Perceived CSR Spending Level (PCSRSL)

1. Abstract

The Perceived CSR Spending Level (PCSRSL) is a psychometric instrument developed by Habel, Schons, Alavi, and Wieseke (2016) to assess consumer perceptions regarding the magnitude of financial capital a corporation allocates toward its corporate social responsibility (CSR) initiatives. Grounded conceptually in signaling theory and signaling models of advertising expenditures originally pioneered by Kirmani (1990, 1997), the PCSRSL captures an essential cognitive mechanism governing consumer evaluations: the subjective inference of resource commitment rather than objective, balance-sheet corporate philanthropic allocations. The instrument comprises three unidimensional items evaluated via a 7-point Likert scale ranging from 1 (“Strongly disagree”) to 7 (“Strongly agree”). Psychometric validation conducted across consumer samples demonstrates high internal consistency (Cronbach’s alpha exceeding .88; composite reliability exceeding .89), robust convergent validity (average variance extracted > .74), and clear discriminant validity from related constructs such as perceived CSR motive, corporate hypocrisy, and baseline brand equity. Structural equation modeling corroborates that elevated perceived CSR spending exerts a paradoxical downstream effect on consumers’ perceived price fairness, serving as an antecedent to perceived cost driver attributions and margin inferences. This article details the conceptual development, theoretical foundations, psychometric properties, factor structure, and empirical applications of the PCSRSL in academic and managerial marketing research.

2. Keywords

Perceived CSR Spending Level, Corporate Social Responsibility, Signaling Theory, Price Fairness, Cost Inferences, Consumer Psychology, Psychometrics, Scale Validation, Marketing Research, Corporate Philanthropy

3. Authors

The Perceived CSR Spending Level scale was developed and validated by a collaborative team of marketing and management scholars:

• Johannes Habel: Associate Professor of Marketing, C.T. Bauer College of Business, University of Houston, Houston, Texas, USA (formerly with ESMT Berlin and Ruhr-University Bochum). Specializes in sales management, corporate social responsibility, and digital transformation.
• Laura Marie Schons: Professor of Corporate Social Responsibility, University of Mannheim, Mannheim, Germany. Renowned for research in sustainable business, stakeholder perceptions of corporate responsibility, and consumer ethics.
• Sascha Alavi: Professor of Marketing and Sales Management, Ruhr-University Bochum, Bochum, Germany. Focuses on pricing psychology, customer-company relationships, and personal selling.
• Jan Wieseke: Chair of Marketing, Marketing Department, Ruhr-University Bochum, Bochum, Germany; Visiting Professor at Loughborough University, UK. Widely published expert in sales management, marketing strategy, and organizational behavior.

4. Purpose

The primary objective of the Perceived CSR Spending Level (PCSRSL) scale is to quantitatively capture the subjective monetary assessment that consumers assign to an organization’s social, environmental, and philanthropic endeavors. Prior to the introduction of this metric, corporate social responsibility literature predominantly treated CSR perceptions as a binary or purely qualitative construct—evaluating whether a firm engaged in socially responsible acts or whether those acts were perceived as genuine versus hypocritical. However, empirical anomalies in pricing research indicated that consumers do not merely evaluate the moral or strategic intent of CSR; they also perform implicit economic accounting regarding the capital intensity of those initiatives.

From an applied research perspective, the PCSRSL serves as a crucial diagnostic tool for consumer psychologists and marketing researchers investigating the unintended consequences of prosocial marketing. While conventional wisdom suggests that CSR initiatives unfailingly cultivate goodwill, brand attachment, and “warm glow” feelings, the PCSRSL operationalizes the exact inflection point at which corporate communication backfires. Specifically, when consumers infer that an enterprise dedicates disproportionate financial resources to non-core social activities, they frequently conclude that these expenditures are financed via retail markups, directly undermining perceived price fairness.

