Cogent Business & Management

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Impact of corporate social responsibility on customer

loyalty: Evidence from the Vietnamese jewellery industry

Ngoc Tu Tran

To cite this article: Ngoc Tu Tran (2022) Impact of corporate social responsibility on customer
loyalty: Evidence from the Vietnamese jewellery industry, Cogent Business & Management, 9:1,
2025675, DOI: 10.1080/23311975.2022.2025675

To link to this article: https://doi.org/10.1080/23311975.2022.2025675

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Published online: 28 Jan 2022.

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Tran, Cogent Business & Management (2022), 9: 2025675
https://doi.org/10.1080/23311975.2022.2025675

MANAGEMENT | RESEARCH ARTICLE

Impact of corporate social responsibility on
customer loyalty: Evidence from the Vietnamese
jewellery industry
Received 31 August 2021 Ngoc Tu Tran*
Accepted 2 January 2022
Abstract: Corporate social responsibility takes an increasingly important role for
*Corresponding author: Ngoc Tu Tran,
Faculty of Business Administration, businesses and receives the attention of many people. The relationship between
Saigon University, 273 An Duong Corporate social responsibility and customer loyalty has been tested in many busi­
Vuong, Ward 3, Dist.5, Chi Minh City
700000, Vietnam ness fields. So, the study aims to determine and estimate the influence of corporate
E-mail: [email protected]
social responsibility on customer loyalty in the jewellery industry. To achieve this
Reviewing editor: objective, the study uses AMOS software that supports confirmatory factor analysis
Usama Awan, Lappeenrannan
Teknillinen Korkeakoulu: LUT and structural equation modelling (SEM) to clarify whether or how Corporate social
University, FINLAND
responsibility impacts customer loyalty. The inputs to the analyses were obtained
Additional information is available at through answers from 300 respondents, which completed the survey questionnaire
the end of the article
with a total of 22 items is utilised to collect data from customers of top jewellery
companies in Vietnam. The research results emphasize the corporate social
responsibility is not only useful for jewellery companies but also enhances the
customers’ perception that relates to some factors trust, satisfaction, and loyalty.

Subjects: Business, Management and Accounting; Corporate Social Responsibility;

Administration and Management

Keywords: Corporate social responsibility (CSR); customer loyalty; jewellery industry;

Vietnam
JEL Classifications: M14; M31

ABOUT THE AUTHOR PUBLIC INTEREST STATEMENT

Ngoc Tu TRAN Corporate social responsibility (CSR) is the key to
Tran Ngoc Tu is currently a lecturer of the Faculty a company’s success. CSR is the goal of most
of Business Administration, Saigon University, organisations to provide not only benefits for the
Vietnam. She is interested in researching the community but also value for the enterprise. CSR
business administration, marketing, and so on. application studies in the hospitality, manufac­
turing, banking, insurance, and transportation
industries exist. CSR takes an increasingly impor­
tant role for businesses and receives the atten­
tion of many people. The relationship between
CSR and customer loyalty has been tested in
many business fields. So, the study aims to
determine and estimate the influence of corpo­
rate social responsibility on customer loyalty in
Ngoc Tu Tran Vietnamese jewellery industry. To achieve that,
the study uses AMOS software that supports
confirmatory factor analysis and structural
equation modelling (SEM) to clarify whether or
how CSR impacts customer loyalty.

© 2022 The Author(s). This open access article is distributed under a Creative Commons
Attribution (CC-BY) 4.0 license.

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1. Introduction
Corporate social responsibility (CSR) is the key to a company’s success (Maqbool & Zameer, 2018;
Paek et al., 2013) and has concerned in academic research and management practice (Youn, Lee
and Lee, 2018; Boulouta & Pitelis, 2014; Tingchi Liu et al., 2014). Thus, CSR investment is
a competitive advantage rather than an expense, a limitation, or an activity separate from the
business operation (El-Garaihy et al., 2014; Porter & Kramer, 2006). Large companies invest in CSR
(Luo & Bhattacharya, 2006) mainly because such an investment is considered as a competitive
advantage and provides benefits to companies such as improving their reputation, reducing
advertising and operating costs, and attracting talents and investors (Fu et al., 2014; Li et al.,
2015). Hence, CSR provides various advantages to companies, such as enhancing brand loyalty,
trust, and positive attitudes towards a brand and countering negative publicity (McWilliams &
Siegel, 2001; Sen, 2006; Sen & Bhattacharya, 2001).

Consumers consider a company’s CSR image in their purchase and consumption decisions (S.
Choi & Ng, 2011). Although this statement does not apply to all product categories or industry
segments (Peloza & Shang, 2011), Luo and Bhattacharya (2006) notes that in the current compe­
titive service market, CSR represents a high-level concept of strategic importance to many com­
panies. Bhattacharya et al. (2009) identified the positive benefits of CSR programme
implementation for consumers, such as enhanced awareness–beliefs, attitudes and loyalty during
a period of financial crisis. Even though, Foreh and Grier and Forehand (2003) claim that
a company’s profit-driven CSR activities can damage the company’s reputation, espeically from
the customers’ perception. Some studies still confirmed that CSR improves a company’s reputation
and financial performance and society. In detail, recent reviews of theories related to CSR showed
that well-executed CSR initiatives can improve consumer loyalty (Asatryan, 2012; Yusof et al.,
2015). Business strategy creation bases on the concept of CSR is an important opportunity for
differentiation, as it considers the interests of different stakeholders and is dedicated to the
achievement of social goals and environmental protection (Stanisavljevíc, 2017). It can be clarified
that many companies are realizing the importance of CSR and its impact on social benefits and
increasing customer loyalty, bringing about operational efficiency for the business itself. The rating
of CSR is quite necessary and set in line with the business performance. So, some companies add
CSR categories to their disclosed reports to achieve CSR ratings to announce their CSR scores. This
rating system is monitored by independent supervisory bodies, such as the Stock Exchange of
Malaysia (Lim, 2011). This redefines CSR’s relationship with existing business and management.

However, CSR activities become harmful when customers perceive an exaggeration compared
with reality to promote business. Customer attitude towards CSR is complex, and customers may
react negatively to CSR activities if viewed as a company’s primary motive for profit. It claims that
the perception of CSR hype is a way to discourage customers from buying products related to CSR
activities. Similarly, Foreh & Grier and Forehand (2003) claims that a company’s CSR activities can
damage a company’s reputation when the company just focuses on their own profits. As a result,
determining whether the CSR theory is truly an incentive for businesses to consider implementing
it in order to ensure the development of society or simplify a business tool to generate profits.
Recently, Osakwe & Yusuf (2020) suggested that customers are likely to support companies
through their positive actions, regardless of the motivation behind CSR commitments.

