CSR and market value a case study of Starbucks

CSR and market value, a case study of Starbucks

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1. Research Proposal

1.1 Introduction

For a long time now, sustainable practises have aroused the interest of the general public. They're more aware than ever before both long and short-term effects of their actions and attitudes on the environment and society. As firms become more cognizant of the “long-term repercussions”, they have planted a “corporate social responsibility” strategy that takes into account not only their own interests but also those of third parties (Tamvada, 2020). As the globe becomes more interconnected and information more readily available, corporate social responsibility (CSR) assumes increasing significance (CSR). As the public's need for information grows, so does the pressure on governments, activists, and the media to hold corporations accountable for their deeds. Among the most notable examples of this is the growing scrutiny of huge corporations around the globe. Since a lot of scandals have occurred, huge corporations are frequently criticised by their shareholders and investors (fraud, bribery, scams, etc.).

1.2. Background of the study

Starbucks is an excellent example of a company following its CSR strategy because of its worldwide notoriety. To make a good difference in the communities they serve, they've taken a number of steps to make that happen. The company's corporate social responsibility (CSR) plan involves, among other things, ethical purchasing, environmental sustainability, and community involvement (Campbell and Helleloid, 2016). Starbucks' CSR approach will fail if any one of these three elements is missing. Starbucks' health care programme for its employees is an example of the company's involvement in the community. As a Starbucks customer, you can rest easy knowing that no farmers or staff are abused, and that no harm is done to the environment throughout the coffee's production process (Chaudhary et al., 2016). Sales have risen as a result of the additional features being well received by customers.

Many businesses, in contrast to Starbucks, have been unable to adequately adopt a CSR strategy. Numerous studies have looked into how a company's CSR approach affects customer satisfaction. Customers' perceptions of a company's CSR efforts can be influenced in both good and poor ways, say business experts. A study by Luo and Bhattacharya (2006) found that whether or not customers are satisfied, a company's market value rises or falls. Impact on customer satisfaction and market value of a CSR strategy depends on the type of CSR indicator employed.

1.3. Problem Statement

There is no direct link between a company's commitment to corporate social responsibility and the level of customer satisfaction or the market value it generates. This makes it imperative that research be conducted on how different CSR initiatives affect market value.

To put it another way, what are the effects of different sorts of actions related to corporate social responsibility on market value? And what weight does the degree to which customers feel their needs are met carry in this equation? The following is a condensed version of the research project's statement of the problem:

1.4. Research Questions-

It is vital to provide an initial response that addresses both the problem statement and the study goals and objectives in order to handle it in the correct manner.

Following research questions will be currently investigated.

1. Can customers tell the difference between different types of CSR?
2. How will customers react on different types of CSR?
3. How big of an effect does the level of satisfaction experienced by customers have on the attitude of investors?
4. In terms of analysing a company's social responsibility, what are investors searching for and how do these factors influence the company's market value?

Justification: The researcher takes a look at CSR from the perspective of customers as the primary focus of this investigation is on the connection between “corporate social responsibility” (CSR) and customer happiness. The next step is going to be determining whether or not there is a connection between satisfied customers and increased market value. There will be a direct correlation between the level of satisfaction a consumer has and the reactions they have to particular products and services.

1.5. Academic Relevance

Both management and customers are increasingly concerned about “corporate social responsibility” (CSR). The concept of “corporate social responsibility” (CSR) has achieved universal acceptance, yet customers and investors are still wary of these initiatives (Zhang and Hanks, 2017). A company's long-term strategy is heavily influenced by its customers' comments. The current focus of CSR research has always been the absence of clearly defined metrics. Contradictory outcomes have been found in studies looking at several strategies of connecting corporate social responsibility and market value (Daszynska-Zygadlo et al., 2016).

.6. Managerial relevance

Corporate social responsibility (commonly known as CSR) contains both positive and bad aspects, however it is critical to assess whether or not a planned CSR strategy will accomplish the desired results. In terms of consumer satisfaction and the market value, however, CSR does not always produce fantastic benefits, as previously stated (Haan, 2012). A manager may believe that the implementation of a CSR strategy is an excellent concept; however, CSR does not always yield favourable results. The capacity of a corporation to anticipate the results of its corporate social responsibility (CSR) efforts is a requirement for the effective execution of those programmes.

1.7. Overview of the subsequent chapters

The following chapter (Literature Review) takes a more in-depth look at Starbucks' CSR initiatives. Customer trust and communication strategy, as well as how effectively a company's CSR policy reflects its identity, are used to decide if a company's CSR policy is excellent or horrible. A company's CSR policy will also be discussed as part of our discussion of consumer trust and communication strategy. How customers feel about the literature study will be used as a metric of customer satisfaction. Next, the study will cover the research method, which includes the study design, the research approach, and the data gathering method. This research will rely on secondary resources to analyse and explain the findings in subsequent chapters, therefore it will start by looking at the quality of past reviews, journals, and publications.

&nbsp1.8 Expected result

According to the findings of the study, corporate social responsibility (CSR) efforts can be implemented into the business plan of a company. CSR has the potential to be both an economic opportunity and a benefit for the community for a business that places a significant emphasis on social responsibility. A corporation's corporate social responsibility (CSR) efforts may result in financial gains, which the company may then reinvest in the expansion and upkeep of its socially responsible programmes.

References

Campbell, K. and Helleloid, D., 2016. Starbucks: Social responsibility and tax avoidance. Journal of Accounting Education, 37, pp.38-60.

Chaudary, S., Zahid, Z., Shahid, S., Khan, S.N. and Azar, S., 2016. Customer perception of CSR initiatives: its antecedents and consequences. Social Responsibility Journal.

Daszynska-Zygadlo, K., Slonski, T. and Zawadzki, B., 2016. The market value of CSR performance across sectors. Engineering Economics, 27(2), pp.230-238.

Hahn, R., 2012. Standardizing social responsibility? New perspectives on guidance documents and management system standards for sustainable development. IEEE Transactions on Engineering Management, 59(4), pp.717-727.

Luo, X. and Bhattacharya, C.B., 2006. Corporate social responsibility, customer satisfaction, and market value. Journal of marketing, 70(4), pp.1-18.

Tamvada, M., 2020. Corporate social responsibility and accountability: a new theoretical foundation for regulating CSR. International Journal of Corporate Social Responsibility, 5(1), pp.1-14.

Zhang, L. and Hanks, L., 2017. Consumer skepticism towards CSR messages: The joint effects of processing fluency, individuals’ need for cognition and mood. International Journal of Contemporary Hospitality Management.