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Corporate Social Responsibility in Practice: The Case of Textile, Knitting and Garment Industries in Malaysia View project
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ABSTRACT
Malaysia is becoming an increasingly captivating market for international textile retailers.
Implementation of Corporate Social Responsibility in textile and apparel industries in
Malaysia is necessary because the industry has diversified itself to value-chain, from
an original equipment manufacturer (OEM) producer to own brand and design supplier.
There are not many studies found on approaches to implementation, drivers, and barriers
for Corporate Social Responsibility in the textile sector. The objective of this paper is
to examine and analyze approaches, initiatives, adoption, drivers and barriers to CSR
implementation in textile and apparel industries in Malaysia. Through this study, the paper
aims to understand the perspectives of the CSR practice in Malaysia and advance potential
areas that could assist textile and apparel firm management to understand the hurdles
preventing CSR implementation. The results of the study indicate that CSR practices
among the textile, knitting and garment industry are mostly based on the stakeholders’
model widely seen in the Western world. This study further reports the potential challenges
of CSR practices in these industries.
Keywords: Barriers, Corporate Social Responsibility, drivers, Malaysia, textile
INTRODUCTION
ARTICLE INFO
Article history:
With the current recognition for inculcating
Received: 21 August 2017 Corporate Social Responsibility (CSR)
Accepted: 26 February 2018
Published: practices by the Malaysian textile and
apparel fraternity, the focus has shifted
E-mail addresses:
g_vimala@cb.amrita.edu (Vimala Govindasamy)
from using CSR as a tool for profit for the
s_kalyani@cb.amrita.edu (Kalyani Suresh) organization’s shareholders to utilizing it
* Corresponding author
ISSN: 0128-7702
e-ISSN 2231-8534 © Universiti Putra Malaysia Press
Vimala Govindasamy and Kalyani Suresh
as a lever for societal and organizational about CSR did not match awareness
development. Handy (2013) reports that about it and also about the lack of clear
the Malaysian Knitting Manufacturers conceptualization and narrow approach
Association (MKMA) states that there to CSR. It is believed that CSR practices
are challenges in exercising the CSR were introduced to Malaysia through
practices in the textile and apparel industry, multinational organizations (Amran, Zain,
nevertheless it is inspired to take on the Sulaiman, Sarker, & Ooi, 2013). Post-
challenges and incorporate CSR into independence, Malaysia was dependent on
their businesses. The textile and apparel foreign investment and joined the CSR fad.
industry is determined to accord social This was a major driver for adoption of CSR
responsibility initiatives by providing good in Malaysia (Amran & Devi, 2008).
environment for workers, fair treatment of A 2012 report by UNICEF Malaysia on
employees and job applicants, enforcing the Malaysian government’s implementation
ethical relationships with shareholders and of Vision 2020 outlines four CSR related
suppliers, reducing human rights abuses, strategic challenges of establishing a society
resolving social problems, supporting that was: (i) a morally attuned and ethical
community development initiative, (ii) benevolent with a culture of compassion
empowering women and other groups, (iii) economically fair and (iv) competitive
reducing human rights and lastly supporting and flourishing (UNICEF, 2012). CSR
government policies. policies and practices in Malaysia
In a nutshell, the concept of CSR have shown tremendous participation
is gaining popularity in the Malaysian from various sectors which include the
industry. More and more company leaders Malaysian government, Bursa Malaysia,
are becoming involved of the CSR and it and Companies Commission of Malaysia to
is believed that CSR will be a key factor to create awareness and encourage companies
generate growth of business and sustainable to promote CSR in their business community
survival of the industry at large (Handy, and environment to uplift the status of CSR
2013). A look into the origin, development (UNICEF, 2012).
and current state of CSR practices in Malaysia is a multi-ethnic and multi-
Malaysia would add a more precise context cultural, with most people being Malay, but
of the problem under study. there are also Chinese and Indians. Muslim
is the majority in the country and their main
Corporate Social Responsibility in form of giving is the Zakat during their
Malaysia festival celebration whereas the Chinese and
Indians communities have their ethnicity-
Authors (Amran & Devi, 2007; Amran &
based contributions (Sharma, 2013).