CSR is the goal of most organisations to provide not only benefits for the community but also
value for the enterprise. CSR application studies in the hospitality, manufacturing, banking, insur­
ance and transportation industries exist. However, within the scope of this research, empirical
studies have yet to examine the impact of CSR on consumer loyalty in the jewellery industry. In
Vietnam, CSR has become a considerable issue requiring attention from the government, society,
and businesses. Therefore, the primary objective of this study is to examine the influence of CSR on
customer loyalty in the jewellery industry in Vietnam. To achieve this objective, this study aims to
answer the question, “How does CSR affect customer loyalty in the Vietnamese jewellery
industry?”.

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After providing the research gap, the paper is structured as follows. First section mentions about
the literature review of basic concept on CSR and its relation to the stakeholder theory. Besides,
this section discusses about other factors to create the hypothesis development. Then, the author
outlines the research procedures, includes samples, and proposed model. Based on research
method (SEM) to estimate the effect of CSR on customer loyalty in Vietnamese jewellery industry
and discuss the results. Final section is the conclusion of CSR’s role in being an effective strategy to
secure customer loyalty. In the last section, the author points out the research’s limitation and
proposed the future study.

2. Literature review and hypothesis development

2.1. Literature review

2.1.1. CSR
Stakeholder theory emphasizes the relationships between a business and groups that are among
related parties, such as customers, suppliers, employees, communities, banks, investors, and
managers in activities that make up their benefits (Freeman, 1984; Walsh, 2005). Based on that
theory, Ivanović-Đukić (2011), Srbljinović (2012), Weimer & Pape (1999) claim that CSR supports
the company to cover its activities that focused on the interests of all stakeholders. Therefore,
Davis (1960) asserted that certain socially responsible business decisions can be justified through
a long, complicated process of reasoning as having the potential to reap long-term economic gains
for the firm, gaining benefits in return for its socially responsible outlook. In addition, McGuire
(1963) defines CSR as a company’s economic obligation, law enforcement, and other specific
responsibilities towards society. Davis (1975) asserts “Social responsibility is the obligation of
decision-makers to take actions which protect and improve the welfare of society along with
their interests”.

Obviously, CSR is enterprises’ commitment to business ethics and contribution to sustainable

economic development and the improvement of the quality of life of their employees and their
families, local communities, and society. Carroll (1979, 1991) generalised CSR into four groups,
namely, economic, legal, ethical, and philanthropic responsibility. In another aspect, Johnson
(1971) presented a second view of CSR, stating that “Social responsibility states that businesses
carry out social programs to add profits to their organization”. In this view, social responsibility is
perceived as long-term profit maximisation.

Generally, CSR is understood as policies and practices employed by companies to ensure the
consideration and protection of society and stakeholders in their strategies and operations.

2.1.2. Trust
Trust signifies reliance based on the willingness of partners to exchange from the confidence
between them (Morgan & Hunt, 1994). The review identified trust as a prerequisite for the creation
and maintenance of long-term relationships between companies and consumers that are inter­
ested in the direct effects of trust and satisfaction as components of customer loyalty (Morgan &
Hunt, 1994), especially in the service market context. The present study.

Trust plays a significant role in service organisations’ management of relational exchanges

(Grönroos, 1984; Gummesson, 1994). Trust from customers is crucial and minimises perceived risks
of service outcomes (Berry, 2000; Darby & Karni, 1973; Laroche et al., 2004). According to Patrick
(2002), customer trust manifests as thoughts, feelings, emotions, or behaviours when customers
believe that a supplier can be trusted to behave in their best interest when they relinquish direct
control. During the last few decades, the idea of “trust” was recognised as a significant mediator in
the relationship between client satisfaction and loyalty (Roland & Kunz, 2010).

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2.1.3. Customer satisfaction

Bachelet (1995) and Zeithaml and Bitner (2000) also argued that the concept of customer
satisfaction is an assessment measured against a product or service.

Kotler (2003) defined customer satisfaction as the level of an individual’s sensory state from
comparing results obtained from the consumption of a product/service meeting the individual’s
expectations. Customer satisfaction involves the comparison of expectations before and after the
purchase of a product or service, whereas customer expectations are formed from shopping
experiences, friends and colleagues and seller and competitor information. Moreover, Tran Phi
(2018) mentioned understanding customer satisfaction levels, enterprises can make decisions
about products and services to change their activities to improve customer satisfaction.
Measuring customer satisfaction can help enterprises engage in advanced competition with their
rivals to satisfy customers’ needs.

2.1.4. Word of mouth (WOM)

WOM is defined as a form of informal trade through the person-to-person dissemination of
information about a brand, product, organisation or service in noncommercial communication
(Harrison-Walker, 2001). According to Bristor (1990), customers can obtain information about
a product or service from previous customers based on the WOM process. Receivers (consumers)
consider this communication form more significant in influencing their decisions than other forms
of communication (Murray, 1991). In addition, Kotler (2000) emphasised that WOM is a low-cost
marketing tool.

WOM can be considered as cultural exchange, the continuous flow of accurate information and
effective communication or dialogue between two individuals. Haywood (1989) considered WOM
as a type of formal conversation. Despite measuring WOM, some researchers agree that WOM is
merely an informal and non-commercial type of communication that cannot be authenticated or
controlled (Paridon, 2008).

2.1.5. Customer loyalty

In service or product case studies, customer loyalty is understood as loyalty to a product or service
provider as well as to a supplier’s brand. Oliver (1997) suggested that loyalty stages represent
a process highlighting the relationship between attitudes and behaviours. Firstly, Oliver stated that
loyalty is developed from three components, namely, cognitive, affective, and conative compo­
nents. The three stages are consistent with the general definition of attitude (Bagozzi, 1978;
Breckler, 1984). Subsequently, researchers vertically developed four stages of the cognitive ver­
ification of loyalty theory, sentiments, trends and behaviours (Evanschitzky & Wunderlich, 2006;
Yuksel et al., 2010).

