Corporate social Responsibility and Organizational Identification: Exploring a bidirectional relationship between CSR and employees
Abstract
This study identifies factors that can be used as means to enhance the CSR actions/activities
of the firms. More specifically, the study explains the mechanisms through which employees
can influence the CSR of their firm. In so doing, this paper also explores the HR practices that
facilitate the firms to increase their CSR. We draw our framework on Social identity theory
and suggest a bi-directional relationship between CSR actions of the firm and employees’
organizational identification which is moderated and by employees’ participation in decision
making (EPDM), and collectivist orientation of the employees. A three wave longitudinal data
collected during 2009- 2011 with the time lag of approximately 1.2 between these three
waves, were used to test the theoretical model of the study. The data supported our framework
and reveal that employees significantly influence the CSR of their firm whereas EPDM and
collectivist orientation of the employees plays a vital role in this process.
Key words: Corporate social responsibility, organizational identification, Employees Moral
Identity, social identity theory, South Asia
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Introduction
Recently, the notion of corporate social responsibility (CSR) has become increasingly popular
in the field of management. CSR deals the environmental, social and societal issues especially
that are related to the corporate world. Although companies are struggling to embed
environmental, social and societal goals into their business strategies, this objective has not
yet been fully realized (Elkington, 1997; Hart, Milstein, & Caggiano, 2003). For this reason,
nowadays CSR is a centre of attention of many management scholars and business mangers.
There are a few studies (e.g. Bansal, 2005; Elkington, 1997; Fowler & Hope, 2007; Hart, et
al., 2003; Shrivastava, 1995; Shrivastava & Hart, 1995) that highlight the role of firms’
strategy, innovation, risk management, pollution prevention and the use of clean technologies
in achieving CSR. While these studies provide a good insight into CSR, the role of human
resource management (HRM) in integrating CSR into firms’ strategy is still an understudied
area (Ehnert, 2009). We argue that traditional human resource (HR) practices are developed to
support the traditional business paradigm of achieving maximum profit so it may not be
coherent with the CSR goals. Firms, therefore, must adopt new HR practices that are
consistent with the CSR (Boudreau & Ramstad, 2005) and help the firms embracing its
principles. In spite of its importance, extant literature does not shed light on these HR
practices. This study, therefore, is an attempt to explore HR practices which are essential for
the integration of CSR into firms’ strategy and helps them in achieving the CSR goals.
We emphasize on HR practices for the CSR because it directly affects employees who are
vital for the execution of firm strategy. The existing literature demonstrates that the HR
practices are one important component that can help an organization becomes more effective
in achieving its goals (Becker & Huselid, 1998; Guthrie, 2001). We argue that HR practices
are not only vital for the conventional business performance but also critical for the social and
environmental performance. This paper addresses an important question “what are the HR
practices that can help the firms to enhance firm level CSR activities?” This paper integrates
micro and macro analysis of CSR in organizations and identifies factors that can be used as
means to enhance the CSR actions/activities of the firms. In so doing, this research also
examines the effect of CSR on employees’ organizational identification (OI). We draw our
framework on Social identity theory and suggest a bi-directional relationship between CSR
actions of the firm and employees’ OI which is moderated and catalyzed by employees’
participation in decision making (EPDM), and employees collectivist orientation.
On the basis of social identity theory, we developed a bi-directional non recursive model
shown in figure-1. The model suggests that CSR has a strong positive effect on the
employees’ organizational identification and further highlights that employees who derive
their organizational identification by the CSR of the firm are likely to enhance the CSR
activities of the firm. They are not only concerned for the CSR of the firm but also ready to
put effort to increase CSR activities of the firm. We further suggest that when employees
want to increase the CSR of the firm, their participation in decision making can play vital role
in increasing the CSR actions of the firm. We also examine the moderating effect of
collectivist orientation of employees on the overall model. Theoretical research model is
given in figure-1.
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Figure 1
Theoretical research model
Collect
CSR
OI
Concern
for CSR
EPDM
OI: organizational identification
EPDM: Employees participation in decision making
Concern: Employees’ concern for CSR of their firm
Collec: Individualism- collectivism orientation
It is potentially the first study of its kind that examines the role of HR practices in the CSR of
the firm. Similarly, it is perhaps the first study that empirically examines the influence of
employees on CSR. In addition, where most academic work on CSR focuses on industrialized
nations, this study shifts the lens towards the developing world. Findings of western studies
may not be applicable to south Asian organizations due to the vast differences in the
economic, social and cultural environments (Khatri, Fern, & Budhwar, 2001).The region
sharply contrasts the western world as it has a highly collectivist culture. Collectivist
individuals may have a stronger group identity due to strong ingroup ties (M.A. Hogg, 2006).
For this reason, an analysis of south Asia in the context of the above mentioned phenomenon
may have great potential to open up new avenues in the field of CSR and HRM.
Method
Sample and Procedure
There is a reciprocal feedback loop in the research model and to test this model, we conducted
a full panel design with three panel waves: participants supplied data at three measurement
points in time. The time lag between first and second point was proximately one-year and two
months whereas time lag between second and third measurements was one year and 5 months.
