csr brand

The Effects of Corporate Social

Responsibility on Brand Performance:

The Mediating Effect of Industrial Brand

Equity and Corporate Reputation

Chi-Shiun LaiChih-Jen Chiu

Chin-Fang YangDa-Chang Pai

ABSTRACT. In this article, the researchers explore the

following question. Can corporate social responsibility

(CSR) and the corporate reputation of a firm lead to its

brand equity in business-to-business (B2B) markets? This

study discusses CSR from customers’ viewpoints by tak-

ing the sample of industrial purchasers from Taiwan

small-medium enterprises. The aims of this study are to

investigate: first, the effects of CSR and corporate repu-

tation on industrial brand equity; second, the effects of

CSR, corporate reputation, and brand equity on brand

performance; and third, the mediating effects of corporate

reputation and industrial brand equity on the relationship

between CSR and brand performance. Empirical results

support the study’s hypotheses and indicate that CSR and

corporate reputation have positive effects on industrial

brand equity and brand performance. In addition, cor-

porate reputation and industrial brand equity partially

mediate the relationship between CSR and brand per-

formance.

KEY WORDS: corporate social responsibility, industrial

brand equity, corporate reputation, brand performance

Introduction

Most prior research and discussion about brands and

brand equity have almost solely focused on consumer

markets. However, facing an unprecedented com-

petitive environment due to the influence of global-

ization and the impact of information technology

forces industrial marketers to differentiate their

products from their competitors to create value for

their buyers. One way to achieve this objective is to

create a private brand because it reduces consumer

risk and links the value-creating activities of suppliers

with buyers’ perceptions. Empirical evidence increas-

ingly demonstrates that when making their buying

decisions, industrial buyers are not only influenced by

tangible attributes like price and quality, but with

intangible features such as trust, brand association,

supplier reputation and image (Cretu and Brodie,

2007; Mudambi, 2002; Mudambi et al., 1997).

According to Mudambi et al. (1997, p. 438), intan-

gible aspects of brand value ‘‘often contain emotional

dimensions.’’ Lynch and de Chernatony (2004,

p. 403) further indicate that ‘‘[b]rands based on

intangible, emotive characteristics – are seen as more

durable and less likely to suffer from competitive

erosion.’’ Thus the intangible, emotive aspects of

brand equity may be important sources of sustainable

competitive advantage. However, they are under-

emphasized in past research.

Industrial marketers now increasingly recognize

the value of branding; yet, how to achieve industrial

brand equity is still unclear. Some researches have

investigated the components of brand equity in

industrial markets (Michell et al., 2001; Mudambi

et al., 1997), but to our knowledge, studies

researching the antecedents of industrial brand equity

are scarce (for an exception cf. van Riel et al., 2005).

In other words, we know what industrial brand

equity is composed of much better than what causes

it to arise. This is an important gap that needs to be

filled to know where industrial brand equity origi-

nates. This study argues that buyers’ perceptions

about suppliers’ corporate social responsibility

(CSR) activities may be an antecedent to industrial

brand equity because this perception induces buyers’

positive brand awareness/association of supplier’s

products, improves perceived quality about these

Journal of Business Ethics (2010) 95:457–469 � Springer 2010DOI 10.1007/s10551-010-0433-1

products, builds brand loyalty, and brings about

brand satisfaction. Furthermore, the focus of CSR

research has shifted from ‘‘why’’ to ‘‘what’’ to

‘‘how’’, i.e., to adopt CSR practices most compat-

ible to business strategy to bring about maximum

outcomes for both the firm and the society (Basu and

Palazzo, 2008). Many studies in consumer markets

have also indicated that CSR and corporate repu-

tation induce positive brand perceptions of a cor-

poration’s products (Brickley et al., 2002; Jones,

2005; Smith and Higgins, 2000; Varadarajan and

Menon, 1988).

However, no related research exists in business-

to-business (B2B) markets. This study investigates

whether CSR and corporate reputation of an

industrial firm can lead to its brand equity in B2B

markets.