Customer loyalty indicates customers’ intention or inclination to repurchase goods or services

from the same organisation (Edvardsson et al., 2000). Businesses are interested in customer
loyalty factors leading to increased profits. Thus, building a customer loyalty foundation became
a major goal for many companies and marketing programmes (Kotler et al., 2007).

2.2. Empirical studies and hypothesis development

Empirical studies revealed the positive relationship between CSR and customer loyalty. Andrea
et al. (2011) determined that CSR awareness positively affects customer loyalty. In addition, Mar
Garcia-De et al. (2005) examined the influence of customer perception of CSR on customer loyalty
and found that CSR has a direct influence on the total value of the received service, which in turn
has a direct effect on loyalty. Especially, the service industry has a close relationship with the
environment; thus, the role of CSR is considered to be an important factor. For example, the
hospitality industry can significantly influence natural and social environments and local commu­
nities (Chung & Parker, 2010). Currently, some hotels are implementing CSR-related activities to
demonstrate their commitment to their customers (Danuta, 2012; Li et al., 2015), as such activities

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contribute to social development that attracts new customers. Therefore, CSR activities can serve
as an effective brand for companies (Raman et al., 2012), especially in the tourism industry, which
is moving towards sustainability. Meanwhile, Balqiah et al. (2011) evaluated the relationship
between CSR and customer loyalty and revealed that CSR activities are cost-consuming activities
and can create a reputation for a company. In the long term, such activities can create customer
loyalty, thereby contributing to the business financially. Nguyen Van Anh and Nguyen Thi Phuong
Thao (2021) focused on the relationship between CSR and customer loyalty that proves the factors
of social responsibility, customer engagement, trust, and satisfaction have interdependent and
positive effects on customer loyalty.

2.2.1. Relationship between CSR and trust

Shared corporate and consumer values are incredibly influential in consumer trust (Morgan & Hunt,
1994). According to Brown and Dacin (1997) and Martinez and del Bosque (2013), CSR-related
initiatives can provide helpful information for enhancing overall trust in organisations. Pivato et al.
(2008) pointed out that trust is the primary outcome of CSR activities and results directly from
certain CSR practices. Hansen et al. (2011) revealed that trust plays a mediating role in linking CSR
to employee attitudes and behaviours (Yu and Choi, 2014). Thus, in this relationship, trust is
consistent with a firm’s expectations owing to its reputation (Ganesan, 1994). This phenomenon
puts CSR at the forefront based on the extent of the CSR activities of a company. Such activities can
enhance trust in a company and its image (Servera-France and Arteaga-Moreno, 2015).

Andrea et al. (2011) proposed that perceived CSR positively impacts trust in a company.
Moreover, Salmones, Crespo, Bosque et al. (2005b) demonstrated that consumers’ perception of
a company’s CSR activities could directly affect their beliefs about the company’s products and
services. When a company has social responsibility commitments, customers will consider and
evaluate the implementation of such commitments, which will directly affect customer trust.
Hosmer (1994) argued that by incorporating principles of responsibility and ethics into corporate
policies, decision-making strategies can strengthen shareholders’ confidence in a company, includ­
ing that of customers.

Hypothesis 1: CSR positively impacts trust in the jewellery industry in Vietnam.

2.2.2. Relationship between CSR and customer satisfaction

Numerous studies found that some customers are loyal to and willing to pay high prices for the
products and services of socially responsible companies (McWilliams & Siegel, 2001). Luo and
Bhattacharya (2006) identified CSR as the driving force behind satisfaction in large companies with
increasing market value (Rhou et al., 2016). CSR can influence customer satisfaction (He & Li, 2011;
Luo & Bhattacharya, 2006; Martínez & Del Bosque, 2013). Three attitudes can explain the influence
of CSR on satisfaction (Luo & Bhattacharya, 2006). Firstly, perceived value has a significant
influence on satisfaction (Athanassopoulos, 2000). Secondly, social and organisational identity
theory indicates that CSR initiatives cause a high level of consumer identity as a form of corporate
identity (Bhattacharya & Sen, 2003) that companies create to satisfy customers’ needs (Luo &
Bhattacharya, 2006). Thirdly, companies must have a balanced attitude towards the interests of all
stakeholders to manage their needs (El-Garaihy et al., 2014). In details, according to Rashid et al.
(2013), CSR refers to activities that generate benefits for customers. Such activities include pro­
duct/service quality assurance, affordable prices, complaint distribution, rights to privacy, and
other concerns, such as charitable activities, environmental protection activities, and CSR encom­
passing strategies for improving customer satisfaction.

Hypothesis 2: CSR positively affects customer satisfaction in the jewellery industry in Vietnam.

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2.2.3. Relationship between CSR and WOM

Social identity theory was first introduced by Bhattacharya and Sen (2003), who asserted that
customers identify with a company to satisfy their need for self-identification. A company that acts
socially responsible will attract recognisable customers (Deng & Xu, 2017). Once customers identify
with a company in the buying process, they exhibit behaviours such as loyalty, positive WOM and
civic behaviours (Ahearne et al., 2005).

Positive WOM involves customers’ satisfaction with and recommendation of goods and services
through informal networks and personal communication (Bansal & Voyer, 2000). Bhattacharya and
Sen (2003) concluded that one of the primary behavioural outcomes of CSR activities is consumers’
willingness to positively convey the image and reputation of companies that often engage in
socially responsible activities.

Several studies examined the impact of interactive CSR on customer WOM. Du et al. (2007)
found that CSR positively impacts customer trust, which is linked with advocacy behaviours, such
as positive WOM. Mandhachitara and Poolthong (2011) demonstrated that CSR is linked with bank
customer loyalty. Thus, CSR activities produce immediate results that are the positive impact of
WOM on customer perceptions and attitudes.

Hypothesis 3: CSR has a positive impact on WOM in the jewellery industry in Vietnam.

2.2.4. Relationship between CSR and customer loyalty

When customers are satisfied with their chosen brands, they will gradually repurchase services and
products and eventually become loyal customers (Martínez and Bosque, 2013). Moreover, CSR can
affect loyalty (Maignan & Ferrell, 2001; Sureshchandar et al., 2002). Several studies revealed the
positive impact of CSR on customer retention and loyalty (Aurier & N’goala, 2010; Leverin & Liljander,
2006). Apart from aspects related to strategic commercial prospects, CSR can affect loyalty directly or
indirectly (De Los Salmones et al., 2005; B. Choi & La, 2013; Shin & Thai, 2014. Furthermore, signalling
theory suggests that accountability can influence customers to perceive a company as trustworthy
through its fairness and responsibility signals (Bustamante, 2018).

