Employees' Perceptions of CSR: A Study Based on Carroll's Pyramid, Exams of Business

Download Employees' Perceptions of CSR: A Study Based on Carroll's Pyramid and more Exams Business in PDF only on Docsity! TAÏP CHÍ PHAÙT TRIEÅN KH&CN, TAÄP 16, SOÁ Q2- 2013 Trang 67 Applying Carroll’s CSR pyramid in studying employees’ perceptions of corporate social responsibility  Lai Van Tai  Le Thi Thanh Xuan  Truong Thi Lan Anh University of Technology, VNU-HCM (Manuscript Received on July 31st, 2013, Manuscript Revised October 04th, 2013) ABSTRACT: The study is to evaluate how employees perceive four types of responsibilities in Carroll’s CSR pyramid (1991), consisting of economic, legal, ethical and philanthropic responsibilities. Moreover, the study also identifies whether there are any differences in employees’ perceptions of CSR in Vietnam from those in other developing countries. Research findings provide some salient points. First, from identified CSR perceptions, business organizations need to change the way to disseminate CSR activities towards their employees. Second, the findings provide more evidences that Carroll’s CSR pyramid (1991) is appropriate, with firm feasibility, to be employed for further CSR studies. Key words: Corporate social responsibility, Carroll, CSR perception, employees’ perception INTRODUCTION As Corporate Social Responsibility (CSR) has become a crucial business issue, it has been taken up by decision-makers in business organizations [10]. Therefore, the concept of CSR, its significance, and its influence on corporate performance, have increasingly considered by both academic scholars and practitioners [5]. CSR practices contribute to create competitive advantages and sustainable development for firms [8, 16, 17]. And, employees are the ones who disseminate these practices to consumers and the public. As a result, employee attachments to corporate performance and to CSR practices as well have an important role in how a corporation succeeds in its operation. Therefore, employees’ of CSR is greatly pivotal. However, most of studies on perceptions of CSR were to investigate those of managers and consumers, but those of employees. Furthermore, one of limitations of these studies is that they have been based on different CSR definitions and frameworks [1]. This study is concerned on how employees understand the concept of CSR and its role to the organizational performance. Employee in this research includes all fulltime labours at the operational levels in the sample company. The aims of this paper are to (1) explore the current perceptions of employees in a service company about CSR; (2) and compare with some previous studies in other countries in Asia which also applied Carroll’s model (1999).The applicability of Carroll’s model (1999) is discussed for a theoretical contribution in CSR study in developing countries. Practical implications from this research are suggested. Eventually, limitations and recommendation for further research are also stated. LITERATURE REVIEW The development in defining CSR The concept of CSR has attracted researchers’ attention for a very long time. However, after 1950s, the literature of CSR is rapidly enriched SCIENCE & TECHNOLOGY DEVELOPMENT, Vol 16, No.Q2- 2013 Trang 68 by many studies in theory and practice as well [4]. Based on papers of Carroll (1999) and Windsor (2001), the study of Xuan and Gregory (2011) provides an overview on how CSR was defined and understood over decades 1950s, 1960s, 1970s, 1980s, 1990s, and 2000s. From this review, Bowen was named as Father of CSR for his first-documented CSR definition in 1953 [4, 24]. In the following decades, there were many publications on how to define CSR. Many of them offered definitions of CSR, while others only mentioned how CSR was understood. Xuan and Gregory make a list of dimensions which are mentioned and explained in CSR definitions. Identified dimensions consist of economic responsibility, legal responsibility, something beyond economic and legal responsibilities, ethical responsibility, philanthropic responsibility, environmental responsibility; business ethics, stakeholder management, and social environment (see Appendix 1). In the paper of Xuan and Gregory (2011), they confirm the comprehensiveness of definition of Carroll (1979). Based on their review on CSR definitions, Carroll (1979)’s CSR definition can integrate all existing aspects and can be explained by all approaches of defining CSR. Although the controversial as to how to define CSR is continuing; up to now, Carroll’s definition is the most-widely accepted and used in academic and practical studies as well[25]. Pyramid of CSR (Carroll 1991) In his 1979-study, Carroll (1979) integrated all relevant aspects of CSR means and articulated a definition to cover the whole responsibilities that business has to respond in order to satisfy stakeholders’ expectations. In 1991, Carroll continued his study and depicted four types, namely economic, legal, ethical and philanthropic responsibilities in a pyramid (see Figure 1). Economic Responsibilities An important duty that a business organization must to comply with is to make and maximize profit in doing business. Nevertheless, Carroll (1979; 1991) also affirmed that all other business duties are predicated on economic responsibility, as without it, all cannot be performed. Legal Responsibilities One crucial requirement of the society on business organization is that they have to run their business on the ground rules – the laws and regulations. In the other words, firms are required to fulfill their economic duties in the legal framework. Moreover, legal and economic responsibilities combine and become fundamental precepts for corporations in doing business. Ethical responsibilities Besides the requirements from the laws, firms are also expected to respond to activities or practices which are not documented into the laws, but expected by the society. Because of not codifying into law, these obligations are not compulsory but they are stakeholders’ concerns and may move to the legal responsibility category at the future time. However, ethical responsibility is more difficult for business to anticipate and follow. Figure 1: The pyramid of Corporate Social Responsibility (Carroll 1991) TAÏP CHÍ PHAÙT TRIEÅN KH&CN, TAÄP 16, SOÁ Q2- 2013 Trang 71 business life. The term something to succeed in business is generated to represent five participants’ opinions on successful business and sustainable development. To answer to the question ‘What is CSR?’; a site manager explained: ... CSR is something ... if a company does not perform CSR activities well, that company cannot sustain its development, or that company can “surf” to get only one or two contracts. They can do that, but if they want to develop sustainability, they must complete their responsibilities. (A project manager, 2011, research interview) The second theme something needed to survive is used to describe interviewees’ of CSR and their awareness of CSR’s extreme significance on business. The terms used by participants are going down and bankrupt. A clerk explained his idea about CSR as following: CSR is ... Companies without clear CSR practice will go bankrupt … no contract, no money to pay salary for employees … You see, we are influenced by CSR practice! (An employee, 2011, research interview) Similarly, another staff pointed out the way she defines CSR as follows: CSR is activities ... if we do such activities not well or think that it is not necessary, the company performance will go down day by day, to wit: in terms of major, relationships with community ... (An employee, 2011, research interview) To sum up, conducting qualitative approach explores some preliminary findings in employees’ perceptions of CSR. Apparently, to interviewees, CSR is quite important due to its roles in business organizations’ success and their surviving. Visibly, respondents are aware of CSR and its crucial impacts on business. Nevertheless, analyzing information from in-depth interviews also shows that participants cannot define CSR clearly. Descriptive statistics and analysis Among respondents, there are 66 females and 195 males, which account for 25.3% and 74.7% respectively. Such unbalance on gender of respondents is normal in a telecommunication company which relies critically on technical services to compete based on technology in the industry. This could be seen when looking into the proportion of each department participating in survey sample. There are nearly half of the respondents come from technical department; while 19% from Sale and Marketing department; 18% from Accounting and Finance department; 6% and 10% from Personnel department and the other groups. About 90 percent of the respondents are between 20 and 40 years old, in which the age of 30-40 is highest at 48%. People in this age usually dynamic and mature enough to control their perception and attitude of work. This is expected for their long term working with high performance and developing in the company. There are 64% of respondents graduated from vocational training, and 28% graduated higher education. Almost of them have been working at the company for more than 2 years, in which more than 51% of them working from 6 to 10 years and 3% above 10 years. These features are good enough for the research about their perception on CSR of the company, they ensure the information provided with full understanding of respondents due to long term observing and working at the company. There are 10 senior managers participating in the research (3.8%). About 16% is at the middle and line managerial levels. Workers and staff account for 80%. This is typical span of control in most of service companies of Vietnam. The role of CSR in existence and success of the company In considering whether the four types of CSR could represent for these roles of CSR significantly, Cronbach’s alpha values are 0.713 for the roles to existence and 0.733 for the role to success. The results showed that the economic responsibility is most perceived by