Corporate Social Responsibility in the Brewery Industry in Ethiopia. Awareness, Perception and Practices

Master's Thesis , 2018 , 99 Pages , Grade: 3.68

Business economics - Trade and Distribution

The focus of this study is the awareness, perception and practice of Corporate Social Responsibility in the Brewery Industry in Ethiopia.

Therefore, a quantitative study with 203 workers out of the 5835 workers in the industry has been conducted. The results of the study indicate that awareness for Corporate Social Responsibility has a direct positive effect on its actual practice.

TABLE OF CONTENTS

LIST OF TABLES

List of Figures

Acronyms

ABSTRACT

1. Introduction
1.1 Background of the Study area
1.2 Motivation of the study
1.3 Statement of the Problem
1.4 General Objectives of the study
1.5 Specific objectives
1.6 Research question
1.7 Significance of the study
1.8 Scope of the study
1.9 Organization of the study

2. LITERATURE REVIEWS
2.1 The Concept of (CSR) as an organizational phenomenon
2.2 Definitions of corporate social responsibility (CSR)
2.3 Theoretical CSR conceptualizations
2.3.1 Economic responsibility
2.3.2 Legal responsibility
2.3.3 Ethical responsibility
2.3.4 Discretionary/philanthropic responsibility
2.3.5 CSR to employees
2.4 The Theoretical Literature reviews
2.5 Empirical Reviews
2.5.1 Stakeholder Theory
2.5.2 Organizational stakeholders
2.5.3 Business Benefits of Corporate Social Responsibility
2.5.4 Why Companies Engaged in CSR
2.5.5 Principles of Corporate Social Responsibility
2.5.6 Who are the Stakeholders?
2.5.7 Stakeholders´ Awareness and Understanding of CSR
2.5.8 Stakeholders´ Perceptions of CSR
2.6 Conceptual framework and hypotheses development
2.6.1 CSR Awareness and CSR perception
2.6.2 Perception OF CSR and CSR Practices
2.6.3 CSR Practices
2.6.4 Hypothesis
2.6.5 Human Rights
2.6.6 Labor Practices
2.6.7 Environment
2.6.8 Fair Operating Practices
2.6.9 Consumer Issues
2.6.10 Community Involvement and Development

3. RESEARCH METHODOLOGY
3.4 Sampling Technique
3.5 Sample Size and determination
3.6 Data collection Design
3.6.1 Survey Structured Questionnaire
3.6.2 Interviews
3.6.3 Data analysis techniques
3.6.4 Validity and Reliability
3.7 Research Model
3.8 Ethical Considerations

4. DATA PRESENTATION, INTERPRETATION, AND ANALYSIS
4.1 Demographic profile of respondents
4.2 Descriptive Outcomes
4.2.1 Awareness of CSR
4.2.1 Stakeholders´ Perceptions of CSR
4.3.2 CSR Practices
4.3 Examining hypothesized relationships
4.3.1 Results from mediation analysis
4.3.2 Full versus partial mediation
4.4 Discussion
4.4.1 Discussions on descriptive outcomes
4.4.2 Discussion on the hypothesis outcomes

5. SUMMARY
5.1 Short Summary
5.2 Major findings
5.2.1 Objective
5.2.2 Objective
5.2.3 Objective
5.2.4 Objective
5.3 Conclusion
5.4 Theoretical implications
5.5 Practical implications
5.6 Recommendation for future research
5.6.1 Limitation and Future direction

6. REFERENCES

APPENDIX A: QUESTIONAIRE

APPENDIX B: SURVEY DATA

ACKNOWLEDGEMENTS

I am truly indebted to God for giving me the strength that keeps me standing and for the hope that keeps me believing that this affiliation should be possible and more interesting. I like to express my sincere gratitude to my advisor Mr Shibiru Ayalew (PhD Candidate) for the continuous support of my master study and this research, for his patience, motivation, enthusiasm, and immense knowledge. His guidance helped me in writing of this thesis. This small piece of appreciation cannot fully convey my heartfelt gratitude towards him.

I would like to thank the staff of Ethiopian brewery industry particularly for general manager and personnel manager, as well as general service manger of in the industry. I am grateful for all the help and encouragement that you have given me over the data collection period. I owe great thanks to my wife Ms. selamawit who have been extremely patient with me during this difficult task. Lastly, I want to give thanks to all participants of the study for the support and encouragement you have given me.

LIST OF TABLES

Table1: Hypotheses are summarized

Table 2: Selection of the sample size

Table 3: Reliability test pilot test

Table 4: Demographic characteristics of the sample respondents

Table 5: Criteria of interpretation of the descriptive outcomes

Table 6: Employees level of awareness in CSR

Table 7: Levels of Stakeholders´ Perceptions of CSR

Table 8: Company levels of CSR practices

Table 9: The existence of the mediating effect

Table 10: Outcomes of the hypotheses analysis

Table 11: Results hypotheses test

List of Figures

Figure 1: Conceptual Framework of the Study formulated by researcher

Figure 2: Mediation model

Figure 3: Simple mediation equation model in path diagram with equation factors

Acronyms

Abbildung in dieser Leseprobe nicht enthalten

ABSTRACT

The prime essence of this study was to examine the awareness, perception and practice of CSR in Brewery industry in Ethiopia. In relation to the methodology, stratified sampling technique was used to selecting the respondents. The study has been conducted on the basis of the quantitative and qualitative research techniques to assess the nature or practice of CSR in the Brewery Industry. 203 workers were selected from the total employees of 5835 in from selected four companies. Data were collected through questionnaire. Moreover, structured and unstructured interview have been also conducted with managers and administrators of the respected companies through open ended questions which are designed to elicit their perception about the nature of CSR in their respected companies. Finally, the data collected through the questionnaires were coded, entered into computer and analyzed and presented in the form of tables using SPSS version 20 Software. Hence, it is through analysis of the direct relationships that insight is developed between the dependent and independent variables. CSR Practices (dependent variable) was found to have a strong positive relationship with CSR awareness and CSR perception. The study employed a survey research design using structured questionnaires and simple mediation technique of data analysis to investigate the relationships of CSR awareness, perception and practices in a proposed CSR response mechanism within the Ethiopian context.

