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The Performance Measurement of

Cause-Related Marketing by Balance
Scorecard
a b
Shwu-Ing Wu & Jr-Ming Hung
a
Department of Business Administration , National Chin-Yi
University of Technology , Taiwan, Republic of China
b
Institute of Distribution and Technology Management National
Chin-Yi University of Technology , Taiwan, Republic of China
Published online: 17 Sep 2007.

To cite this article: Shwu-Ing Wu & Jr-Ming Hung (2007) The Performance Measurement of Cause-
Related Marketing by Balance Scorecard, Total Quality Management & Business Excellence, 18:7,
771-791, DOI: 10.1080/14783360701349831

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 Total Quality Management
Vol. 18, No. 7, 771 –791, September 2007

The Performance Measurement of

Cause-Related Marketing by Balance
Scorecard

SHWU-ING WU & JR-MING HUNG

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Department of Business Administration, National Chin-Yi University of Technology, Taiwan, Republic of
China;   Institute of Distribution and Technology Management National Chin-Yi University of Technology,
Taiwan, Republic of China

ABSTRACT This study focuses on cause-related marketing to evaluate the practiced performance
by balance scorecard, because this measure method not only evaluates performance toward the
financial perspective but also integrates three other perspectives: customer, internal, and
learning and growth. Balance scorecard matches the concept of total quality management of
continuous improvement. It is a useful tool to evaluate an enterprise’s total operation
performance. This paper outlines the measure criteria toward each performance perspective of a
balance scorecard in cause-related marketing. A causal model for linking performance measures
that achieve the strategic objectives of cause-related marketing is presented. A methodology is
proposed to identify critical factors, and for the set-up and implementation of a performance
measurement system. An integrated approach to the measurement of an enterprise’s performance
is outlined, which, if adopted, should result in optimal management actions, and improved total
quality effect for the business.

KEY WORDS : Cause-related marketing (CRM), balance scorecard, performance measurement

Introduction
Recently, many companies have practiced the balance scorecard to improve an
organization’s performance for the goal of Total Quality Management. The balance
scorecard has been frequently used by manufacturers to measure and raise their
operation effects. It not only evaluates performance toward financial perspective but
also integrates three other perspectives: customer, internal, and learning and growth. It
matches the concept of total quality management of continuous improvement toward

Correspondence Address: Shwu-Ing Wu, Department of Business Administration, National Chin-Yi University
of Technology, No.35, Lane 215, Section 1, Chungshan Road, Taiping, Taichung, Taiwan 411, Republic of
China. Email: wusi@ncut.edu.tw

1478-3363 Print/1478-3371 Online/07/070771–21 # 2007 Taylor & Francis

DOI: 10.1080/14783360701349831
 772 S.-I. Wu & M. Hung

whole business, and becomes a useful tool to evaluate an enterprise’s total operation
performance.
In the marketing function, the balance scorecard is applied to evaluate the performance
of marketing strategies. Whereas cause-related marketing (CRM) programs are created to
raise incremental funds for the non-profit’s cause and to promote the image and products
of the business sponsor (File & Prince, 1995), the performance of the results in practicing
cause-related marketing is a significant issue for enterprises.
Cause-related marketing has been highly regarded and recommended by various types
of industry in recent years. Taking what happened in the US for example, the CRM amount
reported a growth from US$125 million in 1990 to US$589 million in 2002 (Porter &
Kramer, 2002) indicating that CRM was becoming popular among enterprises.
However, conventional financial figures were relied upon by the enterprises to evaluate
CRM results to prevent a full understanding of CRM impacts and results. Therefore,
the total performance perspective should be employed in the evaluation of CRM results.
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Originating in 1981 when American Express Company helped raise funds for art groups
in San Francisco, CRM proved a success and started to become popular among various
trades. CRM has been promoted in Taiwan for a decade and regular cases are reported
having success, including events of Hunger 30, Lotus Card, 6-Minute Care for Life,
and Campus Recognition Card.
So far, studies of CRM can be roughly categorized into three types, (1) entering from the
consumer’s viewpoint to explore the attitude and responses in action of the consumer
towards CRM; (2) exploring the objectives and performance of the business to adopt
CRM at the viewpoint of the business; and (3) observing results and impacts to adopt
CRM from the viewpoint of a non-profit organization (e.g. Dean, 2004; Lichtenstein
et al., 2004; Gwin, 2000). However, when judged from the viewpoint of the business,
there is a lack of pragmatic studies of the causal relationship with multiple aspects of per-
formance. This study, introducing the perspective of Balance Scorecard as the framework
for evaluation of CRM, takes advantage of four perspectives of the Balance Scorecard in
the business to design the performance indices for collecting information of post-CRM
performance of the business; meanwhile, Structural Equation Modeling (SEM) is
employed to verify the causal relationship and interaction among all four perspectives
in the hope of achieving the total quality management results through an overall perform-
ance evaluation.
Based on the motivation of the study as described above, this study attempts to achieve
the following:

(1) To analyze the impacts and results of a business adopting CRM;

(2) To develop reliable measurement indices by the perspective of balance scorecard to
evaluate CRM performance of the business; and
(3) To create structure-related modeling of CRM performance for the business.

