Volkswagen defined corporate social responsibility as the ability of a company to incorporate its responsibility into society to develop solutions for economic and ...
Executive and management attitudes towards corporate social responsibility in Malaysia Md Zabid Abdul Rashid and Saadiatul Ibrahim Md Zabid Abdul Rashid is Professor, Graduate School of Management and Saadiatul Ibrahim is Lecturer, Faculty of Economics & Management, both at Universiti Putra Malaysia, Selangor, Malaysia.
Keywords Social responsibility, Corporate governance, Disclosure, Involvement, Malaysia Abstract Examines the attitudes of Malaysian managers and executives towards social responsibility and also the extent of socially responsible activities involved, corporate disclosure, and the factors determining the attitudes towards social responsibility. A structured questionnaire was developed based on studies by Ford and McLaughin, Teoh and Gregory Thong, Gill and Leinbach and Jones. A total of 198 responses were used for analysis in this study. The results showed that only five statements (of the 14 statements) have scores of more than 50 per cent agreement or endorsement of socially responsible activities. About 69 per cent of the respondents believed that involvement by a business in improving its community's quality of life will also improve long run profitability. Nearly 65 per cent agreed that socially responsible activities provide a favourable public image. The analysis of variance showed that there were significant differences in the attitudes of managers working in banking, telecommunication, manufacturing and construction towards social responsibility. Nearly all of the respondents agreed that their companies were involved in socially responsible activities, that they were responsive to consumers' complaints (83 per cent), and that they were maintaining product/service quality (77 per cent). Of the respondents nearly 54 per cent mentioned that their companies informed the general public of their socially responsible activities. The results also showed that the most influential factor determining the attitude towards social responsibility was family upbringing. The other important factors were traditional beliefs and customs, and common practices in the industry. Discusses the implications of the findings.
Introduction he issue of corporate social responsibility has been of growing concern among business communities in recent years. For example, Lord Sieff, the former chairman of Marks & Spencer plc, said that business only contributes fully to society if it is efficient, profitable and socially responsible (Cannon, 1992). Corporations like Johnson & Johnson also believe it is a company's responsibility to be fair, honest, trustworthy, and respectful, in dealing with all its constituents (Johnson & Johnson, 2000). Volkswagen AG (2000) also adopted the position that it is essential to build both shareholder value and worker value in order to deliver sustainable future growth. Volkswagen defined corporate social responsibility as the ability of a company to incorporate its responsibility into society to develop solutions for economic and social problems. These positions suggest that corporate social responsibility (CSR) is still a major concern among companies worldwide. CSR has also been viewed as the continuing commitment by business to behave ethically and to contribute to economic development while improving the quality of life of the workforce and their families.
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Corporate Governance 2,4 2002, pp. 10-16, # MCB UP Limited, 1472-0701, DOI 10.1108/14720700210447641
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Although CSR has received most public attention in the developed countries, CSR has also been of major concern in Malaysia in recent years where several non-governmental organizations like ``Sahabat Alam Malaysia'', Federation of Malaysian Consumers Association, and Consumers Association of Penang (CAP) and many others have raised issues relating to environmental pollution, health hazards products, product safety, discrimination against the handicapped, and drug abuse. These issues have raised the attention of the government and legislation has been introduced to prevent the problems becoming out of hand. For example, the Environmental Quality Act was instituted in 1974 to enforce legislation against problems of environmental safety and pollution. Environmental Impact Assessment (EIA) was made compulsory for construction companies before they were to be allowed to develop new housing/property areas. Several laws pertaining to drug abuse were also introduced by the Ministry of Health to reduce the distribution and supply of drugs that have potential side effects.
