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CSR Actions, Brand Value, and Willingness to Pay a Premium Price for Luxury Brands: Does Long-Term Orientation Matter?

Abstract

Sustainable luxury is a strategic issue for managers and for society, yet it remains poorly understood. This research seeks to clarify how corporate social responsibility (CSR) actions directly and indirectly (through brand value dimensions) affect consumers’ willingness to pay a premium price (WTPP) for luxury brand products, as well as how a long-term orientation (LTO) might moderate these relationships. A scenario study presents fictional CSR actions of two brands, representing different luxury products, to 1,049 respondents from two countries (France and Tunisia). The results of a structural equation modeling approach show that the luxury brands’ CSR actions negatively affect customer WTPP overall and for each brand. The luxury brands’ functional and symbolic value dimensions positively mediate the effects of CSR actions on WTPP, whereas social value does not. The effects of CSR actions and brand symbolic value on WTTP do not differ between countries. The effect of functional value on WTPP differs across countries, such that it is stronger for high-LTO than low-LTO cultures. Inversely, the effect of social on customer WTPP is stronger for low-LTO than high-LTO cultures. These findings have theoretical and practical implications for luxury brand managers.

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Fig. 1

Notes

  1. 1.

    Business for Social Responsibility: https://www.bsr.org/en/.

  2. 2.

    https://enb.iisd.org/consume/oslo004.html.

  3. 3.

    https://www2.deloitte.com/content/dam/Deloitte/es/Documents/bienes-comsumo-distribucion-hosteleria/Deloitte-ES-consumer-industry-global-powers-luxury-goods-2019.pdf.

  4. 4.

    https://thesustainableangle.org/future-fabrics/.

  5. 5.

    https://www.hofstede-insights.com/country-comparison/.

  6. 6.

    https://tn.boell.org/fr/2017/04/04/sondage-dopinion-sur-la-situation-environnementale-en-tunisie.

  7. 7.

    https://www.forbes.com/sites/pamdanziger/2019/05/29/3-ways-millennials-and-gen-z-consumers-are-radically-transforming-the-luxury-market/#2f2e1101479f.

  8. 8.

    https://fr.slideshare.net/MDWebTn/que-reprsente-le-luxe-pour-les-tunisiens-6874278?fbclid=IwAR0gz86GjkHaedPnQYHfbz_azvmG_Vx_NwF06kKnQf46_6FpQFfvtCRp4mg.

  9. 9.

    The correlation between LTO and WTPP (r = .18) served as the reference for the marker variable.

  10. 10.

    Source: https://quantpsy.org/sobel/sobel.htm.

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Appendices

Appendix 1: Brands investigated

Brand 1 (for women): Acqua di Gioia (Giorgio Armani)

figurea

Brand 2 (for men): Rolex

figureb

Appendix 2: Measurement Items and Variable Sources

Constructs Measurement items Sources
1. CSR actions CSR1. This company is really concerned about its employees’ health care
CSR2. This company offers efficiently manufactured products
CSR3. This company is helpful to others in need
CSR4. This company adheres to the law on traceability and product origin
Adapted from Amatulli et al. (2018)
2. Brand functional value Func1. In my mind, the higher price of this luxury brand equals higher quality
Func2. Being higher in price makes this luxury brand more desirable
Func3. Higher priced luxury accessories from this luxury brand mean more to me
Adapted from Shukla et al. (2015)
3. Brand social value Soc1. Owning this luxury brand indicates social status
Soc2. Owning this luxury brand is a symbol of achievement
Soc3. Owning this luxury brand is a symbol of wealth
Soc4. Owning this luxury brand is a symbol of prestige
Adapted from Shukla et al. (2015)
4. Brand symbolic value Symb1. I am very attracted to this luxury brand
Symb2. I would like to own this luxury brand before others
Symb3. I am more likely to be attached to unique luxury brands like this one
Adapted from Shukla et al. (2015)
5. Willingness to pay a premium price WTPP1. I am willing to pay a higher price for this luxury brand than for other brands
WTPP2. The price of this luxury brand would have to increase quite a bit before I would switch to another brand
WTPP3. I am willing to pay a lot more for this luxury brand than for other brands
Adapted from Netemeyer et al. (2004) and Amatulli et al. (2018)
6. Long-term orientation LTO1. Individuals should engage in long-term Planning
LTO2. Individuals should give up today’s fun for success in the future
LTO3. Individuals should work hard for success in the future
Yoo et al. (2011)

Appendix 3: Means, Standard Deviations, Correlation Matrix, and Discriminant Validity

Construct Means (SD) Discriminant validity assessment (correlations)a
1 2 3 4 5 6
1. Brand CSR actions 5.24 (1.01) AVE = 0.57      
2. Brand functional value 3.75 (1.54) 0.34 AVE = 0.84     
3. Brand social value 4.39 (1.75) 0.43 0.58 AVE = 0.92    
4. Brand symbolic value 3.79 (1.83) 0.57 0.67 0.74 AVE = 0.91   
5. WTPP 3.02 (1.78) 0.24 0.74 0.51 0.66 AVE = 0.80  
6. Long-term orientation 5.40 (1.12) 0.55 0.28 0.44 0.47 0.18 . AVE = 0.72
  1. We assessed discriminant validity in each country sample; it was satisfactory
  2. aFor construct discriminant validity, the average variance extracted (AVE) values on the diagonal must be greater than the squared correlations between constructs, which was the case for all constructs

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Diallo, M.F., Ben Dahmane Mouelhi, N., Gadekar, M. et al. CSR Actions, Brand Value, and Willingness to Pay a Premium Price for Luxury Brands: Does Long-Term Orientation Matter?. J Bus Ethics 169, 241–260 (2021). https://doi.org/10.1007/s10551-020-04486-5

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Keywords

  • Corporate social responsibility
  • Luxury brand value
  • Willingness to pay a premium price
  • Culture