The results of the study indicate that CSR awareness had positive significant direct effect on CSR practices and also had a significantly positive effect on CSR practices through CSR perceptions. The findings depicts that the employees awareness towards concept of CSR was partially mediated significant level, and it also the respondents to have good basic knowledge about CSR. It was possible to conclude from the survey different items listed in the study believed practical to views CSR in business organizations.

Key,-Words: Corporate social Responsibility, Stakeholders, shareholders, Awareness, perception and CSR practice,

1.Introduction

One of humankind’s greatest challenges in this century is to ensure sustainable, just and balance development. The needs of current and future generations cannot to be meeting unless there is respect for natural systems and international standards to protect core social and environmental values. In this idea, it is increasingly recognized that the role of the business sector is critical. As a part of society, it was in business interest to contribute to addresses regular problems. Strategically speaking, business can only flourish when the communities and ecosystems in which they operate within healthy environment permanently (Varadarajan & Menon, 1988).

Presently it is very important that business needs to manage its relationship with society and surrounding environment so as to achieve and meet its core business objective. Means business performance was also be measured on the bases of level and impact of its activity on the environment and society as a whole. Company’s responsibilities and trustworthiness in the eyes of customers and the population is now use as a parameter to position the companies against its competitors. Thus top level managers are paying proper due attention on all their activities, actions and respective impacts towards the environment and the society. Being a strategic issue, a firms social policies require active involvement of the entire company, top management in particular (Varadarajan &etal, 1988).

CSR include a broad spectrum of activities, ranging from internal human resource health and safety and management, to environmental protection, and includes every aspect of firm’s impact on society. In fact, when pursued as an abstract to concept, CSR is not easy for the public to understand. Dealing with specific present day issues is often desirable to effective communication; enhance the public receptiveness to a firm’s public relations effort. The Company was needed to explain what they stand for; How CSR was carried out, how society gets benefit from such actions (Varadarajan &etal, 1988).

As per Kotler and Lee (2005), CSR from the marketing context, while addition that decision makers in corporate reflect is an increasing desire for “doing well & doing well. Companies utilize the CSR concept strategically by selecting areas of focus that fit with their value, choosing issues relate to core products & core market, and supporting social issues that provide opportunities to meet their need of being acceptable by its major stakeholders. The quality and level of favorable acceptance and relationship of a company with its stakeholders was critical to its own success. In a given consumer product manufacturing company such as beer factory the major participant of stakeholders measurement are managers, its employees and the surrounding communities in its area of activity partly. Assess the CSR practice in the factory and the degree of confirmatory acceptability level amongst its major stakeholder’s employee and managers. The company would be check and recognizes its status and helps take needful steps for the next level of success.

The researcher attempted to assess the influence of the stakeholders ‘awareness of and perception toward CSR practice in brewery industry in Ethiopia.CSR practice was considered an important subject of study because once the stakeholders identify with their employing organization they are more likely to develop a sentimental bond with it and are more likely to remain in their current work place. Moreover, CSR practice was linked to employees ‘behaviors and withdrawal cognitions’, such as organizational citizenship behaviors and turnover.

1.1 Background of the Study area

Issues of CSR have become to the front in Ethiopia only in the last few years. This is an area that has not been broadly explored in the setting of underdeveloped nations, such as in the context of Ethiopia in general and the CSR practices of one of the most highly privatized sectors in the country, the breweries, in particular. The Ethiopian beer industry was characterized by the presence of prominent MNCs. African Business magazine described the situation by noting that “Ethiopia, one of the fastest growing countries in Africa, has become the arena of fierce competition among multinational beverage companies slugging it out for a bigger share of an expanding market. This trend is being replicated across the continent as companies reach out for new markets to offset slow growth in the West” (James, 2014).

The history of Ethiopian brewery industry dates back 1922, 96 years ago, Ethiopia at that time was under the rule of emperor Zewditu Menelik and Addis Ababa not even three decades old. Addis Ababa at that time there was huge mass of ‘tukuls’(grass roofed cottage).It just beginning to get ready to host things like innovation ,the light of civilization, new development/progress, etc. roads pave cars coming ,construction of modern houses began ,news paper appear ,schools opened ,and the railways streaming in one of the modern things that happen and also opening of the brewery (Ethiopian Ministry of Industry, 2012).

After the formation of the first castle group own Saint George Beer factory in the country around 1930 huge time gaps in the meantime until the second individual Beer factory Meta ABO joined the market in 1973, However, such time-consuming growth rate of the beer industry end around 2008, following the privatization of all state owned factories to the private sector, which Meta ABO, Bedele and Harer brewery companies. Since then the beer industry in Ethiopia is in a rapid growth rate even by attracting well known brand multinational companies like Dutch’s Heineken and UK Company like Vasari and Habasha beer also emerging recently(ibid).

According to annual report the brewery in 2016, Beer industries in Ethiopia grow in recent year and the consumption of beer is also increasing. Surge in demand associate with increasing urbanization, population growth and rising income level of citizens, considers as the cause for demand increase. The report says consumption and production rate of the country increases from the level of just one million hectoliters by 2003/04 to 4.1 million hectoliter in 2008/09 E.C.

