CHAPTER 2 LITERATURE REVIEW 2.1 Corporate Social Responsibility (CSR) 2.1.1 Definition and Importance of CSR CSR is a business model that defines the way companies should be socially accountable to themselves, their stakeholders, and the public. Organizations that implement CSR contribute to society and the environment rather than posing a negative impact on it. For instance, Carroll states that CSR involves four dimensions that each enterprise must take economic, legal, ethical, and philanthropic (1991). These dimensions focus the CSR foundations, on which the companies must operate to function sustainably and responsibly. CSR is crucial as it creates a positive corporate image, fosters customer loyalty and worker satisfaction. Currently, consumers make purchasing decisions based on the companies’ ethical stance, meaning that for many firms, CSR is strategy-critical (Porter & Kramer, 2006). There is empirical evidence to support the statement that CSR promotes financial performance. Many researchers have found that CSR results in cost savings, brand equity, and new market development (McWilliams & Siegel, 2001). Risk management is another reason for a company to engage in CSR. If the firm neglects its social responsibilities, it risks losing customers, paying fines, and ruining the brand. Conversely, CSR helps the company to avoid risks and keep striving in the industry (Palmer, 2012). 2.1.2 Evolution of CSR in Business CSR has come a long way from where it was a few decades ago. CSR started out as an optional activity that was more aligned with charity than strategic corporate decisions. During the 1950s and 1960s, CSR was limited to businesses providing charitable donations or community works (Bowen et al.). During the late 1970s, however, there began to be a shift back towards an earlier and more strategic view of CSR as businesses gained ground in understanding that social issues are not just peripheral but intricately linked with fundamental aspects of their operations. 3 In the 1980s and 1990s, additional theoretical approaches began to gain importance in the CSR thought, specifically concepts that relate it with corporate citizenship (Malone & Brockman p.307) or stakeholder theory. Freeman (1984) argued that companies has a responsibility to fulfil for all its stakeholders as well as the shareholders. Where stakeholders include employees, customers and suppliers in addition to the wider community. It was also the time when global awareness of the environment rose high, so sustainability became a part of the CSR practice (Hart 1995). The new millennium now considers CSR a key feature of business strategy due to the seen increase in pressure from consumers and investors, calling for businesses with morals having an ethical approach towards environment as well. Elkington (1998) explains that today companies are open to the criticism across an extensive spectrum of social and environmental audit, from covering climate change to human rights. In fact, the rise of the internet and social media in recent years has widened CSR influence as consumers can check a company's behavior and get to them instantly (Du, Bhattacharya & Sen 2010). 2.2 Storytelling in CSR Marketing Storytelling is an essential pillar in post-modern marketing strategies, especially if you are talking about the context of Corporate Social Responsibility (CSR). Creating narratives that emphasize a business’ virtues, mission and social advancements will allow users to have an emotional relationship with them leading towards trust & loyalty. The brand not only becomes human (which is the necessary first step) but it also rises to a level that allows consumers see them as both good and right. 2.2.1 The Role of Storytelling in Marketing Storytelling is a robust way for marketing to communicate who the brand's personality and values are just like telling wonderful exciting stories. Fog, Budtz & Yakaboylu (2005) agree that narrative structure is what makes up storytelling in marketing, it creates the bond between a brand and its consumers. This relatability is the core of brand loyalty as people are more likely to engage with brands that have stories which echo their own. 4 CSR storytelling involves adding a twist of the company efforts towards both social and environmental aspects. In this way, businesses can stand out in an oversaturated marketplace with a consumer base that is more and more interested in how their products are made. Holt (2004) predicts brands that successfully embed storytelling into their CSR strategies will establish a high level of emotional connection with consumers, so customers do not buy just the product,customers also feel as though they are buying in to values such purchases represent. In addition, the way of storytelling in CSR marketing can serve to break down complex social problems into simpler stories that everyone can relate. One way that this might look in practice is a company helping to fund clean water projects collecting and sharing stories about the lives of people who gained access to clean water because of their advocacy. By telling this story, the company does not just communicate its CSR work but also how that translates into as an effect for immediate results on creating a credible and attractive brand (Lundqvist et al.) 2.2.2 Impact of CSR Storytelling on Consumer Perception Conversely, the CSR storytelling effect on consumer perception is strong. Research conducted in the past reveals that when it comes to brand CSR storytelling, customers are more likely to create positive opinions about these brands as this reinforces their perception of such brands working ethically and being true( Beckman 2007). This better articulation, in many cases leads to higher consumer loyalty and advocacy as consumers are more likely to support brands which adhere their own personal values (Singh & Sonnenburg 2012). It is also a vital component in creating public perception of the social responsibility that emanates from your brand. Du, Bhattacharya and Sen(2007)state that consumers exposed to narratives centred around a brand's endorsement of social responsibilities will enhance the perception towards how socially responsible is the concerned creating or sustaining entity. This sense of camaraderie can foster a greater emotional bond with the brand itself, therefore translating into transactions and more loyalty. 5 Though, CSR storytelling may work to alleviate suspicion of corporate intentions Some consumers are also skeptical of businesses presenting an image that is not genuine, a practice referred to as "greenwashing." But, when a brand utilises storytelling to present authentic and positive CSR activities it can counter this. decreasing scepticism amongst consumers and help build trust with its audience (Skarmeas & Leonidou 2013). 2.2.3 Social Enterprise Marketing Strategy Social enterprises receive a great benefit from their social mission as they are using it in the core of their marketing strategy. This strategy sets them apart from the rest of the market and serves to create an emotional bond with a loyal customer segment who appreciates both what their product is about, as well as what else they stand for (Nicholls & al 2006). Social enterprises typically center their marketing strategies around transparency, authenticity and storytelling. They tell stories about what they are doing to make the world a better place and use these narratives, stories that describe clear, specific impacts of their normal course business practices, to establish themselves as brands with purpose. On the B2B side of things, how TOMS packages some portion of a sale is like music to socially active consumers ears as it taps into their self-need for something larger, a feel that they are helping drive forward positive change one purchase at a time. 2.2.4 Case Studies on CSR Storytelling Case studies A number of research experiences exhibit that CSR storytelling tactics exert a certain influence over consumer opinions and business results. For example, Patagonia (a famously green company) has a CSR campaign that bears mentioning here. In 2011, Patagonia ran a campaign called "Don't Buy This Jacket" which asked consumers to buy less and consider the environmental impact of their buying decisions. The Patagonia storytelling in this campaign emphasized their sustainable ethos and connected with an increasingly green-minded buying public, which resulted in increased loyalty and revenue (Chouinard, Ellison & Ridgeway; 2011).