Literature Review
Types of CRM
To an enterprise, CRM is a strategic marketing activity that combines business charity,
social responsibilities and fund-raising for non-profit organizations. Varadarajan (1986)
 The Performance Measurement of Cause-Related Marketing 773

proposed that CRM is a horizontal type of association sales pattern, wherein, for mutual
interests, an enterprise cooperates with a non-profit organization to combine products
for a sales promotion to consumers. Varadarajan & Menon (1988) believed that CRM
helps an enterprise catch material interests, including improved performance, enhanced
corporate and brand images, and expanded clientele. Subsequently, experts expand
the definition of CRM. Andreasen (1996) extends CRM in a conceptual level without
limiting CRM to the coexistence of increased sales volume of products for the enterprise,
and fund-raising for the non-profit organization; instead, any marketing campaign pro-
moted jointly by an enterprise and a non-profit organization that directly or indirectly
affects the sales volume of the produce involved is referred as a CRM. Kotler (1998)
added to the type of CRM a certain topic or idea self-promoted by the enterprise. The
application scope of CRM has now extended to cover any issue with which the
community is concerned.
Andreasen (1996) divided CRM into three types based on the cooperative pattern
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between the enterprise and the non-profit organization. The first type relates to trans-
action-based promotion, wherein consumers are solicited to purchase the product or
service of the enterprise through promotion activities staged jointly by the enterprise
and the non-profit organization; and, on the premises of the achievement of the sales
target, a certain portion of the sales proceeds is appropriated to the non-profit organization.
For instance, a credit card issuing banker donates one thousandth of the amounts of sales
closed by the consumers using that designated credit card to a charity foundation. The
second type is characterized by joint issue promotion; wherein the enterprise and one or
a plurality of non-profit organizations take advantage of a social issue in the operation
of strategic marketing. That is, both the enterprise and the non-profit organization work
together to control and prevent a certain social issue by means of distributing product, pro-
paganda materials or placing advertisements, while there is not necessarily any financial
transaction between the enterprise and the non-profit organization. A fine example of this
is the campaign to stop smoking launched each year with various enterprises by Tung’s
Foundation. The third type of CRM is done by licensing, i.e., the non-profit organization
licenses its trade name or mark to the enterprise in exchange for a return of a fixed fee or a
certain percentage of the profit while the enterprise has its sales targeted at the supporters
of that non-profit organization, such as in the form of a campus financial card issued under
a cooperation program between a banker and a university. Kotler (1998) added to
Andreason’s classification a type featuring a self-promoted topic or idea by the enterprise
wherein the involvement a non-profit organization is not necessarily required.

CRM Impacts upon Enterprise

Cause-related marketing and corporate sponsorship advertisement constitute two primary
forms of public welfare oriented business strategic marketing. According to Logsdon et al.
(1990), in sponsoring a public welfare oriented strategic marketing the enterprise has as its
primary concern the option that helps bring in economic profit for the enterprise and sub-
stantial support to the organization of the beneficiary: Cause-related Marketing is one of
the important approaches to achieve such a compromise. File & Prince (1995) listed the
following benefits paid to the enterprise getting involved in CRM:

(1) A breakthrough of marketing mode in sales promotion by advertisement;

 774 S.-I. Wu & M. Hung

(2) Media exposure at low cost;

(3) Attraction to customer groups that support public welfare;
(4) Expanded clientele;
(5) Promoted public image of the enterprise;
(6) Creation of differential corporate image;
(7) Improved marketing relation with retailers; and
(8) Increased desire of a buy among latent customers to generate greater profitability for
the enterprise.

According to the documentary research as described above, CRM may defined as the
involvement in public welfare activities through donation of money, practical service or
labor service primary to an organization based on an interest motive or reason with the
expectation of achieving a two-win situation. Marx (1996) conducted a survey of 2000
large enterprises in the USA, attempting to confirm the value of strategic public welfare
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marketing by the enterprise. However, very few documents focus on the performance
evaluation of CRM. Therefore, it is necessary and worthwhile that this study covers the
enterprises having sponsored CRM projects in order to examine the performance of CRM.
At the same time, CRM, while having been gradually accepted by enterprises, did
trigger certain disputes. According to the experts, the enterprise sponsoring CRM may
be exposed to the following risks:

(1) Commercialized charity – Caesar (1986) questioned that the enterprise for profit-
ability concern of CRM, may give upon the conventional donations to charities.
Varadarajan & Menon (1988) also believed that the money paid by the enterprise
for CRM may be greater than that which has actually been donated.
(2) Biased selection of topic – Gurin (1987) thought that CRM campaigns are usually
marketing oriented; therefore, the value of the topic may not be addressed; instead,
the sponsor enterprise tends to select a popular, low-risk and high exposure non-
profit organization or topic.
(3) Risk of conflict against corporation image – Kolter (1998) believed that consumers
might not welcome the CRM executed by the sponsor enterprise due to the conflict
between the CRM and the corporate image; in a worse case, the existing corporate
image may be damaged due to insufficient publicity of the CRM campaign or poor
interaction with the target non-profit organization.