In addition, Mar Garcia et al. (2005) observed the influence of customers’ perception of CSR
on customer loyalty and showed that CSR directly influences the total value of received services.
Furthermore, Andrea et al. (2011) and Balqiah et al. (2011) supported the argument of the
existence of a positive correlation between CSR and customer loyalty.

Hypothesis 4: CSR positively impacts customer loyalty in the jewellery industry in Vietnam.

2.2.5. Relationship between trust and WOM

The establishment of a business-to-customer relationship can help customers and businesses
connect with comfort and trust (Gwinner, Gremler and Bitner, 1998). This relationship can increase
customer referrals and positive WOM. Satisfaction and trust have a strong relationship but are
conceptually different and thus have different effects on customer retention (Szymanski and
Henard, 2001). The establishment of a relationship of mutual trust between a business and
customer can increase the parties’ commitment and create real customers, that is, loyalty
(Ranaweera and Prabhu, 2003). Thus, a high level of customer trust can help convey a positive
WOM effect.

Consumer trust plays a central role in helping consumers make purchasing decisions in the
growing e-commerce landscape (Gefen, 2000; Jones & Leonard, 2008; McKnight et al., 2002). An
increasing level of trust is likely to encourage consumer exploration and influence intention to

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purchase products from a supplier (Hajli, 2013; Gefen, 2000). In addition, trust can positively affect
transfer from a supplier to a customer through new product development performance (Zhao &
Lavin, 2012). Trust can help consumers overcome the perceived risks of making a purchase. Thus,
trust is a powerful motivation for suppliers to interact with consumers to promote their goods.

In addition, several studies quantified the influence of WOM and found that WOM is nine
times more effective than advertising in converting negative sentiments into positive attitudes
(Day, 1971). Therefore, when consumers have confidence in a business, the business brand will
spread.

Hypothesis 5: Trust positively affects WOM in the jewellery industry in Vietnam.

2.2.6. Relationship between trust and customer satisfaction

Chiou and Pan (2009) argued that trust precedes satisfaction. Thus, trust is a solid foundation for
increasing customer satisfaction and loyalty (Schoorman, Mayer and Davis, 2007). According to
Schoorman et al. (2007), trust reflects a customer’s willingness to purchase a provider’s services/
products based on his/her positive expectations of the quality of the products/services provided.
Contacting customers in good faith to build trust is important for organisations.

Hence, trust in an organisation generates a positive response from the organisation, which
can increase customer satisfaction. For instance, customers’ trust in banks is the basis for the
continuous use of banking services, because trust encourages customers to build long-term
relationships with banks (Ofori et al., 2018). The more a bank can win customers’ trust, the more
satisfied the customers, which will reduce the probability of customers switching to other banks.

Hypothesis 6: Trust positively influences customer satisfaction in the jewellery industry in Vietnam.

2.2.7. Relationship between trust and customer loyalty

Previous studies identified trust as a predictor of customer loyalty (Gul, 2014; Bibb & Kourdi, 2007;
Hsu, 2008; Liang and Wong, 2004; Chaudhuri & Holbrook, 2001). The trust enhances customer
loyalty between the customer and service provider (Kassim & Abdullah, 2008; Kishada & Wahab,
2013). A customer’s loyalty to a product or service indicates the customer’s trust in the company
(Gul, 2014). So, previous studies identified trust as a predictor of customer loyalty (Gul, 2014; Bibb
& Kourdi, 2007; Hsu, 2008; Liang and Wong, 2004; Chaudhuri & Holbrook, 2001).

Consuming a product or service, product/service failure can lead to the breakdown of the
customer’s confidence and loyalty (B. Choi & La, 2013). Trust plays an essential role in developing
customer loyalty (Kaur et al., 2013; Zeithaml et al., 1996). Morgan and Hunt (1994) argued that
trust is necessary for creating and maintaining long-term relationships between businesses and
consumers, especially in the service market context. In details, service quality affects trust and
behavioural outcomes, and trust significantly affects consumer loyalty (Vlachos et al., 2009;
Nguyen et al. (2008). For instance, a satisfied customer will be loyal if a high level of trust exists
(Dimitriadis et al., 2011).

Reichheld and Schefer (2000) concluded that companies must first gain customers’ trust
before gaining their loyalty. In the service industry, trust is the key to building relationships.
Hikkerova (2011) and Andrea et al. (2011) emphasised the role of trust in building customer
loyalty.

Hypothesis 7: Trust has a positive impact on customer loyalty in the jewellery industry in Vietnam.

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2.2.8. Relationship between customer satisfaction and WOM

Studies found customer satisfaction to be the leading factor determining loyalty (Anderson et al.,
1994; Rust & Zahorik, 1993). Similarly, customer satisfaction was identified as a crucial factor
generating positive WOM (File et al., 1994; Yi, 1990). Based on these views, the following hypoth­
esis (Hypothesis 8) is proposed: Customer satisfaction has a positive impact on WOM in the
jewellery industry in Vietnam.

2.2.9. Relationship between customer satisfaction and customer loyalty

Customer satisfaction and loyalty are positively related to a firm’s profitability and market share
(Anderson et al., 1994; Flint et al., 2011; Reichheld, 1993). B. Choi and La (2013) and Martínez and
Del Bosque (2013) suggested that customer satisfaction will contribute to loyalty, positive WOM
and a positive perception of CSR. Several studies, such as Liljander and Roos (2002) and Aldlaigan
and Buttle (2005), determined that loyal customers will exhibit a more favorable attitude towards
a company’s reputation than its competitors. Thus, a strong relationship exists between customer
loyalty and satisfaction (Hallowell, 1996; Hur et al., 2013). Customer satisfaction is the core of
loyalty (Bloemer et al., 1998; Shin and Thai, 2014). Moreover, satisfaction has a positive effect on
consumer loyalty (J. Lee et al., 2001; Andrea et al., 2011; Fang-Yuan et al., 2012). The relationship
between satisfaction and loyalty was examined in different fields (Homburg & Giering, 2001; Lam
et al., 2004; J. Lee et al., 2001). K-Y. Lee et al. (2007) suggested that a high level of satisfaction can
lead to increased committed associations between companies and consumers.

