corporate social responsibility in north odisha strengthening multiple stakeholder relationships

8/13/2019 Corporate Social Responsibility in North Odisha Strengthening Multiple Stakeholder Relationships

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Corporate Social Responsibility in North Odisha StrengtheningMultiple Stakeholder Relationships: A Field Experiment

Ratikant Satpathy 1

Bagwan Dash 2

Soumendra Ku. Patra 3

A S!RAC!

There has been a growing interest in the management literature in investigating the perceptionsof stakeholders toward corporate social responsibility (CSR). Studies have shown that anassessment of stakeholders' perceptions towards CSR may influence top management's decisionto respond in an encouraging manner to CSR initiatives. Several studies have been conducted onstakeholders' perceptions towards CSR. owever! these studies have been primarily conducted in

"ndia. #ery little research on CSR has been done in $disha. %nder this background! the purposeof this research is to e&amine stakeholders' perceptions by using an e&perimental research designon CSR in $disha! more particularly north $disha. Respondents were able to identify that CSRconsists of a range of responsibilities covering economic! legal! ethical! and philanthropiccharacteristics.

"ey#ords: Corporate Social Responsibility! Stakeholders! erceptions and ssessment.

Regional ead (Recovery and R*)! +ahindra , +ahindra -inancial Services td! /hurda! $disha 012 343! "ndia5 he can be reached at6ratikant.satpathy7rediffmail.com.4 ead! *epartment of 8usiness +anagement! -.+. %niversity! 8alasore! $disha! "ndia5 he can be reachedat6 bhagaban9fm7yahoo.co.in.: ssistant rofessor! Regional College of +anagement ( utonomous)! Chakadola #ihar!Chandrasekharpur! 8hubaneswar ; 12 34:! he can be reached at6soumendra.patra7gmail.com.

$N!RO%&C!$ON
mailto:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]


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Corporate Social Responsibility (CSR) is a way towards responsible competitive environment5 it

provides that! social behavior of businesses is the parameters for success. CSR movement all

over the world had been to many phases and faces after its orientation in the corporate world

with a history of over 33 years in the developed economies. The initial phase was started with

the charity then social activism with environmental protection movements. $n the other hand!

simultaneously! legislations regarding employees< right were developed that resultantly forced to

change the corporate behaviors and indulged them to adopt such behavior that make them more

compliant towards legal! social and customer satisfaction. The ne&t phase of developing CSR! in

the corporate world rested with the absorption of social role aligned with the profit takings. "n

past few years! a paradigm change in the CSR role of the corporate world was observed from

profit orientation organi=ation to building relationship with share holders and society

Since the concept of Corporate Social Responsibility (CSR) was initiated in >4? by Sheldon! it

has been a worldwide sub@ect of intense controversy and interest for business! society!

government! and academia alike. The proverb Abusiness is businessB has been critici=ed and

definitions of a more humane and ethical! more responsible and transparent! and more

sustainable way of conducting business have emerged ( indfelt and T rnroos! 433D5 +arrewi@k!

433:). This field has grown significantly! incorporating a great proliferation of theories!

approaches and terminologies! such as social issues management! sustainable development!

sustainable entrepreneurship! business ethics! eco0@ustice! stakeholder management! and CSR

etc. (Earriga and +elF! 433?). "n management literature! the definitions of such issues are too

diverse to form a universally accepted definition of CSR. owever! there is an agreed consensus

on the principles that CSR is about doing business sustainably and ethically! as well as treating

or addressing stakeholder concerns responsibly ( opkins! 433?5 anapanaan et al.! 433:).


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dimension and the highest point ranked as one! followed by second highest point ranked as two!

and ne&t point tanked as three and four conseKuently.