employees, then legal, ethical, and finally philanthropic responsibilities following this order. Concerning on their roles in existence of the organization, the rates are 4.47; 4.11; 3.93; and 3.33, respectively. In regarding to their roles in success of the company, the rates will be 4.65; 4.31; 4.12; and 3.55, respectively. The results indicate that SCIENCE & TECHNOLOGY DEVELOPMENT, Vol 16, No.Q2- 2013 Trang 72 employees perceived economic responsibility clearer than the other three. CSR are perceived as success factors rather than core values for the existence of the company. Economic and legal responsibilities are most important both for existence and success of the company. Factor analysis EFA for 20 observable variables of CSR resulted in four components with high factor loading for almost variables in at least one component. However, there were few variables having high factor loading in more than one component (factor loading above 0.35 in at least two components), they were dropped from the final scales. The variables deleted from the model step by step are A15 (It is important to achieve organization’s objectives without commit to unethical activities), A3 (It is important to fulfill all responsible with employee in complying with what are mentioned in labour law), A20 (It is important to ensure the physical and metal live of employee in organization), A11 (It is important to the organization to participate in solving social problems to improve quality of life), A14 (It is important to be honest and ethical to stakeholders of the organization), A12 (It is important to advertise goods and services in an ethically fair and responsible manner), and A13 (It is important to be fair in career development at the organization). All of steps satisfy the requirements of KMO levels from 0.816 to 0.868 and significant at 0.000. This process also increases the explanation of accumulated variances extracted of the four factors of higher than 68%. The valid variables in these four components have satisfied factor loadings from 0.684 to 0.891. Detailed results and reliability levels of each component are presented in Appendix 2. The resulted factors from EFA were mostly fitted Carroll’s model. The economic responsibility includes 5 variables from A6 (It is important to allocate organizational resources effectively and efficiently) to A9 (It is important to provide goods and services that meet social requirements) and A2 (It is important to fulfill exactly all requirements from law and regulation). Philanthropic responsibility contains 4 variables named A16 (It is important to commit to voluntary and charity activities), A17 (It is important to support public education organizations and communities), A18 (It is important to support and help small enterprises), and A19 (It is important to maintain a policy of increasing charitable and voluntary efforts over time). Legal responsibility consists of two variables A4 (It is important to behave without of any discrimination to anyone in their work force) and A5 (It is important to update and comply with all new law and regulation). Ethical responsibility has 2 variables A1 (It is important to be seriously on considering and abiding to law and regulation aspects when taking any business opportunity) and A10 (It is important to enhance moral and ethical image of the organization in society) (see Appendix 2). All of 4 factors satisfy the reliability requirement with Cronbach’s alpha valued from 0.612 to 0.829. There is slightly difference on the result of this research and the research of Hong (2007). In this research, there is a movement of variables A2 and A9 from legal responsibility to other responsibilities. However, if the meaning of these variables is considered carefully, this could be understood that the moving is reasonable. Variable A1, which is “It is important to be seriously on considering and abiding to law and regulation aspects when taking any business opportunity”, should be moved from legal group to ethical group if we consider it in moral and ethical behavior of employees and decision makers; and variable A2, which is “It is important to fulfill exactly all requirements of law and regulation”, should be moved from legal to economic responsibility if we consider it from the aspects of economic requirement from government for a state-owned company and tax payer. The changing of variables from legal responsibility to economical responsibility can be understood that both of responsibilities are combined to ‘a fundamental precept of free enterprise system’ [3]. Similarly, the move of variable between legal and ethical responsibility also can be explained by Carroll’s (1979; 1991) discussion about these two types of responsibilities. TAÏP CHÍ PHAÙT TRIEÅN KH&CN, TAÄP 16, SOÁ Q2- 2013 Trang 73 Perceptions about CSR of different groups of employees The importance of each type of CSR in this sample was in the same order as in Hong (2007). Economic responsibility is most important. However, different groups of employees might have