Corporate Social Responsibility and Poor’s Child Well Being in Developing Customer’s Loyalty

This research conducted to analyze the contribution of Corporate Social Responsibility (CSR) perceived motives in enhancing perceived poor’s child-well being and loyalty. CRS strategy were being implementing by the 2 companies, Garuda Indonesia and Pertamina, BUMN structure that partially own by government. Garuda Indonesia as service company in airline industry, and Pertamina as non service company in oil and gas industry. Using factor analysis and multiple regression, the result show there are some differences between firms CSR activities in in developing children well being and customer loyalty. This result has implication for the firm that different type of CSR activities and different industry will reflect different motives, further have different impact in children’s well being.


Introduction
explain that there are two management perspectives concerning this responsibility of the firm that are classic and sosioeconomic views. Classic views opinion of CSR against these social responsibility of the firm because the management has the obligation to create profit for shareholder, and the CSR activities create cost that could reduce the profit. Otherwise, the socioeconomic view social responsibility of the firm more than just to create profit for shareholder, but the firm must concern to improve society well being. This view argumentation, firm is not separate entities in society and could not obey its responsibility in social issues because the firm has responsibility not just to shareholder but to all stakeholders.
Some researcher had shown that CSR activites could influence consumer behavior (Maignanand Ferrel, 2004;Luoand Bhattacharya, 2006, Du, Bhattacharya, andSen, 2007). It shows that CSR activites not just social activites that create cost-reduce profit, but could create economic value in the long run through developing customer loyalty. Loyal customers are intangible asset that could create income in future. CSR activities of product or corporate brands Pertamina, Toyota, Sampoerna, Lifebouy, and Aqua-Danone had proved have direct and indirect impact to society quality of life as object of those CSR activities, and customer's behavior (Balqiah etal, 2010(Balqiah etal, , 2011.
Following previous studies, this study had done through investigate two firms from different industry that implement some variation of CSR activites and reflect sustainability in developing society quality of life especially for poor's children. Concerning children as future generation that contribute to economic foundation, therefor the authors choose CSR activities that aim to develop poor's children well being, as government concern and force private sectors to alocate their CSR activities in protecting dan developing children well being.

Research Objectives
The main objective of this research is to evaluate the interrelationship of CSR activities influence in enhanching of children well being and customer loyalty. This research study the dual effect of CSR activities-as socioeconomics views, in creating social dan business outcome, through children well being (social outcome), dan loyalty (business outcome). If there is relationship, CSR is not activity that only create sunk cost but firm's investment. Persuant to the main purpose, this research will attempt to achieve the following objectives: 1. To investigate the effects of CSR motives implemented by the firm (CSR motives) to developing poor's children well being (PCWB) 2. To investigate the effects of CSR motives implemented by the firm (CSR motives) to developing customer loyalty (CL) 3. To investigate the effects of poor's children well being (PCWB) on developing customer loyalty (CL)