Figure *: !he pyramid o+ Corporate Social Responsibility

Source6 Carroll ( >> ! p. ?4)

"t can be summari=ed that the level of awareness on the importance of CSR among the

stakeholders in Horth $disha are still low even though managers and e&ecutives are supportive

of companies< involvement in CSR activities. $ne study shows that stakeholders in Horth $disha

perceived economic dimension as the most important dimension based on Carroll


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)ho are Stakeholders,

The following is list of D key stakeholders for any corporate sector5

The Corporate sectorL 8oard of *irectors L 8oard of Trustees L +anagement

uman resourcesL Staff L Imployees L ersonnel L Mork force

Clientele L Consumer L Customer

urveyor L Supplier L -inancer (-inance roviders0 -inancial "nstitutions)

Society L eople L +edia L uditors

Eovernment L Regulator L ocal uthorities L ssociations

Role o+ Stakeholders in the Corporate -o.ernance o+ Corporate Sector/Emerging Market Firms0 o+ North Odisha

Corporate Eovernance (CE) in its true sense is the mechanism of achieving the pre set corporate

ob@ectives where responsibilities are associated with accountabilities. Eood Corporate

Eovernance could not be achieved without the proper participation of all the stakeholders in the

process of corporate governance. The Horth $disha markets have been categori=ed the Imerging

+arket and all the listed companies at stock markets are reKuired to ensure the compliance of

Code of Corporate Eovernance. The one important function of Corporate Eovernance is to

protect the interest of all the stakeholders. *uring the past one decade! the emerging markets

firm of Horth $disha has recogni=ed the significant role of Stakeholders role for the corporate

governance. Ivery Stakeholder has some uniKue and special role in the CE e&ercise. llstakeholders are playing their due role and as a result of which corporate reforms are on its way.

-rom the above discussion! it is concluded that the stakeholders of corporate sector in Horth

$disha has very effective role in the CE. owever! the role is not efficiently been utili=ed to

improve the in Horth $disha. The efficiency in this regard was observed to be different on case


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and tries to clarify the relationship between antecedent individual (and stakeholder) factors and

perceptions of CSR.

Scope o+ the Study

The scope of the study restricted to the employees of various companies of Horth $disha. -or

the collection ofthe primary data the study was confined to Horthern region of $disha state

only.

Signi+icance o+ the Study

theoretical framework will be developed from the published literature. structured

Kuestionnaire is used to generate primary data. "n line with the research! primary data will be

generated by a survey! conducted on the population of Horth $disha.

2uestionnaire %esign

Kuestionnaire will be developed! on the basis of the variables related to corporate social

responsibility as identified from the literature. The respondents will be asked to record their

opinion on a 20point ikert0type interval scale i.e. strongly agree! agree! neutral! disagree and

strongly disagree. The Kuestionnaire will also contain Kuestions on the demographic profile of

the respondents. pilot survey is proposed to be conducted on :: respondents and language was

refined to make it more understandable. The final Kuestionnaire will contain Kuestions relating to

CSR and the demographic profile of the respondents.


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%A!A ANA'3S$S

Table0 shows the demographic profiles of the respondents. $ut of 1 respondents ma@ority ofthe respondents 1 O ( 4 ) are males and rest 4>O (23) are females. "n age group ??O (12)employees are above 2 years! 4DO (?2) employees are below :2 years and rest of therespondents are in between :2023 years. %nder the e&perience level D3O ( 34) of therespondents having D;43 years of e&perience! 41O (?D) are having less than 2 years ofe&perience and rest : O (4:) having more than 4 years of e&perience. %nder the occupation profile of employees (position in companyLorgani=ation)! 44O (:1) are from top level! ::O(?3) employees are from upper middle level background! 4:O (:>) employees are from+iddle level! 4O (43) were from lower level and 43O (:2) of respondents are havingunemployed. -urther in nature of organi=ation! ma&imum of the employees are from private

sector G?.G3O ( ?2) and only 2.43O from others category like tiny and ancillary industries.!able *: %emographic 1ro+iles o+ the Respondents

articulars Category Hos. 'ercentage

Eender +ale 4 1 O-emale 23 4>O

Total 1 33O

(ge

P:2 yrs ?2 4DO:D023 yrs 12 ??OQ2 yrs 2 :3O

Total 1 33O

I&perience

P 2 yrs ?D 41OD043 yrs 34 D3OQ 4 yrs 4: :O

Total 1 33O

osition in CompanyL$rgani=ation

Top evel :1 44O%pper +iddle evel ?3 ::O+iddle evel :> 4:Oower evel 43 4O%nemployed :2 43O

