How CSR has influenced Qatar corproations

The Role of CSR Strategic integration in the CSR-organizational performance link: The Context of Qatar

Abstract (200 Words)

This paper takes an in-depth look into the current situation in Qatar within the realms of corproate social responsibility (CSR). More specifically, the paper highlights the Role of CSR Strategic integration in the CSR-organizational performance link. The paper is in the format of a first draft proposal and consists of the following sections: introduction, objectives of the study, significance of the study, literature review, contingency approach in the CSR link, CSR and organizational performance link, a proposed model of the contigent approach to the strategic link, hypothesis development, methodology, analysis and findings, hypothesis analysis, discussion and the paper ends with a conclusion. The references used for the paper were all focused around the concept and practical use of CSR within organziational strategies and specfic focus was then given to the Middle East and Qatar and strategies were taken out of the general context and used within the circumstances of Qatar. The findings and conclusion of this paper assert that CSR strategies play a pivotal role in organizations across Qatar and their use has increased tenfold in recent times with modern practices and street smart employees.

Keywords (5 keywords)

Corporate Social Responsibility

Integration

Organizational Performance

Strategy

Qatar

Introduction

Historically, Corporate Social Responsibility (CSR) has attracted a significant interest and attention in the field of business administration. Surprisingly, this interest has intensified presently to gather an exceptional significance not only around the academic community, but also among practitioners (Gualtieri, & Topi?, 2016). The question of whether CSR has become a source of competitive advantage in strategic management has consistently emerged in the recent past. Some scholars view it as mechanism that some companies or entities use to differentiate their products, processes or themselves from their competitors (Jones, Comfort & Hillier, 2007). Other corporate and business strategists opine that these corporates may be developing CSR strategies as mechanisms of outperforming rival companies.

The integration of CSR into business operations and activities in a company such as Qatar requires an understanding of the concerns and objectives of the stakeholders. According to Gualtieri & Topi?, 2016), there is emergence of a new paradigm for business which constitutes various CSR principles and values. These values and principles are diffused and transferred into the organizational structure through organizational network that brings together all stakeholders such as customers, employees, suppliers and the wider community.

Significance of the study

From a strategic viewpoint, the ethical and business orientation of any business relies to a greater extent on its CSR. A company’s obligation towards its stakeholders is measured by the moral orientation it manifest (Farooq et al., 2013). Similarly, stakeholders’ perception towards a company problem and the need to solve it rely on the complex networks of relationships among affected groups within and outside the company. From this perspective, it is deducible that the strategic integration of CSR in the CSR-organizational performance plays a significant role as a measure of the value addition component of a company. For instance, in this case, understanding the role of CSR-strategic integration is important in determining the performance of that entity.

Objectives of the study

In order to provide adequate assessment of the research topic, the following research objectives were formulated:

i. The contribution of CSR strategic integration to the creation of strategic advantage

ii. To determine the contextual factors that need to be taken into account CSR integration in CSR-organizational performance

iii. To determine whether the adoption of CSR activities has a positive and significant relationship to organizational performance.

Literature Review

Corporate social responsibility (CSR) defined as the ‘company activities demonstrating the inclusion of social and environmental concerns in business operations, and in interaction with stakeholders, also according to the ambition levels of corporate sustainability’ (Van Marrewijk, 2003). Over the years, CSR viewed as important as it can lead to improved corporate reputation, brand image, and customer and employee satisfaction (Bai and Chang, 2015). Overall, these valuable resources can lead to enhanced organizational performance (Hansen et al., 2011). An enormous body of the literature has emerged regarding the relationship between CSR and organizational performance (e.g. Rettab et al., 2009; Chang et al., 2013; Griffin and Mahon, 1997; Wright and Ferris, 1997; Graves and Waddock, 1997). However, existing findings on the relationship between CSR and company performance have exhibited inconsistent results, with studies reporting positive link (e.g. Griffin and Mahon, 1997), negative link (e.g. Wright and Ferris, 1997), and mixed relationship (e.g. Graves and Waddock, 1997). Such inconsistency remains the focus of scholars and researchers today in order to provide clear picture of whether CSR related to different indicators of organizational performance.