Also, in industrial markets the company’s name

often becomes the brand name across a range of

product groups. Since buying processes involve

more direct interactions with selling organizations,

integrating the research that examines company

influences is necessary (Cretu and Brodie, 2007). For

inquiring into the antecedents of industrial brand

equity, this study examines the effects of CSR and

corporate reputation on industrial brand equity.

CSR is still an evolving concept, and therefore lacks

a unified definition. This research defines CSR as

‘‘voluntary activities taken by corporations to

enhance economic, social, and environmental per-

formance voluntarily.’’ Additionally, we treat and

measure CSR as a whole construct without dis-

cussing its constitutive elements. Corporate reputa-

tion is defined as ‘‘the overall impression reflecting

the perception of a collective stakeholder group.’’

Empirical research of industrial brand equity has

mainly studied industrial purchasing in the Western

highly industrialized context. The generalizability of

their results to Asian industrial buying settings is

doubtful. Therefore, this research contributes to the

body of literature by using the sample of Taiwan’s

industrial buying firms because they are largely

small-medium enterprises which differ greatly into

their Western counterparts. Amaeshi et al. (2008,

p. 224) who studied CSR in supply chains of global

brands also argued that most people have ‘‘the false

notion that CSR practice is restricted only to global

firms and brands.… Quite often, the fact that pur-

chasing firms are customers is ignored in debates

around responsible supply chain management.’’

Discussing ethics in supplier–buyer relationships,

Bendixen and Abratt (2007) proposed that ‘‘one of

the stakeholders that have been neglected in the …CSR literature is suppliers.’’ This study echoes their

call and discusses CSR from customers’ viewpoints,

using the sample of industrial purchasers from Tai-

wan small-medium enterprises to study the effects of

CSR supplier activities.

When suggesting directions for future researchers,

van Riel et al. (2005, p. 846) indicated that ‘‘research

is needed on the determinants of industrial brand

equity for a broad range of industrial markets’’ (emphasis

added). Because their sample of respondents con-

sisted mainly of engineers, they suggested that future

research includes other participants in the buying

decisions. This study follows their recommendations

and includes all employees involved in purchasing

decisions from a variety of industries in the sample of

respondents.

This study first investigates the effects of CSR and

corporate reputation on industrial brand equity;

second, the effects of CSR, corporate reputation,

and brand equity on brand performance; third, the

mediating effects of corporate reputation and

industrial brand equity on the relationship between

CSR and brand performance. Figure 1 presents the

research framework.

This research contributes to the literature in the

following way: first, prior research on industrial

brand equity rarely discusses its antecedents; we fill

this gap by investigating the effects of CSR and

corporate reputation on brand equity. Second, the

empirical studies of industrial brand equity are still

rare, limiting understanding of the effectiveness of

industrial branding. Although there are a few

branding research studies in industrial markets, these

studies are largely exploratory and thus limited in

their generalizability. Little attempt has been made

to develop a systematic framework to test the

comprehensive model.

The rest of this article proceeds as follows: the

next section reviews the literature about industrial

brand equity and discusses if CSR and corporate

reputation influence industrial brand equity. The

second section develops the research framework

hypotheses. The methodology section describes the

measures, sample, and data. The following section

presents statistical results. Finally, the last section

458 Chi-Shiun Lai et al.

discusses the results and proposes managerial impli-

cations as well as directions for future researchers.

Literature review and hypotheses

This section derives hypotheses from the research

framework shown in Figure 1. This study argues

that CSR and corporate reputation arouse custom-

ers’ emotional perceptions about the firms they deal

with, leading them to associate their perceptions

with the brands they intend to purchase, thus

developing brand equity as well as enhancing cor-

porate reputation of suppliers who supply these

brands. These in turn result in higher brand per-

formance.

It is now widely recognized that industrial com-

panies benefit from investing in branding to reap

the benefits of brand equity (van Riel et al., 2005).

Although some past studies have indicated that brand

equity is ‘‘alive and well’’ (Gordon et al., 1993) in

industrial markets (Bendixen et al., 2004; Davis

et al., 2008; Michell et al., 2001), research of brand

equity in B2B markets is still surprisingly rare

compared to that in business-to-consumer (B2C)

markets.

