Importance of Social Responsibility in the Chinese Banking Industry - Research Proposal Example

Marketing Research and Quantitative Methods Contents 3 Rationale and Research Questions 4 Literature Review 6 Economic performance and CSR 6 Roles of banks in corporate social responsibility 7 The significance of CSR system in Chinese banking system 9 Methodology 11 Ethics in Research 14 References 14 Appendix 15 Title Is corporate social responsibility important in Chinese banking industry? Rationale and Research Questions Corporate Social Responsibility (CSR) is defined as the set of responsibilities of the organizations towards the environment around them in their commercial operations. It is based on the idea that every business operation should have consistency in sustainable development of the society around them. CSR recognizes that while corporate growth and business profitability are the most important things in any business, societal equity and environmental protection is also important (Wilson, 2003, pp. 1-5). Chinese economy was subjected to the criticism of being too conservative in nature. But the growth of economy took place after their market oriented reforms performed by the communist government. Chinese industries have always been a subject of widespread criticism due to unethical human resource practices and lack of concern towards the society. China is infamous for sweatshops and environmental pollution issues in their industries. The brand reputation of Chinese products was always relatively low in nature, and their products were often considered as low cost low quality substandard products. The widespread image of Chinese corporate irresponsibility was the key reason behind Chinese CSR development. The purpose of the research is to explore the importance of corporate social responsibility in Chinese banking industry. This paper review literatures on quality management of banking industries and CSR activities. The key CSR related elements, which were analyzed qualitatively from close ended questionnaires, are: Consumers understanding of the complex financial services, risk assessment procedures, ethical standards of the business, and views on the implementation strategies during financial crisis, consumer right protection mechanism and customer complaint management. The key questions that were analyzed in this research are: Importance of corporate social responsibility in Chinese banking industry from consumers perspective CSR initiatives and their relation with brand reputation Transformation processes related to CSR and challenges of the process. This study can help commercial banks to understand the necessary methods that need to be done for the benefit of customers as well as the community. A proper understanding of the CSR framework can help in fulfilling the criterion for CSR and improve the level satisfaction of customers by increasing the brand reputation which results in increasing market share and profit for the industry. Literature Review Economic performance and CSR It was found that many companies have included CSR in their company strategies. Various reasons were given in favor of that. The most specific one was that increased social concern can result in organizational profit. But the issue that was raised was about the firm’s economic performance, and whether to give priority to the issue at the first place. There is evidence that the adoption of CSR can make significant difference to its course of business (Smith and Langford, 2009, pp. 97-109). Good CSR activities may be innovative in nature. Better innovative approaches require extensive out of box thinking which can result in enhance efficiency in production and service delivery (Ambec and Lanoie, 2008, pp. 45-62). Any CSR activity can generate a good image of the company. Previous researches that have been performed were engaged in deducing the relationship between CSR and economic performance. In case of CSR, the seven hypotheses give insight of the effect of economic outcome of an organization investing in socially responsible activities. Category Hypothesis Causality Positive Social Impact Higher CSR, higher EP, and vice versa Available funds Higher EP, higher CSR and vice versa Positive Synergy Higher EP has positive bilateral relationship with higher CSR. Negative Trade-off Higher CSR, Lower EP, and vice versa Managerial opportunism Higher EP, Lower CSR and vice versa Negative Synergy Lower EP results in lower CSR Neutral Supply and Demand No relationship between EP and CSR (Source: Preston and O’Bannon, 1997, pp. 419-429) Roles of banks in corporate social responsibility Commercial banks’ primary services are taking deposits from customers, granting loans and providing other complementary services. No matter of the type of business the bank is performing, they need to be responsible to the customers in a socially responsible way. A socially responsible bank should not only execute legal banking practices, but should also practice proper supervision of transactions required to provide customer confidence on the service offerings. Researchers have mentioned that there exist four regulatory dimensions to fulfill the CSR requirement of any organization. They are- Human Rights issues, Environment management, Operational fairness Consumer complaints handling. In modern day scenario, businesses should address the perceptions, attitudes and beliefs of customers. Changing consumer outlook is always uncertain in nature and handling the changing nature of consumer behavior is not going to be easy. But the organizations must adjust to the changing outlook of the consumers (McEwen, 2008). The key steps to evaluate ethics in product /service management are as follows: 1. Identification of ethical behavior by marketers. 