The Government's Commitment in Enforcing Sanctions for the Implementation of Corporate Social Responsibility by Companies
Muchamad Taufiq
STIE Widya Gama Lumajang
Email: [email protected]
Abstract
The purpose of this study is to determine: Definition of Corporate Social Responsibility, Definition of Corporate Value and Legal Effects of Corporate Social Responsibility with Corporate Value. The benefits of this research are theoretically expected to provide a study, analysis, understanding and explanation of the philosophical basis of Corporate Social Responsibility and Corporate Value and practically this research is expected to be useful in discovering and explaining the legal influence of Corporate Social Responsibility on Corporate Value. Data analysis in this study used a qualitative approach. The data analyzed in this study is comprehensive and is an integral unit (holistic) regarding Corporate Social Responsibility and Corporate Value and is supported by compliance with applicable regulations (compliance). The Law of the Republic of Indonesia Number 40 of 2007 concerning Limited Liability Companies (UUPT) is the basis for implementing Corporate Social Responsibility (CSR) for the corporate world in Indonesia. The problems posed in this study are: What is the philosophical meaning of Corporate Social Responsibility?, What is Corporate Value? The results of this study state that CSR is an obligation and Corporate Value is about public trust. Between the two, it is necessary to sanction companies related to CSR through regulations with legal certainty that will encourage the realization of Corporate Value.
Keyword: CSR, Corporatae Value and Sanctions.
INTRODUCTION
The Law of the Republic of Indonesia Number 40 of 2007 concerning Limited Liability Companies (UUPT) is the basis for the implementation of Corporate Social Responsibility (CSR) for the corporate world in Indonesia.
In today's business world, one of the success factors is determined by its contribution to the welfare of the general public. An entity in running its business cannot be separated from the community and the surrounding environment, thus creating a reciprocal relationship between the community and the company. Companies need a positive response from the community which is obtained through what the company does to stakeholders, including the community and the surrounding environment (Kamil and Antonius, 2012).
The results of the search for the laws and regulations have not found a Law on Regional-Owned Enterprises replacing Law Number 5 of 1962 concerning Regional Companies as the legal umbrella for Regional Enterprises. This condition is very different from State-Owned Enterprises which already have a legal umbrella, namely Law Number 19 of 2003 concerning State-Owned Enterprises. The absence of a legal umbrella for regional companies automatically does not provide a basis for implementing CSR for BUMDs, while on the other hand, due to the implementation of BUMD's operations, it actually intersects with the interests of environmental protection for the community.
In the era of the industrial revolution 4.0, the large size of the company is no longer a guarantee, but rather how a company is agile in accommodating or anticipating changes that occur.
Legal institutions are one of the social institutions/institutions, just like family, religion, economy, war or others. Law, however, is very much needed to regulate social life in all its aspects, both in social, political, cultural, educational life, and no less important is its function or role in regulating economic activities. In this economic activity, the law is really needed because of limited economic resources on the one hand and unlimited demand or need for economic resources on the other hand, so that conflicts between fellow citizens in fighting over these economic resources will often occur. The demand that the law be able to interact and accommodate the needs and development of the economy with the principle of efficiency is a phenomenon that must be followed up immediately if there is no lag between the dynamic pace of economic movement and the stagnation of legal instruments. In addition, legal experts are also asked to play a role in the concept of development, namely to place the law as an agency (agent) of modernization and that the law is made to build society (social engineering).
The problems posed in this study are formulated as follows:
1. What is the philosophical meaning of Corporate Social Responsibility?
2. What is Corporate Value?
3. What is the legal relationship between Corporate Social Responsibility and Corporate Value?
RESEARCH METHODS
Research has a goal to reveal the truth in a systematic, methodological and consistent manner, including legal research. Legal research differs from social research because law does not belong to the category of social science. Law is sui generis (Philipus M.Hadjon, Tatik Sri Djatmiati, 2005:
1), meaning that law is a separate kind of science. Characteristics (sui generis), the science of law is characterized by (a) being empirically analytical, namely describing and analyzing the content and structure of law; (b) systematization of legal phenomena; (c) interpreting the substance of the applicable law, and (e) the practical meaning of legal science is closely related to its normative dimension (Herowati Poesoko, 2007: 27). Therefore, the research method is different from social research in general.
This type of research is normative legal research (Peter Mahmud Marzuki, 2005: 29-36) namely the process of legal research carried out to produce arguments, theories, new concepts as prescriptions to answer legal issues carried out by reviewing and analyzing statutory provisions, decisions courts and other legal materials. The answer that is expected in legal research as a result of the analysis is right, appropriate, or wrong. Thus it can be said that the results obtained in legal research already contain value. Normative legal research is research based on analysis of legal norms. In the context of normative legal research, Abdul Kadir Muhammad further argues that normative legal research is legal research that examines written law from various aspects, namely:
theoretical aspects, historical aspects, philosophy, comparison, structure and composition, scope and material, consistency, general explanations. and article by article, the formality and binding power of a law and the legal language used, but does not examine its applied or implementation aspects.
