Corporate Social Responsibility in the B2B Market: How Supplier Actions Influence Buyer Expectations . (pp. 10-29)

This research investigated the effects of supplier corporate social responsibility (CSR) on buyer expectations of corporate brand performance as well as the mediating effects of brand equity on buyer expectations of brand performance. For decades, organizations have integrated CSR as a business strategy to engage multiple stakeholders in a favorable manner. Extensive literature has revealed how CSR drives brand equity to sustain a brand’s competitive advantage through improved profitability and reputation in the market; it also has indicated the value of CSR as influencing brand performance. This research successfully closed gaps in the extant literature by addressing the influence of CSR as viewed by U.S. buyers in the business-to-business environment, thus explaining value creation and redistribution through the influence of stakeholder theory. Analysis revealed that supplier CSR significantly influenced brand performance expectations of buyers, with brand equity working to enhance brand performance expectations. Confirming that supplier CSR investment translated to a competitive advantage with business-to-business customers highlighted the available potential of targeted spending by supplier organization marketing divisions to key stakeholder groups. Introduction Corporations today focus on integrating corporate social responsibility initiatives as a business strategy to engage multiple stakeholders in a favorable manner. This commitment is a dynamic contrast to 20th-century businesses’ concentration on profit margins that were derived from refined industry production or management standards. Famed economist Milton Friedman (1970) reinforced this last-century operational standard by insisting that corporate America was obliged to focus on shareholder profits and nothing more. He expanded on this stated obligation, suggesting that to spend on social and environmental concerns was to deny shareholders their rightful returns on their investment in the company. At about the same time as Friedman’s declaration, classic thinking about organizational theory was impacted by new ideas such as stakeholder legitimacy in management (Freeman & Reed, 1983), stakeholder negotiation processes (Charan & Freeman, 1980), and specific techniques of stakeholder management (Emshoff & Freeman, 1981). In opposition to Friedman’s (1970) claim that a company’s sole responsibility was to its shareholders, Freeman (1984) summarized this new thinking, terming stakeholders as any entity affected by or able to impact the firm’s strategic objectives. Explaining, Freeman indicated that each of these entities had a stake in the company’s actions as well as claims on the company; therefore, the company incurred certain responsibilities to each entity or stakeholder. As Freeman’s (1984) stakeholder theory recognized the shift of business from an industrial structure to an economic one, the theory responded as well to growing communications abilities, an increased interest in environmentalism, and a rapidly globalizing market. For example, managers and executives responsible for designing and implementing strategic plans based on internal knowledge began spending greater levels of effort reacting to intrusive challenges from media, international competition, consumer advocates, environmentalists, and the like (Freeman, Harrison, Wicks, Parmar, & de Colle, 2010). In recent decades, methods to address challenges regarding elements of stakeholder theory included stakeholder prioritization and corporate responsibility. For example, managers found it necessary to determine stakeholders to which they were responsible and the extent of their obligation to address those stakeholders’ claims (O’Riordan & Fairbrass, 2014). To reinforce the future of the organization in a responsible manner, company representatives managed equitably the competing interests of what amounted to a stakeholder democracy in which every entity possessed rights and claims (O’Riordan & Fairbrass, 2014). No longer optional, stakeholder engagement became a vital business activity (Noland & Phillips, 2010) that was used to achieve mutual objectives such as consent, accountability, trust enhancement, or improved governance (Greenwood, 2007). Ongoing equitable Corporate Social Responsibility in the B2B Market: How Supplier Actions Influence Buyer Expectations Susan Saurage-Altenloh, ssaurage@saurageresearch.com