Abstract
Corporate social responsibility (CSR) is a force to “pull” customers to the organizational mission and values, and influence them to contribute to the organization. The primary purpose of the research is to assess how CSR contributes to customer value co-creation. The research also seeks evidence on the moderation mechanisms of servant leadership and relationship marketing orientation for the effect of CSR on customer value co-creation behavior. The data were collected from 873 employees and 873 customers in software industry in Vietnam context. The data analysis supported the positive effect of CSR on customer value co-creation behavior. Servant leadership and relationship marketing orientation were also found to play moderating roles for the CSR–customer value co-creation linkage.
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Introduction
Organizations have been facing stronger and stronger forces from the market, especially customer forces such as the increasing fragmentation of consumer markets; rapidly changing customer buying patterns and life styles; more sophisticated and demanding customers; and their higher expectations in terms of customization, newness, quality, and price (Ernst et al. 2011). Customer forces can be challenges for passive organizations, but may be assets or resources for organizations with sustainable strategic posture, which can transform customer forces into values for themselves. Service-dominant logic perspective—the foundation for the study of value creation within service systems (Vargo et al. 2008)—unveils the value co-creating role of customers (Vargo and Lusch 2004) in addition to their traditional role as carriers of needs. Co-creation entails a unique, strategic partnership between the organization and the customer (Zhang et al. 2015). In Vargo and Lusch’s (2004) words, customers are partners and co-producers of value, services, and products. Co-creation blurs the boundaries of the organization by “outsourcing” innovation and value creation to customers. As such, customer forces are not merely demanding but contributive by nature as well.
In light of service-dominant logic (Vargo and Lusch 2004), customer is also operant resource (i.e., source of knowledge and skills, Vargo and Lusch 2008; Gohary and Hamzelu 2016) for value co-creation. Yet, the conversion of this operant resource into value co-creation behavior may not occur without customers’ social identification with the organization in light of social identity theory (Ashforth and Mael 1989). Identification alludes to the extent to which organizational members perceive themselves and the focal organization as sharing the same defining attributes (Dutton et al. 1994). Identified customers not only display loyalty, but also enthusiastically promote the organization and its products or services to others (Bhattacharya and Sen 2003) and may co-create value with the organization.
A notion of value based on ethics such as corporate social responsibility (CSR) is already emerging within a range of cutting-edge economic practices involving aspects of customer co-creation (Arvidsson 2011; Cova et al. 2011). CSR is viewed as instances where an organization transcends its interests and legal compliance to engage in activities that advance social good (McWilliams and Siegel 2001). CSR, which reflects an organization’s orientation toward its stakeholders (Abugre and Nyuur 2015), has been reported to make the organization an attractive target for customers to identify with (Piercy and Lane 2011). In addition, service-dominant logic was extended for some societal and ethical dimensions (Laczniak 2006) using business cases where CSR is a vital part of value creation and value-in-use (Enquist et al. 2006, 2008). Thus, premised on service-dominant logic (Vargo and Lusch 2004) and social identity theory (Ashforth and Mael 1989), CSR may serve as an organizational catalyst for customers’ engagement in value co-creation with the organization.
Yet, the value of CSR to customers may have a stronger influence on customers’ value co-creation behavior if this value is role-modeled by the leader of the organization. Due to “his or her moral responsibility not only to the success of the organization but also to his or her subordinates, the organization’s customers, and other organizational stakeholders” (Ehrhart 2004, p. 68), a servant leader has a commitment to stakeholder interests and role-models stakeholder-oriented value of CSR (Abugre and Nyuur 2015). A spirit of servanthood from a servant leader (Liden et al. 2008) can be infused into employees’ interaction with and services to customers, thereby increasing customer trust in the organization’s enactment of CSR values and identification with these values as well as with the organization. The interactive effect of CSR and servant leadership may hence make the organization a more intriguing target for social identification.
Furthermore, a mechanism that reflects the consideration of customers as an important operant resource (Gohary and Hamzelu 2016) such as relationship marketing orientation (RMO) can further enhance customers’ identification with the organization. Relationship marketing orientation is viewed as “the extent to which a company engages in developing a long-term relationship with its customers” (Tse et al. 2004, p. 1162). Relationship marketing orientation consists of marketing activities oriented toward customer interests (Morgan and Hunt 1994, p. 22) to increase perceived membership in customers and activate reciprocal contributions from customers (Gruen 1995; Gruen et al. 2000). Consequently, activities of RMO bring CSR values closer to customers and further increase reciprocity from customers such as in form of value co-creation. In other words, RMO can contribute another moderation mechanism to the relationship between CSR and customer value co-creation behavior.
Following the above logic, this research makes a fourfold contribution to managerial knowledge. The first aim and contribution of the research is to assess the extent to which CSR contributes to customer value co-creation behavior. With this first aim, the current research adds to the growing scholarly attention to the impact of CSR on the attitudes and behaviors of core organizational stakeholders including customers (He and Li 2011; Karaosmanoglu et al. 2016). Prior CSR research reported the bridge between CSR and customer outcomes such as customer satisfaction, trust, identification, and loyalty (Martínez and del Bosque 2013), but has not paid adequate academic attention to the role of CSR in activating customer value co-creation. This first aim of our research also complements the deficit in scholarship on the antecedents of customer co-creation (Morosan and DeFranco 2016). Moreover, using service-dominant logic as a premise for the link between CSR and customer value co-creation, our research responds to Laczniak and Murphy’s (2006) suggestion for the extension of the thinking of service-dominant logic by connecting it with such concepts as CSR. The second research aim is to seek an insight into the moderation mechanism of servant leadership for the CSR-customer value co-creation linkage. Besides, most research on relationship marketing has just focused on the role of relationship marketing efforts in enhancing customer relationships such as customer loyalty (Palmatier et al. 2006), thereby increasing seller performance outcomes such as sales growth and profits (Morgan and Hunt 1994). Nonetheless, its role in interacting with CSR to enhance customer value co-creation behavior has not been tested. The third research aim thus entails investigating the moderation effect of relationship marketing orientation on the interconnection between CSR and customer value co-creation behavior. The last contribution of the research is to test the research model, which is grounded on Western management theories, in Vietnam context. Vietnam is an Asian emerging market in the process of transitioning from a centrally planned economy to a market economy (Ngo et al. 2016); therefore, customers have been increasing their awareness of their role as active partners in the value co-creation process in addition to their traditional role as passive recipients of products or services that the past centrally planned economy shaped. As a result, Vietnam market with this transition in customer awareness of their role may serve as an interesting context to test research models of customer value co-creation. Besides, Vietnam is a collectivist culture, which mirrors a relatively high level of orientation toward others (Tran et al. 2016). Consequently, the impact of CSR on customer behavior may be more pronounced than that in an individualistic culture since socially responsible organizations, which address collective interests (Abugre and Nyuur 2015), may have more likelihood of value congruence with customers in collectivistic culture of Vietnam.
