Corporate social responsibility institutional drivers a comparative study from ksa and india

1 | P a g e C S R I n s t i t u t i o n a l D r i v e r s b y A d a m S h a f i S h a i k
With concerns about corporate social responsibility (CSR)
growing significantly in recent decades, a majority of
theoretical studies have focused on the consequences of
CSR, linking CSR with corporate financial performance,
consumer loyalty, and corporate reputation (Brammer &
Pavelin, 2006; Maignan, Ferrell, & Hult, 1999; Orlitzky,
Schmidt, & Rynes, 2003).In contrast, strikingly inadequate
attention has been paid to the antecedents of socially
responsible or irresponsible corporate behavior. According
to a meta-analysis of CSR literature by Margolis and Walsh
(2003), 85% of the studies in this field treated socially
responsible behavior as the independent variable, calling
for more serious inquiry into CSR as the dependent
variable. Recently an emerging trend in the literature has
begun to fill this theoretical void and to examine the
individual, organizational, and institutional predictors of
why some firms embrace socially responsible initiatives
while others in seemingly similar circumstances do not
even comply with existing legislation (Aguinis & Glavas,
2012). The author argues that understanding the
antecedents of CSR is critical for two reasons. First, this
knowledge could assist organizational theorists to predict
socially responsible behavior, Furthermore, this
understanding will help expose the mechanisms that foster
socially responsible organizational practices.
The central argument in this article is that firms are
embedded in multiple layers of institutional environment,
and corporate social decision making depends on the
institutions within which they operate (Angus-Leppan,
Metcalf, & Benn, 2010; Athanasopoulou & Selsky, 2015;
Campbell, 2007; Jones, 1999). The institutional
environment, most commonly represented by the key con-
stituents such as government, industry associations,
suppliers, buyers, the public, and media, creates a set of
implicit or explicit rules on organizational structure and
behavior with which firms conform to appear legitimate and
secure the requisite resources for survival and growth
(Campbell, 2007; Meyer), the recognition of external
legitimacy is far from sufficient to support the argument
that firms’ CSR behavior is a function of external
institutional pressure (Greenwood & Hinings, 1996). This
variation may also result from intra firm institutional
dynamics that influence both the commitment and the
capacity for firms’ adoption of responsible practices.
Specifically, the author seeks to align the “why” question
with the “what” and “how” questions of CSR, in an attempt
to understand how institutional conditions are influencing
what elements of CSR.
Institutional Drivers of CSR: Central theme of Article
Article seeks to contribute to the extant literature in the
following ways. First, prior research has found empirical
support for the effects of separate institutional forces on
corporate social practices, but the collective influences on
different aspects of CSR have not been investigated. To
accomplish this investigation, this article emphasizes on
empirically tested a theoretically grounded model that
confirms how the collective influences as well as varying
institutional mechanisms may exert impact on the organiza
Adam Shafi Shaik 1
Corporate Social Responsibility Institutional Drivers: A
comparative Study from KSA and India
ABSTRACT
This study develops an internal–external institutional framework that explains why firms act in socially responsible
ways in the emerging country context of India and Saudi Arabia. Utilizing a mixed method of in-depth study
selected companies & individuals, the author found that internal institutional factors, including ethical corporate
culture and top management commitment, and external institutional factors, including globalization pressure,
Government embeddedness, and normative social pressure, will affect the likelihood of firms to act in socially
responsible ways. In particular, implicit ethical corporate culture plays a key role in predicting different aspects of
corporate social responsibility (CSR), while external institutional mechanisms mainly predict market-oriented
CSR initiatives. This study contributes to the research on CSR antecedents by showing that in the emerging
economy of India and Saudi Arabia, CSR toward nonmarket stakeholders is more closely studied with corporate
tradition and values, while legitimacy-seeking CSR activities are still limitedly rewarded
Corresponding Author: Adam Shafi Shaik, Human Resource Business Partner-KSA, Centrepoint, Landmark Arabia Co. ltd, & PhD scholar from Acharya Nagarjuna
University,Guntur: Paper presented at International Conference on CSR, ANU,India, Paper Code: ISCSR 1.26

-tional adoption of CSR practices. Moreover, this article
addressed the limitation of lacking an internal perspective
in the institutional theory and emphasized the importance
of bringing into focus the role of intra organizational
institutional dynamics as complementing the external
institutional complexities. The author suggests that CSR
and institutional scholars may pay more attention to
internal institutional mechanisms such as ethical corpo-
rate culture and TMT commitment in explaining both the
level and the scope of firms’ CSR involvements. The
findings are discussed within the contextual features of
emerging countries and particularly India & Saudi Arabia.
