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The focus of this dissertation is to analyze the impact of corporate social responsibility of organization performance. In this chapter, background of corporate social responsibility will be given which will be followed by rationale of fulfilling this responsibility and conducting research in this area. Moreover, researcher will present precise aim, research questions and research objectives of this project. Likewise, researcher will also give context of the dissertation research and profile of the selected organization along with an introduction of different chapters of the research. The chapter will end with synopsis of the chapter.
1.2: Background of the Research Issues:
This section will present background of research by sharing information about interaction of organization with its external environment, importance of discharging responsibility towards stakeholder, corporate governance and corporate social responsibility.
1.2.1: Interaction of Organization and its external Environment:
The organizations are just like living organism which interact with their external environment continuously giving and taking influence (Scott, 2002). According to Jauch et al. (1980), the success of an organization depends on its ability to interact and respond to external environment. If an organization can create a harmony with its external environment better than its rivals, it would serve as a basis of competitive advantage for the organization (Jauch et al., 1977). Like human beings, organizations have to interact with their stakeholders and not only have some expectations towards them but also have to fulfil expectations. Child (1997) suggested that organizations should understand and fulfil the requirements of its important stakeholders as these stakeholder may limit or facilitate the choice and implementation of organizational strategy. Further to this, Van Wormer and Besthorn (2010) argued that it is imperative for an organization to keep an eye on the communities, people and society with which its interacts. They further suggested that organizations have to update or adjust their governance style according to these stakeholders. Haesevoets et al. (2009) added to the importance of incorporating the stakeholders in an organizations' strategy formation and suggested that these stakeholders and their preferences create a dominating context in which organization develops and implements its strategy. They further added that if an organization frequently makes such synchronization with its stakeholders soon it would evolve as a self-adaptive and self-healing concern. It would learn how to interact with the legal framework, changing external environment and its employees and management. Aldrich (2007) pointed out that since the present times are observing a very hostile environment and the organizations and their preferences are continuously changing, this requires that organization should continuously observe the preferences of these stakeholders and try to fulfil their expectations as far as possible.
1.2.2: Emergence of Issues Concerning Corporate Governance:
In the presented, the concept of corporate governance is gaining popularity and research is gaining momentum (Leblanc and Gillies, 2005). The concept has been receiving attention in almost all main regions and countries including America, United Kingdom, Germany, France, Japan, India, China, etc. The researchers are attempting to gauge the expectations of the customers and other stakeholders and are trying to pose number of strategies, which are aimed at proposing solutions to the organizational decision makers how to satisfy their stakeholder better than their counterparts. Acharya et al. (2009) suggested that concept of corporate governance is a vital issue for the organization as it is associated with corporate value creation. Further to this, Young et al. (2008) suggested that issue of corporate governance is equally more important for both developed and developing economies. In developed economies, firms have to outweigh their competitors and sustain their market share. Similarly, in developing economies, a strong and flourishing firm is needed so that it can contribute towards economic well being and growth of the country. The concept of corporate governance is related to the administration of the company in such a way that it binds the senior management of the enterprise towards attainment of organizational and stakeholders goals. Bebchuk et al. (2009) embarked that more and more material is published in this domain and new laws are emerging which is binding the organizations towards fulfilling their responsibility towards other stakeholders. Chhaochharia and Grinstein (2007) also advocated strong efforts towards corporate governance as they observed the a strong positive association between corporate governance and value of the firm. Further to this, Erkens et al. (2009) highlighted that during the recent financial crunch, those firms which do not have very strong corporate governance administration were badly affected as compared to those who do have. They, thus propose that organization should strive hard towards attainment of corporate governance rules and regulations.
