Bond between Corporate Social Responsibility and Financial Performance in Telecommunication Industry - Research Proposal Example

HЕ IMРАСT АND RЕLАTIОN ОF СSR ОN FINАNСIАL РЕRFОRMАNСЕ: IN СОMРАRЕ НОNG KОNG АND ОTHЕR СОUNTRIЕS ТЕLЕСОMMUNIСАTIОNS INDUSTRY ABSTRACT 3 1.0 CHAPTER 1: INTRODUCTION 4 1.2 Problem statement 5 1.3 Study Objectives 6 1.3.1 Specific objectives 6 1.3.2 Research questions 6 2.0 CHAPTER 2: LITERATURE REVIEW 6 2.1 Theoretical perspective 9 3.0 CHAPTER 3: RESEARCH METHODOLOGIES 10 3.1 Research design 10 3.2 Research Setting 11 3.4 Data Collection 11 3.4.1 Data collection instrument and Procedure 11 3.5 Data Analysis 12 Reference List 13 ABSTRACT Companies have adapted to the initiative of being socially responsible. In the past many companies focused on maximizing profits. However, with the increased development of corporate social responsibility there have been various level headed discussions in view of its advantages. A large number of companies have started realizing the social responsibilities values and its critical aspects to the functions of a business (Fauzi, 2009). This study explores the connection between corporate social responsibility and financial performance of telecommunication industry. This relation and impacts are utilizing a reliable source of information on CSR. The unique focus of this study is on the accounting and market-based measurements of financial performance. 1.0 CHAPTER 1: INTRODUCTION Corporate social responsibility over the years has been studied from diverse perspectives. Some of these include stakeholder, political, integrative, and normative among others. This multifaceted approach has increased the understanding of corporate social responsibility although it is still uncontested concept. Broadly CSR is understood as the action of furthering some social good far beyond the firm’s interest and that which is required by the law. It is also clear that CSR research has been driven by the firms' advantage that is appear in the investigation of the CSR and firms financial accomplishment. The social impact of companies is progressively turning into a huge issue in the business world. The operations and policies made by businesses affect their performance within the non market and market situations. There is a solid argument on whether or not should leaders and managers consider CSR in their decision making process as a way to boost and enhance business performance. Essentially, corporate social responsibility should be designated as a key approach when it comes to decision making where it comprises of social and environmental variables. Consequently, CSR can be surmised as a purposeful incorporation of public interest into a corporate decision making. It is vital to consider the way that organizations do not just have a solitary objective, benefit, but they additionally have objectives of enhancing the social and environmental perspectives in the general public. Corporate social responsibility has been defined as an environmental and social concept cohesive in companies’ business processes and connection with stakeholders on a charitable premise. As per Helg (2007), CSR is an arrangement of standards that a company subscribes into with an aim of making its effects in the society. Moreover, a wide variety has been provided defining the firms’ performance in the literature. All of them are based on market and accounting definitions and have been applied in the research of the connection between firm performance and CSR. 1.2 Problem statement Sustainability has increasingly become a significant sphere for business scholars in the present period because of authoritative issues that business should create value for their stakeholders and meet their social responsibility duties at the same time to maintain a sustainable globe. The empirical analysis on the connection between firm’s financial performance and CSR has yet to offer a substantial link between these two variables. According to Griffin & Mahons (1997) argument, it is clear that some studies are not in the well-being of stakeholders for a business involvement in CSR practice. In addition, the relationship between these two variables could be neutral, negative or positive (Cadbury, 2006). Research has been conducted on the link among CSR and firms financial performance, but does not seem to be conclusive. In addition, scholars in this area seeks to get an understanding on the manner in which socially responsible firm activities can result into the destruction of shareholder’s wealth, and market definitions of firm performance appear prospective and more suitable than accounting descriptions of firm performance in this setting. In regard to this study there is little study on the CSR and financial performance in telecommunication industry. Therefore, the researcher seeks to add on the already existing body of by looking at the degree to which corporate social responsibility adds to money related performance within the telecommunication industry. 1.3 Study Objectives The overall objective of this research will be look at the effects and connection of corporate social responsibility and financial performance in the telecommunication business in Hong Kong and comparing them with that from another in the US. 1.3.1 Specific objectives To explore the kind of CSR events undertaken by the telecommunication companies in Hong Kong and US. To establish the effects of CSR activities on financial performance in Hong Kong and US telecommunication business To examine the connection between CSR and financial performance in the Hong Kong and US telecommunication business 1.3.2 Research questions What types of CSR activities are undertaken by the Hong Kong and US telecommunication business? How do CSR activities affect financial performance in the Hong Kong and US telecommunication business? What is the relationship between CSR and financial performance in the Hong Kong and US telecommunication business? 