different perceptions. Summated scores of these four factors were used in the next step. They were used for testing whether there are differences between groups of demographics in terms of CSR’ perception, using ANOVA. In consideration of the difference between males and females, excepting for legal responsibility which is significant at 6%, the remaining factors has ensured its confidents levels at 99%. Besides, males have shown their higher awareness of CSR higher than females. Labour ages have no any significantly distinction between groups at 5%. Only the older employees recognized philanthropic responsibility significantly at 6%, but at lowest score of evaluation in comparison to the other three types of responsibility. Different educational levels perceived differently in two types of responsibility: economic and philanthropic (significantly at 0.000). It is much surprised that well-educated employees perceived less than the others in these two responsibilities. Regarding to the differences in perception of CSR between functional departments, only ethical responsibility is not significant. The lowest level of agreement is at Finance and Accounting department which is significantly lower than other departments in all types of responsibility. In contrast, Technical, Production and Information system departments have highest perceived evaluation in all of types of responsibility. Table 1. Benchmark with previous studies of perceptions about CSR based on Carroll’s Model (1991) in Asia Characteristics Hong (2007) Smirnova (2012) This research Country Malaysia Kazakhstan Vietnam Respondents Senior managers in petrochemical industry Working parents of undergraduate students Employees in a service company (SCTV) Sample size 170 120 261 Types of CSR Economic Most important 3rd important Most important Legal 2nd important Most important 2nd important Ethical (including stewardship) 3rd important 2nd important 3rd important Philanthropic (including charity, discretionary) (discretionary) least important least important (charity) least important Correlations among the other types Legal, Ethical, and Discretionary are significantly correlated each other. Only Economic did not correlate any types of CSR. Legal and Ethical, Philanthropic and ethical, Philanthropic and Legal were significantly correlated. Only Economic did not correlate any types of CSR. Legal has correlations with the other three types. Philanthropic also correlates to Economic type. Except Legal, Ethical has no correlation with Economic and Philanthropic. In terms of working experience, philanthropic responsibility is perceived differently among groups (significantly at 5%). Legal and economic responsibilities are perceived differently at 6% of significance. Employees with more than 10 years long rate highest in all four responsibilities. Philanthropic responsibility is perceived increasingly with respect to longer working experience. However, economic responsibility is in reverse situation. Legal responsibility is perceived highest for new comer group. The higher managerial positions seem not to give high priority to economic and philanthropy responsibilities, while lower positions seems not to care much on legal and ethic, vice a versa. However, the difference between groups is not clear and does not achieve significant test. Analyzing the correlations between factors, most of the Pearson coefficients are significant and less than 0.5 (see Appendix 3). Only ethical responsibility has no correlation with economic and philanthropic types with very small correlation ratios and insignificant at 5%. SCIENCE & TECHNOLOGY DEVELOPMENT, Vol 16, No.Q2- 2013 Trang 76 Different Managerial Groups, Journal of Business Ethics, vol. 88, no. 2, pp. 381-393, (2009) [62]. Hong Y L, Perception of senior managers on Corporate social responsibility in the Petrochemical Industry in Malaysia, Doctor of Business Administration Thesis, University of South Australia, (2007) [63]. Huong B T L, The perspective on Corporate social responsibility in emerging countries: the case of Vietnam, International vision, vol. 12, pp. 57-74, (2008) [64]. Huong N, Corporate social responsibility in Vietnam: from history to date, International vision, vol. 12, pp. 35-48, (2008) [65]. Institute of Labour Science and Social Affairs, Study on corporate social responsibility - labour- related practices. Study on Corporate Social Responsibility, Hanoi: Ministry of Labour- Invalids and Social affairs, (2004) [66]. Lin C-H, Yang H-L and Liou D-Y, The impact of corporate social responsibility on financial performance: Evidence from business in Taiwan, Technology in Society, vol. 31, pp. 56-63, (2009) [67]. Moon J, The contribution of Corporate Social Responsibility to sustainable development, Sustainable Development, vol. 15, pp. 296-306, (2007) [68]. Nhu T V, Efficiency of integrating corporate social responsibility and environmentally friendly technology's application: a case study of leading coal manufacture company in Vietnam, International vision, vol. 12, pp. 