Contribution of corporate social responsibility on SMEs' performance in an emerging market – the mediating roles of brand trust and brand loyalty

Abstract

PurposeThe purpose of this paper is to evaluate the role of corporate social responsibility (CSR) on small and medium-size enterprises’ (SMEs') performance by exploring the role of mediating variables such as brand trust (BT) and brand loyalty (BL) in the context of an emerging market.Design/methodology/approachBased on a extend literature review on CSR, BT and BL studies, the authors evaluate the impact of those construct on SMEs’ performance in an emerging market. The paper follows a quantitative approach. In total, 247 responses were collected from 300 samples. The Smart Partial Least Squares SEM (version) was used to analyze the data of the SMEs of Vietnam in the year 2020.FindingsThe findings revealed significant and positive relationships among the variables in the model, such as CSR and firm performance (FP), CSR and BT, CSR and BL, as well as the mediating effect of BT and BL between CSR and firm performance.Research limitations/implicationsFirst, the sample was composed of small business from different segments, thus the respondents' perspective about CSR can differ according the impact of the business on society. Therefore, future studies could address businesses from a single segment to get a deeper understanding of their knowledge and involvement with CSR. Second, a cross-cultural study in emerging countries can be a rich venue for future research. Third, this study was developed through a quantitative approach; thus, the future research can apply qualitative approach or mixed methods to extend the study findings.Practical implicationsManagerial level of firm should prioritize noneconomic-related CSR; however, those will ultimately drive financial indicators of FP. The result is reasonable because firm simultaneously keeps committed with its stakeholders by delivering the committed qualification, transparency in operation and consistency in communication, environment respect, employee development and social welfare integrated directly into business activities. Those will result in creating love, trust and admiration from stakeholder, customers for brand and firms will get their engagement and support in many ways. This implication suggests that firm should incorporate CSR strategy into their core business activities and practice properly toward its stakeholders.Social implicationsThis study contributes to the CSR literature in emerging context by shedding light on the roles of CSR in FP with the mediation roles of BT and BL. Most CSR studies focused on Western context as developed economy, thus less attention has been paid for emerging economy. While there is increasing interest CSR in Vietnam, traditional culture and its distinctive economic and political structure has had a great influence on CSR in Vietnam. Thus, this study is important and meaningful for business practitioners, investors, shareholders and policymakers toward sustainable development for firms and Vietnam as a whole.Originality/valueTo the best of the authors’ knowledge, this is the first study that explores the mediating role of BT and BL between CSR and FP for SMEs. The findings of this study may be of great implications to entrepreneurs, top management with respect to strategic perspectives to drive their businesses and to improve their FP in a sustainable direction in contexts of emerging markets. In addition, this finding may be of great interest to motive SMEs' managers to engage with CSR actions where those businesses are situated during and after the COVID-19 pandemic. By that understanding, Government may consider for policy reforms/innovation/groundbreaking to leverage businesses to promote their strengths toward sustainable development in the new economic settings. The findings of this study may be of significant contribution to SMEs in Vietnam and in others in emerging economies.