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i DETERMINANTS OF CORPORATE SOCIAL RESPONSIBILITY FOR SUSTAINABLE DEVELOPMENT PHD DISSERTATION Submitted By Nasir Hussain NDU-LMS/PhD-13/F-011 Supervisor Dr. Saman Attiq Co-Supervisor Dr. Hassan Jalil Shah SI (M) Department of Leadership and Management Studies Faculty of Contemporary Studies National Defence University Islamabad Pakistan 2019
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Transcript of determinants of corporate social responsibility for sustainable ...
i
DETERMINANTS OF CORPORATE SOCIAL
RESPONSIBILITY FOR SUSTAINABLE
DEVELOPMENT
PHD DISSERTATION
Submitted By
Nasir Hussain
NDU-LMS/PhD-13/F-011
Supervisor
Dr. Saman Attiq
Co-Supervisor
Dr. Hassan Jalil Shah SI (M)
Department of Leadership and Management Studies
Faculty of Contemporary Studies
National Defence University
Islamabad Pakistan
2019
i
DETERMINANTS OF CORPORATE SOCIAL
RESPONSIBILITY FOR SUSTAINABLE
DEVELOPMENT
PHD DISSERTATION
Submitted By
Nasir Hussain
NDU-LMS/PhD-13/F-011
Supervisor
Dr. Saman Attiq
Co-Supervisor
Dr. Hassan Jalil Shah SI (M)
This Dissertation is submitted to National Defence University,
Islamabad in partial fulfillment for the degree of Doctor of
Philosophy in Leadership and Management Studies
Department of Leadership and Management Studies
Faculty of Contemporary Studies
National Defence University
Islamabad Pakistan
2019
ii
Dedication
I would like to dedicate this study to my beloved parents. Their unprecedented love & affection,
tenderness & generosity have made me able to do this. Their prayers have relentlessly been the
guiding ways for me in my entire life.
iii
Abstract
Corporate social responsibility (CSR) is a phenomenon that has received considerable
attention not only from academicians & from researchers but also from corporate sector since it
has multidimensional effects on their performance. It is imperative to note that companies may
use CSR as a tool to manage many types of stakeholders, including stakeholders outside of the
organization and outcomes that go beyond financial result. This notion will lead the companies
towards new era mostly stated as sustainability, where companies act responsibly towards social,
environmental and societal issues at large. The current study seeks to model and empirically test
the relationship amongst determinants and outcomes (i.e. psychological and performance) of
corporate social responsibility, specifically this study probe into relationship between ethical
leadership, corporate social responsibility, trust and performance variables (organizational
citizenship behavior, task performance behavior & counterproductive work behavior).
Furthermore, this study also examines the role of ethical climate between the relationships of
ethical leadership and CSR (ethical climate acts as a moderator).
The current study has used mix methods approach i.e. quantitative and qualitative
research design. The population of the study is scheduled and listed commercial banks in
Pakistan. The study has used both simple random probability sampling technique and purposive
sampling technique. Data was collected using mix methods from the sampled individuals for
quantitative analysis. 500 responses were received back from the employees of banks from major
cities (i.e. Karachi, Lahore, Islamabad, Rawalpindi and Peshawar) however, only 420 were
useable. Fifteen top executives were interviewed out of the thirty-five listed commercial banks
for qualitative analysis in respect to sustainable development.
Data was analyzed using Partial Least Square Structural Equation Modeling (PLS-SEM).
Furthermore, necessary tests were conducted using Statistical Package for Social Sciences
iv
(SPSS) version 23. Findings indicate that ethical leadership has positive impact on CSR and
significantly contributes towards defining the underlying processes of CSR. Results confirmed
that ethical climate acts as a moderator between the relationship of ethical leadership & CSR.
The CSR activities are project based and identified through an internal mechanism sometimes
based on need and philanthropic prospective.
The integrated conceptual framework of the current study will be helpful in decision
making as to determine the impact of CSR on performance variables. Similarly, the current study
will help corporate sector in devising strategies and policies of sustainability for competitive
advantages.
The researcher contends that this is one of the few studies in Pakistani context to
understand the underlying processes linking ethical leadership with CSR along with the
performance outcomes and ethical climate as moderator. This will certainly provide a
comprehensive overview of CSR and sustainability prospective in Pakistan.
Keywords: Ethical leadership; Ethical climate; corporate social responsibility; trust;
organizational citizenship behavior; task performance behavior; counter work
productive behavior
1
ACKNOWLEDGEMENTS
I would like to pay my sincere heartfelt gratitude‘s to my parents for their prayers and affection. I
would also pay my esteem to my wife Shaista Nasir whose contribution has been the potency and
impudence for me.
I would also like to thank my supervisor Dr. Saman Attiq for her brilliant and unforgettable
supervision and guidance. I could not complete this study without her support. She has been very
affectionate, unrivaled & kind to me. I also want to thank Dr. Hassan Jalil Shah SI (M) for his
consistent support and valuable guidance as co-supervisor.
Finally, I would like to thanks all my friends of NDU for their bounteousness and support. I
thank my office collogues as well because they cooperated with me all the way to success.
NASIR HUSSAIN
2
LIST OF ABBREVIATIONS& ACRONYMS
Corporate social responsibility CSR
Counter work productive behavior CWPB
Economic survey report ESR
Environment social and governance ESG
European union EU
Habib Bank Limited HBL
International Union for Conservation of Nature IUCN
Millennium Development Goals MDG‘s
National Bank of Pakistan NBP
National Forum for Environment and Health NFEH
Non-governmental organizations NGO‘s
Organization for Economic Co-operation and Development OECD
Organizational citizenship behavior OCB
Pakistan Stock Exchange PSE
Securities and exchange commission of Pakistan SECP
State Bank of Pakistan SBP
Statistical Package for the Social Sciences SPSS
Structural Equation Model SEM
Sustainable development SD
Sustainable Development Goals SDG‘s
Task performance behavior TPB
United Bank Limited UBL
United Nations UN
United Nations Conference on Environment and Development UNCED
United Nations Development Program UNDP
World Bank WB
World Business Council for Sustainable Development WBCSD
World Commission on Environmental Development WCED
World Wide Fund for Nature WWF
3
TABLE OF CONTENTS
Abstract ......................................................................................................................................... iii LIST OF TABLES ........................................................................................................................ 9 LIST OF FIGURES .................................................................................................................... 10 CHAPTER 1 ................................................................................................................................ 14 INTRODUCTION....................................................................................................................... 14
1. Introduction ......................................................................................................................................... 14
1.1 CSR in Developing Economies ....................................................................................................... 18
1.2 CSR Practice Reference to South Asian Context ........................................................................... 20
1.3 CSR in Pakistan’s Context .............................................................................................................. 21
1.4 CSR and Multi-National Companies in Pakistan ............................................................................ 24
1.5 Large Local Companies in Pakistan ............................................................................................... 24
1.6 Pakistan’s Economic & Social Developments................................................................................ 26
1.7 Background ....................................................................................................................................... 27
1.8 Problem Statement ............................................................................................................................ 32
1.9 Research Questions ........................................................................................................................... 33
1.10 Knowledge Gap Identification ........................................................................................................ 34
1.10.1 Knowledge Gap for Sustainability ....................................................................................... 34
1.10.2 Knowledge Gap for CSR ........................................................................................................... 34
1.10.2 Knowledge Gap for Ethical Leadership .................................................................................... 35
1.10.3 Knowledge Gap for Ethical Climate.......................................................................................... 36
1.10.4 Knowledge Gap for Trust ......................................................................................................... 38
1.10.5 Knowledge Gap for Performance Variables ............................................................................. 39
1.11 Research Objectives .................................................................................................................... 40
1.12 Significance of the Study ................................................................................................................ 41
1.12.1 Theoretical Significance ........................................................................................................... 41
1.12.2 Practical Significance ................................................................................................................ 41
1.14 Structure of the Complete Thesis .................................................................................................... 44
CHAPTER 2 ................................................................................................................................ 48
LITERATURE REVIEW .......................................................................................................... 48 2.1 Introduction ....................................................................................................................................... 48
2.2 Corporate Social Responsibility........................................................................................................ 48
2.2.1 Conceptual Definitions of CSR ................................................................................................... 51
2.2.2 Background ................................................................................................................................ 52
2.2.3 Categories of Corporate Social Responsibility .............................................................................. 58
4
2.2.3.1 Internal CSR ............................................................................................................................. 58
2.2.3.2 External CSR ............................................................................................................................ 61
2.2.4 Theoretical Perspectives of Corporate Social Responsibility ........................................................ 63
2.2.4.1 Stakeholder Theory ................................................................................................................. 63
2.2.4.2 Social Exchange Theory ........................................................................................................... 63
2.2.4.3 Social Identity Theory ............................................................................................................. 64
2.2.4.4 Social Contract Theory ............................................................................................................ 64
2.2.4.5 Legitimacy Theory ................................................................................................................... 65
2.2.4.6 Institutional Theory ................................................................................................................. 65
2.2.4.7 Cultural Theory ....................................................................................................................... 66
2.2.4.8 Management Theory............................................................................................................... 66
2.2.5 Leadership Theories ....................................................................................................................... 66
2.2.5.1 CSR and Transformational Leadership Theory ........................................................................ 66
2.2.5.2 CSR and Transactional Leadership Theory .............................................................................. 68
2.2.6 Determinants and outcomes of CSR .............................................................................................. 68
2.2.7 Relationship between CSR & Sustainability ................................................................................. 72
2.2.7.1 CSR & United Nations ............................................................................................................. 73
2.2.7.2 CSR & Corporate Governance ................................................................................................. 74
2.2.7.3 CSR & Role of Corporate Management / Board Structure ..................................................... 75
2.2.8 Outcomes of Corporate Social Responsibility ............................................................................... 76
2.3 Ethical Leadership ............................................................................................................................ 80
2.3.1 Conceptual Definitions of ethical leadership ................................................................................. 80
2.3.2 Background .................................................................................................................................... 81
2.3.3 Theories of Ethical Leadership ...................................................................................................... 83
2.3.3.1 Social Learning Theory ............................................................................................................ 83
2.3.3.2 Transformational Theory ........................................................................................................ 84
2.3.3.4 Spiritual and Authentic Leadership Theory............................................................................. 84
2.3.4 Models of Ethical Leadership ........................................................................................................ 85
2.3.5 Relationship of Ethical Leadership with Other Study Variables ................................................... 86
2.3.5.1 Ethical leadership and Corporate Social Responsibility .......................................................... 86
2.3.5.2 Ethical Leadership and Ethical Climate ................................................................................... 87
2.3.5.3 Ethical Leadership and Transformational Leadership ............................................................. 87
5
2.3.5.4 Ethical Leadership with reference to situation ....................................................................... 88
2.3.5.5 Ethical Leadership with reference to context ......................................................................... 88
2.4 Trust .................................................................................................................................................. 89
2.4.1 Conceptual Definition of Trust ...................................................................................................... 89
2.4.2 Theoretical base for Trust .............................................................................................................. 90
2.4.3 Dimensions of Trust ....................................................................................................................... 91
2.4.3.1 Affect & Cognition-Based Trust............................................................................................... 91
2.4.4 The Model of Trust ........................................................................................................................ 92
2.4.5 Determinants of Trust .................................................................................................................... 93
2.4.6 Relationship of Trust with study variables..................................................................................... 94
2.4.7 Relationship of trust with other variables ...................................................................................... 95
2.5 Performance Behavior ...................................................................................................................... 96
2.5.1 TPB ................................................................................................................................................ 97
2.5.2 Conceptual Definition of Task Performance Behavior ............................................................... 97
2.5.3 Task Performance Vs Contextual performance ......................................................................... 98
2.5.4 Task Performance and Theory of individual differences ........................................................... 98
2.6.1 Conceptual Definition of OCB .................................................................................................... 99
2.6.2 Background ................................................................................................................................ 99
2.6.3 Determinants of OCB ............................................................................................................... 100
2.7 Counterproductive Work Behavior ................................................................................................. 101
2.7.1 Conceptual Definition of CWP ................................................................................................. 101
2.7.2 Determinants of Counterproductive Behaviors ....................................................................... 102
2.8 Ethical Climate ................................................................................................................................ 104
2.8.1 Conceptual Definition of ethical climate ..................................................................................... 104
2.8.2 Types of Ethical Climate.............................................................................................................. 105
2.8.4 Theories of Ethical Climate ......................................................................................................... 105
2.8.4.1 Moral Development Theory .................................................................................................. 105
2.8.4.2 Ethical Climate Theory .......................................................................................................... 105
2.8.5 Determinants of Ethical Climate .................................................................................................. 106
2.8.6 Outcomes of Ethical Climate ....................................................................................................... 107
2.8.7 Relationship with other study variables ....................................................................................... 108
2.8.8 Ethical Climate as Moderator ...................................................................................................... 109
2.9 Sustainable Development ................................................................................................................ 110
6
2.9.1 Definition of Sustainable Development ................................................................................... 112
2.9.2 Background .............................................................................................................................. 112
2.9.3 Theories of Sustainable Development ......................................................................................... 118
2.9.3.1 Signaling theory .................................................................................................................... 118
2.9.3.2 Legitimacy theory .................................................................................................................. 118
2.9.3.3 Stakeholder theory ............................................................................................................... 118
2.9.4 The Evolution from Conventional to Sustainable Development ................................................. 119
2.9.5 Four Concepts of the Conventional Development Model ............................................................ 120
2.9.5.1 Sustainable Development & United Nations ........................................................................ 121
2.9.5.2 Pakistan and Sustainable Development................................................................................ 122
2.9.6 Sustainable Development & CSR Link ....................................................................................... 123
2.10 Hypotheses .................................................................................................................................... 128
Chapter 3 ................................................................................................................................... 131 Research Methodology ............................................................................................................. 131
3.1 Research Design Mix Method Approach ........................................................................................ 131
3.1.1 Research Design for Quantitative Part ......................................................................................... 132
3.1.2 Research Design for Qualitative Part ........................................................................................... 133
3.2 Population Framework .................................................................................................................... 133
3.3 Sample and Data Collection ............................................................................................................ 134
3.4 Measures ......................................................................................................................................... 139
3.4.1 Ethical Leadership .................................................................................................................... 140
3.4.2 Corporate Social Responsibility ............................................................................................... 140
3.4.3 Ethical Climate ......................................................................................................................... 140
3.4.4 Trust ......................................................................................................................................... 140
3.4.5 Counterwork Productive Behavior ........................................................................................... 141
3.4.6 Task Performance Behavior ..................................................................................................... 141
3.4.7 Organizational Citizenship Behavior ........................................................................................ 141
3.4.8 Sustainable Development ............................................................................................................. 141
3.5 Procedure ........................................................................................................................................ 142
3.5.1 Pilot Study ................................................................................................................................ 143
3.5.2 Data Analysis ............................................................................................................................ 143
3.5.3 Data Screening ......................................................................................................................... 144
3.5.4 Normality Analysis ................................................................................................................... 144
7
3.6 SEM ................................................................................................................................................ 144
3.6.1 Partial Least Square Structural Equation Modeling (PLS-SEM) ................................................ 146
Chapter 4 ................................................................................................................................... 152 Results & Analysis .................................................................................................................... 152
4. Introduction ....................................................................................................................................... 152
4.1 Scheme of Analyses ........................................................................................................................ 152
4.2 Response Pattern of Quantitative Part ............................................................................................ 153
4.2.1 Demographic Characteristics of Sample ...................................................................................... 154
4.3. Descriptive Statistics of Demographic Variables .......................................................................... 156
4.4. Descriptive Analysis of Study Variables ....................................................................................... 157
4.5. Partial least square-structural equation Modeling (PLS-SEM) ...................................................... 163
4.5.1. Reflective Measurement Model .................................................................................................. 163
4.5.1.1 OLs ......................................................................................................................................... 163
4.5.1.2 Reliability and Validity Analysis .............................................................................................. 170
4.5.1.2.1 Internal Consistency (Reliability) ....................................................................................... 170
4.5.1.2.1.1 Cronbach Alpha ............................................................................................................... 170
4.5.1.2.1.2 Composite Reliability (CR) ............................................................................................... 171
4.5.1.2.2 Convergent Validity ............................................................................................................ 172
4.5.1.2.3 Discriminant Validity .......................................................................................................... 173
4.5.2 Structural Model .......................................................................................................................... 175
4.5.2.1 Specification of Structural Model ......................................................................................... 175
4.5.2.3 Step – 1 Assessment of Collinearity ...................................................................................... 176
4.5.2.4 Step – 2 Path Coefficient of Structural Model ...................................................................... 177
4.6. Response Pattern for Qualitative Part ............................................................................................ 184
4.6.1 Sustainable Development ............................................................................................................. 184
4.6.2 Themes and framework for sustainable development ............................................................ 185
4.6.3 Key Results of Interviews ............................................................................................................ 188
Chapter 5 ................................................................................................................................... 196
Discussion, Implication & Conclusion .................................................................................... 196 5.1 Discussion ....................................................................................................................................... 196
5.1.2 Discussion on Quantitative Part ................................................................................................... 198
5.1.3 Discussion on Qualitative Part (Sustainable Development) ........................................................ 204
5.1.3.1 Theme wise discussion on sustainability .............................................................................. 205
5.2 Implications for Research and Practice ........................................................................................... 209
8
5.2.1 Theoretical Implications ........................................................................................................... 210
5.2.1.1 Better understanding of CSR/SD ........................................................................................... 210
5.2.2 Practical Implications ............................................................................................................... 211
5.2.3 Implications to Banking & other Sector ................................................................................... 212
5.2.4 Implications to the Policy Makers ............................................................................................ 214
5.2.5 Implications to the Society ....................................................................................................... 215
5.3 Limitations and Future Research .................................................................................................... 217
5.4 Conclusion ...................................................................................................................................... 219
References .................................................................................................................................. 223 Appendixes................................................................................................................................. 278
9
LIST OF TABLES
Table 1: Definitions of study variables ....................................................................................................... 43
Table 2: Organization of the Thesis ............................................................................................................ 45
Table 3: Evolution of CSR from 1950-2020 ................................................................................................. 54
Table 4: “Summary of Literature Search Results Including Journals Specializing in Corporate Social
Responsibility and Related Topics‖ ............................................................................................................ 57
Table 5: Internal CSR Themes ..................................................................................................................... 60
Table 6: External CSR Themes..................................................................................................................... 62
Table 7: Important studies (Quantitative) on micro-individual level ......................................................... 78
Table 8: The World’s Most Sustainable Companies 2017 ........................................................................ 117
Table 9: Summary of theories defined the constructs ............................................................................. 119
Table 10: Inter-correlation Matrix of Variables ........................................................................................ 125
Table 11: Commercial Banks listed with SBP ............................................................................................ 138
Table 12: Summary of instruments .......................................................................................................... 143
Table 13 : Characteristics of PLS-SEM ....................................................................................................... 145
Table 14: Scheme of Analyses ................................................................................................................. 153
Table 15: Descriptive Statistics ................................................................................................................. 155
Table 16: Descriptive Analysis of Demographic Variables ........................................................................ 156
Table 17: Descriptive analysis of all variables........................................................................................... 158
Table 18: OL of Ethical Leadership ............................................................................................................ 164
Table 19: OL of Corporate Social Responsibility ....................................................................................... 165
Table 20: OL of Ethical Climate ................................................................................................................. 166
Table 21: OL of Trust ................................................................................................................................. 167
Table 22: OL of Counterwork Productive Behavior .................................................................................. 168
Table 23: OL of Organizational Citizenship Behavior ................................................................................ 169
Table 24: OL of Task Performance Behavior ............................................................................................. 170
Table 25: Results of Cronbach Alpha ........................................................................................................ 171
Table 26: Results of Composite Reliability (CR) ........................................................................................ 172
Table 27: Results of Convergent Validity .................................................................................................. 172
Table 28: Discriminant Validity Fornell-Larcker Criterion ......................................................................... 173
Table 29: Summary of Reflective Measurement Model ........................................................................... 174
Table 30: Testing of Structural Model ...................................................................................................... 178
Table 31: Assessment of f2 Effect Size ...................................................................................................... 183
Table 32: Assessment of Q2 Predictive Relevance .................................................................................... 183
Table 33: Details of Interviews with Top Executives ................................................................................ 193
Table 34: Result Summary of all hypotheses ............................................................................................ 204
10
LIST OF FIGURES
Figure 1: CSR pyramid for developing countries ......................................................................................... 20
Figure 2: Conceptualization of Corporate Social Responsibility ................................................................. 50
Figure 3: Determinants and outcomes of CSR ............................................................................................ 71
Figure 4: Drivers of CSR in developing countries ........................................................................................ 72
Figure 5: Model of Trust by Mayer et al. (1995) ......................................................................................... 93
Figure 6: Conventional Development Model (Dernbach, 1998) ............................................................... 120
Figure 7: Sustainable development model UNCED (1992) ....................................................................... 121
Figure 8: UN Sustainable Development Goals 2015 ................................................................................. 121
Figure 9: Conceptual Framework .............................................................................................................. 127
Figure 10: Structural Model ...................................................................................................................... 179
Figure 11: Moderation Analysis showing interaction term EL x EC .......................................................... 181
11
LIST OF SUMMARIES
S. # Title Page no.
1 Summary # 1; Chap-1 ‗Introduction‘ 46
2 Summary # 1; Chap-2 ‗Literature review‘ 129
3 Summary # 1; Chap-3 ‗Research methodology‘ 150
4 Summary # 1; Chap-4 ‗Results and analysis‘ 195
5 Summary # 1; Chap-5 ‗Discussion, implications and future
recommendations‘
222
12
LIST OF APPENDICES
Appendix. No Title Page No.
Appendix A Outer Loadings 278
Appendix B Average Variance 280
Appendix C Collinearity statistics 282
Appendix D Path coefficient 283
Appendix E Adjusted R Square 284
Appendix F Questionnaire for Quantitative Study 288
Appendix G Information Sheet and Consent Form Qualitative
Study
293
Appendix H Semi structured Interview Questions 294
Appendix I Initial Interview with Organizational Contact 296
Appendix J Detailed Interviews Proceedings 297
Appendix K Coding Matrix 327
Appendix L Qualitative Research Sample Profile 328
Appendix M Measurement indicators for sustainability 329
Appendix N The Conceptual Framework for Sustainable
Development
333
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14
____________________________________________________________________________
CHAPTER 1
INTRODUCTION
_____________________________________________________________________________
1. Introduction
Corporate social responsibility is a widely studied construct because it has
multidimensional impact on the economic, environmental, legal & social changes in the
globalized world (Bowen, 1953; Lee, Kim, & Kim, 2018). The rapid business growth in today‘s
world faces both internal and external challenges. Internal challenges include employee‘s
retention, profitability and growth, whereas external challenges cover areas such as tough
competition, maintaining organizational reputation, prestige, environmental impacts and
customerization. These challenges have certainly compelled the organizations to think beyond
financial gains. However, to surmount these challenges, companies now focus on corporate
social responsibility, which may manage many types of stakeholders and outcomes, including;
stakeholders outside of the organization and outcomes that go beyond financial results (Aguinis
& Glavas, 2017). This notion will lead the companies towards a new era of doing business where
the corporate sector aligns its goals, keeping the society‘s interest in priority for growth,
sustainability and economic prosperity.
In today‘s fast growing economic, environmental and social changes, corporate world is
struggling with a new and dynamic role, which is to meet the needs of the present generation
without compromising the ability of the next generations to meet their own needs. This notion is
precisely known as sustainable development model, which is being used to address the massive
issues faced in environmental, social and economic fronts (Charles Jr, Schmidheiny, & Watts,
2017). Corporations often have a substantial impact in eradicating the inequalities in global
development by adopting sustainable development as a model with action-oriented approaches
(Carley & Christie, 2017). In achieving the goals and objectives of the sustainable development
model, it is very much dependent that organizations are taking responsibility for the ways their
actions or operations may impact human needs, culture, societies and the natural environment in
which they operate (Ayuso & Navarrete-Baez, 2018; Jansson, Nilsson, Modig, & Hed Vall,
15
2017). Corporations are also required to apply the basic principles of sustainable development in
its true letter and spirit to transform the business into sustainability. Sustainability often denotes
to activities of organizations, where the inclusion of environmental, economic and social
apprehensions in enterprise‘s operations may be considered in stakeholder‘s management
(Bernal-Conesa, Nieves-Nieto, & Briones‐Penalver, 2017).Sustainability has a set of defined
attributes or characteristics, known as corporate social responsibility (CSR), which may be
termed as the fundamental principles which must be respected by the corporations while doing
the business (Epstein & Buhovac, 2017).
Sustainability and corporate social responsibility are viewed as appropriate highlights of
the cutting edge business and society while tending to corporate social execution, corporate
morals, worldwide corporate citizenship and partner the board (Hall, 2008; Visser & Tolhurst,
2017). The idea of corporate social obligation incorporates the general conviction by the majority
that organizations have a duty to society, which is past the financial specialists and investors of
the firm (Kim & Thapa, 2018). Of course, that responsibility is not only to make money or
profits for the owners but extends to work for the betterment of community at large, government
and the natural environment. In a nutshell, the concept of corporate social responsibility certainly
guarantees a prominent role in addressing the modern challenges of sustainability by contributing
in stirring and heading society towards a sustainable future and economic prosperity of
corporations (Hall, 2008; Ioannou & Serafeim, 2017).
However, the economic prosperity of corporations is no longer acceptable in isolation
from the society and allied forces, which are being impacted by their actions (Kim & Thapa,
2018). Corporate world is required now to focus its attention on both increasing profitability and
work for sustainability through adopting corporate social responsibility. Today‘s organizations
are being forced by a host of factors like social, economic and environmental to reshape their
frameworks, rules, and business models (Gillis & Spring, 2001). The most socially responsible
organizations always try to encompass their efforts to revise their short and long-term goals and
strategies, to meet the global challenges. In the above context, the fundamental concepts of CSR,
whether internal or external, are yet to be explored to further delineate the construct as per
modern era which means beyond financial recompenses. Nevertheless, over the period, the
underlying notions of CSR have gained significant attention of not only corporate giants but also
16
academicians and practitioners (Loosemore & Lim, 2016; Rupp & Mallory, 2015). The corporate
sector has realized that CSR is in fact part of their core business activity and working for society
and planet is the duty of these organizations (Engro Corporation Limited, 2016). In fact, this
concept is being transformed into practice since the modern businesses can feel the pace that
CSR may not only positively enhance organizational credibility (Rasche, 2011) but also impact
open discernment, increment piece of the overall industry, improve partner relations and ensure
corporate notoriety (Ali, Frynas, & Mahmood, 2017; Moratis, 2015) which is certainly the goal
of every organization across the board. Nevertheless, we categorize the CSR activities into three
main facets i.e. micro, macro and strategic based on their outcomes.
Micro CSR is largely concerned with internal organizational activities of management
(Scherer & Bauman, 2007). These activities include the welfare of employees, which is beyond
the financial, strategic and legal bounds of organization (Cooper, 2017; Mehta, Arekar, & Jain,
2014). Micro CSR has its own importance since it deals primarily with employees and the
internal sanctity of the organizations. The study of Rasool (2017) termed micro corporate social
responsibility ―as a psychological endowment for working environment‖. On the other hand,
macro or external CSR is recognized as an excellent tool of credibility-enhancing strategy
(Moratis, 2015) since the external stakeholders may form opinion based on the available
information, which may consequently effect the market share and business growth.
The strategic CSR serves as a tool of strategy formulation for strategic concern, while the
results may help in business integration as a strategy (Loosemore & Lim, 2016). However, the
strategic dimensions of CSR (such as environmental, economic & legal etc.) need to carefully
comprehend because the socio economic context along with the cultural impediments may affect
the results otherwise. The study of Wang, Tong, Takeuchi, and George (2016) concluded that for
a company, strategic CSR is fretful about the long haul accomplishment of the business and its
key situating as to a scope of factors (i.e. environmental, economic & legal etc.). Similarly,
strategic CSR is concerned with customers, suppliers, employees, networks, culture, etc. These
builds may influence the long haul accomplishment of the business and the nature of the
business' vital 'fit' into its condition (Planer-Friedrich & Sahm, 2017). However, the strategic
concept of CSR is in fact influenced by many other contextual factors such as environmental and
legal challenges while the political and regional issues are accumulation to the subject matter.
17
Tilt (2016) contends that while understanding the strategic concept of CSR, researchers should
also study the contextual factors, which means that these factors will certainly differentiate the
outcomes (Ali et al., 2017). It is also important that along with the contextual factors, the
determinants of CSR need to be identified because of socio-political, cultural and environmental
influences. Similarly, the broader concept of CSR along with its determinants, antecedents or
facets might need to be revisited as per the needs of modern businesses and as per the conditions
of various regions, countries and contexts (Campbell, 2007; Carroll, 2015; Tilt, 2016).
The determinants of CSR whether institutional, organizational or individual level, have
gained attention since it‘s important to understand whether, CSR as a construct is being effected
by internal or external factors (Aguinis & Glavas, 2017). The institutional level of determinants
are certainly important factors effecting CSR policies of the companies such as government
regulations (Rizk, Dixon, & Woodhead, 2008), financial performance (Campbell, 2007),
mimetic/simulated forces (Nikolaeva & Bicho, 2011), stakeholder influence/pressure (Brammer
& Millington, 2008) and trade/industry related pressures (Muller & Kolk, 2010). While the
organizational level of antecedents such as board management and governance (Aguilera &
Jackson, 2003), individualistic, relational, collectivist, characteristics of organization and identity
(Brickson, 2007), competitiveness (Bansal & Roth, 2000) and international diversification are
considered important when it comes to institutionalize the concept.
Similarly, individual level factors such as leaders‘ character and moral development
(Snell, 2000), CSR discernments of employees (Rupp, Ganapathi, Aguilera, & Williams, 2006),
psychological needs of employees (Aguilera, Rupp, Williams, &Ganapathi, 2007; Rupp, 2011),
moral values of employee and character attributes and mentalities (Mudrack, 2007), workers
apprehension (Bansal, 2003; Bansal & Roth, 2000; Mudrack, 2007), employee psychological
needs (Trevino, Weaver,& Reynolds, 2006), dispositions and points of view (Mudrack, 2007),
superior‘s promises to CSR (Muller & Kolk, 2010) and CEO intellectual stimulation (Waldman,
Siegel,& Javidan, 2006) attract widespread propositions underlying the specific conditions
(Campbell, 2007; Peng et al., 2016) under which companies could behave socially more
responsible (Ortas, Gallegao,&Alvarez, 2015; Sierra, Zorio,& Garcia, 2015). Nevertheless,
leaders facilitate, encourage and promote the culture where social activities of organization
18
become norms. Similarly, the supervisory commitment to corporate social responsibility is yet
another part where social activities are promoted.
CSR activities are probably an indication of responsible culture promulgated in
companies by their top management (Petrenko, Aime, Ridge, & Hill, 2016). However,
CEO‘s/leaders in firms are motivated for corporate social responsibility activities & policies by
normative/psychological or moral/ethical motives (Bansal & Roth, 2000; Peng et al., 2016; Shin,
2012). This notion becomes itself important at times when leaders practice highly ethical
practices such as CSR, disclosure, compliance and promotion of dutifulness in their operational
affairs by transforming their leadership skills (Abd Rahim, 2016; Sanchez, Bolivar, &
Hernandez, 2017). This transformational process is mostly encouraged by substantial support of
top leaders in companies. Research has demonstrated that transformational pioneers adjust the
qualities, crucial vision of association with CSR arrangements to standardize (Marcus &
Anderson, 2006) and value creation (Gholami, 2011; Neubaum & Zahra, 2006; Obeidat, Tarhini,
& Aqqad, 2016).
Interestingly, research has also emphasized on the leadership qualities including authentic
leadership (Avolio et al., 2004) and types of leadership in relation to CSR policies (Aguilera et
al., 2007) since charismatic leaders at their own may play a vital role in developing these
activities for strategic gains (Carroll, 2015; Waldman et al., 2006). Nevertheless, studies have
just centered around transformational or appealing authority style while evaluating CSR
exercises (Verissimo & Lacerda, 2015). To fill this gap, other leadership styles may be studied
(Frynas & Yamahaki, 2016) such as principled headship (Kalshoven, Den Hartog, & De Hoogh,
2011; Shantz, Alfes, & Latham, 2016).
1.1 CSR in Developing Economies
According to Visser (2006) and the United Nations Development Program (UNDP)
(2006), ―developing economies can be defined as the less industrialized nations with a relatively
low per capita income‖. A study by Belal and Momin (2009) has noticed that the researchers
have focused on the CSR studies in such regions, which are considered as developing economies.
Probably, it is because the developing countries have not been on focus of researchers for many
years (Kratou & Goaied, 2016).
19
The developing economies are struggling to meet the challenges of globalization,
millennium development goals (MDG‘s) and sustainable development agenda. Notwithstanding
less awareness and having no strict regulations for corporate social responsibility, a substantial
work has been done in the developing countries over the last twenty years (Giuliani, 2016;
Jamali & Sidani, 2012). Corporations today work jointly with civil society and other
stakeholders in developing countries to achieve the goals of sustainability, though the parameters
are different for each individual to define the concept in large (Crane & Matten, 2016; Jamali,
Lund-Thomsen, & Khara, 2017). A continuous debate in this regard is going on over the last few
years (Adams, 2006; Ott, 2003) as sustainability addresses the societal, social and ethical
dimensions along with the economic and environmental concerns (Crane & Matten, 2016). In the
context of addressing the ethical and societal concepts of sustainability, CSR encompasses
strategic framework for achieving the goals of sustainability by framing the concerns in society
regarding the environmental and social valor (Baumgartner & Rauter, 2017; Dahlsrud, 2005;
Vitolla, Rubino, & Garzoni, 2017).
A study conducted by Kemp (2001) summed up as ―there are numerous obstacles to
achieving corporate responsibility, particularly in many developing countries where the
institutions, standards and appeals system, which give life to CSR in North America and Europe,
are relatively weak‖. Similarly, a study by Jamali and Mirshak (2007) has suggested and
highlighted that the developing world can modify and fit the CSR plans which have already been
developed in the Western countries. This way, the developing economies can be benefited in
devising and implementing the CSR plans which are integral part of the business enterprises.
However, the developing world should concentrate on the consequences, outcomes, potential
limits and effects of CSR in developing countries (Jamali et al., 2017; Jamali & Sidani, 2012).
20
Figure 1: CSR pyramid for developing countries
1.2 CSR Practice Reference to South Asian Context
South Asia is seen as an important part of world since large numbers of companies are
operating in the region. Corporate social responsibility practices in south Asia has gained
attention of academicians and practitioners. Visser (2006) has discussed four important grounds
for implementing and adopting sustainability in less developed nations. Firstly, it is a fact that
the developing economies are changing at a very rapid pace (IMF, 2006). Secondly, the
developing economies have significant environmental, social and economic problems included
but not limited to disasters, and instable political conditions (WRI, 2005; UNDP, 2006). These
disasters have certainly pushed the South Asian countries into severe poverty and other
challenges. Thirdly, as per the report of World Bank (2005) ―developing nations will be forced to
adopt corporate social responsibility practices in response to environmental and social factors
such as globalization, economic growth, investment and business activity. In developing
countries, corporate social responsibility programs and challenges are different from those in the
developed world‖. These differences can be summed up as high labor standards versus
employment creation, infrastructure development versus environment, and political governance
versus strategic philanthropy (Visser, 2006). As a result, developing countries very rightly
21
prioritize these issues under the label of corporate social responsibility since these are the critical
problems faced by many people living therein. Some of the major problems faced by many Asian
countries and Africa are severe poverty, tackling HIV/AIDS, infrastructure development and the
basic human needs (World Bank, 2017).
Corporate social responsibility is purely based on humanitarian and philanthropic
perspectives in developing economies (Visser, 2006). It is imperative to note that due to the fact
that this region is under severe pressures of natural and economic nature, companies spend
money in building the infrastructure development. However, other studies suggest that these
countries maintain corporate social responsibility activities beyond philanthropic perspectives
(Belal, 2001; Kemp, 2001; Welford 2005). The present study has focused on the literature related
to corporate social responsibility across the world, to further develop a corporate social
responsibility framework for Pakistan.
1.3 CSR in Pakistan’s Context
It is a fact that the interest in understanding the concept of corporate social responsibility
has increased over the period of time; however, it is still relatively a new phenomenon in
Pakistan (Khan, 2015; Qazi, Ahmed, Kashif, & Qureshi, 2015). In the developed economies, the
long-term sustainability and survival of business is largely correlated with CSR since it creates a
link between business and society. Contrarary to the developed world, in Pakistani corporate
sector, CSR is still a growing concept sometimes misunderstood by these companies (Sajjad &
Eweje, 2014; Waheed, 2005). As rightly identified by many researchers (i.e. Khan, 2015; Safi &
Ramay, 2013), that the concept of corporate social responsibility is often mixed with
philanthropic or charitable activities undertaken by corporate sector. It‘s a common dilemma in
developing economies that the concept of CSR is confused with humanitarian activities.
Probably the practitioners of corporate sector are not fully aware of their social responsibilities
and its subsequent impact on their business empires (Khan, 2015; Waheed, 2005). In Pakistan,
on one side the common public has no awareness about the role of corporate sector in society, on
the other end the corporate sector has yet to understand the true philosophy of CSR as being
practiced in the western world (Ehsan & Kaleem, 2012).
22
Pakistani corporate sector need to understand that corporate social responsibility is a
multidimensional concept such as realization of sense of responsibility for society and
environment. Similarly, the corporate social responsibility is altogether a different phenomenon
since it is way beyond the charitable work or community development initiatives (Mahapatra &
Visalaksh, 2011). Additionally, the corporate world in Pakistan now realizes that corporate social
responsibility is one of their main responsibilities since it is difficult to operate in isolation in
twenty first century. This realization is transformed into social, economic and environmental
activities undertaken by many companies in Pakistan. Similarly, it is also a fact that CSR is now
beyond financial gains and customer sensitivity is becoming priority for business organizations
(Waheed, 2005, p. 12).
The study of Khan (2015) concluded that corporate social responsibility is purely on
voluntary basis since there are no mandatory laws for corporate social responsibility. The
mandatory laws might have enforced companies to undertake the specific social activities as part
of their business responsibility. However, Securities and Exchange Commission of Pakistan
(SECP) introduced voluntary guidelines on CSR in 2013 (SECP, 2013). These guidelines are
promulgated with the intention to promote corporate social activities to further ensure
compliance, transparency and due diligence. Similarly, many of non-governmental
organizations, policy makers and advocacy groups in Pakistan are also working to promote CSR
practices. The study of Sajjad and Eweje (2014) concluded that some of the well-organized
organizations including Triple Bottom Line Pakistan, Sustainable Development Policy Institute,
CSR Association of Pakistan, Corporate Social Responsibility Center Pakistan, National Forum
for Environment and Health (NFEH), Responsible Business Initiative Pakistan and Corporate
Social Responsibility Pakistan are promoting corporate social responsibility culture and
awareness in the Pakistani private sector.
Naeem and Welford (2009) stated in their study that the concept of corporate social
responsibility is in growing stage in Pakistan. Many companies in the country are still working
for inter social responsibility such as employee empowerment, equality, compensations, child
labor and other issues. Similarly, Baughn, Bodie, and McIntosh (2007) examined the concept of
corporate social responsibility of fifteen Asian countries and found that the performance of
Pakistan is probably below average compare to other countries of the region. Similarly,
23
sustainability practices in Pakistan aren‘t reported properly since there is no defined standard or
mechanism as compared to the western world (Mahmood, Kouser, & Iqbal, 2017; Naeem &
Welford, 2009; Kemp & Vinke, 2012). These issues are probably because of multiple reasons
such as social, political and economic instability.
Baughn et al. (2007) pointed that country‘s profile (economic & social) is significantly
linked with CSR activities undertaken because these activities are largely dependent on
economic prosperity of the country. Pakistan has suffered a lot in the past few years because of
war on terror and other natural calamities such as floods and earthquakes in year 2005 and 2011
respectively. Resultantly, the investment and business growth hasn‘t been exemplary in the
country compare to modern world. Jeswani, Wehrmeyer and Mulugetta (2008) categorized and
termed performance of CSR as indifferent, beginner, emerging, and active in case of
environmental perspectives. Most of the Pakistani companies were considered in category of
―indifferent, beginner‖ which means that Pakistani companies have to work hard towards the
environmental CSR in upcoming days. Similarly, Pakistani companies are less aware of
environmental regulations and workers safety and security (Jeswani et al., 2008). In year 2012
over 300 workers died because of fire breakout in a factory in Karachi. The human lives could
have been saved if proper safety measures and environmental regulations would have been
followed (ur-Rehman, Walsh, & Masood, 2012). Nevertheless, these kinds of issues have fully
exposed the safety and security arrangements of these companies and also show failure of
government in implementation of existing rules (Awan, 2001; Human Rights Commission of
Pakistan, 2010; Pasha & Liesivuori, 2003).
Interestingly, health and safety regulations in Pakistan have attracted numerous attentions
from around the world due to series of incidents as discussed above. Some of most recent issues
highlighted are extra working hours, less safety measures, less awareness of regulations and non-
compliance of regulations (Kamal, Malik, Fatima, & Rashid, 2012; Pasha & Liesivuori, 2003).
One of the major issues faced by industry is of no doubt that the workers are less literate and
despite trainings their understating of health and safety regulations is not satisfactory (Kamal et
al., 2012). However, it is pertinent to note that the corporate sector is certainly realizing the
importance of making ethical rules since these might turned up as mandatory rules for these
sectors in upcoming years.
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1.4 CSR and Multi-National Companies in Pakistan
Multinational companies (MNC‘s) have a significant role in uplifting the economic
activities followed by social activism. In recent times, these MNC‘s have enhanced their
presence across the world including Pakistan in promoting the social, ethical and other various
activities. The MNC‘s in Pakistan are mostly conscious about their social responsibility since
their global presence, reputation, transparency and disclosure policies are in line with the global
reporting standards. Nevertheless, these companies are mostly dominated by their country of
origin (Ali, 2004), ethical practices as per policy and their intrinsic sustainability values. Some of
the notable MNC‘s such as Shell, Siemens, Procter and Gamble, Imperial Chemical Industries,
Nestle, Telenor, Standard Chartered Bank, Microsoft etc. are working to provide better health
infrastructure particularly in rural areas, quality education, and poverty reduction and
rehabilitation programs. These MNC‘s have served millions of people in rural areas in
collaboration with local partners, government and other policy makers.
Siemens spent over Euros 2.5 million during flood in 2010 and 2011, which helped
hundreds of displaced people (Siemens, 2012). Similarly, Unilever Pakistan, worked for quality
of education including developing early childhood centers in collaboration with local partners
(Sajjad & Eweje, 2014). Subsequently, Unilever disbursed over Rs. 29.2 million for health and
education in year 2012 followed by Rs. 128.7 million expended on welfare of community across
the board (UPL, 2012a). Unilever Pakistan, CSR activities are ranging from sustainable sourcing,
packaging, work diversity and health and safety of workers (UPL, 2010) and using the resources
with responsibility (UPL, 2012b).
1.5 Large Local Companies in Pakistan
According to state bank of Pakistan (SBP) Pakistani banking sector is among vibrant and
growing sectors since the banking sector continues its steady expansion as both investments and
advances are showing growth (SBP, 2018). As a component of CSR, Pakistani banks are
spending huge amount on education, health, environment, cultural activities and sports and other
community services (Iqbal, Ahmed, & Kanwal, 2013; Yunis, Durrani, & Khan, 2017). United
bank limited (UBL) ―symbolizes sustainability as the highest standards in terms of well-being
and social responsibility (UBL, 2016)‖. UBL has been one of the donors for The Forman
Christian College (FCC) Lahore where the School of Business and Social Sciences, was
25
inaugurated in 2014 worth Rs. 150 million (UBL, 2016). UBL has contributed millions of funds
for the establishment of four state of the art computer labs at Namal College in Mianwali. UBL
also regularly contribute towards the scholarship programs at Lahore University of Management
Sciences and Bahauddin Zakariya University Multan. Similarly, in health sector, UBL spent a
huge amount in year 2016 including donations to the Marie Adelaide Leprosy Center Karachi,
Shaukat Khanum Memorial Cancer Hospital Lahore and Shalamar Hospital Lahore (UBL,
2016).
Habib bank limited (HBL) is committed to responsible social, environment and
governance practices. HBL spent a huge amount for safe drinking water at Thar, Sindh in
collaboration with Amir Khan Trust in year 2016. During the year 2016, HBL donated 380
million to both HBL foundation and directly to different causes. HBL foundation spent 144
million in 14 different endowment funds of govt and NGO based hospitals across Pakistan. HBL
foundation spent over 104 million in 21 different schools across Pakistan. The foundation also
collaborated with the Marie Adelaide Leprosy Center Karachi to further help in Baluchistan and
also contributed towards purchase of 21 large ambulances for Edhi Foundation. HBL partnered
with Azad foundation in promoting sports activities in Pakistan (HBL, 2016).
The cement sector i.e. Bestway cement is spending 3.5 million US dollars on education
and scholarship programs. The group has spent 2.5 million US dollars for relief and other
activities (Bestway, 2015). The Bestway Foundation contributed £1 million towards disaster
relief in 2005 after the earthquake in Pakistan. Similarly, the group also contributed a substantial
amount for the rehabilitation of 2010 floods in Pakistan (Bestway, 2015). For example, there is
an increasingly trend concerning with social, environmental, and economic impacts of decisions
made by small and medium enterprises. However, it is yet to be explored further in Pakistan
(Sajjad and Eweje, 2014). Similarly, small and medium enterprises is facing numerous
challenges (such as obsolete production facilities, inadequate industrial infrastructure) which are
probably another obstacle in performing social responsibility (Khalique, Bontis, Abdul Nassir
bin Shaari, & Hassan Md. Isa, 2015). Contrary to small and medium enterprises, large companies
such as Fauji Fertilizer Limited, United Bank Limited, English Biscuit Manufacturing Limited,
Engro Corporation Limited, Pakistan State Oil and other companies are having more sense of
responsibility towards sustainability. Similarly banks like UBL, HBL, National Bank of Pakistan
26
(NBP) and other major banks are actively participating in CSR activities across country.
Research has established that banks use CSR as a tool to attract more customers (Abdillah &
Husin, 2016; Mocan, Rus, Draghici, & Ivascu, 2015). Similarly, Engro Corporation limited has
contributed towards social activities ranging from environmental, social, educational and
sustainable green environment in last few years. The company has a clear policy of CSR and
sustainability, which is itself a great success (Engro Corporation Limited, 2011).