2.0 CHAPTER 2: LITERATURE REVIEW The CSR concepts that are present today originated in the 1950’s after the social responsibilities of a businessman were written by Bowen. After that the CSR notion started dominating the society –business interface and resulted into the proposition of many theories and approaches (Holme, and Watts, 1999.). In regard to financial performance and CSR available literature comprises of three principal areas; lack of correction between financial performance and CSR, presence of negative correction among CSR and financial results and presence of positive relationship between financial related results and CSR. According to Clarkson (1995), there is a disclosure and presence of positive externalities associated with CSR proposition to respond to stakeholders necessities. It is believed that once the interests of stakeholders are satisfied and firms become accountable to them might result into a positive effect on the entire firm dimension mainly financial performance. On the other hand, positive reputation in most cases has been linked to financial returns where CSR initiatives can result into reputation advantage as reactions on capital markets would improve organization’s financial performance. There is another idea from a second team of scholars who trust that there is no current connection between CSR and monetary accomplishment. According to McWilliams & Siegel 2000 neutral aspects may imply that numerous variables among social and financial performance makes this connection coincidental. Moreover, those firms that supply corporate social responsibility products have a diverse demand curve compared to those firms that do not have CSR. According to Ullmann (1985), there is no unmistakable propensity that can be documented in social performance, data and financial results. Theory inadequacy can be termed as the main reason behind this where important issues are not only based on social performance, but data on social performance has been analyzed by only a few studies. The notion of a undesirable connection among CSR and monetary performance depends on exact commitments and studies that attention on managerial advantage theories. The argument behind this notion is that a manager can lower investment on corporate social responsibility and increase short tem profitability. Another group of authors suggests that there is an existence of opposite trend to the similar phenomena where it is assumed that companies that have a responsible behavior are prone to have an aggressive inconvenience since they have unnecessary expense. Experimental studies on CSR and budgetary related performance contain fundamentally two kinds. The first one is based on event methodology in assessing the short term financial effects once firms are engaged in either irresponsible or responsible social activities. In another kind of research the investigation is on the connection between specific measures of corporates social accomplishment and long haul budgetary performance with bookkeeping and financial related measures of productivity. This area has received extensive study where mixed results have been obtained, For instance in an empirical study directed between 1972 up to 2001. In a report by Margolis 2001, CSR when perceived as an autonomous variable it holds on a positive rapport to monetary development. In general, once the experimental writing surveys the association between the budgetary execution and social duty. The assumption is dependably on the fact that the proof is blended. Determining strong hold of CSR has been a troublesome assignment in that there is diminutive convention on the kind of measurement to use whereby in most cases subjective indicators are applied (McWilliams, & Siegel, 2000). Market measures, accounting measures, and a combination of the two aspects have been used in this process. There are diverse theoretical implications from these two measures and each is subjective to certain biases. Additionally, it is critical to note that the utilization of various measures complicates the consequences of various studies. In accordance with past researches, the study embraces the procedures of social accomplishment on community basis, representative and environmental performance touching on aspects such as policies, and management systems and finally social measures. 2.1 Theoretical perspective In order to increase knowledge on this are of CSR it is crucial to draw focus on the theories underlined in this area. The most crucial one is the stake holder theory. This hypothesis has been depicted by Edward Freeman and others. It acts as a mirror picture of corporate social responsibility .Stakeholder hypothesis begins on the world as opposed to listing and depicting people and groups that influences and are influenced by organization's functions. The concerns are based on the kind of legitimate business claims, the rights that the society has in respect to the actions of the company, and the kind of accountabilities and duties that they can defensibly impose on a precise business (Donaldson, and Preston, 1995). In general, the theory affirms that those whose actions and lives are affected by a corporation have the obligation and right to take part in leading it. For instance, once a company produces waste a CSR standpoint a direct responsibility to the factory owners to make sure that the waste e is disposed safely. In a contrast, the stakeholders theorists begins with the people living around and who are likely to find their surroundings polluted, and begins to undertaking concerning a business morals by stressing that they hold a privilege to clean air and water. This makes them stakeholders in the organization and their voices ought to add to the business decisions. It is obvious that they could conceivably posses any shares; however have an ethical case to partake in the basic decision process (Donaldson, and Preston, 1995). This is a crucial point and in theoretical form those affected by the actions of a company actually translates to something like shareholders now that they are retouched by a company’s actions and hold a right take part in managing it which may affect the financial performance of the company as well. 3.0 CHAPTER 3: RESEARCH METHODOLOGIES In this section the methodology to be connected in the study is portrayed. The study design research setting, data collection, data collection instrument and procedure, data analysis is described. 