Hypothesis 9: Satisfaction positively impacts customer loyalty in the jewellery industry in Vietnam.

2.2.10. Relationship between WOM and customer loyalty

The influence of WOM on consumers’ decision to use services is stronger than its influence on
consumers’ decision to purchase physical products (Bristor, 1990; Murray & Schlacter, 1990).
Bansal and Voyer (2000) argued that this difference arises from the intangibility of services,
which can create difficulties in making prepurchase comparisons. Moreover, the extent of the
influence of WOM on consumer decisions varies across services (Still et al., 1984).

Hypothesis 10: WOM has a positive impact on customer loyalty in the jewellery industry in
Vietnam.

3. Methods

3.1. Sample
Jewellery, together with watches, makes up a segment of the market known as “hard luxury,” as
opposed to fashion, accessories, and cosmetics, which are comprised of “soft” materials. Especially,
gold jewellery remains the most popular, accounting for roughly 70 percent to 80 percent of the
income structure of jewellery firms in Vietnam. In 2021, the Luxury Watches & Jewellery segment will
generate the US $224 million in revenue. The market is predicted to expand by 8.13 percent
every year (2021–2025). According to experts in the jewellery industry, Vietnamese jewellery market
turnover will be around USD 126 billion in 2023, more than doubling from 2013 and growing at
a Compounded Annual Growth Rate of around 6% from 2019 to 2023. However, the jewellery market
in Vietnam is highly fragmented, with minor retailers accounting for roughly 73 percent of the market.
Only 20% of the remaining shares belong to big companies like Phu Nhuan Jewellery Joint Stock
Company (PNJ), Saigon Gemstone Jewellery Limited Company (SJC), Bao Tin Minh Chau Gemstone
Jewellery Company, Doji Group . . . The data of local retail stores is difficult to determine due to the
highly fragmented market. Because of the fierce pricing rivalry, big brands’ business activities have
been hampered. However, Circular 22/2013/TTBKHCN on ensuring the quality of jewellery sold has

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progressively allowed major businesses to take market share from small businesses. Since Circular 22
came into effect, PNJ and SJC’s jewellery retail revenue has soared.

The information collection process was conducted from November 2020 to May 2021.
A questionnaire was sent to 350 individuals who bought jewellery and accessories from are
reputable jewellery enterprises, such as Saigon Jewellery Company Limited (SJC), Phu Nhuan
Jewellery (PNJ), the DOJI Gold & Gems Group (DOJI), Diamond World and Vinh Cara-Diamond
Jewellery, in the Vietnamese jewellery industry. There are 340 of them were returned (with 97,1%)
(Table 1). However, the number of collected valid questionnaires was 300, accounting for 85.7% of
the total number of distributed questionnaires. As a rule of thumb, researchers suggest a relatively
large sample size (n > 200) for the SEM (J.F.J. Hair et al., 1998).

3.2. Proposed model

Based on a combination of different studies with a number of research models on the effect of CSR
on customer loyalty, the research model was proposed, which is illustrated in Figure 1.

3.3. Research methods and procedures

The research process to determine the effect of CSR on customer loyalty in the jewellery industry is
structural equation modelling (SEM) that was used in this study to analyse the proposed model
because it is a multivariate data analysis technique commonly used in the social sciences
(González et al., 20092008). AMOS, a powerful statistical tool for SEM (Nachtigall et al., 2003),
that was employed to examine the proposed model. In the structural model, the relationships
between the constructs were examined, and the coefficients were estimated to test the
hypotheses.

4. Results

4.1. Descriptive statistics

The table in Appendix 2 presents the demographic information of the 300 respondents. According
to this table, 184 customers were female (61.3%), and the rest were male. According to data from

Figure 1. Proposed model.

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the World Gold Council, in 2020–2021, 57% of jewellery shoppers were female, and gold jewellery
consumption was high. Thus, data match between the poll and reality was observed.

Moreover, the customers between the ages of 25 and 34 years accounted for the highest
proportion (51.7%), followed by those between the ages of 35 and 44 years (21%) and those
between the ages of 18 and 24 years (17.3%). The second lowest proportion was the customers
between the ages of 45 and 60 years (8.3%) (Appendix 2).

The number of customers with a vocational education or training centre qualification was 122,
accounting for 40.7% of the total number of customers, followed by the customers with an over
undergraduate qualification, which were 121, accounting for 40.3% of the total number of custo­
mers (Appendix 2).

The sample distribution by occupation is explained as follows. The customers in the business
group accounted for the highest proportion, which was 46.3% of the total number of surveyed
customers. In addition, the students accounted for the lowest proportion, which was 4.0% of the
total number of surveyed customers (Appendix 2).

4.2. Survey instrument

As discussed in the previous section, the survey items were adopted from the relevant
literature and grouped into 22 observed variables for measuring the five constructs in the
research model (Appendix 1). To ensure the clarity of each survey item, the author conducts
a pilot test on the survey questionnaire. In addition, the expressions of the survey items were
adjusted to fit the context of the jewellry industry under the test from experts. The survey
items were rated on a five-point Likert scale ranging from 1 (“strongly disagree”) to 5
(“strongly agree”).

4.2.1 Evaluation of scales with the cronbach’s alpha reliability coefficient

The scales were analysed using the Cronbach’s alpha reliability coefficient. Variables with a total
correlation coefficient (item–total correlation) of less than 0.3 were excluded, and the scales were
accepted for the three-step analysis if their Cronbach’s alpha coefficient was 0.6 or higher
(Nunnally and Burnstein, 1994).

Summary of the reliability of the scales: After the reliability of the scales was determined, the
scales were used to measure aspects related to CSR, WOM, trust, customer satisfaction and
customer loyalty. A summary of the scales used for the subsequent analysis is presented in
Table 2.

Table 3 shows that a reliability analysis using Cronbach’s alpha was conducted on the survey
data. The Cronbach’s alpha values of the five constructs were 0.924, 0.939, 0.957, 0.885 and 0.911.
This result confirmed the internal consistency of the constructs, as all the Cronbach’s alpha values
were over 0.7 (Jr. J. F. Hair et al., 2010).

