In light of the recent financial crisis, the practices of CSR have come to the fore in media reports and academic debates. In this context, the goal of this research is, first, to examine the impact of the financial crisis on the implications of CSR activities in relation to stakeholders’ expectations in the financial services industry and, second, to help banking managers to understand what should be done for the benefit of their stakeholders and their own business sustainability.

1. Research Methods
Student Number: 21202244
Tutor: Sharif Sheriff
Module Code: BA70020E
2014
Source: ( Adapted from Google, 2014)

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Table of Contents
ABSTRACT .....................................................................................................................................................2
1. INTRODUCTION ......................................................................................................................................2
2. LITERATURE REVIEW................................................................................................................................3
3. RESEARCH QUESTION ..............................................................................................................................5
4. METHODOLOGY .....................................................................................................................................6
4.1. METHOD OF DATA COLLECTION.............................................................................................................6
4.2. THE QUESTIONNAIRE DESIGN ................................................................................................................7
5. DATA ANALYSIS ......................................................................................................................................7
6. LIMITATION ...........................................................................................................................................8
TIMESCALE ....................................................................................................................................................9
ACRONYMS ...................................................................................................................................................9
BIBLIOGRAPHY .............................................................................................................................................10
APPENDIX....................................................................................................................................................12

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The voice of the stakeholder – customer attitudes to the
role of CSR in the UK Banking Sector since the financial
crisis (2007)
ABSTRACT
In the light of the recent financial crisis, the practices of Corporate Social Responsibility (CSR) have
come to the fore in media reports and academic debates especially in the banking sector. In this
context, the goal of this research is twofold. First, it seeks to examine the impact of the financial
crisis on the implications of CSR activities in relation to stakeholders’ expectations in the financial
services industry, specifically the UK banking sector. This involves investigating whether, since the
financial crisis, banks in the UK need to rethink their societal roles to align with key stakeholders’
expectations. Second, it can help banking managers to understand what should be done
for the benefit of their stakeholders and their own business sustainability. The above
will be researched via a web-based questionnaire and CSR models will be analysed to answer the
research question.
Keywords: Global Financial Crisis, Corporate Social Responsibility, Stakeholder model, Shareholder
model, CSR pyramid, Triple Bottom Line
1. INTRODUCTION
History shows that the most serious recessions are those that involve the financial sector, include
a large number of countries and affect the core of the global system. The coming year, 2014, is
supposed to be the one in which the global economy finally sorts out its problems (Elliott, 2013).
Conversely, the UK banking industry is suffering from some recent failures, including ‘PPI and
interest rate swap mis-selling and the fixing of the LIBOR interest rate’ (Bennett, 2013). Lloyds’
£28m fine for mistreating retail customers is seen as the UK largest ever. This came from a flawed
incentive scheme which, interestingly, was introduced in 2010 long after the bank’s rescue by the
UK taxpayer (Masters, 2014). This raises concerns regarding the CSR activities that were
undertaken in the post financial crisis by banks that contributed to such failures.
Although the notion of CSR emerged in the 1950s, yet, there is no strong consensus of either its
definition or scope. Nevertheless, with the variation in CSR definitions, CSR can considered insofar
as an umbrella term that captures the various ways of thinking in which business defines and
manages its relationships with society and acts in accordance with them (Klara, 2011).
Substantial academic research has focused on core aspects of CSR concerning the determinants of
social responsible behaviour, the relationship between financial and social performance, social
reporting and stakeholder engagement. Although some researchers have also unfolded some CSR
issues in the banking sector, the research in this field is still in its infancy (Perrini, 2005). Thus, the
aim of this research is to contribute to the CSR bank literature and pinpoint the CSR activities that

