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To cite this article: Anton Peršič, Mirko Markič & Marko Peršič (2016): The impact of socially
responsible management standards on the business success of an organisation, Total Quality
Management & Business Excellence, DOI: 10.1080/14783363.2016.1174059
Article views: 68
Download by: [Orta Dogu Teknik Universitesi] Date: 12 May 2016, At: 22:08
Total Quality Management, 2016
http://dx.doi.org/10.1080/14783363.2016.1174059
The purpose of this article is to outline the results of the study concerned with the
importance of the standards on socially responsible management and the
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1. Introduction
Each standard is a good international practice, which as a rule is comprehensively and sys-
tematically applied by organisations that are considered more successful and more respon-
sible within the context of the social environment, and as such command more respect. The
already established standard of socially responsible management provides for more effi-
cient management of business processes of organisations in terms of meeting the require-
ments and expectations of customers, as well as every other affected part within a social
environment. Because of this, the integration of current management standards with that of
an organisation may serve as a one-of-a-kind opportunity to expedite the fulfilment of an
organisation’s mission as well as its aims and objectives (Alič & Rusjan, 2010; Bukovec &
Markič, 2008; Piskar & Dolinšek, 2006; Podobnik & Dolinšek, 2008; Rusjan & Castka,
2010; Stimson, 1998). Furthermore, socially responsible operations of an organisation
may prove socially beneficial and are also simultaneously the basis for the long-term
development and growth of an organisation, as well as the extended social and natural
environment. The paradigm of social responsibility is becoming the focal topic of the
global social environment with the responsible and ethical operations of organisations
∗
Corresponding author. Email: agencija.kocka.prima@gmail.com
and behaviour of individuals (Avolio & Gardner, 2005). For an organisation to achieve
business success within a social and natural environment, there is an emphasis on
continuous adjustment in accordance with the demands of the market (Amabile &
Kramer, 2007; Daft, 2010; McAlister, Ferrell, & Ferrell, 2005), new technological discov-
eries and promotion of creativity, innovations and sustainable development (Becker,
Kugeler, & Rosemann, 2003; Gomezelj Omerzel & Ellemose Gulev, 2011; Hron, 2004;
Nohria, Groysberg, & Lee, 2008; Ortenblad, 2004). The continuous development of the
requirements and expectations of customers, as well as demands from employees in
such organisations to continuously adapt to the situation within the social and natural
environment, call for increasingly more innovative approaches in the development of
operations and generating added value for every participant (Alič & Rusjan, 2010;
Babiak & Trendafilova, 2011; Dobers & Halme, 2009; Jeston & Nelis, 2008; Kottler &
Lee, 2004; Markič, Likar, Meško, Rašič, & Živković, 2011; Schwarz & Carroll, 2003).
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Due to the present economic situation, the European Union has pointed out specifically
that socially responsible operations of an organisation are not considered merely a lone or
self-sufficient incentive aimed at modifying the business environment. Instead, they are
considered the most appropriate tool to resolve the critical social and economic issues
within the society (Ženko, Hrast, & Mulej, 2013). The principles and assumptions of
socially responsible operations are defined in ISO 26000 as the guidelines on social
responsibility associated with management principles of the European excellence
model. Since each business activity is undertaken by suitably qualified and motivated
employees, this is particularly important for the effective provision of market services.
That is why, in the long run, the mutual trust, personal and professional renown as well
as ethically and morally indisputable operations of an organisation and its employees
are considered to be the basis for the positive performance of an organisation, the co-
dependent development of the social environment and the preservation of the natural
environment (Bavec, 2012; Celinšek & Markič, 2008; Windsor, 2006).
In well-developed economies, services constitute the largest and fastest growing econ-
omic sector in terms of employment, social capital and added value; therefore, the compe-
titiveness of the service sector plays a major role in supporting the sustainable development
and growth of a modern organisation in a wider social environment (Eurostat, 2012). What
is more, services linked directly to products also play an important role in ensuring the com-
petitiveness of the industry sector (Bodlaj, Coenders, & Žabkar, 2012).
The increasing potential for jobs in the service sector began to shift in the early twen-
tieth century when 25 OECD member states employed half of all workers in the agriculture
sector and a quarter each in the industry and services sectors. Already by 1950, the share of
individuals employed in the agriculture sector had dropped to 28%, industry employment
had risen to 34%, while the biggest increase in employment was noted in the services
sector, recorded at 38%. Even greater changes in employee structure occurred after
1970, when the share of people in agriculture plummeted to merely 13%, while the per-
centage of individuals employed in the services sector further increased to 49%. Accord-
ing to Eurostat (2012), the share of employees in the services sector in Slovenia amounts to
67.26%, while the average in the European Union member states amounts to a mind-
blowing 76.98%. This value is the highest in the most developed EU member states, for
example, Great Britain, with 87.58% (Eurostat, 2012). Particularly important and influen-
tial in the generation of social capital on a global economic level is the ‘market services’
sector as defined in the Panorama of European Business Statistics. In terms of total gen-
erated capital, the share of employees engaging in market services in the European Union
member states for 2011 equals 48.09%, whereas in Slovenia it is 43.45% (Eurostat, 2012).
