Perceptions of corporate social responsibility initiatives in the banking industry

The South African banking industry is well developed and highly competitive. Banks offer homogenous products and services and are vulnerable to negative reputations. Banks can use corporate social responsibility (CSR) to respond to stakeholder needs and demands, achieve a competitive advantage, gain a positive reputation, achieve positive word of mouth referrals, and increase profitability. On the other hand, banks which neglect CSR, are faced with the threat of clients switching their buying behaviour to banks that profoundly invest in CSR. Therefore, CSR is a business obligation. Carroll (1991) conducted a landmark study and identified four elements of CSR; namely economic responsibilities, legal responsibilities, ethical responsibilities, and philanthropic responsibilities, ranging from the most important to the least important element. Currently, a plethora of studies have been conducted which utilise Carroll’s pyramid of CSR and have found that in different countries and different industries, the pyramid takes a different hierarchical order, while other studies identify the limitation of Carroll’s pyramid as being created from a developed country’s perspective. Therefore, it is not clear which CSR elements are likely to build positive customer responses more than others. The primary objective of this study is to ascertain whether the various elements of CSR influence bank clients’ perceptions of their respective banks. If affirmative, what is the hierarchical order of preference from the most important to the least important CSR element? To achieve this objective, a positivist research paradigm is adopted for the study, utilising a quantitative research design. The empirical results revealed that the various elements of CSR influence bank clients’ perceptions of their respective banks. Bank clients ranked the four elements of CSR from the most important to the least important in the following order: the economic responsibilities, the philanthropic responsibilities, the ethical responsibilities, and the legal responsibilities respectively. Likewise, this confirms the assertion by other researchers who argue that Carroll’s pyramid takes a different hierarchical order in different countries, and in different industries within the borders of a country. The results of the study can assist banks in South Africa to understand bank clients’ experiences, interests, motives, attitudes, and expectations of CSR. Consequently, this can effectively and efficiently help the banks in planning and developing their CSR interventions