``Research in Malaysia may provide implications that corporate social responsibility may have different meanings to different communities in different countries'' In Malaysia, research studies have been conducted on corporate social involvement, social reporting and social performance (Teoh and Gregory Thong, 1986). Abdul Rashid and Abdullah (1991) examined the status of CSR in Malaysia by examining the attitudes of the managers in Malaysian companies. Since then, no other research had been done, and now after more than ten years, it is relevant to review the status of CSR as perceived by the executives and managers in Malaysian companies. The purpose of this paper is, therefore, to examine the attitudes of the Malaysian executives and managers towards CSR, and the factors determining the attitudes towards CSR. This paper will also examine the differences in the perceptions towards CSR of the executives and managers working in different sectors of the economy. Research in this area is particularly important as it will provide greater insight on the extent of CSR in Malaysia, and how that has changed in the last decade. It will also show the changing attitudes of executives and managers towards CSR in a developing country like Malaysia. Further, this research may provide implications on the concept of CSR in Malaysia, as it has often been argued that corporate social
responsibility may have different meanings to different communities in different countries. Literature review Holmes (1976) examined the executives' perceptions of CSR in the USA and how their opinions and the philosophies of their firms concerning social responsibility had changed over the past five-year period (1970-1975). The results showed that the executives believed that their opinions and the philosophies of their firm had changed significantly during that period in relation to this statement: ``In addition to making a profit, business should help to solve social problems whether or not business helps to create those problems ± even if there is probably no short run or long run profit potential''. Her research also showed that the executives were highly optimistic about business's social role: 37.6 percent agreed strongly, 40.7 percent agreed more than they disagreed, 20.1 percent disagreed more than they agreed, 0.5 percent disagreed strongly, and 1.1 percent had no opinion on this statement: ``business possesses the ability and means to be a major force in the alleviation of social problems''. The research also found that there was more agreement on positive outcomes of corporate social involvement than on negative outcomes. Of the respondents, 97.4 percent agreed that it would enhance corporate reputation and goodwill, 89 percent considered it would strengthen the social system in which the corporation functioned, and 74.3 percent considered it would strengthen the economic system in which the corporation functioned. In another study of the attitudes of a number of US chief executive officers (CEOs) and the business school deans, Ford and McLaughlin (1984) found that there was high agreement (above 50 percent) on eight of the 11 statements for corporate acceptance of social responsibility. CEOs and deans differed significantly in two statements. The deans agreed more than the CEOs that ``the idea of social responsibility is needed to balance corporate power and discourage irresponsible behavior'' and that ``since businesses have such a substantial amount of society's managerial and financial resources, they should be expected to solve social problems''. As for the statements against corporate acceptance of social responsibility, there were seven statements (out of the 11) with which the CEOs disagreed strongly (above 50 percent disagreement), and five statements with which the deans disagreed strongly. There were five statements that were found to be significantly different by the CEOs and the deans. Deans were less inclined than the CEOs to disagree with the statements that ``business will participate more actively in social responsibility in prosperous economic times than in recession'' and ``consumers and the general public will bear the cost of business social involvement because business will pass these costs along through the pricing structure''. Ford and McLaughlin found that the two groups seemed to agree on Corporate Governance 2,4 2002
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the major arguments for practising social responsibility. Disagreements arose over the perceptions of resource costs for conducting these activities and perceptions of the ability of business to make good decisions in social responsibility practices. Teoh and Gregory Thong (1986) believed that the philosophy of top management and legislation are primary factors contributing to corporate social awareness. Nearly 49 percent of the respondents considered the view that the social responsibility of business is reflected in the active concern for the social impact of the economic activities of business. This is a responsibility for the social performance of business as an economic unit (Teoh and Gregory Thong, 1981). Overall, the manufacturing sector (36 percent), particularly in the chemicals and petroleum industry (10 percent), and electrical machinery, appliances and parts (7 percent) subscribed to this view. Malaysian-owned and British-owned companies had the same view. In terms of overall involvement in socially relevant activities, human resources (71 percent) appeared to be the major