Impacts of Corporate Social Responsibility on Organizational Performance - the UK - Case Study Example

IMPACTS OF CORPORATE SOCIAL RESPONSIBILITY ON ORGANIZATIONAL PERFORMANCE By Student Name Course Name and Code Class Professor City State Date of Submission Abstract Corporate social responsibility is a concept that is widely practiced by both SMEs and large companies. There is a positive correlation between CSR initiatives and organizational performance. Organizational performance has both financial as well as non-financial aspects. Some of the benefits of CSR that connote organizational performance include financial performance, the growth in market share and sales, customer loyalty and trust, corporate profitability and positive image, just to mention a few. This study is based in the UK, specifically London and aims at looking at the nexus between CSR and organizational performance through examining SMEs and MNCs that operate in the region. Table of Contents Abstract 2 Table of Contents 3 Introduction 4 Research Objectives and Research Questions 5 Preliminary Literature Review 5 Overview of the Concept of Corporate Social Responsibility 5 Organizational Performance 6 The Nexus between Corporate Social Responsibility and Organizational Performance 7 Methodology 8 Techniques of Data Collection 9 Participants and Sampling Strategy 11 Ethical considerations 11 Project Schedule/ Plan 12 Appendix 1. Questionnaire/ Interview Guide 17 IMPACTS OF CORPORATE SOCIAL RESPONSIBILITY ON ORGANIZATIONAL PERFORMANCE Introduction Corporate Social responsibility has gained ascendancy in most organizational studies literature owing to its corresponding connection with the success of organizations. In the competitive and complex business environments, businesses have to capitalize on the slightest opportunities to gain a competitive edge in the market. The major aim of businesses is making profits and attending to the need of customers (Ozuem, Howell, and Lancaster, 2014, p.399). Not until the recent decades, companies were more oriented towards financial performance than the wellbeing of the society (Ozuem, Howell, and Lancaster, 2014, p.399). However, as the legal systems became strict and regulations put in place for businesses to comply with, most enterprises embraced the corporate social responsibility initiatives to avoid being accused of non-compliance (Ozuem, Howell, and Lancaster, 2014, p.399). This study intends to look into the nexus between corporate social responsibility and organizational performance within the companies operating in the UK. The link between CSR and organizational performance applies to businesses operating both locally and internationally. Therefore, this study is significant in that it will open ways towards understanding how to increase organizational performance through CSR practices. Some of the benefits of CSR include a positive image, increased productivity, customer loyalty and trust and greater financial performance of an organization. It is noteworthy that CSR as a concept applies to businesses whether small or large. Even though the setting of the study is the UK, it is transferable and enforceable to any business globally. Research Objectives and Research Questions As mentioned above, this study aims at examining the Small Medium Enterprises and Multinational and National Corporations operating in any sector that supports the economy so as to find the link between CSR and organizational performance. The study will achieve its purpose by answering a series of research questions. The questions are as follows: 1. To what extent do the UK companies engage in Corporate Social Responsibility? 2. What is the link between Corporate Social Responsibility and organizational performance? 3. What is the trend of CSR practices in the UK companies? Preliminary Literature Review Overview of the Concept of Corporate Social Responsibility Corporate social responsibility or CSR is based on the interdependence between an organization or business, the society, and its operating environment. Most scholars have defined CSR differently, and there still lacks a conventional definition (Ozuem, Howell, and Lancaster, 2014, p.399). However, as Osisioma, Nzewi and Paul (2015, p. 58) puts it, CSR may refer to the moral obligation of business towards the first people who are affected in one way or another by its operations (Inyang, 2013, p. 123). Kumari (2014, p. 28) notes that CSR includes activities such as corporate responsibility, sustainable, responsible business corporate citizenship, corporate sustainability, and corporate social performance. Besides, CSR mandates that organization align to the moral principles of business and uphold the decorum of the society (Kumari, 2014; Inyang, 2013, p. 124). Through CSR organizations and businesses engage in actions that have mutual benefits for both the society and the business. According to Jo and Harjoto (2011, p. 352), CSR has a hierarchical dimension of economic, moral, philanthropic and legal actions of a company that influences the quality of life of the stakeholders. Jo and Harjoto (2011, p.352) stresses that amidst all the definitions, CSR deals with how the business serves the society deals with its people and take care of the legal requirements that govern its operations. In sum, CSR is the balancing of the activities of the business