Corporate Social Responsibilty In Mauritius Management Essay
The European Commission defined Corporate Social Responsibility as a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis.
In other words, it concerns actions by companies over and above their legal obligations towards society and the environment. According to the European Commission certain regulatory measures can create a more conducive environment for organisations to voluntarily meet their social responsibility.
Similarly, the National Empowerment Foundation (NEF) defines Corporate Social Responsibility as “the concept whereby companies act to balance their own economic growth with the sustainable social and environmental development of the country”. An organisation that is highly involved in CSR is one that goes beyond the legal compliance and actively practices positive impacts on the local communities and the environment. In fact, there is not a standard definition of Corporate Social Responsibility as it is varies according to various countries and cultures. Corporate Social Responsibility (CSR) has become an important issue over the last two decades. Lawyers, practitioners, economists, and civil society have contributed to defining, developing, and analysing the content, nature and implementation of CSR (P. R.Waagstein, 2011).
CSR has been practiced by companies all over the world for many years as shown by many researchers. At the beginning, it was more for staff well-being. For instance, during the industrial revolution and age, factories provided different facilities for the community surrounding them in order to make use of their labour. Over the past few years, both businesses and academic researchers have shown increasing interest and enthusiasm for Corporate Social Responsibility. For instance, research done has suggested that CSR may be an efficient tool to improve the legitimacy of companies amongst their stakeholders as per Handelman and Arnold (1999), and to develop positive social responsibility images, according to Sen and Bhattacharya (2001).
The term CSR has, over years, been coined to allow the economic development of a country to participate in the socio-economic development. By being responsible for society, the same industries were allowed to give back, in a responsible way, to people working for them and purchasing their goods and services. Amongst the different levels of society, the emergence of need for different categories arose, for example, handicapped people, abandoned children, out laws, the elderly and street people. Thus, Corporate Social Responsibility became a term used for catering to all categories of humans and their wellness in the society.
At the onset, Corporate Social Responsibility was a voluntary initiative for companies to act socially responsible. However, over the years, especially in the new millennium, since complete improvement was not totally visible around the world, the United Nations proposed some Millennium Development Goals to improve the general conditions of living. One of their main goals was to eradicate absolute poverty in developing countries and underdeveloped countries. Indeed, the United Nations Millennium Campaign, started in 2002, supports and inspires people from all four corners of the world to get involved and take actions in supporting the Millennium Development Goals. As stated, the main challenges and major concerns of the International community is to eradicate absolute poverty, but this can only be done by the combined efforts of all governments, civil society organisations and the private sector. As mentioned by the United Nations Secretary General Ban Ki-moon “the goals are ambitious but feasible and, together with the comprehensive United Nations development agenda, set the course for the world’s efforts to alleviate extreme poverty by 2015.” The Government of Mauritius has established a policy with the objective of mandating registered companies to pay 2% of their book profit towards programmes that contribute to the social and environmental development of the country.
In Mauritius, CSR has been formulated in the year 2008, when then the Minister of Finance decided that companies should reinvest 2% of their book profit towards societal development. To date, CSR has been practiced by companies for years and one of the main issues that arose recently is how to regulate it. Should it be a legal norm, ethical norm or social norm? This question can be further elaborated: Should CSR be regulated through state regulation, code of conduct or self-regulation? Should it be regulated in a voluntary way or should it be an obligation to corporations? Another question that arises is whether it is the role of the private sector to take care or to look after the society, or whether it is the role of the government to do so, since all companies are paying tax and the main objective of a company is to maximise profits. In addition, on a different perspective, another question emerges: should an organisation only focus on maximising profits or should its role as a socially responsible organisation also include looking after its society and the community?
Matten and Moon (2008) offers a broad interpretation, arguing that it should be “perceived both as a social imperative and social consequence of business success”. Accordingly, two forms of CSR, implicit and explicit, have been introduced. Implicit CSR is embedded in various relationships among business, society and government within the political system. It is represented by strong values, norms and rules or regulations which require corporations to address stakeholder issues. It is important to note that politics and organisations are interrelated and interdependent as they need each other to accomplish their social responsibility in an effective and efficient way. A textbook example in Mauritius would be the Compagnie Mauricienne de Textile (CMT) that has donated Rs 25m to the government for the new project of building a high tech school for vulnerable and deprived children.
1.3 AIM AND OBJECTIVES OF THE STUDY
The aim of this research is to determine the importance of voluntary or mandatory CSR for the overall socio-economic development of the country. In this context, the specific objectives are to:
To assess the local opinion of CSR drivers and whether it is better as a mandatory or voluntary practice. This will provide a course of action for the new Ministry of Social Integration and Economic Empowerment.
To provide for modifications in the local way of practicing CSR and to be able to answer queries of International organisations on eradication of poverty.
To make recommendations so as to meet the targets set by United Nations and the Millennium Development Goals project, and to showcase Mauritius as a success example in Africa.
1.4 SIGNIFICANCE OF THE RESEARCH
In fact, Corporate Social Responsibility is mandatory in Mauritius and this research primarily focuses on determining the opinions, points of view and the experiences of companies that are actively engaged in CSR. Further assessment will be made as to whether they prefer a voluntary or mandatory implementation and determining whether the local way of practicing CSR has benefitted society and provided improvements in the current way local companies are practicing CSR.
In addition, it analyses the need for mandatory Corporate Social Responsibility in Mauritius and determines whether the government should keep it mandatory or voluntary or both. It further develops the idea of whether voluntary CSR should be modified to some other form to cater to the needs of the Mauritian society.
It also gives a comprehensive overview of findings and conclusions that will allow the local CSR Committee and Government to review and improve its CSR policies for the country.
1.5 RESEARCH QUESTIONS
Based on the above research objectives of the study, the following research questions have been formulated:
How organisations define Corporate Social Responsibility?
Awareness of local CSR guidelines and what their opinions are and suggestions on the CSR guidelines?