Literature Review Corporate Social Responsibility Motives
Corporate associations play an important role in corporate outcome such as corporate reputation and or product/brand reputation, purchase intention, and customer identifica-tion with the company (Ellen, Webb, and Mohr, 2006). Variation of CSR activities could show corporate image through attracting public sympathy to social activities of the firm. Previous studies found that society have cynical feeling to social activities because their perceived that the reasoning why the firm do those social activities just to achieve their business or financial outcome (Bronn dan Cohen, 2009).
Davis in Bronn and Cohen (2009) stated that the reason firm do social activities are concerning strategic perpectives (instrumental and institusional motives), and moral perspectives. Instrumental motives revolve fundamentally around managerial beliefs that engaging in social initiatives can have a direct impact on profitability -improving revenue or protecting existing profit levels. Several studies have shown that companies develop a social portfolio because managers believe these activities can build competitive advantage, provide new business opportunities, insulate the firm from costly regulation, or help the company meet shareholder demands. In addition to showing a strong bottom line, many businesses now believe a social agenda may also be necessary to maintain public support for their activities. This perspective provides a foundation for the notion of Institutional Motives for social initiatives, suggesting that companies engage in social initiatives primarily due to institutional pressures.
Studies have identified a range of institutional forces that compel companies to strengthen their social agendas. These include growing customer intolerance for corporate practices that damage the environment or neglect human rights, increasing public scrutiny of corporate governance practices that lack transparency, demands from local constituents that companies invest in improving community infrastructure, and stakeholder insistence that companies impose swift and meaningful sanctions on executives who engage in misconduct. Researchers have also documented managers' beliefs that responding to these forces is critical for preserving company image, generating goodwill among stakeholders, or enhancing the legitimacy of the industry to which the company belongs (Sen and Bhattacharya, 2001;Bronn and Cohen, 2009). Institutional pressures to develop a meaningful social agenda can emanate ex-ternally from customers, transaction partners, government agencies, and local communities, internally from employees, and laterally from salient business references groups such as competitors and industry associations. In such situations, where managers are pressured by their peers to engage in social initiatives, they perceive that their firm's viability may depend on their ability to respond effectively (Bronn and Cohen, 2009). Some studies have documented instances in which ''doing the right thing'' appears to be a stronger motive for social initiative than the practical benefits these activities can generate for the firm. Others have found that moral motives share the stage with strategic perspectives (Bronn and Cohen, 2009). Brown and Dacin's (1997) pioneering study of the corporate associations held by consumers, much research has attested to the pivotal role of consumers' beliefs about the extent to which a company/brand is socially responsible (i.e., CSR beliefs) in their reactions to CSR. Extrinsic or self-interested motives have the ultimate goal of increasing the brand's own welfare (e.g., increase sales/profits or improve corporate image), whereas intrinsic or selfless motives have the ultimate goal of doing good and/or fulfilling one's obligations to society (e.g.,benefit the community or cause that the CSR actions focus on). Notably, extrinsic and intrinsic motives are not viewed as two ends of a continuum; prior research (Ellen, Webb, & Mohr,2006) indicates that a brand's CSR actions can be attributed to both intrinsic and extrinsic motives.
Research of Ellen, Webb, dan Mohr (2006) found 4 motives as the reasoning why company do CSR activities such as value driven, stakeholder driven, egoistic driven, and strategic driven. Consumer distuingished between selfcentered motives that were strategic and egoistic reacting positively and negatively to those motives. Other-centered motives were differentiated with values driven motives viewed positively, and value stakeholder motives perceived negatively. Value-driven motive is customer belief's perceived that compay do CSR activities concerning customer and society benefits. Stakeholder-driven motive is a respond to fulfill the customer, employee, shareholder, and society expectations. Egoistic motive is the reason company to achieve economic performance based on business activities, and strategic-driven motive based on growth reason of the company. Furthermore, Ellen, Webb, and Mohr (2006) studies show that all those motives influence positively to purchase intention.
It could conclude that whatever the motives are in doing CSR, it could increase sales through buying intention. Kotler and Lee (2005) define Corporate Social Responsibility (CSR) as commitment to improve community well-being through discretionary business practices and of corporate resources. This form of social initiatives that show main activities to support social reason and to confirm the commitment to do CSR. The six social initiatives explored are as follows: 1. Cause Promotions: a corporation provides fund, contributions, or other corporate resources to increase awareness and concern about a social cause or to support fundraising, participation, or volunteer for a cause. 2. Cause-Related Marketing: a corporation commits to making a contribution or donating a percentage of revenue to a specific cause based on product sales. 3. Corporate Social Marketing: a corporation supports the development and implementation of a behavior change campaign intended to improve public helath, safety, the environment, or community well-being. 4. Corporate Philanthropy: a corporation makes a direct contribution to a charity or cause, most often in the form of cash grants, donations, and inkind services. 5. Community Volunteering: a corporation supports and encourages employee, retail partners, and other members to volunteer their time to support local community organizations and causes. 6. Socially Responsible Business Practices: a corporation adopts and conducts discretionary business practices and investment that support social causes to improve community well being and protect the environment.

The Effect of Corporate Social Responsibility (CSR) on Quality of Life (QOL)
Wilkie and Moore (1999) develop propositions, which they called Aggregate Marketing System, that show marketing contributions to society. Beside having responsibility in delivering value to customers, marketing also contribute to economic prosperity in 10 form of contribution that job and income, freedom in consumption, delivering life standard, development of infrastructure, tax, market efficiency, innovation diffusion, raising commerce, international development, and economic growth. Costanza, Fisher, Ali, Beer, Bond, Boumans, Danigelis, Dickinson, Elliott, Farley, Gayer, Glenn, Hudspeth, Mahoney, McCahill, McIntosh, Reed, Rizvi, Rizzo, Simpatico, and Snapp (2007) define quality of life in wider scope, objective and subjective, regarding to well being: "QOL is the extent to which objective human needs are fulfilled in relation to personal or group perception of subjective well being".

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This social responsibility support belief that business can work together with government and other stakeholders to improve better life and not to become debatable about CSR, because CSR constitute business commitment to contribute on sustainability of economic, working with employees, their families, local and whole community to improve their quality of life (World Business Council for Sustainability Development, 2004). In doing so, besides CSR activities interrelated directly with supplying and delivering product that could minimize negative impact for customer directly, CSR also could be done in purpose to increasing society quality of life as one of firms' stakeholders.

