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Wong Lai Cheng and Jamilah Ahmad
Wong Lai Cheng is Post Graduate Student and Jamilah Ahmad, PhD is Senior Lecturer, both at the School of Communication, Universiti Sains Malaysia, Penang, Malaysia.
Abstract Purpose – The purpose of this research is to gain deeper understanding on how the stakeholders’ relationship is incorporated in multinational corporations’ (MNCs’) corporate social responsibility (CSR) approach. Design/methodology/approach – Stakeholder theory by Freeman was used as the theoretical framework of this research. A case study of two established MNCs in Penang, Malaysia, were conducted and analysed through within-case and cross-case analysis. Three research questions focusing on aspects of CSR (internal and external), concerns of primary and secondary stakeholders based on Carroll’s three-domain approach and factors that inﬂuence CSR practices within each stakeholder group were developed. Findings – A main theoretical contribution of the study found that MNCs in developing countries are increasingly addressing new ways to incorporate CSR internal and external aspects in their operations which will eventually alter the fundamental process of evaluation among their stakeholders. Given the tendency among developing countries to regard all forms of CSR concerns, economic, ethical and legal concerns are equally important. Another main theoretical contribution of this study highlighted that different locality between home country and foreign country operation does affect the CSR work. Findings of this study show that the view of increasing investor clout on CSR in the country where they do business does not affect the MNCs and the inﬂuence of CSR activist as top CSR issues does not directly inﬂuence MNCs’ actual CSR work. Research limitations/implications – The study has clearly projected the use of stakeholder theory by Freeman. Internal and external aspects of CSR were supported by these organisations as their standard practices. MNCs need to assume these concerns (economic, ethical and legal) for meeting the obligations towards their stakeholders. Stakeholders are signiﬁcant drivers of CSR which can affect, or is affected by, the achievement of the organisations’ objectives. Practical implications – The study presents practical implications for policy makers and MNCs in developing countries on new ways of incorporating CSR internal and external aspects in their operations and various concerns (economic, ethical, legal) of stakeholders that have been accepted as necessary for the proper functioning of business. Originality/value – This research paper provides a strong base for MNCs and academicians to understand the various aspects, concerns and factors that inﬂuence CSR practices within each stakeholder group. Keywords Corporate social responsibility, Multinational companies, Stakeholder analysis, Malaysia Paper type Research paper
Being a socially responsible organisation seems like a necessary criterion to do business in the twenty-ﬁrst century. Business relies on a multitude of relationships with the stakeholders and staying connected to the parties who have an actual or potential interest in or effect on
VOL. 6 NO. 4 2010, pp. 593-610, Q Emerald Group Publishing Limited, ISSN 1747-1117
SOCIAL RESPONSIBILITY JOURNAL
the most serious environmental problem has been the disposal of toxic industrial waste and the absence of social security during the Asian ﬁnancial crisis of the late 1990s (Nautilus Institute for Security and Sustainable Development. PAGE 594 SOCIAL RESPONSIBILITY JOURNAL VOL. Arthaud-Day (2005) noted the signiﬁcance of investigating corporate social responsibility (CSR) strategies by MNCs from Asian countries that have been expanding rapidly. also known as MNCs to take responsibility for their operations and stakeholders has resulted on an increasing number of these large corporations starting to address the concept of CSR. thus bringing mass employment to developing countries as well as other beneﬁts to the society. 4 2010 j j .1 CSR CSR has been deﬁned as the duty of the organisation to respect individuals’ rights and promote human welfare in its operations (Manakkalathil and Rudolf. 6 NO. social and environmental impacts of their activities on stakeholders. One of the reasons given was. Organisation nowadays must operate as moral agents in society and they must be prepared to place public service and social responsibility over personal gains and special private interests. The World Bank (World Bank Group. the local community. CSR involves the idea of business being proactive in its relationship with a range of social actors (Varey. The increased globalisation has also made it even more difﬁcult for these MNCs. Many corporations open manufacturing factories in developing countries. Growing pressure on international organisations. Together with the emergence of concepts such as sustainable development. the concerns of CSR (primary and secondary stakeholders) based on Schwartz and Carroll’s (2003) three-domain approach and factors that inﬂuence CSR practices within each stakeholders group. ethical. 2006). legal. their families. 2008). ‘‘Corporate social responsibility (CSR) promotes incompetence by leading managers to involve themselves in areas beyond their expertise that is. More than 56 percent of foreign investors in transport equipment manufacturing chose Penang as their manufacturing base. 1991. In Malaysia. 92). since stakeholders’ expectations are host countries have been added to the list. namely Agilent Technologies (Malaysia) Sdn. World Business Council for Sustainable Development (WBCSD) in 1999 deﬁned CSR as the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large (WBCSD. in ways that are good for business and good for development.the business.. global business citizenship and pressure from and demands by various stakeholders help explain the key role of CSR in the business world. 1997). 1995. Bhd. Since high-tech production began in Malaysia in the early 1970s. and philanthropic expectations placed on organisations by society at a given point in time. The Malaysian government’s stand on CSR is that all organisations including MNCs in the country should take account of the economic. and Intel Technology Sdn Bhd that focuses on how stakeholders’ relationship is incorporated in CSR approach based on the internal and external aspects of CSR. 2. American companies continue to be heavily involved in Penang. 2004) deﬁnes CSR as the commitment of businesses to contribute to sustainable economic development – working with employees. and society at large to improve the quality of life. p. 2002). 1999). From the period of January to September 2008. Oppewal et al. This study followed this call and expanded the research on two main established MNCs based in Penang. Carroll and Buchholz (2000) stated that CSR encompasses the economic. Freeman and Liedtka (1991) presented seven reasons why the concept of social responsibility is often abandoned. Penang remained the most popular location for investors to base their manufacturing plant for export-oriented industry of scientiﬁc and measuring equipment (SERI. repairing society’s ill’’ (Freeman and Liedtka. Literature review 2.
