Base Paper Employer Branding
Base Paper Employer Branding
research-article20202020
SGOXXX10.1177/2158244020972372SAGE OpenÖzcan and Elçi
Original Research
SAGE Open
Corporate Reputation
Abstract
Employees are one of the most important factors in business. Therefore, enterprises should account for the expectations
of employees, particularly their perception of the enterprise, and their behavior. This study investigates the importance of
employees’ perceived corporate social responsibility (CSR) and also examines the potential role of predicting employer
brand, brand image, and corporate reputation. The study’s participants comprise employees working in different departments
of various corporations. A total of 559 surveys were collected from randomly sampled company employees working in small
and medium-sized enterprises (SMEs) in Turkey, and the responses were analyzed using component-based least squares
modeling. The model was analyzed and validated by Smart partial least squares software. Employee-oriented CSR activities
have a positive effect on employer brand and brand image perceptions among employees in SMEs. Perceived corporate
reputation mediates this relationship.
Keywords
corporate social responsibility, employer brand, brand image, corporate reputation
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2 SAGE Open
areas; aiding in the development of high-quality products and organizations that want to have a strong reputation and main-
services; and ensuring fulfillment of their obligations, both tain the existing reputation.
legal and to their stakeholders (J. Singh et al., 2008). Another According to the cognitive dissonance theory (Festinger,
important advantage of CSR is its effect on brand awareness 1957), which states that individuals are seeking internal con-
and brand image (BI; Hsu, 2012; Tian et al., 2011). sistency between expectation and reality, companies are
Consequently, many studies in the literature have examined expected to help employees develop positive behaviors
how CSR affects various criteria, such as employee commit- among their employees and reduce their negative percep-
ment to the organization, job satisfaction, intention to leave, tions about their employers. Such practices that are compat-
and corporate image. ible with employee values and expectations will help deter
The employer brand (EB) is defined as a long-targeted employees’ incompatibility and negative behavior (Okolocha,
strategy to manage the awareness and perceptions of employ- 2020). CSR is recognized as a tool to attract and maintain
ees, potential employees, and all relevant stakeholders in talent by enhancing the EB, strengthening an organization’s
companies (Sullivan, 2004). EB is the image of an institution reputation.
perceived by stakeholders, shareholders, and employees Qualitative and quantitative research on CSR in small and
(Sehgal & Malati, 2013). The EB is a necessity for compa- medium-sized enterprises (SMEs) in developing countries is
nies to acquire and retain key employees. The EB is divided limited and has received little scientific interest (Liu & Fong,
into internal and external EB. Internal EB focuses on activi- 2010). Most CSR-related studies focus on large-scale com-
ties that provide opportunities for employees to develop panies (Chon & Yoo, 2013). It is also revealed that employ-
within the institution. As a result, the employee becomes the ees in medium-sized organizations are not aware of CSR
customer of the company. External EB aims to offer brand (Bashir et al., 2012). As a result, this study focuses on CSR
awareness and fulfillment of CSR goals (Kozłowski, 2012). perceptions of employees because CSR perception affects
Employee-oriented CSR activities help motivate compa- employees’ attitudes and behaviors. It aimed to fill the meth-
nies to build a strong EB by keeping their existing employees odological research gap by examining the mechanism that
(Dokania & Pathak, 2013). CSR activities in SMEs help create CR, EB, and BI among
It is only possible for institutions to have their products employees. It aims to answer the following questions with
and services accepted in the domestic and foreign markets in these identified gaps: (a) What is the relationship between
a competitive environment and turn them into a financial employee-oriented CSR activities, perceived CR, EB, and
value by having a good corporate BI. While the institutions BI? (b) Do employee-oriented CSR activities have a positive
are trying to reach their goals, the corporate BI perceptions impact on EB and BI perceptions among SMEs? (c) Does the
of the employees and the values they give to the institution perceived CR mediate the relationship between employee-
are of great importance. While a positive BI will enable oriented CSR activities and EB and BI perceptions in SMEs?
employees to integrate their identities with the organization, This research contributes to the literature in two ways.