Total 1 33O Hature of $rgani=ation rivate Sector ?2 G?.G3O

$thers 4D 2.43OTotal 1 33.33O


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Reliability and (alidity

fter reviewing Table 4! it can be concluded that the items used in the Kuestionnaire areinternally homogenous and consistent. t the same time! all items that validated theKuestionnaire were good. Therefore! all the factors and variables in the Kuestionnaire aresignificantly contributing the study of Consumer perception towards CSR.

!able 4: Reliability Analysis o+ Consumer 1erception on CSR Factors/Cronbach5s Alpha0

Sl6 No6 $temsCronbach5s

AlphaNo o+$tems

Iconomic Responsibility 3.D4D 24 egal Responsibility 3.G4? 2: Ithical Responsibility 3.> 2? hilanthropic Responsibility 3.> 3 22 Charity rinciple 3.GD3 2D Stewardship rinciple 3.>3 21 Invironmental -riendliness 3.G21 2

fter reviewing the above analysis it can be concluded that the items used in the Kuestionnaireare internally homogenous and internally consistent and at the same time all the items are gooditems.

!able 7: %escripti.e Statistics o+ CSR Factors

$tems N Minimum Maximum MeanStd6

%e.iationIconomic Responsibility 1 2 :.>> .31

egal Responsibility 1 2 :.?1 3.>4>

Ithical Responsibility 1 2 ?.DD . 34hilanthropic Responsibility 1 2 :.12 .31?Charity rinciple 1 2 :. 4 .:32

Stewardship rincipleInvironmental -riendliness

11

22

:.4?.G?

3.1?23. 4?

Valid N (list wise) 171

-urther! it was observed in the above table :! descriptive statistics reveals that mean score of

factor AInvironmental -riendlinessB was coming highest mean score (?.G?) which mean strongly

agree upon this factor i.e. consumer perception is more this indicates that consumer are giving

highest importance that company should give more importance to environment which is a


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important factor consumer perception towards CSR in Horth $disha ! than coming AIthical

ResponsibilityB ?.DD which was a good indicator that company should be ethical responsible for

maintaining corporate social responsibility. The standard deviation of the factor ACharity

rincipleB was coming highest i.e. .:32 then coming factor AIthical Responsibility ( . 34)B

which indicates that in comparison to ethical responsible factor in charity principle factor

employees are giving inconsistent response towards CSR in Horth $disha.

Structural E8uation Modeling /SEM0 9 CSR 1erception Factors

Figure *: Structural E8uation Modeling o+ CSR Factors /Co.ariance o+ 1aths0

!able : Maximum 'ikelihood Estimates o+ the Model

Istimate S.I. C.R. abelIconomic Responsibility :.4G1 .3G4 ?3. :4 par944egal Responsibility :.?1? .31 ?G.> 3 par94:

3.29, 1.14

EconomicResponsibility

3.47, .86

LegalResponsibility

3.66, 1.21

EthicalResponsibility

3.75, 1.15

Philanth opicResponsibility

3.12, 1.69

!ha ityP inciple

3.21, .55

"te#a $shipP inciple

4.18, .15

En%i onmental& ien$liness

.2'

.2'

.24

.42

.18

.'2

.42

.32

.34

.34

.'1

.8 9

.97

.5'

.'4.87

.5 '

.'3.59

.'4

.'5


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Istimate S.I. C.R. abelIthical Responsibility :.DD .3G? ?:.?2: par94?hilanthropic Responsibility :.1?> .3G4 ?2.D:3 par942Charity rinciple :. 1 . 33 : .442 par94DStewardship rinciple :.4 .321 2D.::: par941Invironmental -riendliness ?. G .3:3 ? .2 3 par94G