2. organisations are expected to engage with their stakeholders through various initiatives and activities. 2. According to Stark (1994). VOL. 4 2010 SOCIAL RESPONSIBILITY JOURNAL PAGE 595 j j . or must be respected by the corporation. stakeholders that are critical for the continued existence of the company and secondary stakeholders that are affected. Within the organisation. Andriof and Waddock (2002) claim that stakeholder engagement integrates stakeholder thinking with ideas from CSR and strategic networking. or is affected by. 2001).3 Stakeholders’ engagement in CSR Stakeholder engagement involves ways of staying connected to the parties who have an actual or potential interest in or effect on the business. p. the achievement of the organisation’s objectives. or beneﬁts from. Stakeholder engagement has been listed as a main aspect to assess the standard of CSR. 166) then suggested two simple principles: 1. which demands that the corporation has the obligation not to violate the rights of others. 6 NO. by the company’s decisions (Rosam and Peddle.] any group or individual who can affect. says that companies are responsible for the effects of their actions on others. 2004). A stakeholder-oriented approach to CSR emphasises that organisations exist within large networks of stakeholders. 2004). all of which stake claims on organisations. In the light of these two basic principles a stakeholder can be deﬁned in the following slightly more precise way: A stakeholder of a corporation is an individual or a group which either is harmed by. A stakeholder-oriented approach to CSR emphasises that organisations exist within large networks of stakeholders. When organisations face demands from stakeholders to recognise the importance of CSR.. It is said that a company has primary stakeholders. management system. . principle of corporate effect. all of which stake claims on organisations (Theaker. The approach of CSR is based on the stakeholder perspective and discussion of the debate on business and society relationships. or whose rights can be violated. Stakeholder Theory typically focuses on the attributes of the actors in the relationships of the ﬁrm and the stakeholder. Freeman’s (1984. Evan and Freeman (1993. Stakeholder theory was developed and presented by Edward Freeman in the 1980s. CSR can be deﬁned as commitment of business to contribute towards economic development while improving the quality of life of society at large in an ethical and responsible manner. 46) original deﬁnition is perhaps the most widely used: A stakeholder in an organisation is [. stakeholder theory of the ﬁrm is probably the most popular and inﬂuential theory to emerge in the CSR area. principle of corporate rights. the corporation. CSR may have the potential to strengthen stakeholder relationships and instils greater conﬁdence and trust amongst stakeholders by optimising the positive effects and minimising the negative effects of its actions on various stakeholders. they generally translate those demands into CSR objectives and develop CSR policies for the stakeholders. that is. alongside aspects such as stakeholder commitment. 2008). The stakeholder approach begins by looking at various groups to which the corporation has a responsibility. the interests of these various stakeholders meet and interact with one another and the interests of the organisation. audit and certiﬁcation (Tencati et al. In fulﬁlling CSR obligations.2 Stakeholder theory by Edward Freeman Interest in CSR has been inﬂuenced by stakeholder theories (Henderson.In summary. and 2. p. . directly or indirectly. reporting.
Many studies have been published since the 1970s focusing on demand characteristics of consumers of products and services to which are attached green characteristics natural cosmetics. community relations.4 Aspects of CSR (internal and external environment) Kok et al. the maximisation of proﬁts. industrial relations. and education and training. ethical and legal) are equally important. this part of this ‘‘social contract’’ is that businesses in turn have an obligation to operate within the legal framework that society has created. 2. Companies understand that they have to respond to stakeholder concerns how companies have performed against social and environmental criteria and being more open in reporting such criteria (Zadek. and avoiding harm or social injury as well as preventing harm caused by others (Smith and Quelch. for the purposes of their three-domain CSR approach.. respecting peoples’ moral rights.6 Factors that inﬂuence CSR within each stakeholders’ group Different stakeholder groups are the most signiﬁcant drivers of CSR for businesses (Warhurst. criteria: 1. 1993).2. The deﬁnition also implies that social responsibility requires companies not only to strive for economic gains. the maximisation of share value. This is also supported by Clarkson’s (1995) deﬁnition of social and stakeholder issues that there is a difference between responsibilities towards society and towards stakeholders. state. Certo (1993). The external aspects are: social responsibility and new opportunities. doing what is right and fair. These aspects can be used as a part of the CSR planning process both strategically and operationally to review current internal and external CSR practices. these three elements (economic. It also identiﬁes the ones (stakeholders) able to contribute to the CSR work. The internal aspects are: physical environment. 6 NO. but also to address moral issues that they face. 1963). (2001) presented a framework for CSR aspects that is both internal and external. 2. 2004). but related. communication and transparency. working conditions. the economic domain captures those activities which are intended to have either a direct or indirect positive economic impact based on two distinct. consumer relations. supplier relations. Finally the combined internal and external aspect is ethics. minorities/diversity.1 Consumer demand for ‘‘pro-CSR’’ goods and services. The aspects of CSR according to Kok et al. 1991) has summarised. recycled paper PAGE 596 SOCIAL RESPONSIBILITY JOURNAL VOL. Ethical concern entails being moral. Schwartz and Carroll (2003) deﬁne their legal concern of CSR pertains to the business ﬁrm’s responsiveness to legal expectations expected by society in the form of federal. 2. The framework is based on previous literature by Humble (1975 cited in Kok et al. 1998). 4 2010 j j . CSR is concerned with the needs of stakeholders beyond the merely economic goal but also certain concerns for meeting the obligations required by the stakeholders like ethical and legal responsibilities. (2001) consist of 14 aspects. and shareholder relations. Called the three-domain approach of CSR. and local jurisdictions. It simpliﬁes the development of a CSR improvement plan and it provides basic data for measurement of CSR implementation in the organisation. As Carroll (1979. It is also a way to identify the strategic and practical CSR strengths and weaknesses. According to Schwartz and Carroll (2003). natural environment.6. and/or 2.5 Concerns of CSR based on Schwartz and Carroll’s (2003) three-domain approach CSR implies that corporations have not only economic and legal obligations. The ethical concern component recognises that corporations should act above bare legal obligations. organisational structure. 2001). and Porter (1990) to give the framework a spectrum as broad as possible concerning the aspects of CSR which affect the stakeholders. but also certain responsibilities to stakeholders that extend beyond these obligations (McGuire and Joseph.