Corporate Social Responsibility was a legal activity and it is important for social well being. The perceptions of employees about the organizations legal activities largely affect the employee organizational citizenship behaviors OCB (Dutton, Dukerich & Harquail, 1994). For example, when an employee observes that the organization unethical acts like release chemicals, speared water pollution just to save some money, then the society was greatly affects and highly discourage. Employee perceptions about organizational ethical and socially responsible acts would an important and significant impact on employee Organizational Citizenship behaviors OCB (Greening &Turban, 2000). Citizens of the society expect that the business operations should performs in an efficient and effective way and they also achieve their targets and goals within a legal way (Carroll, 1979). This helps in develop good Organizational Citizenship behaviors, as employee feel self-important for their identification relates to a good reputation of the organization (Peterson, 2004).

1.2 Motivation of the study

In Ethiopia, most national and regional policies are broad and intended for some responsibilities of protecting the fair operative practice, community development, environment and human health, but, lack specific components for regulation, hence difficult to enforce. In some cases, relevant components of the laws that would help people and enterprises comply with their obligations are not regulated. This creates a challenge for effective and efficient implementation of the CSR, community development and environmental standards measures. For instance, brewery, Mining, tanneries and textiles are seen as most pollutant and non-compliant regardless of the Industrial Pollution Law and associated Proclamation in force. The regulatory part of the laws focus on allocation and exploitation of the natural resources for economic activities of production and consumption in the country. Because of the above mentioned challenges the citizen forced to damage some industry and plants for the last few years. According to the researcher believe that Corporate social responsibility (CSR) initiative specifically CSR awareness, CSR perception and CSR practice are uncompromised obligation as well as it need government regulation in any organization and in country at large. By these motivations the researcher planned to do the research title as follow:

“CORPORATE SOCIAL RESPONSIBILTY IN THE BREWERY INDUSTRY IN ETHIOPIA: AWARNESS, PERCEPTION AND PRACTICES.”

1.3 Statement of the Problem

Shareholder value theory was the dominant economic theory in use by business. Maximizing shareholder wealth as the purpose of the firm is established in national laws, economic and financial theory, management practices, as a language. Business schools hold shareholder value theory as a central principle. Friedman (1970) strongly argues in favor of maximizing financial return for shareholders. His capitalistic perspective clearly considers the firm owned by and operated for the benefit of the shareholders. He says ‘there is one and only one social responsibility of business to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud (Friedman ,1970).

The intention of stakeholder theory was to offer an alternative purpose of the firm. Stakeholder theory suggests the purpose of the firm should be to serve broader societal interests beyond economic value creation for shareholders alone. It is becoming central to the important story of business in society. The concept of Stakeholder theory was attributed by Edward Freeman (1984) whose original concept is that managers have a moral obligation to consider and appropriately balance the interests of all stakeholders. A stakeholder theory of the firm must redefine the purpose of the firm the very purpose of the firm is to serve as a vehicle for coordinating stakeholder interests. The intention of stakeholder theory was to offer an alternative purpose of the firm.

The ISO 26000 standard publication in 2010 is supported the stakeholder theory development process. The standard was examine the six core of corporate social responsibility including, organizational governance, human right, the environment, fair operating practice, consumer issue and community development (ISO26000, 2010).

Equally, Jensen (2002) argues that CSR and stakeholder theory greatly imperfect because it violates the proposition that any organization must a single value objective as an originator to purposeful or rational behavior. He argues that the adoption of CSR leaves firm handicappers in the competition for survival because, as a basis for action, stakeholder theory politicizes the corporation and leaves managers empowers to exercise their own preference in spend the firm’s resources. Essentially, this core argument against CSR criticizes that CSR involves expend limits resources on social issues necessarily decreases the competitive position of a firm by unnecessarily increase its costs. Devoting corporate resources to social welfare is equivalent to a voluntary redistribution of wealth, from shareholders, as rightful owners of the corporation, to others in society who no rightful claim.

In line with literature (Agle and Mitchell, 2008; Vaaland, 2008) and interview findings (Sweeney, 2008), CSR activities categorize under the headings; Environment, Customers, Employees and Community. Firstly, in relation to the environment, the most common activities include waste reduction and recycling. Energy conservation was also quite common. To a lesser extent; reduction in water consumption, air pollution and packaging carries out by industries product. The most common activity toward customers was commitment to provide value to customers. Respond to customer complaints in a timely manner is also quite popular and to a lesser extent, supplies clear and accurate information to customers and consider customer accessibility. The most common activities in relation to employees are a commitment to the health and safety of employees and ensure adequate steps imprison against discrimination. Slightly less popular activities include encourage employees to develop skills and long term career paths and work/life balance. Lastly, in relation to the community, the most common activity involves donate to charity. Do employees volunteer on behalf of the firm and recruitment and purchase policies in favor of the local community are also popular activities.

The researcher was examining those theory gaps with comparing current practices of the industry. Freeman and Friedman have two different opinions on the goals and responsibilities of a business. Freeman, stakeholders can be anyone; employees, stockholders, competitors, customers, the local community, etc. The firm is constantly asking the question “For whose benefit and at whose expense would be the firm is managed?” What Friedman failed to realize was asking these types of questions may further his ultimate goal of making more profits. In the researcher opinion, people like organizations which are widespread in the community and organizations that help the underdogs of society. The Researcher identifying the gap of Friedman and Freeman theory in the brewery industry in Ethiopia is one of the crucial parts researcher objectives. On the basis of the data researcher was collects from the employees and management brewery industries in Ethiopia. The researcher tries to analyze the extent to which the above mentions problems are present in these companies or not by analyzing the knowledge about CSR awareness, CSR perception and practice in the industry and its relationships. The researcher objectives were planned to analysis in the form of mediating analysis to fill the gap between the opinion, Friedman and Freeman theory gap.

1.4 General Objectives of the study

The primary of objective of the study is to examine the level awareness, perceptions and practices of corporate social responsibility, and the relationship amongst them taking the Ethiopian Brewery industry as a case.