119-127, (2008) [69]. Pham D H, Corporate Social Responsibility: A study on awareness of managers and consumers in Vietnam, Journal of Accouting and Taxation, vol. 3, no. 8, pp. 162-170, (2011) [70]. Smirnova Y, Perceptions of Corporate Social Responsibility in Kazakhstan, Social Responsibility Journal, vol. 8, no. 3, pp. 404-417, 2012 [71]. Taylor S J and Bogdan R,Introduction to qualitative research methods : a guidebook and resource, Wiley, New York., (1998) [72]. Thang T T N, Perception of corporate social responsibility in Vietnam, International vision, vol. 12, pp. 107-118, (2008) [73]. Tuan L , CSR Lessons from Vedan deeds, Macrothink Institute, vol. 1, no. 1, pp. 1-14, (2011) [74]. Windsor D, The future of corporate social responsibility, The International Journal of Organizational Analysis, vol. 9, no. 3, pp. 225- 256, (2001) [75]. Xuan L T T and Gregory T, A development in defining Corporate Social Responsibility, Journal of Science and Technology Development, vol. 14, no. 2, pp. 106-115, (2011). APPENDIX 1 Legal responsibility A1 – It is important to be seriously on considering and abiding to law and regulation aspects when taking any business opportunity A2 – It is important to fulfill exactly all requirements of law and regulation A3 – It is important to fulfill all responsible with employee in complying with what are mentioned in labour law A4 - It is important to behave without of any discrimination to anyone in their work force A5 – It is important to update and comply with all new law and regulation Economical responsibility A6 – It is important to allocate organizational resources effectively and efficiently A7 – It is important for employee to comply regulation of organization regarding to working time, using resources and facilities... A8 – It is important to accelerate solutions to ensure better performance results A9 – It is important to provide goods and services that meet social requirements Ethical responsibility A10 – It is important to enhance moral and ethical image of the organization in society A11 – It is important to the organization to participate in solving social problems to improve quality of life A12 – It is important to advertise goods and services in an ethically fair and responsible manner A13 – It is important to be fair in career development at the organization A14 – It is important to be honest and ethical to stakeholders of the organization A15 – It is important to achieve organization’s objectives without commit to unethical activities Philanthropic responsibility A16 - It is important to commit to voluntary and charity activities A17 – It is important to support public education organizations and communities A18 – It is important to support and help small enterprises A19 – It is important to maintain a policy of increasing charitable and voluntary efforts over time A20 – It is important to ensure the physical and mental live of employee in organization TAÏP CHÍ PHAÙT TRIEÅN KH&CN, TAÄP 16, SOÁ Q2- 2013 Trang 77 APPENDIX 2 Component 1 2 3 4 Mean Economic responsibility Cronbach’s alpha: 0.829 A6 - It is important to allocate organizational resources effectively and efficiently 0.781 3.76 A9 - It is important to provide goods and services that meet social requirements 0.781 4.07 A7 - It is important for employee to comply all regulation of the organization regarding to working time, using resources and facilities, etc. 0.709 4.21 A2 - It is important to fulfill exactly all requirement of law and regulation 0.701 4.10 A8 - It is important to accelerate solutions to ensure better performance results 0.684 3.87 Philanthropic responsibility Cronbach’s alpha: 0.825 A19 - It is important to maintain a policy of increasing charitable and voluntary efforts over time 0.885 3.20 A17 - It is important to support public education organizations and communities 0.783 3.17 A18 - It is important to support and help small enterprises 0.750 3.09 A16 - It is important to commit to voluntary and charity activities 0.688 3.55 Legal responsibility Cronbach’s alpha: 0.641 A4 - It is important to behave without of any discrimination to anyone in their work force 0.849 4.02 A5 - It is important to update and comply with all new law and regulation 0.733 3.92 Ethical responsibility Cronbach’s alpha: 0.612 A10 - It is important to enhance moral and ethical image of the organization in society 0.891 3.99 A1 - It is important to be seriously on considering and abiding to law and regulation aspects when taking any business opportunity 0.749 4.23 APPENDIX 3 Correlations matrix Economic Philanthropic Legal Ethical Pearson Correlation 1 .492** .446** .071 Sig. (2-tailed) .000 .000 .255 Economic N 261 261 261 261 Pearson Correlation .492** 1 .381** .095 Sig. (2-tailed) .000 .000 .127 Philanthropic N 261 261 261 261 Pearson Correlation .446** .381** 1 .211** Sig. (2-tailed) .000 .000 .001 Legal N 261 261 261 261 Pearson Correlation .071 .095 .211** 1 Sig. (2-tailed) .255 .127 .001 Ethical N 261 261 261 261 **. Correlation is significant at the 0.01 level (2-tailed).