The last chapter contains the conclusions and recommendations for the study. The conclusion section includes the conclusion for this study. Also, the study provided some recommendations for the Taiwanese companies. Finally, recommendations for future research were provided.
Research Conclusions
The purpose of this study was to explore empirically the relations between the UNGC, CSR and business performance in the multinational companies context. This research gathers Taiwanese workers in multinational companies, where main test samples of 154 were gathered and analyzed by using PLS method. A GCSR model has been established to offer insights for the various variables and their relationships. The result showed that there is causal effect between independent variables and dependent variables. From this, some implications are concluded as follows.
UNGC main mission is to promote and help companies to follow and focus on four core areas they established. This research cannot conclude whether this initiative had or hadn’t success, even though for example McIntosh (2003) conclude that phase one of the Global Compact Learning Forum ‘was not encouraging’. The result from descriptive analysis shows that Taiwanese companies comply with most of UNGC principles. From PLS analysis, this research shows that most dominant factor is environmental principle, follows by anti-corruption, human rights and the last labour. This supports study of Utting (2002) in which he stated that companies rather to address and internalize all principles consistently, they pick and choose the principles and corporate activities they wish to deal with. It also shows that its interpretation lies on company’s spheres of influence. For example from descriptive statistics results, most companies have high agreement on labour and human rights standards but companies do not recognizes the rights of its workers to freedom of association and to bargain collectively (the lowest score among variable) and the workweek is not limited to 48 hours, which support the Data published by the Council of Labor Affairs in Taiwan. This also shows that level of country participation depends on a diversity of causes (Knudsen, 2011; Rasche, 2012).
Multinational companies are under different types of pressure from different stakeholders. Investors wants from them better performance and higher profit and on the
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other hand society wants them to behave for the best needs of society, environment and human rights. UNGC as guiding tool according to PLS findings have high influence on companies CSR performance. According to the findings in order to improve the CSR, it is encouraged to measure UNGC principles and develop strategies based on the results.
Looking at CSR, result shows that biggest priority for organizations is vision, values and strategy; followed by management systems, organization and processes within organization and products and services. This research confirms the broad literature findings that CSR is part of strategy in companies (Mescon & Tilson, 1987) therefore imply that strategic CSR activities have value for organization (Cox, Brammer, & Millington, 2004;
Werther & Chandler, 2006). This implies also that the meaning of CSR has shifted more to be a strategic role and unit of analysis is more organization (instead of society). Outcome of CSR should not only be target for societal well-being, but organization should design business practices to achieve it (Mackey et al., 2007; McWilliams & Siegel, 2001;Waddock
& Graves, 1997)
The dominant factor within CSR, the vision, values and strategy confirm theories that firm have high awareness for organizational values, because they are accepted as intangible resources that can create competitive advantage (Barney, 1991). These values are incorporated in corporate ideology and it is related to strategy, performance, and social responsibility because ideology affects the decisions made by managers based on their goals, objectives, and beliefs about how the world works (Simons & Ingram, 1997). This also suggests that companies have high priority to relevance of sustainability.
With importance of management systems, organization and processes as second highest priority for companies this study can imply that organizations have high priority to have sustainability responsibilities defined and there is visibility and integration of sustainability in core processes within companies. With regards to the firm value chain CSR activities could be done in such a way that the CSR activity formed part of the firm value chain by supporting either the primary activities or the support activities (Porter & Kramer, 2006). This creates competitive advantage that can be achieved through internal resources or a group of internal resources from the firm.
Other important variable within CSR dimension is product and services. There is strong evidence that when customers make decisions of which product to buy they consider factors such as companies participation in CSR (Kotler & Lee, 2005). With higher corporate social responsibility the availability of a product differentiation will be also higher and social strategy depends upon the existence of consumers sensitive to environmental and social
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issues and whose purchasing decisions are affected by corporate behavior in these areas (Paul et al., 1997).
The least variable – resource and environmental management is still significant, but this research should ask question how companies are really working towards resource and environmental reporting, because according to the first finding in UNGC dimension, the environmental principle have highest priority. This research can conclude that communication and reporting of environmental issues can be a real challenge for firms (Kang, 2009). Communication in various forms is a generally important or even vital activity for most firms’ it’s relevant to note that communication of CSR is particularly important.
Companies should be aware because reporting practices have become a key management tool in risk management due to the growing complexity of global business (Kytle & Ruggie, 2005). CSR reporting are most active in polluting sectors such as electronics, pharmaceuticals, automotive, utilities, chemicals and gas and oil (Kolk, 2004), but this research have more diversified industries.