While paying positive benefits to an enterprise, CRM may produce negative impacts,
making the understanding of post-CRM results more important then ever.

Balance Scorecard and Performance Evaluation

This study employs a Balance Scorecard as the tool to evaluate CRM performance in
order to help the organization have a complete and perfect performance evaluation.
This is within a framework of the general conception about Balance Scorecard proposed
by Kaplan & Norton (1992). Based on the vision and strategies of the enterprise in
performance measurement, the framework is comprised of financial, customer,
internal, and learning and growth perspectives by incorporating financial and non-financial
scales.
 The Performance Measurement of Cause-Related Marketing 775

Martin (1997) pointed out that the benefit of practicing the balance scorecard is to
provide related measurement indices needed by the enterprise to focus on customer’s
responses, profitability, quality, innovation, and product alternatives. MacStravic (1999)
believed that the purposes and advantages of the balance scorecard include improved
insights, readjusted internal focus of operation and incentives to stockholders internally,
and fortified the solicitation of customers, solidified customer relations, promoted custo-
mer loyalty, and extended the value of the enterprise externally. Frigo & Krumwiede
(2000) proposed that the balance scorecard, focusing on strategic management, might
be deemed a tool for daily control to help inject into employees a better understanding
of the implication and approaches of the balance scorecard.
Kaplan & Norton (1992, 2001, 2004a, 2004b, 2005) observed that the idea of the
Balance Scorecard has been comprehensively applied in the manufacturing industry,
service industry, and business organizations to help the enterprise integrate performance,
evaluation and incentives. There are four perspectives proposed by them while serving as
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four important foundations for performance evaluation. The causal relationship among
those four perspectives is as follows.
(1) The financial perspective, with the objective of realizing long-term stockholder’s
equity, is divided into growth strategy (including expanded revenue opportunities,
enhanced customer value), and productivity strategy (containing improved cost and
asset utilization). (2) The customer perspective addresses customer-value proposition
including price, quality, functionality, service and partnership. (3) The internal perspective
examines operations management, customer management, innovation, regulatory and
social processes. And (4) the Learning and growth perspective is itemized by human
capital, information capital, and organization capital. As illustrated in Figure 1, positive
correlation is respectively found between the learning and growth perspective to internal
perspective; the internal perspective to customer perspective, and customer perspective to
financial perspective.

Figure 1. Strategy map (Kaplan & Norton, 2004a)

 776 S.-I. Wu & M. Hung

Accordingly, the balance scorecard by commanding the multiple entries of evaluation

effectively measures the performance of various perspectives of the enterprise. That
helps experts or the organizational leaders to understand better the impacts upon the enter-
prise from the strategies executed, so as to make necessary modification of efforts in future
orientation. While conducting performance measurements, the enterprise must design the
scales that precisely meet the members of the enterprise to honor the comments from
employees within the enterprise. Therefore, getting familiar with the meaning of
‘balance’ in the benefits and design point of the balance scorecard allows the results of
the performance study of an enterprise to become more diversified.

Research Methodology
The two-stage methods including qualitative method and quantitative method were
adopted by this study. An expert-opinion survey was first ventured for in-depth under-
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standing of impacts and results created after the adoption of CRM by an enterprise for
the preparation and modification of measurement indices and questionnaires developed
by the study. A statistical quantification method was then used to collect information on
the comments of the officials and employees of the target enterprise on CRM results by
conventional mailing of questionnaires and online questionnaires, to conduct the perform-
ance analysis for verification of the framework and hypotheses of the study.

Framework
The strategy map of balance scorecard proposed by Kaplan & Norton (1992, 2001, 2004a,
2004b, 2005) was used as the foundation for the framework of the study; and comments
from experts in the related areas were incorporated to present a ‘Structure related model-
ing of performance evaluation for enterprise involved in CRM’ (Figure 2). The CRM-
related performance includes that (1) performance of the learning and growth perspective,
encompassing three categories of human capital, information capital, and organization
capital, has positive impacts upon the internal process perspective; (2) performance of
the internal process containing four categories – respectively, operations management
process, customer management process, innovation process, and regulatory and social
process – gives positive impacts upon the performance from the customer’s perspective;
(3) the performance of the customer perspective casts positive impacts upon the achieve-
ment of the performance of financial perspective, as measured by customer value; (4) per-
formance of the financial perspective is the final objective for the enterprise practicing
CRM, i.e., the realization of stockholder’s equity.

Research Hypotheses
Based on the framework and the relationship among the variables of all four perspectives,
this study proposes the following hypotheses:

H1: Performance of the learning and growth perspective is directly correlated with that of
the internal process perspective.
H2: Performance of the internal process perspective is directly correlated with that of the
customer perspective.
 The Performance Measurement of Cause-Related Marketing 777
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Figure 2. Research framework

H3: Performance of the customer perspective is directly correlated with that of the finan-
cial perspective.