and the well-being of the communities, people, and society that are impacted by the activities. Organizational Performance Just like CSR, there lacks an explicit definition of organizational performance because organizations have conflicting goals and objectives. Nonetheless, According to Valmohammadi (2014, p.458), organizational performance is a measure of how organizations achieve the set objectives concerning marketing and financial output. Even so, performance has financial and non-financial aspects (Lu, Lin, and Tu, 2009, p. 119; Valmohammadi, 2014, p. 458). Financial performance refers to success in areas such as increased profit margins; the growth in sales; turnover and operation costs; return on investments; sales and equity, and the growth of earnings per share (Lu, Lin, and Tu, 2009, p. 121-122; Valmohammadi, 2014, p. 458). On the other hand, a non-fiscal aspect of organizational performance includes increased market share, the introduction of new products and technology, optimized product quality, effectiveness of marketing campaigns, and increased innovation capabilities (Lu, Lin, and Tu, 2009, p. 121; Valmohammadi, 2014, p. 458). The non-financial aspect can also cover such things as customer loyalty and trust, excellent organizational image, the commitment to the employees, customer satisfaction, service quality, and job satisfaction and security. The Nexus between Corporate Social Responsibility and Organizational Performance Corporate Social Responsibility is a widely pursued concept by most if not all organizations. According to Inyang (2013, p. 127) CSR has ceased to be an activity for the large companies, rather, even SMEs are integrating it into employee initiatives, caring for the environment, community involvement, consumerism, and sustainable supply chains. CSR initiatives assure firms of a good reputation that builds customer satisfaction thus creating loyalty and trust on the part of the customers (Inyang, 2013, p. 128). CSR is also connected to reduced costs of operation, increased profit margins and market share, brand differentiation, enhanced brand image, increased visibility, enhanced public and government relations and staff morale as well as high retention rates (Inyang, 2013, p. 128). Besides, CSR initiatives also assure an organization of job commitment, job satisfaction, and job security among the employees leading to increased productivity due to the high motivational levels among the employees (Jo and Harjoto, 2011, p. 353; Inyang, Awa, and Enuoh, 2011, p. 121). Authentically, the ultimate benefit of CSR initiatives in organizations is that it increases the firm value from financial and non-financial aspect (Jo and Harjoto, 2011, p. 353). Borrowing facts from previous research Lu, Lin and Tu (2009, 123) opine that CSR has the impact of enhancing corporate profitability. From a resource-based point of view, CSR also gives businesses a competitive advantage in the market through its enhanced image, motivated workforce and efficient marketing activities (Lu, Lin and Tu, 2009, p. 123-124). There is a positive relationship between CSR and financial performance in organizations as CSR warrants being classified as a differentiation strategy that is used to create demand for new products and services (Lu, Lin, and Tu, 2009, p. 124). CSR initiatives reduce the risks of litigation, negative publicity and costs of criminal prosecutions paving the way for investments in organizational growth activities (Ozuem, Howell, and Lancaster, 2014, p. 402). CSR also improves the morale of the staff in the company and is the pillar of the establishment of corporate integrity as a culture within an organization, which builds the reputation of the enterprise in question (Lu, Lin, and Tu, 2009, p. 124). CSR also ensures improved supplier networks leading to reduced costs of operations and removal of barriers. CSR initiatives also form a base for the attraction and retention of employees and customers thus sustainability of business (Peloza and Shang, 2010, p. 118; Inyang, Awa, and Enuoh, 2011, p. 120). It is conclusive that there is a direct link between CSR and organizational performance. Methodology Proposed Research Design According to Saunders and Tosey (2014, p. 58), a research design gives direction towards the achievement of the set objectives. Moreover, it elaborates on how data collection, measurement, and analysis shall be achieved during the proposed study. Besides, the validity and reliability of the data collected from as study heavily depend on the clarity of the research design (Saunders and Tosey, 2014, p. 59). Philosophically, this study will take the pragmatist approach that is oriented to the mixed methods of data collection (Saunders, Lewis, and Thornhill, 2012). Furthermore, the results of the study apply to almost any business that makes a profit while taking care of the societal needs. The pragmatist approach, unlike the positivist and interpretivist approaches, stresses more on multiple methods of data collection and allows the method that best suits a study to be used in data collection without the influence of philosophical debates (Saunders, Lewis, and Thornhill, 2012). Authentically, this research study will engage both qualitative and quantitative data collection, to realize its objectives and exhaustively answer the research questions (Saunders