The Adoption of Corporate Social Responsibility in Developing Countries - Dissertation Example

?The adoption of Corporate Social Responsibility in developing countries: A case study of the potential effect of CSR on Corporate Sustainability andStakeholders in Jordan Introduction The obligations of the companies may be legal, ethical or economical towards its stakeholders and the Corporate Social Responsibility may also be discretionary in nature and extend beyond statutes. According to Bruntland (1987), the Sustainable Development is a process “that meets the needs of the present without compromising the needs of future generations to meet their own needs”. The industries and the businesses are the part of the environment or ecosystem like peoples, animals and plants which are interdependent for their growth and survival. Therefore, Corporate Social Responsibility covers not only fairness, transparency and accountability in the running of the business of the company, but also other social issues such as pollution control, proper disposal of industrial wastes and water and effluent treatment on account of environmental threats to the world in the form of ozone depletion, extinction of species caused by the imbalances in the ecosystem and global warming. Aim and plan of the research proposal The paper seeks to study the formulation and adoption of CSR Policies and implementation of CSR Practices by the corporate companies in the country for a sustainable development taking into account the needs present and of the future generations. Objective of the research The objective of the research is to find whether the adoption of CSR policies by the companies in Jordan has enhanced Corporate Sustainability and profitability. Also, the study seeks to gauge the awareness about CSR among the corporate companies and its impacts on the stakeholders’ interest as well as the society and environment. Background of the study CSR is wide in nature which encompasses corporate governance, business and environmental ethics apart from the shareholders’ interest. Corporate Governance CSR should reflect in Corporate governance and form the basis for the same as it refers to the fairness, transparency and accountability in the running of the of the business of the company. Akerstrom (2009, p.4) states “CSR is an extended model of Corporate Governance, to be successful in its CSR program; a company must be successful in its Corporate Governance”. Tarif (2005) underlines the responsibilities of the listed companies with regard to disclosure and transparency, and the various regulations in this connection. Central Bank of Jordan has issued Corporate Governance Code for banks in Jordan which insists on the board’s responsibility for the Bank’s financial statements and the contents of the Annual Report, for their accuracy, and for their completeness as a measure of CSR. Stakeholders’ Interest A corporate company is accountable to the various stakeholders who are affected by its activities apart from the shareholders such as employees, creditors, customers, communities where they exist, NGOs, the government and the world at large. For example, an employee is concerned about fair wages and good working conditions. Similarly, there are specific expectations from the other stakeholders. The CSR is a very comprehensive concept that takes into account the interest of all the stakeholders. Business Ethics Lallatin (2004) states “Perhaps, the first thing that becomes apparent in comparing the ethics standards and the social responsibility principles is that “ethics” are embedded in the social responsibility principles”. It speaks about the corporate citizenship in a moral plane as this is applicable to all the companies as to the individuals. However, following highest standards in accordance with the best practices followed in the industry is important. Sustainable Development The industrial and technological developments over the period of time exerted great pressure on environment and the businesses and industries played a major role in the deterioration of the environment. Air and water pollution and other damages caused to environment have severe impact on the ecosystem which will affect the future generation as well. Unless these adverse impacts are properly addressed with a firm action plan with CSR, the development in the long run is not sustainable. Therefore, pollution control, recycling, renewable energy, conservation of natural resources and the development of environmental friendly processes have to find place in corporate agenda by way of CSR apart from the conventional philanthropy. “To achieve a greener future we need new technologies that can lower the cost of saving the planet,” says OECD Secretary-General Angel Gurria. (OECD) CSR Mechanisms CSR mechanisms adopted by the business and industries varies from company to company, depending upon the size, area of operation, geographical location, the need for particular programs in the communities, professional skills available within the companies and so on. Luck (2011) states that “corporate social responsibility (CSR) in Jordan will be revitalized under a national body recently formed to coordinate the sector. Spearheaded by Al Urdun Al Jadid Research Centre, the National Forum for Social Responsibility was formed last week to promote charitable acts and encourage firms and other institutions to give back to the local community”. CSR programs ranges from education, poverty alleviation to environmental protection or other areas, apart from the CSR obligations arising out of statutes. For example, 'Alwaan' aims to encourage education and community development in Jordan through a development scheme that builds on the facets of experience and human resources. (AMEinfo.com, 2008) Benefits of CSR It has been established that the socially responsible corporate companies are well placed in respect of competition, recruitment of labor, marketing of its products, good rapport with the suppliers, brand value and so on. Brand image is important for customer loyalty. The companies following good CSR practices are not adversely affected by the government regulations, rather benefited by it, as preference will be given to these companies by the local bodies/government in supply of electricity, water, good roads, licenses, etc. This will also reduce absenteeism, improve retention of satisfied employees, increase productivity and thereby profits. It has been found in the surveys that the customers are also willing to pay more for the products