Mudambi et al. (1997, p. 434) defined brand

equity as ‘‘the total value added by the brand to the

core product.’’ This article follows their definition

and regards industrial brand equity as brand value

brought to industrial buyers. To create brand equity,

buyers must perceive meaningful differences among

brands in the product or service category. Therefore,

it is necessary for businesses to create brand differ-

entiation. Since brand equity derives from value

brought to buyers, a meaningful brand differentia-

tion must originate from brand value components.

This article emphasizes intangible, emotional aspects

of brand equity.

Since ‘‘consumer branding provides a logical

starting point for examining additional ways to

analyze industrial branding’’ (Mudambi et al., 1997,

p. 435), this study also adapts consumer brand equity

to investigate industrial brand equity. In Aaker’s

model (1996), brand equity is composed of five

components: brand name awareness, brand loyalty,

brand associations, perceived quality, and other

proprietary brand assets such as patents and channel

relationships. However, because most measures in

the past studies did not include the component of

other proprietary brand assets, this study also defines

and measures industrial brand equity as composed of

four components such as that of Aaker, namely

brand awareness, brand loyalty, brand associations,

and perceived quality. This study also refers to Wang

et al. (2006) and includes ‘‘brand satisfaction’’ as

another component of industrial brand equity. Brand

satisfaction is included because it influences the

incremental value of a product or service with a

specific brand name and is based on a customer’s

Industrial

brand equity

Brand Loyalty

Perceived quality

Brand awareness

Brand association

Brand satisfaction

Corporate

reputation

Brand

performance

H1

H2

H4

H5

H6Corporate social

responsibility

H3

Figure 1. Research framework.

459The Effects of CSR on Brand Performance

subjective evaluation of product quality and service

quality by comparing buyer’s expectations with

buyer’s perceptions.

CSR and industrial brand equity

Research broadly defines CSR as a company’s

‘‘status and activities with respect to its perceived

societal or, at least, stakeholder obligations’’ (Brown

and Dacin, 1997). Due to the positive effects of CSR

participation and the negative effects of CSR vio-

lation, most companies today not only pay attention

to CSR issues, but also actively participate in CSR

activities.

In his daisy-wheel model of brand equities, Jones

(2005) proposed that brand equity derives from co-

creative interactions between the brand and its

stakeholders. In other words, the more fulfilled the

stakeholders’ expectations, the more valuable the

brand equity. Among these, socially responsible

behavior is one of the most proposed expectations.

Brickley et al. (2002) also acknowledged that

a company’s reputation for socially responsible

behavior constitutes an important part of its brand

capital. In fact, cause-related marketing (Varadarajan

and Menon, 1988) aims to enhance company reve-

nues and sales through product differentiation by

creating socially responsible attributes associated

with brands. As indicated by Smith and Higgins

(2000, p. 309): ‘‘the brand manager uses consumer

concern for business responsibility as a means for

securing competitive advantage.’’ Following this

logic, this study infers that the perceptions of CSR

practices about an industrial company by buyers can

positively increase its brand equity. Thus the fol-

lowing hypothesis:

H1: The buyer perceptions of CSR activities about

suppliers are positively related to the supplier’s

industrial brand equity.

CSR and corporate reputation

In today’s highly competitive market environment,

many companies have used CSR as a strategic tool to

respond to expectations of various stakeholders such

as media, public opinion, nongovernment organi-

zations and even consumers, to thus create a favor-

able corporate image (Jones, 2005). In reality,

companies have regarded CSR activities as a

necessity, thus urging managers to contemplate how

to implement CSR activities consistently with their

business strategy (Porter and Kramer, 2006).

McWilliams et al. (2006, p. 4) pointed out that

CSR ‘‘should be considered as a form of strategic

investment’’ which ‘‘can be viewed as a form of

reputation building or maintenance.’’ On the other

hand, Fombrun (2005) proposed enhancing corpo-

rate reputation as an extrinsic motivation for com-

panies to engage in CSR activities. Garberg and

Fombrun (2006) also drew reputation gain as rele-

vant outcomes of CSR programs. Finally, Bendixen

and Abratt (2007) studied a large South African

MNC’s reputation in supplier–buyer relationships,

indicating that the buyer’s ethical perception about

suppliers constitutes the basis of corporate reputa-

tion. Thus, we derive the following hypothesis:



corporate reputation.

