The Moderating Effect of Marketing Capabilities on the Relationship between Changes in CSR Perceptions and Changes in Brand Equity

[Abstract] In recent years, firms have been pressured by stakeholders to undertake additional corporate social responsibility investments. Some firms have taken the initiative to allocate additional resources to CSR investments, while others argue that these investments conflicts with the firms' objectives to maximize profits. This controversy has piqued researchers' interests as they explore and study the linkage and relationship between CSR and firm performance. As such, we seek to contribute to this literature by studying the sensitivity of changes in CSR perceptions on brand equity, a noted measure of firm performance. We also take the resource-based view perspective to introduce marketing capabilities as a possible moderator for the CSR-brand equity relationship. Using data from 134 firms, we run a structured equation model (SEM) path analysis and find a positive relationship between changes in CSR perceptions and brand equity, significant at the 5% level. We also find that not only is there a positive and significant (p[keywords] corporate social responsibility, brand equity, resource-based view, marketing capabilities, structured equation modelIntroductionIn recent years, firms have been pressured by stakeholders to undertake additional investments in corporate social responsibility (CSR) activities. CSR activities concern actions that appear to further some social good beyond the interests of the firm and the requirements of law (McWilliams & Siegal 2000). Some firms have taken the initiative to allocate additional resources and devoting them to CSR, while others resist and argue that the additional investments to CSR conflicts with the firms' objective to maximize profits. This controversy has motivated researchers to examine the relationship between CSR and firm performance in an attempt to shed fight upon the tradeoff or benefits of CSR investments.In accounting for firm performance, extant marketing literature has highlighted the importance of brand equity (e.g. Keller 1993; Taylor, Celuch & Goodwin 2004). Brand equity is the centerpiece and the backbone of an organization as it defines the power that a brand may command in the marketplace by the means of only its name, logo, and symbol (Mahajan, Rao, & Srivastava 1994). Realizing its importance, researchers have used brand equity as a measure of firm performance as they try to identify the key antecedents that may have positive effects on brand equity (Kim, 1993; Yoo, Donthu & Lee 2000; Torres et al. 2012).Existing literature on the CSR-brand equity relationship, to the best of our knowledge, has yielded positive results (e.g. Brickley et al., 2002; Lai et al., 2010; Torres et al., 2012). Thus, the social responsibilities of the firm have been identified as a key antecedent in consumers' purchasing decisions as it influences the consumers' perceptions of the brand and the firm as a whole (Wagner, Lutz, & Weitz 2009). However, most studies on this relationship have only examined the present CSR perceptions on brand equity and have not analyzed how the changes in CSR perceptions of the firms affect their brand equity. This brings us to the first purpose of our paper. We analyze the sensitivity of CSR perceptions and its effects in how the changes of the consumers' perceptions of a firm's CSR affect the brand equity and how the brand equity changes.We also draw upon the resource-based view theory (RBV) to introduce marketing capabilities as a possible moderator for the changes in CSR perceptions-brand equity relationship. The RBV theory assumes that firms can achieve a strategic competitive advantage by bundling their heterogeneous resources and realizing their potentials through organizational actions and behaviors (Huit, 2011). …