What problems they encounter while implementing CSR practices? How can the CSR Committee help in implementing CSR activities?
How businesses perceive Corporate Social Responsibility as a mandatory practice in Mauritius. Should it be voluntary or mandatory?
1.6 STRUCTURE OF THE DISSERTATION
Chapter 1 – Introduction
This chapter provides an overview of the topic research on Corporate Social Responsibility (CSR), and sets out the problem statement of the study, outlining the objectives of the research and highlighting the research questions.
Chapter 2 – Literature Review
This chapter reviews the literature relevant to the topic. It provides past reviews carried out by different researchers on Corporate Social Responsibility in various countries around the world. It also provides a description of CSR implementation in Mauritius and the similarities and contrasts that exist among the different countries.
Chapter 3 – Methodology
The methodology chapter outlines the methods and techniques used to conduct the study, namely the research approach, design and strategy used. Information about the target population including the sample size and sampling method is given along with details about the interview questionnaire.
Chapter 4 – Analysis and Findings
This chapter presents the data analysis and research findings. The source of data has been derived mainly from interviews that have been carried out. Further, discussions are based on the findings of this study.
Chapter 5 – Recommendations and Conclusions
In this final chapter, appropriate recommendations will be made and the chapter will end with a concluding paragraph including the possibility for further or future research.
CHAPTER TWO: LITERATURE REVIEW
This chapter presents an overview of the literature relevant to Corporate Social Responsibility. It provides a review of the past studies carried out by different researchers.
The idea of social responsibility emerged in the United States at the beginning of the 20th century. Carroll (1989) states three critical turning points in the evolution of social responsibility:
The Entrepreneurial Era
Businessmen in America were building industrial empires and were abusing their power, being found guilty of antisocial and anticompetitive practices. Such practices included tax evasion and other unethical business practices. This caused frustration among the public who voiced their objections, causing the government to enforce laws whereby business had a role to play in society beyond profit maximisation.
The Depression era of 1929- 1930s
The economy of United States was dominated by large organisations and the government passed laws to protect investors and smaller businesses. In addition, the social responsibility of organisations was more clearly defined.
(iii)The Social Era of 1960s
This era was characterised by social turmoil in the United States. The Government looked closely at organisational practices and it was clearly defined to whom the organisation was responsible and who in an organisation was responsible for the organisational practices.
Bowen (1953) the pioneering advocate of CSR, described Corporate Social Responsibility in terms of “the obligations of businessmen to pursue those policies, to make those decisions, or to follow those lines of action which are desirable in terms of objectives and values of our society.” (Social Responsibilities of Businessmen, 1953). The emphasis was laid on people’s conscience rather on the company itself. This alteration in focus was provoked by a number of factors such as the managerial revolution and the mounting hostility of people experiencing social problems.
The obligations were further elaborated upon, going beyond economic and legal implications by including the employee, the community welfare and the political and educational needs of society (McGuire, 1963). This gave rise to the modern concept of corporate citizenship (Maignan, Ferrell, and Hult, 1999).
The Committee for Economic Development (1971) viewed CSR as the service of a wide range of human values to improve the quality of life. The managerial role in changing societal expectations has also been articulated by the Committee. On one hand, Manne & Wallich (1972) mentioned that businesses should not spoil society but should provide solutions through voluntary assumption of obligations. On the other hand, Caroll (1979) summarised the discussion by providing the following definition: “social responsibility of business encompasses the economic, legal, ethical and discretionary expectations that society has of organisations at a given point in time.”
Figure 1 Carroll’s classic pyramid (Carroll, 1991)
Carroll’s CSR Pyramid covers the whole perspective of what society can expect from a company, economically as well as socially. This theory can be used to identify a company’s CSR activities and how they use CSR as a strategy. It will further explain and recognise the connection between a company’s CSR activities and its stakeholders. Carroll’s CSR Pyramid can be used as a tool to clarify the different kinds of responsibilities that a company has to fulfil in order to achieve legitimacy from its surrounding society and stakeholders.
2.1 Definition of Corporate Social Responsibility
Various organisations have viewed CSR in different ways, although there are considerable common opinions between them. According to Mallen Baker (2004), “CSR is about how companies manage the business processes to produce an overall positive impact on society.”
Lord Holmes and Richard Watts (2000), in their publications “Making Good Business Sense”, defined CSR as: “Corporate Social Responsibility is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large”. This publication also provides some evidence of the different perceptions of what this should mean to a number of different societies across the world. It respects cultural differences and finds the business opportunities in building the skills of employees, the community and the government through CSR.
Corporate Social Responsibility – Developing Countries and Overseas Experiences
In the year 2000 , the Millennium Development Goals set the challenge of Corporate Social responsibility in developing countries in view of eradicating poverty, hunger, providing better education to children, equal opportunities for women and a healthier environment’ (UN, 2006: 3). Unfortunately, in many developing countries these global aspirations have remained unaccomplished.
(Visser et al., 2007) viewed CSR in developing countries as “the formal and informal ways in which business makes a contribution to improving the governance, social, ethical, labour and environmental conditions of the developing countries in which they operate, while remaining sensitive to prevailing religious, historical and cultural contexts”.
According to a survey done by Welford (2005) in Asia, research showed that countries such as Hong Kong, Malaysia and Thailand where indicative of having less prevalent CSR activities. Malaysia is considered as the weakest in terms of CSR performance, with Thailand being relatively strong on external aspects (such as child labour and ethics) and Hong Kong being generally better on internal aspects (such as non-discrimination and equal opportunities).
It was determined through a review done on CSR literature (Visser et al, 2006) that only 12 out of 53 countries in Africa have publications in CSR journals and that 57% of published articles focus on South Africa with 16% focusing on Nigeria.