In accordance with the objectives to be achieved, the methodology in this research design uses three approaches, namely the Statute Approach, the Conceptual Approach, and the Case Approach.
The Statute Approach is an approach taken by examining all laws against other laws, laws with the Constitution or between regulations and laws regarding mediation, especially industrial relations mediation. The result of the study of such an approach is an argument for solving the legal issues at hand. In the context of this research, the Statute Approach is used because it is possible that there may be confusion in various laws and regulations, inconsistencies and even conflicts (conflict of norms) between one legislation and another regarding Corporate Social Responsibility (CSR).
The statutory approach used in this research has the consequence of conducting an assessment and analysis of the consistency or conformity between Law Number 40 of 2007 concerning Limited Liability Companies.
Case approach is an approach that is carried out by examining cases that develop in the business field which in turn can know the dynamics of the development of legal values in society regarding the Mediation of Industrial Relations.
Conceptual Approach (Conceptual Approach) is an approach that is carried out by conducting a search on the views and doctrines that develop in the science of law originating from the opinions of experts or legislation. Thus, in turn, ideas will be found that give birth to legal notions, legal concepts and principles that are relevant to the legal issues at hand. The Conceptual Approach is carried out because it is possible for a conceptual development of the principles of CSR and Corporate Value to occur. It is hoped that with these three approaches, analysis results will be obtained as answers to legal issues in research concerning legal consistency, legal conflicts and the principles of CSR and Corporate Value in the context of Business Law, which in turn gives birth to a contributive prescription in order to revise or create products. new law.
RESULTS AND DISCUSSION
Meaning of Corporate Social Responsibility
We can see the philosophical basis of Corporate Social Responsibility in the Basic State of the Republic of Indonesia Pancasila in the 5th Precept which reads "Social Justice for All Indonesian People". The 5th precept of Pancasila is seen as the philosophical basis of CSR because the value of 'fairness' contained in it provides norms for a balanced relationship between business actors and the community.
Article 33 of the Constitution of the Republic of Indonesia states that “The economy is structured as a joint effort based on the principle of kinship. Production branches which are important to the state and which affect the livelihood of the people are controlled by the state. The land and water and the wealth contained therein are controlled by the state and used as much as possible for the prosperity of the people”. Article 33 of the 1945 Constitution of the Republic of Indonesia indicates that the national economy is organized based on economic democracy with the principles of togetherness, efficiency, justice, sustainability, environmental insight, independence, and maintaining a balance of progress and national economic unity.
The Law of the Republic of Indonesia Number 40 of 2007 concerning Limited Liability Companies in Chapter V of Social and Environmental Responsibility in Article 74 states:
(1) Companies that carry out their business activities in the field and/or related to natural resources are obliged to carry out Social and Environmental Responsibility.
(2) Social and Environmental Responsibility as referred to in paragraph (1) is the Company's obligation which is budgeted and calculated as the Company's expenses, the implementation of which is carried out with due regard to propriety and fairness.
(3) Companies that do not carry out the obligations as referred to in paragraph (1) are subject to sanctions in accordance with the provisions of the legislation.
Chapter I Article 1 point 3 of the Law of the Republic of Indonesia Number 40 of 2007 states,
"Social and Environmental Responsibility is the company's commitment to participate in sustainable economic development in order to improve the quality of life and the environment that is beneficial, both for the company itself, the local community, and the community at large.
generally.
Judging from the Big Indonesian Dictionary (KBBI) there is no lexical meaning of the term CSR which in Indonesian means "Corporate Social Responsibility". However, if we look at the words, the meanings can be found as follows:
1) Responsibility: (1) the state of being obliged to bear everything (if anything happens, it can be prosecuted, blamed, sued). (2) the right to function receives the burden, as a result of the attitude of the party itself or the other party.
2) Social: with regard to the community: the need for communication, likes to pay attention to the public interest
Wikipedia's online dictionary defines CSR as a concept that an organization has an obligation to pay attention to the interests of its customers, employees, shareholders, communities and ecological considerations in all aspects of its business. Corporate Social Responsibility is closely related to sustainable development, where there is an argument that a company in carrying out its activities must base its decisions not only on profit factors but also on current and long-term social and environmental consequences.
