Aom presentation, csr & institutional theory evidence from a developing islamic nation


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Aom presentation, csr & institutional theory evidence from a developing islamic nation

  1. 1. Corporate Social Responsibilityand Institutional Theory; Evidence from aDeveloping Islamic NationS. Amir Hossein GhazinooriManjit Singh SandhuChew Yin TengFaculty of BusinessSunway Campus Malaysia
  2. 2. Background Until the late 1970s, CSR was derided as a joke, an oxymoron & acontradiction in terms of the investment and by the businesscommunity. (Lydenberg 2005; Lee 2008) However, CSR has become an increasingly salient feature of businessand its environment, to which managers are expected to respond. (Lockettet al. 2006) CSR have moved from ethics-oriented arguments toperformance-oriented managerial studies. CSR: explored area of research, but still a ‘contestable’ concept at the‘embryonic’ stage. (Windsor , 2006) Scholars have struggled to achieve a clear paradigm, let alone acommon language to guide the conversation. (Godfrey & Hatch 2007)
  3. 3. Background Current situation of CSR reflects the influence of various theories:Corporate Performance / Sustainability / Stakeholder Model / Agency theory / Resource Base View /Competitive Advantage / Institutional Theory Majority of the theoretically oriented research on CSR have focused on theconnections of CSR and business performance and lately on strategic view of CSR. The argument that corporations engage in CSR just as one of the other ways toimprove their business performance seems clearly unfit to explain the reasons oftheir engagement. (Brammer et al. 2012) If profit maximization or performance improvement were the only reasons forcorporations to engage in CSR, why would CSR vary in different countries andregions? (Brammer et al. 2012) “Given the incentives for maximizing profit and shareholder value, let aloneacting opportunistically, why would a corporation ever act in a sociallyresponsible way, even at the most minimal level?” (Campbell, 2007, p.947)
  4. 4. Research GapThere is call for more comparativeperspective in understanding CSRas a managerial concept throughthe institutional lens• Although there is growing literature on the role ofinstitutions in enhancing CSR, however its still veryfragmented & tend to be confined to studies from theAnglo Saxon Western perspectives• There is paucity of research that compares howinstitutions from developing nations play a role inenhancing CSR practices• We really don’t know “what does CSR mean in a non-Western, non-democratic capitalist institutionalframework?”The way corporations approachCSR differs across countries & isvery much influenced by differentinstitutional arrangements(Kang & Moon,2012)• their contribution has so far only added conceptualunderstanding of the general dynamics of institutionalinfluences.• Role of formal & Informal institutions are rarelyexplored separatelyAlthough CSR research throughinstitutional lenses acrossnational studies is gainingmomentum, But•The formal and informal institutions in a countrysuch as Iran are extremely distinct due to differentpolitical arrangements, diverse cultural system,complex business relations, dissimilar traditionalnorms and unique political- religious arrangements.•Some countries are not covered in the CSRliterature and experimental studies.Role ofInstitutions inShaping CSRConcept inDevelopingCountriesIRANInstitutional structures varyaccording to regions & countries,their influences on CSR may alsobe different.
  5. 5. How Institutions Play a Role in Shapingthe CSR Concept, Policies & Practices inIRAN?
