Csr Final.docx

CHAPTER - 1

CSR AND ITS IMPACT ON ORGANIZATION Introduction Corporate Social Responsibility is how business organization activities influences the stakeholder intrest.CSR plays a very important role in organizational performance. Most organizations have embraced corporate social responsibility without substantial increase in organization performance hence the research sought to find out the effect of CSR on organization performance. It’s now recognized that sustainable development and reduction of poverty are the key issues that need to be addressed by the governments, mostly in the developing world. Policy makers are paying much attention to the potential contribution of the private sector to such policy objectives. As the issue of sustainable development becomes more important, CSR becomes an element that addresses these issues and therefore it becomes more vital in the daily operations of financial institution in the banking industry. According to Pranjali (2011)The World Business Council for Sustainable Development (WBCSD) describes CSR as a contribution to sustainable economic 1

development ;It is said that there is no way to avoid paying serious attention to corporate social responsibility: the costs of failing are simply too high. There are countless win opportunities waiting to be discovered: every activity in a firm’s value chain overlaps in some way with social factors, everything from how you buy or procure to how you do your research, yet very few companies have thought about this. The goal is to leverage your company’s unique capabilities in supporting social causes, and improve your competitive context at the same time. The job of today’s leaders is to stop being defensive and start thinking systematically about corporate responsibility according to Michael Porter (2005) who says successful executive or leaders know that CSR is inevitable and their long term success is based on continued good relationship with the society. Corporate social responsibility is applicable to almost all organization but the banks are keener to these programmers as they have to do extra in order to satisfy their multiplicity of stakeholders. According to Nwankwo (1991) he points the advantages of CSR as, maximizing profit to shareholders who are the real owners of the business, maintaining optimal liquidity for 2

depositors, Complying with regulators demand, Satisfying the deficit sector demand for credits, contributing to the development of the economy and Satisfying the needs of the immediate community in which they operate. CSR is being used today to establish good rapport with the public according to Nolan, Norton and Co (2009). It is also used as pre-emption strategy by the corporations to save their skin from unforeseen risks and corporate scandals, possible environmental accidents, governmental rules and regulations, protect eye-catching profits, brand differentiation, and better relationship with employees based on volunteerism terms. Corporations today are much conscious to publish their CSR activities on their websites, sustainability reports and their advertising campaigns in order to get the sympathy of the customer. CSR is also practiced because customers as well as governments today are demanding more ethical behaviors from organizations.

In

response,

corporations

are

volunteering

themselves to incorporate CSR as part of their business strategies, mission statement and values in multiple domains, respecting labor and environmental laws, while taking care of the contradictory interest of various stake holders according to Kashyap et al( 2006). Another justification in favor of CSR actions by the leading 3

corporations today is to gain competitive advantage which may not be enjoyed by the peer corporations. CSR actions in this respect also help corporations to attract and retain not only customers but also motivated employees, which in turn ensure long-term survival of the corporation. Drumright (1996) supported that companies with sound CSR actions developed positive social identity and enjoyed increased loyalty from both customers and employees. CSR actions are also often associated with better financial performance of the organizations. Margolis et al. (2001) has found significant positive relationship between CSR and corporate financial performance; Research has shown that companies that care for the environment and exhibit good CSR practices experience increased consumer purchase preference in addition to increased investment appeal according to Gildea (1994) and Zaman et al (1996). Banks cannot do this alone without involving the community who are the customers. For them to produce relevant services and products, they must carry out a study to get information from their customer on their perceptions towards their business operations particularly their quality of services rendered to increase customer satisfaction and ultimately their loyalty by offering a variety of products according to customers expectation. 4

Identification of problem Corporate social responsibility or CSR, has come in for its share of criticism over the years. Despite being more recognizable, there is no consensus about what CSR is. A common element in most explanations is the design of new business practices that respond to civil society expectations of good corporate citizenship. Rather than fixing the law, CSR proponents seek to reform the corporation from within and thereby raise the standards of corporate conduct beyond what is legally required. Corporate social responsibility is an old idea, with American roots in the writings of the steel magnate Andrew Carnegie. Carnegie believed that the goal of businessmen should be ‘to do well in order to do well. He maintained that it was up to the more fortunate members of society to aid the less fortunate – that the wealthy ought to be stewards of their property, holding their money ‘in trust’ for the rest of society. As trustees they are entitled to do with it only what society deemed legitimate.

