CSR in Saudi Firms
Corporate Social Responsibility
References to corporate social responsibility (CSR) reportedly occurred numerous times before the 1950s, however, in regard to CSR definitions, that particular decade birthed the "modern era." Carroll (1999) compliments the researcher's current study as it expands on the historical progression of CSR definitions. According to Carrol, Bowen initially defined the social responsibilities of businessmen; explaining that the concept relates to the obligations businessmen have to pursue particular policies, to make deliberate desirable decisions, "or to follow those lines of action which are desirable in terms of the objectives and values of our society" (Bowen as cited in Carroll, p. 270). During the 1960s, the "Iron Law of Responsibility," held that "social responsibilities of businessmen need to be commensurate with their social power" (Davis, as cited in Carroll, p. 271). Davis and others during this decade, however, did not include specific details regarding the firm's obligations.
Although definitions of CSR started to flourish during the 1970s, no succinct definition of the social responsibility construct evolved. Carroll attributes the following definition to Davis during this decade:
For purposes of this discussion it [CSR] refers to the firm's consideration of, and response to, issues beyond the narrow economic, technical, and legal requirements of the firm. It is the firm's obligation to evaluate in its decision-making process the effects of its decisions on the external social system in a manner that will accomplish social benefits along with the traditional economic gains which the firm seeks. (p. 313)
It means that social responsibility begins where the law ends. A firm is not being socially responsible if it merely complies with the minimum requirements of the law, because this is what any good citizen would do. (Davis, as cited in Carroll, p. 277)
Instead of more original definitions of CSR evolving during the 1980s, research related alternative thematic frameworks as well as more endeavors to measure and conduct research on CSR. Carroll summarized his definition during the 1990s as: "The CSR firm should strive to make a profit, obey the law, be ethical, and be a good corporate citizen" (p. 289). In the future, any new definitions or revisions of current definitions of CSR will likely evolve from the foundation researchers established through the past half century but will expand to embrace concerns of society as a stakeholder in the global arena.
Considerations
Stakeholders do not perceive all corporate social responsibility (CSR) activities as equal, positive, or equally positive. People perceive corporate actions or the investments of the firm in corporate social responsibility (CSR) to be good or bad; positive or negative; favorable or unfavorable. In turn, these perceptions contribute to the creating the value of the firm. The study by Peloza and Shang (2011), similar to the study by this researcher, reviews the extant literature. While the researcher focuses on implementing CSR in Saudi firms, however, Peloza and Shang investigate particular CSR activities and outcomes previous research includes. These authors also integrate a number of ways the investment of CSR can augment value for consumer. As different individuals perceive the diverse range of socially responsible corporate behavior to portray "different things in different places to different people and at different times" (Peloza & Shang, p. 118). Consequently, corporations need to carefully consider how they utilize and implement the concept.
The unpredictable relationship between CSR and the firm's financial performance evolves from the diverse evaluations of various CSR activities or investments from both major and minor stakeholders. "CSR in the form of community or diversity programs provides insurance against negative events while CSR in the form of governance, employee relations or product relations does not" (Peloza & Shang, 2011, p. 118). In most areas of CSR, however, when the level surpasses a particular point, the investment may not improve consumer perceptions of value but instead prove destructive to the firm's financial performance.
Some managers invest in CSR activities to develop a social or environmental impact, while others solicit a financial return. Peloza and Shang (2011) stress that the potential for CSR to create firm value correlates with its ability to generate positive stakeholder relations for the firm. The firm's inclusion of CSR activities along with more traditional product attributes and benefits can boost the firm's overall value proposition.
Challenges
The study by Hong and Andersen (2011) differs from that of the researcher's as it encompasses the global concept of the relationship between CSR and earnings management (EM) rather than focusing only on CSR and a specific geographical area like Saudi. Hong and Andersen assert that even though no agreement on the measurement of CSR exists in the extant...
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