6.2 NGOs increasingly sophisticated. 2. 2002). Large corporations are actors to promote CSR among smaller business players to ensure that their suppliers are at least complying with laws and minimal business standards.4 Increasing investor clout on CSR. Most predictions point to increasing numbers of employees concerned about the social values of their employer. VOL.and eco-vacations (Crane and Matten.6 Governments require mandatory disclosure. Concerns about the environment particularly climate change and secondarily water quality and supply/access. 2002).. Good community relation is crucial for sustaining business activities as they are important external auditors that provide legitimacy and ‘‘license to operate’’ and represent potential channels of business insights for companies to better design products and services (Gaspar.6.6. There is some disbelief about the impact socially responsible investment (SRI) will have on the future of CSR. 2003). Companies with a bad CSR track record will have difﬁculty recruiting compared to their more advanced CSR counterparts (Strandberg. For those who addressed the issue of suppliers all agree that large companies will be driving CSR up and down their supply chain. the relationship of the ﬁrm’s social and ethical concerns with ﬁnancial performance. Non-governmental organisations (NGOs) are often part of the secondary stakeholder groups. business ethics and community embeddedness (Visser. including issues of transparency and integrity. CSR often draws cultural traditions of philanthropy. 2. but that of their business partners. social exclusion. 2. social exclusion particularly poverty and access to necessities and governance and accountability.5 The ripple effect up. Henderson (2001).6. 6 NO. tax credits. down and across the supply chain. were the top issues raised by CSR activist (Strandberg. labour conditions. governance. 1994). (1988). 4 2010 SOCIAL RESPONSIBILITY JOURNAL PAGE 597 j j . 2002). 2004). 1995). 2001.6. 1999). accountability and ethics top CSR issues by CSR activist. 2003). There were opinions to which governments will be intervening in the future to encourage more CSR behaviour from the private sector and companies and some are using other voluntary and incentive-based tools such as preferential CSR procurement. Increased measurement and monitoring will push the standards and norms higher for all CSR issues.8 Partnership and civil society demands. Social expectations and pressure for speciﬁc types of CSR have varied over time and are contingent on the nature of the company (Richardson et al. Prothero (1990) considers eco-consumerism as a strategy to capture new markets. Expectations are that the best and the brightest companies most desire will increasingly use their clout in the labour market to affect increased CSR performance of corporations. Within these groups are the NGOs which are a major driver for companies to perform in an environmentally and socially responsible manner. investment subsidies. 2. 2. Davis. 2. This will come about due to the growing insistence that responsible companies look at the impact not only of their own operations. Screening out stocks that negatively impact the environment. 2002). CSR criteria for foreign aid and foreign direct investment as well as pension disclosure (Strandberg. Knox and Maklan (2004) and Greenﬁeld (2004) go even further saying that companies are being blackmailed by NGOs to behave responsibly. but they can cause signiﬁcant damage to a corporation (Clarkson. 2008). Consumers expect that increased social and environmental tragedy will increase consumer awareness and information of these issues thereby growing the ethical consumer market.6. coordinated. According to McGuire et al. voluntary compliance.6.3 Employees a growing CSR force. export guarantees. The issues of ‘‘responsible’’ supply chain management are CSR and supply chain management (capacity to engage SMEs in CSR activities) and CSR-related instruments (capacity to support SMEs toward pro-CSR initiatives) (Gaspar.7 Environment. are increasingly be seen as the weaker investment tool for encouraging CSR (Strandberg. human rights or that positively impact communities for example. 2. challenged and divided. Governments have encouraged CSR behaviour among businesses (Moon. Bansal and Roth. 2000. with the result that some companies might specialise particular CSR areas relevant to their business. CSR is a core corporate duty which consists of corporate decision making.
b). Within-case analysis implies that PAGE 598 SOCIAL RESPONSIBILITY JOURNAL VOL. This purpose has resulted on speciﬁc research questions stated below: RQ1. The ﬁrst sample criterion was that the companies had to be MNCs based in Penang. To date. Under the Involved Matching Grant Programme (IIMGP) programme. CSR and sustainable development reports and other printed sources by the companies are examples of documentation were used in this study. 2009a. from January 1 to December 31 in 2007 (The Star Publications. the MNCs had to be engaged in CSR activities. Agilent Technologies (Malaysia) Sd. These stakeholders play a credible role in inﬂuencing the company’s CSR agenda. Personal interviews with four senior managers responsible for CSR matters in their organisations were conducted. Companies’ web sites. Intel Malaysia garnered the Responsible Entrepreneurship Award for its corporate responsibility programmes at the Asia Paciﬁc Entrepreneurship Awards 2008 (APEA 2008) in July 2008. 4 2010 j j . Non-probability sampling was used as the sampling technique of this study. Interviews and documentation were the most apt data collection methods to use for this study. How can the (internal and external) aspects that affect the performance of stakeholders be deﬁned? How can the concerns of CSR for primary and secondary stakeholders based on Schwartz and Carroll’s (2003) three-domain approach be described? How can the factors that inﬂuence CSR practices in MNCs within each stakeholders group be explained? 4. annual reports. The two MNCs which were chosen for this study are Agilent Technologies (Malaysia) Sdn Bhd and Intel Technology Sdn Bhd because these companies are the pioneer US-based companies in Penang and well-recognised for their extensive work in CSR in Penang. the amount was for 59. 6 NO. Method In this study. Intel Malaysia was awarded the Prime Minister’s Corporate Social Responsibility (CSR) Award 2007 for the best Community and Social Welfare initiative in the country.720 hours of service by IIMGP volunteers in 23 schools across Penang and Kulim. they choose education to be the core of its engagement with its community. the researcher compared and investigated a limited number of companies using theory as a base and investigated these companies within their real-life context. Intel Foundation donates a ﬁxed grant amount of US$4 to participating schools for every hour that an Intel employee spends volunteering there. Bhd’s approach to CSR initiatives and the apparent success it has achieved so far in Malaysia can be seen in different areas like workplace and employee volunteerism such as the Agilent’s After School project (science workshop for students) Agilent Technologies was named the number one best place to work on the inaugural list of ‘‘Best Employers in Asia’’ in a study conducted by Hewitt Associates and Dow Jones publications. For Intel Malaysia. 3. In November 2007. The Asian Wall-street Journal and Far Eastern Economic Review (Penang Development Corporation.Businesses need to frame CSR as a challenge to ﬁnd the most appropriate ways and means to contribute to the development of the communities as well as their stakeholders in which they operate. The company encourages employee volunteerism policy to communicate the importance of education to schoolchildren. the purpose of this research is to gain deeper understanding of how the stakeholders’ relationship is incorporated in MNCs’ CSR approach. and to perceive their MNCs as a global citizen. RQ2. the data were reduced through a within-case analysis for each research question and case. Purposive sampling strategy was used when selecting the right MNCs for this research study. When analysing the data collected for this study. 2004). Research questions Based on the previous literature review. Thereafter. RQ3.
