AN EXPLORATORY STUDY ON CORPORATE SOCIAL RESPONSIBILITY OF BUSINESS ENTERPRISES OPERATING IN MANIPUR
Kh.Tomba Singh
Associate Professor
Department of Commerce,Manipur University(A Central University)
Imphal,Manipur (INDIA)
Cell: 91 9436894427
e.mail:
MoirangthemRaju Singh
Department of Commerce,Manipur University.
Abatact: We all know that people engage in business to earn profit. However, profit making is not the sole objective of business. It performs a number of social functions, as it is a part of the society. It takes care of those who are instrumental in securing its existence and survival like- the owners, investors, employees, consumers and government in particular and the society and community in general. So, every business must contribute in some way or the other for their benefit. Corporates interact with society in many ways. They invest in facilities, produce and sell products, employ people and subcontract or in-source many activities. They also have an impact on the environment by the nature of their activities, by using valuable resources, or creating by-products, which influence the physical environment. Their interaction with society is through their employees and the many facets of society around them. Further, corporates may act explicitly as responsible, for either emotional reasons or business purposes. The aim of this paper is to find the nature and extent of corporate social responsibility (CSR) initiatives undertaken by select services and business enterprises operating in Manipur and to study its relevance in business. The paper explored four factors viz.,Community factors, Employee’s factors, Customers factors, and Natural environment factors. The study revealed that there is a high positive correlation between CSR to Customers and CSR to Community with ‘r’ value of 0. It is also found that there is positive correlation between Community and Natural Environment factor as well as Community and Employees with ‘r’ value of 0.366 and 0.314 respectively. This means that there is situation of multi-collinearity among the 15 independent variables.
Key words:Investors, employees, consumers, government,multi-collinearitycorporate social responsibility.
INTRODUCTION
Corporate Social Responsibility can be understood in terms of corporate responsibility, but with greater stress upon the obligations a company has to the community, particularly with respect to charitable activities and environmental stewardship. Corporate and social responsibility is sometimes described as being a tacit contract between business and a community, whereby the community permits the business to operate within its jurisdiction to obtain jobs for residents and revenue through taxation. Additionally, the community expects the business to preserve the environment and to make the community a better place to live and to work through charitable activities.Corporate Social Responsibility (CSR) has in recent times become somewhat of a ‘buzz-phrase’ in the business community. It is also called corporate conscience, corporate citizenship, social performance, or sustainable responsible business/ Responsible Business. It needed clarification whether CSR is treated as an integral component of organisational culture, planning and strategies and thus a ‘must have’ in an organisation. It is a ‘nice to have’ as well as ‘feel good’ adjunct to the organisation. Corporate Social Responsibility is part of an international drive towards transparency and accountability of business activities. It is a way of monitoring how businesses perform against environmental, ethical and social indices in the profit making process. This is because of the reason that a business organization does not operate in vacuum. It is wholly dependent on society and it can only thrive in well organised societies where individuals cannot, themselves, produce all their needs and wants. Thus, a stable and well-organized society fundamentally makes it possible for people to engage in business. It is on this basis that social activists have strongly argued that the business community ought, in return, show concern to the society that sustains an ideal environment for profit making and survival. Conceptual thinking about Corporate Social Responsibility was ignited by Howard Bowen way back in 1953, he defined CSR as,“Social Responsibility implies the obligations of businessmen to pursue those policies, to take those decisions or to follow those lines of action which are desirable in terms of the objectives and values of our society.” According to Davis (1973) “Corporate social responsibility means bringing corporate behaviour to the level, where it is congruent with prevailing social norms, values and expectations.” EU (European Union) definition of CSR (2003) is “A concept whereby companies integrate social and environmental concerns in theirbusiness operations and in their interaction with their stakeholders on a voluntary basisas they are increasingly aware that responsible behaviour leads to sustainable businesssuccess.” Confederations of Indian Industry (CII) defined CSR (2005) as “Continuing commitment by business to behave ethically and contribute to economic development while improving the quality of work force and their families as well as the local community and society, at large.” CSR is not a new concept in India. Corporates like the Tata Group, the Aditya Birla Group, and Indian Oil Corporation, to name a few, have been involved in serving the community ever since their inception. Many other organizations have been doing their part for the society through donations and charity events.Today, CSR in India has gone beyond merely charity and donations, and is approached in a more organized fashion. It has become an integral part of the corporate strategy. Companies have CSR teams that devise specific policies, strategies and goals for their CSR programs and set aside budgets to support them. An attempt has been made in this research to understand the awareness; clarity of meaning of the term, implementation and attitude of the executives/ planners towards Corporate Social Responsibility. Business plays a significant role in economic, social, political and technological affairs. So business owes responsibilities to all segments of society. Wealth of a country is to a great extent controlled by business. This gives business and its executives “enormous power” to affect the lives of employees, consumers, shareholders, etc. Business is a part of the total environment in which we live, being influenced by it, while being a force in influencing it. The relationship between business and its environment is one of mutual benefits - as explained below in figure 1 both take from and give to various segments. Only through such a relationship can a business survive and prosper.