On one hand, CSR in the United States has been defined mainly in terms of a philanthropic model. Most companies focus on making and maximising profits and only contribute to charitable activities in an effort to benefit from tax concessions, contributing a certain share of the profits to charitable institutions. They believe that receiving any benefits from charitable sharing would tarnish the reputation of the company. On the other hand, the Canadian Governments perception of CSR is generally understood to be the way a company achieves a balance or integration of economic, environmental and social imperatives while at the same time addressing shareholder and stakeholder expectations.
According to Cecil (2008), disclosure of CSR in the United States does not currently exist and is therefore unregulated as a required framework. In fact, various models and categories of reporting do exist under the umbrella of CSR, such as ‘environmental reports’, ‘social reports’ and ‘sustainability reports’. Therefore the CSR report is separate from the annual report and represents non-financial qualitative and quantitative data.
In contrast to other developed countries, Corporate Social Responsibility in the United States is not forcefully imposed. Companies in the United States participate in CSR based on their own moral and social values, allowing them to apply the triple-bottom-line approach voluntarily. In comparison, the laws of Mauritius state that it is mandatory for profit bearing organisations to pay the government 2% of their annual book profit as a CSR contribution. While companies in the United States have no mandatory obligation towards CSR, they widely exploit the CSR programme as a means of increasing their public image and corporate reputation. Given the fact that CSR in the United States is non-mandatory, companies can define and interpret their views of social responsibility within the context of own their company. Having this freedom has allowed them to better measure and promote CSR activities in comparison to their International counterparts.
It is interesting to note that although companies in the United States are very explicit in their public statements with relation to their commitment to corporate responsibility, the lack of precise definition has led to confusion in terminology. A wide range of terms for CSR now exists, such as social responsibility, community investment and corporate citizenship. Each company tends to define them differently, yet having little understanding of what they actually mean, whether that is philanthropic giving, raw material sourcing or employment practices. Mauritius in comparison, although less developed than the United States, has a well-defined CSR programme as the mandatory enforcement of social responsibility has led to a single, precise and distinct perception thereof.
The Government of the United Kingdom interprets CSR as the contribution a business makes to their sustainable development goals in terms of how they account for economic, social and environmental impacts. According to I. Pearson, Minister of the state UK, ‘the world is experiencing major economic challenges and the issue of Corporate Responsibility must remain high on business and political agendas’. He states that ‘most successful companies have always been the most responsible. Business leaders recognise that Corporate Responsibility makes good business sense and it attracts the best talent, earns the trust of customers and the community and acts as a powerful investment for long-term sustainability”. However, just like the United States, and in contrast to Mauritius, CSR is voluntary in the United Kingdom.
The Government of the United Kingdom has adopted the voluntary approach as they believe it will motivate and encourage Corporate Social Responsibility through best practice guidance, and where appropriate, regulation and fiscal incentives. In the United Kingdom, CSR is viewed as a voluntary activity that should address both competitive and social interests. Mauritius does not share this approach and even encourages companies to contribute above the legal requirement to benefit the community and environment, invest in education and to help eradicate poverty.
The question of whether or not CSR should be considered mandatory emerges when we consider that countries like the United States and the United Kingdom have no such legal compliance obligations. Why would a country like Mauritius, being a small island in the Indian Ocean, apply CSR as compulsory, especially considering that Mauritius is only the second country in the world where CSR is mandatory?
NRE (Nouvelles Regulations Economique) law introduced in France in 2001 requires that all publicly listed French companies disclose information to their stakeholders pertaining to social and environmental impacts on their activities, together with their annual reports. There is no requirement for any specific constraints to be included with regards to their standards, thresholds or any other regulatory requirements.
Although the law has been introduced, it should be considered as a ‘soft law’ since the disclosed information is not regulated and there are no clear rules with regards to non-compliance. The legal responsibility is to report on social and environment impacts but without the requirement for certification of the disclosed information. In addition, the law does not clearly outline possible sanctions that may be imposed in cases of non-compliance or falsification of information.
According to the research presented by L. Drusch and A.Lioui (2010) there has been a rapid growth in Corporate Social Responsibility in France over the last decade. This growth can be measured by the increase in the number of French companies that are listed in the Socially Responsible Investment (SRI) index in France as well as the listing of French companies in International CSR rankings, such as the 100 Most Sustainable Corporations in the World listing.
Like the United States, CSR in France is based on the triple-bottom-line approach and is aimed at improving social, economic or environmental aspects in society beyond financial motivation. In addition, the United States does provide CSR reporting to some extent although not regulated and submitted in a separate report to the annual statements.
In July 2007, Indonesia enforced a mandatory regulation regarding corporate social responsibility, being the first country in the world to do so. Based on the research done by Rosser et al (2008), Indonesia promotes CSR to local small and medium enterprises as a way to reach US and European markets.
As compared to Mauritius, where the obligation is to pay 2% of the book profit, Indonesia has imposed a 3-5% obligation to be paid to the government. According to empirical data, the CSR law in Indonesia requires revision and improvement due to misinterpretations thereof, as well as lack of a precise definition.
The law created a fierce debate and was heavily challenged as being nothing more than a philanthropy tax that was detrimental for business. Those challenging the law argue that there is no need to regulate CSR as sectorial rules have already been defined and introduced to regulate corporate responsibilities, such as the Environmental Law, Labour Law and Investment Law. The law is very unclear with regards to the government’s expectations and has no clear definition of CSR. Unlike France, the law in Indonesia does stipulate penalties for non-compliance.
Grafström et al (2008) identified that over the past three decades, the term CSR has been extensively debated by companies and in academic circles across the globe with a common goal: to identify a definition of CSR that all and sundry can collectively agree upon.
Kemp et al (2001) observed that companies were hesitant to divulge their actual CSR activities due to the confusion that the term has produced over the past years. It was found that companies are reluctant to publish their activities for fear of reprisal by the media and NGOs should their approach be erroneous.
Carroll (1998) found that companies often interpret regulations incorrectly and that laws often create a hindrance rather than improving economic performance.