it will make the institution attractive for future employees First, most extant research has focused on the impact of CSR
(H. Kim et al., 2015). on external stakeholders, such as consumers, competitors,
Corporate reputation (CR) is defined as a valuable and and suppliers. However, these studies have not been focused
abstract asset that affects stakeholders’ perceptions and pref- on employee perceptions and attitudes. In recent studies,
erences about the organization. It is a summary view of all employee views, opinions, and perceptions of companies’
the perceptions of the relevant stakeholders about the organi- CSR activities have shown significant benefits. The fact that
zation. It is the beliefs of stakeholders about what the institu- employees are more involved in organizational culture and
tion is and how it connects with it. It is the cognitive and that they have more real information about their company
affective assessments of the past performance of the institu- than other stakeholders supports this view. This study evalu-
tion and the estimates of its future behavior. According to ates the CSR efforts of companies according to employees’
(Chun 2005, p. 105), “corporate reputation is an umbrella perceptions, attitudes, and behaviors. Second, it contributes
structure related to the cumulative impressions of internal to the perception of CSR being linked to the EB, BI, and CR.
and external stakeholders.” Having a positive reputation is To further explore the importance and potential role of CSR
based on the institution’s employees perceiving the institu- in predicting the EB, BI, and CR of SMEs in this study, the
tion as more attractive than its competitors. Institutions current employees were selected as stakeholder groups.
should develop effective programs to protect their CR. Trust
in an institution’s services and product is realized through the
performances of the employees. Therefore, the reputation of Literature Review and Conceptual
the institution they work through is always very important. Model
The beliefs, loyalty, and thoughts of the employees regarding
their institutions are of great importance for the construction
CSR and EB
and continuation of the company’s reputation. It creates the EB is defined as the functional, economic, and psychological
necessity to conduct employee-oriented CSR activities in its benefits of the employment provided by the employer
Özcan and Elçi 3
(Ambler & Barrow, 1996). It has been defined as a concept and there is a strategic requirement that positively affects
that differentiates an enterprise from other enterprises (Wu & Wang, 2014). An organization’s responsibility is to
(Backhaus & Tikoo, 2004) and also as the values attributed develop an effective tool to convey the company’s corporate
to the workplace by the employees, which manifests as a brand identity to all employees. When employees under-
high-quality employment experience wherein employees stand their roles as brand ambassadors and receive apprecia-
feel secure and develop a close relationship with their tion and reward for their roles, they can be successfully
employer (Martin et al., 2011). Enterprises with a strong EB integrated into a corporate image program. There are many
benefit from increased commitment and retention of employ- ways to create a corporate infrastructure that supports the
ees and increased job performance (Knox & Freeman, 2006). role of a company as a brand ambassador. Employee-
Every company must build and consciously shape its EB to oriented CSR activities are one of these ways. As the posi-
improve its competitiveness in the market. EB of companies tive effect of CSR on corporations and brands is known and
is determined by factors such as the company’s reputation, becoming increasingly important worldwide, sensitivity (or
product and service quality, opportunities provided to insensitivity) to issues reflects on the brand. Enterprises’
employees, working environment, payment, and economic ethical and social events are known to enhance relations
conditions. Recently, companies use CSR as a more effective with the brand (J. Singh et al., 2008). CSR strengthens BI
tool to express their operational identity and strengthen their and contributes to brand value (Melo & Galan, 2011).
sustainable development in the labor market communication. Nowadays, increased consumer and employee awareness
The impact of a company’s EB strategy depends on how fostered through CSR-related social activities has an impor-
CSR messages are perceived and interpreted. Studies have tant effect on increasing the corporate brand’s value. It has
shown that EB has a positive effect on employees (Aguinis & been argued that CSR is a highly important factor in creat-
Glavas, 2012; Highhouse et al., 2009; Lievens & Slaughter, ing a BI (Green & Peloza, 2011). Theoretical and empirical
2016; Tkalac Verčič & Sinčić Ćorić, 2018). Employee per- evidence has shown a link between CSR and BI (Lange
ception of CSR is crucial in the formation of EB (G. Davies et al., 2011; Pfarrer et al., 2010), and these relations are
et al., 2018; Jones et al., 2014; Lievens & Slaughter, 2016). found to be positive and meaningful (Ellen et al., 2006;
This leads to the first hypothesis: Maon et al., 2009; Porter & Kramer, 2006). This leads to the
second hypothesis:
Hypothesis 1 (H1): There is a positive relationship
between employee-focused CSR activities and perceived Hypothesis 2 (H2): There is a positive relationship
EB. between employee-focused CSR activities and perceived
BI.
