Beyond Good Intentions: Understanding Corporate Motivations for CSR

By: Ronny Kountur, Ph.D.  Associate Professor & Lecturer at PPM School of Management - Member of the Indonesian Society of Sustainability Professionals (IS2P)

A study on CSR (Corporate Social Responsibility) practices among selected natural based companies in Indonesia was conducted by Indonesia Business Links (IBL) in collaboration with PPM Manajemen. It was a qualitative study mainly taken from printed documents and round-table discussions among experts, government officers, academicians, selected NGOs, and representative of natural base companies. The purpose is to know what do the companies mean by CSR; and what motivate them to do CSR.

Although there were several understandings about CSR, majority of CSR practitioners from companies and experts mentioned things that could be categorized as companys caring of its surrounding.  Activities that could be considered as charity such as mass circumcise, building mosque, developing infrastructure, providing scholarship, and improving school facilities were considered as CSR.  However, it was not related only to charity and physical development; employing the local people was also considered as CSR. Since company operation can damage the surrounding environment, caring of environment was also considered as part of CSR.

Some argued that the CSR activities should not only refer to external parties but also internal.  The welfare of employees and their family was also the responsibility of CSR. Disagreement was found as to whether charity was considered as CSR or not.  Some companies did charity mainly for the purpose of public relation. However, other argued that charity  could be considered as CSR.

Five major factors were found to be the motivation of company doing CSR.  Those factors were:  external pressure, profit, concern, conflict, and fear. (conflict avoidance).

External Pressure. Some companies did CSR because of pressure.  Pressures were coming from the community where it got harder and harder, from NGO, and from buyer when they required the company to have ECO labelling.  Pressure also came from government regulation. 

Profit. Some did CSR for profit motive.  There seemed to be a correlation between the implementation of CSR and the price of stock.  Good implementation of CSR could rise the price of companys stock.  Also, some investors were keen to buy stock of companies that had good report on their CSR.   There was a corporation which specifically mentioned that its motive was to be included in Dow Jones Sustainable Development Index. Some investors were keen to buy stock of companies that had good report on their CSR. There seemed to be a correlation between good implementation of CSR and the high price of stock. There was a corporation which specifically mentioned that its motive was to be included in Dow Jones Sustainable Development Index.

Genuine Concerns. Some companies did CSR because of their genuine concerns.  They did it voluntarily without any pressure or other motives.  They realized that some of their revenue need to be shared to the community around the company. 

Conflict. Some companies did CSR because they experienced conflict with the community.  The conflicts were in the form of demonstration and the blocking of companys operation.  

Fear. Another did CSR because they were afraid that conflict or problem could arise if they did not do CSR. In other words, they are avoiding conflicts (conflict avoidance). 

By knowing the motives of companies doing CSR, regulator or any institutions who have interest in promoting CSR may know how to promote CSR among companies particularly in Indonesia. It seems that there is no one particular method in promoting CSR. Different method may be used to different motive that drive the implementation of CSR since their motive in doing CSR may be different.