5

Today, CSR proponents emphasize that virtuous companies will be rewarded in the marketplace and thus can ‘do well by doing good – an argument widely referred to as ‘the business case’. Despite the human rights risks of not ‘doing good’ today when more business is being done directly or through surrogates (suppliers and subsidiaries) in politically and socially fragile settings throughout the world, CSR remains stubbornly rooted in Carnegie’s vision of the benevolent businessman . CSR gets defined by business managers who cherry-pick the areas of social benefit the company will address. Typically CSR managers, where they exist, struggle mightily to score the financial backing and human resources they need to address the problem. Often the first CSR initiatives adopted by companies are environmental programmes – for example, the reduction of greenhouse gas emissions or packaging. Through these programmes, companies can create efficiencies, help their bottom line and improve brand image all at the same time. These are welcome initiatives. But the problem with an approach that lets business define corporate responsibility is that it is not grounded in a set of principles about what it means to be a responsible business. Ultimately, CSR is 6

whatever companies want it to be – and often, what is most convenient. All too often, companies use CSR programs to deflect attention from socially irresponsible practices in their core operations. In a 2008 article, Conrad MacKerron, of the shareholder advocacy group As You Sow, identified the problems of discretionary CSR in the practices of the American retail giant Walmart. He argued that Walmart’s environmental initiatives to reduce waste and improve energy efficiency among its vast network of Chinese suppliers not only ignored, but also came at a cost to workplace health and safety in those factories. These initiatives are expensive: to pressure suppliers to ‘go solar’ or clean up wastewater discharge, all while making low-priced goods for US consumers, is not possible without cutting corners on worker pay and safety. MacKerron also noted an overlooked aspect of Walmart’s green agenda: Chinese makers of those very solar panels were reportedly dumping silicon tetrachloride, a highly toxic byproduct of polysilicon manufacturing, directly onto fields in Henan Province.

7

CSR advocates agree that a ‘business decides’ approach to corporate responsibility is problematic. But, they counter, companies that practice CSR do operate under constraints, since they must do what the public expects of them. The concept of CSR rests on the idea that businesses operate with a social contract granted by society. Fulfilling that contract requires businesses to respond not only to their shareholders, but also more generally to civil society. Companies that do not behave responsibly in relation to civil society demands risk losing their ‘social licence to operate’. Civil regulation, however, often takes place haphazardly in ways that favour consumers with purchasing power at the expense of politically and economically marginalized members of society. As Katherine Trebeck notes, even in a reasonably well-functioning participatory democracy with a strong civil rights tradition and the capacity to protest safely, citizen regulation is hard to achieve. Apathy or indifference can lead to vocal minorities dominating the decision-making process, while others may find that they do not have the time or means to participate. CSR is dependent upon oversight of business by society. Yet society alone is not capable of articulating the full range of 8

protections its members need; hence, business is free to decide whether or not to devote resources to prevent harm and, to take it a step further, exercise its influence and capabilities to protect the rights of workers and communities. There is little incentive to do so if business finds it too difficult or if there is little payoff in the marketplace. For these reasons, human rights advocates have found that CSR is not up to the task of preventing harm to people. Out of this dissatisfaction, the business and human rights (BHR) movement emerged. It has worked to shift the focus from the ‘needs’ to the ‘rights' of the affected community, and from acts of charity by businesses, towards full accountability in international law. The BHR movement distinctively claims that international human rights law provides a hard legal benchmark against which companies can be judged and in accordance with which they must act, regardless of whether it is convenient, profitable, or will improve the company’s reputation. Others are skeptical of this approach, questioning the motives of corporate participants, who join MSIs in the first place to deter regulation, not advance it. Some concentrate their efforts on getting intergovernmental organizations and governments to 9

create binding rules that hold companies accountable, while others push for innovations in international human rights law in the form of a business and human rights treaty that would explicitly make corporations subject to it. And yet all within the BHR movement can agree that the standard of conduct must be based on international human rights, and that some form of coercion is necessary to deal with corporate laggards that violate those rights with impunity. In short, corporate compliance with human rights standards must be an end in itself rather than a path to making more profit. The late Milton Friedman’s famous 1970 New York Times editorial, “The Social Responsibility of Business is to Increase its Profits”, is best known for the articulation of the libertarian economist’s doctrine that “the business of business is business”. There is a lot to disagree with in the article. But one line still rings true: "...in practice the doctrine of social responsibility is frequently a cloak for actions that are justified on other grounds rather than a reason for those actions.” There is nothing wrong with making money, but there is when it harms people in the process and, worse, is camouflaged by the ‘cloak’ of CSR 10

In spite of the existing of some literature about the role of corporate social responsibility in the aspects of environment and society, there is a significance gap about how corporate social responsibility improves organization performance due to lack of documented evidence of the benefits hence the researchers focus was to find out the effect of CSR on organization performance based on selected commercial banks as we find out whether these institutions realize any benefits from the much they spend. It also seeks to find out the policies set by the government concerning the CSR activities since CSR has been used by business institutions to evade tax in terms of paying less towards tax as tax is free of CSR activities organization indulge in 1) To investigate the effect of Philanthropic CSR activities on organizational performance 2) To investigate the effect of Ethical CSR activities on organizational performance. 3) To investigate the effect of Environmental focused CSR activities on organizational performance. 4) To investigate the effect of government policy and priority on organization performance.