CSR and BI
CSR and CR
They revealed that the first thing affected by CSR is BI and
if it is perceived positively, it has an effect on BI (Swaen & Employees and CR are crucial tools for achieving sustain-
Chumpitaz, 2008). Big companies realize that strong brands able competitive advantage. CR for companies is vital and
cannot be built without the constant support and manage- plays a key role in managing it in employees (Gotsi &
ment of employees (Lange et al., 2011). They have sug- Wilson, 2001). Realizing the strategic role that employees
gested that a good BI attracts customers and employees, and can play in positioning CR can have significant consequences
that companies will become stronger. A. Singh and Verma for companies to achieve their goals. It will affect the CR
(2017) concluded that CSR is an opportunity to achieve a perceptions of the corporate culture, which enables the pro-
better corporate value and will increase the brand value by tection and promotion of reputation in companies. CR of
having a positive effect on the BI. It enhances the emotional businesses can also affect employees’ perception and attitude
aspect of the BI of CSR and provides a competitive advan- toward their business. There have been a limited number of
tage and protects it from competitive risks (Martínez et al., studies related to institutional reputation (Ozdora-Aksak
2014). Employees are critical for the success of the BI. One et al., 2016). Extant studies have focused mainly on external
of the first and most direct points of contact of a company stakeholders and institutional and organizational levels
with its customers is its employees. At all levels of an insti- (Aguinis & Glavas, 2012). Studying at the micro level to dis-
tution, employees have the opportunity to influence the per- cover the importance and potential effects of CSR is becom-
ception of a company’s brand during these critical touch ing an increasingly popular topic (Glavas & Kelley, 2014).
points. Regardless of their job descriptions, employees have CSR was found to be a strong pioneer of CR and has shown
two jobs, one is the job they do and the other is to convey the positive effects on employee and stakeholder behaviors
BI of the company to the outside world, as ambassadors of (Maden et al., 2012). In the analysis of the effect of CSR on
the brand. Employees serving as strong brand ambassadors CR, it was obtained as a result of the study that companies
need to be integrated into the corporate brand management have a higher CR in countries with higher CSR levels (Lu
program. It is accepted that CSR and BI are interconnected et al., 2020).
4 SAGE Open
CR as a Mediating Variable
CR is the result of an overall assessment of the total views of
an organization by all stakeholders (Cornelissen, 2011). CR
acts as a signal with the products and services of the compa-
nies, attracting more qualified employees in the labor market,
and preferring to work in highly reputable companies, which
is a high-level factor that enables employees to develop their
loyalty and attitude positively. Reputation is all about a com-
pany’s corporate actions. Podnar and Balmer (2013) stated
that they can have a direct and indirect effect on establishing
and influencing CR, focusing on the employer’s brand and
corporate BI. There is an overlap in the literature on concep-
tual, empirical, and methodological studies of EB, and CR.
Figure 1. Conceptual model.
The concept of reputation is often used to express the EB
(Cable & Turban, 2003). Ruiz et al. (2016) state that the EB
was associated with CR and was interconnected, defined as EB and BI perceptions and the mediating effect of CR on this
its protector and pioneer. Studies have shown that CR posi- event.
tively affects EB (Tkalac Verčič & Sinčić Ćorić, 2018).