area, followed by product/service to consumers (70 percent). The involvement of these companies in community activities (39 percent), and in the physical environment (37 percent) was considered low relative to the other activities. In Hong Kong, Gilles and Leinbach (1983) found that there appeared to be little room for the practice of social responsibility. Although there were some positive attitudes towards CSR, there were also negative attitudes towards it. For example, whereas 81 percent agreed on the statement that firms should be concerned with the environmental and social consequences of their business activities even to the extent of sacrificing short-term profitability, only 35 percent agreed that a company should subscribe to charities for humanitarian reasons rather than for public relations or selfinterest. This suggests that the situation is a ``catch-22'' as far as CSR is concerned. In examining the determinants of the managers' attitudes towards CSR, Gill and Leinbach found that family training and upbringing, and traditional beliefs and customs are primary factors. Abdul Rashid and Abdullah (1991) judged that family upbringing was rated as the most important factor, followed by religious training. The conduct of superiors was ranked third, followed by traditional beliefs and customs. Teoh and Gregory Thong (1986) also examined the variations in social involvement by the type of business activity, and found some differences, for example, in the manufacturing sector. Methodology A structured questionnaire was developed based on past studies (Ford and McLaughlin, 1984; Holmes, 1976; Teoh and Gregory Thong, 1986; Gilles and Leinbach, 1983). A total of 14 attitudinal statements on CSR were asked on a Corporate Governance 2,4 2002
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five-point interval scale, which ranged from strongly agree (1) to strongly disagree (5). The questions on determinants of CSR were on a six-point interval scale ranging from most influential (1) to least influential (6). The questionnaires were randomly distributed by the enumerators in various organizations in Kuala Lumpur City. A total of 198 responses were used for analysis in this study. The Cronbach alpha coefficient for the 14 attitudinal statements was 0.6052, and for the seven factors influencing attitude it was 0.5855. In the sample, 25.3 percent of the respondents were from the banking sector, 30.3 percent were from the telecommunication industry, 20.25 were in manufacturing, and 24.2 percent were from the construction sector. About 38.4 percent of the firms had fewer than 50 employees, 27.3 percent had 50-99 employees, and the rest had more than 100 employees. Nearly 78 percent of the firms were owned locally, 14.6 percent had 50-50 percent equity owned by foreign and local, and 7.6 percent were foreign owned. In terms of annual sales turnover, 48 percent of the firms studied had a sales turnover of less than RM50 million (US$13 million), 16.2 percent had a sales turnover of RM50RM99 million (US$13-26 million), 11.6 percent had a sales turnover of RM 100-RM199 million (US$26-52 million) and 24.2 percent had a sales turnover of more than RM200 million (US$ 52 million). In terms of job title, nearly 27.8 percent of the total respondents were CEOs, 64.1 percent were managers and 8.1 percent were executives. Nearly 64 percent of the respondents were male, and the rest were female. About 49.5 percent of the total respondents were Malays, 41.4 percent were Chinese, and 7.6 percent were Indians. In the sample, 11.6 percent had a high school education, 18.2 percent had a diploma, 68.7 percent had a degree qualification, and the rest had other types of qualifications. As for the age group, 48.5 percent of the total respondents were under 35 years old, 40.4 percent were between 35-45 years old, and 11.1 percent were above 45 years old. The data were analysed in the SPSSx programme, and descriptive statistics and one-way analysis of variance ware used to analyse the data. Findings and discussion Attitudes towards corporate social responsibility Table I shows the results of the survey. Out of the 14 statements posed, six statements had more than 50 percent agreement by the executives and managers in the study. Of the respondents, 69.2 percent agreed with the statement that ``involvement by business in improving its community's quality of life will also improve long run profitability''. About 65.2 percent of them agreed with the statement that ``a business that wishes to capture a favourable public image will have to show that it is socially responsible''. Nearly 62 percent of the respondents also agreed that ``socially
Table I Ð Attitudes towards corporate social responsibility Attitudes towards corporate social responsibility
Agree 2001 (%)
Agree 1991 (%)
Involvement by business in improving its community's quality of life will also improve long run profitability
69.2
88.1
A business that wishes to capture a favorable public image will have to show that it is socially responsible
65.2
89.1
Socially responsible corporate behaviour can be in the best economic interest of the shareholders
62.1
82.6
The idea of social responsibility is needed to balance company's power and discourage irresponsible behaviour
59.1
75.5
Corporations are social institutions and as such must live up to society's standards
56.6
68.2
Efficient production of goods and services is no longer the only thing society expects from business
53.5
72.7