Following this introduction, the literature review section discusses the relationships among the constructs in the research model. How the data were collected and analyzed is then presented. The section on theoretical and managerial implications eventually wraps up the paper.
Literature Review and Hypotheses Development
CSR and Customer Value Co-creation Behavior
Corporate Social Responsibility (CSR)
Corporate social responsibility (CSR) alludes to values and infiltrating values into practice (Grant and O’Connor 2013). CSR is integrated with a corporate ethical and moral environment and corporate value system (Jin et al. 2013). From Carroll’s (1979) perspective, CSR covers an organization’s obligations to pursue profits, accept social obligations, grow its business, and embed ethical values, which are mapped to instrumental, political, integrative, and ethical theories (Garriga and Melé 2004). Carroll’s (1991) perspective on CSR is also expressed in CSR pyramid which is composed of four tiers in the upward direction including economic CSR, legal CSR, ethical CSR, and discretionary CSR. This research pursues McWilliams and Siegel’s (2001) view of CSR as instances where an organization transcends its interests and legal compliance to engage in activities that advance social good. This definition is adopted in this study since it mirrors both the ethical facet (i.e., doing what is right, just, and fair) and the philanthropic facet (i.e., enhancing quality of life by contributing to the community) of CSR (Carroll 1979).
Customer Value Co-creation Behavior
In light of service-dominant logic (Vargo and Lusch 2004), customers are always co-creators of value. As active participants and cooperative partners in relational exchanges, customers co-create value with the organization through their engagement in the entire service value chain (Yi and Gong 2013). Customers play an active role in the provision of service and in the realization of its benefit (co-creation of value) (Vargo and Lusch 2004). Some customers might be engaged in activities that have traditionally been deemed to be “organizational” activities such as self-service (Mills and Morris 1986), generating ideas for service improvement (Bettencourt 1997), and even co-designing, and can therefore be viewed as “part-time employees” of the organization (McColl-Kennedy et al. 2012).
In service-dominant logic (Vargo and Lusch 2004), value co-creation is implemented through resource integration. Customer value co-creation is defined as “benefit realized from integration of resources through activities and interactions with collaborators in the customer’s service network” (McColl-Kennedy et al. 2012, p. 1). Such activities and interactions are wrapped under the term “customer value co-creation behavior,” which comprises two higher-order factors: customer participation behavior and customer citizenship behavior (Yi and Gong 2013).
Customer participation behavior, which is viewed as required (in-role) behavior vital for successful value co-creation (Yi et al. 2011), comprises information seeking, information sharing, responsible behavior, and personal interaction. Customers seek information on the way to perform their tasks as value co-creators (Yi and Gong 2013). Customers should also share resources such as information for use in value co-creation processes (Lengnick-Hall 1996). Additionally, for successful value co-creation between themselves and employees, customers must be responsible (Ennew and Binks 1999), cooperative, abiding by rules and policies, and accepting directions from employees (Bettencourt 1997). Effective value co-creation also necessitates personal interaction between customers and employees (Ennew and Binks 1999).
On the contrary, customer citizenship behavior is voluntary (extra-role) behavior that yields extraordinary value to the organization but is not necessarily required for value co-creation (Yi et al. 2011). This type of behavior is composed of feedback, advocacy, helping, and tolerance. Feedback embraces solicited and unsolicited information that customers provide for employees, which helps employees and the organization to sustainably improve the service creation process (Groth et al. 2004). Advocacy indicates allegiance to the organization and promotion of the organization’s interests beyond the individual customer’s interests (Bettencourt 1997). In the context of value co-creation, helping alludes to customer behavior aimed at aiding other customers (Yi and Gong 2013). Lastly, tolerance entails customer patience in case of inadequate service delivery, which does not meet the customer’s expectations (Lengnick-Hall et al. 2000).
CSR and Customer Value Co-creation Behavior: From Service-Dominant Logic and Social Identity Perspectives
The relationship between CSR and customer value co-creation behavior can be analyzed through service-dominant logic and social identity approach. Service-dominant logic is a predominant concept in the services industry, providing a crucial marketing theory in which intangible resources, co-creation of value, and relationships are the keys to determining marketing exchanges (Navarro et al. 2014). In service-dominant logic, the aim is to enhance an organization’s value including the value of its relationships with customers, suppliers, and the entire society, leading to a closer alignment between the organization and its multiple stakeholder interests (Abela and Murphy 2008). Service-dominant logic encompasses concepts of the value-in-use and co-creation of value rather than the value-in-exchange and embedded-value concepts of goods-dominant logic. Hence, in lieu of organizations being informed to market to customers, they are encouraged to market with customers, as well as other value creation partners in the organization’s value network (De Chiara 2012). CSR, which addresses the interests of stakeholders including customers (Martínez and del Bosque 2013), may tighten the relationship between customers and the organization as well as influence customers to market with and co-create value with the organization in light of service-dominant logic (De Chiara 2012).
In addition, service-dominant logic highlights the magnitude of operant, not operand, resources. Operant resources focus on actors proactively shaping the use of resources rather than the more passive approach of operand resources (e.g., land and raw materials) being acted on (Laczniak and Santos 2011). The pivotal concept in service-dominant logic is that service—the application of resources for the benefit of another party—is exchanged for service (Vargo and Lusch 2004, foundational premise 1 (FP1)). “We have interaction in society—service-for-service exchange—and its corollary, value (i.e., benefit) (co)creation, is the glue that holds social units and society in general together” (Vargo and Lusch 2011, p.4). Since a socially responsible organization integrates social concerns in its business operations and in its interaction with its stakeholders on a voluntary basis (De Chiara 2012), CSR may produce such an interaction in society for value co-creation.
