7.1 Theoretical Framework

University of the Cumberlands **We aren't endorsed by this school
DSRT 837
Oct 31, 2023
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1 Corporate Social Responsibility (CSR) and How It Affects Customer Loyalty 7.1 Theoretical Framework Professional Writing (DSRT-837-A01) - First Bi-term, Ashay Shah The University of Cumberlands, Dr. Throne 10/13/2023
2 Theoretical Framework The theoretical framework for this study will be based on the stakeholder, social exchange, and consumer behavior theories (Dwidienawati et al., 2022). These theories will provide a backdrop for understanding the relationship between corporate social responsibility (CSR) and customer loyalty. Stakeholder Theory Stakeholder theory is based on the idea that businesses do not operate in isolation and are accountable to a range of stakeholders with a vested interest in the organization's operations and success. These stakeholders include customers, employees, shareholders, suppliers, the local community, and the environment (Dwidienawati et al., 2022). According to this theory, organizations should not only focus on maximizing profits for their shareholders but also consider all stakeholders' needs, values, and expectations. This means that business decisions, strategies, and actions should consider the impact on each stakeholder group rather than solely prioritizing the interests of shareholders. Stakeholder theory recognizes that each stakeholder group can significantly impact the success or failure of an organization. For example, customers can influence sales and revenue, while employees can affect productivity and company culture. On the other hand, shareholders provide capital for the company to operate, and the local community can affect the company's reputation and social license to use. In the context of CSR, stakeholder theory suggests that companies are responsible for acting in the best interests of all stakeholders, not just shareholders (Dwidienawati et al., 2022). This means considering the social, environmental, and ethical impact of business practices and making efforts to reduce any adverse effects on stakeholders. In
3 doing so, companies can improve their relationships with stakeholders and enhance their overall reputation and sustainability. Stakeholder theory also emphasizes the importance of engaging and communicating with stakeholders to understand their needs and expectations and to build trust and transparency (Dwidienawati et al., 2022). By involving stakeholders in decision-making processes, companies can ensure their actions align with stakeholder interests and contribute to all parties' well-being. Social Exchange Theory Social exchange theory is a sociological theory that explains the dynamics of social interactions. It suggests individuals engage in relationships based on give and take, exchanging resources and benefits (Le, 2022). In the context of CSR and customer loyalty, this theory can help explain how customers perceive and respond to a company's CSR initiatives. Customers may perceive a company's CSR efforts as giving back to the community or society and may, in turn, reciprocate by showing loyalty towards the company. Consumer Behavior Theory Consumer behavior theory examines how individuals purchase or consume goods and services. It considers factors such as attitudes, beliefs, and values influencing consumer behavior (Le, 2022). In the context of CSR and customer loyalty, this theory can help understand how a company's CSR initiatives may impact consumer attitudes and behavior towards the company. For example, if a company's CSR efforts align with the values and beliefs of its target customers, it may lead to increased customer loyalty. Methodology Quantitative research involves the use of numerical data to gather and analyze information. It involves systematically collecting data and statistical analysis to understand
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