Fig.1Business and the total environment (Adapted from Porter and Kramer, 2006)
Modern business has acquired a sense of social responsibility to society in general and to its different segments in particular. The objective of business is to balance the conflicting claims of ‘stakeholders’. Business is not to confine to productive or commercial activities as its social concern, but it has to take into account social problems, which arise due to its activity.
Recent literature
The notion of corporate social responsibility has existed for a long period of time in the literature (Bowen, 1953; Carroll, 1979; Sethi, 1975) and in the practices of working organizations. Since late 1880s the discussion of social responsibility has continued and in the last decade companies have started to take more and more social responsibility (Adamsson & Johansson, 2008). Originally, businesses were seen strictly as economic entities with the primary responsibility for producing goods and rendering services required by a society. This is the classical view held by Milton Friedman and Hayek, Theodore Levitt and others. However, over time, business came to see their role in broader perspectives. According to Goyder (1951), industry in the twentieth century can no longer be regarded as private arrangement for enriching shareholders. It has become a joint enterprise in which workers, management, consumers, the local government and trade union officials all play a part. Goyder sought to equate the suggestion of a responsible company with the trusteeship concept advocated by Gandhiji, the aim of which is to ensure that private property is used for the common good of society. Monsen (1963) has undertaken a study on the level of hierarchy of business activity. He found out that there are four levels. According to Friedman (1971) “Corporate social responsibility is beyond the basic purpose of business and violates the responsibility of business to its owners, the stockholders”. Fulmer (1971) had conducted a survey involving over 1,500 business executives to find out the purpose of business, 94% of the respondents agreed with the idea that “business exists for only one purpose, to create and deliver satisfactions at a profit to himself”. Drucker (1973) views that the social responsibility of managers is directly related to the power and authority they have. Davis (1975) has provided five propositions for social responsibility in corporations. Carroll’s (1979) study has divided the social responsibility of organization into typologies
to give direction towards ideal responsibility. Carroll has developed a four dimensional conceptual model of corporate social responsibility and includes the categories of economic, legal, ethical and discretionary responsibilities. Corporate social responsibility has been a topic that has garnered increased attention in recent years (Sethi, 1995). Several studies have examined therelationship between corporate social performance and financial performance ( PavaKrausz, 1995). Although Ullman (1985) found that no clear supportexists for the social responsibility financial performance link (CSR- FP).Russo andTencati (2007) conclude that firms are more likely to identify their relevant stakeholders and meet their CSR requirements through specific and formal CSR strategies
Objectives and Hypothesis of the Study
The study has been carried out with following broad objectives:
i) To find out the strategy for CSR implementation by the target services and enterprises.
ii) To outline the nature of corporate social responsibility (CSR) initiatives undertaken by business enterprises operating in Manipur and to describe, its relevance in the business.
Hypothesis
Ho: Benefit of CSR activities to various stakeholders is not significantly different
H1: Benefit of CSR activities to various stakeholders is significantly different
Methodology
Sampling is an integral part of data collection process. A survey research strategy was adopted. The random sampling techniques were used in selected the respondents. The study was conducted in Manipur State of India. In order to make inferences of the population, it was determined that a sample of 100 respondents from the services and enterprises operating in Manipur State viz., Financial Institutions, Educational Institutions, Hospitality(Hotels & Tourism), Industry Brick Farms(manufacturing), Healthcare Industry, Public Enterprises, Telecom Services, Private Trading Enterprises, Micro, Small and Medium Enterprises Scale Industries.