Service-dominant logic, by offering a stronger relationship focus, endeavors to surmount the depersonalizing effects of specialization by acknowledging that human beings “are at the center and are active participants in the exchange process” (Vargo and Lusch 2004, p. 12). Since the focus of major ethical systems such as socially responsible organizations is on how human beings should behave and to relate to one another (Laczniak and Murphy 2006), CSR can serve as an ethical base for value co-creation in service-dominant logic. Moreover, since it is “inherently both consumer-centric and relational” (Vargo and Lusch 2004, p. 12), service-dominant logic provides a better foundation for marketing ethics and an explanation for how ethical values in CSR can foster value co-creation in customers. For instance, the collaborative nature of co-creation (FP6) presupposes a requisite level of trust and identification by both parties that CSR can foster (Pérez and Rodríguez del Bosque 2015). Besides, customer-oriented relational view (FP8) in service-dominant logic indicates that when organizations view interactions with customers as being sustainable rather than transactional under CSR strategy (Esper and Boies 2013), they are prone to market with customers (De Chiara 2012) and engage them in value co-creation. Service-dominant logic was also expanded for some societal and ethical dimensions (Laczniak 2006) through business cases where CSR is an important part of value creation and value-in-use (Enquist et al. 2006, 2008).
Furthermore, social identity theory (Ashforth and Mael 1989) has been utilized to shed light on the effect of CSR on customer behavior (Karaosmanoglu et al. 2016). The main elements of the social identity approach are self-categorization theory (e.g., Turner et al. 1987) and social identity theory (e.g., Tajfel and Turner 1986). Self-categorization theory indicates that human beings have a need to simplify the social world by categorizing individuals into groups (e.g., occupation, nationality, clubs, social groups). Individuals perceive themselves as belonging to a particular category. According to social identity theory, individuals strive for positive self-esteem by enhancing their social identity.
Bhattacharya and Sen (2003) transferred the social identity approach into the customer domain and built a conceptual framework for customer–company identification. Since this group identification can even occur in the absence of formal membership (Reed 2002), customers who are not formal members of an organization could identify with the organization if they find it attractive and capable of enriching their social identity (Ahearne et al. 2005). In other words, customers’ self-definitional needs can be partially fulfilled by the organizations they patronize. As Bhatthacharya and Sen (2003, p. 77) note, “in today’s era of unprecedented corporate influence and consumerism, certain companies represent and offer attractive, meaningful social identities to consumers that help them satisfy important self-definitional needs.”
The role of CSR in engendering attractive, meaningful social identities for customers has been analyzed in light of social identity theory (Pérez and Rodríguez del Bosque 2015). When customers perceive the values reflected by the organization’s activities to be congruent with their own values, identification with the organization increases. From social identity theory perspective (Ashforth and Mael 1989), individuals need to distinguish themselves from others in social contexts (Tajfel and Turner 1986) and thus tend to seek out groups for affiliation that are distinctive on dimensions they value. Therefore, when customers believe that the organization has a configuration of distinctive characteristics such as CSR that they value, they will find that organization an attractive target for identification (Pérez and Rodríguez del Bosque 2015). When customers perceive that the organization conducts business over and above the legal requirements on a layer of moral and ethics, they are likely to feel esteemed and highly identify with the organization by performing positive behaviors, leading to a positive link between customers’ perceived CSR and their pro-organizational behaviors such as value co-creation behavior. This line of discussion based on service-dominant logic and social identity approach leads to the expected positive relationship between CSR and customer value co-creation behavior:
H1
CSR is positively related to customer value co-creation behavior.
Servant leadership as a Moderator
Leadership that is rooted in ethical and caring behavior, such as servant leadership, is vital (Van Dierendonck 2011). Leaders who lead with a motivation to serve others display servant leadership (Van Dierendonck 2011). The former chairman of the Greenleaf Center for Servant Leadership, Larry Spears, has deemed servant leadership “a model that identifies serving others—including employees, customers, and community—as the number-one priority” (Spears 2002, p. 4). Echoing this sentiment, Hale and Fields (2007) defined servant leadership as “an understanding and practice of leadership that places the good of those led over the self-interest of the leader,” emphasizing leader behaviors that focus on development of others, and de-emphasizing glorification of the leader (p. 397). Servant leadership is leadership that highlights cooperation and care for stakeholders over power and short-term gains (van Dierendonck 2011). Servant leaders hence demonstrate their moral responsibility to the success of the organization as well as to the success of its stakeholders, including its employees, customers, and other organizational stakeholders (Ehrhart 2004, p. 68).
Servant leadership is characterized by providing direction, empowering and developing people, and demonstrating humility, authenticity, interpersonal acceptance, and stewardship (Van Dierendonck 2011). This is in line with Laub’s (1999) six elements of a servant-led organization: valuing people, developing people, building community, exhibiting authenticity, providing leadership, and sharing leadership. Servant leadership thus fosters organizational justice, organizational trust, organizational citizenship behavior, and collaboration (Parris and Peachey 2013).
Servant leadership nurtures a service climate where priority is placed on serving the customer (Jaramillo et al. 2015). When customers perceive customer orientation that the servant leader shapes in the organization’s services to customers (Schwepker 2016), they tend to have a stronger perception of the organization’s CSR actions toward stakeholders, thereby further identifying with it (Pérez and Rodríguez del Bosque 2015). Justice to stakeholders including customers that the servant leader builds (Schwepker 2016) also enhances this customer-company identification. If customers find that the organizational leader demonstrates a low commitment to serve stakeholders, they may not trust that the leader will translate CSR strategy into actions. As a result, customers may have low identification with CSR values of the organization, leading to low motivation to become “partial members” of the organization (Mills and Morris 1986; McColl-Kennedy et al. 2012). With low perceived membership, customers may not behave as dynamic operant resources for value co-creation as reflected in service-dominant logic (Gohary and Hamzelu 2016). Tung et al. (2014) also found that servant leadership fosters service orientation in the organization, which adds to customer–company identification. Thus, servant leadership may enhance the effect of CSR on customer-company identification, thereby further leveraging customers’ co-creation of value with the organization. In a nutshell, servant leadership adds more stakeholder-directed force (Ehrhart 2004) to CSR actions, which also reflect stakeholder orientation (Abugre and Nyuur 2015), in cultivating customer value co-creation behavior.