Several authors have called for the need to improve our understanding of the underlying mechanisms of CSR (Aguinis, 2011, Wood, 2010, Aguinis and Glavas, 2012) In a recent review of the CSR literature made by Aguinis and Glavas (2012), authors offer multilevel and multidisciplinary theoretical framework integrates the literature at the institutional, organizational and individual levels of analysis. They claimed the need to include variables in the framework that explain the underlying mechanisms of CSR-Outcomes relationships and contingency variables that explain conditions under which the relationship between CSR and outcomes change. Authors emphasize this knowledge gap in the CSR literature and recommends future research oriented toward the fulfilment of this gap. Since then, only few studies were found which have tried to overcome this gap in the CSR literature (e.g. Tang et al., 2012).

Accordingly, considerable uncertainty remain regarding the contextual factors and their influences on the CSR-Performance link. In this regards, this study has many purposes. Firstly, it employs the contingency perspective in order to build a conceptual framework that explains clearly how contextual factors could affect the relationship between CSR and organizational performance. Then, it looks at the role of strategic intent as possible contextual factor that could influence CSR-Performance relationship. This conceptual framework shall end with a proposed research model for the CSR-Performance relationship. Finally, by building upon the conceptual framework, this study attempts to empirically examine the proposed research model.

In order to achieve these purposes, this paper organized as follows. The following section of the paper discusses the concept in general and argues for the contingency perspective in the CSR-Performance link. Then, an elaborated discussion of how the level of strategic intent in the company could explain the changes in the CSR-Performance link. Based on this, the proposed research model will be given and, then, an empirical examination for the model shall be suggested.

A Contingency Approach in the CSR-Performance Link

The linkage between CSR and performance may vary according to conditions or factors that could potentially contextualize this relationship (Chang et al., 2013). Accordingly, the contingency perspective is suggested when examining CSR-Performance link to provide explanations for possible intervening variables that could interfere with this relationship. The contingency perspective will be discussed in this section.

Ganescu’s (2012) study puts forward a model of CSR performance assessment using a contingency approach. The study shows that internal and external contingent variables (from the business model to the culture of the organization, its leadership, total quality management, diversity, etc.) all play a part in the enhancement of CSR performance. The application of the model developed by Ganescu (2012) also facilitates the ability to gauge organizations on their social performance in emerging markets. Ganescu (2012) notes that “corporate social performance can be determined based on: CSR principles guiding company activities, corporate social responsiveness processes and results” and that “social policies define the values, beliefs and goals of the organization in connection to social environment” (p. 1000). In other words, a strong CSR-performance link can be established through the contingency approach to social performance.

A list of possible moderators of the relationship between CSR and performance was given in the review made by Aguinis and Glavas (2012). According to this review, moderators of this relationship can be classified into four Ps: people (i.e. moderators that focus on top manager, supervisors, or employees), place (i.e. moderators that focus on location), price (i.e. moderators that focus on perceived cost of CSR), and profile (i.e. moderators that focus on organizational and contextual characteristics) (Aguinis and Glavas, 2012, p. 951). These moderators, according to authors, that represent the conditions under which CSR influence performance are likely to be familiar in the literature. However, much research is still needed that can help understand more contextual variables that may influence this link. Accordingly, knowledge gas still exist in the CSR-Performance link literature that requires conducting research on possible contextual variables that can influence this link.

Based on the contingency perspective, we suggest adding strategic intent, in the profile classification in the 4Ps moderators list, which have the potential to enhance the relationship between CSR and organizational performance by aligning CSR initiatives with the strategic goals and directions of the organization. Strategic intent emerged from the influential work of Hamel and Prahalad (1989), which was then taken up as a matter of interest in the academic literature (O`Shannassy, 2016). The term strategic intent can be defined as the vision or symbolic mode of strategy making (Hart and Banury, 1994). Hamel and Prahalad (1989) emphasize that strategic intent is future focused on winning and is an active management process, which has stability over time.

