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Corporate Social Responsibility Disclosure Effect Sample

Important fact for Corporate Social Responsibility Disclosure

Effect of Corporate Social Responsibility Disclosure in Saudi Arabia

Chapter 1: Introduction 

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Overview

Corporate social responsibility is the term which is used for defining the responsiveness of the corporate businesses towards the various expectations of the stakeholders like that of ethical, legal and social and also the environmental. It is the responsibility that is taken by the various multinational companies on part of their efforts which can have an effect on the environment and social welfare (Corporate social responsibility for market integration, 2013). It is the efforts of the company that usually go beyond incurring of profits and lay emphasis on the well being of the overall society. It is the action which follows the aim of embracing the responsibility for the actions and activities of the companies which then encourages having a positive impact on stakeholders like employees, consumers along with the environment and society as a whole. In today’s competitive scenario, the activities of CSR have increased up to a great extent by the global companies (CSR-2013, 2013).

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CSR has developed as a result of the globalization and expansion of the world economy that has then lead to the multinational companies emerging with more of the economic power which is more than the gross domestic product of most of the developing countries. Therefore, all business activities have a great impact on the society. In addition this, many of the developed economies of the world have recently faced financial crisis due to which society requires that the big enterprises take responsibility for safeguarding the environment, employees and the local community. It is for these reasons that the disclosures regarding the corporate social responsibility has gained a lot of importance in the past years (Hassink, 2012).

Stakeholders are the ones who are directly affected by the performance information or disclosures made by their companies. A firm, on the other side, has also a direct obligation to all of its stakeholders as they will also be affected by the strategies adopted by them. The CSR disclosures are also important as they play a key role in maintaining of relationships with their key stakeholders. The stakeholders are concerned with the long term survival of the firm and value their relationships with the company and therefore there is a requirement of the information about the performance of the company keeping in mind of their interests and welfare (Al-Khater and Naser, 2003). The needs of the information by the stakeholders about the performance of the company are important so that they can judge the activities of their concerned company.

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Focus and Purpose of Research

Focus

The main focus or aim of the current research is to investigate the effects of corporate social responsibility disclosures on stakeholders’ decision making strategy in Saudi Arabia.
Research questions

In order to reach at the final aim of the dissertation some of the research questions are formed which are as follows-

  1. What is the association between CSR disclosure and organizational performance in Saudi Arabia?
  2. What are the effects of corporate social responsibility disclosure on stakeholders’ decision making in Saudi Arabia?
  3. What is the perception of stakeholders of Saudi Arabia on CSR disclosure practices in Saudi Arabia?
  4. How can the companies improve upon their corporate social responsibility disclosure reports?

Objectives

From the above research questions framed the objectives for the report are also made which will help the researcher to reach at the aim. They are the following –

  • To investigate the perception of stakeholders on CSR disclosure practices in Saudi Arabia.
  • To assess the effects of corporate social responsibility disclosure on stakeholders’ decision making strategy in Saudi Arabia.
  • To recommend the companies on improving upon their corporate social responsibility disclosure reports?
  • To analyze the association between CSR disclosure and organizational performance in Saudi Arabia.

Purpose

Increase in the awareness among the stakeholders on the ethical contribution and responsibility towards society by the corporations has resulted into the need of corporate social responsibility disclosures. The harmful impacts to the society and environment because of the exploitation of resources have forced the companies to publish their CSR reports so that stakeholders are aware of their activities. The purpose for studying the report is to have an in depth understanding of the effects of CSR disclosures on the stakeholders and especially is Saudi Arabia.