1.6 Pakistan’s Economic & Social Developments
Pakistan is an emerging economy, having enormous natural resources, located in South
Asia, having a strategic importance with over 207 million populations (Economic Survey of
Pakistan, 2017; 6th
Population & Census Report, 2017). The country is blessed with numerous
resources such fertile agricultural land, feasible climatic conditions, water and other uncounted
resources. Though initially faced with the severe economic challenges, Pakistan has shown a
significant progress in maintaining macroeconomic stability in last couple of years by shrinking
the fiscal deficit from 8 percent to below 5 percent with gross domestic product growth (GDP) of
over 4.7 percent (World Bank, 2017). Pakistan realizes that controlling the fiscal deficit will lead
the country towards macroeconomic stability, yielding long-term growth and creating a better
environment for businesses. Pakistan has also embarked on an ambitious structural reforms
program. The reforms programs include the restructuring the government owned entities,
privatizing the loss making organizations and introduce information technology across
organizations for better service management. However, due to certain other factors such as
energy crisis, devaluation of rupee against dollars and trade deficit, macroeconomic stability is
still under question (Asian Development Bank, 2013; World Bank, 2017). Certainly, macro-
economic instability has its own repercussions on business and trade. Like in case of Pakistan
stock exchange, it has come down from 50,000 to 40,000 base points within few months of time.
Similarly, the devaluation of rupee is all time higher compare to any other currencies of the
world. Of course, businesses suffer a lot due to all these constraints and at the end of the day;
they strive for their survival instead of doing the social work. In the past country has suffered a
lot due to war on terror, floods in year 2010 and 2011 and power crises from 2007-2017 (ESP,
2012 & 2017; ul Hasan & Zaidi, 2012). Over 5.3 million jobs (direct or indirect including
agricultural) got affected due to the heavy floods in 2010 as per the International Labor
Organization (ILO) (2011). The combine loss for all these constraints (war on terror & floods)
27
caused the economy US $ 68 billion followed by loss of thousands of human live (ESP, 2011 &
2017).
Despite the hardships, poverty ratio in Pakistan has dropped off compare to previous
years; however, sustaining the current reduction rate would be a challenge in upcoming years
(Economic Survey of Pakistan, 2017; World Bank, 2013, 2017). Similarly, spending on human
development, education and health has been substantially increased in recent years in contour
with the ratifications of SDG‘s (Economic Survey of Pakistan, 2018). The United Nations
(2013a) alerted Pakistan to improve it‘s ranking on ―Human Development Index‖ (HDI). World
Economic Forum (2017) revealed that Pakistan is improving in its ranking on the ―Global
Competitive Index‖ (GCI) as compared to previous years.
1.7 Background
Bowen (1953) did the first complete dialog of business morals and corporate social duty.
This notion created a foundation by which business executives and academics could consider
CSR as part of strategic planning and managerial decision-making process (Bowen, 1953). CSR
whether individual, organizational or contextual in nature, has been discussed extensively over
the period. Historically, CSR can be divided into two broader categories; internal and external.
Internal CSR deals with internal organizational activities. Whereas, externally CSR is recognized
as a tool for increased market share and business growth. People, idea generation and social
change were interrelated in 1960s whereas; there were lack of innovative ideas in dealing the
upcoming issues of CSR in 1970s as reported by Friedman (1982). Friedman (1982) summarized
that corporate social responsibility is all about making more profits but in a responsible way
staying within the rules of business.
Freeman's (1984) stakeholder theory summed, ―Managers should tailor their policies to
satisfy stakeholders such as workers, customers, suppliers, and community organizations, in
addition to satisfying their shareholders‖. Stakeholder theory suggests that CSR can be used as a
device for new opportunities and value creation (Obeidat et al., 2016) or value maximization for
strategic gains and competitive advantage, corporate citizenship and sustainability (Parsons,
1997). Based on the discussed theory, some of the researchers have categorized stakeholders as
primary and secondary since business environment, capacity and size are important factor while
adopting and sustaining CSR activities. Employees are considered as the primary stakeholders
28
because CSR activities & policies increase their motivation (Bansal & Roth, 2000) and develop
―higher order or morals‖. After 2000s, the importance of CSR converted into the strategic level
having multiple effects on the organization and was rightly owned by businesses (Zakirova,
2001).
Corporate social responsibility from year 2011 and onwards has witnessed that instead of
a one of assistance, companies have worked towards institutionalization of corporate
philanthropy (Corbett, 2003). The firms have realized that transforming and synergizing the
corporate socialization, with its core strategy is certainly in the interest of firms (Cheng, Ioannou,
& Serafeim, 2004). The study of Donker, Poff, and Zahir, 2008, contended the performance and
corporate social responsibility index are interrelated. Furthermore, both financial (i.e.
profitability etc.) and non-financial outcomes (i.e. reputation, image, trust, motivation etc.) of
CSR are now seen as business strategies (Aguinis & Glavas, 2012).
Lee, Park, and Lee (2013) contended that social activities are basically a fit between
employees‘ perception and organizational culture followed by organizational capabilities to
undertake such activities. The secondary stakeholders don‘t directly affect the CSR policies.
However, these policies may affect the perception towards organization which subsequently may
largely affect the organizational reputation and image (Lee at al., 2013). Research has established
that the CSR activities may also improve stakeholder relations (Ward & Smith, 2015) and protect
corporate reputation (Moratis, 2015) which is important elements of secondary stakeholder‘s
management. Initially CSR was seen as a normal process but the current dynamics of business
consider it as a strategic concept because of its multiple effects ranging from socio-political,
cultural, economic and environmental (Tilt, 2016). The normative (cultural and sociological
context) effects of CSR has developed and promoted effects such as employee motivation and
sense of dutifulness, which consequently have assumed an imperative job in further
understanding and expounding the idea.
The modern businesses intelligence sees corporate social responsibility as a tool of
credibility-enhancing (Moratis, 2015) for some organizations while the others use it as a strategic
concern for business integration (Loosemore & Lim, 2016). Firstly, the globalization,
international economy and internationalism is compelling the organizations to encourage the
corporate social responsibility practices (Gunther, 2005; Lee et al., 2018) since it is becoming a
29
forced option for these organizations for maintaining competitive advantages. Secondly, it has
become a criterion for organizations to understand the outcomes along with the antecedents of
such practices to attain both financial and non-financial advantages (Carroll, 2015; Gunther,
2005).
Ethical leadership is based on moral reasoning (Langlois, Lapointe, Valois, & de Leeuw,
2014) morals (Hansen, Dunford, Alge, & Jackson, 2016) and beliefs; (Brown, Triveno, &
Harrison, 2005; Freeman, 2016; Liu, 2017). Ethical leadership is mostly linked with the social
and moral practices by leaders while performing their duties (Langlois et al., 2014). Ethical
leader‘s efficacy along with morality and trustworthiness is significantly correlated with
corporate social activities (Langlois et al., 2014) and trust in the leader (Brown & Triveno,
2006). However, the relationship between leadership ethicality, moral values and corporate
social responsibility are affected by other constructs such as public perception (Lev, Petrovits, &
Radhakrishnan, 2010), institutional conditions (Campbell, 2007), firm visibility to stakeholders
(Chiu & Sharfman, 2011), organizational culture (Bansal & Roth, 2000) and ethical climate
(Mayer, Kuenzi, & Greenbaum, 2009). Ethical climate is mostly referred as a ‗‗higher-order
social structure‖ (Ostroff, Kinick & Muhammad, 2013) based on both individual and firm level.
Studies have delineated that ethical climate perceptions or shared ethical climate isn‘t a
myth (Chiu & Sharfman, 2011; Ostroff et al., 2013) but represents the shared environment where
employees work (Choi, Ullah, & Kwak, 2015; Mayer et al., 2009). Although, the outcomes of
ethical climate are well connected in both individual and organizational level (Mayer et al.,
2009) however, the subduing role of ethical climate needs further study (Hansen et al., 2016;
Ostroff et al., 2013). The substantive process of ethical leadership along with the ethical climate
leads to corporate social responsibility practices which has outcomes like job satisfaction and job
involvement (Wang & Hsieh, 2012), creating sense of ownership and organizational
commitment (Erben & Guneser, 2008). However, trust is one of the outcomes which has been
widely studied and has got numerous attention in the recent years (DeConinck, 2011; Mulki,
Jaramillo, & Locander, 2006; Nedkovski, Guerci, Battisti, & Siletti, 2017). Trust whether
implicit or explicit can be attaining through actions of leaders (Mayer et al., 2009).
Trustworthiness and infidelity can either be inferred or in-directed from corporate social
responsibility activity and performance (DeConinck, 2011; Rupp et al., 2006) since
30
pragmatically trust been interrelated with trust in leaders (Wang & Hsieh, 2012; Hansen,
Dunford, Boss, Boss, & Angermeier, 2011). These constructs need to be revisited as per the
needs of modern businesses and as per the conditions of various regions, countries and contexts
(Carroll, 2015; Campbell, 2007; Ostroff et al., 2013).
Another important disposition of CSR is its outcomes such as preference of customers
(Arora & Henderson, 2007), moral capital (Godfrey, 2005) and financial performance (Lev et al.,
2010). The competitiveness at both individual and institutional level has attained numerous
attentions over the period of time (Greening & Turban, 2000; Lev et al., 2010). Generally, CSR
has been associated to performance outcomes such as corporate social performance (Rupp et al.,
2006), social receptiveness, corporate social accessibility, corporate citizenship, corporate
administration, corporate responsibility, supportability, and corporate social business enterprise
(Lev et al., 2010).
Some of the recent studies have focused more on work related behaviors and attitudes of
CSR such as organizational citizenship behavior (OCB), (Farooq, Payaud, Merunka, & Valette,
2014; Lee & Kim, 2015), task performance behavior (TPB) and its impact on counterproductive
work behavior (CWB) which are non-financial outcomes of CSR (Aguinis & Glavas, 2012). The
performance outcomes of CSR (consumer choice of company/product, moral capital financial
performance etc.) at both individual and institutional level, have been widely studied (Lev et al.,
2010). However, recent readings have more concentrated on work related behaviors of CSR such
as OCB, (Farooq et al., 2014), TPB and CWB. To better understand the outcomes of
performance behavior, we should study the theories particularly the social exchange theory.
Social exchange theory says that leaders create a socially responsible environment and create a
positive behavior as reciprocity (OCB, TPB) among employees towards the firm (Aguinis &
Glavas, 2012).
In other words, OCB and CSR are positively related to each other (Farooq et al., 2014;
Seivwright & Unsworth, 2016). The above proposition is also supported by theories like social
exchange. The social exchange theory state that the CSR-OCB link is correlated on interchange
norms (Low, 2016; Zink, 2011) which means that leaders may create the environment where
employees tend to believe in them based on their actions (Podsakoff et al., 2009). It is pertinent
to note that corporate social responsibility activities not only develop organizational citizenship
31
behavior but also impact the organizational outcome such as task performance of employees.
Similarly, showing and developing positive organizational citizenship behavior is directly related
to TPB especially when employees show positive behavior towards organization (Podsakoff et
al., 2009). This process of win-win positivity is multidimensional attributing both performance
and behavioral outcomes (Hui-Hua & Schutte, 2015). Furthermore, it is also contended that the
CSR policies and activities reduce the negative tendencies among employees in return (Zink,
2011). CWB has been categorized on two dimensions such as individual differences and
situational factors (Dalal, 2005; Fox, Spector, Goh, & Bruursema, 2007). Individual differences
as defined are ―stable personality traits and other individual characteristics such as age and
gender‖ (Fox et al., 2007). These factors are purely judged, perceived and interpreted by
individuals. Whereas, the situational factors are ―aspects of the social context that are perceived
by people and are largely influenced by other members of the organization‖ (Hershcovis et al.,
2007).
Prior analyses have established that organizational justice (Colquitt, 2001), ethical
leadership (Brown et al., 2005), ethical climate (Ashforth, Harrison, & Corley, 2008)
organizational citizenship behavior (Podsakoff et al., 2009) and corporate social responsibility
(Appelbaum & Roy, 2007) can overcome reduce the negative deviances among the employees
(Dalal, 2005; Hershcovis et al., 2007). It is obvious that non-existence of social activism in
companies encourage employees to peruse negative and deviant behaviors as lateness and
counterproductive work behavior (Appelbaum & Roy, 2007; Lilienfeld, Watts, & Smith, 2015).
In the present study, we will analyze performance behaviors as outcomes of corporate social
responsibility, in accordance with the proposals of past research (Appelbaum & Roy 2007;
Bennett & Robinson, 2000; Farooq et al., 2014; Lilienfeld et al., 2015; Ong, Mayer, Tost, &
Wellman, 2018; Hui-Hua & Schutte, 2015).
32
1.8 Problem Statement
Sustainable development has been studied mostly as a feature of modern business in
understanding corporate performance, organizational behavior, corporate ethics and managing
stakeholders as a whole (Hall, 2008). Interestingly, the corporate ethics, now referred as
corporate social responsibility has attained numerous attention from all stakeholders (Visser &
Tolhurst, 2017). Therefore, corporate social responsibility is one of the components of
sustainability in uplifting the society towards sustainable future and economic prosperity
(Ioannou & Serafeim, 2017). Similarly, the modern business world focuses that sustainability is
in fact the responsibility of business, which is beyond financial gains (Kim & Thapa, 2018;
Visser & Tolhurst, 2017). It is therefore important that the role of CSR should be studied in
understanding the qualitative aspect of sustainable development in terms of its depth, theories
and concepts. Also, the literature lacks as what is the role of CSR in formation of sustainable
development?
In previous studies, researchers have mostly focused on CSR from a control theory, goal
theory, stakeholder theory, stewardship theory, resource based theory or institutional theory
perspective (Bondy, Moon, & Matten, 2012; Lindgreen & Swaen, 2010). These theories address
multiple stakeholders needs, and probably explain an explicitly normative and ethical perspective
(Lindgreen & Swaen, 2010), stakeholder category and competitive advantage. The current
research will focus on the ultimate strategic and the primary stakeholder, the employee, by
applying the leadership theory since leadership shows charisma and plays a vital role in devising
ethical policies. Recently, the need of ethical leadership has grown in business management due
to multiple reasons such unethical practices, conflict of interest and other scandals (Kalshoven et
al., 2011). Since most of the studies have checked the effects of ethical leadership in devising
ethical policies (such as CSR) through qualitative studies. However, the need for quantitative
research is justified as such study will actualize the ethical conduct of ethical leadership.
Corporate social responsibility whether individual, organizational or institutional has
been seen through macro level analysis in qualitative terms. The micro level (such as effects on
employee‘s attitude and behavior) still lacks quantitative explanations and requires further
comprehensive probing (Farooq et al., 2014). The attitude of employee‘s (such as trust) can be
one of the important outcomes of CSR which requires quantitative explanations. In other words,
33
the focus of research has moved from an external to an internal performance and management of
the firm, for strategic and operative gains on CSR. This is one of important reasons why CSR has
become the topic of interest for both practitioners and academics. It is need of time that CSR
should be studied in broader management philosophy (Carroll & Shabana, 2010; KPMG, 2013).
Interestingly, most of the studies have deliberated the financial outcomes of CSR, whereas the
non-financial outcomes (such as performance behaviors) are also important (Carroll & Shabana,
2010). The current shift to the organizational level certainly suggests that studies should address
more non-financial performance-oriented outcomes of CSR (such as OCB, CWP & TPB). It is
worth mentioning that the non-financial outcomes of CSR (such as OCB, CWP & TPB) should
turn into an indispensable piece of business tasks for competitive advantages.
Much research has been devoted to determining causal antecedents of CSR such as
perceived external prestige but few studies have dealt with such variables as ethical climate.
Furthermore, existing studies have been conducted primarily in developed settings and few have
considered the construct in relation to CSR. In developing contexts, exploring the effects of
ethical climate as a moderator of CSR needs further research to know the outcomes and
significance (Hansen et al., 2016). It‘s important that the above mentioned constructs need to be
investigated together in relation to ethical leadership & ethical climate by examining their effect
and contribution towards CSR. Furthermore, it is also important that the collective effect of the
above mentioned variables on trust and subsequent impact on performance outcomes (such as
OCB, CWP & TPB) should be studied as per the recommendations of researchers (Choi et al.,
2015; Mozumder, 2018). The current study will certain contribute towards the knowledge gap
including better understanding of construct and open new ways for stakeholders (such as
academicians, policy makers, psychologists, behaviorists).
1.9 Research Questions
Following are the main research questions in the current study.
1. Is the role of ethical leadership having significant impact on corporate social
responsibility?
2. Is there any impact of corporate social responsibility on employee‘s trust?
3. Is there any impact of employee‘s trust on task performance behavior?
4. Is there any impact of employee‘s trust on organizational citizenship behavior?
34
5. Is there any impact of employee‘s trust on counterproductive work behavior?
6. Does the ethical climate act as moderator between the relationship of ethical
leadership and corporate social responsibility?
7. Is corporate social responsibility a part of sustainable development and (or what is role of
CSR from the perspective of sustainable development)?
1.10 Knowledge Gap Identification
In the light of previous studies and recommendations, research gap is identified for the
variables used in the study as corporate social responsibility of micro perspective in relation to
employee‘s behavior. The gap for the study variables is discussed in detail.
1.10.1 Knowledge Gap for Sustainability
Sustainability as a concept has multiple effects on the overall performance of
organization. The understanding, interpretations and considerations of sustainability in terms of
corporate socialization has emphasized in multidimensional ways: to manage the firm‘s
reputation which is part of external management, patronage to ‗brand‘ the establishment. This
implies CSR is to be sure conveyed by a social/moral/supportability measurement and by a
business measurement, the last alluding to organizations' prime duty to create benefits (Hediger,
2010). Likewise, Lynes and Andrachuk (2008) also stress the significance of sober mindedness
in clarifying the reason for CSR, as ―corporations are made up of individuals whose values, goals
and ideals often clash with the rigor and inflexibility set in laws and institutional structures that
guide the operation of corporations. It is within this context that the issue of corporate social and
environmental responsibility sits, torn between social consciousness and shareholder profits.
Increasingly, however, corporations are realizing for varying reasons that being environmentally
and socially conscious makes good business sense”.
1.10.2 Knowledge Gap for CSR
CSR has emerged as the topic of interest since its inception as it is having
multidimensional impact on society at large (Bowen, 1953; Hall, 2008; Lee et al., 2018).
However, CSR has been mostly seen in macro level i.e. external level having impact on
environment and economical changes in society (Bernal-Conesa et al., 2017). Employee despite
being the important part at the micro level of corporate social responsibility is neglected part
mostly. Studies have concluded that any positive action (such as CSR) of management has a
35
major impact on employee‘s general behavior (Aguinis & Glavas, 2017). Research has also
contended that employees who are treated positively, they have reciprocated the same towards
organization (Khan et al., 2014; Rupp & Mallory, 2015).
Studies have recommended that there is need of exploring the role of internal/micro
corporate social responsibility with reference to outcome behaviors of employee‘s in developing
countries (Abd-Elmotaleb, Saha, & Hamouda, 2015; Mehta et al., 2014). Managers use internal
corporate social responsibility practices as a tool to increase the behavior of employees.
Behaviors such as organizational citizenship behavior are important when it comes to obtaining
better organizational results. There is an increasing trend in studying micro corporate social
responsibility (i.e. Rup et al., 2006). This increasing trend suggests that employee‘s behavior is
an important area to be further explored in relation to corporate social responsibility (Aguilera et
al., 2007; Aguinis, 2011; Peloza, 2009; Santoso & Suratin, 2016). Similarly, the studies have
also suggested that corporate social responsibility is becoming a topic of wider discussion in
parallel to psychology (Glavas, 2016). Organizations are working for better practices such as
disclosure, transparency, compensation management etc. as part of corporate social
responsibility (Amann & stachowicz-Stanusch, 2013; Glavas, 2016; Rup, 2011). Based on
recommendations of many studies (i.e. Aguilera et al., 2007; Aguinis, 2011; Glavas, 2016) the
current study is aimed to explore the impact of corporate social responsibility on micro level that
is the performance of employee‘s.
1.10.2 Knowledge Gap for Ethical Leadership
The concept of ethical leadership is centuries old. However, the importance of leadership
studies has always been the topic of interest for many researchers (e.g. Freeman, 2016; Liu,
2017; Shapiro & Stefkovich, 2016). The early orientations on ethical leadership were based on
administrative level (e.g. Beck, 1994), providing an outline to study management practices based
on ethicality. These management practices were however, based on values of organization earned
through years of demonstration (Begley & Johansson, 2003; Enomoto & Kramer, 2007).
Similarly, the study of Cranston et al. (2006) and Maxcy (2002) summarized that ethical
practices in organization are subject to ethicality and moral development of its leadership on top.
More recently, the ethical leadership has been linked to the demonstration of normative
characteristics and conduct (Liu et al., 2013; Mayer, Aquino, Greenbaum, & Kuenzi, 2012;
36
Schaubroeck et al., 2012; Schwartz, 2017; Shapiro & Stefkovich, 2016). The importance of
ethical leadership attracted widespread attention due to the ill practices in corporate sector
(Colvin, 2003; Dinh et al., 2014; Kalshoven, 2010; Kalshoven et al., 2011; Liu, 2017).
Some of the recent studies (Newman, Allen, & Miao, 2015; Thaler & Helmig, 2016;
Yang, 2014) tested the predominance and ethical and moral practices, it‘s outcomes on the
attitudes, behaviors and cognitions by concluding that ethical leaders positively affect the
performance of employees. Based on the mentioned studies, we propose that the outcome of
ethical leadership such as corporate social responsibility positively increase the performance of
employees.
1.10.3 Knowledge Gap for Ethical Climate
An ethical work climate encompasses the organizational climate that affects the leader‘s
behavior and organizational performance (Choi et al., 2015). Employee‘s ethical climate
perception is in fact the foundation for representation of a shared ethical climate in organization
having multiple effects (Ostroff et al., 2013). Ethical climate perceptions and discernments are
mostly concerned with individual and organizational level outcomes (Hansen et al., 2016; Mayer
et al., 2009). Similarly, antecedents of ethical climate such as ethical leadership are important to
study to check its positive outcomes on both individual and organizational level (Choi et al.,
2015). Based on the discussion, the current study will check the moderating impact of ethical
climate on the study variables.
Choi et al. (2015) originated a significant positive impact of ethical climate as a
moderator between the relationship of ethical leadership and corporate social responsibility in
Korean financial and banking service firms. The study recommended confirming the results in
other contexts. Cullen and Simha (2011) directed for future search as, ―more research spanning
multiple levels of analysis needs to be conducted to better understand contextual determinants of
ethical behavior. An interesting area in that regard stems from the informal economy.‖ Similarly,
Godfrey (2011) concluded, ―perhaps ethical climates could be studied in the context of informal-
economy enterprises. This would be particularly interesting because informal economies are
prevalent in developing and undeveloped nations, and studying ethical climates in the context of
informal economies is bound to be important and useful‖. The current study will check and
reconfirm the results in line with the recommendations of previous research.
37
Ethical climate line up well with organization needs, so far support growth of governance
competencies, it is devoted to large ethical systems, clear competition when at the same time
conventions stakeholders and customer‘s commitments. Erakovich, Bruce, and Wyman (2002)
states that, ―Ethical climates are influential through any resulting creative work in the
organization's culture made through the chosen leadership.‖ Perhaps, ―the consequential changes
that chosen leaders have on organization culture may be predicted to have cascading impacts on
followers‘ ethical behavior of their rights. These chosen officials perform sets the quality for the
ethical climate in the organization for its followers. A significant part in innovative an ethical
atmosphere in organizations is leadership (Gortner, 1991; Cooper, 1998). The leadership
supervision structure of the organization builds up the organization ethical climate for followers‘
criteria to act and think, especially in era of disaster (Gortner 1991, 1995). Leadership study has
emphasized on the separation of two scopes of leadership performance: thoughtfulness or helpful
and initiating or system. Work environment of common trust, respect for followers‘ ideas and
thoughts of follower‘s emotions describe leaders who achieve high on the thoughtful scopes.
This study argues that helpful leaders will build ethical climates, which are more
sophisticated. Previous study has exposed confirmation of relationships between the expectations
of ethical climate kind and individual standard task outcomes, so that job satisfaction (Martin &
Cullen, 2006; Armstrong, Kusuma, & Sweeney, 1999; Joseph & Deshpande, 1997) and
organizational promises (Cullen, Parbooteeah, & Victor, 2003). In their experimental study,
Cullen et al. (2003) established that expectations of a compassionate climate were absolutely
linked to promises and in resolve expectations of selfish climate were negatively linked to
promises. Research conducted by Okpara (2002) and Koh and Boo (2001) has displayed that
followers wish evenness between their own moral worth system and the moral climate of their
organizations. Discrepancies between individual‘s inner ethical worth, their expectations of
leadership‘s worth and the ethical climate in the organization may consequences in ethical
clashes if irregularity prevails (Ferrell, Fraedrich, & Ferrell, 2002).
Trevino and Brown (2004) have suggested that moral leaders obtain ethical performance
from followers by the followers‘ desire to respond the leader‘s helpful behavior. Research by
Brown et al. (2005) has also established that expectations of ethical leadership were linked with
job dedication, satisfaction, and willingness through followers to account problems to
38
management. The relationship between ethical reasoning, ethical leadership and ethical climate
has been the issue of research through Sch Schminke, Ambrose, and Neubaum (2005). This
study established that leader with largely ethical reasoning was further probably to impact the
ethical climate in his/her teams, particularly in new born organizations (Trevino et al., 2006).
1.10.4 Knowledge Gap for Trust
Trust develops over the period of time when the exchange partners (employees and
management) interact with each (Elfenbein & Zenger, 2013; Li, Eden, Hitt, & Ireland, 2008;
Lioukas & Reuer, 2015). Trust builds better relationship between employees and organizations.
However, it is important to understand the predictor and outcome of trust particularly on
employee‘s performance. The study of Mozumder (2018) linked correlation of ethical leadership
and trust in leaders. The study further concluded that employee‘s well-being and performance
behavior are the outcomes of correlation between ethical leadership trust. Additionally, trust in
leaders increases the employees‘ positive attitudes, behaviors and cognitions. Several studies
have explored the trust as mediator between moral administration and constructive result
practices of workers (Beeri, Dayan, Vigoda-Gadot, & Werner, 2013; Schaubroeck et al., 2012;
Yang, 2014).
Similarly, studies conducted in organizational settings (i.e. Arye, Budhwar, & Chen,
2002; Li & Tan, 2013; Park, 2012) have shown positive relationships between trust and
individual/organizational outcomes. Previous studies (such as Li & Tan, 2013; Park, 2012; Zhu
& Akhtar, 2014) have noted some of the notable outcomes of leadership and trust nexus,
discussing the effects across organizations. Recent studies such as Downe, Cowell, and Morgan
(2016), Kim (2015), Miao, Newman, Schwarz, and Xu (2014), Yang (2014), Park (2012) and
Schaubroeck et al. (2012), summarized the interrelations and found positive significant interplay.
Sing and Malhotra (2015) has explored the relations with employee silence with mediation of
trust. However, there is need to explore that trust may be a mediator between CSR and other
performance variables (Burke, Sims, Lazzara, & Salas, 2007). The current study, in line with
previous research therefore proposes that trust in leaders develops when leaders show explicit
actions such as corporate social responsibility (Miao et al., 2014; Yang, 2014; Yang &
Mossholder, 2010). In response to this need, we propose corporate social responsibility as
outcome of ethical leadership and trust as outcome of corporate social responsibility.
39
1.10.5 Knowledge Gap for Performance Variables
Studies have delineated that corporate social responsibility positively affect the
performance of employees (Seivwright & Unsworth, 2016; Ong et al., 2018). Organizational
citizenship behavior is contended beyond in role behavior of an individual working in
organization. Thus it is purely the discretion of the individual not being performed for any
reward or financial benefits (Organ, 1988; Kim & Moon, 2005; Ong et al., 2018). However, it is
yet to be further explored that CRS positively affects the behavior of people working in
organization (Seivwright & Unsworth, 2016). Similarly, few studies have also suggested that
getting desired behavior from employees requires the organizations to put some extra efforts
probably ahead of social obligation (i.e. Bozkurt & Bal, 2016). Studies also revealed that the
corporate social responsibility has been mostly observed through macro level analysis
(Chepkwony, Kemboi, & Muange, 2015; Khan et al., 2014; Lee & Kim, 2015; Santoso &
Suratin, 2016). The micro perspective (i.e. employee and internal) is yet to be explored in
relation to performance variables (Farooq et al., 2014; Lee & Kim, 2015; Low, 2016; Ong et al.,
2018).
In the context of addressing the ethical and societal concepts of sustainability, CSR
encompasses strategic framework for achieving the goals of sustainability by framing the
concerns in society regarding the environmental and social valor (Dahlsrud, 2005). Yet the study
of CSR along with its antecedents in nexus to sustainability is much needed to further delineate
the construct. Therefore, the current research is based on the theoretical support such as social
exchange theory; that CSR-OCB link is correlated on interchange norms (Peterson, 2004; Zink,
2011). Secondly, we are of the view that non-existence of social activism may tend to peruse
negative and freak practices by representatives, for example, delay and CWB (Appelbaum &
Roy, 2007; Lilienfeld et al., 2015). Thirdly, the current framework is of distinct significance for
addition in the literature of outward, upward and inward perceptions of ethical climate in a single
study. Fourthly, in the current study, we will analyze OCB, TPB and CWB in relation to CSR,
in accordance with the proposals of past research (Appelbaum & Roy 2007; Bennett &
Robinson, 2000; Lilienfeld et al., 2015; Hui-Hua & Schutte, 2015). Finally, this study will also
unearth the underlying concepts of CSR along with the multiple effects of ethical leadership and
trust.
40
Researchers (such as Lai & Lee, 2007) have linked organizational culture directly with
organizational performance. Ethical climate is mostly referred as a ‗‗higher-order social
structure‖ (Ostroff, Kinick, & Muhammad, 2013) based on both individual and firm level (Chiu
& Sharfman, 2011; Ostroff et al., 2013) and it also represents the shared environment where
employees work (Mayer et al., 2009). Ethical climate is affected through leadership role
(Schminke et al., 2005). Various researchers found ethical leadership and entrepreneurial
orientations (Neubaum et al., 2004; Ostroff et al., 2013; Schminke et al., 2005) as
predictor/determinants of ethical climate, whereas very few studies concentrated on the positive
job of moral atmosphere in the creation of EL and CSR relationship. The constructs such as
organizational culture and ethical climate moderates EL and CSR (Bansal & Roth, 2000; Mayer
et al., 2009). Similarly, scholars found various outcome variables and these outcomes of ethical
climate are well connected in both individual and organizational level (Mayer et al., 2009) such
as propensity to leave. Nevertheless, the moderating role of ethical climate needs further study
(Ostroff et al., 2013).
1.11 Research Objectives
1. To examine the positive impact of ethical leadership on corporate social responsibility.
2. To examine the positive impact of corporate social responsibility on trust.
3. To analyze the positive role of trust on task performance behavior.
4. To analyze the positive role of trust on organizational citizenship behavior.
5. To analyze the negative role of trust on counterproductive work behavior.
6. To examine the role of ethical climate as moderator between the relationship of ethical
leadership and corporate social responsibility.
7. To discuss/debate the importance of corporate social responsibility from the perspective
/view point/lens of sustainable development
41
1.12 Significance of the Study
CSR as a concept is widely studied but still need to be better understood by the many
stakeholders. By implementing the underlying concepts of CSR, ethical leadership, ethical
climate and trust, corporations get the competitive edge and investors can easily make more
benefits. Applying the same concepts on outcomes of CSR may further facilitate firms in
engaging the employees towards positivity. Thus, introducing CSR transformation towards SD
frameworks/approaches can help both an organization and its stakeholders to better understand
CSR and SD practices. Finally, the current study will facilitate in identifying the determinants of
CSR in relation to the approaches affecting the performance variables for sustainable business
developments.
1.12.1 Theoretical Significance
The literature of CSR and SD has emphasized that a suitable CSR and SD framework are
an important factor in confirming CSR factors (Fernando, 2008; Moon, 2002; Rathnasiri, 2003).
The study of McWilliams, Siegel, & Wright (2006) has stressed on the operationalization of the
constructs such as CSR and SD. Similarly, Gellego et al. (2010) has also focused on the
developing more operational understanding of the CSR and SD to align the constructs with real
business problems. The current study will fill this gape. The major contribution of the current
study would be;
Develop understanding of CSR in the context of sustainable development
Identify the role of ethical leader in defining corporate social responsibility
Authentication of the significance of relationship among ethical leadership,
ethical climate and corporate social responsibility
Identification of relationship between corporate social responsibility and
employee‘s performance variables i.e. TPB, OCB and CWB
1.12.2 Practical Significance
The current study will add multiple practical contributions towards CSR because it will
help the corporations in devising policies and strategies for the application of CSR. The SD
strategies and policies were branded by developing a framework through elaborating the
approaches which can be of great help in understanding the underlying processes of SD in
relation to implementation of CSR. Furthermore, the current framework as a tested model can be
42
used as to endure CSR investigation. Also the said model can be used for better decision making
by the managers. Also, the development of CSR and SD structure certainly will help managing
stakeholders (both internal & external). The management could better understand the concepts of
SD & CSR in context of social and environmental dimensions (Maon, Lindgreen, & Swaen,
2009). Finally, the current investigation will open new ways for further research in multiple
sectors and the future researchers can also be benefited though the recommendations. In nutshell,
corporate social responsibility being new phenomena is yet to be explored in Pakistani corporate
sector. The current study will explore the underlying processes of corporate social responsibility
and its subsequent impact on performance variables through a tested model. This will further
strengthen the perceived benefits of CSR for sustainability.
43
Table 1: Definitions of study variables
44
1.14 Structure of the Complete Thesis
45
Table 2: Organization of the Thesis
46
47
Organization of “Literature review”
CHAPTER NO. 2
LITERATURE REVIEW
Part
A
Part
B
Theories,
Models
&Conceptualizati
on
Background
Ethical
leadership, ,
Trust &
Performance
Variables &
Ethical Climate
Theories,
Models
&Conceptualizati
on,
Determinants,
Outcomes
Background&
Categories
Corporate
Social
Responsibility
Introduction
Relationship
with other study
variables
Relationship
with other study
variables
Sustainable
Development
Introduction
Part
C
Theories,
Models
&Conceptualizati
on
Background
Prospective
from Practical
Scenario
through
Interviews
48
_____________________________________________________________________________
CHAPTER 2
LITERATURE REVIEW
______________________________________________________________________________
2.1 Introduction
This chapter will provide an encompassing analysis of literature review of study
variables. We will explain the introduction, conceptual definition of study variables, background,
categories, theories and models, determinants and drivers, outcomes and relationships of study
variables, which are significantly essential to establish the relationship between and among the
variables. However, first we will explain the concept of sustainable development in qualitative
terms with reference to the role of sustainability and morality in defining the sustainable
development. We have incorporated extensive literature in support of the claim that sustainable
development is a broader concept, having multi dimensions and effects, whereas; corporate
social responsibility is one the core and integral parts of sustainable development. Similarly,
sustainability and corporate social responsibility are considered pertinent features of the modern
business, addressing society and organization simultaneously in terms of managing stakeholders
including society, employees and others. The nexus of addressing the issues of society,
employees and enhancing their performance for increasing productivity leads the organizations
towards sustainable development.
2.2 Corporate Social Responsibility
Corporate social responsibility is becoming an emerging topic of interest for all.
Corporate social responsibility, whether individual, organizational or contextual in nature, is
emerging as a widely studied matter (Ward & Smith, 2015). Organizations do realize that
corporate social responsibility has become more than an option now days. Initially corporate
social responsibility was seen as a normal process but the current dynamics of business consider
it as a strategic concept because of its multiple effects ranging from socio-political, cultural,
economic and environmental (Tilt, 2016). Secondly, the normative effects of corporate social
responsibility, such as employee motivation and sense of dutifulness have also played a vital role
in further understanding and elaborating the concept (Aguilera et al., 2007). Employees being the
49
focus of micro corporate social responsibility are probably among the most important
stakeholders of organization, corporate social responsibility serves the vest purpose in managing
these stakeholders (Aguinis & Glavas, 2017). Corporate social responsibility has multiple
outcomes ranging from financial and non-financial paybacks. Furthermore, both financial (i.e.
profitability etc.) and non-financial outcomes (i.e. reputation, image, trust, motivation etc.) of
corporate social responsibility are now seen as business strategies (Aguinis & Glavas, 2012).
These strategies are best tools to be used for business intelligence for better brand management
and image of the organization.
The modern business intelligence sees corporate social responsibilities as a tool of
credibility-enhancing for some organizations (Moratis, 2015) while the others use it as a strategic
concern for business integration (Loosemore & Lim, 2016). The organizations use their social
activities for business ties, collaboration, competitive advantages and strategic integration for
future endeavor. The globalization, international economy and internationalism is compelling the
organizations in encouraging the corporate social responsibility practices (Gunther, 2005) since it
is becoming a forced option for these organizations for competitive advantages. The global shift
from traditional way of doing business to more responsible and ethical business operations are
yet another pressure for corporate sector to undertake the social activities. Secondly, it has
become a criterion for organizations to understand the outcomes along with the antecedents of
such practices to attain both financial and non-financial advantages (Carroll, 2015; Gunther,
2005).
Corporate world is battling with another and dynamic job, which is to address the issues
of the present age without bargaining the capacity of the following ages to address their own
issues. This thought is correctly known as practical advancement model, which is being utilized
to address the enormous issues looked in ecological, social and monetary fronts (Charles Jr,
Schmidheiny, & Watts, 2017). Partnerships frequently have a generous effect in killing the
disparities in worldwide advancement by receiving feasible improvement as a model with
activity arranged methodologies (Carley & Christie, 2017). In accomplishing the objectives and
goals of the maintainable improvement model, it is particularly needy that associations are
assuming liability for the manners in which their activities or tasks may affect human needs,
culture, social orders and the indigenous habitat in which they work (Ayuso & Navarrete-Baez,
50
2018; Jansson, Nilsson, Modig, & Hed Vall, 2017). Companies are additionally required to apply
the fundamental standards of supportable improvement in its actual letter and soul to change the
business into maintainability.
Figure 2: Conceptualization of Corporate Social Responsibility
Corpora
te Social
Responsi
bility
(CSR)
Introduction
Conceptual Definition
Background
Categories of CSR
Theories of CSR
Determinants,
outcomes, & drivers
of CSR
Sustainability & CSR
CSR & other study
variables
Internal CSR
External CSR
Social Exchange Theory
Social Contact Theory
Social Identity Theory
Stakeholder Theory
Management Theory
Leadership Theory
CSR---Sustainability—United Nations
CSR---EU---Sustainability
CSR---Pakistan---Sustainability
CSR---Corporate Governance
CSR---Board Structure
Role of CSR in
development of
sustainability
51
2.2.1 Conceptual Definitions of CSR
Rupp and Mallory (2015) defined CSR as;
―Context-specific organizational actions and policies that take into account stakeholders‘
expectations and the triple bottom line of economic, social, and environmental
performance.‖
Farooq et al. (2017) defined CSR as;
―The social responsibility of business encompasses the economic, legal, ethical and
discretionary expectations that society has of organizations at a given point of time.‖
European Commission (2011) elaborated the concept of CSR;
―The process of integration in the organizational activities of social, environmental,
ethical and human concerns from their interest groups, with two objectives: (1) to
maximize value creation for these parts, and (2) to identify, pre- vent and mitigate the
adverse effects of organizational actions on the environment‖.
Community for Economic Development (1971) concluded their research by defining the CSR;
―The inner circle includes the clear-cut basic responsibilities for the efficient execution of
the economic function-products, jobs and economic growth. The intermediate circle
encompasses responsibility to exercise this economic function with a sensitive awareness
of changing social values and priorities: for example, with respect to environmental
conservation; hiring and relations with employees; and more rigorous expectations of
customers for information, fair treatment, and protection from injury. The outer circle
outlines newly emerging and still amorphous responsibilities that business should
assume to become more broadly involved in actively improving the social
environment. (For example, poverty and urban blight)‖.
This elaboration is itself an important step towards conceptualization of the concept and
makes an effort to institutionalize the construct. Nevertheless, leaders in organizations have
52
understood that sustainability for not only human aspect but also for environment and social
integration is the need of hour. Corporate social responsibility has been defined by many
researchers starting from 1953 to present. These definitions stress on corporations the need to
work not only for their profitability or growth but also for better society at large. Today,
corporate social responsibility has become a strategic tool for companies where companies can
attempt to link their core business activities with the social integration and environmental
challenges. ―The strategic importance of corporate social responsibility also focuses on the
stakeholder management, employee‘s motivation, retention and even companies more socially
responsible may gain better profitability as compare to less socially responsible corporations‖.
2.2.2 Background
The concept of corporate social responsibility evolved in 1953 when a scholar Bowen
discussed the subject matter in his book ―The Social responsibility of Businessman‖. Another
scholar, Frederick (1960) followed by Johnson (1971) concluded that though business is an
economic activity for profit maximization however, it has a social responsibility as well. Carroll
(1979) said, ―Corporate social responsibility involves the conduct of a business so that it is
economically profitable, law abiding, ethical and socially supportive. To be socially capable,
implies that gainfulness and compliance to the law are preeminent conditions to talking about the
association's morals and the degree to which it bolsters the public where it exists with
commitments of cash, time and ability. Thus, corporate social responsibility is composed of four
parts: economic, legal, ethical and voluntary or philanthropic. Further, Jone (1980) concluded
that businesses are responsible for their shareholder‘s profits as well as the society and its
problems due to the businesses directly‖.
In 1991, Carroll reexamined his former four-part corporate social responsibility definition
and recommended the optional segment as corporate citizenship. ―Also for the millennium
century, he suggested measurement initiatives and theoretical developments, that the corporate
social responsibility concept will remain as an essential part of business language and practice,
because it is a vital underpinning to many of the other theories and is continually consistent with
what the public expects of the business community today (Carroll, 1991)‖. European
Commission (2001) stated, ―CSR is a concept whereby companies integrate social and
environmental concerns in their business operations and in their interaction with their
53
stakeholders on a voluntary basis‖. Similarly, Moon (2002) and International Chamber of
Commerce (ICC) (2005) highlighted ―the voluntary nature of initiatives of firms, where
voluntary nature means at the minimum being legally compliant to the rules of the land‖.
Corporate social responsibility encompasses and comprehends apprehensions aroused
due to the operations of businesses (Tsoutsoura, 2004). Research has revealed that the initial
concept of corporate social responsibility largely focused on the economic and social
perspectives (Lockett, Moon, & Visser; 2006; Visser, 2006). These two (economic & social)
challenges were basically introduced for self-regulations by businesses. Corporate social
obligation is a type of corporate self-guideline. Corporate self-regulation aims integrating
business model into a deliberate inclusion of public interest into corporate decision-making.
―This model is called triple bottom line honoring: people, planet and profit (Muruganantham,
2010)‖. ―Ethical or ideological theory of corporate social responsibility says that an entity
whether it is a government, firm, organization or individual has a duty to society at large (Bedi,
2009)‖. ―Furthermore, businesses would proactively fuel public interest by encouraging
community growth and development, and voluntarily eliminating practices that harm the public
sphere, regardless of legality (Bedi, 2009). Eventually corporate social responsibility is a
comprehensive set of policies, practices, and programs integrated into business operations,
supply chains, and decision-making processes throughout the company‖.
The next rising thought, therefore, is that corporate social responsibility, aside from
bettering society, should bode well or vital sense (Porter & Kramer, 2011; Crawford & Scaletta,
2005; Friedman, 1970; Perrini, 2005). The strategic sense of corporate social responsibility will
protect the interest of business in log run by addressing the expected challenges such as
corporate branding etc. ahead. Similarly, the business sense of corporate social responsibility is
yet another important aspect need to be further understood by businesses to address the internal
and external challenges. Aguinis and Glavas (2017) have observed that the rapid business growth
in today‘s world faces both internal and external challenges. Internal challenges such as
employee‘s retention, profitability and growth whereas, external challenges such as tough
competition, maintaining organizational reputation, prestige, environmental impacts and
customerization have compelled the organizations to think ahead of financial gains (Aguinis &
Glavas, 2017). To overcome these challenges, companies now focus on corporate social
54
responsibility. This notion will lead the companies towards new era mostly referred as
sustainability (Lee et al., 2018). Attaining the sustainability through corporate social
responsibility is certainly the aim of organizations.
Table 3: Evolution of CSR from 1950-2020
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It is evident from the above summary that the concept of corporate social responsibility
was initially based on single component i.e. business itself. Subsequently, the inclusion of
community, employees and law were also considered by the businesses. However, the changing
needs of modern businesses and to meet the challenges of new era, corporations have now
transformed their businesses towards sustainability. This transformation is helping the businesses
to meet the challenges in a better, ethical and more professional way. The business ethics have
compelled organizations for transparency, disclosure and to have compliance of law. These
ethical practices aren‘t subject to profits or because of financial advantages but are part of
business transformation. Likewise, corporate social responsibility is mostly practiced by
companies not only to meet the current demands/challenges of society i.e. health, educations,
56
environment and safer climate but to keep the future secure in a way that future generations
should live their lives as per their requirements. Furthermore, corporate sector also realizes that
their contribution towards wellbeing of society is in fact delimited by self-regulations at
institutional level. These self-regulations are focused and more structured in developed
economies, however; these are practiced in developing economies as well (Santoso & Suratin,
2016).
The recent research conducted by Aguinis and Glavas (2017) concluded that ―research on
corporate social responsibility has mainly focused on institutional level of corporate social
responsibility followed by the outcomes e.g., financial performance‖. Results of literature review
by Aguinis and Glavas (2012) summarized ―First, in the entire set of 588 articles, there are
slightly more conceptual (i.e., 53%) than empirical (i.e., 47%) articles. Second, a content
analysis based on the subset of 181 articles published in 17 journals that do not specialize in CSR
revealed an increased interest in the topic over time. In the 1970s, there were 23 articles
published, which then dropped to 16 in the 1980s. From 1990 to 2005, the number of articles
published per year doubled. Since 2005, the number of publications has greatly accelerated, and
almost half (43%) of the CSR articles have been published since 2005. Third, regarding level-of-
analysis issues, 33% of the articles focused on the institutional level, 57% on the organizational
level, 4% on the individual level, and 5% addressed two or more levels. In short, our literature
search revealed that there is a balance between the number of conceptual and empirical articles‖.
In like manner, corporate social obligation is for the most part polished by organizations
not exclusively to fulfill the present needs/difficulties of society for example wellbeing,
instructions, condition and more secure atmosphere however to keep the future secure such that
future ages should live their lives according to their necessities. Besides, corporate area
additionally understands that their commitment towards prosperity of society is in truth delimited
independent from anyone else guidelines at institutional level. These self-guidelines are engaged
and increasingly organized in created economies, be that as it may; these are drilled in creating
economies also (Santoso and Suratin, 2016). The ongoing examination directed by Aguinis and
Glavas (2017) presumed that "inquire about on corporate social duty has principally centered
around institutional degree of corporate social obligation pursued by the results e.g., budgetary
execution".
