatives exist. Such a relationship is supported by the views of Sen

and Bhattacharya (2001), who hypothesises that people belonging to the higher income segments

will be more willing to pay for green practices because it adds to their self-esteem, however, the

findings of Kang et al. (2012) finds a negative relationship between the two. In addition, the same

research by Kang et al. (2012) finds a strong positive connection between the standard of the hotel

an individual usually visits and the willingness to pay for green initiatives, meaning that individuals

who more commonly visit expensive hotels displays a higher willingness to pay. This relationship is

inconsistent with the finding of a negative relationship between income and a willingness to pay for

green initiatives, which is presented in the same study. This thesis supports the notion of Sen and

Bhattacharya (2001) and so it is expected that a positive relationship between respondents’ income

and the willingness to pay for CSR-initiatives of the respondents will be found.

Hypothesis 3: The willingness to pay in response to CSR-initiatives will increase when

income increases.

28

4. Analysis

This section will deal with the statistical part of this thesis. Firstly it will be analysed if the data col-

lected with the questionnaire is representative of the population. Then it will be tested whether the

questions of the questionnaire can reasonably be reduced into the four factors as proposed by Ellen

et al. (2006). This will be done through the use of a factor analysis. Finally the three hypothesises

established in section 2.5 will be tested using a multiple linear regression model.

4.1 Analysis of the control variables

The questionnaire used in relation to the empirical work of this thesis was handed out during three

consecutive days in accordance with the methodical principles outlined in section 2. During the

aforementioned period 162 persons was approached with an enquiry of completing the question-

naire. Of these 162 persons 135 responded positively yielding an initial response rate of 83.3 %1.

Subsequently a further 6 responses were removed due to incomplete answers which leaves back 129

valid responses which yields a final response rate of 79.6 %2. This final response rate must be con-

sidered as being more than adequate (Thimm and Rasmussen, 2009) and any considerations in re-

spect to a non-response bias are considered irrelevant based on this. As already mentioned the high

response rate uncovered is very satisfying and it is very likely that this can mainly be contributed to

the method of enquiry utilized in this study.

Besides the questions relating to the motivational attributions of the respondents the questionnaire

that the respondents were presented with also contained three control variables namely the age,

gender and income of the respondents. These variables are used to determine whether the sample is

representative of the population as a whole. The first control variable, the gender of the respondent,

is a dichotomous variable taking on the value 1 if the respondent is male and 0 if the respondent is

female. The average of this variable is equal to 0.636 meaning that 63.6 % of the respondents are

male. This indicates that there is an over-representation of males in the sample, which could also be

expected given the location where the questionnaire was handed out, however, this over-

representation is not far from the distributions of Ellen et al. (2006) with 60 % female respondents

and Becker-Olsen et al. (2006) with 58 % female respondents.

1 135/162*100 % = 83.3 % 2 129/162*100 % = 79.6 %

29

The next control variable is the age of the respondents. Unlike the two other control variables this

variable uses a ratio scale and as such it is possible to measure the mean of this variable and com-

pare this sample mean with the population mean. As it can be seen from appendix 3 the variable is

reasonably normal distributed with a minimum age of 18 and a maximum age of 78 and a mean age

of 46.6 years. A two-tailed T-test is conducted to establish whether it can be rejected that the sam-

ple mean is equal to the population mean of 49.35 years3 and this yields a P-value of 0.036 meaning

that it cannot be rejected that the sample mean age is equal to the population mean age at a 95 %

significance level. 4

The last control variable is the income of the respondents. A Comparison of the relative frequency

distributions of the incomes of the sample and the population is provided in appendix 4. This com-

parison reveals that the distributions are fairly similar, however, there is a very high occurrence of

respondents in the high income group segment in the sample. This can either be seen as an abnor-

mality in the sample that could cause a bias in the later results, or it might be seen as a manifesta-

tion of the social desirability bias mentioned in section 2.

Taking all of this into consideration the sample is considered as being representative of the popula-

tion although some minor variances exists between the two, and the statistical analysis will now

proceed to the next stage, the factor analysis of the variables relating to consumers’ motivational

attributions of firm motives.