Questionnaire Design
In-depth interviews for qualitative study were the first phase of this study. Using the judg-
ment sampling method, officials from local enterprises in the Taiwan area, having three
years or longer of experience in CRM, were selected as the interviewees to identify
their CRM objectives, service items, and indices for the performance evaluation of each
of those four perspectives. Before conducting the interview, documentations were referred
to list all possible indices for performance evaluation for the development of the questions
to be used in the interview. Marketing officials and public relationship staff from three
enterprises were selected with each session of interview to last approximately half an
hour. Based on the interview results, 32 items having general concerns were picked up
for the design of the questionnaire and a 7-point scale measured each question.

Pilot Test
To establish the validity and reliability of the performance measurement tools concerning
the perspective factor scales of the balance scorecard, a pilot test was targeted at employ-
ees of an enterprise who have executed cause-related marketing in Taiwan’s companies.
Two steps were undertaken to ensure validity and reliability. First, the questionnaire
 778 S.-I. Wu & M. Hung

was sent to 75 employees. Of these, there were 70 usable responses. Corrected item-total
correlation (CITC) was used to search every perspective measure scale by deleting the
item if its CITC was below 0.50 (Kerlinger, 1978; Tu et al., 2001). Second, the factor
analysis using varimax rotation was used to assess the convergent validity of each perspec-
tive scale, and Cronbach’s alpha (1951) was used to assess scale reliability. Factor loading
above 0.6 and alpha values over 0.7 were considered good (Nunnally, 1978; Tu et al.,
2001). After deleting two items (Q3 and Q5) about the financial perspective, and one
item (Q28) about the learning and growth perspective, the CITC fell below 0.5 or a
factor loading below 0.6. The final instrument for the four perspectives and the remaining
29 items are listed in Table 1. Table 1 shows that all factor loadings were greater than 0.60
and CITC were above 0.50 for every perspective item, and all Cronbach’s alpha values
over 0.7. This demonstrates the validity and reliability of the measurement questionnaire.
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Definition of Variable and Measurement

The draft of the questionnaire was designed based on the concept of the measurement
indices of each perspective of the balance scorecard proposed by Kaplan & Norton
(2001, 2004a), the results of the in-depth interview, and the modification by the pilot
test to use the following 30 variables for measurement:

(1) Financial perspective

The financial perspective refers to those impacts on the financial performance of an enter-
prise that has practiced CRM. According to Varadarajan & Menon (1988), CRM may
improve enterprise performance, fortify corporate and brand images, and expand clientele.
Schiller (1988) argued that the CRM may replace the conventional donation by an enter-
prise; the enterprise will donate more and link four orientations in realizing stockholder’s
equity – respectively, expanded revenue opportunities, enhanced customer value,
improved cost structure and increased asset utilization. In this study, four questions includ-
ing Improved Corporate Cost (Q1), Expanded Revenue Opportunities (Q2), and Corporate
Net Profit (Q4) were raised to measure the financial performances of CRM.

(2) Customer perspective

Customer perspective relates to those impacts on the customer of an enterprise having
practiced CRM. Garrison (1990) believed that CRM help promote a good name, corporate
image, and the morale of employees. Pringle & Thompson (1999) suggested that CRM
may give a unique faith system for the brand, thus improving the recognition of the
brand and the willingness to buy by the customer. Following the concepts of product/
service attributes, customer relationship and image to address customer value in the
balance scorecard, this study designed three questions for measurement, respectively,
Product Knowledge (Q6), Customer Relationship (Q7), and Corporate Image (Q8).

(3) Internal process perspective

The internal process perspective relates to those impacts upon the internal process of an
enterprise after having been involved in CRM. The internal control process in the balance
scorecard contains operations management processes, customer management process, inno-
vation process, and regulatory and social process, respectively defined as follows:
 Table 1. Analysis of validity and reliability for pilot test

Explained
Perspective Measurement Item- total Factor variance
(Mean) variable correlation loading Eigenvalue (%) Cronbach’s a
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Financial perspective Improved Corporate Cost Q1 0.905 0.602 2.67 66.84 0.8268
Expand Revenue Opportunities 0.856 0.735

The Performance Measurement of Cause-Related Marketing

Q2
Corporate Net Profit Q4 0.687 0.800
Customer perspective Product Knowledge Q6 0.9903 0.659 2.109 70.294 0.7286
Customer Relationship Q7 0.812 0.816
Corporate Image Q8 0.796 0.634
Internal process Operation Supplier Relationship Q9 0.917 0.841 1.682 84.08 0.7897
perspective perspective
Operation Efficiency Q10 0.917 0.841
Customer Capability to Select Customer 0.903 0.694 3.01 75.26 0.8865
management Q11
Attraction to New Customer Q12 0.874 0.815
Retained Customer Relationship 0.859 0.764
Q13
Market share Q14 0.833 0.737
Innovation process Opportunities to New Market 0.917 0.84 2.44 81.32 0.8837
Q15
Selection & Management 0.916 0.759
Capabilities Q16
Success Rate of New Product 0.871 0.841
Q17
Regulatory and Employee Work Safety& Health 0.838 0.619 1.963 65.44 0.7318
social process CareQ18
Recruit of Newcomers Q19 0.801 0.703
Relationship with Neighboring 0.787 0.642
Communities Q20