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Table 4: “Summary of Literature Search Results Including Journals Specializing in Corporate
Social Responsibility and Related Topics‖
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2.2.3 Categories of Corporate Social Responsibility
Corporate social responsibility is categorized by Neves and Bento (2005) as internal
which deals with the organization‘s Prudential‘s regarding employees wellbeing (Shen & Zhu,
2011) and external, the activities related to environment and legality (Banerjee, 2017). These
dimensions pass on several facets under social, economic and environmental aspects.
2.2.3.1 Internal CSR
The internal corporate social responsibility is undoubtedly considered to be a critical
factor in modern business environment. Internal corporate social responsibility as defined earlier
is mainly concerned beyond the strategic bonds and takes care of its employees for mutual
benefits (Abd-Elmotaleb et al., 2015; Mehta et al., 2014). Organizations certainly know that the
corporate social responsibility especially internal, having a unique standing since it affects the
relations of employer and employee at long run. There might be certain factors affecting the
internal corporate social responsibility; however, the internal core activities towards employees
are mainly linked with it (Scherer & Bauman, 2007). The study of Maignan and Ferrell (2004)
concluded that the employees take more interest in organizational decision makings when they
are treated equally, fairly and regardless of any ethnicity.
It is evident from the research that internal corporate social responsibility promotes a
culture where everyone is provided with equal opportunity for growth which in the longer run
creates trust among the employees (Santoso & Suratin, 2016; Vives, 2006). Additionally, the
59
employees when provided equal space for growth based on the competitiveness instead of
nepotism, they posit and reciprocate with better sense of belongingness. The study of Rasool
(2017) recommended the internal CSR as ―psychological endowment for working environment‖.
The psychological endowment states the employees own and respect the decision makings when
they are part of the process. In other words, internal corporate social responsibility promotes
human development and diversity in organization. The study of Aguinis and Glavas (2012)
concluded that ―the internal corporate social responsibility includes improved perceptions of the
quality of management and enhanced demographic diversity. Research has posited that diversity
is the strength of organization‖ (Bradley- Geist & King, 2013).
Similarly, internal corporate social obligation is without a doubt viewed as a basic factor
in present day business condition. Inward corporate social duty as characterized before is mostly
worried past the key securities and deals with its representatives for shared advantages (Mehta et
al., 2014). Associations surely realize that the corporate social obligation particularly inner,
having a remarkable remaining since it influences the relations of business and worker at since
quite a while ago run. There may be sure factors influencing the inside corporate social
obligation; notwithstanding, the interior center exercises towards workers are predominantly
connected with it (Scherer & Bauman, 2007). The investigation of Maignan and Ferrell (2004)
reasoned that the representatives look into authoritative choice makings when they are dealt with
similarly, reasonably and paying little heed to any ethnicity. Finally, the organizations realize
that the psychological representatives possess and regard the choice makings when they are a
piece of the procedure. As such, internal corporate social obligation advances human
improvement and assorted variety in association.
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Table 5: Internal CSR Themes
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2.2.3.2 External CSR
External, social responsibility is mainly related to external stakeholders‘ i.e. natural
environment, consumers and legal etc. through various dimensions (Neves & Bento, 2005).
These dimensions pass on several facets under social, economic and environmental aspects.
External social responsibility targeting the community can include but not limited to charitable
giving, support for humanitarian causes, community development investments, socioeconomic
up liftmen‘s and collaboration with non-governmental organizations (Farooq et al., 2014).
External social responsibility supporting the environment may be focused on ecological
initiatives focused on the natural environment, environmentally-conscious investments, practices
focusing on sustainable growth for future generations and pollution prevention (Banerjee, 2017;
Farooq et al., 2017). External corporate social responsibility targeting consumers relates to, ―the
responsibilities of a business toward those who receive its services or consume its products. CSR
practices within this domain include product safety initiatives and customer care programs‖
(Agan, Kuzey, Acar, & Acikgoz, 2016; Farooq et al., 2014). These initiatives may significantly
enhance many outcomes of organization in longer run.
External corporate social responsibility positively enhances organizational credibility and
ensures corporate reputation (Moratis, 2015; Rasche, 2011). The external social activism is
certainly an effective tool in managing the external stakeholders as a matter of organizational
strategy. External corporate social responsibility is recognized as an excellent tool of credibility-
enhancing strategy (Moratis, 2015). Businesses use external social responsibility as a tool of
gaining competitive edge and catching new opportunities. External corporate social
responsibility represents as a strategic concern for business integration (Loosemore & Lim,
2016). Undoubtedly, organizations use the external corporate social responsibility for business
advantages, community relationship management, relations with media and interest groups on
win win basis. Perrini (2005) has summarized different themes/stakeholder based categories of
corporate social responsibility starting from human resource, customer, supplier and community.
These themes are interrelated and have significant importance on community and society. Also
the themes under discussed are categorized and discussed as per their effects and magnitude. All
these steps are in fact taken by organizations in better managing the consumers and local
community where businesses operate (El Akremi, Gond, Swaen, De Roeck, & Igalens, 2015).
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Table 6: External CSR Themes
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2.2.4 Theoretical Perspectives of Corporate Social Responsibility
We have linked leadership theories in context of corporate social responsibility.
Particularly, transformational leadership has a positive relationship with many considerable
organizational conclusions through different ways (Avolio et al., 2004; Eisenbeiss, van
Knippenberg, & Boerner, 2008; Kearney & Gebert, 2009). However, some of the major theories
(such as stakeholder, social exchange, social identity, and social contract and legitimacy theory)
have explained CSR in different perspectives. Particularly, the stakeholder, social exchange and
social identity theories best explain corporate social responsibility (Low, 2016). Stakeholder
theory posits as how important is CSR, whereas the social contract and legitimacy theories
elucidate why CSR is important for organizations (Moir, 2001). CSR has been associated with
large number of theories. However, agency theory, stakeholder and social contract theories are
frequently associated with CSR. These theories and CSR approaches are mainly concerned with
economics, politics, social integration and ethics (Jamali & Mirshak, 2007). We will discuss each
theory in detail in later paragraphs.
2.2.4.1 Stakeholder Theory
Freeman's stakeholder theory stated, ―Managers should tailor their policies to satisfy
stakeholders such as workers, customers, suppliers, and community organizations, in addition to
satisfying their shareholders‖. Stakeholder theory strongly believes that CSR can be used as a
device for attaining new business opportunities, corporate citizenship, corporate sustainability
(Van Marrewijk & Hardjono, 2003), value creation or value maximization (Carroll & Shabana,
2010; Obeidat et al., 2016), financial stability, competitive advantage (Porter & Kramer, 2011)
and strategic gains. The theory is uesd to analyze the stakeholder‘s management due to the result
of CSR activities, and also devise a strategy where further business opportunities can be created.
This notion clearly determines that CSR is an important component of managing the
stakeholders across the board through creating a positive image of organization.
2.2.4.2 Social Exchange Theory
Social exchange is mostly referred as a predetermined association between the two
parties (such as employee and employer) for a common interest (Mowday, Porter, & Steer,
1982), where they exchange certain interests with each other mutually agreed upon. Such
relationship may sometimes be either explicit; where some contractual obligations are taken care
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of (such as labor contract) or implicit where psychometric or inner (such as psychological
contract) are met with. Certainly this relationship is on reciprocal basis (Zhu, 2012) where
reciprocity is the basis of relationship.
The theory is applied as a base where the relations of employee and organization are
based on some reciprocity and also devise a base for mutual cooperation through win-win
scenario. It further emphasizes that both implicit and explicit actions of organization must be in
the better interest of all stakeholders.
2.2.4.3 Social Identity Theory
Formulated by Tajfel and Turner (1979), this theory suggests; individuals associate
themselves with groups to distinguish from others. It is commonly believed that people try to
associate themselves with different sets/groups/identities/personalities based on social
identity/constructs. Tajfel (1981) suggests that such perception is based on the experiences,
knowledge and affiliation they develop over the period of time.
Badea et al. (2010) revealed that by using the social identity theory, the understanding of
organizational identification has become easier since the social identity clearly delineate the
construct. Similarly, the study of Ashforth and Mael (1989) concluded that social identity creates
a sense of ownership/belongings which is mostly distinctive in nature from other. This
distinctiveness gives a complete shift and creates a positive mindset which leads to a better
external reputation. Consequently, a different level of identification with organization leads to a
positive outcome (Rodrigo & Arenas, 2008) following by a different level of prestige of
organization can be achieved for stakeholders (Farooq et al., 2014).
The thesis applies social identity theory to analyze the social identities of different sets of
people including employees and other stakeholders in response to CSR activities, and also
develops a scenario where CSR can attain these identities.
2.2.4.4 Social Contract Theory
This theory basically deals with the social contracts based on assumptions. The study of
Weiss (2014) concluded that theory of social contract is based on assumptions and rules
regarding the various factors in society. Society is having certain sets of rules and standards for
mutual existence wherein all the stakeholders respect these set rules. This social contract is
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articulated between members of society and organizations while substituting something based on
mutual trust and (Weiss, 2014). Social contract theory is grounded on the relationship and social
bonding between organization, customers, vendors and other stakeholders (Donaldson &
Preston, 1995). This relationship is maintained for long-term sustainable growth of organization.
Social contact theory is therefore linked with stakeholder management theory since both serve
the same purpose.
2.2.4.5 Legitimacy Theory
The theory mostly depends on the idea that the firm initiates a social contract, where it
consents to perform different socially wanted activities as an end-result of endorsement of its
goals, different prizes and its definitive survival. The theory further explains that corporate
disclosures react to social, economic and environmental elements and legitimizing these actions
(Hogner, 1982). ―One of the purposes of legitimizing actions through disclosure is that these
organizations reciprocate their existence‖ (Lehman, 1983). ―This theory is largely reactive in that
it suggests that organizations aim to produce congruence between the social values inherent (or
implied) in their activities and societal norms (Lindblom, 1983). Corporate social disclosures
may then be conceived as reacting to the environment where they are employed to legitimize
corporate actions‖.
2.2.4.6 Institutional Theory
As Aguilera and Jackson (2003) have contended ―that institutional as opposed to agency
theory is especially valuable for understanding cross national contrasts in corporate
administration. Because stakeholder identities and interests vary cross-nationally, some of the
assumptions of agency-oriented analysis are too simplistic. In CSR the thought processes of
supervisors, investors, and other key partners shape the way organizations are administered.
Institutional hypothesis permits these to be investigated and thought about inside their national,
social, and institutional settings‖.
Additionally, institutional hypothesis brings interdependencies between and cooperation
among partners into the investigation, which is fundamental to comprehension CSR, given its
cultural direction.
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2.2.4.7 Cultural Theory
Cultural theory was developed and surfaced in the 1970s by the Mary Douglas. It depicts
how discernment, culture and hierarchical decision are connected, and it suggests that
institutional life might be comprehended as far as the two measurements' network and gathering,
which might be joined to create four unmistakable rationalities and lifestyles. With its
distinguishing proof of four particular 'myths of nature', social hypothesis gives an illustrative
structure to the manageability which might be inspected in the light of the approach wrangle
about. Social hypothesis contends that institutional and arrangement flexibility might be
expanded by guaranteeing majority, in particular the consideration of the considerable number of
myths of nature in approach plan, albeit no apparatuses are given to operationalize this
hypothetical proposition. The proposition applies social hypothesis to break down the
maintainability banter about, and furthermore builds up an arrangement of situation based
apparatuses that can be utilized to accomplish more noteworthy majority.
2.2.4.8 Management Theory
Theories of organizational learning ―first became prominent in management theory
during the 1970s, when they were proposed as an alternative to mechanistic models of how
businesses function and how they might most effectively be managed. The 1970s also saw the
refinement and application to business strategy of scenario based techniques, which provide a
practical tool for enhancing organizational learning and resilience‖.
2.2.5 Leadership Theories
Leadership has been defined by theories such as trait theory, behavioral theory and
charismatic leadership theory. However, transactional and transformational theory of leadership
(Angelo, Eddy, & Lorenzet, 2004) can be linked to corporate social responsibility context. These
theories have been widely discussed over the period of time. We will briefly discuss each theory
in the coming paragraphs.
2.2.5.1 CSR and Transformational Leadership Theory
Downton (1973) introduced transformational leadership first. This approach was widely
appreciated after the classic work of Burns (1978). Burns tried to connect the roles of ―leadership
and followership‖. By differentiating the concept of vested power and leadership, he explains it
clearly that leadership is not in terms of power to be exercised but it is a relationship with
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followers need. Thus followers are important in relation with transformational leader rather
power because leaders inspire the followers rather using power. Literature over the last few
decades has been developed on transformational leadership by researchers. It has been built up
that transformational administration has results past desires (Avolio, et al., 2004; Dumdum,
Lowe, & Avolio 2002; Eisenbeiss et al., 2008; Kearney & Gebert, 2009). The transformational
leader guides by stimulating and motivating followers and by constructing extremely captivating
and inspiring visions (Conger, Kanungo, & Menon, 2000; Kark, Shamir, & Chen, 2003).
Another milestone in transformational leadership was achieved when Multi-factor
Leadership Questionnaire (MLQ) was developed by Bass (1985). Bass (1985) called these as
―4Is‖ contrary to the initial three components. However, later aspect analysis recommended that
the personality aspect, what has been therefore known as Idealized Impact, was divided from the
charismatic-inspiration and Inspiring Liability (Bass & Riggio, 2006). ―The most recent model of
transformational leadership, based on continuing empirical development by Bass and Avolio
(2000) and other scholars (e.g. Bass, 1998), studied five leadership dimensions including
idealized attributes, idealized behaviors, inspirational motivation, intellectual stimulation, and
individualized consideration‖.
Leaders who exhibit idealized attributes and behaviors gain respect from their followers.
Leaders carefully consider their followers‘ needs above their own needs and emphasizing and
―keeping in view of the importance of the moral and ethical consequences of key decisions
(Bass, 1985). Leaders who give centrality and challenge to their disciples' work, and urge
supporters to envision appealing future states for their work units and the affiliation depict
helpful inspiration. Academic actuation is described as practices that urge supporters to be
creative and inventive by tending to suppositions, re-enclosing issues, and pushing toward old
issues in new habits. Finally, individualized idea incorporates rehearses that highlight giving
close thought to lovers' individual prerequisites for achievement and advancement, including
teaching, educating, and making new learning possibilities (Groves & LaRocca, 2011; Hoffman
& Frofst, 2006)‖.
Some of the studies (such as Conger, 1999; Judge & Piccolo, 2004; Lowe et al., 1996)
have summarized that leadership at three levels i.e. individual, organization and group. Some of
the outcomes of transformational leadership include impressive performance of employees,
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organizational commitment and job satisfaction (Lowe et al., 1996). Similarly, other outcomes
include organizational citizenship behaviors, task performance behavior considered as
performance behaviors (Podsakoff et al., 1993) followed by profitability (Waldman et al., 2001),
furthermore, administration adequacy during times of authoritative change (Groves, 2005).
Waldman et al. (2006) summarized in their research, ―CEO incitement is seen as
altogether connected with the penchant of the firm to take part in 'vital' CSR, or those CSR
exercises that are destined to be identified with the associations corporate and business‐level
techniques‖. ―Thus, studies that ignore the role of leadership in CSR may yield imprecise
conclusions regarding the antecedents and consequences of these activities‖. ―We also critique
transformational leadership theory, in terms of its overemphasis on charismatic forms of
leadership. This leads to a reconceptualization of transformational leadership, which emphasizes
the intellectual stimulation component in the context of CSR‖. ―The study of Chen, Liu, & Tsai
(2017) concluded that ―Differentiated and group- focused transformational leadership can
influence group members‖ perceptions toward leaders‘ corporate social responsibility values in
contrasting ways‖. Furthermore, leaders‘ ―corporate social obligation esteems are adversely
related the perceptional variety of gathering individuals. What's more, pioneers' corporate social
duty esteems not exclusively can be transmitted to bunch individuals through gathering centered
authority yet additionally can kill the negative impact of separated initiative on transmitting CSR
qualities to aggregate individuals".
2.2.5.2 CSR and Transactional Leadership Theory
Transactional leadership supports the status quo by offering exchange and reciprocity
contrary to transformational leadership (Bass & Avolio, 2000). Leader having transactional style
demonstrate and offer contingent reward in exchange of achieving some goals or objectives.
Some of the studies (e.g., Avolio, 1999; Bass, 1998; Bass & Avolio, 2000) have linked
transactional leadership style with bartering system where give and take is factored in. Whereas,
some research studies (e.g., Carless, 1998; Turner et al., 2002) have linked transactional style
with rewarding the work only irrespective of efficiency and effectiveness.
2.2.6 Determinants and outcomes of CSR
Determinants are the factors those define or contribute to conceptualize the constructs.
The determinants of corporate social responsibility have been discussed by many scholars (e.g.
69
Ortas et al., 2015; Sierra et al., 2015) in different context. These determinants include like
financial performance (Campbell, 2007), government regulations (Rizk et al., 2008),
mimetic/simulated forces (Nikolaeva & Bicho, 2011), industry compressions (Muller & Kolk,
2010) and deletion/addition to social index (Doh, Howton, Howton, & Siegel, 2010).
Organizations sometimes get effected by these determinants particularly in compliance with the
regulatory bodies. Similarly, inclusion in the social index is yet another pressure that certainly a
driving forces for corporate social responsibility activities. Study also states that companies
behave socially more responsible under certain conditions referred as determinants (Ortas et al.,
2015; Sierra et al., 2015). Some of the determinants such as firm instrumental and normative
reasons, corporate governance structure, values, needs and mission of organization are also
important to study in relations with corporate social responsibility (Aguinis & Glavas, 2012).
However, there seems to be difference among scholars regarding a comprehensive model of
determinants of corporate social responsibility.
Campbell (2007) is considered to be an authority in defining the predictors, determinants
or factors of corporate social responsibility. He specifically developed a model and mentioned
five determinants; financial performance, economic environment, competition, legal
environment and employer employee relations. Regarding the financial performance, Campbell
(2007) says ‗‗Companies will be more averse to act in socially mindful manners where they are
presently encountering generally powerless money related execution‘‘. The economic
environment can be referred, as corporations will definitely be less active in social responsibility
if they are not financial healthy. Competition is another factor, as ―Corporations will be less
likely to act in socially responsible ways if there is either too much, or too little competition; that
is, the relationship between competition and socially responsible corporate behavior will be
curvilinear‘‘. The legal environment suggests that if there are well-defined rules, regulation and
standards by the state, corporation will be in a better way to comply with those regulations. The
legal system may not only regulate the local but also outside investors not to act in irresponsible
ways (Leuz, Nanda, & Wysocki, 2003). as far as the employer employee relations is concerned,
Campbell (2007) suggests that trade unions if used positively, may create an environment where
the employer may act socially more responsible.
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Another important study that defines the determinants of corporate social responsibility is
developed Aguinis and Glavas (2012). The study has focused on the determinants of corporate
social responsibility such as corporate governance, regulation standards followed by stakeholder
pressures. However, this study is important since it has revealed a new but important determinant
of corporate social responsibility i.e. the leadership/supervisory role. Leaders always care about
the ethical consequences of their key decision makings (Avolio, 1999). Similarly, leaders
through their individualized considerations focus on the employees learning and create values for
them (Groves & LaRocca, 2011). Additionally, the role of leader is important in defining the
company‘s vision and mission in adopting the social activities beyond financial gains.
However, it is important to link the sometimes leaders in firms are motivated for
corporate social responsibility activities and policies by normative/psychological or moral/ethical
motives such as a ―sense of responsibility and duty‖ (Bansal & Roth, 2000), following a ―higher
order or morals‖ (Aguilera et al., 2007). Research has demonstrated that transformational
pioneers adjust the qualities, mission and vision of association with corporate social obligation
arrangements to regulate (Marcus & Anderson, 2006) and charge creation (Neubaum & Zahra,
2006; Obeidat et al., 2016).
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Figure 3: Determinants and outcomes of CSR
Source; Aguinis and Glavas (2012)
Aguinis and Glavas (2012) summarized 588 articles, among which more conceptual than
empirical articles. Secondly, the content analysis of the published articles revealed an increased
interest in the topic of corporate social responsibility, its determinants and outcomes over the
period. It is also worth mentioning that the published articles focused on the institutional,
organizational and individual level analysis of corporate social responsibility. The Sustainability
Report (2001) summed that ―there are six noteworthy budgetary drivers for reasonable
advancement of an organization. These drivers incorporate client fascination, brand worth and
notoriety, human and scholarly capital, chance profile, development and permit to work. It merits
referencing that these drivers are distinctive for each organization. Once in a while, the
individual drivers may be more grounded for divergent portions and for assorted enterprises
(Brine Brown, & Hackett, 2007)‖.
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Figure 4: Drivers of CSR in developing countries
Source: Adapted from Visser (2006)
2.2.7 Relationship between CSR & Sustainability
Sustainability and CSR are viewed as a relevant element of the cutting edge business and
society, while tending to corporate social execution, corporate morals, worldwide corporate
citizenship and collaborate the executives (Hall, 2008). The concept of CSR encompasses the
general belief by the masses that organizations have an obligation to society, which is past the
speculators and investors of the firm. Of course, that responsibility is not only to make money or
profits for the owners but extends to work for the betterment of community at large, government
and the natural environment. CSR thus supports sustainability by contributing in stirring and
heading society towards a sustainable future (Blindheim, 2008). We will discuss the relationship
between the two variables (i.e. CSR & sustainability) in detail while addressing sustainable
development.
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2.2.7.1 CSR & United Nations
United Nations has a clear and brief policy on CSR comprehending the context and
international scenario. The United Nations Conference on Environment and Development
(UNCED) states that supports the ―responsible entrepreneurship‖ which means that businesses
must be including society as their priority apart from their profits (UN, 1992). United Nations as
an institution has always promoted sustainable energy production, free of hazardous activities
and social inclusion for their sustainable development model (UN, 2002). The sustainable
development model further elaborates that businesses should realize that the inclusion of society
as major stakeholder is the need of twenty first century. The environmental sustainability is
becoming another top priority on United Nations agenda. Environmental sustainability is linked
with responsible enterprises, assuring the business operations are done in compliance with the
environmental regulations, protecting the environment in general. The enrichment of
environmental and corporate social responsibility followed by accountability will further add
values to the social development of society. This will also encourage corporate sector to adopt
voluntary initiatives, for social, economic and environmental performances. Furthermore,
corporate reporting, disclosure, formulation of prudential as per international standards and
sustainability reporting, will further help in promoting social sustainability (UN, 2002).
Nevertheless, the United Nations CSR policy is multidimensional, encouraging businesses to
include society and environment in their priority lists.
In line with the recommendations of United Nations, European Commission (EC)
published a Green Paper (2001) and established a formal CSR forum (EC, 2006). The EC
postulated a renewed European Union Strategy (i.e. 2011-1014) for CSR in year 2011 (EC,
2011). This strategy was formulated based on eight key actions including improving self- and co-
regulation processes, improving & tracking levels of trust and enhancing CSR‘s visibility (CSR
Europe, 2011). The study of Angel and Rock (2009) concluded that role of state is important in
defining the role for industries in social development. Therefore, by adopting a joint strategy, EC
is encouraging its member states to comply with the guidelines of the United Nations sustainable
development framework.
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2.2.7.2 CSR & Corporate Governance
Companies are directed and controlled by corporate governance which acts as backbone
in corporate sector. Corporate governance is therefore about the management of organizations by
taking into account the responsibilities towards the shareholders and other stakeholders.
According to Malaysian Code of Corporate Governance, businesses / affairs of company in this
procedure are directed and managed in a manner to achieve maximum prosperity and corporate
accountability. The aim is that while taking into account the interests of other stakeholders,
ensure ultimate objective i.e. realize long term shareholders value. The importance of good
corporate governance practices for long-term survival of companies has become very crucial
after many corporate scandals like Asian Financial Crisis, Enron, Worldcom and Parmalat
(Mokhtar et al., 2009). According to Mokhtar et al. (2009), companies following good corporate
governance practices have an effective and efficient board of directors to monitor and reduce the
agency problems; resultantly organizational performance is increased than those companies who
do not follow these practices. These boards of directors will never let interest of investors
jeopardize (Hashanah & Mazlina, 2005).
There is complete trust and confidence between different segments of organization
primarily due to across the board accountability and transparency in the shape of good corporate
practices. The accountability part of board provides assurance for smooth, efficient and honest
running of company. In this way corporate governance improves stakeholders‘ confidence
besides ensuring stability and sustainability in businesses. Edwards and Clough (2005) also
focused on the relationship between the governance practices and performance. According to
OECD (1999), Corporate Governance provides a platform through which organization‘s
objectives are set and then all measures / resources are inducted to achieve them followed
by their monitoring ensured. It also ensures proper coordination and cooperation between
management, board, shareholders and stakeholders by establishing relationship based on
trust and respect. The objective of Corporate Governance is to enhance organizational
performance and involves two dimensions i.e. performance and conformance. In
performance, CEO output or performance is primarily monitored besides evolving strategy
or setting up of organizational goals. On the other hand, conformance means compliance
with legal requirements, industry standards and accountability to relevant stakeholders
(ANAO, 2003). These two aspects of corporate governance are mainly undertaken by the
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board / governing body. Chen, Cheung, Stouraitis, and Wong (2005) found that corporate
governance mechanism (CEO duality, composition of BOD, audit committee) affect
performance of firms / organizations, after having gone analysis of 412 publicly listed firms in
Hong Kong from 1995-1998. On similar lines, Haniffa and Hudaib (2006) established
relationship of six corporate governance variables in Malaysia for good corporate
performance i.e. board size, board composition; CEO duality, multiple directorship,
ownership concentration & managerial shareholding. Report on corporate governance
failures by Edwards & Clough (2005) have emphasized on accountability and conformance
measures. Larker, Richardson, & Tuna (2004) discussed corporate governance in seven general
categories which are: characteristics of the board of directors, stock ownership by executives and
board members, stock ownership by institutions, stock ownership by activist holders, debt and
preferred stock holdings, anti-takeover devices, and unionization.
2.2.7.3 CSR & Role of Corporate Management / Board Structure
In corporate governance job of shareholders and management is different, one owns a
company or organization but do not run it and other does not own it but runs the company. In
order to bridge the gap between two, directors are appointed by the former group i.e.
shareholders and they supervise the latter group. In this way ownership is separated from
directorship and management. A director may therefore be defined as a person having control
over the direction, conduct, management or superintendence of a company (Fernando, 2012). In
fact, directors are a body to who has delegated the duty of managing the general affairs of
company. Board is recognized legally as the top layer of management with the responsibility of
governing the enterprise, yet, in actual practice the board of directors delegates most of its
managerial power to chief executives / managing director. The board lays down the policies /
programs / procedures and ensures their implementation by different executive committees led
by one or more whole time directors commonly known as CEOs (Chief Executive Officers) /
Managing directors. The Chief Executive serves as a link between boards of directors and
operating organization, hence it is very important for a company / organization to have very
effective and responsible board.
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2.2.8 Outcomes of Corporate Social Responsibility
Corporate social responsibility has multiple effects on business and society. In other
words, corporate social responsibility creates significant positive impact socio economic
conditions of society followed by safeguarding the natural environment. Studies have shown that
the outcomes of corporate social responsibility are ranging from profitability, business
intelligence, business integration, credibility enhancement tool, environmental protection and
economic reforms (Aguinis & Glavas, 2012; Moratis, 2015; Loosemore & Lim, 2016; Tilt,
2016). The mentioned outcomes are external in nature and mostly used to engage the external or
macro level stakeholders. Some of the researches have concluded that company‘s corporate
social responsibility is sometimes resulting of pressures from different stakeholders (e.g.
Brammer, Millington, & Pavelin, 2007). However, organizations now do realize that the
corporate social responsibility is beyond the pursuit of legal compliance (Bauman & Skitka,
2012; Lee et al., 2013). Nevertheless, the external outcomes are certainly important at macro
level particularly for business integration and bridging the gap between business and society for
long term relationship and mutual coexistence.
The micro level of corporate social responsibility outcomes has gained numerous
attentions at multilevel analysis. These are also called internal corporate social responsibility,
where mainly employees attitude, behavior and wellbeing is taken due care. Studies have shown
that corporate social responsibility brings positivity among employees of organization (Aiman-
Smith, Bauer, & Cable, 2001; Glavas, 2016). The micro level of corporate social responsibility
outcomes is ranging from employee performance, commitment, job satisfaction and sense of
belongingness (Jones, 2010; Maignan, Ferrell, & Hult, 1999). Some of the studies have linked
micro level corporate social responsibility with other outcomes such as relationships with
employer (Moon et al., 2014; Chun, 2011), turnover intentions (Im, Chung, & Yang, 2016)
creativity and appealing to prospective employees (Brammer, He, & Mellahi, 2015; Greening &
Turban, 2000). However, the outcomes of micro level corporate social responsibility on
behavioral level of employees such as organizational citizenship behaviors and performance
behavior have got serious attention from researchers (Aguinis & glavas, 2012; Jones, 2010).
Similarly, the micro level of corporate social responsibility is certainly linked with workplace
attitudes such as organizational identification (Lee et al., 2013). These workplace attitudes and
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behaviors are important to be managed by organizations for better productivity of employees.
Nevertheless, the micro level corporate social responsibility does this well.
The work place behaviors; organizational citizenship behavior, task performance
behavior, and counterproductive work behavior are important outcomes of corporate social
responsibility. OCB is yet another important outcome of CSR. Research has seen a positive
relationship between corporate social responsibility and organizational citizenship behavior (e.g.
Hansen et al., 2011; Lin, Lyau, Tsai, Chen, & Chiu, 2010). Employee‘s citizenship behavior
increases when companies spend on corporate social activities. Workers will in general have
progressively inspirational demeanors about their association when it takes part in corporate
social duty (e.g., Brammer, Millington, & Rayton, 2007; De Roeck, Marique, Stinglhamber, &
Swaen, 2014). For instance, one paper (Rupp, Shao, Thornton, & Skarlicki, 2013) argues and
finds that ―the positive relationship between corporate social responsibility and citizenship
behavior is more pronounced among employees high in moral identity‖. Other papers (Farooq,
Rupp, & Farooq, 2017; Jones, 2010; Shen & Benson, 2016) suggest that, ―corporate social
obligation expands representative's hierarchical recognizable proof, which positively affects their
citizenship conduct. Given the inspirational mentality individuals from associations have towards
corporate social duty, researchers have started to explore how corporate social obligation
influences worker practices‖ (Rupp & Mallory, 2015). One of the forms of behavior referred as
―individual behavior that is discretionary, not directly or explicitly recognized by the formal
reward‖.
Counterproductive work behavior is another important outcome of corporate social
responsibility (Shin, Hur, & Kang, 2017). Corporate social responsibility certainly plays an
important and significant role in decreasing or countering counterproductive work behavior of
employees (Shin et al., 2017). Employees get motivated when organizations participate in social
activities and in return posit a positive perception. This positive perception is linked with the
countering counterproductive work behavior and corporate social responsibility (MacKinnon &
Fairchild, 2009). Organizations do realize that the more employees are being taken care off,
employees reciprocate the same at workplace (Zhu, Yin, Liu, & Lai, 2014). In nutshell, corporate
social responsibility certainly decreases the trend of countering counterproductive work behavior
among employees at work place.
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Table 7: Important studies (Quantitative) on micro-individual level
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2.3 Ethical Leadership
Ethical leadership is believed to be the one of the important constructs widely discussed
worldwide. Ethical leadership is based on moral reasoning‘s, morals and believes (Brown et al.,
2005; Freeman, 2016; Hansen et al., 2016; Liu, 2017; Langlois et al., 2014). Ethical leadership
exercises these moral obligations through a process and actions in organization. This process
effects in two-way direction i.e. a) individual context and b) organizational context. In individual
context, the substantive process of ethical leadership no doubt creates a sense of trust, ownership
and positively aligns the performance behavior of employees (Langlois et al., 2014; Nedkovski
et al., 2017; Wang & Hsieh, 2012). Whereas, in organizational context, ethical leadership align
the goals of organization, in such a direction that the strategic gains may be ensured in longer run
(Carrol, 2015; Schwartz, 2017; Shapiro & Stefkovich, 2016; Waldman et al., 2006).
2.3.1 Conceptual Definitions of ethical leadership
Ethical leadership is well defined by Brown et al. (2005);
„„The demonstration of normatively appropriate conduct through personal actions and
interpersonal relationships, and the promotion of such conduct to followers through two-
way communication, reinforcement, and decision-making‘‘ (p. 120).
Langlois et al. (2014) defined;
“Ethical leadership is defined as a social practice by which professional judgment is
autonomously exercised. It constitutes a resource rooted in three ethical dimensions
critique, care, and justice as well as a powerful capacity to act in a responsible and
acceptable manner” (p. 312).
The above definitions are mostly behavioral based. According to Yukl et al. (2013),
ethical leadership is occasionally related with transformational and servant leadership. However,
ethical leadership is often related to social practices constituting three ethical dimensions (such
as critique, care, and justice). Employees often notice ethicality of their leaders through
observations, actions taken by the leaders and their contextual familiarity and perception about
the social activities (Hansen et al., 2016). Leadership ethicality is more often referred as values
and believes in others which are best considered from the worker‘s perspective (Lind, 2001). The
impression of leaders and organization are sometimes based on the contextual information (Lind
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& Van, 2002) rather the actual or available information. This lack of understanding the context
may lead to negative notions among employees about their leaders and their actions. Some of the
recent studies (Carroll, 2015; Hansen et al., 2011) have suggested that employees accustom
actions taken by the organization to assess and link the character and moral of the organizational
leaders liable for these actions (Lavelle, Rupp, & Brockner, 2007). In fact, employees believe in
actions more often taken by the ethical leaders in organizations. This action oriented approach
develops trust among the employees by reciprocating their increased performance. The empirical
analysis by Hansen et al. (2011) also confirms that leader‘s character is assessed by their actions
in organizations. Certainly, these actions are based on moral reasoning, rationale and to align the
goals of organization strategic gains.
2.3.2 Background
In the 1970s and 1980s, researchers got attention towards the moral dimensions of
leadership (Bates, 1982; Foster, 1986; Greenfield, 1987). The moral heights of leadership are in
fact predetermines of ethicality in leaders (Halpin, 1970; Hodgkinson, 1978; Trevino et al.,
2000). Starratt (1991) made a noteworthy stride toward this path by fusing good thinking and
basic hypothesis builds into his model of moral authority. Subsequently, Beck (1994) got a
position subject to ethics of thought while Brunner (1998) found that two good fragments could
be recognized in the way heads work. These two components are the ethics of justice and the
ethics of care. However, the concept of ethical leadership has evolved through three distinct
phases as elaborated by Trevino (1986). The first phase emerged when Trevino (1986) wrote an
article on ―a person-situation interactionism model of ethical decision-making in organizations‖.
In that article, the author demonstrates a model wherein the mix of individual variables and
situational components explains and predicts moral fundamental administration lead (Craig &
Gustafson, 1998). Be that as it may, very little extra research was done until the second stage,
from 1995 to 2006, when researchers gave significant applied and hypothetical investigation of
the elements of moral authority and moral basic leadership (Brown & Trevino, 2006; Brown et
al., 2005; Trevino, Brown, & Hartman, 2003). We will have a brief description of each phase in
upcoming paragraphs.
Linda Trevino (1986) presented the starting point of moral administration hypothesis in
the administration writing. Triveno talks about and connected moral basic leadership in setting of
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moral administration. As indicated by Trevino (1986) moral basic leadership got critical
contemplations in the predominant press because of the way that basic leadership is one of center
elements of authority. In any case, Triveno contended that there was minimal scholarly research
in the zone preceding 1986. Trevino further expressed that "there is minimal thought about
chiefs' points of view with respect to moral problems in their work" (p. 602). This of course
opened new ways for research in the management context. It is imperative to note that Trevino
used Kohlberg‘s 1976 psychological good improvement model for individual factors. Kohlberg
(1976) articulated some of the fundamental philosophical issues; include a fair definition of the
construct.
The leadership model by Bass (1985) played a pivotal role in defining the role of
leadership in management sciences. The personality aspect, what has been therefore known as
Idealized Impact, was divided from the charismatic-inspiration and Inspiring liability (Bass &
Riggio, 2006). Notwithstanding, the enthusiasm for moral authority developed, definitions turned
out to be increasingly exact and nuanced, and the quantity of experimental investigations
fundamentally expanded after the presentation of moral initiative model by Brown et al. (2005).
This stage finished in 2005 and 2006 to some degree in view of two significant articles; one was
by Brown et al. (2005) where they presented the Ethical Leadership Scale (ELS) for estimating
moral administration. While, the other article was presented by Brown and Trevino (2006) which
expounded the field of moral initiative. Without a doubt, the model introduced by Brown et al.
(2005) opened new ways for future research.
The current phase of ethical leadership has gained attention from different directions
ranging from academicians to corporate level and in different context. Particularly, the current
practices see the ethical leadership in individual and organizational context. In the individual
context, some of the recent studies (e.g. Carroll, 2015; Hansen et al., 2011; Lavelle et al., 2007)
have concluded that employees adapt behavior followed by the actions of leaders. Employees
believe in practical actions taken by ethical leaders. The organizational context of ethical
leadership is yet another important concept, paved in the long run success of organization.
Kalshoven et al. (2011) introduced a multi-dimensional model referred as ethical leadership at
work (ELW) grounded on behavior of leaders which is in line with Brown et al. (2005) model.
The Kalshoven model aims at interpreting and assessing the conduct of leaders/managers based
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on behaviors of leaders. The Kalshoven subsequently concluded the ELW questionnaire which is
instrumental in measuring the ethical leadership. The current era of research is using frequently
either the Brown ELQ or Kalshoven ELW leadership questionnaire to measure the ethical
leadership. Nevertheless, both the models are based on ethical reasoning and moral development
of leadership at work place.
2.3.3 Theories of Ethical Leadership
Moral authority might be imagined as laying on three crucial 'columns' or parts. The
principal concerns the individual uprightness of the pioneer, additionally named the 'ethical
individual' segment of moral initiative. The second accentuates the degree to which a pioneer can
develop trustworthiness among his or her supporters, for example the 'ethical administrator part
(Trevino, Hartman, and Brown, 2000). The third segment concerns the nature of the pioneer
devotee relationship, which scaffolds the ethical individual and good director segments and
encourages their consequences for adherents. A portion of the hypotheses talked about beneath
will further expand the idea further.
2.3.3.1 Social Learning Theory
The social learning hypothesis presented by Bandura's (1977) has been connected with
the moral administration in sociologies inquire about (Brown et al., 2005). The hypothesis best
clarifies the forerunners and results of moral initiative in individual and authoritative setting.
Workers see the pioneers to be very moral in both their activities and practices while, the
pioneers must adjust their vision to that of an association (Brown and Treveno, 2006). Social
Learning Theory sets that people gain from one another, by methods for discernment,
pantomime, and illustrating. Bandura (1977) displayed the social learning speculation, which
joins scholarly learning theory (which places that learning is affected by mental factors), and
direct learning speculation (which acknowledge that learning relies upon responses to regular
lifts). The examination consolidated these two theories and devised four essentials for learning:
observation (biological), upkeep (scholarly), age (mental), and motivation (both). This
integrative way to deal with learning was called social learning hypothesis. The social learning
hypothesis causes in understanding with respect to why and how the moral initiative impacts
devotees. Maybe, the hypothesis depends on the possibility that people learn by focusing and
watching the frames of mind, conduct and ethics of pioneers in associations. These pioneers are
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truth be told, controlling power and now and again good examples for the people working in an
association (Bandura, 1977; Triveno, 1986). In nutshell, workers pursue the stride of pioneers in
association and respond in a similar way. This correspondence depends on the contention that
pioneers set the norms and pursue the equivalent without anyone else's input so adherents might
be pulled in.
2.3.3.2 Transformational Theory
Transformational pioneer impacts the authoritative emphatically in various ways (Avolio
et al., 2004; Dumdum, Lowe, and Avolio 2002; Kearney and Gebert, 2009; Eisenbeiss et al.,
2008). The transformational pioneer directs by animating and rousing adherents and by
developing amazingly dazzling and moving dreams (Conger, Kanungo, and Menon, 2000: Kark,
Shamir, and Chen, 2003). Transformational administration and moral authority cover in their
attention on close to home qualities (Brown and Trevino, 2006). Moral and transformational
pioneers care about others, act reliably with their ethical standards (for example uprightness),
think about the moral results of their choices, and are moral good examples for other people.
2.3.3.4 Spiritual and Authentic Leadership Theory
Such kind of leadership is defined as, ―individuals who are deeply aware of how they
think and behave and are perceived by others as being aware of their own and others'
values/moral perspective, knowledge, and strengths; aware of the context in which they operate;
and who are confident, hopeful, optimistic, resilient, and high on moral character‖ (Avolio et al.,
2004, p. 4). The study also views authentic leadership as a ―root construct‖ that ―could
incorporate charismatic, transformational, integrity and/or ethical leadership‖. Like
transformational authority, bona fide administration appears to cover with moral initiative
especially as far as individual attributes (Brown and Trevino, 2006). Both genuine and moral
pioneers share a social inspiration and a thought authority style. Both are morally principled
pioneers who think about the moral outcomes of their choices. In any case, valid administration
likewise contains content that is random to the moral initiative develop. Profound initiative is
contained "the qualities, frames of mind, and practices that are important to naturally propel
one's self as well as other people with the goal that they have a feeling of otherworldly survival
through calling and enrollment‖ (Fry, 2003, p. 711; Reave, 2005, p. 663).
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2.3.4 Models of Ethical Leadership
Bass (1985) developed the model based on transactional & transformation leadership.
Bass and Avolio (1994) summed as ―transactional leadership style identifies the responsibilities
and checks the performance to accomplish the tasks by facilitating employee with rewards‖. This
notion is also ratified by Kearney and Gebert (2009) contending that transformational leadership
style has a bond between employees and leaders.
The tridimensional model developed by Starratt (1991) determined ethical leadership on
three dimensions of ethics (care, critique, and justice). Starratt (2004) contended that a
meaningful process of learning determines ethical leadership model. Starratt (2012) summarized
the justice as ―the ethics of justice is rooted in the practice within a community and the
assumption that the protection of human dignity depends on the moral quality of social relations
which, in the end, is a public and political matter‖. The critique is elaborated by Starratt (2012)
as ―their basic stance is ethical for they are dealing with questions of social justice and human
dignity, although not with individual choices‖. The care is concerned with ―requirements of
interpersonal relations‖ based on respect rather law or any other obligations (Starratt, 1991,
2012).
Ethical leadership models have been assessed based on its antecedents (integrity,
trustworthiness, honesty & effectiveness) and outcomes (follower‘s ethical decision making,
prosaically behavior, motivation, decreasing counterproductive work behavior etc.). Ethical
leadership has been best elaborated in the model developed by Brown et al. (2005) which is
followed by the current study. Brown et al. (2005) model is based on behaviors (i.e. integrity,
fairness, ethical guidance, justice and disseminating accurate information) related to ethical
leadership. Brown et al. (2005) presents and forecasts the outcomes (follower‘s ethical decision
making, prosaically behavior, motivation, decreasing counterproductive work behavior etc.) of
decisions while using the ethical leadership (Kalshoven et al., 2011). The model supports that
followers see the leader‘s credibility & characteristics prior to form opinion (Brown et al., 2005).
The stimulated effect of leaders on followers is also dominated by actions taken by leaders
(Kalshoven et al., 2011). Finally, based on the model Brown et al. (2005) developed a scale to
measure the ethical leadership named as Ethical Leadership Scale (ELS).
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Kalshoven et al. (2011) coined the multi-dimensional model named as ethical leadership
at work (ELW). ELW model is based on behaviors (i.e. fairness, integrity, ethical guidance,
people orientation, power sharing, role clarification, and concern for sustainability) related to
ethical leadership (Kalshoven et al., 2011). The ELW model follows the Brown et al. (2005)
interpreting and assessing the conduct of leaders grounded on the mentioned behaviors.
Similarly, a Kalshoven et al. (2011) claim as the model best explains the outcomes of ethical
leadership decision makings. Nevertheless, the validation of their tool is yet to be delineated
contrary to their claim.
2.3.5 Relationship of Ethical Leadership with Other Study Variables
Though ethical leadership has been best elaborated in the model developed by Brown et
al. (2005) based on behaviors related to ethical leadership; however different approaches have
further explained the concept with different perspectives. Past investigations have interrelated
moral authority to moral atmosphere (Shinn 2012; Mayer et al., 2010). Secondly, ethical
proportions of leadership have only been associated with either transformational or charismatic
leadership (Bass & Avolio, 2000), whereas Brown et al. (2005) suggests that these characteristics
can be studied in relation to ethical leadership. The outcomes of ethical leadership such as
financial performance (Campbell, 2007), social responsiveness (Doh et al., 2010) and sense of
responsibility (Bansal & Roth, 2000) have attained great considerations in the recent years.
Companies have been practicing moral duties (Campbell, 2007) to behave socially ―more
responsible‖ (Ortas et al., 2015; Sierra et al., 2015). These responsive actions, lead to CSR for
―higher order or morals‖ in companies and create character, integrity, ethical awareness and
ethical accountability (Aguilera, Rupp, Williams, & Ganapathi, 2007; Resick, Hanges, Dickson,
& Mitchelson, 2006).
2.3.5.1 Ethical leadership and Corporate Social Responsibility
It is imperative to note that the leaders having ethical reasoning tend to believe in moral
obligations and prefer to develop moral development among their team (De Hoogh & Den
Hartog, 2008). This notion itself promotes the ethical practices in organization irrespective of
financial gains. Nonetheless, the connection between moral administration and corporate social
obligation is impacted by certain different factors in association, for example, authoritative
culture, moral atmosphere and institutional conditions (Bansal & Roth, 2000; Campbell, 2007;
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Mayer et al., 2009). Nevertheless, ethical leaders definitely promote corporate social
responsibility as part of their best practices considering the fact that organizations can no longer
operate in isolation.
2.3.5.2 Ethical Leadership and Ethical Climate
Ethical leadership and ethical climate are associated with each since it is evident that
leaders in organization create an environment where the employees feel satisfied working in.
Leaders in organization create ethical culture through their explicit actions and behavior
whereas; employees adopt the same when having trust and confidence on their leaders.
Employee‘s perception of ethical climate is certainly linked and associated with the self-rated
ethical leadership of leaders in organization (Shin, 2012).
Work environment and organizational culture and ethical leadership have significant
relationship since ethical leadership has outcomes behaviors supported by ethical culture in
organization. Generally, analysts (Lai and Lee, 2007) connected hierarchical execution with
authoritative culture. It has likewise been considered with assortment of orders, for example, the
board sciences, human sciences, authoritative conduct, social science and duty and so on in
alternate points of view.
