LITERATURE REVIEW - Who Cares about CSR? Investigating Employee’s Perception of Corporate Socia

Through reviewing the previous literature, this chapter provides diverse points of view respectively related to corporate social responsibility, employee’s perception of corporate social responsibility, employee engagement, and perceived supervisor support. Further, the hypotheses are derived based on the contents.

Corporate Social Responsibility

Today, it is indisputable that the idea of corporate social responsibility (CSR) becomes more and more popular. However, its concept still lacks a commonly accepted definition (Bučiūnienė & Kazlauskaitė, 2012). World Business Council for Sustainable Development (WBCSD, 2002), which provided one of the most widely popular used CSR definitions, addressing that CSR is an organization’s commitment to a discretionary conduct which contributes to the felicity of the society, the local community and the employees at large and causes the development of economy.

Another statement about the definition of CSR was provided from Aguinis (2011) who claimed that CSR means the context-specific organizational activities and strategies that consider the triple bottom line of economic, environmental, social performance and stakeholders’ anticipations; this definition was adopted by many authors (e.g., Aguinis & Glavas, 2012; Rupp, Williams, & Aguilera, 2010).

Around for many centuries, CSR is a construct which firms have to transcend the profits pursuing goal to be responsible to society (Carroll & Shabana, 2010). In the early 1950s, the concerns about the more extensive responsibilities of management in this complex world were introduced by Frank Abrams who was a former executive in Standard Oil Company. Abrams (1951) pointed out that in order to manage in a professional manner, the companies should pay more attention on the rights and

interests of their employees, customers and the public, instead of just making profits for the business goals. However, during the 1950s, there was scanty argument that discussed about how business could obtain benefits from the emphasis on CSR.

Meanwhile, the main focus was just on firms’ duties to do something good for society (Carroll & Shabana, 2010).

The circumstances remain unchanged until the 1960s and beyond when the most significant social movements, including the environmental movement, women’s rights, civil rights and consumers’ issues, happened in the US. From then on, the foundation of CSR was established quickly. The business enterprises had no choice but to think about the adoption of CSR policies, perspectives and practices by the pressure from the changing social context (Carroll & Shabana, 2010). Nevertheless, it is worth knowing that without the efforts of making important social legislation in the early 1970s from the Equal Employment Opportunity Commission (EEOC), the Consumer Product Safety Commission (CPSC), the Environmental Protection Agency (EPA) and the Occupational Safety and Health Administration (OSHA), the notion of CSR couldn’t become indelibly clear (Carroll, 1991).

Since CSR does not have a universally accepted definition, different authors hold distinct point of views to describe this concept, here are some primary divisions based on the literature. Carroll (1979, 1991) categorized CSR into four dimensions which encompass the economic, legal, ethical, and discretionary [later pointed out as philanthropic] responsibilities; the above can be seen as the expectations that society has toward the organization. This four-part conceptual classification made up of complete CSR dimensions, it is saying that CSR for the purpose of being widely acknowledged has to contain the extensive scope of responsibilities, including the economic aspect which is the essence of a business enterprise (Carroll, 1991).

First, economic responsibilities refer to make profits, sell products and services to society which are the most fundamental and primary essence for a business enterprise. All of these have to be achieved before companies want to pursuit other goals. Second, legal responsibilities imply that business organization as an economic unit of society has to operate its function by obeying the laws and regulations to meet the expectation of government and community. Third, ethical responsibilities indicate that there are some rules and norms which are not codified into law, yet corporations still have to sense and follow them as they embody the concern of civil society. In view of its ill-defined and controversial features, it is hard for companies to handle the duties in approaches seemed as fair, right, and just, and preserve the moral rights of stakeholders containing the environment, customers, employees, suppliers, and others.

Finally, philanthropic responsibilities represent that business enterprises actively and voluntarily donate some financial resources, working hours or practice some programs to facilitate the well-being of society, meet the expectation of civil community and be recognized as corporate citizens. Being explained respectively does not mean these four-part categories exclude one another mutually; instead, they have continuous and dynamic tension in between. This classification aims to let employers know more clearly about which components they have to strengthen in order to construct comprehensive CSR (Carroll, 1991).