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Structure of Research

The present report will be carried on by following the given below structure of the chapters-

  1. Chapter 1: Introduction – The first chapter of the dissertation will provide an overview about the corporate social responsibility and its disclosures by the companies. An explanation will also be given on the general purpose and focus that is involved with the research.
  2. Chapter 2- Literature review – This part of the report aims to explore the work done by some of the earlier researchers in the field of corporate social responsibility and its disclosures provided and published by the companies. In this respect, various books, journal articles and periodicals will be considered and reviewed in order to collect ample information on the subject. Useful data will be compiled in the chapter so that a clear understanding about the subject can be known.
  3. Chapter 3- Research methodology – In this chapter, different methods and tools of research for collecting and analyzing the information and data will be given. It encompasses within it the other aspects like that of aims and objectives, data collection methods, research philosophy and approach. This also provides information on sampling technique applied in the report. In addition to this, the chapter would also include ethical issues and research limitations associated with the report.
  4. Chapter 4- Data analysis – This chapter includes the method of analysis of data which has been collected from various sources.
  5. Chapter 5 Conclusions and recommendations – This is the final chapter of the dissertation and this includes the concluding outline of the entire study done. Furthermore, recommendations shall also be provided to improve upon the CSR disclosure and reports.
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Context

There is an increase in the awareness of the stakeholders regarding the activities of corporate social responsibility and they take keen interest in knowing about such activities conducted by their companies. The research conducted in this field will help to know about the information disclosed in the CSR reports of the companies and how it can affect the decision of stakeholders. It is conducted at this point of time as stakeholders want to know the CSR activities conducted by their companies.

For the purpose of conducting the research in this particular dissertation survey will be conducted from employees of different companies belonging to different sectors in Saudi Arabia. The sectors are of construction, mining and banks and services. The political factors of Saudi Arabia depict the various issues like that of interference of the government in the industries. It includes the environmental law and labor law.

Chapter 2: Literature Review

Corporate Social Responsibility

The term corporate social responsibility can be defined as the responsible behavior taken on behalf of the large corporations in order to keep compliance with the legal and ethical standards and working for the welfare of the consumers , communities and overall the society. It can be said to be a form of self regulation of the corporations which has been integrated into the models of business (Abu-Baker and Naser, 2000). The policies of CSR functions as a built in and also a mechanism of self regulation where a business is monitors itself and insures that the companies are in alignment with ethical and legal standards along with the international norms. Apart from this, engagement of a firm in CSR activities also implies its involvement in embracing social welfare and well being. This includes activities like provisions of educational programs for the children of employees and distribution of edibles among the poor and needy (Adams, 2002). It is the way through which the company’s can be able to put a positive impact on its consumers, communities, stakeholders, employees and environment. It can be said that through CSR companies take into account the interest and concerns of the wide range of stakeholders like that of shareholders, consumers and employees. The list also includes the government, suppliers and the environment (Adams and Kuasirikun, 2000).

 CSR is entitled to help with mission of an organization and also guide towards the aim of the company and how it can uphold to its customers (Pava and Krausz, 1996). Development of business ethics is used for examining the moral principles or problems which can arise while utilizing the environmental resources.

Corporate Social Responsibility Disclosures

The practice of CSR disclosures can be defined as the initiatives taken by the corporations in order to take responsibility for the effects of the company on the environment as well as its impacts on the social well being and welfare. It is to ensure to the public that the operations of the company are taken by complying with the norms of legal and international standards (Ahmed and Courtis, 1999). This term of disclosure is the one which is generally used for depicting the efforts of the company that generally goes beyond the requirements of the authorities and regulators. In this way, this process is a means to show to all and especially the stakeholders about the efforts of the company towards the society and environment and also towards legal and ethical principles (Roberts, 1992).

This concept of corporate social responsibility disclosures can also be said as corporate citizenship. It is so because CSR reports involves incurring of short term costs by the large firms which do not provide any kind of financial benefits immediately to them but it surely ensures a positive environmental and social change and a positive impact on the society and stakeholders (Albinger and Freeman,  2000).