11

CHAPTER - 2 REVIEW OF LITERATURE It has been rather difficult to construct a truly representative measure of CSR due to the complexity of the theoretical construct itself and because measurements of a single dimension provide a rather limited perspective with regards to the firm’s performance in the relevant social and environmental domains (Wolfe, 2003). Some authors try to identify the type of CSR strategy that best favours innovation (Sharma and Vredenburg, 1998; Perrine, 2012). Using supply and demand theory as a framework, McWilliams and Siegel (2000) show that the adoption of environmental practices, going beyond legal requirements, may promote investments in research and development, which in turn can produce both process and product innovations. By using a case study methodology, MacGregor and Fontrodona (2008) analyze the CS Renovation relationship for companies from Spain, Italy and the UK. They attempt to study this relationship in both directions, that is, whether CSR influences innovation and vice versa. Their findings underscore that CSR-driven innovation is aimed at products and 12

services that have some sort of social purpose, while innovationdriven CSR may be more aligned with creating social processes and is driven by value. Therefore, we extend these studies to CSR to analyse if strategic CSR has a positive effect on its propensity to innovate. Thus, we hypothesis: 1. There is a positive relationship between CSR and organizational innovation The impact of CSR on economic performance has received considerable attention in the literature over the past three decades. There is generally expected to be a positive relationship between CSR and financial performance according to both stakeholder theory and agency theory. The instrumental stakeholder theory (Donaldson and Preston, 1995) argues that good management implies positive relationships with key stakeholders, which, in turn, improve financial performance (Freeman, 1984; Waddock and Graves, 1997). The basic assumption behind this theory is that CSR may be an organizational device that leads to more effective use of resources (Orlitzky et al., 2003), which then has a positive impact on corporate financial performance (CFP).

13

2. There is a positive relationship between CSR and firm performance Regarding the link between CSR and innovation, Devinney et al. (2008) considers it as an additional area within the relationship between CSR and corporate performance, which has been widely studied in the previous literature (e.g. Ingram and Frazier, 1980; Aupperle et al., 1985; Waddock and Graves, 1997; Preston and O’Bannon, 1997) without a global consensus having been reached. This lack of concurrence may be due to the existence of many variables that influence corporate performance, making it difficult to determine the impact of CSR practices effectively. As Surroca et al. (2010) demonstrate that intangible resources, including innovation, might be a missing link to explain relationships between CSR and financial performance. Despite recognition of the importance of CSR, Lockett et al. (2006) affirm that we remain in a “continuing state of emergence” as far as theoretical approaches and methods are concerned. Innovation heralds the introduction of new products and processes that, if embraced by the market, will enhance firm’s performance.

14

As firms work to recognize, manage, and reduce environmental impacts, they potentially reap competitive advantages (Hart, 1995; Porter and Van der Linde, 1995; Russo and Fouts, 1997), captured in the form of enhanced innovation. Nidumolu et al. (2009) even state explicitly that CSR and sustainability are ‘‘key drivers for innovation”. 3. Organizational innovation mediates the relationship between CRS and firm performance The set of relations is illustrated in Figure 1.

15

CHAPTER - 3 METHODOLOGY 1. DATA COLLECTION AND SAMPLE The target population of our study is SMEs from the Region of Murcia (Spain). Currently, SMEs represent around 99% of the total number in the country. Data collection was conducted following two phases. First, a pilot study was performed and, following that, a questionnaire was conducted. Five SMEs were randomly selected from a database to perform the pilot study. Based on these responses and subsequent interviews with participants in the pretest, minor modifications were made to the questionnaire for the next phase of data collection. Responses from these five pilot study firms were not included in the final sample. To ensure a minimum firm complexity in which corporate social responsibility practices may be relevant, only firms with more than 20 employees were considered for the questionnaire phase. Thus, the population considered consisted of all Spanish enterprises, with more than 20 employees, located in the southeast of the country which have their primary business activity in one of the following 16

business activities: manufacturing, commercial, services and construction (see Table 1). A total of 2,558 were identified and contacted for participation. The survey was administered to the CEO of the companies via personal interview and the unit of analysis for this study was the company. In total, 550 valid questionnaires were obtained, yielding a response rate of 21.50 percent. The dataset was examined for potential bias in terms of non-response by comparing the characteristics of early and late participants in the sample. These comparisons did not reveal significant differences in terms of general characteristics and model variables, suggesting that non-response did not cause any survey bias.

17

2. MEASURES Measurement items were introduced on the basis of a careful literature review. Constructs and associated indicators in the measurement model are listed in the Appendix and discussed below. To facilitate cumulative research, operationalizations tested by previous studies were used. 3. COMMON METHOD VARIANCE MEASURES We used Structural Equation Modelling (SEM) for measurement validation and testing the structural model. SEM is particularly useful for testing complex models and when researchers need to incorporate latent variables. More specifically, we opted to use SEM based on Partial Least Squares (PLS) approach because the variance-based PLS method is preferable to the covariance-based for exploratory or early-stage theory testing models (Barroso et al., 2010; Petter et al., 2007). Since we collected both independent and dependent variables simultaneously from the same respondents, common method variance could be a concern in this study. The extent of common method bias was assessed by using four different methods. First, the Harman’s one factor test was used by entering all the indicators into a principal components factor analysis (Podsakoff and Organ 1986). Evidence for common 18

