Interview with the Dean of a prestigious University located in Bangkok. (September 30,2014) The Dean sees that the upcoming AEC in January, 2015, will lead to a focus on a business management knowledge and landscape in ASEAN countries to become regional as well as being better prepare students to compete in the global environment.
The School has emphasized the need for international learning for some time, with an attention to, How to Do Business in ASEAN study in the form of Student Business Trip to Singapore and plan to visit more neighbor in the near future.
To prepare for AEC in 2015, the School has set a Vision to AEC with a Mission to run a Capstone course in Strategy for doing Business within ASEAN Community.
A great deal of attention has also been given to ASEAN Business study through a conduct of Post graduate program, where students from Laos and Cambodia are invited, to join in a class discussion and learn about each culture with an Independent study as part of the program.
More ASEAN cases will follow and the School is moving toward being both regionally and Internationally focused in the near future.
The school has launched a 3 I as a guiding star, Impact, International and Innovation. In addition the School is applying for AACGSB standard. And under this Direction, the School is launching an International MBA with a Business Trip as part of the requirement.
This University Dean appears to be more focused on the AEC than do the other University Deans interviewed.
ANALYSIS
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All Deans think that the advent of the AEC is important for Thailand.
However, only two of their Business/Management Schools/Faculties teach core course or subjects concerning the AEC.
This may be for several reasons:
The Faculty is concentrating on producing world class graduates who can operate successfully in the global marketplace, not only in the AEC.
It is not usually possible to add new courses to existing degrees as this may mean that existing degrees as this may mean that existing courses may have to be replaced which may mean a disruption to teachers and students.
Likewise it is not easy to replace existing course with new courses.
Not all existing teaching staff have expertise about the AEC but they are specialists in various business and management topics such as accounting, finance, management, marketing, HRM, etc.
The main argument appears to be that if postgraduate students are taught well in business and management , then they would not have difficulty in coping with Thailand’s entry into the AEC.
In a number of Thai universities, the concentration is on teaching and improving students’
English language skills, as English is the chosen communication language of the AEC.
Obviously, it is important to try to improve Thai students’ English communication skills but it may not be sufficient by itself.
CONCLUSION
The authors of this paper are of the view that postgraduate business and management students at Thai universities should be aware of the AEC, its foundation and major provisions and conditions as well as developing ideas about the possible or likely impacts on Thai business and management.
This means that they should be able to study, consider, and discuss the AEC in an analytical way, particularly in respect in respect to its likely effect on Thailand’s business and management.
As is indicated in the various interviews we have conducted, all the Deans took the view that knowledge of the AEC is desirable, but it is not so necessary to adjust their programs to specifically include the AEC in their curricula.
As indicated, however, while this paper covers the interviews with Deans of five Bangkok government universities which are regarded as highly prestigious plus three ‘up-country government universities also with good reputations, the results of this study may not apply to all Thailand’s government universities’ postgraduate business and management schools. But the study may also be regarded as somewhat indicative of the general approach taken by many Deans of Thailand’s government universities postgraduate business and management schools.
Of course, there are many sources of information and data about the AEC in the media and on the web and many postgraduate business and management students , who are mainly already in employment may become well aware of the AEC through such sources of information and through the activities of the organizations where they are employed, but it seems unfortunate to the authors that such knowledge is not also usually buttressed by their academic studies.
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LIMITATIONS
As clearly indicated, the paper is not meant to be representative of all postgraduate business and management schools in Thai government universities but is restricted to those schools where interviews occurred.
It also appears that some Thai private universities postgraduate business schools may better prepare their students for Thailand’s entry into the AEC but this is not the topic of this paper.
We also only interviewed Deans of government university schools, we did not interview other academic staff of these schools nor students of these programs. We also were only concerned with postgraduate students in our study so we can give no details or comments about undergraduate students in this paper.
We realize that some may consider that a study of undergraduate students might be more worthwhile than concentrating only on postgraduate students.
We have also not looked at other areas of the universities studied, such as Engineering and the Medical Sciences where the picture may be different.
FINAL COMMENT
It is, of course, now too late to change academic programs and to include details of the AEC as entry into the AEC is only seven weeks away. However, it is hoped that Thai universities can quickly adapt both their staff and students to this event and to its further development.