779
(Table continued)
 780
S.-I. Wu & M. Hung
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Table 1. (Continued)
Explained
Perspective Measurement Item- total Factor variance
(Mean) variable correlation loading Eigenvalue (%) Cronbach’s a

Learning and growth Human capital Reduced employees change-over 0.952 0.715 3.354 83.84 0.9354
perspective Q21
Jobbing Competence Q22 0.931 0.906
Learning Willingness Q23 0.931 0.866
Problem-solving Technique Q24 0.845 0.867
Information capital Information Collection Channels 0.946 0.853 2.79 82.99 0.8903
Q25
Use of Market Information Q26 0.924 0.894
Use of Information Technology 0.861 0.742
Q27
Organization capital Employee Innovative Capability 0.797 0.789 2.81 70.4 0.8558
Q29
Employee Loyalty Q30 0.709 0.689
Teamwork efficiency Q31 0.808 0.812
Corporate Mission Q32 0.820 0.672
 The Performance Measurement of Cause-Related Marketing 781

(a) Operations management processes comprise items of supply, production, distribution,

and risk management. In the study, the corresponding measurement questions include
Supplier Relationship (Q9) and Operation Efficiency (Q10).
(b) Henricks (1991) believed that CRM helps the enterprise enter into a new market. The
customer management process in the balance scorecard comprises customer selection,
acquisition, retention and growth; and in this study, questions for measurement
include Capability to Select Customer (Q11), Attraction to New Customer (Q12),
Retained Customer Relationship (Q13), and Market Share (Q14).
(c) The innovation process in the balance scorecard contains items of Opportunity ID,
R&D Portfolio, Design/Development, and Launching of Product. In this study,
three questions are developed to measure the innovation process within an enterprise
– respectively, Opportunities to New Market (Q15), Selection & Management Capa-
bilities (Q16), and Success Rate of New Product (Q17).
(d) Shell (1989) addressed that CRM helps the enterprise win its popularity, build up a
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positive relationship with the community, and provide opportunities for the enterprise
to elaborate its value to the general public. The regulatory and social process in the
balance scorecard contains items of Environment, Safety and Health, Employment,
and Community; and this study developed three questions for measurement including
Employee Work Safety & Health Care (Q18), Recruit of Newcomers (Q19), and
Relationship with Neighboring Communities (Q20).

(4) Learning and growth perspective

The learning and growth perspective relates to those impacts upon the learning and growth
among the employees in an enterprise after having practiced CRM. The learning and
growth perspective in the balance scorecard comprises human capital, information
capital and organization capital respectively defined as follows in this study:

(a) In terms of impacts upon the human capital from CRM, four questions were devel-
oped – respectively, Reduced Employee Change-over (Q21), Jobbing Competence
(Q22), Learning Willingness (Q23), and Problem-solving Technique (Q24).
(b) Three questions were developed to measure the impacts of CRM upon the information
capital – respectively, Information Collection Channels (Q25), Use of Market Infor-
mation (Q26), and Use of Information Technology (Q27).
(c) Garrison (1990) believed that CRM helps promote good name, corporate image and
employee morale. Four questions to measure the impacts of CRM upon organization
capital were developed in this study – respectively, Employee Innovative Capability
(Q29), Employee Loyalty (Q30), Teamwork Efficiency (Q31), and Company Mission
(Q32).

Sampling
Phase II of this study deals with quantitative research by conducting a sampling survey on
those from private businesses who have been involved in CRM for three years or longer,
taking advantage of the questionnaire and measurement variables developed from Phase
I. Websites or public e-mail boxes of the enterprises constituted the first group of subjects
for the survey, while members of the Advisory Association for Central Taiwan were
approached as the subjects of the second group, by post. Six hundred copies of the
 782 S.-I. Wu & M. Hung

questionnaire were sent through the web and 62 valid responses were received; in addition,
317 copies were mailed with 150 valid responses returned. In general, a total of 212 copies
of valid responses were received at a valid return of 23.11%.

Results Analysis
Establishing the Measurement Indices
To avail the effective measurement indices of validity and reliability, a Cronbach’s a
reliability analysis and exploratory factor analysis were conducted on the sample (212
copies of valid responses returned). Nunnally (1978) insisted that the loading of the
measurement variable in each factor must be greater than 0.6, and the value of Cronbach’s
a for each factor must be greater than 0.5 to be accepted. Accordingly, this study deleted
Q6 in the Customer Perspective, Q18, Internal Process perspective, and Q32, Learning &
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Growth Perspective as listed in Table 2 to reduce the size of the measurement variables
from 29 to 26.
Furthermore, the Analysis of Moment Structure (AMOS) was applied to perform
confirmatory factor analysis (CFA) to test the measurement models of financial, custo-
mer, internal process, and learning and growth perspectives in solving the standardized
factor loadings between each latent variable and the measurement variables. The stan-
dardized factor loading was solved as the validity index representing the extent of the
measurement latent variable in relation to the individual measurement variable. This
study improved the fitness of the measurement model through three steps proposed
by Sethi & King (1994): deleting any variable with a factor loading less than 0.6; delet-
ing any variable found with higher error correlation between items but with a low
factor loading in the event that the fitness index does not fall within the acceptable
range; and deleting any variable with higher error in case of insufficient fitness. Fur-
thermore, the principle of demanding that the fitness indexes of GFI, AGFI, NFI,
and CFI must be greater than 0.9; RMR, RMSEA, less than 0.05 (Joreskog &
Sorbom, 1982; Danes, 1984; Gefen et al., 2000; Gefen, 2002; Chau, 1997; Bentler,
1990); and the ratio between chi-square statistic and degrees of freedom, i.e. x2/df
not greater than 3 (Carmines & Mclver 1981) is employed to judge the model
fitness. As a result, the measurement models for those four perspectives of CRM
were verified as follows:

(1) As illustrated in Figure 3, each factor loading of the first-order measurement model for
the financial perspective is greater than 0.6 and all fitness indexes meet the standard.
(2) Each factor loading of the first-order measurement model for the customer perspective
is greater than 0.6 as illustrated in Figure 4.
(3) Following the first-order confirmatory factor analysis modified as rules above, the
second-order confirmatory analysis is carried out to solve the indices fit for measure-
ment of the internal process perspective, as illustrated in Figure 5, with each factor
loading greater than 0.6 and each index compliant with the standard.
(4) The second-order confirmatory analysis is carried out following the first-order confir-
matory factor analysis modified as described above to solve the indices fit for
measurement of the learning and growth perspective as illustrated in Figure 6 with
each factor loading greater than 0.6 and each index compliant with the standard.
 Table 2. Analysis of validity, reliability of measurement variables and effect of CRM (n ¼ 212)

Latent Variable Measurement Explained

Perspective (Mean) (Mean) Variable Mean Cronbach’s a Factor Loading Variance (%)

Financial perspectiven Improved Corporate Cost 3.73 0.8465 0.750 77.42

(4.44) Q1
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Expand Revenue 4.36 0.790

Opportunities Q2
Corporate Net Profit Q4 4.11 0.770

The Performance Measurement of Cause-Related Marketing


Customer perspective Product Knowledge Q6 0.7317 0.565 67.28
(5.48) (0.7579) (80.46)
Customer Relationship Q7 5.42 0.793
(0.80)
Corporate Image Q8 6.00 0.646
(0.80)
Internal process Operation Supplier Relationship Q9 4.73 0.7802 0.821 82.00
perspective (4.82) management
process (4.58)
Operation Efficiency Q10 4.43 0.821
Customer Capability to Select 4.65 0.8548 0.667 71.03
management Customer Q11
process (4.85)
Attraction to New 4.92 0.780
Customer Q12
Retained Customer 5.04 0.723
Relationship Q13
Market share Q14 4.80 0.621
Innovation Opportunities to New 4.84 0.8221 0.788 74.889
process (4.76) Market Q15
Selection & Management 4.74 0.743
Capabilities Q16
Success Rate of New 4.71 0.694
Product Q17

783
(Table continued)
 784
Table 2. (Continued)
Latent Variable Measurement Explained

S.-I. Wu & M. Hung

Perspective (Mean) (Mean) Variable Mean Cronbach’s a Factor Loading Variance (%)

Regulatory and Employee Work Safety& 0.6608 0.494 60.76
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social process Health CareQ18 (0.6633) (74.99)

(5.00)
Recruit of Newcomers 4.86 0.699
Q19 (0.75)
Relationship with 5.53 0.609
Neighboring (0.75)
Communities Q20
Learning and growth Human capital Reduced employees 3.83 0.9072 0.721 78.73
perspective (4.61) (4.14) change-over Q21
Jobbing Competence Q22 4.12 0.838
Learning Willingness Q23 4.30 0.821
Problem-solving 4.31 0.753
Technique Q24
Information Information Collection 4.90 0.8332 0.765 76.43
capital (4.76) Channels Q25
Use of Market 5.00 0.857
Information Q26
Use of Information 4.37 0.667
Technology Q27
Organization Employee Innovative 4.69 0.8437 0.655 (0.69) 68.04
capital (4.96) Capability Q29 (0.8403) (75.88)
Employee Loyalty Q30 4.94 0.742 (0.78)
Teamwork efficiency Q31 4.85 0.773 (0.79)

Corporate Mission Q32 0.563

: Item deleted.
(): the value after item deletion.
 The Performance Measurement of Cause-Related Marketing 785

Figure 3. The first-order measurement model for the financial perspective

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Figure 4. The first-order measurement model for the customer perspective

Figure 5. The second-order measurement model for the internal process perspective

After the exact screening process, this study acquired valid and reliable measurement
indices to effectively conduct the CRM performance evaluation. According to Figures 3
through 6, each measurement model is an efficient performance evaluation tool with its
model fitness meeting the good standard. The fact that each of all the standardized
 786 S.-I. Wu & M. Hung
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Figure 6. The second-order measurement model for the learning and growth perspective

factor loadings between the latent variables and the measurement variables is greater
than 0.6 indicates that each model is sufficient to measure CRM performance. As
proved by the verification procedure, those 26 measurement variables are of extremely
high efficiency.