Table 1. Customer survey results

Criteria Number of survey Percentage
questionnaires
Number of forms distributed 350 100%
Number of forms collected 340 97.1%
Number of valid forms 300 85.7%

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Table 2. Summary of scales

No. Contruct Number of Cronbach’s Evaluate
Observations Alpha
1 CSR (CSR) 5 0.924 Satisfactory
2 WOM (WOM) 5 0.939 Satisfactory
3 Trust (NT) 4 0.957 Satisfactory
4 Customer 4 0.885 Satisfactory
satisfaction (HL)
5 Customer loyalty 4 0.911 Satisfactory
(TT)

Table 3. KMO and Bartlett’s test of sphericity

KMO measure of sampling adequacy .900
Bartlett’s test of sphericity Approx. Chi-square 6464.271
df 231
Sig. .000

Table 4. Model fit summary

Model RMSR GFI AGFI PGFI
Default model .034 .889 .853 .671
Saturated model .000 1.000
Independence .360 .161 .081 .147
model

Table 5. AVE
No. AVE
1 TT 0.694
2 HL 0.660
3 CSR 0.708
4 WOM 0.738
5 NT 0.859

Because the index RMR equals 0,000 which is less than 0.05, it is confirmed that the model
is appropriate (Table 4).Moreover, the average variance extracted (AVE) is higher than 0.5
which indicates the adequate convergence (Hair et al. 2010). Table 5 shows that all AVE
values figured for each construct are both larger 0.5, it means that there is an adequate
convergence.

4.2.2 Evaluation of scales with exploratory factor analysis (EFA)

After the Cronbach’s alpha reliability test was performed, EFA was conducted on the scales.
However, before EFA was conducted, considering whether the data are suitable for the factor
analysis method by performing Bartlett’s test of sphericity was necessary. Bartlett’s test of
sphericity tests the null hypothesis, that is, “H0: The variables in the population correlation matrix
are uncorrelated”. If this hypothesis is not rejected, then factor analysis is likely unsuitable.

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The method of extracting the main components (principal components) and performing Varimax
rotation to simplify the interpretation of the variables and factors was used in this study. The results of
Bartlett’s test of sphericity are presented in Table 3. The sig. = 0.000 result allowed the rejection of the
hypothesis stating that the variables are not correlated with one other in the population, and KMO
index = 0.900 > 0.5; thus, the analytical method factor could be used for the data analysis.

According to Total variance explained (Appendix 3), with five groups of factors drawn, 74.67% of
the data variability can be explained, which exceeds the acceptable threshold for forming new
factors (50%). Variables can be grouped by factor by assessing the sample matrix. In each row of
each variable, if the factor loading of the attributes is the largest for any factor and satisfies the
condition of > 0.4, then it will belong to that factor. Thus, the variables in the row with the largest
load factor of less than 0.4 were excluded, as they had no measurement significance for any factor
(Appendix 4: Rotated component matrix).

4.3 CFA
As shown in Figure 2, to assess the overall model fit without being affected by the sample size,
alternative standalone fit indices that are less sensitive to sample size were used. According to
Jr. J. F. Hair et al. (2010), such indices include the GOF index (GFI), adjusted GFI (AGFI), comparative

Figure 2. Results of model fit

assessment through CFA.

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Figure 3. Hypothesis testing.

fit index (CFI) and the root mean square error of approximation (RMSEA), which must satisfy various
conditions for a good model fit. Specifically, the GFI should be close to 0.90, the AGFI should be more
than 0.80, the CFI should be more than 0.9, the RMSR should be less than 0.05 and the RMSEA should
be less than 0.10 (Jr. J. F. Hair et al., 2010).

The validity of the structural model was examined, with acceptable values for the GOF indices,
and the structural relationship parameters were investigated. The examination of the structural
relationships involved the investigation of the standardised regression weights and the assess­
ment of the explained variance in the main dependent variable (Jr. J. F. Hair et al., 2010). The GOF
values (χ2 = 480.679, p < 0.000, df = 192, χ2/df = 2.504, TLI = 0.946, CFI = 0.955, RMSEA = 0.071)
indicated that the structural model fit the data well.

Carmines and McIver (1981) stated that the relative chi-square of an acceptable model should
be within the range of 2:1 or 3:1. However, Kline (1998) argued that 3 or less is acceptable. Some
researchers accepted a value as high as 5 to consider a model adequately fit (Schumacker &
Lomax, 2004). Besides, according to Jr. J. F. Hair et al. (2010), the RMSEA should be less than 0.10.

The results showed that the chi-square/df = 2.504 ≤ 3, and the RMSEA = 0.071 < 0.1. Thus, the
model was suitable.

4.4 SEM and hypotheses

After the compatibility test results of the entire model were obtained, SEM was implemented for
the entire model. Thus, the model presented for analysis was completely satisfactory, with the
following results (Figure 3):

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+ Chi-square/df = 2.277 ≤ 3

+ GFI = 0.889, TLI = 0.954 and CFI = 0.962

+ RMSEA = 0.065 < 0.1

As the RMSR index was 0.000, which is less than 0.05, the model was confirmed to be appro­
priate. Moreover, the AVE is higher than 0.5, which indicated adequate convergence (Jr. J. F. Hair
et al., 2010). Table 5 shows that the AVE value for each construct is larger 0.5, which indicated
adequate convergence.

4.5. * Hypothesis testing

After the appropriate test model was confirmed, the results of the hypothesis testing are pre­
sented in Tables 6 and 7.

According to Table 8, the following was observed:

- CSR in the jewellery industry had a positive impact on customer trust, with an estimated impact
of 0.503.

- CSR in the jewellery industry had a positive impact on customer satisfaction, with an estimated
impact of 0.211.

- CSR in the jewellery industry had a positive impact on WOM, with an estimated impact of 0.308.

- CSR in the jewellery industry had a positive impact on customer loyalty, with an estimated
impact of 0.296.

- Customer trust in the jewellery industry had a positive impact on customer satisfaction, with an
estimated impact of 0.480.

- Customer trust in the jewellery industry had a positive impact on WOM, with an estimated
impact of 0.417.

- Customer trust in the jewellery industry had a positive impact on customer loyalty, with an
estimated impact of 0.355.

- Customer satisfaction in the jewellery industry had a positive impact on WOM, with an
estimated impact of 0.200.

- Customer satisfaction affected customer loyalty, with an estimated impact of 0.157.