4.2 Factor analysis

In order to test whether the 15 variables of the questionnaire5 relating to respondents’ motivational

attributions can be used to describe the four different motivational attributions as found in the study

of Ellen et al. (2006) an exploratory factor analysis is applied. Since the relationships between some

of the variables that is sought validated through the use of a factor analysis have already been estab-

lished by Ellen et al. (2006) a confirmatory factor analysis would have been a more appropriate

procedure. The SPSS software made available for us students does, however, not support such an

3 Mean age of population aged 18 and up. Data from www.statistikbanken.dk.

4 See appendix 3. 5 These 15 variables are displayed in appendix 2 in the excel sheet and are named 1 to 15, here forth they will be re-

ferred to as variable X1 to X15

30

analysis and therefore an exploratory factor analysis is used. The main difference between the two

types of analysis is that the confirmatory factor analysis allows for the researcher to lock the indi-

vidual variables to different factor in order to test if the expected relationship is indeed supported by

the data, while the exploratory factor analysis does not allow for this because it is based on the idea

that there is no pre-conceived factors. Given this description it is evident that the exploratory factor

analysis fits better with the purpose of this study, however, if the factors sought validated do indeed

exist, the exploratory factor analysis will still be able to uncover the relationships.

In the first factor analysis all 15 variables are included.6 The KMO-measure of 0.714 shows a satis-

fying result justifying the use of a factor analysis and the Bartlett’s test shows a very strong statist i-

cally significant result indicating correlation between the different variables. The “Total variance

explained”-table reveals that there are four significant factors with eigenvalues above 1, which is

consisted with the expected outcome based on the results of Ellen et al. (2006). The results of the

initial factor analysis does also show that there are problems especially with variable X11, which

does not show any significant factor loadings in respect to any of the four factors discovered by the

factor analysis showing eigenvalues above one. Due to this lack of significance variable X11, which

was expected to have a significant factor loading for the third factor, egoistically-driven motiva-

tions, is removed from the model and a new factor analysis is performed on the remaining 14 varia-

bles. The rotated component matrix of the initial factor analysis and the different factor loadings are

shown in figure 4.2.1.

6 SPSS output for the first factor analysis is available in appendix 5

31

Figure 4.2.1 – The initial rotated component matrix

The rotated component matrix of the final factor analysis is depicted in figure 4.2.2.7 This model

does, just like the initial model, show significant results both in the KMO-measure and in the Bart-

lett’s test. Once again four factors are shown to have eigenvalues above one and the classification of

these variables is consistent with the structure found by Ellen et al. (2006) except variable X15,

which has a highly significant loading on the third factor, egoistically-driven motivations. The theo-

retical consequences of the results in relation to variable X11 and variable X15 will be discussed

below in section 4.3. All of the factor-loadings in the model, except X4, are well beyond the mini-

mum threshold of 0.5 which is considered as the minimum for statistical significance by Lii and Lee

(2011). The variable X4 has nevertheless been maintained in the model because its factor loading of

0.412 is close to the threshold of 0.45 set by Hair et al. (2010) for sample sizes of 150, which is

close to the sample size of this study and because it loads on the first factor which accounts for five

of the 14 variables in question (Hair et al. 2010). In order to test the internal reliability of the four

factors, Cronbach’s alpha has been calculated for each of the four factors.8 These values range from

0.804 down to 0.745 and are therefore well beyond the minimum threshold of 0.7 (Hair et al. 2010).

Based on the four factors revealed by the factor analysis four new variables have been generated

7 SPSS output for the first factor analysis is available in appendix 6 8 The SPSS output for each of the four tests of Cronbach’s alpha can be found in appendix 7

32

based on the factor scores. These variables will be used in the following multiple linear regression

as measures of the four different constructs found in the factor analysis.

Figure 4.2.2 – The final rotated component matrix

4.3 Theoretical consequences of the results

The results of the factor analysis resulted in the omission of one variable X119, which was found to

have no factor loading above 0.4 to either the third factor, egoistically-driven motivations, which

was expected in the light of the results of Ellen et al. (2006), or to any of the three other factors.

This result does not come as a big surprise since issues was already raised by the respondents of the

pilot-test of the questionnaire. Here questions was raised as to whether this motivation should be

seen as egoistic, since the money spent on CSR is just treated as any other expense in respect to tax

purposes, and the act of adding a new expense is hardly considered egoistic. The factor analysis also

9 The wording of variable X11 can be found in appendix 2

33

revealed that the last variable, X1510

, loaded on the third factor, egoistically-driven motivations,

rather than the fourth factor, strategically-driven motivations, as expected based on the results of

Ellen et al. (2006). These results affect the composition of the two last factors and thus it may also

affect the theoretical understanding of these two factors.

