An assessment of corporate social responsibility on customer company identification and loyalty in banking industry: a PLS-SEM analysis

Abstract

Purpose

This paper aims to address the need for a more in-depth empirical investigation of exploring the link between the adoption of corporate social responsibility (CSR) practices and different aspects of customer behavior in a developing country. This paper develops a research framework and assesses the mediating role of trust, customer-company identification (CCI) and electronic-service quality (E-SQ) between customer perceptions of CSR and customer loyalty.

Design/methodology/approach

Working with a sample of 280 banking customers in Pakistan, partial least square based structural equation modeling is used to test the conceptual model.

Findings

Surprisingly, results suggest that CSR is not directly related to customer loyalty, which is contradictory to previously established findings conducted in developed countries. Thus, confirming a full mediation of CCI, E-SQ and trust in enhancing the effect of CSR on customer loyalty. The study also confirms that CSR is positively related to E-SQ, and E-SQ also directly affects CCI.

Practical implications

Banks should adhere to honest CSR practices and effectively communicate and advertise these practices to increase awareness and knowledge among the customers. Similarly, banks should advance in technological expertise to generate customer identification, which then leads to their loyalty.

Originality/value

Previous studies conferred short-term customer’s reactions, such as purchase intention and brand image. Still, this research discusses the long-term effect of CSR on customer behavior, such as the loyalty of the customers. Moreover, this is the pioneer study that investigates how CSR actions influence customer perceptions about E-SQ and how electronic services affect customer identification with a bank.