Advantages to stakeholders in Saudi Arabia

  • The benefits of disclosing the reports of corporate social responsibility lie both to the companies and stakeholders. 
  • With the help of the CSR disclosures the stakeholders come to know about the operations of the company in which they are interested in. 
  • With this, they get information about the extra activities that are incurred by the companies keeping in mind of their interests and concerns (Banerjee, 2007).
  • They become aware of the assets and other earnings of the company and know whether they should invest into it or not. It is also known to the stakeholders that how the company involves itself in the social activities for the welfare of the society.
  • In addition to this, information is also used to know that whether the company is carrying on its operations by aligning with the set norms of legal and ethical issues. This will insure that they are no involved with a wrong or a corrupt company (Turnbull, 1997).
  • Stakeholders like employees will come to know about the provisions of their safety and security which their company has incorporated for them. This will further motivate them to work for their work with full dedication (Belal, 2008).
  • Similarly if quality of raw materials will be used by the company then the consumers will be ensured that the company is offering the best products.
  • The government, which is an important stakeholder for the companies, come to know and is ensured that the company is following all the legal rules and regulations according to them while functioning (Verrecchia, 1983).

In this way, the stakeholders have a lot of benefits of the CSR disclosures of the companies.

Advantages to companies in Saudi Arabia

  • Besides stakeholders, companies also benefit from the CSR disclosures published by them.
  • With the help of the disclosures, it is easier for the companies to attract strong stakeholders towards their firms so that they can invest into their business.
  • This helps the companies to set a positive image in front of them which helps them to ensure all that all the operations of the company are in accordance with the set norms and standards (Belal, Khan and Alam, 1998).
  • The good quality of CSR reports contain all kind of information about the company which are easily understood by all which eventually helps the company to connect with all the concerned stakeholders.
  • Due to the increased competition and awareness these reports have helped the companies to ensure that stakeholders that company are utilizing the resources in the best manner and are not harming the environment (Vogel, 2010).

Chapter 3: Research Methodology

Introduction

Research methodologies is being regarded as one of the most important and crucial section of the dissertation. It basically provides the main foundation of the survey of the project and thus, gained more attention in comparison with the other sections of the report. For the purpose of carrying out an effective research, the researcher abruptly makes use of assortment of strategies, techniques and methodologies (Babbie, 2007). All these are also being depicted here in this chapter. Thus, it can be articulated that the research methodology section of the report offers a brief introduction in regards with all techniques, which will be applied by the researcher. (Jean Lee, 1992). For the purpose of fulfilling the aims and objectives of the study, along with to trace out effective solution of the problem, various research instruments and philosophy are also being developed under this section only (Kathleen and Stephen, 2004).

The word “Investigation” can be used in place of research; both are synonym to each other. They both possess similar meanings. It is being referred as the official work, which is carried out for the purpose of increasing the knowledge and understanding. (Glicken, 2002). Thus, the main idea behind research is presenting an answer for useful and practical question. Finally, the social research is being performed by the social scientists by making use of systematic and organized plan (Miller, Delbert and Salkind, 2002).

In the present research report, the research methodology section provides deep insights about the various methods being adopted by the researcher to investigate the impact and effect of corporate social responsibility disclosure on the stakeholder’s decision making strategy in Saudi Arabia, with special reference to “Thomson one banker-analytics” from where the data of companies is collected.

Aims and Objectives of the research

Aim - The aim of this report is “to investigate the effects of corporate social responsibility disclosures on stakeholders’ decision making strategy in Saudi Arabia.”

Objective – With a view to accomplish the above mentioned aim of the research, there are several objectives, which need to be fulfilled. Some of these are being described below:

  • To investigate the perception of stakeholders on CSR disclosure practices in Saudi Arabia.
  • To assess the effects of corporate social responsibility disclosure on stakeholders’ decision making strategy in Saudi Arabia.
  • To analyze the association between CSR disclosure and organizational performance in Saudi Arabia.
  • To recommend the companies on improving upon their corporate social responsibility disclosure reports

Research questions

  1. What is the association between CSR disclosure and organizational performance in Saudi Arabia?
  2. What are the effects of corporate social responsibility disclosure on stakeholders’ decision making in Saudi Arabia?
  3. What is the perception of stakeholders of Saudi Arabia on CSR disclosure practices in Saudi Arabia?
  4. How can the companies improve upon their corporate social responsibility disclosure reports?