The effect on the understanding of these two factors, egoistically-driven motivations and strategi-

cally-driven motivations, does not seem to be large. In the case of the last construct, strategically-

driven motivations, the remaining two variables of the factor11

seem to have some degree of overlap

with the variable, X15, that has no significant factor loading on the factor. In a ceteris paribus-

setting an increase in the number of new customers and an increase in the retention rate of custom-

ers should, given that the product is sold at a profit, yield a higher total profit for the firm. One pos-

sible difference in the understanding of the last factor prompted by the disparity in the variables is

that this specific motivational attribution, strategically-driven motivations, might be considered as

more innocent, since the profit aspect is now omitted.

The third factor, egoistically-driven attributions, seems to be more impacted by the change than the

fourth factor. According to the qualitative work of Ellen et al. (2006) question X11, asking whether

people believe the company is engaging in the CSR-activity in order to be tax deductible for the

amount, is related to a believe that the company is doing this in order to pocket the donations with-

out having to pay taxes. The factor analysis, conducted in this study, finds that this question does

not have a significant factor loading for the third factor. Instead the last variable, X15, were found

to have a significant factor loading for this factor. This new composition of variables loading on this

factor is to a large extent in thread with the egoistically-driven motivations of Ellen et al. (2006),

however, while still being characterized by variables of a cynical nature the factor is now not con-

nected to a the same degree of unlawfulness and this might have an mitigating effect in the multiple

linear regression model.

4.4 Multiple linear regression model

In this section a multiple linear regression model is produced. It will be based on the four variables,

generated on the factor scores from the factor analysis and the three control variables: age, gender

10 The wording of variable X11 can be found in appendix 2 11 Variable X13 and X14 – The wording of these two variables can be found in appendix 2

34

and income, which yields a total of 7 variables, The purpose of the model is to discover any signifi-

cant relationship between the seven variables and the respondents’ willingness to pay for the CSR

initiative, which is thus defined as the dependent variable in the regression model.

In order to make a multiple linear regression certain assumptions must be fulfilled. The first as-

sumption is that the sample is randomly drawn. As it has previously been discussed in section 4.1

this premise is certainly fulfilled. The second assumption that has to be fulfilled is that no perfect

collinearity must exist among the variables of the model. Because the factor scores from the factor

analysis in section 4.2 have been produced on the basis of a Varimax rotation, which is an orthogo-

nal rotation method, there will be no correlation amongst these variables. In the regression model

there is, however, also included the three control variables as already mentioned, therefore it is still

necessary to test the model for multi-collinearity. To test for the presence of multi-collinearity the

variance inflation factor (VIF) has been included in the model.12

The values of the VIF does not

exceed 1.2 for any of the variables in the model and considering that the proposed cut-off value for

the VIF is 10 (Kutner, 2004), it can be concluded that multi-collinearity is not a problem for this

multiple regression model. The remaining two assumptions are that the errors are normally distrib-

uted and that the variance does not display heteroskedacity. The treatment of these two remaining

assumptions can be found in appendix 8, however, it is worth mentioning that, while the presence of

heteroskedacity could be rejected, the initial test for the distribution of the errors was able to reject

the H0-hypothesis, thereby implying that the errors was not normally distributed. This led to the

omission of four of the 129 responses that were considered outliers based on their residuals. After

the omission of these variables it could no longer be rejected that the errors were normally distribut-

ed, and the regression analysis was conducted based on the remaining 125 responses.