Involvement in socially responsible activities threatens business by diverting time and money away from its primary business purpose
45.5
66.3
If business is more socially responsible, it will discourage additional regulation of the economic system by government
44.9
38.2
A company that ignores social responsibility can obtain a competitive advantage over a company that does not
42.9
70
It is unwise to allow business to participate in social activities where there is no direct way to hold it accountable for its actions
39.4
39.1
Social responsibility, when it reduces shareholders' equity, amounts to theft. Managers are appropriating and then giving away money which belongs to shareholders Business leaders are trained to manage economic institutions (companies) and not to work effectively on social issues
37.4
55
35.9
51.9
Consumers and general public will bear the costs of business social involvement because businesses will pass these costs along through their pricing structure Business already has too much social power and should not engage in social activities that might give it more
36.4
33.6
33.8
55
responsible corporate behaviour can be in the best economic interest of the shareholders''. There was also high agreement on the statements related to ``balancing the corporate power and discouraging irresponsible behaviour'' (59.1 percent), that ``corporations are social institutions and must live up to society's standard'', and that ``efficient production of goods and services is no longer the only thing society expects from business''. Nearly 53.5 percent of the respondents also agreed that being efficient in producing the goods and services may not be the only thing expected by society from business organizations. On the other hand, the results also showed that the respondents disagreed considerably on the six negative statements on CSR. For example, 66.2 percent of the respondents disagreed that ``business already has too much social power and should not engage in social activities that might give it more''. Nearly 64 percent of the respondents also disagreed with the statement that ``business leaders are trained to manage economic institutions and not to work effectively on social issues''. Further, 63.6 percent of the respondents disagreed that business should pass the social costs through the pricing structure. About 62.6 percent of the
respondents also disagreed that being socially responsible does not mean that the managers are reducing shareholders' equity. Finally, nearly 61 percent of the respondents disagreed that it was not wise to allow business to participate in social activities, as they were not accountable for their actions. The above results show that the managers had a positive attitude towards CSR. These findings were consistent with the results by Ford and McLaughlin (1984) although the percentages of agreement and disagreement were higher in the former studies. In relation to the Hong Kong study by Gilles and Leinbach (1983), the present finding is different as the Gilles and Leibnach conclusion was quite unclear on the attitude of Hong Kong managers in CSR activities. However, a comparison of the results with the previous findings by Abdul Rashid and Abdullah (1991) indicated that the percentage of agreements on these statements had decreased. For instance, nearly 88 percent had agreed on the first statement in 1991, while nearly 89 percent had agreed with the second statement. Similarly, 82.6 percent of the respondents had agreed with the third statement. This means that the attitude of executives and managers towards Corporate Governance 2,4 2002
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CSR in the last ten years has degenerated. Similarly, it was found that the percentage of disagreement on the negative statements was higher in 1991 than in 2001. Such results can probably be attributed to the fact that there is more of a lackadaisical attitude among the younger generations on the issue of social responsibility than in the past. Involvement in CSR activities Overall, the results in 2001 showed that 97.5 percent of the respondents agreed that their company was involved in CSR activities (see Table II). In 1991, about 95.5 percent believed that their company was involved in such activities. Almost 91.8 percent of the respondents felt that their company was involved in human resources (employees' welfare), 82.9 percent in response to customers' complaints, 76.7 percent in maintaining product/service quality to consumers, 62.3 percent in ensuring product safety, 60.3 percent in donations to welfare organizations, and 35.6 percent in contributions for Table II Ð Areas of CSR in which Malaysian companies are involved Yes 2001 (%)
Yes 1991 (%)
a.
Employees' welfare (facilities and benefits)
91.8
91.8
f.
Responsive to consumer's complaints
82.9
86.4
e.
Maintaining product/service quality to consumers
76.7
82.7
d.
Ensuring product safety
62.3
64.5
k.
Donation to welfare organizations Provide guarantee policy or warranty provisions
60.3
80.0
j.
Provide contribution for games and sports
35.6
l.
Contributions to culture and/ or literary works
34.9
b.
Employment of handicapped individual
32.9
g.
52.1
m. Contribution to educational institutions (other than research grants, e.g. scholarships or bursary to students)
24.7
c.
Assistance in overcoming problems related to drugabuse and alcoholism
21.2
h.
Provide loans for low-income housing
28.1
i.
Provide loans to small enterprise
21.9
n.
Contribution for public amenities (e.g. bus stop shades)
19.9
Contribution to crime prevention
15.1
o.