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address the stakeholders’ expectations post financial crisis and how these activities influence the
customers’ behavioural perception.
The next section includes a review of literature on the subject. This is followed by an outline of
problem statement, research question and the development of the proposed hypotheses. The
penultimate section depicts the research methodology and data analysis. Finally, the limitation of
the study is presented.
2. LITERATURE REVIEW
Many are holding banks, at least partly, responsible for the recent FC (financial crisis), albeit in the
context of extreme short-termism and market manipulations. Such irresponsible business
behaviours have drawn the attention to the concept of CSR which its core approach has been
argued to reflect the business ethics and attributes towards society (Herzig & Moon, 2012).
The importance of CSR surged only since 1960s (Carroll & Shabana, 2010). This growing interest in
the field has served to extend the array of its definitions which contributed to cloud the CSR
literature with a proliferation of terms. Nevertheless, Visser (2010, cited in Sun et al, 2010), argues
that CSR 1 – referring to all other terms concerning CSR before 2007 – failed to prevent the FC and
thereof he presents a new model – CSR 2 – to replace CSR 1.
Given this array, CSR concept and interpretation are bound to by its application. To the
neoclassical economists, the only social responsibility of business is to increase its profits while
following legal rules (e.g. Friedman, 1970). However, according to Martin (2011 cited in Leavy,
2012), this shareholder maximization model would eventually destroy business and the efficiency
of markets. Hence, the key argument is that the malpractices of banks such RBS, Lloyds and Co-
operative indicate that the financial sector might be in jeopardy of this shareholder-capitalism
‘‘The only one responsibility of
business towards society is the
maximization of profits to the
shareholders within the legal
framework and the ethical
custom of the country.”
“Creating a strong business and
building a better world are not
conflicting goals – they are both
essential ingredients for long-term
success”.
- Milton Friedman
- William Ford Executive
Chairman, Ford Motor
Company.

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which has been claimed to aggressively pursuing expansion and profits at all costs (Greenham,
2013).
In stark contrast is the stakeholder approach, whereby Freeman (1984) posits that firms owe a
duty to society rather than only to the shareholders. From this perspective, a firm has
responsibility towards many groups who are its stakeholders that affect and are affected by the
actions of the firm. Customers are considered eminent stakeholders for having direct effect on the
continuity of the firm (Blanpain et al, 2011). Arguably, CSR initiatives are those actions taken to
bridge firm and stakeholder expectations (May et al, 2007). Further, Porter and Kramer (2006
cited in Bouvain et al, 2012) elaborate that cultivating stakeholder approach in management
implies strategic CSR as a source of competitive advantage – reputational advantage. In the same
vein, it is claimed that firms with CSR adhere in practice to the expectations of its stakeholders
and create a positive image and a reputation as a socially responsible business that can influence
the customers’ behavioural perceptions towards this business (Tello & Yoon, 2009). In line with
this, some marketing studies by Sen and Bhattacharya (2001) reported that CSR activities can
positively affect consumer attitudes including customer loyalty and trust.
Notably, the function of banks incorporates societal thrust as it is embedded in its DNA whereby,
on one hand, they collect idle funds from individuals or business and, on the other hand, they
transform them into loanable capital (Lapavitsas, 2003). Hence, banks have a direct impact on the
society within the social, ethical and environmental considerations that are taken into account in
the investment decision making.
To shed light on the customers’ expectations, CSR pyramid and TBL (Triple Bottom Line) are
reviewed. Carrols’ pyramid of CSR (1979) – the most widely CSR cited model – illustrates the social
responsibility of businesses as the economic, legal, ethical, and philanthropic expectations that
firms are bound to towards stakeholders, at large. Carroll (1991) posits that the economic
responsibility refers to the fundamental responsibility of business to produce goods and services
that society wants and which it sells at a profit, thereof it is situated at the base of the pyramid for
all the subsequent responsibilities. At the same time, business is required to strictly obey the law.
Ethical responsibilities pertain to expectations that reflect a concern for stakeholders over and
beyond economic and legal expectations, while philanthropic responsibilities refers to voluntary
actions which a company assume even if there are no clear-cut societal expectations (Blowfield &
Murray, 2008).
The TBL of CSR advocated by John Elkington in 1994 contends that business creates value in
multiple dimensions (social and environmental as well as economic values). Further, he highlights
sustainability as an important goal for business ethics. The broader concept of economic
sustainability postulates that company’s attitude impacts the economic framework in which it is
embedded (Crane & Matten, 2010).