CSR and brand performance

Over the last three decades, many researchers have

empirically tested the relationship between CSR and

financial performance with largely positive results

(Beurden and Gossling, 2008; Margolis and Walsh,

2003; Orlitzky et al., 2003). The basic premise is that

CSR improves financial performance by improving

the relationships of a firm with its major stakeholder

groups. This improvement shows from the cost and

the revenue side. From the cost side, as relationships

improve, trust builds between the two sides, thus

leading to a decline in transaction costs and certain

risks. From the revenue side, improved stakeholder

relationships bring in new customers as well as new

investment opportunities, enabling a firm to charge

premium prices (Barnett, 2008). This study defines

brand performance as ‘‘financial performance

brought by the supplier’s brands and perceived by

buyers.’’ Following this definition, this study argues

that the supplier’s CSR activities perceived by


buyers induce them to buy products or services of its

brands, creating brand performance. Therefore, we

propose the following hypothesis:



brand performance.

Corporate reputation and industrial brand equity

According to the resource-based view, a good cor-

porate reputation differentiates a company from its

competitors and is thus an important strategic asset to

a firm not only because of its value creation poten-

tial, but also because its intangible character makes it

difficult for competing firms to replicate (Fombrun

and Shanley, 1990; Roberts and Dowling, 2002).

Developing a stakeholder model of brand equity to

find the sources of brand value, Jones (2005) sug-

gested that brand value is created by fully satisfying

all stakeholder expectations, not just those of cus-

tomers. What most stakeholders expect is a company

with a good reputation. Thus a good corporate

reputation can improve the brand equity of its

products.

H4: Corporate reputation is positively related to

industrial brand equity.

Corporate reputation and brand performance

A good corporate reputation is ‘‘a top-level factor

for achieving sustained competitive advantage for

the organization’’ (Sanchez and Sotorrio, 2007,

p. 337) to bring about benefits of demanding a

higher price premium for company offerings.

Company reputation serves as a signal for the

underlying quality of a firm’s products and services;

the payment of lower prices in its purchases due to

lower contracting and monitoring costs; attracting

more qualified people in the labor market because of

the association of good corporate reputation with

high self-esteem; greater loyalty from employees

because employees prefer working for high-reputa-

tion firms; greater loyalty from customers because

customers value associations and transactions with

high-reputation firms (Roberts and Dowling, 2002).

Sabate and Puente (2003), surveying the empirical

analysis literature of the relationship between repu-

tation and financial performance, also demonstrated

that prior research about corporate reputation’s

influence on financial performance is largely posi-

tive. As such, we derive the following hypothesis:

H5: Corporate reputation is positively related to

brand performance.

Industrial brand equity and brand performance

High brand equity induces customers to pay a pre-

mium price for the product or service and to engage

in favorable advocacy regarding the firm and its

products, thus enhancing its brand performance

(Beverland, 2005; Beverland et al., 2007). Hutton

(1997) studied professional buyers in the personal

computer, fax machine, and floppy disk industries

and concluded that there was a brand equity ‘‘halo

effect’’ transferring brand evaluation from one cat-

egory to another and that buyers were willing to pay

a premium price as well as prepared to buy and

recommend products with the same brand name.

Bendixen et al. (2004) studied the products of

medium-voltage electrical equipment in South

Africa where the subjects of decision-making unit

members of industrial companies also achieved the

same results.

H6: Industrial brand equity is positively related to

brand performance.

Research method

Sample and data collection

This study gathered empirical data using a ques-

tionnaire survey among purchasing managers of

Taiwan manufacturing and service companies.

Questionnaires were mailed to 300 dealers with 96

returned after two weeks. After making telephone

calls, the questionnaires were mailed a second time,

and 83 more were received two weeks later; so the

total number of returned questionnaires was 179


(response rate, 59.67%). This study uses t-testing to

compare the response groups before and after the

telephone calls, with insignificant differences in

terms of the percent of purchase, average of annual

sales volume, capital, and industry type, with a

p-value between 0.44 and 0.94; therefore, the

combined statistical analysis was satisfactory.