Moreover, underscoring personal integrity and serving others, including employees, customers, and communities (Liden et al. 2008), servant leadership extends beyond the workplace to foster within employees a spirit of servanthood, or working to create value for the community. Employees are thus motivated to emulate serving behavior of their leader by serving their stakeholders including customers (Liden et al. 2008). In other words, besides the motivation to serve stakeholders which is cultivated in CSR context, servant leadership adds more motivation of servanthood to employees. Perceiving the servant leader’s investment in their relationships with and the growth of stakeholders (Ehrhart 2004; Liden et al. 2008) including customers, employees have higher trust in CSR values and further engage in sharing and enacting CSR values with customers, thereby further inspiring customers to co-create value with the organization. In addition, according to Chen et al. (2015), servant leadership fosters customer-focused citizenship behavior and customer-oriented prosocial behavior among frontline employees, which further increases customer identification with prosocial values of CSR and further engages in value co-creation behavior. Servant leadership can thus be posited to play a moderating role for the positive impact of CSR on customer value co-creation behavior as in the following hypothesis:
H2
Servant leadership positively moderates the positive relationship between CSR and customer value co-creation behavior.
Relationship Marketing Orientation as a Moderator
The concept “relationship marketing” can be deemed to be a philosophy of doing business effectively, or as a distinct organizational culture/value that places the buyer–seller relationship at the center of the organization’s strategic or operational thinking (Sin et al. 2005). Relationship marketing alludes to a set of marketing activities oriented to establishing, developing, and sustaining successful relational exchanges (Morgan and Hunt 1994, p. 22). Relationship marketing orientation (RMO) is viewed as “the extent to which a company engages in developing a long-term relationship with its customers” (Tse et al. 2004, p. 1162). An organization with RMO proactively builds and enhances customer relationships (Berry 1983). From Sin et al.’s (2005) view, RMO consists of six components: trust, bonding, communication, shared value, empathy, and reciprocity. Trust, the first component, is the willingness to rely on an exchange partner in whom one has confidence and reliability (Morgan and Hunt 1994). The second component is bonding, which refers to the development of an emotional relationship between the two partners acting in a unified manner toward a desired goal (Sin et al. 2005). The third component—communication—indicates formal and informal exchanging and sharing of meaningful and timely information between buyers and sellers (Sin et al. 2005). Fourth, shared value denotes the degree to which partners have beliefs in common about the appropriateness, rightness, and magnitude of policies, goals, and behaviors (Morgan and Hunt 1994). Fifth, empathy enables a partner to look at the situation from the other partner’s stance (Wang 2007). The last component is reciprocity, which indicates “the processes that enable customers to interact and share information with the firm and that enable the firm to respond to customers” (Jayachandran et al. 2005, p. 178).
The link between CSR and customer value co-creation behavior may be strengthened by the organization’s activities to deepen relationship with customers. Relationship marketing orientation can serve as such an enhancer. Viewed as strategic marketing actions designed to build “partial organizational member” mindset in customers and the organization’s sustainable relationship with customers (McColl-Kennedy et al. 2012; Tse et al. 2004), relationship marketing orientation may drive customers to further identify with the organization and its CSR values, and become active participants in the value co-creation process.
With the relationship marketing strategy, a socially responsible organization further invests resources in building a strong relationship with its customers. Receiving increased value through such a relationship with the organization, customers find the relationship crucial and invest effort in reinforcing and sustaining it (Lagace et al. 1991) such as through co-creating value with the organization. Customer value co-creation behavior is also a form of reciprocity from customers that relationship marketing strategy cultivates (Tse et al. 2004).
The above logic also indicates the role of service-dominant logic and social identity theory in illuminating how RMO intensifies the effect of CSR on customer value co-creating behavior. Service-dominant logic (Vargo and Lusch 2004) holds that customer is a crucial operant resource (Gohary and Hamzelu 2016) for value co-creation. According to Vargo and Lusch (2011, p.4) and De Chiara (2012), interaction and marketing with customers can transform them into dynamic operant resources for the organization. Consequently, such strategic orientations as RMO, which build sustainable relational exchanges with customers (Morgan and Hunt 1994, p. 22), may strengthen the relationship that socially responsible organizations build with customers, leading to stronger effect of CSR on customers’ contributions as dynamic operant resources (Gohary and Hamzelu 2016) for co-creation of value with the organization.
Furthermore, due to its capability to foster sustainable relationship with customers (McColl-Kennedy et al. 2012; Tse et al. 2004), RMO may reinforce customers’ identification with the organization and its CSR values. Specifically, with marketing activities in RMO which reflect trust in customers as well as respect and care for the bonding with them (Tse et al. 2004), a socially responsible organization augments customers’ positive assessment of the organizational status and image, their identification with the organization, as well as their motivation to engage in pro-organizational behaviors such as value co-creation. Besides, when both partners communicate and share goals and values, customers may further understand and appreciate the care which the organization provides for its stakeholders including customers through CSR activities (Abugre and Nyuur 2015). This drives customers to further identify with the organization (Pérez and Rodríguez del Bosque 2015) and co-produce values with it. Empathy in RMO (Tse et al. 2004) even further differentiates the organization from other organizations in the eyes of customers. When the organization empathizes with customers’ situation from their stance (Wang 2007), they will be grateful to the organization (Mishra 2016) and find it even worthier to affiliate with and reciprocate through value co-creation. Reciprocity of relationship marketing activities (Tse et al. 2004) can further enhance customers’ self-concept and self-esteem in the social identification process since this “reciprocity” component renders the organization open and responsive to customers’ interaction and feedback (Jayachandran et al. 2005, p. 178). Put differently, six components of RMO further increase customers’ positive evaluation of a socially responsible organization’s status and values, thereby leveraging their social identification as well as reciprocal contributions to the organization in the form of value co-creation. Relationship marketing orientation may thus intensify the effect of CSR on customer value co-creation behavior, leading to the ensuing hypothesis:
H3
Relationship marketing orientation positively moderates the positive relationship between CSR and customer value co-creation behavior.
Figure 1 depicts the relationships among the constructs in the research model.