The coefficients of the different variables of the initial regression model are shown in figure 4.4.1.13

From the significance levels of the individual variables it can be seen that most of the variables

show insignificant results even at a 10 % significance level. In the case of the three control varia-

bles: age, gender and income all of these are insignificant. The remaining four variables, the varia-

bles relating to the motivational attributions can be divided into two groups. The two variables

stakeholder-driven attributions and egoistically-driven attributions, called REGR factor score 2 and

12 The VIF generates a measure for the presence of multi-collinearity in an OLS regression. The values of the VIF for

the individual variables can be found in figure 4.4.1 and figure 4.4.2 13 The rest of the SPSS output can be found in appendix 8

35

REGR factor score 3 in the regression model, display highly insignificant results. The two remain-

ing variables, Values-driven attributions and Strategically-driven attributions, called REGR factor

score 1 and REGR factor score 4 in the regression mode, are the only two variables in the regres-

sion analysis to display significant relationships with respondents’ willingness to pay for the CSR-

initiative described in the stimulus. Before more is concluded on the relationship between the varia-

bles and the willingness to pay, the individual insignificant variables are excluded one by one from

the regression model to detect any changes this might inflict on the significance on the remaining

factors.

Figure 4.4.1 – Coefficients of the initial multiple regression analysis

After excluding the insignificant variables, only the two that already showed significant results in

the initial regression analysis remains in the model. As already mentioned these two variables are

constructs which, together with two of the excluded variables, are based on the factor scores of the

original variables X1 through X15. The first factor remaining in the model, REGR factor score 1,

explains the impact of respondents’ values-driven attributions of firm motives on their willingness

to pay. This factor is shown to have a positive beta-coefficient and is significant even at a 99 % sig-

nificance level. The other remaining factor in the model, REGR factor score 4, explains the impact

on respondents’ willingness to pay in respect to their propensity to attribute strategic motivations to

the company presented in the stimulus of the questionnaire. Here again the relationship is positive

and the effect is significant at the 99 % significance level. It is not possible to make any detailed

inferences on the basis of the values of the beta-coefficients, because they are both constructs based

on other variables. The only conclusion that can be made on the basis of the beta-coefficients is that

36

they both display a positive relationship, which is consistent with the expected relationship. The

further implications of the results on the hypotheses established in section 3.5 will be discussed in

the following section.

Figure 4.4.2 – Coefficients of the final multiple regression analysis

5. Discussion

In this section each of the hypotheses described in section 3.5 will be discussed in relation to the

results found in the data analysis. The different hypotheses will be discussed one by one and finally

an overall conclusion to the thesis as a whole will be presented in the last section, section 6.

5.1. The effect of consumers’ motivational attributions of CSR on their

willingness to pay

This is the main hypothesis of this thesis, and it is also the only hypothesis to be at least partly sig-

nificant in the multiple regression analysis. The theoretical basis for this hypothesis was found in

the seminal article by Ellen et al. (2006) and the result that was expected to be found, as described

in section 3.5, was as follows:

Hypothesis 1: The willingness to pay in response to CSR-initiatives will be higher

when motivational attributions are (a) values driven or (b) strategic and lower when

motivational attributions are (c) egoistic or (d) stakeholder driven.

The existence of the four different motivational attributions: values-driven motivations, stakehold-

er-driven motivations, strategically-driven motivations and egoistically-driven motivations were

37

supported by the findings of the factor analysis in section 4.2 with only small changes in the com-

position in the variables relating to the individual attributions. The results of the multiple regression

analysis was, however, more ambiguous. While the two factors: values-driven motivations and stra-

tegically-driven motivations showed to display the anticipated positive relationship with the will-

ingness to pay of the respondents, the remaining two factors: stakeholder-driven motivations and

egoistically-driven motivations displayed insignificant relationships with the willingness to pay for

the CSR-initiative in question.

The two factors, which were found to show a positive relationship with the respondents’ willingness

to pay for the CSR-initiative, are located in opposite ends of the traditional continuum of consum-

ers’ motivational attributions. This result supports the notion of Ellen et al. (2006), that consumers’

view on the different motivations that drives businesses into the realm of CSR are more complex

than they are otherwise given credit for, and that consumers show an understanding for the strategic

aims of companies because these have become such an integral part of the realm of business. How-

ever, the results of this thesis were not able to find support for the negative relationship between

stakeholder-driven motivations and egoistically-driven motivations. Thus hypothesis 1 has not been

proven in this thesis, although certain indications are found of the expected relationship.

5.2. The relationship between sex and willingness to pay for CSR

The result of this hypothesis was found to be inconclusive. While it was expected that women

would display a higher willingness to pay for the CSR-initiative, which would be consistent with

the findings of Dietz et al. (2002) and Blocker and Eckberg (1997), the coefficient found in the ini-

tial multiple regression analysis was found to be insignificant even at the 10 % significance level.