2.3.5.3 Ethical Leadership and Transformational Leadership
Ethical leadership and transformational leadership have many similarities in quest of
personal characteristics and moral development. However, both are different concepts aims
giving different thought process. Research scholars (such as Brown et al., 2005; Trevino et al.,
2003) have contended that ethical leadership and transformational leadership are distinct
constructs. Transformational leadership style clarifies how pioneers change groups or
associations by making, conveying, displaying a dream and motivating workers to endeavor the
proposed vision (Mcshane, 2004) and increase organizational citizenship behavior, performance,
commitment, trust among the employees of the organization. Transformational leaders ―by
defining the vision, communicating the task and involving the employees in decision making
transformational leaders look the psychological impact on employees which leads to job
satisfaction and job involvement‖. The study says ―positively and significantly associated with
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transformational leadership, transformational culture, contingent reward dimension of
transactional leadership, leader effectiveness, employee willingness to put in extra effort, and
employee satisfaction with the leader‖. The makers construed that pioneers in affiliation need to
exhibit moral organization through methodologies, rules or formal records yet furthermore
through their decisions, exercises and clearly rehearses. Correspondingly, pioneers whether
transformational of moral, need to demonstrate the methodology through unequivocal activities
so the subordinates may pursue the pioneers in following the prescribed procedures.
2.3.5.4 Ethical Leadership with reference to situation
Ethical leadership is influenced by many factors and variables. Stenmark and Mumford
(2011) discussed six situational factors/variables, which might affect the behavior and outcome
of ethical leadership. The performance pressure is certainly critical when the leaders perform
under difficult circumstances. Similarly, decision-making autonomy is very much critical since
leaders fully empowered may act different from leaders less empowered and not free to make
timely decisions. For decisions to be within due time, leaders must be fully empowered and
supported by their team members so that they may decide accordingly to mitigate the problems
faced by subordinates. It is pertinent to note that leaders act positive and significantly, when they
decide matters related to their subordinate compare to their superiors. Stenmark and Mumford
(2011) led ponder on 238 undergrad brain research understudies whose reaction was recorded
dependent on the moral issue situations. The consequences of the examination recommend that
pioneers when reacting to a predominant solicitation settle on more regrettable choices instead of
a solicitation by a friend or subordinate.
2.3.5.5 Ethical Leadership with reference to context
Resick et al. (2011) examined different meanings of ethical leadership by studying from
different context, from managers and leaders of from different regions & countries. The research
states ―qualitative methods to explore the culture-specific behaviors and characteristics of ethical
and unethical leadership in these six societies‖. In view of their reactions, ―the authors were able
to determine, across cultures, six dominant ethical leadership and six dominant unethical
leadership themes‖. The dominant themes as discussed are similar in every region, country and
context at large. Ethical leaders exhibit the same behavior irrespective of context or country
because the common ground for them is based on the moral reasoning and moral development.
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On contrary, the unethical practices or themes such as dishonesty, lack of transparency are more
common in different parts of world (Resick et al., 2011).
2.4 Trust
Trust has emerged as an important topic of interest for both academicians and corporate
sector. Trust becomes more important when it comes to communication or interaction among the
employees and with other stakeholders for sustaining individual and organizational relationship
(Elfenbein & Zenger, 2014; Lioukas & Reuer, 2015). The business enterprises realize that
uncertainty in organization is counterproductive for both employees and business. The
development of relational capital followed by building trust among team members certainly help
in overcoming the vagueness and ambiguities (Blatt, 2009). The corporate world faces this
situation almost every day as the mergers and acquisitions have become a daily business now.
Certainly, trust reduces financial costs for organizations. Trust certainly increase performance
and cooperation among employees (Costa, Roe, & Taillieu, 2001; Mozumder, 2018), need-based
monitoring, upward communication opportunistic and self-protective behaviors of employees.
2.4.1 Conceptual Definition of Trust
Farooq et al. (2017) defined trust as:
‗‗Expectations, assumptions, or beliefs about the likelihood that another‘s future actions will be
beneficial, favorable, or at least not detrimental to one‘s interest‘‘.
Schoorman et al. (2007) defined trust as:
―Willingness of an individual to engage in relationship or characteristic of relationship of that
requires them to be vulnerable in some way‖.
Mayer, Davis, and Schoorman (1995) defined ―an employee‘s dispositional tendency to trust or
their willingness to become vulnerable to the actions of other people‖.
Operational definition;
Rupp et al. (2006) termed trust as:
―Psychological state comprising the intention to accept vulnerability based upon positive
expectations of the intentions or behavior of another‖.
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The above definitions have clearly defined the construct in different ways. Studies have
generally concluded that trust naturally emerges as a result of employee‘s interactions with each
other over the period of time (e.g., Elfenbein & Zenger, 2014; Gulati & Singh, 1998; Li, Eden,
Hitt, & Ireland, 2008). Workers for the most part will in general trust others increasingly because
of a solid affinity to trust and such workers are happy to go for broke contrast with others
(Colquitt et al., 2007; Mayer et al., 1995; Zhang & Zhou, 2014). However, trust is predetermined
by certain factors such as trustworthiness and corporate social responsibility. Previous studies
have also revealed that trust is positively related to intrinsic motivation, job-related attitudes
(such as job satisfaction, job involvement) and behaviors (such as task performance and
organizational citizenship behavior) (Ashforth et al., 2008; Ashforth & Mael, 1989; Caligiuri,
Mencin, & Jiang, 2013). Nooteboom, Berger, and Noorderhaven (1997) still noticed that there is
as yet a requirement for more information driven investigations of trust.
2.4.2 Theoretical base for Trust
The assumptions of trust are simply presupposed, ―how others will act when they are
trusted‖ (Rousseau et al., 1998). Trust is based on reciprocity where give and take behavior is
encouraged. Social exchange theory provides a predetermined association between the two
parties (such as employee and employer) for a common interest (Mowday et al., 1982), where
they exchange certain interests with each other mutually agreed upon. Such relationship may
sometimes be either explicit; where some contractual obligations are taken care of (such as labor
or employment contract) or implicit where psychometric or inner (such as psychological
contract) are met with. Certainly, this relationship is on reciprocal basis (Zhu, 2012) where
reciprocity is the basis of relationship. This reciprocity has certain outcomes such as results rise
of trust in relational and entomb hierarchical trades (Bercovitz, Jap, and Nickerson, 2006;
Cropanzano and Mitchell, 2005), saw authoritative help (Eisenberger, Armeli, Rexwinkel,
Lynch, and Rhoades, 2001) and authoritative citizenship practices (Konovsky and Pugh, 1994).
Specifically, the two sorts of trust that are established in social trade hypothesis (e.g.,
Blau, 1968) and the rule of correspondence (Gouldner, 1960) and which the hypothesis stresses
are: ―trust based on institutionalization of norms of reciprocity and equity‖ (institutionalization-
based trust) and ―trust based on emotional bonds of friendship or kinship‖ (affect based trust). In
presence of the institutional based trust, partners are having confidence on each other that neither
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party will manor the norms of organization. Whereas, in affect-based trust, partners trust each
other that they will not behave in a ―self-interested manner‖ which would damage their personal
relationship and attachments (Lioukas & Reuer, 2015).
2.4.3 Dimensions of Trust
The dimensions of trust like affect & cognition based and organizational based are
discussed in the current study. Trust can in like manner be associated with both an energetic and
genuine act. Deep down, it is the spot you open your vulnerabilities to people, anyway tolerating
they will not abuse your responsiveness. Intelligently, it is the spot you have studied the
probabilities of expansion and disaster, learning anticipated utility subject to hard execution data
and contemplated that the individual being eluded to will carry on in a foreseen manner. Trust in
the pioneer has been a broad thing created by noteworthy position, particularly the
transformational activity (Casimir, Waldman, Bartram, and Yang, 2006). A portion of the
examinations has contended that one of the key reasons why transformational activity works is
fans' trust and respect. It demonstrates that getting to be transformational pioneer must be
conceivable if the qualities like honesty, sympathy, care and pondering are met with.
2.4.3.1 Affect & Cognition-Based Trust
Cognition-based refers to trust ―from the head, whereas affect-based trust refers to trust
from the heart‖ (Satyanarayana & Robert, 2007). The distinction between cognition and affect
based trust has received considerable empirical support. Affect-based trust is the stimulant for
the adversities of cognitive conflict. Similarly, cognition-based trust is the remedy to fortify the
paybacks of cognitive conflict (Holste & Fields, 2005; Satyanarayana & Robert, 2007). So also,
thinks about have uncovered that while cognizance and influence based trust each spoken to
unmistakable variables of trust, they were as yet interrelated (Baker & Omilion-Hodges, 2013;
Satyanarayana & Robert, 2007).
2.4.3.2 Organizational Trust
At corporate level, organizational trust is congested by communication, intellectual
difficulties. Trust then must be built by frequent interaction, shared information and the
development of a joint organizational culture. Trust plays a great role in the success of any
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organization since it develops a link between organization and its employees (Baker & Omilion-
Hodges, 2013; Mey, Werner, & Theron, 2014).
Scholars have emphasized on organizational trust by categorizing two major perspectives
on its nature. First is the character-based perspective and the other is the relationship-based
perspective (Dirks & Ferrin, 2002). In the pioneer adherent relationship, trust in the pioneer is
considered and can be seen as the commitment of the supporters or devotees to be helpless
against their pioneers. Pioneers' consideration, fondness, thought and examination are the
essential predecessors of this commitment (Baker & Omilion-Hodges, 2013; Dirks & Ferrin,
2002). Transformational authority may pick up devotees' trust by going about as good examples
during the time spent building up a mutual vision and furthermore by exhibiting individualized
thought for adherents' needs and the capacity to accomplish the vision (Jung & Avolio, 2000).
This creates a shared commitment among the workers of the organization, which leads to trust &
better performance with satisfaction. Nevertheless, once supporters consider that their leaders
can‘t be reliable; adherents are probably going to feel genuinely and mentally bothered, which
thusly impacts worker prosperity (Dirks & Ferrin, 2002). Interpersonal and inter-organizational
trust affect inter organizational deliberations and to be related to increased performance,
satisfaction, commitment and stress (Costa et al., 2001). Tazeem, Muhammad, Kashif, & Ijaz
(2011) examined that the relationship of transformational leadership and trust. When the
employees are motivated they can show better performance and innovativeness and increase
commitment (Tazeem et al., 2001). Reliability of the reformer is seen as a noteworthy essential
for a moral head (Trevino & Weaver, 2003; Trevino et al., 2006).
2.4.4 The Model of Trust
Mayer et al. (1995) model has multidimensional effects on both organization and
employees. This model summarized the characteristics of trustee as ―trustworthiness‖ which is
the attribute of trustee. This attribute is built over the period of time by trustee through his
explicit actions. Mayer et al. (1995) attached certain factor; 1) ability, 2) benevolence and 3)
integrity with trustworthiness. Ability is the group of skills that the trustee has in a particular area
(such as interpersonal communication, relationship management etc.). Benevolence is the
perception or rather ―the positive orientation of trustee‖ toward the trust or. The integrity is
associated with the perception of trust or that trustee is following the set of rules, standard
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operating procedures and principles accepted or followed by the trust or. All these factors are
interrelated and significantly contributed towards defining trustworthiness (Mayer et al., 1995).
Figure 5: Model of Trust by Mayer et al. (1995)
According to the Mayer et al. (1995), trust is determined by trustworthiness.
Trustworthiness is ―the ability to be relied on as honest or truthful‖ and mostly attributed to
leadership in organizational science. Trustworthiness is probably an outcome of explicit actions
taken by leaders such as corporate social responsibility (Rupp et al., 2006). Studies have linked
corporate social responsibility with trust in organizational context (Hansen et al., 2011). In
organizations where there is a lack of trust among employees can lead to dissatisfaction and the
consequences can be higher over the period. Cummings and Bromiley (1996) examined that lack
of trust in an organization among employees. The investigation inferred that absence of trust
either unequivocal or understood, can be adverse and lead to expanded outcomes as far as self-
defensive conduct and strategies or frameworks that are viewed as untrusting may result in
representatives that work around the framework so as to right an apparent bad form making an
unavoidable outcome in that regarding somebody as dishonest will prompt deceitful conduct.
Trust is considered as mien of a person to take part in relationship or normal for relationship of
that expects them to be helpless here and there (Schoorman, Mayer, & Davis, 2007).
2.4.5 Determinants of Trust
Determinants of trust whether implicit or explicit, have been the topic of interest in
behavioral and management sciences. Research says that choice to trust is likely identified with
desires, character contrasts and social personality (Evans & Revelle, 2008). Rotter (1967)
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worked on dispositional trust and concluded that it is the general expectations from others to
behave likely. These expectations sometimes become remedy for creating trust among
employees. However, expectation when not fulfilled, become source of negativity. The study of
Holm and Nystedt (2008) concluded that one can manipulate the social identity for creation of
trust. Certainly, trust will create an environment in an organization where employees will feel
strong socially and will show a higher inclination in reciprocating the same. However, the study
of Glaeser, Laibson, Scheinkman, and Soutter (2000) established positive correlation of trust
with the frequency of participation and occurrence of events in organization. The study of
Greiner, Ockenfels, and Werner (2007) and Evans and Revelle (2008) contended that trust can be
determined upon the conditions known to the individuals. In other words, the determinants of
trust either explicit or implicit like its outcomes are more related to conditions and environment
where the individuals operate.
2.4.6 Relationship of Trust with study variables
The relationship of trust can be studied in two ways; a) predictors of trust and b)
outcomes of trust. The predictors of trust such as leadership, corporate social responsibility,
ethical climate and ethical culture are the prominent factors directly affect trust. Whereas, the
outcome of trust can be categorized in further two bases i.e. i) individual and ii) organizational.
The outcome of trust on individual is performance, ethical decisions and attitudes of employees
and organizational outcomes could be reputation and organizational prestige (Farooq et al.,
2014). Research has discovered that initiative especially moral pioneers defeat authoritative
correspondence holes, which manufactures trust in representatives (Den Hartog, 2003). The
dependable quality of moral pioneers, cause them to pursue the guidelines of straightforwardness
and revelation, which may lift trust of representatives (Javed, Rawwas, Khandai, Shahid, and
Tayyeb, 2018). The moral practices of pioneers in association make a noteworthy positive
connection among pioneers and workers. Consequently to the moral practices, representatives
show more prominent responsibility which prompts improved choice makings. This condition
surely urges workers to share thoughts, show more noteworthy inventiveness and better basic
leadership (Chen & Hou, 2016).
Trust has been linked with leadership particularly leadership styles such as ethical
leadership. Studies have found strong positive relationship of trust with ethical leadership style
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(Bello, 2012; Caldwell, Hayes, Bernal, & Karri, 2008; Dirks & Ferrin, 2002; Lapidot, Kark, &
Shamir, 2007; Zhu, 2008). Research has suggested that integrity of leaders is important specially
building trust among employees in organization (Lapidot et al., 2007). Of course, trust is a
significant characteristic of moral pioneers to have so as to build execution and moral basic
leadership. Leaders in organization enhance trust among the employees through actions such as
increased corporate social responsibility. Ethical leader‘s effectiveness is positively linked with
corporate social responsibility (Langlois et al., 2014). Leaders align the vision and mission of
organization with social activism since such kid of activities creates value and take the policies
towards institutionalization (Marcus & Anderson, 2006). The social activism is certainly linked
with social performance, citizenship behavior, enhance overall non-financial outcomes (Aguinis
& Glavas, 2012) and significantly increase work related behaviors (Farooq et al., 2014).
2.4.7 Relationship of trust with other variables
Trust, is important whether it is on individual level or organizational level.
Research has seen positive relationship between trust and employee‘s behavior (Hansen et al.,
2011; Mey et al., 2014). Employees infer positive behavior when they trust the leaders. The
organizational trust has been linked with psychology and social sciences (Yildiz & Oncer, 2012)
since its outcomes include moral confidence in individual and employees recognition of the
company as trustworthy (Gucer & Demirdag, 2014; Rusu & Babos, 2015). The organization can
build its employees confidence by actions such as corporate social responsibility. There seems to
be a positive nexus of corporate social responsibility with trust as in case of Brown, Gray,
McHardy, and Taylor (2015) followed by the Lee et al. (2013) concluded that workers trust at
workplace creates a positive relationship. Similarly, employees reciprocate positivity towards
organization if they are being treated equally (Krot & Lewicka, 2012). Nevertheless, this
reciprocity is based on mutual respect and dignity at both ends. Furthermore, studies have
investigated the negative effect of CSR attributions on the work environment aberrance practices
since numerous creators (e.g. Aguinis & Glavas, 2013; Lange & Washburn, 2012; Rupp &
Mallory, 2015) have explicitly featured this.
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Research has also shown that organizational identity is one of the outcomes of CSR.
However, the relationship between organizational identity and CSR is mediated by trust (De
Roeck & Delobbe, 2012). Trust develops the relationship of management and employees. Sing &
Malhotra (2015) has explored the relations with employee silence with mediation of Trust and
suggested to explore some other variables in this relation. Morgeson, Aguinis, Waldman, &
Siegel (2013) and Jones (2010) featured the significance of testing elective mental components
among CSR and representative's dispositions and conduct.
2.5 Performance Behavior
The performance outcomes of corporate social responsibility (consumer choice of
company/product, moral capital financial performance etc.) at both individual and institutional
level, have been widely studied (Lev et al., 2010). However, recent studies have more focused on
work related behaviors of corporate social responsibility such as OCB, (Bozkurt & Bal, 2016;
Farooq et al., 2014; Seivwright & Unsworth, 2016), TPB, CWB and attitudes. Although these are
non-financial outcomes of corporate social responsibility (Aguinis & Glavas, 2012) but social
exchange theory says that this is a process of reciprocity (Peterson, 2004) where leaders create a
socially responsible environment and create a positive behavior (OCB, TPB) among employees
towards the firm (Aguinis & Glavas, 2012). In other words, OCB and CSR are positively related
to each other (Farooq et al., 2014).
When employees develop OCB, their performance is much better and they create a sense
of ownership by putting extra efforts (Carroll, 2015). Past studies on OCB show that employee
attitude, personality, traits and perceptions are directly related to OCB (Podsakoff et al., 2009).
The social exchange theory states that the CSR-OCB link is correlated on interchange norms
(Peterson, 2004; Zink, 2011) which means that leaders may create the environment where
employees tend to believe in them based on their actions (Podsakoff et al., 2009). It is pertinent
to note that CSR activities not only develop OCB but also impact the organizational outcome
such as task performance of employees (Podsakoff et al., 2009; Totterdell, 2000). Similarly,
showing and developing positive OCB is directly related to TPB (Totterdell, 2000) especially
when employees shows positive behavior towards organization (Podsakoff et al., 2009). This
process of win-win positivity is multidimensional attributing both performance and behavioral
outcomes (Bennett & Robinson, 2000; Hui-Hua & Schutte, 2015). Furthermore, it is also
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contended that the CSR policies and activities reduce the negative tendencies among employees
in return (Zink, 2011).
CWB has been categorized on two dimensions (Dalal, 2005). The Individual differences
are attributed to individual personality traits or characteristics such as age and gender (Fox et al.,
2007). These factors are purely judged, perceived and interpreted by individuals. Whereas, the
situational factors are ―aspects of the social context that are perceived by people and are largely
influenced by other members of the organization‖ (Hershcovis et al., 2007). Previous research
has established that organizational justice (Colquitt, 2001), ethical leadership (Brown et al.,
2005), ethical climate (Ashforth et al., 2008) OCB (Podsakoff et al., 2009) and CSR (Appelbaum
& Roy, 2007) can overcome reduce the negative deviances among the employees (Dalal, 2005;
Hershcovis et al., 2007).
It is obvious that non-existence of social activism in companies encourage employees to
peruse negative and deviant behaviors as lateness and CWB (Appelbaum & Roy, 2007;
Lilienfeld et al., 2015). In the present study, we will analyze OCB, TPB and CWB in relation to
CSR, in accordance with the proposals of past research (Appelbaum & Roy 2007; Bennett &
Robinson, 2000; Lilienfeld et al., 2015; Hui-Hua & Schutte, 2015).
2.5.1 TPB
TPB has been the most important work related construct. Task performance is ―the
effectiveness with which job incumbents perform activities that contribute to the organization's
technical core either directly by implementing a part of its technological process, or indirectly by
providing it with needed materials or services‖ (Borman & Motowidlo, 1993). Task performance
of a sales job probably includes product knowledge etc. and time management. Some of the
studies have linked contextual performance with performance ratings overall (e.g. MacKenzie,
Podsakoff, & Fetter, 1991). However, task performance is an independent topic since it‘s a
formal job performance rather voluntary work.
2.5.2 Conceptual Definition of Task Performance Behavior
―Task performance can be defined as the effectiveness with which job incumbents
perform activities that contribute to the organization's technical core either directly by
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implementing a part of its technological process, or indirectly by providing it with needed
materials or services‖ (Borman & Motowidlo, 1993).
2.5.3 Task Performance Vs Contextual performance
Contextual performance is different from task performance (Barman & Motowidlo,
1993). Contextual performance as the name denotes, increases the organizational efficacy
followed by activities, social well-being and processes (Bateman & Organ, 1983; Borman &
Motowidlo, 1993; First, Smith, Organ, & Near, 1983). The earlier studies by Barnard (1938),
Katz (1964), Katz and Kahn (1978) and Smith et al. (1983) contended that contextual
performance is the discretionary of employees motivated by OCB. A study conducted by Brief
and Motowidlo (1986) linked task performance with pro-social behavior of employees. A similar
study by Borman, Motowidto, Rose, and Hanser (1985) and Near and Miceli (1987) contended
that leader‘s positive behavior is yielding contextual performance in organizations. Motowildo,
Borman, and Schmit (1997) attributed contextual performance with task performance whereas,
few other studies (i.e. Barrick and Mount's, 1991; Conway, 1996; Midili & Penner, 1995;
Motowidlo & Van Scotter, 1994) linked the personality of individual with task performance.
2.5.4 Task Performance and Theory of individual differences
The antecedents of task and contextual performance are individual differences,
motivation and training processes. The theory of individual differences is inspired by some of the
notable studies (such as Campbell, McCloy, Oppler, & Sager, 1993; Hunter, 1983; McCrae &
Costa, 1996; Schmit, Motowidlo, DeGroot, Cross, & Kiker, 1996). Motowildo et al. (1997)
summarized the theory as, ―theory of individual differences in task and contextual performance,
the frequency and contribution value of behavioral episodes in the performance domain are
determined directly by relevant knowledge, skills, and work habits‖. The contextual knowledge
is associated with contextual performance. In sum, the individual differences are different in
context and based on factors such as knowledge, skills and personality traits.
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2.6 Organizational Citizenship Behavior
Organizations have comprehended the universal fact that employees are one of the major
success factors for them (Brief & Motowidlo, 1986). The changing dynamics of corporate world,
facing the severe competition has compelled organizations to invest on the human resources.
Only a competent, motivated, trained and skilled human force can meet the challenges of
industry and perhaps better understand the citizenship behavior which is after all sole discretion
of individual (Midili & Penner, 1995). These motivated individuals do realize that the
organizational citizenship behavior is above rewards or formal compensation system and
informal. However, the informal recognition of OCB results in increasing the productivity and
effectiveness of employees (Smith et al, 1983).
2.6.1 Conceptual Definition of OCB
Organ (1988) defined OCB;
―Individual behavior that is discretionary, not directly or explicitly recognized by the
formal reward system and that in the aggregate promotes the effective functioning of the
organization‖ (p. 4).
The willingness of individual is sole discretion as studied by Barnard (1938). Katz (1964)
referred OCB as ―innovative behavior‖, whereas in another study Katz and Kahn (1978) referred
it as ―spontaneous behavior‖. Similarly, this kind of behavior isn‘t dependent on rewards or
recognition but it is preference of individuals working in organization (Bateman and Organ,
1983; Organ et al., 2006). Such individuals are highly motivated and concerned for the
organizations effectiveness (Organ, 1990). OCB has gained attention from academicians and
corporate world due to the obvious reasons associated with it (Organ, 1997; Organ et al., 2006;
Williams & Anderson, 1991). Organizations are working for the improved employee‘s behavior
including OCB having known positive effects on the efficiency and effectiveness for
organizations (Podaskoff, 2000)
2.6.2 Background
The concept of OCB got formal attention after the study of Katz (1964) followed by
William and Anderson (1981) and Bateman and Organ (1983). Smith et al. (1983) expanded the
concept based on generalized Compliance and altruism. Similarly, Organ (1988) expanded the
concept of OCB in further five factors based on the observations that the behavior of employees
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is reciprocated by multiple factors. Additionally, Graham (1991) presented his four dimensions‘
model of OCB based on the assumptions that OCB is linked with the contextual factors within
organization. Lee and Allen (2002) backed the earlier studies by delineating that context plays a
vital role in defining the OCB in organizations. However, researchers have differed in formally
defining the OCB in context of organizational culture and hence defer in linking the OCB with
contextual factors (Jahangir, Akber & Haq, 2004; Khalid and Ali, 2005; Lee and Allen, 2002; Le
Pine et al., 2012; LePine & Van Dyne, 2001; Podsakoff, MacKenzie, Paine, & Bachrach, 2000;
Sahafi, Danaee, & Sarlak, 2011; Srivastava & Gope, 2016; Turnipseed & Murkison, 2000).
2.6.3 Determinants of OCB
The determinants of OCB have been categorized as financial and nonfinancial (Zarea,
2012). However, most of the studies (i.e. Katz & Kahn, 1996; Khalid & Ali, 2005; Podsakoff et
al., 2009; Srivastava & Gope, 2016) have summarized that determinants of OCB are mostly
nonfinancial and not included in the formal reward systems. Likewise, some of the studies have
summed determinants such as job design, role of supervisors and trust (Jahangir et al., 2004;
Podsakoff et al., 2009). Similarly, some of the related determinants are also important such as
organizational culture, working environment. The individual factors such as behavior of co-
worker, employee‘s self-development, motivation and self-efficacy are linked with OCB (Ali,
2012; Podsakoff et al., 2009; Skarlicki & Latham, 1995).
However, trust as predictor of OCB has got numerous attentions across the board (George
& Bettenhausen, 1990; Jahangir et al., 2004; Podsakoff et al., 1997). Trust creates an
environment where the employees are positively affected for enhancing OCB as well as other
positive behaviors towards organization. The study of Bateman and Organ (1983) found trust as
the predictor for job satisfaction whereas Podsakoff et al. (2000) linked organizational support
with positive work behaviors. The study of Waltz and Niehoff (1996) linked OCB as work
related outcome of trust and the study of Schnake and Dumler (2003) linked positive work
behaviors such as OCB with trust.
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2.7 Counterproductive Work Behavior
Counterproductive work behavior refers to any deviant behavior of employee in contrary
to the interest of organizational interest. ‗Counterproductive work behavior is sometimes
different from `counter productivity'. Counter productivity is viewed as is in fact the outcome of
counterproductive work behavior which could be avoided in first instance (Campbell et al., 1993;
Khalid & Ali, 2005). CWB is mostly linked with job performance of employees which is
reflective behavior of employees rather the outcome of CWB. It is pertinent to note that this kind
of behavior at part of employee may put the organization as well as the employee themselves
under severe risks (Srivastava & Gope, 2016). The financial and nonfinancial costs due to the
deviance behavior are unparalleled since organizations cannot afford to let their employees
having negative behaviors because organization understand that employees are primary success
factors for organization. Therefore, organizations work for controlling such deviance behaviors
and create positive work related behaviors among the employees.
2.7.1 Conceptual Definition of CWP
Collins and Griffin (1998) defined;
―Counterproductive workplace behaviors are characterized by a disregard for societal and
organizational rules and values. In addition, they note that counterproductive behaviors
can range in seriousness from low (e.g. petty stealing) to high (e.g. violence)‖.
Hogan and Hogan (1989) views;
―Counterproductive job behavior as a construct covering all deviant behaviors ranging
from absenteeism to assault‖.
Cullen and Sackett (2003) defined;
―Counterproductive workplace behavior at the most general level refers to any intentional
behavior on the part of an organization member viewed by the organization as contrary to
its legitimate interests‖.
These definitions give a clear perspective that such kind of deviance behavior is
counterproductive for organizations. Employees are now considered as primary factors for
success of organizations. Organizations do realize that increase the productivity and
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effectiveness of employees, organizations have to work ahead of rewards and compensations.
The rewards and compensation are formal systems fulfilling the explicit needs of employees. But
when it comes of the implicit needs of employees, organizations have to think beyond their
financial limits (Gruys, 1999). Similarly, employees on the other hand also realize that their
positive behavior is in fact reciprocal and hence dependent on organizational capabilities to
maintain it. In other words, deviance behavior is the product of organizations failure.
Furthermore, the study of Cullen and Sackett (2003) has established that deviance behavior is
intension and could be controlled by employees based on the treatment they get from
organization. This kind of tendency is counterproductive for both organization and employees
and should be avoided for mutual existence.
2.7.2 Determinants of Counterproductive Behaviors
Some of the studies (Dalal, 2005; Fox et al., 2007; Hershcovis et al., 2007) have listed
two factors i.e. individual differences and situational as predictors of CWB. The individual
differences (such as stable personality) are associated with the personality of employees whereas
characteristics (such as gender and age differences) are attributed to individual character. The
predictors actually derive the personality of individuals and influence them accordingly.
However, individual‘s personality is primarily deriving the factors as if positive or negatively
deviant (e.g., Fox et al., 2007). Other important variables are called situational elements. The
situational elements are socially connected and largely attributed to co members of organization
(Hershcovis et al., 2007). Additionally, the big five personality traits are also linked with the
CWB (Dalal, 2005; Hershcovis et al., 2007).
However, the individual factors have been discussed in numerous studies (e.g. Cullen &
Sackett, 2003; Fox et al., 2007; McCrae & Costa, 1987). Furthermore, the study of Lee, Ashton,
and Shin (2005) attributed organizational deviance with diligence. In a similar study Mount,
Ilies, and Johnson (2006) summarized that counter productivity is linked with low cordiality.
Similarly fear, hostility or anxieties are other potential predictors of deviance behavior (Watson
& Clark, 1984). All these negative deviances lead to trauma, negative behavior of employees,
negativity towards job and tasks and on top of it negative behavior towards organization overall
(George & Bettenhausen, 1990; Martinko, Gundlach, & Douglas, 2002; Staw, Bell, & Clausen,
1986). However, it is also an established fact that demographical factors closely linked with
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counterproductive behavior. In fact, notion of CWB is lesser in older employees as compare to
the younger one‘s as noted in the study of Lau et al. (2003). Additionally, gender is yet another
factor differs in tending CWB (Nowakowski & Conlon, 2005).
Some of the other determinants of CWB such as perception of organizational justice
particularly distributive and procedural injustice have been studied (Ambrose, Seabright, &
Schminke, 2002; Greenberg, 1993; Skarlicki & Folger, 1997). The employees trust their
management for fair allocation of compensation and rewards which comes under distributive and
procedural justice. However, due to the injustice on the part of management compel employees
towards deviance behaviors which is untoward and unfounded on part of management (Aquino,
1995; Colquitt, 2001; Moorman, 1991; Niehoff & Moorman, 1993; Skarlicki & Folger, 1997).
The study of Fox, Spector, and Miles (2001) correlated organizational justice with
counterproductive behavior. The perception of injustice leads to distrust among employees on
management. Studies have shown that trust plays a vital role in decreasing the negative
tendencies among employees (Aquino, 1995; Bennett & Robinson, 2000; Fox et al., 2007).
When employees they are being treated fairly by the management, following the ethical code of
conduct, they show more inclination towards organization (Galperin, 2002). In other words,
employee‘s negative deviance is highly linked with organizational justice followed by trust on
management (Spector, 1997; Hershcovis et al., 2007).
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2.8 Ethical Climate
Ethical climate was used an analytical tool in understanding normative systems of
organization. However, in the lateral stage ethical climate was linked with organizational context
linking it with the ethical and unethical practices of employees (Choi et al., 2015; Simha &
Cullen, 2012). Ethical climate creates a contextual inspiration, elaborated by Ostroff et al. (2013)
‗‗higher-request social structure a socially intuitive setting inside which people work and which
features the practices and reactions that are normal, upheld and compensated‖. The behavior and
responses of the individuals are often affected by the climate they work in (Hansen et al., 2016;
Schneider, Ehrhart, & Macey, 2011).
It‘s important to understand that how ethical climate change the employee‘s perceptions
regarding the organization and leaders. The outcomes of ethical climate are well connected in
both individual and organizational level (Mayer et al., 2009).
2.8.1 Conceptual Definition of ethical climate
Martin and Cullen (2006) defined;
“An ethical climate can be defined as the perception of what constitutes right behavior,
and thus becomes a psychological mechanism through which ethical issues are
managed” (p. 177).
Ostroff et al. (2013) defined;
„„Higher-order social structure a socially interactive context within which individuals
operate and which highlights the behaviors and responses that are expected, supported
and rewarded‘‘.
These definitions delineate the concept in broader term. However, research says that that
ethical climate is formed by firm age, history and practice (Neubaum, Mitchell, & Schminke,
2004). Ostroff et al., (2013) say that ethical climate is not only a perception of employees but it
is a contextual environment where they work. This contextual environment is in fact the outcome
of ethical leadership (Hansen et al., 2011) which provides a base for corporate social activities
(Doh et al., 2010). Secondly, the ethical climate not only positively affects the individual
outcomes such as commitment, performance etc. but also organizational outcomes such as
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organizational performance and social responsiveness (Mayer et al., 2009). Employees form their
opinion on ethical climate based on ethical leadership and corporate social activities company
perform (Lev et al., 2010).
2.8.2 Types of Ethical Climate
Empirically, five types of ethical climate such as instrumental, caring, independence, law
and code, and rules exists in organizations across the board (Bulutlar & Oz, 2009; Martin &
Cullen, 2006; Simha & Cullen, 2011; Tsai & Huang, 2008). The instrumental climates encourage
ethical decision making by leaders (Simha & Cullen, 2011). Similarly, rules and codes climates
are guided by rules followed by ethical practices (Appelbaum, Deguire, & Lay, 2005; Aquino &
Becker, 2005; Liu, Fellows, & Ng, 2004; Martin & Cullen, 2006).
2.8.4 Theories of Ethical Climate
In its unique detailing, moral atmosphere spoke to a graphic guide of moral basic
leadership and activities inside an association dependent on philosophical and sociological
hypothesis. In the years since its presentation, in any case, experimental research has appeared
between moral atmosphere and an assortment of results. These results incorporate factors
identified with morals, yet additionally incorporate work results often contemplated in the
executives and hierarchical research (e.g., duty and occupation fulfillment) (Carr et al., 2003).
We will talk about the principle speculations in detail;
2.8.4.1 Moral Development Theory
Moral development though has been studied through the lens of learning theory and other
cognitive developmental approach based on the study of Jean Piaget and Lawrence Kohlberg
(1984). Kohlberg (1984) listed many fundamental philosophical concerns based on studies of
moral development. Clinicians considering profound quality or good advancement must
arrangement with the issue of good relativism or worth impartiality, which stems from the worth
loaded, words "good" and "improvement". Certainly, moral development is based on the socio
psychologically factors supported by morality and ethicality.
2.8.4.2 Ethical Climate Theory
The model developed by Victor and Cullen (1988) consists of a two dimensions i.e.
considering ethical philosophy and the sociological theory of reference groups. The model got
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attention particularly from corporate world since the framework addressed the ethicality in a
wider prospective (Belak & Mulej, 2009). The moral way of thinking measurement incorporates
three criteria: generosity, selfishness and rule. Vanity alludes to conduct that is concerned
predominantly with personal circumstance. Kindheartedness is like utilitarianism, in that choices
and moves are made to deliver the best useful for the best number of individuals. Standard is like
deontology, in that choices are made and moves are made as per laws, principles, codes, and
techniques.
2.8.5 Determinants of Ethical Climate
The external organizational context, organizational structure, and strategic or managerial
orientations are important to study in addition to the internal drivers of ethical climate. It derives
from institutional theory (DiMaggio & Powell, 1983), and in a general sense centers the
organizations attempting to "legitimize" themselves in light of outside weights. Albeit few
examinations research how outer authoritative settings and moral atmospheres connect, one that
does is Bourne and Snead‘s (1999) exploration of how community norms and values determine
employees‘ moral discernments, and consequently decide the hierarchical moral atmospheres.
Research conducted by Cullen, Parboteeah, and Hoegl (2004) summarized the effects on ethical
decision making by external organizational contexts.
The study of Weber and Gerde (2011) found that environmental uncertainty and
organizational role influenced ethical climates. These findings are in contour with the results of
Victor and Cullen (1988) expressing that authoritative structure is a huge determinant of moral
atmosphere discernments. The organizational forms encourage the ethical climates in
organizations as studied by Ouchi‘s (1980) and Wimbush, Shepard, and Markham (1997).
Similarly, the study conducted by Wyld and Jones (1997) concluded that context factors of
organization are important in linking the ethical climate. Additionally, the emergence of modern
technology has changed the ethical climate of organizations having positive significance (Stone
& Henry, 2003).
The empirical analysis conducted by Jin, Drozdenko, and Bassett (2007) summarized that
the tech based companies showed altogether different ethical practices. The tech based
companies are in fact in a better position in practicing ethical climate. Similarly, ethical climate
practices in nonprofit organizations differ from profit oriented organizations (Agarwal, Malloy,
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& Rasmussen, 2010). The nonprofit entities performed better in practicing ethicality and
promoting ethical climate (Brower & Shrader, 2000; Agarwal et al., 2010). Few researches (such
as Duh, Belak, & Milfelner, 2010; Kidwell, Kellermanns, & Eddleston, 2012) revealed that
nonfamily enterprises are promoting ethical climate as compare to family owned businesses.
Furthermore, studies also revealed the association of ethical work climates with strategic
dimensions (VanSandt, Shepard, & Zappe, 2006), managerial practices (Parboteeah et al., 2010)
and leader‘s role in delineating the ethical environment in organizations (Dickson, Smith,
Grojean, & Ehrhart, 2001; Grojean, Resick, Dickson, & Smith, 2004; Neubaum et al., 2004;
Schminke, Ambrose, & Neubaum, 2005).
2.8.6 Outcomes of Ethical Climate
The study of Simha and Cullen (2011) has focused on investigating and exploring the
impacts of ethical climate on different hierarchical results. The key preface behind this beneficial
domain of research is by all accounts the acknowledgment that views of ethical climate tap
generally critical issues that influence individuals' responses to work and their associations
(Martin & Cullen, 2006). The result factors being examined are conventional administration and
hierarchical conduct factors, work fulfillment, authoritative duty, turnover aims, moral conduct,
and broken practices or dysfunctional practices (Simha & Cullen, 2011). The outcome variables
of ethical climate may vary from different contexts (Deshpande, 1996b; Elci & Alpkan, 2009;
Goldman & Tabak, 2010; Joseph & Deshpande, 1997; Koh & Boo, 2001; Martin & Cullen,
2006; Tsai & Huang, 2008; Wang & Hsieh, 2012; Woodbine, 2006).
The study of Deshpande (1996b) contended the positive impact of ethical climate on job
performance and overall satisfaction of employees working at different levels. The study
concluded that ethical climate significantly affects the performance variables. Organizational
commitment is another outcome of ethical climate (e.g., Ambrose, Arnaud, & Schminke, 2008;
Cullen, Parboteeah, & Victor, 2003). The organizational commitment is positively correlated
with ethical climate as studied by scholars (such as DeConinck, 2010; Martin & Cullen, 2006;
Sims & Keon, 1997; Tsai & Huang, 2008). Studies have also showed that ethical climate and
organizational commitment are on reciprocal basis (Ambrose et al., 2008; Cullen and colleagues,
2003; Valentine, Godkin, & Lucero, 2002). Similarly, few studies (e.g., Ambrose et al., 2008;
DeConinck, 2011; Deshpande & Joseph, 2009; Lopez, Babin, & Chung, 2009; Mulki, Jaramillo,
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& Locander, 2008; Sims & Keon, 1997; Stewart et al., 2011) have linked turnover intensions
with ethical climate where employees are encouraged to leave the organization if the
environment in general isn‘t conducive.
The performance behaviors have also been linked to ethical climate. Employee‘s
behavior, particularly ethical is linked with organizational commitment and ethical climate (e.g.,
Deshpande, 1996b; Fu & Deshpande, 2012; Fritzsche, 2000; Leung, 2008; Rothwell & Baldwin,
2007; Saini & Martin, 2009). The behavioral outcome of climate is no doubt important for both
organizations and employees at large for a win-win condition (Shacklock, Manning, & Hort,
2011; Smith, Thompson, & Iacovou, 2009; Wimbush & Shepard, 1994). Additionally, some
scholars have also pointed that ethical behavior of employees is positively affected by ethical
climate irrespective of context and culture (Deshpande, George, & Joseph, 2000; Deshpande,
Joseph, & Shu, 2011; Wimbush & Shepard, 1994; Wimbush & colleagues, 1997). Dysfunctional
behavior is yet another organizational outcome widely studied by scholars (e.g. Barnett &
Vaicys, 2000; Bulutlar & Oz, 2009; Elm & Nichols, 1993; Carr and Colleagues, 2004; Martin &
Cullen, 2006; Ozer & Yilmaz, 2011; Peterson, 2002; Vardi, 2001; Watley, 2002; Wimbush et al.,
1997).
2.8.7 Relationship with other study variables
The ethical climate has been studied mostly on moral development and sociocultural
context in line with the studies of Kohlberg (1984) and Schneider (1983). The philosophy of
moral development is associated with the performance and attitudes of employees and leaders in
organization. However, the relationship of ethical climate with other constructs such as, ethical
reasoning, ethical leaders, corporate social responsibility and ethical performance have been
studied in different contexts (Schminke et al., 2005; Triveno et al., 2006). Trevino and Brown
(2004) concluded that the ethical leaders obtain ethical performance from their workers. Ethical
leaders create an environment of win-win for both employees and organization to enhance the
performance. This supposition qualifies that there is a positive connection between moral
pioneers and execution pursued by moral atmosphere. Koh and Boo (2001) has summarized that
employees tend to wish uniformity between their moral standards and that of their organization.
This simply means that the relationship of ethical performance of employees and ethical climate
of organization is on reciprocal basis. This reciprocity is based on moral reasoning and mostly
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encouraged by ethical leaders in organization. However, it is important to study the role of
ethical climate as moderator between the relationships of different constructs.
2.8.8 Ethical Climate as Moderator
The relationship between ethical leadership and corporate social activity is affected by
other constructs such as organizational culture and ethical climate (Bansal & Roth, 2000; Mayer
et al., 2009; Lai & Lee, 2007). Research has linked the organizational culture with collection of
formal components (Alvesson, 2002; Schein, 2004), sometimes believes and behavioral and
moral norms (Trevino & Brown, 2004). Ethical climate is mostly referred as a ‗‗higher-order
social structure‖ (Ostroff, Kinick, & Muhammad, 2013) based on both individual and firm level.
Studies have delineated that ethical climate perceptions or shared ethical climate isn‘t a myth
(Chiu & Sharfman, 2011; Ostroff et al., 2013) but represents the shared environment where
employees work (Mayer et al., 2009). Although, the outcomes of ethical climate are well
connected in both individual and organizational level (Mayer et al., 2009) however, the subduing
role of ethical climate needs further study (Ostroff et al., 2013).
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2.9 Sustainable Development
By the end of 20th
century, sustainable development has been the topic of discussion in
the global world because of inequalities in global development, environmental challenges and
other economic reasons. The recent past has observed that sustainable development has been
discussed widely in economic and management sciences because the investors and other
stakeholders are urging the corporate sector to act responsibly towards environment and society
at large through explicit actions and disclosure of their activities by issuing sustainability or
corporate social responsibility reports (Braam & Peeters, 2018; Ebner & Baumgartner, 2008;
Huge, Waas, Eggermont, & Verbruggen, 2011). These reports are part of compliance and best
practices corporate sector could undertake for better relations with its employees as well as the
international community followed by improved stakeholders‘ confidence and thus enhance the
corporate reputation (Pflugrath, Roebuck, & Simnett, 2011; Reimsbach, Hahn, & Gurturk, 2017;
Simnett, Vanstraelen, & Chua, 2009).
The international community adopted the concept of sustainable development because it
provides multidimensional framework and supports triple-bottom-line model. The triple-bottom-
line model supports the ecological, economic and social factors at large. Corporations often have
a substantial impact in eradicating the inequalities in global development by adopting sustainable
development as a model with action-oriented approaches. In accomplishing the objectives and
destinations of the manageable improvement model, it is especially needy that associations are
assuming liability since they understand that their tasks may impact human needs, culture and
condition.
Corporations are also required to apply the basic principles of sustainable development in
its true letter and spirit while they conduct their business. The international community adopted
the concept of sustainable development because it provides multidimensional framework and
supports triple-bottom-line model. The triple-bottom-line model supports the ecological,
economic and social factors at large. Corporations often have a substantial impact in eradicating
the inequalities in global development by adopting sustainable development as a model with
action-oriented approaches. In achieving the goals and objectives of the sustainable development
model, it is very much dependent that organizations are taking responsibility for the ways their
actions may influence human needs, culture, societies and the natural environment. Corporations
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are also required to apply the basic principles of sustainable development in its true letter and
spirit during the operations of their business.
Sustainability is also referred to the activities of organization, where the inclusion of
economic, societal and environmental apprehensions in business operations may be considered in
stakeholder‘s management. Sustainable development as a precise concept aims to meet the
present and future human aspirations and needs, in a rationale way by protecting the earth where
we live with other human beings. Sustainability has a set of defined attributes or characteristics
which may be termed as the fundamental principles must be respected by the corporations while
doing the business (Huge et al., 2011). The economic prosperity of corporations is no longer
acceptable in isolation from the society and allied forces which are being impacted by its actions.
Corporate world is required now to focus its attention on both increasing profitability and work
for sustainability through adopting corporate social responsibility (Siemens, 2016). Today‘s
organizations are being forced by many factors like social, economic and environmental to align
their business strategies by inclusion of socialization (Gillis & Spring, 2001). The most socially
responsible organizations always try to encompass their strategies and goals, to meet the global
challenges. In fact, organizations are facing challenges as how to understand and transform
themselves in relation to many local and global stakeholders. Companies today are required to
keep excellent relations with its internal stakeholder‘s i.e. employees as well as external
stakeholders i.e. government, public, global community etc. This is a strategy to ensure
organizational success and to escalate its ability to respond to competitive environment. A
variety of strategies have been developed by organizations for dealing with this juncture of
human aspirations, communal needs, environment, and resultantly business obligations
(Grossmanx, 2004).
Sustainability and corporate social responsibility are therefore considered to be a
pertinent feature of the modern business and society, while addressing corporate social
performance, corporate ethics, global corporate citizenship and stakeholder management (Hall,
2008). Corporate social responsibility encompasses the common conviction by the masses that
businesses have a responsibility to society which is beyond the investors and stockholders of the
firm. Of course, that responsibility is not only to make money or profits for the owners but
extends to work for the betterment of community at large, government and the natural
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environment. It is therefore labeled as a model for organizations where they can guarantee to
address the modern challenges of sustainability by contributing in stirring and heading society
towards a sustainable future (Blindheim, 2008). Additionally, we will also study the scope,
theories and its nexus with corporate social responsibility in upcoming write up. Before going to
the details, we will have a look at the definition of the construct since many people might mix
the same with conventional development model.
