Results of the analysis are shown in the following figures. Figure 1. Tabel 1. Path coefficient and corresponding significance Effect of Path coeff. SE3 CR4 Sign5. CSR significantly affect on corporate operating efficiency BOPO in negative manner which means that the higher the company implements CSR the more efficient the company operation will be. These results are generally in line with Kotler and Lee , who state that companies that implement corporate social responsibility will obtain to some extent either direct or indirect benefits.
One of which, according to them, is that these companies will lower their operating cost. The costs of marketing their products can be reduced and replaced it with the costs of CSR which subject to tax deductible. In this study, it is found that corporate social responsibility implementation affects in a significant manner corporate operating efficiency i.
Regarding corporate income tax and its relationship with corporate social responsibility implementation, Irawan , Aris , Adoe , and Williams, , Watson , have an interesting statement. They argued that from tax regulation or tax law point of view, corporate social responsibility implementation can be linked with income tax and value added tax VAT.
To obtain benefits from corporate social responsibility implementation in relation with income tax, companies are required to select an appropriate strategy that makes all costs incurred for the selected CSR program can be deducted from as expenses that reduce taxable income Irawan, ; Aris, ; Adoe, ; Williams, ; Watson, However, CSR activities that are tax deductible is limited only to certain types of activities as stipulated in Law no.
In this study, as mentioned earlier, corporate social responsibility implementation does affect income tax that must be paid by companies. Interestingly, however, it affects corporate income tax indirectly through corporate operating efficiency. This phenomenon is generally in accordance with Kotler and Lee , Irawan , Aris , Adoe , and Williams , and Watson For investors in capital markets, especially those with long-term investment horizon, CSR implementation report can be used as a source for investment decisions in the stock world.
The report is useful for identifying companies that have a high commitment to CSR. Companies that have a high commitment to CSR will be appreciated by the community that will increase the company's reputation Cahyono, ; Cellier, ; Cheng and Christiawan, A study conducted by Ismiyanti and Mahadwartha revealed that there a strong relationship between corporate social responsibility implementation with corporate profitability.
Since corporate financial performance, which is, among other things, represented by corporate profitability, is closely related to corporate stock price, social responsibility implementation has the potential to positively affect corporate stock price Flori et al. This is indicated that corporate social responsibility implementation is of importance to the corporate stock price.
Results of this study strongly support these statements. Corporate social responsibility implementation i. Conclusions and Suggestions General conclusions of the study, which was aimed at analyzing the effect of the implementation of corporate social responsibility CSR on operating efficiency, income tax, and stock price, are that CSR implementation directly affects corporate stock price and indirectly affects corporate income tax through corporate operating efficiency.
It is interesting that CSR implementation was found to significantly affect, either directly or indirectly, corporate stock price as well as corporate income tax. This suggests that CSR implementation is of importance to the firm, particularly in increasing its financial performance which is represented, amongst other things, by stock price and in decreasing its income tax as a result of tax deduction in accordance with Act No.
It will be not only benefit the companies but also, and most importantly, benefit the society in term of a better long term social, economic, environmental, and possibly political Indrawati, , conditions.
References Adoe, Andreas. Accessed on January 2, When an organisation carries out corporate social activities, it is telling the community members that it is a friend of the community. This improves the impression people have about the corporate existence of the organisation. To offset unfavourable image, many business leaders work hard to convince the public that business creates much good for society Frederick, , p.
Reduction in Operation Costs: There are also other cases in which doing what is good and responsible converges with doing the best for the particular business. Some CSR initiatives can dramatically reduce operating costs. The process of adopting the CSR principles motivates executives to reconsider their business practices and to seek more efficient ways of operating.
Attracting New Customers: Companies perceived to have a strong CSR commitment often have an increased ability to attract and to retain employees Turban and Greening , cited in Tsoutsoura, , which leads to reduced turnover, recruitment and training costs.
There are many known cases in which employees were asked, under pressure of their supervisors, to overlook written or moral laws in order to achieve higher profits. It balances Power with Responsibility: Organisations have power and this power should be accompanied with certain social responsibility. Those who have power should use it judiciously. As noted by Fredrick , modern business corporation possesses power and influence and this should be accompanied with responsibility.
The foregoing therefore implies that organisations have power; they have great influence and they need to balance it with responsibility. When they do this, they win the goodwill of the community members, but when they fail to do this, they attract the wrath of the community members. The iron law of responsibility as noted by Frederick , p.
It Discourages Government Regulation: When the government is fully aware that an organisation or all organisations are alive to their responsibilities social responsibilities , government becomes discouraged to regulate business.
Government regulations may affect the business negatively, but when organisations know that they have a social responsibility to the community where they operate, there may be no need for regulation. Frederick , p. It Promotes Long Run Profit. When an organisation carries out corporate social activities, it makes more profit. Rao , cited Asemah, et al avers that socially responsible businesses tend to have more and secure long run profits.
This is the normal result of the better community relations and improved business image that responsible. Asada , cited in Asemah, et al avers that proponents of social responsibility as social obligation posit that a company engages in socially responsible behaviour when it thinks of profits only within the constraints of law. They believe that because the society supports business by ensuring its continuous existence, the only way business can repay society is to continue to ensure that it is making profits.
Thus, Freedman , cited in Asada avers that there is one and only one social responsibility of business - to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engage in open and free competition without deception or fraud. Recognises Business Moral Obligations: Organisations owe it a duty to provide amenities to environments where they operate.
Improved Relations with the Investment Community and Better Access to Capital: The investment community has been exploring the links between corporate social responsibility and financial performance of businesses.
