The Benefits of Corporate Social Responsibility Practices - Research Paper Example

Table of Contents Introduction 2 Literature Review 3 Research Objectives 4 Hypotheses 4 Research Design and Methodology 5 Survey Results 6 Analysis 9Bibliography 10 Introduction Corporate Social Responsibility has become an important area because of the increasing business activities both locally and globally. The increasing environmental concerns and globalization together encourage the global providers or large organizations to recognize the benefits of CSR practices. If at one hand, it is argued that large companies have more resources to invest in CSR practices, then at other hand, it is also argued that local companies have more access to implement CSR programs. The aim of this report is to analyze whether local or large corporations are more involved in practicing and encouraging CSR practices. Literature Review Some researchers argue that local corporations are more likely to practice and promote CSR because of governmental pressure, however, some researchers believe in the other way. Small and local companies live in CSR shadow more than large companies and although their practices are not formal however, they have more potential to change CSR landscape (Niblock-Siddle, 2008). Various large and small companies are pursuing CSR practices but the debate on which companies pursue them more actively is still important. According to UN’s Food and Agriculture Organization, World’s Fisheries are under threat therefore, Unilever, the largest buyer of frozen fisheries, with a clear commercial interest to save the fisheries decided not to have fish business without regular supplies. Moreover, the organization is also working with WWF to develop fisheries practices (Aldwinckle & Knight, 2003). On the other hand, small companies face problems such as small mining companies face problems in practicing CSR because of uncertain conditions, lack of government support and infrastructure (Lungu & Shikwe, 2007). It is also believed that regardless of the size of company, the region in which it is operating also matters a lot. The large public corporations which are operating in Europe and North America have more public pressure on corporate behaviour as compared to the large corporations in Asia Pacific. Nevertheless, some of the large corporations in Asia Pacific even being the private firms do have strong localized philanthropic programmes and the local companies which provide supply chain service to these companies also focuses on CSR programs because of the significant pressures from the global corporations (ASOCIO, 2004). Research Objectives This baseline study investigates whether local companies are more likely to practice and promote CSR than large corporations. Following are the main objectives of this research. To determine CSR practices in small and large corporations To determine the areas in which small and large corporations are seeking to bring a change To determine whether local companies are more likely to practice and encourage CSR practices than large corporations To determine the reasons because of which small and large corporations practice CSR programmes Hypotheses Null Hypothesis: Local companies are more likely to practice and promote Corporate Social Responsibility than large companies Alternate Hypothesis: Large companies are more likely to practice and promote Corporate Social Responsibility than local companies Research Design and Methodology A research method has been developed to investigate the involvement of local and large corporations in Corporate Social Responsibility practices. Both the qualitative and quantitative research method techniques have been used to reach on a solid conclusion. Primary data was collected mainly from small and large companies operating in Pakistan. Total ten companies have been selected to conduct the research including five multinational companies and five local companies. The data was collected through questionnaires (Appendix) and total 500 questionnaires were sent to all organizations (50 each). Out of 500, around 409 replied to the questions asked in questionnaires. Secondary data has been collected by reviewing the early literature and the findings drawn from primary data were also supported by the research work of other researchers. Survey Results The survey results presented below are according to the structure of the questionnaire (Appendix). Since total two kinds of companies have been selected for this research including local and large companies, therefore, the survey results will be also presented accordingly. Total 409 replied to questions including 191 from large corporations (47%) and 218 from small corporations (53%). Out of 500 questionnaires sent to 10 companies, 119 individuals from large companies and 218 individuals from local companies responded. It means that the sample size in both groups is large enough to represent the group. Total 76 individuals from large companies (60%) responded that compliance to mandatory legislation is very relevant to their activities however; remaining 76 stated that they are not absolutely compliant to legislation. On the other hand, 87(40%) individuals from small companies stated that they meet mandatory legislations whereas, 128 respondents showed that legislation is fairly relevant to their social and environmental activities and only 3 respondents states that legislation is not relevant to their activities. It means that most respondents