Total Quality Management 3
The aim of the research on the importance of the standards of socially responsible man-
agement was to investigate the correlation and feasibility of the integration of selected
management standards and the business excellence model as well as their impact on the
increased business performance of organisations. Also examined was whether medium
and large organisations engaged in market services in the Republic of Slovenia which gen-
erate the greatest added value in operations and employ the largest numbers of employees
are actually able to influence to a greater extent the realisation of social responsibility prin-
ciples, resulting in the enhanced sustainable development of organisations as well as the
broader social and natural environments.
systems, models and standards of socially responsible management also in the sense of
a comprehensive improvement of the competitiveness of operations as well as successful
development at the national level. European Foundation for Quality Management
(EFQM), the European excellence model, therefore serves as an example of systematic
improvement of an organisation’s performance based on the integration of management
standards and models (Bukovec & Markič, 2008; Kern Pipan & Soković, 2012; Podobnik
& Dolinšek, 2008).
As a result, our research encompassed the integration of the selected management stan-
dards and models most characteristic in organisations in the field of market services which
simultaneously significantly impact greater added value in the sense of the broader social
environment. The correlation between the integration of standards of socially responsible
management and business performance of an organisation is substantiated by various
theoretical discussions and actual studies performed worldwide as well as in Slovenia
(Kern Pipan & Soković, 2012). Bakker states that already in 2003, 127 empirical
studies were examined, majority of which confirmed the positive correlation of individual
key constituents of social responsibility and business performance of an organisation
(Bakker, 2008). In 2010, Rusjan and Castka carried out a study on the purpose and benefits
of the ISO 9001 quality management system in enhancing the efficiency of business pro-
cesses as well as other competitive advantages of an organisation (Rusjan & Castka, 2010).
In 2012, Bavec (2012) completed a comprehensive international empirical study on the
correlation between social responsibility, ethics in management and the economics
environment at the level of European, Asian and American countries.
Theoretical discussions and scientific studies confirmed a direct correlation between
increased social responsibility and improved economic efficiency, ethical cooperation of
management and partners, as well as a lower degree of corruptibility. In their study,
Munoz-Torres confirmed the beneficial impacts of the integration of standards of socially
responsible management on the improvement of business results, easier fulfilment of
requirements and expectations of all company stakeholders, as well as the improvement
of environmental impacts within an extended social environment in as much as 99% of
small and medium enterprises in Spain (Munoz-Torres et al., 2012). Other international
studies have also researched the importance of the socially responsible management
system and its influence on the business success of organisations, which also included
large enterprises based in the Republic of Slovenia (KPMG, 2011). Initially, the results
especially indicated poor understanding of and generally inappropriate reporting on the
principal importance and observance of the principles of social responsibility in the
business sector. Furthermore, socially responsible operations were recognised by an
4 A. Peršič et al.
The purpose of the questionnaire was to outline and evaluate the understanding and
actual implementation of selected socially responsible management standards and
models, as well as their impact on business performance. All the collected primary data
were analysed statistically by means of appropriate descriptive and inferential statistics.
That way, the statistical characteristics of data were evaluated by means of a single-
sample t-test in the majority of cases, while Spearman’s rank correlation coefficient was
used to examine the correlation between the understanding of selected management stan-
dards and the business performance of an organisation. The independent samples non-
parametric test (Kruskal– Wallis test) was used to establish the existence of differences
between the selected factors. Eleven variables were constituted according to the sets of
questions, and index reliability was calculated using Cronbach’s alpha for each variable
separately – for example, for the ‘familiarity with management standards’ variable, Cron-
bach’s alpha is 0.863 (.0.70), which means that the selected variable is well formed and
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4. Results
The questionnaire was filled-in in its entirety by 136 persons engaging in every included
market service in the Republic of Slovenia. The most, that is, 19 management representa-
tives, engaged in retail, banking and insurance as well as various other commercial activi-
ties (14% of all study participants), 14 participants in the study (10.3%) engaged in
transport and retail as well as scientific and technical activities, while 3 persons participat-
ing in the study (2.2%) dealt with real estate. The structure of the participating organis-
ations in percent by sectors is indicated in Table 1.