1.5 Specific objectives

The specific objectives of the study are to:

- Examine firms’ awareness level of corporate social responsibility (CSR) in the Ethiopian Brewery Industry.
- Assess firms ‘level of perception towards corporate social responsibility (CSR) in the Ethiopian Brewery Industry.
- To examine the level of corporate social responsibility practices in the Ethiopian Brewery Industry.
- To investigate firms’ level of CSR awareness and level of CSR practices through CSR perception as mediation effect in the Ethiopian Brewery Industry.

1.6 Research question

a) To what extent is firms in the brewery industry in Ethiopia are aware of corporate social responsibility?
b) How do firms in the Ethiopian Brewery industry perceive corporate social responsibility?
c) To what extent do firms in the Ethiopian Brewery Industry implement (practice) CSR?
d) Is level of CSR practice (implementation) influenced by CSR awareness and perceptions of the firm?

1.7 Significance of the study

The results of this study would be significant in a variety of respects. Firstly, on the basis of the findings of the study, the report is try some conclusions and identifies certain problems with in industry CSR practices. Second, it’s a piece of contribution to the current knowledge in the area of CSR for many Ethiopian industries particularly for beer industry by reporting the finding to the stakeholders specially the company’s managers.

1.8 Scope of the study

Despite the fact that try to examine the awareness’s, perception and practice of CSR in the Brewery industry, this research tries to show its awareness and the perception of the company, employees and its managers towards the CSR practices. In this research when it says stakeholders, it represents (Manager of company and employees). As a basic research the scope of the research limit to disclose the overcome simple information with regard to the practice of the subject matter. The study was targeted stakeholder, employees and managers of in major beer factory in Addis Ababa. The research was conducted within the brewery industry in the Ethiopia to examine the stakeholder’s level of awareness, perception and practices in the CSR practice. The research findings and conclusion presents and understanding of the awareness; perception and practices associate with Corporate Social Responsibility to the brewery industry in the Ethiopia.

1.9 Organization of the study

The study would organize into five chapters. Chapter one deal with the Introduction which entail the background of the study, problem statement, objectives and research questions, significance of the study , scope of the study, and the limitation of the study. Chapter two, literature review: reviewed literature on the concept of Corporate Social Responsibility as an organizational phenomenon, the perceptions, benefits and challenges of Corporate Social Responsibility and the conceptual framework. Chapter Three the Methodology and Organizational Profile, discuses the methods employee in data collection, analyses and interpretation of the study as well as the organizational profiles of the two companies select for the study. Chapter Four deal with Data presentation, analysis and discussion. Chapter Five contain, Summary of key findings, conclusion and recommendations.

2. LITERATURE REVIEWS

The foregoing chapter provided the background to the study, the problem statement, research objectives, and the significance of the study. This chapter focuses on a review of relevant literature in relation to the underlying concepts and theory for the study as well as the development of conceptual framework for the study. The chapter consists of discussions related to definition, theories and conceptualization of CSR, the connection among CSR, practices and the stakeholder approach, the stakeholder theory, CSR and organizational stakeholders as well as CSR and stakeholder perception. The study would also review literature in relation to CSR awareness stakeholder practices and CSR based CSR practices. Based on the preceding review, the chapter then moves on to discuss the conceptual framework employed in the study.

2.1 The Concept of (CSR) as an organizational phenomenon

The concept of Corporate Social Responsibility (CSR) was derived from the perception of social responsibility. Organizations consider their very existence an opportunity to contribute to the well being of society and as such their mode of operation and behavior would restructure to conform to the share norms and values of society. Corporate Social Responsibility (CSR) was which then termed as the social responsibility of businessmen in the 1950s described as an organizational phenomenon where businessmen carries out policies, actions and make decisions which would in good tastes or conform to societal objectives and values. Social responsibility not a universal remedy for societal problems but that it serves as a legitimate foundation and guideline for future business activities. In the 1950s, much emphasis placed on the doctrine of social responsibility to the neglect of the challenges it shams to organizations and stakeholders in their attempts to implement or act in a socially responsible way (Bowen, 1953). The concept of social responsibility though deeply root in societal norms and values to modernize and inculcates into the managerial settings of organizations as managers make decisions relate to social responsibility so far as it result in the long term economic gain of their organizations. These economic gains in the form of profit maximization serve as a reward to organizations for socially responsible. There was a strong bond between socially responsible and doing business all over the world. For businessmen to be able to exercise social power or gain economic benefits, their implementation of social responsibility activities would strongly links with the kind of benefits or social power they derive(Davis, 1960). According to Davis for Economic Development the existence of business organizations hypothesize in their interest to satisfy the needs of society through Corporate Social Responsibility in the areas of job creation, economic growth and environmental conservation.

2.2 Definitions of corporate social responsibility (CSR)

Despite numerous efforts to bring about a clear and unbiased definition of CSR, there was still some confusion as to how CSR to be define. The definitions of CSR evolve over the past years. Earlier it referrers to the responsibilities of businesses over and above the economic and legal obligations (Carroll, 1979; Waddock, 1997). CSR associate with voluntary and philanthropic acts assume by business organizations in order to alleviate social problems. CSR now increasingly perceive as accomplish commercial success in a way that admiration ethical values and respect people, communities and the natural environment. This implies that businesses minimize any negative social and environmental impact and maximize the positive ones.

Shafiqur R. (2011) suppose that various definitions of CSR cover various dimensions include economic development, ethical practices, environmental protection, stakeholders involvement, transparency, accountability, responsible behavior, moral obligation and corporate responsiveness. This definition focuses only on the dimensions of CSR despite other dimensions such as health and human rights exist. Thus, it generalizes the meaning of CSR on its standards or dimensions

Some of the famous definitions of CSR which focus on the dimensions of voluntariness, stakeholder, social, environmental and economic aspects are: CSR was a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction Social with their stakeholders on a voluntary basis (Commission of the European Communities, 2001).

