Dissertation – Corporate Social Responsibility and Consumer Trust in Australian Retail

Abstract

Australian retailers increasingly compete on corporate social responsibility (CSR), yet consumers encounter these claims amid heightened greenwashing scepticism and active regulatory scrutiny. Grounded in signalling theory, this dissertation examines how perceived CSR authenticity shapes consumer trust and purchase intention in the Australian retail market, and how greenwashing scepticism conditions that relationship. An explanatory sequential mixed methods design combined a survey of 400 Australian consumers with 15 follow-up interviews. Structural analysis showed that perceived CSR authenticity was a strong predictor of consumer trust, which in turn drove purchase intention and substantially mediated the authenticity-intention relationship. Greenwashing scepticism weakened the authenticity-trust link, indicating that sceptical consumers discount even credible signals. Interviews revealed that consumers assess authenticity through consistency, cost and independent verification, echoing signalling logic. The study concludes that CSR builds trust only when claims are costly to imitate and independently substantiated, with clear implications for Australian retailers and regulators such as the ACCC and ASIC.

Introduction

Corporate social responsibility (CSR) has become a competitive battleground in Australian retail. Consumers now expect the businesses they patronise to demonstrate environmental and social responsibility, and retailers respond with sustainability pledges, ethical-sourcing labels and carbon commitments. The stakes are large: with monthly retail turnover of around A$36 billion, the sector is a central arena in which Australian households translate values into spending (Australian Bureau of Statistics [ABS] 2024). Yet the credibility of CSR communication is under strain. The Australian Competition and Consumer Commission’s 2023 internet sweep found that more than half of the businesses it reviewed had made potentially misleading environmental claims, prompting warnings that vague or unsubstantiated green messaging may breach the Australian Consumer Law (ACCC 2023).

This tension defines the problem the present study addresses. When some firms exaggerate their credentials, the informational value of all CSR claims declines and consumers grow sceptical. Regulators have responded: the prohibition on misleading or deceptive conduct in section 18 of the Australian Consumer Law (Competition and Consumer Act 2010 (Cth)) has been used to challenge greenwashing, and the Australian Securities and Investments Commission has secured penalties against financial-product issuers for unsubstantiated sustainability claims (ASIC 2023). Trust, meanwhile, remains volatile; Roy Morgan’s risk research attributes much brand distrust to perceptions of unethical or self-interested conduct (Roy Morgan 2024). What remains unclear is how perceived authenticity converts CSR into consumer trust and purchase behaviour once scepticism is taken into account, and how Australian consumers themselves judge whether a claim is genuine.

This dissertation examines these dynamics in the Australian retail setting. Drawing on signalling theory, it investigates the relationships among perceived CSR authenticity, greenwashing scepticism, consumer trust and purchase intention using a mixed methods design. Three research questions guided the study:

1. How does perceived CSR authenticity relate to consumer trust and purchase intention among Australian retail consumers?
2. Does consumer trust mediate the relationship between perceived CSR authenticity and purchase intention?
3. How does greenwashing scepticism condition these relationships, and how do consumers interpret the authenticity of retailers’ CSR claims?

Literature Review

Signalling theory and CSR

Signalling theory offers the organising framework for this study. It originates in Spence’s (1973) analysis of markets characterised by information asymmetry, in which one party holds quality-relevant information that the other cannot readily observe. To bridge the gap the informed party sends signals, and a signal is only credible when it is costly to produce and difficult for lower-quality actors to imitate (Connelly et al. 2011). Applied to retail, CSR functions as a signal of otherwise unobservable qualities such as ethical conduct, product integrity and long-term reliability. The theory’s central implication is discriminating: substantive, verifiable and costly CSR initiatives constitute credible signals, whereas cheap, unsubstantiated claims are separating failures that rational consumers should discount. Greenwashing is therefore best understood not merely as deception but as signal debasement that raises the screening burden consumers carry (Delmas & Burbano 2011).

CSR authenticity and consumer trust

Perceived CSR authenticity is the degree to which consumers judge a firm’s social and environmental conduct to be genuine and intrinsically motivated rather than opportunistic (Alhouti et al. 2016). Authenticity matters because it is the interpretive lens through which a signal is read: the same initiative can be received as principled commitment or as calculated image management. Trust is the proximal consequence. In the commitment-trust theory of relationship marketing, trust, defined as confidence in an exchange partner’s reliability and integrity, is the linchpin that converts favourable perceptions into loyalty and cooperative behaviour (Morgan & Hunt 1994). Authenticity supplies the raw material for that confidence by signalling that CSR reflects stable values rather than transient positioning, so trust is theorised here as the mechanism linking authenticity to behavioural intention.