2.9.1 Definition of Sustainable Development
Townsend, Meima, and Starik (2016) defined:
"Collection of ever-awakening dreams that are continuously unfolding, a kind of
multilevel/multisystem kaleidoscope of things and people we recognize and things and people
we don‘t recognize".
World Commission on Environmental Development (1987) defined:
"Development that meets the needs of the present without compromising the ability of future
generations to meet their own needs".
IUCN et al. (1980) defined:
―Development is defined as: the modification of the biosphere and the application of human,
financial, living and non-living resources to satisfy human needs and improve the quality of
human life. For development to be sustainable it must take account of social and ecological
factors, as well as economic ones; of the living and non-living resource base; and of the long
term as well as short term advantages and disadvantages of alternative actions‖ (IUCN et al.,
1980, p. 1).
2.9.2 Background
The concept of sustainable development discussed in 18th
century, typically used in
forestry since the protection of the population of trees could be ensured. However, literature
lacks the evidence of its development and usage from 18th
century until 1942 when Peter
Drucker concluded that organizations have social obligations. Similarly, Bowen (1953)
contended that the concept of sustainable development was discussed in detail in 1949. Earlier
Bowen had studied the relationship of organizations and their social responsibility (Bowen,
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1953). Some of the scholars such as Narver (1971) discussed social responsibility in context of
ethicality and ethical practices. Such contextualization opened the ways for new discussion
wherein organizations started to think about the inclusion of society at large while doing
business.
The global communities for the last many years have shown great concern about issues in
our ecosystems and loss of biological diversity which affects the human health and wellbeing
directly or indirectly. Global community has shown significant progress in improving industrial
and agricultural practices in both developed and developing countries since 1960 (Carson, 1962).
The concept of sustainable development got further attention with the publication of ―Silent
Spring‖ by Carson (1962). Similarly, the expansion of Non-governmental organizations (NGOs)
such as the World Wide Fund for Nature (WWF) and International Union for Conservation of
Nature (IUCN) played a vital role in becoming watchdogs on business enterprises. Sustainable
development, especially the environmental sustainability got more attention after the United
Nations conference 1972 held in Stockholm followed by 1978 OECD. After these conferences,
the world leaders came to a conclusion on well-defined definition of sustainable development.
The definition encompasses a wide range of strategic framework and economic development
perspectives. Although the analysis and interpretation of sustainable development may vary from
country to country but the essence should remain same as to work for better planet we share with
others. The industrialization today, has forced both the developed and developing nations to
address the environmental, societal and worker health and safety standards. However, the
approach of developing nations is different as the nature of their problems is different in nature.
The globalization has created the opportunities of economic growth and encouraged the global
community resolving challenges of sustainability which are closely associated with development.
The conferences of Rio de Janeiro (1992) held by United Nations followed by
Johannesburg (2002) add more values to concept of sustainable development. The outcome of
these conferences was ―Our Common Future‖ a well-known publication which surfaced
milestone for establishment of World Business Council for Sustainable Development
(Gummesson, 2008; Peet & Hartwick, 2009). However, as contemporary buzzwords, due to
awareness about sustainability issues, the terms ―sustainable development/sustainability‖
misused by many concerns (Robinson, 2004; Du Pisani, 2006). While several use the terms
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sustainability and sustainable development without understanding (Du Pisani, 2006) however,
the global world stressed on the need to eradicate the environmental issues during 1980‘s with
the realization to spur environmental protection regulations (Speth, 2003). A formal universally
accepted definition of sustainable development was presented by the World Commission on
Environment and Development (WCED) in late 1980‘s.
Sustainability concepts required to be operationally clarified (Robinson, 2004; Kuhlman
& Farrington, 2010). Difference amongst various scholars and practitioners regarding the
concepts of sustainable development may be because of its normative nature (Hajer, 1995). The
key principles of sustainable development as defined by scholars are; a) normative, b) equity, c)
integration and d) dynamism (Lafferty & Meadowcroft, 2000). Sustainable development concept
is considered to be socially constructed and normative or subjective in nature (Huge et al., 2011).
Its normativity is based on the thoughts and aspirations of human being because after all
whatever sustainability refers entirely rests on our values concerning the planet we live in and
want for our generations (Haughton, 1999). Our values are based on societal and normative
choices, which mean we decide our views based on certain emotional attachments (Leiserowitz,
2006). However, the dichotomy of subjectivity or objectivity of sustainable development has
been remained the topic of interest for scholars (Van Zeijl-Rozema, Corvers, Kemp, & Martens,
2008).
The equity principle of sustainable development as elaborated by scholars is a pertinent
concept which deals not only with the needs of present but also future generations based on short
and long term objectives (Gibson, 2006; Lafferty & Meadowcroft, 2000; Huge et al., 2011). The
concept of integration (Herzig & Schaltegger, 2011; Gibson, 2006) which means that it
integrates the aims and objectives of sustainable development with environmental and societal
objectives (Herzig & Schaltegger, 2011). It means that failure to achieve or going towards
achieving the aims of sustainability or objectives certainly challenges the attainment of the other
aim or objectives (Gibson, 2006). The dynamism principle aims that practical improvement or
sustainable development is presumably a procedure of coordinated supportability arranged
change (Robinson, 2004), rather a defined end-state (Lafferty & Meadowcroft, 2000). Since the
society and environment are always in a process of change, which means that sustainable
development is not in an end-state but instead a continuous process where sometimes
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environmental and social systems are at jeopardy (Gibson, 2006; Hodge & Hardi, 1997). Such
dynamism in explaining sustainable development leads to theory developments which are
categorized in the upcoming chapters.
The major theories under discussion in the current thesis are of immense importance
because of their multidimensional approaches. Stakeholder theory is connected with manageable
advancement model since the unit of examination of the hypothesis isn't simply the organization
yet the connection among organization and partners (such as employees, customers etc.)
(Freeman, 2010). Signaling theory is more focused on the increased confidence of stakeholders
on the sustainability reports issued by the companies (Hummel & Schlick, 2016). The legitimacy
theory posits that the companies should remain practice the business within best norms and
disclose the legitimate information in form of sustainability reports (Simnett et al., 2009).
Complexity theory is based on a scientific dynamism whereas; the cultural theory describes the
patterns of modern organizations, while management theory suggests the ways towards
institutionalization (Ravetz, 1986). Based on the theory development, we will also use few
approaches or models like comprehensive/rationale policy and complex/adaptive policy model to
further elaborate the concept of sustainable development.
The comprehensive/rationale policy model has been extensively studied in relation to
sustainable development (Buttel, 1992) since it addresses the socio economic problems and
objective in nature, problem identification with alternative resolutions (Briassoulis, 1989). Based
on scientific approach, this model is referred as rationale model (Pearce, 1989). On the hand, the
complex/adaptive policy model undertakes that policy matters are complex, unpredictable and
have issues with analyzability. The sustainable development model/framework by Dernbach
(2004) which is under discussion in the current thesis integrates the five factors/dimensions of
sustainable development. A continuous debate in this regard is going on over the last few years
(Ott, 2003; Adams, 2006) as sustainability addresses the societal, social and ethical dimensions
along with the economic and environmental concerns (Crane & Matten, 2016). Corporations
today, work jointly with civil society and other stakeholders to achieve the goals of sustainability
though the parameters are different for each individual to define the concept in large (Crane &
Matten, 2016).
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In a nutshell, the purpose of sustainability is to integrate business and society at large
having apprehensions on environmental and ecological concerns (Roome, 1998). These
apprehensions must be addressed by organizations in the better interest of society and its own.
Organizations, must realize that their business performance is very much dependent on the
overall wellbeing of society. Though financial viability and profit maximization are core
functions of any enterprises, however, the later isn‘t possible without addressing the challenges
of sustainability at large. Nevertheless, society is very much concern on the value creation and
fulfilling the social responsibility by businesses towards civilization. Similarly, organizations are
now required to create some social values along with their financial benefits as to transform their
business into a new sphere (Edvardsson & Enquist, 2013). The value creation is much needed to
in today‘s business, to meet the challenges of competition globalization. The competitive
advantages of business conglomerates certainly place them in a rank where their reputation is
protected. The study of Vargo and Lusch (2008) and Jamali, El Dirani, and Harwood (2015)
concluded that value creation is in fact one of the core activities of modern businesses
irrespective of small or large scale in operations.
The organizational caring for sustainability is a future trend for corporate social
responsibility beyond 2000 to 2050 as explained by Frederick (2016) earlier studied by
Armstrong and Taylor (2014). The top business conglomerates work to protect the environment,
provide environmentally friendly infrastructure, green systems and much more in their
operations. This behavior of such corporations, protect their identity and reputation. Similarly,
the performance of their employees is substantially increased with low turnover ratio across the
board. We have incorporated the study of Forbes (2017) mentioning the same factors which
these companies adopt. Concisely, sustainable corporations maintain profits, retain employees by
addressing the challenges of society and primary stakeholders i.e. employees. In spite of the fact
that money related practicality and benefit expansion are center elements of any undertakings, in
any case, the later is absurd without tending to the difficulties of manageability on the loose. In
any case, society is particularly worry on the worth creation and satisfying the social obligation
by organizations towards development. In addition, associations are presently required to make
some social qualities alongside their monetary advantages as to change their business into
another circle (Edvardsson & Enquist, 2013).
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Table 8: The World‘s Most Sustainable Companies 2017
Forbes, 2017
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2.9.3 Theories of Sustainable Development
The concept has precisely been defined as, ―Sustainability or supportability, has been
depicted similar to three circles, estimations, zones or segments, for instance the earth, the
economy and society. The business examiner René Passet from the outset proposed the three-
hover framework in 1979. It has also been worded as "monetary, common and social" or
"science, economy and worth". This has been reached out by specific makers to consolidate a
fourth backbone of culture, establishments or organization, or on the other hand reconfigured as
four spaces of the social - condition, money related angles, administrative issues and culture,
consequently bringing monetary viewpoints back inside the social, and seeing science as the
intersection purpose of the social and the trademark. The beneath hypotheses will further talk
about the develop in detail‖;
2.9.3.1 Signaling theory
The theory gives an inside as why the organizations are working to increase the
confidence level of their stakeholders through sustainability reports (Simnett et al., 2009;
Hummel & Schlick, 2016). The theory further states that organizations are more careful about
their reputation therefore, they use to prepare the sustainability reports in contour with the
endorsements of social performance (Hahn & Kuhnen, 2013; Casey & Grenier, 2014). The study
of Braam and Peeters (2018) contended that stakeholder‘s confidence is a prerequisite for
credibility enhancement of companies. Casey and Grenier (2014) concluded that greater
credibility leads to reduced cost of equity capital followed by improved financials (Lys,
Naughton, & Wang, 2015; Plumlee, Brown, Hayes, & Marshall, 2015).
2.9.3.2 Legitimacy theory
The purpose of linking legitimacy theory is obvious; because companies will certainly
want to disclose the legitimate and credible information to the stakeholders which is itself an
assurance and tool of credibility enhancement. Perhaps this way companies may also increase the
organizational reputation and perceived legitimacy (Odriozola & Baraibar-Diez, 2017).
2.9.3.3 Stakeholder theory
Stakeholder theory demands that companies need to identify and manage their
stakeholders at large since they are having the primary interest. Secondly, it is imperative that
sustainability is having a multiple impact on the business operations where inclusion of society at
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large and environmental apprehensions needs to be fixed. Nevertheless, companies are now more
careful about the sustainability and its impact for their stakeholders (e.g., Agle, Mitchell, &
Sonnenfeld, 1999; Jawahar & McLaughlin, 2001; Sangle & Ram Babu, 2007; Wallis, 2006).
Instrumental stakeholder theory defines the effects of stakeholder management on the
achievement of corporate objectives. Further research tended to the instrumental part of partner
the board expanding on such exact work.
Table 9: Summary of theories defined the constructs
2.9.4 The Evolution from Conventional to Sustainable Development
Development is a construct, which is widely argued both academically and politically in
the global discourse. As Thomas (2000) argues, ―development is contested, complex, and
ambiguous‖. Thomas (2000) expounds three ways the word ‗development‘ is used,
―development as a vision or description of how desirable a society is. Development as historical
process as social changes that takes place over long periods due to inevitable processes.
Development as an action deliberate effort to change things for the better. For example,
providing food aid to alleviate hunger‖. Sometimes development is referred as a ―long haul
procedure of auxiliary cultural change or as a short-to medium term result of alluring targets or
as a predominant 'talk' of western innovation‖ (Gore, 2000).
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2.9.5 Four Concepts of the Conventional Development Model
Dernbach (1998) proposes four interrelated concepts of development. These are
collectively called as model of ―conventional development‖ (Dernbach 1998, p. 24).
Figure 6: Conventional Development Model (Dernbach, 1998)
Dernbach (1998) states the model as ―Since the end of World War II, development has
included at least four related concepts: peace and security, economic development, social
development, and national governance that secure peace and development. Each concept is
reflected in major multilateral treaties that provide a common framework for relations among
sovereign nations as well as a shared set of national purposes‖.
Peace & security
Economic development
Social development
National Governance
that Secures Peace and
Development
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Figure 7: Sustainable development model UNCED (1992)
The global shift towards sustainable development after a coordinated effort by UNCED
in 1992 to integrate the environment and development issues. The environmental concern got the
international recognition (Dernbach, 2004).‖ The special attention towards sustainable
development model has been drawn after 2015 since the resolution of UN with the affirmation
from the member states including Pakistan. Furthermore, the sustainable development model
covers the multi-dimensions; social, economic and environment disclosure of companies, which
subsequently increase the organizational reputation (Odriozola & Baraibar-Diez, 2017).
Figure 8: UN Sustainable Development Goals 2015
2.9.5.1 Sustainable Development & United Nations
The United Nations General Assembly (2015) adopted a resolution on sustainable
development goals, which states ―The Sustainable Development Goals and targets are integrated
and indivisible, global in nature and universally applicable, taking into account different national
realities, capacities and levels of development and respecting national policies and priorities‖.
This resolution is now binding on all member states of United Nations including Pakistan being
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one of the member countries. The UN General Assembly on 27 July 2015 (resolution 69/313)
passed and emphasized on the member‘s states “Cohesive nationally owned sustainable
development strategies, supported by integrated national financing frameworks, will be at the
heart of our efforts. We reiterate that each country has primary responsibility for its own
economic and social development and that the role of national policies and development
strategies cannot be overemphasized. We will regard every nation's approach space and authority
to execute strategies for destitution destruction and feasible improvement, while staying steady
with applicable universal principles and responsibilities". In any case, this responsibility by part
states would be a night female horse if unequivocal advances are not being taken to kill the
exchange hindrances, improved monetary administration, practical answers for ensure condition,
learning the board utilizing innovation and reinforcing the financial improvement.
2.9.5.2 Pakistan and Sustainable Development
Pakistan is the member country at United Nations. Pakistan‘s permanent representative
has shown commitment to formally implement the points taken in the resolution. In addition to
that government has taken practical steps such as prime minister‘s Green Pakistan Programme,
aimed at ―striking natural resource degradation and mitigating the adverse impacts of climate
change‖. Following such, the government plans to revise the National Sustainable Development
Strategy and Pakistan Environmental Protection Act in accordance with the guide line of
sustainable development goals. Government of Pakistan has formally devised s strategy named
as vision 2025. The policy framework is aimed to address the issues in environment, climate
change and industrial education. In addition, the framework will also address safe drinking water
and sanitation across the country. The inclusive economic development is the core theme in
achieving the national sustainable development targets in Pakistan (Economic Survey of
Pakistan, 2018). To address the ecological degradation, Pakistan aims to strategize deforestation,
desertification and soil degradation and erosion. Similarly, urbanization and regional planning is
also part of revising the strategy as per the needs of sustainable development framework.
However, linking the government priorities, capacity development, devising new policies
and inclusion of corporate sector for sustainable development goals would be a major challenge
in upcoming days. The social and economic infrastructure development is yet another challenge
for government followed by agricultural development. Pakistan realizes that industrialization,
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provision of better service infrastructure with improved public sector reforms are the key factors
to achieve economic development (World Bank, 2017).
2.9.6 Sustainable Development & CSR Link
It is interesting to study the relationship or link between sustainable development and
corporate social responsibility. Before going into the details of the two constructs, first we will
try to understand the triple-bottom-line concept of business; social, environmental/ecological and
financial. This concept defines that the modern businesses have transform themselves from only-
bottom-line i.e. profit to triple-bottom-line approach. Perhaps, this transformation would not
have been possible without the support of top management and board of director of these
companies. However, sustainable development as a broader concept can positively affect the
companies in long run by encompassing the concepts of development i.e. social, economic and
environmental. The social concept of corporate social responsibility is in line with the
dimensions of triple bottom line since the outcomes are ranging from problem identification to
its resolution (Ebner & Baumgartner, 2006). In supporting sustainability, companies add more
value to human capital and organizations do understand that the yielding effect of investment on
human capital is increasing in future (Dyllick & Hockerts, 2002; Payne & Raiborn, 2001).
Besides, it is likewise basic to comprehend that whether CSR speaks to supportable improvement
on corporate level, regardless of whether manageable advancement and CSR are tradable words
and whether social components of corporate social obligation covers the more extensive ideas of
SD. This preposition is more interesting i.e. whether SD and corporate social responsibility are
interchangeable words? Research has indicated that the corporate social responsibility and
sustainability are interchangeable constructs (Ebner & Baumgartner, 2006). Ebner and
Baumgartner (2006) summarized it as ―It reflects some kind of trend as more and more
companies define their social and environmental commitment as corporate social responsibility.
The trend of using this term comes from the USA, although American companies focus more on
social commitment than on achievements and programs on sustainability issues including
environmental concerns‖. Economic advancement and corporate social commitment are used as
proportional words yet depict corporate social obligation as a three-dimensional-model (which is
commonly seen as SD).
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Based on the literature, concepts and theories, we can suggest five core reasons as a
support of nexus between corporate social responsibility and sustainability. Firstly, we
recommend and incorporate the study of Ebner and Baumgartne (2006) which is based on
reciprocity. Secondly, corporate social responsibility is mostly linked with social attributes
whereas; sustainable development is multidimensional covering social, economic and
environmental concerns. Thirdly, the transformation of corporate social responsibility in
sustainable development is already in practice since the companies now issue sustainability
reports annually by clubbing the corporate social responsibility activities undertaken during the
year. Fourthly, the research trend now is acclaiming sustainable development more as compare
to corporate social responsibility since sustainable development delineate the concept of social
and corporate sustainability in multi-dimensional trends.
Finally, sustainable development is becoming the area of interest for researchers since its
underlying concepts open ways for further discussions based on solid theoretical grounds. This
idea characterizes that the innovative organizations have change themselves from just primary
concern for example maximizing the owner‘s wealth to significantly level. Maybe, this change
would not have been conceivable without the help of top administration and leading group of
executive of these organizations. These executives realize that business growth is linked with the
overall growth of society. This idea has been discussed over the period that business and
community are copartners. The strategy structure is expected to address the issues in condition,
environmental change and modern instruction. Furthermore, the structure will likewise address
safe drinking water and sanitation the nation over. The comprehensive financial improvement is
the center topic in accomplishing the national supportable advancement focuses in Pakistan. Be
that as it may, manageable improvement as a more extensive idea can decidedly influence the
organizations in since quite a while ago keep running by incorporating the ideas of advancement
for example social, monetary and natural. The social idea of corporate social duty is in
accordance with the components of triple main concern since the results are going from issue SD
to its goals (Ebner and Baumgartner, 2006).
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Table 10: Inter-correlation Matrix of Variables
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This study based on literature, theories and theoretical framework assumes that the
ethical leadership through its actions influences the CSR & sustainability activities in
organization. However, the connection between CSR and moral authority is altogether directed
by moral atmosphere by expanding the association's high moral gauges, which thus makes trust,
which essentially responds execution factors, for example, TPB, CPWB and OCB.
The current study is a hypothesis testing/explanatory study in which hypothesis were
developed based on previous studies and references. This is a relationship study, which has
created the correlation among the study variables in a field study, and researcher collected the
data and interacted with the respondents in the real environment. There is no controlling and
manipulation of variables involved as this study since it has been conducted in the field, in non-
contrived environment so there is minimum interference of the researcher. Study identifies and
tested the relationships among the variables based on cross sectional based data collected from
the individual employees of selected organizations. After data collection the data was entered
into SEM/SPSS sheets and hypothesis were tested. The study in this regard was/is expected to
provide the organizational leaders with guidance in successfully managing their stakeholders and
providing an ethical climate that would support this activity of Stakeholder management.
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Figure 9: Conceptual Framework
Conceptual Model Showing Determinants and Outcomes of CSR
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2.10 Hypotheses
Based on the literature review, the variables of interest for the current study can be
formulated, which can identify the relationship among the variables and can be tested with
relevant statistical tests. Hypotheses are basically, testable statements. For this study, the
hypotheses can be formulated as:
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______________________________________________________________________________
Chapter 3
Research Methodology
______________________________________________________________________________
This chapter of study will explain the research methodology in detail, discussing the
research design for both qualitative and quantitative part of study, population framework, and
sample and data collection. Furthermore, we will discuss the measures used in current study
followed by the procedure adapted to analyze the hypothesized model.
The current study aimed on mix-method approach where hypothesis testing as well as
descriptive analysis were done using interviews. The research approach used is deductive based
on positivist philosophy. The type of investigation is field based, using cross sectional method
and unit of analyses are employees of banking sector.
3.1 Research Design Mix Method Approach
The current study has used mixed methods since one of the parts of our study (defining
sustainable development) is descriptive in nature whereas, the other part (containing CSR, ethical
climate, ethical leadership, trust, OCB, CWB & TPB) of the current study is termed as
explanatory in nature. The reason of using mix method was based on our theoretical framework.
The current study has analyzed sustainable development in terms of qualitative analysis
extracting the open-ended interviews. The framework used in the study adheres with using mix
method design, analyzing, and mixing both quantitative and qualitative data in a single study.
Generally, mixed methods research is being used to collect, analyze, and interpret quantitative
and qualitative data in a single study. Creswell, Klassen, Plano Clark and Smith (2011) defined
mixed methods design as, ―Mixed methods research is a research design with philosophical
assumptions as well as methods of inquiry. As a methodology, it involves philosophical
assumptions that guide the direction of the collection and analysis of data and the mixture of
qualitative and quantitative data in a single study or series of studies. Its central premise is that
the use of quantitative and qualitative approaches in combination provides a better understanding
of research problems that either approach alone‖ (p.5).
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Mixed methods researchers use and often make explicit diverse philosophical positions.
Greene (2007) stated that ―these positions often are referred to as dialectal stances that bridge
post positivist and social constructivist worldviews, pragmatic perspectives, and transformative
perspectives‖. Mixed methods research, is more than basically gathering subjective information
from meetings, or gathering various types of subjective evidence(e.g., perceptions and
interviews) or different sorts of quantitative proof (e.g., reviews and demonstrative tests). It
includes the deliberate accumulation of both quantitative and subjective information and the mix
of the qualities of each to respond to research questions.
3.1.1 Research Design for Quantitative Part
The first part (containing CSR, ethical climate, ethical leadership, trust, OCB, CWB &
TPB) of the current investigation is named as illustrative in nature. Despite the fact that there has
been restricted research on the examination develops notwithstanding, there has been essential
research on the theme in world and in Pakistan over the most recent couple of decades. In the
present examination, the essential information on one independent, one indigent and one
directing and four outcome factors was gathered utilizing surveys technique. Optional
information relating to the investigation populace was gathered through distributed yearly
reports, yearly maintainability reports, and authority sites and from Securities and Exchange
Commission of Pakistan, which is the administrative expert on corporate issues in Pakistan.
Additionally, we also collected information regarding the population from Pakistan stock
exchange. This research study is relational for exploring link between the study variables. At first
step, the association between ethical leadership and CSR has been analyzed, at second step, the
link among ethical leadership, CSR, and ethical climate has been mapped. At third level, the
outcome of CSR such as trust has been explored in relation to performance variables such as
TPB, OCB & CWPB. This study is relationship study because the dependent variable is being
affected by independent variable. This study would be useful for creating the correlation amongst
the variables and also to check the impact of ethical climate between the relationships of ethical
leadership and CSR. Its field study, in non-contrived environment as it has been carried out in
the practical setup. Since the study is based on non-contrived environment therefore the
interference of the researcher is less. The data has been gathered once, therefore, it is a cross
sectional study. The researcher has used the individuals of the organization as unit of analysis of
the study.
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3.1.2 Research Design for Qualitative Part
The second part of our study (defining sustainable development) is descriptive in nature.
The primary data has been collected using interview methods from the top executives including
chief executive officers, regional heads and heads of communication and compliance of study
population. Secondary data pertaining to the study population was composed and collected
through their published annual reports, annual sustainability reports and uniform resource
location commonly known as web address. These reports are issued by these companies as a
matter of compliance since they are required to issue such reports for disclosure purposes. These
reports give a clear picture of spending pattern on CSR activities by banks. Some of the
information was considered using the resource locator of Securities and Exchange Commission
(SECP) and State Bank of Pakistan (SBP). SBP and SECP are the regulatory body in Pakistan,
governing the corporate and related sectors. Additionally, we also collected information
regarding the population from Pakistan stock exchange.
3.2 Population Framework
We selected all listed commercial banks in Pakistan as population. These banks are listed
with State Bank of Pakistan as well as with Pakistan Stock Exchange (PSE). State Bank of
Pakistan is the regulatory authority for banking sector in Pakistan. Selection of population has its
own unique reasons. Firstly, Pakistani banking sector is performing extremely well in terms of
net profitability and spending pattern on CSR activities across Pakistan. It is imperative to note
that banking sector is spending a huge amount on CSR as part of their net profit on many
different socio economic sectors such as education, health, infrastructure development and other
societal sectors based on need (Malik & Nadeem, 2014). Secondly, banking sector regularly
follow the guide lines laid down by SECP (2013) which states, ―CSR report may prominently
disclose the CSR objectives, working model, implementation status, impact/achievements, risks,
opportunities, challenges and working partners. This may also include comparison drawn from
previous year‖. The selected banks report their sustainability activities, complying the SECP and
global reporting standards. Thirdly, the studied sectors are having established and more
formalized programs as identified by researchers (Malik & Nadeem, 2014; Sajjad & Eweje,
2014). Additionally, the banking sector has a more structured and diversified self-regulations,
which are rarely seen in any other sectors in Pakistan. Self-regulations are though on voluntary
basis but are more formalized structures.
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Furthermore, banking sector is among top sectors having a larger share in overall
economy of Pakistan (Economic Survey Report, 2017) and included in the trade screen of top
100 companies in Pakistan Stock Exchange. These companies ensure compliance with SECP
(2013) guide lines about the disclosure and enforcement which states, ―Notwithstanding the
preparation of CSR Report, the company shall provide descriptive as well as monetary
disclosures of the CSR activities undertaken by it during each financial year in line with the
requirements of Companies (Corporate Social Responsibility) Order, 2009. This may also
include disclosure to the effect of compliance by companies with relevant industry/regulator
guidelines or standards‖. Resultantly, data availability, knowledge of employees with the
construct and participation of employees in CSR activities are high as compare to other sectors.
Finally, banking sector meet the minimum benchmark of corporate governance, board structure,
disclosure, compliance, transparency and explicit vision & mission statement for CSR activities
to be undertaken for attaining sustainability. Nevertheless, this population is selected to have
diverse representation and inclusion from different corporate setups for more generalizability of
results.
3.3 Sample and Data Collection
Probability, simple random sampling technique was used for qualitative part, whereas,
purposive sampling technique was used for quantitative part of the current study. There are
number of reasons for using simple random sampling such as to extract a sample from a larger
population. This kind of sample technique is considered as unbiased, balanced and composed
mechanism. Such technique is adopted to ensure generalizability. Additionally, some of the
researchers (such as Cornesse, 2018; Du Shuili, Bhattacharya, & Sen, 2015) have claimed that
researchers prefer to use simple random probability method for inferential studies. Simple
random method ensures higher representation and often reaches high numbers of respondents
(e.g., Bethlehem & Biffignandi, 2012). The inclusion of higher number of participants leads to
representation and mitigate the chances of biasness by yielding the external validity of findings
and generalizability.
Prior to disseminating the survey forms, the researcher strategized the inclusion criteria
with the help of Human Resource department of these organizations. After thorough discussion,
we conclude that for quantitative part, employees working as President/Chief Executive Officer,
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Chief Operating Officer, Senior Executive Vice-President and Executive Vice-President will be
approached in consultation with Human Resource department. Whereas, for the qualitative
interviews, only top executives i.e. Chief Executive Officers, Regional Heads or Head of
Communication were participants from each listed bank. The reason of this inclusion was
obvious since such employees are having hands in knowledge of sustainability activities,
disclosure and implementation. The Human Resource department was of view that the CSR
activities are though nationwide and all their employees are aware of it however, employee
ahead of certain rank are more familiar with the decision makings. Secondly, filling the survey
form by lower middle and middle management employee need special approvals, which may
hinder the activity. Additionally, filling the questionnaire form needs proper attention and
background knowledge of CSR activities. Therefore, we included the discussed employees in our
study. The researcher personally monitored the distribution in most of the cases; however, some
of the employees were approached using emails, referral systems and sharing Google links via
handset applications. Concisely, the unit of analysis for the current study is employees of
banking sector.
The number of employees working above Executive Vice-President in listed banks is
3,750 (SBP, 2017). The researcher used Krejcie and Morgan (1970) formula to determine the
sample for quantitative analysis. Using the said formula sample size should be 351 for such
population size. However, the researcher distributed 600 questionnaires, received back 500 filled
questionnaires, however; only 420 responses were useable. For the qualitative part of the study,
35 top executives of the listed commercial banks were approached. However, 15 top executives
responded timely agreeing for interviews with open ended questions. Similarly, the open ended
questionnaire was used as a tool for data collection in qualitative study. The overall response
ration in the current study is found good both quantitative as well as qualitative part of the study.
The study of Cornesse (2018) linked good response ratios representation and superiority of
investigation. Similarly, survey is also referred as established and structured queries. Survey
method primarily takes into account the belongings and characteristics associated with the
constructs (Goodwin, 2010). This method is extensively applied and acknowledged across all
and particularly in social sciences research. Likewise, survey method is best in measuring the
normative believes, of subject matter (Johnson & Onwuegbuzie, 2004).Traditionally, the survey
method is recommended for quantitative analyses however, data collection through modern
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mode (such as through resource locator, handset applications & other technological methods)
have paved their importance as highlighted in a recent study by Tourangeau (2018).
Selection of sample size was a challenge since there has been a dichotomy that small
samples are attributed to qualitative and large samples are being correlated with quantitative
researches. The size of the sample ought to reflect principally by the examination destinations
pursued by research question(s), and, therefore, the exploration structure. The sample sizes
relating to the customary quantitative research structures (i.e., correlational, causal similar,
exploratory) are the consequence of the factual power examination embraced by Onwuegbuzie,
Jiao, and Bostick (2004). The study of Onwuegbuzie et al. (2004) concluded that ―many of the
sample size guidelines provided in virtually every introductory research methodology and
statistics textbook, such as the recommendation of sample sizes of 30 for both correlational and
causal-comparative designs (e.g., Charles & Mertler, 2002; Creswell, 2002; Gay & Airasian,
2003), if followed, would lead to statistical tests with inadequate power because they are not
based on power analysis‖ (Onwuegbuzie et al., 2004). Sample size is near to similar studies that
examining the CSR (Korschun, Bhattacharya, & Swain, 2014; Du Shuili et al., 2015) which lies
between 350 to 550 participants. Responses item ratio is also used to determine sample size for
SEM analysis. Several studies have recommended five responses against each item in SEM
analysis (Bentler, 1989; Tabachnick & Fidell, 2007; Westland, 2010). Similarly, general rules of
thumb for sample size of 300 are good and 500 are very good for factor analysis cases
(Tabachnick & Fidell, 1996; VanVoorhis & Morgan, 2007). The study of Schreiber, Nora, Stage,
Barlow, and King (2006) used sample size of 203 for SEM analysis and recommended the same.
Likewise, for SEM analysis, few studies have recommended sample size of 150-200 as large in
size (Goodhue, Lewis, & Thompson, 2006; Raykov & Marcoulides, 2006). In a nutshell, the
current study has used 420 useable responses as sample, which is 6:1 in ratio and in line with the
recommendations of mentioned studies for analysis in SEM.
In current research, we have applied mix methods using both traditional (survey method)
and modern methods (through resource locator, handset applications & other technological
methods) for data collection from employees of banking sector. This technique has enabled us
gathering maxim number of responses from the employees of banks. It is imperative to mention
here that using the modern method for data collection is yielding better results as compare to the
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traditional method. Furthermore, the modern survey method is more reliable, accurate and
comprehensive; resulting in accurate, discrete and simplified analysis. Nevertheless, technology
has simplified the odds and impediments in research world.
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Table 11: Commercial Banks listed with SBP
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SBP (2017)
3.4 Measures
The current study is based on data collection through survey (questionnaire). The
questionnaire was divided in three main parts i.e. introduction, items for measurement and
demographic information. The introductory section, mainly described the objectives of study
followed by general instructions as how to fill the questionnaire. Whereas, the subsequent part
comprised of items of constructs representing the adopted instruments. Likewise, the final part,
described and sought information regarding the demographic variables (such as education, age,
gender etc.). The reliability (composite as well) and validity (content and convergent) of the
instruments were established prior to using the same. The instruments discussed below taped the
concepts in the study.
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3.4.1 Ethical Leadership
EL is defined as ―the demonstration of normatively appropriate conduct through personal
actions and interpersonal relationships, and the promotion of such conduct to followers through
two-way communication, reinforcement, and decision-making‖ (Brown et al., 2005). We used 10
items scale of Brown et al. (2005) to measure ethical leadership.
3.4.2 Corporate Social Responsibility
Corporate social responsibility is the second latent variable. Corporate social
responsibility is defined as ―actions on the part of the firm that appear to advance or acquiesce in
the promotion of some social good, beyond the immediate interests of the firm and its
shareholders and beyond that which is required by law‖ (Farooq et al., 2017). Corporate social
responsibility is denoted as C_S_R. The items of corporate social responsibility are coded as i.e.
Csr1 and so on.
3.4.3 Ethical Climate
Ethical climate is the third latent variable. Ethical climate is defined as ―higher-order
social structure a socially interactive context within which individuals operate and which
highlights the behaviors and responses that are expected, supported and rewarded‖ (Ostroff et al.,
2013). Ethical climate is denoted as E_Climate. The items of ethical climate are coded as i.e.
Ecl1 and so on.
3.4.4 Trust
Trust is the fourth latent variable. Trust is defined as ―expectations, assumptions, or
beliefs about the likelihood that another‘s future actions will be beneficial, favorable, or at least
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not detrimental to one‘s interest‖ (Farooq et al., 2017). The current research used 10 items scale
of Taylor-Gooby (2000) to measure trust.
3.4.5 Counterwork Productive Behavior
Counterwork productive behavior is the fifth latent variable. Counterwork productive
behavior is defined as ―counterproductive work behaviors are those employees‘ behaviors which
go against organizational goals and direction. These acts can restrict or delay the objectives and
goals set by the organization and can be either intentional or unintentional‖ (Machiavelli, 1966).
The current study used 10 items scale of Robinson and Bennett (1995) to measure counterwork
productive behavior counterwork productive behavior stands symbolized as C_W_B. The
observed variables of CWB stand implied cwb1 and so on.
3.4.6 Task Performance Behavior
TPB stands sixth latent construct. TPB can be defined as ―the effectiveness with which
job incumbents perform activities that contribute to the organization's technical core either
directly by implementing a part of its technological process, or indirectly by providing it with
needed materials or services‖ (Borman & Motowidlo, 1993). The current study used 7 items
scale of Williams and Anderson (1991) to measure task performance behavior. TPB stands
symbolized as T_P_B. Observed variables of TPB stand implied as cwb1 and son on.
3.4.7 Organizational Citizenship Behavior
Organizational citizenship behavior is the seventh latent variable. Organizational
citizenship behavior is defined as ―individual behavior that is discretionary, not directly or
explicitly recognized by the formal reward system, and in the aggregate promotes the efficient
and effective functioning of the organization‖ (Organ et al., 2006). In current study, we used 9
items scale of Smith et al. (1983) to measure organizational citizenship behavior. OCB stands
symbolized as O_C_B. Observed variables of OCB stand implied as ocb1 and so on.
3.4.8 Sustainable Development
Sustainable development is defined as "Development that meets the needs of the present
without compromising the ability of future generations to meet their own needs" (WECD, 1987).
The concept of sustainable development was induced through open ended interviews from top
executives of the study population. These interviews helped the researcher in better
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understanding the concept of corporate social responsibility through the lens of sustainable
development. Sustainability is also referred to the activities of organization, where the inclusion
of economic, societal and environmental apprehensions in business operations may be
considered in stakeholder‘s management. Sustainable development as a precise concept aims to
meet the present and future human aspirations and needs, in a rationale way by protecting the
earth where we live with other human beings. Sustainability has a set of defined attributes or the
corporations while doing the business (Huge et al., 2011) must respect characteristics, which
may be termed as the fundamental principles. The economic prosperity of corporations is no
longer acceptable in isolation from the society and allied forces, which are being impacted by its
actions. Corporate world is required now to focus its attention on both increasing profitability
and work for sustainability through adopting corporate social responsibility (Siemens, 2016).
Today‘s organizations are being forced by many factors like social, economic and environmental
to align their business strategies by inclusion of socialization (Gillis & Spring, 2001).
3.5 Procedure
Partial Least Square Structural Equation Modeling (PLS-SEM) technique was used to
analyze the hypothesized model. This technique permits to draw and analyze complex
interactions between and among variables or multiple constructs. This method is also helpful in
relating theory and data and to draw correlation among multiple constructs. Likewise, it also
helps to test cause-effect relationship of latent variables.
PLS-SEM is a two stage technique model. The first model is called as ―measurement
model‖ whereas the second model is referred as ―structural model‖. The validity is checked
through convergent validity which is one of the categories of construct validity, and discriminant
validity to analyze the distinct relationship between and among the observed variables. Likewise,
Cronbach alpha (coefficient alpha) was measured to analyze reliability and internal consistency
of each study variable. The structural model was applied to check the study hypotheses and test
the significance of path coefficients. PLS technique was performed with Samrt PLS 2.0 software
(Ringle, Wende, & Will, 2005) to empirically evaluate the projected model.
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Table 12: Summary of instruments
3.5.1 Pilot Study
Preliminary investigation is conducted to check the legitimacy of survey (i.e.
questionnaire). We distributed fifty (50) survey questionnaires among the employees of selected
organizations. We conducted test such as Cronbach‘s alpha to check and verify the reliability and
consistency of constructs. The outcomes of tests indicated that results are within benchmark
values, that means > 0.70.
3.5.2 Data Analysis
Some of the important investigation tools were used in the current study for analysis part
such as reliability, validity, correlations and PLS-SEM etc. Smart PLS version 2.0 and Statistical
Package for the Social Sciences (SPSS version 23) were made part for quantitative analysis in
the current study. The PLS-SEM was used due to the obvious reasons that PLS-SEM is
considered to be user friendly having a compatible interface (Mujis, 2010). Similarly, PLS-SEM
makes no assumption or fewer assumptions about the data distribution. Certainly, PLS-SEM
facilitates. One of main reasons using PLS-SEM is that it can analyze multiple relationships in
one study.
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3.5.3 Data Screening
Data was proofread after feeding it into SPSS. This procedure helps to minimize the
information section mistakes helping information index as true representation.
3.5.4 Normality Analysis
To check the normality of data, Skewness and kurtosis were used. The standard or
benchmark values are ranging -1 and +1. Whereas, kurtosis values ranging -3 to +3 as per the
standards of quantitative analysis.
3.6 SEM
The CB-SEM is using maximum likelihood whereas; the second approach PLS-SEM
explains the maximum explained variances of endogenous constructs (Hair et al., 2010). Each of
these approaches, have used in different research context and researcher needs to understand the
true context of research to apply these approaches accordingly (Hair, Ringle, & Sarstedt, 2011).
There is question when to use CB-SEM or PLS-SEM, researchers should consider the objectives
and characteristics of these approaches (Hair et al., 2012b).
When the purpose of using structural modeling is to predict and explain the variables,
then PLS-SEM is used.
To estimate the PLS-SEM, ordinary least square (OLS) regression method is used while
maximum likelihood (ML) method is used in CB-SEM. In PLS-SEM, coefficient
estimates are find out that enhanced the value R2 of endogenous variables that feature
accomplish the objective of prediction of PLS-SEM. Thus PLS-SEM is a preferred
method when the purpose is to explain the variance (prediction of variables).
PLS-SEM is more suitable with small size and with complex models.
Further, PLS-SEM also handles both formative and reflective models.
There are four important matters relevant to application of PLS-SEM (Hair, Ringle, & Sarstedt,
2011; Hair et al., 2012a; Hair et al., 2012b; Ringle, Sarstedt, & Straub, 2012): (i) data, (ii) model
properties, (iii) PLS-SEM algorithm, and (iv) model evaluation concerns. Key characteristics of
PLS-SEM are presented in Table 13.
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Table 13 : Characteristics of PLS-SEM
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3.6.1 Partial Least Square Structural Equation Modeling (PLS-SEM)
PLS-SEM deals with two models. The evaluation of the measurement and structural
model results in PLS-SEM constructs on nonparametric evaluation criteria and employ
procedures i.e. bootstrapping and blindfolding. Now here discuss these models in detail.
3.6.1.1 AMM
This connects the correlation among constructs along with their predictors. PLS-SEM
calls this as outer model. Reflective and formative measurement models are the two main sub
categories for further explaining the measurement model.
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Formative measurement (sometimes denoted as Mode B in SEM): is a kind of
measurement model in which the indicators cause the construct and casualty from indicators to
the construct. There are different criteria to assess the two models. Reflective measurement
model is the base of current stud.
3.6.1.1.1 Assessment of Reflective Measurement Model
The reflective model measures the scale for inter correlations using Cronbach alpha for
internal consistency and validity analysis for convergent and discriminant validity. This is to
ensure that the observed variables really reflect the latent variable. Fornell-Larcker is considered
to be one of the tested criterions for such analysis. We will discuss each steps individually in
upcoming paragraphs.
3.6.1.1.2 Internal Consistency
The current study used two criterions i.e. Cronbach alpha and composite reliability to
check inter consistency. Cronbach (alpha coefficient) is considered as one of the best criterion
internal consistency. Alpha coefficient ensures that equal reliability does exist among all study
constructs. The standard value for alpha coefficient is > 0.70 as recommended and used by
researchers (Fornell & Larcker, 1981).
Composite reliability is the second criterions to check inter consistency. Composite
reliability used OLs (OL) for checking inter consistency amongst the constructs of study. The
standard value for composite reliability is > 0.70 as recommended and used by researchers.
3.6.1.1.3 C Vl
It is the subtype of construct validity used in social sciences research to check the extent
to which a measure correlates with alternative measures of the same construct., Researchers
study the OLs of observed variables and average variance extracted (AVE).
To check the reliability and validity, OL is checked to ensure that the values are > 0.70 or
above for each observed variables. However, researchers have observed weaker OLs in social
sciences research (Hulland, 1999). If the OL values lies between 0.40 and 0.70, then the
researchers prudently scrutinize the composite reliability. Also, the researchers remove the
indicator if composite reliability is increases as a result of OLs (Hair et al., 2014). The study of
Hair, Ringle, and Sarstedt (2011) has recommended that the observed variables having value
below 0.40 should always be eliminated.
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AVE is signified for convergent validity analysis. The AVE is in fact a measure of the amount of
variance captured due to measurement error. The standard threshold for AVE value is > 0.50 in
social sciences research (Hair et al., 2014).
3.6.1.1.4 Discriminant Validity
It is the subset of construct validity. Researchers use discriminant validity to check the
effects of each observed variables having their own distinct and different effects on the latent
variable. In social sciences research Fornell-Larcker criterion is used for such analysis.
3.6.1.2 Assessment of Structural Model
Structural model is the next step upon confirmation of reliability and validity analysis.
Step - 1 Assessment of collinearity
Step – 2 Assessment of significance and relevance
Step – 3 Assessment of R2 (coefficient of determination)
Step – 4 Assessment of effect size f2
Step – 5 Assessment of predictive relevance Q2 and q
2 effect size
Step - 1 A Col
It exist > 0.70, the probabilities of collinearity cannot be overruled. To address such
issues, researchers use tolerance. After applying the VIF, if the variance inflation factor is > 5,
collinearity problem exists. In the current study, collinearity issue doesn‘t exist.
Step – 2 path coefficient method
Path coefficients are consistent forms of linear regression. In PLS-SEM, path coefficient
shows structural paths or the postulated relationships between the constructs. Results of path
coefficient ranges from -1 and +1 as per standard. Values, near or adjacent to +1 indicate
positive and strong association whereas, -1 indicates negative affiliation exists amongst the
constructs. Similarly, ―0‖ displays inadequate relationship.
Step – 3 Assessment of R2
Denoted as R2 and pronounced as ―R squared‖ is used to explain the variance. In simple
words, R2
explains the variance in dependent variable or endogenous variable that is anticipated
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from independent variable. However, no recommended verge for R2 value since it is grounded on
context of research. In general, 0.25 as weak, 0.50 as medium, and 0.75 as strong R2
values as
per the study of Hair et al. (2014).
Step – 4 Assessment of effect size f2
This tolerates reviewing significance of constructs in enlightening specific endogenous
constructs. Specifically, investigator scrutinizes the influence of conjecturer construct to R2 value
of categorical construct. Values of 0.02 as small, 0.15 as medium and 0.35 are considered as
strong f2 effect size as stated in the study of Hair (2014).
This procedure analytically removes and forecasts each data point of observed variables. To get
the estimated error of path model, on account of particular reflective variable, predictive values
are compared with the original values. If calculated Q2 value is > 0, it reflects that the path model
is having a projecting significance for a particular construct (Hair et al., 2014). The standard
value for q2 effect size is same as for f
2 effect size values of 0.02 as small, 0.15 as medium, and
0.35 are considered as strong f2 effect size as stated in the study of Hair (2014).
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Chapter 4
Results & Analysis
______________________________________________________________________________
4. Introduction
This chapter provides a detailed description of data analyses techniques used for testing
the hypotheses and obtaining the results. The study has used Partial Least Square Structural
Equation Modeling (PLS-SEM) for quantitative data analysis and hypotheses testing followed by
indebt interviews for qualitative part of study. The analysis of the results from the measurement
model are presented along with the details, analysis and results obtained from structural model
testing. Furthermore, multivariate analyses were conducted using Statistical Package for Social
Sciences (SPSS) version 23. Descriptive statistics were calculated for demography of the sample
and variables description.
