1. INTRODUCTION:

The term "corporate social responsibility" came in to common use in the late 1960s and early 1970s, after many multinational corporations (MNC) were established in the corporate world. Since then, the corporate companies gradually included a focus to add value for the society, in addition to their core operational strategies.

Even though there are some criticisms on the CSR to divert the corporate performance, CSR is instrumental to benefit the society in compensating the imbalances and improvising the social values such as Health, Safety, Literacy, etc.

Now days, several organizations claim to demonstrate the “Corporate Social Responsibility (CSR)” through grand campaigns and publications. The term CSR has been so popular and demanding to the extent that the Google webpage displays 9,780,000 results by May 2011 on the search of “Corporate Social Responsibility” Though it is a good sign to add value to the society, the rationale behind the CSR approach needed to be analyzed further, as different organizations interpret their social responsibility with different themes, budgets and methods.

As Jeremy Moon (2004) has pointed out, CSR is a difficult concept to pin down. It overlaps with other such concepts as corporate citizenship, sustainable business, environmental responsibility, the triple bottom line; social and environmental accountability; business ethics and corporate accountability. It is highly contextual not only in terms of its corporate environment but also in terms of its national environment. Moreover, CSR is an essentially contested concept. Thus any definition will necessarily be challenged by those who wish to contest the reach and application of any version of CSR.

Since 1990, the growth of CSR lobby groups or interested parties was commendable, to name a few were the World Economic Forum, World Business Council for Sustainable Development, UK- Business in the Community (BITC), US- business for Social Responsibility, Global Reporting initiative (GRI) from Amsterdam, Corporate Citizen Research Centre from Australia, Quality Associates International Inc., which developed the Social Accountability norms SA 8000, International Organization for Standardization (ISO) from Switzerland which has established a lot of standards on the Environment, Risk Assessment, Food Safety and Sustainability elements and European Foundation for Quality Management (Belgium) and Malcolm Baldrige Excellence Program (US), etc.

Several organizations have the “CSR Season” on-going and associated budget as well, regardless how they have understood and customized their CSR practices for creating the maximum benefits to society. Further, organizations shall monitor the extent, to which a social change has been achieved because of CSR. All the above needs became driving forces to initiate this study.

2. TERMS AND DEFINITIONS:

· CSR: Corporate Social Responsibility, a self initiative by organizations to serve the society.

· Initiatives : Systematic Plans or Approaches

· Management Systems: Frame work of coordinated activities with a specific objective to maintain and improve.

· EFQM – European Foundation for Quality Management, a non-profit organization owing a business excellence model.

· Sustainability: The state of survival with a capacity to endure for future.

3. LITERATURE REVIEW:

The term, “Corporate Social Responsibility” has been defined with several perspectives. The European Commission's definition of CSR is "A concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis.” The World Business Council for Sustainable Development in its publication "Making Good Business Sense" by Lord Holme and Richard Watts used the following definition. "Corporate Social Responsibility is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large", A study on Corporate Sustainability Reporting in Canada(2005) defines CSR as “A company’s commitment to operating in an economically, socially and environmentally sustainable manner, while recognizing the interests of its stakeholders including investors, customers, employees, business partners, local communities, the environment and society at large. In a nutshell, “CSR is a corporate commitment for adding values to the society and community, through their economical, social and environmental performance. Corporate Social Responsibility (CSR) is about how businesses align their values and behavior with the expectations and needs of stakeholders - not just customers and investors, but also employees, suppliers, communities, regulators, special interest groups and society as a whole. CSR demands that businesses balance their economic, environment and social perspectives.

CSR refers to a whole range of fundamentals that organizations are expected to acknowledge and to reflect in their actions. It includes, but not limited to caring the sustainability of the environment, respecting human rights, fair treatment of the workforce, customers and suppliers, being good corporate citizens of the communities, fair trade with business ethics, etc. The literature for CSR is vast and growing dynamically.

Citations:-

As derived from the TQM Word press website, the CSR has the basic responsibilities, classified as below:-

· Economic Responsibility: To improve productivity, Sales and Profitability

· Legal Responsibility: Compliance to the Statutory, Regulatory and Subscribed requirements.

· Ethical Responsibility: To be ethical in doing the business

· Discretionary Responsibility: To contribute and add value to the society and community, which is not mandated by the core business.

CSR Approaches: There are so many approaches adapted by the organizations in demonstrating their social responsibility, a few primary approaches obtained from the Wikipedia have been improvised as below:-

· Community Approach: The community will be selected and their social needs will be identified, accordingly the CSR programs will be provided. E. g. Literacy Programs for the nearby village community, Educational Scholarship programs, employment for the people of special needs, etc.

