UNIVERSITY OF LJUBLJANA FACULTY OF ECONOMICS

MASTER’S THESIS

CORPORATE SOCIAL RESPONSIBILITY AND CONSUMER’S WILLINGNESS TO PAY

Ljubljana, September 2017 ANJA BAVČAR

AUTHORSHIP STATEMENT

The undersigned Anja Bavčar, a student at the University of Ljubljana, Faculty of Economics, (hereafter: FELU), author of this written final work of studies with the title Corporate social responsibility and consumer’s willingness to pay, prepared under supervision of prof. dr. Vesna Žabkar

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TABLE OF CONTENTS INTRODUCTION ................................................................................................................... 1 1 CORPORATE SOCIAL RESPONSIBILITY AND WILLINGNESS TO PAY –

THEORETICAL OVERVIEW ....................................................................................... 51.1 Corporate social responsibility (CSR) ........................................................................... 5

1.1.1 Defining CSR ...................................................................................................... 51.1.2 Overview of development of CSR ...................................................................... 71.1.3 Stakeholders and CSR ....................................................................................... 141.1.4 Advantages of CSR ........................................................................................... 151.1.5 Disadvantages of CSR ....................................................................................... 161.1.6 Globalisation and CSR ...................................................................................... 161.1.7 CSR standards ................................................................................................... 181.1.8 Adidas’ sustainability measurements ................................................................ 191.1.9 Crisis’ effect on CSR ......................................................................................... 191.1.10 Environmental CSR ......................................................................................... 20

1.2 Willingness to pay (WTP) .............................................................................................. 211.2.1 Defining WTP ................................................................................................... 211.2.2 Classification of methods to measure WTP ...................................................... 22

1.3 Impact of consumer’s psychology and knowledge about CSR on WTP ....................... 241.3.1 Perceived value theory ...................................................................................... 271.3.2 Equity theory ..................................................................................................... 281.3.3 Institutional theory ............................................................................................ 281.3.4 Corporate identity theory ................................................................................... 28

2 CASE PRESENTATION ................................................................................................... 29

2.1 Fashion and environment ............................................................................................... 292.2 Adidas AG ...................................................................................................................... 30

2.2.1 History ............................................................................................................... 302.2.2 Adidas and sustainability ................................................................................... 31

2.3 Parley for the Oceans ..................................................................................................... 342.4 Evolution of Parley sneakers .......................................................................................... 35

3 EMPIRICAL RESEARCH ................................................................................................ 38

3.1 Methodology .................................................................................................................. 383.2 Population and sample characteristics ........................................................................... 403.3 Research hypotheses ...................................................................................................... 43

4 SURVEY RESULTS AND MAIN FINDINGS ................................................................ 46

4.1 Statistical analysis .......................................................................................................... 464.1.1 Overlap between organisational attributes and customer’s individual attributes,

and willingness to buy ...................................................................................... 464.1.2 Beliefs about corporate socially responsible company and willingness to pay

higher price .................................................................................................... 474.1.3 Personal tendency towards social responsibility and willingness to pay more for

socially responsible products and services ........................................................ 474.1.4 Factors (price, quality, design, CSR etc.) that affect customers’ buying decisions

for sneakers ....................................................................................................... 484.1.5 Demographic characteristics as predictors of WTP for Parley sneakers ........... 50

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4.1.6 Demographic characteristics as predictors of WTP for socially responsible goods in general ........................................................................................................... 52

4.1.7 Demographic characteristics as predictors of WTP for socially responsible goods in general, without financial limits ................................................................... 54

4.1.8 Self-social responsibility and socially responsible companies .......................... 564.1.9 Adidas’ CSR and young Slovenian consumers’ willingness to pay .................. 56

4.2 Descriptive statistics of CSR .......................................................................................... 594.3 Summary of main findings ............................................................................................. 604.4 Limitations and recommendations for further research ................................................. 63

CONCLUSION ....................................................................................................................... 64 REFERENCE LIST ................................................................................................................ 65 APPENDIXES

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LIST OF TABLES Table 1. Comparative evaluation of competing methods for measuring WTP……...……..…23 Table 2. Reviewed literature for construction of survey’s method………………….....……..39 Table 3. Factors affecting WTP the most for Parley footwear………………………...……...52 Table 4. Factors affecting WTP the most for socially responsible products……………….....53 Table 5. Factors affecting WTP the most for socially responsible products without financial

limitations…………………………………..……………………….……………….56 Table 6. Summary of hypotheses’ main findings……………………………………………..58 LIST OF FIGURES Figure 1. Graphic presentation of CSR ...................................................................................... 6Figure 2. The Corporate Social Performance Model ................................................................. 9Figure 3. Carroll’s pyramid of social responsibility ................................................................ 10Figure 4. Triple bottom line ..................................................................................................... 11Figure 5. Share of socially conscious consumers who think companies should support these

specific causes (in %) .............................................................................................. 15Figure 6. Classification framework for methods to measure WTP ......................................... 22Figure 7. Top sustainability purchasing drivers for global respondents vs. those willing to

pay more .................................................................................................................. 24Figure 8. Conceptual framework ............................................................................................. 28Figure 9. Victorious German Football Team in 1954 World Cup, wearing Adidas screw-in

spike shoes ............................................................................................................... 31Figure 10. 15 years of transparency and disclosure at the Adidas group ................................ 32Figure 11. Six elements of ‘Sport needs a space’ strategy ...................................................... 33Figure 12. The journey of an Adidas x Parley product ............................................................ 35Figure 13. First concept of Parley shoes, 2015 ........................................................................ 36Figure 14. First limited edition of 50 pairs of Parley shoes ..................................................... 36Figure 15. Limited Edition of 7000 Parley shoes, launched on November 4th 2016 ............... 37Figure 16. Price range of Ultra Boost Uncaged sneakers ........................................................ 37Figure 17. Tailored Fibre Placement ....................................................................................... 38Figure 18. Millennials by gender and CSR .............................................................................. 41Figure 19. Demographic characteristics of participants (in %) ............................................... 42Figure 20. Factors, influencing purchase of sportswear in general (in %) .............................. 49Figure 21. Factors, respondents assigned to Parley sportswear (in %) .................................... 49Figure 22. Parley sneakers’ features, positive answers – neutral description (in %) ............... 57Figure 23. Parley sneakers’ features, positive answers – CSR description (in %) .................. 57Figure 24. Reasons why corporations support CSR (in %) ..................................................... 60

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INTRODUCTION Consumers are becoming more and more thoughtful and selective about their buying decisions, since information is coming from all sides and the customer communicates with different sources (Kapferer, 2008). In modern times, companies deal with global competition, decreasing brand differentiation and enormous media power (Sen, 2006). Last decade was marked with global crisis, which changed the rules of the game as well. Thereby, there are hard times for companies to convince purchasers about their brand and products being better from the competitors’ ones, and worth purchasing by higher price. Firms need to find the point of difference to satisfy consumers’ needs and beliefs, sweep the competition, build a strong appreciated brand and thereby gain the loyalty of the clients (Barboza, 2016; Kapferer, 2008). Companies, especially global ones, cannot be determined as an individual subject due to their integration in broader surroundings. Their actions effect wider social perception and activities, so they need to be incorporated socially and legally in society (International Standard Organisation – hereinafter ISO, n.d.a, n.d.b; What is Corporate Social Responsibility? – hereinafter CSR, 2016). Corporations create enormous profits what gives them a certain power as well as responsibility to influence the environment they exist in. Their first duty is to create money but simultaneously to contribute to community’s welfare in many different ways. To satisfy the stakeholders (individuals or groups, who influence or are influenced by the entity) (Amaeshi, Osuji, & Nnodim, 2007), and subsequently the condition of the profit, companies became progressive and innovative. They invent new strategies and develop competitive advantages, which could create a difference in buyers’ eyes (Kapferer, 2008). In 21st century, companies, primarily in developed economies, recognized important tools, which could make a difference - corporate social responsibility and sustainability. CSR is certainly one of the game changers. Concept is enticing more and more attentiveness in last few decades from companies, their stakeholders, consumers and academics. It tries to explore the companies’ awareness of their actions’ effect on shareholders, society and environment, and implement them without secure plans for immediate financial results. It is a soft factor, which characterizes guidelines and prepositions, not rules (Murray & Vogel, 1997; United Nations Industrial Development Organisation – hereinafter UNIDO, 2012). Many definitions were made, but they all have in common long-term managerial responsibility of companies towards society and themselves, concerning economic, ecological and social factor, including corporate ethical and transparent behaviour (Lee, 2008; Sen & Bhattacharya, 2001, p.226; Tully & Winer, 2013). Sustainability can be described as term defining that business should be led without harmful impact on the environment and irretrievably exploitation of natural sources on a long term, and with this providing constant, solid and steady growth (Sustainability, n.d.). Terms have similar meaning, but not the same. CSR is commonly seen as corporate responsibility, which considers its impact to broader community, while sustainability could be one of these responsibilities. Difference can be found also in time frame - CSR captures former achievements and performance, whilst sustainability centres on the future improvement plans,

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especially the long-term one. CSR is focused on opinion makers, such as media and politicians; sustainability covers the whole supply chain from suppliers to end-consumers (Last, 2012). Overpopulation, polluted air and water, tons of rubbish, inequality and many more drives civilisation into the abyss. Corporations are among institutions, which can make a change. Precise and interesting innovations, implemented in goods and services, slowly but steady lead towards positive and green changes. With globalisation, corporations are able to spread their word and knowledge around the world and improve well-being of society. Diverse global markets bring different understandings of companies’ vision. To assure the most efficient and responsible business also outside domestic markets, companies adopted many different standards, which apply for the whole supply chain as well (Adidas Group, 2016d, 2016e; ISO, n.d.a, n.d.b). Besides standards, company’s vision needs to be implemented in all aspects of its business. This creates solid positive public image and encourages consumers to join the story. With raising awareness, firms increase buyer’s knowledge about CSR and change their beliefs and buying behaviour. Some scholars claim if firm’s agenda overlaps with customer’s beliefs, those feel more attracted to company’s products, sharing common interests and vision (Brown & Dacin, 1997; Lichtenstein, Drumwright, & Braig, 2004; Maignan & Ferrell, 2004; Marin & Ruiz, 2007; Sen & Bhattacharya, 2001; Sichtmann, Geigenmüller, & Žabkar, 2010). Some people value extrinsic feature as much as intrinsic ones. That means, not only the product and its features themselves are important (extrinsic), but as well under what conditions it was created and what is the external impact of production (intrinsic) (Barboza, 2016). With CSR, companies can convince customers that their purchase helps to contribute to better world (Cargo Collective, 2015). Difficulty of predicting behaviour initiated many research studies, which led to diverse results. There are many ‘green’ innovative products in the market, which promises better tomorrow and greater customer’s satisfaction. Not only they offer same features as comparable ones, they are made under strict CSR conditions as well. Consequently, numerous companies charge a premium price for these items. Are purchasers really willing to pay more for these items? How much more? Willingness to pay (hereinafter WTP) notes the highest price consumer is prepared to pay for a certain product. It rises with additional profits of the item, which cause greater satisfaction. Customers perceive price as a negative aspect of shopping, so the product’s features need to offer so many benefits that the product is worth of purchasing at given price (Etilé & Teyssier, 2013). As one of the leading sports manufacturing companies, Adidas feels the responsibility for its shareholders, customers and environment. It is an innovative corporation, which contributes a great portion of its profits to corporate social responsibility and improvement of working processes. As a global company, it tries to assure the quality in all subsidiaries and whole supply chain (Adidas Group, 2016d). In passion for saving the environment, it had teamed up with non-governmental organisation (hereinafter NGO) Parley for the Oceans (hereinafter Parley), which deals with harmful oceanic plastic waste. New techniques and a lot of imagination

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brought market a new extraordinary product – Ultra Boost Uncaged Parley sneakers (hereinafter Parley sneakers). This footwear is made out of recycled plastic garbage, using the modern technology with almost zero waste (Adidas Group, 2016d; Parley for the Oceans, 2016b). But revolutionary product has premium price as well – are consumers really prepared to pay more for socially responsible product and contribute to the better future? This thesis will try to examine the link between CSR and WTP. CSR became an important objective on agenda of corporations. The topic is becoming more and more significant every day and has been analysed by many authors. They have dealt with many aspects of the subject and gained different conclusions. Study will try to investigate given different standpoints and reveal if it really makes a difference in WTP for environmentally friendly products among young people in Slovenia. For experimental purpose, research will focus on German sport corporation Adidas and its newest product, sneakers Parley, which are the result of collaboration with NGO Parley, and are presented as ultimate green product. Goals of this thesis can be described as following: • To examine history, current situation and trends for companies and their CSR. • To investigate studies of many influential authors from the fields of corporate social

responsibility and willingness to pay, and try to offer critical conclusions from the articles (e. g. Barboza, G.A., 2016; Bhattacharya, C. B., 2001; Carroll, A.B., 1979; Dacin, P. A., 1997; Horrigan, B., 2010; Kapferer, J.N., 2008; Sen, S., 2001).

• To explain different buyer’s behaviour and try to inspect what are the triggers that lead to purchase.

• To inspect existing situation and predictions in environment, especially marine one, and sustainable fashion.

• To find the link between corporate social responsibility and willingness to pay. Based on the described objectives, thesis will focus on next research questions: 1. If there is an overlap between organisational attributes and customer’s individual attributes,

is there more chance that customers will buy a product from the company? 2. Does corporate social responsibility factor of a company have a positive engagement effect

on customer? 3. Are consumers with higher tendency towards CSR prepared to pay more for CSR products? 4. Do factors (price, quality, design, CSR etc.) that affect customers’ buying decisions for

sneakers in general, align with Adidas, and particularly Parley sneakers?

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5. Are young Slovenian consumers willing to pay a premium price for Adidas x Parley products and, if so, to what extent?

In search for the answers, quantitative method of analysis was applied. It was carried out among young Slovene people, aged between 18 and 34, often called Millennials. Study was built on two different portrayals. First one describes the company and product in general, neutral way while the second one includes many positive affirmations and tries to show Adidas enterprise and Parley sneakers as a socially responsible. Questionnaires distinguished in colours as well - neutral one was presented in brown, while CSR one was turquoise. Stories were tested with two groups; each got a different description. Afterwards, both divisions answered the same survey. With coherent questions, several aspects of customer’s view on CSR were tested. The results tried to answer the questions regarding the effect of CSR on customers, their awareness and if they are really prepared to pay more for an environmentally friendly product from socially responsible company. Questionnaires were distributed online, because the target group of young Slovenian people commonly uses this channel. Written work consists of researches based on theoretical and empirical studies. In the first part, an in-depth theoretical and analytical part is presented, consisting of different scientific literature from foreign as well as domestic authors. It summarizes definitions, observations, thoughts, insights, findings and conclusions from different sources. Second, empirical part is explained through different examination methods, combined out of primary and secondary data. Adidas provided secondary data about already made studies. In the process of creating master thesis, theoretical knowledge acquired at postgraduate studies is applied. Master thesis entails out of four main chapters. Introduction consists of purpose and objectives of the thesis. Initial section is dedicated to presentation of CSR and WTP. First segment describes development of CSR, different models, definitions, its dependence on stakeholders, advantages and disadvantages, globalisation’s effect on CSR, main standards that assure company’s CSR is implemented in all levels around the world equally, and consequences of global crisis. Furthermore, it exposes environmental aspect of CSR, which will be in the foreground of the thesis, and general importance of preserving oceans. Second segment portrays definition of WTP and different approaches to classify and measure WTP. The connection of both concepts is summarized in different behavioural theories, which are derived from customer’s knowledge and awareness. Second chapter describes case presentation. General description of fashion’s impact on CSR is followed by presentation of Adidas AG company. Chapter examines Adidas’ history, CSR role, development and accomplishments. Latter is based on different reports and articles, and studies company’s global impact, standards, and sustainability plans and achievements. This chapter also introduces NGO Parley, their development and goals. The result of collaboration between the companies are Parley sneakers, which are socially responsible product and will be the centre of thesis’ research. In third chapter, empirical research is explained. Section includes explanation of methodology, population and sample characteristics, hypotheses and analysis. Last chapter summarizes the results of impact

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of CSR on WTP in Adidas x Parley case among Millennials in Slovenia, introduces limitations and suggests recommendations for future researches. Conclusion of the thesis reviews the main findings and suppositions for the future. To create a firm red line of this study, thesis was made with few assumptions and limitations: precise results of CSR impact on company can be observed only after a long-term period of time. Buyer’s behaviour can be explained by several theories but at the end it is still unpredictable. Furthermore, well-known corporations put a lot of effort in their sustainable business strategies to get advantages in the eyes of consumers. Empirical examination for this thesis will be done through two different stories and a questionnaire. It can be assumed that participants will not double and the answers will be credible. Thesis also met some limitations. First one is examination of young Slovenians only. Their answers can differ from other markets’ responses due to crisis, small market and lack of knowledge regarding CSR, Adidas and Parley. Second is ambiguousness of the product. At the time of writing the thesis, Parley sneakers were only launched, so awareness of the product was low. Last but not least are many different factors that influence buyer’s behaviour and this thesis did not capture all. This aspect can be interesting for further examination.

1 CORPORATE SOCIAL RESPONSIBILITY AND WILLINGNESS TO

PAY – THEORETICAL OVERVIEW

1.1 Corporate social responsibility (CSR) 1.1.1 Defining CSR CSR is a fundamental element in modern business concept (Barboza, 2016). Because of different authors’ standpoints, several definitions were made (Lee, 2008). Yet, seldom the clear ones are given, what makes theoretical development, and consequently measurements, challenging (McWilliams, Siegel, & Wright, 2006, p.1). CSR broadly represents managerial responsibility to defend and develop both – well-being of society as a whole as well as the interest of organisations (Sen & Bhattacharya, 2001, p.226). ISO 26000 defines it as responsibility of an organisation for the impacts of its decisions and activities on society and the environment, through transparent and ethical behaviour (Tully & Winer, 2013, p.7). Green paper by Commission of European Communities (2001, p.8) identifies it as “a concept, whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis”. CSR can be also described as actions an enterprise develops to meet dynamic expectations of business, social environment and stakeholders by gaining a positive impact and reducing any unfavourable effects on society (Maon, Lindgreen, & Swaen, 2009; Sichtman, Geigenmüller, & Žabkar, 2010, p.2), expand competitiveness of the company and increase stock market performance (Marin & Ruiz, 2007, p.3). Kotler & Lee (2008, p.3) describe it as a commitment to improve community well-being through discretionary practices and contributions of corporate resources. In this case, well-being can involve human condition as well as environmental matters. It is a situation where the

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company ‘goes beyond compliance and engages in actions that appear to further some social good, beyond the interests of the organisation and that which is required by law’ (McWilliams et al., 2006, p.1). By Barboza (2016), CSR can be seen as reduction of external harm made by production of the item, and so satisfy the customer’s needs about extrinsic and intrinsic characteristics of the product. Some studies state that purchasers pay more attention to CSR if brands are rather unknown (Haase, Kohlmeyer, Rich, & Woll, 2016, p. 45). Term does not only capture the immediate effect, CSR in its core provides suitable today’s actions for a better future. On the other hand, sustainable development satisfies the current needs without endangering future generations. It represents the perfect balance between economy, ecology and social performance (Figure 1) (Lee, 2008).

Figure 1. Graphic presentation of CSR

Source: UNIDO, What is CSR?, 2012.

Khojastehpour & Johns (2014) claim that companies implement CSR for four main reasons - pure altruistic motives to contribute to better world, to increase their brand image in the eyes of different stakeholders, to decrease employing fluctuation, and to attract consumers, which value CSR goods. CSR for moral community can be divided in next sections: Economic Responsibility (responsibility to make money), Legal Responsibility (responsibility to obey the law in an understandable and proactive manner. CSR shall not only represent the burden, but it supposed to be implemented to create better conditions for society), Ethical responsibility (responsibility to do the right thing) and Philanthropic responsibility (includes public generosity and act of the company as a good citizen) (Philosophia, 2016). By Horrigan (2010), four main

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CSR types can be defined – environmental-focused, community-based, human resource-based, and charity-based CSR; further description for each is specified below. 1.1.2.1 Environment-Focused CSR This type of CSR concentrates on decreasing harmful effects of the corporation’s operations on the environment. Corporation needs to be innovative with materials, production and products to lessen environment harming by-products and waste. This type investigates new possibilities regarding renewable energy and sources to prevent harm caused by burning of fossil fuels and unnecessary leftovers (Horrigan, 2010). The thesis is focused on this aspect of CSR. Sports fashion corporation Adidas engaged in collaboration with NGO Parley and created environmental friendly sneakers made of recycled plastic from ocean waste. In practical part examination will measure the impact this approach has on perception of customers, if it really makes a difference in buyers’ eyes, and what buyers appreciate in this type of CSR. 1.1.2.2 Community-Based CSR In this type, corporation collaborates with other institutions and organisations, typically non-profit ones, to contribute to well-being of local community. Organisations receive founding or found different areas to improve the living conditions of society (Horrigan, 2010). 1.1.2.3 Human Resource (HR)-Based CSR Companies contribute to well-being of their employees in different ways, including paternity leave and medical insurance (Horrigan, 2010). 1.1.2.4 Charity Based CSR The most common CSR activity deals with companies’ donations to organisations or individuals, typically through a charity partner, to improve their financial condition and consequently welfare. Most corporations provide direct financial assistance to organisations or individuals who require such support (Horrigan, 2010). 1.1.2 Overview of development of CSR The word responsibility has its roots in Latin word responsabilis or respondeo (Responsible, n.d.), what can be translated as answerable, offered in return, to respond (Amaeshi et al., 2007). It roots from the concept of morality. Word marks the company’s obligation for responsible actions towards common well-being of society and environment. The history of Western philosophy regarding moral responsibility leads back to ancient Greek philosophers, especially Aristotle. In Nichomachean Ethics, Aristotle assumes that condition for responsible act is a

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voluntary act from an individual, which is aware of his actions. Philosopher Kant argued that the idea of moral responsibility derives from the perception of a person as moral agent. This is rational with strong sense of duty, no matter the consequences. Moral practices do not necessarily maximize utility, but they follow moral principles that can become universal moral laws (Amaeshi et al., 2007). Several researches have examined, rejected and confirmed many different theories. In the past, corporate social responsibility did not play an important role; furthermore, it was even considered to decrease maximum utilization of shareholders and their profits. Without aligning with stockholders’ interests, CSR seemed inadequate. In the past, companies perceived CSR only as less important competitive advantage, what changed in time; in modern economy, CSR does not represent deviation of a conventional business, but an important business imperative in the global international involvement (Lee, 2008). First notion about modern CSR dates back in 1930s. Reference is assigned to two Harvard University professors, A.A. Berle & C.G. Means. They advised corporations to revise their business and take responsibility for society after the Great Depression in 1929 (Radu, 2009). Another mention from this time comes from Wendell Wilkie, who ‘helped educate the businessman to a new sense of social responsibility’. An important early work was ‘Social Responsibilities of the Businessman’ from H.R. Bowen, released in 1953, which Carroll (1979, p.497) designates as ‘the first definitive book on the subject’. 1960s were years of great movements. Civil rights movement, consumerism and environmentalism challenged perspective of society on business behaviour. In these years, Organisation for Economic Co-operation and Development (hereinafter OECD) was established to set the guidelines for sustainable economic growth, employment and other living standards, and simultaneously maintain financial stability (Horrigan, 2010). Early contemporary scientific research studies CSR date back in 1970s. Many companies faced mergers and acquisitions. Social and environmental issues, formed by firms, were increasing so companies needed to take care of their responsibilities. Stockholders entered new era of business. They were not interested in maximizing profit only in one company. They spread their investments in several diverse portfolios to decrease the risk, so the attitude towards CSR changed. With these conditions, they became interested in achieving social optimization and spread social expenditures evenly over all companies in their portfolios to reach the point where marginal costs equal marginal appropriate outcomes. Social responsibility was recognized as an interesting factor in stockholders’ long-term interests due to its impact and strength on the community and environment. It has been realised that firms, according to improve their client base and support structure, have a responsibility to create their decision-making process, in accordance to the external social system, in a way to align social benefits along with the traditional economic benefits. Next big step was done in 1979 with Carroll’s ‘Three-Dimensional Conceptual Model of Corporate Performance’ Academy of Management Review

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article. He proposed three-dimensional model of corporate social performance (hereinafter CSP) (Figure 2) (Lee, 2008). Carroll stated that CSP requires assessing of company’s social responsibilities, identification of social issues CSP must address, and choosing of a response philosophy (Carroll, 1979). This model combines three different aspects in one study – corporate social responsiveness, social issues and CSR. To avoid abstract relationship between business and society, he concentrated on a connection between company and its immediate surrounding environment. He tried to show that societal and business aims do not exclude each other. Both can be included into the context of total social responsibility of business, including economic, legal, ethical and discretionary categories. Latter can reach different extents but at the end they all create the whole organisation’s social responsibility. Furthermore, each category can be implemented on different levels – reactions, defence, accommodation or pro-action (Lee, 2008).