REFERENCES
ASEAN Concord II, (2003),Collaboration among Universities : Enhancing Cooperation in Higher education , ASEAN Foundation (Bali, 7December 2003).Retrieved July 8th, 2014, from http://www.aseanfoundation.org/documents/brochure/Rev-AUN.pdf
Blueprintfor the ASEAN Socio-Cultural Community (2009-2015). Singapore Year Book of International Law and Contributors 2015, Retrieved 7th July, 2014 from http://seacorp .eu/files/2010/04/ASEAN_ Blueprint.pdf
Bureau of International Cooperation Strategy (2011). Background of the ASEAN Community 2015, Retrieved 7th July, 2014 from www.repsrayong.com.home.
Chalapati, S. (2007), The Internationalization of Higher Education in Thailand : case Studies of two English-Medium Business Graduate Programs . Unpublshed Ph.D Dissertation of Social Science and Planning design and Social Context Portfolio, RMIT University, Melbourne, Australia.
International College, Mahidol University (2012), Roles and Responsibilities .International Relations Division, President’s Office, Retrieved 4th July, 2014 from
http://www.kmutt.ac.th/inter/roles.htm
Monitor.icef/…/opportunities-await-foreign-educational-providers, retrieved 1st June, 2014.
Office of International Affairs, Chulalongkorn University(CU).Roles and Responsibilities, Retrieved 5th July, 2014 from http;//www.chula.acth/inter/roles.htm
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Santipaks,B.(2013), “Creating Networks that Deliver”.Deputy Director-General, ASEAN Thailand,Ministry of Foreign Affairs . Retrieved 6th July, 2014 from
http:////www.britishcouncil.or.th/sites/britishcouncil.th./files/busadee_santipitaks.pdf Somjai,K. Tubsree,C, and Smith, I.D, Internationalizing Rajamangala University of
Technology Lanna (RMUTL) in the Context of the ASEAN Economic Community (AEC) ,HRD Journal,, Vol.5 No.1, June 2014,28-40.
Suttipun, M.(2012), Readiness of Accounting Students in the ASEAN Economic Community:
An Empirical Study from Thailand.1st Mae Fah Luang University International Conference . retrieved 6th July,2014 from http://mfuic2012mfu.ac.th/electronic _
proceding/Documents/00_PDF/0-SSH-03%20Muttanachai%20Suttipun.pdf
The Nation, 1stSeptember, 2012, Supatra Amornvivat’s comments in article, “Thailand’s readiness for the AEC”.
Vongchavalitul,B. 92012) “Preparing Thai Private Universities for ASEAN Economic Communiity (AEC)in 2015” Athens: ATINER’S Conference Paper Series , No:BUS2012- 0193, Retrieved 5th July, 2014 from http://www.atiner.gr/papers/BUS2012-0193.pdf www.ASEAN.org/communities/asean.economic.community, retrieved 4th July, 2014.
www.kriengsak.com/asian%/20aec, retrieved 4th July, 2014.
www.nationmultimedia.com.national , retrieved 5th July, 2014.
www.multimedia./.../leading-the-way-to-the-ASEAN-bloc, retrieved 8th July, 2014.
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DEVELOPING A REPUTATION AND BUSINESS PERFORMANCE THROUGH CORPORATE SOCIAL RESPONSIBILITY
I Gede Riana
Universitas Udayana, Bali, Indonesia Email: [email protected]
I Wayan P.Wirasedana
Universitas Udayana, Bali, Indonesia Email: [email protected]
I Gede Rihayana
Universitas Mahasaraswati, Bali, Indonesia Email:[email protected]
ABSTRACT
Corporate social responsibility (CSR) is a concept whereby a company ideally runs social functions in addition to its primary business function. The purpose of this study is to analyse the effect of CSR on business reputation and business performance. Using the banking industry population in Bali, the samples were collected using purposive sampling technique.
The data were analysed with Structural Equation Modelling (SEM) using the Partial Least Square (PLS) method. The finding indicates that CSR does not have a direct significant effect on business performance; however, it does have an indirect significant effect on business performance through business reputation.
Keywords : CSR, reputation, business performance.
INTRODUCTION
The relation between corporate social responsibility (CSR) and firm performance has evoked much interest among researchers (Supriti and Damodar, 2010). Corporate social responsibility is predominantly considered as a Western phenomenon due to strong institutions, standards, and appeal systems which are weak in developing countries of Asia (Chapple and Moon, 2005). Such weak standards pose considerable challenge to firms for practicing CSR in developing countries of Asia, including Indonesia.