Corporate Governance 2,4 2002
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70.9
sports and games. About a decade ago, the percentages were higher for the contributions to sports and games (71 percent), and donations to welfare organizations (80 percent). Once again the results showed a decline in the level of involvement of companies in CSR activities. The above findings also appeared to be consistent with the findings by Teoh and Gregory Thong (1981) in the sense that these corporations were more involved in areas related to human resources and marketing. Although all of these corporations may be involved in CSR activities, only 54.5 percent of the respondents mentioned that they informed the general public of any aspects of their CSR activities. The areas that were reported to have been mentioned to the public or in their annual reports (see Table III) were employees' welfare (50 percent), product/ service to customer (55 percent), community involvement (39.2 percent), and physical environment (23.3 percent). In 1991, 62 percent of the respondents reported the CSR activities. The present findings, however, showed that the level of reporting was slightly higher in 2001 than in 1991. A comparison with the findings of Teoh and Gregory Thong (1986) indicated that there were slight variations in the sense that 21.1 percent of the firms reported social performance in the area of product/service to consumers in the annual report. The above results showed an encouraging trend in the sense that the Malaysian companies have improved their involvement in CSR activities. Determinants on attitudes towards CSR The results showed that family upbringing (mean = 2.25) was the most influential factor determining the attitudes of executives and managers towards CSR (see Table IV). Traditional beliefs and customs were ranked second (mean = 2.53), and common practices in the industry were ranked third (mean = 2.57). School or university training was ranked least influential (mean = 2.83) in determining attitudes towards CSR. These results showed the importance of culture and values in nurturing the attitudes of our future executives and managers. In comparison with the previous study in 1991, the findings are similar except that in 1991 the religious factor was ranked second but only fifth in 2001. These results, however, appeared to be consistent with Gilles and Leinbach (1983).
Table III Ð Aspects of CSR reported to media or in annual reports
i. ii. iii. iv.
Employees' welfare Product/service to consumers Community involvement Physical environment
Yes 2001 (%)
Yes 1991 (%)
50.0 55.0 39.2 23.3
48.2 49.1 41.8 20.9
Table IV Ð Factors influencing attitudes towards CSR No.
Attitudes
1. 2. 3. 4. 5. 6. 7.
Family upbringing Traditional beliefs and customs Common practices in industry School or university training Conduct of superiors Religious training Conduct of peers
Mean
2001
2.25 2.53 2.57 2.83 2.82 2.72 2.81
Rank
Mean
1 2 3 7 6 4 5
n.a. n.a. n.a. n.a. n.a. n.a. n.a.
1991
Rank 1 5 6 3 3 2 7
Note: n.a. = mean scores were not available
Table V Ð Differences on attitudes towards CSR by sectors No.
Manufacturing Construction F value
Banking
Telecom
Socially responsible corporate behaviour can be in the best economic interest of the shareholders Business already has too much social power and should not engage in social activities that might give it more
1.96
2.63
2.45
2.67
6.157
0.001
2.58
3.48
3.58
2.48
17.674
0.000
3
A company that ignores social responsibility can obtain a competitive advantage over a company that does not
2.24
3.32
3.23
2.54
11.133
0.000
4
Efficient production of goods and services is no longer the only thing society expects from business Involvement by business in improving its community's quality of life will also improve long run profitability
2.46
2.75
2.53
2.60
0.932
0.426
1.80
2.27
2.00
2.67
9.627
0.000
6
A business that wishes to capture a favorable public image will have to show that it is socially responsible
1.98
2.52
1.88
2.63
7.588
0.000
7
It is unwise to allow business to participate in social activities where there is no direct way to hold it accountable for its actions Business leaders are trained to manage economic institutions (companies) and not to work effectively on social issues
2.74
3.18
3.05
2.50
5.406
0.001
2.52
3.40
3.23
2.71
8.773
0.000
9
Consumers and general public will bear the costs of business social involvement because businesses will pass these costs along through their pricing structure
3.34
2.87
2.85
2.54
6.422
0.000
10
If business is more socially responsible, it will discourage additional regulation of the economic system by government
2.74
2.95
2.78
2.42
2.567
0.022
11
The idea of social responsibility is needed to balance company's power and discourage irresponsible behaviour Involvement in socially responsible activities threatens business by diverting time and money away from its primary business purpose
2.24
2.50
2.30
2.60
1.403
0.133
2.72
3.10
3.18
2.25
8.610
0.000
1
2
5
8
12
Attitudes
Results
13
Corporations are social institutions and as such must live up to society's standards
2.30
2.68
2.35
2.63
1.887
0.074
14
Social responsibility, when it reduces shareholders' equity, amounts to theft. Managers are appropriating and then giving away money which belongs to shareholders
2.84
3.00
3.23
2.42
5.319
0.000
Corporate Governance 2,4 2002
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Variations in attitudes towards CSR The one-way analysis of variance showed that there were significant differences on 11 of the 14 statements on the attitudes towards CSR by the respondents from the different industries/sector (banking, telecommunication, manufacturing, and construction). There were three statements that were not significant: Efficient production of goods and services is no longer the only thing society expects in business. The idea of social responsibility is needed to balance company's power and discourage irresponsible behaviour. Corporations are social institutions and as such must live up to society's standards.