4.1 Scheme of Analyses
The scheme of analyses in the current study is in two parts. In the first part we have
discussed and delineated the quantitative analyses of mentioned objectives. The objectives of the
current study followed by hypotheses for quantitative part have been operationalized in standard
format. We have used Partial Least Square Structural Equation Modeling (PLS-SEM) for
quantitative data analyses. PLS-SEM explains the maximum explained variances of endogenous
constructs. We have also discussed the characteristics of SEM explaining data characteristics,
model characteristics, algorithm properties and model evaluation issues. The two models i.e.
Measurement model (to check outer loadings, internal consistency, convergent validity
&discriminant validity)and structural model testing (to check specifications of structural model
i.e. endogenous variables, exogenous variables, collinearity analysis, hypotheses testing, R2 test,
f2 test&Q
2 test) have been developed. Furthermore, we have discussed the relationship between
and among the study variables in detail in subsequent part of the study. The moderating effect of
ethical climate has been shown using the interaction term, having positive effect.
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In the second part, we have discussed the qualitative indebt interviews to further
understand the concept of sustainable development. These interviews have further helped the
researcher to understand the broader concept of social activities undertaken by businesses.
Table 14: Scheme of Analyses
4.2 Response Pattern of Quantitative Part
We approached employees of listed commercial banks using simple random sampling
technique in consultation with Human Resource department of the listed commercial banks. The
total number of listed commercial banks in Pakistan is 35 as per report of State Bank of Pakistan
(SBP, 2017). We distributed questionnaires among 600 employees working as President/Chief
Executive Officer, Chief Operating Officer, Senior Executive Vice-President and Executive
Vice-President. The distribution was made among these employees since they are having enough
knowledge of sustainability activities in the organization. Nevertheless, these are the people at
decision-making level having authority to review the Prudential‘s of social activities. The
researcher personally monitored the distribution in most of the cases; however, some of the
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employees were approached using emails, referral systems and sharing Google links via handset
applications. The entire activity of distribution of survey was done in the month of
August/September, 2017. We received back 500 filled questionnaires, however; only 420
responses were useable. The responses were collected until December 2017.
4.2.1 Demographic Characteristics of Sample
Respondents were asked about their characteristics i.e. gender, age, education, and job
experience. First of all, respondents were asked about their gender. Results showed that there
were 234 (55.7%) males and remaining 186 (44.3%) were females.
After that respondents were asked about their age. Respondents were divided into
different age group i.e. less than 20 years 21-30 years, 31-40 years, 41-50 years and above 50
years. There were 30 (7.1%) respondents who lie in less than 20 years‘ age group. There were 58
(13.8%) respondents who lie in 21-30-year age group. There were 114 (27.1%) respondents who
lie in 31-40-year age group. There were 114 (27.1%) respondents who lie in 41-50-year age
group.
The job experience i.e. less than 5 years‘ experience, 6-10 years‘ experience, 11-15
years‘ experience, 16-20 years‘ experience and above 20 years‘ experience. Results revealed that
42 respondents are having < 5 years‘ working experience, 130 respondents are having between
6-10 years of experience and 128 respondents are having 11-15 years of experience. Only 50
respondents have between 16-20 years of working experience and 70 respondents have above 20
years of practical experience. This variation represents multilevel of people from diverse groups.
Such diversification is the sign of representation and inclusion of large ad varied set of
respondents.
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Table 15: Descriptive Statistics
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4.3. Descriptive Statistics of Demographic Variables
Descriptive analysis was also performed for demographic characteristics of the sample.
For descriptive analysis, mean, mode, standard deviation, Skewness, and kurtosis were checked.
Result showed that mode of gender is 1 which represent there were more males than females in
sample. Standard deviation of gender is 0.50.
Skewness of gender is 0.23 which is between -1 and +1. In the same way kurtosis of
gender is -1.96 which lies between -3 and +3. Result showed that mean of age is 3.49 which
represents the average age of the sample.
Standard deviation of age is 1.20. Skewness of age is -0.39 which is between -1 and +1.
In the same, way kurtosis of age is -0.74 which lies between -3 and +3. Result showed that mean
of job experience is 2.94 which represent the average job experience of the sample.
Standard deviation of job experience is 1.22. Skewness of job experience is 0.33 which is
between -1 and +1. In the same, way kurtosis of job experience is -0.84 which lie between -3 and
+3.
Table 16: Descriptive Analysis of Demographic Variables
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4.4. Descriptive Analysis of Study Variables
In the previous section gave the information about the respondents who participated in
the survey. Now this section is presenting the information relating to item wise descriptive
analysis (mean, standard deviation, Skewness, and kurtosis) of all study variables (ethical
leadership, corporate social responsibility, ethical climate, trust, counterwork productive
behavior, task performance behavior, and organizational citizenship behavior). Ethical leadership
(E_LEADER) has 10 items (Eld1-Eld), corporate social responsibility (C_S_R) has 17 items
(Csr1-Csr17), ethical climate (E_CLIMATE) has 11 items (Ecl1-Ecl11), trust (TRUST) has 10
items (Tru1-Tru10), counterwork productive behavior (C_W_B) has 10 items (cwb1-cwb10),
organizational citizenship behavior (O_C_B) has 9 items (ocb1-ocb9) and task performance
behavior (T_P_B) has 7 items (Tpb1-Tpb7).
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Table 17: Descriptive analysis of all variables
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4.5. Partial least square-structural equation Modeling (PLS-SEM)
PLS-SEM technique is consisting on two models analysis i.e. reflective measurement
model and structural model.
4.5.1. Reflective Measurement Model
In reflective measurement model, reliability and validity are examined. Initially, OL of
each item is observed. If the resulting value of OL of any item is below 0.50 then that item is
deleted as per criterion. After that validity and reliability were checked.
4.5.1.1 OLs
OL of each item is observed. If the resulting value of OL of any item is below 0.50 then
that item is deleted as per criterion. Results of OLs of each variable are presented below.
4.5.1.1.1 EL
EL is ―E_LEADER‖. Ethical leadership was defined as ―the demonstration of
normatively appropriate conduct through personal actions and interpersonal relationships, and
the promotion of such conduct to followers through two-way communication, reinforcement, and
decision-making‖ (Brown et al., 2005). E_LEADER is measured through the scale having 10
items however, 5 items (such as Eld3,5,6,7 & 10) were omitted due to low OL i.e. below 0.50.
So, ethical leadership was analyzed through remaining five items (including Eld1,2,4,8 & 9)
having outer values ranging from 0.75-0.92.
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Table 18: OL of Ethical Leadership
4.5.1.1.2 Corporate Social Responsibility
Corporate social responsibility is the second latent variable of this research which is
denoted as ―C_S_R‖. Corporate social responsibility was defined as ―actions on the part of the
firm that appear to advance or acquiesce in the promotion of some social good, beyond the
immediate interests of the firm and its shareholders and beyond that which is required by law‖
(Farooq et al., 2016). Corporate social responsibility is measured through 17 however, seven
items (Csr2,4,8,12,13,16 & 17) were omitted due to low OL i.e. below 0.50. So, corporate social
responsibility was analyzed through remaining ten items (including Csr1,3,5,6,7,9,10,11,14 &
15) having outer values ranging from 0.66-0.79.
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Table 19: OL of Corporate Social Responsibility
4.5.1.1.3 Ethical Climate
Ethical climate is the third latent variable of this research which is denoted as
―E_CLIMATE‖. Ethical climate was defined as ―higher-order social structure a socially
interactive context within which individuals operate and which highlights the behaviors and
responses that are expected, supported and rewarded‖ (Ostroff et al., 2013). Ethical climate is
measured through 11 items however; two items (i.e. Ecl10 and Ecl11) were omitted due to low
OL i.e. below 0.50. So, ethical climate was analyzed through remaining nine items (Including
Ecl1,2, 3,4,5,6,7,8 & 9) having outer values ranging from 0.69-0.91.
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Table 20: OL of Ethical Climate
4.5.1.1.4 Trust
Trust is the fourth latent variable of this research which is denoted as ―TRUST‖. Trust
was defined as ―expectations, assumptions, or beliefs about the likelihood that another‘s future
actions will be beneficial, favorable, or at least not detrimental to one‘s interest‖ (Farooq et al.,
2017). Trust is measured through 10 items however; two items (i.e. Tru9 and Tru10) were
omitted due to low OL i.e. below 0.50. So, trust was analyzed through remaining seven items
(Including Tru3,4,5,6,7 & 8) having outer value ranging from 0.72-0.85.
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Table 21: OL of Trust
4.5.1.1.5 Counterwork Productive Behavior
Counterwork productive behavior is the fifth latent variable of this research which is
denoted as ―C_W_B‖. Counterwork productive behavior was defined as ―counterproductive
work behaviors are those employees‘ practices which conflict with authoritative objectives and
heading. These demonstrations can confine or defer the targets and objectives set by the
association and can be either purposeful or accidental‖ (Machiavelli, 1966). Counterwork
productive behavior is measured through 10 items however, six items (cwb1, 2, 6, 7, 9 & 10)
were omitted due to low OL i.e. below 0.50. So, counterwork productive behavior was analyzed
through remaining four items (Including cwb 3, 4, 5 & 8) having outer value ranging from 0.80-
0.84.
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Table 22: OL of Counterwork Productive Behavior
4.5.1.1.6 Organizational Citizenship Behavior
Organizational citizenship behavior is the sixth latent variable of this research which is
denoted as ―O_C_B‖. Organizational citizenship behavior was defined as ―individual behavior
that is discretionary, not directly or explicitly recognized by the formal reward system, and in the
aggregate promotes the efficient and effective functioning of the organization‖ (Organ et al.,
2006). Organizational citizenship behavior is measured through 9 items however, two items (i.e.
ocb7 & ocb9) were omitted due to low OL i.e. below 0.50. So, organizational citizenship
behavior was analyzed through seven items (ocb1, 2, 3, 4,5, 6& 8) having outer values ranging
from 0.76-0.87.
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Table 23: OL of Organizational Citizenship Behavior
4.5.1.1.7 Task Performance Behavior
Task performance behavior is the seventh and last latent variable of this research which is
denoted as ―T_P_B‖. Task performance behavior was defined as ―the effectiveness with which
job incumbents perform activities that contribute to the organization's technical core either
directly by implementing a part of its technological process, or indirectly by providing it with
needed materials or services‖ (Borman & Motowidlo, 1993). Task performance behavior is
measured through 8 items however, one item (tpb3) was omitted due to low OL i.e. below 0.50.
So, task performance behavior was analyzed through seven items (Tpb1,2,4,5,6,7 & 8) having
outer values ranging from 0.74-0.89.
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Table 24: OL of Task Performance Behavior
4.5.1.2 Reliability and Validity Analysis
After analysis of OLs, reliability and validity analysis have been performed for each
latent variable (i.e. moral administration, corporate social obligation, moral atmosphere, trust,
counterwork profitable conduct, task execution conduct, and hierarchical citizenship conduct).
Internal consistency using Cronbach alpha, convergent validity and discriminant validity of all
latent variables are found out at next level.
4.5.1.2.1 Internal Consistency (Reliability)
First of all, internal consistency (reliability) of theoretical model is calculated. The
current study used two criterions i.e. Cronbach alpha and composite reliability to check inter
consistency.
4.5.1.2.1.1 Cronbach Alpha
Cronbach (alpha coefficient) is considered as one of the best criterion internal
consistency. Alpha coefficient ensures that equal reliability does exist among all study
constructs. The standard value for alpha coefficient is > 0.70 as recommended and used by
researchers (Fornell & Larcker, 1981). Results showed that Cronbach alpha of all latent variables
ranged between 0.84-0.93. This showed that all latent variable has high internal consistency as
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Cronbach alpha is higher than 0.70 as recommended by Fornell and Larcker (1981). Results of
Cronbach alpha of each latent variable is presented in Table.
Table 25: Results of Cronbach Alpha
4.5.1.2.1.2 Composite Reliability (CR)
Composite reliability is the second criterions to check inter consistency.
Composite reliability used OLs for checking inter consistency amongst the constructs of study.
The standard value for composite reliability is > 0.70 as recommended and used by researchers
(Nunally & Bernstein, 1994). In the current study, results revealed that composite reliability of
all latent variables ranged between 0.89-0.94. This translates that all latent variables of the study
have high internal consistency. The standard benchmark value for composite reliability is > 0.70
as recommended by research (Arnold & Reynolds, 2003). It is imperative to note that such high
composite reliability sometimes leads to collinearity. However, the current study has checked the
and there hence established that collinearity doesn‘t exist. The below table will further
summarize the results of composite reliability.
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Table 26: Results of Composite Reliability (CR)
4.5.1.2.2 Convergent Validity
To test correlation between all observed variables of same variable, convergent validity
can be used. For finding convergent validity of latent variables, average extracted variance
(AVE) is used. Results showed that convergent validity of all latent variables ranged between
0.52-0.79. This showed that all latent variables have high convergent validity as AVE is higher
than 0.50 thresholds as recommended by Fornell and Larcker (1981). Results of convergent
validity of each latent variable are presented in Table.
Table 27: Results of Convergent Validity
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4.5.1.2.3 Discriminant Validity
Discriminant validity finds out the difference among all latent variables. For
finding the discriminant validity, Fornell-Larcker criterion is utilized. It is the subset of construct
validity. Researchers use discriminant validity to check the effects of each observed variables
having their own distinct and different effects on the latent variable. In social sciences research
Fornell-Larcker criterion is used for such analysis.
Table 28: Discriminant Validity Fornell-Larcker Criterion
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Summary of Reflective Measurement Model
Table 29: Summary of Reflective Measurement Model
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4.5.2 Structural Model
After examining the reflective measurement model.
4.5.2.1 Specification of Structural Model
The structural model specification was displayed in Figure 14. The structural model is consisting on mean score of seven latent
variables. Out of these latent variables, EL is one and while remaining six latent variables (i.e. corporate social responsibility, ethical
climate, trust, CWB, TPB, and OCB) are endogenous variables (dependent variable).
Exogenous Variable
This study has one exogenous variable i.e. ethical leadership. Ethical leadership measure ―the demonstration of normatively
appropriate conduct through personal actions and interpersonal relationships, and the promotion of such conduct to followers through
two-way communication, reinforcement, and decision-making‖ (Brown et al., 2005). Out of the 10 items scale, 5 items have been
removed due to low OL. The ethical leadership is comprised on mean score of five items and denoted as E_Leader.
Endogenous Variables
In this study, corporate social responsibility is the first endogenous variable that measure ―the actions on the part of the firm
that appear to advance or acquiesce in the promotion of some social good, beyond the immediate interests of the firm and its
shareholders and beyond that which is required by law‖ (Farooq et al., 2017). Corporate social responsibility is measured through 17
items, out of which 7 items has been deleted due to low OL and finally corporate social responsibility comprised of mean score of
remaining 10 items and denoted as C_S_R. Ethical climate is the second endogenous variable measuring the behaviors (Ostroff et al.,
2013). Ethical climate is measured through 11 items, out of which 2 items has been deleted due to low OL and finally ethical climate
comprised of mean score of remaining 9 items and denoted as E_Climate. Trust is the third endogenous variable that measures ―the
expectations, assumptions, or beliefs about the likelihood that another‘s future actions will be beneficial, favorable, or at least not
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detrimental to one‘s interest‖ (Farooq et al., 2017). Trust is measured through 10 items, out of which 2 items has been deleted due to
low OL and finally trust comprised of mean score of remaining 8 items and denoted as trust. Counterwork beneficial conduct is the
fourth endogenous variable that measures "the counterproductive work practices are those representatives' practices which conflict
with hierarchical objectives and bearing. These demonstrations can limit or defer the targets and objectives set by the association and
can be either purposeful or accidental‖ (Machiavelli, 1966). Counterwork productive behavior is measured through 10 items, out of
which 6 items has been deleted due to low OL and finally counterwork productive behavior comprised of mean score of remaining 4
items and denoted as C_W_B. Task performance behavior is the fifth endogenous variable that measure ―the individual behavior that
is discretionary, not directly or explicitly recognized by the formal reward system, and in the aggregate promotes the efficient and
effective functioning of the organization‖ (Organ et al., 2006). Task performance behavior is measured through 8 items, out of which
1 item was deleted due to low OL and finally task performance behavior comprised of mean score of 7 items and denoted as T_P_B.
Organizational citizenship behavior is the sixth endogenous variable that measure ―the effectiveness with which job incumbents
perform activities that contribute to the organization's technical core either directly by implementing a part of its technological
process, or indirectly by providing it with needed materials or services‖ (Borman & Motowidlo, 1993). Organizational citizenship
behavior is measured through 9 items, out of which 1 item was deleted due to low OL and finally organizational citizenship behavior
comprised of mean score of 8 items and denoted as O_C_B.
4.5.2.3 Step – 1 Assessment of Collinearity
Before moving toward hypothesis testing, collinearity issues were also checked since the high composite reliabilities
sometimes leads to collinearity. For this purpose, variance inflation factor (VIF) was found for all item of each variable separately.
Results revealed that collinearity issue doesn‘t exists as variance inflation factor values are < 5 compared to the threshold suggested by
Hair et al. (2014). Results of variance inflation factor are shown in Appendix.
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4.5.2.4 Step – 2 Path Coefficient of Structural Model
Following are the research hypotheses that were tested through structural model.
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Table 30: Testing of Structural Model
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Figure 10: Structural Model
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Moderation Analysis
H6: Ethical climate acts as moderator between ethical leadership and corporate social
responsibility.
We have conceptualized that ethical climate acts as a moderator. To check the
moderation effect of ethical climate, initially we check the composite reliability of moderator
variable i.e. ethical climate that is 0.90 that is in acceptable range. Ethical climate has significant
relationship with corporate social responsibility, and in the same interaction term of ethical
leadership and ethical climate i.e. EL x EC also have positive significant relationship with
corporate social responsibility which showed that ethical climate positively moderates the
relationship between ethical leadership and corporate social responsibility. The interaction term
i.e. EL x EC shows the estimated effect of moderator between the two variables.
The current study anticipated that the relationship between ethical leadership and
corporate social responsibility is moderated by ethical climate. The interaction term (EL x EC)
shows that ethical climate positively affects the relationship between corporate social
responsibility and ethical leadership. In other words, the individual and organizational outcomes
are significantly moderated by ethical climate. Rupp‘s (2011), Choi et al. (2015) and Barnett and
Vaicys (2000) support proportion of the multiple-experience model which suggests that
employees develop perception in three ways i.e. outward, upward and inward. In particular, the
outward perception is directly affected by corporate social responsibility activities of
organization, whereas upward perception is correlated with leadership in organization and
inward perception is developed by trust on others (Chiu & Sharfman, 2011; DeConinck, 2011;
Mayer et al., 2009; Mulki et al., 2006; Nedkovski et al., 2016; Wang & Hsieh, 2012). In a
nutshell, ethical climate is the construct that positively moderates between the dependant i.e.
ethical leadership and independent variable i.e. corporate social responsibility.
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Figure 11: Moderation Analysis showing interaction term EL x EC
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4.5.2.5 Step – 3 Assessment of R2 (Coefficient of Determination)
Coefficient of determination denoted as R2 and read as (R squared) measures the
predictive accuracy of the model. This means that the effect and variance on dependent variable
due to independent variable. Results showed that corporate social responsibility has moderate
level of R2 value i.e. 0.40. In the same way, trust and other behaviors also have moderate level of
R2 values i.e. 0.31, 0.63, 0.16, and 0.50 respectively.
4.5.2.6 Step – 4: Assessment of f2 effect Size
The f2 effect size measures the change in R
2 when any construct is included or excluded
from the model. Results showed that task performance behavior has medium level effect size i.e.
f2= 0.14. While other study variables such as corporate social responsibility, trust,
counterproductive behavior and organizational citizenship behavior have large level of effect
size i.e. f2= 0.35, f
2=0.97, f
2= 0.75. Results are presented in the below table.
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Table 31: Assessment of f2 Effect Size
4.5.2.7 Step – 5 Q2
Results showed that all study variables have Q2 values above zero that represents model
have predictive relevance. The below table will further explain the values.
Table 32: Assessment of Q2 Predictive Relevance
Construct Q2 Value
Corporate Social Responsibility 0.19
Trust 0.11
Counterwork Productive Behavior 0.27
Task Performance Behavior 0.29
Organizational Citizenship Behavior 0.25
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4.6. Response Pattern for Qualitative Part
For qualitative part of study, the researcher approached the president/chief executive
officers, regional heads and heads of communication and compliance of all listed commercial
banks, having either head offices or regional offices located in Islamabad, Rawalpindi, Karachi,
Peshawar and Lahore. These banks are listed and scheduled with State Bank of Pakistan. Fifteen
commercial banks responded timely agreeing for interviews including National Bank of
Pakistan, MCB Bank Limited, Habib Bank Limited, United Bank Limited, Askari Bank Limited,
Soneri Bank Limited, Silk Bank Limited, Faysal Bank Limited, Sindh Bank Limited, Meezan
Bank Limited, Allied Bank Limited, Bank Alfalah Limited, Zarai Taraqiati Bank Limited, The
Bank of Punjab and JS Bank Limited. These banks spend a substantial amount as part of their
sustainability themes. The approach of these banks towards sustainability is multidimensional i.e.
running a safe, efficient, responsible and profitable business. The mentioned companies have a
structured system of sustainability and regularly issue sustainability reports annually disclosing
the spending and areas of focus.
4.6.1 Sustainable Development
One of the purposes of the present investigation is to comprehend the job of corporate
social duty in arrangement of manageable improvement referred as sustainability. We have
expounded corporate social obligation to further depict the idea of reasonable improvement since
we realize that manageable advancement is a more extensive idea while, corporate social duty is
centerpiece of supportable improvement leading towards sustainable development. For
understanding the role of corporate social responsibility, we have conducted interviews of top
executives from Pakistani companies engaged in corporate social responsibility practices.
Furthermore, these companies are regularly issuing corporate social responsibility reports with
full disclosure, meeting the standards of transparency followed by the guidelines of Securities
and Exchange Commission and State Bank of Pakistan. These companies are listed at Pakistan
Stock Exchange, having presence of either head offices or regional head offices and are market
leaders in their respective sectors. These interviews will certainly help us in understanding the
practical aspect of corporate social responsibility practices from top executives of Pakistani
companies. Additionally, it will also give us inside knowledge as to what extend the corporate
sector is practicing the ethical practices.
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The reasons behind selection of top executives i.e. chief executive officers or regional
heads; firstly, these executives have hands on knowledge of company‘s corporate social
responsibility policies, disclosure and spending criteria. Secondly, these executives are having
over twenty years of professional experience in top positions in other similar positions where
they have been part of corporate social responsibility policy makings. Thirdly, these executives
are in leadership positions where their point of view is taken seriously by board of directors as
per best practices of industry. This way, these leaders influence the board of directors for
spending social activities. Finally, these leaders are well versed with the determinants and
outcomes of corporate social responsibility since they are practically noticing the impact.
Information was taken from using semi-structured face-to-face interview method with
respondents (top executives) from each company located in Islamabad, Rawalipndi, Lahore,
Karachi and Peshawer. The interviews covered aspects of corporate social responsibility for
attaining sustainability using the pre-determined guidelines. Owing to the time limitation, busy
schedules of the interviewees and other constraints, interviews lasted between 20 and 35 minutes
approximately. However, since the interviewees were well versed with the subject matter,
understanding of the construct and questions was non-issue during interview process.
The data was taken from the top executives of companies from different corporate sector
setups i.e. banking, industrial, and manufacturing, audit, telecom, hospitality and food
companies. Then view of government was also incorporated to understand the concept of
sustainable development. Similarly, the qualitative interviews were conducted in the month of
December, 2017 to April, 2018.
4.6.2 Themes and framework for sustainable development
The initial conceptual framework for sustainable development consisted of four main
themes. These themes were strategic planning, economic practices, social practices and
environmental practices. These are discussed in detail in the below manner;
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4.6.3 Key Results of Interviews
Generally, subjective information furnished significant data concerning different angles,
for example, the proposed portrayal and conceptualization of corporate social duty regarding
accomplishing sustainability. Some of the respondents have also discussed the subsequent
outcomes of social responsibility in managing stakeholders along with its implication for future.
Similarly, some of the interviewees have also discussed the underlying principles of corporate
responsibility, which encompasses the business and society. The questions asked were open
ended and participants were learned enough to respond each question in detail. Based on themes
as discussed above, following questions were put forward before the participants;
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We have annexed the full interviews in detailed Interviews proceedings. However, the short crux
is given below. Starting with the conceptualization of the construct one interviewer said:
―The sustainability reporting rates are very high and companies have made a
huge progress in last few years. The companies who aren‟t reporting, in fact
ignore the importance of sustainability. They need to immediately think about it
since sooner or later they will be required to do so under law”.
One of the respondents stressed on the CSR since it‘s a matter of public interest. Secondly, the
respondent linked it with the regulatory requirements of industry:
“Sustainability and corporate social responsibility are need of today‟s business.
We all know that we need to take care of the environment and surroundings where
we do our businesses. This realization must be felt soon by all”.
A respondent from public sector banking linked corporate social responsibility with few
important areas i.e. customer awareness, risk management and regulatory requirement of
reporting standards:
“Sustainability reporting is a must in banking sector. For the moment, the quality
of corporate social responsibility reporting by banks is better in objectivity and
transparency. Over the next five years, the Corporate Governance Code will
likely act as a catalyst for better business reporting by raising the bar on what is
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expected followed by the guidelines of securities & exchange commission of
Pakistan for reporting sustainability”.
One of the respondents from industrial banking says that in line with the industrial view, govt of
Pakistan is also committed to achieve the goals of sustainable development agenda. In fact,
Pakistan is the signatory of implementing sustainable development goals promulgated by United
Nations General Assembly in 2015:
“Pakistan is the signatory of UN sustainable development goals resolution 2015.
Government plans to revise the National Sustainable Development Strategy and
Pakistan Environmental Protection Act in accordance with the guide lines of
sustainable development goals. Our commitment to green energy and access to
safe drinking water with the help of corporate sector would be a good addition to
our profile”.
One of the respondents from public sector bank was of opinion that that by the time industry
grows, the corporate social responsibility reports start publishing at fast pace since the market
will become in mainstream reporting line:
“Stock exchange is a different science. However, the listed companies might get
certain mandatory regulations to more formalize their corporate social
responsibility activities”.
Another respondent pointed and linked corporate social responsibility with companies‘ risk and
opportunities along with regulatory requirement of SECP:
“The trend for banking companies to include more corporate social responsibility
information in annual financial reports is driven by two factors: firstly,
sustainability information is increasingly perceived by shareholders as relevant
for their understanding of a company‟s risks and opportunities, and secondly,
stock exchanges and governments are issuing requirements for companies to
report on corporate social responsibility data in annual reports as in case of
SECP guide lines. We try to show maximum information and progress in our
annual accounts”.
Similarly, another respondent from public sector banks focused on the importance of shared
values and considers corporate social responsibility as a tool of effective management of external
stakeholders:
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“We think CSR can create a shared value which is our organizational vision. We
have been working on embedding the sustainability practices in our business
processes and share our performance with our stakeholders through our annual
sustainability report. We envision the process of measuring and sharing the value
creation process, outputs and impacts adds transparency to our business and
builds trust of our shareholders”.
Interestingly, one of the respondents stated the business motto as to run a safe, efficient,
responsible and profitable business which is simply the core philosophy of corporate social
responsibility for them. Certainly, this kind of approach is based on the fact that businesses now
understand that they cannot run in isolation:
“Our approach to sustainability is integrated across our business activities on
three levels; running a safe, efficient, responsible and profitable business”.
One interviewee linked the corporate social responsibility activities with brand management and
to help the underprivileged in the vicinity they are working in:
“Corporate Social Responsibility is one of our core values and an integral part of
the Company‟s overall mission. We believe that CSR creates a shared value
amongst its stakeholders and enhance our corporate brand image amongst the
general public”.
One of the respondents well-constructed the concept of corporate social responsibility and states
that corporate social responsibility increases company‘s reputation, encourage innovation and
employee engagement, demonstrates compliance and leads to market differentiation which are
all key ingredients for long-term growth and profitability:
“CSR can increase a company‟s reputation. We also believe that companies do
realize that their customers are educated enough and they understand the way
companies operate and take care of CSR and disclosure etc.”.
One of the interviewee focused on corporate social responsibility in relation to transparency,
disclosure and responsible business practices by taking care of world around us. Similarly, the
respondent also focused on the information sharing with stakeholders and integration of business
with social responsibility:
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“Transparency and disclosure are at the heart of our CSR reporting. We feel that
we should be taking care of the environment where we operate. We also realize
that our survival is dependent on our CSR activities”.
Some of the interviewees support the conceptualization of corporate social responsibility as a
value creation with shared goals and reducing the inequalities in society through education,
health, disaster relief and supply chain sustainability:
“We are working for social investment including education, health and disaster
relief etc. as a matter of CSR. We think that the inequalities in our societies can
be reduced if all companies do practice CSR as mandatory”.
One respondents from agricultural banking referred corporate social responsibility as to adopt a
proactive approach to using cleaner technologies and safer systems of work while ensuring
compliance with all applicable national laws and regulations and other policies such as
environment, Health and Safety policy:
“Our company is one of the pioneers of corporate social responsibility initiatives
in the country. We operate in rural communities. We are committed to conducting
our business operations in a manner that protects the health and safety of our
employees and follow applicable national laws and regulations and other
policies”.
One of the respondents stated that business executives do realize the importance and relationship
of financial success and social responsibility. Of course, this essence is well maintained at
employee level as well as for external stakeholder management:
“CSR is included in our business operations. We take care of local communities
that support us, the overall wellbeing of our employees and finally the degree to
which we contribute to the economic health of the countries in which we
operate”.
A respondent from industrial and agricultural bank states that they growth philosophy is based on
‗inclusive business models which is probably the essence of corporate social responsibility:
“We provide trainings to local farmers where we operate as a matter of CSR.
Similarly, we do spend a huge amount on education, health and other social areas
and these funds are disclosed in our annual reports. We believe that our business
can go longer upon spending on the local community in CSR activities”.
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Table 33: Details of Interviews with Top Executives
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______________________________________________________________________________
Chapter 5
Discussion, Implication & Conclusion
______________________________________________________________________________
5.1 Discussion
In this chapter, rational interpretations of the logical results along with the explanation of
some key findings of the current study will be discussed. Besides, possible validations and
justifications for the substantial impact and significant findings between ethical leadership and
corporate social responsibility and their subsequent impact on performance behaviors will be
explained. Furthermore, limitation, implications and future recommendations have been
comprehensively discussed in the current study followed by a logical conclusion has been drawn
based on the entire study, model, results and discussion.
In accordance with the fundamental objective of current investigation, i.e. to understand
the concept of sustainable development and role of corporate social responsibility in formation of
sustainable development; In the principal stage thinking about that supportability and corporate
social obligation are viewed as an appropriate element of the cutting edge business and society,
while tending to corporate social execution, corporate morals, worldwide corporate citizenship
and partner the board. The idea of corporate social duty envelops the general conviction by the
majority that organizations have an obligation to society which is past the financial specialists
and investors of the firm (Kim & Thapa, 2018). The current study variables are resulting from
leadership theories, social identity theory, institutional theory and stakeholder theory. Whereas,
in second phase, a detailed analysis was carried out on the theoretical aspect of the variables to
further delineate the construct.
Similarly, the current investigation gives confirmation of our another objective i.e. role of
ethical leadership in corporate social responsibility as a determinant since the determinants of
corporate social responsibility whether institutional, organizational or individual level, have
gained attention since it‘s important to understand whether, corporate social responsibility as a
construct is being effected by internal or external factors (Aguinis & Glavas, 2017). However,
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ethical climate moderates the relationship between ethical leadership and corporate social
responsibility (Choi et al., 2015; Mayer et al., 2009). Although, the outcomes of ethical climate
are well connected in both individual and organizational level however, the subduing role of
ethical climate needs further study (Ostroff et al., 2013). The substantive process of ethical
leadership along with the ethical climate leads to corporate social responsibility practices which
have outcomes like organizational commitment and trust (Nedkovski et al., 2017). However,
trust whether implicit or explicit can be attaining through actions of leaders. Trustworthiness and
infidelity can either be inferred or in-directed from corporate social responsibility activity since
pragmatically corporate social responsibility has been interrelated with trust in management.
These constructs need to be revisited as per the needs of modern businesses and as per the
conditions of various regions, countries and contexts (Carroll, 2015). The contextual analysis
will further strength the understanding of the construct.
Some of the recent studies have more focused on work related behaviors and attitudes of
CSR such as organizational citizenship behavior (OCB), (Farooq et al., 2014), task performance
behavior (TPB) and its impact on counterproductive work behavior (CWB) which are non-
financial outcomes of CSR. The performance outcomes of CSR (consumer choice of
company/product, moral capital financial performance etc.) at both individual and institutional
level, have been widely studied (Lev et al., 2010). However, recent studies have more focused on
work related behaviors of CSR such as OCB, (Farooq et al., 2014), TPB and CWB. To better
understand the outcomes of performance behavior, we should study the theories particularly the
social exchange theory. This theory posits that human relationships are formed by the use of a
subjective cost-benefit analysis and the comparison of alternatives. Social exchange theory says
that leaders create a socially responsible environment and create a positive behavior as
reciprocity (OCB, TPB) among employees towards the firm (Aguinis & Glavas, 2012).
In conclusion, the context of addressing the ethical and societal concepts of sustainability,
CSR encompasses strategic framework for achieving the goals of sustainability by framing the
concerns in society regarding the environmental and social valor. Yet the study of CSR along
with its antecedents in nexus to sustainability is much needed to further delineate the construct.
Therefore, the current research is based on the theoretical support such as social exchange
theory; that CSR-OCB link is correlated on interchange norms (Zink, 2011).
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5.1.2 Discussion on Quantitative Part
We will discuss the quantitative part as per the stated prepositions earlier supported by
literature.
It was proposed that ethical leadership has positive impact on CSR. Results validated the
hypotheses and revealed that ethical leadership has significant and direct impact on corporate
social responsibility in a way that employees form their opinion of ethicality through
observations, actions taken by the leaders; the contextual acquaintances and perception about the
CSR activities. These results are consistent with previous studies (such as Freeman, 2016; Liu,
2017; Shapiro & Stefkovich, 2016; Shin et al., 2015; Verissimo & Lacerda, 2015; Yang et al.,
2010). Similarly, these results also strongly support that ethical leadership creates a win-win for
both the employees and organization simultaneously as postulated in many previous studies
(such as Kalshoven et al., 2011; Langlois & Lapointe, 2009; Shantz et al., 2016).
An interesting argument in the perspective of leadership is developed as whether is it the
top, middle or supervisory level leadership that contribute or promote corporate social
responsibility activities? A study conducted by Shin et al. (2015) found that top management
plays a role in devising policies for corporate social activities. Similarly, Yang et al. (2010)
summarized that middle management is basically responsible for implementation of social
activities. The earlier study by Posner and Schmidt (1984) linked supervisory role with behavior
of employees and organizational performance. In a nutshell, role of leader either in top, middle
or supervisory level, plays a vital role in devising and implementing corporate social activities in
organization. These leaders realize that the social activism can certainly increase the motivation,
attitude and positive behavior of employees (Yang et al., 2010).
Finally, as the theoretical base suggest that ethical leader‘s effectiveness/efficacy with
insights of the leader's uprightness and fidelity is positively related to affective CSR (Langlois et
al., 2014). Leaders create a culture of trust among the employees of the organization through
their explicit actions such as CSR etc. which subsequently create an ethical environment
supported by moral obligations along with compliance of legal and other regulations. However,
ethical leaders undertake such activities beyond legal requirements and instead they encourage
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employees to participate in voluntarily activities. Similarly, for ethical leader‘s employees ethical
and moral development is more important. These findings are in line with the results of many
studies in past (such as Brown & Linda, 2006; Hansen et al., 2016; Langlois et al., 2014; Ostroff
et al., 2013; Schwartz, 2017; Shapiro & Stefkovich, 2016; Lev et al., 2010; Langlois et al.,
2014).
As we hypothesized, CSR creates trust among employees of the organization. In other words, our
framework suggests that employees having higher propensity of trust on ethical leadership due to
the reason that they formalize and undertake CSR activities. The hypothecation was based on
outcome of comprehensive literature support mentioned in the current study. Similarly, results of
the current study are directly supporting the outcomes of previous studies (DeConinck, 2011;
Chiu & Sharfman, 2011; Mayer et al., 2009; Nedkovski et al., 2016; Rupp et al., 2006) which
had suggested that trust whether explicit or implicit can be attained through actions of leaders
such as CSR which creates an environment where employees feel that their organization is
thinking ahead of financial gains (Aguinis & Glavas, 2012; Lev et al., 2010).
The effects ethical leadership and CSR are presented in three ways i.e. direct, indirect and
cross-level. The direct or immediate level effects of ethical leadership and CSR have addressed
the attitude of employees. In the current study trust being the attitudinal outcome of corporate
social responsibility has been discussed. Similarly, the indirect effect of ethical leadership and
social responsibility are the performance outcomes having substantial effect on organization. The
cross-level of ethical leadership and corporate socialization have been conceptualized since the
combine effect of both constructs is positively significant on attitude and behavioral outcomes
(Thaler & Helmig, 2016). Findings of the current study also revealed that outcomes of CSR such
as trust are in fact a universal concept across the conditions of various regions, countries and
contexts. Trustworthiness and infidelity can either be inferred or in-directed from CSR activity
(Khan et al., 2014; Rupp et al., 2006; Rupp & Mallory, 2015) since pragmatically CSR has been
interrelated with trust in leadership and management (Hansen et al., 2011). The findings of
current study validate the findings of previous studies (Carroll, 2015; Campbell, 2007; Ostroff et
al., 2013).
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In a nutshell, the current study has added on the existing literature of ethics wherein the
effects of corporate socialization have been studied in relation to trust which is psychological
state after all. Managers across the board do demonstrate ethicality followed by corporate social
reforms, inclusion of society in priority and practices of social ethics while performing the
business affairs. This notion certainly motivates employees as better citizens in organization,
encourage them to trust management, show more inclination and subsequently stay away from
deviance behavior.
We have postulated that trust has one of the important outcomes i.e. task performance behavior.
Findings of the study confirmed the theory of organizational trust, which determines that trust in
organizations must be built by frequent interactions in the organization to build the performance
outcomes i.e. task performance and OCB (Settoon, Bennett, & Liden, 1996; Campbell, 2007).
Previous studies have revealed that trust is positively related to intrinsic motivation, job-related
attitudes and behaviors such as task performance, job satisfaction, job involvement (Ashforth et
al., 2008; Ashforth & Mael, 1989; Caligiuri et al., 2013).
Recent studies have more focused on work related behaviors of CSR such as OCB,
(Farooq et al., 2014), TPB and CWB. To better understand the outcomes of performance
behavior, we have incorporated the social exchange theory. This theory posits that human
relationships are formed by the use of a subjective cost-benefit analysis and the comparison of
alternatives. Social exchange theory says that leaders create a socially responsible environment
and create a positive behavior as reciprocity (OCB, TPB) among employees towards the firm
(Aguinis & Glavas, 2012).
As indicated in the results, a direct and positive significant relationship was found
between trust and task performance. These findings are as per the hypothesized statements and in
line with previous studies (Asrar-ul-Haq & Kuchinke, 2016; Caligiuri et al., 2013; Newman et
al., 2015; Walumbwa et al., 2011). Corporate socialization promotes sense of ownership among
employees. Employees as a result reciprocate trust on leaders and organization. This win-win
factor leads to effective performance on part on employees referred as task performance as
studied by Bouckenooghe, Zafar, and Raja (2015). As stated earlier, leader‘s ethicality is
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positively correlated with employees‘ task performance behavior enabling them to achieve their
tasks timely through efficiency and effectiveness. The performance outcome is sometimes linked
with the style of leaders in organization since the measurement of effectiveness is associated
with leadership style. The study of Vigoda-Gadot (2007) summarized that leaders particular the
ethical leadership style resonates employees more towards them subsequently increasing the task
performance behavior. In addition, transformational leadership style is also linked with the
positive performance behavior; however, the recent analysis by Bande, Fernandez-Ferrin,
Varela-Neira, & Otero-Neira (2016) and Asrar-ul-Haq and Kuchinke (2016) summed that ethical
leadership style is more proactive in enhancing the task performance behavior of employees as
compare to other leadership styles.
In line with the previous research, we hypothesized that trust and OCB are positively related to
each other (Farooq et al., 2014). This proposition is also supported by literature and theories like
social exchange. Findings of the current study validated the theory and literature that states that
the trust-OCB link is correlated on interchange norms which means that leaders in organizations
may create the environment where employees tend to believe in them based on their explicit
actions such as CSR. It is pertinent to note that CSR activities have outcomes like trust which
develop performance variables such as OCB. Similarly, showing and developing positive OCB is
directly related to TPB especially when employees show positive behavior towards organization.
This process of win-win positivity is multidimensional attributing both performance and
behavioral outcomes (Hui-Hua & Schutte, 2015). In nutshell, trust as discussed is becoming a
topic of wide discussion due to the fact that leaders must act responsibly in the changing domain
of modern businesses. Such a propensity is mostly encouraged and institutionalized by ethical
leadership. The results of current study revealed that there is a positive and significant
relationship between trust and OCB. The results are in line with the findings of the previous
studies (Jahangir et al., 2004; Khalid and Ali, 2005; Langlois et al., 2014; Podsakoff et al, 2000;
Sahafi et al., 2011; Smith et al, 1983).
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It was hypothesized that counterproductive work behavior is negatively correlated with trust.
Results of the current study substantiated that trust in fact has a negative relationship with
counterproductive work behavior. This means that counterproductive work behavior is
negatively correlated with trust. The findings of present research are an addition to the current
literature, as it demonstrates indirect negative and significant relationship between trust and
counterproductive work behavior. The findings of current research are in consistent with
previous research conducted by Elci, Sener, and Alpkan (2013) and Bouckenooghe et al. (2015).
The deviance behaviors of employees are counterproductive for both organization as well as
employees. The survival and success of organization and employees are interdependent. Neither
of the two can survive in isolation; hence the leaders in organization take the lead and promote
social activities to endorse positivism among employees considering them the primary
stakeholder (Appelbaum & Roy, 2007).
Ethical leaders in organization devise promote and review corporate social activities
followed by ethical climate. This notion results in manifold. The study of Newman et al. (2015)
summarized that negative relationship between ethical leadership and deviant behavior was
harder when employees perceived higher levels of role clarity. Leaders in organization delineate
the tasks of employees after assessing the required skills, mitigating the ambiguities and
uncertainties. Employees produce better results when their roles are clearly defined and their
immediate supervisors are trustworthy. Social learning theory posits that employees take
influences from outside being socially motivated. The social exchange theory further pointed that
leadership and employees are having a bond based on reciprocity. The reciprocity can be used
positively by leaders in organization meeting the psychological needs of employees
(Bouckenooghe et al., 2015). When the psychological needs of employees are met with, they
tend to show positive behavior and the deviance behavior is discouraged.
It is obvious that non-existence of social activism in companies encourage employees to
peruse negative and deviant behaviors as lateness and CWB. In the present study, we have
analyzed OCB, TPB and CWB in relation to CSR, in line with the recommendations of previous
research (Lilienfeld et al., 2015; Hui-Hua & Schutte, 2015). Furthermore, the results of the
current study revealed that trust whether explicit or implicit has a significant positive impact on
counterproductive work behavior. This means that leaders create trust among employees to avoid
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counterproductive work behavior. The individual factors of CPWB are purely judged, perceived
and interpreted by individuals. Whereas, the situational factors are ―aspects of the social context
that are perceived by people and are largely influenced by other members of the organization‖
(Hershcovis et al., 2007). Previous research has established that organizational justice (Colquitt,
2001), ethical leadership (Brown et al., 2005), ethical climate (Ashforth et al., 2008) OCB
(Podsakoff et al., 2009) and CSR (Appelbaum & Roy, 2007) can overcome reduce the negative
deviances among the employees (Dalal, 2005; Hershcovis et al., 2007).
The current study proposed that the relationship between ethical leadership and CSR is
moderated by ethical climate. The results revealed that ethical climate positively affects the
relationship between CSR and ethical leadership. In other words, the individual and
organizational outcomes are significantly moderated by ethical climate. These results are in line
with the results of Rupp‘s (2011), Choi et al. (2015) and Barnett and Vaicys (2000) and are in
support proportion of the multiple-experience model which suggests that employees develop
perception in three ways i.e. outward, upward and inward. In particular, the outward perception
is directly affected by CSR activities of organization, whereas upward perception is correlated
with leadership in organization and inward perception is developed by trust on others (Chiu &
Sharfman, 2011; DeConinck, 2011; Mayer et al., 2009; Mulki et al., 2006; Nedkovski et al.,
2016; Wang & Hsieh, 2012).
Additionally, research has also revealed that the positive effects of ethical leadership on
organizational level become more significant when followed by ethical climate (Kish-Gephart,
Harrison, & Trevino, 2010; Martin & Cullen, 2006). Nevertheless, the compounded social
elements compel leaders to understand the multilevel effects of ethical climate in organizations.
Rupp‘s (2011) summarized that the ethical climate perceptions of employee‘s raise in result of
outward effects, which means organization‘s CSR activities across the board. Similarly, the
upward effects, which mean the quantum of information about top-level leaders in organization,
also contribute in delineating the perception of ethical climate. Likewise, inward effect, which
means employees own predisposition to trust leaders, also effect the perception of ethical climate
in organization. Our multi-experience framework for understanding ethical climate perceptions
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was supported: CSR perceptions, an outward looking measure of an organization‘s CSR activity,
was associated with employee ethical climate perceptions, and this relationship was fully
supported by employee perceptions of top management ethical leadership, as employees look
upward at their organization‘s leadership (Nedkovski et al., 2016). This ethical culture is being
promoted by leaders through their substantial ethical actions.
Table 34: Result Summary of all hypotheses
5.1.3 Discussion on Qualitative Part (Sustainable Development)
It is evident from the interviews that the companies mainly due to either regulatory or
social reasons are practicing the corporate social responsibility. It is also imperative to note that
most of the executives very rightly emphasized on the role of management and leadership while
deciding about the social activities. Certainly, leadership plays a pivotal role in devising and
defining policies about the company‘s social activities. Another very important point that
became hallmark of these interviews was ―ethics/ethical practices‖. The top executives of
corporate sector do feel that the ethical practices are important while conducting business
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operations. The ethical practices should not be limited to internal operations but it should also
include society.
The social, human and environmental development is priority of every government since
it increases the productivity of the society overall. Government is focusing on the sustainable
environment, infrastructure and socioeconomic development in line with the guidelines of
UNSDG‘s. Although government is committed to play its role in achieving the targets of
sustainable development goals, however, this dream can‘t be fulfilled unless the corporate sector
plays its due role. While conducting the interviews, we observed that the corporate leaders are
happy to play their part in contributing towards social, human and environmental development.