  6. 6. Why Institutional LensHighly applicable to the CSR debateCorporations are social structures consisting of individuals.Corporations operate within socially constructed limits.Development of CSR notion is completely involved in the historical, socio-economic, political, andorganizational characters of the society.National institutional arrangements influence the CSR and therefore the way that corporationsapproach the CSR, differ across countries.Since formal & informal institutional structures vary according to regions & countries, theirinfluences on CSR may also be different. In fact the impact of informal institutions (such asreligious norms, customary practices or traditions) on CSR may be far greater than formalinstitutions in developing countries (Brammer et al. 2012).Conducting cross national investigations into the impact of institutions will further shed lighton how different national institutions in different countries influence CSR practices.“Institutional Theory considers the processes by which structures, including schemas,rules, norms, and routines, become established as authoritative guidelines for socialbehaviour and it inquires into how these elements are created, diffused, adopted, andadapted over space and time; and how they fall into decline and disuse” (Scott, 2004)
  7. 7. Conceptual FrameworkIranian Specific ContextFORMAL INSTITUTIONSLawsRegulationsRulesIndustry self-Regulatory SystemINFORMAL INSTITUTIONSCultureTraditions & Social NormsReligionPersonal Values & EthicsIndependent NGOsCorporate SocialResponsibilityCompaniesAdapted by combining Campbell’s perspective (2007) & Peng et al. (2009) framework
  8. 8. Research Methodology Exploratory Qualitative : In-depth understanding of the current CSR condition and therole of institutions in shaping CSR in a developing nation such as Iran. Unit of Analysis are firms and institutions playing a role in promoting CSR in Iran Case study ApproachStandardized Open EndedQuestionnaireIn-depth Semi StructuredInterviewsInstitutional Theory PerspectiveContent AnalysisTranscriptsThematic AnalysisPattern MatchingQualitative ApproachDesigned Conceptual FrameworkTranslationLiterature ReviewDesign Data Collection Data Analysis
  9. 9. Data Collection Multiple Sources of Data Semi-structured interviews with key informants in companies,using open ended questionnaires. Semi-Structured interviews with Key Informants in institutions Semi-Structured interviews with Key Informants in Mediaorganizations. Secondary sources of informationo Letters, memoranda, email correspondenceo Agendas, announcements, written reportso Administrative documents, progress reportso Formal studies or evaluations of the same cases of studyo News clippings and other articles appearing in the mass media or community newspapers
  10. 10. Data Collection; Interviewed CompaniesCOMPANIESCaseIndustrySectorBusinessNatureFoundationYearNo. ofEmployeesOwnershipOperationScopeKey ActivitiesSpecific Unitfor CSRC1 Automobile Manufacturing 1966 30’000Public-PrivateLocal-InternationalProducing full range of vehicles; namely, passenger cars,pick-ups, 4WDs, light & heavy commercial vehicles,minibuses and busesNOC2 Natural GasManufacturing+Service1953 7’000 Private LocalProviding LPG to 2.5 million consumers in the domesticindustrial, commercial & service sectors of Iran.NOC3 Power Manufacturing 2002 3’000Public-PrivateLocal-RegionalProvider of turbine solutions to industrial sector. Offeringpower Gas and Steam Turbines to power projectsCSRCommitteeC4 Construction EPC Contractor 1977 15’000 PrivateLocal-InternationalEPC company providing design, management,procurement and construction servicesYESC5Tele-CommunicationService 1994 5’000Public-PrivateLocal Mobile phone network operator. NOC6AutomobilePartsManufacturing+Service1994 5’000Public-PrivateLocalManufacturing and procurement of vehicle equipment toautomobile manufacturers.CSRCommitteeC7FoodIndustryManufacturing 1998 350Private-FamilyOwnedLocal-Regional-InternationalProducing full kinds Spaghetti, Pasta, Flour, Cornflakes,Cake Powder, Oil & Tomato Paste.NOC8MedicalEquipmentManufacturing 1981 200Private-FamilyOwnedLocalProducer of various standard light medical material &equipment as Bandage, Gauze & Cotton.CulturalCommitteeTo capture the holistic and integrated picture, it was logical to select cases among differentindustrial sectors through selective sampling strategy.
  11. 11. Data Collection; Interviewed InstitutionsINSTITUTIONCase Name Type Interviewee PositionFoundationYearCSR RoleI1 Iran CSR Development Center NGO Founder/CEO 2004Promotion,Education,ConsultationI2 Iran Chamber of CommerceNon-GovernmentalHead of EthicsCommission1883 PromotionI3 Tehran Chamber of CommerceNon-GovernmentalHead of Imports &Secretary of Chamber1926 PromotionI4National Iranian ProductivityOrganizationGovernmental Head of NIPO 1964 EducationMEDIACase Media Classification Type Foundation Year No. Of Employees CSR RoleM1 Newspaper Non-Governmental 2002 100 > X > 300 InformativeM2 News Agency Non-Governmental 2003 300 > X > 500 InformativeBesides focusing on companies, the research also covered somemain Iranian institutional bodies which had some degree ofinfluence on the development of CSR practices in Iran.