The instrument was pilot tested before the ﬁnal version was used in the actual study. conclusion drawing and veriﬁcation is presented in the last chapter. When it comes to social responsibility and new opportunities. In order to increase the construct validity. consumer relations. 1994). supplier relations and natural environment. all consider the internal and external aspects of CSR important for their operations. Consumer relations are a central part of these MNCs’ work in CSR. intellectual and social asset in each nation and community in which they do business. communication and transparency. This allowed the respondents to prepare themselves for the interviews. (see Table I) considering that both MNCs’ (Intel Technology Sdn Bhd and Agilent Technologies (Malaysia) Sdn Bhd) perception of the internal and external aspects of CSR agreed with the literature that these aspects can negatively affect the stakeholders and can be used as capabilities to beneﬁt them. which allows a researcher to detect similarities and differences of the different cases (Yin. Regarding the reliability of this study. The respondents were managers involved in their company’s CSR activities. 6 NO.1. industrial relations and education and training and in accordance with the internally and externally aspect which is ethics awareness were all part of the content of Agilent Technologies (Malaysia) Sdn Bhd’s and Intel Technology Sdn Bhd’s CSR (see Table I). These two MNCs have strong interest in the natural environment and address several of these issues in their sustainability reports. minorities/diversity. 4 2010 SOCIAL RESPONSIBILITY JOURNAL PAGE 599 j j . Physical environment such as health and safety is an area that both MNCs in this study focus on and strive to improve continuously. 1994). where careful conclusions have been drawn from the different ﬁndings of the research. The MNCs subjected to this study. working conditions. This review also prevents misunderstanding that might have occurred which gives higher reliability. Both MNCs offer good working conditions for its VOL. During the interviews.a researcher compares a case against previous theory (Yin. the respondents were informed about the topic in advance and were given a copy of the same. These MNCs believe that the external aspects of CSR: social responsibility and new opportunities. ﬁgures-format. the respondents were allowed to speak freely about the topic and leading questions that could affect the answers were avoided.1 Within-case analysis 5. an interview guide was presented to the researcher’s supervisor prior to the interviews and was checked by the interviewees from Agilent Technologies (Malaysia) Sdn Bhd and Intel Technology Sdn Bhd. organisational structure and management style. interview guide prior to the interview sessions. in relation to the aspects of corporate social responsibility (internal and external environment) is found congruence between the theory and the two cases as well as between the cases parallel. shareholders relations did not seem to have a signiﬁcant importance on both MNCs’ CSR aspects because of the availability of the procedures to keep shareholders informed about their corporate activities and investment decisions are centralised in their HQs rather than in foreign countries operation. Having good supplier relations are essential for these two MNCs. community relations. cross-case analyses were made. both MNCs engaged in economic. A cross-case analysis is where the two cases are compared with each other. A tape recorder was used during the interviews in order for the researcher to go back to what was said to further increase the construct validity of this study. 5. Good community relations are essential for both MNCs’ business. However. Support for RQ1. Then. The last step. Findings 5. which further reduced and displayed the data. internal aspects of CSR: physical environment.1 Aspects of CSR (internal and external environment). Shareholder relations are based at their main head quarters (HQ) because of the availability of procedures to keep shareholders informed about investment decisions are centralised at their main HQ. Both the within and cross-case analyses are displayed in the following chapter.
accessibility policy. health and safety programmes. gender. test and measurement instrument manufacturing. marital status. environmental and health and human services needs. webcasts. climate change impact. and waste recycling are important ingredient of its future business success Procedures to keep shareholders informed about investment decisions are centralised at HQ Long-range goals for environmental health and safety is to prevent all injuries in the workplace Working environment that empowers. conservation of resources. dialogues and multi-sector efforts and exchanges with joint industries Intel University volunteer instructor programme and training workshops for employees Code’s business principles and guidelines promote honest and ethical conduct. deter wrongdoing. inclusion and accessibility such as: non-discrimination policy. and volunteer activities Intel’s Customer Excellence Programme Intel Malaysia’s Supplier Day and Supplier Newsletter Environmental goals for energy and water use. sponsorship programmes. global supply chain development centre for test and measurement and semicon products. extended coffee breaks. veteran status. but not limited to race. harassment-free work environment Six VPs from Penang to take charge optoelectronics and motion control products. and promotion of environmental responsibility Procedures to keep shareholders informed about investment decisions are centralised at HQ Preventing work-related injuries and illnesses while increasing awareness of safety implications and improving overall site-safety performance Help employees manage commitments in their work and personal life Employee diversity. HQ for supplier mgt quality. VMGP. dialogues and multi-sector efforts and exchanges with joint industries Programmes. workshops and on-the-job learning to help its employees develop their technical and professional capabilities Conduct business with uncompromising integrity and to promote human rights within the company’s sphere of inﬂuence Works with in this area are through the Millennium Development Goals (MDGs) Consumer relations Supplier relations Natural environment (pollution and packaging) Intel Involved Matching Grant Programme (IIMGP). worldwide manufacturing centre for optical navigation and imaging products and R&D and IC design centre Open-door approach. cash and in-kind donations. meetings. age. balance between campus recruiting. management by wandering around. motivates. Asia marketing. national origin.Table I Aspects of corporate social responsibility (internal and external environment) Internal and external aspects External environment Social responsibility and new opportunities Agilent Technologies (Malaysia) Sdn Bhd Intel Technology Sdn Bhd Community relations Social responsibility role includes: support science education. religion. meetings. and employee hot lines Engages in policy in legislative efforts through discussions. and recognises the achievements of all their employees Equal employment opportunity. open forums. and most of Intel’s company directors are not employees Shareholder relations Internal environment Physical environment Working conditions Minorities and diversity Organisational structure and management style Communication and transparency Industrial relations Education and training Written communications. and disability Roles of chairman and CEO are separate. sexual orientation. environment. and health and human services issues Customer Satisfaction Programme and Customer Engagement Day Annual Supplier Day Recycling. 6 NO. public policy issues. 4 2010 j j . environmental. prevention of pollution. and support compliance with applicable laws and regulations Internally and externally Ethics awareness PAGE 600 SOCIAL RESPONSIBILITY JOURNAL VOL. ancestry. meetings. blogs and cyber-chats Engages in policy in legislative efforts through discussions. workforce diversity and development of products that provide environmental and social beneﬁts Increase student interest and achievement in science education. gender identity. colour.