An Institutional Analysis of Why Firms Commit to
CSR
Existing institutional theory has generated valuable
insights into the processes that define and explain the
institutionalization of the organizational environments and
its influence on organizational adoption of homogeneous
practices. Earlier versions of institutional theory assumed
the implicit nature of institutional rules, myths, and beliefs
as shared social reality and emphasized the processes by
which organizations become instilled with shared values
and social meaning (Selznick, 1996). More recent
institutional analyses, usually termed “new
institutionalism” (DiMaggio & Powell, 1983;), have
placed more emphasis on the nature and variety of these
institutional processes, as well as the range of influences
these processes exert on the behavioral variation of
organizations (Oliver, 1991). New institutionalism regards
homogenization of organizational practices as a result of
legitimacy pressure from the institutional environment.
However, these pressures cannot be deterministic; instead,
organizations may adopt various strategies to cope with the
legitimacy demands from the external and internal
institutional environments (Oliver, 1991Meanwhile,
institutional actors with differing opinions on CSR issues
will dialogue and debate to establish firms’ commitment
(or lack thereof) to social responsibility (Hoffman, 1999).
Thus, applying institutional theory to CSR may highlight
the unique institutional complexities that businesses face
and provide opportunities for conceptual and empirical
development of CSR studies (Brammer, Jackson, &
Matten, In recent years, some preliminary attempts have
emerged aiming to adopt both external and internal
perspectives for examining different mechanisms which
determine variances in firms’ CSR practices. In a study of
the adoption of total quality management (TQM) practices
among multinational subsidiaries, Kostova and Roth (2002)
find that multinational corporations (MNCs) adopt TQM
best practice as a response to the dual pressures coming
from the institutional profile of the host country and from
the relational elements, including dependence, trust, and
identity within the MNCs. Similarly, Bansal’s (2005). A
recent study by Westermann- Behaylo, Berman, and Van
Buren (2014) identifies market-, state-, professional-, and
firm-based institutional logics that influence corporate
responsibility toward employees. They find that external
institutional logics both enable and constrain firms to adopt
a more instrumental relationship with their employees.
Although these studies have explored some robust internal
and external institutional mechanisms, they have neglected
some other critical aspects that lead to the commitment and
the capacity for firms to adopt responsible practices, such
as TMT commitment and ethical corporate culture.
Moreover, these studies mostly focus on the external
and/or internal influences on a single aspect of CSR
without paying adequate attention to potentially varying
influences on different aspects of CSR.
Frame work: Joining this emerging stream of literature,
the author proposes an integrative institutional framework
(as shown in Figure 1) for analyzing the antecedents of
socially responsible behavior and exploring the application
of the framework at the level of the corporation. In the
literature, the link between institutional pressures and CSR
is well established, and therefore one expects the
India/Saudi Arabia institutional environment to have a
significant influence on corporate practices. Moreover, to
select the most relevant explanations for the antecedents of
CSR.
Figure 1. An Inside–Outside InstitutionalFramework for Analyzing CSR
The author analyzed qualitative interviews with India &
Saudi Arabia business executives, and a selection of
representative quotations from these interviews is
provided in Table 1.The empirical setting for this study
is the emerging economy of India, KSA (Saudi Arabia)
where businesses, just like their Western counterparts, are

under mounting pressure to be not only competitive but
also socially responsible.
Saudi Arabia
The popularity of Corporate Social Responsibility (CSR)
is growing in a country like Saudi Arabia, CSR initiatives
are driven by strong sociocultural factors which already
promote such values. Saudi Arabia is situated in Middle
East region and is a major oil exporting country in the
region. Politically, it is the key player in world politics as
it has very close ties with western powers of the world.
Although traditionally CSR has been seen as a
philanthropic practice, most businesses are now
understanding the value it adds to the bottom line.
