Corporate social responsibility: Creating brand equity in banking

Corporations can create a competitive advantage if they effectively utilize their corporate social responsibility (CSR) initiatives to gain more positive recognition than the competition. In banking, CSR activities are important because in an economic downturn and with today’s high demand for good corporate governance, customers consider CSR as part of their buying criteria. This study examines how CSR activities of the Bank Rakyat Indonesia (BRI), namely BRI Peduli, increase brand equity and reputation directly or through customer satisfaction. Purposive sampling was used for this research with 72 respondents. The results were analyzed using multiple regression to test six hypotheses. All six hypotheses were accepted, indicating that CSR increase brand equity and reputation directly or indirectly through customer satisfaction. Although CSR is a social activity, it could enhance business performance. The results suggest that BRI should be able to improve its business strategies through its products and services especially, in conducting and communication about its CSR programs. These activities improve customerrelationship management and enhance clients’ experience in using bank products, and further enhance its business position in the banking industry. These results can be generalized to other service-based industries in many countries.