Having good CR is an important factor for gaining competi-
tive advantage (Sánchez & Sotorrío, 2007). CR reveals the
Data Collection and Measurement Instruments
quality of products and services, and it allows for the creation A survey was used to collect data from the study population
of BI by differentiating it from its competitors. Although BI of employees from various enterprises. Survey items were
and reputation are two different things, they are clearly measured on a 5-point Likert-type scale (from 1 = strongly
strongly related and tend to be in the same direction, espe- disagree to 5 = strongly agree), and the survey contained
cially in times of crisis. In some cases, a strong BI can over- two sections. The first section contained demographic ques-
come reputation problems, and reputation problems can also tions, such as participant gender, age, education, and depart-
damage a strong brand. CR is used as an overview of all ment; the second section contains items known to measure
stakeholders (Tischer & Hildebrandt, 2014). Hoejmose et al. all constructs examined in the study. Twenty different SMEs,
(2014) stated that reputation is more permanent than image, which have 50 to 250 numbers of employees and located in
and reputation is a source of support in negative situations. It the Marmara region from Turkey, are selected. Evaluation is
is seen as a signal that guides stakeholders’ perceptions of the done among employees who have worked in the company
organization. It is concluded that CR has a mediating effect for more than a year, at least 10 people from each company.
on the relationship between CSR and brand performance The reason for this is that employees who stay in their com-
(Lai et al., 2010). According to the results, it is stated that panies for more than a year have more information about
employee-oriented CSR activities will increase the CR per- their CSR activities. During the data collection process, 20
ceptions of an institution positively. It is assumed that SMEs, which agreed to participate in our survey, were deter-
employees’ CR perceptions will also mediate the impact of mined as a result of the interview from SMEs operating in
employee-oriented CSR activities on employees’ EB and BI the production area in the Marmara region using the random
perceptions. This leads to the third and fourth hypotheses: sampling method. The total number of employees of these
SMEs is 3,000. Questionnaires were sent online to SMEs.
Hypothesis 3 (H3): CR has a mediating role between Return was received from 725 employees; 559 of these
CSR and EB. employees worked more than 1 year. According to the ran-
Hypothesis 4 (H4): CR has a mediating role between dom sampling method, approximately 3,000 employees in
CSR and BI. total need 341 in the 5% error and 95% confidence intervals,
and 543 employees in the 5% error and 99% confidence
The potential effects of CSR on EB and BI are investi- intervals; 559 employees responded to the survey.
gated. In addition, the study also examines the role of the Demographic characteristics are as follows: 75.5% of the
mediating effect of CR between CSR, EB, and BI. Based on respondents are men and 24.5% are women. In terms of the
the theoretical framework and purpose of the study, a con- departments of respondents, 25.6% were from production,
ceptual model of the research is portrayed in Figure 1. 22.5% from engineering/design, 14.8% from research and
development, 12.3% from a department not listed elsewhere,
8.9% from marketing, 7.5% from management, 5.7% from
Research Method
accounting/finance, and 2.5% from human resources. The
The main aim of the study is to empirically test the effective- distribution of highest educational attainment among respon-
ness of employee-oriented CSR activities of companies on dents was as follows: undergraduate degree, 64.8%; graduate
Özcan and Elçi 5
degree (except doctoral degree), 12.7%; 2-year college distinctiveness validity, requires that the correlation between
degree, 9.3%; high school, 8.8%; and doctoral degree, 4.5%. an unobservable variable and other unobservable variables
The items in the second part of the study were taken from be smaller than the square root of the AVE (Fornell &
scales with proven validity and reliability. As seen as in Larcker, 1981). Furthermore, for convergence validity, the
Appendix, the scale to measure employee-focused CSR was loadings of basic variables should be higher than .70
adapted from Turker (2009). The employee-focused CSR (Hulland, 1999).
was measured by means of an 11-item scale. The scale to As seen in Table 1, the AVE values are higher than the
measure EB was adapted from Knox and Freeman (2006) threshold value of .50, Cronbach’s alpha values are higher
and Lievens et al. (2007). The EB was measured by means of than the threshold value of .60, and the CRI values were
a four-item scale. The scale to measure BI was adapted from higher than the threshold value of .70. Thus, it was concluded
Bravo et al. (2010). The BI was measured by means of a that all the convergence criteria were met. In Table 2, in the
seven-item scale. The scale to measure CR was adapted from discriminant analysis used in the assessment of the distinc-
Ponzi et al. (2011). The CR was measured by means of a tiveness criteria, the values shown in bold letters indicate the
four-item scale. square root of AVE values. The other values indicate the
between-variable correlation coefficients. For all criteria, the
square root of the AVE values was higher than the correlation
Data Analysis values, indicating that the model satisfies this distinctiveness
The partial least squares (PLS) method, a variance-based criterion. The loadings applied to the activators of each indi-
method used to estimate composite-based path models, was cator (as another distinctiveness criterion) should be higher
used for data analysis. It is a multivariate statistical tech- than the cross-loadings to other activators. As seen in Table 2,
nique that can infer causal relations (Henseler et al., 2016). all indicators can be grouped by taking the highest loading
PLS data analysis is separated into two phases (outer and among the assumed activators, so the measurement model
inner) and uses a structural analysis model wherein hypoth- satisfies this distinctiveness criterion also.