The leaders in corporate sector also realize that the human development will certainly reciprocate
in providing trained and skilled labors. Similarly, spending money on education and health of the
employees will certainly help these organizations in maintaining the health and safety of their
workers which means retaining skilled employee at lower cost. Some of the corporate leaders
emphasized on the green environment while the others highlighted the importance of social
investments. Some of the leaders stressed on the need of investing on the wellbeing of employees
as part of their corporate social responsibility. Similarly, some of the executives do realized that
the brand image and organizational reputation is also linked with the volume of corporate social
activities they perform while doing business.
5.1.3.1 Theme wise discussion on sustainability
We will discuss the conceptual model theme wise i.e. strategic planning, economic
practices, social practices and environmental practices.
Theme-I Strategic planning
Sustainability practices in institutions has gained importance and became a central issue
over the recent decades (Lee, Barker, & Mouasher, 2013; Larran Jorge, Herrera Madueno, &
Javier Andrades Pena, 2015). Both policy makers and public drew attention to the importance of
embedding sustainability in operations and integrating sustainability across all of its activities,
responsibilities, and mission (Larran et al., 2015). As Milutinovic and Nikolic (2014) explain, a
vision of sustainability in an organization aims to create an environment where everyone has the
opportunity to learn values, behaviors, and lifestyles required for a sustainable future (Larran et
al., 2015).
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Vision of success. Articulation of organizational vision for framing sustainability is one of the
important functions of management. The process of clearly framing the vision certainly helps the
management in smooth decision making (Broman & Rob rt, 2017). Vision is obviously based on
long-term strategic thinking, aims to help the management in implementation and strategizing
the priorities (Collins & Porras, 1996). During interviews, few organizations emphasized the
importance of creating the vision together with multiple stakeholders involved in all spheres of
operations. Senge (2008) explains the benefits of building a shared vision as follows: ―When
more people share a vision, the vision becomes a mental reality that people can truly imagine
achieving. They now have partners, co-creators; the vision no longer rests on their shoulders
alone‖.
Definition of sustainability. According to findings, even though institutions define sustainability
in their reports and other official documents, not all sustainability practitioners are on the same
page as there is lack of a shared mental model of sustainability across corporate sector. The
results suggest that the definition of sustainability that an organization uses is very vague and
lack whole system perspective. Therefore, sustainability practitioners have their own
understanding of sustainability which sometimes radically differs. Hence, several sustainability
areas are left uncovered in their operations and practices. A widely agreed, thoroughly
articulated, and well communicated definition of sustainability would help institutions to build a
common language to govern their sustainability effectively (Broman & Rob rt, 2017).
Action prioritization process. Another interesting finding is that institutions mostly have
different prioritization principles in terms of which project they should carry forward first. For
instance, in some institutions sustainability practitioners use deadlines and enthusiasm about the
topic in the team as indicators for prioritization, in other institutions they start with a ―low
hanging fruit‖ project, other sustainability practitioners orientate on projects of current interest in
their local area. It may be concluded that some institutions do not have a comprehensive
approach to strategic planning. Therefore, sustainability practitioners act spontaneously while
trying to adapt to the current situation and predict trends. The results suggest that as
sustainability offices are relatively new, they have not developed the approach for strategic
planning towards sustainability yet. The role of culture in sustainability is widely discussed and
debated in literature (Soini & Dessein, 2016). This is because achieving sustainability goals is
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closely dependent on human accounts, actions and behavior which are embedded in culture
(Soini & Dessein, 2016). Therefore, the cultural context is essential for embedding sustainability
in the vision and strategy of institutions. For instance, sustainability may not be the priority in the
country; therefore, senior management does not include sustainability in the vision of the
organization. Unfortunately, sometimes due to these limitations bright ideas of sustainability
practitioners cannot be implemented.
Collaboration with other organizations. Sustainability governance at institutions is time
consuming, requires a lot of resources and collaborative work (Sharp, 2002). Therefore, the
researchers recommend to all organizations to be more open and supportive to sustainability
offices. Moreover, a larger number of sustainability practitioners would positively influence the
flow of work as each one is responsible for different aspects of sustainability and all tasks can be
accomplished sooner in a bigger sustainability team.
Challenges. The results suggest that due to lack of support from senior management, many
sustainability related ideas cannot be put into practice and remain on paper. Therefore, it is
essential to raise awareness of the senior management about sustainability challenge and
persuade them on the importance of the proposed actions.
Theme-II Economic practices
Sustainability policies and practices need to go beyond the boundaries of organizations
and need to be incorporated in their supply chain and investment management (Meehan &
Bryde, 2011). In this respect, a strategic guideline on financial management is needed for
institutions to make decisions encompassing the environmental, economic and social elements of
sustainability (Meehan & Bryde, 2011).
Assessment of suppliers. Information about the procurement process which was found in the
official documents was not very clear and complete. Therefore, the researchers would like to
emphasize that this area needs particular attention. It is important to have financial collaboration
with suppliers who aim to reduce their negative impact on the society and environment, hence,
encourage transition of society towards sustainability.
Budget for sustainability. Another aspect of economic practices at institutions that drew attention
of the researchers was the internal budget allocated to sustainability offices. Sample
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organizations emphasized the importance of having sufficient budget for their activities and
projects as financial resource is usually a prerequisite to put ideas in action. Some sample
organizations expressed that their actual budget is much less than they need. In this regard, in
order for institutions to allocate more budget for sustainability offices senior management needs
to be convinced of the return on investments from sustainability offices‘ activities (Willard,
2012).
Challenges. Institutions often find it challenging to promote sustainability on site as it may bring
extra costs for institutions to pay. The priority is given to other projects and activities. Therefore,
as also explained above, the senior management of institutions needs to be persuaded into the
‗business case benefits‘ of sustainability (Willard, 2012).
Theme III- Social practices
Social sustainability is a broad concept which is strongly related to fundamental human
rights and freedoms. As a safe and healthy environment is a prerequisite to the enjoyment of
other rights (Rudd & Walsh, 1993), it should be one of the priorities for organizations to advance
in sustainability. According to the interviews and official documents of sample organizations, the
majority of them align with social sustainability on site. However, there is still room for
improvement. Institutions need to allocate financial resources, adapt their policy and
infrastructure and train their staff to assure an inclusive, impartial environment for all members
(Forlin & Small, 2014).
Theme-IV Environmental practices
Institutions have a fundamental role in creating an ecologically healthy society (Dagiliūtė
& Liobikienė, 2015). They need to address global environmental challenges not only by
engaging in sustainability practices, but also demonstrating best practice in their own operations
(Ralph & Stubbs, 2013). These way institutions may have both multiple and multiplier effects on
society (Ralph & Stubbs, 2013) and they can contribute to environmental awareness and
behavior (Dagiliūtė & Liobikienė, 2015).
Initiatives and operations. According to findings, sample institutions take actions to contribute to
environmental sustainability. The range of their projects is very wide: addressing various issues
related to environment such as unsustainable transportation, construction, physical resource
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management, irrational consumption of energy and water, production and distribution of waste,
negative impact on biodiversity. While choosing environmental sustainability projects sample
institutions prefer focusing on issues of current importance.
However, to summarize it; Firstly, organizations do recognize the practices of
sustainability and corporate social responsibility and part their ethical practices. Secondly, these
companies are issuing sustainability reports every year in compliance to regulatory guide lines
by Securities and Exchange Commission of Pakistan. Thirdly, some of the sectors such as the
manufacturing sector are facing international pressures to maintain sustainability reports with
disclosure to avoid trade bans. Fourthly, organizations also realize that corporate social
responsibility maintains their reputation among their customers. The top executives also feel that
the corporate social responsibility practices enhance customer satisfaction. Finally, to maintain
relationship with external stakeholders and retain the employees working therein companies
work for social development. Furthermore, government as regulator does realize its role and try
to enforce the policy and revise the implementation mechanism in consultation with corporate
sector. Nevertheless, corporate social responsibility is becoming a need for all businesses to stay
in the competitive environment.
5.2 Implications for Research and Practice
The current study is making numerous noteworthy theoretic and applied contributions.
The study endeavored to build and test a model that studied the effects of some of the important
variables such as corporate social responsibility, ethical leadership, ethical climate and trust on
outcome variables such as task performance behavior, organizational citizenship behavior and
counterproductive work behavior jointly known as performance behaviors. The current study is
focused on banking sector of Pakistan; therefore, maximum benefits of the current study will be
taken by the same sector. Similarly, since the current study has used simple random sampling
technique by reaching higher number of respondents for inclusion and maximum participation.
The inclusion of higher number of participants leads to representation and mitigate the chances
of biasness by yielding the external validity of findings and generalizability which is the strength
of current study. We are confidant to generalize the study results particularly on the study
population. However, as far as external validity is concerned, as real-world settings vary
intensely, findings in one setting may or may not generalize to other setups.
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5.2.1 Theoretical Implications
The extensive literature review in chapter two shows that corporate social responsibility
as subject matter has gained a lot of attention among researchers and management specialists.
Though the existing theories of corporate social responsibility outlines a lot; however, there is a
lot to explain as how the process of CSR occur, what may impact CSR and what could be its
outcome. The current study has added to the theory by explaining the complete process of CSR,
its determinants and positive outcomes. The current study has identified some of the key factors
such as internal and external, which determines the CSR activities in organization. The
theoretical aspect of corporate social responsibility can be seen from lens of moral and ethical
aspects, social benefits, economic benefits and relationship between economic entities and their
environment. The idea of corporate social responsibility is basically building relationship
between all stakeholders participating in economic activity. Nevertheless, corporate social
responsibility protects the formal and legal requirements and protection of environment apart
from building relationship between the stakeholders. Though the contribution of the current
study is manifold; however, we categorized them broadly as use of a theoretically driven
approach to study and test the model where determinants of CSR are studied in context of ethical
climate and second is application of the model to explain that CSR has outcomes such as trust
which subsequently lead the performance behaviors. The outcomes of current study deliver
moving concern to understand the process of CSR. In nutshell, the concept of corporate social
responsibility involves the organization in defining corporate governance, board structure,
disclosure, care for human rights, addressing the employee‘s behaviors, social engagement and
best practices. In subsequent stages, the concept of corporate social responsibility tells the
enterprises that investing on environment and employee‘s wellbeing will reciprocate in building
positive image of the organization. Likewise, the organizations may better learn the
legitimization of policies and moral authority while spending on social driven activities. This
will certainly lead the organizations towards sustainability. In the upcoming paragraphs, the
precise implications of the study to academia are presented.
5.2.1.1 Better understanding of CSR/SD
The primary objective of CSR concept is to protect the social and economic life against
the economic relativism or ―market fundamentalism‖. This simply means that human dignity and
social protection should be primary principles of business entities. More specifically, the ethical
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and moral standings of business, respect for law, creating mutual trust among all stakeholders
and protection of environment must be integrated in the core business mission. Such kind of high
morality and disclosure will yield the organizations in longer run. However, the socialization
should be exercised as matter of institutionalization rather onetime event or a need based
arrangement. Socialization must be a process based activity in these organizations strengthens
the relationship of society and business. Certainly, the processed based social integration creates
a viable culture in organizations where the employees feel more empowered and show higher
inclination, taking it as their moral responsibility. The literature of CSR and SD has emphasized
that a suitable CSR and SD framework are an important factor in confirming CSR factors
(Fernando, 2008). The current CSR and SD researchers such as, McWilliams et al. (2006) and
Gallego et al. (2010) have criticized research in CSR and SD claiming lack of operationalization.
The current study will fill this gape. The major contribution of the current study would be;
Comprehensive understanding of SD and its facets
Role of SD in defining CSR
The literature on CSR is evident that relationships defined and explored in the current
study are not only unique in nature but also having sound backgrounds and theoretical support.
Though some of the variables such as CSR and ethical leadership have been explored in other
cultures (Glavas, 2016), but impact of ethical climate between the relationship of CSR and
ethical leadership by linking the performance outcomes of CSR in relations to trust is of a unique
stud model. Lastly, the current analysis will contribute towards knowledge gap revealed in CSR
studies conducted by numerous researchers (such as Abd-Elmotaleb et al., 2015; Farooq et al.,
2017; Frederick, 2016; Glavas, 2016). In particular, the current study has rightly highlighted that
the corporate social responsibility should be process based approach instead of event based. This
means that the banking sector in particular and other sectors in general should institutionalize the
concept of corporate social responsibility. On the other hand, social integration should be driven
by a clear policy and at the same time it should be part of their disclosure requirements.
5.2.2 Practical Implications
The current study is expected to have major practical implications particularly for private
sector companies, policy makers and government functionaries. Firstly, the present study has
made a significant practical contribution in defining the underlying processes of CSR which
212
affect the organizational image practically. Secondly, it will help the corporations in devising
policies and strategies for the application of CSR in relations to its context. Thirdly, the SD
strategies and policies were branded by developing a framework through elaborating the
approaches which can be of great help in understanding the underlying processes of SD in
relation to implementation of CSR. Furthermore, the framework can be used as a model to
endure CSR investigation and decision making for future researchers. Also, the process of
developing a CSR and SD framework can be useful for management as well as stakeholders to
help them understand the concepts of SD & CSR in context of social and environmental
dimensions (Carroll 2004; Maon et al., 2009). Nevertheless, the current investigation will open
new ways for further research in multiple sectors and the future researchers can also be benefited
though the recommendations.
Finally, observing the present perceived descriptive and empirical gap based on literature
review, it is observed that corporate social responsibility being new phenomena is not explored
too much in Pakistani corporate sector. The present study therefore, adopts a multi theoretical
approach to develop a model to explore the mechanism of potential impact of corporate social
responsibility as external and internal on performance variables. This will further strengthen the
perceived benefits of CSR for sustainability.
5.2.3 Implications to Banking & other Sector
Banking is one of the best progressive sectors in Pakistan. Banking sector is already
spending a substantial amount on social activities across the board. These social activities are
different in nature for each bank depending on the priority set by these banks. However, there are
few areas, as identified in the current study on which these banks need to work more. First of all,
banking sector should realize that the pro-social and pro-environmental policies and activities
impact broadly in two ways; internal and external. Internally, social activism creates a win-win
culture in organization which leads to employee‘s trust on management and organization
simultaneously. The employees of such organizations show more ownership and inclination
towards their organization as a result of trust. Certainly, this inclination is yielding organizations
in terms of better efficiency and effectiveness of employees, harmonizing their attitude and
addressing behavioral aspects of employees. Similarly, social activism also leads to employee
satisfaction and retention which are becoming a major problem now day‘s in corporate sector.
213
The intrinsic task motivation and creating organizational citizenship behavior among employees
are yet the important and positive outcomes of corporate socialization. Nevertheless, banking
sector should realize that they are operating in human intensive environment. Now therefore, the
integrity and dignity of human should be their top priority while devising such policies.
Externally, corporate socialization creates positive and a soft image of banks, creating
more customer base and retaining the existing ones. In other words, pro-social activities increase
the reputation and creates better image of the organization yielding in terms of customerization.
Customers are now better aware of the activities of banks and they prefer to have relationship
with such banks which are more pro-social, have dignity for humans, protect environment, have
respect for law and devise moral bond policies. Though the primary objectives of these banks are
to maximize shareholder‘s wealth, yet profiteering and profit driven policies will be detrimental
in longer run. Banks should make the social activism as their core part of business in addition to
making profits. This will create a balancing act on part of banks.
The findings of the current study also provide directions to banking sector of Pakistan to
devise such policies regarding sustainability and CSR that it could serve the core objective of the
business since these sectors are of primary focus in Pakistan. However, the banking sector needs
to understand that the effects of its corporate social activities will have longer positive impact on
environmental and health and education in the close vicinity where they operate particularly in
rural areas. The findings will increase the sector‘s awareness about the underlying processes of
CSR especially in relation to leadership and trust and thus help them to develop their strategies
accordingly. These strategies should be multidimensional addressing all concerns of the society
as well as employees working in these banks.
It is pertinent to note that the banking sector of Pakistan is spending millions of disclosed
funds on sustainability activities across the country. This study can help the sector in better
understanding the practical implications of their spending and it might help them to increase such
activities in future by spending in other areas particularly where it is much needed. Secondly, the
leadership at these sectors can devise policies as per the aspirations of modern era by keeping
CSR as focused. Additionally, banking sector must transform its policies into institutionalization
since the social activism should be process based. The process oriented approach should
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immediately be adopted for social activism instead of event based or acting at times of natural
calamities such as earthquake or floods etc.
5.2.4 Implications to the Policy Makers
The CSR as a matter of strategy may be focused on social &community welfare activities
extended but not limited to promoting education, providing health facilities, and human welfare.
However, as discussed earlier that there are no CSR-specific regulations or mandatory
obligations in Pakistan which might ensure the ethical compliance. As a result, CSR is purely
practiced in Pakistan whether by government, private sector or NGO‘s on a voluntary or
humanitarian basis. We can expect that the regulatory of private sector i.e. Securities and
Exchange Commission of Pakistan will take guide lines from the current study in devising rules
for promotion of CSR activities in Pakistan by making it as an obligatory regulation. Similarly,
State Bank of Pakistan, which is the regulator for banks in Pakistan, can introduce some of the
innovative ideas to promote social activism by banking sector. Some of the recommendations to
these regulators are summarized in the current study.
The regulators should make social activism as one of the pre-requisite for licensing or
renewal of license for all corporate sector entities. The fair and better idea would be probably to
link it with their net profits during the financial year. Secondly, the regulator and policy makers
should invite corporate sector to adopt some schools, hospitals and welfare organizations
specifically operating in rural areas of Pakistan. This might impact in running these institutions
on sustainable basis benefiting the common public. Another idea could be that government
should make it a mandatory requirement for these entities to build such institutions in rural areas
or surrounding the areas where they are operating, which could help the oppressed and less
empowered. However, these regulations should not be an impediment for doing business.
Policy makers should understand that social activism by private sector should be
reciprocated with certain policy level facilitations. This facilitation could be in terms of rebates
in corporate taxes, lower range of withholding taxes, special incentives in custom duties and
declaring tax holidays etc. Similarly, government and policy makers should invite private sector
for collaboration and partnership to invest on human development as part of their CSR program.
The human development will certainly benefit both corporate sector and policy society in long
run on a sustainable basis. In addition, government can introduce such programs where private
215
sector could invest jointly through their corporate social responsibility program. Example of such
programs could be to create an equity fund for investment in education, health, social
development and community welfare on the basis of poverty level. This fund can speeded
through a proper mechanism under the supervision of renowned business entities. The structure
of the fund can be developed through top rated firms and the annual audits can be done through
third parties to maintain transparency and disclosure.
Similarly, NGOs and advocacy groups can also instigate the need for government and
businesses to promote corporate social responsibility practices based on findings of our study.
Several advocacy and research organizations, such as Corporate Social Responsibility Center
Pakistan, CSR Association of Pakistan, National Forum for Environment and Health, Triple
Bottom Line Pakistan, Sustainable Development Policy Institute, Corporate Social
Responsibility Pakistan, and Responsible Business Initiative Pakistan can take insight knowledge
from the study in promoting corporate social responsibility culture and awareness in the
Pakistani private sector. Specifically, these organizations can provide corporate social
responsibility awareness to public and businesses, a forum for stakeholder dialogue, corporate
social responsibility related capacity building interventions in the private sector, and research
work related to corporate social responsibility. The NGOs and advocacy centers can develop
corporate social responsibility training programs for top executives of corporate sector.
Similarly, organizing seminars on corporate social responsibility by the advocacy groups will
also help in creating awareness among masses. The NGO‘s in collaboration with international
donor agencies should ensure that some of the renowned social activists, motivational speakers
and management specialists should be invited in these seminars and trainings as to increase the
participation threshold. Nevertheless, such activities can play a vital role in increasing awareness
among businesses and society at large.
5.2.5 Implications to the Society
The social activities undertaken by organizations play a vital role in better managing the
consumers and local community where businesses operate (El Akremi et al., 2015).Companies
are aware of the facts that undertaking social activities are one of the key factors in building
corporate reputation and good image (Moratis, 2015; Rasche, 2011).The external social activism
is certainly an effective tool in managing the external stakeholders, such as society as a matter of
216
organizational strategy. The importance of stakeholder management including society would be
important for any business entity keeping in view the severe competition. Business entities
would certainly want to create and enhance its credibility among the existing customers and
attracting the potential customers. Corporate social responsibility is recognized as an excellent
tool of credibility-enhancing strategy for organizations (Moratis, 2015). Businesses use external
social responsibility as a tool of gaining competitive edge and catching new opportunities.
Nevertheless, the new opportunities will yield these organizations not only in terms of financial
stability but also benefit them on a sustainable basis in long run (Loosemore & Lim, 2016).
Undoubtedly, organizations use the corporate social responsibility for business
advantages, community relationship management, relations with media and interest groups on
win-win basis. Gaining competitive advantage is of course important for brand management.
This is based on the perceptions and attitude of customers and society. Businesses can register a
good brand image in the minds of customers through tangible social activism (Aguinis & Glavas,
2012). Consumer‘s buying behavior is also affected through CSR activities since buyers are also
part of the society. Perrini (2005) has summarized different themes/stakeholder based categories
of corporate social responsibility starting from human resource, customer, supplier and
community. These themes are interrelated and have significant importance on community and
society.
Finally, organizations should realize that their activities suffer society in way or the other.
Businesses should integrate their activities in such a way that the affects could be minimize.
Specially, the environmental impacts should immediately be addressed by business engaged in
manufacturing or industrial concern. It is in the best interest of businesses and society that there
must not be a communication gap between society and business. Partnership and collaboration
with local community and society will fill this gap. Local community and society at large can be
given some special tasks to identify the areas on which business can invest CSR funds. This way
business can create a positive impact on society at large. Of course, this will address the concerns
of society creating a soft image of business which will yield them in future. It is also important to
understand that the attitude and behavior of individuals, groups and society are positively
affected through social activities. The current study has explained that CSR does exactly the
same while addressing the internal and external factors affecting these activities.
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5.3 Limitations and Future Research
Some notable limitations should be considered before the generalization of the results.
We can broadly categorize the limitations into three main phases i.e. research design, research
participants and conduct and research outcomes. In both the phases, the use of self-reporting
sometimes creates biases and tends to give socially accepted responses. This means that the
study has actually measured the attitudinal data as opposed to actual behavior of the individual.
If the individual‘s perceptions do not match with their behavior, the current study could not find
such anomaly.
In terms of research design, simple random probability sampling may be replaced with
other techniques in future for more insight of the phenomenon. Also, the current study is cross
sectional in nature; a longitudinal method is required to further measure the relationship between
and among the study constructs. Using the framework for banking industry only is yet another
limitation. The theoretical framework can be replicated in other sectors such as telecom,
pharmaceuticals and aviation etc. Results of the current study do not allow for comparison
between organizations based on sizes, culture and structure since these factors may create an
impact on the corporate social responsibility activities in such organizations.
The results of the current study are based on the representation from within the sampled
organizations. It is acknowledged that within the organization in question, male representation is
heavy compare to the female representation. This may create biasness. The results would have
been otherwise if the female representation were heavy as compare to male. Similarly, the gender
of researcher as female may have had an impact particularly during qualitative interviews, given
the male dominated work place involved in the current study.
Future research may consider longitudinal methods using other sample designs replacing
simple random probability sampling for more insight of the phenomenon. This might help in
understanding the actual behavior of individuals instead of studying only attitudinal data.
Secondly, using the current framework for other sectors such as telecom, pharmaceuticals and
aviation etc. would allow for comparison between organizations based on sizes, culture and
structure. Nevertheless, organizational variances may give a different yield to the study. The
current study has used ethical leadership and ethical climate as predictors of corporate social
responsibility. However, future research may consider other determinants of corporate social
218
responsibility such as financial aspects, top management and organizational structure.
Recommending the financial aspect has obvious reasons as companies might spend on corporate
social responsibility if they are financial sound. Secondly, top management is obviously has an
influence in corporate social spending. Finally, the organizational structure is another important
determinant of corporate social responsibility. Organizations, which are structured and follow
standard operating procedures, might spend more on social responsibility activities as compare to
nonstructural organizations.
Similarly, the current study has taken ethical climate as moderator between the relations
of ethical leadership and corporate social responsibility. However, future studies may consider
other moderators such as culture and organizational size etc. using the partial as well as
sequential mediation analysis. Likewise, we also suggest that future research may be conducted
by taking ethical leadership as moderator between the relationship of ethical climate and
corporate social responsibility. Additionally, we suggest that ethical climate may be studied as
predictor for ethical leadership taking environmental related theory or framework into account.
The performance variables of corporate social responsibility may be seen by studying the effects
of mediating variables such as reputation and image.
As discussed, that within the organization in question, male representation is heavy
compare to the female representation. We suggest that future studies may consider heavy female
representation as compare to male. This may give a different perspective altogether. Similarly,
inclusion of more female representation in qualitative interviews would give a different result.
Finally, future research may be conducted by focusing particularly on the processes of corporate
social responsibility through which it affects the psychological constructs in organization.
Additionally, to check and validation of current study results, a similar study can be done in
other setups, place and time through inclusion of higher number of participants to increase
representation and mitigate the chances of biasness by yielding the external validity of findings
for higher generalizability.
219
5.4 Conclusion
The current study has shown that sustainable development is a broader concept whereas;
corporate social responsibility is an integral part of sustainable development. Also, sustainable
development is dependent on the activities of organization addressing the needs and aspirations
of society, environment and employees being the primary stakeholders. The self-regulated
sustainability is performed mostly through corporate social responsibility in organizations.
Corporations have now transformed their business models into more fit to meet the challenges of
global world. In response to the apprehensions and trepidations of society and employees,
organizations now delineate their corporate social responsibility regulations and share the social
works through sustainability reports. Correspondingly, corporate social responsibility plays a
vital role in defining the broader concept of sustainability. It is of significance that the social and
moral policy development is attributed towards ethical leadership in organizations. Certainly,
ethical leaders play their role in devising ethical policies and framework in organizations. It is
also worth mentioning that ethical leadership positively affects corporate social responsibility as
rightly shown in the results of current study. This way the ethical leadership acts a predictor of
corporate social responsibility. Subsequently, results also revealed that corporate social
responsibility has both attitudinal and behavioral outcomes. Trust is the attitudinal outcome of
corporate social responsibility as concluded in the current study. Leaders create trust among
employees in organization since they are aware of the fact that employee‘s attitude is one of the
most important components to be satisfied with.
The current study also concludes that when attitude of employee‘s i.e. trust is created, it
leads to positive effect on behaviors. Trust has significant impact on organizational citizenship
behavior, task performance behavior and play important role in decreasing counterproductive
behavior. When the attitude and behaviors of employees are addressed through social activities,
organizations transform towards sustainability. The sustainable development is in fact a process
wherein inclusion of society and employees well-being is considered as most important part of
business activities. Finally, the study also validated that the relationship of ethical leadership and
corporate social responsibility is moderated by ethical climate. These results have been in
consistent both theoretical and empirical with previous research (Lilienfeld et al., 2015; Schutte
et al., 2015). These results also provide scholars with initial insight into understanding how
corporate social responsibility may be associated with non-financial outcomes.
220
Corporate social responsibility delineates the culture of organization where it cares for
both individuals and organizational outcomes. This substantive process is always monitored and
encouraged by ethical leadership in organizations. Ethical leaders take it as their moral duty;
hence devise such policies as to promote the social activities. Furthermore, ethical leadership has
significant positive impact on corporate social responsibility, corporate social responsibility has
significant positive effect on trust, trust has significant negative relation with counter work
behavior and trust is significant determinant of task performance behavior. All these results show
that the constructs are positively related to each other by validating the earlier suppositions and
objectives of the study.
Corporate sector should realize that the pro-social and pro-environmental policies and
activities impact the business broadly in two categories; a) internal and b) external. Internally,
corporate social activism creates a positive culture in organization which leads to employee‘s
trust on management and organization simultaneously. The implicit and explicit trust of
employees yields the organizations in addressing their behavior. The employees of such
organizations show more ownership and inclination towards their organization as a result of
trust. Certainly, this inclination will yielding organizations in terms of better efficiency and
effectiveness of employees, harmonizing their attitude and addressing behavioral aspects of
employees. Organizations should realize that addressing the attitude and behavior of employees
is in fact in the best interest of both business and employees. Resultantly, employee‘s
satisfaction, intrinsic task motivation and creating organizational citizenship behavior among
employees are yet important and positive outcomes of corporate socialization. Nevertheless,
investing in human development and protecting the integrity and dignity of human being through
social activities will benefit organizations on a sustainable basis.
In a nutshell, corporate socialization creates positive and a soft image of organizations,
creating more customer base and retaining the existing ones. In other words, pro-social activities
increase the reputation and creates better image of the organization yielding in terms of
customerization. This is one of the key factors for strategic integration of business. The modern
business intelligence sees corporate social responsibilities as a tool of credibility-enhancing for
some organizations (Moratis, 2015) while the others use it as a strategic concern for business
integration (Loosemore & Lim, 2016). The organizations use their social activities for business
221
ties, collaboration, competitive advantages and strategic integration for future endeavor.
Customers are now better aware of the activities of organizations and they prefer to have
relationship with such organizations which are more pro-social, have dignity for humans, protect
environment, have respect for law and devise moral bond policies. The ethical practices on part
of organizations impact society at large. These ethical practices have trickle down affects for
organizations. Customers and employees of such entities feel pride in associating themselves
with such organizations. Lastly, though the primary objectives of these entities are to maximize
shareholder‘s wealth, yet profiteering and profit driven policies will be detrimental in longer run.
Businesses should make the social activism as their core part of business in addition to making
profits. However, this should not be a balancing act on part of organization to overcome the
negative perception resulting in unethical practices.
222
223
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278
Appendixes
Annex A
279
280
Annex B
281
282
Annex C
283
Annex D
284
Annex E
285
286
Structural Model
287
Moderation Analysis showing interaction term EL x EC
288
Annex F. Questionnaire for Quantitative Study
Dear Sir/Madam,
I would be pleased if you spare some time to fill the questionnaire and provide truthful, accurate and
honest information. Data would be collected anonymously and analysis will be made on group basis,
ensuring that information provided is kept strictly confidential and used only for the study.
Through this questionnaire it is intended to have only your views on the issues and there are no
‗right‘ or ‗wrong‘ answers. So, please respond to all questions as requested.
Thanking you in advance for your support and cooperation.
Regards,
Sincerely,
Nasir Hussain
PhD Scholar
National Defence University
Faculty of Contemporary Studies (FCS)
Department of Leadership and Management Studies (NDU)
Cell: 0345-5165905, E-mail: [email protected]
289
Code Statement Strongly
Disagree
(1)
Disagree
(2)
Neutral
(3)
Agree
(4)
Strongly
Agree
(5)
Ecl1 In this company, people are expected to follow their own personal and moral beliefs 1 2 3 4 5
Ecl2 People are expected to do anything to further the company‘s interests 1 2 3 4 5
Ecl3 In this company, people look out for each other‘s good 1 2 3 4 5
Ecl4 It is very important here to follow strictly the company‘s rules and procedures 1 2 3 4 5
Ecl5 In this company, people protect their own interests above other considerations 1 2 3 4 5
Ecl6 The first consideration is whether a decision violates any law 1 2 3 4 5
Ecl7 Everyone is expected to stick by company rules and procedures 1 2 3 4 5
Ecl8 The most efficient way is always the right way in this company 1 2 3 4 5
Ecl9 Our major consideration is what is best for everyone in the company 1 2 3 4 5
Ecl10 In this company, the law or ethical code of the profession is the major consideration. 1 2 3 4 5
Ecl11 It is expected at this company that employees will always do what is right for the
customer and the public
1 2 3 4 5
Eld1 My manager listens to what employees have to say 1 2 3 4 5
Eld2 My manager disciplines employees who violate ethical standards 1 2 3 4 5
Eld3 My manager conducts his/her personal life in an ethical manner 1 2 3 4 5
Eld4 My manager has the best interests of employees in mind 1 2 3 4 5
Eld5 My manager makes fair and balanced decisions 1 2 3 4 5
Eld6 My manager can be trusted 1 2 3 4 5
Eld7 My manager discusses business ethics or values with employees 1 2 3 4 5
Eld8 My manager sets an example of how to do things the right way
in terms of ethics
1 2 3 4 5
Eld9 My manager defines success not just by results but also the way
that they are obtained
1 2 3 4 5
Eld10 When making decisions, my manager asks ―what is the right thing to do?‖ 1 2 3 4 5
290
Csr1 Our company participates to the activities which aim to protect and improve the
quality of the natural environment
1 2 3 4 5
Csr2 Our company makes investment to create a better life for the future generations 1 2 3 4 5
Csr3 Our company implements special programs to minimize its negative impact on the
natural environment
1 2 3 4 5
Csr4 Our company targets a sustainable growth which considers to the future generations 1 2 3 4 5
Csr5 Our company supports the non-governmental organizations working in the
problematic areas
1 2 3 4 5
Csr6 Our company contributes to the campaigns and projects that promote the well-being
of the society
1 2 3 4 5
Csr7 Our company encourages its employees to participate to the voluntarily activities 1 2 3 4 5
Csr8 Our company policies encourage the employees to develop their skills and careers 1 2 3 4 5
Csr9 The management of our company primarily concerns with employees‘ needs and
wants
1 2 3 4 5
Csr10 Our company implements flexible policies to provide a good work and life balance
for its employees
1 2 3 4 5
Csr11 The managerial decisions related with the employees are usually fair 1 2 3 4 5
Csr12 Our company supports employees who want to acquire additional education 1 2 3 4 5
Csr13 Our company protects consumer rights beyond the legal requirements 1 2 3 4 5
Csr14 Our company provides full and accurate information about its products to its
customers
1 2 3 4 5
Csr15 Customer satisfaction is highly important for our company 1 2 3 4 5
Csr16 Our company always pays its taxes on a regular and continuing basis 1 2 3 4 5
Csr17 Our company complies with the legal regulations completely and promptly 1 2 3 4 5
Tru1 Trust is the core in human relations 1 2 3 4 5
Tru2 Trust fosters cooperation 1 2 3 4 5
Tru3 A lack of trust increases rigidity 1 2 3 4 5
Tru4 Trust creates a positive climate 1 2 3 4 5
Tru5 Trust involves keeping promises 1 2 3 4 5
Tru6 Trust has to be earned 1 2 3 4 5
291
Tru7 Trust creates a supportive atmosphere 1 2 3 4 5
Tru8 Trust is achieved through actions 1 2 3 4 5
Tru9 Trust enables others to act 1 2 3 4 5
Tru10 To earn trust a leader must be able to implement tough decisions 1 2 3 4 5
tpb1 I adequately complete the duties assigned to me 1 2 3 4 5
tpb2 I fulfill responsibilities specified in my job description 1 2 3 4 5
tpb3 I perform tasks that are expected of me 1 2 3 4 5
tpb4 I meet formal performance requirements of my job 1 2 3 4 5
tpb5 I engage in activities that will directly affect my performance evaluation 1 2 3 4 5
tpb6 I neglect aspects of my job I am obliged to perform 1 2 3 4 5
tpb7 I fail to perform essential duties 1 2 3 4 5
ocb1 I help other employees with their work when they have been absent 1 2 3 4 5
ocb2 I volunteer to do things not formally required by my job 1 2 3 4 5
ocb3 I take the initiative to orient new employees to the department even though it is not
part of my job description
1 2 3 4 5
ocb4 I help others when their work load increases (until they get over hurdles) 1 2 3 4 5
ocb5 I assist supervisor with his/her work load 1 2 3 4 5
ocb6 I make innovative suggestions to improve overall quality of the department 1 2 3 4 5
ocb7 I particularly arrive at work on time in the morning and after the tea/lunch breaks 1 2 3 4 5
ocb8 I exhibit attendance at work beyond the norm by taking fewer days off than officially
allowed
1 2 3 4 5
ocb9 I give advance notice if unable to come to work 1 2 3 4 5
cwb1 I exaggerated about the hours I worked 1 2 3 4 5
cwb2 I started negative rumors about my organization 1 2 3 4 5
cwb3 I gossiped about my coworkers 1 2 3 4 5
cwb4 I covered up my mistakes at my workplace 1 2 3 4 5
cwb5 I competed with my coworkers in an unproductive way 1 2 3 4 5
cwb6 I gossiped about my supervisor 1 2 3 4 5
292
Please encircle the appropriate answer
Gender (1) Male (2) Female
Age (in years) (1) < 20 (2) 21-30 (3) 31-40 (4) 41-50 (5) >51
Education (in years) (1) < 14 (2) 14- 16 (3) 16- 18 (4) > 18
Experience (overall in years) (1) < 5 (2) 6- 10 (3) 11- 15 (4) 16-20 (5) > 21
Experience (current org) (1) < 5 (2) 6- 10 (3) 11- 15 (4) 16-20 (5) > 21
Organization Name (1)
Job Status (1) Frontline
employees
(2) Middle Management (3) Top Management
cwb7 I stayed out of sight to avoid work 1 2 3 4 5
cwb8 I took home organizational equipment and materials 1 2 3 4 5
cwb9 I blamed my coworkers for the mistakes I made 1 2 3 4 5
cwb10 I intentionally worked slower 1 2 3 4 5
293
Annex G. Information Sheet and Consent Form Qualitative Study
Dear Sir/Madam,
Thank you for agreeing to be involved in my research looking at determinants of corporate social
responsibility for sustainable development, which is being conducted as part of my PhD studies with
National Defence University.
Through this questionnaire it is intended to have only your views on the issues and there are no
‗right‘ or ‗wrong‘ answers. So, please respond to all questions as requested.
As a participant in this research, you are guaranteed confidentiality. This research will be reported
within my PhD report, and elements of it will be reported at conferences and in journals. In
all of these situations, neither individuals nor organizations will be identified, and the level of
information provided about participants will not allow for identification.
Thanking you in advance for your support and cooperation.
Nasir Hussain
Cell: 0345-5165905,
E-mail: [email protected]
-------------------------------------------------------------------------------------------------------------------------------------------------
By signing below, you are indicating that you:
•Have read and understood the information provide above about this project
•Have had any questions answered to your satisfaction
•Understand that if you have additional questions you can contact the research team
•Understand that you are free to withdraw at any time without comment
•Understand that you can contact the research team if you have any questions about the project, via email of cell
phone
•Agree to participate in this project
Name
Signature
Date
*Please feel free to request of copy of this consent form once signed, for your future reference.
294
Annex H. Semi structured Interview Questions
Section-I Qualitative interview introduction
Length: 20-35 minutes
Primary goal: To see things the way you see the more like a conversation with a focus on your
experience, your opinions and what you think or feel about the topics covered
Section-II Questions
Pilot Questions Revised/Final Questions Remarks if any
We want to understand the term
sustainable development from
your point of view.
What do you think about when you hear the
word sustainable development? What are the
goals and objectives of sustainability
programs in your organization?
Tell us about the projects your
organization is undertaking.
What sustainability projects, events and
activities is your organization currently
running?
Is it something personal or
professional commitment for
you?
How do you relate to the sustainable
development concept? Would you say that
you have a personal relation to the concept
or is it strictly academic/professional?
How do you deal with
sustainable development
concept? Are you satisfied with
the projects you are doing?
How would you describe your way of
working with the sustainable development
concept? Feel free to describe how you work
with the concept.
Do you coordinate with
community and your staff for
projects?
Does your sustainability project engage your
staff and collaborate with local community
where your business operates?
What roles can sustainable
development paly for society?
How would you describe the role of the
sustainable development concept(s) in
society today? What role do you think it
should play?
Anything further you want to add.
295
Section-III Biographical Data
Gender (3) Male (4) Female
Age (in years) (6) < 20 (7) 21-
30
(8) 31-
40
(9) 41-
50
(10) >51
Education (in
years)
(1) < 14 (2) 14- 16 (3) 16- 18 (4) > 18
Experience (overall
in years)
(1) < 5 (2) 6- 10 (3) 11- 15 (4) 16-20 (5) > 21
Experience
(current org)
(1) < 5 (2) 6- 10 (3) 11- 15 (4) 16-20 (5) > 21
Organization Name
Job Status (4) President/CEO (5) Regional Heads
296
Annex I. Initial Interview with Organizational Contact
Contact Name
Contact Position
Organization
Name
Age of
organization
Organizational Structure
Focal person for interview and arrangements
Name
Designation
Cell #
Email ID
297
Annex J. Detailed Interviews Proceedings
INTERVIEW-1
Objective; To see things the way you see the more like a conversation with a focus on your experience,
your opinions and what you think or feel about the topics covered.
Interviewee; Top Executive
Length; 32 minutes
Key Questions Themes Answers Outcomes/Co
ncepts/Terms
1. What do you
think about when
you hear the
word sustainable
development?
What are the
goals and
objectives of
sustainability
programs in your
organization?
Social sustainability
Business conduct &
compliance
Environmental
sustainability
As an organization we take sustainable
development as a broader theme. It includes
the social, business and environmental
aspects. The more we comply with the
sustainable development themes, covering the
disclosure part by internal reporting, the
greater chances are there for representation in
society. I believe that sustainable reporting
will increase in future since we all know that it
is one of the medium to communicate with
your customers.
As far as the goals and objectives of
sustainable development are concerned, we as
an organization do understand that our
business can progress when we follow the
rules of business. Sustainability is exactly one
of the rules of business. You see, society and
business are now a day‘s co related with each
other. It is time to understand that we as an
organization should understand across the
board that social responsibility is now the
major part of business success.
Compliance,
Disclosure,
Internal
reporting
2. What
sustainability
projects, events
and activities is
your organization
currently
running?
Social
&Environmental
Business conduct &
compliance
We are mainly focusing on social,
environmental, sports, education and overall
employee‘s wellbeing. We have clear
guidelines on the spending pattern and its
reporting. We have taken part in number of
other activities such as rehabilitating the
masses in floods, earthquake etc. in Pakistan.
Social
Environmental
,
Education
3. How do you
relate to the
sustainable
development
concept? Would
you say that you
have a personal
relation to the
concept or is it
strictly
academic/profess
Areas of focus;
Code of Conduct
Social issues
Anti-corruption and
ethics
Health & safety
As I said earlier, we take sustainable
development as a broader concept. We as an
organization have a clear understanding
towards the implementation of sustainable
development goals across our organization.
The same is being reported in our annual
reports. We train our employees to enhance
their understanding of CSR/ Sustainability.
Personally I believe that through CSR we can
integrate social, environmental, and ethical
and human rights concerns into the operations
Human rights
298
ional?
and core strategy of our business.
4. How would
you describe
your way of
working with the
sustainable
development
concept? Feel
free to describe
how you work
with the concept.
Working conditions
(e.g. mandatory days
off, etc.)
Wages & benefits (e.g.
no unpaid overtime,
etc.)
Non-discrimination
(e.g. age, gender,
religion, race, etc.)
Our organization is committed to work for
sustainable development in terms of
developing better process, working conditions,
and non-discriminatory approach and based on
merit. We prefer actions and implementations
of these themes as discussed because I think
that sustainable development is in fact best
narrated through our actions.
Better process,
Working
conditions
5. Does your
suitability project
engage your staff
and collaborate
with local
community
where your
business
operates?
Community
participation
Ethics
Social bounding
Yes we have a clear policy on the subject
matter. Participation of local community is in
fact in our interest since your organization is
monitored by your customers after all.
Community
Participation
6. How would
you describe the
role of the
sustainable
development
concept(s) in
society today?
What role do you
think it should
play?
Business conduct &
compliance
Environmental
Economic
Overall
The concept of sustainable development is
frequently discussed everywhere as I have
noticed it. Businesses and society should
understand that mutual benefit is important.
Both should apply the concept practically in
our day to day life. I personally feel that this
concept should be propagated by each
individual in society so that we all could
collectively get its benefits.
Implementatio
n
299
INTERVIEW-2
Objective; To see things the way you see the more like a conversation with a focus on your experience,
your opinions and what you think or feel about the topics covered.
Interviewee; Top Executive
Length; 25 minutes
Key Questions Themes Answers Outcomes/Co
ncepts/Terms
1. What do you
think about when
you hear the
word sustainable
development?
What are the
goals and
objectives of
sustainability
programs in your
organization?
Social sustainability
Business conduct &
compliance
Environmental
sustainability
Sustainability and corporate social
responsibility are need of today‘s business.
We all know that we need to take care of the
environment and surroundings where we do
our businesses. This realization must be felt
soon by all because we know that our
employees take a closer part in such activities.
Our goals and objectives are simple; we as an
organization do understand that our business
has a social responsibility. We need to be
upfront in resolving community issues where
we operate our business. Particularly in rural
areas where the need exists.
Compliance,
Disclosure,
Employees
management,
Environment
2. What
sustainability
projects, events
and activities is
your organization
currently
running?
Social
&Environmental
Business conduct &
compliance
We focus on social, economic, environmental,
sports, education and overall employee‘s
wellbeing.
These activities are also reported in our annual
reports.
Social
Environmental
,
Education
3. How do you
relate to the
sustainable
development
concept? Would
you say that you
have a personal
relation to the
concept or is it
strictly
academic/profess
ional?
Areas of focus;
Code of Conduct
Social issues
Anti-corruption and
ethics
Health & safety
In our early years of business this concept was
in very initial phase. Now we take this as a
guiding principle to operate and conduct our
activities. This includes all things we just
mentioned.
Yes, I have both professional and personal
approach towards the concept in my decades
of experience.
Guiding
Principle
4. How would
you describe
your way of
working with the
sustainable
development
concept? Feel
free to describe
how you work
with the concept.
Working conditions
(e.g. mandatory days
off, etc.)
Wages & benefits (e.g.
no unpaid overtime,
etc.)
Non-discrimination
(e.g. age, gender,
religion, race, etc.)
We do work for internal management, better
working conditions. Just to add on it, we also
engage our employees to take part in social
activities and theme based activities. We
encourage them to initiate such activities in
collaboration with NGO‘s.
Better working
conditions
300
5. Does your
sustainability
project engage
your staff and
collaborate with
local community
where your
business
operates?
Community
participation
Ethics
Social bounding
Yes, I said earlier, we encourage staff to take
part in such activities. Participation of local
community is also ensured during the year.
Community
Participation
6. How would
you describe the
role of the
sustainable
development
concept(s) in
society today?
What role do you
think it should
play?
Business conduct &
compliance
Environmental
Economic
Overall
I would take this in two phases.
Resource management
Social activism
If we do these two steps, I think we can deal
with this concept ahead. The results of the two
will definitely give benefits in longer term
basis.
Implementatio
n
301
INTERVIEW-3
Objective; To see things the way you see the more like a conversation with a focus on your experience,
your opinions and what you think or feel about the topics covered.
Interviewee; Top Executive
Length; 24 minutes
Key Questions Themes Answers Outcomes/Co
ncepts/Terms
1. What do you
think about when
you hear the
word sustainable
development?
What are the
goals and
objectives of
sustainability
programs in your
organization?
Social sustainability
Business conduct &
compliance
Environmental
sustainability
We have very formal and written guidelines
about sustainability. These guidelines aim to
participate and engage our organization in
social activities. We issue annual report at the
end of our financial year.