Although Mauritius followed Indonesia’s stance on mandatory CSR, being only the second country in the world to do so, the differences between the two countries can be easily identified. When the law was introduced, Indonesia faced fierce disapproval and the mandatory requirement is still an on-going debate. It remains mostly a disorganised and misunderstood concept whereas Mauritius appears to have a clearly understanding of what CSR actually entails as opposed to simply being a governmental tax requirement. The introduction of CSR into the Mauritian business environment was done so with a clear understanding on the benefits to business success, reputation and the social impact that such contributions would make on the island. Many are of the opinion that even if CSR was not mandatory in Mauritius, most organisations would still voluntarily contributing to CSR as a good business practice.
Like Indonesia, India faced strong criticism when trying to impose mandatory CSR obligations in 2011. Their intention was to make it mandatory for companies to contribute at least 2% of net profits to the government. In July 2011 the Indian government backed down and made CSR contributions voluntary by recasting it as ‘responsible business” and issuing a set of guidelines for companies released on July 8th 2011 by the then Union Minister of Corporate Affairs, Mr. Murli Deora. The debate surrounding the mandatory CSR in India continues and the government has requested that companies keep records of their CSR spending in order to disclose to their stakeholders.
The Companies Bill 2009 contains many provisions but none more debated than CSR. Salman Khurshid (the current Union minister for law) and Deora’s predecessor, initially a mandatory CSR enthusiast, swayed his views that if CSR contributions were publicised, they would create competitiveness between organisations that in turn would encourage contributions.
The Federation of Indian Chambers of Commerce & Industry (FICCI) suggested tax concessions to companies who reached voluntary targets. The Confederation of Indian Industry (CII), a rival of the Indian Chambers, felt that mandatory corporate responsibility would be counterproductive, arguing that “companies may resort to camouflaging activities to meet such regulations, particularly during recessionary periods and economic downturns.”
India’s philanthropic community does not support mandatory CSR. According to research, the CEO of the NGO ‘Give India’ viewed this as a crazy idea. He believed that once CSR is made mandatory, people will find ways and means to get out of it. The rules would be so vague that the reporting would be even vaguer. The CEO and co-founder of the Dasra foundation agreed. He was not in favour of mandatory CSR. He felt that when you make things mandatory, the chance of them not being done would be greater.
Philanthropist Rohini Nilekani strongly opposed mandatory CSR believing that it was just outsourcing of governance. She felt that if wanted, the corporations should be taxed and the money put into social programs but that CSR should not be dictated.
Corporate giants, TATA and BIRLA, have practiced Corporate Social Responsibility actively, decades before the term CSR became popular in India. Even still, CSR remains misunderstood in the Indian Development Sector. Only a few private and public companies apply CSR and those that do tend to have International shareholding from countries where CSR is considered a business best practice.
India attempted to follow in the footsteps of Indonesia and Mauritius by imposing mandatory CSR regulations, the only other country to have actively considered such enforcement.
It seems evident from the various researchers’ and the review of the various approaches and overseas experiences that there is a marked difference in the concept and interpretation of CSR world-wide.
In Mauritius, private organisations are reputed to have an extended culture and tradition of CSR, principally in terms of voluntary social engagement in the communities where they operate and in the society at large. They have participated and contributed over the years to the social and environmental development of the country. Previous survey reports published by the Mauritius Employers Fund (MEF) in 2006 and 2008 indicate that “Mauritian businesses in their large majority believe that their role in society extends beyond wealth generation and that pursuing economic interests needs to be balanced with social and environmental responsibility”. Indeed, Mauritian enterprises have been engaged in both internal and external CSR, driven mainly by ethical considerations, employee motivation, company reputation and brand positioning. They have also taken into consideration benefits of employees and engaged in external CSR initiatives by contributing and supporting social and community related activities. The MEF Surveys have also shown that CSR has followed a rather philanthropic approach, characterised by informal activities, unrelated to business operations and strategy.
The recent economic and financial crisis has led to a rise in the level of involvement of governments in the operation of the business sector across the world. There is also an emerging debate in the Corporate Social Responsibility literature with regards to the role of the state in the business relationship. Despite the efforts made by government and International agencies, the global poverty problem is worsening day by day. Thus, the contribution of organisations to Corporate Social Responsibility for the creation of a better society is rising.
Corporate Social Responsibility Mandatory in Mauritius
According to Y.Ramtohul (Sept 2011), on one hand, in Mauritius, “all companies such as those holding a Category 1 Global Business Licence under the Financial Services Act, banks in Mauritius whose income is derived from banking transactions with non-resident or corporation holding a global business license under the financial, IRS companies as mentioned in the investment promotion ( Real Estate Development Scheme) Regulations 2007, as well as any non-resident societe , a trust or a trustee of a unit trust scheme are exempted from mandatory obligation from contributing to the CSR fund”.
On the other hand , all other companies incorporated and registered at the Registrar of Companies of Mauritius have to contribute 2% of their annual book profits to the CSR fund as provided by the S 50L of the Income Tax of Mauritius ( Act 16 1995). According to the S 50L of the same Act the 2 % that goes to the CSR fund shall be used to either implement an approved programme by a company, an approved programme under the National Empowerment Foundation or to finance an approved NGO.
It is the responsibility of the CSR committee to review these programmes or NGO’s to be financed as set up under the S 50 L section of the Income Tax in order to have a better control and transparency about the investment made. It is also interesting to understand that if, in respect to a year, the amount paid out to the CSR fund is less than 2% then the difference shall be remitted as an income and will be taxed at the end of the financial year.
As from July 2009, companies in Mauritius therefore have the legal obligation to contribute two percent of their profit after tax towards CSR activities in the following approved areas of intervention:
Socio-economic development (including Gender and Human Rights);
Education and Training;
Leisure and Sports;
Catastrophic Interventions and Support;
A refinement of the law brought in December 2010 requires that half of all CSR contributions be directed towards programmes contributing to social housing, welfare of children in vulnerable groups and eradication of absolute poverty.