The statistical processing of the research results included 41 questionnaires properly
filled in by the representatives of large organisations with over 250 employees (31.2%
of the participants in the research) and 95 questionnaires filled in by the representatives
of mid-sized organisations (50 – 249 employees); 62 organisations (45.6%) in the study
were primarily owned by domestic private owners, while 44 participating domestic
6 A. Peršič et al.
organisations (32.4%) were in the majority ownership by the state, whereas 12 organis-
ations (8.8%) had a primarily foreign ownership structure. As many as 92 study partici-
pants (67.7%) were representatives of top management. In all, 82 participants (60.3%)
were male and in as many as 94 instances (69.1%), participants in the study held at
least a university degree, a Master’s degree or a PhD. Their average age was 44 years,
while they had an average of 14 years of service in the organisation that they managed
and are employed by. The total number of participating organisations was 136 out of
759 to whom the invitations had been sent out, constituting 17.9% of the selected popu-
lation and thus appropriate to ensure the adequacy of the statistical analysis of the data col-
lected throughout the study.
Table 3. Spearman’s rank correlation coefficient – understanding standards and the organisation’s
characteristics.
Growth in Number of Cost-
Familiarity Revenue Profit business employees Productivity effectiveness
R 0.246a 0.153 0.108 0.268a 0.083 0.013
P 0.006 0.105 0.232 0.002 0.366 0.894
N 123 114 124 134 122 113
Notes: Reproduced and adapted from own sources.
a
Identified statistical characteristics of standard understanding.
requirements and expectations of customers, is by far the most recognisable quality man-
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Table 6. Spearman’s rank correlation coefficient – understanding the standards and demographic
characteristics of the decision-makers.
Familiarity Sex Age DD_incom DD_total Position Education
R 20.028 0.243a 0.288a 0.184 20.191a 0.128
P 0.746 0.009 0.002 0.054 0.032 0.139
N 135 116 118 110 126 136
Notes: DD_incom – years of service in a company, DD_total – total years of service of decision-makers.
Reproduced and adapted from own sources.
a
Characteristic of the familiarity with standards.
Furthermore, the study examined the correlation between the understanding of man-
agement standards and characteristics of the study participants. Spearman’s rank corre-
lation coefficient indicates that the understanding of management standards is also
associated with the age of the participants in the study (p ¼ .009), years of service in
an organisation (p ¼ .002) as well as their position (p ¼ .032) – indicated in Table 6.
The coefficient is the highest in the following categories: participant’s age and years of
service in an organisation, which means that those are the key characteristics of managers
influencing the understanding of management standards.
By means of the Kruskal– Wallis test, the correlation between familiarity with man-
agement standards and a manager’s position of employment within an organisation was
examined. It was established that the understanding of management standards is most
characteristic for senior and executive management, that is, representatives of the
highest management of an organisation, who also influence an organisation’s perform-
ance to the greatest extent. On the other hand, the poorest understanding of management
standards is characteristic for middle management, which seriously influences the
adjustment, re-engineering and optimisation of the business processes within an organ-
isation. In practice, this results in a poorer realisation of quality projects and obstacles in
the way of systematic and continuous improvement of the performance of an organis-
ation – see Table 7.
electricity and gas, and the least for the field of informatics and real-estate business (Table
4). Furthermore, familiarity with management standards is more significant for older
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members of the executive management with more seniority in the company which they
run (Tables 6 and 7).
In confirming H2, the research has confirmed that participants in the organisation often
or fully take all the stated principles of social responsibility into consideration, whereas the
measured median values M range from 4.1 to 4.5 – shown in Table 8.
Spearman’s rank correlation coefficient was used to establish whether there are corre-
lations between the implementation of principles of social responsibility and the perform-
ance of an organisation with respect to the financial indexes presented in Table 9. The
study results prove that consideration of the principles of the ISO 26000 standard on
social responsibility does have a statistical influence on the majority of financial perform-
ance indexes of an organisation, that is, both the revenue and the maximisation of profits as
well as the cost-effectiveness of the operations.
5. Discussion
The study results have also confirmed certain findings of preliminary research, namely that
study participants are most familiar with the ISO 9001 standard, which is considered as the
foundation for the quality management system, while the principles of the ‘process’
approach expedite the fulfilment of the requirements and expectations of customers as
well as every other stakeholder in the organisation. It is followed by ISO 14001 on
environmental management systems. Participants are less familiar with the new guidelines
of ISO 26000, which were recognised later in the study as a basic starting point for the
socially responsible operations of an organisation. Here, a direct correlation was recorded
between familiarity with management standards and the characteristics of large organis-
ations in terms of revenue (p ¼ .006) and the number of employees (p ¼ .002) in an
organisation. Familiarity with management standards is, therefore, most characteristic
for large and successful organisations engaging in catering, electricity, gas and steam
supply as well as water supply. It is assumed that because of the current situation in the
business environment, the lowest ratings belong to sectors dealing with real estate (i.e.