The World Business Council for Sustainable Development reflects the council’s focus on economic development in describing CSR as “ business commitment to contribute to sustainable economic development, work with employees, their families, the local communities and the society at large to improve their quality of life”.

The organization Business for Social Responsibility defines CSR as “operate a business in a manner that meets or exceeds the ethical, legal, commercial and public expectations that society do business”. This definition is broader as it encompasses business decision making relate to “ethical values, legal requirements as well as respect for people, communities and the environment”. Thus, CSR was a measure of the total impact of a business’ activities on the lives of individuals within and outside the company (European Commission 2001).

2.3 Theoretical CSR conceptualizations

Diverse conceptualizations of the CSR have existed in literature over the past three decades and these conceptualizations of CSR have generally existed on a continuum from a core business perspective of CSR to a broader goals perspective of CSR (Jamali, 2008). The core business perspective has included the views of Friedman (1970) who limited the concept of CSR to economic responsibility within existing legal framework. Broader perspectives of CSR has included views of Carroll (1979) who has considered CSR as encompassing the economic, legal, ethical and philanthropic responsibilities of the firm towards society. According to Guzman and Becker Olsen (2010) the core business approach suggests that companies need to act responsibly with regard to their core business, but do not need to engage in corporate social investment beyond the core business? However, contrary to the core business perspective, scholars like Hillenbrand and Money (2007) and Coombs and Holladay (2012) have argued that CSR as a concept should rather be seen as relating only to the specific social, philanthropic and community focused responsibilities of businesses thus not including the economic and legal responsibilities of firm. However, the broader goals perspective of CSR suggests that companies should embrace goals beyond profit and core business operations, and include goals of sustainability, poverty reduction, education and other philanthropic based endeavors’ (Guzman & Becker-Olsen, 2010). As such the broader goals perspective seems to advocate for the integration of the prior views of CSR.

Maignan and Ferrell (2004) on the other hand, in a brief overview of conceptualizations of CSR existing in literature, identified and grouped CSR conceptualization into four groups. These conceptual viewpoints include CSR as social obligation, CSR as stakeholder obligation, CSR as ethics driven and CSR as managerial process. Maignan and Ferrell (2004) in stating that these various conceptualizations have been developed using different units of analysis including business in general, the individual firm and the decision maker. Additionally, they stated that viewpoints adopted in examining the various units within the stated conceptualizations of CSR include normative standpoints concerned with the duties of businesses in general toward society, managerial approaches concerned with how individual firms successfully manage CSR and instrumental perspective focused how CSR can generate organizational benefits.

In spite of the contributions of the various conceptual view points to the development of the CSR concept, this study sides with the broader goals perspective of CSR which sees CSR as embracing not only core business goals but also include goals beyond the core business operations of the firm. This study therefore proposes to adopt the Carroll (1979/1991) conceptualization of CSR which views CSR as consisting of the economic, legal, ethical and philanthropic responsibilities of CSR.

2.3.1 Economic responsibility

According to Carroll (1979) the economic responsibility of business was to produce goods and services that society desires and sell them at a profit. This category of responsibility also delineates responsibilities including creation of jobs and fair pay for workers as well as new product developments, discovering of new resources and pursuing any legitimate form of business growth (Jamali, 2008; Pinkston & Carroll, 1994). According to Carroll (ibid), before it became anything else, the business organization was the basic economic unit of society. As such, by satisfying economic responsibilities, businesses fulfill their primary responsibility to society (Carroll, ibid).

Results of some studies (Pinkston & Carroll, 1996; Visser, 2005; Ramasamy & Yeung, 2009) have indicated that the economic responsibility of firms may be the most important business responsibility from the view of stakeholders as postulated by Carroll (1979). Some studies on the other hand have found the opposite. Maignan (2001) for example found that, in the exception of U.S consumers who considered economic responsibilities as most important, both French and German consumers’ rated economic responsibilities as the least important corporate responsibility. The view of how important economic responsibilities are relative to the other types of CSR may thus vary among countries.

In Africa however, Visser (2005) argues that, economic CSR was the most important type of CSR and was “highly prized” by communities and governments alike as it contributes to the both institutional and infrastructural development of the continent. Nelson, (2003), Visser (2005) says that, economic CSR in Africa takes the form of what the International Business Leaders Forum calls the “economic multipliers”, of which they identify eight ideas:

1. Generate investment and income
2. Produce safe products and services
3. Create jobs
4. Invest in human capital
5. Establish local business linkages
6. Spread international business standards
7. Support technology transfer
8. Build physical and institutional infrastructure.

All of the above listed practices seem to have the potential to contribute to the socio-economic wellbeing of the continent and hence the importance of firms’ economic responsibility to stakeholders on the African continent.

2.3.2 Legal responsibility

“Society has not only sanctioned business to operate according to the profit motive; at the same time business was expected to comply with the laws and regulations” (Carroll 1991). The legal responsibility of business thus refers to the positive and negative obligations put on businesses by the law and regulations of the society where it operates (Carroll & Shabana, 2010). According to Jamali (2008) the legal responsibility of business entails expectations of legal compliance and playing by “rules of the game”. It therefore dictates the responsibility of firms obey “codified ethics” promulgated by federal, state, and local governments as the ground rules under which business must operate.

Legal responsibility does exist and was found in developed, developing, and less developed countries alike; there however exist significant differences in legal systems and responsibility among countries and regions of the world (Carroll, 2004). For example according to Visser (2005) , although there have been recent developments in the legal systems of some countries in Africa such as South Africa and Kenya, legal responsibility in countries on the African continent have a lower priority compared to those in developed countries. This does not necessarily mean that companies flaunt the law; however, owing to poorly developed legal infrastructure which often lacks independence, resources and administrative efficiency, there is far less pressure for good conduct in Africa countries compared to developed countries (ibid, 2005). That said, legal responsibilities in various countries may generally include compliance with various legal requirements including workers safety, environmental standards and tax laws (Ramasamy & Yeung, 2009).