method bias exists when a general factor accounts for the majority of the covariance among all factors. With all indicators entered, 9 factors were extracted. The variance explained ranged from 9.50% to 5.17%), indicating no substantial common method bias. Second, a partial correlation method was used (Podsakoff and Organ 1986). The highest factor from the principal component factor analysis was added to the Partial Least Square (PLS) model as a control variable on all dependent variables. According to Podsakoff and Organ, this factor is assumed to “contain the best approximation of the common method variance if is a general factor on which all variables load” (Podsakoff and Organ 1986: 536). This factor did not produce a significant change in variance explained in any of the three dependent variables, again suggesting no substantial common method bias. Third, we used Lindell and Whitney’s (2001) method, which employs a theoretically unrelated construct (marker variable) to adjust the correlations among the principal constructs.

E-business use was used as the marker variable (Soto-Acosta and Meroño-Cerdan, 2008). Any high correlation among any of the items of the study’s principal constructs and E-business use would be an indication of common method bias, as e-business use is 19

weakly related to the study’s principal constructs. Since the average correlation among diversity and the principal constructs was r=0.09, this test showed no evidence of common method bias. Fourth, the correlation matrix (table 2) did not indicate any highly correlated variables, while evidence of common method bias usually results in extremely high correlations (r>0.90) (Bagozzi et al. 1991). In summary, these tests suggest that common method bias is not a serious threat in our study. Table 2 also provides an overview of the means, standard deviations and correlations of the constructs.

20

4. INSTRUMENT VALIDATION The measures from the dataset were refined by assessing their unidimensionality and reliability. First, an initial exploration of unidimensionality was made using principal component factor analyses. In each analysis, given values was greater than 1, lending preliminary support to a claim of unidimensionality in the constructs. Next, the reliability and validity of the measurement model were verified (Barclay et al. 1995). Convergent validity of the scales is contingent on the fulfillment of three criteria (Fornell and Larker 1981; Hair et al. 1998): (1) all indicator loadings should exceed 0.65 (2) Composite Reliabilities (CR) should exceed 0.8; and (3) the average variance extracted (AVE) for each construct should exceed 0.5. As table 3 shows, all the indicator loadings are above the recommended threshold, the CR values range from 0.84 to 0.96, and the AVE ranges from 0.56 to 0.93. All three conditions for convergent validity thus hold. To evaluate discriminant validity, Fornell and Larker (1981) suggest that the square root of the AVE of a latent variable should be greater that the correlations between the rest of the latent variables. As table2 shows, discriminant validity holds for the model, as the square root of the AVE for each construct is greater 21

than the squared correlations between pairs of constructs. Furthermore, the Cronbach’s alpha values of all indicators should exceed the recommended value of 0.6 (Nunnally, 1967) and all our measurement items noted in table 3 exceed 0.6. Thus, overall measurement items have adequate item reliability.

This study measures corporate social responsibility as a single construct made up of five dimensions: CSR with suppliers, CSR with 22

customers, CSR with employees, CSR with the local community and Environmental responsibility. As presented in table 4, the four dimensions reflect the higher-order construct. Similarly, firm performance was operationalized as a second-order construct consisting of three dimensions (see table 5): financial performance, customer relations performance and human relations performance (Quinn and Rohrbaugh, 1983).

23

4. Methods The study applied a cross-sectional research technique to collect primary data on 50 selected RCBs in the 10 regions of Ghana. We selected and focused on RCBs known to engage in CSR in their communities. The study population was employees of the selected RCBs. Employees selected were those who had worked in the selected RCBs for at least 2 years. We selected employees who had worked in the banks for at least 2 years to ensure that participants had been exposed to a considerable period of CSR. Of course, assessment of the effect of CSR on employees requires employees’ exposure to CSR for a considerable period. We used top management members because these employees had in-depth knowledge on CSR for employees and better satisfied the selection 24

criterion. Three employees each were selected from 50 RCBs making a convenient sample of 150 employees. The employees were selected based on satisfaction of the criterion identified above. In all, two variables were measured in this study. The independent variable (IV) is CSR practice for employees (i.e. CSR-employees) and the

dependent

variable

(DV)

is

Employee

Organizational

Commitment. The control variables are gender, educational level and work experience. Employee Organizational Commitment was measured using items borrowed from the study of Adekola (2012 Adekola, B. (2012). The impact of organisational commitment on job

satisfaction:

A

study

of

employees

at

Nigerian

universities. International Journal of Human Resource Studies, ISSN, 2, 2162–3058. CSR activities for employees were measured using items borrowed from the study of Khan and Jan (2015 Khan, A. S., & Jan, F. (2015). The study of organization commitment and job satisfaction among hospital nurses; A survey of district hospitals of Dera Ismail Khan. Global Journal of Management and Business Research: Administration and Management, 15, 17–28. The control variables were measured by assigning values to their 25

levels as follows: Gender—Male (1); Female (2); Educational level— Basic/secondary (1); Diploma (2); Degree (3); Master’s degree (4); PhD or higher (5); Work experience—Up to 2 years (1); 2–4 years (2); 5–7 years (3); 8–10 years (4); and above 10 years (5). CSR-employees and OC were measured using a Likert scale which allowed the participants to respond on a scale of 1–5 in indicating their extent of agreement or disagreement to each CSR activity or item. The scale of the Likert scale includes: 1 = strongly disagree; 2 = disagree; 3 = not sure; 4 = agree; and 5 = strongly agree. In coding however, not surewas corresponded to 0, since it represents neutrality and uncertainty. Out of 150 questionnaires sent out, 145 were retrieved and deemed duly completed, representing a 97% response rate. Descriptive statistics (including skewness and kurtosis) was used to check data for outliers and then dependent variable was tested for data normality (see results in Table 3 and Figure 1). A confirmation of data normality made it possible to use the parametric statistical tools, precisely ordinary least square regression analysis.

26

CHAPTER - 4 ANALYSIS In this section, data are analysed to address the research hypotheses. Firstly, PCA is used to explore the first hypothesis. Theoretically, the validity of results of the PCA is based on various statistical indicators nested in the PCA. The first of these indicators is the correlation coefficients formed by each pair of the indicator variables. The rule of thumb is that a high number of these coefficients

must

be

greater

than

.3

(Ringnér, 2008

Ringnér, M. (2008). What is principal component analysis? Nature Biotechnology; Suhr, 1999Suhr, D. D. (1999). Principal component analysis vs. exploratory factor analysis (Paper 203–230, pp. 1– 11). Greeley: University of Northern Colorado. In other words, no pair or just a few pairs of indicator variables should have a correlation coefficient less than .3. In Appendix Table A1, this requirement is met. It is therefore more likely that the PCA is sufficiently valid and would therefore give rise to valid principal components. However, the validity of the PCA depends on the results of other diagnostic tests. 27

The value corresponding to the Kaiser-Meyer-Olkin Measure of Sampling Adequacy (MSA) is required to be greater than 50 (Suhr, 1999 Suhr, D. D. (1999). Principal component analysis vs. exploratory

factor

analysis (Paper

203–230,

pp. 1–

11). Greeley: University of Northern Colorado, whereas higher values are better (Ringnér, 2008 Ringnér, M. (2008). What is principal component analysis? Nature Biotechnology, Suhr, 1999 Suhr, D. D. (1999). Principal component analysis vs. exploratory factor analysis (Paper 203–230, pp. 1–11). Greeley: University of Northern Colorado. Moreover, the Bartlett’s Test of Sphericity is required to be significant at 5% significance level (Ringnér, 2008 Ringnér, M. (2008). What is principal component analysis? Nature Biotechnology. From Table 1, both requirements are met, further buttressing the validity of the PCA and its resulting principal components. In Appendix Table A2, the MSA value of all variables is represented in the leading diagonals (i.e. values in bold). It can be observed that each of these values is greater than .50, therefore the MSA requirement is satisfied for each indicator variable as well. It is worth saying that the MSA value in Table 1 is for all indicator variables, whereas those in Appendix Table A2 are for the individual indicator variables. 28

Based on statistical evidences produced in Appendix Table A1, Table 1 and Appendix Table A2, the PCA is sufficiently valid and would therefore produce valid principal components. In Appendix Table A3, communalities of all indicator variables are shown. Generally, the size of the communalities or extraction values is the basis for removing indicator variables from an iteration of the PCA. An indicator variable is removed when its communality is less than .5 (Suhr, 1999 Suhr, D. D. (1999). Principal component analysis vs. exploratory

factor

analysis (Paper

203–230,

pp. 1–

11). Greeley: University of Northern Colorado. In the first iteration of this analysis, none of the variables has a communality value less than .50. This result suggests that all indicator variables of CSRemployees and EC are retained in the PCA. In Appendix Table A5, the first component includes a majority of the indicator variables of CSR-employees and EC (i.e. CSR3, CSR4 … EC7). This means that the first component represents highly correlated variables of both CSR-employees and EC. This is the first ultimate statistical evidence of the relationship between CSRemployees and EC. The second component is made up of only one indicator variable of EC (i.e. EC8), whereas the third component is 29

constituted by the first two indicator variables of CSR-employees (i.e. CRS1, and CSR2). The fourth component is made up of only one indicator variable of CSR-employees (i.e. CSR11). With reference to Appendix Tables A4 and A5, it could be observed that a greater part of the total variation explained is accounted for by the first component. This evidence can be verified from Appendix Table A5 and is indicated by the fact that all indicator variables are strongly positively related to Component 1 (see component loadings formed by component 1 and indicator variables in Appendix Table A5). Moreover, against components 2, 3 and 4, each indicator variable is relatively weakly related (see Appendix Table A5). The strongest evidence regarding the positive relationship between CSR-employees and EC is shown in Table 2. In this table, the first component is positively related to the second component (R = .601), third component (R = .630), and fourth (R = .328). Moreover, components 2 and 3 are positively correlated (R = .533), likewise components 2 and 4 (R = .362). Components 3 and 4 are also positively correlated (R = .457). It is therefore evident that components formed by indicator variables of both CSR-employees and EC are positively correlated. The first null 30