Corporate Social Responsibility is a mechanism for an organization to voluntarily integrate its environmental and social concerns into its operations and interactions with stakeholders, which goes beyond the organization's legal responsibilities (Darwin, 2004 in Rimba Kusumadilaga, 2010)
According to Melling & Jensen (2002) regarding CSR, “However, the meaning of CSR continues to change over time. When a family or business owner runs a business, the CSR program is linked to charity - donations or philanthropy - corporate philanthropy.
Meeting Changing Expectations in 1999 defined CSR as a continuing commitment by business to behave ethically and contribute to economic development, while improving the quality of life of employees and their families, as well as the local community and society at large.
Menampilkan tanggung jawab sosial perusahaan yang sering juga disebut sebagai social disclosure, corporate social reporting, social accounting atau corporate social responsibility merupakan proses pengkomunikasian dampak sosial dan lingkungan dari kegiatan ekonomi organisasi terhadap kelompok khusus yang berkepentingan dan terhadap masyarakat secara keseluruhan. Hal tersebut memperluas tanggung jawab perusahaan, diluar peran tradisionalnya untuk menyediakan laporan keuangan kepada pemilik modal, khususnya pemegang saham.
Perluasan tersebut dibuat dengan asumsi bahwa perusahaan mempunyai tanggung jawab yang lebih luas dibanding hanya mencari laba untuk pemegang saham (Hackston & Milne, 1996 dalam Imam Subekti).
Showing corporate social responsibility which is often also referred to as social disclosure, corporate social reporting, social accounting or corporate social responsibility is the process of communicating the social and environmental impacts of an organization's economic activities to special groups of interest and to society as a whole. This expands the company's responsibilities, beyond its traditional role of providing financial reports to shareholders, particularly shareholders.
This expansion is made with the assumption that the company has a wider responsibility than just seeking profit for shareholders (Hackston & Milne, 1996 in Imam Subekti).
Currently, Corporate Social Responsibility is no longer voluntary or a commitment made by companies in being responsible for their company's activities, but is mandatory / becomes an obligation for several companies to do or implement it. This is regulated in Law Number 40 of 2007 concerning Limited Liability Companies (UUPT). According to Soetomo (2006), there are a number of factors that encourage the business world to carry out CSR activities as part of all company activities, although for certain businesses CSR activities are not required, but there are still many factors that encourage them to carry out CSR activities so that it is not uncommon to find an independent institution that certifies the business world that has carried out various social care activities and it is considered to be able to raise the company's image so as to provide a stimulant for the business world itself, besides that many businesses take into account that CSR activities carried out can be part of and a promotional tool marketing, thus they actually include this CSR activity as an integral and overall part of their business activities.
Showing Corporate Social Responsibility is basically based on the existence of stakeholders and legitimacy theory. The stakeholder theory states that the company is not an entity that only operates for its own interests but must provide benefits to its stakeholders, while in the legitimacy theory the company is said to have a contract with the community to carry out its activities based on the values of justice as mandated in the Pancasila State Basis, namely the Precepts of the Republic of Indonesia. 5 “Social Justice for All Indonesian People”. Mas Achmad Daniri as
chairman of the mirror committee on social responsibility Indonesia said CSR is the theoretical basis for the need for a company to build harmonious relationships with local communities.
Theoretically, CSR is defined as a company's moral responsibility to its strategic-stakeholders, especially the community or community around its work area and operations. Meanwhile, Edi Suharto (2008) argues that CSR is a business operation that is committed not only to increase the company's profits financially, but to develop the socio-economic region in a holistic, institutionalized and sustainable manner.
The World Bank states "CSR is the commitment of business to contribute to sustainable economic development working with employees and their representatives, the local community and societ y for business and good for development". In this case CSR means the commitment of business to behave ethically and participate in sustainable development by working with all stakeholders to improve their lives in a way that benefits business, the sustainable development agenda, and society at large. The definition that is also widely accepted by practitioners and activists of CSR is the definition according to The Word Business Council for Sustainable Development, namely that CSR is a continuous commitment of business people to behave ethically and to contribute to economic development while improving the quality of workers and families, as well as local communities and society in general.
Moral according to Bruggink is the whole of the rules and values with regard to "good" or human good deeds. (Bruggink, 1999) while ethics is a theory of morals in the first sense, namely the overall rules and values. While philanthropy is usually translated as love (generosity and so on) to others.
Corporate Social Responsibility (CSR) according to McMilliams and Siegel (2001) is defined as actions that arise as a continuation of social actions, beyond the interests of the company that are required by law. In Indonesia, corporate social responsibility is required by law. This is stated in Law Number 40 of 2007 concerning Limited Liability Companies (PT) which was ratified on July 20, 2007 concerning Limited Liability Companies which regulates the company's obligation to carry out CSR. The obligation to carry out social responsibility is no longer a burden for companies, because there are many benefits that companies can get from CSR activities. Recent developments show that many companies are developing CSR and its implementation is no longer recognized as a cost, but as an investment (Erni, 2007).