2.3.3 Ethical responsibility

Although the first two categories of social responsibility embody ethical norms about fairness and justice, ethical responsibility brings into the fold those activities and practices that are expected or prohibited by societal members even though they are not codified into law. Ethical responsibility encompass the full scope of norms, standards, and expectations that reflect a belief in what employees, consumers, shareholders, and the global community regard as fair, just, and consistent with the respect for and protection of stakeholders’ moral rights. Ethical responsibility of firms to stakeholders thus incorporate activities such as respecting people, avoiding social harm, and prevention social injury (Jamali, 2008). Ethical responsibilities are among the most difficult for business to deal with because they are ill defined or continuously under debate as to their legitimacy and also vary across cultures. The advantage of ethical responsibility however lies in the fact that it overcomes the limitation of law by creating an ethics ethos that firms can abide by (Jamali, 2008).

2.3.4 Discretionary/philanthropic responsibility

According to Jamali (2008), this type of responsibility was the most controversial of the categories of CSR proposed four-part framework. Carroll (1991) asserts that, discretionary responsibility refers to roles that are purely voluntary, and the decision to assume them is guided only by a business’s desire to engage in social roles not mandated or required by law. He added that discretionary responsibilities are not generally expected of business in the ethical sense and as such a business was not considered unethical if it does not participate in them. This may however not be applicable in developing countries in Africa for example, where Kuada and Hinson (2012) have argued that the boundaries between responsibilities that may be defined as ethical and discretionary are frequently blurred. They set the example that, in some collectivist countries, as may be present in Ghana, poorer members of societies expect economically advantaged members of their societies to provide economic support to individuals and the communities beyond what was considered ethically appropriate in developed countries. This culturally prescribed responsibility may be generally accepted by owners of small businesses as a normal part of doing business and as such, what may seem to be a voluntary CSR practice in these countries may actually be guided by enshrined cultural obligations making them ethical responsibilities. This assertion by Kuada and Hinson (2012) is supported by Visser (2005) who argues that, in Africa, philanthropy is an expected norm it was considered the right thing to do by business.

2.3.5 CSR to employees

Within the domain of the internal CSR; i.e. the CSR responsibility of a business to its internal people, there are individuals, or groups or parties involved as internal stakeholders that include the employees and shareholders of the organizations (Argandoña von Weltzien Hoivik, 2009; Werther Chandler, 2010), and employees are becoming increasingly important to businesses as internal stakeholders (Corley, Cochran, Comstock, 2001). That is part of a company’s CSR commitments involves treating workers of an organization reasonably (Business Impact, 2000). A business has a corporate social responsibility to its employees that aims at providing employee support and better labor practices (Kinder, 1998), and socially responsible businesses take better care of the needs and interests of their employees and they seek to improve the employees’ working conditions and well-being on an ongoing basis (Buciuniene Kazlauskaite, 2012). Likewise, Frolova and Lapina (2014) explain that “integrating CSR in organizational policy and activities allows increasing well-being of the employees and improving the quality of the processes which they perform. It maintains employee loyalty to organization and provides sustainability in long-term.”

In view of this, according to Ruggie, there are a number of responsibilities of a business to its employees such as freedom of association, right to equal pay for equal work, right to organize and participate in collective bargaining, right to non-discrimination, abolition of slavery and forced labor, abolition of child labor, right to work, right to equality at work, right to just and favorable remuneration, right to a safe work environment, right to rest and leisure, and right to family life (Ruggie, 2008). Similarly, the ILO declaration contains related particulars such as freedom of association and the effective recognition of the right to collective bargaining, elimination of all forms of forced or compulsory labor, effective abolition of child labor, and elimination of discrimination in respect of employment and occupation (ILO, 1998). Most of these principles are shared by the UN Global Compact, which maintains in its principles that a businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining; the elimination of all forms of forced and compulsory labor; the effective abolition of child labor; and the elimination of discrimination in respect of employment and occupation (Global Compact, 2000).

Other authors have also shared what they considered to be a business’s CSR commitment to its employees; such as considering employee volunteering and education (Tsang , et al., 2009); concern for safety, job security, profit sharing, union relations, employee involvement (Sen Bhattacharya, 2001); treating employees fairly and equitably, appropriate compensation and benefits, openness to employees, respect to employees grievances, without intimidation and retribution (Business Roundtable, 2012); implementing employees’ complaint mechanisms that is free from repercussion (Kolk, 2008); encouraging openness, inclusiveness and empowerment (Molnar Mulvihill, 2003); providing employees with education and training opportunities, attractive pay, employees participation in decision making, and safe working conditions (Porter Kramer, 2006); training, safety and health, equal opportunity, and participation (Graafland, et al., 2004); providing attractive career opportunities, nurture required talent, expand access to medications/benefits (Heslin Ochoa, 2008); supporting and encouraging employees to volunteer their time to support local community organizations and causes (Kotler Lee, 2005); providing employees with healthy, safe and hygienic conditions of work at the workplace and no discrimination should be exercised on any ground in providing employment opportunities (Jain Jain, 2013); competitive wages, health insurance coverage, employee development programs, and positive union relations (Bauman Skitka, 2012); employment issues and conditions that go beyond legal requirements, especially the fair treatment of employees and other workers irrespective of gender, race, religious orientation, age and disability (Ellerup Nielsen Thomsen, 2009). Similarly, Crane, Matten, Spence (2008) put forth that CSR in the workplace was a main issue for businesses everywhere, which involves responsibilities such as providing good working conditions, impartiality and equal opportunity, healthy and safe working environment, proper pay, and right to association even without the presence of useful legal enforcements.