The Extent to which Corporate Social Responsibility is Mandatory
The primary reason for CSR reporting is to provide investors with the information they desire to make decisions. With the increase in social and environmental funds it is easy to see the need for such information. Many corporations already provide such information voluntarily. They promote their environmental and social accomplishments either in their annual report or in a separate stand-alone report. Companies in industries such as energy, forestry and manufacturing use similar reporting techniques as a means to answer their critics. The problem with this is that without comparability and consistency standards the current reports are more ‘green wash’ or environmental spin than a factual representation of the company’s actual position.
Without regulated reporting standards or guidelines to follow, current reports are nothing more than strategic marketing employed by the company. The demand for CSR has resulted in competing standards of accountability. Some worry that the individual regulating organisations will not provide the assurance that comes with one internationally accepted global standard. CSR nowadays plays a very crucial role throughout the whole world in every organisation. Government in many countries has implemented the contribution in the CSR fund as voluntary. According to Reich (2007), governments need to set the agenda for social responsibility by way of laws and regulations that will allow businesses to conduct themselves responsibly. One of the first countries to apply Reich’s thinking has been Indonesia. Indeed, this country has been one of the pace-setters as far as mandatory CSR is concerned.
It is important to note that Mauritius has been one of the first countries to follow the pace of Indonesia, through the introduction of a mandatory CSR framework for business organisations. Organisations in Mauritius are fully aware of the importance of CSR and the role that it plays for the betterment of the society as well as for their corporate image. In Mauritius the initiative from the Mauritian authorities did not meet with much resistance from private sector. This was due to the fact that they are fully aware of the key role they were called to play in terms of social development and environmental protection. They have also benefitted from generous tax concessions in the same year, as the corporate tax level was brought down from 25% to 15% (Ragodoo, 2009).
The recent economic and financial crisis that has hit the whole world is contributing to the increasing rate of unemployment and poverty throughout the planet. Thus, to one extreme, the CSR Fund has its good reason to be mandatory as it will help the government to a certain extent to alleviate poverty. Organisations can also contribute in diminishing the rate of poverty and participate in the betterment of the community and for the welfare of the society. By giving the government 2% of their annual book profits, organisations are providing significant contributions to the development of society, provided that the government spending thereof is used appropriately. If it were not mandatory, organisations would only have concentrated on profit maximisation instead of giving some attention to the society, people, employees and their surroundings. Many companies do not even bother about employees, environment, education and poverty affecting the country. Their main goals are to achieve their organisational objectives without any concern to the impact their activities have on the environment and community. The government, by making CSR mandatory, has sensitised business sectors on their responsibility towards their environment, people working for them and the well-being of the society.
To the other extreme however, imposing CSR as mandatory is not really a good thing in the sense that it is true that the main objective of shareholders and organisations are to maximise profits. As tax payers, it is not their role to ensure that the rate of poverty diminishes and to work for the well-being of society as this is the role of the government. Very often companies are reluctant to contribute as they are not aware what the government is doing with the 2% that they are contributing each year. Many organisations do not even know if the money they are contributing is going to the CSR fund or is considered simply as a social tax. The government uses the funding obtained from the business sector for initiating various social projects and claims all credit for the successful implementation thereof.
CSR should be voluntary instead of being mandatory. Organisations need to understand that the first step in participating or contributing in CSR is to cater and care for their employees first. By giving due respect, good treatment, motivating salaries and providing other benefits to employees and their families, the organisation in one way or another is participating in CSR. Even with a contribution of 2% to the CSR fund, organisations should go the extra mile for the better of our society, provided that they have the financial capacity available. They cannot just focus on maximising profits since the whole world has presently changed. People and investors are more inclined to invest in companies that are contributing or participating in the betterment of society, the environment and the enhancement of education.
Organisations can use CSR as tool for their image branding since people tend to invest and buy products coming from a company that has good moral values and reputation. For example, the Mauritius Commercial Bank (MCB) has a strong corporate image since it invests, contributes and participates in various CSR programmes and activities around the island. Companies should not be forced or compelled to contribute to CSR activities. Applying a voluntary approach would not mean fewer contributions. Instead, contributions will be plentiful and the organisations contributing will rightfully earn the credit for the value they have brought to the community.
When a company accepts it’s social and civic responsibility and takes active interest in the well-being of its community, it gains a number of long term benefits in terms of community support, loyalty and goodwill. Organisations are recognised when they support programs that improve the quality of life, including crime prevention, employment, scholarship programs, and environmental programs, clean up and beautification, recycling and restoration. For example, the Mauritius Commercial Bank Ltd (MCB) and British American Tobacco and the State Bank of Mauritius (SBM) have sponsored scholarship programs for needy students. Emtel Ltd and Mauritius Telecom have launched programs by collecting old batteries that are sent for recycling. In addition, organisations might achieve community visibility and engender goodwill by sponsoring local sports teams or other events. For example, the MCB Ltd sponsored the CNFF (Centre National Formation de Football) and also other sports events to initiate and motivate youngsters to participate and develop their talents.
Further, with climate change and other negative impacts that are occurring in the world, organisations have no choice but to contribute to the well-being of society so that they can sustain in this competitive business world. To achieve the Millennium Development Goals, many countries and the United Nations are encouraging all public and private sectors to contribute to CSR in order to alleviate absolute poverty in the world. This should not be mandatory. Profit making organisations and business sectors will instinctively feel a responsibility and duty to help people living in absolute poverty and to improve conditions of life. Organisations should not be forced but rather encouraged to contribute further towards CSR to help the United Nations alleviate these countries suffering from poverty. This cannot be forced by any rules or regulations. It has also become crucial for all business sectors nowadays to consider the impact that climate change can have on their business and therefore, it has become important for them to work out, in collaboration with the government, and to find a solution to prevent further damage to the environment. Ideally, CSR should be a combination of voluntary and mandatory implementation in order to have maximum efficiency to society as a whole.