3.1 Research design A research design framework refers to a blue print for conducting a research. It offers a clear plan on how a research will be undertaken and helps the research to stick to the plan. This study will adopt a correlational descriptive design (Calder, Phillips, and Tybout, 1981). This form of design explains a phenomena as they occur and are used in a descriptive design acquire data of a certain problem or issue .on the other hand correlation studies seeks to establish a relationships between various variables. In this a correlation relationship is being sought on the impact and relation of CSR to financial performance. The target population will comprise of 4 telecommunications companies 3 in Hong Kong and 1 from the 1 US. Complete data will be assessed on CSR and financial reports. 3.2 Research Setting The study will be conducted on PCCW, Smartone, HKT and AT&T Inc. which are telecommunication companies from the US and Hong Kong. These companies are chosen because they are involved in CSR activities and correlation will be one to get a clear picture of the connection concerning CSR and their financial performance. Data collected will depend on the CSR and financial reports from these companies. 3.4 Data Collection In this case both qualitative and quantitate data will be collected .Qualitative data is numerical and can be computed mathematically. According to Burns and Grove, quantitative research is an objective and methodical procedure applied in describing and examining cause and effect interaction between variables. There are different scales used in this data such as nominal, ration, and ordinal scale (Sørensen, Sabroe, and Olsen, 1996). The ordinal scale measure for quantitate data categorizes items into different groups and permits ranking of the data as well. For instance a run of the mill ordinal in positioning an arrangement of information is poor, attractive, great, exceptionally god, superb. Qualitative data are is part of the non-numerical and commonly descriptive or nominal in nature. The implication is that the data collected inform of words and sentences will be crucial in explaining aspects based on CSR reports. 3.4.1 Data collection instrument and Procedure The study is aimed at collecting secondary data Based on the CSR report and financial report of 3 Hong Kong telecommunication companies namely PCCW, Smartone and HKT and compared them with that of AT&T Inc. which is a use based telecommunication company. As stated above secondary data will be obtained from CSR report and audited financial report and other relevant publications. This will include information fro companies’ websites within a span of five years (Yin, 1994). In any CSR study it should be noted that correspondence is a urgent parts of social association. On the other hand, the organizations' capacity to go on their activities and goals to the social orders in which they are arranged is recognized as being crucial to the relationship amongst business and society. Consequently, organizations' websites will be utilized disseminating organizations' data. Websites are type of secondary sources of information and holds some diverse inclinations over other data sources for investigation purposes. 3.5 Data Analysis Through the qualitative approach data was labeled and coded in order to recognize the similarities and differences. It is notable that qualitative research data collection procedures needs a lot of time, thus, data was gathered from a small sample of secondary sources (Schulte Nordholt, Hartgers, and Gircour, 2004). The frequency tables will be drawn where data presentation will be done on pie charts bar graphs and diagrams. This approach will enable the researcher to measure engaging characteristics and concepts. In other words, a process refers to the procedures embraced in evaluating verbal or written communications in a methodical manner in order to quantity variables. Reference List Cadbury, A., 2006. Corporate social responsibility. Twenty-First Century Society, 1(1), pp.5-21. Calder, B.J., Phillips, L.W. and Tybout, A.M., 1981. Designing research for application. Journal of consumer research, 8(2), pp.197-207. Clarkson, M.E., 1995. A stakeholder framework for analyzing and evaluating corporate social performance. Academy of management review, 20(1), pp.92-117. Donaldson, T. and Preston, L.E., 1995. The stakeholder theory of the corporation: Concepts, evidence, and implications. Academy of management Review, 20(1), pp.65-91. Fauzi, H 2009, Corporate Social and Financial performance: Empirical evidence from American companies. GMJ, 3, Iss Jan – June 2009. Griffin, J.J. and Mahon, J.F., 1997. The corporate social performance and corporate financial performance debate twenty-five years of incomparable research. Business & Society, 36(1), pp.5-31. Helg, Å., 2007. Corporate social responsibility from a Nigerian perspective.rapport nr.: Organisation. Holme, R. and Watts, P., 1999. Corporate social responsibility. Geneva: World Business Council for Sustainable Development. Margolis, J.D. and Walsh, J.P., 2001. People and profits?: The search for a link between a company's social and financial performance. Psychology Press. McWilliams, A. & Siegel, D. 2000, Corporate Social Responsibility and Financial Performance: correlation or misspecification?Strategic Management Journal, 21(5), 603-9. Schulte Nordholt, E., Hartgers, N. and Gircour, R. 2004, The Dutch virtual census of 2001, Analysis and methodology. Statistics Netherlands, Voorburg/Heerlen. Sørensen, H.T., Sabroe, S. and Olsen, J., 1996. A framework for evaluation of secondary data sources for epidemiological research.International journal of epidemiology, 25(2), pp.435-442. Ullmann, A.A., 1985. Data in search of a theory: A critical examination of the relationships among social performance, social disclosure, and economic performance of US firms. Academy of management review, 10(3), pp.540-557 Yin, R., 1994. Case study research: Design and methods . Beverly Hills. Yin, Robert K. Case study research: Design and methods. Sage publications, 2013. Read More