!able ;: Co.ariances o+ the Model

Istimate S.I. C.R. abelegal Responsibility P00Q Iconomic Responsibility . >G .311 4.222 .3 par9Iconomic Responsibility P00Q Ithical Responsibility .434 .3> 4.4 G .341 par94Iconomic Responsibility P00Q hilanthropic Responsibility .4?4 .3>3 4.D>2 .331 par9Iconomic Responsibility P00Q Charity rinciple .?4: . :.1>? par9?Iconomic Responsibility P00Q Stewardship rinciple . 1> .3D4 4.G1D .33? par9

Iconomic Responsibility P00Q Invironmental -riendliness .3 G .3:4 .211 .2D? par9Degal Responsibility P00Q Ithical Responsibility .?4? .3G2 2.3 2 par91egal Responsibility P00Q hilanthropic Responsibility .:4? .3G3 ?.3?D par9Gegal Responsibility P00Q Charity rinciple .::D .3>D :.232 par9>egal Responsibility P00Q Stewardship rinciple .::> .32> 2.1D3 par9 3egal Responsibility P00Q Invironmental -riendliness .3 ? .341 .?>2 .D4 par9Ithical Responsibility P00Q hilanthropic Responsibility .G> . : 1.G1: par9 4Ithical Responsibility P00Q Charity rinciple .>D> . :4 1.: G par9 :Ithical Responsibility P00Q Stewardship rinciple .?>G .31: D.1>? par9 ?Ithical Responsibility P00Q Invironmental -riendliness .3:G .3:: . D> .4?4 par9 2hilanthropic Responsibility P00Q Charity rinciple .G14 . 4D D.> 4 par9 D

hilanthropic Responsibility P00Q Stewardship rinciple .?>1 .314 D.> 3 par9 1hilanthropic Responsibility P00Q Invironmental -riendliness .34G .3:4 .GG? .:11 par9 GCharity rinciple P00Q Stewardship rinciple .2G> .3G1 D.1G2 par9 >Charity rinciple P00Q Invironmental -riendliness .3:1 .3:> .>D1 .::? par943Stewardship rinciple P00Q Invironmental -riendliness .323 .344 4.44? .34D par94

!able


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Istimate S.I. C.R. abelegal Responsibility .G21 .3>: >.443 par94>Iconomic Responsibility . ?3 . 4? >.443 par9:3Ithical Responsibility .431 . : >.443 par9:hilanthropic Responsibility . ?1 . 4? >.443 par9:4Charity rinciple .D>? . G? >.443 par9::Stewardship rinciple .224 .3D3 >.443 par9:?Invironmental -riendliness . ?G .3 D >.443 par9:2

3.29

EconomicResponsibility

3.47

LegalResponsibility

3.66

EthicalResponsibility

3.75

Philanth opicResponsibility

3.12

!ha ityP inciple

3.21

"te#a $shipP inciple

4.18

En%i onmental& ien$liness

.'8

!"RPe ception

.14

.12

.'7

.16

.16

.'8

.25

', 1.14

e1

1

', .86

e21

', 1.21

e31

', 1.15

e41

', 1.69

e5 1

', .55

e61

', .15

e71

', .'8

e8

1

Figure 4: Structural E8uation Modeling o+ CSR Factors /1ath coe++icients0

"n the above table the path of stakeholder perceptions are coming significant. "n above table! the

co variance path coefficients are significant since all the p values are coming .


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!able =: Maximum 'ikelihood Estimates> Regression )eights: /-roup number * 9 %e+ault model0

Istimate S.I. C.R. abelCSR erception P000 Iconomic Responsibility . :G .34 D.DD3 par9CSR erception P000 egal Responsibility . 4? .34? 2.43? par94

CSR erception P000 Ithical Responsibility .313 .343 :.233 par9:CSR erception P000 hilanthropic Responsibility . 2G .34 1.DDD par9?CSR erception P000 Charity rinciple . D .3 1 >.?G par92CSR erception P000 Stewardship rinciple .3G4 .3:3 4.12D .33D par9DCSR erception P000 Invironmental -riendliness .4?> .321 ?.:? par91