The result findings showed that there is a positive dominate relationship between CSR towards business performance. This study supports the previous studies (Orlitzky et al., 2003;
Schnietz & Epstein, 2005; Waddock & Graves, 1997) that there is a positive relation CSR and business performance. Therefore, this study provides better understanding for the importance of CSR to the company’s performance. From the result, it is also proved that following the UNGC principles can be one of the ways to improve the performances of the organizations and therefore maintain the competitive advantage of the organizations. The organization performance hypothesis continues to be a topic of interest for researchers and practitioners alike. As many academics and practitioners maintain the view that CSR must provide a return in order to be worthwhile. Since the competition for better performance is heightened, the needs for companies to improve on their performance and retain their survival and competitiveness advantage are urgent. This study offer one dimension answer where most impact on business performance have performance from customer perspective.
With the performance from customer perspective this study can draw the conclusion that most companies performance within the target market segments was successful.
With comparison between IT industry and other industries the result showed that vision, values and strategy in CSR dimension are more important for IT industry than management systems, organization and processes, in other industries. In business performance for IT industry is more important performance from learning and growth perspective, in comparison other industries performance from learning and growth
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perspective is the dominant factor, which followed by performance from customer perspective. Taiwan as one of the leading countries in IT industry is trying to maintain its position in recent years, but with rise of other emerging countries the vision and values have high priority for companies. This research can conclude that in dynamic and rapidly changing industry as IT it is inevitable to have this result.
Research Recommendations
The findings can help companies to form the best strategies to enhance their CSR and performance by emphasizing the strong points and improve the weak characteristics.
First, companies in order to improve their CSR should adopt UNGC principles in full motion. Companies within UNGC frame should emphasize the environmental principles.
Demand for environmental behavior from firms is on and will become more apparent than it has been until now, thus companies should embed more eco-friendly performance and into their core businesses. On the other hand, companies should improve their labour rights principles. In concrete terms, the results suggest that managers should be counseled to promote company’s commitment and responsibility in terms of labour rights principles order to build up CSR awareness. Companies have high agreement on basic rights, but freedom of association and bargain collectively can be improved.
Second, in terms of CSR and its performance, companies should emphasize their vision, values and strategy in order to improve their business performance. From practical point of view, companies should start from top of the management of companies and their commitment to CSR. Companies should also embed the sustainability dimensions environment, corruption, human rights to their strategy and they should worked on their definition of these dimensions. Where they lack of most is resource and environmental management reporting. The reasons are for another research, but companies should be aware of it because these environmental reports for instance, are generally targeted to stakeholders that are actively seeking out information and critically evaluating the content of the communication.
Lastly, in regards to business performance this study confirms previous studies that corporate social responsibility has positive effect on business performance. That implicates that UNGC and CSR have positive relationship with performance and companies should emphasize their ability to gain contracts and market share from customer perspective. What
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their lack for is performance from financial perspective, thus companies should focus on how they can get on track with financial performance, especially non IT industry.
Recommendations for Future Research
The researcher placed some delimitation in order to manage the study. Constrained by the scarcity of resources, this study tested only a small-sized sample of just limit type of industries in one geographical region (i.e., Taiwan). Furthermore, the research was also delimitated to full time employees working for Taiwanese multinational companies. Since people can have different perception on the organization they belong to and may respond differently to their organization environment, the findings of this study may be context specific and may not be applicable to the other industries and to other nationalities.
This research is first quantitative approach of its kind. The findings provided significant evidence for the underlying previous statements about CSR and endorsed the feasibility of research, but studies are still needed to explore these issues under research. Since this study embraced only a quantitative survey methodology, this approach is constrained by inability to gather anything more than superficial data without much contextual data. Therefore, to better comprehend the impact of UNGC, CSR and business performance, future studies may need to incorporate a qualitative approach to provide rich and depth examination of topic.
The framework, GCSR model and the questionnaires can be replicated to one industry or other industries not only bound to multinational companies but can also be performed for different size organizations, and also to another country. Because of broad nature of topic in CSR literature, future studies can further explore each of aspects for example vision, products, communication aspects of CSR. There is also almost non-existence of quantitative research of CSR initiatives and their relationship with organizational performance, therefore researches can use the GSCR framework and change the UNGC dimension for other initiative (GRI). Future studies with adequate resources could obtain a larger sample of data across multiple sectors/industries, in different geographical region so it can draw more benefits from the SEM approach. The result of this study shows high validity and reliability of construct, but the researcher recommend to further test the questionnaire, or to use more reversed questions or modify the questionnaire design for validation of construct.
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