1. Both MNCs in this study emphasise on ethics awareness and their codes of conduct states that they work with high standards of business ethics and integrity in order to show their stakeholders that they are a social responsible company. These are economic.2 Concerns of CSR based on Schwartz and Carroll’s (2003) three-domain approach. insurances. MNCs in this study (Agilent Technologies (Malaysia) Sdn Bhd and Intel Technology Sdn Bhd) believe that economic concern is important for the following stakeholders: B B B employees and managers. Support for RQ2 in relation to the concerns of CSR based on Schwartz and Carroll’s (2003) three-domain approach also found congruence and the results are provided in Table II. ? ¼ The data ﬁnding is inconclusive. Table II Economic. Both MNCs participate in trade. legal and ethical responsibilities. ethical. Both MNCs in this study provide all of their employees with education and training in order to develop them as individuals and professionals. The ﬁndings between the two cases are equal and consistent with the empirical study by Schwartz and Carroll’s (2003) three-domain approach (see Table II).employees. industry and professional organisations that are local and national by enabling the company to work with other companies on issues that affect the industry by keeping abreast of industry issues. Minorities/diversity is something that these two MNCs strive to accomplish. ethical and legal concerns of corporate social responsibility (CSR) based on Schwartz and Carroll’s (2003) three-domain approach Agilent Technologies (Malaysia) Sdn Bhd Economic Ethical Legal Intel Technology Sdn Bhd Economic Ethical Legal Stakeholders/concerns Primary stakeholders Shareholders and other investors Employees and managers Customers Local communities Suppliers and business partners Natural environment Future generations Nonhuman species Secondary stakeholders Government and regulators Civic institutions Social pressure groups Media and academic commentators Trade bodies Competitors Environmental interest groups Animal welfare organisations ? þ þ þ þ N/A – N/A þ N/A þ – N/A N/A N/A N/A N/A þ þ þ þ þ þ þ þ þ þ þ þ N/A þ þ N/A þ þ N/A þ þ N/A N/A þ þ – – þ N/A þ N/A ? þ þ þ þ N/A þ N/A þ N/A þ – N/A N/A N/A N/A N/A þ þ þ þ þ þ þ þ þ þ þ þ N/A þ þ N/A þ þ N/A þ þ N/A N/A þ þ – – þ N/A þ N/A Notes: + ¼ The data ﬁnding embrace the aspect of the theory. and legal. local community. suggesting that these MNCs have responsibilities towards each stakeholder (primary and secondary stakeholders) and these responsibilities can be qualiﬁed according to Schwartz and Carroll’s approach using the economic. This study shows that both MNCs have addressed three different concerns where their CSR work is carried out. Both MNCs based in Penang are committed to an open communication and transparency practice within the organisations. The MNCs in this study see organisational structure and management style as important in their business operations. and employee beneﬁts. consisting of good wages. customers. 6 NO. – ¼ The data ﬁnding does not embrace any aspect in the theory. 5. 4 2010 SOCIAL RESPONSIBILITY JOURNAL PAGE 601 j j . N/A ¼ The data ﬁnding is not applicable VOL. pensions.
The company’s community care for future generation is evidenced through cash and in-kind donations as well as funding. nonhuman species and secondary stakeholders: government and regulators. The two MNCs in this study have been consciously and strongly committed to community involvement in which employees are encouraged not only to give money. These MNCs believe that the way they operate business in the country are effected by ethical concern on operational areas like product environmental as well as health and safety concerns. and percentage of signiﬁcant products and services categories subject to such procedures. environmental interest groups and animal welfare organisations (see Table II). future generations (for Intel Technology Sdn. Both MNCs claim that their CSR practices for employees and managers are affected by economic concern such as compensation and beneﬁts packages for employees and targeting employee cash compensation. The two MNCs in this study also contribute to dialogues and decision-making on public policies that affect the company. 4 2010 j j . Bhd. trade bodies. 6 NO. Both MNCs in this study claim that individual performance of executives is measured by business conditions and both MNCs offer programmes for skills management and lifelong learning that support the continued employability of employees and assist them in managing career endings. customers. suppliers and business partners. Ethical concern is important for both MNCs’ suppliers and business partners whereby environmental. media and academic commentators. and social pressure groups when integrating CSR. components and plant equipment. The two MNCs in this study state that economic concern is associated to their CSR practices by giving ﬁnancial support for the community. environmental. Intel Technology Sdn Bhd believes all students deserve to have the tools they need to become the next generation of innovators. These MNCs show its commitment to diversity and inclusion in the community by awarding grants and establishing partnerships with local universities to expand university curriculum. codes of conduct. future generations. The two MNCs in this study state that ethical concern has the ultimately factor for the CSR work for non-human species in Malaysia through their efforts to increase the number of turtles in Malaysian waters. The two MNCs in this study stated that the companies develop ongoing relationships with the state government in matters concerning corporate taxes on raw materials. Ethical concern is an area that this two MNCs focus on under natural environment whereby their products and services are assessed across their lifecycles to minimise their negative environmental impacts. local community. natural environment. Secondary stakeholders are: B B government and regulators.’s case only).B B suppliers and business partners. civic institutions. and encourage students to pursue a range of opportunities for technical study and research areas. Both MNCs believe in successful partnerships with diverse and small businesses and offer grows opportunities for small and diverse of local suppliers. Both MNCs state that their ethical concern is important for the future generations. Both Agilent Technologies (Malaysia) Sdn Bhd and Intel Technology Sdn Bhd consider ethical concern to be a framework for the following stakeholders: employees and managers. For Intel Technology Sdn Bhd ﬁnancial support towards this group of stakeholder (future generations) are seen through their contribution to schools in Penang and Kulim as part of their Intel Involved Matching Grant Programme (IIMGP) (see Table II). health and safety (EHS) expectations and statements of mission or values. The two MNCs also support social pressure groups activities by contributing to health and human services by giving monetary donations. its employees or operations. social pressure groups. and principles relevant to economic. and these companies PAGE 602 SOCIAL RESPONSIBILITY JOURNAL VOL. These MNCs state that besides selling products and services to customers and they should be involved in business transactions activities. Both MNCs believe that the concerns of their customers are affected by ethical concern in which health and safety impacts of products and services are assessed for improvement. and social performance and the status of suppliers were developed. but also time. engage in focused research.