Survey Instrument and Data collection
The study being empirical in character was based on survey method. Pursuant to the objectives set, essential information pertinent to the study were collected personally through structured, close-ended questionnaire. Personal interviews were also initiated to collect more authenticable information to reinforce the genuineness of the information. The questionnaire contained two parts: the part contained general information and the part consisted of 15 items of CSR benefit to stakeholders. Respondents were asked to mark their responses on these items on a five-point Likert type scale (1 = Strongly Disagree, 5 = Strong Agree) used to measure the dimension. Secondary information was also incorporated from different sources both published and unpublished viz., Missions and Visions, Annual Reports, Departmental Manuals, monthly and annual journals, newspapers, periodicals, Govt. published reports of state and central Governments. Additional information was also extracted through personal discussions. Personally faced experiences in setting up and running enterprises were revealed during the course of interaction. Opinions and suggestions were also shared by the interviewed entrepreneurs/corporate entrepreneurs. The research is qualitative, drawing on a range of sources to form comparative studies specific to selected organisations and business enterprises operating in Manipur.The administered questionnaires were collected in the second half of 2012.Cronbach’s alpha coefficient was calculated to measure the internal consistency among the 15 items benefits of CSR to stakeholder is 0.853 therefore constructed reliability was high and well above the cut-off point of 0.7.In order to test the dimensionality of the measurement constructs, an exploratory factor analysis was performed.
DATA ANALYSIS
The collected data were analysed to determine the awareness and perceptions of CSR among the managers, executives and planners of organisations/enterprises with the help of appropriate statistical techniques and tools were used based upon the nature of the data and the relevance of the statistical technique. The data were then entered and processed using the Statistical Package for Social Sciences (SPSS), of the English Version 21.0. The study used factor analysis.
RESULTS AND DISCUSION
Factor analysis
Table 2: KMO and Bartlett's Test
Kaiser-Meyer-Olkin Measure of Sampling Adequacy. / 0.790Bartlett's Test of Sphericity / Approx. Chi-Square / 576.042
Df / 105
Sig. / 0.000
Source: Authors’ own
On the basis of preliminary investigations, 15 variables were listed. These 15 variables were tested and put to factor analysis and the results so obtained were subjected to Kaiser-Meyer-Olkin (KMO) measure of sampling adequacy and Bartlett’s test of sphericity tests.The Bartlett’s test of sphericity is used to test whether the correlation matrix is an identity matrix.The approximate chi-square is 576.042 with 105 degree of freedom, which is significant at the 0.000 level. The value of the KMO statistics is 0.790 which is more than 0.5. This indicates that the factor analysis for the selected variables is appropriate to the data. Hence, all the benefit of CSR activities is equally important to various stakeholders. The findings of KMO and Bartlett’s test are shown in Table 2.The Principal Component Analysis has been used to extract the factors since the objective is to summarise most of the original information in minimum number of factors for prediction purpose. The Principal Component Analysis is a factor model used to transform a set of correlated factors into a set of uncorrelated factors so that the factors are unrelated and the variables selected for each factor are related. The variances extracted by the factors are called Eigen values. Hence, only those factorswhose Eigen value was more than 1 were considered meaningful. From table 3, it is evident that factor 1 accounts for 5%of variance, factor 2 about 2% of variance and factor 3 with 1% of variance and factor 4 with 1% of variance.The first four variables represent the 63.449% of variance. Therefore, only these four factors with the variance greater than have been retained and the other factors are not included in the model. Thus, from Eigen values in table 3, we extract only four factors from the fifteen variables.