Children Well being
Children's well-being is accessed in terms of three subjective domains: (1) personal wellbeing, (2) relational well-being, and (3) wellbeing at school (Bradshaw, Keung, Rees, and Goswami, 2010). Subjective well-being is a multidimensional construct that includes both Children are among the most vulnerable of the constituencies that corporations interact with. Whether through the products and services that they advertise and sell to them, or through the employment of children and their parents in the process of production, business can have enormous impact on the lives of young people. However, to date, most of the attention given to these issues in the corporate social responsibility (CSR) literature has tended to focus either on the employment of child laborers in developing countries, or on the ethics of advertising to young children. (Crane and Kazmi, 2009). They explain seven key areas where businesses were found to be confronted with issues of corporate responsibility toward young people.
Recent changes in our understanding of how children develop have been paralleled by important changes in how societies view children and childhood. Perhaps most important to discussion of indicators of positive child development is the concept of viewing children as a specific group that differs from other age groups (e.g., adults, the elderly) and has value in its own right, rather than value only as future adults (Lippman, Moore, and McIntosh, 2011). Their research contributed to major changes in the study of child indicators, including a shift from a focus on measuring basic needs (e.g., immunization) to measuring the quality of life beyond mere survival (e.g., life satisfaction).
The shift to the development of measures of well-being, in turn, helped move the child indicators field toward a focus on indicators of flourishing, as opposed to negative measures such as deviance.
Common domains of well-being include physical health, development, and safety; cognitive development and education; psychological and emotional development; and social development and behavior. Coverage of these domains tends to be uneven and, within domains, coverage of positive and negative constructs also tends to be uneven. For example, health and safety problems are tracked more closely than positive health indicators, and the social behaviors that are measured tend to include behavior problems such as drug use and violence. Indicators of psychological and emotional well-being are the leastwell-monitored in national and international data systems (Lippman, Moore, and McIntosh, 2011).
The creation of health and well-being is thus a process with outcomes depending on the personal background, the innerand outer situation, strengths and capacities of the individual. Young children are highly dependent on a nurturing and loving environment and adequate economic and physical resources. Older children increasingly develop their own strategies to deal with the demands in their environment as they become more independent from their family by interacting with other social systems (e.g. school, peers) (Bradshaw, Hoelscher, dan Richardson, 2006;Bradshaw, Richardson, dan Ritakallio, 2007).
Connections between the different structures within the microsystem, e.g. parents -school, are described asmesosystem. One level up the  (Bradshaw, Hoelscher, dan Richardson, 2006).

Customer Loyalty
Loyalty is commitment to repeat buying or repatronage product or services that prefer in the future even though they influenced by situational factors and marketing efforts that make switching behavior (Oliver, in Kotler and Keller, 2006). Regarding to Oliver (1999), this loyalty build in 4 phases following : (1) Cognitive loyalty: the initial loyalty phase, the brand attribute information available to the consumer indicates that one brand is preferable to its alternatives. This stage of loyalty based on brand belief only. Cognition can be based on prior or vicarious knowledge or on recent experience-based information.
(2) Affective loyalty: a liking or attitude toward the brand has developed on the basis of cu-mulatively satisfying usage occasions. This reflects the pleasure dimension of the satisfaction definition-plesureable fulfillment-as previously described. Commitment at this phase is referred to as affective loyalty and is encoded in the consumer's mind as cognition and affect. Conation, by definition, implies a brandspecific commitment to repurchase. Conative loyalty is loyalty state that contains deeply held commitment to buy. (4) Action loyalty: intentions are converted to actions. In the action, the previous loyalty state is transformed into readiness to act accompanied by an additional desir. It was conducted to overcome obstacles that might prevent the act.

Research Model and Hypothesis
Conceptual model for this study was developed to achive the objective that is evaluate the relationship between CSR motives, poor's children well being and customer loyalty, both are stakeholders. The model was developed with the result for corporate attribution that CSR activity could be perceived has different motives, such as Instrumental and Institutional Motives, and Moral Motives (Ellen, Webb, and Mohr, 2006 Research model was developed through literature study regarding the objectives of this research. There are the relationships between CSR and Quality of Life (Sirgy dan Lee, 1996;Wilkie dan Moore, 1999;Sen, Bhattacharya, dan Korschun, 2006;Castaldo, Perrini, Misani, dan Tencati, 2009;Raghubir, Roberts, Lemon, and Winer, 2010;Balqiah et al, 2010Balqiah et al, , 2011, relationship between CSR and loyalty (Liu and Zhou, 2009;Shuili, Bhattacharya, and Sen, 2007;Balqiah et al, 2010Balqiah et al, , 2011, relationship CSR and Children Well Being (Crane and Kazmi, 2009), positive indicator of children subjective well being Keung, 2010, 2011;Bradshaw, Keung, Rees, and Goswami, 2010;Lippman, Moore, and McIntosh, 2011) The difference this research from previous study is this research evaluate direct contibution of CSR on Children Well Being as object of those CSR activities, and direct effect CSR on customer loyalty that using company's offering in their business activities.