Corporate Social Responsibility is a form of corporate social responsibility to improve social and environmental problems that occur as a result of the company's operational activities, therefore CSR plays a very important role in increasing company value. Companies must disclose CSR as a profitable long-term strategy, not as a detrimental activity, CSR information can be used as a managerial tool to avoid social and environmental problems (Chariri, 2008). Awareness of the importance of practicing CSR has become a global trend in line with the increasing global public concern for environmentally friendly products regulated by Law of the Republic of Indonesia Number 40 of 2007 Article 74 concerning social and environmental responsibility (Susanto, 2007:3).
Corporate social responsibility (CSR) is a mechanism for an organization to voluntarily integrate its environmental and social concerns into its operations and interactions with stakeholders, which goes beyond the organization's legal responsibilities (Darwin, 2004)
Corporate social responsibility information, which is often refered to as social disclosure, corporate social reporting, social accounting or corporate social responsibility, is a process of communicating the social and environmental impacts of an organization's economic activities to specific groups of interest and to society as a whole. This expands the responsibility of the organization (especially the company), beyond its traditional role of providing financial reports to the owners of capital, especially shareholders. This expansion is made with the assumption that the company has broader responsibilities than just seeking profit for shareholders (Hackston & Milne, 1996).
Currently, Corporate Social Responsibility is no longer voluntary or a commitment made by companies in being responsible for their company's activities, but is mandatory / becomes an obligation for several companies to do or implement it. This is regulated in Law Number 40 of 2007 concerning Limited Liability Companies (UUPT). However, this regulation only applies to mining companies, even though there are no regulations governing corporate social responsibility for manufacturing companies, especially the food and beverage sector, but corporate social responsibility must still be applied by large companies in Indonesia. According to Soetomo (2006), there are a number of factors that encourage the business world to carry out CSR activities as part of all company activities, although for certain businesses CSR activities are not required, but there are still many factors that encourage them to carry out CSR activities so that it is not uncommon for them to carry out CSR activities. There are independent institutions that provide certification to the business world that have carried out various social care activities and this is considered to be able to raise the company's image so as to provide a stimulant for the business world itself. marketing promotion tools and parts, thus they actually include this CSR activity as an integral part of their overall business activities.
Information on Corporate social responsibility is basically based on the existence of stakeholders and the legitimacy of the theory. Stakeholder theory states that the company is not an entity that only operates for its own interests but must provide benefits to its stakeholders, while in the legitimacy theory the company is said to have a contract with the community to carry out its activities based on the values of justice as stated in Pancasila, namely the second principle of humanity. fair and civilized, and the fifth principle of social justice for all Indonesian people. Mas Achmad Daniri as chairman of the mirror committee on social responsibility Indonesia said CSR is the theoretical basis for the need for a company to build harmonious relationships with local communities. Theoretically, CSR can be defined as the moral responsibility of a company to its strategic-stakeholders, especially the community or community around its work area and operations. Meanwhile, Edi Suharto (2008) argues that CSR is a business operation that is committed not only to increase company profits financially, but to develop the socio-economic region in a holistic, institutionalized and sustainable manner.
Wikipedia's online dictionary defines CSR as a concept that an organization has an obligation to pay attention to the interests of its customers, employees, shareholders, communities and ecological considerations in all aspects of its business. CSR is closely related to sustainable development, where there is an argument that a company in carrying out its activities must base its decisions not only on profit factors but also on current and long-term social and environmental consequences.
The World Bank states "CSR is the commitment of business to contribute to sustainable economic development working with employees and their representatives, the local community and society for business and good for development". In this case CSR means the commitment of business to behave ethically and participate in sustainable development by working with all stakeholders to improve their lives in a way that benefits business, the sustainable development agenda, and society at large. The definition that is also widely accepted by practitioners and activists of CSR is the definition according to The Word Business Council for Sustainable Development, namely that CSR is a continuous commitment of business people to behave ethically and to contribute to economic development while improving the quality of workers and families, as well as local communities and society in general.Pada sisi sebaliknya terdapat pandangan tradisional yang melihat bahwa tanggung jawab utama perusahaan adalah semata-mata terhadap pemiliknya, atau para pemegang saham. Adanya konsep tanggung jawab sosial dan lingkungan mewajibkan perusahaan untuk memberikan sebagian keuntungan kepada kepentingan sosial kemasyarakatan.