First wave of data collection was conducted in March 2011, second wave was conducted in
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May 2012 whereas third data collection was conducted in September 2013. This time appears
to be long enough for possible changes in individual scores, but not too long for too much
non-response in our study sample (Frese & Zapf, 1994). We short listed well known 100
companies with the help of MBA students. We contacted the resource persons in these
companies and collected data in a face to face interview from employees. We used self
reporting questionnaires to collect the data. All questionnaires contained an administration
number for second and third round identification. At the time 1, we collected data from 684
employees. After one year and two months, at Time 2, we again contacted the 682 employees
for the follow up data. Again, we collected the data face to face in interview mode on a self
reporting questionnaire. At Time 2, we succeeded in collecting data from 507 out of 684
employees which is approximately 74% of the Time 1 sample. At Time 3, we again contacted
the same 682 respondents of Time T-1 and succeeded in collecting data from 502
respondents. Out of these 502 respondents, 13 respondents did not participated in the second
wave of time 2. Therefore, we drop these 13 responses from our sample. The final sample
comprised of those persons (489) who participated at all three times. This percentage is not
very unusual according to the literature about panel non-response (Hagenaars, 1990). A
breakdown of the demographic characteristics of the sample shows that 64% of the employees
were male. The mean age of the group was 28.42 years at time 1.
Results
We proposed direct and reciprocal effects with moderated mediations. To test these
relationships, we used three wave longitudinal panel data collected form South Asia during
2011 and 2013. We used time lagged structural equation modeling to analyze the data. For the
main effects (effect of CSR on OI and then effect OI on employees’ concern), we did not
develop an a priori hypothesis with regard to timing of the effects of control and complexity;
instead, we explore models with different time lags. Regarding the reciprocal path of the
model—effects of employees concerns for CSR on organizational actions/policies —previous
research and theoretical thinking indicate that the processes need a considerable amount of
time to unfold. We therefore test whether employees concern for CSR at a given time affects
CSR strategy of the firm 2.7 years later and 1.2 year later.
We ran the analysis in three phases. In the first phase we examined the main effects whereas
reciprocal effects were tested in the second phase and finally, we tested moderated effects in
the last phase.
The results revealed there is no time lag required when CSR affects the OI and when OI
influences the employees concern. It was found that CSR is a strong predictor of employee
organizational identification which implies that CSR actions generate a positive perception of
prestige whereas internal CSR actions positively influence the perception of internal respect.
Prestige and respect in turn positively induce the employees’ identification with socially
responsible companies we also found a strong positive relationship between OI and
employees concerns for the CSR of the firm. These results strengthen the assertion of social
identity which demonstrates that individuals always strive to enhance and maintain their
positive social identity. For this reason, they are usually very conscious of and sensitive to the
status related issues of the groups to which they belong (T.R. Tyler, 1999). The desire of an
individual to be identified with a distinctive and prestigious groups not only compels him to
be attached with a group containing that character but also motivates him to struggle for the
enhancement of that particular group identity.
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In addition to these main effects, our results show that collectivist culture has a strong impact
on these relationships. We found a strong positive moderation of collectivism orientation on
the relationship of OI and employees concern. These results imply that effect of
organizational identification on employees’ concern for CSR of their firm is higher for
collectivist employees than individualist. It seems that collectivist individuals are more
concerned about the status related issues of the groups to whom they are identified or
attached.
When it comes to the reciprocal relationship between employees concern and CSR of the
firm, it was found that employees concern of time T1 has a strong impact on CSR of time T2
as well as CSR of time T3. The influences of employees concern on CSR was stronger for
time lag of 2.7 year as compared to time lag of 1.2 years. These findings imply that if
employees have high concerns for CSR of their organization, it will have an effect on the CSR
actions of the organization. Employees are the engine of the firm which not only execute the
firm’s strategies to achieve the organizational goals but also has a strong influence on the
formation of the firm’s strategies. Employees have a multifaceted effect on actions, activities
and performance of their organization. Therefore, it is more likely that if employees of a firm
have high concern for the CSR, the firm may have high CSR.
The most interestingly, we found that employees’ participation in the decision making plays
important role in CSR strategy of the firm. We found that employees’ participation positively
moderates the influence of employees concern on the CSR of the firm. It means that if
employees’ participation is high, employees concern will have more influence on the firm
strategy. It also implies that employees’ tendency to affect CSR strategies of their
organization is dependent upon the level of their participation in decision making. Employee
participation in decision making give opportunities to employees to suggest improvement in
the way things are done, and there is an open communication between superior and employees
(Delery & Doty, 1996; Li-Yun, et al., 2007). Participation increases the overall influence of
employees within the company (e.g. Argyris, 1955; R.J. Long, 1978; Tannenbaum, 1966) and
they can exercise their influence to achieve their CSR goals related to their organization.
REFERENCES
References and detail results will be provided with the full length paper.
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