The influence of Corporate Social Responsibility (CSR) on Taiwanese Consumers’ Purchase Intention and Brand Image in the Diamond Industry

Table of Contents

1 Title and Introduction
1.1 Title
1.2 Introduction

2 Literature Review
2.1 Corporate Social Responsibility (CSR)
2.1.1 De Beers Drivers to CSR Implementation
2.1.2 CSR Pyramid for De Beers
2.1.3 Categories of CSR
2.2 Brand Image
2.2.1 Definition of Brand Image
2.2.2 The Impact of CSR on brand Image
2.3 Purchase Intention
2.3.1 Definition of Purchase Intention
2.3.2 The Impact of CSR on Purchase Intention

3 Research Aim and Objectives
3.1 Research Aim
3.2 Objectives

4 Methodology
4.1 Research Structure
4.2 Hypotheses Development
4.3 Questionnaire
4.3.1 Question Design Draft
4.4 Interview
4.5 Data Analysis

5 Difficulties and Limitations

6 References

List of Figures

Figure 1: CSR pyramid

Figure 2: Dimensions of Brand Knowledge

1 Title and Introduction

1.1 Title

The influence of Corporate Social Responsibility (CSR) on Taiwanese Consumers’ Purchase Intention and Brand Image in the Diamond Industry

1.2 Introduction

In spite of the pessimistic worries of the global economy, in 2011 the global diamond industry performed successfully beyond expectation. A total of 124 million carats of rough diamonds, which is worth of $15 billion, were excavated (AWDC, 2013). According to the industry consulting organization, Bain & Company (2013), “those stones were worth $24 billion after moving through the chain of dealers, cutters and polishers, on their way to making diamond jewellery worth $71 billion at retail”. They also reported that compared to 2010, the global diamond sales significantly increased by 18% to $71 billion, close to the 2007 peak of $73 billion before the crisis. IDEX (2013) and Tacy LTD (2013) indicated that the majority of growth contributed to the mounting demand from Chinese and Indian markets. De Beers, which is reviewed in this proposal as an example of the world’s leading diamond company for more than a century, reached their second highest level of sales ever to $6.5 billion in 2011.

In the 1990s an issue of “conflict diamonds” or “blood diamonds” was heatedly debated across the globe. The diamond industry encountered the crisis from their diamond sourced countries. In several politically unstable African countries, such as Angola, Sierra Leone, Liberia, the Democratic Republic of the Congo, the diamond mines were under control of the military as a means to finance their military power. With the media‘s widespread coverage and the movie “Blood Diamond”, the transactions between diamond buyers and the military, although not all from such illegal channels, were regarded as intensifying violent tribal conflict. Consequently, the reputation of the diamond industry was blackened (The Kimberly Process, 2013; Pauwelyn, 2003; Worldbank.org, 2013). In response to this situation, the Kimberley Process was organized in 2002. Under the auspices of the United Nations, The Kimberley Process Certification Scheme (KPCS) conducted a list of rules that every diamond trading country should obey: certification of rough diamonds is now required before being exported (Pauwelyn, 2003; Schefer, 2005). This is to "guarantee that their trade does not finance rebel activities" (The Kimberly Process, 2013).

To establish a positive prestige from the infamous “blood diamond” image, and to ensure that De Beers’ “corporate activities contribute significantly to the development and prosperity of the countries and communities in which they operate” (De Beers Group, 2013), their CSR principles has developed across five sustainability factors – Economics, Ethics, Employees, Communities and Environment, as all well as obeying the KPCS trading system (ibid). The case of De Beers will be explored, because it is a company which has executed its CSR policy since 2006, which provides luxury industry marketers a possible framework for strategic thinking and the effective use of CSR activities.

There has been an upward research trend on how a company’s corporate social responsibility policy benefits consumer communication for several decades (Maignan, 2001). Meanwhile, this academic stream has invigorated the potential marketing development of corporate responsibility initiatives, such as the issue of corporate sustainability, environmentalism and corporate citizenship, among the real business world (Menon & Menon, 1997; Drumwright, 1994; Wigley, 2008; Lee, 2009;). However, most of previous research discussed on CSR is more in the context of sustainability management or shareholder theory, rather than consumer aspects of understanding of this notion. Reinforcing this, Sen and Bhattacharya (2001) highlighted that in spite of swelling prominence of CSR in the business market, there is little understanding about the influences of CSR activities on consumers, coupled with minimal consumer research on the diamond industry. To fill the gap in the literature and practical business field, this research proposal outlines an investigation that will critically explore the relationship between the contributory role of CSR in Taiwanese consumer purchase intentions and brand image in relation to the luxury diamond market.

The CSR notion initiated from Anglo-Saxon countries, predominantly the U.K. and the United States of American (Matten and Moon, 2004; Maignan, 2001). With a more Western cultural tradition, most empirical implementations of CSR have been carried in these countries. Contrastingly, CSR perception and awareness is relatively lower for consumers in the Asian countries (Ramassamy et al, 2010). It was not until 2005 that the first CSR report in Taiwan was published by Global Views Monthly, the socio-economic category leading magazine in Taiwan. Moreover, due to the internationalization of corporate activities nowadays, it is vital to identify whether the CSR activities are perceived in the same manner in other countries and cultures. Thus, understanding how Taiwanese consumers perceive CSR, benefits marketers or corporations attempting to enter Taiwan’s luxury diamond market to construct a sounder marketing plan.

2 Literature Review

2.1 Corporate Social Responsibility (CSR)

CSR is a constantly developing concept that has been redefined with significantly contrasting points of views and varying use of the terminology which has depended on changing needs and times(O’Riordan and Fairbrass, 2008; Lai et al, 2010; McWilliams et al, 2006). It has, therefore, no universal definition (ibid). The social scope of CSR is wide-ranging, comprising environmental, social welfare, education and global warming issues. Generally speaking, CSR is a social obligation that a corporation towards its stakeholders or even society (Brown & Dacin, 1997). This is echoed by Atuguba and Dowuona-Hammond (2006) that CSR is “about the relationship of corporations with society as a whole, and the need for corporations to align their values with societal expectations.” Amaeshi et al (2006, p.127) have also indicated that:

“CSR is a localized and socially embedded concept and as such the prevailing ideas, perceptions, issues addressed and modes of practicing CSR are reflections of organisations responses to their socio-economic environment.”

2.1.1 De Beers Drivers to CSR Implementation

From the researcher’s own observation and supported by academic research, there are three main reasons why De Beers employed CSR activities as one of marketing communication approach, which are crisis reaction, socio-economic priorities and market access.

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