Implemetasi dari kewajiban dimaksud tentunya dengan harapan ketiga elemen di atas saling berinteraksi dan mendukung. Praktisipasi aktif masing-masing stakeholder sangatlah dibutuhkan agar dapat bersinergi, dalam mewujudkan dialog secara komprehensif, sehingga dengan partisipasi aktif para stakeholder diharapkan dalam pengambilan keputusan, menjalankan keputusan dan pertanggungjawaban dari implementasi tanggung jawab sosial dan lingkungan akan di emban secara bersama. (Kalangit, Holy K.M. Konsep corporate social responsibility, pengaturan dan pelaksanaanya di Indonesia).
According to Brigham (2001) "profitability is the end result of a series of management policies and decisions, where these policies and decisions concern the source and use of funds in carrying out company operations which are summarized in the balance sheet". Toto (2008) "the purpose of establishing a company is to make a profit (profit) so it is natural that profit is the main concern of analysts and investors. A consistent level of profitability will be able to stay in business by getting the return expected by investors, thus making the company value better.
Corporate Social Responsibility Information
In Preston's (1978) research in Hackston and Milne (1996), companies will disclose more CSR activities if the company's profitability is higher. Theoretically, the more CSR activities disclosed by the company, the value of the company will increase because the market will give a positive appreciation to companies that carry out CSR as indicated by an increase in the company's stock price. Investors appreciate CSR practices and see CSR activities as a guideline for assessing the sustainability potential of a company. Therefore, in making investment decisions, many investors pay enough attention to CSR or social responsibility that is disclosed or reported by the company.
According to Martin Freedman, there are three approaches to social performance information, namely:
a. Social Audit (social Audit)
social audit measures and reports on the economic, social and environmental impact of socially oriented programs of the company's operations. Social audit is done by making a list of company activities that have social consequences, then the social auditor will try to estimate and measure the impacts caused by these activities.
b. Social Report
Various alternative report formats for presenting social reports have been proposed by academics and practitioners. The approaches that can be used by companies to report their social responsibility activities are summarized by Dilley and Weygandt into four groups as follows (Henry and Murtanto, 2001):
1) Inventory Approach
The company compiles and discloses a comprehensive list of corporate social activities. This list must contain all the company's social activities, both positive and negative.
2) Cost Approach
The company makes a list of the company's social activities and discloses the amount of expenditure on each of these activities.
3) Program Management Approach
The company not only discloses social responsibility activities but also the objectives of these activities and the results that have been achieved by the company in accordance with the company's goals that have been set.
4) Cost Benefit Approach
The company discloses activities that have a social impact and the costs and benefits of these activities. The difficulty in using this approach is that it is difficult to measure the social costs and benefits that companies have on society.
c. Disclosure In Annual
Social information is information about company activities related to the company's social environment. Social information can be done through various media, including annual reports, interim reports/interim reports, prospectuses, announcements to the stock exchange or through mass media. Companies tend to disclose information related to the activities and impacts caused by the company
Influence of Corporate Value
Corporate (English) is a group of people who unite to establish a legal entity. The word corporate comes from the Latin word corporationem which means "to establish a body".
Legally, this corporate is the same as an ordinary company, except that the word corporate is used to describe a company that is already well established.
Corporate (English) is a Germanic language that was first spoken in England in the Early Middle Ages and is today the most commonly spoken language worldwide. English is the third most
widely spoken mother tongue worldwide, after Mandarin and Spanish. English is also used as a second and official language by the European Union, Commonwealth of Nations, and the United Nations, as well as various other organizations.
Based on the Big Indonesian Dictionary (KBBI) Corporate means (adjective) meaning related to legal entities. Corporate company means a company that is a legal entity.
In the English dictionary, Corporate means (1) of or belonging to a corporation, (2) Formed into a body by legal enactment; united in an association, and endowed by law with the rights and liabilities of an individual; incorporated; as, a corporate town.
The word corporate rarely stands alone, corporate is often interpreted when combined into the phrase "Good Corporate Governance" or "Corporate Social Responsibility" or others.
Based on business dictionary.com the word value is defined as : 1. Accounting: The monetary worth of an asset, business entity, good sold, service rendered, or liability or obligation acquired;
2. Economics: The worth of all the benefits and rights arising from ownership. Two types of economic value are (1) the utility of a good or service, and (2) power of a good or service to command other goods, services, or money, in voluntary exchange, 3. Marketing: The extent to which a good or service is perceived by its customer to meet his or her needs or wants, measured by customer's willingness to pay for it. It commonly depends more on the customer's perception of the worth of the product than on its intrinsic value, 4. Mathematics: A magnitude or quantity represented by numbers.