1.2.3: Corporate Social Responsibility - A Pivotal Dimension of Corporate Governance:
One of the dimensions of the corporate governance is satisfying the expectations of the society. Spitzeck and Hansen (2010) analyzed the influence of organizational decision makers towards corporate decision making. Their work incorporated the review of corporate governance practices of more than 45 companies. Their work highlighted that the preferences of stakeholders are clearly visible at various levels of organizations including operational, managerial and strategic level. They also highlighted that in certain instances the stakeholders and organizations jointly takes decisions. They also witnessed that organizational decision makers aligned their views according to the preferences of the stakeholders. They also urged that since stakeholder's preferences are volatile, managers should do scenario planning so that they can manage such changing preferences. Corporate social responsibility is an emerging business practice and has started receiving attention of businessmen and research. The concept is equally important for small and large organizations (Perrini et al., 2007) yet the large firms are in a better position to discharge this responsibility as they have more resources and are better off as compared to small firms. Capriotti and Moreno (2007) suggested that if an organization spend resources on fulfilling its CSR and devote some human resources towards CSR then it not only ensures that organization is attempting to fulfil its responsibility rather it also acknowledges that organization may also link CSR with the performance evaluation of some of its people in the organization. Unerman (2000) highlighted that the issue has become so important that now it among one of the mandatory disclosure of number of companies of the world. Lewis (2001) suggested that fulfilling the CSR by an organization adds to the goodwill of the organization and a good fulfilment of CSR increase the corporate repute of the organization. Aupperle et al. (1985) elaborated the importance of CSR by linking it with organizational profitability. They suggested that if an organization maintains a good stance towards satisfying its responsibility towards society, the society would treat it as a better. McWilliams and Siegel (2001) also urged that extent to which an organization fulfils its corporate social responsibility is associated with the size of the corporation, amount of money that it spend on corporate social responsibility, labour market condition and extent of Governmental regulation which require firm to spend certain amount on CSR initatives. However, one thing is common among these firms and that is the strong positive association between amount of money spend on CSR and profitability of the organization.
1.2.4: Importance of Telecommunication Sector of Pakistan:
The telecommunication sector of a country is one of the important sectors as it has strong association with the economic well being of the country. Awan et al. (2011) analyzed the role of telecommunication sector of Pakistan and suggested that it is contributing toward economic prosperity of the country. They also highlighted that in the last few years, a lot of foreign direct investment has been attracted in the country. Ahmed et al. (2010) analyzed the contribution of services in the economic development of Pakistan and suggested that sector has to be further investigated for its dynamics as it has lot of potential for further development. Still, there is a sizeable population, which is directly and indirectly involved with this. In Pakistan, few major players are providing telecom services to Pakistan. These include Orascom Private limited, Wateen Group and Telenor. Ali et al. (2010) suggested that there are lot of determinants of telecommunication sector growth so researchers should analyze the dynamics of the industry.
1.3: Focus of Research Problem:
The work of Steiner and Steiner (1991) posed attention towards importance of discharge social responsibilities towards society. Moreover, according to Frederick et al. (1992) the matter has to be brought in line with the formal performance management of the organization and resources must be devoted to ensure its compliance. Moreover, Bowen (1971) also emphasized similar ideas. Prakash (2006) highlighted various dimensions in which organizations should contribute significant attention while discharging its responsibilities towards society. These areas include responsibilities associated with general economic well being, sustainability of environment and eco-system along with well being of public. Similarly, Kolk (2008) regarded that organizations do have their responsibility towards their customers and must discharge such duties. Prakash (2006) suggested if an organization intends to fulfil its responsibilities towards its stakeholders, this has to be demonstrated in its organizational systems. Moreover, when organization intends to conform to such system, accountability and transparency of such endeavours must also be ensured. Gao and Zhang (2006) embarked that such issues would increase the level of trust of the people on the organization which will positively influence organization.