Ministry of Education (MOE). Support for RQ3 in relation to the factors that inﬂuence CSR practices within each stakeholders group. Both MNCs in the study state that ethical concern is crucial and regarded as a key factor to their success in their relations with the trade organisations to achieve its business and citizenship goals by enabling the company to work with other companies on issues that affect the industry. For both MNCs in this study. is found congruence between the two cases and to some extent consistent with the literature review (see Table III). such as investment climate. natural environment. These MNCs state that legal concern is crucial and regarded as a key factor to their success in their relations with the trade organisations like Malaysian Industrial Development Authority (MIDA) on industrial relations issues. and optimisation of disaster relief efforts are seen through collaborations with local health.encourage communication between its managers with civic institutions ofﬁcials like Akademi Sains Malaysia (ASM).1. technology options and solutions for developing countries. Both MNCs believe that CSR practices for their supplier and business partners are connected to legal concern by stating that the company will not establish or maintain a business relationship with a supplier if the company believes that its practices violate local laws relating to labour standards or environmental protection and OSH certiﬁcation.3 Factors that inﬂuence CSR practices within each stakeholder group. Both MNCs formed approaches approach to managing potential environmental impacts and demonstrate its commitment to worldwide environmental excellence by completing independent third-party audits at its manufacturing sites each year that focuses on regulatory compliance. The two MNCs in this study state that legal concern contributes to the overall responsibilities for their customers to ensure that the products comply with relevant safety and regulatory requirements. improvements in supply chain management. These companies often collaborate with National Institute of Occupational Health and Safety Malaysia (NIOSH) and Social Security Organisation (SOCSO) when it comes to employees’ occupational safety and Employees’ Social Security Act. civic institutions. infrastructure policies. including applicable environmental standards and policies. suppliers and business partners. by keeping the company abreast of industry issues and best practices. and social performance and the status of their implementation of its employees and managers. customers. These MNCs mention that legal concern is aligned with the natural environment in order to provide products and services that meet legal and regulatory requirements. These MNCs’ interactions with social pressure groups to promote mutual understanding on critical issues such as regional education priorities. legal concern is a framework that is important to: employees and managers. environmental. Legal concern for environmental interest groups is important for both MNCs in this study. Animal welfare organisation is important to these MNCs through their working relationship with Jabatan Perhilitan Pulau Pinang and the World Wildlife Fund (WWF) to save Malaysia’s Green Turtles. The two MNCs state that legal concern is important to civic institutions as the way they do business. government and regulators. regional and national levels such as Ministry of Human Resources regarding operational areas such as product environmental and safety compliance. The two MNCs in this study believe that legal concern play an important role for government and regulators. and labour-related issues such as foreign workers policies. 4 2010 SOCIAL RESPONSIBILITY JOURNAL PAGE 603 j j . 5. Contrary to the VOL. and principles relevant to economic. Media and academic commentators are important stakeholders for these organisations and play an important role in information sharing. 6 NO. Both MNCs claim that CSR practices for their employees and managers are considered by legal concern statements such as codes of conduct. and by providing a vehicle in which the company can contribute to and inﬂuence public policy. human care and environmentalism organisations. Ethical concern is important for the two MNCs’ environmental interest group whereby environmental consciousness is part of every aspect of their work. The ﬁnding has signiﬁcant implications for MNCs in the developing countries which suggested that there are a number of factors that inﬂuence CSR practices within each stakeholders group for MNCs in foreign countries’ operation. trade bodies and environmental interest groups (see Table II). Both MNCs have ongoing relationships with regulators at local.