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The emerging of the new developed model CSR 2 as a result of the failure of CSR 1 and the recent failures
in the banking sector formulates the assumption that there is a gap, which pertains to the difference
between the current Banks’ CSR practices and the stakeholder current expectations. This leads to the
second hypothesis:
•H01: There is a gap between the current CSR practices of the banks and current Customer-Stakeholders'
expectations.
Recent studies claim that the company's preferred CSR activities - referred to as "CSR fit" - positively
influence consumers' behavioural perceptions - a) trust and b) repeat patronage intentions (Sen and
Bhattacharya, 2001). This formulates the following hypothesis:
• H02: CSR fit will have a positive impact on customer-stakeholders' behavioural perceptions.
Further, Roberts and Dowling (2002- cited in Bouvain et al, 2013) opine that CSR activities can result in
high quality intangible assets such as reputation which can be regarded as a powerful competitive edge.
Also, it is claimed that corporate reputation attracts customers, influences the behavioural perceptions-
a) trust, and b) repeat patronage intention- and creates sustainable business (Bouvain et al, 2013) . This
yields the following hypotheses:
• H03: CSR fit will lead to positive reputation of banks as socially responsible businesses in the
marketplace.
• H04: Bank reputation as socially respobsible business will have a positive impact on customers'
behavioural perceptions.
On the one hand, given the aforementioned financial strand, a heightened awareness of the importance
of ethics and CSR in business practices has led banks to increase their CSR performance in order to regain
the lost trust in businesses since the onset of this GFC in 2007 (Bouvain et al, 2013). In this view, as the
assumption goes, banks might have rethought their CSR activities in the post-financial crisis to address
the society expectations as a result of this crisis. On the other hand, some recent financial failures
remain in flux into the UK banking sector. Hence, this study wants to investigate about this subject. In
particular, the aim of the paper is to answer to the following research question:
Has the financial crisis been a wake-up call for CSR activities to resonate with customer
stakeholders expectations to create sustainable business?
3. RESEARCH QUESTION
The Problem Statement

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4. METHODOLOGY
The research will follow a deductive approach, it has a positivist paradigm, whereby it seeks to
confirm or refute the research question through its data collection and analysis. In order to obtain
answers for the research question, a literature review was carried out in section 2.
The target population is bank customers resident in the UK. For this research, the planed sample
size is 200. To develop a homogeneous sample, the sampling units will be customers from one
bank, Barclays Plc where Snowball sampling will be employed to reach them. The snowball
sampling is a non-probability method that is typically used in situations where compiling a
complete list of sampling units is very difficult as banks do not give out such list of its customers.
Hence, it might not possible to use a Stratified random method to develop a representative
sample (Shiu et al, 2009).
The use of the online survey will help to reduce the social desirability biases inherent in the
Snowball method. In addition, to make the sample reasonably representative to have the same
distribution of characteristics as the population from which it is drawn, respondents will be from
various socioeconomic categories, from diverse ethnic backgrounds who are men and women
between 23 and 70 years. Choosing an age over 23 years was to ensure that all the participants
will be able to recall the crisis in 2007 during their adult years. Moreover, Snowball sampling has
been successfully used by some banking researchers (McDonald & Lai, 2011). Further, selecting
the bank on the basis of its position in FTSE4Good ranking, and being the 2nd largest British bank
(Market Consensus, 2013) will help to draw a big sample size.
4.1. METHOD OF DATA COLLECTION
In accordance with the positivist research paradigm, the data collection will be conducted via self-
administrated questionnaire distributed through email. The use of the Internet has been
associated with many positive implications such significantly reducing cost and providing a quick
reach to respondents as well as yielding a high response rate. The advantage of using such a
primary data collection is that information gained is more coherent with the research questions.
The questionnaire will be sent to the respondents after the approval of the supervisor.
Respondents will be presented with a statement that summarises the research objectives. They
will be guided to answer the questions anonymously and to complete the survey within two
weeks. A reminder will be sent one week after the first email to the ones that have not responded
yet. To incentivize them, they will be offered a gift voucher as a thank you on completion.