Research Philosophy and Approaches

A concise thought in relation with the several methods being adopted by the researcher to carry out the research work, is being provided by the research philosophy. By seeking help from this method, information and understanding in relation with the certain specified topic can be gathered, analyzed and scrutinized (Lawrence, 2006). The interpretive practices help in deriving the main theoretical supposition in almost all the projects. Further, it is the research philosophy that facilitates accurate and proper maintaining and functioning of methodology being used in the research. As a result of this, they occupy quite significant role in the whole research process. If this part needs to be move forward, it become essential to have an understanding in regards with the research philosophy. It is segregated into two parts, interpretivism and positivism. It becomes obligatory on the part of researcher to make use of both these philosophies by choosing an apt approach for the survey (Patten, 2004).

Chapter 4: Conclusion and Recommendation

Conclusion

The above section has significantly furnished a detailed overview in regards with corporate social responsibility disclosure and its importance in decision making strategy for all the valuable stakeholders. The literature review section of the report has given a comprehensive account in regards with what is corporate social responsibility, corporate social responsibility disclosure (CSRD) and its need in Saudi Arabian companies, perception of stakeholders about CSRD, theories related to corporate social responsibility disclosure and its importance in influencing the decisions making strategy of all the valuable stakeholders.

The review of literature chapter of the dissertation has been greatly helpful in providing illuminating insight in relation with the assortment of topics related to the undertaken study. It has been learnt from the study that corporate social responsibility disclosure is very important for all the stakeholders. Due to increasing concern and awareness of the stakeholders, organizations are now compelled to initiate corporate social responsibility activities and also need to disclose the same in the possible manner as well. Further, because of the rising level of competition and globalization in almost every economy of the world, the need for the disclosure of activities of corporate social responsibility by the companies was felt. In addition to this, internationalization of business has also resulted into the emergence of multinational and global companies, which share a huge portion of economic power. This share is even greater than the gross domestic product of many of the developing countries. It is for this reason that most of the business activities have a lot of impact on the environment and society on whole. Thus, it can be said that there is a need of CSRD in almost every organization, as the operations and working of the organization significantly influence the society and thus, all the members of the society should be made familiar about the activities of the business concerns (Gunawan, 2010).

Recommendation

As, it was determined from the above research so conducted that corporate social responsibility disclosure plays an important role in the decision making process of the stakeholders. Although, they provide various information in regards with the CSR practices, activities undertaken by keeping in considering the society and community interest, programs for the welfare of the employees and other stakeholders of the company, still there is an uncertainty that whether in reality it is being implemented by the companies or not. In other words, is the disclosure is authentic or company has just unveiled with a view to gain the attention from most of the stakeholders as well as to sustain a reputable position in the market. The quality of corporate social responsibility disclosure is very important to take into consideration by each and every stakeholder prior taking any decisions. Thus, it is highly recommended to companies operating in the Saudi Arabia to encompass quality information in their CSR disclosures so that all the valuable stakeholders of the companies can take an effective decision. It is world known fact that it is not recommended to stakeholder to rely only on the CSR disclosures reading making any important decisions. They are required to analyze many other reports and media such as annual report, corporate advertisements and broachers etc. This is because of the fact that corporate social responsibility disclosure might provide incomplete information, which hampers the stakeholders to undertake quality decisions. Attributed from this, it is suggested to the companies to limit their disclosures document, but should engross quality information in them.