Nejati, 2014; Nejati & Amran, 2009) have
In the Bahasa Malaysia language,
suggested that during the early stages of
the national language of Malaysia,
CSR in Malaysia, active communication
Ndela (2015) and Abreu (2015) posited growth of Malaysia. These sectors boost
that textile companies could be CSR driven exports, enhance human capital and assist
through identified socially responsible to capitalize on the digital economy (The
approaches in their day-to-day operations Star, 2016).
with maximization of safety in working A list of drivers and barriers to CSR
environment, reduction of damage to the in academic literature specific across
natural environment, proper waste handling Malaysian Industries include management
methods, sustaining local communities and commitment and employee involvement,
a good stakeholder relationship. competitive advantage, reputation and
risk management, organization size,
Textile Industry in Malaysia and CSR purchasing, and supply. The external
Practices drivers are government, customers, media
Way back in the 1980s’, Malaysia’s apparel organizations and technology in sustainable
industry, stood as a contract manufacturer of supply chain practices (Tay, Rahman, Aziz,
high-end brands such as Giordano, Dockers, & Sidek, 2015); encourage companies to
Nordstrom, Tori Richard, Polo, Tommy promote CSR in their business community
Hilfiger, Puma, DKNY, Victoria Secret, and environment (UNICEF, 2012); skill
Macy’s, Beverly Hills, Disney and many training and awareness programs (Tay et
others (MATRADE, 2016). Based on its past al., 2015). The barriers include resources
experiences and automated manufacturing cost, management committee, government
processes, the development of the textile policies, technology, customer awareness,
and apparel industry diversified itself to media organization, and lack of training
value-chain, from an original equipment (Tay et al., 2015).
manufacturer (OEM) producer to own brand These barriers and drivers are to be
and design supplier as well as capitalizing taken into serious consideration to avoid
on expertise gained during this transition shortfalls in the implementation level. CSR
(Crinis, 2012). activities in Malaysia are widespread in
The multinational organizations almost all the industries. Textile industry
comprise indigenously owned companies forms one of the upcoming industries in
and foreign companies having a considerable Malaysia. A number of socio-economic
presence abroad and controlled/owned and political factors gave a momentum for
by Malaysian citizens. Its objective is to the rise of textile and apparel industry in
maximize profits, coaxing on international Malaysia.
business partnership. Small and medium- The literature on CSR practice in the
sized Enterprises play an essential role field of textile and apparel industries are
in the Malaysian economy development mainly from countries like India, China
and have contributed substantially to the and from the West (Gunay & Gunay 2009;
Księżak, 2016; Nasreen & Rao, 2014;
(drivers) for pursuing CSR and iv) barriers/ one ethical. These findings correlated with
obstacles for pursuing CSR. The scale items their CSR adoption (as shown in Figure 2),
ranged from (1) ‘‘to a minimum extent’’ to with the stakeholder and statist approaches
(7) ‘‘to a great extent’’. being the most popular, followed by liberal
The graphs in the manuscript have been and last, ethical. This is an indication that
modified to reflect numbers in the horizontal underlines the growing importance of
axis. stakeholders in adopting CSR activities.
Figures 1 to 4 reflect the respondents’ The Friedmanian view of business was
responses to the top choices regarding their of it having only one social responsibility
approaches to CSR and the motivations and - to create a monetary value for itself by
barriers. The horizontal axis details values utilization of its resources (Carson, 1993).