Measures

This study used measurement items for each con-

struct from the relevant literature. The questionnaire

included five parts, with each part separately assess-

ing supplier CSR, supplier corporate reputation,

supplier industrial brand equity, and firm’s brand

performance. The last part also recorded basic

demographic information about respondents. All

items except demographic information were mea-

sured on a 7-point Likert-type scale from ‘‘strongly

disagree’’ (1) to ‘‘strongly agree’’ (7). The informants

were asked to answer questions according to their

perceptions of purchasing organizations.

The assessment of supplier industrial brand equity

included: (i) brand loyalty; (ii) perceived quality; (iii)

brand awareness/association; and (iv) brand satisfac-

tion. Brand loyalty measured the degree of cus-

tomer’s favorable attitude toward a brand that

resulted in repurchasing behaviors. Perceived quality

measured the degree of customer’s subjective eval-

uation of product quality and service quality by

comparing what he or she expected with what was

perceived. Brand awareness measured the degree to

which the buyer recognized or recalled that the

brand was a member of a certain product category.

Brand association measured the degree to which

anything of significance was linked to memory of a

brand. However, in our study, as also found by

Washburn and Plank (2002) and Yoo and Donth

(2001), measurement items for brand association and

brand awareness were heavily loaded on one single

factor. Brand satisfaction measured the degree to

which an overall evaluation was based on the total

purchase and consumption experiences with a brand

over time. All items were adapted from Washburn

and Plank (2002) and Yoo and Donth (2001). Each

construct contained three to five items.

Supplier CSR measured the degree of suppliers’

engagement in social initiatives related to their

stakeholders including employees, buyers, commu-

nity, etc. All items were adapted from Maignan et al.

(1999), including five items for this construct. Sup-

plier corporate reputation measured the degree to

which customers think about a firm, and whether

they judge it as highly esteemed, worthy, and mer-

itorious compared to its competitors. All items were

adapted from Wang et al. (2006), including three

items for this construct. The firm’s brand perfor-

mance measured the perceived financial perfor-

mance related to purchasing or consuming supplier’s

brand products and services by purchasing managers.

All items were adapted from Lee et al. (2008),

including four items for this construct. All mea-

surement items are listed in Appendix.

Analyses and results

Reliability and validity

Measurement model

This study used LISREL 8.72 to analyze the research

model. The measurement model of all constructs

first assessed the adequacy of each multi-item scale in

capturing its construct. This research checked

internal consistency reliability, convergent validity,

and discriminant validity before testing the hypoth-

eses via the causal model (Anderson and Gerbing,

1988b). First, according to confirmatory factor

analysis (CFA), this research deleted items and

compressed dimensions. Industrial brand equity to-

taled 15 questions within four sub-dimensions. We

used CFA of the first order and the second order,

respectively. According to Marsh and Hocevar

(1985), by calculating the target coefficient1 this

study compares CFA of the first order and the sec-

ond order to decide the fitness with data. The T

value that is closer to 1 implies that the second-order

CFA can replace the first-order CFA, making the

model more precise. The T values of industrial brand

equity are 0.99, closer to one in this study. The

fitness index of second-order CFA of industrial

brand equity reveals the fitness is good. Therefore,

this study takes the results of second-order CFA to

implement structural model analyses.

Second, in the reliability aspect, according to the

result of Table I, the Cronbach a of each variable is

between 0.86 and 0.89, above 0.70 recommended


by Nunnally and Bernstein (1994). The composite

reliability (CR) of measurable variable is between

0.86 and 0.91, above 0.6 recommended by Bagozzi

and Yi (1988) and Fornell and Larcker (1981),

revealing that the research variables are in the

acceptable range.