Turker (2009) argued CSR represents a consideration with the needs and objectives of society that far more than only economic focus. Turker (2009) further claimed that CSR can be prescribed as corporate practices influencing stakeholders positively and exceed its economic interest. The literature from Carroll (1991) also mentioned there is a natural link between the organization’s stakeholders and the notion of CSR. The above arguments can be associated with the further developed

idea of CSR which Freeman (2004) proposed in his stakeholder theory. He proclaimed in order to be perceived as socially responsible, an organization should take into account the rights and interests of its various stakeholders, such as employees, shareholders, customers, suppliers and community; because they all matter crucially to organizational performance outcomes.

With the trend of advocating the importance of CSR, another statement argued that CSR practices face decoupling problems which implied some corporations embedded CSR as their strategic tool while some business organizations adopted CSR only for window-dressing objectives (Weaver, Trevin˜o, & Cochran, 1999).

Embedded CSR in practice as described by Aguinis and Glavas (2013) meant that all of corporations’ daily routine operations and policies level from an individual to the whole organization have to be directly linked to the construct of CSR with which integrated companies’ central competencies and strategies. Some companies did not voluntarily value the importance of CSR; instead, they just took it as a passive approach to deal with the massive pressure from community. For instance, in the early 1990s, Nike had no choice but to aware of CSR idea after encountering a large-scale boycott from the customers as it was accused of abusing some of its Indonesian suppliers by the famous media (Porter & Kramer, 2006). In fact, Porter and Kramer (2006) stated that for those companies which utilized CSR methods for reconciling the requests from pressure groups, their CSR actions declined as a series of incoherent, temporary, and opposing responses, which firms cannot get any strategic advantage inside. Today, CSR trend focuses more on how firms can strategically and actively incorporate CSR into their internal system and combine it with their resources and expertise to deal with the dynamic social issues, then society and companies can get win-win benefits (Porter & Kramer, 2006; Sethi, 1975).

In the light of this, Porter and Kramer (2006) provided a model that divided CSR into two wide classifications, responsive and strategic. Concentrating on generic social issues or fixing the adverse influence caused by corporations’ value chain execution is the feature of responsive CSR. On the contrary, strategic CSR represents companies locating themselves in a unique status by linking their internal value chain with external social issues to create shared value for both society and companies. Take Toyota as an example, they connect their newest technology with the need of environmental problems – automobile emissions to create the hybrid gasoline/electric vehicle which made Toyota win the competitive advantage among its competitors (Porter & Kramer, 2006).

Employee’s Perception of Corporate Social Responsibility

Employees are not only organizations’ important assets, but also are the ones who in charge of transferring CSR ideas to actions (Tsai, Tsang, & Cheng, 2012). As stated by Tsai et al. (2012), it is doubtful that the CSR related contributions and efforts were offered by the higher level managers congruent or well-communicated with the lower level employees. When CSR becomes a growing concern for companies, it no longer covers firms’ philanthropy only, but gradually has evolved as a role for organizations to earn more profits and create competitive advantage, but employees’

voices are usually ignored during this whole process. For the purpose of achieving the biggest advantages of CSR for the organization and the society, it is necessary for corporations and their employees to cooperate with each other and have the same or similar values. Hence, understanding employees’ points of view toward CSR would be the first priority for organizations to re-examine their CSR implementing process.

Even though the practical CSR actions that a corporation executes can be rated

by diversified approaches, Glavas and Godwin (2013) argued that investigating employees’ perception of CSR is an important way to know the reality of organizations’ CSR implementation. Employee’s perception of CSR was defined as the extent that employees perceived organizations support the initiatives related to social issues and it encompasses three dimensions included environmental, philanthropic, and ethical CSR activities (Lee et al., 2013).

Employee Engagement

Historically, the first major concern about employee engagement was offered by Kahn (1990) who claimed that those who are engaged express themselves thoroughly in emotional, cognitive and physical toward the work roles they employed in organizations. Actually, engagement can be seemed as a status of which intellectual and emotional committed to a group or organization. An engaged employee refers to whoever has enthusiasm and is completely involved in his or her job (Falcone, 2006).

Since Kahn (1990) proposed his argument till today has been around twenty-something, the concept of employee engagement remained unpopular until the recent decade (Saks & Gruman, 2014). Employee engagement becomes more and more prominent because a lot of literature proved it does matter to the company in many aspects. Luthans and Peterson (2002) addressed that Gallup empirically ascertained employee engagement as an important predictor of ideal organizational outcomes encompassing retention, profitability, consumer satisfaction and productivity (Buckingham & Coffman, 1999). Similarly, Lockwood (2006) pointed out that it is possible to make or break the bottom line by engaging employees. In fact, it is necessary to engage employees constantly, as engaged employees is helpful for the organizations to increase their competitive advantage, which is in line with the

resource-based view of corporations (Joo & Mclean, 2006). The resource-based view postulates that in contrast to technical, financial or physical assets, human and organizational resources are able to bring a corporation with sustained competitive advantage since they are especially inimitable. (Lado & Wilson, 1994; Wright &

McMahan, 1992).