2. Establishment of proper channel to implement particular marketing program with an analysis of products/services. 3. Identification of consequences of marketing practices in terms of ethical aspects 4. Implementation of ethical practices and changing the practices according to the customer feedback In case of banks, internal audit should focus on the strategic, operational and business risks associated with the product/service offerings to the stakeholders. Internal auditing should be consistent with the ethical service offerings. Internal audit should be conducted keeping the focus on five value adding activities. They are: Organizational Alignment Employee expertise Challenges in the work environment Audit risk assessment Other services related to internal audit (Coetzee and Fourie, 2010, pp. 959-968). The significance of CSR system in Chinese banking system World economy is presently changing into a low carbon, reusable and recyclable pattern, where most of the nations are focusing on sustainable development. Corporate CSR activities can result in direct sustainable development. The importances of CSR system in Chinese banking sector, as deduced earlier, are as follows: CSR system is essential for sustainable development in China After economic reform, GDP growth rate of China has increased significantly. But it has paid a great cost of over consumption of energy resources and resulted in environmental pollution. It is true that organizations are the sole responsible bodies for economic development. But on the other hand they should also be responsible to the resources and environmental issues. Many Chinese companies have made significant profit by harming the legitimate rights of their employees and consumers by organizational malpractice and substandard product offerings. The banks are the largest financial institution of any country. If the interest of the consumers is harmed, then they will shift their focus. Thus a socially responsible behavior is expected from them. CSR is an effective way of winning the trust CSR activities are essential elements in winning the trust of the stakeholders. If the banks are focused on fulfilling the objectives of their stakeholders in a better and more beneficial way, then there will be an automatic inclusion of trust, understanding and support of stakeholders. Trust is essential in meeting the business objectives. Thus, banks should go for more value added socially responsible service offerings in their business. CSR system is an important element to safeguard public interest Publics are the people associated with the day to day activities of the business. CSR system can be a standard for fulfilling the corporate responsibilities to the consumers. Business must ensure that it is giving proper and updated information to the customers regarding their business activities. Issues in intervening public interest have always been a key issue in Chinese banks. To prevent this, CSR system should be implemented (Wang et.al, 2010). In the above discussions, it is obvious that CSR system is essential in organizational superiority in terms of both reputation building and stakeholder management. But in the previous researches there was no mention of the exact requirements of the customers expecting from the banks. There are many activities in the broad social activities category. Customers’ preference was also absent in the researches. The challenges regarding the transformation were not analyzed properly. This research will help in finding the exact requirements of the customers and the distinct CSR activities that can make highest profit. Methodology It can be said that for the purpose of successful conduction of the research based assignment, conduction of significant research is very important. The reason behind that importance can be associated with the fact that the market research provides some of the highly relevant data, which can be processed and analyzed using various tools and techniques, so that it empowers the marketer with the highly desired hidden knowledge that is available in the hidden and highly complicating data (Kolb, 2008, p. 12). It is of considerable importance to state that during the course of handling of a research work, both kind of data sources are however, taken into consideration. The reason why secondary data sources are often taken into consideration is because of its ability to shed light on the previous handled research studies and assignments. It is of significant importance to state that in many cases, the previously handled assignments provides significant amount of relevant information in regards to the current research topic. This research study having being focused on qualitative data and interpretive philosophy uses deductive approach to data analysis. Using deductive approach this study primarily takes into account the opinion of customers and presents an analysis based on the data gathered from the interviews as well as from the literature while comparing the two. Researcher’s interpretation is also included to draw conclusion, as during literature review deep insights on the subject matter has been collected which has further assisted in data analysis. Figure: Research Methodology Data Collection Method Structured