A key driver of this approach in
Saudi Arabia is Islam, Saudi society bond to Islamic
values which influence business leaders, While an early
focus on philanthropy is not unusual in a developing
economy that is beginning to explore CSR which serves as
the underlying value system in business culture as well as
all other aspects of life in the kingdom. One of Islam’s core
pillars, zakat, refers to the duty of all Muslims—
individuals and companies to give roughly 2.5 percent of
their annual income to charity. It is often within the context
of zakat that companies view their responsibility toward
society. The Holy Qur'an obliges Muslims to fulfil the
concept of social justice represented as the betterment of
the society as whole (Zubairu, Sakariyau, & Dauda, 2011).
This showed that Islam gave a large concern on
communities, individuals, environment and others (Khan
& Karim, 2010). In Islam the well-being of all humans is
ensured by protecting the five essentials; faith (Al Din),
self (Al 5 5 Nafs), human intellect (Al 'Aql), posterity (Al
Nasl), and finally their wealth (Al Mal); in other word
applying Maqasid Al-Shariah. Islam believes that all
companies must prove to be good no matter what their
finance situation is; positive or negative, because to Islam
CSR is a moral and religious principle (Dusuki, 2008). As
a matter of fact, the main goal of Islam is to prove that
business deals must not be based solely on finance rather
it is equally important to be based on moral behavior of the
businessperson as well (Mohammed, 2007). Besides, any
corporation that is financially successful at the cost of good
social conduct is considered not successful under Islamic
concepts (Mohammed, 2007). Muslim individuals as well
as Islamic banks have the task of considering social benefit
and behave according to the society's interest (Sairally,
2007). In Islam there is a set of rules that guide humans’
interrelations called Fiqh Al Mua'amlat, and this Fiqh is
the Islamic commercial law basis and it redefines the limits
of financial issues in life aspects such as economic
freedom, social equity, transparency, civil liberties,
accountability, and justice (Alsayyed, 2009). Therefore,
Islam encourages Muslims to connect social realities with
their piety (Taqwa) by announcing that Taqwa includes
love of fellow human beings as members of their family in
addition to loving God From this we can see the wide
meaning which is covered in the Islamic concept of CSR;
and thus corporations which represent a group of
individuals will fulfill their roles as God Vicegerents and
Servants through accepting their responsibilities in all life
situations (Dusuki & Abdullah, 2007; Waemusor, 2010).
While leading companies have begun
forming new CSR departments that are separate from the
corporate functions managing the zakat, these teams
remain largely focused on similar community engagement
efforts, CSR in Saudi Arabia is still largely focused on
corporate philanthropy and community engagement.
While corporate philanthropy entails no financial benefit
to the business, a well-developed CSR strategy is meant to
feed back into the company’s bottom line. Informa
Middle East survey, interviewees and survey respondents
agreed upon is the ambiguity of defining CSR, as it
remains unclear to many professionals in Saudi Arabia
Over 60% of local professionals confirmed that there is a
vague understanding of the concept in general, and 70%
agreed that it is commonly confused with corporate
philanthropy. Gosh (2014) said, “There is a focus on
diversity & human rights: minimizing gender bias and
advancing the equal opportunities agenda across the
Kingdom.” “Community services and contribution from
corporates working in the Kingdom should be directed
mainly towards preparing the next generation of entries to
the job market, therefore an investment should be focused
to gender equalities and providing females with equal
developmental opportunities and for preparing Saudi
youth in general in work readiness focus programs”
CSR Legends at Saudi Arabia
Saudi government recognizes the importance of the private
sectors in national development but are not yet ready to
incentivize or encourage CSR at strategic and policy level.