!able ?: $ntercepts o+ the SEM 1ath

Istimate S.I. C.R. abelIconomic Responsibility :.4G1 .3G4 ?3. :4 par9G

egal Responsibility :.?1? .31 ?G.> 3 par9>Ithical Responsibility :.DD .3G? ?:.?2: par9 3hilanthropic Responsibility :.1?> .3G4 ?2.D:3 par9Charity rinciple :. 1 . 33 : .442 par9 4Stewardship rinciple :.4 .321 2D.::: par9 :Invironmental -riendliness ?. G .3:3 ? .2 3 par9 ?CSR erception .31D .:3? .42 .G34par9 2

!able *@: (ariances o+ the SEM

Istimate S.I. C.R. abele . ?3 . 4? >.443 par9 De4 .G21 .3>: >.443 par9 1e: .431 . : >.443 par9 Ge? . ?1 . 4? >.443 par9 >e2 .D>? . G? >.443 par943eD .224 .3D3 >.443 par94e1 . ?G .3 D >.443 par944eG .3G: .33> >.443 par94:

-or construct adeKuacy and discriminate validity of the test of Consumer perception towards

CSR in Horth $disha! confirmatory factor analysis through +$S was used to test whether theobserved measures were associated with their respective constructs. The fit of the model wase&amined and verified! that each indicator loaded significantly with its intended construct. Thenthe discriminate validity of the test of consumer perception practices was assessed by testingmodel that constrain the association between latent constructs and using a chi0sKuare test of thedifference in fit between the model with unconstrained association.


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model was tested! linking the constructs of Consumer erception parameters ; IvaluatingIconomic Responsibility! Ivaluating egal Responsibility! Ivaluating Charity rinciples!Ivaluating hilanthropic responsibility and Ivaluating Stwardship. The theori=ed eight factormodel! Chi0sKuare (2:4.32D! df 4G! pP.33 ! C-" .G2 ! HH-" .GG! R+SI .2G! provided agood fit to the data (8rowne and Cudek! >>:5 u and 8entler! >>>). Iach item loadedsignificantly with its intended construct! as evidenced by the t0values. (pP.3 ).

ll the p value of error in Table was acceptable at a signi cant level of 3.32. Mithin theanalytical framework of the study! structural eKuation model (SI+) was performed to determinethe inUuence of eight factors towards stakeholders< perceptions in Horth $disha. inear SI+estimates models6 a measurement model and a structural model. measurement model is onethat speci es some number of latent! unmeasured variables or factors! each with a speci ednumber of measured indicators or variables. structural model includes a set of paths(regression coef cients) or correlations between the various measured and unmeasured variables

in the overall model. The assessment of the model t is also revealed by the goodness of t inde&(E-") and other statistics such as the H " and T ". "t is generally recogni=ed that the E-"! H "and T " close or to above 3.>3 indicate a good model t. The root mean sKuare (R+SI )residual is a measure of the average e&plained variances and covariances in the model. The inde&should be close to =ero if the model ts the data well.

CONC'&S$ON

"t is apparent from this study that the long term financial success! sustainable growth anddevelopment of every organi=ation rest with the implementation CSR activities. There is a strong

need that the corporate sector of Horth $disha reKuires swift actions to accept and implement thefast growing CSR activism that is being adopted world wide and setting the new standards offinancial successes! social reputations and growth. $n overall basis! the corporate sector in Horth$disha is at the initial stage of CSR activism but needs serious efforts to accept and assume the present fast pace of CSR along with recent paradigm change world wide. There is a reKuirementto progress the overall Kuality of CSR in the Horth $disha. The stakeholders are the mostimportant element of CSR environment in any society and with reference to Horth $dishasociety! the stakeholders needs to get the awareness of what their rights are and how they could be protected. -urther! the role of stakeholders is reKuired to be more focused! effective andefficient towards good corporate governance and implementation of CSR. t the end! the longterm financial , socio economic successes! sustainable development and organi=ation growth ofcorporate sector of Horth $disha as a whole! is associated with the implementation of CorporateSocial Responsibilities.

REFERENCES


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opkins! +! Corporate Social Responsibility6 n "ssue aper>.

corporate social responsibility in north odisha strengthening multiple stakeholder relationships

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