Applying a Consumer Perceptual Measure of Corporate Social Responsibility: A Regional Australian Perspective

The study examines the patterns of perceptions of retail banking consumers in respect to banking services in regional Australia from a corporate social responsibility (CSR) perspective. A novel twodimensional measure of corporate social responsibility was used for this purpose. Findings from the analysis of levels of contentment/discontentment of bank consumers are noteworthy. Contrary to popular belief, consumers in this study not only portrayed a diversity of opinions on the corporate social responsibility roles of banks, but also showed general support for the two main opposing views of CSR which represent the classical and the emerging perspectives. The implication of these findings is that banks need to cater for both perspectives by maintaining a careful balance between pursuit of profits and being concerned with society-related issues. The observance of the triple bottom line as a practical philosophy for supporting the diverse interests of diverse stakeholders is recommended. Disciplines Business | Social and Behavioral Sciences Publication Details Rugimbana, R. , Quazi, A. & Keating, B. (2008). Applying a Consumer Perceptual Measure of Corporate Social Responsibility: A Regional Australian Perspective. Journal of Corporate Citizenship, 29 (Spring), 61-74. This journal article is available at Research Online: https://ro.uow.edu.au/commpapers/2978 Applying a Consumer Perceptual Measure of Corporate Social Responsibility A Regional Australian Perspective' Robert Rugimbana Griffith L/n/Vers/ty Ali Quazi Byron Keating University of Canberra University ofWollongong The study examines the patterns of perceptions of retail banking consumers in respect to banking services in regional Australia from a corporate social responsibility (CSR) perspective. A novel two-dimensional measure of corporate social responsibility was used for this purpose. Findings from the analysis of levels of contentment/discontentment of bank consumers are noteworthy. Contrary to popular belief, consumers in this study not only portrayed a diversity of opinions on the corporate social responsibility roles of banks, but also showed general support forthe two main opposing views of CSR which represent the classical and the emerging perspectives. The implication of these findings is that banks need to cater for both perspectives by maintaining a careful balance between pursuit of profits and being concerned with 'society-related issues'. The observance ofthe triple bottom line as a practical philosophy for supporting the diverse interests ofdiverse stakeholders is recommended. Corporate social responsibilrty Retail banking Factor analysis Cluster analysis Regional Australia Robert Rugimbana is an Associate Professor in the Department of Marketing at Griffith University. Australia. His PhD was earned from the Macquarie Graduate Schoo! of Management, examining the adoption of new banking technologies. His research has been published widely in outlets such as the Inlemalional Journal of Bank Marketing, Journal of Consumer Behaviour, Journal of Financial Services Marteling, Journal o/Marketir^ Management and Journal of Asia-Pacijic Business. Dr Ali Quari is an Associate Professor of Marketing within the Faculty of Business and Government at the University of Canberra, Australia. He received his PhD from the University of New South Wales. His research interests are in the areas of corporate social responsibility, environmental/ green marketing, services and relationship marketing and bus in ess/marketing ethics. His articles have appeared in numerous academic and professional journals including the European Journal of Marketing. Journal of Business Ethics, Australasian Marketing Jouma/and Management Decision. Byron lut ing is a Lecturer in the School of Information Systems and Technology and a Research Fellow in the Centre for Business Services Science at the University ofWollongong, Australia. He obtained his PhD from the University of Newcastle in the area of customer relationship management and was awarded the inaugural Dissertation Prize for the Internationa Consortium of Electronic Business. His research has been published in the Australasian Marketing Joumai, Managing Service Quality and Journal of Management and Worid Business Research. Department of Marketing. CriFRth Business School, CrifFith University. Nathan Campus. Queensland, Australia 4111 r. rugimbana fgJgriffith.edu.au Faculty of Business and Government. University of Canberra, Australian Capital Territory, Australia 2601 a I i.quazi (glean berra.edu.au Centre for Business Services Science, School of Information Systems and Technology, University ofWollongong. New South Wales, Australia 2553 bkeatingig) uow.edu.au * The authors would like to express gratitude to Professor Glenda Strachan (Griffith University) for her contribution to an earlier draft. JCC 29 Spring 2008 6l ROBERT RUCtMBANA, ALI QUAZI AND BYRON KEATING T