There are few fiscal incentives for companies to
undertake CSR related initiatives and there is no set
framework to coordinate CSR initiative at national
level. Even though there are no formal rules Saudi
companies continue to engage in CSR activities and report
their CSR activities in annual report. Corporate

responsiveness in the society with contribution in
increasing national participation in workforce
(Saudisation % in workforce), Feminization, Training
Saudi nationals, Islam propagation & training, Schools and
free education in the society, Eid celebrations, orphan care,
Children & disable care, back to school, Islamic finance
(interest free loans..etc), Hujaaz services (Haj support),
feeding poor, refugee services, Construction of house,
community services, Roads & public building,
Entrepreneur development, Health and wellness, Science
and technology education, Water and sustainable
agriculture, Safety (EHS). Other side branding and
compliance on the services offered to customer at par
quality standards in the world. Human development, KSA
ranked 57, CSR happen to be core pillars of business house
commitment in KSA
Most large companies in the kingdom in a bid to
increase the Saudi-to-foreign worker proportion in line
with the government’s saudization program (Increasing
nationalization percentage in workforce), Large
companies opinion Nationalization is one of responsibility
towards society with which locals are been trained, sent
for foreign graduate program as well Saudi locals salary
is 13% high than expat average salary across job positions
(Hay report (2016)), new labor regulatory frame work in
the kingdom is Balance score card program (Nitaqat),
Objective of the program is increasing feminization
proposition, Saudis in top management, average tenure of
Saudi workforce happen to be key indicator , this looks to
be CSR government compliance by enforcing strict
guidelines towards Nationalization across all the business
enterprise. Continues to this Saudi Govt announced “expat
levy” from 2017, with charges of up to SR800 per worker
& dependent to be phased in by 2020., expects the fees to
reach SR65 billion by 2020, the same amount to be used
for Saudi nationals up skilling, education unemployment
benefit..Etc
In 2005, the government established the Saudi Arabian
Responsible Competitiveness Index (SARCI), and placed
it under the administration of the Saudi General
Investment Authority (SAGIA), in January 2009 the
institution of the King Khalid Award for Responsible
Competitiveness which awards Saudi companies for
CSR performance. Opportunities been identified A strong,
longstanding and deeply embedded ‘culture of giving’
already exists through the Islamic pillar of Zakat, A
growing interest in CSR among the corporate community,
which could provide the momentum for change and
implementation, Leadership emerging from the Chambers
of Commerce to establish committees for CSR, Increased
government support for improving economic
competitiveness and for exploring the linkages between
responsible business practices/ CSR and national and
corporate competitiveness. The most important challenges
CSR at KSA are: lack of awareness of CSR, both in terms
of the overall ‘business case’ for CSR, and in terms of
concrete CSR practices, implementation tools, and
methodologies, Lack of institutionalization of CSR within
companies and within the business community, i.e.
relatively few CSR organizations, consultancies, business
leadership initiatives etc. although the Chambers of
Commerce have started to establish dedicated CSR
Committees, which is an extremely important
development, A mismatch -between the need for CSR
practices and the skills taught by local colleges and
universities, a lack of CSR resources available in Arabic is
a big challenge.
CSR reporting & recognition: CSR
perceived by corporate in value proposition activities The
King Khalid Awards is most prestigious awards focused
on socially responsible and sustainable practices in Saudi
Arabia. They are effective tools for social change and are
designed to recognize, encourage and support exceptional
achievements by NPOs, and Saudi citizens companies, this
award honored. SIB Bank, Hadeed (2017) Mawakib Al-
Ajr awarded 2015, for initiative to employ people of
special needs, NCB (2013) for Supporting Entrepreneurs
and Small Enterprises SABIC (2011) The company has
set several programs to develop the community and
improve living conditions, besides initiatives to protect the
environment and natural resources, and integrate the
concept of sustainability in all its operations charitable
contributions to the community and support for the
national development agenda, BAE Systems (2012)
awarded for employing 50% Saudi nationals in its work
force, CSR award majorly awarded based on corporate
sustainability, environmental efforts and a high rate of
female employment, Supporting Entrepreneurs and Small
Enterprises NCB Bank (2011)
Simon Zadek suggested three important factors
where CSR can become a force for positive change,
‘Normalization’ where Saudi companies and business
leaders become a more integral part of the global business
community and adapt existing international norm and
business practices. ‘Exceptionalism’ In short are the
cultural and faith traditions and business practices that are
unique to Saudi Arabia or Islam, such as zakat, which form
the basis for good business and responsible corporate

practices. ‘Transformation’, whereby Saudi companies
and business leaders and foundations could actually
‘export’ local practices and projects to other countries.