According to the Big Indonesian Dictionary, value is defined as value/value/ n 1 price (in the sense of estimated price): actually there is no definite measure to determine -- diamond; 2 the price of money (compared to the price of other currencies): -- the rupiah continues to decline; 3 intelligence points; seed; ponten: average -- the subjects are nine; at least -- seven for new exact sciences to be admitted to the technical academy; 4 a lot or less content; rate; quality: -- nutrition of various oranges is almost the same; a work of high literature -- his; 5 traits (things) that are important or useful for humanity: -- we need to develop traditional things that can encourage development; 6 things that perfect man according to his nature: ethics and -- are closely related;
-- a culture of abstract concepts about basic issues that are very important and valuable in human life;
-- ethical values for humans as whole persons, for example honesty; values related to morality;
values related to right and wrong held by a group or society;
-- biological values for humans as vital-biological subjects, for example the value of water, the value of air;
-- the intrinsic value or price of goods used to make money or goods;
-- religious concepts regarding the high appreciation given by community members on several main issues in religious life that are sacred in nature so that they become guidelines for the religious behavior of the members of the community concerned;
-- the beauty of value for humans as the subject of the sense-soul, for example, beauty;
-- the enjoyment of values for humans as vital-sensitive subjects, eg good taste;
-- moral ethical values;
-- nominal value listed on shares or other securities;
-- Pet heat is the heat that occurs during complete combustion of a number of units of weight or unit volume of fuel;
-- the par value stated on the security; face value;
-- Ek market 1 the fair price of an asset will be sold in the free market; 2 daily prices or valuations of shares in the capital market for buying and selling transactions;
-- the disposal of the residual value or the remaining fixed assets when the assets are not used in the production process;
-- the residual book value of an asset at the end of its useful life;
-- Ling semantics the ability of language elements to distinguish lexical meanings, for example the phonemes /r/ and /l/ distinguish average and lata words;
-- add the price difference between raw materials and the price of finished goods after processing;
-- exchange the amount of money actually received which is obtained in exchange for an item;
Likewise the word value, rarely stands alone, unless combined into a phrase, for example corporate value.
Based on business dictionary.com, corporate value is defined as The operating philosophies or principles that guide an organization's internal conduct as well as its relationship with its customers, partners, and shareholders. Core values are usually summarized in the mission statement or in the company's statement of core values.
According to Robert G.owens in his book Organizational Behavior in Education, Terrence Deal and Allan Kennedy define culture as follows: "culture is a system of shared values and benefits that interact with an organization's people, organizational structures, and control system to produce behavioral norms." . In other words, culture is a system of shared values and beliefs that interact with people in an organization, organizational structures, and control systems that produce behavioral norms.
Corporate values are closely related to the company's goals, therefore employees need to understand the company's goals. This will create a conducive corporate climate. The impact of entrenched corporate values in the organizational environment will motivate employees who usually will try their best to carry out their work with dedication and high enthusiasm.
Corporate values are values in the company that can motivate employees to achieve company goals. Corporate values are formulated by top management and designed to achieve the company's overall goals.
Values that interact with each other in the company will result in the formation of organizational culture. According to Miller; Robert Kreitner and A. Kinnicki some of the values contained in organizational culture are:
a. The concept of trust (belief) b. Regarding the desired behavior c. Very important situation
d. Guidelines that select or evaluate events and behaviors
According to Analysis (2011) the value of the company can also be influenced by the size of the profitability generated by the company. Profitability is the ability of a company to generate profits during a certain period, the profitability ratio is the company's ability to earn profits in relation to sales, total assets and own capital. Weston and Copeland (1992) define that profitability can also be used as a measure of the extent to which the company generates profits from sales and investment of the company. With good company performance will also increase the value of the company.
"Company value is the price that prospective buyers are willing to pay if the company is sold, enterprise value (EV) or also known as film value (company value) is an important concept for investors, because it is an indicator for the market to assess the company as a whole" ( Nurlela and Islahuddin, 2008). "Company value is defined as market value in this study, because if the company's stock price increases, the company can provide prosperity to stakeholders" (Nurlela and Islahuddin, 2008).
A company is said to have good value if the company's performance is also good. The value of the company can be reflected in its share price, if the value of the shares is high, it can be said that the value of the company is also good, because the company's goal is to increase the value of the company through increasing the prosperity of the owners or shareholders (Wahidahwati, 2002).
According to Hardiyanti (2012) "high company value will make the market believe not only in the company's current performance but also the company's prospects in the future.
The Influence of Corporate Social Responsibility on Corporate Value
Corporate social responsibility is disclosed, among others, in a report called Sustainability reporting. CSR can be carried out continuously if the program of a company is truly a commitment and shared responsibility of the elements concerned within the company itself. Wit hout full commitment and support from employees and related parties, the program will not run as planned, therefore by involving employees intensively, the value of these programs will give a very big meaning for the company.