CSR and Organizational Performance Link

The link between CSR and organizational performance is examined by Reverte et al. (2016) and by Petrenko et al. (2016) respectively. Reverte et al. (2016) show in their assessment of 133 eco-friendly Spanish companies that there are “positive and significant direct effects of corporate social responsibility on both innovation and organizational performance across all groups of companies (i.e., manufacturing vs. non-manufacturing, proactive vs. non-proactive, smaller vs. larger and younger vs. older firms” (p. 2870). Petrenko et al. (2016) find that CEO narcissism can have a positive effect on quality and profile of organizational CSR performance. The researchers also find that CEO narcissism can lessen the effect of CSR on performance. The study shows that there is a substantial link between an organization’s leadership, its CSR, and its organizational performance.

The Contingent Role of Strategic Intent: A proposed model

The role of the leader in an organization and the leader’s impact on strategic intent can be seen in the study Chen et al. (2016). The study finds that by rationally analyzing strategic intent, a firm’s expansion strategy can be impacted to a large degree. Contingent role of strategic intent indicates that leadership is a major factor in how a firm’s long term objectives and goals are elucidated, and a possible model for enhancing the contingent role of strategic intent is to allow leaders to verbalize and embody this intent in their manifest dealings with the firm from a top-down perspective. A proposed model would show that leadership is responsible for ultimately guiding and directing the organization through the strategic application of the overall strategic vision for the firm. This application must be moderated by an element of corporate social responsibility to ensure its enhancement.

The figure below depicts a moderated relationship between the study variables: CSR, strategic intent toward CSR, and organizational performance. A research proposition developed reflecting this moderated relationship.

Strategic intent towards CSR

H1

H2Corporate Social Responsibility

Organizational Performance

Figure 1: The Proposed Research Model

Hypotheses Development

Based on the contingency perspective, this study propose that strategic intent could serve as a contextual variable in the relationship between CSR and organizational performance. This can be done by aligning CSR initiatives with the strategic direction of the company. In particular, it can be seen from the strategic intent literature that providing future direction and communicating it at multiple levels of the organization can deliver better performance (O`Shannassy, 2016). When strategic intent of the organization is oriented toward CSR initiatives. Accordingly, this study proposed that the relationship between CSR and organizational performance is moderated by the strategic intent of the company towards CSR. The proposition is as follows:

H1: Strategic Integration is positively and significantly related to CSR activities adoption

Tang et al. (2012) focus on absorptive capacity theory and other approaches (like time compression diseconomies, asset mass efficiencies, and path dependence theory) to show that a company that implements a CSR policy over time and with consistency, while establishing CSR dimensions and setting internal dimensions of CSR and corporate financial performance will ultimately be much improved.

The researchers’ longitudinal study examines 130 firms over a 12 year period from 1995 to 2007, and found that most companies benefit significantly from a CSR engagement strategy that is consistent over time and that expands CSR internally so as to make its dimensions more inclusive of everything the company does. In the end, the company will reap considerable financial benefits from the implementation of such a policy.

As Tang et al. (2012) assert in their study that an organization’s profits are impacted by the methods; the company utilizes to implement its corporate social responsibility policy. The researchers note that other studies on CSR and corporate financial performance relationships examine different variables that stem from contextual and organizational areas. What Tang et al. (2012) emphasize is the lack of critical attention on how CSR policy can be used as an engagement strategy.

H2: the adoption of CSR activities is positively and significantly related to organizational performance

Methodology

Sampling and Data Collection

Data were collected from companies located in different Qatari sectors. As the most competitive economy in the Middle East, Qatar is experiencing rapid economic growth. At the same time, more and more companies in Qatar are engaged in corporate social responsibility activities. An initial study conducted on companies located in Qatar has shown the level of CSR activities implemented in these companies is promising (CSR Report, 2015). Moreover, there are increased emphasis placed by the Qatari government to enforce CSR by companies that operate in Qatar. Accordingly, Qatar is a rich research setting to study the strategic integration of CSR activities and their influence on organizational performance.

The selected companies in this study represent different sectors in Qatar, such as oil and gas, financing and banking, building and construction, and education sector. The study relied on quota sampling and identified companies from 11 sectors in Qatar. The selected companies satisfy the two conditions in order to ensure that appropriate respondents were included in this study. First, only Qatari companies with CSR activities were considered for the purpose of this study. In particular, those companies listed in CSR Qatar records are only selected. A total of 100 companies were identified. Those companies represented the sample of this study.