  12. 12. Research Findings (Formal Institutions)Our findings identified the extremely weak role of formal institutions in Iran.It has been revealed that industry-specific conditions can affect the institutional surroundingsof companies and consequently their social policies. On the other hand views frominstitutional bodies supported our findings on the corporate side.Formal institutions like laws and regulations are the backbones of the development processesin each society. Since these formal institutions are not well-developed in social related areas incountries like Iran, subsequently their effects are extremely weak.Only two companies in the automobile industry were under the influence of some laws andregulations regarding their CSR practices.Industry self regulations have limited impact on some CSR practices of companies, based onthe nature of their industry.Except two automobile companies, rest of the companies defined that there is no pressure orexpectation from government side for responsible business practiceThere is no defined incentive for CSR practices in Iran and only giant automobile companiescan have some limited incentives through their lobby management.
  13. 13. Role of Formal InstitutionsCase IndustryAffected byFormalInstitutionsAffecting Formal InstitutionPressure or expectationby the governmentIncentive for CSRpractices?C1 Automobile YesLaws & RegulationsStandard OrganizationTraffic PoliceIndustry Self RegulationsPressureExpectationYes (Limited)C2 Natural Gas Yes Industry Self Regulations No NoC3 Power No NA No NoC4 Construction No NA No NoC5Tele-CommunicationNo NA No NoC6 Automobile Parts YesLaws & RegulationsStandard OrganizationTraffic PoliceMinistry of Industries for NGV projectPressureExpectationYes (Limited)C7 Food NoIndustry Self Regulations(Extremely Limited)No NoC8MedicalEquipmentNo NA No No
  14. 14. Informal Institutions had higher impact on CSR policies and practices in Iran compared toformal institutions.As Iran is an Islamic country, we expected to find ‘institution of religion’ as the most effectiveinformal institution affecting CSR policies and practices. However, our findings indicate thatpersonal values and beliefs were ‘more influential in Iran and religion was considered as asecondary factor.Most of the companies believed that culture, traditions and social norms are integrated intotheir day-to-day life and they also affect all their decisions indirectly.Most of the interviewees had some degree of resistance in accepting religion as an affectinginstitution which can be rooted in the historical path of religion and its alignment with politicswithin the last thirty years after the Islamic revolution.It has been noted that the effect of NGOs is extremely weak in Iran and there is a missing linkbetween companies and NGOs. It seems NGOs are not aware of the capabilities and actualneeds of these organizations.Media as informal institutions have a minimal role in promoting CSR in Iran and their role ismostly informative and it’s confined to creating awareness within the society and businessenvironment.Managerial structure in SMEs enables them to experience better and more effective CSRpractices compare to large firms as.Research Findings (Informal Institutions)
  15. 15. Role of Informal InstitutionsInformalInstitutionC1 C2 C3 C4 C5 C6 C7 C8CultureEffectiveinstitution onany decision &practiceEffectiveinstitution on anydecision &practiceWeak effecton CSRdecisions &PracticesStrongeffectiveinstitution onCSR policiesand practicesEffectiveinstitution onCSR policies &practicesEffectiveinstitution onany decision& practiceEffectiveinstitution onany decision &practiceEffectiveinstitution onany decision& practiceNorms &TraditionEffectiveinstitutions onany decision &practiceEffectiveinstitutions onany decision &practiceWeak effect onCSR decisions &PracticesStrongeffectiveinstitutions onCSR policiesand practicesEffectiveinstitution onCSR policies &practicesEffectiveinstitution onany decision& practiceEffectiveinstitution onany decision &practiceEffectiveinstitution onany decision& practiceReligionStrong effectiveinstitution onCSR policiesand practicesEffectiveinstitution onCSR policies &practicesNot effectiveinstitution onCSR