CSR in India:
According to Infosys founder, Narayana Murthy, “social
responsibility is to create maximum shareholders value
working under the circumstances, where it is fair to all its
stakeholders, workers, consumers, the community,
government and the environment”. CSR in India has
traditionally been seen as a philanthropic activity, and in
keeping with the Indian tradition, it was an activity that
was performed but not deliberated. As per companies act
"CSR is the process by which an organization thinks about
and evolves its relationships with stakeholders for the
common good, and demonstrates its commitment in this
regard by adoption of appropriate business processes and
strategies. Thus CSR is not charity or mere donations. CSR
is a way of conducting business, by which corporate
entities visibly contribute to the social good. Socially
responsible companies do not limit themselves to using
resources to engage in activities that increase only their
profits. They use CSR to integrate economic,
environmental and social objectives with the company's
operations and growth.
CSR derived from ethics, Genetic Inheritance: It is the
genes present in body inherited by parents that act as traits
followed by the presence of ethics and values in a person.
Family: “Matru Devo Bhava”. House is the first school and
mother acts as the first teacher for every child.. Religion:
religion binds people together. It enlightens us with the
knowledge, values and morals. Philosophical System:
They teach us the pleasure of being good. They help us in
developing an understanding for self-actualization and
self-realization. Culture: The society within which one
grows and develops directly plays a big role in mounting
ethical know-how. Organization: Place from where one
generates its lively hood and opportunity to grow in
professional life have a critical effect on value building.
Legal System: Rules and regulations of the country from
which an individual belongs also play a source of ethic
building in one’s life. Indian Tradition of Ethics and
Responsibility : Rigveda spreads the dignified notion “let
noble thoughts come from every side” Loksamgraha (Gita)
aims at working for good of all without any proclivity to
exclusively for your own sake or for the good of your own
people. It aims working for the benefit of whole
community. The great epic Ramayana exposes different
characters depicting values and ethics throughout their
lives. Rama, Lakshmana, Bharat, Sita, Hanuman and many
others are the epitome of idealism and values. Epic of
Mahabharata is composed of numerous stories related to
the philosophy of human relations and their role in the
society, governance; judiciary etc. Managers face ethical
dilemma and challenges due to Globalization and work
force diversity Ethical judgment could be made with the
help of Ethics analysis and Ethics resolution. Ethic
resolution is the rational step of meeting a firm justified
decisions and bringing ethics analysis to a final conclusion.
CSR development in India: the First Phase:
In the first phase charity and philanthropy were the main
drivers of CSR. Culture, religion, family values and
tradition and industrialization had an influential effect on
CSR. In the pre-industrialization period, which lasted till
1850, wealthy merchants shared a part of their wealth The
construction of temple..etc. Second Phase: during the
independence movement, there was increased stress on
Indian Industrialists to demonstrate their dedication
towards the progress of the society. This was when
Mahatma Gandhi introduced the notion of "trusteeship",
according to which the industry leaders had to manage
their wealth so as to benefit the common man Indian
companies were supposed to be the "temples of modern
India". Under his influence businesses established trusts
for schools and colleges and also helped in setting up
training and scientific institutions. The Third Phase: The
third phase of CSR (1960–80) had its relation to the
element of "mixed economy", emergence of Public Sector
Undertakings (PSUs) and laws relating labor and
environmental standards. During this period the private
sector was forced to take a backseat.[citation needed] The
public sector was seen as the prime mover of development.
The Fourth Phase: In the fourth phase (1980 - 2013) Indian
companies started abandoning their traditional
engagement with CSR and integrated it into a sustainable
business strategy. In the 1990s the first initiation
towards globalization and economic liberalization were
undertaken. since late 1800s. Historically, the philanthropy
of business people in India has resembled western
philanthropy in being rooted in religious belief. Business
practices in the 1900s that could be termed socially
responsible took different forms: philanthropic donations
to charity, service to the community, enhancing employee
welfare and promoting religious conduct. Corporations
may give funds to charitable or educational institutions and
may argue for them as great humanitarian deeds, when in
fact they are simply trying to buy community good will.
The ideology of CSR in the 1950s was primarily based on
an assumption of the obligation of business to society

Corporate Social Responsibility is not a new concept in
India, however, the Ministry of Corporate Affairs,
Government of India has recently notified the Section 135
of the Companies Act, 2013 along with Companies
(Corporate Social Responsibility Policy) Rules, 2014 " to
comply with the provisions relevant to Corporate Social
Responsibility. As mentioned by United Nations Industrial
Development Organization (UNIDO), CSR is generally
understood as being the way through which a company
achieves a balance of economic, environmental and social
imperatives ("Triple Bottom-Line- Approach"), while at
the same time addressing the expectations of shareholders
and stakeholders
Applicability: The companies on whom the
provisions of the CSR shall be applicable are contained in
Sub Section 1 of Section 135 of the Companies Act, 2013.