HE RETAIL BANKING SECTOR IN MANY DEVELOPED ECONOMIES AROUND THE world, particularly over the last two decades, has witnessed significant changes as a consequence of progressive deregulation in this industry. Whereas the intention ofthe deregulatory imposition was to create an environment that reflected a more level playing field for banking organisations, and superior value for all stakeholders, the subsequent competitive strategies adopted by banking organisations, in particular those that involve economic rationalisation initiatives appear to have derailed this expectation for at least one important group of stakeholders, the bank customers. The banking fraternity views progressive deregulation as a means of recasting the retail banking trade as an economic activity and therefore social responsibility as another form of'subsidy' (ABA 2003). It is therefore conceivable that bankers have tended to either ignore or totally reject the notion of corporate social responsibility (CSR) within the ethos of competitive forces and their fundamental obligation to deliver shareholder returns. In a submission to the NSW Premier's Department titled 'CSR: The Challenges and Opportunities' (NSW Premier's Department 2001) it was noted that, although CSR definitions vary, there was one constant: that is, the three components that make up CSR. First is doing business responsibly, second is taking a leadership position in community investment and social issues relevant to the business, and third is the triple-bottomline accountability. The ABA (2003) submission appears to present bankers as rejecting the above-mentioned components of CSR within the ethos of competitive forces and their one and only fundamental obligation: that of delivering high net worth shareholder returns. This stance appears to find its roots in the orthodox and increasingly outmoded paradigm of 'the business of business is business' which maintains that the social responsibihty of business should be confined to those activities and actions that are justified in economic terms (Friedman 1968). This classical position of CSR is about profit maximisation, ensuring maximum returns to investors and strengthening service provision. It is therefore not surprising that retail banks have all but ignored any resistance by customers to the strategies of reducing branch networks and replacing them with remote servicing innovations. The impact of branch rationaHsation and reallocation on rural and other communities' access to financial services is best appreciated in terms ofthe aggregate decline (e.g. since 1993 over 1,500 bank branches and agencies have dosed around Australia and the trend is continuing; Cutcher 2004). The impact on customers is greater than the loss of a bank branch. Customer dissonance is clearly linked to loss of jobs, accessibility of services, lack of security and erosion of their financial control (Arend 1993; Marthur and Moschis 1994; Rugimbana and Iversen 1994; Corby 1995). Given this scenario, customers could be forgiven for interpreting the ABA (1990) submission as appearing to suggest that bankers view such important cSR tenets such as the retention of muchneeded service provision and employees as nothing more than 'special privileges to particular groups'. Consequently, customers have tended to assume a view of an amoral (or perhaps immoral) way in which the banking sector has pursued profit at the expense of its corporate social responsibility. The number of branch bank closures that ensued (NSW Department of Fair Trading 1997-98), and the disproportionate manner in which this was done, continue to raise significant CSR implications. A report by the NSW Department of Fair Trading contended that the rationalistic strategies had left many small rural towns with significantly reduced banking services, and in many cases no services at all (NSW Department of Fair Trading 1999), resulting in unsustainable financial leakages. The relatively recent initiatives to create community banks such as Bendigo (Argent 2003) are a consequence of efforts by disenfranchised stakeholder groups (apparently) 62 jCC 29 Spring 2QoS APPLYING A CONSUMER PERCEPTUAL MEASURE OF CORPORATE SOCIAL RESPONSIBILITY to address what appears to be a rejection ofthe notion ofa customer-focused CSR commitment by mainstream bankers. In response to customer reactions such as those above, more recently many business organisations including banking organisations appear to be reviewing their stance on CSR. Indeed many businesses have advanced beyond rhetoric to pour millions of dollars into various forms of CSR measures in a race to be seen as 'doing good' in the eyes ofthe community and customers. According to some authors (Pearce and Doh 2005), CSR has irreversibly become part ofthe corporate fabric. In fact, a recent study found that more than 80% ofthe Fortune 500 companies address CSR issues (Bhattacharya and Sen 2004). In Australia, banking organisations are now reviewed more formally on their CSR commitments using measures such a