Table 3:Total Variance ExplainedComponent / Initial Eigenvalues / Extraction Sums of Squared Loadings
Total / % of Variance / Cumulative % / Total / % of Variance / Cumulative %
1 / 5.066 / 33.771 / 33.771 / 5.066 / 33.771 / 33.771
2 / 2.177 / 14.516 / 48.287 / 2.177 / 14.516 / 48.287
3 / 1.157 / 7.714 / 56.001 / 1.157 / 7.714 / 56.001
4 / 1.117 / 7.448 / 63.449 / 1.117 / 7.448 / 63.449
5 / .961 / 6.405 / 69.854
6 / .773 / 5.152 / 75.005
7 / .712 / 4.748 / 79.753
8 / .614 / 4.091 / 83.844
9 / .520 / 3.464 / 87.308
10 / .428 / 2.851 / 90.159
11 / .384 / 2.560 / 92.719
12 / .333 / 2.220 / 94.939
13 / .300 / 2.000 / 96.939
14 / .248 / 1.655 / 98.594
15 / .211 / 1.406 / 100.000
Extraction Method: Principal Component
Loading on factors can be positive or negative. A negative loading indicates that this variable has an inverse relationship with the rest of the factors. The higher the loading the more important is the factor. However Comrey (1973) suggested that anything above 0.44 could be considered salient, with increased loading becoming more vital in determining the factor. Factor loadings are simple correlation between the variables and factors. The is an orthogonal method of rotation that minimizes the number of variables with high loadings of factor, hereby enhancing the interpretability of the factors. Orthogonal rotation results in factors that are uncorrelated.Table 4 depicted the results obtained on basis of the Varimax rotation procedure, on the basis of which the components are extracted.
Table 4: Rotated Component Matrix
Benefits / Component1 / 2 / 3 / 4
Avoid excessive regulation / .779 / .086 / .194 / .000
Attract green and ethical investment / .754 / .090 / .010 / .042
Support social integration / .705 / .056 / .160 / -.008
Corporate donorship and volunteerism / .586 / -.034 / .416 / .146
Complain with regulation and standards (ISO) / .536 / .171 / .192 / .484
Greater efficiency and less waste / .445 / .406 / .282 / -.009
Support work life balance / .100 / .849 / .092 / .211
Retention of employees / -.056 / .812 / .107 / .214
Motivate and improve employees ‘ moral and encourage team work / .213 / .766 / .158 / .176
Customer satisfaction and awareness / .253 / .192 / .829 / .012
Built customer / .050 / .086 / .806 / .273
Quality product at an affordable rate / .339 / .216 / .619 / -.098
Protection of natural resources / -.055 / .189 / .029 / .821
Environmental friendly product, services and manufacturing / .070 / .324 / .065 / .808
Developing employment and infrastructure / .387 / .034 / .368 / .396
Extraction Method: Principal Component Analysis.
Rotation Method: Varimax with Kaiser Normalization.
a.Rotation converged in 6 iterations.
Factor analysis is used to understand the important factors influencing CSR activities. There were around 15 variables taken into consideration for research which are grouped under 4 major heading or factors as follows: Community factors, Employee’s factors, Customers factors, and Natural environment factors. The various statements were grouped under each factor, depending upon the maximum score obtained (table 3) in rotated matrix of factor analysis using SPSS software package.
Table 5: Exploratory factor analysis
FACTOR 1- CSR TO COMMUNITY / Scores1 / Avoid excessive regulation / 0.779
2 / Attract green and ethical investment / 0.754
3 / Support social integration / 0.705
4 / Corporate donorship and volunteerism / 0.586
5 / Complian with regulation and standards (ISO) / 0.536
6 / Greater efficiency and less waste / 0.445
FACTOR 2 -CSR TO EMPLOYEES
7 / Support work life balance / 0.849
8 / Retention of employees / 0.812
9 / Motivate and improve employees ‘ moral and encourage team work / 0.766
FACTOR 3- CSR TO CUSTOMERS
10 / Customer satisfaction and awareness / 0.829
11 / Built customer / 0.806
12 / Quality product at an affordable rate / 0.619
FACTOR 4- CSR TO NATURAL ENVIRONMENT
13 / Protection of natural resources / 0.821
14 / Environmental friendly product, services and manufacturing / 0.808
15 / Developing employment and infrastructure / 0.396
FACTOR 1- CSR TO COMMUNITY: Benefits of Community from CSR.Researcher notice that variables 11,12,8,7,14 and 10 have loadings of 0.779,0.754,0.705,0.586,0.535 and 0.445 on factor 1; this suggests that factor 1 is a combination of these six variables.