eses are tested by examining the relations among latent vari- The reliability and validity of the four scales used in this
ables and path coefficients with confirmatory factor analysis study were carried out with the second-order CFA using the
(CFA) used to test the reliability and validity analyses of the maximum likelihood method. In the reliability analysis, it
measurement model. was evaluated with Cronbach’s alpha and CRI. CFA results
are presented in Table 1. The results suggested in the litera-
ture were obtained for model compatibility of CFA. In our
Assessment of Outer Measurement Model measurement model, it was concluded that all of the general
Two types of assessments of the conceptual model were goodness-of-fit (GOF) measures were acceptable, and there-
conducted using the PLS structural modeling system. These fore structural validity was provided. It is seen that all the
assessments are in the form of an assessment of the internal factors of the relevant factors are important (p < .001), the
structural model, which characterizes the relations among loads of all factors are more than .60, Cronbach’s alpha and
unobservable variables, and an assessment of the external CRI are more than .70, and the variance extract index (VEI)
measurement model, which characterizes the relation is more than .50. All values show evidence that the validity
between unobservable and observable variables. The analy- of reliability and convergence is sufficient, justifying the
sis of these models was performed using Smart PLS pro- internal reliability of the scale used.
gram, which was also used to check the model validity. In
the assessment of the external measurement model, both
Assessment of Inner Structural Model
convergence and discriminant validity need to be evaluated
when studying the relationship between activators and their After confirming the reliability and validity of the model in
indicators. Convergence validity, an indicator of internal terms of convergence and distinctiveness validity, the struc-
consistency, requires that each indicator measures only the tural validity, which indicates the model’s relations among
activator it is assumed to measure (i.e., indicators should not the structures, was conducted. In this assessment of the inter-
measure other activators). The assessment of convergence nal structural model, the following were performed for the
validity was based on Cronbach’s alpha, the composite reli- controlled variables: multicollinearity assessment, t-statistic,
ability index (CRI), and the average variance extracted path coefficient (β value) testing, and evaluation of effect
(AVE) values. The distinctiveness validity was based on dis- size and predictive relevance.
criminant validity and activator loadings. A model is con-
ventionally considered good if Cronbach’s alpha is at least Measuring the value of R2. For the squared correlation value
.60 and the CRI score is higher than .70 (Rahman et al., (R2), which indicates the model’s predictive power, it is sug-
2013). Alternatively, an AVE of at least .50 can be consid- gested to consider values of .67, .33, and .19 as the boundaries
ered sufficient for convergence validity (Fornell & Larcker, for substantial, moderate, and weak predictions, respectively
1981). Discriminant validity, which is used in evaluating (Hair et al., 2011). For the unobservable variables, from the
6 SAGE Open
Note. χ2(df = 525) = 858.865, χ2/df = 1.634, p < .0041, CFI = 0.920, GFI = 0.930, AGFI = 0.925, SRMR = 0.032, and RMSEA = 0.054. AVE = average
variance extracted; CRI = composite reliability index; VEI = variance extract index; CSR = corporate social responsibility; EB = employer brand; CR
= corporate reputation; BI = brand image; CFI = comparative fit index; GFI = goodness of fit index; AGFI = adjusted goodness of fit index; SRMR =
standardized root mean residual; RMSEA = root mean square error of approximation.
