Factors affecting CSR performance, brand equity and business performance: the role of CSR leadership and CSR culture
Creators: name: PHILLIPS, Schavana
Publisher: name: RMIT University
Year: 2024
Subjects: classificationCode: 350702
subject: Corporate social responsibility
classificationCode: 350707
subject: Leadership
classificationCode: 350903
subject: Logistics

description: Over the years, the focus on firm performance has primarily been on commercial goals with a lack of consideration and insufficient recognition by firms of ecological and societal opportunities (Borra 2015; D'heur 2015). In fact, through a lack of training and engagement with this new era, firms are still not ready and do not fully understand the sustainability framework which outlines the 17 Sustainable Development Goals by the United Nations (UN) (Di Vaio &amp; Varriale 2020). The Business and Sustainable Development Commission highlighted that sustainable business can unlock at least US$12 trillion for global sustainable goals such as the elimination of poverty, improving education and health outcomes, creating better jobs and tackling key environmental challenges (Polman 2015).  However, Lindgreen (2013) state that there are gaps and inconsistencies in the academic literature, and research has not been able to fully explicate the actual enablers of and barriers to adopting sustainable performance. Recent literature does highlight some enablers and barriers, for example,  Nagariya, Kumar and Kumar (2021) highlighted the importance of business ethics and commitment of top management as an enabler of sustainability. Further, it has been identified that there are barriers such as  limited awareness of the impacts and benefits associated with sustainability, a lack of time and resources, and a lack of skills and expertise (Journeault, Perron &amp; Vallières 2021).  For this reason firms need to create their own indicators and reports on the components of social responsibility. These components include diversity, health and safety and community activities, equal opportunity policies for female senior executives, members of visible minorities, staff with disabilities, well-being programmes,  use of local contractors and suppliers, support of education and training programs, humanitarian programs and  and tackling key environmental challenges. (Norman &amp; MacDonald 2004).  However, real leadership is needed to achieve this through being a trusted partner with civil society, the corporate sector and governments (Polman 2015).

This study focused on key elements of CSR-driven leadership and CSR culture and their effect on CSR performance as well as the resulting effects on brand equity and financial performance. To develop the conceptual framework, the main research questions were: 1) How do CSR leadership (CSRL) and CSR culture (CSRC) influence firms' CSR performance (CSRP)? and 2) How does CSR performance influence firms' business performance? The proposed model used transformational leadership, stakeholder management and sustainability theories to examine the relationships between leadership and culture and their influence on performance within the corporate social responsibility setting.  It looks at the effects of two intangible variables, leadership and culture, as enablers of CSR performance, and further its effect on brand equity and financial performance. The research specifically considers how CSR oriented leadership and culture as intangible resources within an organisation impact CSR performance. It further looks at the economic effect CSRP has on brand equity (BE) and financial performance (FP). When compared to economic sustainability, CSR performance in this research took into consideration two of the three pillars of sustainability, namely the social and environmental, as an essential focus and as an underdeveloped area of the sustainability discussion (Missimer 2017). McKenzie (2004) explained that economic, social and environmental sustainability are inextricably linked, however, within the realm of this study, social and environmental sustainability as a notion of business responsibility to society, are distinct from economic sustainability. Further, social and environmental performance impact entire communities through improvement of the firm's impact on social and natural environments (Di Vaio &amp; Varriale 2020).

To achieve a detailed understanding of the effects of CSR leadership (CSRL) and CSR culture (CSRC) on  CSR performance (CSRP), two stages of empirical research and analysis were conducted. The approach used for data collection was convergent mixed methods research design whereby both qualitative and quantitative methodologies were employed (Mixed Methods). First, semi-structured interviews were conducted where the main purpose of collecting this qualitative data was to collect information about the research issues based on the respondents' understanding and their real-life experiences of the issue under observation. The semi-structured interviews were conducted with 22 senior executives from firms in the transportation industry industry (major international airlines, rail, road and sea organisations) which ensured a comprehensive study to investigate the influence of CSR leadership and CSR culture on CSR performance and further, how CSR performance impacts brand equity and financial performance. 

The second stage adopted a quantitative approach employing a structured undisguised questionnaire survey, meaning that the participants were aware of what the researcher wants to know.  These were distributed within the transportation industry in Australia.  In total, 83 valid responses were received. The purpose of this survey was to collect information from a targeted population whose answers were to constitute the data to be analysed and to validate the qualitative data already collected in order to enhance the accuracy of the results. 

Following the data collection, the qualitative data were analysed using thematic analysis while structural equation modelling (SEM) analyses were conducted for the quantitative data using SPSS and SmartPLS software. The empirical evidence indicates that there is a significantly positive relationship between CSR leadership and CSR performance, and between CSR culture and CSR performance. CSR culture significantly influenced environmental performance, but not social performance. In turn, environmental performance has a significant effect on brand equity, but social performance does not positively impact brand equity. Additionally, the relationship between the twin pillars of CSR performance and financial performance is not statistically significant. Finally, the relationship between brand equity and financial performance was not statistically significant either. It was expected that the data would have supported the hypothesis that CSR culture positively effects social performance but it may be that the results are industry specific, in that the transportation industry industry are the biggest polluters and so have focused on environmental performance. The results of CSRP on brand equity and financial performance showed that the industry perception of CSR was focused on environmental performance and reinforces the view that the concept of CSR still remains soft and nebulous. 

This research contributes to enhancing knowledge on how CSR leadership and CSR culture may direct social and environmental performance which in turn positively influences brand equity, resulting in improved financial performance. Findings from this research may inform organisations on the design and implementation of CSR practices. A methodological limitation of this research was the moderate sample size compared to the large number of items in the data set. More research with middle management as a target respondent is also needed on the effect of CSR performance on brand equity and financial performance.