As per the said section, the companies having Net worth of
INR 500 crore or more; or Turnover of INR 1000 crore or
more; or Net Profit of INR 5 crore or more during any
financial year shall be required to constitute a Corporate
Social Responsibility Committee, Company has to report
CSR Policy, including overview of projects or programs
proposed to be undertaken and a reference to the web-link
to the CSR policy and projects or programs; Prescribed
CSR Expenditure (2% of the amount of the net profit for
the last 3 financial years); Less than INR 100 crore 3%–5%
INR 100 crore to INR500 crore 2%–3% INR 500 crore and
above 1%–2%. CSR activities: Poverty & malnutrition,
Promoting education, Reducing child mortality, combat
human immunodeficiency, environmental sustainability,
Employment generation, Protection of national heritage,
promote rural sports, technology incubators, Rural
development projects, Slum area development
(Companies (Corporate Social Responsibility Policy)
Rules 2014)
Hypothesis Development Inter Institutional Analysis
As argued earlier, while recent research has called for
bringing in the institutional perspective to examine the
antecedents of CSR (Campbell, 2007), empirical studies
pay scant attention to the internal institutional mechanisms
that encourage corporate decision makers to actively
undertake their responsibilities. (Singhapakdi & Vitell,
2007). According to Fishbein and Ajzen’s (1975) theory of
reasoned action, actual behavior is determined by
behavioral intention, which is preceded by attitude and
perception.
Table 1. Illustrative Interview Evidences Supporting the Research
Framework.
Key Variable Case Quotation
TMT (Top management)
commitment) -The top managers
perceived importance of ethics and
social responsibility for
organizational effectiveness.
It is essential to the CSR practices
whether or not the leadership is
concerned with public interests and
believes honest business. (Chairman,
Company I),It is the strong leadership
in our company that propels CSR
development to current level.
(Manager, Company D),As far as I
know, it is essential to get the top boss
buy in. (Employee, Company O
Ethical corporate culture (The
extent to which ethics and social
responsibility are embedded in the
corporate culture, values, and
policies)
The motto of our company (for
engaging in CSR) is to create a
perfect life together. (General
director, Company I), Our core
competitiveness lies in the
professional and responsible
business, which has everything to do
with our management philosophies of
people-oriented, caring and inclusive
enterprise culture.
(President,Company P)
Globalization pressure (The
dependence of a firm on the
international market)
It was as early as the year 1995 that
we got a rough idea of CSR when our
foreign customers requested factory
inspections. Honestly speaking, we
found it repulsive at that time . . .
Through the years of groping for the
international market, we are learning
from them (international buyers) and
beginning to detect problems by
ourselves. (Vice director, Company
C)
Political embeddedness (The top
managers’ use of connections with
political leaders at various levels)
Government policies play a decisive
role in sector development; thus,
government needs to provide an open,
fair, and just environment for us to
compete. (General manager,
Company J)To encourage firms to do
this from the bottom of their heart
(CSR), supporting policies are the
most important. (Vice chairman,
Company N)
Peer imitation pressure (Shared
consensus about CSR and ethics)
Firms around us still rely on price
competition, rather than on good
quality, which makes it hard for
responsible companies to demand
premium price. (Deputy president,
Company N)
Normative social pressure: (The
CSR-related social norms and
values)
CSR is not numerical but attitudinal
issue. (General manager, Company G
CSR needs to be widely recognized
and made common sense in the
society. (President, Company F)
When TMT commitment is high, institutional pressures for
the adoption of socially responsible behavior are more
likely to be heeded as they are better aligned with the
leaders’ vision for how the firm should improve its
practices (Angus-Leppan et al., 2010; Voegtlin, Patzer, &
Scherer, 2012). CSR engagements, as a result of being
championed by the top leaders, are made possible by the
autonomy of leaders’ roles in the organization. As a result,
the first hypothesis argues that TMT commitment to ethics
and social responsibility acts as a frame for recognizing

social issues and evaluating the salience of stakeholders,
and thus will enhance the likelihood of firms to act in
responsible ways.