and make government more efﬁcient in communities Increasing investor clout on CSR The ripple effect up. 6 NO. governments require mandatory disclosure. social exclusion. although clearly more research on this topic is needed. health and community engagement Employee volunteerism through IIMGP and VMGP Corporate investment decisions are all centralised at their main head quarters Supplier ethics. environmental and social performance/CSR disclosure Can only be viewed as a source of information and feedback on these companies’ fulﬁlment of their CSR Provides local contributions to support civil society’s demands on science education and health and human services and that are ‘‘Inspiring Minds and Enriching Lives’’ in the communities Intel Technology Sdn Bhd Energy efﬁciency. These may be direct factors of the fact that control ownership over these aspects is based in their home country. outstanding performance. Both MNCs in this study believe that civil society demand as a part of the drivers that affect their CSR work. Factors inﬂuencing the two cases in CSR were quite similar overall in connection to the conceptualised literature. Factors that inﬂuence CSR within each stakeholder’s group that were agreed on by the two cases were: B B B B B B consumer demand for ‘‘pro-CSR’’ goods and services. technology support programmes and equipment donation programmes Use up to four hours of company time per-month. Another factor that inﬂuences these MNCs’ CSR practices is managing their suppliers. challenged and divided Employees a growing CSR force Agilent Technologies (Malaysia) Sdn Bhd Take-back recycling programmes to meet the WEEE Directive requirements Fund raisers. and innovative materials for eco-smart product designs Education and technology inclusion. and NGOs increasingly sophisticated. ripple effect up. voluntary compliance. accountability and ethics as top CSR issues by CSR activist factors did not seem to have signiﬁcant importance on these MNCs’ CSR approach. challenged and divided (see Table III). 4 2010 j j .Table III Factors that inﬂuence corporate social responsibility practices within each stakeholders group Factors Consumer demand for ‘‘pro-CSR’’ goods and services NGOs increasingly sophisticated. environmental stewardship and safety. employees a growing CSR force. protect the environment. Both Agilent Technologies (Malaysia) Sdn Bhd’s and Intel Technology Sdn Bhd’s primary objective is to be recognised as a responsible corporate citizen. coordinated. voluntary compliance can affect their companies’ CSR initiatives. The inﬂuence of NGOs is something that these MNCs in the study fully agree with and that they need to behave responsibly and partnered with NGOs in their CSR work. partnership and civil society demands. enhance education. Throughout the last decade. The two MNCs in this study share the opinion that governments require mandatory disclosure. increasing investor clout on CSR and environment. where they operate. greening of the supply chain and supplier diversity Forms partnerships with the government to build education programmes that address the needs of different communities Can only be viewed as a source of information and feedback on these companies’ fulﬁlment of their CSR Look for creative ways to help increase economic growth. The rise of emerging economies generates a challenge of managing supply chains across countries with different regulations and norms for CSR. down and across the supply chain Governments require mandatory disclosure. coordinated. people have become increasingly aware of how the manufacturing and use of electronics can affect the environment. particularly through volunteerism among its employees. book and food donation drives. to work on company-sponsored community activities Corporate investment decisions are all centralised at their main head quarters Supplier to follow responsible management practices Communicate its economic. improve healthcare. governance. down and across the supply chain. accountability and ethics top CSR issues by CSR activist Partnership and civil society demands literature review. social exclusion. voluntary compliance Environment. These MNCs state that consumer factor absolutely inﬂuence their CSR work. governance. PAGE 604 SOCIAL RESPONSIBILITY JOURNAL VOL.
suppliers and business partners.2. governance.2 Comparison of concerns of CSR based on Schwartz and Carroll’s (2003) three-domain approach. minorities/diversity. working conditions. 4 2010 SOCIAL RESPONSIBILITY JOURNAL PAGE 605 j j . The analyses of the two MNCs subjected to this study all indicate that economic concern is important when integrating CSR.2 Cross-case analysis 5. The internal aspects that the two MNCs look into are: physical environment. local community. MNCs only play important role in supplying ethical corporate information to these stakeholders and support the social pressure groups by participating in CSR activities that will beneﬁt the society at large. accountability and ethics issues by CSR activist and increasing investor clout on CSR do not inﬂuence both Agilent Technologies (Malaysia) Sdn Bhd’s and Intel Technology Sdn Bhd’s CSR initiatives. customers.2. The role of CSR activist on environment. Factors that inﬂuence the CSR practices within VOL. accountability and ethics issues directly does not affect how MNCs in this study are working with their CSR initiatives. The two MNCs state that legal concern is a fundamental part of the organisation and that they have a culture that supports such concern. and natural environment and were all agreed with the literature. customers. Instead the inﬂuence of CSR activist can only be viewed as a source of information and feedback on these companies’ fulﬁlment of their CSR and in form of collaboration. community relations. governance.2.3 Comparison of factors that inﬂuence CSR practices within each stakeholder group. Finally. communication and transparency.1 Comparison of aspects of corporate social responsibility (internal and external environment). 5. industrial relations. The two MNCs in this study share the same opinions that increasing investor clout on CSR does not inﬂuence their CSR practices. natural environment. a great amount of similarities are visible. Both Agilent Technologies (Malaysia) Sdn Bhd and Intel Technology Sdn Bhd have economic responsibilities towards the following primary stakeholders: employees and managers. supplier relations. From the analyses regarding the MNCs’ legal concern. environmental interest groups. media and academic commentators. The external aspects that the two MNCs look into are: social responsibility and new opportunities. local community. trade bodies. the congruence between the theory and the two cases as well as between the cases is similar. social exclusion. civic institutions. social pressure groups. social exclusion. the research found that both MNCs disagree with the literature on legal responsibility towards social pressure groups and media and academic commentators. future generations. However. 6 NO. nonhuman species. organisational structure and management style. and secondary stakeholder are: government and regulators and social pressure groups and future generations (applicable for Intel Technology Sdn Bhd only). 5. Both Agilent Technologies (Malaysia) Sdn Bhd and Intel Technology Sdn Bhd agreed with the literature and have the following primary stakeholders: employees and managers. 5. and animal welfare organisations that they found are important and need to be taken into ethical consideration under their CSR initiatives. In regard to the aspects of corporate social responsibility (CSR). suppliers and business partners. These companies only need to take responsibility over this aspect in their home country rather than in foreign markets. and. The analysis of CSR economic concern for both MNCs show similarities and agreed with the theory and literature.The somewhat surprising discovery for this research was that the inﬂuence of environment. both Agilent Technologies (Malaysia) Sdn Bhd and Intel Technology Sdn Bhd were clearly in accordance with the internally and externally aspect which is ethics awareness and agreed with the literature. Both MNCs perform legal practices and actions within their primary stakeholders group: employees and managers. suppliers and business partners. customers. trade bodies and environmental interest groups. and education and training. The factors inﬂuencing the two cases CSR in MNCs based in Penang were quite similar overall in connection to the conceptualised literature. secondary stakeholders: government and regulators. natural environment as well as their secondary stakeholders group: government and regulators. civic institutions. consumer relations.