This study determined that CSR significantly influenced customers’ trust, satisfaction, and loy­
alty. Various jewellery product providers in the Vietnamese market have a highly competitive
market share, quality products and customer policies. Maintaining customer loyalty is difficult
and challenging for any company. Hence, jewellery firms should implement and invest in CSR
activities, as such practices can effectively increase customer satisfaction and trust. Besides, CSR
activities can create not only benefits for communities but also value for a company. As a result,
maintaining customer loyalty can help companies sustainably.

5. Discussion
As the p-values are smaller than 1%, the results of the hypothesis testing show that CSR and its
interactions with other factors are consistent top previous research study. In details, CSR has
a positive impact on customer loyalty (Aurier & N’goala, 2010; Leverin & Liljander, 2006; Maignan &

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Table 6. Regression weights

Estimate SE CR P Label
NT <— CSR .587 .066 8.879 ***
HL <— CSR .232 .068 3.398 ***
HL <— NT .452 .059 7.708 ***
WOM <— NT .366 .049 7.410 ***
WOM <— HL .187 .052 3.586 ***
WOM <— CSR .316 .053 5.973 ***
TT <— CSR .202 .044 4.555 ***
TT <— HL .097 .041 2.384 .017
TT <— NT .207 .042 4.907 ***
TT <— WOM .005 .050 .106 .916
CSR4 <— CSR 1.000
CSR3 <— CSR .898 .051 17.603 ***
CSR5 <— CSR .977 .051 19.147 ***
CSR2 <— CSR .927 .048 19.118 ***
CSR1 <— CSR .942 .048 19.602 ***
WOM3 <— WOM 1.000
WOM2 <— WOM .919 .052 17.831 ***
WOM1 <— WOM 1.022 .058 17.755 ***
WOM4 <— WOM .899 .041 21.757 ***
WOM5 <— WOM 1.032 .047 21.949 ***
NT4 <— NT 1.000
NT1 <— NT 1.004 .032 31.387 ***
NT3 <— NT .885 .034 26.390 ***
NT2 <— NT .904 .036 25.333 ***
TT3 <— TT 1.000
TT2 <— TT 1.060 .057 18.540 ***
TT1 <— TT 1.566 .096 16.274 ***
TT4 <— TT 1.565 .097 16.193 ***
HL2 <— HL 1.000
HL3 <— HL .885 .053 16.800 ***
HL1 <— HL .812 .053 15.346 ***
HL4 <— HL .852 .050 16.912 ***
Note: ***p < 0.001
From Table 11, the results of the regression weights showed the following evidence:
- CSR affects customer trust (p = 0.000)
- CSR impacts customer satisfaction (p = 0.000)
- CSR affects WOM (p = 0.000)
- CSR affects customer loyalty (p = 0.000)
- Customer trust has an impact on customer satisfaction (p = 0.000)
- Customer trust affects WOM (p = 0.000)
- Customer trust affects customer loyalty (p = 0.000)
- Customer satisfaction affects WOM (p = 0.000)
- Customer satisfaction affects customer loyalty (p = 0.017)
Moreover, the degree of impact of the independent variables on the dependent variable is presented in Table 7.

Ferrell, 2001; Sureshchandar et al., 2002), customer trust (Brown & Dacin, 1997; Martinez and del
Bosque, 2013; Andrea et al., 2011) and customer satisfaction (El-Garaihy et al., 2014; He & Li, 2011;
Luo & Bhattacharya, 2006; Martínez & Del Bosque, 2013). In addition, the research shows the CSR
also has an indirect influence on loyalty through customer trust (Choi, Beomjoon; La, Suna, 2013).

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Table 7. Standardised regression weights

Estimate
NT <— CSR .416
HL <— CSR –.220
HL <— NT .142
WOM <— CSR .009
WOM <— NT .089
WOM <— HL –.028
TT <— WOM –.018
TT <— HL –.086
TT <— NT .320
TT <— CSR .207
TT5 <— TT .874
TT4 <— TT .878
TT3 <— TT .933
TT1 <— TT .819
TT2 <— TT .821
HL5 <— HL .794
HL1 <— HL .838
HL2 <— HL .864
HL4 <— HL .822
HL3 <— HL .748
CSR4 <— CSR .861
CSR2 <— CSR .955
CSR3 <— CSR .520
CSR1 <— CSR .588
WOM4 <— WOM 1.006
WOM1 <— WOM .816
WOM2 <— WOM .511
WOM3 <— WOM .370
NT2 <— NT .883
NT3 <— NT .812
NT1 <— NT .712

CSR is a broad category that originates from companies’ activities. Hence, CSR implementation is
necessary for development. The more businesses participate in social programs and sponsor
humanitarian programs, the more loyal their customers are to their products/services. CSR activ­
ities help customers recognise companies that provide benefits to the community instead of
focusing only on their value. Because of CSR generates benefits for the company and contributes
to the sustainable development of the community, and the business operations of the jewellery
industry are no exception. Therefore, enterprises must make strong CSR commitments in their
business strategies to achieve customer loyalty and a sustainable competitive advantage. Besides,
the implementation of practical and meaningful CSR programs that can differentiate a company
from its competitors will increase consumer trust and loyalty. With continuing effort in their social
responsibility activities, businesses in the jewellery industry reached various accomplishments.
However, limitations remain in their social responsibility activities. To encourage enterprises to
conduct social responsibility activities, the jewellery industry must involve the long-term social
responsibility planning strategy for each period based on the companies’ development orientation.

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Table 8. Summary of hypothesis testing results

No. Hypothesis Path Coefficient P-value Study Results
1 CSR—> Trust 0.503 0.000*** Accepted
2 CSR—> Customer 0.211 0.000*** Accepted
satisfaction
3 CSR—> WOM 0.308 0.000*** Accepted
4 CSR—> Customer 0.296 0.000*** Accepted
loyalty
5 Trust—> WOM 0.417 0.000*** Accepted
6 Trust—> Customer 0.480 0.000*** Accepted
satisfaction
7 Trust—> Customer 0.355 0.000*** Accepted
loyalty
8 Customer 0.200 0.000*** Accepted
satisfaction—>
WOM
9 Customer 0.157 0.017* Accepted
satisfaction—>
Customer loyalty
10 WOM—> Customer 0.008 0.916 Rejected
loyalty
Note: *p < 0.05, **p < 0.01 and ***p < 0.001

Then, the companies establish the implementation of social responsibility activities yearly. In
addition, attention should be paid to the inspection and review of social responsibility activities.
When a company’s development orientation changes, adjusting its long-term social responsibility
strategy is necessary.