Hypothesis 1: The greater TMT commitment to ethics
and social responsibility, the more likely firms will act
in responsible ways.
Ethical corporate culture. Corporate culture refers to the
collective values, beliefs, and principles of organizational
members that determine how a company’s employees and
management interact and handle outside business transac-
tions and is a product of such factors as history, product,
market, technology, and strategy; type of employees;
management style; and national culture (Ravasi & Schultz,
2006). Ethical corporate culture is affecting CSR through
two channels. On one hand, ethical corporate values and
ideology as part of implicit ethical culture will serve as the
underlying guideline for firms’ CSR decision making..,
2007). Based on the theoretical as well as empirical
evidences, Hypothesis 2 is proposed:
Hypothesis 2a: The greater extent firms advocate
ethical corporate values and ideology, the more
likely firms will act in responsible ways
Hypothesis 2b: The greater extent firms integrate
ethics policies into organizational structure, the more
likely firms will act in responsible ways.
External Institutional Analysis
In addition to the internal institutional mechanisms that
emphasize firms’ conformity to leadership influences, and
corporate structures and values, external institutional
perspective attributes growing corporate social engage-
ment to the social context within which firms are
embedded. Although firms have discretion to operate
within institutional constraints, failure to conform to
critical, institutionalized norms of acceptability can
threaten the firms’ legitimacy, resource acquisition, and
ultimately survival chances (DiMaggio & Powell, 1983;
Oliver, 1991).
Globalization pressure. Much research on globalization
shows that an increase in global economic ties and
international organizations has led to a “world society,” in
which nation-states around the world increasingly adopt
Western- style governance principles and structures (Meyer,
Boli, Thomas, & Ramirez,1997). A number of
interviewees referred to coping with foreign clients’ high
CSR demands as learning about international best
practices. Interviewees often emphasized meeting higher
social and environmental standards to obtain licenses in
international markets.. Here the author proposes the
following hypothesis:
Hypothesis 3: The more a firm relies on the
international market, the more likely it will act in
responsible ways.
Political embeddedness. Investigating the institutional
environment is essential for differentiating various
business systems as well as their ability to encourage or
constrain responsible business practices. Establishing a
regulatory framework that seeks fair competition,
environment protection, labor rights, and product quality is
crucial to ensuring responsible corporate behavior. Given
the presence of a regulatory framework, its effect on a
firm’s CSR activities may depend on the firm’s
dependence on various government actors).
The author identifies government network as a major
external source of uncertainty for firms and therefore a
critical constituent that influences firms’ operations as well
as social decision making. The author therefore proposes
the following hypothesis:
Hypothesis 4: The greater the dependency on
government, the more likely a firm will act in
responsible ways.
Peer imitation pressure. CSR is marked by significant
uncertainties because of changing social expectations, the
complexity of social issues, and the difficulty of social
outcome measurement (Bansal, 2005 By imitating their
peers, firms will be buffered from public or financial
sanctions since many actors in the same organizational
field are engaged in similar practices. As a result, CSR is
not only the behavior of an individual firm but also a social
action influenced by the behavior of others in the
organizational field “Thus, the author proposes the
following hypothesis:
Hypothesis 5: The greater peer imitation pressure is
perceived by a firm, the more likely it will act in
responsible ways.
Normative social pressure. In addition to the mimetic
mechanism from peer influences, local normative social
systems set expectations for CSR practice and help enforce
conformity to local standards of corporate social

engagements in a less observable way (Galaskiewicz &
Wasserman, 1989; Guthrie,2003). Normative isomorphism
corresponds to the internalization of values, norms, beliefs,
and assumptions about the nature and behavior of firms,
which usually results from professionalization processes,
including professional training, trade associations, and
education (DiMaggio & Powell,1983). Thus, the author
proposes the following hypothesis:
Hypothesis 6: The more normative social pressure is
perceived by a firm, the more likely it will act in
responsible.
Discussion and Conclusion
Susan McPherson, a senior vice president at Fenton who
writes frequently about corporate responsibility, shared the
following four trends in a posting on the Harvard Business
Review Blog entitled, "Why CSR's Future Matters to Your
Company" (January 6, 2012): 1.Employee engagement. 80%
of major corporations are planning to invest significantly
in employee engagement in 2012, McPherson predicts a
continued growth in employee volunteer
programs.2.Cause marketing. According to a PR
Week/Barkely PR Cause Survey in 2010, two-thirds of
brands now engage in cause marketing, up from 58% in
2009. McPherson predicts that these cause marketing
programs will multiply.3.The skeptical consumer.