However, with all negative changes that are happening in the world like the financial crisis, economic crisis, crimes, drugs, wars and climate change that are leading to a rise in unemployment and poverty, organisations should be contributing voluntarily but actively participating in CSR as it also indirectly concerns the sustainability of their organisations.
CHAPTER THREE: RESEARCH METHODOLOGY
This chapter outlines a detailed explanation of how the research was conducted to achieve its objectives. It explains the methodology used in the gathering of information necessary for this study. Further, it highlights the sources of data and the survey design including the sampling plan and data analysis method adopted.
In this chapter, the methodology used for this study has been elaborated. This includes the research design, formulation of the questionnaire, outline of the survey, the sampling techniques, the data collection techniques, designing and administering and collecting the questionnaires, the research process, survey timescale and data collection and the outline of the data analysis.
3.1 RESEARCH DESIGN
“A research design situates the researcher in the empirical world and connects him or her to specific sites, persons, groups, institutions, and bodies of relevant interpretive materials, including documents and archives” ( Denzin and Lincoln 2005, p.25). A research design is the detailed blueprint for the entire research used to direct a study towards its objectives.
For the purpose of this study, qualitative research has been employed. In fact, qualitative research deals with interpreting social realities and involves an interpretive and natural approach to the world (Bauer and Gaskell, 2002; Denzin and Lincoln, 2005). Qualitative researcher may be viewed as a “bricoleur”, as maker of quilts, or as in film making” and such researchers lay emphasis on “the value-laden nature of inquiry” (Denzin and Lincoln,2005, p. 4&10).
3.1.1 Epistemology and Ontology
Epistemology is the theory of knowledge. It includes the methods, validity and scope of knowledge that is employed in research and provides evidence for conclusions (Nel and Com, 2007). Ontology is that part of “philosophy that concerns itself with the kinds of entities that exist and the features they possess” (Howe, 1998, p. 16).
Ontology specifies “the nature of reality” that is to be studied, and what can be known about it, whereas epistemology describes “the relationship of knower to known” (Lincoln and Guba, 1985, p. 37). Ontology is the framework; it refers to the what of the research, whereas epistemology is a set of questions based on a framework and refers to the how of research (Nel and Com, 2007).
A paradigm or an interpretative framework comprises a researcher’s ontological, epistemological, and methodological principles. All interpretive paradigms, however, suggest that social actors are different from natural phenomena and research needs to interpret their behaviour from their perspectives (Bryman, 2001; Silverman, 2001).
3.1.2 Qualitative versus Quantitative Approaches
According to Kothari (1990), “qualitative approach is an interpretative approach and is concerned with subjective assessment of attitudes, opinions and behaviour”. Blaikie (2000) stated that quantitative and qualitative research approaches can be seen as merely different ways of doing research. Qualitative research leads to hypothesis-generating research (Auerbach and Silverstein, 2003) whereas quantitative research typically tests hypotheses.
Qualitative research is much more subjective than quantitative research and use very different methods of collecting information, mainly individual, in-depth interviews and focus groups. The nature of this type of research is exploratory and open-ended.
Qualitative research is conducted through an intense and/or prolonged contact with a “field” or life situation, reflective of the everyday life of individuals, groups, societies, and organisations (Miles and Huberman, 1994, p. 6).
Quantitative research deals with numbers, uses statistical models to explain the data, and is considered as hard research (Bauer and Gaskell, 2002). The epistemology of the quantitative research is positivist. Qualitative research tends to be more constructionist (Gubrium and Holstein, 2002). According to Rubin and Rubin (2005, pp. 23-27) “positivists assume that objects and events that researchers study exist independently of people’s perceptions while constructionists expect people to see somewhat different things, examine through distinct lenses and come to different conclusions”.
Qualitative research provides theories, models and descriptions of human experiences and perceptions within particular contexts. It is intended to penetrate to the deeper significance that the subject of the research, and involves an interpretive, naturalistic approach to its subject matter and gives priority to what the data contribute to important research questions or existing information. Qualitative research encompasses a range of philosophies, and specific techniques including in-depth qualitative interviews; participant and non-participant observation; focus groups; document analyses; and a number of other methods of data collection (Pope, 2006).
Qualitative research yields valuable knowledge for decision makers. It provides theories, models and descriptions of human experiences and perceptions within particular contexts. Qualitative inquiry, which is inductive, is often labeled as “subjective” (Mayan, 2001, p.6).
Given the exploratory nature of this study, emphasis was laid solely on qualitative data gathering, and primarily descriptive and interpretative, concentrating on a few selected individuals or phenomena in some detail (Borland, 2001).
The researcher’s role in a qualitative study is to gain a holistic overview of the context under study, and attempt to capture data on the perceptions of local actors.
3.13 Ethical Considerations and Confidentiality
In planning and conducting research, as well as in reporting research findings, researchers will have to fulfil several obligations. First, the research was planned in such a way to minimise misleading results and to meet ethical acceptability. Care should also be taken to protect and ensure the dignity and welfare of all respondents, as well as those who may be affected by the results of the research project.
One of the key hallmarks of modern ethical research is informed consent. Respondents should be told about the general nature of the study as well as the fact that there would be no risk involved and that the research would be done under condition of anonymity. The participants should also be informed of what is expected of them and should be told that they would be free to decline participation.
To ensure that no emotional harm will be caused to the subjects, care will be taken by the interviewer regarding the use of sensitive words or difficult questions during the interview. Finally, when reporting the results, the researcher will make sure that accurate representation of what observed was given and not what was told. Further, confidentiality was assured by ensuring that those interviewed not identified. Code names were used and identifying information avoided.
3.2 Data Collection
Qualitative researchers use several methods for collecting data and these include interviewing, direct observation, analysis of artifacts, and the use of visual materials (Denzin and Lincoln, 2005).
The data collection method for this research included the use of interviews, and an analysis of existing documents and reports to address the main research questions.
