Corporate Social Responsibility (CSR) Implementation In Lebanon: A Causal Recursive System Abdulrazzak Charbaji, Ph.D Professor of Applied Statistics and Research Methods www.charbaji.com - PowerPoint PPT Presentation

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Corporate Social Responsibility (CSR) Implementation In Lebanon: A Causal Recursive System Abdulrazzak Charbaji, Ph.D Professor of Applied Statistics and Research Methods www.charbaji.com

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Title: Corporate Social Responsibility (CSR) Implementation In Lebanon: A Causal Recursive System Abdulrazzak Charbaji, Ph.D Professor of Applied Statistics and Research Methods www.charbaji.com


1
Corporate Social Responsibility
(CSR) Implementation In Lebanon A Causal
Recursive System Abdulrazzak Charbaji,
Ph.D Professor of Applied Statistics and Research
Methods www.charbaji.com
2
Lebanon Area 10,400 sq km about 0.7
times the size of Connecticut land 10,230 sq km
water 170 sq km border countries Israel 79
km, Syria 375 km Population 3,727,703 (July
2003 est.)
3
http//www.heritage.org/research/features/index/do
wnloads.html
4
http//www.chaostan.com/legal.html Lebanon.
Mixture of French Civil Law and Ottoman Civil
Law. 2.95. America and Switzerland both score
1.9. Russia and Albania are both 3.65, and Cuba,
Laos and North Korea are the worst in the world,
with 5.0.
5
http//www.ciesin.columbia.edu/indicators/ESI/rank
.html Environmental Sustainability Index 2002
Rankings
  • Rank Country ESI
  • 1  Finland  73
  •  106  Lebanon  43.8 
  • 142  Kuwait  23.9 

6
The purpose of this paper is To look closely
at the CSR  issue and to check if  Lebanese
firms are  involved in corporate social
responsibility
7
DEFINING CORPORATE SOCIAL RESPONSIBILITY A
review of related literature reveals that the
definition of CSR remains a problematic issue
8
At one extreme Frankental believes  that CSR
is ambiguous and indefinable term., which can
mean any thing to anybody (Frankental, 2001).
9
At the other extreme   We find  a motivational
definition that argues that CSR  is the
fulfillment of a firm's self-actualization needs
 (Tuzzolino and Armandi , 1981)
10
The legitimacy of CSR relates to fundamental and
crucial questions as to why do corporations exist?
11
  • Should corporations be concerned
  • with social performance
  • as well as economic results? If so,
  • what is meant to be socially responsible?
  • Should economic performance
  • be sacrificed for social performance?
  • To whom does business owe responsibilities?
  • What kinds of activities
  • and programs should CSR include?
  • And to what extent should social responsibility
  • activities consume the companys resources?

12
  • Carroll (1979) suggested that corporations
  • have four responsibilities to fulfill
  • Economic,
  • Legal,
  • Ethical, and
  • Philanthropic

13
Ethical responsibilities derive their source of
authority from religious convictions, moral
traditions, and human rights commitments.
Business social responsibility was to maximize
profits, subject to the constraints of the law.
(Carroll, 2001)
14
  • Novak (1996) defined seven responsibilities.
  • These are to
  • Satisfy customers
  • Earn a fair return on the funds
  • entrusted to the corporation by its investors
  • 3. Create new wealth,
  • 4. Create and maintain new jobs
  • 5. Giving people the sense
  • that their economic conditions can improve
  • 6. Promote innovation and
  • 7. Diversify the economic interest of citizens
  • so to prevent the domination of the majority.

15
The Effect of CSR on Firm's Performance
16
previous empirical research has produced varied
results
  • Some studies have argued for a positive relation
    (Moskowitz, 1972 Parket Eibert, 1975).  
  • Whereas others have concluded that CSR has
    negative effects
  • (Aupperle, Carroll, Hatfield, 1985  Vance,
    1975)

17
REVIEW OF BASIC CSR THEORIES IN FINANCIAL
ECONOMICS
18
The Property Rights Theory Rule
  • Business only has an economic responsibility to
    make a profit while obeying the law.