Research model
Research Methodology
Sample and Procedure
The company sample included 146 software companies in Vietnam context. The participants in this study encompassed sales employees from these software companies, and purchase managers of their customer companies. Two waves of data collection were conducted so as to mitigate the potential common method variance (CMV) bias (Podsakoff et al. 2003). In the first-wave survey (T1), demographic data and responses on CSR and servant leadership were collected from sales employees of software companies. In the second-wave survey (T2), conducted 1 month after T1, responses on relationship marketing orientation were also collated from these sales employees. Also in T2 survey, demographic data and responses on customer value co-creation behavior were harvested from purchase managers of customer companies.
Based on Dillman’s (2000) Tailored Design Method, the self-administered questionnaire and its cover letter were emailed to each respondent. A reminder email was sent to the non-respondents after 10 days. Prior to the questionnaire distribution, the questionnaires were code-numbered to match responses from sales employees (T1 and T2) with those from purchase managers of customer companies (T2). The questionnaire to be delivered to a sales employee (T1 and T2) and that to his/her purchase manager (T2) was coded with the same code number. Despite this code numbering, the respondents remained unidentified since all questionnaires were answered anonymously. In the T1 survey, sales employees who had been working with the software company at least 5 years were invited as participants (Alkhater et al. 2014). From the responses collected, we excluded responses from software companies which had under five sales employees participating in the survey (Bryson et al. 2013), leading to 1124 sales employees (64.60%) as participants in the first-wave survey. In the T2 survey, questionnaires were sent to these sales employees in the T1 survey, and 918 complete responses (52.76%) were returned. The T2 survey also collected responses from purchase managers of customer companies whom these sales employees had served. We recruited customer companies which had had at least 3-year business relationship with the software company (Jia et al. 2016). Eliminating responses with missing data engendered the final sample of 873 sales employee–customer dyads: 873 employees (50.17%) and 873 customers. Among the sales employees, 324 sales employees (37.11%) were female, their average age was 31.64 years (SD = 9.07), and they had an average job tenure of 8.73 years (SD = 3.91).
Measures
Respondents indicated their perceptions on scale items on a five-point Likert scale of 1 = “strongly disagree” to 5 = “strongly agree.” The scales were translated into Vietnamese, following the back translation approach (Schaffer and Riordan 2003).
Corporate Social Responsibility (CSR)
A nine-item scale adapted from Turker (2009) was utilized to estimate corporate social responsibility, including CSR to social and non-social stakeholders (e.g., “Our company contributes to the campaigns and projects that promote the well-being of the society”; “Our company participates in the activities which aim to protect and improve the quality of the natural environment”), CSR to customers (e.g., “Our company respects consumer rights beyond the legal requirements”), and CSR to employees (e.g., “The managerial decisions related to the employees are usually fair”).
Customer Value Co-creation Behavior
A 19-item scale from Yi and Gong (2013) was employed to gauge customer participation behavior and customer citizenship behavior in their value co-creation. Customer participation behavior comprises four dimensions: information seeking (e.g., “We have asked others for information on what this service offers”), information sharing (e.g., “We provided necessary information so that the employee could perform his or her duties”), responsible behavior (e.g., “We fulfilled responsibilities to the business”), and personal interaction (e.g., “We were kind to the employee”). Customer citizenship behavior, on the other hand, comprises feedback (e.g., “If we have a useful idea on how to improve service, we let the employee know”), advocacy (e.g., “We said positive things about the company and the employee to others”), helping (e.g., “We assist other customers if they need our help”), and tolerance (e.g., “If the employee makes a mistake during service delivery, we would be willing to be patient”).
Servant Leadership
This construct was measured through Ehrhart’s (2004) 14-item servant leadership scale. Sample items encompass “My supervisor creates a sense of community among department employees” and “My supervisor makes the personal development of department employees a priority.”
Ehrhart’s (2004) scale was utilized in our study since, while other servant leadership scales focus more on “serving employees,” and Ehrhart’s (2004) scale demonstrates a balance between items reflecting “serving employees” and those reflecting “serving other stakeholders” and contributing to their sustainable growth. Ehrhart’s (2004) scale has recently been used in empirical inquiries on servant leadership and employee service orientation behavior such as Hunter et al. (2013), Ling et al. (2016), and Miao et al. (2014) as well as on servant leadership and customer value co-creation such as Hsiao et al. (2015).
Relationship Marketing Orientation (RMO)
This construct was assessed via a 22-item scale developed by Sin et al. (2005), which comprises six dimensions: trust (e.g., “They are trustworthy on important things”), bonding (e.g., “We both try very hard to establish a long-term relationship”), communication (e.g., “We can show our discontent toward each other through communication”), shared value (e.g., “We share the same values”), empathy (e.g., “We understand each other’s values and goals”), and reciprocity (e.g., “If our customers gave assistance when my company had difficulties, then I would repay their kindness”).
Control Variables
Organizational size was included as a control variable since, according to Bhattacharya and Sen (2004), customers hold more positive attributions toward smaller organizations’ CSR activities than they do for CSR activities implemented by larger organizations. Customers have propensity to recognize the magnitude of small organizations engaging in CSR activities and seem ready to reward this engagement such as through value co-creation (Green and Peloza 2014). In addition, large organizations may have high levels of complexity, bureaucracy, and rigidity, which may hamper relationship marketing efforts (Samaha et al. 2014), therefore likely to reduce customer motivation to engage in value co-creation. Organizational size was estimated by the number of full-time employees (Brettel et al. 2011).
Due to the link between relationship length and relationship quality (Palmatier et al. 2007) as well as customer citizenship behavior (Nguyen et al. 2014), relationship length was controlled. Customers were asked to report the number of years for which they have dealt with the organization and have known the sales employee (Palmatier et al. 2007). The question on customer–organization relationship length is “How long have you had business dealings with this organization? (# years)” and the question on customer–sales employee relationship length is “How long have you known this sales employee? (# years).”