Still the coefficient found in the regression analysis displayed a negative value indicating that wom-

en did show a higher willingness to pay. The insignificant relationship found then might be a symp-

tom of the relatively small sample size for the regression analysis of only 125 subjects. Perhaps a

significant relationship could be found by expanding the size of the sample, however, for now it

must be concluded that this thesis was not able to support the expected relationship of hypothesis 2.

38

5.3. How income affects consumers’ willingness to pay for CSR

The result of this hypothesis is almost identical to the findings in respect to hypothesis 2 related to

the effect of gender on the willingness to pay. The expected relationship is described in hypothesis

3 in section 3.5:

Hypothesis 3: The willingness to pay in response to CSR-initiatives will increase when

income increases.

However, the multiple regression analysis was not able to identify any significant relationship be-

tween the two variables. Earlier work on this relationship supports the notion that people belonging

to a higher income segment will be more willing to pay for green practices because it adds to their

self-esteem Sen and Bhattacharya (2001), while other research finds the exact opposite relationship.

The coefficient found in the initial multiple regression analysis displays a positive relationship be-

tween income and willingness to pay supporting the notion of Sen and Bhattacharya (2001) and

hypothesis 3 of this thesis, however, the P-value of .336 does not grant any statistical significance to

the results. As is the case with hypothesis 2, the small sample size may have an effect on the

strength of the relationship displayed, but for time being the results of the regression analysis does

not allow any conclusions to be made.

6. Conclusion

The purpose of this thesis was to investigate how consumers’ different motivational attributions

affect their willingness to pay for CSR-initiatives. In order to distinguish between different attribu-

tions the four categories of Ellen et al. (2006) were used and a multiple regression analysis was ut i-

lized to detect any differences in the willingness to pay across these different attributions.

As the discussion of the individual hypothesis in section 5 reveals, the results of the data analysis

does little in order to support the hypotheses of this thesis. While no statistical significant results

supporting hypothesis 2 and 3 was found hypothesis 1 was only partially supported. Based on the

factor analysis it was possible to recreate the four different motivational attributions described by

39

Ellen et al. (2006), however, the anticipated effect of these individual attributions on the willingness

to pay was only supported in two of the instances. As described in section 5.1, the positive relation-

ships discovered in two of the instances adds support to the notion, that consumers’ motivational

attributions are not as simple and bi-polar as earlier research has assumed. Instead, consumers’ mo-

tivational attributions seems to show many similarities with the actual firm motivations as ident ified

by Swanson (1995), and furthermore consumers seem to show an understanding for strategically-

driven firm motivations and even show a significant willingness to pay for initiatives, they assume

to be driven by such strategic motivations.

The lesson to be learned from these results is that business professionals must pay notice to the mo-

tivational attributions of their customers in respect to their CSR-initiatives, since these can have a

significant impact on the willingness to pay. As far as possible businesses should try to put empha-

sis on the motivations found to have a significantly positive impact on the expense of the two other

motivations. If businesses do not pay attention to this aspect of their CSR-campaigns they might

risk that the money they have spent are utterly wasted.

The findings of the thesis may, however, also indicate that inherent differences exist among Danish

and American consumers. This would explain why variable X15 was found to have a significant

loading on the theoretically wrong factor, while variable X11 was found to have insignificant load-

ings for each of the four factors. Such national differences are previously proven to exist in the sem-

inal article of Dutta et al. (2008) who found that differences existed in the willingness to pay for

green initiatives between American and Indian consumers. These findings suggest that more re-

search in this field could be warranted.

Such future research may be based on a qualitative approach, which would better allow for the de-

tection of specific differences in the underlying motivational attributions. Other aspects that could

be investigated in future research could be the generalizability of the results found in this thesis, in

respect to other product groups and other CSR-initiatives. Araña and León (2009) have previously

investigated how respondents’ willingness to pay has differed across various types of CSR-

initiatives and product types. This approach could also be used in this case, in order to test the ro-

bustness of the results. Future research might also be concerned with, how the motivational attribu-

tions of consumers can be influenced in order to take advantage of the relationship between these

40

attributions and consumers’ willingness to pay. If such a method was found, it would be possible

for companies to increase the effectiveness of their CSR-initiatives in the future.

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