The term of CSR has been widely used in the 1970s and getting even more popular thanks to the book Cannibals with Forks: The Triple Bottom Line in 21st Century Business (Elkington, 1997). The books highlighted three important components for sustainable development (economic growth, environmental protection and social equity) which were first coined in The World Commission on Environment and Development (Brundtland Report, 1987). CSR was build upon three main focuses called 3P (profit, planet and people), which means a company should not only pursue economic advantages in the mean of profit, but also need to care for the environmental sustainability (planet), as well as the welfare of its stakeholder (peoples). The CSR concept was also supported and expanded by Danai (2013) who outlined
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that the current business concept has shifted to be more focused on 4P (profit, planet, people, and passion).
CSR was the deal on World Summit on Sustainable Development (WS-SD) in Johannesburg, South Africa in 2002, which aimed to encourage world businesses to create sustainable development. In Indonesia, the term CSR was started to become popular in the 1990s. In terms of CSR, several companies have engaged in Corporate Social Activity (Riana, 2010), although not mentioning it as CSR, the activity itself has in partially resembles CSR, which represents the companies’ concern on social and environmental aspect. This has caused more major Indonesian companies to get engaged in social activities and take the responsibility of its stakeholders welfare and its environmental wellbeing.
Kotler and Lee (2005) outlined that CSR can provide many benefit for the companies engaged in it, in terms of sales and market share. There are many indicators showing that in the 21st centuries business, social and environmental issues are business strategies which can rellied upon (Social Investment Forum, 2013). In the unpredictable business environment, profit dimension not enough for developing business sustainability. Companies need running another business dimension are called; planet and people as a part of basic dimensions of CSR (Nurdizal, Asep and Emir, 2011). Hence, the triple bottom line have became elementary dimension of the CSR program in practices.
CSR is a social responsibility with the aim to create better economic, social and environmental condition. Samuel and Wijaya (2008) outlined that CSR can boost companies reputation in creating corporate image, as reputation and corporate image are seen as crucial tangible assets of the company, and CSR can be seen as an investment to increase the value of that asset. Therefore, corporate image will give many return and advantages for companies as they will compete to increase their reputation in the view of its stakeholder.
Chi, Chih, Chin and Da (2010) tried to test the effect of CSR toward brand performance, using companies reputation as the mediating variable in small medium enterprises in Taiwan.
The research indicates that the company reputation mediated the effect of CSR with brand performance, and CSR can increase the brand performance through company reputation.
Furthermore, Innocent, Martin and Abdel (2011) research on the effect of CSR to profitability in Shell. The result of the research suggests that the performance of companies social responsibility was highly correlated with profitability.
Anis, Belaid and Kamel (2010) finds that CSR and business performance were significantly correlated. CSR itself can be seen as part of company’s social responsibility to its stakeholder, which in turn affects business performance. The better implementation of the CSR, the better the financial performance will be for the company (Innocent, Martin and Abdel, 2011) just as Susilowati (2010) described that CSR will strengthen company’s reputation and eventually affect their business performance.
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Belaid, Anis and Kamel (2009) observe that related research to the implementation of CSR was mainly conducted for developed countries, primarily Western countries which have relatively stabilized economies. Belaid, Anis and Kamel (2009) analised the effect of CSR on business performance in developing countries. The result shows that it has positive effect in three measures of organizational performance: financial, organizational commitment and company’s reputation. It is also supported by Supriti and Damodar (2010) who concluded that responsible business practices can give many advantages to the organization. Relating on those studies, this research will study the effect of CSR on building company’s reputation and its business performance.
CONCEPTUAL FRAMEWORK AND HYPOTHESIS
Based on the relationship between variables mentioned earlier, the conceptual structure framework of this research is shown in Figure. 1:
FIGURE 1: THE CONCEPTUAL FRAMEWORK
TABLE 1 : INDICATORS OF VARIABLES Indicator Variable Indicator Variable
X1.1 Economic Responsibility Y1.1 Learning and Growth Perspective X1.2 Discretionary
Responsibility
Y1.2 Consumer Perspective X1.3 Ethical Responsibility Y1.3 Internal Business Process X2.1 Thrusworthiness Y1.4 Financial Perspective X2.2 Credibility
X.23 Reliability
RELATIONSHIP BETWEEN CSR AND REPUTATION
The concept of corporate social responsibility (CSR) has grown exponentially in importance and significance. More companies than ever before are engaged in serious efforts to define and integrate CSR into all aspects of their business (Patrizia, 2014). Meanwhile, the concept of business reputation as described by Fombrun (1996, p. 36) is based on the set of values and principles employees and managers associate with the company.