Validity and Reliability of the Measures
Confirmatory factor analyses (CFAs) through Lisrel 8.80 (Jöreskog and Sörbom 2006) were conducted to ensure convergent and discriminant validity among all constructs. The results denoted a good fit between the hypothesized four-factor model and the data (Table 1). Fit indices such as Tucker–Lewis coefficient (TLI), incremental fit index (IFI), comparative fit index (CFI), standardized root mean square residual (SRMR), and root mean square error of approximation (RMSEA) were used to estimate the model. The fit indices: TLI = .96; IFI = .96; CFI = .95 exceeded the .90 benchmark (Tabachnick and Fidell 2001). The degree of misfit was also tolerable, with SRMR = .043 and RMSEA = .048, under the relevant benchmark of .08 (Hu and Bentler 1999). Besides, the model fit was further strengthened through χ2/df = 459.62/247 = 1.86 (p < .01), which is under 2 (Carmines and McIver 1981). Convergent validity was attained since the items loaded significantly on their target construct, exceeding the recommended level of .60 (t value > 1.96) (Gefen and Straub 2005) (see Table 2).
As displayed in Table 2, the loadings were larger than the cross-loadings with no substantial cross-loadings, which confirmed discriminant validity. The discriminant validity of the four constructs was also tested by contrasting the four-factor model against alternative models. Following Williams and Anderson (1994), some of the factors were collapsed to form alternative models. The findings in Table 1 indicated that the four-factor model fitted the data notably better than any of the alternative models, providing clue for the construct distinctiveness. In addition, discriminant validity was achieved since the square root of the average variance extracted (AVE) of each construct surpassed its correlations with the other constructs (Fornell and Larcker 1981) (Table 3).
The reliabilities of the scales were assessed through the composite construct reliability coefficients and AVE (Table 3). Composite reliabilities ranged from .78 (for CSR) to .87 (for servant leadership), above the .70 cutoff value (Bagozzi and Yi 1988). AVE, which ranged from .62 (for customer value co-creation behavior) to .74 (for relationship marketing orientation), also surpassed the recommended benchmark of .50 (Fornell and Larcker 1981).
Furthermore, multicollinearity was not a threat in the current research since the condition of discriminant validity was satisfied (Fornell and Larcker 1981). Moreover, according to Grewal et al. (2004), multicollinearity can occur if a correlation higher than .80 is found between any two pairs of constructs. Yet, in examining correlations among constructs in our study (Table 3), no correlations above .80 were detected. The highest score was observed between CSR and customer value co-creation behavior (r = .51).
Common Method Issues
Common method variance (CMV) bias was tested through the marker variable approach (Lindell and Whitney 2001). A marker variable (i.e., attitude toward social media usage on a 5-point scale (1 = strongly disagree; 5 = strongly agree)), which was theoretically unrelated to other variables, was included into the survey. CMV has a propensity to occur if the significant zero-order correlations for the variables in the research alleviate their significance levels when partialling out the marker variable from the correlation matrix. Nonetheless, in the current research, all significant zero-order correlations remained significant after the marker variable was partialled out, indicating the low CMV risk in the dataset. Moreover, since two of the research model’s predictions are interaction hypotheses, such interaction effects cannot be artifacts of CMV but rather can solely be deflated by CMV (Siemsen et al. 2010).
Descriptive Statistics
Table 3 displays the means, standard deviations, composite construct reliability, average variance extracted, the square root of the average variance extracted, and zero-order Pearson correlations of all key variables. CSR was found to have positive association with customer value co-creation behavior (r = .51, p < .001).
Hypothesis Tests
Moderated multiple regression was used to estimate the moderation effects (Cohen et al. 2003). Control variables were entered in the first step. The independent variable “CSR” was entered in the second step, and the moderators “servant leadership” and “RMO” were entered in the third step. Lastly, we entered the interaction variables (CSR × servant leadership; CSR × relationship marketing orientation) in the fourth step. From Cohen et al.’s (2003) standpoint, the statistical significance of the moderator effect may be established if the interaction variable influences the relationship between CSR and customer value co-creation behavior. Prior to computing the product terms (CSR × servant leadership; CSR × relationship marketing orientation), standard skewness and kurtosis tests were conducted to ensure the normality for each variable. Then the variables (predictor and moderator) were mean-centered to reduce multicollinearity (Cohen et al. 2003).
Among the control variables, customer–sales employee relationship length and customer–organization relationship length demonstrated positive correlations with customer value co-creation behavior through positive significant coefficients β = .18 (p < . 05) and β = .16 (p < .05), respectively. Organizational size, on the contrary, was found to have no significant correlation with customer value co-creation behavior (β = .09, p > .10) as well as no significant interaction effect with CSR (β = .06, p > .10).
As displayed in Table 4 and Fig. 2, CSR was positively related to customer value co-creation behavior (β = .46, p < .001), lending support for hypothesis H1. Additionally, to strengthen the causal direction of our hypothesized model, a test was also conducted on the model in the reverse direction (Customer value co-creation behavior → CSR). As Table 1 demonstrates, the fit of the reversed model was worse than the fit of the hypothesized four-factor model: χ2 = 631.48, df = 247, p < .01, TLI = .77, IFI = .79, CFI = .78, SRMR = .095, RMSEA = .101, and the divergence between the two models was significant: Δχ2 = 171.86, p < .01.
Model estimation findings
Furthermore, as Table 4 and Fig. 2 exhibit, the interaction term of the predictor “CSR” × the moderator “servant leadership” was significantly positive (β = .28, p < .01), which corroborated hypothesis H2. The interaction pattern between CSR and a moderator in this research was also estimated by testing the relationship between CSR and customer value co-creation behavior at high (one SD above the mean) and low (one SD below the mean) values of the moderator (Aiken and West 1991). The simple slope test was conducted based on Preacher et al.’s (2006) procedure. The plotted interaction in Fig. 3 revealed that CSR enhanced customer value co-creation behavior when servant leadership was high (simple slope = .48, p < .01) versus low (simple slope = .10, p < .01).
Moderating effect of servant leadership
Likewise, as shown in Table 4 and Fig. 2, the interaction term of the predictor “CSR” × the moderator RMO was significantly positive (β = .41, p < .01), providing evidence for hypothesis H3. The plotted interaction in Fig. 4 revealed that CSR augmented customer value co-creation behavior when RMO was high (simple slope = 1.04, p < .01) versus low (simple slope = .15, p < .01).