governance. The role of stakeholders’ relationship in CSR practices among business practitioners is needed to improve the representation of these organisations with its community stakeholders as a standard business practice where they do business.1 How can the (internal and external environment) aspects that affect the performance of stakeholders be deﬁned? With reference to objective 1. education and training. coordinated. (2001) have said that these internal and external aspects can be used as a part of the CSR planning process both strategically and operationally to review current internal and external practices. the ripple effect up. internal and external aspects of CSR. customers. governments require mandatory disclosure. have said that these aspects can negatively affect the stakeholders and can be used as capabilities to beneﬁt them.each stakeholders group that were agreed on by the two cases are: consumer demand for ‘‘pro-CSR’’ goods and services. 6 NO. the main theoretical framework of this study. future generations (for Intel Technology Sdn Bhd’s case). employees a growing CSR force. concerns of primary and secondary stakeholders based on Schwartz and Carroll’s (2003) three-domain CSR approach. and ethics awareness. voluntary compliance. Kok et al. who stated that the procedures to keep shareholders informed about their corporate investment decisions were all centralised at headquarters and these companies only need to take responsibility over this aspect in their home country rather than in foreign markets. accountability and ethics issues by CSR activist is not an inﬂuential factor for both Agilent Technologies (Malaysia) Sdn Bhd and Intel Technology Sdn Bhd even though they state that CSR activist which is a part of the institutional consequences can inﬂuence their CSR initiatives. community relations. social exclusion. industrial relations. local community. 6. Economic concern is important for both business and non-business stakeholders like employees and managers. 6. The somewhat surprising discovery for this research was that the inﬂuence of environment. The inﬂuence of CSR activist can only be viewed as a source of information and in form of collaboration as well as feedback on the company’s fulﬁlment of their CSR initiatives. NGOs increasingly sophisticated. organisational structure and management style. Large businesses are increasingly aware about their responsibilities towards their stakeholders. and partnership and civil society demand.2 How can the concerns of primary and secondary stakeholders based on Schwartz and Carroll’s (2003) three-domain CSR approach be described? With reference to objective 2. The incorporation of internal and external aspects of CSR ensures that these MNCs are responsible towards stakeholders and identiﬁes the ones able to contribute to CSR work. down and across the supply chain. 4 2010 j j . ethical and legal as a part of the concerns for their stakeholders. These include: social responsibility and new opportunities. natural environment (pollution and packaging) and future generations. challenged and divided. communication and transparency. and secondary stakeholders are: PAGE 606 SOCIAL RESPONSIBILITY JOURNAL VOL. suppliers and business partners. Discussion This study has concluded that MNCs in Penang have high involvement in their CSR activities towards their stakeholders. supplier relations. both MNCs agree with the literature and have economic. the study’s ﬁndings strongly suggest that internal and external aspects of the CSR content are important to include for companies working in a global market. working conditions. physical environment. minorities and diversity. The study has clearly projected the use of Stakeholder Theory (1984) by Edward Freeman. The results of this study is also supported by Dan O’Brien (2001). 6. Increasing investor clout on CSR as a factor that inﬂuences their CSR practices was disagreed on by both Agilent Technologies (Malaysia) Sdn Bhd and Intel Technology Sdn Bhd.
suppliers and business partners. and environmental interest groups. natural environment. voluntary compliance. civic institutions. As Marks and Rapoport (2009) have stated. 6 NO. Even though Strandberg (2002) had proven that shareholder action will have impact in the CSR marketplace and establish incentives that drive corporations towards CSR. civic institutions. ripple effect up. trade bodies. businesses are essentially good for society. government and regulators. future generations. social exclusion. customers. The research has found quite interestingly that different locality between home country and a foreign countries operation does affect the CSR work in MNCs. 1991) has summarised that the society has sanctioned their existence. The results of this research is also supported by Clarkson’s (1995) deﬁnition of social and stakeholder issues that there is a difference between responsibilities towards society and towards stakeholders. governance. Marks and Rapoport’s (2009) study has shown that corporations should act morally. The two MNCs agree that legal concern is a fundamental part of the organisation and thus they perform legal practices and actions within the following stakeholder groups: employees and managers. however. The inﬂuence of CSR activist can only be viewed as a source of information and feedback on the company’s fulﬁllment of their CSR. 7. It is important for MNCs to understand that they have to respond to stakeholders’ concerns and conforms to the prevailing norms and expectations of social performance given by their stakeholders. this study has found that there are many factors that inﬂuence CSR practices within each stakeholders group and the fact that the companies mostly agree with the factors of inﬂuence brought up in this study acts as evidence for that. The research has evaluated both recognised VOL. The result of this study also found that ethical concern is crucial in MNCs’ CSR initiatives. the ﬁndings of this study shown that the view of increasing investor clout on CSR in the country where they do business does not affect these MNCs’ CSR practices because MNCs only need to take responsibility over this aspect in their home country but not in foreign markets. 4 2010 SOCIAL RESPONSIBILITY JOURNAL PAGE 607 j j . The results found that the inﬂuence of CSR activist that include environment. nonhuman species and secondary stakeholders: government and regulators. coordinated. environmental interest groups. legal and ethical responsibilities. and thus part of this ‘‘social contract’’ is that businesses in turn have an obligation to operate within the legal framework that society has created. natural environment. customers. as judged by how society views their actions. employees a growing CSR force. social pressure groups. factors that inﬂuence CSR practices in MNCs within each stakeholders group. local community.government and regulators and social pressure groups when integrating CSR. The study shows that the factors inﬂuencing CSR within each stakeholders group are: consumer demand for ‘‘pro-CSR’’ goods and services.3 How can the factors that inﬂuence corporate social responsibility practices in MNCs within each stakeholder group be explained? With reference to objective 3. Schwartz and Carroll’s (2003) three-domain approach asserted that companies have responsibilities towards each stakeholder and these responsibilities can be qualiﬁed according to Schwartz and Carroll’s approach using the economic. Such concern agrees with the literature and have: the following primary stakeholders: employees and managers. trade bodies. accountability and ethics as top CSR issues in MNCs does not directly inﬂuence MNCs’ actual CSR work. partnership and civil society demands. and NGOs increasingly sophisticated. media and academic commentators. governments require mandatory disclosure. Conclusions This paper has focused attention on the determinants of how stakeholders’ relationship is incorporated in the CSR approach in MNCs. and animal welfare organisations and agreed that MNCs should act morally. down and across the supply chain. challenged and divided. 6. Carroll (1979. suppliers and business partners.
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