Are employees well evaluated in their CSR actions? The perception of managers in an emerging country.
| Autor | Bolanos, Edmundo Lizarzaburu |
1 Introduction
Corporate social responsibility (CSR) has evolved over time and has become one of the main pillars for the development of any project undertaken by a company. From an academic point of view, there has been extensive research on its importance for the economic benefits of companies and for community development. Furthermore, as empirical evidence shows, CSR practices may have positive consequences in terms of both the internal and external development of companies, improving confidence in them (Porter & Kramer, 2006) and reinforcing their reputation.
Some authors explain that CSR actions to obtain profits for companies must go beyond their economic and legal responsibilities. Companies should give strategic consideration to CSR, that is, they should conceive CSR as a social action that would be present in all policies and processes of the company and at all hierarchical levels (Freeman, 1984; Gupta, 2002). Integrating CSR actions into a company's strategy requires the commitment of all the internal stakeholders, among which the role of the employees is essential (Gonzalez-Padron, Hult, & Ferrell, 2016; Nielinger, 2003; Peterson, 2004). However, research on this topic is generally conducted within the context of developed countries and has focused on the productive sector of the economy, overlooking the context of emerging countries and other sectors, which represents a gap in the research.
In order to reduce the research gap mentioned above, the main objective of this paper is to analyze the role played by employees in CSR activities, as a component of the strategic conception of CSR within companies in an emerging country, Peru, setting this research in the banking sector.
In the banking sector of developed countries, corporate social responsibility is solidly established due to its significant impact on society and its various interest groups (Scholtens, 2009). The banking sector has undergone significant transformations in recent years and has become one of the most proactive agents, becoming involved in CSR in all its actions worldwide (Marin, Ruiz, & Rubio, 2009; Truscott, Bartlett, & Tywoniak, 2009). This approach to CSR actions has changed significantly and, therefore, banks are now closer to social and environmental problems, they play a greater role in society by implementing CSR objectives and principles in their operations, and with this the transactions that they carry out are more transparent and generate value for society in general and for various interest groups such as customers, suppliers, investors, and employees (King & Levine, 1993; Prior & Argandona, 2008). In addition, banks are implementing CSR strategies and practices with initiatives such as financial inclusion (Decker, 2004). However, it is not yet clear if the positive response to CSR in developed countries will be the same in emerging countries and, therefore, if the managers, the main drivers of CSR actions, perceive their advantages or not. In the case of one emerging country, Peru, the banking sector has included different CSR plans within the framework of its strategic planning since 2000. In recent years, several banking companies have strengthened these plans because the results of their initial actions have been positive.
The first novelty of this paper is it analyzes the relevance of employee CRS actions from the perspective of managers. The perception of managers and ability to influence them will have an impact on the success of the application of CSR actions (Fatma & Rahman, 2015). therefore, the results obtained from this paper will help to understand the current state of CSR in an emerging country from the perspective of the managers responsible for its implementation.
Secondly, the amount of studies on the effects of CSR in the banking sector has historically been lower than in other sectors, especially the chemical and pharmaceutical industry (Roberts & Dowling, 2002), not doing justice to the central role it plays in the economic development of nations. The absence of actions in favor of CSR can lead to short-term benefits; however, such short-term benefits can cause a loss of reputation and long-term profits (Ruiz, Esteban, & Gutierrez, 2014). Thus, CSR is a very valuable asset of the banking sector. The choice of commercial banks as a framework for this study is conditioned by the great challenge facing the financial sector to counteract the negative effect that the economic crisis has had on perceptions of banking institutions, which has occurred not only in developed countries but also in emerging countries (Matute-Vallejo, Bravo, & Pina, 2010). This has led to a deterioration in the perception of financial institutions among the general public, generating a feeling of fear among bank customers about the security of their investments and financial assets (Simon, 2009).
The final novelty of the study lies in it raising how CSR actions can directly influence perceptions of trust toward companies. The reasons behind the implementation of CSR in companies, which do not necessarily have to be linked to altruism or a pursuit of the common good, may involve an economic motivation (McWilliams & Siegel, 2001). Managers can perceive CSR as a means, with a marked economic and instrumental component and whose development will depend on its foreseeable positive impact for the company.
This paper is structured in the following way. Firstly, we review the theory that explains the importance of the strategic conception of CSR through the involvement of employees and its relationship with improvements in business confidence. In section 3, we explain the methodology used for testing the hypothesis proposed in the theoretical section. Then, we show the main results of the analysis. Finally, we present our conclusions.
2 Employees' involvement in CSR and business confidence
Employees are a key element for the strategic conception of CSR. The role of employees in establishing responsible practices has been considered a necessary element since the success of CSR practices can hardly be achieved without a profound transformation of employees' motivations and commitments (Bhattacharya, Sen, & Korshun, 2008; Maak & Pless, 2006; Wittenberg, Harmon, Russel, & Fairfield, 2007).
The theory of social identity explains that people want to obtain a positive social identity (Aberson, Healy, & Romero, 2000). In general, people achieve their social identity through belonging to different groups (Ashforth & Mael, 1989). Hogg and Terry (2000) teach us that belonging to business organizations is one of the most important components of people's social identity and call this organizational identification. Employees evaluate their value and self-esteem through their status and the social position of their organization. For this reason, they like to identify with organizations whose image is perceived as prestigious or whose identity enhances their self-esteem, and fulfills their need for self-improvement (Ashforth & Mael, 1989). Organizational identification, therefore, is very sensitive to the image of the organization (Dutton, Dukerich, & Harquail, 1994; Tyler & Blader, 2003). Employees evaluate the image of an organization as the interpretation of its external image, that is, the employees' perception of what others think about their organization (Dutton, Dukerich, & Harquail, 1994). When a company implements CSR practices and involves the employees, they perceive that third parties consider their work to be more relevant, improving their self-esteem and encouraging them to become more involved with the company (Crites, Fabrigar, & Petty, 1994). This forges a competitive advantage which is difficult to imitate because it is based on the involvement of the employees (Hart, 2005).
Once a company's intentions to support social and environmental causes are known, employees are inspired to improve their attitudes toward their workplace (Du, Bhattacharya, & Shen, 2010). This point of view is also supported by a series of studies that explore the relationships between CSR procedures adopted by the organization and employee CSR attitudes. For example, Aguilera, Rupp, Williams, and Ganapathi (2007) confirm that employees' perceptions of their company's external CSR practices model their attitudes and behavior towards the organization. In addition, Rupp (2011) argues that CSR practices could stimulate employee morale. Having satisfied people means greater productivity for the organization and having people who lead their work teams, which increases the profitability and reputation of the company. In contrast, dissatisfied employees leads to increased absenteeism, resignations from work, and reduced productivity and profitability of the company.
For Becker-Olsen, Cudmore, and Hill (2006), investment in CSR has become a concept that is of great interest due to its multiple human capital benefits for companies. Some of these benefits from human capital include the retention of talent, employee welfare and the best working environment, the best relationship between the company, employees, and other interest groups, and the active participation of employees in the activities of the company (Table 1).
Several studies have analyzed the relationship between these advantages of human capital and company results, since these actions generate competitive advantages with respect to other competitors, improving the image of the brand and having a positive effect on business confidence (Eberle, Berens, & Li, 2013; Sen & Bhattacharya, 2001). Although employees are recognized as a group of key actors on which leaders must focus their attention, if managers are not capable of transmitting and perceiving this need, that is, employees' commitment to CSR practices, the success intended with the CSR actions will not be achieved (Aguilera et al., 2007). This perception of commitment in an emerging country is essential to check if CSR practices are...
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