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Does CSR add Value to Service Innovation Performance via HRM? A Conceptual Framework and Future Research Agenda

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Abstract

Drawing upon social exchange theory, the present study conceptualizes CSR as a strategic asset, and organizational CSR initiatives influence employee’s attitudes and behaviors, including citizenship and innovative behavior. CSR can be aligned with HR strategies to get employees boost and committed to their organization. CSR strategy from an employee perspective may become a rare, valuable, non-substitutable and inimitable resource that gives organizations’ strategic and sustainable competitive advantages. The study concludes CSR is a promising area that affects employee’s attitudes and behaviors within the framework of HRM. Current literature is inconsistent and lacks maturity. The present study integrates CSR with attitudes and behaviors from an innovation perspective. CSR as a strategic resource is an attraction for stakeholders, including employees.

Key Words

Corporate Social Responsibility, Affective Commitment, Employee Innovative Behavior, Organizational Citizenship Behavior, Competitive Advantage

Introduction

Corporate social responsibility is the allocation of corporate resources for the improvement of communities where corporations operate which is a source of attractive relations with key stakeholders (Barnett 2007, p. 801) and is rooted back since (Bhaduri & Selarka, 2016). At that time, corporations in the banking and telecommunication industries started to hold the concept. In the 1950s, it was the first time considered a management area. Later on, Carroll’s (1991, 1999) presented his famous model of the CSR pyramid, which revealed four organizational responsibilities, including economic, legal, ethical and discretionary responsibilities. Generally, CSR is being taken place with the object to extend association with the communities and to have good and healthy relations with the societies or NGOs. CSR activities are carried out in collaborations with civil society organizations, community service organizations and other not for profit non-governmental organizations. Carroll’s (1979) view of CSR states that in spite of having similar nature of jobs performed by all the organizations but all firms do not demonstrate CSR similarly.  Firms show irresponsibility and make a minimum effort than is required by the stakeholders’ value for forming social liabilities. Firms always escape from their societal duties and reject their social obligations which they have to perform. On the other hand, those firms that are proactive in knowing the CSR and act further than supposed provisions, these firms will contribute to the general public and communities keeping in view their long term interest for improving long term performance (Carroll, 1979).

The functioning of the CSR in this research study can be considered as the occurrence of social show or performance; logically, it explains the extent to which a firm is performing its actions excellently in the sense that it measures the degree to which a firm is signifying positive outcomes/ actions that are rightly in close relation to the social performance. CSR study with different theoretical backgrounds is logical and normal because this is the idea that has many aspects, and possibly it can upset the stakeholders in various but equally positive ways. So different theoretical approaches are considered for study (Aguilera et al., 2007). CSR has a long history of its growth and emergence (Carroll, 1979). Yet, it is still no consensus on the meaning and definition of CSR and the range of activities it includes. Researchers have studied CSR through various approaches. CSR theories and approaches can divide into four different disciplines (Garriga & Melé 2004). On this classification, CSR approaches can have four categories. These four categories include influential, biased, integrative, and principled theories.

Influential theories focal point is companies’ economic objectives achievements through performing social activities in the societies and getting a competitive advantage by creating their soft image in the minds of the general public. Biased theoretical perspective center of concentration is the social power of organizations and the companies’ responsibilities in politics of the country and its influencing power to shape to government system of the country. Integrative theories put pressure on the companies that the companies are in need to include social responsibility as their priority. Principled theories consider social duties as moral responsibilities of the companies.    Earlier work done in the area of CSR considers its economic dimension only. The sole responsibility of the business is to maximize the shareholder profit while obeying the law and working in an honest framework (Friedman, 1970). Then the more comprehensive definition of CSR was given by Carroll (1979). According to him social responsibility of the business is not only to maximize the profit of the shareholder. He talked about the stakeholders instead of shareholders. He says the business should fulfil four basic responsibilities, i.e. economic, legal, ethical and discretionary. After some time importance of economic CSR was illustrated that economic CSR is most valuable in comparison with others; without economic other CSR, dimensions will become a debatable issue (Carroll 1991).  After that, the span of CSR was extended to the welfare of all the stakeholders (Agle et al., 1999; Mitchell et al., 1997). Broad-spectrum research revealed that the versatile view of corporate social responsibility is broadly acceptable (Inoue & Lee, 2011). There is a point of view to look into the stakeholders’ side (Clarkson, 1995; Turker, 2009b). It was proposed that there are some special stakeholders, without whom the firm cannot grow and is unable to get success (Clarkson, 1995). These stakeholders can be called chief stakeholders. In his scale development study, Turker (2009b) has addressed four dimensions of CSR. These dimensions included social and nonsocial stakeholders, employees, customers and regulatory authorities.

There is an association of CSR to the operations of an organization, and the activities of an organization can be classified on the basis of operation and non-operation related (Lee et al. 2013b). Four dimensions, proposed by Carroll, including economic, legal, ethical and discretionary, have got much attention. Economic CSR revolves around the production of goods and services for meeting society’s needs and wants and then selling of these products for the value. From legal CSR mean that the organization should fulfil the legal requirements of the organization and should follow the laws and policies developed by the authorities.  Ethical means that the organization should perform extra-role, which is hoped by the society and it is not clearly mentioned in the books of law. Main theme of the mostly research studies conducted has focus on macro level perspectives of CSR such as concrete performance and tangible out comes. Micro level perspectives have got less attention (Rupp et al., 2006). Many researches have been taken place in the field of charity in order to explore the association of CSR and firm financial performance (Boluk, 2013). Same study was conducted and concluded that there is a positive association between CSR and firm financial performance (Lee et al., 2013c).