There is growing evidence that companies that embrace the essential qualities of CSR generally outperform their counterparts that do not use features of CSR. This information is being translated into action within the investment community. Enhanced Employee Relations, Productivity and Innovation: A key potential benefit from CSR initiatives involves establishing the conditions that can contribute to increasing the commitment and motivation of employees to become more innovative and productive.
Companies that employ CSR related perspectives and tools tend to be businesses that provide the pre-conditions for increased loyalty and commitment from employees. These conditions can serve to help to recruit employees, retain employees, motivate employees to develop skills and encourage employees to pursue learning to find innovative ways to not only reduce costs, but to also spot and take advantage of new opportunities for maximising benefits, reduce absenteeism and may also translate into marginally less demands for higher wages.
To the extent that stakeholder engagement and collaboration involve maintaining an open dialogue, being prepared to form effective partnerships and demonstrating transparency, through measuring, accounting and reporting practices, the relationship between the business and the community in which it operates is likely to be more credible and trustworthy.
This is a potentially important benefit for companies because it increases their "licence to operate", enhances their prospects to be supported over the longer term by the community and improves their capacity to be more sustainable. No employee or shareholder would like to be associated with a business that does not show legal, legitimate and decent ways of making money.
That is where CSR or corporate social responsibility comes in. Companies with an active CSR also play a major role in the development of the land by donating to charities and uplifting the lesser fortunate populace. Socially responsible organisations make profit in a way that does not harm the social and environmental fabric of the country where they operate. Human beings are also first on their list of concerns.
Generally, socially responsible companies have very high employee satisfaction and motivation levels; CSR lowers the cost to companies in the long run. More so, companies that have CSR will attract more and more investors, thereby increasing the business access to capital.
Thus, the paper recommends that organisations should endeavour to pay due attention to corporate social responsibility and this practice should be a continuous one. References Ali, I. Effects of corporate social responsibility on consumer retention in cellular industry of Pakistan, African Journal of Business Management.
Asada, D. Corporate social responsibility of companies and sustainable development in Nigeria: Recent trends and lessons from other African Countries. Asemah, E. S and Asogwa, C. E Indian Journal of Arts, Sciences and Commerce. Issue 4 1 , Pp. N and Anatsui, C. Corporate social responsibility and community relations as critical factors in conflict management.
Maiduguri Journal of Arts and Social Sciences. N and Ogwo, C. Dimensions of community and media relations. Jos: University Press. A and Olumuji, E. Universities and corporate social responsibility performance: An implosion of the reality. African Research Review. Communicating corporate social responsibility performance of organisations: A key to winning stakeholders' goodwill.
International Journal of Arts and Humanities. Backhaus, K. Exploring the relationship between corporate social responsibility performance and employer attractiveness. Business and Society. Ballou, B. Firm value and employee attitudes on workplace quality. Accounting Horizons. Barone, M. Consumer response to retailer use of cause- related marketing: Is more fit better?
Journal of Retailing, 83 4 , Pp. Bhattacharya, C. Journal of Business Ethics. Branco, M. Corporate social responsibility and resource-based perspectives. Journal of Business Ethics, Vol. Cardan, S. D and Darragh, O. A halo for angel investors. The McKinsey Quarterly. Chahal, H and Sharma, R. Implications of corporate social responsibility on marketing performance: A conceptual framework. Journal of Services Research. Cone, Inc. Corporate social responsibility.
Copenhagen: Ventus Publishing. Davis, K. The case for and against business assumptions of social responsibilities. Academy of Management Journal. De Bakker, F and Nijhof, A. Responsible chain management: A capability assessment framework. Business Strategy and the Environment. Deegan, C. The legitimising effect of social and environmental disclosures: A theoretical foundation. Account Audit Accountability Journal. Dodd, M.
D and Supa, D. Public Relations Journal Vol. Maximising business returns to corporate social responsibility CSR : The role of social responsibility communication. International Journal of Management Reviews. Fombrun, C. Building corporate reputation through corporate social responsibility initiatives: Evolving standards.
Corporate Reputation Review. Fonceca, C and Jebaseelan, A. Critical appraisal of corporate social responsibility activities in India.
Can socially responsible firms survive in a competitive environment? Messick and A. Tenbrunsel Eds. Frederick, W. Business and society, corporate strategy, public policy, ethics. Freeman, R. S and Wicks, A.
New Haven: Yale University Press. Fulmer, I. Are the best better? An empirical investigation of the relationship between being a great place to work and firm performance. Personnel Psychology. Greening, D. Social responsibility and ethical practices are vital to your success. Although they share a basic concept of CSR that, it is a voluntary process of an organization, which it carries out for the welfare of its employees, society, and environment as an obligation towards all three. Subscribe our YouTube channel for more related videos.
Corporate Social Responsibility: There is vagueness and a lot of argument associated to what is owing of CSR in an organization Horrigan, Through CSR, organizations create a constructive and affirmative image in the society Baker,. The concept of "corporate social responsibility" has become pervasive enough that it has earned its own acronym in business circles: CSR. The term means that a corporation should be accountable to a community, as well as to shareholders, for its actions and operations.
India is one of the top countries which are in danger of suffering the worst effects of climate change. As the planet warms, agriculture and farming income will suffer from rising temperatures and less rain.
This research was conducted to reveal the risks and advantages associated with sustainability in India. The literature has been reviewed to obtain relevant information and knowledge. All the initiatives undertaken by organisations, either public or private, and by the government in the education sector, and at individual level have been elaborated in this study. Corporate social responsibility. CSR is a business approach that contributes to sustainable development by delivering economic, social and environmental.
Corporate social responsibility CSR has many advantages that can apply to any business, regardless of its size or sector. What are the disadvantages of CSR?
0コメント