made through environmental friendly processes. Social Investment Forum Foundation (2007, p. 6) states “…socially screened portfolios have provided returns comparable to unscreened peers, with no necessary additional cost in performance… The Dow Jones Sustainability Index (DJSI) World, for example, has outperformed its unscreened benchmark, the MSCI World…last year”. Environment and Future Generation The future generation needs to be saved from the environmental hazards. It is the responsibility of the present generation to preserve the natural resources and to prevent deterioration of the ecosystem. It is therefore, important to minimize the pollution level and bring it to a tolerant level so that the ecosystem can absorb it without strain. Rising to the occasion, the CSR policies of the Jordanian companies reflect their commitments in this respect. For example, it is stated that Taameer Jordan Holdings ensures that its real estate projects are environment friendly and non-polluting to their surrounding natures, without compromising optimal quality. CSR Standards The implementation of CSR standards on voluntary basis worldwide by the corporate companies has been on the rise. These standards such as SA800 issued by the international agencies provide direction to the companies in CSR for adoption and effective implementation of CSR policies and measuring their own performances, as the standard is ISO compatible based on the principles of ILO conventions and applicable to all industries. Likewise, “The UN Global Compact and the OECD Guidelines for Multinational Enterprises (“the OECD Guidelines”) are the world’s foremost comprehensive, voluntary corporate responsibility initiatives. In articulating principles of responsible business conduct, they draw on international standards enjoying widespread consensus”. (OECD, 2005) International Developments The guidelines on various issues such as Annual Reports, Appointment of Directors and AGMs have been issued in various countries. The pressure groups emerging in the modern economies have while encouraging socially responsible companies exert enormous pressure on the companies which fail to acknowledge their responsibilities. Environmentally screened market instruments, for example differentiate the companies with reference to their CSR programs. Since measurable returns on investments in CSR programs are considered meaningful, CSR can’t be approached merely for the advertisement value attached to it. Research Design and Methods The investigation is exploratory in nature to study and analyze CSR in relation to Corporate Sustainability and its impact on the stakeholders. Qualitative research is proposed to be undertaken by interviews and collection of data through questionnaire. This will be supplemented with the research on secondary sources of data for the purpose of analysis in a larger and global perspective. These methods are considered to be appropriate due to the depth of the subject which involves policy decisions at the highest level of the management and on account of the developments taking place in respect of CSR globally. The other methods such as Case Study, In-depth analysis of a single case, Phenomenology based on the structures of experience, Ethnography through field observation of socio-cultural phenomena or Grounded theory from a corpus of data acquired by a participant-observer have limitations, because eliciting views and study of the existing policies, the ideas and future plans of the participants could not be comprehensively covered under these methods. Sampling: Probability sampling method is proposed to be used for the purpose of survey. It is a simple random sampling and sample mean and sample standard deviation will be used for analysis and interpretation of data. For a population size of 150, with confidence interval level of +/- 0.49, sample size of 7 would give 99% Confidence Level in the analysis. There are about 150 companies listed in the Amman Stock Exchange, and it is proposed to cover at least 5 to 6 % of the companies, say 7 or 8 companies of various industries and sizes, and this sample size for a population of 150 is considered reasonable. Data collection Method In-depth interview and questionnaire will be used in the process. This will be supplemented by the data collected from the secondary sources. Interview: This method is open ended with good scope for exploring the ideas, hearing experiences and understanding the view points as it is semi-structured, flexible and interactive. The in-depth interviews will reflect the emerging consensus with regard to the CSR policies, statutory support and the government initiatives, etc. Questionnaire: The questionnaire will be useful in collecting and recording the general information which ranges from personnel and finance employed in the current CSR programs, details of earlier projects and the feedback and the proposed future plan(s), its aims and objectives and financial outlay. The questions would be more or less common and applicable to all the companies. This will also be useful in the assessment of the CSR efforts made by the businesses and industries in the country. Ethical guidelines: Ethical guidelines to be followed in the research is based on The Belmont Report (1979) with three core principles, Respect for persons (ensuring autonomy to the participants and protection from exploitation of their vulnerability), Beneficence (minimizing the risks and maximizing the benefits to participant) and Justice (fair distribution of the risks and benefits resulting from research to the participants with the informed consent of the participants assuring confidentiality that the data would be used only for the research and not for any other purpose. Importance of the Research and its Contribution It is now well accepted that the management of a company is accountable not only to the shareholders but also to the other constituents who are affected by the corporate activities. Corporate sustainability is a business approach that encompasses social, economical and environmental aspects and the stakeholders’ value for a growth without impairing the rights and the needs of the future generations. Colbert & Kurucz (2007) state “Business firms are therefore placing increased emphasis on their ongoing sustainability, which implies a simultaneous focus on economic, social, and environmental performance”, called as triple bottom line in business sustainability. The enormity of the situation the mankind faces today could be gauged by the