Corporate social Responsibility and Organizational Identification: Exploring a bi-directional 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
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.
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.
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 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.
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.
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 and detail results will be provided with the full length paper.