Some of the useful and authentic information is required to be included in CSR disclosure by the companies for ensuring effective decision making strategies to all the stakeholders. These are being described below:

  • The organizations should publish information in various categories so as to have major influence on the performance and decision making process of all the stakeholders.
  • The first section should be related to environment. It must include information in relation with the pollution control, conservation of natural resources, protection of environment, prevention of environmental damages and many other disclosures about the surroundings of the organizations.
  • The second section should give information about the fair business practices being adopted by the companies. Under this heading, various practices of the firms in abroad as well as in the domestic market must be included. Further, it should also include the activities undertaken by the organizations for advancement of women and minorities, employment of minorities etc.
  • Human resources category is considered as very important in CSR disclosures. It must cover the issues in regards with the health and safety of the workers, training and development, recruitment etc.
  • The next category is energy. Under this heading the companies should disclose information about the practices adopted by firms in order to conserve the natural resources and energy, energy related disclosures and energy efficiency of products.
  • The last one is community. This should encompass the assortment of activities being undertaken by companies by keeping in consideration the interest of all stakeholders. This includes community, health and education and arts activities.

Chapter 6: Reflective Statement

The whole process of this research study was really proved an important journey for me, as I was able to develop comprehension in regards with the subject area of the research and developed my independent learning. However, I found that it was many a times challenging as well. The above dissertation has offered me enormous knowledge in regards with corporate social responsibility disclosure and its importance in stakeholder’s decision making strategy of companies in Saudi Arabia. The current dissertation has given emphasis on investigating the affects of CSR disclosure on stakeholders’ decision making strategy in Saudi Arabia. Further, a deep insight related to need of CSR disclosure and its advantages pertaining to the stakeholders are also being explored. The reports of corporate social responsibility disclosures is being defined as a way through which it can make sure to the public at large that apart from generating profits the organizations is also involved in social activities as well.

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For the purpose of extracting all these information, more focus and commitment was required apparently. Further, it was also a time consuming process. With a view to keep myself on right track, I have also made significant efforts in developing an action plan. In this action plan, I have included activities pertaining to every week as well as their respective time frames. Further, when throwing light on the research methodology part of the report, both primary and secondary research methods were adopted by me. Since, the primary research is being involved; it was very difficult for me to indentify the respondents who possess intact knowledge about the CSR disclosure and information that needs to be included in it. In addition to this, assortment of sources like, journals, books and articles published by prominent authors were also reviewed by me. Other than this, there were many issues and problems that have intrigued me significantly in the whole process of dissertation. Therefore, as a whole it can be articulated that the entire assignment has substantially increased by level of understanding and the confidence. At this phase of time, I feel that the current dissertation was quite successful in concluding my academic phase and further, I am looking for bright prospects in future.

References

Books and Journals

  • Abu-Baker, N., and Naser, K.,  2000. EMPIRICAL EVIDENCE ON CORPORATE SOCIAL DISCLOSURE (CSD) PRACTICES IN JORDAN. International Journal of Commerce and Management. 10. ¾. pp. 18-34. 
  • Adams, C., 2002. Internal organizational factors influencing corporate social and ethical reporting. Accounting, Auditing and Accountability Journal. 15(2). pp.223-250.
  • Adams, C.A. and Kuasirikun, N., 2000. A Comparative Analysis of Corporate Reporting on Ethical Issue by UK and German Chemical and Pharmaceutical Companies. The European Accounting Review. 9(1). pp.53-79.
  • Aerts, W. and Cormier, D., 2009. Media Legitimacy and Corporate Environmental Communication. Accounting, Organizations and Society. 34(1). pp.1-27.
  • Aguilera, R.V. , Rupp, D.E., and  Williams, C.A., 2007. Putting the S back in corporate social responsibility: A multi-level theory of social change in organizations. Academy of Management Review. 32, pp. 836-63.
  • Ahmed, K. and Courtis, J.K., 1999. Association between Corporate Characteristics and Disclosure Levels in Annual Reports: A Meta-Analysis. British Accounting Review. 31p pp.35-61.
 
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