hypothesis is therefore not confirmed. The alternative hypothesis is therefore provisionally accepted. The second null hypothesis is tested using OLS regression analysis as follows. Yet before looking at the results of the OLS regression analysis, there is a need to ensure that the data came from a normally distributed population. The first test, Kolmogorov–Smirnov, is only applicable for large samples of at least 2,000 cases. Considering the fact that the sample size of this study is less than 2,000, we would focus on the second test, Shapiro–Wilk. This test is based on the 5% significance level. It can be seen that the p-value of the Shapiro–Wilk test is less than the chosen level of significance (p < .05), suggesting that data did not come from a normally distributed population. But the deviation from normality is not serious, considering the Box Plot of Figure 1. Moreover some researchers (e.g. Sawilowsky, 2005 Sawilowsky, S. S. (2005). Misconceptions leading to choosing the t test over the Wilcoxon Mann-Whitney test for shift in location parameter. Journal of Modern Applied Statistical Methods, 4, 598– 600, observed that such moderate deviation from normality is

31

acceptable. We therefore decided to proceed with the test of the second hypothesis using OLS regression analysis. There is a strong positive correlation between CSR-employees and EC (R = .736). Figure 2 shows the line of best-fit associated with the relationship between EC and CSR-employees and EC. It can be observed that this line is a perfect straight line, with a variation of 54.1% explained by CSR-employees confirmed. In Table 4, this total variation explained by the predictor is confirmed; thus CSRemployees explain 54.1% of the variation. The error term of the regression model therefore explains 45.9% of the total variation. It is therefore deemed that our model moderately fitted. In Table 5, the

ANOVA

test

is

significant

at

5%

significance

level

(F = 168.66, p = .000). Significance of ANOVA test is the evidence to the prediction of EC from CSR-employees. In Table 6, CSRemployees significantly predicts EC at 5% significance level (t = 12.99, p = .000, β = .367). In addition, a unit change in CSRemployees changes the conditional mean of EC by .367 within a confidence interval of .311–.423. The relationship between CSRemployees and EC is expressed as follows: EC=.367∗CSR-employees+7.347EC=.367*CSR-employees+7.347 32

The positive coefficient (that is .367) produced in the mathematical model supports the positive correlation between the two variables as seen in Table 4. It is therefore evident that enhancing the level of engagement in CSR activities for employees increases employee commitment. The second null hypothesis is therefore not confirmed and the alternative hypothesis is provisionally accepted. Though CSR (for employees) significantly predicts Employee Commitment in the selected RCBs, there is the need to control for background variables that are likely to influence this relationship between EC and CSR-employees. As stated earlier, controlling for these variables is aimed at eliminating alternative effects on EC. Table 7 shows a model summary of the prediction of EC from CSRemployees. CSR and the three background variables (Gender, Educational Level, and Years of Working in the Bank) account for a 56.1% of the total variation in EC, with a residual variation of 43.9% accounted. In Table 4, CSR alone accounts for 54.1% of the total variation. This means that the three background variables explain just .02% of the total variation. Moreover in Table 8, the Analysis of Variance is significant at 5% significance level [F (4, 131) = 41.86, p = .000], 33

suggesting that EC can be expressed as a linear combination of CSR and the three background variables. CSR-employees significantly predicts EC at 5% significance level (t = 12.62, p = .000, β = .349). Gender also significantly predicts EC at 5% significance level (t = −2.52, p = .000, β = −1.89). Educational level and “Years of working with bank” however fail to predict EC at the same level of significance (p > .05). Though gender significantly predicts EC, the general effect of the background variables on the relationship between CSR-employees and EC is scanty and almost negligible. For instance, with respect to Table 4, the background variables, especially Gender, account for just 5% of the effect of CSR-employees on EC. Yet this small influence of the background variables cannot be totally ruled out, though it is largely contributed by Gender.

34

CHAPTER - 5 FINDINGS In this chapter, findings of the study are presented along with the summary, suggestions and conclusion of the study. The aim of the study was to find out the awareness, practice, strategy, benefits of Corporate Social Responsibility practice and to suggest suitable measures for effective implementation of Corporate Social Responsibility practices by the select services and enterprises, both government and non-government organisations. The study being empirical in character, was based on survey method and information

collected

personally

through

a

structured

questionnaire reinforcing its genuineness by initiating personal interviews. The data collected from executives of the select services and organisations were analysed and the result drawn on some major findings are presented as below: 1.