Moderating effect of relationship marketing orientation
Discussion
Theoretical Implications
Multiple theoretical contributions are reflected in our research results. First, our research extends the application spectrum of service-dominant logic and social identity theory through their role in explaining the relationships among the research constructs. Prior studies have found the element “ethics” underlying some foundational premises (FPs) in service-dominant logic such as “the customer is always a co-creator of value” (FP6) reflecting stakeholder-oriented force from customers (Abela and Murphy 2008). Yet, the current research can be deemed to be among the first that empirically investigated the role of CSR as a stakeholder-oriented lever to activate stakeholder orientation among customers and the role of customers as value co-creators in light of service-dominant logic (Vargo and Lusch 2004). Besides, this role of CSR in the present research also further advocates the ethical underpinning of marketing that service-dominant logic reflects (Abela and Murphy 2008). In addition to referring to the role of ethical premise in service-dominant logic (Abela and Murphy 2008) as an underpinning for the predictive role of CSR for customer value co-creation behavior, the current research also looks at CSR as a strategy to orient toward and integrate customers as operant resources (Gohary and Hamzelu 2016) into the organization’s value creation process. In this logic, organizational factors that can consider and enhance the role of customers as operant resources such as relationship marketing orientation can strengthen the effect of CSR on customer value co-creation.
Furthermore, the current research indicates a new application of social identity theory in explaining the role of CSR in catalyzing customers’ value co-creation. Social identity theory (Ashforth and Mael 1989) has been used to elucidate the predictive role of CSR for customer behaviors (Karaosmanoglu et al. 2016). Social identity theory has tended to be utilized as an underpinning theory for illuminating how CSR influences customers’ purchase intent (Pérez 2009) and purchase repeat (Martínez and del Bosque 2013). Yet, the current research bases on social identity theory to shed light on the predictive role of CSR for both in-role and extra-role behaviors of customer value co-creation. CSR values that categorize the organization as a right target for customer identification (Piercy and Lane 2011) enhance customers’ self-concept and self-esteem, driving them to go beyond their in-role behaviors with the organization. Social identity theory also adds to the power of service-dominant logic in explaining the relationship between CSR and customer value co-creation in that customer identification with the organization leverages “collaborative nature” of value co-creation in service-dominant logic (Abela and Murphy 2008). Moreover, identifying with the organization, customers are more prone to perceive the oneness with the organization (Hong and Yang 2009), share values, and become dynamic operant resources for co-creation of new values for the organization.
The second theoretical contribution of this research is the extension of servant leadership literature through the moderation mechanism of servant leadership for the effect of CSR on customer value co-creation behavior. Our research thus also marks the convergence between CSR, servant leadership, and marketing research streams. While prior research has revolved around individual or organizational outcomes of servant leadership such as organizational citizenship behavior or organizational justice (Parris and Peachey 2013), the current study examined the interaction pattern of CSR and servant leadership in cultivating a marketing outcome (i.e., customer value co-creation). This interaction pattern indicates that the synergy of the two stakeholder-directed forces from leadership (i.e., servant leadership) (Ehrhart 2004) and from an organizational mechanism (i.e., CSR mechanism) (Abugre and Nyuur 2015) has a stronger and more far-reaching effect on customer behaviors. This far-reaching effect may drive customers to engage in co-creation of value with the organization. This point further indicates that the synergy of stakeholder-directed forces can mobilize resources from inside and outside the organization, especially customers as dynamic operant resources (Gohary and Hamzelu 2016; Vargo and Lusch 2004), for the organizational sustainability.
Third, through its investigation into the moderation mechanism of relationship marketing orientation for the linkage between CSR and customer value co-creation behavior, the present study not merely increases the breadth of relationship marketing literature, but also connects the research streams of RMO, CSR, and customer value co-creation in particular and service-dominant logic in general (Vargo and Lusch 2004). Additionally, the interactive effect of RMO and CSR in catalyzing customer value co-creation behavior distinguishes the current research from the research trends on relationship marketing and customer satisfaction (Le and Ngo 2012) or loyalty (Hennig-Thurau et al. 2002). Relationship marketing orientation engenders customers’ embedded relationships with organizations, which make them further perceive their membership (Rao et al. 2000) that CSR shapes (McColl-Kennedy et al. 2012), thereby enhancing the likelihood that the organization is going to be designated as a viable social category, capable of shaping their social identity. As a result of building psychological attachment to the organization, this identification motivates customers to further commit to the attainment of the organization’s goals (Ahearne et al. 2005), leading to value co-creation with the organization. Consequently, the use of social identity theory (Ashforth and Mael 1989) to illuminate the moderation role of RMO in this study indicates the rendezvous between RMO and social identity theory as well as further strengthens the position of social identity theory in marketing literature.
The last theoretical contribution of the current research entails the use of a sample from Vietnam context to derive evidence for the relationships in the research model, which are theoretically grounded on Western management theories including service-dominant logic (Vargo and Lusch 2004) and social identity theory (Ashforth and Mael 1989). In most western countries, customers have had an awareness of their role as dynamic value co-creators to contribute to the sustainable growth of the focal organization as well as the community. Yet, Vietnam is an emerging economy transitioning from a centrally planned economy to a market economy (Ngo et al. 2016), in which customers still have been in transition in their awareness from their traditional role as recipients of products or services to value co-creators. Our research findings, which identified organizational predictive factor (i.e., CSR) and moderating factors (i.e., servant leadership and relationship marketing orientation) for customer value co-creation, will help organizations with a compass to guide customers into their new roles as dynamic value co-creators and operant resources (Gohary and Hamzelu 2016) for the growth of both organizations and customers. Moreover, since Vietnam is a collectivistic culture with orientation toward others (Tran et al. 2016), leaders can base on these collectivistic values of the culture to leverage CSR values or relationship marketing orientation through the organization as well as extra-role contributions from customers. Besides, in comparison with Swierczek and Ha’s (2003) findings on high uncertainty avoidance in Vietnam, Vietnam culture now scores lower in uncertainty avoidance and higher in proactiveness (Duong 2013), which may encourage customers to engage in such a dynamic role as value co-creator. Consequently, this study grounded in Vietnam context suggests a future comparative analysis of the current research model in collectivist versus individualistic cultures as well as in low uncertainty avoidance versus high uncertainty avoidance cultures.
Managerial Implications
The current research model, which reflects the transformation of organizational values (here, CSR values) into values from customer value co-creation actions, produces numerous managerial implications.