CRM Effects Analysis

To achieve better understanding of the results to an enterprise practicing CRM, this study
used the mean of all the performance indices to carry out the effect analysis. Referring to
Table 2 for the mean of performance indices, the mean of each perspective as a whole is
greater than 4, showing that positive effects are paid to each CRM performance perspective
for the enterprise, wherein, the best achievement comes from the Customer Perspective
(5.48), followed by the Internal Process Perspective (4.82). As for the Financial Perspective,
the highest mean is observed with the item of Expand Revenue Opportunities (4.36) telling
the significant result of CRM on the expand revenue. The mean of each item in the Customer
Perspective is greater than 5, showing also the significant result of CRM on the customer
with the best result going to the item of the upgraded corporate image (6.00). Within four
categories of the Internal Process Perspective, the mean for the item of Operations Manage-
ment is 4.58, indicating mild impacts of CRM; Customer Management, 4.85 showing a
certain level of results with the best achievement from the item of Retained Customer
Relationship (5.04); Innovation Process, 4.76 exhibiting a fair result; and Regulatory &
Social, 5 revealing the highest mean in the item of relationship with neighboring commu-
nities (5.53). Among three categories of the Learning & Growth Perspective, the mean of
human capital is 4.14 displaying a mild result; information capital, 4.76 with a better
result reported in the use of market information (5.0); and organization capital, 4.96 with
the most impressive result coming from the employee loyalty (4.94). To sum up, the
 The Performance Measurement of Cause-Related Marketing 787

enterprise after having adopted CRM is paid positive results to all four perspectives of the
performance, meaning CRM does help upgrade the general performance of an enterprise.

Structure Related Modeling Analysis

Structural Equation Modeling (SEM) was employed by this study to conduct the structure-
related modeling analysis in exploring into the interaction among four performance
perspectives. Wherein, the maximum-likelihood method was used to estimate the analysis
of the structure-related modeling. Results of analysis revealed that most of the indices of
the model fitness attained a good level by meeting the principle of demanding that the
fitness values of GFI, AGFI, NFI, and CFI must be greater than 0.9; RMR, RMSEA,
less than 0.05 (Bentler, 1990; Joreskog & Sorbom, 1982; Danes 1984; Gefen et al.,
2000; Gefen, 2002; Chau, 1997); and the ratio between the chi-square statistic and
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degrees of freedom, i.e., x2/df, not greater than 3 (Carmines & Mclver 1981). Wherein,
GFI (0.917) is greater than 0.9; AGFI (0.876) approaching 0.9; NIF (0.936), greater
than 0.9; CFI (0.992), greater than 0.9, RMSEA (0.025) less than 0.05, x2 at 267.6 (P-
value ¼ 0.08); chi-square statistic/degrees of freedom (x2/df ¼ 1.13), less than 3; but
RMR (0.07), slightly greater than 0.05, the model assumed in this study should be a
good one and acceptable as a proper one.

Figure 7. The causal relationship structure

 788 S.-I. Wu & M. Hung

Other than the measurement of the model fitness as whole, model standardized
estimates of this study are summarized in Figure 7 with all the parameters therein comply-
ing with the significant level of 0.05 to show that the fitness of the structure-related
modeling of this study is acceptable.
Regarding the first hypothesis of this study, the path coefficient of the Learning &
Growth Perspective in relation to the Internal Process Perspective is 0.81 (P-
value , 0.01), indicating direct impacts; therefore, H1 is supported.
The path coefficient of the Internal Process Perspective in relation to the Customer
Perspective is 0.89 (P-value , 0.01) as seen from Figure 7, which shows the significant
positive relation to support H2.
H3 also stands good for indicating the significant positive relation of the path coefficient
reaching 0.88 (P-value , 0.01) for the results of the Customer Perspective in relation to
the Financial Perspective, as illustrated in Figure 7.
According to the results of the modeling analysis, the conceptual framework of the
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balance scorecard is an effective measurement tool that can be applied in the evaluation
of CRM performance and in the verification of a causal relationship among four
perspectives. With the duly established hypotheses, an enterprise is urged to facilitate
positive impacts upon its internal process performance through learning and growth by
practicing CRM; an efficient internal process within the organization in turn has positive
effects upon the customer to help achieve the mission of upgraded financial performance
for the enterprise. Therefore, those four perspectives exist, interlocking the causal
relationship. Should the management of an enterprise be able to stick to the spirits of
the balance scorecard to address the overall performance evaluation for upgrading the
general performance, the enterprise could become more competitive.