‘the real-estate bubble’) as well as information and communication services. In the
sense of ownership of an organisation, the implementation of standards is most character-
istic for mixed-ownership and domestic enterprises in the majority ownership by the state,
while it is the lowest in public and scientific institutes. Especially characteristic is the fam-
iliarity with management standards by senior representatives of top management with
longer service in the organisation and more experience, who are as such responsible for
achieving the aims and objectives of an organisation within a social environment, and
10 A. Peršič et al.
the fact that the respect for the rule of law is obligatory
Transparency. Our organisation makes decisions and 136 4.3 4.0 5 0.878
performs activities that impact the society and
environment in a transparent way. We disclose the policy,
decisions, and activities for which we are responsible,
including their impact on the society and environment,
clearly and completely
Respect for human rights. Our organisation respects human 136 4.2 4.0 5 0.816
rights as well as acknowledges their meaning and
universal applicability
Respect for international norms of action. Our organisation 136 4.2 4.0 5 0.860
respects international norms staying loyal to the principle
of respect for the rule of law at the same time
Respect for the interests of stakeholders. Our organisation 136 4.1 4.0 4 0.789
respects, considers, and reacts to the interests of its
stakeholders (individuals or groups with interests in the
organisation’s activities)
Notes: Reproduced and adapted from own sources. In the statistical and probability theory, N, number; M, middle
value; Me, median value and Mo, mode.
Table 9. Spearman’s rank correlation coefficient – between the ‘principles’ index and the financial
indexes.
Principle Revenue Profit Growth of operations Productivity Cost-effectiveness
R 0.284a 0.392a 0.240a 0.159 0.284a
P 0.001 0.000 0.007 0.080 0.002
N 123 114 124 122 113
Note: Reproduced and adapted from own sources.
a
Organisation’s characteristics.
apparently more responsible in the sense of preservation and protection of the natural
environment.
In confirming H1, it was established that familiarity with management standards and
the excellence model is significant for organisations with a larger number of employees
and a higher income from operations. In confirming H2, Spearman’s rank correlation coef-
ficient was used to confirm the correlation between the ‘Principles’ index (consideration of
ISO 26000 on social responsibility) and the majority of the selected financial indexes
linked to the performance of an organisation.
Total Quality Management 11
6. Conclusion
The results of this study generally correspond to the findings of other conducted research,
especially those that included Slovenian organisations (Alič & Rusjan, 2010; KPMG,
2011; Piskar & Dolinšek, 2006), stating that executive management in organisations is
in general familiar with the standards of socially responsible management, which are
even implemented occasionally. However, in practice, this is insufficiently reflected in
the implementation of a systematic improvement of the operation processes and conse-
quently the business results (Kern Pipan et al., 2014). This could turn out to be a once-
in-a-lifetime opportunity to enhance an organisation’s operations as the results of the
study speak in favour of the findings that the implementation of the principles and guide-
lines of socially responsible operations in accordance with ISO 26000 directly positively
influences business results (Ženko et al., 2013).
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Another finding in our research was that the integration of socially responsible man-
agement standards as a rule is substantially poorer in organisations recording a less-
than-favourable performance, possibly due to poor engagement of an organisation’s
middle management or even due to the unfavourable economic situation or poor manage-
ment of an organisation during the depression, for example, in the field of real estate or the
well-known instance of the deterioration of the civil engineering sector in Slovenia, in part
also due to the lack of competitiveness of the information and communication services
sector.
In his research, McAlister has confirmed that the organisation that successfully inte-
grates the social responsibility concept into its comprehensive business strategy,
especially on the basis of the integration of current management standards, can build its
image on trustfulness, fairness and integrity, as well as develop precious sources for the
evolution of a new dimension of sustainable development and long-term operational
success (McAlister et al., 2005; de Waal, 2012).
The most important limitation of this study is the fact that questionnaires were filled in
by representatives of executive management, who as a rule have a better understanding of
management standards and models while also possessing a greater influence on the per-
formance of an organisation. Studies primarily include successful organisations. It is
similar in our study, which includes organisations that have generally introduced at
least one ISO 9001 quality management standard, though the study incorporated exclu-
sively a population of medium and large enterprises. Upgrading and optimisation of
socially responsible management standards integration as presented through this study
may in the future focus on even greater investments into employee education and training,
improving the communication between employees and customers within a social environ-
ment, as well as promoting the integration – especially of new socially responsible man-
agement standards and excellence models, for example, ISO 27001 on information
security management, ISO 26000 guidelines on socially responsible operations and the
EFQM European excellence model (Kern Pipan et al., 2014; Ženko et al., 2013).
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