· Philanthropic Approach: Financial and Physical contributions for the needy

· Sustainability Approach: This approach focuses on the conservation of energy, prevention of pollution and environmental sustainability related themes.

· Health and welfare Approach: This approach will make the organizations to organize health and public awareness related campaigns such as “Blood-Donation, Road Safety, HIV-AIDS Awareness, Anti-Tobacco”, etc

· Strategic Approach: As a part of organizational Strategy, the CSR theme will be identified and organized. E.g. the energy conservation theme derived from organizational strategy.

· Social Accountability Approach: This approach makes the organization to ensure socially accountable business as a way to serve CSR through fair-trading, fair pay and work conditions, equality in treatment for all employees, ethical consumerism and human rights.

· Emergency Response Approach: Natural Calamity response and relief programs to those affected, such as provision of rescue, food, shelter, domestic appliances, relief fund and health care measures.

According to a survey published in 2008 by “ Economist Intelligence Links (Canada)”, carried out with 1200 managers from everywhere in the world, and who intended to benefit from the implementation of strategies and policies, the six principal advantages mentioned were:-

I. Capacity to attract new customers,

II. A greater value for the shareholders,

III. An increased profitability,

IV. Better capacity to manage the risks,

V. Products and processes of better quality and,

VI. Capacity to recruit first choice employees.

The Key advantages perceived on CSR, but not limited to are:-

· Balancing the society and community against poverty, illiteracy, ill-health and lack of awareness

· Equality in treatment of employees, civilians and corporate stakeholders such as customers, suppliers, etc

· Pollution free or safe environment

· Social balance and security

· Good health and well-being.

But CSR is not absolutely criticism- free, as

I. Not all the organizations demonstrating CSR are having their scope of business appropriate for the society (Like Tobacco companies organizing health programs),

II. CSR might distract the focus of maximizing the returns to the investors, described as “It is wiser for firms to act strategically than to be concerned into making investments in CSR” (Husted and Salzar 2008:481)

III. Some Considerable percentage of organizations “Preach” CSR rather than demonstrating it and

IV. It is difficult to measure the real-time effectiveness of CSR. Managing societal responsibilities requires these organizations to use appropriate measures and the leaders to assume responsibility for those measures. (Malcolm and Baldrige Business Excellence criteria 2011:53)

V. As revealed by the Middle East information web resources (AME info FZ LLC), During the World Economic Forum (WEF) May 2008, the Executive Chairman of Alshaya group remarked that the CSR practices at UAE were in the elementary stage, not significantly improved beyond the donations to charity.

VI. John Elkington (1999) puts forth that “Social reporting is now well-established, as of course is financial reporting. But further challenges lie ahead for companies looking to evaluate social indicators…” These above citations were instrumental to take a decision to study the CSR practices against a standard framework.

EFQM CSR Framework:-

The European Foundation for Quality Management(EFQM) is a global non-for-profit membership foundation based in Brussels, Belgium. With more than 500 members covering more than 55 countries and 50 industries, provides a unique platform for organizations to learn from each other and improve performance.EFQM is the custodian of the EFQM Excellence Model, a proven framework for success that is helping over 30 000 organizations around the globe to strive for Sustainable Excellence. The EFQM Model is at the heart of many organizations who perform consistently outstanding beyond the minimum compliance.

The EFQM model 2010 explains the concept of CSR is put into practice in the following way:-

Excellent organizations adopt a highly ethical approach by being transparent and accountable to their stakeholders for their performance as a responsible organization.

They give consideration to, and actively promote social responsibility and ecological sustainability both now and for the future.

The organization’s CSR is expressed in its values and integrated within the organization.

Through open and inclusive stakeholder engagement, they meet and exceed the expectations and regulations of the local and where appropriate, the global community.

As a well managed risk, they seek out and promote opportunities to work on mutually beneficial projects with society inspiring and maintaining high levels of confidence with stakeholders.

They are aware of the organization’s impact on both the current and future community and take care to minimize any adverse impact.

Once the concepts are understood, EFQM highlights the following questions as challenges for the leaders of the organizations:

How should the CSR concepts be implemented in an appropriate manner to give benefit to the organization and its stakeholders?

How do we know what our stakeholders require?

How do we know where to focus our attention?

How do we know whether we are achieving the benefits we expected for our organization and our stakeholders?

The EFQM Excellence criteria 2010, criteria 8 on Society results, specified the societal requirements on Excellent organizations, as below:-

Develop and agree a set of performance indicators and related outcomes to determine the successful deployment of

their societal and ecological strategy and related policies, based on the needs and expectations of the relevant external stakeholders.