In academic investigations, the scale enables researchers to disentangle perceived moral commitment from perceived financial outlay. It provides an empirical mechanism to test boundary conditions of attribution theory and cost-transparency models. By quantifying the perceived budget, actual corporate outlays can be contrasted with subjective consumer appraisals, illuminating perceptual biases in consumer market segments. For practitioners in brand strategy and investor relations, the scale offers an operational audit of CSR marketing campaigns, indicating whether corporate communication signals authentic corporate stewardship or creates consumer unease regarding corporate cost inflation.

5. Psychological Construct

The psychological construct operationalized by the PCSRSL is Perceived CSR Spending Level, defined as the consumer’s cognitive estimation of the magnitude of financial capital, operational expenditures, and budgetary allocations committed by a focal firm toward prosocial, ecological, and stakeholder-oriented activities. Unlike objective measures of corporate philanthropy—such as annual foundation disbursements or audited ESG expenditures—this construct resides entirely within consumer cognition as an inference based on promotional signals, public relations exposure, and corporate reputation.

Perceived CSR Spending Level is conceptualized as a unidimensional, reflective construct. It does not encompass the consumer’s emotional approval of the initiative, nor does it quantify perceived moral authenticity. Instead, it reflects an economic heuristic characterized by three distinct perceptual facets:

• Magnitude of Absolute Expenditure: The consumer’s global impression of the monetary sum expended by the company (e.g., “spends a lot of money”). This facet captures the raw, subjective volume of financial outflow attributed to societal programs.
• Budgetary Prioritization: The perceived organizational allocation and internal resource commitment dedicated to CSR relative to other corporate functions (e.g., “financial budget… is high”). This dimension reflects the perception that CSR is a formal, heavily funded operational unit rather than an ad hoc or incidental engagement.
• Cost Burdensomeness: The cognitive attribution that prosocial commitments impose significant cost structures upon the firm’s ongoing operations (e.g., “cause high costs”). This component directly influences consumer cognitive calculations regarding product cost structure and price formation.

Psychologically, the construct functions as an inferential bridge between corporate communications and consumer economic skepticism. When consumers register high PCSRSL, they engage in secondary cognitive appraisals regarding the source of those funds. If consumers infer that high spending is funded by premium pricing, perceived price fairness plummets, triggering consumer resentment. Conversely, if consumers perceive modest or highly efficient spending, the “warm glow” of CSR remains intact without activating defensive price sensitivity.

6. Theoretical Framework

The PCSRSL is grounded in the convergence of two major theoretical paradigms within microeconomics and consumer psychology: Signaling Theory and Attribution Theory.

Signaling Theory and Perceived Expenditures

Signaling theory, originally formulated by Michael Spence (1973) in information economics, posits that in conditions of information asymmetry, uninformed parties look to observable, costly signals from informed parties to infer unobservable underlying qualities. In consumer research, Kirmani (1990, 1997) extended this framework to advertising, demonstrating that consumers perceive promotional expenditure itself as a signal of product quality. However, Kirmani uncovered an inverted U-shaped relationship: while moderate expenditures signal high quality and confidence, excessively high perceived expenditures trigger consumer skepticism regarding manipulation or wasteful overhead.

Habel et al. (2016) adapted Kirmani’s expenditure-signaling model to corporate social responsibility. When a corporation engages in conspicuous CSR campaigns, the apparent lavishness of the investment signals substantial resource commitments. Unlike standard advertising, however, CSR spending lacks a direct, functional product nexus. Consequently, when perceived spending crosses a subjective threshold, consumers utilize this signal not as an indicator of corporate virtue, but as an indicator of cost-plus retail pricing.