following news. Chicago Press Release Services (2010) states “Researchers…tested till receipts made from thermal paper which they collected from 22 popular retailers and cafes, and found that half of them were coated with large quantities of BPA…More than 130 studies over the past decade have linked even low levels of BPA to serious health problems, including breast cancer, obesity and early onset of puberty”. It is genuinely expected by the world communities that the industries, predominantly corporate companies responsible for the environmentally unfriendly activities by way of pollution, prodigal use of scarce natural resources and damage to environment should take initiatives to reverse this situation. The research will contribute for the spread of awareness about the utility and benefits of CSR and its role for a sustainable growth of the business in the long run. Research Planning Research planning involves identifying the phases involved in the research, establishing timeline to complete the project and preparing an estimate for the resources required in connection with the research. Key Activities Key activities in the project involves sending request letters to the companies selected on random basis to obtain their consent and cooperation in conducting survey through interviews and questionnaire in the organizations, collection of data and information through interviews, searching relevant data from the secondary sources to supplement the qualitative analysis proposed to be made, interacting with the lecturer at every stage for systematic approach to the research by taking advice and guidance during the progress of the project and finalizing the paper in line with the guidance. Interview structure In the meantime, the structure of the interview is planned based on the data collected from the secondary sources of information. Finalizing the format of the questionnaire, points to be covered in respect of the existing CSR programs, CSR policies of the companies, benefits derived on implementation of CSR programs, future CSR plans, environmental issues, stakeholders’ interest, etc. Secondary Sources of Information Secondary data is data which has been collected by individuals or agencies for various purposes. Secondary data can play an important role in the exploratory phase of the research for firming up the ideas and for defining the research problem. Study and analysis of secondary data improves the researcher's understanding. This will also reduce the cost involved in the research, as the time involved in searching data is comparatively less and these published data could be relied on for accuracy. In the present study, integration of the findings to the international developments is very important to understand the concept in a larger perspective and the secondary sources will be very useful in this regard. Finalization of the paper The structure, content and the presentation style will be finalized in consultation with the lecturer in the light of the data collected, based on his advice and guidance in this regard. Time scale Requirement of time with reference to the Schedule of activities may vary with the estimate in respect of the individual activity. However, by and large the overall time as indicated below may be needed to complete the research. 1. Obtaining consent letter from the companies 15 days 2. Study and taking notes from secondary sources -time under 1 could be used 3. Interview with the company 80 days -@10 days for 8 Companies 4. Compilation of data & references 10 days 5. Review of the work by lecturer/guidance 10 days 6. Completion of the paper (writing work) 20 days Total number of days 135 days If we consider an allowance 15 days for unforeseen delays in securing interviews, feedback and due to any other reason, the project could be comfortably completed in 5 months’ time. Resources required Comparatively, the resources importantly required are mostly non-financial. It is the intangible resources in terms of support required in securing consent from the companies, advice and guidance from the lecturer during the progress and completion of the research, help in facilitating the availability of secondary sources by the institution are considered very important. Conclusion The major issues to be covered in the research are about the dimensions of CSR, and how they are perceived by the companies and the stakeholders. Apart from statutory regulations, the Jordanian Government’s concrete social programs set an example to the industries. CII (2008) states that the Jordan Education Initiative (JEI), an ambitious e-learning project, is helping improve Jordan's educational foundation and establish an Internet-enabled learning model that can be replicated around the globe. The Jordan Education Initiative supports the Jordanian government's vision of building a knowledge-based economy by providing lifelong learning opportunities for all citizens. It is in this backdrop that the research on CSR in Jordan at this juncture is considered crucial in espousing the cause of CSR. References AMIinfo.com, 2008. Alwaan, a new CSR initiative from Abdali opens up a doorway to the disadvantaged youth. [online] Available at: [Accessed 6 January 2011].  Amman Stock Exchange. [online] Available at: [Accessed 6 January 2011].  Akerstrom, A., 2009, Corporate Governance and Social Responsibility, GRIN Publishing GmbH, [online] Available at: [Accessed 6 January 2011]. Brundtland Report, 1987. [online] Available at: [Accessed 7 January 2011]. Chicago Press Release Services, 2010. Study links receipts, cash to cancer and obesity (AFP), [online] Available at: [Accessed 7 January 2011]. Colbert, B. A. & Kurucz, E. C., 2007. Three conceptions of triple bottom line business sustainability and the role for HRM, Entrepreneur, [online] Available at: [Accessed 7 January 2011]. Confederation of Indian Industry (CII), 2008. CSR News, April 2008. [online] Available at: [Accessed 7 January 2011]. Lallatin, C.S., 2004. Business Ethics = Social Responsibility??? 89th Annual International Supply Management Conference, April 2004, guardian.co.uk, [online] Available at: [Accessed 7 January 2011]. Luck, T. 2011. Corporate responsibility umbrella body launched. The Jordan Times, 7 January 2011. [online] Available at: [Accessed 7 January 2011]. OECD, 2005, THE UN GLOBAL COMPACT AND THE OECD GUIDELINES FOR MULTINATIONAL ENTERPRISES: COMPLEMENTARITIES ANDDISTINCTIVE CONTRIBUTIONS, [online] Available at: [Accessed 6 January 2011]. 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