Saks and Gruman (2014) clarified that although there are some similar points between the two main definitions offered respectively by Kahn (1990) and Schaufeli, Salanova, González-Romá, and Bakker (2002); their arguments do still have some differences in many perspectives. Kahn (1990) described engagement as “The harnessing of organization members’ selves to their work roles; in engagement, people employ and express themselves physically, cognitively, and emotionally during role performance” (p. 694). By contrast, those who are in disengagement choose emotionally, physically, or cognitively withdraw and protect themselves when performing their roles (Kahn, 1990). Therefore, an engaged individual will be psychologically present when employing his or her organizational roles (Kahn, 1990).

Cognitive energy refers to one’s perception and identification toward his or her work roles and non-work responsibilities (Ashforth, Harrison, & Corley, 2008). Emotional energy indicates that people as human beings eager to content the personal values and psychological needs (Rich, Lepine, & Crawford, 2010). While physical energy implies that people concentrate on particular actions to stimulate their intrinsic motivation like sense of autonomy, competence and discretion (Rich et al., 2010).

Noticing an individual’s behavioral demonstration of his or her emotional, physical, and cognitive energy into work roles is a way to observe engagement (Kahn, 1992). In short, engagement represents that people consciously and actively invest their head, heart, and hands into the roles they performed in organizations (Ashforth &

Humphrey, 1995). Despite being discussed respectively, engagement signifies that an individual involves his or her emotional, cognitive, and physical energy into work roles in a linkage simultaneously instead of presenting in a fragmented way (Kahn, 1992).

The other influential definition argued by Schaufeli et al. (2002) that the two distinctive states, engagement and burnout are direct opposite of each other.

Engagement means “A positive, fulfilling, work-related state of mind that is characterized by vigor, dedication, and absorption” (p.74). Two major features of burnout are exhaustion (low activation) and cynicism (low identification); while engagement is composed of vigor (high activation) and dedication (high identification) (Schaufeli et al., 2002). Then they provided a further argument that instead of being a temporary and particular status, engagement represents a more steady and ubiquitous affective-cognitive state which is not centralized on any specific individual, activity, behavior or object.

According to the literature, almost every author concerned about confusing the construct of engagement with some other concepts, such as job satisfaction (one’s attitude toward his or her job), organizational commitment (one attached to his or her organization emotionally), and job involvement (the extent that one view his or her job as the core part to their identity); yet engagement is a unique idea which level is higher than other motivational concepts (Christian, Garza, & Slaughter, 2011).

Likewise, Gubman (2004) also mentioned that engagement has a distinct meaning from satisfaction; engagement represents “A heightened emotional connection to a job and organization that goes beyond satisfaction” (p.43). Having such an emotional connection can stimulate employees have better performance and decrease their intention to leave employers (Gubman, 2004). On the other hand, as clarified by

Schaufeli and Salanova (2011) that employee engagement encompasses employees’

relationship with their occupational role, job and organization; yet work engagement particularly implies the connection between the employees and their work.

Employee’s Perception of Corporate Social Responsibility and Employee Engagement

Nowadays, more and more companies utilize CSR as a strategy to recruit prospective employees, increase employee morale and retain talents; as employee is recognized as a crucial stakeholder for an organization (Slack et al., 2015). However, when most of the studies highly addressed CSR as the organization has to remain a good relationship with its stakeholders such as employees, the studies that discussed CSR based on individual level-of-analysis are very little (Aguinis & Glavas, 2012).

Especially, scant studies mentioned specifically on the relationship between CSR and employee engagement (Glavas, 2016).

Nevertheless, some research did prove that CSR has positive relationship with employee engagement. For example, Caligiuri, Mencin, and Jiang (2013) discovered that CSR positively affected employee engagement. In addition, Glavas (2012) complemented that employees’ perception of superior meaningfulness and value congruence from work might be the two reasons of why CSR has positive relationship with employee engagement. Instead of establishing the formal rule on paper, CSR gives organization chances to practice its value substantially, which makes the employees better understand the company’s value (Jones, Willness, & Madey, 2014).

