Abstract

The purpose of this research is to propose and empirically test a research framework that illustrates how Corporate Social Responsibility (CSR) and performative action influence consumer’s perception of organizational legitimacy and loyalty intention, based on institutional theory. Further, we examine the interaction effect of CSR and performative action on organizational legitimacy, where we propose that the effect of CSR on legitimacy becomes amplified when performative action is high. To test the hypotheses, a total of 222 usable data were collected from consumers residing in a metropolitan area. Hypotheses were tested using Moderated Structural Equation Modelling. The study result reveals that both CSR and performative action are critical in establishing organizational legitimacy. Further, the result shows that the interaction coefficient for the interaction is significant that the relationship between CSR performance and legitimacy intensifies when performative action is high. The research outcome provides valuable implications to practitioners that legitimacy from the institutional environment and loyalty from the economic environment has to exist as separate domains for business to survive.

This work is licensed under a Creative Commons Attribution 4.0 License.