ranging from (1) “to a minimum extent” to Figure 3 pertains to data regarding
(7) “to a great extent”. Motivations or Drivers for implementation
of CSR in Malaysian textile firms reveals
RESULTS that the top four reasons are related to
business and profit enhancement such as
A total of 26 textile, knitting and
increasing sales, satisfying employees,
garment industries operating in Malaysia
satisfying major customers and brand
participated in the study. Among these 18
reputation. This finding is consistent
were industries falls under the SMEs and
with Baron, Harjoto, and Jo (2009) who
remaining 8 were MNCs. Table 1 lists
found that a higher Corporate Social
out the companies which participated in
performance was associated with higher
this survey. The researchers were able
corporate financial health in consumer
to get a diversified data in the dimension
industries, with the opposite being true
of geographical location and area of its
for industrial industries. Adhering to
operation. The representing officials who
government regulation, gaining market
had filled the questionnaire were the senior
access and leadership in CSR follow close
officials looking the CSR activities of the
behind. The Grant Thornton International
firm. Among the 26 managerial employees
Business Report (Raleigh, 2014) also
participated in the study, 14 were females
mentions building a brand reputation
and 12 were males. They represented
among prospective stakeholders as being
different age group with a mean age of with
a key driver for CSR globally. The drivers
the majority from 42-50 age group (30%).
of CSR activities indicate how industries
The most popular approach to
are utilizing CSR as a strategy for business
initiating CSR among textile firms was a
promotion and building reputation. The
stakeholder (Figure 1). Based on the top
sustainability of the business undertaking
seven choices, three outlined corporate
can be potentially contributed by the CSR
affinity to stakeholder interest, two were
activities.
statist modelled, and one was liberal and
9. American & Efird (Malaysia) Accessories Finance & Admin Manager Johor
Sdn. Bhd. (Sewing thread)
10. Abharuddin Aziz Design Apparel Entrepreneur Kuala Lumpur
11. Basilic Concept Apparel Apparel Designer Kuala Lumpur
12. Coats Thread (Malaysia) Accessories HR & Admin Manager Melaka
Sdn. Bhd (Sewing thread)
13. Carven Ong Couture Apparel Creative Director Kuala Lumpur
7
8
Table 1 (Continue)
19. Radzuan Radziwill Sdn. Bhd. Textile Fashion Designer / Kuala Lumpur
Entrepreneur
20. SHK Smart Sdn. Bhd. Textile Marketing Manager Kuala Lumpur
21. Sara J Global Sdn Bhd Apparel Fashion Designer Selangor
22. Tanoti Sdn. Bhd. Hand-woven Textile Director Sarawak
4. Liberal approach
10. Solving social problems 3. Statist approach
9. Supporting community development 2. Ethical approach
8. Increasing community’s economic stability 1. Stakeholder approach
7. Enforcing ethical relations with shareholders
6. Empowering women and other groups
Figure 2. Approach to CSR adoption
5. Reduce human rights abuses
4. Support government policies
3. Enforcing ethical relations with suppliers
2. Not harming the environment
1. Fair treatments all employees and job
applicants
Figure 1.General approach to initiating CSR
Figure 4 indicates that the most in the initial phases of its implementation.
significant barriers were lack of resources A proper budgeting and financing for the
- in terms of knowledge, information, CSR activities have to be materialized to
finance, and training. Management support make wider impacts and prevent barriers.
was found to be an insignificant barrier. Put Also, lack of knowledge of CSR potential
together, these findings indicate that even directly leads to lack of investment in
though top management is not a deterrent to training for CSR awareness and knowledge.
CSR, there is lack of allocation of finance
for implementation, maybe due to lower ANALYSIS OF FINDINGS
belief of top management in CSR (as shown
The study finds a strong link between
in Figure 3) and also due to the fact that
reasons for the implementation of CSR and
most of Malaysia’s CSR is still conducted
its approaches among Malaysian apparel
at the philanthropy stage and has not
firms. These firms adopt CSR primarily due
actualized into a strategic implementation
to stakeholder and government pressure.
stage. (Abdullah, Mohandes, Hamid, &
The main drivers for CSR are thus business
Singh, 2016).
promotion and building reputation in the
The complexity of CSR and
eyes of the stakeholders and government. As
implementation difficulties were medium
CSR adoption is only a form of lip service
level barriers. These could also be the
or points towards a halo effect, the lack of
main reason for lack of financial support.
interest to sustained awareness and adoption
As delineated by the Grant Thornton
fails due to lack of resources - knowledge,
International Business Report (Raleigh,
information, finance, and training.’