Greenwashing scepticism and the Australian context

Consumer scepticism is the disposition to doubt the veracity of marketing claims, and green scepticism specifically has grown as exposure to exaggerated environmental messaging has increased (Leonidou & Skarmeas 2017). Scepticism operates as a screening heuristic: sceptical consumers apply a heavier discount to CSR signals, so authenticity must clear a higher bar before it yields trust. The Australian regulatory environment sharpens this dynamic. The ACCC has identified vague claims, absent substantiation and misleading imagery as hallmarks of problematic environmental marketing and has signalled enforcement under the Australian Consumer Law (ACCC 2023), while ASIC’s greenwashing actions extend the same logic to financial products (ASIC 2023). These interventions can be read, in signalling terms, as third-party verification that raises the cost of false signalling. Two gaps remain. First, the pathway from authenticity through trust to purchase intention is often asserted rather than modelled together with scepticism. Second, little evidence is grounded in the Australian retail market. On this basis four hypotheses were advanced:

• H1: Perceived CSR authenticity is positively associated with consumer trust.
• H2: Consumer trust is positively associated with purchase intention.
• H3: Perceived CSR authenticity is positively and directly associated with purchase intention.
• H4: Greenwashing scepticism negatively moderates the authenticity-trust relationship, weakening it.

Methodology

Research design and conceptual model

An explanatory sequential mixed methods design was adopted, in which a quantitative phase establishes the pattern of relationships and a subsequent qualitative phase explains it (Creswell & Plano Clark 2018). The quantitative phase tested the hypothesised model; the qualitative phase examined how consumers interpret authenticity in their own terms. Figure 1 presents the conceptual model, in which CSR authenticity influences purchase intention both directly and indirectly through consumer trust, with greenwashing scepticism moderating the authenticity-trust path.

Participants and procedure

The quantitative phase surveyed 400 Australian adult consumers recruited through an accredited online panel, with quotas on age, gender and state of residence set to approximate the national population distribution reported by the ABS (2024). Respondents evaluated a large Australian retailer with which they had shopped in the preceding three months, with the category held to everyday apparel and grocery retail to control for sector effects. Of the sample, 51% identified as women, the mean age was 41.3 years (SD = 14.2), and respondents were distributed across all states and territories. The qualitative phase involved 15 semi-structured interviews with a maximum-variation subsample selected to span age, scepticism level and shopping frequency.

Measures

All constructs were measured with multi-item seven-point Likert scales (1 = strongly disagree, 7 = strongly agree) adapted from established instruments. Perceived CSR authenticity was assessed with four items adapted from Alhouti et al. (2016); greenwashing scepticism with four items reflecting doubt about the veracity of retailers’ environmental claims (Leonidou & Skarmeas 2017); consumer trust with five items grounded in the commitment-trust tradition (Morgan & Hunt 1994); and purchase intention with three items capturing likelihood of future purchase. Item wording was refined through a pilot with 25 consumers to ensure clarity in the Australian context.

Analysis

The quantitative data were analysed using partial least squares structural equation modelling (PLS-SEM), which is well suited to predictive models incorporating moderation (Hair et al. 2022). Analysis proceeded in two stages: assessment of the measurement model for reliability and validity, followed by estimation of the structural paths and the interaction term. The interview data were analysed using reflexive thematic analysis (Braun & Clarke 2021), with coding organised around how participants judged the credibility of CSR claims. Ethics approval was granted by the administering university’s Human Research Ethics Committee, participation was voluntary and informed, and all responses were de-identified.

Findings

Measurement model

The measurement model demonstrated sound reliability and validity, as summarised in Table 1. Cronbach’s alpha and composite reliability exceeded the conventional .70 threshold for every construct, and each average variance extracted (AVE) surpassed .50, indicating adequate convergent validity (Fornell & Larcker 1981). The AVE for CSR authenticity, for example, was computed from its standardised item loadings as

AVE = (0.78² + 0.82² + 0.76² + 0.81²) / 4 = 2.515 / 4 = 0.63,

comfortably above the 0.50 benchmark. Discriminant validity was likewise supported: the square root of the AVE for consumer trust, the root of 0.66 = 0.81, exceeded that construct’s largest correlation with any other construct (r = 0.61 with purchase intention), satisfying the Fornell-Larcker criterion. The model achieved acceptable fit (comparative fit index = 0.96, standardised root mean square residual = 0.041).

Table 1: Measurement model reliability and validity (N = 400)

Note. Constructs scored 1 to 7; higher scores indicate more of each construct. CR = composite reliability; AVE = average variance extracted. The square root of each AVE exceeded all inter-construct correlations, supporting discriminant validity.