· Set clear targets for Key Results based on the needs and expectations of their external stakeholders, in line with their chosen strategy.

· Demonstrate positive or sustained good Society Results over at least 3 years.

· Clearly understand the underlying reasons and drivers of observed trends and the impact these results will have another performance indicators and related outcomes.

· Anticipate future performance and results.

· Understand how the Key Results they achieve compare to similar organizations and use this data, where relevant, for target setting.

· Segment results to understand the experience, needs and expectations of specific stakeholders within Society.

EFQM - 8a. Perceptions.

· This is society’s perception of the organization. This may be obtained from a number of sources, including surveys, reports, press articles, public meetings, NGOs, public representatives and governmental authorities.

· These perceptions should give a clear understanding of the effectiveness, from society’s perspective of the deployment and execution of the organization’s societal and environmental strategy and supporting policies and processes.

· Depending on the purpose of the organization, measures may focus on:

o Environmental impact

o Image and reputation

o Societal impact

o Workplace impact

o Awards and media coverage

EFQM - 8b. Performance Indicators.

· These are the internal measures used by the organization in order to monitor, understand, predict and improve the performance of the organization and to predict the impact on the perceptions of society.

· These indicators should give a clear understanding of the effectiveness and efficiency of the approaches adopted to manage the organization’s societal and environmental responsibilities.

· Depending on the purpose of the organisation,measures may focus on:

o Environmental performance

o Regulatory and governance compliance

o Societal performance

o Health and safety performance

o Responsible souring and procurement performance

EFQM elaborates further, a five step approach for CSR, as below:-

a. Create Awareness and commitment: Before starting along the CSR journey, it is important to create CSR awareness throughout the organization and to gain commitment from the senior management team.

b. Identify stakeholders and their needs and expectations: The identification of all the appropriate stakeholders and the understanding of their needs, expectations and risks is a crucial starting point for organizations which want to be more socially responsible.

c. Conduct a Self-Assessment: Self assessment for CSR is a comprehensive, systematic and regular review by an organization of its activities and results against the EFQM framework for CSR. It aims to understand better the CSR maturity level of the organization and to drive improvement.

d. Improve the organization’s activities: Based on the outcomes of the self-assessment, an organization should identify the improvement activities. These should help the organization to progress in its CSR journey.

e. Review and Report CSR Performance: Public CSR reporting provides insight into what the organization is doing for its stakeholders. It provides measurements and transparency, helping to increase the image of the organization.

4. DATA ANALYSIS:

This study investigated the effectiveness of demonstrating the Social Responsibility by the UAE organizations, represented by a sample group of 100 contractors out of the lot of 800 Contractors. (35 Mechanical Contractors, 35 Electrical Contractors and 30 Civil contractors) and the data was analyzed as below:-

a. Commitment : 18% of the respondents revealed that their top management was committed towards serving the society, 14% of the respondents had their management unwilling towards social responsibilities, 68% of the respondents could not say whether their management was committed or not.

b. Budget for CSR: 18% of the respondents had a clear idea as how much of budget was planned and allocated for CSR. 22% of the respondents revealed no budget for CSR and the remaining 60% had no idea about the budgetary figures related to their organization.

c. Formal CSR Initiatives: Only 16% of the respondents accepted that their organizations had formal CSR initiatives implemented, 46% respondents denied of any such formal initiatives and the remaining 38% respondents had no idea on the CSR related initiatives of their organization.

d. CSR Action Plan: Regardless of the CSR budget and initiatives, hardly 18% of the responded organizations had action plan framework for demonstrating CSR within their organization, 76% organizations did not have any such action plan and 6% respondents had no idea whether their organizations had action plan or not.

e. CSR Approaches: 18% of the respondents revealed that their organizations had CSR initiatives in addition to donations. 64% respondents adapted a philanthropic approach only and not any other initiatives and 18% respondents had no idea on which CSR approach their organization had.

f. CSR and Corporate Strategy: 16% of the organizations accepted that CSR was a part of their corporate strategy. 14% respondents revealed that CSR was not aligned with their corporate strategy and the remaining 70% were not clear of the relationship between CSR and their corporate strategy.

g. CSR Performance Measurement: 16% organizations agreed that their CSR was linked with performance measurement framework such as Balance score card, 40% of organizations had not measured their CSR performance and the remaining 44% respondents had no idea about measuring their CSR performance.

h. CSR Reporting: 22% of responding organizations revealed that the CSR reporting was done in their organization, 34% respondents replied that CSR in their organization was not being reported. 44% respondents were not aware of CSR reporting mechanism.