Rugimbana et al. (2008) urged that there are still number of industries and countries where the issue of corporate social responsibility is not clear. It, thus, requires lot of research to be conducted in this area. They further urged that the amount of CSR research which incorporate the customers' perspective is still scarce. According to the work carried out by Pomering and Dolnicar (2006) customers are not only interested in the actions taken by the management for the organization but they are also interested in the community activities carried out by the organization. Further to this, Chapple and Moon (2005) and Shen and Chang (2009) put forth the relative dearness of CSR research in South Asian context. Both of them urged that in future CSR research should also incorporate the perspective of customers about CSR initiatives of the organizations. Similarly, McDonald and Rundle-Thiele (2008) emphasized that organizations which are having massive customer interaction should focus on conducting research in this area. They suggested that since customers are an important stakeholders for the organization so organization should seek their feedback while it is deciding its relationship with other stakeholders specially community. It was advocated as the customers also belong to the society. Likewise, many prospective customers are also part of the society.
1.3: Aim of Dissertation:
The main aim of this dissertation is critical evaluation of influence of corporative social responsibility initiatives of Telenor on organizational performance as perceived by customers. It is one of the fastest growing telecom companies of Pakistan and has invested considerable amount of money in Pakistan. It is Norwegian company and operates in more than 40 countries of the world. The company being a multinational company faces considerable challenges in Pakistan and thus regard corporate governance and corporate social responsibility as an integral issue of its business strategy.
1.4: Research Questions:
The achievement of above stated aim, posed following research questions.
What are various facets of CSR that influence customers' perception of organizational performance?
What is the importance of each dimension of CSR as perceived by the customers?
What is the satisfaction of customers of each dimension of CSR initiatives?
Which dimension of CSR has a major influence on customer's perception of organizational performance?
1.5: Research Objectives:
Zikmund (2000) suggested that a researcher should systematically explore a research issue. This involves crystallizing overall aim of the research and developing associated research objectives. For this dissertation, the researcher has developed following research objectives.
To conduct a review of scholarly literature for identifying various facets of CSR that influence customers' perception of organizational performance.
To identify customers' perception of importance and satisfaction of environmental-protection initiatives taken by Telenor.
To identify customers' perception of importance and satisfaction of customer-centric initiatives taken by Telenor.
To identify customers' perception of importance and satisfaction of philanthropic initiatives taken by Telenor.
To analyze the influence of each dimension of CSR on customer's perception of organizational performance
1.7: Scope and Limitations of Research:
This section will specify scope and limitations of this CSR research. It is important to mention here that researcher will collect data concerning certain dimensions of research. These dimensions will be mentioned in detail in the second chapter of this dissertation. To be more specific, these dimensions are environmental protection initiatives, customer centric initiatives and philanthropic initiatives taken by the organization. This list of initiatives is not exhaustive by any means. However, the researcher will select only these dimensions. Moreover, there could be number of perspectives that could be used in order to evaluate the perception about these initiatives however the researcher will use the perspective of customers only. Further to this, researcher will use both qualitative and quantitative method of data collection yet because of limitations on amount of time for collection of data, the researcher will not have opportunity for triangulation of data. Similarly, the findings of the research are confined to selected company. The researcher has selected Telenor Pakistan for this researcher. The reader of this dissertation should keep this factor in mind before generalising the findings of this research.
1.8: Structure of Dissertation:
This dissertation is divided into five chapters. In the first chapter of the dissertation, the researcher will give background of the selected topic and an overview of the research problem. Aim, research questions and objectives of research will follow these. Moreover, chapter one will also give scope and limitation of research. In chapter two, a comprehensive review of literature in the selected area of research will be given. Using this literature, the researcher will develop and present theoretical framework of research. The issues concerning methodology of research are given in the third chapter of the research. This chapter will give details concerning selection of research paradigms and approach along with selected strategy and data collection methods. In addition to this, chapter will also give details selected population, sample and collection of data. Findings of the dissertation, both primary and secondary, will be given in chapter four of this dissertation. Conclusion and Recommendations, if any, will be given in chapter five of the dissertation.
1.9: Synopsis of Chapter One:
In this chapter, the researcher presented an account of interaction of organization and its environment, emergence and importance of corporate social responsibility and importance of telecommunication sector. This was followed by an overview of research aim and objectives that was followed by overall structure of research project. In the next chapter, detailed review of literature in the subject area will be presented.