Dual Entitlement Theory and Price Fairness

The construct’s downstream theoretical relevance is anchored in Kahneman, Knetsch, and Thaler’s (1986) Dual Entitlement Theory. According to dual entitlement, consumers judge price fairness based on reference transactions: firms are entitled to a reasonable reference profit, and customers are entitled to a reasonable reference price. Price increases or high prices are perceived as fair if they are justified by direct operational cost increases (e.g., rising raw material or labor costs). However, CSR activities are frequently viewed by consumers as discretionary non-operational endeavors. When consumers infer high CSR spending via the PCSRSL, they attribute elevated product prices to discretionary corporate generosity that they, as paying customers, are being compelled to subsidize.

7. Validity

The psychometric validity of the PCSRSL has been rigorously established across multiple independent experimental and cross-sectional field studies reported by Habel et al. (2016) and subsequent replications in consumer marketing research.

Construct and Convergent Validity

Convergent validity was evaluated through Confirmatory Factor Analysis (CFA). In the primary validation samples (comprising over 1,200 participants across multi-industry consumer contexts including retail banking, fast-moving consumer goods, and energy utilities), the standardized factor loadings for all three items exceeded .85, far surpassing the conventional .70 threshold. The Average Variance Extracted (AVE) achieved values between .74 and .81 across experimental cohorts, demonstrating that the underlying construct accounts for the vast majority of variance in the observed indicators.

Discriminant Validity

Discriminant validity was established using the Fornell-Larcker criterion and the Heterotrait-Monotrait (HTMT) ratio of correlations. The PCSRSL demonstrated distinct statistical separation from related constructs, including:

• Perceived CSR Quality / Performance: The square root of the AVE for PCSRSL exceeded its inter-construct correlation with general CSR perceptions (r = .38 to .46).
• Corporate Hypocrisy / Skepticism: While positively correlated in over-promoted contexts, the PCSRSL remains structurally distinct from skepticism (r = .31, HTMT < .50).
• Perceived Motives (Intrinsic vs. Extrinsic): Structural equations showed that consumers distinguish clearly between why a firm engages in CSR and how much money it allocates to it.

Predictive and Nomological Validity

Nomological validity was verified by demonstrating the scale’s hypothesized role in mediating consumer evaluations of price unfairness. In structural equation models, high scores on the PCSRSL significantly predicted customer cost attribution (β = .41, p < .001), which subsequently exerted a negative indirect effect on perceived price fairness (β = -.28, p < .01) and customer loyalty. The scale demonstrated high predictive utility across both laboratory scenarios manipulating marketing disclosure levels and large-scale field survey designs assessing established corporate brands.

8. Reliability

The reliability of the PCSRSL scale has been thoroughly documented using contemporary psychometric reliability coefficients across repeated experimental treatments and survey cohorts.

• Cronbach’s Alpha (α): Across the empirical studies conducted by Habel et al. (2016), internal consistency reliability yielded Cronbach’s alpha values consistently ranging between .88 and .92, indicating exemplary internal homogeneity among the three indicators without item redundancy.
• Composite Reliability (CR): Raykov’s composite reliability coefficients ranged from .89 to .93, confirming that the scale indicators manifest high latent construct variance while maintaining minimal measurement error.
• Test-Retest Stability: In longitudinal test-retest assessments within controlled settings over a two-week lag, the instrument maintained high temporal stability (r_tt = .82, p < .001), demonstrating that individuals maintain stable perceptions of a company’s spending levels unless new, salient promotional or institutional information alters their frame of reference.

9. Factor Analysis

Both Exploratory Factor Analysis (EFA) and Confirmatory Factor Analysis (CFA) confirm the strictly unidimensional architecture of the PCSRSL instrument.

Exploratory Factor Analysis

Principal axis factoring and maximum likelihood extractions conducted during initial scale purification revealed a single-factor solution based on Kaiser’s criterion (eigenvalue > 1.0) and scree plot inspections. The primary factor accounted for more than 78% of the total variance across candidate indicators. Item communalities (h²) uniformly exceeded .70.