and Tosey, 2014, p. 59). Being that the collected data is applicable within the population, the research study must avoid risks, and the short time available for the study, this study will take the deductive approach (Saunders and Tosey, 2014, p. 59). The population used in this study will be managers of the companies and businesses that operate in London. Regarding time horizons, this study will be cross-sectional as it is aimed towards answering the research questions and is using the survey strategy (Saunders and Tosey, 2014, p. 59), case in which the time limitedness will be covered. Techniques of Data Collection As stated in the previous section, this research will use a mixed method approach that entails both qualitative and quantitative method. This study will involve the use of interviews and questionnaires as the primary data collection methods. Qualitatively, in-depth interviews will serve in obtaining information that will contribute towards the development of questionnaires. Furthermore, the interview method in this study will be used to identify the major areas to concentrate on when analyzing the responses from the questionnaires. The applicability of the two methods is based on their advantages and disadvantages. Questionnaires do not require expertise when administering them to a sample population. Additionally, the method is also easy and efficient in data collection where the sample is large (Zikmund, 2010). In the case of this study, numerous companies and SMEs shall be integrated into the study, making the method valid. Questionnaires can be sent through mail or post and thus a significant geographical coverage (Zikmund, 2010). Thus, the questionnaires assure the researcher of representativeness of the general population. Furthermore, the response rate of the questionnaires is also high apart from their ability to reduce the chances of researcher bias as the respondents fill them to the best of their knowledge (Bajpai, 2011, p.146-150). The questionnaires have a weakness in that they are only applicable to the literate lot in the population (Saunders, Lewis, and Thornhill, 2012). Secondly, some of the respondents may be uncooperative and fail to return the questionnaires either completely or in the specified time (Bajpai, 2011, p.146-150). Furthermore, the ambiguity of the questionnaires often leads to the misunderstanding and thus inaccurate answers from the questionnaires. Also, some of the replies by the respondents might be mere guesses, thus prone to misinformation (Bajpai, 2011, p.146-150). The exploratory nature of the research makes the questionnaires the best option (Saunders, Lewis, and Thornhill, 2012). The interviews, on the other hand, are useful for getting detailed information more so that based on opinions, perceptions, and feelings. They also allow detailed questions to be asked, rephrased and clarified for the accuracy of answers (Bajpai, 2011, p.146-150). The respondents are also authorized to use their word. As a method of date collection, the interview method also has a high response rate and has fewer chances of being influenced by other respondents (Bajpai, 2011, p.146-150; Zikmund, 2010). Furthermore, during the interviews the questions can be tailored to the respondents so as to achieve meaning and clarity, thus accurate answers. However, interviews are very time-consuming and costly. Furthermore, the interpretation of the collected answers might differ according to the researcher’s point of view (Bajpai, 2011, p.146-150). Thus, the method is open to bias. Lastly, the method lacks any measure of validity and thus raises issues of validity and reliability. Nonetheless, the study will use the questionnaires and interviews to cover exhaustively for the demerits discussed above. Participants and Sampling Strategy This study will be based in London and will involve the SMEs and large companies that operate in the region. However, other large MNCs in selected regions in the UK shall also be included in the study. The SMEs category will include sole proprietorships and partnerships that locally operate within London. On the other hand, the large company’s category will comprise of national and multinational corporations that operate in London and also have their operations globally. The research shall adopt quota sampling, which is an example of non-probability sampling, to avoid chances of biases and ensure representativeness (Zikmund, 2010). In essence, quota sampling will enable the researcher to choose the best out of the available sample. Besides, it also fits with the limited nature of financial resources and time constraint (Zikmund, 2010), which is real for this study. A total number of 120 companies shall be involved in the study with more preference being given to large and well-established companies that have been in business for a long time. The inclusion criteria, therefore, will be any business that is not affiliated to Coventry University London Campus, and the companies that operate in London and have operations spread across the UK region. Furthermore, as stated above, the businesses must have been in operation for the last ten years. Ethical considerations The research study will take place in a business environment where failure to take ethical measures might warrant serious litigations. This study shall pay attention to