Methods
Data were collected by cross sectional survey in five urban areas JABODETABEK using self administered questionaires from 100 respondents that were chosen by convenience sampling. The objects are GARUDA INDO-NESIA and PERTAMINA (lubricant product with brand Mesran, Prima XP, and Enduro).
The questionaires consists of 35 questions with 5 scale of likert regarding to 7 research constructs that is 16 questions for CSR Motives (4 questions for Egoistic, 4 questions for Strategic, 5 questions for Stakeholder, and 3 questions for Value), 14 questions for Children Well Being (9 questions for Personal Well Being and 5 questions for Family Well Being), and 5 questions for Customer Loyalty.
The respondent is the customer of firm that implemented CSR activities. The respondent will give their perceived of CSR motives, children well being as object the CSR activities, and their loyalty to the firm which implement CSR. The children in this research is the young people under 14 years old regarding the BPS definition of children in Indonesia.
Before the main survey, authors conducted pretest using 30 respondent to ensure reliability and construct validity of constructs. It was done to refine the questionaires to reduce response error. Furthermore, after 100 datas was collected, Multiple Regression with SPSS 19 is used to test the hypothesis at each firms at α=10%.

Result and Discussion
This section discuss the result of Multiple Regression for each firms regarding to hypothesis testing. The significance of the path coefficients were evaluated by analyzing t value for the parameters.   Eventough GARUDA has mean score of egositic motive 3.391, and strategic motive 3.722, these motive could not harmfull the customer's perception that personal CWB could be increased through these activities. Accordingly Bronn and Cohen (2009), GARUDA CSR activity was perceived has institutional motives. It means, GARUDA implement CSR as respond to demand from institutional or external entities, because there pressure from customer that GARUDA should not harm environmental condition or obey human's right. GARUDA CSR innitiative that doing recycle of used paper support these motive to environmental concern that could influence CWB, but not strong enough to influence loyalty. Thereby, to enhance loyalty, company could not use only CSR activities (Ellenet al, 2006;Vlachos et al, 2011). Eventough CSR motives influence CWB, but CWB could not enhance loyalty. In this company, loyalty was developed through instrumental motives of CSR (Bronn and Cohen, 2006).

Garuda Indonesia
Value CSR's motive of PERTAMINA positively influence Personal and Family CWB of poor children that is in health and education well being, but other motives do not have signifinace influence.
CSR innitiative PERTAMINA that is free tooth examination for children was perceived positive strategic and value motives that could   Table 6 show that egoistic CSR motives of GARUDA higher than PERTAMINA. It shows that the CSR activities of PERTAMINA concerning the children's tooth health was perceived less company benefit's focus than GA-RUDA. It could be because the characteristics of GARUDA CSR innitiative (used paper) does not cost as high as expenses of PERTAMINA innitiative.
Eventough the CSR could influence all

Conclusion
The data supported partially the model. Different CSR activities have different effect on customer perceived concerning company motives of doing CSR that involving in activities that targeted to poor children. CSR motives could build Children Well Being and customer loyalty. GARUDA, that has CSR program reused paper, CSR motives was perceived more egoistic and strategic than PERTAMINA, that has CSR program, tooth health. Other wise, PERTAMINA was perceived more concern about stakeholder and more value motives. Furthermore, Pertamina could create higher personal dan family CWB than GARUDA. The result show that different type of CSR activities having differential effect on personal and family issue of children well being and customer loyalty.. These 2 CSR innitiatives have different impact on the relationship between CSR motives and Children Well Being, and between CSR motives and Customer Loyalty.GARUDA CSR activity was perceived has institutional motives, and PERTAMINA has instrumental motive (Bronn and Cohen, 2009;Vlachos et al, 2011). As summary, there is relationship between CSR motives influence customer loyalty directly or indirectly through developing poor's children well being.
There are some limitations to this study. First, this research objects only 2 firms. Future research using different company and wider coverage area is recommended. Second, the outcome of CSR activities is from customer's perspective, future research should consider multiple perspective from other stakeholder, such as employee and society which involve directly with CSR activities. Third, this study uses loyalty as behavior consequences of CSR activity. Using other consequenses such as customer satisfaction and customer lifetime value