Figure 2. The Corporate Social Performance Model

Source: A.B. Carroll, A three-dimensional conceptual model of corporate performance, 1979, p. 503.

Reaction could be seen as corporate denial for social troubles; defence is shown, when company confesses responsibility, but fights it with the lowest effort; about accommodation we talk when firm accepts responsibility, but only after requests of segmented stand-alone groups; pro-action is expressed when organisation wants to go beyond industry norms (Kaplan Financial Knowledge Bank, 2012). This model enables a base for a firm’s strategic response to a social issue that can be acknowledged and assessed. Carroll considered academic as well as managerial aspects. For the first ones, he tried to offer a comprehensive framework to understand various standpoints of CSR. For managers, he wanted to deliver a tool to support them in analytically thinking through the main social issues they confronted (Lee, 2008). In the same article, Carroll provided new pyramid scheme (Figure 3), which easily pictures four stages of social responsibility. He defined CSR as ‘the entire range of obligations business has to society, and it must embody the economic, legal, ethical, and discretionary categories of business performance’ (Carroll, 1979, p.499). This tool combines different types of

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obligations and responsibilities, which arise from risks, what helps managers with long-term strategic plans and risk management (Carroll, 1979).

Figure 3. Carroll’s pyramid of social responsibility

Source: A.B. Carroll, A three-dimensional conceptual model of corporate performance, 1979, p. 499. The next important milestone was done in 1980s, with World Conservation Strategy, published by International Union for Conversation of Nature (hereafter IUCN). Plan included objectives for more stable world economy; stimulate global growth, world equality and decreasing poverty (Horrigan, 2010). Contemporary management adopted the concept of social responsibility in mid-eighties in parallel with the idea of sustainability. Latter was established through World Commission on Environment and Development report, more known as Our Common Future. It was published in 1987 as Brundtland Report, named after Norwegian President Gro Brundtland who chaired the commission at that time. Organisation has been focused on society, food quality, environment, energy, industry and overpopulation (United Nations Economic Commission for Europe – hereinafter UNECE, n.d.). In nineties, the idea of CSR finally fully flourished. In this time, stakeholders realised that the difference between social and economic objectives is no longer the most important factor. The main problem became the survival of the organisations. In addition to shareholders, existence is affected with several other stakeholders including employees, governments and clients. This network established complex relationships with observable implication to CSR (Lee, 2008). In 1994, John Elkington presented Triple bottom line (known as well as TBL or 3BL) (CSR Ambassadors, 2015) (Figure 4). Triple bottom line concept broadened the aspect of financial bottom line. Idea defends theory that any company needs to balance and measure three important factors – economic prosperity, social equity and environmental quality. For successful business, companies need to calculate the total outcomes from all three elements. The key challenge of the model is difficulty to measure societal and environmental bottom

DISCRETIONARYresponsibilities

Be a good corporate citizen

Contribute resources tot he community.Improve quality of life.

ETHICALresponsibilities

Be ethical.Obligation to do what is right, just and fair.

Avoid harm.

LEGALresponsibilities

Obey the law.Law is society’s codificationof right and wrong.

Play by the rules of the game.

ECONOMICresponsibilities

Be profitable.

The foundation upon which all others rest.

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lines. All three fields need to be measured separately. Model is also called People-Planet-Profit, since these are its essential factors. It does not include legal aspect what aligns with assumption that CSR is a voluntary state of act rather than rule (CSR Ambassadors, 2015).

Figure 4. Triple bottom line

Source: CSR Ambassadors, Triple bottom line, 2015.

In the mid-nineties, two new breakthrough researches were done. Author Clarkson (1995) stated that it is crucial to distinct between stakeholders’ issue and social issues. Latter can be defined as sufficiently substantial public issues that prompt eventual legislation or regulation. If there is no such legislation or regulation, it could be a stakeholders’ issue, but it is not necessarily a social issue. When the problem is classified, author claims it is crucial to define suitable levels of analysis (institutional, organisational and individual). Afterwards, responsible managers can efficiently analyse and evaluate the social performance of the companies and managers. Clarkson also introduced categories of several new measurements in the model. Simultaneously, Jones (1995) managed to support the theory with some testable hypotheses and create ‘instrumental stakeholder theory’ with thorough predictive ability. He connected the stakeholder model of CSR to various economic theories such as principal agent theory, team production theory and transaction cost economics. He adopted some principles, which base on behavioural assumptions. This theory had a great potential to become the central paradigm in the field of CSR (Lee, 2008). In the late nineties, authors including Rowley (1997) and Berman, Wicks, Kotha, & Jones (1999), endorsed the assumption that strategic stakeholder model, centred on economic aspect of CSR, has more empirical support than the intrinsic stakeholder model, which is connected to the moral side of CSR. In the first half of 2000s, stakeholders showed different interests in different CSR activities. This broadened the concept of CSR in various categories such as diversity, transparent accounting practices, and environmental responsibility. Argumentations stated if company engages in these practices, they could gain new opportunities for innovation, broaden their customer pool, and develop new relations. Strategic CSR does not distinct between

SUSTAINABLE

Bearable Equitable

Viable

PROFITPLANET

PEOPLE

Social variables dealing with community.education, equity, social resources, health,

well-being, and quality of life.

Environmental variables

relating to naturalresources,

water and air quality,energy conservation

and land use.

Economic variables

dealing withthe bottom lineand cash flow.

12

organisational social and economic aspects. At least in theory, CSR could have important effects on a firm’s financial outcomes (Murray & Vogel, 1997). Throughout the time, it became clear that CSR is not only a corporate responsibility, but it can improve the bottom line performance of the business. Responsibility has been rationalised by scoping on managerial issues at the organisational level. It broadens the focus to cover all types of business activities that cross with different stakeholders of the company. CSR and corporate performance are connected in both directions. CSR increased convergence of economical and societal interests on macro-political as well as organisational level. Idea of corporate performance expanded and covered social and economic interests on organisational and institutional stage. The concept was integrated in idea that efficient management requires the development of CSR practices to reduce non-market risks and expands overall company’s performance. CSR enables risk control, which is created by social changes, insecurity regarding environmental politics on global markets and fast-changing economic conditions. This idea did not demand any major changes in attitude or rationality of organisational elements (Lee, 2008). The idea of CSR works in both directions – through the time, corporations caused many negative external effects with their operations. Consumers became aware and started to demand more responsible act. To please their customers and positively increase their public image, companies adapted CSR practices (Barboza, 2016). Nowadays, CSR is implemented in business strategies of financially well-preforming companies as well of those which performance is not so favourable. Latter still invest in CSR with motivation that this strategy will eventually pay off. There are many fresh relations between corporations and their indirect or direct stakeholders such as government, communities, consumers, investors, employees, suppliers, taxpayers, and investors developing. CSR moved from altruistic to strategic element of business (Lee, 2008). Companies on different stages deal with different levels of CSR. Last has moved from minimal CSR, which included economical and law obligations, and was focused on business partners, to strategic CSR, which involves ethnical, environmental, philanthropic and other stakeholders’ perspective as well, and it does not necessarily yield immediate profit (CSR quest, n.d.). United Nations (hereinafter UN) accepted so called sustainable development goals, which cover many different fields, from human to environmental perspective. This thesis’ main objective, life below water, will be further explained in chapter 1.1.10.1 (Sustainable Development Knowledge Platform, n.d.; United Nations – Economic and Social Council, 2016). In the future, researches should put more attention on precise CSR measurements, especially in the field of objective behavioural aspects. Legislation improvements may as well lead to better implementation of CSR. There are already many studies, which measure companies’ performance and try to direct them in the right path. The new challenge is to implement the CSR practices in the core business of the companies (Lee, 2008).

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In their business strategy, companies should implement environmental and ethical component, plus human and consumers’ rights. Goals should be connected to mutual values with stakeholders, identification and confrontation of harmful influences, and development of innovative products, services and business models, which lead towards expansion of social welfare, better quality and better working conditions (CSR quest, n.d.). CSR can represent effort for health, safety, education, employment, environment, community and economic development, and other basic human needs and desires. It can be expressed in many forms including cash contributions, grants, paid advertising, publicity, promotional sponsorships, technical expertise, in-kind contributions, employee volunteers, and access to distribution channels. Monetary contribution may come directly from the firm or through its foundations focused on company’s creation of a good. Corporations can be involved individually or in partnership with others. They can be created and managed by a certain department within the company or by a team representing multiple business units. Trends are heading to growing corporate giving, corporate exposure on social responsibility activities, formation of a corporate social norm to do good, and an obvious transition from giving as an unnecessary obligation to giving as a strategy. Many company issue special sustainability report where the initiatives and plans are described to help companies being closer to the people and community (Kotler & Lee, 2008, p.4). In recent decades, many papers were written regarding CSR. They built a solid base, but there are still many uncovered areas including defining CSR, specifying motives for CSR, explaining specifics and differences across different countries and cultures, measuring the demand and costs, defining CSR strategies, modelling the effects of CSR on the company and stakeholders set, specify the results of leadership and corporate culture on CSR activities, and evaluate the current knowledge pool. These fields should be studied profoundly to ensure the quality for further practical implementation of CSR (McWilliams, 2006, p.8). There is distinction between altruistic and strategic CSR. First ones include e.g. social issue participation, while strategic can be described as stakeholder management. Studies have shown a positive relation between firm performance and strategic CSR, and on the other hand the negative correlation with altruistic CSR (McWilliams et al., 2006, p.12). CSR activities represent important factors of product differentiation and reputation building (McWilliams et al., 2006, p.10). Firms, that are socially responsible for internal as well as external stakeholders, can be described as sustainable, and the importance of sustainability can be manifested in social responsibility (UNIDO, 2012). CSR connotations reflect the company’s position and activities according to its perceived societal obligations (Brown & Dacin, 1997, p.68), and can be understood as a process and not a result (Podnar & Golob, 2002, p.964). Consumer’s associations are not always connected with organisation’s ability in producing goods, and corporate associations differ in their focus from product associations (Brown & Dacin, 1997, p.68). Because of this, is very important to consider collaboration among various societal parties, such as government, citizens and profit sector (Podnar & Golob, 2002, p.953). In the future, marketers should focus more on green purchasers in general. This would cause a major positive impact on society and environment and solve several ecological

14

issues (Laroche, Bergeron, & Barbaro-Forleo, 2001). Simultaneously, CSR demands time to learn about stakeholders’ expectations and develop new sustainable practices (Maon et al., 2009). CSR and its impact represent one of the most important global business factors in 21st century (Horrigan, 2010, p.3). 1.1.3 Stakeholders and CSR Stakeholders are closely connected to CSR concept. Notion captures all individuals or groups that are linked to the organisation. They highly affect organisation’s motivation and approaches when implementing CSR, since stakeholders present observer and demand (Maon et al., 2009). Stakeholders can be defined as employees (internal), shareholders, consumers, government, community, environment, suppliers, trade unions, business associates and competitors (external) (Amaeshi et al., 2007). They can also be divided in primary ones and secondary ones. First group portrays stakeholders whose direct impact is essential for the organisation to recognize the aim of producing goods and services. Secondary ones include political and social aspects, which support organisational business goals and enlarge their business credibility, such as NGOs, governments and local communities (Maon et al., 2009). CSR motivates internal stakeholders through higher motivation for company’s goals, grow and development. External shareholders exhibit their trust with fruitful long-term business collaboration (Marin & Ruiz, 2007, p.247). Enterprise must carefully define which stakeholder will prioritize, since it needs focused plan to successfully implement long-term CSR strategy and avoid misallocation of resources. Stakeholders are usually categorized by power, interest and influence they have on the company (Maon et al., 2009). Developing correct implementation demands time, effort and dedication (Maon et al., 2009). Goals become clear after a certain amount of time and evolution of processes. Without real commitment and enthusiasm, all these factors can discourage companies from successful application of CSR in their business (Horrigan, 2010). The concept of CSR needs to base on development of CSR within every individual company (Horrigan, 2010). To be implemented sufficiently, CSR vision must align with company’s goals, values and norms (Maon et al., 2009). Firm needs to include different expectations, desires, knowledge and interests of stakeholders in its long-term CSR strategy. Figure 5 shows that major certain demand is to ensure environmental sustainability, which is described in chapter 1.1.10. Durable CSR tactic requires a strong definition of company’s identification and goals. Short-term goals need to be aligned with the long-term vision that originates from strategy trends of the firm. Business objectives need to be synchronized with CSR ones. It is important for marketers to identify which CSR strategies will raise attention among their stakeholders so CSR strategy will bring desired results. Implementation of CSR in marketing function demands collaboration on all management levels, innovative thinking, knowledge, skills and constructive dialogue between all sides involved. Encouraging personal social responsibility has a key role for expansion and building the business at home as well as abroad (Horrigan, 2010).

15

Figure 5. Proportion of socially conscious consumers who think companies should support these specific causes (in %)

Source: The Nielsen Company, The global, socially-conscious consumer, 2012, p. 4.

1.1.4 Advantages of CSR Motives for CSR are different. Mutual focus can be found in business excellence, economic efficiency and added value. Caring for wider interests of all involved elements bring more trust, loyalty, profits and increases positive public image, reputation and influence. CSR firms have more loyal customers, easier access to financial capital, healthy long-term relationships with suppliers, loyal and motivated employees. It has been proven that companies with those characteristics have longer life cycle. Implementing CSR in business encourages companies to develop new competencies, capabilities and resources. It drives firms towards opportunity identification and innovations. This results in the company’s structure, human resources, technology and culture. CSR can be a factor that consolidates the firm’s position on the market. It boosts customer’s positive view towards the company; it increases corporate reputation, consumer brand association and value of the products. Institutions gain solid brand positioning, better corporate image and influence, and boosted appealing power. CSR improves attraction to investors and financial analysts. Its effect for business can be seen in increased long-term profitability, reduced risks, rising growth, expanding market shares, lower costs, higher ROI and providing free PR. Every new business connection demands checking credit ratings and performance indicators. Consequently, CSR can be an important factor in decreasing transactional costs caused by short-term collaborations. It reduces operating costs as well. It is also an important factor in maintaining contacts with politics and other elements of decision-making process in society. Corporations, which include higher levels of responsibility in their business in the eyes of stakeholders and business environment, record higher buyers’ trust and loyalty than competitors. Because CSR often cannot be seen directly from product, responsible companies need to be more transparent in their business and more informational towards stakeholders. CSR increases employees’ commitment, engagement, motivation, and

45

45

46

48

50

50

52

53

56

66

Protect animals

Promote gender equality

Achieve universal primary education

Increase access to clean water

Increase access to technology

Support small business and enterpreneurship

Provide relief following natural disasters

Eradicate extreme poverty and hunger

Improve science and technology

Ensure environmental sustainability

16

productivity, internally stimulates the search for efficiencies, and attracts new perspective workforce (Adidas Group, 2016d; Barboza, 2016; Kotler & Lee, 2008; Marin & Ruiz, 2007). 1.1.5 Disadvantages of CSR If not implemented correctly, CSR can disturb the focus on profitability, waste company’s resources and loose good business opportunities for well-being. Only to satisfy public image and not self-motivation, and exploiting CSR to hide negative aspects of the company can lead to greenwashing and harm public image for a longer period of time (Adidas Group, 2016d; Barboza, 2016; Kotler & Lee, 2008; Marin & Ruiz, 2007). Greenwashing describes embellishment of facts, which are overstated or even false. Their unsustainable practices are contradictory with their perceived green public image. The pioneer of greenwashing was American electrical company Westinghouse’s nuclear power division, which claimed their business is clean. Expression as it is today, first appeared in 1986. People received many media information through advertising, but they had limited public access to information. Essay, written by environmentalist Jay Westerveld, discussed new trend in the hotel industry. Hotels tried to raise a green awareness with more-than-one-day towel usage. Under the pretext of being environmental friendly, hotels wanted to decrease the washing costs (Watson, 2016). With such actions, negative effect is set on other CSR companies what consequently result in decreased trust of stakeholders. To prevent such problems, companies are required to lead a transparent business, with sustainability reports as well as financial transcriptions (GRI, n.d.). 1.1.6 Globalisation and CSR Globalization started to transform the organisations’ consciousness. Global market enables new business culture without boundaries, but also without any ethical guidelines (Podnar & Golob, 2002, p.963). Globalization is a broad notion, describing many changes on a level of society and individual stage. In last decades, the process impacted business vision and relations across the world. Changes are caused due to expansion of trading around the world and affect society, culture, politics and economy. Free market encourages migrations of people, knowledge, ideas, goods and money. It leads towards increasing interdependence of politics, economy, culture and society. In modern society, we can often hear the expression Global Village, which reflects unification of cultures, life styles and worldviews. Accordingly, every individual is aware of the world problems and for general well-being, since world represents his home. This leads to social responsibility and sustainability (Kaučič, 2013, p.18). Global market players often create the life of society involved in their business at home as well as in foreign countries with subsidiaries (Amaeshi et al., 2007). Multinational corporations can be entitled as ambassadors of globalisation. With expansion to foreign countries, companies share business culture, philosophy and vision. Almost every complex entry has a connotation of CSR – it brings new market the knowledge, managerial and organisational skills (Kaučič, 2013). Especially business at emerging markets still lacks the awareness towards CSR, but on

17

the other hand, in developing countries, customers are more conscious (Adidas Group, 2016d). Corporations have many financial, organisational and human resources for successful implementation of CSR. They are able to recognize the risks and prepare strategies to deal with them. Fast business conditions, uprising competition and non-market risks created forced firms to rethink measurements for success. With globalisation, markets became interdependent. Companies are not anymore valued only by profits, stakeholders demand from corporations to go beyond. Collaboration can identify the problems, solve them together and thereby contributes to improvements in highly globalised civilization. Responsibility exceeded business function of the company and became the key element in strategic orientation for the long-term business. Firms, which invest in CSR, will successfully continue with the practice abroad as well, under condition they choose appropriate CSR strategy that aligns with their operations. Latter as well includes new partners in the strategy when expanding assures reconciliation between company’s and new stakeholders’ interests. This helps to achieve efficient market entry and adjustment to new market’s specifications (Horrigan, 2010). On the other hand, corporations need to pay a lot of attention on responsible actions from their suppliers in accordance to maintain their positive public image. They are constantly targets of opponents, including competitors and protest groups, which would like to exposure its weak points (Amaeshi et al., 2007). The structure of primary and secondary rules for state responsibility under international law interrelates with primary and secondary rules of international law for the obligations and rights of individuals, corporations, and other involved. It needs simplify the transfer of rules for states and individuals to rules for corporations, to develop international law of corporate responsibility. Horrigan (2007), stated these guidelines as following: • State liability for failing to prevent corporate abuses of human rights. • Investment-attracting state obligations and arrangements favouring business entities under

bilateral investment treaties. • Corporation-affecting domestic laws of nation states in meeting their international legal

obligations generally (e.g. labour conditions and workplace non-discrimination). • Corporate complicity in human rights atrocities and other international crimes committed by

state actors (e.g. crimes against humanity). • Extension of corporate liability domestically for involvement in international crimes. • Extra-territorial jurisdiction for international crimes committed by or against a state’s

citizens. • Corporate civil liability in home countries for corporate wrongs committed in host countries

(e.g. foreign direct liability laws such as the US Alien Torts Claims Act). • Authoritative codes and other standards of corporate responsibility developed by

intergovernmental bodies, including ‘soft’ law norms that draw heavily upon human rights enshrined in international human rights instruments (e.g. UN Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises with Regard to Human Rights).