Data Collection

The data was collected via a questionnaire survey targeted at 100 companies from different sectors. Those companies were initially contacted via telephone by trained research assistant to solicit their cooperation and to verify key informants for this study. In particular, the questionnaire targeted senior managers (mainly the senior manager in charge of CSR activities) who are part of the strategic planning team and have an intimate knowledge of the company`s CSR initiates. Through initial telephone contacts, we received 75 initial agreement to participate in the study. Then, the questionnaire link was sent to them via email. In the last stage, respondents were contacted again via a phone call in order to follow up with them and to make sure that they have completed the questionnaire. Of the 75 who agreed to participate, 54 respondents actually completed the questionnaire, resulting in an effective response rate of 54%. After eliminating incomplete responses with extensive missing values, a total of 50 usable questionnaires were obtained. The overall response rate, after eliminating incomplete responses, was 50%.

Measures

Corporate Social Responsibility (CSR). This study adopted the same measurement of CSR employed by Turker (2009). In this scale, seven dimensions for CSR were identified, as follows: CSR to employees, CSR to customers, SCR to government, CSR to society, CSR to the natural environment, and CSR to the future generations. The responsibility of these stakeholders were integrated into the CSR scale.

The study relied on 20 items to measure CSR in this study. In particular, three items were used to measure CSR to employees, for example, “Our Company supports employees who want to acquire additional education”. Three items were used for measuring CSR to customers, example of an item used “Our Company provides full and accurate information about its products to its customers”. Two items were used to measure CSR to government, an example of items used “Our Company complies with legal regulations completely and promptly”. In addition, 3 items were used to measure CSR to the society, like “Our company contributes to campaigns and projects that promote the well-being of the society”. Moreover, 3 items were used to measure CSR to the natural environment, an example of items used “Our company participates in activities which aim to protect and improve the quality of the natural environment”. Another 3 items were used for measuring CSR to the future generations, like “Our company makes investment to create a better life for future generations”. Organizational Performance. This study relied on perceived measures of organizational performance. A set of measures for measuring organizational performance were used. The scale for measuring organizational performance was adopted from previous studies (e.g. Khandwalla, 1977; Rettab et al., 2008). In particular, respondents were asked to provide their perception regarding the extent their company were able to achieve the following performance indicators compared with others in the industry: productivity, sales, profitability, revenue, and market share price.

CSR Strategic Integration. The level of strategic integration of CSR was measured using two types of items. First, categorical items were used whereby respondents were asked if their companies have formal mission statement, formal corporate strategy, and formal CSR strategy. Respondents were asked to answer these categorical questions as follows: (1) Yes, (2) No, or (3) not aware. Then, respondents were asked to respond to 5 scale items which measures the level of CSR strategic integration in the company. The five-point likert scale was adopted from Swink et al. (2007) but was modified to fit the purpose of this study. The following item was used “Corporate social responsibility initiatives are well aligned with corporate strategy”.

Categorical variables. A set of control variables were used as control variables in the analysis, as follows: company origin, company sector, company size, company ownership, and the industry within which the company operates.

Analysis and Findings

Profile of Sampled Companies

The current study aims at investigating the level of adoption of different CSR activities at Qatari companies. Moreover, it aims examine the level of strategic integration of CSR and its influence on organizational performance. The table below (Table 1) provides description of companies under investigation. In particular, it provides information about company sectors and the industry within which it operates, company origin, and the size and ownership structure of the company.

As can be seen from table 1, the majority of companies are large sized employing more than 500 employees. About 64% are Qatari companies. In addition, the service industry is the most heavily represented, with 76% of the sampled companies work in the service industry. This reflects the nature of the Qatari economy, particularly to the fact that the service sector is the country's second-largest economic sector and most important non-oil sector. Approximately, 30% of the sampled companies are publicly held, and the remaining are privately held 26%, joint venture 16%, and others 16%.