First, customer perceived value of co-creation and their value co-creation behavior should be built through CSR initiatives. With the orientation toward stakeholders (Abugre and Nyuur 2015) including customers, CSR strategy will cultivate customer identification with the organization in light of social identity theory (Ashforth and Mael 1989), thereby activating customer value co-creation behavior. CSR strategy should be translated into actions oriented toward sustainable growth of employees, customers, and community, which customers can observe. Customers observe and assess not only the organization’s CSR actions toward themselves, but also its treatments toward other stakeholders. Customers should have chances to “see” high intrinsic motivation in employees’ services, which come from the accurate appraisal and reward for employee contributions, both financial and non-financial, to the organization. The organization should let customers “see” its CSR actions through employees’ pride in their organization’s contributions to the community, in which they have participated, rather than only letting customers “feel” about CSR activities in advertisements or on the packaging of products. CSR values and actions should be measured and reinforced or “refreezed” (Lewin 1951) through performance indicators at individual level and team level under the internal process dimension as well as at the organizational level under the learning and growth dimension of the performance appraisal system (Kaplan and Norton 2006).
Second, CSR strategy should be implemented in collaboration with HR managers as strategic partners of the organization (Ulrich and Brockbank 2005), who design training and coaching to build the image of customers as value co-creators in the mindsets of employees, especially frontline employees who have direct exchange with and influence on customers. Employees’ awareness of customers’ role as value co-producers, rather than merely recipients of values from the organization, will shape their behaviors toward customers. Employees are then cognizant that they build relationships with customers, through relationship marketing activities, not merely to satisfy and retain customers, but also to augment the infusion of CSR values into customers and transform them into “partial members” of the organization (Mills and Morris 1986; McColl-Kennedy et al. 2012) who have commitment to the organizational vision (Gruen et al. 2000) and reciprocate through value co-creation behavior. Moreover, through relationship marketing activities, the organization can enhance customer role clarity and perceived value of co-creation, which drive customers to further engage in value co-creation behavior (Dong et al. 2008).
Last, due to the interactive effect of servant leadership with CSR in fostering customer value co-creation behavior, servant leadership should be built through leadership training for current managers and succession planning for a new generation of servant leaders (Dessler 2010). Leaders with high competence to build strategic marketing plan may not nurture customer value co-creation behavior if they lack servant leadership to infuse CSR values into the interactions with and services to customers. Leadership training program should underscore and cultivate service orientation in leaders. Leaders should then bring this service orientation into practice by prioritizing interests of others, especially of employees and customers in every action. Leaders should place customers’ sustainable growth above profitability as well as give away some of the organizational gains to customers if they are in a hard time, thereby further embedding stakeholder-oriented values of the organization’s CSR initiatives in customers. Besides, leaders should also build a next generation of servant leaders through cultivating servant leadership at all tiers of the organizational pyramid as a part of succession planning of servant leaders.
Limitations and Future Research Paths
Some limitations should be surmounted in the replication of the current research model. One of the limitations resides in the use of self-report scales for all research variables. Data on CSR can be harvested from strategy implementation reports of organizations. Likewise, customer value co-creation behavior can be gauged through a performance indicator under the customer dimension of the performance appraisal system if such a performance indicator exists in the researched case. Besides, the self-report data exposed the research results to CMV risk (Podsakoff et al. 2003). Nonetheless, this risk was proved to be insignificant through the marker variable test (Lindell and Whitney 2001) as well as through the data collection from different sources (employees and customers) and at different survey waves (Podsakoff et al. 2012).
In addition, the current research model should be generalized with caution to industries other than software industry. Customers of software suppliers tend to work along with programmers on the designs of the softwares. They also tend to recommend the effective softwares to other organizations within their industry. For instance, when a school has successfully applied an academic management software in its operations, it tends to recommend the software to other schools. Hence, customer value co-creation behavior may be high in software industry. The research model should thus be retested in other manufacturing industries and service industries as well.
The positive effect of CSR on customer value co-creation behavior indicates that other stakeholder-directed forces such as corporate governance (Luu 2013; Rahim and Alam 2014) or clinical governance in healthcare services (Luu 2016) can be included as an antecedent in a new research model. Customer perceptions of distributive justice, procedural justice, and interactional justice, which were found to foster customer positive affect (Yi and Gong 2008), may also shape value co-creation behavior among customers. Besides the moderation role of RMO, the close relationship between frontline employees and customers, deemed “employee–customer identification” (Korschun et al. 2014), can also serve as a moderator for the interconnection between CSR and customer value co-creation behavior. Moreover, service orientation inside individual employees such as organizational citizenship behavior (OCB) (Hogan et al. 1984) or emotional intelligence (Goleman et al. 2013) may also produce an interactive effect with CSR in inspiring customers to co-create value with the organization. The moderation roles of OCB or emotional intelligence for this effect may thus attract scholarly attention.
Furthermore, future research should consider other control variables that may also influence customer value co-creation behavior. Organizational reputation should be controlled since customers have propensity to identify with and go beyond their in-role behaviors for reputed organizations (Hong and Yang 2009). Customer extra-role behaviors may be influenced by the perceived performance of the organization’s offerings. Therefore, a control for product performance is vital to comprehend the true effects of CSR on customer value co-creation behavior (Ahearne et al. 2005). Variables to be controlled should incorporate employee citizenship behavior, which may catalyze customer contributions beyond their roles (Yi et al. 2013) such as value co-creation. The more customers identify with the community, the more they identify with and contribute to the organization (Ho 2015); as a result, the effect of customer-community identification on customer value co-creation behavior should be controlled in the replication of the current research model.
Conclusion
The findings supported the current research model, in which CSR has a positive effect on customer value co-creation behavior. The evidence was also found for the moderation mechanisms of servant leadership and relationship marketing orientation for the linkage between CSR and customer value co-creation behavior.
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The author thanks Professor Michael R. Hyman, New Mexico State University, and two anonymous reviewers of Journal of Business Ethics for their helpful comments and suggestions.
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Luu, T.T. CSR and Customer Value Co-creation Behavior: The Moderation Mechanisms of Servant Leadership and Relationship Marketing Orientation. J Bus Ethics 155, 379–398 (2019). https://doi.org/10.1007/s10551-017-3493-7
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DOI: https://doi.org/10.1007/s10551-017-3493-7