Interviews In this research, structure interview method is used as a tool for data collection. The questions for interviews are pre-planned. Each interview is an exact replication of the other. It can be carried via different methods such as face to face, telephonic, video calls or using the internet. The interview consists of questionnaires and survey which is answered by the participants, and based on their responses the result is evaluated. Sampling Method Sampling Design Process Sampling design process comprise of various steps like defining the target population, determining the frame of sample, selecting the appropriate kind of a sampling techniques, selecting the right sample size and finally conducting and successfully executing the sampling process. Target population While identifying the target population for the purpose of getting relevant inputs from the respondents in regards to primary research, it can be said that the respondents will mainly comprises of the customers of the banks and the stakeholders who are subjected to the direct influence of the product/ service offering of the banks. Sampling Technique For the purpose of data collection from the respondents, it can be said that the most appropriate sampling method will be the usage of simple random sampling technique. Sample size For appropriate and accurate data collection, 100 customers can be enough to justify the research question. Designing the questionnaire The questionnaires are close ended in nature so that the collected data can be analyzed through data tables and other statistical tools. Ethics in Research The research should be performed in an ethical manner and the fieldwork should be consistent with the interests of the community. While collecting the data, proper ethical approach should be kept in mind. The ethical aspects of the research should be: Commitment to the country The research should be performed with a broader view of the country’s well being. CSR activities of banks can be a great way to transform the economic outlook of the country. Commitment to shareholders The research should ensure that the analyzed data fulfils shareholders’ value and gives an insight to the appropriate risk management procedures. Commitment to customers Research objective must be primarily focused on the customers of the banks. It should be wiser enough to provide recommendations on strengthening development of customer relationship management. Commitment to society The research must be accountable to the societal aspects of the industry. The analyzed data should give a proper view on the responsibility of the banks to the society. Commitment to the environment Finally, the research should ethical enough to support the green economy concept by promoting environmental protection practices. References Ambec, S., & Lanoie, P. (2008). “Does it pay to be Green? A systematic overview”. Academy of Coetzee, P., Fourie, H. (2010). “Perceptions on the role of the internal audit function in respect of risk”. African Journal of Business Management. 3:13. Kolb, B. (2008). Marketing Research: A Practical Approach. California: Sage Publications Inc. Management Perspectives. 23(4). McEwen, W.J. (2008). “When the Going Gets Tough”. The Gallup Management Journal. New York. Preston, L. E., & O’Bannon, D. P. (1997). “The corporate social-financial performance relationship: A typology and analysis”. Business and Society. 36(4). Smith, V., & Langford, P. (2009). “Evaluating the impact of corporate social responsibility programs on consumers”. Journal of Management & Organization. 15(1). Wang, J., et.al. (2010). “Problems and Prospects of CSR System Development in China”. International Journal of Business and Management. Vol. 5, No. 12. Wilson, M. (2003). “Corporate sustainability: what is it and where does it come from?” Ivey Business Journal, 67(4). Appendix 1. Do you think banking organizations should conduct risk assessment of financial products? 2. Do you think frontline staff of banking organizations should well understand complex financial services before offering to customers? 3. Do you feel banking organizations should protect the rights of customers in providing details of financial products? 4. Do you think banking organizations should strengthen business ethics training to staff? 5. Do you think banking organizations should take timely actions to address customers complaints on financial products? 6. Do you think the more meaningful social activities that banking organizations engage in, the more preferences will be given to them? 7. Do you think banking organizations should invite representative customers in meetings before promoting new financial products? 8. Do you think banking organizations should implement strategy for the financial crisis? 9. Do you think banking organizations should set up effective channels for customers to address complaints? 10. Do you think banking organizations should be accountable to their performance? 11. Do you think banking organizations should bring forth programs and policies to enrich wealth knowledge of banking service staff? 12. Do you think banking organizations should comply more than minimum regulations? 13. Do you think banking organizations should engage in community development? 14. Do you think banking organizations should provide lending options to low income individuals and small business? 15. Do you think banking regulators should examine the suitability of advertisements on financial products for social responsibility? Read More