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• Corporate polluter responsibility under international environmental law. • International standard setting for corporate avoidance of corruption and bribery of foreign

officials. • The impact upon business of economic sanctions imposed by the UN (Horrigan, 2007, p.94). CSR guidelines can be found on national as well as regional levels. Institutions such as International Labour Organisation (hereinafter ILO), OECD, UN, World Bank and European Union (hereinafter EU) provide soft law norms and codes to implement business in the correct manner (Horrigan, 2007). 1.1.7 CSR standards Standards enable easier and more efficient results in the field of corporate social responsibility. Obtaining these standards requires financial, organisational, technical, legal and marketing intakes. Standards can provide reputation and advantages to firm in front of competitors. The latter especially counts for companies, where stakeholders see CSR as an important attribute of the business. Standards can lead towards efficient operationalization among internal, and durable relationships with external stakeholders. Furthermore, CSR companies have more favourable conditions to get new financial capital at international tenders. Organisations, which assure alignment of business with standards, check the execution regularly. This can be often difficult because of out-dated parameters. Firms are often confronted with a lack or even violation of CSR standards when entering new markets, especially emerging ones. Because the regulative is sometimes so unclear, violators of the standards can get away with unreasonably low punishments. Many multinational companies want to assure their contractors have all the standards and certificates, even for intermediate products. If suppliers do not meet these standards, they cannot enter the supply chain. Additionally, standards demand to constantly monitor development of all aspects of social responsibility in entity. On worldwide markets, they need to respect norms and directives from a given country. Through their international market function, they are responsible for domestic and foreign stakeholders, their expectations, desires, and obligations (ISO, n.d.a; ISO, n.d.b). Stakeholder demands, business norms, standards and regulatory frameworks can vary across nations, regions, and lines of business. The companies are almost forced by different parties, including government, community, NGOs, suppliers and employees, to engage in CSR practices (McWilliams et al., 2006, p.2). Dispersion of management demands more collaboration, mutual values and responsibility to create fruitful operations around the world (Podnar & Golob, 2002, p.963). Especially managers from multi-national and multi-divisional firms are interested in engaging with CSR, because the larger supply chain and more complex the product, more difficult is to control if all the factors are really aligned with CSR expectations (McWilliams et al., 2006, p.1). Globalisation can expose corporations, which present with false tendency towards social responsibility. If they do not have strong strategy in its core, they cannot implement the strategy efficiently abroad. This can be especially seen in less developed

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economies. Multinational corporations are under constant pressure, so they try different approaches to prevent their suppliers from taking actions, which could affect their corporate image in the eyes of consumers. Codes of conduct in clear manner state the value orientation of the purchasing firm and its expectations from the suppliers. This can be created in consultation with direct suppliers or at the point of engagement with new stakeholders (Kaučič, 2013, p.20). Companies from the similar industry can adopt similar codes of conduct to set standards, protect themselves and share good practices across the world. These codes can be as well a result of a pressure from activists or other social initiatives. Firms try to align their standards with all the contractors, subcontractors, suppliers and licensees, but with a large supply chain, this is difficult to control. Public has a critical view, but on the other hand, in developed economies, every supplier should take care for its reputation and so contribute for the greater good. Additionally, company can control suppliers with strong ethical focus infiltrated in its culture. Another option to influence the behaviour of supply chain can be personal training and value orientation (Amaeshi et al., 2007). Dispersion of management demands more collaboration, mutual values and responsibility to create fruitful operations around the world (Podnar & Golob, 2002, p.963). At the end, the important factor in decision-making is mentality. This is still in favour of the most profitable organisations, which are making profits regardless the environment and subsequently the whole society (Kaučič, 2013, p.22). Through the time, many standards developed. Most important in the area of CSR are alphabetically described in Appendix D. 1.1.8 Adidas’ sustainability measurements Sustainability reports reflect companies’ achievements in broad range of sustainability, their transparency, and risk and future prospects (GRI, n.d.). Adidas creates sustainability reports since 1998 with a help of Social and Environmental Affairs (hereinafter SEA) team. Group consists from around 70 engineers, lawyers, human resource managers, environmental auditors and former NGO members. Regionally, team covers Asia, both Americas, and Europe, Middle East and Africa. Company reached high recognition among sustainability evaluations. Most important are listed in Appendix E (Adidas Group, 2016a). 1.1.9 Crisis’ effect on CSR Economic crisis and accompanying events caused conditions in which a lot of people struggled with economic and social isolation, young people faced discouragement about the future, and the nature was under even higher threat (Podnar & Golob, 2002, p.953). The beginning of crisis started in United States of America (hereinafter USA) in 2007 because of liquidity shortfall in the banking system. Consequences became visible in the second quarter of 2008. Crisis expanded to European markets due to their exposure to USA financial markets. Companies faced the problems with loans from banks what affected their operational and investment

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processes. In the next few years, crisis inflated worldwide. It affected managers as well as shareholders, and caused fall of the stock indexes, collapse of financial institutions, higher unemployment and consequently poverty. Governments needed rescue financial packages to save their financial systems. Companies realised they need to cut off the costs in accordance to survive. This highly distressed their expenses for CSR (Giannarakis & Theotokas, 2011). During the crisis, the violation of human rights increases (Horrigan, 2010). On the other hand, crisis makes all involved more inventive. Many new practices and recommendation arisen afterwards, including innovation, comfortable atmosphere, stakeholders’ role, business strategy, market attitude, investor confidence and deep internal reflection. Firms need to set new business objectives, and find original ways to social potentials and new markets (Giannarakis & Theotokas, 2011). 1.1.10 Environmental CSR Two main branches of large environmental issues can be defined - climate responsibility and natural source utilization. Humankind is challenged to reduce already make impact for future generations. Companies use different approaches to address everyone in supply chain, stakeholders and responsible use of resources. Attention to this global problem is brought from influential political and social sides as well as from consumers. They demand responsibly made products, which address all kind of environmental challenges, from air to the seas. Many consumers stress the importance of not only the responsible goods production but as well broad legislation, regulations and monitoring of implementation and realisation. Companies are challenged to invest more in research and development of environmentally friendly assembly and goods to increase consumers’ satisfaction and respect. Important factor in the eyes of companies, stakeholders and consumers is responsible source utilization, since it maximizes economic, social and economic benefits. This perspective encourages new research, development and modernization, but on the other hand it demands a lot of managerial compromises among stakeholders, since can lead to the conflict of interests (Adidas Group, 2016a; Khojastehpour & Johns, 2014). One of possibilities for the future collaboration can be seen in circular economy. Its main goal is to reuse the sources for as long as possible on different manners. It includes renewable energy, no pollution and zero waste philosophy. This model is a result of collaboration between different fields, so it demands adaptation of old business models. It is defined as ‘an economic model wherein planning, resourcing, procurement, production and reprocessing are designed and managed, as both process and output, to maximize ecosystem functioning and human well-being’ (Murray, Skene, & Haynes, 2015, p.377). Zero waste is a visionary philosophy about reducing waste and increasing recycling of all kinds of sources, from origin to disposal. Similar as natural resource utilization, it demands careful reconsideration and implementation (Adidas Group, 2016a; Lombardi, 2016). By definition from 2009 (Zero Waste International Alliance, 2015), this concept represents ‘a goal that is ethical, economical, efficient and visionary, to guide people in changing their lifestyles and practices to emulate sustainable natural cycles, where all discarded materials are designed to become resources for others to use. Zero waste means designing and

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managing products and processes to systematically avoid and eliminate the volume and toxicity of waste and materials, conserve and recover all resources, and not burn or bury them. Implementing Zero Waste will eliminate all discharges to land, water or air that are a threat to planetary, human, animal or plant health’. 1.1.10.1 Importance of preserving oceans About 640.000 metric tons of fishing gear per year is discarded in the oceans and endanger environment (Parley for the Oceans, 2016d). On 25th of September 2015, 193 members of UN General Assembly accepted 17 Sustainable Development Goals (hereinafter SDGs) for global development until 2030. The 14th objective is represented by conserving and sustainable use of the oceans, seas and marine resources. This is an important ecosystem, which heavily influences the living conditions on Earth (Sustainable Development Knowledge Platform, n.d.). Oceans cover three quarters of the Earth’s surface, contain 97 per cent of the planet’s water and represent 99 per cent of the living space on the world by volume. Most probably includes over 200.000 unidentified species, and is the largest source of proteins. Oceans help with global warming by absorbing 30 per cent of carbon dioxide created by human race. More than three billion people depend on coastal and marine biodiversity, since resources are estimated at five per cent of global GDP (Sustainable Development Knowledge Platform, n.d.; United Nations, 2016; United Nations – Economic and Social Council, 2016). United Nations’ actions would help to preserve and recover oceanic health and improve the lives of people dependent on this source. With the help of scientists, people should identify and minimize the impacts of ocean acidification, increase the knowledge, develop research capabilities and transfer marine technology, according to Intergovernmental Oceanographic Commission Criteria and Guidelines on the Transfer of Marine Technology. By 2020, they want to achieve healthier oceans by responsibly manage and protect marine and coastal ecosystems, strengthening their resilience, and take actions for their recovery. This includes uncontrolled and excessive fishing to restore fish stock, and preservation of sensitive coastal regions. Goal by 2025 is to avoid and considerably reduce pollution of all kinds, particularly one from land-based activities, including marine debris and nutrient pollution. By 2030, there should be increased economic benefits for small and vulnerable players, rising from sustainable use of marine resources, including sustainable fishing, aquaculture and tourism (United Nations, 2016; United Nations – Economic and Social Council, 2016).

1.2 Willingness to pay (WTP) 1.2.1 Defining WTP Willingness to pay (WTP) stands for highest amount of money buyer is willing to spend on given product or service. It is monetary measure of customer’s preference for the product

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attribute (Etilé & Teyssier, 2013, p.3). It is stated as essential readiness of a consumer to pay the highest price for a specific performance in a future purchase situation. WTP bases on reservation price, the difference between the market price of the good and preparation of purchasers to pay more. Typically, WTP increases with product benefits, which effect customers in a way they are prepared to pay more if they sense an additional use of product or service. Price is determined as a negative benefit, so the positive ones need to exceed it (Haase et al., 2016). It can be stated that product needs to have all the features and characteristic of comparable competitive products (intrinsic) plus additional value of CSR (extrinsic) so it can represent utility-maximization (Barboza, 2016; Haase et al., 2016). 1.2.2 Classification of methods to measure WTP There are many classifications how to record WTP (Figure 6). Latter can be based on revealed preferences or stated preferences (Breidert, Hahsler, & Reutterer, 2006; Haase et al., 2016). Revealed preferences are resultant from price-responses. Stated preferences derive from data obtained from the surveys, which can be either direct or indirect (Breidert et al., 2006). Additionally, it needs to be defined if the individual or aggregate willingness will be collected (Haase et al., 2016). Revealed preferences include market observations and experiments. Last can be divided in into field and laboratory experiments, including auctions. Collecting data is possible by indirect or direct surveys. Indirect surveys utilize ranking process for different products to approximate a preference structure that derives WTP (e.g. conjoint analysis and discrete choice analysis). With the direct ones, respondents are questioned how much they would be prepared to pay for the certain product. Direct surveys are the most suitable for new products not yet on the market. The term can be split in two sections – expert judgements, where usually sales or marketing managers, which are familiar with customers and markets, are questioned, and customer surveys, where respondents are customers (Breidert et al., 2006; Haase et al., 2016). Advantages and disadvantages are presented in Table 1 (Breidert et al., 2006).

Figure 6. Classification framework for methods to measure WTP

Source: C. Breidert et al., A review of methods for measuring willingness-to-pay, 2006, p.10.

WTPmeasurement

Revealedpreference

Statedpreference

Marketdata

ExperimentsDirect

surveysIndirect surveys

Laboratoryexperiments

Fieldexperiments

Auctions Expert judgements

Customersurveys

Conjoint analysis

Discrete choiceanalysis

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Table 1. Comparative evaluation of competing methods for measuring WTP

Market data

Experiments Direct surveys

Conjoint analysis

Discrete choice analysis

Cost effective +/- -- ++ + +

Time efficient +/- -- ++ + +

Flexibility to include new price/product combination

-- ++ +/- ++ ++

Validity of estimations ++ +/- -- + +

Real purchase behaviour ++ +/- -- -- --

Observed choice behaviour ++ + -- -- +

Individual level estimations +/- +/- ++ ++ + Note.* + (++) = (strong) advantage, - (--) = (strong) disadvantage, +/- = no clear advantage or disadvantage

Source: C. Breidert et al., A review of methods for measuring willingness-to-pay, 2006, p.25.

Asking customers about the price is referred as direct approach to measure WTP. Development of customer surveys dates back in 1954 when author Stoetzel explored researches based on minimum and maximum price. In 1987, Marbeau designed two questions: • ‘Above which price would you definitely not buy the product, because you cannot afford

it or because you did not think it was worth the money?’ • ‘Below which price would you say you would not buy the product because you would

start to suspect the quality?’ (Breidert et al., 2006, p. 8). In 1976, Van Westendorp presented price sensitivity meter with two additional questions about reasonable cheap and reasonable expensive price of the product. Later, this approach became quite popular among different researches, which developed many new ways of implementation. This method is facing the following disadvantages: • Sometimes consumers are not willing to unveil their real WTP. They can understate the price

in the spirit of helping to keep low prices for the market. On the other hand, respondents can overvalue the product due to the prestige effects and not to seem parsimonious.

• Questioning consumers for the price directly can affect the focus on product’s other features, since there is an artificial concentration on price.

• New and complex items can present a cognitive challenge for respondents. The answers can be biased because of understating or overstating the valuations.

• Even if respondents disclose their real WTP, estimate not necessarily converts into real purchasing behavior.

• Valuation of products is not always steady. Respondents can misjudge the price, especially in cases when the good is not purchased often, so they do not have a firm comparison. This

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can affect consumer’s WTP once learned about the real market price (Breidert et al., 2006, p. 8-9).

Even though this method is not particularly accurate when setting the exact price (Breidert et al., 2006), this thesis will use it because only the price difference between CSR-related and neutral product will be explored.

1.3 Impact of consumer’s psychology and knowledge about CSR on WTP Positive firm’s image can increase consumer’s engagement, and thereby profitability of the business and customer’s WTP (Khojastehpour & Johns, 2014; Lichtenstein et al., 2004; Marin & Ruiz, 2007). Economic benefits are one of the main factors why companies decide to implement sustainable practices (The Nielsen Comapny, 2015; Tully & Winer, 2013). According to The Nielsen Company (2015), consumers are willing to spend more on responsible products every year (Figure 7). Additionally, it is more likely for people from emerging markets to pay more than those from developed ones (The Nielsen Company, 2015). Many studies have shown that correlation between CSR and financial performance is positive but weak and it depends on consumers’ unpredictable decisions (Sen & Bhattacharya, 2001). The knowledge consumers have about a certain enterprise can impact their beliefs and attitudes regarding products offered by that firm (Brown & Dacin, 1997). To satisfy this condition, consumers and stakeholders need to be aware of company’s CSR efforts, otherwise their initiative towards CSR purchasing can be defined only as theoretical. Consumers’ CSR awareness of the company also encourages certain quality standards, further CSR development of offered goods and thereby reputation (Khojastehpour & Johns, 2104).

Figure 7. Top sustainability purchasing drivers for global respondents vs. those willing to pay more

Source: The Nielsen Company, The sustainability imperative: New insights on consumer expectations, 2015, p. 5.

Enterprises develop new mix of strategies beyond conventional brand-marketing initiatives. New approaches involve corporate-level intangible assets, which try to display the company as honourable player in wider well-being of community (Sen, 2006, p. 164). CSR revolution is a

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result of gentle but definite changes in consumer’s preferences in recent decades (Barboza, 2016). Profits of CSR are rather conditional than universal (Kum, Vinh, & Wong, 2016). In Cargo Collective study from 2015, more than 80% of consumers responded they would buy a product from a company, which strives for better tomorrow. Corporations have the ability to collaborate with the most contemporary trendsetters and change the minds of masses. Especially Millennials and Gen Zs are sensitive regarding social responsibility – they expect from corporations to combine their business with surrounding problems. The important element in modern media is diverse advertising. Marketers spent a lot of time and money to create innovative strategies, appealing to customers. They offer hope for the future generations and try to convince the consumers they can help to co-create the better well-being for all with purchasing their service or product (Cargo Collective, 2015). CSR is a company’s tool to invent safer production strategies, which will decrease external negative consequences. Customers get satisfaction both from intrinsic and extrinsic product’s features. Additional value that goes beyond product intrinsic features does not necessarily result in higher using value, but it increases customer’s WTP, what yields in greater exchange value. On the other hand, any assumption or action resulting in violating externality, leads to reduced WTP. Externalities are the main condition for CSR creation; to start WTP for CSR negative externalities must exist; customers must be informed about them and their effects, and ‘individuals must have revealed preferences that are matched by a reservation price that is higher than the prevailing market price at least by the amount of the externality internalization cost’ (Barboza, 2016, p.4). Manipulating associations is an important strategic factor, so companies put a lot of effort in environmental friendliness (environmentally friendly products, hazardous-waste management, animal testing, recycling, pollution management), corporate philanthropy (commitment to diversity in hiring and promoting, job security, profit sharing, variety outside organisation) community involvement (sponsoring, educational and housing initiatives), human rights (overseas practises, supply chain control), products (safety and development) and public image studies. These approaches can affect consumers’ image about the organisation, but this information has a small connection with the information about the product (Brown & Dacin, 1997, p.70; Sen & Bhattacharya, 2001, p.226). CSR goes beyond ethics and tries to improve at large the whole positive impact on society and decrease the negative one on a long-term. Empirical studies have shown that purchasers use both preference-related corporate associations and perceived social responsibility when creating an opinion of an organisation and its products (Sen & Bhattacharya, 2001, p.226). Clients’ cognitive associations can be a strategic asset and a source of sustainable competitive advantage for a company. CSR connotations may have diverse results on buyer responses to products (Brown & Dacin, 1997, p.68; Sen, 2006, p.159). CSR effect on purchasers’ product

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evaluation is likely to correspond its positive effect on their company evaluations (Sen & Bhattacharya, 2001, p.226). Customers are pragmatic and seek for self-realization, climbing towards the peak of Maslow’s Hierarchy of Needs (Kotler & Lee, 2008). If strategy is aligned with beliefs and expectations, it can affect not only customers, but as well employees’ desire to work at a certain firm, or investors’ choosing socially screened investment funds (Kotler & Lee, 2008, p.8; Sen, 2006, p.164). Good strategy can persuade customers to become the part of the company, develop multidimensional relationship with organisation, and commit personal resources (e.g. work, money, etc.) (Sen, 2006, p.164). To assure long-term business, company needs to carefully pick responsible strategies that matters their customers the most, and aligned them with firm self-interests (The Nielsen Company, 2015, p.10; Tully & Winer, 2013, p.3). For business, it is crucial to understand how customers ally the information with a company and how it affects their reactions towards goods from the company. It is important to comprehend the customers and react according to their beliefs, needs and actions (Brown & Dacin, 1997, p.68). Companies must precisely identify customers’ preferences for CSR category and align these preferences with firm’s actions, to capture larger payments from purchasers (Barboza, 2016). Effect can be seen as cognitive and affective (e.g. beliefs, identification, etc.) as well as behavioural (e.g. loyalty) (Sen, 2006). Devoted companies have strong agenda: one-time event cannot be compared with the long-term effort company puts in progressive business (Kaučič, 2013, p.8). There were many studies regarding CSR and firm performance done in the past. Results vary tremendously from negative relation, no correlation, to positive relation. Latter can be a consequence of discrepancy in defining CSR, firm performance, in samples, research design, misspecification of the models, changes over time, or some more fundamental variance in the samples that are being analysed (McWilliams et al., 2006, p.12). On the other hand, products of companies with negative associations are not always accepted negatively (Brown & Dacin, 1997, p.68). Only under certain conditions, CSR can reduce customer’s intentions to purchase a firm’s product (Sen & Bhattacharya, 2001, p.226). If customers have pre-existing beliefs that company is more interested in CSR activities for publicity than actual integrity, CSR as marketing instrument can be less effective (Marin & Ruiz, 2007, p.258). Companies need to develop their own strong strategies. Copying other models can be helpful at the beginning, but with the time, major discrepancies can occur. This can lead to slow collapse of the firm and its corporate image in the eyes of consumers (Porter & Kramer, 2007). Companies must constantly present new implications of CSR to hold a step with competition and gain beneficial financial outcomes. Firms try really hard with different approaches but at the end are really difficult to manipulate and influence the human factor (Brown & Dacin, 1997, p.68). Customer’s satisfaction can be defined as a crucial element in his decisions, but there are also beliefs and loyalty. Besides, CSR hardly deals with traditional factors as price, quality, and brand familiarity. Customers can express their buying decisions throughout other product’s attribute such as colour or design (Marin & Ruiz, 2007, p.246).

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In accordance to fulfil CSR expectations, companies need to adapt new operational approaches and technology. This can significantly increase costs. Often, CSR products are sold at the premium price; aware consumers need higher disposable income and WTP to satisfy the needs. On the other hand, improved resources and new technologies can decrease the costs of production but still increase WTP, so companies need to thoughtful analyse new strategies (Barboza, 2016). Correlation between CSR and WTP depends on demography, consumer’s knowledge, values, attitudes, and behaviour. Knowledge is the main factor recognized in purchasing behaviour. It affects gathering and organizing information, how much information is used in decision-making and how purchasers evaluate products (Laroche et al., 2001). The more consumers know and engage with CSR, more likely is the identification and overlapping with the company’s CSR strategy (Sen, 2006, p. 160). Organisations sometimes lift engagement on a higher level and invite customers to cooperate with them in an exclusive social movement (Marin & Ruiz, 2007, p.248). The second important factor are values. Latter can be defined as ‘desirable goals, varying in importance that serves as guiding principles in people’s lives’. Values drive people towards responsible acting for greater good even if actions do not have immediate effect on someone’s personal well-being (Laroche et al., 2001). The results of the studies could be biased since many consumers do not reveal their exact and real preferences due to many factors such as society expectations and customers’ behavioural intentions instead of real behaviour (Sichtman, Geigenmüller, & Žabkar, 2010, p.2). Some studies showed that buyers purchase more because of personal reasons than societal ones (Marin & Ruiz, 2007, p.246). CSR contributes positively to clients’ satisfaction and fulfil their psychosocial needs, and social and moral obligations (Kum et al., 2016, p.94). The influence can be recognized directly and indirectly over behaviour’s effect on customer-company identification (Lichtenstein et al., 2004, p.16). If customer is satisfied, he starts expressing positive behavioural intentions such as WTP (Kum et al., 2016, p.94). There are many theories regarding buyers’ behaviour in connection with satisfaction and CSR, such as perceived value theory (Sánchez-Fernández & Iniesta-Bonillo, 2007; Kum et al., 2016), equity theory (Ajzen, 1991; Kum et al., 2016), institutional theory (Ajzen, 1991; Kum et al., 2016), and corporate identity theory (van Riel & Balmer, 1997, Kum et al., 2016). 1.3.1 Perceived value theory Perceived value became an object of business interest in 1990s (Perceived value, n.d.; Sánchez-Fernández & Iniesta-Bonillo, 2007). It can be defined as value that good or service presents in mind of purchaser. Buyers are mostly unaware of true production costs, so perceived value can be described as abstract internal sense that can be manipulated by marketers with value creation. Customer satisfaction arises from individual evaluation of the product features. In this case, CSR can be seen as an element that delivers functional, emotional and social values to clients. The process of identifying, implementing, and communicating CSR activities to customers can

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improve organisation’s knowledge about their habits and behaviour what leads to larger customer satisfaction. Values, created by CSR can also increase customer’s appraisal of other products by the company (Kum et al., 2016; Sánchez-Fernández & Iniesta-Bonillo, 2007). 1.3.2 Equity theory Equity theory is based on social exchange theory, which states that fair treatment of individuals results in greater satisfaction, e.g. when company engages in CSR such as fair treatment of employees and with this communicates positive treatments of customers as well (Ajzen, 1991; Kum et al., 2016). 1.3.3 Institutional theory Institutional theory claims corporations as important pillars of society. They have certain power on surroundings. Customers as members of community care about the impact of companies on their society and environment (Sánchez-Fernández, 2014). If firm fulfils or even exceeds those expectations, this increases customer satisfaction, so institutional theory directly addresses CSR (Ajzen, 1991; Kum et al., 2016). Consumers that appreciate those efforts are pleased with awareness that their purchases contribute to better world creation (Shank & Bédat, 2016). 1.3.4 Corporate identity theory Positive brand creates an identity that expands affirmative evaluation of products in customer’s eyes. Besides from quality, CSR can be seen as an alternative form of branding with which customers can relate to. Forming a CSR-related brand is especially efficient in satisfying high self-confident or self-enhancement individuals (Figure 8) (Kum et al., 2016; van Riel & Balmer, 1997).