Structural model

Table 2 reports the structural estimates, and all four hypotheses were supported. CSR authenticity was strongly associated with consumer trust (β = 0.52, p < .001), which in turn predicted purchase intention (β = 0.49, p < .001); authenticity also retained a smaller direct association with purchase intention (β = 0.18, p < .001), consistent with partial mediation. The indirect effect of authenticity on purchase intention through trust was

indirect effect = 0.52 × 0.49 = 0.25,

so that, against a total effect of 0.25 + 0.18 = 0.43, trust accounted for 0.25 / 0.43, or 58%, of authenticity’s influence on intention. Greenwashing scepticism negatively moderated the authenticity-trust path (β = -0.14, p < .01): among highly sceptical consumers the conversion of authenticity into trust was materially weaker, indicating that scepticism functions as a discount applied to otherwise credible signals. The model explained 41% of the variance in trust and 44% in purchase intention.

Table 2: Structural model path estimates and hypothesis tests

Note. Standardised path coefficients from PLS-SEM with bootstrapped standard errors. Indirect effect (authenticity to trust to intention) = 0.25; R² = .41 for consumer trust and .44 for purchase intention.

Qualitative themes

Reflexive thematic analysis of the interviews produced five themes, summarised in Table 3, that explain how consumers arrive at authenticity judgements. Participants repeatedly distinguished substantiated action from slogans, privileging independent certification, consistency between claims and observable conduct, and evidence that the commitment was costly to the firm. As one participant observed, “if it is just a green leaf on the packaging and nothing behind it, I assume it is marketing” (Participant 7). Regulatory oversight surfaced as a reassurance, with several consumers treating the prospect of ACCC scrutiny as a reason to give substantiated claims the benefit of the doubt. The themes map closely onto signalling logic, with cost, consistency and verification operating as the criteria by which consumers separate credible signals from noise.

Table 3: Themes from reflexive thematic analysis of consumer interviews (n = 15)

Discussion

The findings answer the first research question clearly: perceived CSR authenticity is a strong antecedent of consumer trust, and trust is the dominant proximal driver of purchase intention in Australian retail. This ordering is consistent with the commitment-trust account, in which trust is the mechanism that converts favourable evaluations into behaviour (Morgan & Hunt 1994). The second research question is addressed by the mediation result: with 58% of authenticity’s total effect transmitted through trust, the data indicate that authenticity matters largely because of the trust it generates rather than through a direct route to the checkout. In signalling terms, an authentic CSR signal is valuable precisely because it updates the consumer’s confidence in the retailer’s unobservable qualities (Spence 1973; Connelly et al. 2011).

The third research question is illuminated by the moderation and the interview evidence together. The negative interaction shows that greenwashing scepticism weakens the authenticity-trust link, which the qualitative data explain: sceptical consumers demand costlier and independently verified signals before they are willing to trust. This is the screening logic of signalling theory in action, and it clarifies why undifferentiated CSR messaging underperforms in a market saturated with claims (Leonidou & Skarmeas 2017; Delmas & Burbano 2011). It also reframes Australian regulation. Enforcement of the Australian Consumer Law by the ACCC and parallel action by ASIC do more than penalise offenders; by raising the cost of false signalling they function as a shared verification infrastructure that restores the informational value of honest CSR (ACCC 2023; ASIC 2023). Where consumers named regulatory oversight as a reason to extend the benefit of the doubt, that mechanism was visible at the individual level.

Several limitations qualify these conclusions. The quantitative phase is cross-sectional, so the causal ordering among authenticity, trust and intention cannot be confirmed. Purchase intention is a stated measure and an imperfect proxy for actual spending. The sample is confined to apparel and grocery retail, and results may differ in categories where CSR is less salient. Finally, the study captures a single national market, so generalisation beyond the Australian context should be cautious.

Implications and Conclusion

Three sets of implications follow. For retail managers, the results counsel substance over slogans: because sceptical consumers discount unverified claims, CSR communication should foreground independent certification, quantified commitments and consistency between message and conduct, all of which raise the perceived cost and credibility of the signal. For policy, the analysis positions the ACCC’s greenwashing enforcement and the Australian Consumer Law not as constraints on marketing but as trust infrastructure that protects the value of honest signalling, a role reinforced by ASIC in the financial domain (ACCC 2023; ASIC 2023). For research, longitudinal and behavioural designs that link authenticity perceptions to observed purchases, ideally across additional Australian retail categories, would strengthen the causal claims advanced here.

In conclusion, CSR builds consumer trust and, through it, purchase intention in Australian retail, but only when claims read as authentic, and authenticity is itself conditional on scepticism. Framed through signalling theory, the practical lesson is that credibility is earned through signals that are costly to fake and open to verification. Retailers that treat CSR as substantiated commitment rather than presentation stand to convert consumer values into trust; those that rely on unsupported claims will find, in an increasingly sceptical and closely regulated market, that the signal has already lost its worth.

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