i. CSR Indicators: 42% respondents agreed that their organizations had certain Key Performance Indicators (KPIs) related to CSR. 32% respondents did not agree with any such KPIs related to CSR. 26% organizations had no idea about the CSR related KPIs.

j. Tailor-Made CSR: 38% of the respondents replied that their organization’s CSR framework is not generic and has been customized to suit its scope, scale and social needs. 4% of respondents mentioned that their CSR model was generic and not customized. 58% of respondents had no idea on the level of customizing their CSR model.

k. Code of Ethics: 22% respondents had got the statement of ethics developed in their organization, 76% of organizations did not have any such statement, 2% respondents stayed neutral.

l. Stakeholder Satisfaction: 38% of the respondents revealed a hike in the stakeholder satisfaction, as a result of demonstrating the social responsibility, 34% respondents did not notice any such increase in stakeholder satisfaction and 28% had no idea in this regard.

m. Corporate Compliance: 40% of respondents agreed with the idea that their corporate compliance to Legal and regulatory requirements got improved because of CSR implementation. 32% respondents did not agree with this idea and 28% respondents stayed neutral.

n. CSR Responsibilities: 6 % of responding organizations revealed that the CSR was everyone’s responsibility in their organization, 42% respondents replied that CSR in their organization was the responsibility of a single person or that of department assigned for it. 52% respondents were not aware of whose responsibility CSR was how it was managed.

o. Internal Communication: 6% of respondents confirmed of an internal communication in their organization on their progress regarding CSR performance. 40% of respondents indicated no means of internal communication on their CSR performance. 54% respondents had no idea regarding such internal communication.

p. CSR Celebrations: Only 6% of the sampled organizations celebrate the completion of CSR related initiatives /achievements. 42% organizations don’t celebrate the achievements and 52% respondents were not aware of their achievements at all.

q. CSR related Recognition: Hardly 26% of respondents motivate their staff by recognizing those who participated in the CSR related initiatives. 52% respondents revealed no motivation/ recognition related to CSR performance. 22% respondents stayed neutral.

r. CSR and Brand Image: 34% respondents agreed of improved brand image because of social initiatives and 30% denied of any such hike in the brand image due to CSR, 36% of respondents stayed neutral.

5. HYPOTHESIS TESTING:

Primary data collected were analyzed for the internal relationship between variables. To compare the existing CSR practices in relation to the EFQM CSR framework, Hypothesis testing was carried out for 7 constructs, including the 5 EFQM approaches on CSR framework:-

As an example, the first one is illustrated below:-

HO: Null hypothesis: There is no relationship between Effectiveness of CSR Programs and identification of Stakeholder needs and expectations.

Ha: Alternative hypothesis: There is a significant relationship between the CSR programs and Stakeholder needs identification.

The hypothesis was tested as represented in table 1. The null hypothesis was rejected and alternate hypothesis accepted, proving that the process of identifying the needs and expectations of stakeholders had a significant relationship with the effective CSR performance of the organization.

Table 1: The hypothesis testing.

	YES	NO	NEUTRAL	TOTAL
YES	7	1	1	9
NO	7	14	1	22
NEUTRAL	6	1	12	19
TOTAL	20	16	14	50

Observed	Expected	(O — E)2/ E
7	3.6	3.21
1	2.88	1.22
1	2.52	0.91
7	8.8	0.36
14	7.04	6.88
1	6.16	4.32
6	7.6	0.33
1	6.08	4.24
12	5.32	8.38

Where, is the observed frequency for bin i and is the expected frequency for bin i. The expected frequency is calculated by

Calculated Chi Square = 29.85

Degrees of Freedom = (c - 1)(r - 1) = 2(2) = 4

Table Chi Square value is 9.488 (for 95% significance level)

Reject Ho because calculated value 29.85 is greater than the tabulated value 9.488

The null hypothesis was rejected and alternate hypothesis accepted, proving that the process of identifying the needs and expectations of stakeholders had a significant relationship with the effective CSR performance of the organization.

Similar to the test indicated above, other tests were conducted and the result is as below:-

There was a significant relationship hypothetically proven between

a) Top management’s social commitment and the effectiveness of CSR programs. (EFQM CSR Approach 1 of 5)

b) Formal CSR initiatives and CSR effectiveness.

c) Identification of stakeholders’ needs and expectations and CSR performance. (EFQM Approach 2 of 5)

d) CSR self assessment and CSR effectiveness (EFQM CSR Approach 3 of 5)

e) CSR effective implementation and improving Organization’s activities. (EFQM CSR Approach 4 of 5)

f) Social Responsibility and Organizational Brand Image

g) Specific social programs tailored for organization and CSR effectiveness

h) CSR reporting and CSR performance improvement (EFQM CSR Approach 5 of 5)

6. CONCLUSION:

Corporate Social Responsibility has been a great tool for solving societal issues and improving the social values.