Figure 8. Conceptual framework

Source: M. Laroche et al., Targeting consumers who are willing to pay more for environmentally friendly products, 2001, p.504.

KNOWLEDGE

Ecoliteracy

VALUES

individualismcollectivism

securityfun/enjoyment

DEMOGRAPHICS

agegenderincome

level of educationemployment statushome ownership

marital statusfamily size

Consumers’ willingness to pay more for environmentally

friendly products

BEHAVIOURS

Considering environmental issues when making a purchase.Recycling.Buying environmentally friendly products.

ATTITUDES

Importance of being environmentally friendly.Inconvenience of being environmentally friendly.Severity of environmental problems.Level of responsibility of corporations.

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Personal beliefs can be defined as a link between customer satisfaction and WTP for CSR. Latter is developed from theory of planned behaviour, which propose that people are likely to display an explicit type of behaviour if they consider behaviour will result in positive outcome. This belief consists out of an individual’s attitudes towards the behaviour, subjective norms and perceived behaviour control (Ajzen, 1991; Kum et al., 2016). Consumers with more knowledge and tendency toward sustainability are more likely to purchase sustainable products. Green buyers can be divided in several groups; e.g. those who recycle are not always prepared to pay more for environmental friendly products (Laroche et al., 2001). Company needs to assure that its CSR vision aligns with the vision of a product; otherwise the discrepancy negatively affects buyers’ perception on both (Barboza, 2016; Sen & Bhattacharya, 2001, p.229). Asymmetry between company and consumer can arise from weak customer’s knowledge about processes, operations and costs in the companies. This is a consequence of buyer’s low interest, since this knowledge does not bring any significant utility. On the other hand, when the results of production are shown negatively on the outside, consumer’s curiosity rise and consequently the knowledge and utilization, what decrease inconsistencies (Barboza, 2016). Effect of CSR on customer’s buying decisions is more complex than CSR’s positive effect on overall company image (Sen & Bhattacharya, 2001, p.238). Factors can be divided in following classifications: demographics, knowledge, values, attitudes and behaviour. Examinations detected that education and income generally do not affect customer’s willingness to pay for socially responsible products. More and more customers have become aware of the fact that their purchasing actions have direct impact on environmental problems. They are more conscious about e.g. ecological wrapping and absence of hazardous ingredients such as chlorofluorocarbon. Study from Laroche et al. (2001), based on various statistical analyses, investigating demographic, psychological and behavioural profiles, revealed that typical green purchaser is a married woman with at least one child still living at home. She likes warm relationships with her environment and has high tendency towards security. They put a lot of attention on ecological issues when buying products, as they believe that ecological issues are critical, companies do not put enough effort in environmental problems, and that responsible behaviour is really necessary. Results could be connected with the fact that these persons care more about their family’s future. There is increasing number of customers who are prepared to pay more for environmental friendly products detected and the percentage is rising every year (Adidas Group, 2016d; Laroche et al., 2001).

2 CASE PRESENTATION

2.1 Fashion and environment Fashion is one of the most fast-changing businesses in the world. Moving seasons cause a lot of waste and industry is often associated with hard working conditions, high water

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consumption, pollution, and chemical usage. Almost everything had already been done, so designers are on a search for new interesting points of differentiation. Current examinations show that the future leads to new technologies and sustainability. Creators need to be innovative, opened for new methods, and have to consider not only the latest fashion trends but also environmental ones. In 21st century, focus has moved on sustainable products. Development is not only concentrated on recycling, which can often be difficult, since products are made of mixed materials, but to long lasting items as well, so the logical next step is to expand durability of the products. Materials are becoming more of a good quality and many companies offer maintenance of their products. To wrap the perfect attractiveness to consumers, products should not only be sustainable but also need to keep their basic purposes - aesthetic and appeal (Khan, Rodrigues, & Balasubramanian, 2016). Trends for companies can be seen in zero waste approach (Adidas Group, 2016d; Lombardi, 2016), and modern technology, which enables sufficient implementation of new and recycled materials in their products, and thereby reduce and reuse resources for this restless industry (Adidas Group, 2016d). Fashion corporations centre a lot of attention to their stores as well. It is not only about attractive sustainable interior - low energy consumption, renewable energy and environmentally friendly materials are important as well to deliver consumers the whole CSR experience with aligning vision of responsible customer, company and products (Mallen Baker’s respectful business blog, 2016). In general, companies invest a lot of effort in researches regarding sustainable business but at the end buyers are the ones, who decide to purchase the products and support organisational vision. Present trends are still in mind-set of high consuming. Studies revealed an item is worn on average seven times before staying in the closet. Purchasers will have to adopt new approaches in fashion and slowly reduce their need for more to contribute to general global well-being (Shank & Bédat, 2016).

2.2 Adidas AG 2.2.1 History Adidas AG is European largest sports corporation and world second largest multinational sporting goods company in terms of sales. In 2016, it was ranked as 60th on Best Global Brands scale, scaling up for two places from previous year (Interbrand, 2017). Enterprise, with the three stripes logo as a trademark, was established by Adolf Dassler as “Adi Dassler Adidas Sportschuhfabrik” in 1949 in Herzogenaurach, Germany (Adidas Group, 2016b). First products were athletic footwear, including running and soccer shoes. Company received a lot of attention in 1952 after athlete Emil Zatopek won three golden medals in Olympic games in Helsinki, wearing Adidas shoes. Brand made its position even more solid with screw-in spikes shoes, which led German football team to become champions at World cup in 1954 (Figure 9) (Adidas Group, 2016b).

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Figure 9. Victorious German Football Team in 1954 World Cup, wearing Adidas screw-in spike shoes

Source: ESPN FC, World cup 1954, 2016.

Currently, they design and manufacture a wide assortment of products such as apparels, footwear and hardware for the majority of sports and lifestyle. By the end of 2015, Adidas employed over 55.500 people, and worked with 1079 independent factories in 61 countries. 65% of their production fields are positioned in Asia Pacific region, 25% in both Americas, and the rest in Europe, Middle East and Africa. Adidas Group unites several different companies, such as Reebok, TaylorMade and Runtastic. Company sponsors many important sportspeople and events including Olympic games. In order to expand its market, they collaborate with several celebrities, including Pharrell Williams, Kanye West, Rita Ora and Selena Gomez. Company collaborates with world-known designers, such as Stella McCartney, Nigo, Jeremy Scott and Yohi Yamamoto (Adidas Group, 2016b). 2.2.2 Adidas and sustainability Adidas company is quickly becoming a forerunner of sustainability in the sportswear sector. It raises awareness in different fields, divided in human and environmental part (Figure 10). On one hand, company is aware of the problems with which community deals, and on the other hand of firm’s power to offer solutions. Main points can be characterized by attention to develop employees in combination of attentiveness they work for environmental responsible enterprise, active shaping industry with sharing the best practices and collaborate with other companies, concentrating on long-term achievements and expectations of society to assure good business outcomes, assurance that customers value company’s products for their performance, quality and environmental identifications, and minimizing environmental footprint (Adidas Group, 2016b).

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Figure 10. 15 years of transparency and disclosure at the Adidas group

Source: Adidas Group, Sustainability progress report 2014, 2015, p.6.

Corporation is developing precise strategy in collaboration with internal as well as external stakeholders, which are involved closely in the process. Firm is aware of the fact that only collaboration can bring long-term sustainable results. For this reason, they promote an open cooperation with stakeholders and partners in other companies, to create a new tactic and positive change in the industry. Performance, passion, integrity and diversity represent the essential standards in sport. Adidas sets these values for itself as well as for its business partners. They expect fairness, honesty and respect in entire supply chain (Adidas Group, 2016b). Company’s initial environmental program called Green Company was established in 2008. Initiative was launched to reduce the environmental footprint of the firm. It includes administration offices, manufacturing sites and distribution centres (Adidas Group, 2016b). In 2015, Adidas established initiative Sport Infinity. It represents a cross-industry Waste and Resources Action Programme (hereinafter WRAP) Consortium project, researching completely recyclable sporting goods, funded by European Commission (Directorate-General for research, industrial technologies and Material Unit). Project explores possibilities of new recyclable materials with zero waste, consumer-driven design and manufacturing processes for innovative product solutions. The idea it to break down the used product to basic materials and use them again in different items (Adidas Group, 2016d, 2016e). With sustainability report 2015, they launched new scheme called Sport needs a space (Figure 11), which addresses corporate responsibility at all stages. They are striving to integrate sustainability in their mainstream business practices. The main focus is directed towards improvement of social and environmental footprint, which has been acknowledged as crucial to stakeholders and has meaningful effect on business. Business strategy identifies six strategic priorities to deal with these issues (Adidas Group, 2016d).

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Figure 11. Six elements of ‘Sport needs a space’ strategy

Source: Adidas Group, Sustainability progress report 2015, 2016b, p.11.

Corporation presented Workplace Standards to align their policy and expectation with every partner involved, last version launched in 2016. Guideline includes human rights, employment standards, health and safety standards and environmental requirements (Adidas Group, 2016d, 2016e). In 2015, 69% of the suppliers were marked at least as good in the field of social compliance, and 81% in environmental assessments. They rejected 101 factories in same year, because their standards did not meet the expected. Thirty-one athletic footwear suppliers, producing approximately 98% of global athletic footwear, are certified in accordance with ISO 14001, which provides practical tools for companies and organisations of all kinds looking to manage their environmental responsibilities (Adidas Group, 2016d; ISO, n.d.a), and/or Occupational Health and Safety Management System (hereinafter OHSAS) 18001, which covers the field of health and safety (The British Standard Institution - hereinafter BSI, 2016). Adidas develops new innovative materials and processes, which deal with environmental issues. Being aware that corporations produce an enormous amount of waste from non-renewable materials and hazardous chemicals contaminate water, Adidas strives for innovative solutions. Their vision is to steadily implement the use of more sustainable materials in production, products and stores. The amount of new non-renewable materials declines what increases costs, so they are in search for alternative solutions. Company needs to replace the material they currently use, e.g. synthetic fibres and cotton in various blends to meet unique criteria with high functional and quality standards and decrease its footprint (Adidas Group, 2016d, 2016e). Example of good initiative is Better Cotton, which requires less water and fewer pesticides, encourages better working conditions for farmers and yet still preserves the quality of the fibre. By 2015, Adidas managed to substitute 43% of the cotton used. It plans to completely remove harmful with environmentally preferred one by 2020 (Adidas Group, 2016d, 2016e).

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By January 2016, Adidas managed to save 28% of water per employee, reduce the volume of household waste by 27% and carbon emissions by 30%. These savings have been mainly attained through energy efficiency projects and various carbon offsetting programmes. Some of the locations still face common challenges in accessing greener energy and increasing their use of renewable energy (Adidas Group, 2016d). In same year, Adidas banned all the plastic bags from their stores, removed plastic microbeads from its body care products, and stopped using plastic bottles in their headquarters. By the end of this decade, company plans to reduce the waste of their strategic suppliers by 20%, 50% of waste diversion for owned operations to minimalize landfill, and 75% of paper used by employee (Adidas Group, 2015). Corporation’s commitment is regularly awarded by ranking in several leading socially responsible investment ratings (chapter 1.1.8), including Dow Jones Sustainability Indices (hereinafter DJSI), Financial Times Stock Exchange for good index (hereinafter FTSE4Good) and Global 100 Most Sustainable Corporations in the World index (Adidas Group, 2015).

2.3 Parley for the Oceans NGO Parley for the Oceans started as a group of conscious young people, under leadership of Cyrill Gutsch. They acknowledged global strive for changes, and recognized many new sustainable ways to create business. In 2013, they established an NGO dealing with ocean’s plastic waste removal and eco innovations. It briefly gained a lot of publicity, so members got an opportunity to spread the word at many important places and events, such as United Nations and COP21 (Adidas Group 2016b; Parley for the Oceans, 2016c). In 2016, Parley excreted more than 740 tons of plastic from the ocean, what equals 11 million plastic bottles (Parley for the Oceans, 2016d). After Maldives, where the initiative started, many other countries have joined by developing legislation about banning the plastic products, organizing regular beach clean-ups, and raise awareness already in schools by educational programs about this issue (Adidas Group, 2016d). Parley’s leading A.I.R. (Avoid, Intercept and Redesign) strategy represents the mutual focus with Adidas. “We’re building this movement together” is one of the firms’s paroles (Parley for the Oceans, 2016a), which aligns with some organisations’ approach of their portrait as a leading example, and engaging customers (Adidas Group, 2016d; Marin & Ruiz, 2007, p.248). Furthermore, Cyrill Gutsch described collaboration with words that summarizes the power of idea, cooperation and corporations: "Nobody can save the oceans alone. Each of us can play a role in the solution. It's in the hands of the creative industries to reinvent faulty materials, products, and business models. The consumer can boost the demand for change. But it's up to eco innovation leaders, like Adidas, to make change a reality" (Tumpalan, 2016).

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Besides customers, Parley believes the idea of preserving oceans could be spread through athletes, artists, designers, actors, musicians, scientists and environmentalists (Adidas Group, 2016d; Parley for the Oceans, 2016c).

2.4 Evolution of Parley sneakers In June 2015, Adidas announced the brand as the founding partner of Parley at the United Nations in New York, under slogan From Threat to Thread. Teamed up, they created eco-friendly sneakers (Figure 13, 15 and 16) and confirmed to establish completely new supply chain (Figure 12), which promises to follow three routes: Communication and Education, Research and Innovation, and Direct Actions to reduce ocean plastic pollution (Adidas Group, 2016d, 2016e). Adidas and Parley are trying to develop their facilities, expertise and skills to produce more usable materials that can be integrated in the Adidas product. The vision of collaboration goes beyond creating products; they want to raise awareness regarding social responsibility and help the world to recover (Adidas Group, 2016d, 2016e).

Figure 12. The journey of an Adidas x Parley product

Source: M. Nokkonen, Plastic is a design flaw – this is how to fix it, 2016.

Even though is stated that for sport fashion items design and functionality are taking the first place, Adidas’ collaboration with Parley tries to prove that CSR also represents a very important factor of purchase (Adidas Group, 2015). The result of this partnership are Ultra Boost Uncaged Parley, 3D printed sneakers, using recycled polyamide and gill net content (Adidas Group, 2016d).

Every pair is made of 95% of plastic waste from Maldives and 5% recycled polyester. The amount of used plastic equals 11 plastic bottles per pair (Towers, 2016; Tumpalan, 2016). New

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partners obliged to generate at least one million pairs of new sneakers by the end of 2017. First prototypes were released on World Oceans Day in June 2016 (Figure 14). For this occasion, special contest was organized through social network Instagram to get the best ideas how to reduce plastic. The winners got first pairs of Parley sneakers in October 2016. First limited edition of 7000 pairs for wider public was launched on November 4th 2016 (Figure 15) (Parley for the Oceans, 2016a, 2016c). Description on Adidas’ webpage presents Parley shoes as: “High performance built with a purpose. This shoe combines an energy-returning boost™ midsole with a Primeknit upper made from 95% Parley Ocean Plastic™. The Continental™ natural rubber STRETCHWEB outsole provides all-weather traction, while a full-length boost™ midsole is designed to help you run further with less fatigue. The laces, heel cap base, heel webbing, heel lining and sock liner cover are made of 100% recycled PET. The TORSION® SYSTEM bar, also from a renewable source, supports the foot’s natural flex from heel to toe. All Parley Ocean Plastic™ used to build this shoe was collected and recycled from the Maldives” (Adidas Online Store, 2016b). The basic of the footwear is represented by Ultra Boost running shoes, which were declared as one of the most consumer-friendly running shoes. Parley shoes are completely comparable by functionality, with additional green value (Adidas Group, 2016d).

Figure 13. First concept of Parley shoes, 2015

Source: M. Tumpalan, Adidas Ultra Boost Uncaged Parley made of plastic bottles; shoes aim to save ocean,

2017.

Figure 14. First limited edition of 50 pairs of Parley shoes

Source: R. Towers, Adidas is turning plastic waste from the ocean into sneakers, 2017.

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Figure 15. Limited Edition of 7000 Parley shoes, launched on November 4th 2016

Source: Adidas Online Store, Ultra Boost Uncaged Parley shoes, 2016b.

Figure 16. Price range of Ultra Boost Uncaged sneakers

Source: Adidas Online Store, Ultra Boost Uncaged, 2016a.

Regarding price, Ultra Boost Uncaged cost 179.95 euros (hereinafter EUR) and Ultra Boost Uncaged Parley sneakers have premium price of 199.95 EUR, what is 11% more. On the other hand, with Ultra Boost Uncaged with coloured sole there is not any price difference from Parley (Figure 16) (Adidas Online Store, 2016a). Adidas strives to move from the limited collections towards full integration of the plastic waste in their products (Adidas Group, 2016d, 2016e). For this purpose, corporation adapted innovative production method called Tailored Fibre Placement (Figure 17). This technology is more often related with automotive and aerospace industries. The system is building up textile components using different assortment of materials from those associated with textile items. Machines provide optimal distribution of material for the needs of the shoe user. Because of its specifics, this technology enables almost zero waste (Taylor, 2016).

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This strategy aligns with the basic concept of environmental friendliness, since companies should take care of wise exploitation of natural resources, including energy, raw materials, and approaching zero-waste philosophy (UNIDO, 2012).

Figure 17. Tailored Fibre Placement

Source: A. Taylor, Adidas x Parley – Tailoring with ocean plastic, 2016.

3 EMPIRICAL RESEARCH

3.1 Methodology The thesis tried to examine whether CSR really makes a difference from the buyers’ standpoint, are they willing to spend more for the CSR product or service, in this case for Parley sneakers, and other factors that affect customer’s view on CSR. Data in quantitative empirical study were captured via questionnaire. Quantitative research is commonly used method, since it collects responses from a larger sample (Baran & Jones, 2016). Research used two different descriptions, neutral (hereinafter N) and CSR-based one (hereinafter C), and same survey with 23 questions in Slovene language (Appendix A). Latter were constructed based on reviewed literature (Table 2). Neutral description used general information about all elements without any other connotation. Colour of the article is neutral brown. CSR description exaggerated environmental responsibility of Adidas and Parley, and emphasized all advantages of Parley sneakers. Green colour underlines the environmentally friendly features. Both descriptions contained the same picture of the product. Questionnaire is combined out of several closed-ended questions, such as dichotomous yes and no questions, and seven-point Likert scale ranging from 1 = “strongly agree” to 7 = “strongly disagree” with several matrix questions, and open-ended questions about WTP.

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Questionnaire was divided in six different parts. They measured view on Parley sneakers according to the article, personal social responsibility, expectations from sports footwear, opinion regarding Adidas’ CSR, general corporation CSR and demographic based on the scholars in theoretical part. Sources for questions are collected and presented in Table 2. Section about Parley sneakers examined the reach of information in early stage of launching new product and perception of it. Last question in this section showed the most important question of this thesis – are consumers willing to pay more for a particular socially responsible product and to what extent with exact amount (Sichtmann et al., 2010). Second section extended latter question and measured personal social responsibility in combination with WTP in percent (Brown & Dacin, 1997; Lichtenstein et al., 2004; Maignan & Ferrell, 2004; Marin & Ruiz, 2007; Sen & Bhattacharya, 2001; Sichtmann et al., 2010). Third section examined general buying habits of sneakers. It opened the section with simple inspection if reader uses sportswear at all. Matrix survey checked buyer’s priorities and later verified if matches with Parley sneakers’ perception of features (Adidas Group, 2016d; Adidas Online Store, 2016b). Fourth part was focusing on Adidas and CSR. With seven-point Likert scale matrix questions examined consumer’s perception and thereby engagement. Questions were developed based on Adidas’ corporate self-perception of its main attributes (Adidas Group, 2016d; Sichtmann et al., 2010). Last part consisted of demographic data, which seem to affect CSR perception the most (Laroche et al., 2001).

Table 2. Reviewed literature for construction of survey’s questions

(table continues)

Respondent’s perception of Parley footwear Have you heard about Parley sneakers before reading the article?

Sichtmann et al., 2010

Based on description and photo from article, Parley footwear seems…

Utraboost Uncaged, 2016

Based on article, how likely would you decide to purchase Parley footwear?

Sichtmann et al., 2010

Without financial limitations, the highest amount I would be willing to pay for Parley footwear is…

Khojastehpour & Johns, 2014; Sichtmann et al., 2010

Personal social responsibility Please specify the level, which you believe is true for you personally

Brown & Dacin, 1997; Lichtenstein et al., 2004; Maignan & Ferrell, 2004; Marin & Ruiz, 2007; Sen & Bhattacharya, 2001; Sichtmann et al., 2010

How many % more would I be willing to pay for socially responsible product?

Khojastehpour & Johns, 2014; Sichtmann et al., 2010

How many % more would I be willing to pay for socially responsible product, if there would not be any financial limitations?

Khojastehpour & Johns, 2014; Sichtmann et al., 2010

Customer’s perspective of Adidas’ values Adidas Group, 2016d, 2016e

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Table 2. Reviewed literature for construction of survey’s questions (continued)

Sportswear buying factors What is important when buying sneakers? Adidas Online Store, 2016b

Adidas’ CSR Have you heard of Adidas company before reading the article?

Sichtmann et al., 2010

How likely is it to do purchase in Adidas in the next year?

Sichtmann et al., 2010

Please specify the level, which you believe is true for Adidas company

Adidas Group, 2016d, 2016e; Brown & Dacin, 1997; Lichtenstein et al., 2004; Maignan & Ferrell, 2004; Marin & Ruiz, 2007; Sen & Bhattacharya, 2001; Sichtmann et al., 2010

Evaluation of Adidas company Adidas Group, 2016d, 2016e; Sichtmann et al., 2010

Corporations’ CSR in general Evaluation of corporations’ effort towards CSR

Adidas Group, 2016d, 2016e; Khojastehpour & Johns, 2014; Sichtmann et al., 2010

Factors influencing CSR Adidas Group, 2016d, 2016e; Sichtmann et al., 2010

Demographics Demographics Laroche et al., 2001

3.2 Population and sample characteristics The consequences of our irresponsible actions on the planet are becoming obvious, so consumers became concerned about environmental issues. Forest Stewardship Council (hereinafter FSC) global consumer research (2013), which covered respondents aged between 21 and 64, claims that more than 80% participants find environmental pollution and global climate change very serious. Even though emerging markets still fight with implementing sustainable practices, consumers from these markets put a lot of effort in reducing their environmental footprint. 90% of consumers would boycott irresponsible items, 89% consumers would purchase a CSR product if given the opportunity, 59% consumers are willing to pay more for eco-friendly products, 60% plan to spend more on it in the next year, 76% believe their purchasing decisions make a difference to environment, and 53% is less prepared to switch the brand, if products are environmentally friendly (FSC, 2013). The centre of thesis’ study are Millennials. Figure 18 represents graphic presentation of Milennialls by gender and their socially responsible habits.