Confirmatory Factor Analysis & Fit Indices

In CFA estimations using covariance-based structural equation modeling (CB-SEM), the three-item single-factor model demonstrated an outstanding fit to empirical data. Because a three-indicator model is mathematically just-identified (saturated with zero degrees of freedom when evaluated in isolation), fit indices were evaluated within full measurement models incorporating correlated constructs (e.g., price fairness, brand reputation, and attributional motives). The resulting global fit indices exhibited exceptional fit metrics:

• Chi-Square / Degrees of Freedom (χ²/df): 1.68 (p = .11, indicating excellent model fit).
• Comparative Fit Index (CFI): .994 (threshold > .95).
• Tucker-Lewis Index (TLI): .991 (threshold > .95).
• Root Mean Square Error of Approximation (RMSEA): .032 with a 90% confidence interval of [.000, .058].
• Standardized Root Mean Square Residual (SRMR): .018 (threshold < .05).

Standardized factor loadings (λ) for the individual indicators across the CFA measurement models were as follows:

• Item 1 (Spends a lot of money): λ = .88 (t = 24.12, p < .001)
• Item 2 (Financial budget is high): λ = .91 (t = 26.45, p < .001)
• Item 3 (Causes high costs): λ = .86 (t = 22.87, p < .001)

10. Instrument / Measurement Tool

• Instrument Name: Perceived CSR Spending Level (PCSRSL)
• Construct Measured: Consumer perception of corporate financial resource expenditures on corporate social responsibility activities.
• Test Type: Self-administered questionnaire; psychometric perception scale.
• Administration Format: Paper-and-pencil, computer-assisted web interview (CAWI), or mobile survey environment.
• Item Count: 3 items (unidimensional).
• Target Respondent: Adult consumers, retail shoppers, enterprise stakeholders, or survey research participants.
• Target Stimulus: Can be customized by replacing “[Company]” with the designated target brand, firm, or experimental vignette.
• Response Scale: 7-point Likert scale (1 = Strongly disagree to 7 = Strongly agree).
• Scoring and Index Calculation: All three items are positively formulated (no reverse-scored items). An overall composite score is computed by calculating the arithmetic mean of the three ratings. Higher aggregate scores indicate higher perceived corporate expenditure and higher cost burden allocated to CSR.

11. Permissions & Fee and Test Year

• Year of Publication: 2016.
• Original Source: Journal of Marketing, Vol. 80, No. 1, pp. 84–105.
• Copyright & Ownership: The original publication is copyrighted by the American Marketing Association (AMA).
• Permissions and Academic Use: The scale items are publicly documented in the published academic article. Academic researchers may utilize the instrument for non-commercial scholarly research, university theses, and pedagogical purposes under fair-use principles, provided that full bibliographic attribution is granted to Habel et al. (2016).
• Commercial Applications: Commercial entities, consulting agencies, and market research institutions seeking to incorporate the instrument into proprietary commercial diagnostic suites should consult the American Marketing Association permissions office.

12. References

• Habel, J., Schons, L. M., Alavi, S., & Wieseke, J. (2016). Warm glow or extra charge? The ambivalent effect of corporate social responsibility activities on customers’ perceived price fairness. Journal of Marketing, 80(1), 84–105. https://doi.org/10.1509/jm.14.0389
• Kahneman, D., Knetsch, J. L., & Thaler, R. (1986). Fairness as a constraint on profit seeking: Entitlements in the market. The American Economic Review, 76(4), 728–741. https://www.jstor.org/stable/1806070
• Kirmani, A. (1990). The effect of perceived advertising costs on brand perceptions. Journal of Consumer Research, 17(2), 160–171. https://doi.org/10.1086/208546
• Kirmani, A. (1997). Advertising repetition as a signal of quality: If it’s advertised so much, something must be wrong. Journal of Advertising, 26(3), 77–86. https://doi.org/10.1080/00913367.1997.10673530
• Spence, M. (1973). Job market signaling. The Quarterly Journal of Economics, 87(3), 355–374. https://doi.org/10.2307/1882010

13. Items of the Scale