privacy, confidentiality, informed consent, and anonymity through different strategies for compliance with research ethics. The informed consent of the respondents shall be obtained through ensuring that before conducting the research, a letter requesting permission for interviews and questionnaires is sent to the respective organizations. The letter shall clarify the intent of the study, its scope and potential benefits, as signature of the relevant authorities from the University. Accompanying the letter will be the University’s Code of Ethics that governs research, to show that the study is serious and establish trust in the chosen organizations and businesses. Moreover, anonymity shall be maintained throughout the data collection, analysis, and presentation processes. Furthermore, the raw data collected firsthand from the respondents shall be secured, and access granted only to the authorized persons. Project Schedule/ Plan The project will take 21weeks to complete as shown in the schedule below Task Timeline – Week Drafting and Polishing Introduction Week 1 Drafting research objectives and the research questions. Week 1 Review of literature Week 2 Drafting and polishing the methodology part Week 3 Preparing guidelines for questionnaires and interviews Week 3 Preparing and sending letter of request Week 4 Conducting interviews and administering questionnaires to relevant persons Week 5-6 Completing data collection Week 6 Analysis of collected data Week 7-8 Preparation and presentation of report Week 9-10 Task Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Week 7 Week 8 Week 9 Week 10 Drafting and Polishing Introduction Drafting research objectives and the research questions. Review of literature Drafting and polishing the methodology part Preparing guidelines for questionnaires and interviews Preparing and sending letter of request Conducting interviews and administering questionnaires to relevant persons Completing data collection Analysis of collected data Preparation and presentation of report Bibliography Bajpai, N. (2011). Business research methods. Delhi: Pearson. Inyang, B. (2013). Defining the Role Engagement of Small and Medium-Sized Enterprises (SMEs) in Corporate Social Responsibility (CSR). IBR, 6(5), pp.123-132. Inyang, B., Awa, H. and Enuoh, R. (2011). CSR-HRM Nexus: Defining the Role Engagement of the Human Resources Professionals. The Special Issue on Contemporary Issues in Business and Economics, 2(5), pp.118-126. Jo, H. and Harjoto, M. (2011). Corporate Governance and Firm Value: The Impact of Corporate Social Responsibility. J Bus Ethics, 103(3), pp.351-383. Kumari, N. (2014). Business Ethics and Corporate Social Responsibility: A Holistic Approach. British Journal of Business and Management Research, [online] 1(2), pp.22-30. Available at: http://www.gbjournals.org. Lu, C., Lin, C. and Tu, C. (2009). Corporate social responsibility and organizational performance in container shipping. International Journal of Logistics Research and Applications, 12(2), pp.119-132. Osisioma, H., Nzewi, H., and Paul, N. (2015). Corporate Social Responsibility and Performance of Selected Firms in Nigeria. International Journal of Research in Business Management (IMPACT: IJRBM), [online] 3(3), pp.57-68. Available at: http://www.impactjournals.us [Accessed 23 Mar. 2016]. Ozuem, W., Howell, K. and Lancaster, G. (2014). Corporate social responsibility: towards a context-specific perspective in developing countries. Social Responsibility Journal, 10(3), pp.399-415. Peloza, J., and Shang, J. (2010). How can corporate social responsibility activities create value for stakeholders? A systematic review. J. of the Acad. Mark. Sci., 39(1), pp.117-135. Saunders, M. and Tosey, P. (2014). The Layers of Research Design. Rapport, [online pdf] 2(4), pp.58-59. Saunders, M., Lewis, P. and Thornhill, A. (2012). Research methods for business students. Harlow, England: Prentice Hall. Valmohammadi, C. (2014). Impact of corporate social responsibility practices on organizational performance: an ISO 26000 perspective. Social Responsibility Journal, 10(3), pp.455-479. Zikmund, W. (2010). Business research methods. 4th ed. Mason, OH: Thomson/South-Western. Appendix 1. Questionnaire/ Interview Guide Questionnaire: Please answer all the questions to the best of your knowledge. Some questions need Yes or No and some that need some illustration. 1. What is your position in the company? 2. What type of industry do you operate in? 3. How long have you been operating in the industry? 4. Have you ever heard of Corporate Social Responsibility (CSR)? 5. Does your company has a department or management person responsible for CSR activities? 6. How often does your company publish Corporate Social Responsibility or Sustainability reports? 7. Through which channels are the reports accessible to the public? 8. In a nutshell, what are some of the components of the CSR report? 9. Does your company offer training sessions to enhance the understanding of CSR or sustainability? 10. Has there been any change in the operations of the business since the CSR adoption practices in the company? Enlist some of the changes. 11. What are the motivations of the company to participate in CSR initiatives? 12. What are some of the benefits you have realized as an organization/business since the inception of CSR? Thank you for your cooperation Read More