The results showed that the financial sector had three positive statements with higher agreements than the other sectors, and one negative statement with the higher disagreement. The telecommunication sector had three negative statements with the higher disagreements, while the manufacturing sector had three negative statements with higher disagreements. The construction sector had one positive statement with higher agreements (see Table V). The results suggest that in the financial sector there are more positive attitudes towards CSR than in the telecommunication, manufacturing or construction sectors. This is not unusual as the financial sector is expected to be more prudent and more conscious of the role of banks in CSR. The above findings also point to the differences between the sectors on their priorities towards CSR activities. For example, the financial sector had higher agreement among its members that the involvement of business in improving the community's quality of life will also improve the long run profitability of the company. The telecommunication sector did not agree that by ignoring CSR the company would have a competitive advantage over a company that does not ignore CSR.
phenomenon in Malaysia, the level of awareness appears to have improved slightly. Since family upbringing and traditional beliefs and customs have much influence in shaping the executives' and managers' attitudes towards CSR, it is imperative that efforts should be made to instill such values in the younger age group. This will consequently improve their general attitudes towards CSR and their commitment towards CSR activities. It may also be timely for the Malaysian government to consider introducing a social performance index and tax benefit or incentives for the local companies to benefit from such moves. Such moves would also enhance the level of participation and support by the private sector towards a more equitable and just society. Further research should also be conducted to examine the effects of other factors like organizational size, structure, ownership and performance on the attitudes towards corporate social responsibility. References
Abdul Rashid, M.Z. and Abdullah, I. (1991), ``Managers attitudes towards corporate social responsibility'', Proceeding of Pan Pacific
Conference, June, Kuala Lumpur, pp. 218-20. Cannon, T. (1992), Corporate Responsibility, 1st ed., Pitman Publishing, London. Ford, R. and McLaughlin, F. (1984), ``Perceptions of socially responsible activities and attitudes: a comparison of business school deans and corporate chief executives'', Academy of Management
Journal, September, pp. 670-1. Gilles, R.W.T. and Leinbach, L.J. (1983), ``Corporate social responsibility in Hong Kong'', California Management Review, Vol. XXV No. 2, January, pp. 107-23. Holmes, S.L. (1976), ``Executive perceptions of corporate social responsibility'', Business Horizons, June, pp. 34-40. Johnson & Johnson (2000), Social Responsibility in Action. Teoh, Hai-Yap, and Gregory Thong, T.S. (1981), ``An empirical research on corporate social responsibilities undertaken by Malaysian
Conclusion The findings of this study showed that although the Malaysian executives and managers had positive attitudes towards CSR, the extent of their involvement in CSR was lower today than a decade ago. The extent of corporate disclosure on CSR was nevertheless slightly higher in 2001 than in 1991. This implies that while CSR is not a recent
Corporate Governance 2,4 2002
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companies'', Malaysian Management Review, August, pp. 1-110. Teoh, Hai-Yap, and Gregory Thong, T.S. (1986), ``Another look at corporate social responsibility and reporting: an empirical study in a developing country'', Malaysian Management Review, Vol. 21 No. 3, December, pp. 36-51. Volkswagen AG (2000), Corporate Social Performance: Commitment
and Performance, Generic, Milton Keynes.