2014), Malaysia figures in the third position
The study finds Management support
of top ten countries that cite stakeholder
to be an insignificant barrier. What can be
demand for CSR implementation as a key
the reasons then for lack of allocation of
driver. Findings of this study tentatively
resources for CSR if the management was
point towards a symbolic/theoretical
not averse to its adoption? The answer lies
adoption of CSR practices for a so-called
in its primarily stakeholder/statist approach
halo effect (whereby its action of symbolic
to CSR. The Malaysian Socio-economic
adoption earns it greater consideration
landscape is different from that of the West.
from its stakeholders and the community),
Its strong Asian rootedness sets it apart from
without practical implementation, to stave
its Western counterparts, in terms of CSR as
off the competition with better ethical
innate to its culture and values. Yet, in the
credentials.
face of global competition and in keeping
It is clear that strategic implementation
with the tenets of Vision 2020 in becoming
of CSR activities is yet to be developed in
an export-focused economy, there has been a
the context of Malaysia and this is a core
concerted effort by Malaysian apparel firms
reason that most of the industries are still
to reflect global (dominated by Western)
trends in business strategies, which focus could be related to a skew towards SMEs
on Freidmanistic view or that of a social in the study sample. Size of enterprise has
contract or an instrumental approach. been identified in the academic literature
It is clear that strategic implementation as a barrier for CSR implementation (Font,
of CSR activities is yet to be developed in Garay, & Jones, 2014; Hung, 2011; Moyeen
the context of Malaysia and this is a core & Courvisanos, 2012), with SMEs facing
reason that most of the industries are still in major constraints in financial, training and
the initial phases of its implementation. The knowledge capacities of CSR. Also, because
complexity of CSR and implementation the basic terminology for CSR is broad and
difficulties is a major challenge. A proper vague, lack of understanding and shortage
budgeting and financing for the CSR of information about CSR is challenging
activities have to be materialized to make and slows down effective implementation
wider impacts and prevent barriers. Also, (Ahmed & Rahim, 2005; Jenkins, 2004).
lack of knowledge of CSR potential directly In terms of lack of financial resources
leads to lack of investment in training for for CSR implementation, though Raleigh
CSR awareness and knowledge. The need (2014) in the Grant Thornton International
of the hour is to adopt a more realistic Business Report reported that MNEs
CSR focus, which would best suit a non- in Malaysia were actively involved in
Western-centric approach, so as ensure that philanthropic activity, a 2016 study on CSR
compatibility of CSR initiatives with its implementation challenges faced by SME
socio-economic setting. food retail owners in Malaysia, reported
that individuals do not donate generously
LIMITATIONS AND CONCLUSION towards CSR.
The study advances the current
This study examined the state of CSR
knowledge base of CSR in the context of
within the Malaysian textile, knitting and
textile and apparel industries in Malaysia.
garment industry. Findings reveal that
The understandings on the approaches
similar patterns of adoption of CSR as in
adopted and motives of the CSR activities
Western countries where the stakeholder
would be helpful in designing further
approach is dominant. However, the fact
CSR strategies for Malaysia. Some more
that CSR activities in Malaysia are seasonal
sensitive CSR policies contextual to the
(Zulkifli & Amran, 2006) coupled with its
socio-economic scenario can be initiated
shorter history of adoption does not allow
and recommended. The indication of the
us to generalize this study’s result. Also,
barriers will be helpful in designing better
this study has a small sample size and is
strategies for the implementation of CSR in
limited to textile firms.
the textile industry.
Lack of resources (information, training
Different companies may have unique
and financial) for CSR was found to be a
programs for CSR. In this paper, CSR
major obstacle in this study. This finding
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