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Better company reputation is one of the main intangible resources, which can create superior value and competitive advantage (Carnelli and Tishler, 2004). Reputation also gives signal on the shape of the company, current performance and predicted future performance (Bae and Cameron, 2006). Mayangsari (2005) described that company can build on their reputation based on: (1) building unique identity from a product based on the consumer needs (2) creating consistent governance to create good image on stakeholder.
Some research on the relationship between company’s social responsibility and reputation were conducted by Brown (1998) who studied reputation in relation to community’s appreciation towards social behaviour by company to the community and the environment.
Ginter (1977) and Puente (2003) analised the relationship between company’s social behaviour as a means of company’s responsibility towards its financial performance. Schultz and Har (2001) suggest that company’s reputation is not only measured by its current social behaviour but the community will also judge its past behaviour.
Up until currently, studies shows that there is a positive relationship between company’s social responsibility and company’s performance (Abratt et al. in Qu, 2007). Social responsibility is the consequences of the company’s policy towards the norm, values and performances which was expected by the community social system (Miles and Jeffrey, 2000).
Survey conducted by Smith (2007) found that 88% of consumer preferred to purchase products produced by company with good social responsibility (Qu, 2007). Dowling (1986) described that peoples perception towards company’s reputation is affected by its social behaviour shown in their marketing strategy.
Knox and Maklan (2004) concluded that CSR program gives advantages to build the company’s reputation. With the CSR program, companies are seen to be responsible and understand risks associated with the environment and strengthen their reputation. Brammer and Paveli (2004) in Perrini (2005) stated that CSR could enhance stakeholder trust and company’s reputation. CSR could enhance company’s reputation and performance (Belaid, Anis and Kamel, 2009) by creating brand equity and brand performance of the company (Chi et al. 2010). Based on the previous studies, the first hypothesis is established below.
H1: Corporate Social Responsibility is positively associated with business reputation
RELATIONSHIP BETWEEN REPUTATION AND BUSINESS PERFORMANCE A company’s reputation reflects consumer’s judgement towards the company, both its full judgement to the individual company and the result of comparison with their competitors.
Beside pricing and qualities of the products, especially in the service industry, reputation can be built upon relationship between the company and its surrounding environment as an act of responsibility towards the company’s governance.
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Reputation is some form of reward or punishment received by the company if there is any excellence or infirmity (Herbig, Milewicz and Golden, 1994). Company would attract any form of reputation, for instance quality reputation, marketing reputation, innovation reputation and branding to name a few. The level of reputation would eventually decline if the company failed to fulfill the market needs (Herbig, Milewicz and Golden, 1994).
Fombrun (1996) in Miles and Covin (2000) argued that company’s reputation is a view or perception by internal and external stakeholder. The observer is their customer, distributor, beside their shareholder, community at large, bank and business partner (Miles and Covin, 2000). In strategic management theory, good reputation can create a sustainable competitive advantage and affect company’s performance as a whole (Fombrun and Ridova et al. in Dolphin, 2004).
Weiss et al. (1999) in Cempakasari and Yoestini (2003) described company’s reputation is a public perception of the company, positively or negatively based on their openness and quality so it can be viewed as perception towards the direction of the company. Reputation is an intangible asset or goodwill of a company which can positively affect market perception towards the company. Company with good reputations can create trust, confidence and support from its stakeholder (Dowling, 2004). Herbig, Milewicz and Golden (1994) viewed that reputation can be judged from the company’s competency and its superiority from its competitor.
Lado, Boyd and Wright (1993) recommend company to build on their distinctive competencies. It has to be built to integrate four components; managerial and focus strategy, resource based competency, transformation competency and cost competency. Specific to the cost competency, Lado, Boyd and Wright (1993) pointed that company has to build reputation based on distinctiveness and consistent product quality according to market needs, as one recipe to succeed in sales.
Moorman and Miner (1997) in Margaretha (2004) stated that companies focusing on their core business will succeed in their operation, reflected by core competencies that they have.
Companies with positive reputation can attract more high quality prospectous employee, create wider market reach, pricing advantages and attract more investor (Fombrun and Shanley, 1990 in Massey, 2003). In other words, good reputation gives the company more competitive advantages (Van Ries and Balmer, 1997 in Massey, 2003). Indicators used to measure reputation are: competency, credibility and goodwill. Belaid, Anis and Kamel (2009) supports the theory by starting that company with good reputation tends to do better in many ways compared to their competitors.
H2: Business reputation is positively associated with business performance