The main objective of the company is to increase Corporate Value. Corporate Value will be guaranteed to grow in a sustainable manner if the company pays attention to the economic, social and environmental dimensions because sustainability is a balance between economic, environmental, and community interests, these dimensions are related to the implementation of Corporate Social Responsibility by the company as a form of accountability. responsiveness and concern for the environment around the company. Many benefits are obtained by the company by carrying out comparative social responsibility, among others, products are increasingly favored by consumers and companies are attracted by investors. The implementation of CSR will increase Corporate Value in terms of stock prices and company profits (earnings) as a result of investors investing their shares in the company. With good CSR practices, it is expected to increase the value of the company and the company is considered good by investors.
High profitability reflects the company's ability to generate high profits for shareholders. The greater the profit obtained, the greater the company's ability to pay dividends, and this has an impact on increasing the value of the company. With a high profitability ratio owned by a company will attract investors to invest their capital in the company.
Profitability is the company's ability to generate net income from activities carried out in a period.
Profitability can be an important consideration for investors in their investment decisions, because the larger the dividends, the more efficient the cost of capital, on the other hand, managers will increase their power and can even increase their ownership due to dividends as a result of high profits. With the offer of getting a high profit yield, it is expected to attract investors to invest.
According to Bowman and Haire (1976) "the higher the profitability of the company, the greater the social information information carried out by the company. So it can be concluded that Corporate Social Responsibility will increase the value of the company when the company's profitability increases ". The results of research by Dahlia and Siregar (2008) also indicate that
"the ethical behavior of companies in the form of social responsibility towards the surrounding environment has a positive impact, which in the long term will be reflected in the company's profits (profit) and increased financial performance".
The Influence of Corporate Social Responsibility on Corporate Value Based on Aspects of Company Size
The size of the company is one indication of measuring the performance of a company, a large company size can reflect if the company has a high commitment to continuously improve its performance, so the market will be willing to pay more to get its shares because it believes it will get a profitable return from the company.
Company size can also describe the size of the company which can be assessed from the total value of the company's assets. A large company size indicates that the company is experiencing good growth. Companies with large growth will find it easy to enter the capital market because investors receive positive signals for companies that have large growth so that the positive response reflects the increasing value of the company.
In addition, company size also affects corporate social responsibility information because company size is one of the variables considered in determining company value. Company size is a reflection of the total assets owned by the company. The bigger the size of the company, it means that the assets owned by the company are also getting bigger and the information on social responsibility is getting wider.
Aspects of Business Law
The legal aspect always demands clarity. The existence of CSR in the company cannot be separated from the legal aspects of business because the company is part of the business. Some of the opinions below provide an understanding that CSR requires clarity in terms of company administration. According to Martin Freedman, there are three approaches to reporting social performance, namely:
a. Social Audit (social Audit)
Social audits measure and report on the economic, social and environmental impacts of socially oriented programs of the company's operations. The social audit is carried out by making a list of the company's activities that have social consequences, then the social auditor will try to estimate and measure the impacts caused by these activities.
b. Social Report (Social Report)
Various alternative report formats for presenting social reports have been proposed by academics and practitioners. The approaches that can be used by companies to report their social responsibility activities are summarized by Dilley and Weygandt (Rimba Kusumadilaga, 2010) into 4 groups:
1) Inventory Approach
The company compiles and displays a comprehensive list of corporate social activities. This list must contain all the company's social activities, both positive and negative.
2) Cost Approach
The company makes a list of the company's social activities and displays the amount of expenditure on each of these activities.
3) Program Management Approach
The purpose of the company is not only to display social responsibility activities, it also aims to display the company's activities and the results that have been achieved in accordance with the company's stated goals.
4) Cost Benefit Approach
The company displays activities that have a social impact and the costs and benefits of these activities.
CSR exposure is displaying information about the company's activities related to the company's social environment. Showing CSR can be done through various media, including annual reports, interim reports, prospectuses, announcements to the stock exchange or through mass media.
Companies tend to display information related to the activities and impacts caused by the company.
Based on stakeholder theory, it means a collection of policies and practices related to stakeholders, values, compliance with legal provisions, community and environmental appreciation, as well as the commitment of the business world to contribute to sustainable development. Stakeholder theory begins with the assumption that values are explicitly undeniable as part of business activities (Rimba Kusumadilaga, 2010).
Stakeholder theory is a theory that explains how company management meets or manages stakeholder expectations. Stakeholder theory emphasizes organizational accountability far beyond simple financial or economic performance. This theory states that organizations will choose to voluntarily display information about their environmental, social and intellectual performance, over and above their mandatory requests, to meet actual or recognized expectations by stakeholders. One form of voluntary display that is currently developing is CSR publications.