Most

of

the

executives

in

sectors

where

higher

intellectual/technical skills are required such as Education, Health, Telecom and Financial sector, are more aware of Corporate Social 35

Responsibility

(CSR)

while

those

in

sectors

where

less

knowledge/skills are required, are lesser aware of Corporate Social Responsibility (CSR). 2. Awareness of CSR and, clarity of its meaning are both important for the executives and managers to understand its implications. Sector wise, it reveals that telecom-100 percent, Health-100 percent, Public enterprises-100 percent, 159 Education-92 percent, Financial sector-87 percent and SS Industries-80 percent have higher clarity about CSR while Hospitality-70 percent, Brick farm-67 percent and Private Enterprises-60 percent have lower clarity of CSR. While majority of the executives have the idea of what CSR is, only a few are fully aware and clear about CSR. It is also observed that majority have little idea only while 20 percent are unsure about Corporate Social Responsibility. 3. Profit is important for a business to survive, but profit should not be the sole aim of an enterprise. The present analysis aims to find out the understanding of the executives about the relationship between Corporate Social Responsibility and profitability. It is found that profitability and practice of CSR are positively related as 36

86 percent respondents revealed their positive relationship while only 14 percent have revealed negative relationship. Interestingly, Education service revealed highly negative relationship (33.30 percent) between profitability and CSR, followed by brick farms and health services. 4. Enterprises and service institutions use different strategies for implementation of CSR. Most of the Private Enterprises perform CSR through NGOs, as they do not have large resources whereas big services / enterprises with large resources set up Foundation Trusts for CSR implementation. It came to light that big enterprises/ services have set up separate departments for CSR implementation. 5. Large corporate and Enterprises like financial institutions (65.2 percent), public enterprises (66.7 percent) earmark a certain amount of fund for CSR implementation annually. 86.7 percent of brick firms do not have separate allocation of funds for CSR implementation. Overall, 33 percent of 160 service/enterprises allocate fund for CSR and 67 percent do not have allocation of fund for CSR. 37

6. It is found that 44 percent contribute to Community Investment Initiatives, and 56 percent do not. Conservation of nature (75 percent), youth development (70 percent), games and sports (68 percent) are the most ventured areas. On the other hand, local heritage (30 percent), working for disability (31 percent), and poverty alleviation (32 percent) are the least ventured areas by service/enterprises. 7. Education is the most vital area for community initiatives by services/enterprises as this is the basis for development in all areas. 51 percent service/ organisation are found to have promoted education and 49 percent do not have investment initiatives in the promotion of education. It is observed that all the educational institutions have the facility for subsidised education for the staff children. Financial sector, health and private. trading are also contributing in this regard while hospitality services (71 percent), brick farms (manufacturing 86.7 percent) and telecom services (100 percent) do not invest in education even for its stakeholders.

38

8. 75 percent of service/organisation are found to have investment programme for conservation of nature while 25 percent do not invest in conservation of nature. Telecom and education services 100 percent contributed for the conservation of nature while financial sector (47.80 percent) as well as Private Trading enterprises 40 percent do not contribute/ invest for conservation of natural environment. 9. As a part of community investment initiatives, 42 percent of service/enterprises have investment programme for Infrastructure while 58 percent do not invest in 161 Infrastructure. Financial Institutions 69.6 percent is the highest contributor in this regard while Brick farms 66.7 percent and Public enterprises 66.7 percent invest for the development of infrastructure. Education and Hospitality sector are the lowest/no contributor infrastructure investment. 10. Brick farms are found to have motivated to practice CSR equally due to Image buildings, increase in profits and vision of the firm.

39

11. In health sector, the drivers of CSR are equally shared by legal compliance. Vision and philosophy and rising international standard while increasing profits. Image buildings, increasing awareness and community pressure are also weak drivers of CSR. 12. Image building, vision and philosophy and legal compliance with 33 percent are important CSR drivers for public sector. While profits,

international

standard,

awareness,

increase,

and

community pressure do not influence CSR activities. 13. Telecom sector is found to be mostly influenced by vision and philopshy to undertakes CSR initiatives. The second driver is equally shared by Image building, rising international standard and increasing awareness. 14. Vision and philosophy and image buildings are the main drivers of CSR for Private trading enterprises (non-manufacturing) while international standard and community pressure do not influence CSR initiatives. 15. Manufacturing small scale industries and micro industries are driven highest by philosophy as well as image building (27 percent 40

each). Community pressure does not influence CSR practice except in the health sector (only 10 percent). 16. Money is found to be the most provided resource with 46 percent for CSR practice, 19 percent in kind, 17 percent as loan, 16 percent provide volunteers and 2 percent only provides other types of resources. Among the Service/Enterprises, Private Trading Enterprises provide money with the highest percentage of 80, 67 percent by Public Enterprises and Telecom as well as small scale industries provide money with 60 percent each. With 2 percent, Health Services is the lowest provider of money for CSR practice. Brick Firms provide resources in kind with the highest 60 percent for CSR practice. Health service and Education sector provides volunteers the highest with 60 percent and 50 percent respectively and Financial Institutions provide loan to the needy, with a high of 70 percent.