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4.2. THE QUESTIONNAIRE DESIGN
Initially, the survey will be pretested by sending it to a small convenience sample to provide
suggestions on the developed scales in an effort to enhance face validity. In essence, these
inappropriate items will be adjusted or deleted. Further, CFA (Confirmatory Factor Analysis) is
conducted via AMOS 19 to measure the reliability as well as the convergent and discriminant
validity of the constructs. Cronbach’s alpha is used to gauge the internal consistency of the
constructs. Also T-value and AVE (Average Variance Extracted) are employed to test convergent
validity (Choi & La, 2013). The measurement model will be checked for having a good fit. The
structural model and path analysis will also be checked.
The questionnaire will consist of closed-ended questions which relate to all of the research
objectives. For the demographic part, they will be multiple-choice questions. For the rest, they will
be in Likert scale format ranging from 1 (strongly disagree) to 5 (strongly agree). The survey is
designed over a number of sections separated over different Web pages. The instrument will be
programmed so that respondent cannot progress to the next page unless they answer all
questions. Skipping questions will not be allowed to avoid missing data. The questionnaire
encompasses 5 parts, one for demographic questions and the others will be value-based questions
which are all written in a simple style free from ambiguity. Many of these questions will be pre-
coded.
In an attempt to use SERVQUAL for H01, a 10-item measurement scale will be adapted from
Gournaris et al (2003 cited in Mandhachitara & Poolthong, 2009). It is extended from SERVQUAL
specifically for the banking industry. It also measures value for money, employee competence,
product innovativeness and bank’s reliability. The five-Likert scale will be carried out for these
questions as well.
In addition, this paper will adapt two elements of Carroll’s CSR framework which deal with ethical
and philanthropic dimensions besides the CSR activity for economic perspective from TBL. The CSR
activities – CSR fit – are further grouped into seven broad groups for analysis: service orientation,
stakeholder engagement, Community development, Volunteer Staff, charitable donations,
philanthropy and environment. The respondents will be asked to grade these activities using the
five-Likert scale. Further, the five Likert scale will be deployed to measure the respondent’s
behavioural perceptions (trust and repeat patronage intention). Last part of the survey is to score
the reputation of the bank as socially responsible and last question to score whether that is
related to their behavioural perceptions.
5. DATA ANALYSIS
Data analysis involves a series of stages: Data validation and preparation, testing hypothesis,
conducting analysis and evaluating findings. These stages incorporate turning a set of raw
numbers to some knowledge to answer the research question.

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Hence, the first stage is to clean the data by looking for mistakes and errors in the entering
process, treating these pieces of data as missing. The data entry involves the input of coded data
into SPSS to manipulate this data and further to transform it into useful information. The
demographic variables are measured by categorical scale while others are measured at metric
scale using summated rating (five-Likert scale). Using summated scales result in significant
reliability since the assurance that the different questions are measuring dimensions of the same
construct (Hair et al, 2007).
This Likert scale is an interval rather than an ordinal scale. The justification is that the breaks
between points on such scales are equal in magnitude hence it can be treated as intervals (Hair et
al, 2007).
Further, these variables will be coded by assigning numbers to them so that they can be entered.
Dummy variable coding will be used for greater flexibility in data analysis by assigning 0 to one of
the categories to be dealt as a dummy. An error detection technique will also be deployed to
minimize errors in the data entry.
A null hypothesis concerns a population parameter not the sample statistic. Thus, inferential
statistics is used to estimate the characteristics of the population, on the basis of sample data.
Based on this sample, null hypothesis can be rejected or the alternative hypothesis can be
accepted (Hair et al, 2007).
After developing the hypotheses and selecting an acceptable level of statistical significance, the
next step is to test the hypotheses. The choice of techniques depends on the number of variables,
scales of measurement and other considerations (Hair et al, 2007).
To summarize and describe the data obtained about the demographic of respondents, a
descriptive statistic such as percentage is used.
A multivariate data analysis is employed by using SEM which is a covariance- structural equation
model that involves the estimation of interrelated dependence relationships (see Appendix). Thus,
SEM will be developed via AMOS to test H02, 03, 04. The dependent – endogenous – variables in
this case are: H02a) Trust and H02b) Repeat patronage intention as well as Reputation for H03,
whereby CSR fit is the independent – predicator – variable. The latent variable cannot be
measured directly but by one or more indicators. The mediating effects of reputation are also
investigated. Bivariate analysis is employed to test H01 by using t-test which is applicable with
interval data (Shiu, 2009).
Finally, having undertaken the descriptive and inferential statistics, the findings will be presented
and conclusions will be drawn from these findings.
6. LIMITATION
While this study undertakes a primary research presenting an interactive approach, it exposes a
limitation because the focus is on one bank only due to limited resources.