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Figure 18. Millennials by gender and CSR

Source: Cone Communications, 2015 Cone Communications Millennial CSR study, 2015.

They are most commonly defined as born around year 1980 and 2000, but this examination investigated only those between 1982 and 1998 (18 – 34). According to Millennial Marketing (2016), Millennials believe companies should go beyond making profit. A lot of them would be more eager to buy from a company if their purchase supports a cause, even if that means a higher price. They are very open to new and useful things, so they are really eager to switch the brands to ones associated with cause (Adidas Group, 2016c). A lot of Millennials were hit with market’s disadvantages by the last financial crisis, so they developed different perspective on business from previous generations. They are more price sensitive and involved in sharing economy, as they often cannot afford their own things or they do not even feel the need to poses ones (Goldman Sachs, 2016). Many of them can be described as aspirational consumers. This is the largest target segment for CSR products, since values both, brand responsibility and consumption. Group connects materialism, sustainability and cultural influences. They appreciate meaningful experiences and build their personal style with brands as a badge of their identity. With small actions, they want to contribute to positive changes. Aspirational consumer strives for safe and healthy products, fair wages for employees, preserving environment, responsible supply chains, and fair treatment of employees (Adidas Group, 2016c; E Marketer, 2015).

To capture the relevant Slovenian market, survey was created in Slovene language, and tested on 12 volunteers. This approach assured that questions were understandable, appropriate and consistent. All the comments were taken in consideration to eliminate any uncertainties. Many

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respondents complained about the length of the survey, so two questions were adjusted to shorten the time from 7min 1s to 6min 53s, while the average in real case was 4min 8s. Millennials use online channels on a daily basis, what enables to reach higher share of the target group, is environmentally friendlier than hard copies and easier to distribute. Because of the two different descriptions, questionnaire could not have been published openly on social media. It was distributed through private channels such as Messenger and e-mail, and posted separately on different forums. Questionnaire was opened from November 18th 2016 until January 3rd 2017. Neutral questionnaire gathered 40% (n=139) and CSR 32% (n=174) of appropriate answers, what means both questionnaires reached relevant sample of n = 55 respondents each. The sample is quite small due to difficulty to reach larger population without posting publicly. Some hypotheses enabled combining both groups of respondents, since answers were independent from descriptions of Parley footwear, and yield a larger sample of n = 110. Demographic characteristics of participants are summarized in Figure 19. Females represent larger portion of respondents (64,5%; N: 73%, C: 56%) than males (35,5%; N: 27%, C: 44%). Highest share of respondents were 26 years old (year 1990), what is an average in Millennial group (18 – 34). Most of participants completed bachelor degree (36,4%). Nobody has less than middle school, so these data were not taken in consideration. By working status, there is the largest quantity of students (29,2%), followed by permanent employees (26,4%). Most participants have average personal monthly income of 501 EUR – 1000 EUR (32,7%). Average respondent lives in a household with 2,5 people.

Figure 19. Demographic characteristics of participants (in %)

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3.3 Research hypotheses Some behavioural theories explored the correlation between similarity of customers’ and companies’ characteristics, and willingness to purchase goods. With sharing common interests and vision, buyers feel more attracted to company’s outcomes (Barboza, 2016). With internal satisfaction, which is created with knowledge and perception of observed company, customer starts to develop WTP for firm’s products (Kum et al., 2016). Therefore, we state the following hypothesis: H1: If there is an overlap between organisational attributes (Q14) and customer’s

individual attributes (Q9), it is more likely that customers, who overlap, will buy a product from the company within the next year (Q13).

In recent years, CSR became an important organisational asset, so companies try to establish firm strategies and get customers’ attention. With raising awareness, firms expand the knowledge of consumer, who became fairly demanding (Barboza, 2016; Brown & Dacin, 1997; Sen, 2006). The following hypothesis will be tested: H2: Customers, who believe Adidas represents corporate socially responsible company

(Q15g), are more likely to buy sneakers by higher price (Q5). H1 is testing similarities that Adidas company tries to align with their clients (Adidas Group, 2016d, 2016e). Hypothesis H3 tries to confirm that general behavior of individuals could lead to higher appreciation of socially responsible companies’ products from different angles. There is a raising awareness towards socially responsible goods, but these are often priced at premium level (Etilé & Teyssier, 2013). There is a remarkable difference between appreciation of socially responsible companies and socially responsible products. Socially responsible companies can offer many different products, which are not necessarily socially responsible. Company can put more effort in diverse employees, responsible source consumption, etc. (Adidas Group, 2016d, 2016e). Socially responsible product can be made of recyclable materials, under fair trade regime, etc. (Adidas Group, 2016d, 2016e). Customers often even believe they help to create a better future, even with small steps such as purchase by higher price (Millennial marketing, 2016). This will be examined with next hypotheses: H3: Consumers with higher personal tendency towards social responsibility (Q6a) are

prepared to pay more for socially responsible products and services (Q6, Q16).

H3a: Socially responsible respondents (Q6a) are willing to pay more for products from socially responsible companies (Q16b).

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H3b: Socially responsible respondents (Q6a) are willing to pay more for socially responsible product (Q6b).

H3c: Socially responsible respondents (Q6a) believe lower price is more important than social responsibility (Q6d).

H3d: Without financial limitations, people in general value socially responsible products and are willing to pay more for (Q6c).

Hypothesis H4 tries to answer the question if Parley sneakers offer similar features that are important for respondents when buying sportswear in general and so satisfy customers’ requirements (Barboza, 2016). H4: Factors (price, quality, design, CSR etc.) (Q11) that affect customers’ buying

decisions for sneakers in general, align with Adidas, and particularly Parley sneakers (Q3).

Based on various statistical analyses, investigating demographic, psychological and behavioural profiles, examination of Laroche et al. (2001) stated that typical conscious buyer is a married woman with at least one child still living at home. They defended findings with a fact that she is concerned about the family and its future welfare. Additionally, research studied the influence of educational level, working status and monthly income on decision for WTP. For Parley case, the next hypotheses will be tested: H5: Demographic characteristics are significant predictors of WTP for Parley sneakers.

H5a: Women (XSPOL) would pay the most for Parley sneakers (Q5). H5b: Older age group (Q18) would pay the most for Parley sneakers (Q5). H5c: People with three household members (Q20) would pay the most for Parley sneakers

(Q5). H5d: Those with higher education (XIZ1a2) would pay the most for Parley sneakers (Q5). H5e: Those with permanent employment (XDS2a4) would pay the most for Parley

sneakers (Q5). H5f: Those with higher personal income (Q19) would pay the most for Parley sneakers

(Q5). As described in hypothesis H5, Laroche et al. (2001) portrayed typical green consumer. Hypothesis below tests if the factors are significant for general WTP for products in percentage: H6: Demographic characteristics are significant predictors of WTP for socially

responsible goods in general (Q7).

H6a: Women (XSPOL) would pay the most for socially responsible products (Q7).

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H6b: Older age group (Q18) would pay the most for socially responsible products (Q7). H6c: People with three household members (Q20) would pay the most for socially

responsible products (Q7). H6d: Those with higher education (XIZ1a2) would pay the most for socially responsible

products (Q7). H6e: Those with permanent employment (XDS2a4) would pay the most for socially

responsible products (Q7). H6f: Those with higher personal income (Q19) would pay the most for socially

responsible products (Q7). Hypotheses H7 try to test devotion to social responsibility without financial boundaries, who would potentially pay but maybe does not have sources or she or he is limited with it. This hypothesis more than purchase testes psychological triggers and values regarding CSR and WTP. Parameters for hypothesis still base on Laroche et al. (2001) study. H7: Demographic characteristics are significant predictors of WTP for socially

responsible goods in general, without financial limits (Q8) (n = 110).

H7a: Without financial limitations, women (XSPOL) would pay the most for socially responsible products (Q8).

H7b: Without financial limitations, older age group (Q18) would pay the most for socially responsible products (Q8).

H7c: Without financial limitations, people with three household members (Q20) would pay the most for socially responsible products (Q8).

H7d: Without financial limitations, those with higher education (XIZ1a2) would pay the most for socially responsible products (Q8).

H7e: Without financial limitations, those with permanent employment (XDS2a4) would pay the most for socially responsible products (Q8).

H7f: Without financial limitations, those with higher personal income (Q19) would pay the most for socially responsible products (Q8).

Overlapping of beliefs and knowledge can lead to higher engagement of customer with CSR company (Barboza, 2016). This will be tested with next hypothesis: H8: People with higher self-social responsibility (Q6a) value socially responsible

companies more (Q16c). Questionnaire examined different perception of Parley footwear, based on the opening article with description and picture (Appendix A). Descriptions, neutral and CSR, were made in different colours to underline the difference and affect respondents’ perception even more. Latter will be studied with the following hypothesis:

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H9: Are young Slovenian consumers willing to pay a premium price for Adidas x Parley sportswear and, if so, to what extent (Q5)?

4 SURVEY RESULTS AND MAIN FINDINGS

4.1 Statistical analysis In this research, computer programmes Excel and SPSS were used. 4.1.1 Overlap between organisational attributes and customer’s individual attributes, and

willingness to buy This hypothesis examined 14 different attributes (active, responsible, best, competitive, compassionate, innovative, honest, sensitive, aesthetic, collaborative, efficient, activist, socially responsible, daring), which can describe self-opinion of individual respondents (Q9) as well as opinion about company (Q14), measured on seven-point Likert scale. In first step, two groups were developed - first set captured data for “Strongly Agree”, “Agree” and “Partially Agree”, and the second one “Strongly Disagree”, “Disagree” and “Partially Disagree”. This approach was used in individual’s as well as company’s perspective (Appendix B). Both groups (n = 100 respondents for individual’s attributes (Q9) and n = 110 respondents for company’s attributes (Q14)) were tested for correlations. This means higher correlation if respondents’ attributes level closely matches corporate level. All correlations between answers for individual and corporate attributes are statistically significant (p = 0.000). Smaller deviation can be seen only with the attribute “Sensitive” (p = 0.031), but it is still statistically significant. Highest correlation can be found in factor “Best” (R = 0.604), followed by moderate “Competitive” (R = 0.499). Factor “Socially Responsible” showed medium correlation between individual and corporate perception (R = 0.344), what can be explained that social responsibility is not on the first place when describing Adidas, but respondents recognized potential. Second step examined “Matches”. Factor 1 means that consumer has similar priorities to company, and 0 has no resemblances. Results were compared to question “How likely is it for you to do a purchase from Adidas company in next year?” (Q13), so we were able to determine crucial attributes that affect purchasing. “Efficiency” (p = 0.005) resulted in strong correlation with intend for purchase (R = 0.592). Moderate correlation can be found also with factors “Collaborative” (p = 0.001, R = 0.585) and “Daring” (p = 0.003. R = 0.469). Social responsibility is statistical significant (p = 0.005) but correlates very weakly (R = 0.027), so it can be concluded, that CSR is not a notable reason for purchasing from Adidas company. After preforming independent t-test, excluding all statistically insignificant matches and calculating the average correlation, the results showed weak correlation among overlap of respondents’ and company’s attributes and purchase intention (R = 0.182) (Table 6).

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4.1.2 Beliefs about corporate socially responsible company and willingness to pay higher price

This hypothesis examines if CSR of defined company really affects WTP for given products. Question Q15g about Adidas’ CSR was measured on seven-point Likert scale. Answers (n = 110) were divided in two groups, positive (“Strongly Agree”, “Agree” and “Partially Agree”) and negative ones (“Strongly Disagree”, “Disagree” and “Partially Disagree”), to get more detailed results. Question Q5 measured numerical amount of money that respondents would be prepared to pay for Parley sneakers if they would not have any financial limitations. Data were normalized and tested with Independent T-test. Hypothesis cannot be confirmed (Table 6), since there is no statistical significance for this question (p = 0.754, Appendix B), even though group, which agrees Adidas is socially responsible, is notably larger (agree = 74, do not agree = 10). Result is insignificant due to high deviation at the answers about the price. Both groups of participants were tested together to take into consideration larger sample, but the difference in price was too diverse.

4.1.3 Personal tendency towards social responsibility and willingness to pay more for

socially responsible products and services All data were measured on seven-point Likert scale (n = 109). 4.1.3.1 Socially responsible respondents are willing to pay more for products from socially

responsible companies (H3a). This hypothesis focuses on general respondents’ view about CSR companies and captures all the goods provided by these institutions, no matter if products are socially responsible or not. What counts here, is the corporate image. Participants defined the level of their social responsibility (Q6a) and level on which they agree to pay more for goods from socially responsible companies (Q16b). Hypothesis is moderately statistically significant (Table 6) for respondents with higher self-inclination towards social responsibility that are willing to pay more for products from socially responsible companies (p = 0.000, R = 0.496) (Appendix B). This can be justified with fact that companies’ offer and behavior aligns with individuals’ preferences and beliefs. Customers are aware they can get items that will satisfy their needs from CSR companies. They believe institutions put a lot of effort and sources to maintain responsible conditions, so they deserve award in financial appreciation.

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4.1.3.2 Socially responsible respondents are willing to pay more for socially responsible product (H3b).

This hypothesis centers on respondents’ WTP to purchase socially responsible products by premium price. Participants defined the level of their social responsibility (Q6a) and level on which they agree to pay more for socially responsible goods (Q6b). The focus here is on socially responsible products, no matter the corporate image. Willingness to pay more for sustainable product is strongly correlated (Table 6) with personal social responsibility (p = 0.000, R = 0.699) (Appendix B). There is slightly more significance than in H3a, most probably due to question paying attention directly to product, which is more specific, than to company in general. People searching for sustainable goods would pay more for them if they believe products were made under responsible conditions and will satisfy their intrinsic and extrinsic needs. Simultaneously, they consider these products offer so many positive features that they are worth of higher price. 4.1.3.3 Socially responsible respondents believe lower price is more important than social

responsibility (H3c). This hypothesis tries to observe if people who marked themselves as socially responsible (Q6a) stand behind their believes or at the end reasonable price is more essential than responsibility (Q6d). Statement is statistically insignificant (p = 0.135, R = -0.165) (Appendix B). Millennials represent new era of thinking. A large portion (89,1%) is aware of surrounding and responsibility they have to society. Because of the crisis, they are careful with their finance, but in case of social responsibility, they are prepared to open wallets and in a way contribute to the common better future. Hypothesis is rejected (Table 6). 4.1.3.4 Without financial limitations, people in general value socially responsible products and

are willing to pay more for (H3d). This hypothesis tries to define if people would be willing to pay more for socially responsible products if they would not have any financial limitations (Q6c). This examination checks consumers’ behavior and general aspect on social responsibility and their strive for sustainable goods. Only two respondents claimed they “Partially disagree”, all the others checked the positive part of the scale (Appendix B). Hypothesis is confirmed (Table 6). 4.1.4 Factors (price, quality, design, CSR etc.) that affect customers’ buying decisions for

sneakers Both parts were opened with dichotomous question and examined with matrix seven-point Likert scale. The opening dichotomous question (Q10) selects respondents (n = 110), which

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use sportswear. 91% participants were appropriate for continuing section about general preferences when buying sportswear (n = 100). 56% of respondents marked comfort as strongest factor (“Strongly agree”) (Q11) affecting buying sportswear in general. Next priority can be seen in functionality (47% of all respondents). Only 14% strongly agree about sustainability of the product. Brand is at least important (8%), and has the most (4%) “Strongly disagree” answers. Apart from given answers, participants claimed they care about durability of material and soles. Parley sneakers were completely new product at the time of examination. Out of both surveys, only one third of respondents heard about Parley sportswear before reading the article (Q2) (n = 108). Because Parley sneakers were only launched, (Q3) we measured perception based on only visual descriptions and photos. For purpose of this hypothesis, data from both were combined to get an approximation what is the view on Parley footwear in general (n = 110) (divided data for neutral and CSR description can be seen in Figure 22 and 23). The most significant factor (“Strongly agree”) is environmental friendliness with 30%. The result is most probably consequence of CSR description, since 85% of “Strongly agree” answers come from this survey. Comfort and functionality gathered the same percentage of importance (19%). The least likely factor is price (4,5%) so Parley footwear is perceived as premium priced. Since negative (“Partially disagree”, “Disagree” and “Completely disagree”) answers are negligible, positive factors were taken in consideration. Figure 20 and Figure 21 summarize the positive (“Strongly agree”, “Agree” and “Slightly agree”) responds on general and Parley sportswear’s qualities.

Figure 20. Factors, influencing purchase of sportswear in general (in %)

65

76

90

91

96

97

97

Brand

Social responsible product

Design

Price

Quality

Comfort

Functionality

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Figure 21. Factors, respondents assigned to Parley sportswear (in %) Features as quality, design, functionality and comfort are positioned in similar proportions, but do not align entirely. Graphs as well demonstrate that consumers care about price when buying sneakers, what does not align with perception of Parley sportswear as premium priced. On average, respondents show more interest in social responsibility in general than in Parley case. This can be explained as result of ambiguous information about social responsibility from neutral description of Parley footwear. Because factors that affect buying decisions of sneakers in general do not align with Parley attributes completely, hypothesis cannot be fully confirmed (Table 6). 4.1.5 Demographic characteristics as predictors of WTP for Parley sneakers The following questions were answered by n = 110 respondents. WTP for Parley sneakers was measured by the amount respondents are willing to pay for Parley sneakers (Q5). Only data for more than 25 respondents will be presented if the group does not present highest monetary value. 4.1.5.1 Women would pay the most for Parley sneakers (H5a). Women (XSPOL) are willing to pay 124,64 EUR on average for Parley sneakers, while men are prepared to pay 193 EUR (Table 3), what is 54,9% more. Hypotheses H5a is rejected (Table 6). 4.1.5.2 Older age group would pay the most for Parley sneakers (H5b). This hypothesis can be confirmed (Table 6). As for population sample, age (Q18) was divided in four groups. On average, group from 18-21 years is prepared to pay 105 EUR, group 22-25 136,84 EUR, 26-29 153,21 EUR and 30-34 172,6 EUR (Table 3). This is clear demonstration

46.4

67.3

75.5

76.4

78.2

78.2

Price

Social responsible product

Functionality

Design

Comfort

Quality

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that older the age group, the higher is WTP for Parley footwear. Those born in year 1985 are willing to pay the most, 263 EUR on average. Older generations are prepared to pay more most probably because they have better career positions and thereby more disposable income. This generation as well avoided global crisis and unemployment of young people. 4.1.5.3 People with three household members would pay the most for Parley sneakers (H5c). This hypothesis cannot be confirmed (Table 6). Q20 measured household members. If there is only one member in the household, the average willingness to pay is at price 193,65 EUR (Table 3). The result can be defended with less financial obligations towards partner and family, so single individuals can afford to spend more disposable income on items with higher price. This amount is followed by three members and 150,83 EUR, two members and 137,34 EUR, five 125, 71 EUR, four would pay 112,14 EUR, and nine-member household 40 EUR. 4.1.5.4 Those with higher education would pay the most for Parley sneakers (H5d). This hypothesis can be confirmed (Table 6). Willingness to pay rises with education (XIZ1a2). On average, respondents with middle school are prepared to pay 98 EUR, those with finished high school 100,23 EUR, upper secondary education 140,56 EUR. On faculty level, those with bachelor degree would pay on average 157,75 EUR and those with master degree or higher 196,4 EUR (Table 3). Knowledge is an important factor at WTP for CSR. Besides higher education and knowledge, outcome can be justified that people with higher degree have more disposable income. 4.1.5.5 Those with permanent employment would pay the most for Parley sneakers (H5e). Question about employment was marked with code XDS2a4. Group that is willing to pay the most is those with independent profession, on average 230 EUR (Table 3). This can be justified that freelancers have different lifestyle, which includes curiosity for new and unusual things. 124 EUR is the amount students are willing to pay, 149 EUR those with temporary contracts, and permanent employed 159,31 EUR. Based on latter data, hypothesis is rejected (Table 6). 4.1.5.6 Those with higher personal income would pay the most for Parley sneakers (H5f). This hypothesis can be confirmed (Table 6). Question about employment was marked with code Q19. Participants with more than 2001 EUR of monthly personal disposal income are prepared to pay 270,83 EUR on average for Parley footwear (Table 3). Since this group has the most disposable income, they can afford to pay the most. Group with 1001 – 2000 EUR of monthly personal disposal income is prepared to pay 137,78 on average, followed by those with up to 500 EUR (132,78 EUR). Unit between 501 and 1000 EUR is prepared to pay the least, 113,29 EUR.

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Table 3. Factors affecting WTP the most for Parley footwear

4.1.6 Demographic characteristics as predictors of WTP for socially responsible goods in

general The following questions were answered by n = 110 respondents. WTP was measured in percentage (Q7). Only data for more than 25 respondents will be presented if the group does not present highest monetary value. 4.1.6.1 Women would pay the most for socially responsible products (H6a). A hypothesis is rejected (Table 6). Women (XSPOL) are willing to pay 18,67% more on average for socially responsible products, while men are prepared to pay 19,05%, what is 0,38% more (Table 4). 4.1.6.2 Older age group would pay the most for socially responsible products (H6b). Hypothesis is rejected (Table 6). As for population sample, age (Q18) was divided in four groups. On average, group from 22-25 is willing to pay the most for socially responsible product (Table 4). It can be justified that this group is young enough to be opened for new things and sensitive for sustainability, but as well grown up enough to critically evaluate the features. Group between 18-21 years is prepared to pay 18,4% more, group 22-25 24,4%, 26-29 19,36% and 30-34 20 %. Those born in year 1991 are willing to pay the most, 31,9% more on average for sustainable product. 4.1.6.3 People with three household members would pay the most for socially responsible

products (H6c). A hypothesis is rejected (Table 6). The highest average willingness to pay more can be found in households (Q20) with four and nine members, 25% (Table 4). If there is only one member in the household, the average willingness to pay more is at 22,39%. Five members would pay 17,9%, three members 17,3%, and two members 15,2%.

Demographic factor Group with highest WTP WTP (EUR) Gender Male 193 Age 30 - 34 172 Education Master Degree 196,4

Employment Independent profession 230 Income 2001 EUR + 270,83 Household members 1 193,65 Total average 209,31

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4.1.6.4 Those with higher education would pay the most for socially responsible products (H6d).

A hypothesis can be confirmed (Table 6). Education was measured with code XIZ1a2. On average, respondents with middle school are prepared to pay 8% more for socially responsible products, those with finished high school 17,4%, upper secondary education 14,6%. On university level, those with bachelor degree would pay on average 20% and those with master degree or higher 24,2% what is the most of all sections (Table 4). The latter result is similar to the one measured in monetary value (chapter 4.1.5.4), and could be justified with the fact that education raises knowledge, awareness and enables higher disposable income. 4.1.6.5 Those with permanent employment would pay the most for socially responsible

products (H6e). A hypothesis is rejected (Table 6). Employment was measured with code XDS2a4. Highest percentage for socially responsible product would pay unemployed, 25,6% (Table 4). Students would pay 18,3% more, temporary contractors 18,9%, permanent employees 19,8%. These results can be explained in a way that unemployed have more spare time, so they can do researches about CSR goods and create opinion and value. 4.1.6.6 Those with higher personal income would pay the most for socially responsible products

(H6f). A hypothesis can be confirmed (Table 4). Participants with more than 2001 EUR of personal income (Q19) are prepared to pay 26,3% on average more for sustainable products (Table 4). This fact again can be supported with explanation that more disposable income enables higher spending. Group 1001 – 2000 EUR is prepared to pay 19,2% on average, followed by those between 501 and 1000 EUR, 18,4%. The least are prepared to pay those with the least disposable income, up to 500 EUR, 16,9%.