from large companies state that they are completely or fairly relevant to legislation. The findings of small companies might indicate that small companies are less compliant to legislation or they are not fully aware of the relevant legislation. When asked about the extent to which the organization meets the non mandatory legislations, it was found that 157 (82%) respondents from large companies stated that their companies pursue non mandatory government recommendations which are ‘very relevant’ to their activities and only 34 answered ‘fairly relevant’. Total 173 (79%) respondents from small companies admitted that non mandatory recommendations of government followed by their companies are ‘very relevant’ to their activities and only 45 answered it as ‘fairly relevant’. When the individuals were asked about the motivational factors which encourage them to accept their responsibility towards the society and environment, it was found that most of the respondents from large companies were motivated by ‘to reach basic value of business’, whereas, most of the respondents from small companies were motivated by ‘cost savings’. None of the companies from large or small companies stated as motives improved by ‘to motivate employees’, ‘to lower risks of organization’ and ‘to get benefits from subsides’. Another interesting finding is that ‘networking’ and ‘legislation’ have been motivating factors for large companies and no for small companies. It might indicate that corporate social responsibility requires huge investments and the larger companies are in a better position to invest in CSR activities. When asked about the benefits which these companies provide to local communities, most of the respondents from large companies (151) ranked ‘minimize environmental concerns’ followed by ‘provide investment and employment opportunities’. On the other hand, most of the respondents from small companies (162) ranked ‘provide investment and employment opportunities’ at highest position followed by ‘minimize environmental concerns’. It might be because small companies have operations at very limited level therefore, they benefit the local communities by providing local opportunities. On the other hand, large companies operating and manufacturing at large level, impact the environment directly. When asked the respondents how they consider their voluntary activities, most of the respondents (135) from large organizations stated ‘central part of operations’ followed by (38) ‘good to have’ and (18) ‘additional benefit to their organization’. On the other hand, most of the respondents from local companies stated (183) ‘central part of operations’ followed by (35) ‘additional benefits’. It means none of the representative from any company considers voluntary activities as a reason of pressure. In this question, I can see a limitation that it might be because none of the employee wanted to highlight the focus of his company as a reaction to pressure. However, from the findings, it is evident that companies are highly focusing on CSR activities and both respondents from large companies and small companies consider them as a part of their operational activities. Since many of the respondents believe that it is an additional benefit therefore, this answer again gives an optimistic opinion of the companies towards CSR practices, regardless of their size. When asked the respondents about the areas which they focusing upon through their CSR activities, 69 respondents from large companies said ‘climatic issues’, 65 respondents said ‘saving wildlife’ and 57 respondents said ‘chemical risks. None of the respondent from large company opted for gender equality or to promote development. On the other hand, 111 respondents from small companies stated ‘promote development of local people’, 54 respondents stated ‘climatic issues’, 53 respondents stated ‘chemical risk’ however, none of the respondents from small companies marked gender equality and saving wildlife. In order to analyze whether companies are actually pursuing and promoting CSR activities, they were asked how they incorporate CSR activities in their regular operations. Another aim of this question was to analyze whether the companies consider CSR activities as built-in activities or bolt-on activities. Most of the respondents from small corporations (213) have incorporated CSR practices into their written statements and 5 stated that they are integrated into specific policies. On the other hand, respondents from large companies (159) stated that CSR practices have been integrated into their strategies and 32 respondents answer that they have been incorporated into defined targets. However, the ways which were more practical and measureable are more pursued by large corporations rather than small corporations. The activities which are primarily promoted by large corporations are at regional and national level. It is evident from the fact that 145 respondents from large corporations highlighted that their activities are promoted at national level and 46 stated them at regional level. On the other hand 178 respondents from local organizations highlighted that their activities are promoted at local level and only 40 argued that their activities are promoted at regional level. It might be because of the reason that small corporations have limited geographical access therefore; their activities are usually promoted at local level. This question was asked to analyze whether the CSR activities are affected