Consumers now have a variety of on-line tools to help
them interact directly with various watchdog organizations
to track corporate practices. McPherson suggests that
companies that invest in engaging with such consumers
will reap benefits.4.Board-level involvement. In 2011, the
National Association of Corporate Directors Public
Company Governance Survey asked about the highest
priorities for boards of directors. The highest priority was
strategic planning and oversight at 72% and the lowest
priority was CSR at 2%. McPherson suggests that boards
will be playing catch up in 2012.
Why do firms commit to socially responsible practices?
Recent studies have turned to institutional theory as a
relevant perspective for identifying the antecedents of CSR,
but few have tackled both the internal and external
institutional factors in an empirical study. This study paints
a picture of how both the internal and external institutional
mechanisms shape CSR behavior in the emerging economy
of India & Saudi Arabia through a mixed method of
qualitative field interviews and a quantitative survey study.
First, looking at the internal institutional conditions, this
study found strong positive effects of ethical corporate
culture on CSR. Corporate culture, as the robust regression
results reflect, constitutes a main foundation of corporate
social strategy formulation for firms. Integrating ethics
with corporate values and ideology helps orient firms
toward acting more responsibly not only toward market-
related stakeholders, such as shareholders and customers,
but also toward nonmarket stakeholders, including the
employees, the community, and the natural environment.
These effects are particularly salient for the latter form of
responsibility TMT commitment to ethics and social
responsibility is found to strongly influence employee
responsibility only. It shows that top leaders’ influence on
CSR is mainly reflected in the responsibility toward
internal participants. This empirical discovery corroborates
previous findings that ethical corporate culture and
managerial advocacy act as the major internal drivers for
socially responsible behavior in the emerging economies
(Shafer, Fukukawa, & Lee, 2007; Yin & Zhang, 2012).On
the external front, globalization is pressuring India firms to
act in more responsible ways with productivity, safe
production, and customer satisfaction, probably as an
attempt of differentiation positioning. Firms embedded in
the global production network are more likely to transfer
global knowledge and innovation ability to enhance
market responsibility. In contrast, greater reliance on the
international market negatively influences community
responsibility. One possible interpretation is that firms
which rely more on international market may instead
neglect attending to the interests of local community.
References:
 Juelin Yin (2015). Institutional Drivers for Corporate Social Responsibility in an
Emerging Economy:A Mixed-Method Study of Chinese Business
Executives
 Handbook on CSR, Confederation of Indian Industry (2015)
 Samia Maqbool, A overview of CSR in with reference to selected organization at
KSA (2016)
 CSR Saudi Arabia & Globally Harvard Kennedy School CSR Initiative &
SAGIA,KSA (2016)
 “Corporate Social Responsibility in Islamic Commercial Banks in Saudi Arabia”
Samia Mohammed S. Baghalab-2013
 Corporate Social Responsibility: The Good, the Bad,and the Ugly- Subhabrata
Bobby Banerjee-University of Western Sydney, Australia
 Corporate Social Responsibility,(CSR) in Asia,A Seven-Country Study of CSR
Web Site Reporting,WENDY CHAPPLE,JEREMY MOON
 Aguinis, H., & Glavas, A. (2012). What we know and don’t know about
corporate social responsibility: A review and research agenda. Journal of
Management,
 38, 932-968.
 Angus-Leppan, T., Metcalf, L., & Benn, S. (2010). Leadership styles and CSR
practice: An examination of sensemaking, institutional drivers and CSR
leadership. Journal of Business Ethics, 93, 189-213.
 Athanasopoulou, A., & Selsky, J. W. (2015). The social context of corporate
social responsibility: Enriching research with multiple perspectives and multiple
levels. Business & Society, 54, 322-364.
 Aupperle, K. E., Carroll, A. B., & Hatfield, J. D. (1985). An empirical examina-
tion of the relationship between corporate social responsibility and profitability.
Academy of Management Journal, 28, 446-463.
 Bansal, P. (2005). Evolving sustainably: A longitudinal study of corporate
sustainable development. Strategic Management Journal, 26, 197-218.
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