Table 4. Factors affecting WTP the most for socially responsible products

Demographic factor Group with highest WTP WTP (%) Gender Male 19,5 Age 22 - 25 24,4 Education Master Degree 24,2 Employment Unemployed 25,6 Income 2001 EUR + 26,3 Household members 4 and 9 25 Total average 24,2

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4.1.7 Demographic characteristics as predictors of WTP for socially responsible goods in general, without financial limits

These hypotheses more than purchase test values regarding CSR and WTP, so respondents are not limited with monetary value. The following questions were answered by n = 110 respondents. WTP was measured in percentage, without any financial limits (Q8). Only data for more than 25 respondents will be presented. 4.1.7.1 Without financial limitations, women would pay the most for socially responsible

products (H7a). Hypotheses H7a can be confirmed (Table 6). Gender was measured with question XSPOL. If there would not be any financial restriction, women would be willing to pay 55,6% more on average for socially responsible products (Table 5), while men are prepared to pay 44,5%. 4.1.7.2 Without financial limitations, older age group would pay the most for socially

responsible products (H7b). This hypothesis cannot be confirmed (Table 6). As per population sample, age (Q18) was divided in four groups. On average, group from 26-29 (53,3%) is willing to pay the most for socially responsible product (Table 5). Group 22-25 is prepared to pay 52,4% more, between 18-21 years 40,1% more, and 30-34 is willing to pay 51,2% more on average. Those born in year 1996 are willing to pay the most, 65% more on average for sustainable product. This can be justified that younger generation is more conscious about global problems and they are strongly aware they can contribute to solutions. 4.1.7.3 Without financial limitations, people with three household members would pay the most

for socially responsible products (H7c). Hypothesis H7c can be accepted (Table 6). Households (Q20) with three members would eventually pay the most for sustainable products if they would not have any financial restrictions (54,8%) (Table 5). On second place are two persons (54%) and third household with four members (49,3%). It is interesting to see that households with one member, which is willing to pay the most in hypothesis H5 in H6, is here in the middle with 49,2%. For the future researches would be interesting to examine this anomaly. The least would pay larger households with five (41,4%) and nine people (25%).

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4.1.7.4 Without financial limitations, those with higher education would pay the most for socially responsible products (H7d).

This hypothesis can be accepted (Table 6). Education was measured with question XIZ1a2. As seen in previous results, those with completed master degree or more are willing to pay the most (60%) (Table 4). Latter is followed by finished bachelor degree (58,5%). Respondents with upper secondary education would pay 37,6% more, high school 44,32% and middle school 33%. This pattern clearly shows the connection between increasing WTP and higher education. This question shows basic value of the product, without financial restrictions, so pure knowledge and appreciation of CSR were evaluated. 4.1.7.5 Without financial limitations, those with permanent employment (XDS2a4) would pay

the most for socially responsible products (H7e). This hypothesis cannot be confirmed (Table 6). Without financial limitations, the most would be willing to pay people with independent profession (74,8%) (Table 5). Characteristic of this group is that they like new, unusual and interesting things and most commonly they are good observers as well. They are progressive, what aligns with idea of CSR and innovative implementation of it in goods. They can see outside the box and recognize interesting opportunities. Students would pay 55,5% more, permanent contractors 49,8%, and temporary workers 39,8%. 4.1.7.6 Without financial limitations, those with higher personal income (Q19) would pay the

most for socially responsible products (H7f). This hypothesis cannot be confirmed (Table 6). The most are prepared to pay participants with the lowest monthly personal income (57%), which aligns with the age group and unstable employment (Table 5), but they still appreciate responsible products and their mission the most. Because there is no monetary value, they can value the product in this other, more subtile way. This is followed by highest income (53,8%) and 501 – 1000 EUR (49%). Without financial limits, average person who is willing to pay the most from H7 (Table 5) section is willing to pay 35,1% more than the one from H6 (Table 4) (in total 145,2% more). All demographic hypotheses have in common highest education. From latter can be concluded that level of education affects WTP for socially responsible goods the most. First two results differ from Laroche’s study, but the group without financial limits can be applied. In this case, assumptions about employment and income cannot be applied. Typical consumer who would be willing to pay more without financial limitations can be described as housewife with high education, but hit with financial crisis. She stays at home, care about her small family and run domestic business, which gives her minimal monthly income.

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Table 5. Factors affecting WTP the most for socially responsible products without financial limitations

Demographic factor Group with highest WTP WTP (%) Gender Female 55,6 Age 26 - 29 53,3 Education Master Degree 60 Employment Independent profession 74,8 Income Up to 500 EUR 57 Household members 3 54,8 Total average 59,3

4.1.8 Self-social responsibility and socially responsible companies The following questions were answered by n = 110 respondents. Social self-responsibility was measured with question Q6a, and respect for CSR companies with Q16c on seven-point Likert scale. Hypothesis is accepted (Table 6) with statistical significance and moderate correlation (p = 0.000, R = 0.571) (Appendix B). It can be explained as alignment of values and vision, with a deeper knowledge about the field. People appreciate if corporations care about global issues and try to contribute since they have a lot of disposable sources and power to create a change. 4.1.9 Adidas’ CSR and young Slovenian consumers’ willingness to pay Figure 22 and Figure 23 summarize the positive responds on Parley sneakers’ features. Percentage of positive responds (“Strongly agree”, “Agree” and “Slightly agree”) is larger with CSR description than neutral one. With neutral description (Figure 22), the majority of respondents saw the most positive feature in comfort (74,6%). CSR description (Figure 23) revealed that 89% of respondents perceive Parley sneakers as environmentally friendly, what is 43,5% more than with neutral one. Furthermore, participants, who checked Parley footwear as environmentally unfriendly (“Strongly disagree”, “Disagree” and “Slightly disagree”) represent only 5,5% with CSR description and 14,5% with the neutral one. Under section “Others” participants included comments about Parley footwear being interesting and innovative. Both results show that this sportswear is perceived as a premium-priced product. 72,2% respondents who read CSR description would buy a product (Q4), among 13% definitely, while with neutral one this amount is only 32,7% (4% definitely). There is even higher discrepancy with negative responses – with neutral portrayal, 13% of respondents would never buy footwear, while this amount is 0% with CSR description.

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Figure 22. Parley sneakers’ features, positive answers – neutral description (in %)

Figure 23. Parley sneakers’ features, positive answers – CSR description (in %) The price per pair of Ultra Boost Uncaged Parley was 199,95 EUR (Figure 16) for limited edition, launched in November 2016 (Adidas Online Store, 2016b). Survey (Q5) showed that Millennials in Slovenia are willing to spend on average 203 EUR, what is 1,53% more than real price, for sneakers if presented with environmentally friendly note. Those with general description would spend only 94,10 EUR on average, so CSR description roots 108,90 EUR or 115,73% increase. On average, people are prepared to spend 19% more for environmentally friendly products (Q7), and 59,65% if there would not be any financial restraints (Q8). Hypothesis is confirmed (Table 6), Slovene Millennials are willing to pay more for corporate social responsibility on all levels. The two different portrayals of Parley sneakers really made a difference in WTP, even though the picture of the product was the same on both. This is a clear example how human’s perception can be manipulated by the story and colours. Reader accumulated a certain knowledge and provided measurable outcomes.

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45.5

69.1

70.4

71

74.6

Reasonable priced

Environmentally friendly

High quality

Attractive design

Functional

Comfortable

58.2

80

81.8

83.6

87.3

89

Reasonable priced

Functional

Comfortable

Attractive design

High quality

Environmentally friendly

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Table 6. Summary of hypotheses’ findings

Hypothesis Description Result H1 If there is an overlap between organisational attributes and

customer’s individual attributes, it is more likely that customers, who overlap, will buy a product from the company within the next year.

Confirmed

H2 Customers, who believe Adidas represents socially responsible company, are more likely to buy sneakers by higher price.

Rejected

H3: Consumers with higher personal tendency towards social responsibility are prepared to pay more for socially responsible goods.

H3a Socially responsible respondents are willing to pay more for products from socially responsible companies.

Confirmed

H3b Socially responsible respondents are willing to pay more for socially responsible product.

Confirmed

H3c Socially responsible respondents believe lower price is more important than social responsibility.

Rejected

H3d Without financial limitations, people in general value socially responsible products and are willing to pay more for.

Confirmed

H4 Factors (price, quality, design, CSR etc.) that affect customers’ buying decisions for sneakers in general, align with Adidas, and particularly Parley sneakers.

Partially confirmed

H5: Demographic characteristics are significant predictors of WTP for Parley sneakers. H5a Women would pay the most for Parley sneakers. Rejected H5b Older age group would pay the most for Parley sneakers. Confirmed H5c People with three household members would pay the most for

Parley sneakers. Confirmed

H5d Those with higher education would pay the most for Parley sneakers.

Confirmed

H5e Those with permanent employment would pay the most for Parley sneakers.

Rejected

H5f Those with higher personal income would pay the most for Parley sneakers.

Confirmed

H6: Demographic characteristics are significant predictors of WTP for socially responsible goods in general.

H6a Women would pay the most for socially responsible products. Rejected H6b Older age group would pay the most for socially responsible

products. Rejected

(table continues)

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Table 6. Summary of hypotheses’ findings (continued)

Hypothesis Description Result H6c People with three household members would pay the most for

socially responsible products. Rejected

H6d Those with higher education would pay the most for socially responsible products.

Confirmed

H6e Those with permanent employment would pay the most for socially responsible products.

Rejected

H6f Those with higher personal income would pay the most for socially responsible products.

Confirmed

H7: Demographic characteristics are significant predictors of WTP for socially responsible goods in general, without financial limits.

H7a Without financial limitations, women would pay the most for socially responsible products.

Confirmed

H7b Without financial limitations, older age group would pay the most for socially responsible products.

Rejected

H7c Without financial limitations, people with three household members would pay the most for socially responsible products.

Confirmed

H7d Without financial limitations, those with higher education would pay the most for socially responsible products.

Confirmed

H7e Without financial limitations, those with permanent employment would pay the most for socially responsible products.

Rejected

H7f Without financial limitations, those with higher personal income would pay the most for socially responsible products.

Rejected

H8 People with higher self-social responsibility value socially responsible companies more.

Confirmed

H9 Are young Slovenian consumers willing to pay a premium price for Adidas x Parley sportswear and, if so, to what extent?

Confirmed

4.2 Descriptive statistics of CSR First slot of data was gathered on seven-point Likert scale, where 1 stands for “Completely Agree”, and 7 “Completely disagree” (Appendix B). Based on survey question Q15, Slovenian Millennials see Adidas mostly as profitable (Q15i) and innovative (Q15b), what consequently brings beliefs it produces high-end pricy goods (Q15g). Participants evaluate Adidas’ representation of socially responsible products (Q15f) and company’s general CSR support (Q15h) really low compared to other factors. Sports corporation is investing a lot of resources to raise the awareness and to set the new standards in the industry, but Millennials in Slovenia have not recognised it yet.

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In general (Q16), more than half of respondents (51,4%) think corporations are acting socially responsible. 82,6% (N: 80%, C: 85,2%) respondents are prepared to pay more for products and services of socially responsible companies, and 95,4% (N: 96,4%, C: 94,4%) worship socially responsible companies (Appendix B). They suppose it is more likely that corporations implement CSR to gather more clients and cope with competitors. Figure 24 summarizes findings about what respondents consider are the main factors for companies to implement social responsibility. Proportion of respondents, who believe in sincere intentions of the companies, is 66,4%. Study revealed that Slovene Millennials still perceive implementation of CSR as a tool to increase business benefits and not really as an instrument contributing to the better world.

Figure 24. Reasons why corporations support CSR (in %)

4.3 Summary of main findings As humankind accelerated exploitation of several resources through the last few centuries, a need for balancing arisen to prevent natural catastrophe. Issue is becoming alarming. Most obvious global leaders with abilities to unite masses of people, provide sources and tangible solutions are corporations, acting as a good corporate citizen, preferably including all dimensions of CSR. Latter is becoming one of the most important factors in buying decisions. If implemented correctly, can be a notable business advantage also in financial terms. Trends show that the most respondents long for environmental CSR. Because of fast-changing trends and consequently a lot of waste, fashion business is certainly one of the largest polluters, so this thesis examined products from recycled oceanic plastic, made under strict working conditions and with the best technology on market.

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CSR arose as an important business element worldwide. Research’s results have proven that slowly but stable expands among Slovene Millennials as well. Slovenia has specific market, constrained by small size and reserved progressiveness. This reflects in slower adaptation of CSR trends than in more developed Western countries, where CSR can be observed in everyday practices. Based on the questionnaire, Slovenian youngsters are aware of importance of sustainability, and majority of them would prefer responsible goods. A lot of respondents marked themselves as socially responsible. In this group, majority agrees to pay higher price for sustainable goods. As many other countries, Slovenia still recovers from financial crisis, so people are careful with their spending, and do not trust corporations completely. Exact causes that activate consumers’ WTP are still ambiguous, but closer to understand with every study. There are many psychological triggers behind every buying decision, and many of them are rigorously subjective. Even though global trends are pointing in sustainable direction, people still need additional knowledge about problems and solutions. Thesis confirmed the connection between individual and organisational preferences, individual beliefs, visions, and WTP. Consumers feel more engaged and are prepared to spend more for products from companies with which they share common values. The most correlated to Adidas and their customers, leading to purchase, were notions efficiency, collaboration and dare. These terms can be highly connected to sports, what is a reasonable outcome for sports fashion corporation. In term of overlapping values, CSR was statistically significant but not highly correlated, so it can be concluded that Adidas is not yet recognized as a notable CSR company, and CSR is not yet the main reason, which would stimulate purchase intention. Regarding WTP and sustainability in general, respondents are prepared to spend more money on CSR goods, especially if perceiving themselves as green individuals. Additionally, more buyers believe in responsible behaviour of the company or features of the products, more their WTP increases. Latter was measured in several different aspects – with actual monetary amount, percentage and abstract value with readiness to pay with no financial limitations. All hypotheses were confirmed, respondents are willing to pay more for socially responsible products. There is major distinguish between answers, which measured financially limited and unlimited WTP – with limitation, prevailing group are men between 20 and 25 with higher disposable income, while WTP without limitations, what measures values and beliefs for CSR products, are female between 26 and 29, in lowest disposable income group. Furthermore, respondents cherish both players of CSR - companies as well as CSR goods. Responsible companies produce a variety of goods, not only CSR ones. Enterprises put a lot of effort to ensure responsible process throughout the whole supply chain and through the whole production, from original material to decomposition. Because a large part of this processes is invisible to consumer they do not have knowledge about it, what may consequently lead to lower appreciation of CSR firms than would with more information. Most of respondents are

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still perceived that companies are executing CSR mainly because of financial reasons. More than 60% of respondents believe that companies are hiding poorer products with CSR and most of people still believe companies implement it because they want to reach wider customer’s population. All and all, there are still 66.4% of respondents, which believe in sincere corporate concern about social and environmental issues. Regarding Slovene Millennials, Adidas is seen as international corporation, connected to profit more than to actual social responsibility. Higher scores can be seen in appreciation of the tangible CSR products. This could be explained through direct satisfaction of sustainable needs. Buyers can directly see CSR elements in defined products. As for managerial implementation, this could mean targets need to be highly defined in accordance to present it better to customers, align with their values and expectations, and therefore activate higher WTP. Additionally, the term product is much narrower than company, so person can evaluate its attributes much more in details than the company’s entire offer. Considering sportswear features, study displayed that young people in Slovenia still seek for traditional factors such as functionality, comfort, quality and price when buying sneakers. Design, CSR and brand are in second plan. Parley sneakers offer more or less all wanted features that affect buying decisions of sportswear in general, so it could satisfy intrinsic as well as extrinsic values, what may result in higher WTP. With correct psychological implementations of the goods’ story, buying behaviour can be manipulated and measured. Majority of respondents never heard about Parley sneakers, because they were only launched in the time of the survey, so they were able to evaluate features only from description. This is as well one of the first Adidas’ CSR products with such amount of positive affirmation and strong PR regarding awareness, what is another reason, why Adidas is still not highly recognized as CSR company in the first row. Nonetheless, even though respondents have not seen the product in person yet, there is notable part of respondents who would buy CSR sneakers, more than 72%. The buyer, prepared to pay the most, can be seen in highly educated male, aged between 30 and 34, from the highest disposable income group. Research revealed a large value difference in WTP regarding neutral and CSR survey’s descriptions about particular sportswear, so it can be concluded, that people appreciate sustainable sneakers. In general, study showed increasing demand for sustainable products – in our case, with contribution of right marketing implementation, buyers would in addition spend more than 115%. Respondents of all profiles are interested in CSR, but the only permanent factor to pay the most, when analysing demographic with different elements, such precise item, sustainable item and sustainable item without financial limitations, is educational level – master degree or higher. This fact can conclude that knowledge could trigger the awareness, which is one of the main factors for attractiveness to sustainable products.

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4.4 Limitations and recommendations for further research The main centre of this thesis is the difference in WTP caused by different descriptions of the same product. As example, Parley footwear produced by Adidas was chosen. To reach the difference, two different portrayals were made, which separated respondents in two groups. Capturing flawless data, each group could see only one description, what disabled public sharing on social media. Because of this, smaller pool of respondents was gathered. Due to relatively low number of answers, some hypotheses were statistical insignificant due to high variation of the answers. Results for Parley footwear are only based on the article, while customers did not have the opportunity to see Parley sneakers in person and try them, since only limited edition was launched by the time of the questionnaire. Survey gathered only young people of certain age from Slovenia, which is a very small market that is not always in step with the latest global trends. Correlation between CSR and WTP is every day more up-to-date. Even though many studies were already done, there is a lot of place for improvement. What is the most intriguing is the psychological part. What triggers engagement in social responsibility, and furthermore, WTP? Additional analyses would help to explain different demographics components. Why are women prepared to pay for sustainable products the most only in group without financial restrictions? And why individuals with the lowest disposable income in this same group? Would larger sample give different results? To get complex view and understanding, in-depth interviews with groups, shown as those prepared to pay the most, would maybe reveal triggers and preferences. In broader sense, are people aware of CSR and to what extent? Do they even appreciate it? And how companies implement it, to what level and do they have power to do remarkable change in world? Interesting research would be about respondents’ perception on Parley sportswear during the time - before launching, right afterwards and after certain amount of time, with both descriptions. Would additional knowledge and seeing product in real bring the answers from both groups closer together? Can consumers’ behaviour be manipulated even after they gain their own knowledge and vision on products? Or with different stories? What would be result if there would be financial limitation? Acting of CSR and WTP throughout different events (wars, Brexit, governmental changes) and countries would give a deeper knowledge on wider picture. Comparison of results might offer even deeper macroeconomic insights on other business fields. In this study, only young Slovenes were captured – would there be a difference with different and larger sample?

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CONCLUSION In recent history, there have been some tough times for our planet. Endless exploitation results in slow changes, which could be fatal for the life as we know. Much can be improved with changes in consumption habits, but how long will it take to really see the difference? World is becoming aware that many changes need to be implemented in accordance to reduce harmful footprint humankind leaves on a daily basis, and survive. Corporations have the power and sources to contribute to better living space and on the other hand attract more customers who care to survive. Business came to a point where exploiting raw material is easier and more profitable than producing sustainable goods. Will consumers recognize the efforts and collaborate in changes to protect the surrounding? Objective of this thesis is to prove that corporate social responsibility is becoming more and more important factor in the eyes of consumers as well. The research confirmed consumers are becoming more thoughtful about their buying decisions and they value socially responsible products and services. First research questions dealt with alignment of individual and organisational beliefs and WTP. There is confirmed corporate relationship with customers with same preferences. Individuals search for goods and services they want and need and if they really feel engaged, they are willing to pay more, since they believe given firm can provide them exactly what they expect. Latter was examined more precisely with second research question about CSR factor. In general, people value organisational efforts to become more sustainable. Especially if respondents perceive themselves as socially responsible, they feel more engaged and with enough knowledge about company and products, they start developing WTP, since they believe will get what will fulfil their needs. But it is not only about the abstract notions of sustainability, at the end consumers demand satisfactory physical features of the product as well. This thesis was focused on environmental factor, precisely oceans. Latter is right now the most sensitive environment, which contributes as large portion to stable global conditions, such as consuming carbon dioxide. Since fashion is one of the most fast-changing businesses with a lot of waste, as an example, sneakers that were result of collaboration between sports giant Adidas and NGO Parley were chosen for checking direct effect of CSR to WTP. Large part of sportswear represents recycled plastic from the oceans. Characteristics of the shoes are similar to more known Ultra Boost running sportswear, with additional environmental note. Study showed a notable difference in WTP when the whole story behind the product was presented to participant. Consumers are prepared to pay premium price for sustainable products. Several analyses demonstrated that more and more consumers believe that with purchasing goods with socially responsible note helps to contribute to greater good and co-create the story of saving the planet and ourselves.

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71

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1

APPENDIXES

2

TABLE OF APPENDIXES Appendix A: Quantitative research questionnaire in Slovene and English language………….1 Appendix B: Hypotheses output………………………………………………………...........14 Appendix C: List of abbreviations…………………………………………………………....19 Appendix D: CSR Standards……………………………………………………………….…20 Appendix E: Sustainability evaluations….……………………………………………………25 Appendix F: Extensive summary of findings in Slovene.…………………………….............28

1

Appendix A: Quantitative research questionnaire in Slovene and English language

� � � � � � � Magistrska anketa

� � � Kratko ime ankete: Adidas x Parley Dolgo ime ankete: Magistrska anketa Število vprašanj: 23 Anketa je zaključena. Aktivna od: 18.11.2016 Aktivna do: 18.02.2017 Avtor: abavcar@gmail.com Spreminjal: abavcar@gmail.com Dne: 18.11.2016 Dne: 03.01.2017

Pozdravljeni!

Lepo prosim, da odgovorite na kratek vprašalnik in mi tako pomagate pri raziskavi, ki bo prispevala k izdelavi magistrskega dela na Ekonomski fakulteti v Ljubljani. Anketa je namenjena starostni skupini med 18. in 34.

letom. Prosim, da skrbno preberete članek in šele nato pričnete odgovarjati na vprašanja.