Table 1: Description of Companies

Number of Full Time Employees

Frequency

Percent

Company Sector

Frequency

Percent

Less than 100 employees

Oil and Gas

From 100 to less than 300 employees

Finance and banking

From 200 employees to less than 500 employees

Food and retail

500 employees and more

Building and construction

Not identified*

Telecommunication

Total

Transportation

Type of Ownership

Frequency

Percent

Education

Private

Utilities and Services

Public

Healthcare

Joint Venture

Hospitality and Tourism

Others

Not identified*

Not identified*

Total

Total

Company Origin

Frequency

Percent

Type of Industry

Frequency

Percent

Qatari

Manufacturing

Multinational

Services

Not identified*

Not identified*

Total

Total

Note: not identified data refers to completed responses received but respondents did not provide the company`s descriptive information.

As can be seen from the above table (Table 1), eleven sectors were included and were involved as part of the sampled companies. This is important in order to be able to generalize results to all sectors that operate in Qatar.

In order to examine the strategic integration of CSR in Qatari companies, respondents were asked whether their companies have formal mission statement, formal corporate strategy, and a formal CSR strategy. The findings are shown in figures 2, 3, and 4 that appear below. In particular, 86% said that their companies follow a formal mission statement, 4% of them said their companies do not follow a mission statement, and 8% are not aware. Moreover, when they are asked whether their companies have formal corporate strategy, the responses were as follows: 88% answered yes, 2% answered no, while 6% answered with ‘Not aware’. Finally, when respondents are asked whether their companies follow a formal CSR strategy, the responses were as follows: 72% said ‘Yes’, 16% said ‘No’, and 10% said they are ‘Not aware’. The findings reveal that the strategic planning in the sampled companies is implemented to a high level, and companies are placing more emphasis on developing a formal CSR strategy that supports its overall corporate strategy.

Hypotheses Analysis

In order to measure the study hypotheses, the partial least squares (PLS) to structural equation modelling was used. This methodology has become a powerful method of analysis in business research because of its minimal demands on measurement scales and sample size (Chin, 1998). The use of PLS is suitable for the current study since it relies on small sample size since it can be used for a sample size of less than 250 (Reinartz et al., 2009).

In PLS analysis, a two-step approach was used. Firstly, we performed a validation of the scale and a verification of the measurement model in order to measure the constructs reliability and validity. In particular, in order to check the internal consistency, item factor loadings were analyzed on their latent variables. a loading above 0.60 is considered acceptable (Hensler et al., 2009). All factor loadings were greater than 0.6, that shows internal consistency. Moreover, construct reliabilities were examined by calculating Cronbach’s Alpha, Composite reliability, and the average variance extracted for the study constructs. The results are shown in Table 2 and demonstrate that the outer model is internally reliable since all values of Cronbach`s ? are greater than 0.7, CR greater than 0.8, and AVE values are greater than 0.5 (Hulland, 1999).

Table 2: Scale`s Internal Consistencies

Construct

Cronbach's Alpha

Composite Reliability

Average Variance Extracted (AVE)

CSR Activities

Organizational Performance

CSR Strategic Integration

In addition, discriminant validity was assessed, which shows the extent to which the measure of one construct differ from the other constructs (Fornell and Larcker, 1981). In particular, the analysis has shown that the loading of each indicator is greater than all of its cross-loadings. Another way of assessing discriminant validity is the one suggested by Fornell and Larcker (1981), which consists of verifying that the value of AVE of each latent variable should be greater than the latent variable`s highest squared correlation with any other latent variable. The analysis showed that the test for discriminant validity based on the AVE values is acceptable.

Then, the analysis assessed the structural equation modelling (SEM) that describes the proposed relationships among variables (Hensler et al., 2009). The explanatory power of the research model was assessed by calculating the coefficient of determination (R²) of the endogenous constructs. Values above 0.10 are considered acceptable (Falk and Miller, 1992). The R² value is 0.413 for CSR Activities and 0.313 for organizational performance, thus R² values are acceptable. The results imply that 41% of the variation for CSR activities can be accounted for the strategic integration of CSR in companies. also, about 31% of the variation in organizational performance can be accounted for CSR activities implemented in the company.