Publication: SAM Advanced Management Journal
Publication Date: 22-SEP-07
Delivery: Immediate Online Access
Author: Katsioloudes, Marios I. ; Brodtkorb, Tor
Company: Intel Corp.
Article Excerpt
Introduction
In a region that makes headlines for wars and political turmoil, the United Arab Emirates (UAE) is an oasis of political and economic stability rarely found in the Middle East. This stability, among other factors, has allowed the UAE to carve a place among the world's most significant business centers, with impressive multinational corporations such as DHL, Shell, Intel, and many others establishing their offices in the country. If current trends continue, these multinational corporations will be followed by many more. With both global and local firms operating side by side in a rapidly expanding economy, one of the most important business issues in the UAE in recent years is corporate social responsibility (CSR) and its role, present and future, in the country's business environment.
This paper looks at CSR in the UAE, an Islamic country where multiculturalism and a Western presence through multinational corporations (MNCs) are prevalent. The literature on CSR, though vast, is still extremely limited in the Middle East, especially in the UAE. Therefore, this paper attempts to shed more light on this important subject, examining the UAE enterprises' self-reported performance in three key areas of CSR: environment, community affairs, and consumer protection. Performance in these areas varies, and within them the performance of different industry sectors also varies. We consider the current and possible role of Islam in the development of CSR in the UAE, finding that in medium-to-large enterprises operating outside the Free Zones, there is an awareness that something called "corporate social responsibility" is important, both to society and to the financial success of businesses, but also that many enterprises are unaware of what CSR requires of them and how to align CSR initiatives with their business goals.
Literature Review
Despite 70 years of vociferous academic debate regarding the concept of corporate social responsibility, there is no universally accepted definition of the term (Votaw, 1973; Whitehouse, 2003). Meanwhile, many large companies appear to have found common ground upon which they have constructed elaborate CSR policies and practices. As Hester notes, while, "... there has been no general agreement as to the meaning of corporate social responsibility or how it should be implemented ... businessmen enthusiastically have adopted the concept..." (1973). The increased prevalence of CSR as a feature of corporate policy and practice during the last decade is evident by a review of the literature of some of the largest companies in Europe, the U.S., and the rest of the world.
A few paragraphs within an annual report dealing with the nonfinancial aspects of the business have been replaced by glossy reports and a high profile presence on corporate Web sites of CSR issues. The popularity of CSR among European firms reflects to some extent the approach adopted by large companies within the U.S. where CSR has been a feature of corporate practice since the 1960s. As Esrock and Leichty's analysis of a random sample of Fortune 500 companies revealed, "90% had Web pages and 82% of the sites addressed at least one corporate social responsibility issue" (1998).
The literature available regarding the concept of CSR is substantial (Andriof and McIntosh, 2001; Carroll, 1991, 2001; Davis, 1960; Friedman, 1962; Mcintosh et al., 2003; Sethi, 1970), but it is not the aim of this paper to review current thinking about the concept; that task has been undertaken by other writers (Garriga and Mele', 2004). To date, the existing literature has tended to focus on perceptions of CSR in relation to three groups, namely, consumers (Drumwright, 1994; Mohr et al., 2001), investors (Hockerts and Moir, 2004), and managers (Das, 2005; Hemingway and Maclagan, 2004), located usually within the U.S. A survey undertaken by Mohr et al. (2001), for example, involving 48 in-depth interviews with U.S. consumers, coupled with the use of secondary data sources (Brown and Dacin, 1997; Creyer and Ross, 1996; Holmes and Kilbane, 1993), found that consumers desire more accurate information about the CSR activities of firms, "Many respondents reported that it is difficult to use CSR in their buying decisions because they do not have enough information on what companies are doing, and they would have to work too hard to get it" (Mohr et al., 2001). Unsurprisingly, they conclude by suggesting that companies should offer more information to consumers on CSR policies and that public policy-makers should seek to educate consumers on this issue (Mohr et al., 2001). The increase in corporate reporting on CSR by firms in both the U.K. and the U.S., alluded to above, may indicate that action has been taken in response to the findings of such research. The question remains, however, as to whether that information is sufficient in terms of quantity and quality to allow consumers to make an informed choice in their purchasing decisions.
The basic belief that "... organizations are accountable to a larger society" (Kerin et al., 2003) has evolved into debate about the accountability of corporations to a myriad of special-interest stakeholders. Much of the discussion is centered on whether CSR should take priority over a company's obligation to make money for its stockholders, or vice versa (Bakan and Burke, 2005). For example Mintzberg et al. (2002) suggest that
"In the past 15 years, we in North America have experienced a glorification of self-interest perhaps unequalled since the 1930s. It is as if, in denying much of the social progress made since then, we have reverted to an earlier and darker age. Greed has been raised to some sort of high calling; corporations have been urged to ignore broader social responsibilities in favor of narrow shareholder value ..."
The quote illustrates the importance of a firm's perceived social responsibility in recent decades. Views on social responsibility run the gamut from a purely stockholder perspective, such as that advocated by Friedman (1962), where the sole focus is on a firm's responsibility to its equity holders, to a perspective that suggests that firms have an obligation to balance the interests of all stakeholders (Polonsky, 1995; Post et al., 2002; Mintzberg et al, 2002). Munilla and Miles (2005) propose that a corporation's commitment may follow a social responsibility continuum that ranges from a compliance perspective (corporations meet legal and ethical requirements but do not expend stockholder monies for noneconomic priorities), to a strategic perspective (corporations change their business models to include CSR strategies that create economic returns for stockholders), to a forced perspective (corporations are pressured by various entities to go beyond compliance or strategic interests and expend resources that may not, in the long term, be in the best interest of the stockholders)....
NOTE: All illustrations and photos have been removed from this article.
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