Najlepša hvala in lep dan, Anja � �

Neutral description

2

CSR description

(Parley obutev) Q1 - Prosim, da skrbno preberete članek in odgovorite na vprašanja v nadaljevanju. � � Q2 - Ste pred branjem članka že slišali za športno obutev Parley? Da. � Ne. � � Q3 - Glede na opis in fotografijo iz članka, se mi športna obutev Parely zdi: �

Popolnoma se strinjam

Se strinjam

Delno se strinjam Nevtralno

Delno se ne

strinjam

Se ne strinjam

Nikakor se ne

strinjam Visoke kakovosti

Privlačnega videza

Cenovno ugodna

Funkcionalna Udobna Okolju prijazna

Drugo � Q4 - V kolikšni meri bi se na podlagi informacij iz članka odločili za nakup športne obutve Parley? �

1 2 3 4 5 6 7 Zagotovo Nikakor

3

� Q5 - Če finančna plat ne bi bila ovira, bi bil/a za športno obutev Parley pripravljen/a plačati največ: �

€ � (Osebna družbena odgovornost) � Q6 - Prosimo, navedite stopnjo, do katere verjamete, da naslednje značilnosti držijo za vas osebno: �

Popolnoma se strinjam

Se strinjam

Delno se strinjam Nevtralno

Delno se ne

strinjam

Se ne strinjam

Nikakor se ne

strinjam Imam se za družbeno odgovorno osebo.

Za družbeno odgovoren izdelek sem pripravljen/a plačati več.

Če finančna plat ne bi bila ovira, bi bil/a pripravljen/a plačati več družbeno odgovoren izdelek.

Nizka cena je pomembnejša od družbene odgovornosti.

Q7 - Koliko % več sem pripravljen/a plačati za družbeno odgovoren izdelek: � �

% � � � Q8 - Če finančna plat ne bi bila ovira, koliko % več bi bil/a pripravljen/a plačati za družbeno odgovoren izdelek: � �

% � � � Q9 - Prosimo, navedite stopnjo, do katere verjamete, da naslednje značilnosti držijo za vas osebno: �

Popolnoma drži Drži Delno

drži Nevtralno Delno ne drži

Ne drži

Nikakor ne drži

Aktiven/a Odgovoren/a Najboljši/a Kompetenten/a Sposoben/a vživljanja v druge

Inovativen/a Iskren/a

4

Občutljiv/a Estetski/a Sodelovalen/a Učinkovit/a Aktivist/ka Družbeno odgovoren/a Drzen/a � � (Športna obutev) � Q10 - Uporabljate športno obutev? � � Da. � Ne. � � � � IF (4) Q10 = [1] � Q11 - Kaj je za vas pomembno pri nakupu športne obutve? �

Zelo

pomembno

Pomembno

Delno pomemb

no Nevtralno

Delno nepomembno

Nepomembno

Nikakor ni pomembno

Znamka Kakovost Videz Cena Družbeno odgovoren izdelek

Funkcionalnost

Udobje Drugo: � � (Družbena odgovornost Adidas) � Q12 - Ste pred branjem članka že slišali za podjetje Adidas? � � Da. � Ne. � � � Q13 - Kako verjetno je, da bi se v naslednjem letu odločili za nakup izdelkov Adidas?

Popolnoma verjetno Verjetno Delno

verjetno Nevtralno Delno ni verjetno

Ni verjetno

Sploh ni verjetno

Kako verjetno je, da bi se v naslednjem letu odločili za nakup izdelkov Adidas?

� � Q14 - Prosimo, navedite stopnjo, do katere verjamete, da naslednje značilnosti veljajo za podjetje Adidas: �

Popolnoma drži Drži Delno

drži Nevtralno Delno ne drži

Ne drži

Nikakor ne drži

Aktivno Odgovorno Najboljše Kompetentno Sposobno vživljanja v druge

Inovativno

5

Iskreno Občutljivo Estetsko Sodelovalno Učinkovito Aktivistično Družbeno odgovorno Drzno � � � IF (6) Q12 = [1] Q15 - Kako ocenjujete podjetje Adidas? �

Popolnoma se strinjam

Se strinjam

Delno se strinjam Nevtralno

Delno se ne

strinjam

Se ne strinjam

Nikakor se ne

strinjam Je zaupanja vredno.

Razvija inovativne izdelke.

Ima jasno vizijo prihodnosti.

Odkriva nove tržne niše in jih izkorišča.

Ima odličen management.

Predstavlja družbeno odgovorne izdelke.

Predstavlja ugodne izdelke.

Podpira družbeno odgovornost.

Je donosno. Presega konkurenco.

� � Q16 - �

Popolnoma se strinjam

Se strinjam

Delno se strinjam Nevtralno

Delno se ne

strinjam

Se ne strinjam

Nikakor se ne

strinjam

Velika podjetja se vedejo dovolj družbeno odgovorno.

Pripravljen/a sem plačati več za izdelke

6

in storitve družbeno odgovornih podjetij. Cenim podjetja, ki so družbeno odgovorna.

� � Q17 - Podjetja, ki podpirajo družbeno odgovornost, to počno, ker: �

Popolnoma se strinjam

Se strinjam

Delno se strinjam Nevtralno

Delno se ne

strinjam

Se ne strinjam

Nikakor se ne

strinjam Jih iskreno skrbi glede socialnih in okoljskih težav.

Želijo očarati potencialne kupce.

Menijo, da je donosno.

Je odziv na podobne dejavnosti konkurence.

Želijo zadovoljiti uporabnike, ki jim je pomembna družbena odgovornost.

Da bi odvrnili pozornost od slabših izdelkov.

� � (Demografija) � XSPOL - Spol: � � Moški � Ženski � � � Q18 - Izberite letnico rojstva: XIZ1a2 - Kakšna je vaša najvišja dosežena formalna izobrazba? � � Manj kot osnovnošolska izobrazba � Osnovnošolska izobrazba � Poklicna izobrazba � Srednješolska izobrazba � Višje ali visokošolska izobrazba � Univerzitetna izobrazba � Magisterij, specializacija, doktorat � Drugo

7

XDS2a4 - Kakšen je vaš trenutni status? � � Dijak, študent � Zaposlen za določen čas � Zaposlen za nedoločen čas � Honorarno zaposlen � Svoboden poklic � Nezaposlen � Drugo Q19 - Okvirni osebni mesečni neto dohodek: � � do 500 EUR � 501 EUR - 1000 EUR � 1001 EUR - 2000 EUR � 2001 + EUR � Q20 - Koliko ljudi živi v vašem skupnem gospodinjstvu? �

8

Adidas x Parley – sports footwear (neutral description) Nowadays, more and more people engage in sports and healthy lifestyle. Consequently, many new trainings arose what requires appropriate equipment. Adidas is German multinational company, dealing with manufacturing and sales of sports equipment, headquartered in Herzogenaurach, Germany. Beginnings of the company date back in 1920s, but corporation as we know today was established in 1949. Today, Adidas is European largest sports corporation and second largest globally. Adidas Group unites several different companies, such as Reebok, TaylorMade and Runtastic. Recently, company teamed up with American organisation Parely for oceans. They created footwear with the same name, coming out in year 2017. From ocean to footwear – Adidas x Parley (CSR description) Nowadays, we can witness increasing pollution of living environment. Oceans cover more than 70% of our planet. Because of our irresponsible behaviour, scientists predict the beginning of the end of the ocean life in the next two decades by the latest. Adidas is German multinational company, which deals with manufacturing and sales of sports goods, headquartered in Herzogenaurach, Germany. Beginnings of the company date back in 1920s, but corporation as we know today, was established in 1949. Today, Adidas is European largest sports corporation and second largest globally. Company is quickly becoming a forerunner of sustainability in the sportswear sector. A lot of its resources are assigned to corporate social responsibility on different fields, including sustainability, supplier control, environmentally friendly products, human rights, environmental responsibility, sponsorships, diversity of employees and equal rights. In drive to create innovative and environmentally friendly products, Adidas teamed up with NGO Parley, which deals with discarding plastic waste from the oceans. Adidas recognized the value of the company and with help of the newest technology they created Parley sportswear, sneakers made out of recycled ocean plastic. Revolutionary technology, mainly used in automotive and aerospace industries, enables almost zero waste. Even though the project is still on prototype level, Adidas promises to produce million pairs of shoes from recycled plastic by the end of 2017. Products will be completely comparable with the top running shoes with Ultra Boost technology. Upper, laces and midsole are made completely out of oceanic waste, including PET from discarded plastic bottles and nylon from fishing nets. Designers laid a lot of effort in design as well, so Parley footwear definitely represents an iconic milestone in sportswear industry.

9

Master’s Survey � � � Short survey’s name: Adidas x Parley Long survey’s name: Master thesis’ survey Number of questions: 23 Survey is closed. Active from: 18.11.2016 Active until: 18.02.2017 Author: abavcar@gmail.com Changes: abavcar@gmail.com Opened: 18.11.2016 Closed: 03.01.2017

Hi!

I would kindly ask to answer short questionnaire and help me with the research for master’s

thesis at Faculty of Economics in Ljubljana. Survey is intent for age group between 18 and 34 years. Please, read the article carefully and then answer the questions.

Thank you very much and have a nice day,

Anja

(Respondent’s perception of Parley footwear) Q1 – Please, read the article carefully and answer the following questions. Q2 – Have you heard about Parley sneakers before reading the article? Yes. No. Q3 - Based on description and photo from article, Parley footwear seems:

Strongly Agree Agree Partially

Agree Neutral Partially Disagree Disagree Strongly

Disagree High quality Attractive design

Reasonable priced

Functional Comfortable Environmentally friendly

Other � Q4 - Based on article, how likely would you decide to purchase Parley footwear?

1 2 3 4 5 6 7

Definitely Definitely not

� Q5 - Without financial limitations, the highest amount I would be willing to pay for Parley footwear is:

€ � (Personal social responsibility) � Q6 - Please specify the level, which you believe is true for you personally: �

10

Strongly Agree Agree Partially

Agree Neutral Partially Disagree Disagree Strongly

Disagree I am socially responsible person.

I am willing to pay more for socially responsible product.

If there would not be any financial limits, I am willing to pay more for socially responsible product.

Low price is more important than social responsibility.

Q7 - How many % more would I be willing to pay for socially responsible product: � �

% � � � Q8 - How many % more would I be willing to pay for socially responsible product, if there would not be any financial limitations: � �

% � � � Q9 - Please specify the level, which you believe is true for you personally: �

Strongly Agree Agree Partially

Agree Neutral Partially Disagree Disagree Strongly

Disagree Active Responsible Best Competitive Compassionate Innovative Honest Sensitive Aesthetic Collaborative Efficient Activist Socially responsible

Daring � � (Sport footwear) � Q10 – Do you use sport footwear? � � Yes. � No. � � �

11

IF (4) Q10 = [1] � Q11 – What is important when buying sport footwear? �

Strongly Agree Agree Partially

Agree Neutral Partially Disagree Disagree Strongly

Disagree Brand Quality Design Price Socially responsible product

Functionality Comfort Other � � (Adidas CSR) � Q12 – Have you heard of Adidas company before reading the article? � � Yes. � No. � � � � Q13 -

Strongly Agree Agree Partially

Agree Neutral Partially Disagree Disagree Strongly

Disagree How likely is it to do purchase in Adidas in the next year?

� � Q14 - Please specify the level, which you believe is true for Adidas:

Strongly Agree Agree Partially

Agree Neutral Partially Disagree Disagree Strongly

Disagree Active Responsible Best Competitive Compassionate Innovative Honest Sensitive Aesthetic Collaborative Efficient Activist Socially responsible

Daring � � � IF (6) Q12 = [1] � Q15 – How do you evaluate Adidas company? �

Strongly Agree Agree Partially

Agree Neutral Partially Disagree Disagree Strongly

Disagree It is trustworthy.

Develops

12

innovative products. Has clear vision.

Explores new markets.

Has excellent management.

Presents socially responsible products.

Presents reasonable priced products.

Is socially responsible.

Is profitable. Exceeds competition.

� � Q16 - �

Strongly Agree Agree Partially

Agree Neutral Partially Disagree Disagree Strongly

Disagree Corporations are socially responsible.

I am willing to pay more for services and products from socially responsible companies.

I respect socially responsible companies.

� � Q17 – Companies support CSR because: �

Strongly Agree Agree Partially

Agree Neutral Partially Disagree Disagree Strongly

Disagree Sincere concern about social and environmental issues

To extend customer pool

To increase profitability

Reaction to similar actions of competitors

13

To satisfy socially responsible customers

To defocus attention from poorer products

� � (Demographic) � XSPOL - Gender: � � Male � Female� � � � Q18 – Year of birth: XIZ1a2 – Level of education? � � Less than elementary school Elementary school Middle school High school Upper secondary education Bachelor degree � Master degree, specialisation, PhD Other XDS2a4 – Working status? � � Student Temporary employment Permanent employment Part-time employment � Independent � Unemployed Other � Q19 – Personal monthly neto income: � � below 500 EUR � 501 EUR - 1000 EUR � 1001 EUR - 2000 EUR � 2001 + EUR Q20 – Number of household members?

14

Appendix B: Hypotheses output

H1. Correlations between organisational (Q14) and individual (Q9) attributes

Q14 Q9

Aktivno Odgovorno Najboljše Kompe-tentno

Sposobno vživljanja v druge

Ino- vativno

Iskreno

Aktiven Pearson’s Correlation Sig. (2-tailed)

,364 ,000

Odgovoren Pearson’s Correlation Sig. (2-tailed)

,388 ,000

Najboljši Pearson’s Correlation Sig. (2-tailed)

,604 ,000

Kompe- tenten

Pearson’s Correlation Sig. (2-tailed)

,499 ,000

Sposoben vživljanja v druge

Pearson’s Correlation Sig. (2-tailed)

,201 ,000

Inovativen Pearson’s Correlation Sig. (2-tailed)

,415 ,000

Iskren Pearson’s Correlation Sig. (2-tailed)

,349 ,000

Občutljivo Estetsko Sodelovalno Učinko- vito

Akti- vistično

Družbeno odgovorno

Drzno

Občutljiv Pearson’s Correlation Sig. (2-tailed)

,178 ,062

Estetski Pearson’s Correlation Sig. (2-tailed)

,430 ,000

Sodelo-valen

Pearson’s Correlation Sig. (2-tailed)

,384 ,000

Učinkovit Pearson’s Correlation Sig. (2-tailed)

,340 ,000

Akti- vističen

Pearson’s Correlation Sig. (2-tailed)

,293 ,000

Družbeno odgovoren

Pearson’s Correlation Sig. (2-tailed)

,344 ,000

Drzen Pearson’s Correlation Sig. (2-tailed)

,179 ,000

15

H1. Correlations between overlapping individuals’ (Q9) and organisational (Q14) attributes and intention to purchase Adidas products in next year (Q13 - How likely is it to do purchase in Adidas in the next year?)

Attribute Correlation

Active Pearson’s Correlation Sig. (2-tailed)

0.068 0.000

Responsible Pearson’s Correlation Sig. (2-tailed)

0.003 0.000

Best Pearson’s Correlation Sig. (2-tailed)

0.442 0.157

Competitive Pearson’s Correlation Sig. (2-tailed)

0.043 0.000

Compassionate Pearson’s Correlation Sig. (2-tailed)

0.006 0.005

Innovative Pearson’s Correlation Sig. (2-tailed)

0.253 0.002

Honest Pearson’s Correlation Sig. (2-tailed)

0.013 0.000

Sensitive Pearson’s Correlation Sig. (2-tailed)

0.618 0.190

Aesthetic Pearson’s Correlation Sig. (2-tailed)

0.016 0.000

Collaborative Pearson’s Correlation Sig. (2-tailed)

0.585 0.001

Efficient Pearson’s Correlation Sig. (2-tailed)

0.592 0.010

Activist Pearson’s Correlation Sig. (2-tailed)

0.255 0.139

Socially responsible

Pearson’s Correlation Sig. (2-tailed)

0.027 0.010

Daring Pearson’s Correlation Sig. (2-tailed)

0.469 0.003

16

H2. Descriptives, group statistics and T-test

H3a. Correlation between individual’s social responsibility and WTP for goods from socially responsible company.

H3b. Correlation between individual’s social responsibility and WTP for socially responsible goods.

EXAMINE VARIABLES=Parley_Price /PLOT HISTOGRAM NPPLOT /STATISTICS DESCRIPTIVES /CINTERVAL 95 /MISSING LISTWISE /NOTOTAL.

Explore - Normality Test - original data

KOMENTAR:15-JAN-2017 23:52:34

Active Dataset DataSet7Filter <none>Weight <none>Split File <none>N of Rows in Working Data File

110

Definition of MissingUser-defined missing values for dependent variables are treated as missing.

Cases Used Statistics are based on cases with no missing values for any dependent variable or factor used.

EXAMINE VARIABLES=Parley_Price /PLOT HISTOGRAM NPPLOT /STATISTICS DESCRIPTIVES /CINTERVAL 95 /MISSING LISTWISE /NOTOTAL.

Processor Time 00:00:01.97Elapsed Time 00:00:03.94

N Percent N Percent N PercentParley_Price 109 99,1% 1 ,9% 110 100,0%

Statistic Std. Error146,2844 12,80247

Lower Bound 120,9077Upper Bound 171,6611

130,7492100,0000

17865,465133,66175

0,00650,00650,00125,002,027 ,2313,819 ,459

Statistic df Sig. Statistic df Sig.Parley_Price ,241 109 ,000 ,748 109 ,000

Parley_Price

Syntax

Resources

Case Processing Summary

CasesValid Missing Total

Notes

Output CreatedCommentsInput

Missing Value Handling

Tests of Normality

Kolmogorov-Smirnova Shapiro-Wilk

a. Lilliefors Significance Correction

Descriptives

Parley_Price Mean95% Confidence Interval for Mean

5% Trimmed MeanMedianVarianceStd. DeviationMinimumMaximumRangeInterquartile RangeSkewnessKurtosis

Analiza'podatkov:'sklepamo,'da'ne'gre'za'normalno'distribucijo'podatkov,'kar'pomeni,'da'bo'potrebno'podatke'verjetno'normalizirati'(to'je'ena'izmed'predpostavk'za't:test

N Mean Std. Deviation Std. Error MeanDo_agree 74 154,7297 146,36671 17,01478Do_not_agree 10 139,5000 123,11806 38,93335

Lower UpperEqual variances assumed

,263 ,610 ,314 82 ,754 15,22973 48,51565 -81,28334 111,74280

Equal variances not assumed,358 12,709 ,726 15,22973 42,48892 -76,77615 107,23561

Group Statistics

CSR_AdidasParley_Price

Parley_Price

Independent Samples Test

Levene's Test for Equality of Variances t-test for Equality of Means

F Sig. t df Sig. (2-tailed) Mean DifferenceStd. Error Difference

95% Confidence Interval of the Difference

t"test%for%Equality%of%Means

Parley_Price Equal variances assumed

,754

Equal variances not assumed

,726

Equal variances assumed

,314 82 ,754

Equal variances not assumed

,358 12,709 ,726

Parley_Price

t"test%for%Equality%of%Means

t df Sig. (2-tailed)

Sig. (2-tailed)

Notes

Output CreatedCommentsInput Active Dataset

FilterWeightSplit FileN of Rows in Working Data File

Missing Value Handling Definition of Missing

Cases Used

Syntax

Resources Processor TimeElapsed Time

16-JAN-2017 03:22:48

DataSet3<none><none><none>

110

User-defined missing values are treated as missing.Statistics for each pair of variables are based on all the cases with valid data for that pair.CORRELATIONS /VARIABLES=PersonalCSR MoreForCSR /PRINT=TWOTAIL NOSIG /MISSING=PAIRWISE.

00:00:00,0200:00:00,01

Correlations

PersonalCSR MoreForCSRPersonalCSR Pearson Correlation

Sig. (2-tailed)N

MoreForCSR Pearson CorrelationSig. (2-tailed)N

1 ,496**

,000101 92

,496** 1,000

92 97

Correlation is significant at the 0.01 level (2-tailed).**.

CORRELATIONS /VARIABLES=PersonalCSR MoreForProduct /PRINT=TWOTAIL NOSIG /MISSING=PAIRWISE.

Correlations

Page 87

Notes

Output CreatedCommentsInput Active Dataset

FilterWeightSplit FileN of Rows in Working Data File

Missing Value Handling Definition of Missing

Cases Used

Syntax

Resources Processor TimeElapsed Time

16-JAN-2017 03:23:59

DataSet3<none><none><none>

110

User-defined missing values are treated as missing.Statistics for each pair of variables are based on all the cases with valid data for that pair.CORRELATIONS /VARIABLES=PersonalCSR MoreForProduct /PRINT=TWOTAIL NOSIG /MISSING=PAIRWISE.

00:00:00,0000:00:00,01

Correlations

PersonalCSRMoreForProduc

tPersonalCSR Pearson Correlation

Sig. (2-tailed)N

MoreForProduct Pearson CorrelationSig. (2-tailed)N

1 ,699**

,000101 89

,699** 1,000

89 94

Correlation is significant at the 0.01 level (2-tailed).**.

CORRELATIONS /VARIABLES=PersonalCSR NoLimitations /PRINT=TWOTAIL NOSIG /MISSING=PAIRWISE.

Correlations

Page 88

17

H3c. Correlation between individual’s social responsibility and perception if lower price is more important than social responsibility. Personal social responsibility

H3d. Survey results for question “If there would be no financial limitations, I would be willing to pay more for socially responsible product”.

Notes

Output CreatedCommentsInput Active Dataset

FilterWeightSplit FileN of Rows in Working Data File

Missing Value Handling Definition of Missing

Cases Used

Syntax

Resources Processor TimeElapsed Time

16-JAN-2017 03:49:06

DataSet3<none><none><none>

110

User-defined missing values are treated as missing.Statistics for each pair of variables are based on all the cases with valid data for that pair.CORRELATIONS /VARIABLES=PersonalCSR LowerPrice /PRINT=TWOTAIL NOSIG /MISSING=PAIRWISE.

00:00:00,0200:00:00,01

Correlations

PersonalCSR LowerPricePersonalCSR Pearson Correlation

Sig. (2-tailed)N

LowerPrice Pearson CorrelationSig. (2-tailed)N

1 -,165,135

101 83-,165 1,135

83 90

T-TEST GROUPS=LowerPrice(1 2) /MISSING=ANALYSIS /VARIABLES=PersonalCSR /CRITERIA=CI(.95).

T-Test

Page 97

18

H8. Correlation between personal social responsibility and appreciation of socially responsible companies. Descriptive statistics

How do you evaluate Adidas company? Medium Average

Neutral CSR Average Q15a It is trustworthy. 2.6 2.4 2.5 Q15b Develops innovative products. 2.4 2.1 2.25 Q15c Has clear vision. 2.6 2.4 2.5 Q15d Explores new markets. 2.5 2.2 2.35 Q15e Has excellent management. 2.6 2.3 2.45 Q15f Presents socially responsible products. 3.1 2.6 2.85 Q15g Presents reasonable priced products. 3.5 3.1 3.3 Q15h Is socially responsible. 3.2 2.6 2.9 Q15i Is profitable. 2.2 2.2 2.2 Q15j Exceeds competition. 2.9 2.3 2.6

Completely Agree

Agree Partially Agree

Neutral Partially Disagree

Disagree Completely Disagree

Q16a Corporations are socially responsible.