41

CHAPTER - 6

SUGGESTIONS:

The present chapter presents suggestions to the various services and

business

enterprises

both

governmental

and

non-

governmental organizations to promote better relationships between these services/ enterprises and society in general and the various stakeholders in particular. Corporate Social Responsibility can be classified as those policies, activities, or behaviour undertaken by an organization that goes beyond the traditional economic and legal obligations that the firm has with its target internal and external stakeholders. Corporate social responsibility is more than a business policy or a response to issues raised by society. It is a governing business philosophy. Responding to the ethical obligations must be voluntary in nature and if undertaken effectively should eventually benefit and improve the overall welfare of the community in which the firm operates. The following are the suggestions: 1. Identification of reasons and benefits of practicing Corporate Social Responsibility in different sectors of business can have a 42

scope for further research along with development of company ethics programme, integration of business ethics and ethics training to the staff. 2. A study involving other independent variables such as Corporate Reputation, Organizational Climate, and Sustainability can be undertaken to find out its effect on Corporate Social Responsibility. 3. Further study may focus on identifying and comparing the perception of line managers, staff managers, and employees on Corporate Social Responsibility practices of the company. 4. Future study can look into Corporate Social Responsibility practices and Business performance of product oriented or services oriented companies in Manipur. 5. Identification of programs and policies to enhance Corporate Social Responsibility practices is also a relevant area of research. 6.

Companies

and

organisations

should

integrate

social

entrepreneurship into their core culture by actively channelizing their research and development capabilities in the direction of socially innovative products and services.

43

RECOMMENDATIONS  Recommends in investing much in ethical activities then philanthropic as this will lead to improve in performance  CSR environment has got insignificant impact on organization performance  Recommends further research to check other factors as :  Why environment does not affect bank performance  The research limited itself to 3 aspect of CSR i.e. Ethical, Environmental and Philanthropic, further research should include other factors

44

CHPATER - 7 CONCLUSION Items of employee organizational commitment and CSR-employees are all retained in the Factor Analysis, suggesting that items of the two constructs are significantly related. Moreover, factors formed by the two constructs are significantly positively correlated. The ordinary least squares regression analyses confirm a strong positive relationship between EC and CSR-employees. Results of both the FA and OLS regression analysis therefore confirm the hypothesis that engagement in CSR for employees enhances employees’ organizational commitment. Yet, the relationship between CSRemployees and EC is influenced by the background variable of educational level and years of working with the bank. Thus, the CSR-employees and EC have no relationship when these variables are controlled for. However, the relationship between CSR and EC is still significant when gender is controlled for. It is therefore concluded that CSR-employees makes a significant effect on EC even when gender is controlled for. This relationship is not significant when education and work experience are controlled for. This means that this relationship is based on the effects of 45

education and years of working with the bank. The findings reported in this study have reinforced the argument that CSR generally has a significant influence on employee’s commitment towards his organization. However, the study also indicates that this relationship is premised on some background variables including gender, educational level and years of working. This should inform decision-making regarding the planning and implementation of CSR strategies in organizations. RCBs in particular should integrate CSR strategies with their human resource policies and must acknowledge that having particular concern for the welfare of employees goes a long way to boost the employee’s commitment and by extension, their performance and ultimately the growth of the organization. To boost organizational performance therefore, managements would have to enhance and maximize their engagement in CSR for employees. According to Santoso (2014 Santoso, I. L. (2014). The impact of internal CSR towards employee engagement and affective commitment in XYZ hotel Surabaya. iBuss Management, 2, 79–88, this may demand that managements offer employees better conditions of service, a fair organizational system and a family-oriented organizational environment. 46

REFERENCES 1. Abugre, J. B., & Nyuur, R. B. (2015). Organizations’ commitment to and communication of CSR activities: Insights from Ghana.Social Responsibility Journal, 11, 161–178.10.1108/SRJ-06-2013-0066 2. Adekola, B. (2012). The impact of organisational commitment on job

satisfaction:

A

study

of

employees

at

Nigerian

universities.International Journal of Human Resource Studies, ISSN, 2, 2162–3058. 3. Aguilera, R.

V., Rupp, D.

E., Williams, C.

A.,

& Ganapathi, J. (2007). Putting the S back in corporate social responsibility:

A

multilevel

organizations. Academy

of

theory

of

social

Management

change

in

Review, 32, 836–

863.10.5465/AMR.2007.25275678 4. Albdour, A.

A.,

& Altarawneh, I.

I. (2012). Corporate

social

responsibility and employee engagement in Jordan. International Journal of Business and Management, 7, 80–105. 5. Ali, I., Rehman, K. U., Ali, S. I., Yousaf, J., & Zia, M. (2010). Corporate social responsibility influences, employee commitment and organizational

performance. African

Management, 4, 2796–2801. 47

Journal

of

Business

BIBLIOGRAPHY BOOKS: 1. Organization commitment to and communication of CSR activities by Abugre, J.B., & Nyuur, R.B.(2015) 2. The impact of organizational commitment on job satisfaction by Adekola, B. (2012) 3. Corporate Social Responsibility by Aguilera, R.V. Rupp,D.

WEBSITES: www.google.co.in www.fastcompany.com www.blendermedia.com www.csrwire.com www.csr.gov.in

48