It implies that devotion of corporate resources
to social causes is contrary to an implied
contract with investors to maximize their profits.
19
The Social Institution Theory
  • Public welfare is the primary concern
  • Firms should provide employment opportunities
    for everyone, improve the environment, and
    promote worldwide justice even if it comes at
    the expense of profits

20
The Contractual Theory of the Firm
  • A moderate and relatively recent view
  • which now dominates
  • the thinking in financial economics
  • and that of public law

21
Companys assets are provided by many groups
including shareholders, such as employees,
customers, suppliers, and the like, and so the
company arises from the property rights and the
right of contract of every corporate
constituency, not just stockholders
22
Corporate Social Responsibility in Lebanon CSR
is in its infancy stage in Lebanon There is a
scarcity of applied  research into CSR  in
Lebanon
23
Lebanons Prime Minister Rafik Hariri wrote an
article in which he notes that taking
environmental issues seriously means that
people are striving for a better quality of
life
24
  • The Lebanese government
  • Tackled environmetal issues
  • such as
  • Establishing an Environment Ministry,
  • Passing a clean air Act,
  • Adopting a nation wild reforestation scheme, and
  • Including integrated environmental management in
    its policy statement.

25
A study prepared by the Mediterranean
Environmental Technical Assistance Program
(METAP) and the UNDP estimated the cost of
environmental deterioration in Lebanon at US
565 million per year, that is around 3.9 of
GDP. It is the most among other Arab
countries covered by the assessment
26
Today, Sukleen , has 384 committed
institutions that are enrolled in environmental
campaign for resources and energy preservation
This initiative is undertaken to provide an
outlet to the recycling community
27
HSBC is funding teacher training seminars
28
IDAL launched a new service on its website, the
Investors Matching Service, which aims at
facilitating the creation of strategic
international local partnership One of the
main criteria used in the evaluation include
employment effort, environmental soundness and
social liability
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The project aims to promote enhanced the active
participation of UN volunteers business
and local communities. The project is composed
of two phases, an action research phase and a
partnership promotion and building phase
31
Action Research
  • The action research phase includes
  • A qualitative research study aimed at businesses
    to investigate why and how they become involved
    in development initiatives.

32
Partnership promotion and building
  • The project offer individual companies
    tailor-made strategies that benefit both their
    firm and local communities. Various activities
    under the project include
  • Awareness through written, audio visual, and
    virtual media (web-site and e-mail list).
    Identification and formation of partnerships
    between various stakeholders including UNDP,
    other lead UN agencies, civil society, local
    community-based associations and NGOs,
    businesses, associations, chambers of commerce,
    universities, etc. Organisation of a national
    workshop to bring together businesses and
    development actors together for brainstorming,
    dialogue and joint action. Publications
    including reports, brochures, newsletters, case
    studies, and a guidebook on business-community
    relations. Formulation of Project Document/Joint
    Project Proposals with UNV/UNDP/UN Agencies/ New
    Academy of Business.

33
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This year Go Green in Lebanon is supported by
UNDP and its projects at the Ministries of
Environment and Agriculture along with the
private sector
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Schtroumpf a local restaurant chain
  • Is the initiator and co-manager of the Go Green
    project. Its practices include partnering with
    educational institutes to raise environmental
    awareness continuously recycling and using
    recyclable products and organizing a wide range
    of activities mainly targeting youth including
    environmental contests, forums, seminars, etc

37
FTML- Cellis a subsidiary of France Telecom
worldwide group/Orange
  • The company applies strict rules and policies,
    which prevent pollution and degradation of the
    landscape in setting up their network.
  • in August 2000, the company launched a Childhood
    Protection support programs for children who are
    rejected, abused, exploited in their work
    environment, for whom education is not provided
    or who are at risk of delinquency.

38
Coca-Cola
  • The company has supported the Lebanese community
    in various causes including the environment.
    Recently the company launched the Cedar Roots
    project, which included building the first cedar
    forest in the South of Lebanon (Jezzine).