Interviewing method was used for collecting the materials and investigating the opinions and perceptions of various stakeholders in Mauritius. Semi-structured interviews were undertaken with different organisations mainly involved in CSR in Mauritius. Respondents such as Chief Executive Officers, CSR Managers or Senior Officers who are responsible for CSR were targeted for this study. In addition, secondary data was retrieved from published reports and official documents so as to compare, triangulate and cross-validate the primary data collection.
3.2.1 Semi-Structured Interviews
As May (2001, p. 120) points out, ”interviews yield rich insights into people’s biographies, experiences, opinions, values, aspirations, attitudes and feelings”. Interview is direct verbal interaction between the interviewer and the respondent. The researcher yield descriptive data by digging down into details of interviewees’ opinions.
Semi-structured interviews were conducted with respondents from mainly private sectors by the use of a questionnaire (see Appendix â€¦) The interview questions were open-ended so as to enable the researcher to yield rich insights of their experiences, opinions, values, aspirations, obstacles encountered and recommendations.
In this research semi-structured interviews were used for two reasons. First, the introduction of CSR for Mauritius was a mandatory policy objective of the government. Therefore, the views and opinions of the various stakeholders with respect to CSR, whether it should be mandatory or voluntary, are crucial. Second, semi-structured interviews are one of the most commonly recognised forms of qualitative methods used and can give enormous amounts of information that could not be gathered from published documents.
The interview schedule covered questions on (i) understanding and knowledge of Corporate Social Responsibility with different stakeholders; (ii) the perceptions of CSR whether mandatory or voluntary; (iii) the usefulness and effectiveness of CSR (iv) the contribution and involvement of CSR above the legal compliance.
3.2.2 Sampling Strategy
The main objective of qualitative sampling is to achieve the best possible understanding of phenomenon of interest and to enable one to focus on specific issues. In qualitative inquiry usually “samples are generally small” (Mayan, 2001, p.33) and Patton argues that “there are no rules for samples size in qualitative inquiry” (Patton, 2002, p.244).
The sampling for this research was not random. Respondents were selected from a list of organisations actively engaged in the Corporate Social Responsibility (CSR) in Mauritius that are registered to the National Empowerment Fund (NEF). Respondents were selected on the basis of their understanding and involvement in CSR. Only respondents with a sufficient level of knowledge and experience were selected for interview. Using this interview strategy, in this research a total of number of 30 organisations was contacted. However, the actual sample size was 18. The respondents include people involved in Corporate Social Responsibility activities, Directors, and Chief Executive Officers, representative of NEF, NGO’s and Senior Officials from Public Sector.
Document analysis will provide a natural, contextual source of information about related endeavours and developments in the field of CSR. Documents on CSR will be collected so as to help the researcher to set out the interview questions, review the evolution of CSR in focus to the particular settings.
The primary data from the semi-structured interviews will be examined to clarify the themes that emerged. Thematic analysis will be used because it offers a flexible and useful research tool, which can provide a detailed and rich account of qualitative data (Braun and Clarke, 2006).
CHAPTER FOUR: DATA ANALYIS AND FINDINGS
This chapter presents the data analysis and discusses the findings from the qualitative research, and provides the results of the semi-structured interview.
Data analysis is “the process of moving from raw interviews to evidence-based interpretations that are the foundation of published reports” (Rubin and Rubin, 2005, p. 201). Patton (1990, p. 297) describes the data gathered by qualitative method as “voluminous” and the process of making sense out of pages of interviews and notes as “overwhelming”. There are various ways of analysing data; in fact, there is no right way or not only single way to analyse qualitative data (Tesch, 1990; Creshwell 2002). Qualitative data analysis consists of identifying, coding and categorising patterns found in data. In this study, during the data analysis phase, the researcher read thoroughly the transcribed data, and divided them into meaningful analytical units.
The method of thematic analysis chosen for this study is the data-driven inductive approach (Boyatzis, 1998). An inductive approach means the themes identified are linked to the data themselves. Inductive analysis is therefore a method of coding the data without trying to fit it into a pre-existing code frame. An inductive method has been used for all themes apart from those easily identified in the direct nature of the question put to the interviewees.
4.1 Thematic Analysis
Thematic analysis is a process that involves the identification of themes through careful reading of the data. It is a form of “pattern recognition within the data, where emerging themes becomes categories for analysis” (Fereday and Muir-Cochrane, 2006, p. 4).
Thematic analysis is a way of seeing, as well as a process for coding qualitative data and the qualitative content analysis usually uses individual themes as the unit for analysis. Braun and Clarke (2006, p. 82) state that a theme “captures something important about the data in relation to the research question, and represents some level of patterned response or meaning within the data set”.
The phases of thematic analysis represent the different processes that have been carried out in analysing the data generated through the interviews with the 18 respondents in Mauritius. The phases include familiarisation with the data, generating initial codes, searching for themes, reviewing and refining themes, defining and naming themes, and producing the reports (Boyatzis, 1998; Braun and Clarke, 2006)
In this study, each of the transcribed interviews was read through more than once and identified the points that are related to the perceptions of CSR. For each of the transcripts, the data were reduced by highlighting the relevant materials, coding of common ideas, discarding, and organising the data into relevant text and transferring an Excel sheet. Each relevant text from the transcripts was then coded and summarised into a theme (group of repeating ideas that had something in common).
The primary data findings have been presented in a narrative form. In the presentation of the primary findings, direct quotes are used as outlined by Miles and Huberman (1994) to allow the reader to confirm the conclusions. The respondents from the various organizations were designated as “R” and allocated numerical figures 1 to 18 (R1, R2â€¦..R18) when illustrating their quotes in order to maintain confidentiality.
4.2 Data Findings
The first part of the data findings illustrated the company activities, budget allocation, and number of employees.