Conclusions and Discussion

CRM activities co-sponsored by enterprises and non-profit organizations have increased in
recent years; however, it is very difficult to evaluate the performance of the CRM results.
The conventional performance evaluation is usually demonstrated on the financial aspect.
Nonetheless, from the viewpoint of the enterprise, the results of CRM activities should not
be limited only to the financial aspect; instead, it warrants multi-level exploration. This
study, from the viewpoint of the enterprise, has attempted to explore the consequence
to the enterprise of involvement in CRM, as well as to construct reliability measurement
indices, and to review the structure of the relationship among the four perspectives. The
findings of this study are summarized as follows:

(1) In the course of analyzing the results of CRM impacts, it is found that all four perspec-
tives of performance give positive benefits, with the best achievements falling on the
Customer Perspective. In the Financial Perspective, the highest achievement is
observed with expanding revenue opportunities indicating that the enterprise may
take advantage of CRM to expand revenue; that is, CRM helps the enterprise keep
moving to achieve its business objectives. As for the results upon the Customer Per-
spective, CRM allows the customer to develop a positive impression about the spon-
soring enterprise, thus winning the long-term customer loyalty for the enterprise. In
terms of the results of the Internal Process Perspective, CRM effectively retains the
existing customers while similar significant results are found in the relationship
 The Performance Measurement of Cause-Related Marketing 789

with the neighboring communities to explain that an enterprise may change for the
better its relationship with the neighboring communities through the use of CRM.
On the results of the Learning and Growth Perspective, CRM permits the enterprise
to take effective advantage of the use of market information to realize a customer’s
behavior and response. Furthermore, CRM also creates employee loyalty and innova-
tive capability.
CRM for delivering various benefits at a significant level to an enterprise – either in
the upgraded expand revenue and corporate image, existing customer retention,
improved relationship with neighboring communities, taking advantage of market
information, or helping employees understand the corporate mission – provides posi-
tive results and thus justifies the promotion by the enterprise.
(2) This study has developed measurement indices for validity and reliability based on
four measurement models of performance. They are (a) three items of Improved
Corporate Cost (Q1), Expanded Revenue Opportunities (Q2) and Corporate Net
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Profit (Q4) in Financial perspective; (b) two items, respectively, Customer Relation-
ship (Q7) and Corporate Image (Q8) are included in the Customer Perspective; (c)
there are four categories and 11 performance indices in the Internal Process Per-
spective, respectively, Supplier Relationship (Q9), Operation Efficiency (Q10),
Capability to Select Customer (Q11), Attraction to New Customer (Q12), Retained
Customer Relationship (Q13), Market Share (Q14), Opportunities to New Market
(Q15), Selection & Management Capabilities (Q16), Success Rate of New
Product (Q17), Recruit of Newcomers (Q19), and Relationship with Neighboring
Communities (Q20); (d) the Learning & Growth Perspective includes three cat-
egories and ten indices, respectively, Reduced Employee Change-over (Q21),
Jobbing Competence (Q22), Learning Willingness (Q23), Problem-solving Tech-
nique (Q24), Information Collection Channels (Q25), Use of Market Information
(Q26), Use of Information Technology (Q27), Employee Innovative Capability
(Q29), Employee Loyalty (Q30), and Teamwork Efficiency (Q31). Those four
measurement models from the study contain a total of 26 validity and reliability
measurement indices, sufficient and effective in the measurement of results of an
enterprise getting involved in CRM.
(3) The CRM causal structure models assumed in this study relate to acceptable and effec-
tive models provided with qualified fitness. Therefore, those models assumed by this
study should give a certain practical value. It is proved that a significant causal
relationship exists among four performance perspectives of an enterprise involved
in CRM. Positive impacts are found on the performance of Internal Process Perspec-
tive from that of the Learning & Growth Perspective; the performance of the Customer
Perspective from that of the Internal Process Perspective; and the performance of the
Financial Perspective from that of the Customer Perspective. Findings of this study
suggest that, in practicing CRM, an enterprise should not only address the financial
performance; instead, it should have focused on other’s performance perspectives
since the financial performance will be influenced by other three perspectives. The
concept of the balance scorecard introduced into the area of marketing in this study
could become an important system and tool in continuous improvement through
TQM performance evaluation, and thus a must for all business administrators. This
study at the same time leads to a new orientation of study pending further and
deeper exploration.
 790 S.-I. Wu & M. Hung

Limitations of the Study

Although it does claim certain preliminary results for the application of the concept of the
balance scorecard in the evaluation of the results paid to the enterprise involved in CRM,
there are certain limitations pending further improvement:
(1) On information collection: comparatively fewer valid samples collected by the
study may result in deviation in the process of inference; therefore, samples col-
lected in this study fail to achieve complete explanation of the behavior of the
population of samples.
(2) On the design of the questionnaire: since this study takes the lead to attempt
analyzing CRM results with the balance scorecard, variables defined in the ques-
tionnaire fail to control fully all possible correlated variables.
(3) On the research findings: the related structure modeling developed in this study
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may not be the only structural relationship; there must be better structure-related
modeling available to have further studies.

Future Study Proposed

(1) In this study, only those marketing officials and CRM executing staff from three
companies were approached for the in-depth interviews; it is recommended to
make the questionnaire more measurement efficient for future studies by
increasing both of the width and depth of the population of interviewees to
modify the questions.
(2) A larger scale survey is invited for the future studies to present more realistic
results since this study suffers from comparatively few responses returned
with the questionnaires owing to limited time and manpower.
(3) This study adopts the definition of CRM in a broad sense, i.e., the sum of all
CRM categories. It is therefore recommended that deeper analysis of the
specific CRM program should be done in future studies for a better and more
substantial understanding of CRM results.

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