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TIMESCALE
Month Activity
January 2013 Handing out the research proposal to get guidance of the
establishment of the dissertation basis is in the right path.
February 2013 The literature review for relevant work. Designing the questionnaire
to later get the supervisor approval before testing it.
March 2013 Data analysis and comparison with literature from desk research
April 2013 Writing up of findings, and first draft
May 2013 Final draft
ACRONYMS
AVE Average Variance Extracted
CFA Confirmatory Factor Analysis
CSR Corporate Social Responsibility
FC Financial Crisis
GFC Global Financial Crisis
TBL Triple Bottom Line

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BIBLIOGRAPHY
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http://www.gbsense.com/2012/01/12/why-csr-12-quotes-to-help-build-your-argument/
Bennett, A. (2013) Only One In Five Think Banks Are Well Run, After Majority Backed Banks In 1983
[Accessed on 29 Dec 2013] http://www.huffingtonpost.co.uk/2013/09/10/banks-trust-levels-
_n_3898587.html
Blanpain, R., Bromwich, W., Rymkevich, O. & Senatori, I. (2011) Rethinking Corporate Governance:
From Shareholder Value to Stakeholder Value, Kluwer Law International
Bouvain, P., Baumann, C. & Lundmark, E. (2012) Corporate social responsibility in financial services
A comparison of Chinese and East Asian banks vis-a`-vis American banks, International Journal of
Bank Marketing, 31(6), 420-439
Blowfield, M. & Murray, A. (2008) Corporate Responsibility: A Critical Introduction, OUP Oxford
Carroll, A. & Shabana, K. (2010) The Business Case for Corporate Social Responsibility: A Review of
Concepts, Research and Practice, International Journal of Management Reviews, 12(1), 85-105
Choi, B. & La, S. (2012) The role of customer affection and trust in loyalty restoration after service
failure and recovery, The Service Industries Journal, 32(1), 105-125
Crane, A. & Matten, D. (2010) Business Ethics: Managing corporate citizenship and sustainability in
the age of globalization, OUP Oxford, 3ed
D'Anselmi, P. (2010) Values and Stakeholders in an Era of Social Responsibility: Cut-Throat
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readjusted
Fassin, Y. & Gosselin, D. (2011) The Collapse of a European Bank in the Financial Crisis: An Analysis
from Stakeholder and Ethical Perspectives, Journal of Business Ethics, 102(2), 169-191
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22 Jan, 2014] http://www.theguardian.com/commentisfree/2013/jun/17/co-operative-bank-bail-
in
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Sons
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Business School
Jensen, M. (2001) Value maximisation, stakeholder theory, and the corporate objective function,
European Financial Management, 7(3), 297-317

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Klára, P. (2011) The Impact of Recession on the Implementation of Corporate Social Responsibility
in Companies, Journal of Competitiveness, 1(2), 83-98
Lapavitsas, C. (2003) Social Foundations of Markets, Money and Credit, Routledge
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May, S. K., Cheney, G. & Roper, J. (2007) The Debate over Corporate Social Responsibility, Oxford
University Press
McDonald, L. & Lai, C. (2011) Impact of corporate social responsibility initiatives on Taiwanese
banking customers, International Journal of Bank Marketing, 29(1), 50-63
Perrini, F. (2005) Building a European Portrait of Corporate Social Responsibility Reporting,
European Management Journal, 23(6), 611-627
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Corporate Governance, 10(4), 365-374
Sen, S. & Bhattacharya, B. (2001) Does doing good always lead to doing better? Consumer
reactions to corporate social responsibility, Journal of Marketing Research, 38(2), 225-243
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Up To The General Election [Accessed 31 Dec 2013]
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Greening Initiatives of Leading Global Brands, University of Massachusetts Lowell, Competition
Forum Vol. 7(2)

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APPENDIX
SEM model:
CSR
fit
Trust
Reputation
Repeate
patronage
intention
H03