Corporate Social Responsibility and Customer Equity in Smart Phone Industry, a Chinese Customer Perspective

12 Pages Posted: 26 Feb 2019

See all articles by Zhang Dongyong

Zhang Dongyong

Henan Agricultural University - College of Information and Management Science

Li Xiaolu

Henan Agricultural University

Qiaoyun Ma

Henan Agricultural University

Date Written: December 30, 2018

Abstract

Customer equity is the total value of potential future revenue generated by a company’s customers in a lifetime. It is a result of customer relationship management. The more loyal a customer, the more is the customer equity. Since the concept of customer equity was introduced into China, it has become the center of discussion in academia and industry. Scholars have tried to explore drivers of customer equity and factors that stimulate these drivers. But studies on the relationship between corporate social responsibility (CSR) and customer equity are sparse. The purpose of this study is to explore how a company’s customer equity can be enhanced by improving its performance in CSR. The smart phone industry is selected as a case study, and 171 smart phone users are questionnaire surveyed. Market responsibility, social responsibility and environment responsibility are included as three dimensions of CSR, and value equity, brand equity and relationship equity are regarded as three drivers of customer equity. 10 hypothesized relationships between CSR and customer equity are tested. Structural equation model (SEM) is employed to analyze data. It was found that a company’s CSR performance has significant impact on customer equity (with path coefficient of 0.767), and the relationship between the dimensions of CSR and the drivers of customer equity are also significant. However, the impact of market responsibility and social responsibility on value equity is more significant than that of environmental responsibility (with path coefficient of 0.754, 0.582, and 0.349 respectively). Social responsibility and market responsibility have closer relationship with brand equity than environmental responsibility does (with path coefficient of 0.789, 0.460, and 0.207 respectively). In addition, social responsibility is strongly related to relationship equity while environmental responsibility has a relatively weaker relationship with relationship equity, and market responsibility works in between (with path coefficient of 0.831, 0.779, and 0.290). These results indicate that for smart phone industry, customers pay more attention to a company’s performance in social responsibility, then its performance in market responsibility, and lest attention is paid to environmental performance. But it does not mean that Chinese smart phone industry should invest less on environmental protection and resource preservation because almost half of our respondents agree on green packaging and less wastes. Along with the increasing awareness Chinese people gain, environmental performance will soon become an important affecting factor of customer equity. The results suggest that smart phone companies should focus on improving their CSR performance so as to build and improve their customer equity, which will eventually help them achieve profit goals.

Keywords: Customer Equity; Corporate Social Responsibility; Smart Phone Industry; China

Suggested Citation

Dongyong, Zhang and Xiaolu, Li and Ma, Qiaoyun, Corporate Social Responsibility and Customer Equity in Smart Phone Industry, a Chinese Customer Perspective (December 30, 2018). OIDA International Journal of Sustainable Development, Vol. 11, No. 12, pp. 29-40, 2018. Available at SSRN: https://ssrn.com/abstract=3340660

Zhang Dongyong (Contact Author)

Henan Agricultural University - College of Information and Management Science ( email )

Zhengzhou
China

Li Xiaolu

Henan Agricultural University

Zhengzhou
China

Qiaoyun Ma

Henan Agricultural University ( email )

Zhengzhou
China

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