Corporation always blame for the environmental pollution, financial scandals and causing social problems. Nowadays, business companies are not just the one to blame for, but also, at the same time, those companies can be the saviors for the global regulation and public goods problems. (Scherer and Palazzo, 2008)
Corporate Social Responsibility is not a new issue in business. Over the years, we can see that companies have been engaged with global problems such as poverty, pollutions, climate change and human rights. Companies have been asking to play a positive role in social and environmental issues. However, according to Lougee and Wallace (2008), using a social responsibility metric to measure the net strengths for each company, they found that the average CSR decreased during their 15 year time period. “
Although anecdotal evidence suggests that CSR is rapidly becoming commonplace within U.S. corporations, our findings have a somewhat mixed message. Although U.S. companies have significantly increased their CSR strengths during the past 15 years, CSR concerns appear to have proliferated during the same period, and many remain unaddressed. The net result is that our measure of net CSR strengths (strengths minus concerns) decreased during this period, even among the Domini 400 sample. (Lougee & Wallace, 2008)” Why do companies take part in such a responsibilities?
There are different premises for companies take part in such a responsibility. According to Aguilera, Rupp, Williams and Ganapathi (2007), “Corporations are being pressured by internal and external actors to engage in CSR actions to meet rapidly changing expectations about business and its social responsibilities (Clark & Hebb, 2004; Cuesta Gonzalez & Valor Martinez, 2004; Economist, 2005)… CSR are exposed to decoupling effects so that some companies introduce CSR practices at a superficial level for window-dressing purposes, whereas other companies embed CSR into their core company strategy (Weaver, Trevin ̃o, & Cochran, 1999). We further assume that companies’ responses to changing social expectations—in particular, their serious implementation of CSR initiatives into their strategic goals—have the potential not only to change their corporate culture but also to impart true social change.”
It suggested that company is encouraged to have such a policy due to the pressure of its internal and external actors for meeting the changes of the business environment. Corporate social responsibility can be a tool to fulfill social expectations and act as a strategy to achieve its strategic goals. So what are corporate social responsibilities?
Definition of Corporate Social Responsibility
To begin with, let define what corporate social responsibility is. There are a lot of definitions of CSR in both corporate and academic world, according to Dahlsrud (2008). It has identified 37 definition of corporate social responsibility usually used but there are still more academically derived definitions were not included in the research. “A standard definition of CSR is that it is about sacrificing profits in the social interest. For there to be a sacrifice, the firm must go beyond its legal and contractual obligations, on a voluntary basis. CSR thereby embraces a wide range of behaviors, such as being employee friendly, environment friendly, mindful of ethics, respectful of communities where the firm’s plants are located, and even investor friendly. Sometimes, the call for duty extends beyond the corporation’s immediate realm and includes supporting the arts, universities and other good causes.”, accorded to Bénabou and Tirole (2009). Nevertheless, Dahlsrud (2008) also found that there are five dimensions regarding varies definitions of corporate social responsibility, environmental dimensions, social dimensions, economics dimensions, stakeholder dimensions and voluntaries dimensions. According to Habidin, Fuzi, Desa, Hibadullah & Zamri (2012),...