N 5% 11% 25% 15% 15% 15% 15%

C 4% 22% 35% 9% 7% 11% 11% Q16b I am willing to pay more for services and products from socially responsible companies.

N 9% 33% 38% 16% 4% 0% 0%

C 13% 50% 22% 6% 6% 0% 4%

Q16c I respect socially responsible companies.

N 29% 47% 20% 4% 0% 0% 0%

C 41% 35% 19% 4% 2% 0% 0%

Notes

Output CreatedCommentsInput Active Dataset

FilterWeightSplit FileN of Rows in Working Data File

Missing Value Handling Definition of Missing

Cases Used

Syntax

Resources Processor TimeElapsed Time

17-JAN-2017 11:48:26

DataSet3<none><none><none>

110

User-defined missing values are treated as missing.Statistics for each pair of variables are based on all the cases with valid data for that pair.CORRELATIONS /VARIABLES=ValueCSr PersonalCSR1 /PRINT=TWOTAIL NOSIG /MISSING=PAIRWISE.

00:00:00,0300:00:00,02

Correlations

ValueCSr PersonalCSR1ValueCSr Pearson Correlation

Sig. (2-tailed)N

PersonalCSR1 Pearson CorrelationSig. (2-tailed)N

1 ,571**

,00091 86

,571** 1,000

86 101

Correlation is significant at the 0.01 level (2-tailed).**.

Page 128

19

Appendix C: List of abbreviations 3D - Three Dimensional AG - Aktiengesellschaft CEO - Chief Executive Officer CERES - Coalition for Environmentally Responsible Economies CDP - Carbon Disclosure Project COP21 - Conference of the Parties CSP - Corporate Social Performance CSR - Corporate Social Responsibility DJSI - Dow Jones Sustainability Index ECPI - European Council for Plasticisers and Intermediates EP - Equator Principles EPFI - Equator Principles Financial Institutions ESG - Environmental, Social and Governance ESI - Ethibel Sustainability Index EU - European Union EUR - Euro FFC - Fair Factories Clearinghouse FSC - Forest Stewardship Council FTSE4GOOD - Financial Times Stock Exchange for good GRI - Global Reporting Initiative IFC - International Financial Corporation ILO - International Labour Organisation ISO - International Standard Organisation ISO/TC - International Standard Organisation Technical Committee IUCN - International Union for Conversation of Nature KPI - Key Performance Indicator NCP - National Contact Points NGO - Non-Governmental Organisation OECD - Organisation for Economic Co-operation and Development OHSAS - Occupational Health and Safety Management System PR - Public Relations ROI - Return On Investment SDG - Sustainable Development Goals SEA - Social and Environmental Affairs TBL or 3BL - Triple Bottom Line UN - United Nations USA - United States of America WRAP - Waste and Resources Action Programme WTP - Willingness to pay

20

Appendix D: CSR standards Equator Principles The Equator Principles (hereinafter EPs) was established in 2003 in Washington, USA. It represents a risk management context, adopted by financial institutions, for determining, assessing and managing environmental and social risk. It was set to provide a minimum standard for due diligence to support responsible risk decision-making. The EP is set globally, to all industry segments and to four financial products: Project Finance Advisory Services, Project Finance, Project-Related Corporate Loans and Bridge Loans (Equator Principles, 2013). Presently, it is implemented in 84 Equator Principles Financial Institutions (hereinafter EPFIs) in Australia, Austria, Belgium, Canada, Chile, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Israel, Italy, Japan, Korea, Luxemburg, Netherlands, New Zealand, Norway, Poland, Portugal, Slovak Republic, Slovenia, Sweden, Switzerland, United Kingdom and USA. EP covers 70 per cent of international Project Finance debt in developing markets (Equator Principles, 2013). EPFIs oblige to apply the EP in their internal environmental and social policies, procedures and standards for financing projects, and will not involve with clients, which are not able to fulfill standard expectations. While the EP are not intended to be applied retroactively, EPFIs apply them to the expansion or upgrade of an existing project where changes in scale or scope may create noteworthy environmental and social risks and impacts, or notably differ the nature or degree of an existing impact. Equator Principles have improved the focus on social standards, responsibility and environment, and engaged several different stakeholders (Equator Principles, 2013). Global Reporting Initiative Global Reporting Initiative (hereinafter GRI) came on stage in 1997 in Boston, USA. It is an international independent organisation. It advises business, governmental and other organisations to understand and communicate the impact of business on critical sustainability problems including climate change, human rights, and many others. It beginnings go back to US non-profit organisations as Coalition for Environmentally Responsible Economies (hereinafter CERES) and the Tellus Institute. They pioneered sustainability reporting back in 1990s and expanded once a niche practice to a well-adopted system for many organisations worldwide. GRI believes in different practices such as power of a multi-stakeholder process and inclusive network, transparency as a catalyst of change, GRI standards empower informed decision-making, need for global perspective to change the world. GRI unites more than 90 countries worldwide (GRI, n.d.; Horrigan, 2007).

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International Financial Corporation Performance Standards International Finance Corporation (hereinafter IFC) was founded in 1956 in USA. Member of World Bank Group includes 184 countries around the world. It is the largest development organisation, focused solely on private sector in emerging markets. Sustainability presents IFC’s strategic priority. They try to help undeveloped economies to reduce poverty and improve opportunities. Institution provides financial resources, technical expertise, global experience and innovative thinking to help clients to overcome financial, operational, and political challenges, including infrastructure, employee skills, and regulatory environment (IFC, 2016). International Organisation for Standards (ISO) ISO 14000 group was developed by ISO Technical Committee (hereinafter ISO/TC) 207 and several subcommittees. International standard represents practical tools for firms and institutions of all sorts to manage their environmental responsibilities, gaining higher competitive advantage and trust of stakeholders. Substandards help to identify, manage, monitor and control environmental issues in a holistic manner. They deal with environmental challenges, audits, communication, labelling and life cycle analysis. ISO 14001:2015 includes criteria for an environmental management system and can be certified to. It can be applied to any company or organisation. Using this standard can provide assurance to company management and employees as well as external stakeholders that environmental impact is being measured and improved. Standard was recently revised, to assure up to date information, including increased importance of environmental management within organisation’s strategic planning processes, higher focus on leadership, extension of proactive initiatives to protect the environment from degradation and abuse, such as sustainable resource use and climate change mitigation, improved environmental performance, lifecycle thinking when considering environmental aspects and addition of a communications strategy. Economic benefits of this standard can be seen in reduced raw material, resource use, energy consumption, waste generation and disposal costs, improved process efficiency, and utilization of recoverable resources (ISO, n.d.a). ISO 26000 standard is international standard for businesses and organisations to operate in a socially responsible way. It includes recommendation how to operate in a transparent and ethical manner that contributes to the health and well-being of society. Substandard ISO 26000:2010 serves as guidance more than requirement, so it cannot be certified to unlike some other well-known ISO standards. As name says, this standard was founded in 2010, after five years of negotiations among global stakeholders, including governments, NGOs, industry, labour organisations, academics and consumers (ISO, n.d.b). This standard helps to interpret what social responsibility is, create effective actions for companies and share the best practices worldwide, and so maintain sustainable development. Standard can be applied to all categories of organisations, regardless size, location and

22

activities, on concepts, terms and definitions related to social responsibility; the background, trends and characteristics of social responsibility; principles and practices relating to social responsibility; the core subjects and issues of social responsibility; integrating, implementing and promoting socially responsible behaviour throughout the organisation and, through its policies and practices, within its sphere of influence; identifying and engaging with stakeholders; and communicating commitments, performance and other information related to social responsibility (ISO, n.d.b).

Schematic overview of ISO 26000

Source: ISO, Schematic overview of ISO 26000, 2016.

OECD Guidelines OECD Guidelines for Multinational Enterprises were created in 1976. Since then have been revised for five times to ensure moving with the times in fast changing business environment, last edited in 2011. Guidelines are part of OECD Declaration and Decisions on International Investment and Multinational Enterprises (OECD, 2016). Instrument represents the most comprehensive set of government-backed recommendations on responsible business conducts. In accordance to guidelines, governments try to boost MNEs’ sustainable development and social progress at domestic as well as foreign markets.

23

It includes voluntary principles and standards in areas such as environment, human rights, employment and industrial relations, information disclosure, consumer interests, bribery, taxation, competition, and science and technology (OECD, 2016). Countries adhering to the Guidelines are: Argentina, Australia, Austria, Belgium, Brazil, Canada, Chile, Colombia, Costa Rica, Czech Republic, Denmark, Egypt, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Israel, Italy, Japan, Jordan, Korea, Latvia, Lithuania, Luxemburg, Mexico, morocco, Netherlands, New Zealand, Norway, Peru, Poland, Portugal, Romania, Slovak Republic, Slovenia, Spain, Sweden, Switzerland, Tunisia, Turkey, United Kingdom and USA (OECD, 2016). Involved countries are compelled to set up National Contact Points (hereinafter NCPs) to monitor the effectiveness of the Guidelines through promotional activities, handling enquiries, and contributing to the resolution of issues raised from non-observance in special cases. Governments have flexibility in organising NCPs as long as they are effectively implemented. To provide comparable NCPs operations, the notion of ‘functional equivalence’ is used. NCPs regularly report and meet with OECD Investment Committee and its Working Party on Responsible Business Conduct. NCPs confide profoundly on multi-stakeholder input and are committed to maintain and improve interactions with business community, worker organisations, NGOs and other involved parties that are able to contribute to the effective realization of the Guidelines (OECD, 2016). Occupational Health and Safety Management System 18000 This standard is an international specification and a part of Health and Safety Electronic Kit. It includes two parts, 18001 and 18002. Standard helps organisations to assure occupational health and safety risks (BSI, 2016). Majority of Adidas’ footwear manufactures are OHSAS certified (Adidas Group, 2016d). United Nations Global Compact

UN Global Compact was founded as a part of United Nations in 2000 in New York, USA. Global business, based on sustainability can bring lasting benefits to people, communities and markets. UN Global Compact encourages companies to align their strategies and operations in area of human rights, labour, environment and anti-corruption, and develop innovative and collaborative approaches. Initiative combined Universal Declaration of Human Rights, International Labour Organisation’s Declaration on Fundamental Principles and Rights at Work, Rio Declaration on Environment and Development and United Nations Convention Against Corruption to create Ten Principles for guidance to sustainable business (United Nations Global Compact, n.d.).

24

Ten Principles for guidance to sustainable business (hereinafter UN Global Compact)

Human Rights Principle 1 Businesses should support and respect the protection of

internationally proclaimed human rights. Principle 2 Make sure that they are not complicit in human rights abuses.

Labour Principle 3 Businesses should uphold the freedom of association and the

effective recognition of the right to collective bargaining. Principle 4 The elimination of all forms of forced and compulsory labour. Principle 5 The effective abolition of child labour. Principle 6 The elimination of discrimination in respect of employment and

occupation. Principle 7 Businesses should support a precautionary approach to

environmental challenges. Principle 8 Undertake initiatives to promote greater environmental

responsibility. Principle 9 Encourage the development and diffusion of environmentally

friendly technologies. Anti-Corruption

Principle 10 Businesses should work against corruption in all its forms, including extortion and bribery.

Source: United Nations Global Compact, The ten principles of the UN global compact, n.d.

25

Appendix E: Sustainability evaluations Carbon disclosure project Carbon Disclosure Project (hereinafter CDP) is an independent NGO. It holds largest self-reported database about climate changes. Collection enables transparency on climate-related investment risk and encourages low-carbon economy trends (Adidas Group, 2016a). Adidas annually reports about their past achievements and future targets about CO2 emissions. In 2016, company has been listed for Germany, Austria and Switzerland in category “Consumer Discretionary” in the Carbon Disclosure Leadership (Adidas Group, 2016a).

Dow Jones Sustainability Indices DJSI is the oldest (1999) worldwide sustainability scale. It provides key database with information for investors interested in sustainability, and innovative and effective platform for uniting companies, tending to adopt best sustainable practices. Yearly evaluation of approx. 3400 companies from 60 industries is based on profound investigation of environmental and social performance, customer relationship management, risk management, corporate economics, climate change mitigation, labour practices, supply chain standards, branding, and assessing other issues such as corporate governance (Adidas Group, 2016a; Robeco Sam, n.d.). In 2000, Adidas was first time selected to join DJSI (Figure 10). Rating every year afterwards, it includes it in the best sustainable performers in the world. Corporation was rated as the best in “Textiles, Apparel & Luxury Goods Industry” in the next fields: brand management, innovation management, risk & crisis management, environmental policy & management systems, operational eco-efficiency, corporate citizenship and philanthropy, and stakeholder engagement (Adidas Group, 2016a).

European Council for Plasticisers and Intermediates Indices Since 1997, European Council for Plasticisers and Intermediates Indices (hereinafter ECPI) provide consulting services for sustainability and investment on fields of sustainability, efficiency and thematic investing. Furthermore, it seeks for environmental, social and governance (hereinafter ESG) research and index improvement, calculation and publication. As positive screening, organisation uses ESG Rating Methodology and controversial sector exclusion as negative screening. Adidas Group is again included since December 2015 (Adidas Group, 2016a). Ethibel sustainability index excellence Europe and Ethibel sustainability index excellence global NGO Ethibel was established in 1991 as a set of different NGOs. Label Ethibel Excellence was formed in 2004, to meet requirements of contemporary business trends. Ethibel Sustainability

26

Index (hereinafter ESI) detects sector leaders in CSR. As of October 2016, Adidas Group is confirmed as a valid member (Adidas Group, 2016a; Forum Ethibel, n.d.). Euronext vigeo group indexes Indexes mark the most advanced companies in Europe and Eurozone in fields of ESG performance, sustainable development and social responsibility. Adidas group joined in June 2016 (Adidas Group, 2016a). Fair Factories Clearinghouse Non-profit organisation Fair Factories Clearinghouse (hereinafter FFC) was established in 2004 as a collaboration amongst Reebok International Ltd., National Retail Federation, Retail Council of Canada and World Monitors. Organisation unites companies, industry associations and non-profit organisations. Aim is to develop cooperation between industry stakeholders to improve working and environmental conditions, deliver an alternative to stiff already-existing systems on the market as a fresh configurable platform environment that suits associate requirements, and offer solutions, not only identification of the problems. Their technology is used for several actions, such as decreasing entry cost for those requesting to manage compliance programs, facilitating global management and standards tracking system, spreading non-competitive information about good practices and improvements, and general promotion and education about global workplace conditions (FFC, n.d.). Having common platform reduces quantity of compliance assessments what is resourceful for suppliers as well for the brands, and assures smooth information exchange (Adidas Group, 2011). Adidas Group uses FFC programme as internal compliance database since 2006 (Figure 10), to monitor all suppliers and products along the supply chain, and shares all the good practices with others since November 2008. They provide reviews twice per year to ensure that supplier data is up-to-date and correct. All reviews, rating and findings are uploaded to supplier FFC file regularly. Constant trainings enable suppliers to follow FFC’s mission and stay up to date with most recent sustainability trends (Adidas Group, 2011). Fair Labour Association Since 1999, Fair Labour Association (hereinafter FLA) aims to be a global leader in fighting for good working practices around the world. It unites socially responsible companies, colleges and universities, and civil society organisation, which create sustainable solutions for inappropriate working conditions by delivering coaching for workers and management, providing tools and resources to organisations, conducting due diligence through independent assessments, and promoting larger accountability and transparency from companies, manufacturers, factories and other links of supply chain. The FLA Workplace Code of Conduct standards are based on International Labour Organisation standards and globally acknowledged decent labour practices. Companies are expected to obey those practices in order with firm’s

27

country legislation and throughout the whole supply chain. Firms are monitored by Workplace Code in two different manners. Specific requirements for meeting each Code standard are checked with Compliance Benchmarks. Valuation of compliance is measured with Principles of Monitoring guide. Main pillars of fair working conditions are represented by employment relationship, non-discrimination, harassment or abuse, forced labour, child labour, freedom of association and collective bargaining, health, safety and environment, hours of work, and compensation (Fair labor association, 2012). All the products form Adidas Group are credited by FLA since 2005 (Figure 10). Company regularly creates global tracking charts and reports for the whole supply chain (Fair labor association, 2012). In 2015, Adidas aligned own project called Group Workplace Standards with FLA’s ones (Adidas Group, 2016d). FTSE4GOOD Index This index includes companies, which commit themselves towards CSR standards as environmental sustainability, human rights, strong financial performance and good relationships with stakeholders. Adidas is again a member since August 2016 (Adidas Group, 2016a). Global 100 most sustainable corporations worldwide (Global 100 Index) Toronto-based Corporate Knights Magazine established Global 100 Index in 2005. Every year, organisation creates an index of 100 most sustainable corporations globally with market capitalization of at least 2 billion dollars. Companies are screened for KPIs such as energy productivity, carbon productivity, water productivity, waste productivity, innovation capacity, percentage tax paid, CEO to average worker pay ratio, pension fund status, safety performance, employee turnover, leadership diversity and clean capitalism pay link (Corporate Knights, 2016). In 2016, Adidas was ranked as 5th, with overall score of 73.10%, as the leader in the industry. Previous year, Adidas reached 3rd place with only 72.60% score what portrays growing and tightening of conditions every year (Adidas Group, 2016d; Corporate Knights, 2016).

28

Appendix F: Extensive summary of findings in Slovene Družbena odgovornost podjetij (v nadaljevanju DOP) postaja pomemben element v potrošništvu, tako v svetovnem merilu kot med slovenskimi Milenijci. Četudi je še dokaj v povojih, DOP čaka svetla prihodnost. Predvsem mednarodne korporacije s svojimi sredstvi omogočajo odgovorno ravnanje na globalni ravni, ki ima vpliv na širšo družbo. Vendar, ali je DOP tudi dovolj velik razlog, da so ljudje pripravljeni odpreti denarnice? Sprožitelji pripravljenosti plačati zanjo so še vedno dokaj neznani in jih je težko opredeliti. Vzroki zanjo so večinoma subjektivni in imajo korenine globoko v psihologiji, vendar so znanstveniki z vsako študijo bližje razlagi. Magistrska naloga se je osredotočala na naraščujočo pomembnost DOP in potrošnikovo pripravljenost plačati zanjo. Prvo raziskovalno vprašanje se je nanašalo na prekrivanje posameznikovih in korporativnih lastnosti, in če to lahko sproži pripravljenost za nakup v bližnji prihodnosti. Ker se kupci počutijo bliže podjetjem, s katerimi imajo več stičnih točk, in tako lažje zadovoljijo svoje potrebe, je tudi možnost nakupa v takšnih primerih večja. Ker je verjetnost, da bodo kupci z določeno vizijo izbrali izdelke podjetja, ki se s to miselnostjo zliva, je večja tudi možnost, da bodo posamezniki pripravjeni odšteti večje vsote denarja za dobrino, za katero verjamejo, da lahko zagotovi natanko to, kar potrebujejo. V primeru Adidasa pa glavna asociacija poistovetenja ni DOP, temveč lastnost “najboljši”, glavni razlog za nakup v prihajajočem letu pa “učinkovitost”. Zanimiva ugotovitev je, da so sodelujoči pripravljeni plačati več za konkretne izdelke kot za izdelke odgovornih podjetij na splošno. To je verjetno povezano z znanjem, ki ga imajo o točno določeni dobrini, ki jo želijo, družbeno odgovorna podjetja pa so širok pojem, ki predstavlja veliko različnih dobrin z različnimi lastnostmi. To bi lahko bila dobrodošla informacija za tržnike, ki bi lažje identificirali potencialne dobrine, ki so glavni atributi podjetja. Naslednje vprašanje je preučevalo pozitvne vplive DOP na kupce. Na splošno ljudje cenijo trud in vložek odgovornih podjetij. S slednjimi se čutijo povezani predvsem anketiranci, ki so se opredelili kot družbeno odgovorni. Če imajo na voljo dovolj znanja in podatkov o podjetju in njegovih izdelkih, in njihova vizija sovpada, lahko začnejo razvijati pripravljenost plačati več, saj se čutijo pripadne in verjamejo, da jim bodo izdelki popolnoma odgovarjali. Seveda bistvo pri zadovoljitvi kupca, poleg abstraktnih pojmov kot so trajnost, predstavljajo osnovne fizične karakteristike izdelka, ki so še vedno na prvem mestu pri odločanju za nakup. Magistrsko delo se je posvetilo predvsem okoljski odgovornosti, natančneje oceanom. Slednji so trenutno eden izmed nabolj ogroženih ekosistemov, ki po drugi strani veliko doprinesejo k ostalemu življenju na planetu, med drugim z vsrkavanjem velikih količin ogljikovega dioksida. Ker je moda eden izmed največjih onesnaževalcev, je bila za študijski primer izbrana športna obutev iz reciklirane oceanske plastike, imenovana Ultra Boost Uncaged Parley. Ta je nastala kot plod sodelovanja med športnim velikanom Adidas in nevladno organizacijo Parley for the Oceans, ki se ukvarja z odstanjevanjem plastike iz oceanov. Čevlji združujejo osnovne

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elemente trenutno ene najboljših tekaških obutev Ultra Boost, vendar so v veliki meri izdelani iz odpadne oceanske plastike. To pomeni, da obutev Parley zadovolji temeljne potrebe kupcev, kot so udobje in funkcionalnost, hkrati pa doda veliko okoljevarstveno noto. Študija je bila zastavljena kot enak vprašalnik z dvema različnima opisoma. Prvi je opisoval splošno zgodovino in značilnosti podjetja, medtem ko je drugi poudarjal družbeno odgovornost podjetja in sodelovanje z neprofitno organizacijo Parley for the Oceans. Da je bil učinek razlikovanja še večji, je prvi opis oblikovan v nevtralnih, zemeljskih tonih, medtem ko je družbeno odgovoren opis skladen z živahnejšimi, oceansko turkiznimi barvami Parleyja. Oba opisa sta vsebovala enako sliko izdelka. Rezultati so pokazali veliko, kar 115,73% razliko v ceni med opisom, ki je ponazarjal splošne podatke o podjetjih in izdelku, in opisom, kjer so zavedena hvalevredna dejanja obeh podjetij in okoljski doprinos športne obutve. Zaključki kažejo, da ljudje vedno bolj cenijo družbeno odgovornost in so zanjo tudi pripravljeni odšteti višje zneske, vsaj s predpostavko, da nimajo nikakršnih finančnih omejitev, in da imajo na voljo dovolj informacij, za katere verjamejo, da so resnične. Nemalo raziskav je pokazalo, da predvsem mladi verjamejo, da lahko s temi majhnimi koraki doprinesejo k skupnemu reševanju planeta in posledično boljšemu jutri. Po drugi strani pa je pred DOP še dolga pot, saj sodelujoči še vedno vidijo odgovornost podjetij kot orodje, s katerim korporacije širijo domet kupcev in višajo dobičke. V prihodnosti bodo tako podjetja morala pokazati oprijemljive rezultate blagodejnega vpliva na družbo, saj jim tega ne nalaga le moralni zorni kot, marveč bo pridobljeno spoštovanje ugodno vplivalo tudi na njihovo poslovanje.