Moreover, according to McWilliams and Siegel (2001) employees are considered as important stakeholders, who demand better labor relations policies, safety conditions, financial security, and other conditions such as child care services. More so, employees’ engagement in CSR was vital in order to achieve the CSR goals of a company and it was necessary to make sure that the company has the support of its employees to its CSR initiatives and their commitment needs to be secured. Collier and Esteban indicated that employees have a critical responsibility for implementing the CSR initiatives of the company and attaining the intended outcomes of a company’s CSR depends on the participation and willingness of employees (Collier Esteban, 2007), and there was a compelling reason for companies to engage their employees in CSR “ranging from simple decency to competitive advantages in recruiting and retention to more effective human resource management” (Mirvis, 2012). Employees were increasingly considered as driver for CSR (Moon, 2007), and in terms of addressing the needs of employees as stakeholders, employees centered CSR has “positive effects on employee motivation, retention, and recruitment, and effects in this area can result from an improved reputation. On the other hand, CSR can also directly influence employees as they should be more motivated working in a better working environment or draw motivation from the participation in CSR activities such as volunteering programs. Similarly, CSR activities can directly or indirectly affect the attractiveness of a company for potential employees.

2.4 The Theoretical Literature reviews

A review of literature reveals a wide range of theories that have been brought to bear on the subject of CSR (McWilliams et al., 2006). These include theory of the firm (McWilliams Siegel, 2001) and stakeholder theory (Spiller, 2000; Maignan Ferrell, 2004; Maignan et al., 2005). Other theoretical views identified by McWilliams et al. (2006) include agency theory resource based view of the firm (Hart, 1995) and stewardship theory. Garriga and Mele (2004) classified the main CSR theories into four main groups; instrumental theories, political theories, integrative theories and ethical theories. According to Garriga and Mele (2004) the instrumental theories which represent the first group in their classification consist of theories that “understand CSR as a mere means to an end of profits”. This understanding stems from the fact that these theories assume that corporations have only one social responsibility and that is to serve as an instrument for wealth creation. This group of theories includes Friedman’s (1970) view articulated through the agency theory, as well as other strategic CSR views like the natural resource based view by Hart (1995) supported by scholars including Porter and Kramer (2006).

The second group CSR theories discussed by Garriga and Mele (2004) are the political theories. These theories emphasize the interactions and connections between business and society and on the power and position of business as well as its inherent responsibility. Theories related to corporate constitutionalism and corporate citizenship belong to his group theories. A key theory under this group is the integrative social contract theory (Donaldson Dunfee, 2009).

Integrative theories which according to Garriga and Mele (2004) are the third group to CSR theories consist of theories that posit that business must integrate social demands into their operations, ensuring that business operates in accordance with social values. This group of theories recognizes that business depends on society for sustainability and growth and also that the content of business responsibility is limited to the space and time of each situation. Thus the content of business responsibility depends on the values of society at that moment. Belonging to this group of theories include theories of corporate social performance (CSP) and stakeholder management or stakeholder theory as discussed by Mitchell, Agle, and Wood (2007).

The fourth group of CSR theories as proposed by Garriga and Mele (2004) are the ethical theories. These theories assert that the relationship between business and society was embedded with ethical values and that firms ought to accept social responsibilities as an ethical obligation. In this group of theories was the normative stakeholder theory (Freeman, 1984; Donaldson Preston, 2005).

As was evident from the proposed definition of CSR adopted for this study, the study would be situated in the domain of integrative theories and would be informed by concepts rooted in corporate social performance and stakeholder theory. Additionally, this study was of the view that stakeholder dealings of the firm must lead to mutual benefit for both the stakeholders and the firm. This study would thus be guided by the strategic view of CSR as was existent in the context of the instrumental theories and as is propounded by authors such as Porter and Kramer (2006).

There are a variety of theories in the concept of CSR which design in different perspectives and it’s contradicted each other. In practice, before ISO26000 core practices emerging most of CSR theory presents four dimensions relate to profits (economic), political performance, social demands and ethical values. Thus, this section deals about the theoretical framework of CSR supports by different authors on the basis stakeholders and shareholder theory.

From the time of Adam Smith, through the age of industrialization, the Great Depression and the recent half-century globalization and prosperity, the purpose and role of business a focus of debate. Much of the debate revolves around two theories; namely shareholder theory and stakeholder theory. Shareholder theory represents the classical approach to business, agreement to this theory a firm’s responsibility rests solely with its shareholders. On the other hand stakeholder theory argues that organizations not only accountable to its shareholders but also balance a multiplicity of stakeholders interests (Van Marrewijk, 2003). These two opposite views of the firm contrast each other so sharply that stakeholder and shareholder theories are often describe as polar opposites.

Stakeholder theory emerges as an alternative to shareholder theory. The term stakeholder explicitly and future represents a soft of (if not a fundamental challenge to) strict shareholder theory. Agreement to different literature the term “stakeholder” invents as a deliberate play on the word “shareholder” to signify the other parties have a “stake” in the decision making of the modern corporation in addition to those holding equity positions define stakeholders as “individuals and constituencies that contribute, either voluntarily or involuntarily, to its wealth-create capacity and activities and its potential beneficiaries and or risk bearers”. The resources provide by stakeholders can include social acceptance as well as more obvious contributions such as capital, labor and revenue. The literature argues that the resources contribute by stakeholders greater than the financial investments of shareholders by roughly a factor of ten. The risks were not only financial exposure but employment and career opportunity, the quality of products and services and environmental impact. If the firm fails, employees lose their jobs and often their retirement package and health benefits. In line with the benefits provide by stakeholders and the risks bear by them, according to the contribution justice principle, the profits of a firm divide among those manner risks within the organization.