In the circumstances when people sense the values of their working organizations are congruence with their personal values, and the role performance anticipated by the organizations are compliance with people’s desired self-image, people are more likely

feel meaningful in their work and increase engagement naturally (Chatman, 1989;

Kahn, 1990, 1992; Kristof, 1996).

Social exchange theory can be applied to understand the CSR-engagement relationship more clearly. Social exchange theory postulates that economic and social exchanges are two types of exchange in organization (Blau, 1964; Gouldner, 1960;

Settoon, Bennett, & Liden, 1996). Economic exchange refers to the monetary reward;

while social exchange indicates the nonmonetary side of employment, and has undefined responsibilities with frequent indirect routes of exchange (Blau, 1964). As described by Organ (1988), the discretionary conduct and extra role actions are direct related to the idea of social exchange. Social exchange theory points out the relationship between employee and employer is reciprocal interdependence, both sides produce the obligations naturally via their continuous interactions (Saks, 2006).

This argument is in line with the explanation that viewed engagement as a mutual relationship between the employee and employer (Robinson, Perryman, & Hayday, 2004). In order to know more details of workplace conduct, Cropanzano and Mitchell (2005) proclaimed that Social exchange theory may be one of the most powerful conceptual models. To reciprocate the resources that obtained from organizations, employees tend to feel obligated to dedicate themselves more thoroughly into the roles they performed in organizations (Kahn, 1990). On the other hand, if corporations are not able to offer the resources that employees want, employees have higher possibility to disengage in their performing roles (Kahn, 1990). Accordingly, the degree of emotional, cognitive, and physical energy that employees bring into their performing roles in the workplace is contingent upon how many socioemotional and economic resources they acquired from corporations (Saks, 2006).

Glavas and Piderit (2009) found that perceived CSR significantly correlated with

employee engagement. Further, Glavas (2016) found that perceived CSR has the largest influence on employees when they can express their fully selves at work (i.e., authenticity) due to the execution of CSR. Supported by Rokeach (1973) and Heidegger (1962) who assumed that all human beings have the need for caring, people cannot express their whole selves and may less engage in their work if this need cannot be valued. Conversely, corporations that highly endeavored in CSR practices provide humanized working environment for their employees and value more on their needs rather than treat them as a profit-making machine. Thus, employees are allowed to show more of their true selves during the working process (Glavas & Piderit, 2009).

Based on the above statements, the researcher presumed that if an organization could treat its employees fairly, make them feel meaningful in their work roles, and care about their voices, then employees were more likely to increase their engagement toward the works. Hence, the researcher proposed the following hypothesis:

Hypothesis 1a: Employees who perceive higher degree of philanthropic CSR activities have higher degree of employee engagement.

Hypothesis 1b: Employees who perceive higher degree of ethical CSR activities have higher degree of employee engagement.

Hypothesis 1c: Employees who perceive higher degree of environmental CSR activities have higher degree of employee engagement.

Perceived Supervisor Support (PSS)

Perceived supervisor support (PSS) refers to the degree which employees perceived their contribution, well-being, and socioemotional needs are valued and

satisfied by supervisors. The concept including employees’ feeling of respect, support, and belonging, which can increase employees’ morale and lead to desired organizational outcomes (Kottke & Sharafinski, 1988). Kottke and Sharafinski (1988) asserted that employees’ perception of being supported can be distinguished into two kinds of support, one from the entire organization and the other from their immediate supervisor. Actually, prior research such as Greller and Herold (1975) found that instead of getting the working information from colleagues or organizations, employees prefer to obtain it from their supervisors. In addition, the feedback given by the closest supervisor is more valuable to employees.

Supervisors act as agents of organizations who have duties to supervise and appraise inferiors’ performance. Therefore, employees take supervisors’ favorable or unfavorable actions toward them as the index of organizations’ support. In short, people view their supervisors’ conduct and beliefs as the representation of their organizations’ values (Eisenberger, Huntington, Hutchison, & Sowa, 1986; Levinson, 1965). According to the literature, supervisors can win more satisfied employees by creating a supportive environment (Jose & Mampilly, 2015; Laschinger, Finegan, &

Shamian, 2001).

Found by Malatesta (1995) that subordinates’ extra-role performance fostered by PSS can not only be advantageous to supervisors but also be favorable to entire organizations. Consistent with the point that PSS has positive relationship with perceived organizational support (Kottke & Sharafinski, 1988; Malatesta, 1995;

Rhoades, Eisenberger, & Armeli, 2001). PSS reinforces employees to enhance their organizational commitment and feel obligation to assist supervisors and organizations

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