Finally, this study measures validity according to

convergent validity and discriminant validity pro-

posed by Anderson and Gerbing (1988b). Table I

shows that the factor loading t value is between 8.80

and 17.42, and each measurable variable reaches

significance (Gerbing and Anderson, 1988). The

average variance extracted (AVE) of measurable

variable is between 0.55 and 0.71, above 0.5 rec-

ommended by Fornell and Larcker (1981), and the

other variables are all accepted. This measurement

model, therefore, has good convergent validity. In

the test of discriminant validity shown in Table II,

the Dv2 among six pair variables are all reached at

p < 0.001. Any two pair variables among them all

have significance difference, and the fitness with data

of the unlimited model is better. Consequently, the

result supports the existence of discriminant validity

(Anderson, 1987; Anderson and Gerbing, 1988a;

Bagozzi and Phillips, 1982; Venkatraman, 1989).

Structural model

After the pretest model of reliability and validity, we

move onto comprehend the structural model fitness.

The structural equation modeling (SEM) analysis

usually takes the v2 to verify model fitness; however,

the sample influences v2, as the literature indicates

(Bentler and Bonett, 1980; Marsh and Hocevar,

1985; Marsh et al., 1988). Therefore, except for

considering sample size (Bagozzi and Yi, 1988),

when taking the v2 and the degree of freedom to

measure model fitness, Chin and Todd (1995) re-

quired that the standard should not be over three.

Following the suggestion of Bagozzi and Yi (1988)

and Hair et al. (1998), this study used seven indi-

cators to measure fitness of the entire model. The

result revealed that v2 = 167.64 (p = 0.000), v2/

df = 1.80(167.64/93), GFI = 0.89, AGFI = 0.85,

RMSEA = 0.07, NFI = 0.96, NNFI = 0.98, CFI =

0.98. Except that the GFI and AGFI were lower

than the recommended 0.9, the others were all

above. Hair et al. (1998) argued that if the GFI and

AGFI were closer to one, the result would be better,

but an implicit standard did not exist to judge the

fitness between observed data and the model.

Baumgartner and Homburg (1996) took LISREL to

TABLE I

The reliability and validity analysis of each measurable variable

Index Mean Standard

deviation

Factor

loading

t CR AVE Cronbach a

CSR 1 4.58 1.16 0.72 Standard 0.86 0.55 0.86

CSR 2 4.88 1.10 0.81 12.23

CSR 3 4.74 1.13 0.63 8.80

CSR 4 4.58 1.20 0.76 11.88

CSR 5 4.76 1.09 0.76 11.88

Corporate reputation 1 5.46 0.86 0.86 Standard 0.86 0.68 0.86

Corporate reputation 2 5.47 0.93 0.87 14.51

Corporate reputation 3 5.72 0.86 0.73 11.11

Industrial brand equity 1 5.40 1.01 0.80 Standard 0.91 0.71 0.89

Industrial brand equity 2 5.65 0.88 0.81 11.74



Brand performance 1 5.05 1.17 0.86 Standard 0.89 0.60 0.89

Brand performance 2 5.06 1.20 0.85 17.42




analyze 184 articles in the marketing and consumer

area from 1977 to 1994,2 finding that the GFI (24%)

and AGFI (48%) were under the recommended

value and still in the acceptable range. Consequently,

the fitness between model and the observed data in

this study should be acceptable.

Hypothesis testing

After measuring the path relationship between ob-

served variables and latent variables of the model

with LISREL, this study proposed five hypotheses

tests as follows.

According to the results, CSR has positive impact

on industrial brand equity (c11 = 0.15, t = 2.22,

p < 0.05), corporate reputation (c21 = 0.58, t = 7.12,

p < 0.01), and brand performance (c31 = 0.18, t =

2.04, p < 0.05). Therefore, H1, H2, and H3 are

supported. Moreover, corporate reputation has posi-

tive impact on industrial brand equity (b12 = 0.72,

t = 8.33, p < 0.01) and brand performance (b32 =

0.28, t = 2.06, p < 0.05). Therefore, H4 and H5 are

supported. Finally, Industrial brand equity has positive

impact on brand performance (b31 = 0.32, t = 2.47,

p < 0.05) and H6 is supported.