Through CSR publications, companies can provide more and more complete information related to their activities and their impact on the social conditions of the community and the environment .
Daud and Akbar (2008) argue that these groups (employees, communities, competing companies and the government) are the most important considerations for companies to display information, according to stakeholder theory, companies are entities that operate not only for the benefit of the company itself but must also provide benefits. to its stakeholders. Therefore, support from stakeholders greatly affects the existence of a company. Jesen's opinion (2001) that management decisions must pay attention to its stakeholders to increase the value of the company.
According to Haniffa and Cooke (2005) in Imam Subekti, in legitimacy the company has a contract with the community to carry out activities based on the values of justice, and the company tries to respond to various interest groups to gain legitimacy from these groups. The company is increasingly aware that its survival also depends on its relationship with the community and the environment in which the company carries out its activities. Showing corporate social responsibility is done to get positive value and legitimacy from the community.
According to the theory of legitimacy is an idea about a social contract between the company and the community. According to this theory, to be accepted by society, companies must display corporate social activities so that they will ensure the survival of the company.
Based on the Legitimacy Theory, it is also found that companies must implement and disclose CSR activities as much as possible so that the company's activities can be accepted by the community. Showing CSR is used to gain public trust. Displaying the CSR will show the level of compliance of the company.
Value in Business Law
Company is a legal entity which is a capital partnership, established based on an agreement, conducting business activities with authorized capital which is entirely divided into shares and fulfills the requirements stipulated in the law and its implementing regulations.
Value in business law can be interpreted as the value of the company which is the price that prospective buyers are willing to pay if the company is sold.
Value in the field of business law can be equated with Goodwill. Goodwill is one of the elements of corporate affairs, including in the group of immovable objects or immaterial objects. Goodwill only exists in companies that are well developed, so they get a lot of profit. The company has goodwill (Mr. S.J. Fockema Andrea).
That goodwill manifests itself in balance as gain or gain and not loss. Goodwill is an understanding of the progress of the company and not the decline of the company. Goodwill can be described as the “plus value” (meerwaarde) of the company as a result of business activities, when compared to the total value of all objects that are the business of the company.
The consequences that can be caused to the company's goodwill are:
a) Profit in balance
b) Increase the share price above the nominal price on the trading exchange.
Goodwill is a subjective right that is compounded with the affairs of the company, so it cannot be transferred separately, apart from the affairs of the company. If people want to sell goodwill, the company's business must also be sold to the same buyer.
Goodwill only exists in profitable companies. A newly established company or a company that does not make a profit or loss, then goodwill does not exist in that company.
The company is said to have good value if the company's performance is also good. The value of the company can be reflected in its share price, if the value of the shares is high, it can be said that the value of the company is also good, because the company's goal is to increase the value of the company through increasing the prosperity of the owners or shareholders (Wahidahwati, 2002).
It should be stated here that the authorized capital of the company consists of the entire nominal value of shares. Shares can be issued in the name of and or by appointment. Shares in the name are shares that include the name of the holder or owner. Appointed shares are shares that do not include the name of the holder or owner.
Shares in Indonesian are called “shares”. Shares are movable objects and give ownership rights to the holder. Ownership of shares as movable property grants material rights to the holder. This right can be defended against everyone.
CONCLUSION
Based on the discussion above, it can be concluded several things as follows:
1) Corporate Social Responsibility is the Social and Environmental Responsibility as referred to in paragraph (1) of the Company Law, which is the Company's obligation which is budgeted and calculated as the Company's expenses, the implementation of which is carried out with due regard to propriety and fairness. If the Company does not carry out the obligations as referred to in paragraph (1), it is subject to sanctions in accordance with the provisions of the legislation.
2) Corporate Value is related to public trust, company honesty, goodwill and customer loyalty, all of which will encourage increased company performance and profits.
3) The influence of Corporate Social Responsibility Law on Corporate Value is an affirmation of the implementation of obligations and the existence of sanctions for companies related to CSR through regulations with legal certainty that will encourage the realization of Corporate Value.
RECOMMENDATIONS
Based on the results of the analysis as well as some conclusions, this research is recommended as follows:
1) Implementing Corporate Social Responsibility in a sincere, transparent, planned and reasonable manner is very strategic in order to achieve Corporate Value.
2) Corporate Value should not be assessed superficially, namely the aspect of performance or profit, but realizing goodwill and trust is much more important for the company's sustainable ability in the future.
3) In order to realize legal certainty in the implementation of Corporate Social Responsibility, the government immediately issues a government regulation as a derivative regulation of the Company Law so as to guarantee the imperative aspects of the law.
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