An in-depth review of CSR literature was made, supported by the EFQM’s CSR framework.

The existing CSR activities of UAE organizations were compared with the 5 basic approaches of EFQM CSR framework and validated that all these approaches had a significant impact on the CSR performance.

Through statistical sampling, it is evident that a major proportion of UAE organizations have the following strength areas in their social responsibility:-

· Clear Direction setting in the social responsibility by the Government (Executive Council)

· Social responsibility set as a part of national and corporate strategy

· Community development initiatives are mandated such as employment of the UAE Locals, Females and those with special needs.

· A dedicated budget for the social responsibility.

There were a few challenges revealed in our study which affect the CSR effectiveness, especially at UAE:-

· CSR activities at UAE need to mature well, as in most organizations the scope of social responsibility stopped with donations or charity.

· Though organizations were allocated budget, Social responsibility initiatives were undertaken by a department or a team of staff only, rather than a direct involvement of Top management in partnering with the society and CSR programs. This resulted in a perception that CSR is a non-productive business element.

· Majority of organizations, regardless of their CSR programs, were not clear about which CSR approach they adapt in their organization as well as formal initiatives with action plan for implementation.

· CSR programs were not systematically monitored to evaluate the effectiveness and efficiency of demonstrating the social responsibility.

· CSR action planning, tracking and quantification of results were found inadequate.

· Internal communication of CSR progress and external communication of CSR performance were found inadequate, which need to be adapted.

The UAE organizations needed to fine-tune their CSR approaches and accountability according to standard frameworks such as the CSR framework approach by EFQM, so that it will be easy for them to quantify the social change contributed by them, in par with the expectations of the Stakeholders for the best interest of the society and community.

7. REFERENCES:

· AME Info FZ LLC. “CSR is not Charity”. Web. 2008. http://www.ameinfo.com/158575.html

· Elkington.J. (1999), “The link between accountability and sustainability – theory put into practice”, conference on the practice of Social Reporting for Business, ISEA, Tuesday 19 January, Commonwealth Conference Centre, London. UK

· Environmental Agency of Abu Dhabi. Abu Dhabi EHSMS Framework. Revision 2.1,Abu Dhabi, UAE: EAD Copyright,2009.Print.

· European Commission. “Corporate Social Responsibility”. Web.2011. http://ec.europa.eu/enterprise/policies/sustain able-business/corporate-social-responsibility/index_en.htm

· European Foundation for Quality Management, The EFQM framework for Corporate Social Responsibility, 1st ed. Brussels. Belgium: EFQM Publications, 2004. Print

· European Foundation for Quality Management, The Excellence one Tool book for Self-Assessment , 1st ed. Brussels. Belgium: EFQM Publications, 2004. Print

· European Foundation for Quality Management, Criteria for Business Excellence: 2010, 5^th ed. Brussels. Belgium: EFQM Publications, 2010. Print

· Husted B.W. and Salazar (2008). “Government choices for corporate social responsibility: to contribute, collaborate or internalize? Long range planning”. 36(5): 481-498.

· Malcolm Baldrige National Quality Program. Criteria for performance excellence 2011-2012. 11th edition, National Institute of Standards and Technology. Gaithersburg, USA: 2011.Print.

· Nelson .J (1998), “Leadership companies in the 21^st Century: Creating Shareholder value and Societal Value”, Visions of Ethical Business, No.1, October, Financial Times Management, London, pp 21-6.

· TQM Wordpress, “Corporate Social Responsibility”. Web 2009. http://totalqualitymanagement.wordpress.com/2009/ 03/12/stakeholders-and-corporate-social-responsibility/

· Wikipedia. “Corporate Social Responsibility”. Web. 2011. http://en.wikipedia.org/wiki/Corporate_social_responsibility

· World Business Council for sustainable development. Corporate Social Responsibility : making good business sense. First ed. London. UK: Red Letter Desig, 2000. Print.

· Zairi, Mohamed.,ed. Excellence Toolkit: Building Enabling Capability. First edition. Bradford. UK: e-TQM College Publishing House, 2005. Print.

Received on 13.06.2011 Accepted on 20.07.2011

Asian J. Management 2(3): July-Sept., 2011 page 108-114