The results demonstrate that explanatory variance

(R2) of each variable to overall model, respec-

tively, is: corporate reputation (R2 = 0.34), industrial

brand equity (R2 = 0.68), and brand performance

(R2 = 0.48). The explanatory variances of these

three latent dependent variables are all above 0.34,

revealing that the explanation of the research model

is at acceptable range. Figure 2 shows the details

TABLE II

The test of discriminant validity of each measurable variable

Variable Pair variable Limited model Unlimited model Dv2

v2 df v2 df

CSR Corporate reputation 258.50 20 75.61 19 182.89

Industrial brand equity 494.67 27 80.70 26 413.97

Brand performance 474.36 27 56.29 26 418.07

Corporate reputation Industrial brand equity 103.91 14 39.99 13 63.92

Brand performance 336.27 14 106.29 13 229.98

Industrial brand equity Brand performance 431.96 20 59.21 19 372.75

All Dv2 reached p < 0.001 (when df is 1 and p = 0.001, the v2 is 10.827)

Corporatereputation η2

R2=0.34

Industrial brand equity η1R2=0.68

Brand performance η3

R2=0.48 CSR ξ1

21=0.58**

11=0.15*

12=0.72**

32=0.28*

31=0.32*

* p<0.05 ** p<0.0131=0.18*

Figure 2. The structural model of CSR, corporate reputation, industrial brand equity, and brand performance.


of completely standardized estimates and empirical

results.

Mediating effects

This study estimates the mediating effects through

SEM as suggested by Baron and Kenny (1986) and

Williams et al. (2003), to respectively take competitive

models to fulfill the following four conditions: (1) the

relationship between the independent variable (CSR)

and the mediating variable (corporate reputation and

industrial brand equity) needs to be significant; (2) the

relationship between the independent variable (CSR)

and the dependent variable (brand performance)

needs to be significant; (3) the relationship between

the mediating variable (corporate reputation and

industrial brand equity) and the dependent variable

(brand performance) needs to be significant; (4)

simultaneously, the independent variable (CSR) with

the mediating variable (corporate reputation and

industrial brand equity) to the dependent variable

(brand performance) need to have significant relation,

and the independent variable effect needs to be

weaker than the second group.

Figure 3 shows that the results of statistic analysis

fulfill these four conditions. Under the fourth con-

dition, ‘‘industrial brand equity’’ and ‘‘corporate

reputation’’ to ‘‘brand performance’’ does not reach

the significant level of p < 0.05, the effect of ‘‘CSR’’

to ‘‘brand performance’’ reduces from 0.48 to 0.17

and reaches the significant level of p < 0.05. Con-

sequently, ‘‘industrial brand equity’’ and ‘‘corporate

reputation’’ have partial mediating effects on the

relationship between ‘‘CSR’’ and ‘‘brand perfor-

mance.’’

Discussion

This article investigates the effects of CSR and

corporate reputation on industrial brand equity and

brand performance. The empirical results support

our hypotheses and indicate that CSR and corporate

reputation have positive effects on industrial brand

equity and brand performance. Corporate reputation

and industrial brand equity also have partial medi-

ating effects on the relationship between CSR and

brand performance.

CSR

Corporatereputation

(1) First condition

0.62**

0.58**

(2) Second condition

0.48**

Brand performance

(3) Third condition

0.38**

0.30*

Brand performance

(4) Fourth condition

0.17*

0.30*

0.31*

* p<0.05 ** p<0.01

CSR

Industrial brand equity



Brand performance

Corporatereputation

CSR

Corporatereputation

Figure 3. The competitive models of CSR, corporate reputation, industrial brand equity, and brand performance.


Managerial implications

According to the above results, we propose the

following managerial implications. First, since buy-

ers’ perceptions about supplier’s CSR activities

constitute an antecedent of industrial brand equity,

we urge managers in the B2B market to engage in

CSR activities to enable their buyer’s perception of

them. The traditional Chinese proverb, ‘‘doing good

and not wanting others to know it,’’ is not suitable in

this context. Second, buyers’ perceptions about

supplier’s CSR activities positively enhance the

supplier’s corporate reputation, in turn enhancing

the industrial brand equity of suppliers. Moreover,

corporate reputation and industrial brand equity not

only have direct effects on brand performance, but

also have partial mediating effects. These results

indicate that CSR effect on brand performance is

partially through the effects of corporate reputation

and industrial brand equity. If the supplier wants to

improve financial performance by its brands, man-

agers must do their best to enhance their corporate

reputation and prevent it from erosion because

corporate reputation takes a long time to build, but

is easily dismantled. On the other hand, managers

must also devote their energy to enhancing industrial

brand equity. In this respect, Mudambi et al. (1997)

explored branding in industrial markets and pro-

posed performance components of the brand value

pinwheel to the customer. Their pinwheel of brand

value to purchasers comprises four performance

components: product, distribution services, support

services, and company. Therefore, to enhance brand

equity, managers in industrial market can improve

their industrial brand equity by devoting their

attention to these four components.