by any factor or not. Most respondents of small companies (133) marked dealing with local authorities, poor communication (57) and competition with other companies (28) as the major barriers to their CSR activities. On the other hand, most respondents from large corporations marked local economy issues (107), foreign government policies (46), no openness of local people and dealing with local authorities (38) as barriers to their activities. When asked the companies whether they measure the performance of their CSR programs or not, it was found that all respondents of large corporations agreed that they measure the performance of their CSR programs, whereas, only 139 respondents of small companies argued that they measure the performance of their CSR programs. Total 79 respondents of small companies showed that they do not measure the performance of CSR programs, which mean that they might not be pursuing such programs or they implement them at very small level. Analysis From the survey findings, it has been analyzed that large corporations meet the mandatory legislations and also pursue non mandatory government legislations. Large corporations are motivated by business value to encourage CSR practices and to reduce climatic, wildlife, chemical and other concerns; these companies provide benefits at regional and national level. The only barriers faced by these organizations are the local conditions, authorities and poor communication. Moreover, to promote CSR activities, large companies have made them as an integral part of their operations and incorporated them into strategies and defined targets and they also measure their performance after implementing such practices. On the other hand, small companies also meet mandatory legislations and believe that they also follow non mandatory government legislations. Small companies are more motivated by cost saving encourage CSR practices and they operate at local level to benefit local communities such as development of local people. The barriers faced by local companies include competition, poor communication and dealing with local authorities, however, to incorporate CSR practices into their regular operations, they have incorporated them into their written and specific policies. Moreover, because of lack of resources, less impact on legislation and environment and to keep the costs low, local companies are less likely to practices and promote CSR policies than large corporations. Therefore, it is proved that null hypothesis of this report is wrong and alternate hypothesis is proved, which states that, Large companies are more likely to practice and promote Corporate Social Responsibility than local companies Bibliography Aldwinckle, R., & Knight, P. (2003). An Overview of Unilever’s Approach to Environmental & Social Responsibility. Retrieved May 26, 2010, from Unilever: http://www.unilever.com/images/Global%20Challenges%20Local%20Actions_tcm13-5100.pdf ASOCIO. (2004, June). Corporate Social Responsibility. Retrieved May 26, 2010, from http://www.asocio.org/policy/Corporate%20Social%20Responsibility.pdf Lungu, J., & Shikwe, A. (2007). Corporate Social Responsibility in Small-scale Mining on the Copperbelt. Retrieved May 27, 2010, from http://www.groundwork.org.za/Publications/ZCTU.PDF Niblock-Siddle, K. (2008, August 15). What About? Retrieved May 27, 2010, from http://www.accsr.com.au/pdf/CC34-37.pdf Appendix Questionnaire 1. In which category, would you classify your organization? Local or small corporation Medium sized corporation Large corporation 2. Is mandatory legislation is relevant to your social and environmental activities? Very relevant fairly relevant not relevant not at all relevant can’t say 3. Do you think your organization meets non mandatory government recommendations? Very relevant fairly relevant not relevant not at all relevant can’t say 4. Check the factors below which motivate your organization to accept the responsibility of CSR programs? No. Factors 1 To reach basic value of business 2 To get recognized as an ethical company 3 Benefits from networking 4 Cost savings 5 To contribute in sustainable development 6 To lower the risks for organization 7 To satisfy customers and shareholders 8 To motivate and retail employees 9 To get benefit from public programmes or government subsidies 10 To meet legislation 11 Others 5. What are the benefits, do you think, which you provide to the local communities in which you operate? Minimize environmental concerns Provide investments and employment opportunities Set example Very relevant Fairly relevant Not relevant Not at all relevant Can’t say 6. How do you consider voluntary activities? Central part of operations Additional benefit Good to have Pressure Other 7. What are the important selected issues, you are focusing on through your CSR programs? Climatic issues Chemical risks Gender equality Saving wildlife Promote development of local people\ 8. How do you incorporate CSR into your regular operations? Written statements Communicating verbally to people Specific policies Defining targets and making them a part of strategy 9. What level of community activities do you (primarily) promote? Local Regional National 10. What are the barriers, do you face to social and environmental activities Local economy issues No openness of local people Foreign government policies Poor communication Competition with other companies Dealing with local authorities 11. Do you measure the performance of your CSR programs? Yes No Read More