6. Conclusion
The essential role of perceived CSR as identified in the present research indicates that managers of
jewellery companies should recognize the influence of perceived CSR and monitor service recovery
encounters to ensure that the recovery process improves the customer perceptions of firm CSR.
Because CSR has a direct influence on customer loyalty and indirect customer loyalty through
WOM. This is also the new contribution of this paper to the jewellery industry when conducting
how CSR and its interactions with customer loyalty.

Jewellery companies in Vietnam need to address CSR and customer loyalty issues to ensure their
long-term development and sustainable operations. Promoting CSR would be an effective strategy
to secure customer loyalty. In addition, increasing word-of-mouth via better service quality and
better customer trust in association with CSR would enhance customer loyalty.

The study has limitations, such as a small sample size, because the scope of the study only
surveyed enterprises within Ho Chi Minh City. Besides, the research has not mentioned the legal
and ethical aspects. So legal and ethical issues should be taken seriously. I recommend that future
research directions should extend to the entire country, focus on the legal and ethical aspect, and
classify according to the type of ownership between the state and the private sector.

Funding
The author received no direct funding for this research. Disclosure statement
No potential conflict of interest was reported by the author(s).
Author details Citation information
Ngoc Tu Tran Cite this article as: Impact of corporate social responsibil­
E-mail: [email protected] ity on customer loyalty: Evidence from the Vietnamese
Faculty of Business Administration, Saigon University, Chi jewellery industry, Ngoc Tu Tran, Cogent Business &
Minh City, Vietnam. Management (2022), 9: 2025675.

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Appendix 1 Survey questions

No. Observed variables Code Source

Corporate social responsibility (CSR)
1 The jewellry company CSR1 McGuire (1963); Du et al.
always provide accurate (2007); Mandhachitara
information about and Poolthong (2011)
products to customers.
2 The jewellry company CSR2
always care about the
interests of customers.
3 The company’s jewellry CSR3
products are affordable
and reasonable.
4 The jewellry company CSR4
always treat customers
fairly, always have
programs to support
social and cultural
activities.
5 The jewellry company CSR5
always bring the best
products to customers.
Word-of-mouth (WOM)
6 I often share the policies’ WOM1 Mandhachitara and
benefits that the jewellry Poolthong (2011)
company bring to me, so
that everyone knows.
7 I always have a good WOM2
perception of the jewellry
company and shares his
or her percept to friends
and relatives.
8 I give the dissemination WOM3
of the enterprise’s
preferential policies and
programs in discussions
with other people.
9 When introducing the WOM4
jewellry company to
other people, I always
identify the business as
one of the successful
businesses
10 Talking about jewelry WOM5
industry, I always
mention the jewellry
company
Trust

(Continued)

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No. Observed variables Code Source

11 I trust completely into NT1 Hosmer (1994);
the jewellry company Salmones, Crespo,
Bosque et al. (2005b)
12 I have a high trust on NT2
jewellry company’s
products
13 I really believe on the NT3
quality of the company’s
products
14 I am confident in the NT4
company’s
commitments.
Customer satisfaction
15 The company’s products HL1 Rashid et al. (2013)
meet the requirement of
customers.
16 I am completely satisfied HL2
with the company’s
products
17 Choosing the jewellry HL3
company is my right
choice to buy jewellry.
18 I am completely satisfied HL4
with the program/policy
of the jewellry industry.
Customer loyalty
19 I recommend the jewellry TT1 Salmones, Crespo,
company’s products to Bosque et al. (2005b);
other people. Balqiah et al. (2011)
20 I will talk well about the TT2
jewellry company to
other people.
21 I am a loyal customer of TT3
the jewellry company
22 I still intend to continue TT4
to be a customer of the
company

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Appendix 2 Characteristics of respondents

Criteria Frequency Percentage (%)

1/ Gender
Female 184 61.3
Male 116 38.7
Total 300 100
2/ Age
18–24 years 52 17.3
25–34 years 155 51.7
35–44 years 63 21.0
45–60 years 25 8.3
> 60 years 5 1.7
Total 300 100
3/ Education level
High school 57 19.0
Vocational education or training 122 40.7
centre qualification
Over undergraduate 121 40.3
Total 300 100
4/ Occupation
Students 12 4.0
Officers and employees 84 28.0
Business 139 46.3
Others 65 21.7
Total 300 100

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 Appendix 3 Total variance explained
Component Initial Eigenvalues Extraction Sums of Squared Loadings Rotation Sums of Squared Loadings
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Total % of Variance Cumulative % Total % of Variance Cumulative % Total % of Variance Cumulative %

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1 11.115 50.522 50.522 11.115 50.522 50.522 3.986 18.118 18.118

2 2.201 10.004 60.526 2.201 10.004 60.526 3.801 17.275 35.393
3 1.781 8.094 68.620 1.781 8.094 68.620 3.458 15.718 51.111
4 1.495 6.794 75.413 1.495 6.794 75.413 3.257 14.804 65.914
5 1.074 4.880 80.293 1.074 4.880 80.293 3.163 14.379 80.293
6 .562 2.554 82.847
7 .475 2.161 85.008
8 .420 1.909 86.917
9 .398 1.808 88.725
10 .319 1.451 90.176
11 .298 1.355 91.531
12 .281 1.277 92.808
13 .269 1.222 94.030
14 .243 1.104 95.134
15 .235 1.070 96.204
16 .193 .877 97.082
17 .156 .710 97.792
18 .145 .657 98.449
19 .133 .605 99.055
20 .095 .432 99.487
21 .063 .288 99.774
22 .050 .226 100.000
Extraction method: principal component analysis.

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Appendix 4 Rotated component matrix

Component

1 2 3 4 5
CSR4 .861
CSR3 .822
CSR5 .806
CSR2 .803
CSR1 .760
WOM3 .805
WOM2 .793
WOM1 .765
WOM4 .752
WOM5 .737
NT4 .849
NT1 .828
NT3 .805
NT2 .784
TT3 .832
TT2 .805
TT1 .798
TT4 .790
HL2 .838
HL3 .790
HL1 .768
HL4 .730
Extraction method: principal component analysis.
Rotation method: Varimax with Kaiser normalisation.
a. Rotation converged in six iterations.

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Tran, Cogent Business & Management (2022), 9: 2025675
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