Of the 18 respondents interviewed, 50% of the respondents’ company activities are from the Ministry, Bank and Financial Services and Manufacturing Industry (three respondents from each sector). The remaining 50% respondents’ company activities are from the Freight and Logistics, Land and Property Management, BPO, Construction, Sugar Industry, Telecommunication, Hotels and CSR Foundation (one respondent from each company) as illustrated at Figure 4.1.
Figure 4.1 Respondents’ Company Activities
The budget allocation for the Ministry differs as it depends on the government allocation and is non-profit organisation. However, the private companies’ budget vary from the range of Rs 4 million to Rs 3.7 billion, manufacturing industry (Rs 120 million), Land and Property Management (Rs 200 million), Construction and Motor Vehicle industry is similar ( Rs 350 million), Telecommunication (Rs 500 million), BPO (Rs 4 million), and Sugar industry (Rs 3.7 billion).
Figure 4.2 indicates the number of employees from the different companies which respondents were interviewed for this study. The highest number of people employed is from the Hotels sector and the lowest from the BPO sector.
Figure 4.2 Company’s Number of Employees
The second part of the findings revealed important themes in relation to the key research questions which both informed the interview schedule and which were further refined in the light of transcript data. These particular themes cover the definition and understanding of CSR, awareness, opinions and suggestions on CSR guidelines, implementation problems with CSR practices, regulatory bodies’ assistance, Involvement in CSR activities, improvements by CSR Committee, and whether CSR should be voluntary or mandatory in Mauritius.
4.2.1 Definition and Understanding of CSR
Respondents provided a lot of definitions on CSR and answered the questions according to their own understanding of the terms CSR. Some of the respondents defined that CSR is whether by voluntary or mandatory initiatives, contributes a percentage (2%) of their annual book profits to help the community and society to have a better environment. It goes beyond the legal compliance where a company should feel responsible to help its community and contribute in eradicating absolute poverty.
The level of understanding of CSR differs among the respondents. Some respondents viewed CSR as initiatives for the socio-economic needs, environmental and community development, and poverty alleviation, whereas for other respondents CSR is the company’s contribution to the welfare of society and to improve the quality of life.
Four respondents, all CSR Managers, commented:
CSR is the responsibility of the corporate in terms of ethical behaviour internally, with its stakeholders, towards the environment (R3.Q1)
CSR is the responsibility of business towards the society beyond economic goal. It implies also business ethics, decent workplace, fair conditions of work, health and safety, and social commitment to local communities (R8.Q1)
CSR is the integration of environmental and social concerns in the day to day operations of a business organisation (R11.Q1)
Any activity towards society and it should be in line with CSR agreed guidelines in view of alleviating poverty (R12.Q1)
Similarly, two administrative heads, responded:
CSR can best be described as voluntary corporate initiatives concerned mainly with community development and poverty alleviation. CSR seeks to benefit society while simultaneously improving the corporation’s public image (R 2.Qu1)
CSR is the responsibilities that each company that has got sufficient profitability has to engage in society and help to improve the social environment, and help the country to develop more sustainability (R10.Q1)
In addition, a CSR officer (R14), had the following view:
CSR is the voluntary commitment by a company to contribute to the improvement of the quality of life of the local community and society at large and to a better environment.
Another respondent (R 18), CSR Manager, made the following observation:
It is the voluntarily act of helping the society, environment and the community in a proper manner to enhance the lives of the deprived and marginalised people living in the society.
The majority of the respondents have sufficient level of understanding of the concept CSR in Mauritius and the definitions provided by them are in line with that of the NEF that is to balance the economic growth with the sustainable social and environmental development of the country. Further, the responses also revealed that CSR is meant primarily to build relationship with all stakeholders, to respond to the country financial, economical and social needs and also as corporate citizen for betterment of the nation in general.
4.2.2 Awareness, Opinions and Suggestions of CSR Guidelines
The analysis of the interviews clearly revealed that the respondents are conscious of the CSR guidelines implemented in Mauritius. Of the 18 respondents, 100% are aware of the CSR guidelines.
This indicates that the respondents engaged in the CSR initiatives for their own organisations are reasonably conversant with the guidelines and also used for consultation as and when required.
Opinions of CSR Guidelines
Of those interviewed the respondents’ opinions of CSR guidelines vary. Some of them considered that the guidelines are too broad, general, and vague. Other respondents believed the guidelines need to be more flexible, clear and concise. The CSR guidelines are mostly based on the CSR concept broadly, but unfortunately the employees and customers are not taken into consideration.
However, 28% of the interviewees are of opinions setting CSR guidelines gives a better direction to companies to act.
These guidelines set the criteria and give the different sectors where contribution can or cannot be made so as to ensure that there is a proper distribution of fund. Further, they indicated these guidelines are good initiatives but there is need for continuous improvements so as to provide sufficient information for an organisation to understand CSR.
Two of the respondents (R1 and R 3) made the following comments:
Little general and vague, very open to individual interpretation and difficult to apply in practice (R1 Q7)
Local CSR guidelines is not holistic enough, too broad, does not take into account specific groups; does not propose any guideline to tackle problems from root (R1 Q7)
Further, one respondent, Head of an organisation (R4), and the other, a Chief Executive Officer (R 6), commented:
The guidelines could be more flexible, is more of a burden to the companies. There need to be guidelines but some relaxation and also certainty is required (R4 Q 7)
It is clear, concise and provides the right guidance to those entitled as well as those companies that are subject to (R6 Q7)
The following quotes from the respondents R2, R9, R11, and R13 illustrate the above views:
Good guidelines which need continuous improvements in keeping with the corporate and NGO requirements which generally become apparent in the course of CSR implementation (R2 Q7)
The CSR Guidelines are mostly self-explanatoryâ€¦ (R9 Q7)
Good initiative constantly has to be reviewed. Need to be in line with demand of society (R11 Q7))
A good start but need to reviewed constantly to prevent abuse and close the loopholes that some may take advantage for their own benefit rather than what it is destined at (R13 Q7)
The CSR guidelines are mostly based on the CSR concept broadly, but unfortunately the emplOrder Now