Table 2. Discriminant Validity. the t-values) were examined. The critical t-value is 1.96 for a
significance level of 5% and 2.58 for a significance level of
BI CSR CR EB
1% (all two-tailed, Figure 3; Hair et al., 2011). As seen in
BI .826 Table 4, the path coefficients of both the inner and outer
CSR .792 .805 models were significant (p < .01). As seen in Table 3, for the
CR .768 .793 .891 effect sizes (f 2), when the independent structure of the model
EB .759 .756 .733 .790 is ignored, the effect sizes of independent values on depen-
Note. CSR = corporate social responsibility; CR = corporate reputation;
dent values are determined by measuring changes in the
EB = employer brand; BI = brand image. value of R2. It is recommended to set the effect size thresh-
olds (at the structural level) for f 2 to .35 for large, to .15 for
medium, and to .02 for small (Hair et al., 2011).
analysis results shown in Figure 2, EB (.572), BI (.687), and
CR (.670) all had substantial predictive power. 2
Rincluded − Rexluded
2
f2 = .
Path Coefficients (β Values) and t-Statistic Values, Effect Size f 2. 1 − Rincluded
2
Dependent construct İndependent construct R2 (included) R2 (excluded) Effect size (f 2) İnference
EB CSR .687 .578 .348 Medium to large
CR CSR .572 .535 .409 Medium to large
BI CSR .670 .626 .195 Medium to large
EB CR .687 .632 .175 Medium to large
BI CR .670 .629 .124 Small to medium
Note. EB = employer brand; CSR = corporate social responsibility; CR = corporate reputation; BI = brand image.
Appendix
Variables of the study Number of items
CSR
Social and non- CSR1. Our company tries to invest in future generations.
social stakeholders CSR2. Our company tries to contribute to organizations and projects that will contribute to society.
responsibility CSR3. Our company targets sustainable growth that will take care of future generations.
CSR4. Our company attaches importance to social responsibilities aimed at the community.
CSR5. Our company invests in research and development aimed at protecting and improving the natural
environment.
Employee CSR6. Our company has a management that attaches importance to the requests and needs of employees.
responsibility CSR7. Our company has policies that encourage employees to develop their talents and careers.
CSR8. Our company supports its employees who need training and contributes to their development.
CSR9. Our company adjusts working conditions that are harmful for the health of employees and which are
unsafe and allows flexible work hours.
Legal and ethical CSR10. Our company attaches importance to fulfillment of its legal obligations to the state on time and in full.
values responsibility CSR11. Our company attributes great importance to customer satisfaction.
EB EB1. I’m in a good relationship with my superiors in the institution where I’m working.
EB2. In the institution where I’m working, the managers care about the employees.
EB3. In the institution where I’m working, the managers are sincere with the employees.
EB4. Competent employees are selected for this institution.
CR CR1. This firm is an organization I have a good feeling about.
CR2. This firm is an organization that I trust.
CR3. This firm is an organization that I admire and respect.
CR4. This firm has a good overall reputation.
BI BI1. This enterprise has better product/service quality than its competitors.
BI2. This enterprise has better environmental responsibility than its competitors.
BI3. This enterprise is more innovative than its competitors.
BI4. This enterprise has a more qualified workforce than its competitors.
BI5. This enterprise invests more in its employees than its competitors do.
BI6. This enterprise/company provides high-quality, innovative products or services.
BI7. This enterprise/company has a clear vision of its future and provides excellent leadership.
Note. CSR = corporate social responsibility; EB = employer brand; CR = corporate reputation; BI = brand image.
10 SAGE Open
Declaration of Conflicting Interests Cable, D. M., & Turban, D. B. (2003). The value of organizational
reputation in the recruitment context: A brand-equity perspec-
The author(s) declared no potential conflicts of interest with
tive. Journal of Applied Social Psychology, 33(11), 2244–2266.
respect to the research, authorship, and/or publication of this
https://doi.org/10.1111/j.1559-1816.2003.tb01883.x
article.
Carroll, A. B. (1991). The pyramid of corporate social responsi-
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The author(s) received no financial support for the research, author- 1016/0007-6813(91)90005-g
ship, and/or publication of this article. Cho, C. H., & Patten, D. M. (2013). Green accounting: Reflections
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ORCID iD Perspectives on Accounting, 24(6), 443–447. https://doi.org
/10.1016/j.cpa.2013.04.003
Fatih Özcan https://orcid.org/0000-0002-4928-0125
Chon, M. L., & Yoo, J. M. (2013). The internal impact of CSR on
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