CSR consists of ‘a number of activities that focus on the welfare of stakeholder groups such as communities, employees, suppliers, customers, and future generations (Sprinkle Maines, 2010). Smith (2003) also noted CSR refers to the obligations of the firm to society or, more specifically, the firm’s stakeholders those affect by corporate policies and practices. Similarly, according to Ismail (2009), CSR represents the responsibility of businesses to integrate the interests of stakeholder’s contains shareholders, employees, customers, suppliers, communities, and the environment. In the words of Branco and Rodrigues (2006) CSR relate to complex issues such as environmental protection, human resources management, health and safety at work, relations with local communities, and relations with suppliers and consumers. Thus, in examine what CSR practices the case companies perform in the study set; this research would attempt to study the companies’ CSR commitments from the perspective of what CSR practices they perform to their stakeholders. Even though a business may have a number of stakeholders, for the purpose of this study, shareholders, employees, local community, customers, suppliers and the environment identified as main stakeholders (Rodrigues ,2006).

2.5 Empirical Reviews

According to Carroll (1991), explain the overall relationship of corporations with their stakeholders. This includes communities, customers, employees, owners/investors, government, suppliers, and competitors. Social responsibility elements include investment in community area, employee, creation and maintenance of employment, environmental issues, and financial performance.

2.5.1 Stakeholder Theory

The stakeholder theory as it is now known is accredited to Freeman (1984) and has its roots in his landmark book “Strategic management: A stakeholder approach”. According to the stakeholder theory, the firm can be viewed as a web of actors who are motivated to participate in organizational activities by various and sometimes incongruent interests (Donaldson Preston, 2005). The stakeholder theory according to Maignan and Ferrell (2004) describes the firm as an open and flexible system consisting of various actors or agents that is also in a network of relationships with other stakeholders. Contrary to classical economic view of maximizing shareholder value or profits (Friedman, 1970), the central theme of the stakeholder theory is that businesses have obligation to a broader group of stakeholders than just shareholders (Hillenbrand Money, 2007). The theory also holds that managers are agents who owe a fiduciary responsibility to stakeholders, the latter of whom are legal-principals (Mitchell et al. 2007). Hence, stakeholder theory offers a new way to organize thinking about businesses’ responsibility by suggesting that the needs of shareholders cannot be met without satisfying to some degree the needs of other stakeholders (Jamali, 2008).

According to Hillenbrand and Money (2007), stakeholder theory has made tremendous strive forward with the contribution of Donaldson and Preston (2005). Donaldson and Preston (1995) in their work, “The Stakeholder Theory of the Corporation: Concepts, Evidence, and Implications” asserted that work conducted within the context of stakeholder theory could be viewed as descriptive, instrumental and normative. In summary, Hillenbrand and Money (2007) said that descriptive approaches seek to investigate and describe ‘how’ organizations and stakeholders relate to each other. Instrumental approaches are concerned with ‘what happens if’ organizations relate to stakeholders in certain ways. Normative approaches suggest how a firm ‘should’ relate to its stakeholders. They however concluded that most researches in the business and society literature focus on instrumental and normative issues.

2.5.2 Organizational stakeholders

Freeman’s (1984) defined a stakeholder as any group or individual who can affect or is affected by the achievement of the organization’s objectives. According to Carroll (1991), the word "social" in CSR has always been vague and lacking in specific direction as to whom organizations are responsible. He asserts that the concept of stakeholder however delineates the specific groups or persons business should consider in its CSR orientation and thus provides "names and faces" of those most urgent to business and to whom it must be responsive. Individuals, neighborhoods, organizations, and even the natural environment are considered to qualify as actual or potential stakeholders (Mitchell et al., 2007).

Diverse classifications exist in literature for businesses’ stakeholders and these seem to be a result of the varying central concepts employed in the classification. Maignan et al. (2005) for example explains that a view of stakeholders classifies them as either primary or secondary stakeholders. According to this view, primary stakeholders refer to those whose continued participation is absolutely important to the survival of the business; this group includes employees, customers, investors, suppliers and shareholders. On the other hand, secondary stakeholders refer to stakeholders who are not usually engaged in transactions with the focal organization and include the media, trade associations, non-governmental organizations, along with other interest groups (Maignan et al., 2005). According to Coombs and Holladay (2012) a stake, that is, “how the group or individual affects or is affected by an organization” (pp. 5), can be employed in classifying stakeholders. According to them typical categories of stakeholders include employees (for whom employment is the stake), members of the community (for whom living near the organization is the stake), customers (for whom the product or service is the stake) and investors (for whom financial interest is the stake).

2.5.3 Business Benefits of Corporate Social Responsibility

Kivivirta (2010) lists business pay backs originating from CSR activities. These benefits are positive effects on company image, reputation, employee motivation, retention and recruitment, cost savings, revenue increase from higher sales and market share, and CSR related risk reduction or management. Cost savings tend to be the easiest way to begin CSR activities. Cost savings could arise from material substitution, lower energy consumption, reduced material storage and handling costs or reduced waste disposal. A company handling CSR aspects well can have better access to capital since some investors may pay attention to social and environmental performance and give preference to companies handling these aspects well. The financial services companies have a significant role in offering financing. They can have an effect on the companies applying finance by requiring better CSR behavior. Business case refers to a call for an investment in a project or initiative that promises to yield a sufficient return to justify the spending. In the case of CSR this means that the organization would be better off financially by attending not only its core business but CSR as well. Four general types of the business case for CSR are cost and risk reduction, profit maximization and competitive advantage over industry rivals, reputation and legitimacy, and synergetic value creation meaning finding win-win situations between the company and its stakeholders.

[...]

• College: Arsi University (Business and Economics)
• Course: MBA
• Grade: 3.68
• Author: Yitref Dinberu (Author)
• Publication Year: 2018
• Pages: 99
• Catalog Number: V454207
• ISBN (eBook): 9783668878990
• ISBN (Book): 9783668879003
• Language: English
• Tags: corporate, social, responsibility, brewery, industry, ethiopia, awareness, perception, practices