39
Tetra Pak East Med
  • Tetra Pak takes active measures to ensure that
    its activities and products are environmentally
    friendly

Tetra Pak supports health and education through
the development of the Captain Mike
school-feeding program that aims at providing
better nourishment for children
40
To sum up, Even though CSR is becoming a
corporate goal in Lebanon
  • the international indices about Lebanon reveal
    that an imperative need exists for a project to
    identify
  • gaps and opportunities
  • in the provision
  • of sustainable development

41
  • The Research Questions are
  • What are the major characteristics
  • of the selected sample for the study?
  • 2. How many dimensions
  • underline the measuring instrument?
  • 3. What are the direct and indirect effects of
    the explanatory variables
  • to the explained variation in the dependent
    variable?

42
The present study involved   a sample of 406
including managers, assistant managers,
directors, assistant directors
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Findings of the Study Factor Analysis was
ran on 217 valid cases without missing values
out of 406 cases
59
KMO and Bartlett's Test
  • KMO measure of sampling adequacy (KMO 0.650)
  • and the Bartlett test
  • of sphericity (B 3608.464, p .000) suggest
    that the data is suitable for factor analysis

60
Factor extraction using oblique rotation
  • Returned a four-factor solution accounting for
    81.906 of variance among the original twelve
    variables
  • two criteria were used
  • Factor loading greater than 0.70,
  • Eigenvalues greater than 1.0

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Factor 1 accounts for 30.5 of the variance
  • (Z4) could be called Environmental Management.
    It includes high positive loadings for My
    organization issue CSR report that include
    performance against benchmarks My company
    adopted CSR environmental impact policy and My
    company has environmental mission statement

63
Factor 2 accounts for 25.28 of the variance
  • (Z3) could be called TQM practices. It is a
    bipolar factor which includes negative high
    loading for My company regularly track the
    satisfaction and/or complaints of customers and
    high positive loadings for My organization is
    involved in minority and women employment

64
Factor 3 accounts for 15.2 of the variance
  • (Z1) could be called Corporate Governance
    Organizational Policy.
  • It includes high positive loadings for My
    company issue CSR Environmental report My
    organization issue CSR economic performance
    report environmental guidelines for selecting
    suppliers. And My company uses employee
    performance appraisal systems that integrates
    compliance with code of conduct

65
Factor 4 accounts for 10.89 of the variance
  • (Z2) could be called code of conduct.
  • It is a bipolar factor which includes high
    negative loading for My company has code of
    ethics high negative loading for our
    company has a system in place to handle employees
    grievances and high positive loading for My
    company implement code of ethics.

66
Using factor scores and the dependent variable
Indicate the percentage of your companys total
shares held by ethical, sustainable, or socially
responsible investors. , multiple regression
analysis is conducted
67
The results of the regression analysis is
highly significant (p .000) R2 0.948,
indicates that almost all of the
variance in the data is accounted for by the
model
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Path Analysis
71
Decomposing the Correlation Coefficients
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Z3 P31 Z1 P32 Z2 Ru Z4 P41 Z1 P42 Z2
P43 Z3 Rw Z5 P51 Z1 P52 Z2 P53 Z3 P54
Z4 Rv r51 P51 P52P21 P53P31 P53P32P21
P54P41 P54P42P21 P54P43P31 P54P43P32P21
r52 P51P21 P52 P53P31P21 P53P32
P54P41P21 P54P42 P54P43P31P21
P54P43P32 r53 P51P31 P51P32P21 P52P31P21
P52P32 P53 P54P41 P31 P54P41P32P21
P54P42P331 P21 P54P42P332 P54P43 r54
P51P41 P51P42P21 P51P43P31 P51P43 P32 P21
P52P41 P21 P52P42 P52P43P31P21 P52P43P32
P53P41 P31 P53P41P32P21 P53P42P31 P21 P53P42
P32 P53P43 P54
74
Conclusion
75
The true direct effect of Corporate Governance
Organizational Policy on the percentage of
companys total shares held by ethical,
sustainable, or socially responsible investors
is almost four times the simple relation but
the relation is decreased because of the
indirect negative effects implying a more
environmental concern
76
Suggested methodology to construct CSR Index
that aids in ranking countries on CSR scale
77
  • Construct a valid instrument
  • that can be used in measuring CSR
  • Use factor analysis to obtain
  • factor scores for different
  • dimensions underlying the CSR
  • Obtain a grand total CSR score
  • for each country
  • in standardized score
  • Use median standardized
  • as an index to rank
  • countries on CSR scale
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