policies &practicesNot effectiveinstitution onCSR policies &practicesEffectiveinstitution onCSR policies &practicesNot effectiveinstitution onCSR policies& practicesStrongeffectiveinstitution onCSR policiesand practicesNot effectiveinstitution onCSR policies& practicesEthics &ValuesEffectiveinstitution onCSR policies &practicesStrong effectiveinstitutions onCSR policiesand practicesStrong effectiveinstitutions onCSR policiesand practicesStrongeffectiveinstitutions onCSR policiesand practicesStrong effectiveinstitutions onCSR policiesand practicesStrongeffectiveinstitution onCSR policiesand practicesEffectiveinstitution onCSR policies &practicesStrongeffectiveinstitution onCSR policiesand practicesNGOs(Weak Effect)There are onlysomeexpectations(No Effect)There is nopressure orexpectation(No Effect)There is nopressure orexpectation(Weak Effect)There are onlysomeexpectations(No Effect)There is nopressure orexpectation(Weak Effect)There are onlysomeexpectations(No Effect)There is nopressure orexpectation(No Effect)There is nopressure orexpectation
  16. 16. Concluding RemarksThere is a general lack of knowledge regarding CSR concept among Iranian companies andfirms are not aware of the potential positive outcomes that can be reaped from effective CSRpractices and policies.Weak formal institutional structure in Iran has resulted in unhealthy governance system andthis unfavourable governance structure resulted in reluctance by some firms to adopt CSRpractices since its value is not clear.Research findings revealed that institutional changes (mostly formal) are necessary for furtherimprovement and development of CSR practices in Iran.The empirical findings reinforce the notion that CSR is significantly influenced by the specificsocial, cultural, economic and political conditions of a particular country (Visser 2008; Matten andMoon, 2008; Kang and Moon 2012).This research has significant contribution for future policy development in the field of CSR in Iran.There were some serious limitation for this study, however ….
  17. 17. ReferencesBrammer, S., Jackson, G., & Matten, D. 2012. Corporate Social Responsibility and institutional theory: New perspectives on privategovernance. Socio-Economic Review, 10: 3-28.Campbell, J. L. 2007. Why would corporations behave in socially responsible ways? An Institutional Theory of Corporate SocialResponsibility. Academy of Management Review, 32(3): 946-967.Godfrey, P.C., Hatch, N.W. 2007. Researching Corporate Social Responsibility: An Agenda for the 21st Century. Journal of Business Ethics,70: 87–98.Kang, N. & Moon, J. 2012. Institutional Complementarity between Corporate Governance and Corporate Social Responsibility: AComparative Institutional Analysis of Three Capitalisms. Socio-Economic Review, 10: 85–108.Lydenberg, S. D. 2005, ‘Corporations and the Public Interest: Guiding the Invisible Hand’, San Francisco, CA: Berrett-Koehler.Lee, M.P. 2008. A review of theories of corporate social responsibility; its evolutionary path and the road ahead. International Journal ofManagement Reviews, 10(1): 53–73.Matten, D., & Moon, J. 2008. “Implicit” and “Explicit” CSR: A conceptual Framework for a Comparative Understanding of CorporateSocial Responsibility. Academy of Management Review, 33: 404-24.Lockett, A., Moon, J. & Visser, W. 2006. Corporate Social Responsibility in Management Research: Focus, Nature, Salience and Sources ofInfluence. Journal of Management Studies, 43: 115–136.Peng, M.W., Sun, S.L. & Chen, H. 2009. The Institutional-Based View as a Third Leg for a Strategy Tripod. Academy of ManagementPerspectives, 23(3): 63-81.Scott, W. R. 2004. Institutional Theory: Contributing to a Theoretical Research Program. In K. G. Smith, & M. A. Hit, (Eds.), Great Minds inManagement: The Process of Theory Development, New York: Oxford University Press.Visser, W. 2008. Corporate Social Responsibility In Developing Countries. In A. Crane, A. McWilliams, D. Matten, J. Moon & D. Siegel(Eds.), The Oxford Handbook of Corporate Social Responsibility: 473-479, Oxford: Oxford University Press.Windsor, D. 2006. Corporate Social Responsibility: Three Key Approaches. Journal of Management Studies, 43(1): 93-114.
  18. 18. Thank YouQuestions ?