Limitations and future directions

This section addresses some limitations in our

research and suggests related directions for future

research. Our first limitation is that we focus only on

industrial buyers, ignoring other stakeholders. We

suggest that future researchers investigate the influ-

ences of other stakeholders on brand equity. Our

second limitation is that in addition to the brand

equity model proposed by Aaker (1996), other

models exist. For example, Davis et al. (2008) adopt

Keller’s (1993) brand equity framework to study the

differentiation effect of brands in the context of

logistics service. We do not claim that our results in

this article will also hold in other brand equity

models. Future researchers can adopt different

models and compare their results with ours. The

third limitation of this research is that we are con-

cerned only with buyers’ perceptions about suppli-

ers’ CSR activities, not actual CSR activities.

Although buyers’ perceptions are related to suppli-

ers’ CSR activities, they are not equivalent to actual

CSR activities. Distinguishing these effects is nec-

essary to understand the real effects of actual CSR

activities. Additionally, we treat CSR as a whole

construct and not as a composite; therefore, we do

not discuss the effects of different elements of CSR

activities on industrial brand equity and corporate

reputation. However, as our definition indicates,

CSR is an overarching concept which includes

several dimensions such as economic, social, envi-

ronmental, etc. Future research could deconstruct

these elements to inquire into their separate effects to

learn about the separate effects of different CSR

dimensions on industrial brand equity and corporate

reputation. Focusing on the sample of Taiwan’s

SMEs also limits the generalizability of our findings

to similar conditions. We suggest that future re-

searches compare large enterprises with SMEs and

also recommend cross-cultural comparisons.

Notes

1 Target coefficient (T) = first-order measurement

model v2/second-order measurement model v2.2 Reference from the Journal of Marketing, the Journal

of Marketing Research, the International Journal of Research

in Marketing and the Journal of Consumer Research.

Appendix

Corporate social responsibility

1. Our major supplier is very concerned with

local community


environment protection



buyers’ benefits


the rights of female and disabled employees

5. Our major supplier actively participates in

social initiatives


Brand loyalty

1. Products and services of this brand are the

first choice of us

2. We feel ourselves loyalty to this brand

3. Even with many choices, we will not choose

alternative brands

Perceived quality

1. This brand is of very good quality

2. The likelihood that this brand will function

well is very high

3. The likelihood that this brand is reliable is

very high

Brand awareness/association

1. The name of this provider is well known in

our industry

2. We can recognize this brand among compet-

itive brands

3. In comparison to other providers, this com-

pany is a leading brand in the industry

4. We have no difficulties in imagining this

brand in mind

5. We can recall some characteristics of this

brand

Brand satisfaction

1. Products and services of this brand usually

meet our expectations

2. Products and services of this brand are at the

desirable level

3. Overall, we are very satisfied with products

and services of this brand

4. Products and services of this brand always

bring happiness and delights to us

Corporate reputation

1. Customers’ overall perceptions of total expe-

rience in the firm is rather good

2. Customers’ comparative perceptions of this

firm with other competitors are very good

3. Customers believe in a good long-term fu-

ture of this firm

Brand performance

1. Purchasing or using this brand will increase

our company’s sales growth

2. Purchasing or using this brand will enlarge

our company’s market share


our company’s margin


our company’s overall performance.

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Chi-Shiun Lai and Chih-Jen Chiu

National Yunlin University of Science and Technology,

Yunlin, Taiwan

E-mail: [email protected]

Chin-Fang Yang

Da-Yeh University,

Changhua, Taiwan

Da-Chang Pai

ChungChou Institute of Technology,

Changhua, Taiwan


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