Sustainability reporting is a must in banking
sector. For the moment, the quality of
corporate social responsibility reporting by
banks is better in objectivity and transparency.
Over the next five years, the Corporate
Governance Code will likely act as a catalyst
for better business reporting by raising the bar
on what is expected followed by the
guidelines of securities & exchange
commission of Pakistan for reporting
sustainability.
Compliance,
Disclosure,
Leadership,
Ethics,
Corporate
governance
2. What
sustainability
projects, events
and activities is
your organization
currently
running?
Social
&Environmental
Business conduct &
compliance
We cover almost all aspects i.e. social,
environmental, sports, education and overall
employee‘s wellbeing. As I said earlier that
we have very formal and written guidelines
about sustainability across our organization.
Social
Environmental
,
Education
3. How do you
relate to the
sustainable
development
concept? Would
you say that you
have a personal
relation to the
concept or is it
strictly
academic/profess
ional?
Areas of focus;
Code of Conduct
Social issues
Anti-corruption and
ethics
Health & safety
Personally, I feel more happiness when we
initiate social activities. This remains my area
of interest through put my career. We always
try to encourage our employees as well as
shareholders to participate in community
development. We devise such policies where
all these activities are strictly monitored by a
team of professionals.
Community
development
4. How would
you describe
your way of
working with the
sustainable
development
Working conditions
(e.g. mandatory days
off, etc.)
Wages & benefits (e.g.
no unpaid overtime,
etc.)
Our organization is committed to work for
sustainable development in terms of
developing better process, working conditions,
and non-discriminatory approach and based on
merit. We prefer actions and implementations
of these themes as discussed because I think
Better process,
Working
conditions
302
concept? Feel
free to describe
how you work
with the concept.
Non-discrimination
(e.g. age, gender,
religion, race, etc.)
that sustainable development is in fact best
narrated through our actions.
5. Does your
suitability project
engage your staff
and collaborate
with local
community
where your
business
operates?
Community
participation
Ethics
Social bounding
Yes, community participation and
collaboration are our strengths. I would
strongly advocate the same concept.
Community
Participation
6. How would
you describe the
role of the
sustainable
development
concept(s) in
society today?
What role do you
think it should
play?
Business conduct &
compliance
Environmental
Economic
Overall
Society should be taught about the importance
of sustainable development. The problem of
implementation arises when the general
masses are not aware of its facts. I would
recommend that we should think ahead of
making money and empires. Socialization
after all pays a lot.
Implementatio
n
303
INTERVIEW-4
Objective; To see things the way you see the more like a conversation with a focus on your experience,
your opinions and what you think or feel about the topics covered.
Interviewee; Top Executive
Length; 30 minutes
Key Questions Themes Answers Outcomes/Co
ncepts/Terms
1. What do you
think about when
you hear the
word sustainable
development?
What are the
goals and
objectives of
sustainability
programs in your
organization?
Social sustainability
Business conduct &
compliance
Environmental
sustainability
Pakistan is the signatory of UN sustainable
development goals resolution 2015.
Government plans to revise the National
Sustainable Development Strategy and
Pakistan Environmental Protection Act in
accordance with the guide lines of sustainable
development goals.
Our commitment to green energy and access
to safe drinking water with the help of other
corporate sector entities would be a good
addition to our profile.
Socio
economic
development,
Sustainability
2. What
sustainability
projects, events
and activities is
your organization
currently
running?
Social
&Environmental
Business conduct &
compliance
We are mainly focusing on green energy and
access to safe drinking water social. We have
clear guidelines on the said issues. We are
spending a huge amount currently on the
projects as I mentioned earlier.
Green energy
Access to safe
drinking water
3. How do you
relate to the
sustainable
development
concept? Would
you say that you
have a personal
relation to the
concept or is it
strictlyacademic/
professional?
Areas of focus;
Code of Conduct
Social issues
Anti-corruption and
ethics
Health & safety
I believe each one of can play a very
important role in implementing the social
activities in our country. Collective efforts
will lead to safer environment. Our agenda
should be mutual collaboration and
partnership for socialization and positive
change.
Socialization
and positive
change
4. How would
you describe
your way of
working with the
sustainable
development
concept? Feel
free to describe
how you work
with the concept.
Working conditions
(e.g. mandatory days
off, etc.)
Wages & benefits (e.g.
no unpaid overtime,
etc.)
Non-discrimination
(e.g. age, gender,
religion, race, etc.)
I would say organizational processes to
promote the positive socialization and prevent
the negative thoughts as you just mentioned in
themes. We are more focusing on the positive
side. Sometimes, we feel that our role should
be wider in spending on these activities but
you know one has to understand the financial
constraints we face.
Organizational
processes
304
5. Does your
suitability project
engage your staff
and collaborate
with local
community
where your
business
operates?
Community
participation
Ethics
Social bounding
It is personal commitment on my side. We
strongly believe in participation of local
community. This is good for engaging your
potential customers after all.
Community
Participation
6. How would
you describe the
role of the
sustainable
development
concept(s) in
society today?
What role do you
think it should
play?
Business conduct &
compliance
Environmental
Economic
Overall
I agree that business conduct & compliance,
environmental
and economic conditions should be linked
with core business strategy.
I would also say that formal education on
sustainable development should be part of our
academia because most the people are least
aware of the concept.
Formal
education on
sustainable
development
305
INTERVIEW-5
Objective; To see things the way you see the more like a conversation with a focus on your experience,
your opinions and what you think or feel about the topics covered.
Interviewee; Top Executive
Length; 29 minutes
Key Questions Themes Answers Outcomes/Co
ncepts/Terms
1. What do you
think about when
you hear the
word sustainable
development?
What are the
goals and
objectives of
sustainability
programs in your
organization?
Social sustainability
Business conduct &
compliance
Environmental
sustainability
Sustainable development is a different
science. However, the listed companies might
get certain mandatory regulations to more
formalize their corporate social responsibility
activities.
The goals and objectives of sustainable
development programs are meant to aware the
general public about the social responsibility
of business. We feel that we are part of society
and should spend whatever amount possible
on social activities. We cannot run business in
isolation.
Compliance,
Disclosure,
2. What
sustainability
projects, events
and activities is
your organization
currently
running?
Social
&Environmental
Business conduct &
compliance
We are mainly focusing on social, sports
activities and education. We have also been
taking part in health sector reforms in Karachi
and Lahore. We are regular donors for some
of the renowned Hospitals in Pakistan.
Health
Social
Education
3. How do you
relate to the
sustainable
development
concept? Would
you say that you
have a personal
relation to the
concept or is it
strictlyacademic/
professional?
Areas of focus;
Code of Conduct
Social issues
Anti-corruption and
ethics
Health & safety
Personally I believe that social activities are in
build in our faith. When I think of some
charity work, it gives you a different feelings
altogether. The bottom lie s that we need to
institutionalize these practices.
Institutionalize
4. How would
you describe
your way of
working with the
sustainable
development
concept? Feel
free to describe
how you work
with the concept.
Working conditions
(e.g. mandatory days
off, etc.)
Wages & benefits (e.g.
no unpaid overtime,
etc.)
Non-discrimination
(e.g. age, gender,
religion, race, etc.)
Our organization is committed to work for
sustainable development in line with the
recommendations of SECP. We follow the
code of conduct which is very much as per
compliance of rules. Just to add on it, we
strongly follow Non-discrimination in our
hiring procedures.
SECP
compliance
306
5. Does your
suitability project
engage your staff
and collaborate
with local
community
where your
business
operates?
Community
participation
Ethics
Social bounding
I am a strong believer in community
participation. I have been myself conducted
several trainings on partnership and
collaboration. This is very nearer to my
feelings and I believe that together we can
defeat the failure.
Community
Participation
6. How would
you describe the
role of the
sustainable
development
concept(s) in
society today?
What role do you
think it should
play?
Business conduct &
compliance
Environmental
Economic
Overall
I would say education will bring change. We
know that sustainable development is
important but what role should we play as a
general common person is probably
undefined.
We all should create a campaign about its
positive effects. I am ready to lead at least.
Implementatio
n
307
INTERVIEW-6
Objective; To see things the way you see the more like a conversation with a focus on your experience,
your opinions and what you think or feel about the topics covered.
Interviewee; Top Executive
Length; 25 minutes
Key Questions Themes Answers Outcomes/Co
ncepts/Terms
1. What do you
think about when
you hear the
word sustainable
development?
What are the
goals and
objectives of
sustainability
programs in your
organization?
Social sustainability
Business conduct &
compliance
Environmental
sustainability
Before going into the details of sustainable
development I think we should understand the
concept of business responsibilities. As a bank
we have certain rights and responsibilities. We
do understand that our progress is linked with
the progress of our customers. The trend for
banking companies to include more corporate
social responsibility information in annual
financial reports is driven by two factors:
firstly, sustainability information is
increasingly perceived by shareholders as
relevant for their understanding of a
company‘s risks and opportunities, and
secondly, stock exchanges and governments
are issuing requirements for companies to
report on corporate social responsibility data
in annual reports as in case of SECP guide
lines. We try to show maximum information
and progress in our annual accounts as per our
goals of bank.
Compliance,
Disclosure,
Environment,
Regulations
2. What
sustainability
projects, events
and activities is
your organization
currently
running?
Social
&Environmental
Business conduct &
compliance
We are focusing almost all sort of social
activities. If we think about the social and
environmental aspects more carefully, I think
half of the objectives are achieved.
Social
Environmental
,
3. How do you
relate to the
sustainable
development
concept? Would
you say that you
have a personal
relation to the
concept or is it
strictlyacademic/
professional?
Areas of focus;
Code of Conduct
Social issues
Anti-corruption and
ethics
Health & safety
Our organization has standard operating
procedures. Sustainable development should
start from within organization at first stage. I
strongly believe that if we do it inside, the
effects of the same goes outside. Whatever
listed themes are there, yes we should all work
towards those.
Standard
operating
procedures
4. How would
you describe
Working conditions
(e.g. mandatory days
We should more focus on standard operating
procedures and implementation of the same in
Standard
operating
308
your way of
working with the
sustainable
development
concept? Feel
free to describe
how you work
with the concept.
off, etc.)
Wages & benefits (e.g.
no unpaid overtime,
etc.)
Non-discrimination
(e.g. age, gender,
religion, race, etc.)
true letter and spirit. As the head of bank, I
feel and believe that we can make a difference
if we wish so. Our decisions should be based
on the inclusion of social activities.
procedures
Implementatio
n
5. Does your
suitability project
engage your staff
and collaborate
with local
community
where your
business
operates?
Community
participation
Ethics
Social bounding
It is a fact that yes we do the same. We report
it in annual reports. We issue monthly
handouts etc. in this regard. We understand
that our employees feel proud of our
spending‘s on social activities.
Participation
6. How would
you describe the
role of the
sustainable
development
concept(s) in
society today?
What role do you
think it should
play?
Business conduct &
compliance
Environmental
Economic
Overall
I would we need more and more education in
our society to understand the concept. Unless
we understand this, we cannot implement the
same.
Education
309
INTERVIEW-7
Objective; To see things the way you see the more like a conversation with a focus on your experience,
your opinions and what you think or feel about the topics covered.
Interviewee; Top Executive
Length; 25 minutes
Key Questions Themes Answers Outcomes/Co
ncepts/Terms
1. What do you
think about when
you hear the
word sustainable
development?
What are the
goals and
objectives of
sustainability
programs in your
organization?
Social sustainability
Business conduct &
compliance
Environmental
sustainability
Sustainable development to me is all about the
social sustainability and business conduct &
compliance. We think CSR can create a
shared value which is our organizational
vision. We have been working on embedding
the sustainability practices in our business
processes and share our performance with our
stakeholders through our annual sustainability
report. We envision the process of measuring
and sharing the value creation process, outputs
and impacts adds transparency to our business
and builds trust of our shareholders
Compliance,
Disclosure,
Environment,
Trust of
society and
employees
2. What
sustainability
projects, events
and activities is
your organization
currently
running?
Social
&Environmental
Business conduct &
compliance
We do work closely with NGO‘s and
community welfare organizations in Pakistan.
We help health sector in Pakistan particularly
in rural districts as per the need.
Health
3. How do you
relate to the
sustainable
development
concept? Would
you say that you
have a personal
relation to the
concept or is it
strictlyacademic/
professional?
Areas of focus;
Code of Conduct
Social issues
Anti-corruption and
ethics
Health & safety
All these issues as you just mentioned, are in
our focus. In fact we believe that as a bank it
is our professional responsibility to undertake
such activities. Personal I think we should
give more time to volunteering activities
which we do as well but not up to that pace.
Professional
responsibility
4. How would
you describe
your way of
working with the
sustainable
development
concept? Feel
free to describe
how you work
with the concept.
Working conditions
(e.g. mandatory days
off, etc.)
Wages & benefits (e.g.
no unpaid overtime,
etc.)
Non-discrimination
(e.g. age, gender,
religion, race, etc.)
I think this concept should be more
transformed into practices of banks. We have
a huge customer base and once we start doing
this, certainly our employees and customers
feel satisfaction or at least they can think
something positive about our bank. So, yes
these activities do matter for us.
Customer base
Employees
satisfaction
310
5. Does your
suitability project
engage your staff
and collaborate
with local
community
where your
business
operates?
Community
participation
Ethics
Social bounding
We believe in partnership, participation and
work ethics. Community development comes
under partnership. Of course this should be
our priority.
Partnership
Participation
6. How would
you describe the
role of the
sustainable
development
concept(s) in
society today?
What role do you
think it should
play?
Business conduct &
compliance
Environmental
Economic
Overall
Frankly speaking, I am more confident that
the day we realize the importance, we can
implement the same. The top management of
all banks should realize that we need to lead
the society for better future. At least, we can
take a lead.
Realization
311
INTERVIEW-8
Objective; To see things the way you see the more like a conversation with a focus on your experience,
your opinions and what you think or feel about the topics covered.
Interviewee; Top Executive
Length; 30 minutes
Key Questions Themes Answers Outcomes/Co
ncepts/Terms
1. What do you
think about when
you hear the
word sustainable
development?
What are the
goals and
objectives of
sustainability
programs in your
organization?
Social sustainability
Business conduct &
compliance
Environmental
sustainability
Our approach to sustainability is integrated
across our business activities on three levels;
running a safe, efficient, responsible and
profitable business.
When we say running a safe, efficient,
responsible and profitable business, it means
we do care about everything possible. Of
course, we need to maintain and follow the
business conduct & compliance as per our
regulatory framework.
Safety,
employees
efficiency,
compliance,
disclosure and
green
environment
2. What
sustainability
projects, events
and activities is
your organization
currently
running?
Social
&Environmental
Business conduct &
compliance
Our bank work on sports, social development
and health care in Pakistan. We allocate
budgets to all these programs annually and
same is disclosed in annual statements.
Social
Sports
3. How do you
relate to the
sustainable
development
concept? Would
you say that you
have a personal
relation to the
concept or is it
strictlyacademic/
professional?
Areas of focus;
Code of Conduct
Social issues
Anti-corruption and
ethics
Health & safety
As I said earlier,we believe in running a safe,
efficient, responsible and profitable business.
This is not just a motto but we practically
follow the same in business activities.
Responsible
and profitable
business
4. How would
you describe
your way of
working with the
sustainable
development
concept? Feel
free to describe
how you work
with the concept.
Working conditions
(e.g. mandatory days
off, etc.)
Wages & benefits (e.g.
no unpaid overtime,
etc.)
Non-discrimination
(e.g. age, gender,
religion, race, etc.)
Every organization across the board is
providing safe and best possible good working
conditions. One should understand that
employees are our asset. The way you deal
them would be either productive or it will
create problems for organization. I would
always prefer that employees should be more
focused.
Working
conditions
312
5. Does your
suitability project
engage your staff
and collaborate
with local
community
where your
business
operates?
Community
participation
Ethics
Social bounding
Community participation, ethics and Social
bounding are key factors I think. Business
ethics are something those gives a direction.
Participation of community as well as
employees is somehow in the benefit of
organization. I would just say that it will
create a win-win prospective.
Participation
6. How would
you describe the
role of the
sustainable
development
concept(s) in
society today?
What role do you
think it should
play?
Business conduct &
compliance
Environmental
Economic
Overall
I would simply say if you follow compliance
and business ethics, you can implement the
concept of sustainable development.
Otherwise, mere developing SOP‘s would
serve the purpose.
Compliance
and business
ethics
313
INTERVIEW-9
Objective; To see things the way you see the more like a conversation with a focus on your experience,
your opinions and what you think or feel about the topics covered.
Interviewee; Top Executive
Length; 30 minutes
Key Questions Themes Answers Outcomes/Co
ncepts/Terms
1. What do you
think about when
you hear the
word sustainable
development?
What are the
goals and
objectives of
sustainability
programs in your
organization?
Social sustainability
Business conduct &
compliance
Environmental
sustainability
Corporate Social Responsibility is one of our
core values and an integral part of the
Company‘s overall mission. We believe that
CSR creates a shared value amongst its
stakeholders and enhance our corporate brand
image amongst the general public.
Green
environment,
reputation,
brand
management,
society
2. What
sustainability
projects, events
and activities is
your organization
currently
running?
Social
&Environmental
Business conduct &
compliance
Our area of concern are green environment,
rehabilitation etc. in Pakistan.
These projects are either short term or long
term based on the funding‘s we allocate.
However, we spend a substantial amount on
social development as well. Particularly, in
less developed areas in Pakistan.
Green
environment,
Rehabilitation
3. How do you
relate to the
sustainable
development
concept? Would
you say that you
have a personal
relation to the
concept or is it
strictlyacademic/
professional?
Areas of focus;
Code of Conduct
Social issues
Anti-corruption and
ethics
Health & safety
The themes you have just mentioned (Areas of
focus, Code of Conduct, Social issues, Anti-
corruption and ethics and Health & safety) are
of course included in our areas of preference
where we feel that more development is
needed in devising better policies.
Devising better
policies.
4. How would
you describe
your way of
working with the
sustainable
development
concept? Feel
free to describe
how you work
with the concept.
Working conditions
(e.g. mandatory days
off, etc.)
Wages & benefits (e.g.
no unpaid overtime,
etc.)
Non-discrimination
(e.g. age, gender,
religion, race, etc.)
You see these are the areas where we have our
strength. I can confidently say that we follow
non-discriminatory policy towards all the
mentioned themes.
Our concept is very clear. We work for all and
all are equally treated based on merit.
Merit
314
5. Does your
suitability project
engage your staff
and collaborate
with local
community
where your
business
operates?
Community
participation
Ethics
Social bounding
I am personally trying every time that
participatory approach should be adopted in
all our decision makings. Leaders are those
who lead people but give due weightage to
their opinion. I believe in it in my decades of
experience.
Participatory
approach
6. How would
you describe the
role of the
sustainable
development
concept(s) in
society today?
What role do you
think it should
play?
Business conduct &
compliance
Environmental
Economic
Overall
Banks should realize, particularly the top
management of all banks that we development
of society is their responsibility. I have
personally noticed in developed world that
their organizations are more careful about
their social duties. In Pakistan, we have to
develop this culture at a fast rate.
Implementatio
n
315
INTERVIEW-10
Objective; To see things the way you see the more like a conversation with a focus on your experience,
your opinions and what you think or feel about the topics covered.
Interviewee; Top Executive
Length; 32 minutes
Key Questions Themes Answers Outcomes/Co
ncepts/Terms
1. What do you
think about when
you hear the
word sustainable
development?
What are the
goals and
objectives of
sustainability
programs in your
organization?
Social sustainability
Business conduct &
compliance
Environmental
sustainability
Sustainable development is now formally
practiced in banks. Our bank issues
sustainability reports annually where CSR
activities are mentioned. We believe that CSR
can increase a company‘s reputation. We also
believe that companies do realize that their
customers are educated enough and they
understand the way companies operate and
take care of CSR and disclosure etc.
Compliance,
disclosure,
board/leadershi
p decisions,
ethical
practices
2. What
sustainability
projects, events
and activities is
your organization
currently
running?
Social
&Environmental
Business conduct &
compliance
Our bank thinks that Compliance, disclosure,
board/leadership decisions, ethical practices
matter a lot in devising CSR policies. I
remember that in the 90‘s there was a little
resistance towards CSR activities by banks.
But now, it is part of our practices.
Disclosure,
board/leader
3. How do you
relate to the
sustainable
development
concept? Would
you say that you
have a personal
relation to the
concept or is it
strictlyacademic/
professional?
Areas of focus;
Code of Conduct
Social issues
Anti-corruption and
ethics
Health & safety
The more we practice, the better we get the
idea of sustainable development concept.
What I feel is that we adopt these changes so
that we remain ethical in our deals.
Adoptation
4. How would
you describe
your way of
working with the
sustainable
development
concept? Feel
free to describe
how you work
with the concept.
Working conditions
(e.g. mandatory days
off, etc.)
Wages & benefits (e.g.
no unpaid overtime,
etc.)
Non-discrimination
(e.g. age, gender,
religion, race, etc.)
State Bank of Pakistan has clear guidelines
regarding all these points. We follow the code
of conduct laid down by the regulator.
These are the areas where yes further
development be introduced but at the end of
day we are answerable to regulator.
Regulatory
conditions
316
5. Does your
suitability project
engage your staff
and collaborate
with local
community
where your
business
operates?
Community
participation
Ethics
Social bounding
Yes engage our staff and collaborate with
local community where our business operates.
This is something we are proud of.
Community participation is good for banks
since the same are either directly or indirectly
your customers.
Community
Participation
6. How would
you describe the
role of the
sustainable
development
concept(s) in
society today?
What role do you
think it should
play?
Business conduct &
compliance
Environmental
Economic
Overall
I see sustainable development as a
transformation in our society. I have noticed
that UN is working closely on the subject. In
our corporate setup, SECP has clear guidelines
regarding CSR activities. I think it is time to
implement the same.
Implementatio
n
317
INTERVIEW-11
Objective; To see things the way you see the more like a conversation with a focus on your experience,
your opinions and what you think or feel about the topics covered.
Interviewee; Top Executive
Length; 29 minutes
Key Questions Themes Answers Outcomes/Co
ncepts/Terms
1. What do you
think about when
you hear the
word sustainable
development?
What are the
goals and
objectives of
sustainability
programs in your
organization?
Social sustainability
Business conduct &
compliance
Environmental
sustainability
Our sustainability policy is very clear. We
care about society while doing business.
Transparency and disclosure are at the heart of
our CSR reporting. We feel that we should be
taking care of the environment where we
operate. We also realize that our survival is
dependent on our CSR activities.
Regulations,
society
pressures,
employee
safety and
health
2. What
sustainability
projects, events
and activities is
your organization
currently
running?
Social
&Environmental
Business conduct &
compliance
Our bank follows regulations, work social
development and employee safety and health.
Business conduct & compliance is more about
disclosures. We maintain standardized policies
for all activities across our organization.
Social
Health &
safety
3. How do you
relate to the
sustainable
development
concept? Would
you say that you
have a personal
relation to the
concept or is it
strictlyacademic/
professional?
Areas of focus;
Code of Conduct
Social issues
Anti-corruption and
ethics
Health & safety
Personally I am more tilted to CSR activities.
I think banks should invest in human
development and Health & safety of
employees. I have seen in developed world
that they invest more on human development.
This can create a difference.
Human
development
4. How would
you describe
your way of
working with the
sustainable
development
concept? Feel
free to describe
how you work
with the concept.
Working conditions
(e.g. mandatory days
off, etc.)
Wages & benefits (e.g.
no unpaid overtime,
etc.)
Non-discrimination
(e.g. age, gender,
religion, race, etc.)
Working conditions and non-discriminatory
are mandatory part in our compliance. As a
bank, I think we should be more transparent
and maintain higher ethical culture. It is all
about your vision. I believe that your BOD
play a very vital role in devising such policies.
Working
conditions
318
5. Does your
suitability project
engage your staff
and collaborate
with local
community
where your
business
operates?
Community
participation
Ethics
Social bounding
The answer is yes.
You see, community participation is
something always beneficial. I have seen in
manufacturing sector, it is the community that
plays a role in dispute resolution. So yes we
should and we are already doing this practice.
Community
Participation
6. How would
you describe the
role of the
sustainable
development
concept(s) in
society today?
What role do you
think it should
play?
Business conduct &
compliance
Environmental
Economic
Overall
Training and development are the sources I
think we should channelize to understand the
concept.
We are living in 21st century and to comply
with rest of world we should be more
motivated in implementing the goals of
sustainable development. Pakistan as country
has huge potential in doing so. I am hopeful
that we can do it.
Implementatio
n
319
INTERVIEW-12
Objective; To see things the way you see the more like a conversation with a focus on your experience,
your opinions and what you think or feel about the topics covered.
Interviewee; Top Executive
Length; 25 minutes
Key Questions Themes Answers Outcomes/Co
ncepts/Terms
1. What do you
think about when
you hear the
word sustainable
development?
What are the
goals and
objectives of
sustainability
programs in your
organization?
Social sustainability
Business conduct &
compliance
Environmental
sustainability
If we go through the policies and procedures
of our organization, we can understand that
sustainable development is always in longer
run. As a baker I think sustainable
development is more concerned with
coexistence of business and society.
We are working for social investment
including education, health and disaster relief
etc. as a matter of CSR. We think that the
inequalities in our societies can be reduced if
all companies do practice CSR as mandatory.
Social
investment,
Disclosure,
Environment,
Employees
satisfaction
2. What
sustainability
projects, events
and activities is
your organization
currently
running?
Social
&Environmental
Business conduct &
compliance
As I explained earlier, we are working for
social investment including education, health
and disaster relief etc. These are the disclosed
activities as a matter of fact.
Social
investment
3. How do you
relate to the
sustainable
development
concept? Would
you say that you
have a personal
relation to the
concept or is it
strictlyacademic/
professional?
Areas of focus;
Code of Conduct
Social issues
Anti-corruption and
ethics
Health & safety
Though all these points are important
however, as a matter of fact we focus more on
employee‘s satisfaction programs. Though
these are the formal programs however, we do
some of the activities as part of CSR programs
for our employees.
Employee
satisfaction.
4. How would
you describe
your way of
working with the
sustainable
development
concept? Feel
free to describe
how you work
with the concept.
Working conditions
(e.g. mandatory days
off, etc.)
Wages & benefits (e.g.
no unpaid overtime,
etc.)
Non-discrimination
(e.g. age, gender,
religion, race, etc.)
We follow State Bank of Pakistan‘s guidelines
and code of conduct since SBP is the
regulator.
Better process,
Working
conditions
320
5. Does your
suitability project
engage your staff
and collaborate
with local
community
where your
business
operates?
Community
participation
Ethics
Social bounding
When you say community participation, it is
in fact a Social bounding. So, yes it is
important. Banks are working more like a
family unit now. Customers are more sorted of
persons now.
Community
Participation
6. How would
you describe the
role of the
sustainable
development
concept(s) in
society today?
What role do you
think it should
play?
Business conduct &
compliance
Environmental
Economic
Overall
It‘s very simple. Follow the guidelines of
SECP and SBP; implement the concept of
sustainable development in your daily
workings. You will feel the change.
Implementatio
n
321
INTERVIEW-13
Objective; To see things the way you see the more like a conversation with a focus on your experience,
your opinions and what you think or feel about the topics covered.
Interviewee; Top Executive
Length; 29 minutes
Key Questions Themes Answers Outcomes/Co
ncepts/Terms
1. What do you
think about when
you hear the
word sustainable
development?
What are the
goals and
objectives of
sustainability
programs in your
organization?
Social sustainability
Business conduct &
compliance
Environmental
sustainability
Our company is one of the pioneers of
corporate social responsibility initiatives in the
country. We operate in rural communities. We
are committed to conducting our business
operations in a manner that protects the health
and safety of our employees and follow
applicable national laws and regulations and
other policies.
Health &
safety of
employees,
environment,
social change
2. What
sustainability
projects, events
and activities is
your organization
currently
running?
Social
&Environmental
Business conduct &
compliance
We work for health & safety of employees,
environment, and social change.
These programs are well connected and
mostly funded across the board.
Social
Environmental
,
Education
3. How do you
relate to the
sustainable
development
concept? Would
you say that you
have a personal
relation to the
concept or is it
strictlyacademic/
professional?
Areas of focus;
Code of Conduct
Social issues
Anti-corruption and
ethics
Health & safety
We arrange training sessions and seminars for
our employees as an awareness regarding the
understanding of CSR/ Sustainability
programs of bank.
Human rights
4. How would
you describe
your way of
working with the
sustainable
development
concept? Feel
free to describe
how you work
with the concept.
Working conditions
(e.g. mandatory days
off, etc.)
Wages & benefits (e.g.
no unpaid overtime,
etc.)
Non-discrimination
(e.g. age, gender,
religion, race, etc.)
We believe in providing better working
conditions, market based wages & benefits
and non-discrimination. As a listed company,
these are the basic code of conduct we need to
follow.
I want to make it clearer that our bank prefers
that employees are provided best opportunities
because I know that human mind performs
well when you are provided with good
opportunity.
Working
conditions
322
5. Does your
suitability project
engage your staff
and collaborate
with local
community
where your
business
operates?
Community
participation
Ethics
Social bounding
Absolutely yes.
As a banker, having decades of experience I
do realize that participation of community in
social programs of bank is always productive.
We have experienced this in Baluchistan and
Tribal area where local community is
somehow reluctant to such activities. The
moment they are involved in decision making,
they are more comfortable.
Community
Participation
6. How would
you describe the
role of the
sustainable
development
concept(s) in
society today?
What role do you
think it should
play?
Business conduct &
compliance
Environmental
Economic
Overall
The basic goal of sustainable development
shouldbe to achieve balance/harmony between
environment sustainability and economic
sustainability. These way businesses can play
their due role in nurturing a safer
environment.
Balance/harmo
ny
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INTERVIEW-14
Objective; To see things the way you see the more like a conversation with a focus on your experience,
your opinions and what you think or feel about the topics covered.
Interviewee; Top Executive
Length; 30 minutes
Key Questions Themes Answers Outcomes/Co
ncepts/Terms
1. What do you
think about when
you hear the
word sustainable
development?
What are the
goals and
objectives of
sustainability
programs in your
organization?
Social sustainability
Business conduct &
compliance
Environmental
sustainability
Sustainable development is relatively new
concept probably. We have mostly seen this
concept in social development context.
However, it has become an integral part of
businesses now.
CSR is included in our business operations.
We take care of local communities that
support us, the overall wellbeing of our
employees and finally the degree to which we
contribute to the economic health of the
countries in which we operate.
Wellbeing of
employees,
environment
2. What
sustainability
projects, events
and activities is
your organization
currently
running?
Social
&Environmental
Business conduct &
compliance
Wellbeing of employees, environment and
social development are of focus areas. As
an organization, we can only identify areas
visible to us. However, I think it should be
coordinated effort at every level.
Social
development
3. How do you
relate to the
sustainable
development
concept? Would
you say that you
have a personal
relation to the
concept or is it
strictly
academic/profess
ional?
Areas of focus;
Code of Conduct
Social issues
Anti-corruption and
ethics
Health & safety
I would say, personally I believe CSR should
be strategy of our business. We can use it in
positive way. Businesses should always use
CSR in linking relationship instead of gains.
It‘s a thin line one should understand.
Strategy of our
business
4. How would
you describe
your way of
working with the
sustainable
development
concept? Feel
free to describe
how you work
Working conditions
(e.g. mandatory days
off, etc.)
Wages & benefits (e.g.
no unpaid overtime,
etc.)
Non-discrimination
(e.g. age, gender,
religion, race, etc.)
Working for sustainable development concept
should be in fact our priority. These are the
mandatory requirements we need to follow
otherwise as well.
In our organization, the basic policies and
SOP‘s are very much clear that we follow
non-discriminatory approach in our business.
It is important for us that we follow business
ethics.
Mandatory
requirements
324
with the concept.
5. Does your
suitability project
engage your staff
and collaborate
with local
community
where your
business
operates?
Community
participation
Ethics
Social bounding
I would say Yes. At the same time I want to
suggest that state bank should devise such
policies that banks should make a consortium
of local community particularly in less
developed areas of Pakistan.
Employees are of course consulted at least at
higher level for all decision makings and any
change therein.
Community
Participation
6. How would
you describe the
role of the
sustainable
development
concept(s) in
society today?
What role do you
think it should
play?
Business conduct &
compliance
Environmental
Economic
Overall
Sustainable development has continued to
evolve as a concept. It canbe useful in
protecting the world's resources.Its true
agenda could be to control the world's
resources. Secondly, Sustainable development
as a concept should be practiced ever where,
be it a bank or be it something else. This is
the true success I think.
Practice/
Implementatio
n
325
INTERVIEW-15
Objective; To see things the way you see the more like a conversation with a focus on your experience,
your opinions and what you think or feel about the topics covered.
Interviewee; Top Executive
Length; 25 minutes
Key Questions Themes Answers Outcomes/Co
ncepts/Terms
1. What do you
think about when
you hear the
word sustainable
development?
What are the
goals and
objectives of
sustainability
programs in your
organization?
Social sustainability
Business conduct &
compliance
Environmental
sustainability
When we strategize our annual sustainability
activities, one thing that always comes to our
minds is that what difference we as a bank can
make in society. This is the driving force for
us to conduct such activities.
As an agricultural development bank, we
provide trainings to local farmers where we
operate as a matter of CSR. Similarly, we do
spend a huge amount on education, health and
other social areas and these funds are
disclosed in our annual reports. We believe
that our business can go longer upon spending
on the local community in CSR activities.
Social change,
green
environment
2. What
sustainability
projects, events
and activities is
your organization
currently
running?
Social
&Environmental
Business conduct &
compliance
I already explained that we provide trainings
to local farmers where we operate. Similarly,
we do spend a huge amount on education,
health and other social areas. Our main focus
is rural areas of Pakistan as a matter of policy.
Trainings to
local farmers
3. How do you
relate to the
sustainable
development
concept? Would
you say that you
have a personal
relation to the
concept or is it
strictlyacademic/
professional?
Areas of focus;
Code of Conduct
Social issues
Anti-corruption and
ethics
Health & safety
I haven‘t had any personal experience.
However, in our bank we regularly follow the
guidelines of SECP. I am of the opinion that
these guidelines should be mandatory for all
banks. It should also be linked with the laws
of the land.
Guidelines of
SECP
4. How would
you describe
your way of
working with the
sustainable
development
concept? Feel
free to describe
how you work
Working conditions
(e.g. mandatory days
off, etc.)
Wages & benefits (e.g.
no unpaid overtime,
etc.)
Non-discrimination
(e.g. age, gender,
religion, race, etc.)
If we comply with the basic requirements, I
think that would be the first step towards
implementation.
I have personally seen that banking has more
formal procedures for CSR activities.
However, there sectors where no formal
policies are undertaken. Our regulators should
include those organizations in mainstream.
Better process
326
with the concept.
5. Does your
suitability project
engage your staff
and collaborate
with local
community
where your
business
operates?
Community
participation
Ethics
Social bounding
Yes.
I want to say something on social bounding. In
our society, we learn from each other. Society
as a whole should act responsibly. Our acts
should justify our deeds. This is my faith at
least.
Community
Participation
6. How would
you describe the
role of the
sustainable
development
concept(s) in
society today?
What role do you
think it should
play?
Business conduct &
compliance
Environmental
Economic
Overall
I think unless SECP and SBP play their due
role; banks though try to spend their part but
the real change will be felt once these sectors
are regulated under tight policies.
Secondly, this concept should be part of our
education. Business schools should focus on it
and take a lead.
Implementatio
n
327
Annex K. Coding Matrix
Coding matrix of the sample intuitions according to the conceptual framework
Themes Guidelines Bullet Points Banking Sector
Inte
r.
Off
.do
c
Strategic Planning I 1.1 Y Y
1.2 Y Y
1.3 Y Y
1.4 Y Y
Economic practices II 2.1 Y Y
2.2 Y Y
2.3 Y Y
2.4 Y Y
2.5 Y Y
Social practices III 3.1 Y Y
3.2 Y Y
3.3 Y Y
3.4 Y Y
3.5 * Y
3.6 Y Y
3.7 Y Y
3.8 Y Y
Environmental practices IV 4.1 Y Y
4.2 Y Y
4.3 Y Y
4.4 * Y
4.5 Y Y
Legend
Inter. Interview
Off.doc Official
documents
Y Yes
* Don‘t know
328
Annex L. Qualitative Research Sample Profile
Sample Profile Representative/Position
1 Habib Bank Ltd Regional Head
2 United Bank Ltd Regional Head
3 Allied Bank Ltd Regional Head
4 Faysal Bank Ltd Regional Head
5 The Bank of Punjab President/CEO
6 Sindh Bank Ltd Regional Head
7 Bank ALfalah Ltd Regional Head
8 National Bank of Pakistan Regional Head
9 Zarai Taraqiati Bank Limited. Regional Head
10 Meezan Bank Ltd Head of Communication
11 Silk Bank Ltd Regional Head
12 MCB Bank Ltd Regional Head
13 JS Bank Ltd President/CEO
14 Askari Bank Ltd Head of Compliance
15 Soneri Bank Ltd Regional Head
329
Annex M. Measurement indicators for sustainability
A. Company Management (General) Background
1. Company has a management person for;
Social sustainability
Business conduct & compliance
Environmental sustainability
Social sustainability relates to practices that
Contribute to the quality of life of both
employees and communities that could be
impacted by the company‘s operations.
Examples of social topics to address include
working conditions, non-discrimination, freedom
of association and collective bargaining, health
and safety at work, etc.
Business conduct and compliance relate to the
principles that guide business conduct in its
relations towards its business partners and
customers. Examples of unethical business
practice include corruption, extortion and
bribery.
Environmental sustainability relates to
practices that contribute to the quality of the
environment on long-term basis. Examples of
company practices include recycling programs,
carbon emissions reduction programs, programs
for waste management, etc.
Companies are expected to appoint a senior
management representative, who irrespective of
other responsibilities, serves as a management
person responsible to ensures that the company
meets its commitment related to social
sustainability, business conduct and compliance
and environmental sustainability.
2. The company issues Corporate Social
Responsibility(CSR)/Sustainability Report?
A CSR/ sustainability report is an organizational
report that gives information about economic,
environmental, social and ethical performance.
An environmental report is a systematic
document published by companies with the aim
of communicating with stakeholders on the most
relevant environmental issues.
3. Company organizes training sessions to
enhance the understanding of Corporate Social
Responsibility/Sustainability at your site?
Areas for training;
Code of Conduct
Social issues
Training sessions to enhance the understanding
of CSR/ Sustainability refers to companies
training their employees on the expectations,
policies and procedures relating to Corporate
Social Responsibility within the company
context. Training is intended to raise awareness
on CSR topics, so that specific functions could
330
Anti-corruption and ethics
Health & safety
Environmental management
identify and act on issues they encounter in their
day-to-day activities. Training could be function-
specific (e.g. trainings for buyers, managers,
etc.), or topic-specific (e.g. on anti-corruption,
Health Safety, etc.)
Corporate Social Responsibility (CSR) is
process for companies to integrate social,
environmental, ethical and human rights
concerns into their operations and core strategy,
in close collaboration with their stakeholders.
B. Social Sustainability Background
4. Company covers the followingsocial issues
and your company hasa policy?
Respect for human rights (e.g. fair
treatment)
No forced or compulsory labor
No child labor (e.g. no worker under
legal working age, etc.)
Working conditions (e.g. mandatory days
off, etc.)
Wages & benefits (e.g. no unpaid
overtime, etc.)
Non-discrimination (e.g. age, gender,
religion, race, etc.)
Freedom of association
Collective bargaining
A company policy refers to a business approach
to a given issue and contains general principles
and/or practical how-to-do items. A policy may
includecomponents such as prohibited behaviors,
rights, and dispute procedures. Social issues
could be containedin the company HR policy,
CSR policy, Human Rightspolicy, etc.
Human rights are the rights we are entitled to
simplybecause we are human beings. They
represent theuniversally agreed minimum
conditions that enableall people to maintain their
dignity. Human rights are inherent to all of us,
whatever our nationality, placeof residence, sex,
national or ethnic origin, color, religion, or any
other status.
Forced or compulsory labor refers to all work
orservice exacted from any person under the
menace ofany penalty and for which that person
has not offeredhimself voluntarily. Examples
include forced overtime, retention of identity
documents, etc.
Child labor relates to the prohibition of
employment of children who are under the legal
minimum workingage i.e. 18 years in case of
Pakistan. Young people admitted to work must
have working conditions appropriate to their age
and beprotected against economic exploitation
and any worklikely to harm their safety, health or
physical, mental, moral or social development or
to interfere with their education.
Working conditions refer to the working
environment and aspects of an employee‘s terms
and conditions of employment. Examples
include health, safety and well-being; maximum
daily and weekly working hours, including
331
mandatory days off, annual paid leave etc.
Wages & benefits relate to the basic or
minimum wage or salary and any additional
entitlements payable directly or indirectly, in
cash or in kind, by the employer to the worker
and arising out of the worker‘s employment.
Examples include paid sick days, family and
medical leave, paid overtime, etc.
Non-discrimination is a principle that requires
the equal treatment of an individual or group
irrespective of their particular characteristics,
including sex, race, color, ethnic or social origin,
genetic features, language, religion or belief,
political or any other opinion, membership of a
national minority, property,
birth, disability, age or sexual orientation.
Freedom of association relates to the right to
freedom of peaceful assembly and to freedom of
association at all levels, in particular in political,
trade union and civic matters, which implies the
right of everyone to form and to join trade
unions for the protection of his or her interests.
Collective bargaining is a process of
negotiations between employers and a group of
employees aimed at reaching an agreement that
regulates working conditions.
5. Company has health and safety management
system?
Health and safety management system relates
to organized efforts and procedures for
identifying workplace hazards and reducing
accidents and exposure to harmful situations and
substances. It also includes the training of
personnel in accident prevention, accident
response, emergency procedures,
and use of protective clothing and equipment.
Examples of relevant standards and certification
include:
• OHSAS 18001
• ILO-OS
C. Business Conduct and Compliance Background
6. Company has a formal policy in place
regarding business conduct and compliance?
(corruption, extortion, bribery).
Corruption can take many forms that vary in
degree from the minor use of influence to
institutionalized bribery. It is defined as the
abuse of entrusted power for private gain. This
332
can mean not only financial gain but also non-
financial advantages.
Extortion: The solicitation of bribes is the act of
asking or enticing another to commit bribery. It
becomes extortion when this demand is
accompanied by threats that endanger the
personal integrity or the life of the private actors
involved.
Bribery is an offer or receipt of any gift, loan,
fee, reward or other advantage to or from any
person as an inducement to do something which
is dishonest, illegal or a breach of trust, in the
conduct of the enterprise‘s business.
D. Environmental Sustainability Background
7. Company has a formal environmental policy,
which includes a commitment to legal
compliance, continuous measurement and
continuous improvements in environmental
performance?
An environmental policy shows the company‘s
overall intensions and direction related to its
environmental performance. It reflects the
company‘s commitment and is formally
expressed by top management.
It provides a framework for action, setting
environmental objectives which take into
account applicable legal and other requirements
and the company‘s environmental impact of its
operations, products and services, with the
purpose of decreasing the environmental impact,
saving resources and costs.
E. Supplier Management Background
8. Company has a Supplier CSR/Sustainability
Policy?
Examples of Supplier CSR/Sustainability
Policy could be a specific Supplier Code of
Conduct or Company Conduct document which
applies to both internal employees as well as
external business partners, such as suppliers. The
objective should be to promote healthy working
conditions and environmental responsibility
throughout the entire supply chain.
333
Annex N. The Conceptual Framework for Sustainable Development
Theme I: Strategic planning
Strategic guideline:In a sustainable institution a unified definition of sustainabilityand shared vision
shape strategic planning which aims movesociety towards sustainability.
Aspirations:
1.1. Institution has a clear definition of sustainability which covers environmental,social and
economic pillars.
1.2. Institution builds a shared vision in cooperation with all units whichaims tomove society
towards sustainability.
1.3. Institution makes a transition towards its vision by determiningwhat the Institution needs to do
today to reach the desired outcomes. Institution assesses its current reality in relation to the vision to
support shortterm and longterm strategic planning.
1.4. Institution supports and creates opportunities for collaboration between itsdepartments
to achieve the common goal of a sustainable development.
Theme II: Economic practices
Strategic guideline:In a sustainable institution financial operations are aligned withthe ethical
investment policy.
Aspirations:
2.1. Institution ensures that all institutional investments and banking practices aretransparent and
conducted in a socially, economically and environmentally responsiblemanner.
2.2.Institution assesses suppliers‘ labor practices and impacts on societyandenvironment before
establishing financial collaborations with them.
2.3. Institution allocates a budget for the sustainability practices.
2.4. Institution focuses its training budget on projects that have a better chance of long term
employment.
2.5. Institution provides equal opportunities across the board.
Theme III: Social practices
Strategic guideline: In a sustainable institution staff is not subject to structural obstacles to
health, influence, competence, impartiality andmeaning making.
Aspirations:
3.1. Institution protects its staff‘s right to freedom of peaceful assembly and association. No one may
be compelled tobelong to anassociation.
3.2. Institutioncreates and preserves necessary conditions to realize its staff‘s right to freedom
of opinion and expression. Institution is open to change and responsive to these opinions and
expressions to take initiatives for future improvement and development.
3.3. Institution creates education and training opportunities for its staff to encourage them to reach
their full potential.
334
3.4. Institution is committed to providing equal opportunity for all and refrains from
discrimination of any kind in employment, educational programs and activities.
3.5. Institution ensures that there are no obstacles for staff to receive appropriate performance
based remuneration.
3.6. Institution guarantees that staff abstains from corrupt practices or acts of bribery to obtain an
unfair advantage.
3.7. Institution provides disability friendly services and facilities.
3.8. Institution provides a healthy and safe environment for staff.
Theme IV: Environmental practices
Strategic guideline: In a sustainable institution contribution to systematic increases in
concentrations of substances extracted from the Earth‘s crust and produced by society and
degradation of nature is eliminated.
Aspirations:
4.1. Institution maps impact transport areas and activities for the full scope of operations. Institution
measures baseline for sustainable transport and sets targets beyond legal compliance and local
planning requirements.
4.2. Institution maps construction and refurbishment impact areas and activities for the full scope of
operations. Institution measures a baseline and sets targets for construction and refurbishment going
beyond legal compliance and local planning regulation requirements.
4.3. Institution maps impact areas and activities on biodiversity for the full scope of operations.
Institution prepares an action plan for the protection of biodiversity.
4.4. Institution maps waste and physical resource management areas and activities for the full scope
of operations. Institution measures a baseline and sets targets for waste and physical resource
management going beyond legal compliance and local planning regulation requirements.
4.5. Institution maps energy and water consumption impact areas for the full scope of operations.
Institution is committed to promoting energy and water efficiency and aims to reduce its carbon
dioxide emissions.