Different kinds such as operation and non-operation related CSR have been studied. This has also been studied that to how much level CSR affects firms’ financial performance. There are unpersuasive that some researchers exposed a positive and similar relationship (Boluk, 2013; Lee et al., 2013b). Due to environmental pollution, resource depletion and food safety, CSR has got consideration of the researchers (Farrington et al., 2017). CSR reflects the organizational policies and actions for achieving environmental, social and financial sustainability (Akremi et al., 2018). Academician and Practitioners consider CSR as a strategic factor so use it as an instrument for getting competitive advantage (Cheema, Afsar, & Javed, 2020). Most of the research studies have been conducted within the context of macro level perspective of CSR( Gangi et al., 2019) while micro level perspective is CSR got least consideration and there are very limited studies which considered employee perceptions about CSR and this is a critical are to explore more ( Luu, 2017; Oo, Jung, & Park, 2018). Theoretically, CSR effects on attitudinal and behavioral aspects of employee personality like commitment, OCB and Innovative behaviors. Furthermore, moral aspects of CSR have got more considerations of the researchers and it got linked to employees’ moral conduct like employee involvement in job (Tian & Robertson, 2019), Employee citizenship behavior (Oo et al., 2018), commitment (Collier & Esteban, 2007), employee intentions to quit job (Ng, Yam, & Aguinis, 2019) and helping behaviors (Newman et al., 2015).

Stakeholders’ knowledge about organizations’ genuine and sincere CSR effort is very important so the organizations should communicate it to all the stakeholders so that may have complete awareness about CSR programs of the organization. Stakeholders’ organization’s CSR perceptions is of vital importance, if they perceive that organizational CSR activities are only for good image or just impression making rather real contribution, may provoke negative behaviors in them (Umrani et al., 2019). One of the most important stakeholders are employees and their perceptions are also very important. In prior research studies, CSR has been investigated from the external stakeholders’ perspective (Gangi et al., 2019) and there was less consideration for internal stakeholders’ perspective. Therefore, the current research study considers hotel employees and their perception about CSR, how they perceive CSR actions of their hotel’s and its impacts on society and community, environment and the employees and general public as a whole.

 

Affective Commitment

Organizational commitment is the “identification and involvement with the organization by believing in the organization’s value systems and goals, exerting efforts on behalf of the organization, and desire to remain with the organization” (Mowday et al., 1979). Workplace commitment is of various forms and can possibly influence the employees’ well-being and organizational effectiveness (Islam, et al., 2013). Organizational competitive performance requires commitment from employees as an effective team player for meeting their goals. OC is a vital component of employee’s emotional condition because committed employees are involved in positive activities and exhibit positive behaviors and involve in activities that lead to enhance organizational performance (Jaros, 1997). OC as a dedicated employee’s stability and intensity has got ample attention of the researchers (Eisenberger et al., 1990).  Commitment is considered as a vital factor contributing to organizational efficiency. Commitment has been conceptualize through various approaches. According to Morrow (1983), commitment is related to 25 concepts and measures. Two approaches, behavioral approach and attitudinal approach identify the commitment (Blau & Boal, 1987). Meyer & Allen (1991) have marvelous contribution in developing the main model of OC and this models is based on three distinct conceptualizations including affective, continuance and normative.

The more prevalent approach for OC in literature is the consideration of psychological association with the organization as the individuals with strong commitment involve and enjoys while staying and working at the organization (Allen & Meyer 1990).  AC is based on the individual recognitions and value correspondence with the objective. AC may be described by emotional connection to, recognition with, and association with the organization (Meyer et al., 2002). Hotel employees’ CSR perception positively affects emotional attachment and AOC mediates the association between PCSR and OCB in Korean hotel industry (Lee & Kim, 2013). Perceived internal CSR affects employee’s commitment; it can strongly affect affective commitment, while normative commitment can be weakly affected by it (Mory et al., 2015). Employees’ CSR perception towards all the internal stakeholders affects their organizational commitment significantly and positively (Hofman & Newman, 2014).

 

CSR and Affective Commitment

CSR and OC research is gaining consideration of the researchers now a day’s and researchers are considering it as an important area of research in the current era (Farooq et al., 2014; Ditlev-Simonsen, 2015). CSR is positively linked to organizational commitment which ultimately results in better organizational performance (Glavas & Kelley, 2014). CSR determines the workplace job attitudes and behavior (Glavas, 2016a) including OCB (Rupp et al., 2013), innovative behavior (Brammer et al., 2015) and OC (Glavas & Kelley, 2014). CSR directly and positively affects affective commitment of employees (Rego et al., 2011). Social exchange theory (Blau, 1964) is helpful in explaining the mechanism of peoples’ emotional attachment with organizations when they are socially responsible. CSR and its influence on employees’ affective organizational commitment is the fundamental basis of the relationship of studies between CSR and commitment (Roeck & Maon, 2018). An employee’s OC positively affects in performing extra-role behavior (OReilly & Chatman, 1986). Previous research studies also reveal that OC predicts the employee extra-role behavior because it has significant impact on OCB (Ahmed et al., 2011). OCB is ratified differently in various cultural settings the meaning of good citizen varies differently (Gautama et al., 2005). Jaros (1997) says that level of commitment will determine the level of OCB, mean as much high as the commitment, the high will be extra-role performance which is considered as favorable for the organizational performance. Scholl (1981) finds that OC made individual exhibit and keep stable behavior unconditional and without any reward. OC results in performing extra-role behaviors (Johnson et al., 2005). It is empirically verified that affectively committed employees are very good in compliance behavior comparative to altruistic behavior. Furthermore, (Shore & Wayne, 1993) found that affective and normative commitments have positive influence on employee citizenship behavior while continuance commitment negatively affects these behaviors and organizational performance.

Organizational Citizenship Behavior

OCB is not a part of formal job description and is discretionary personal behavior exhibited by an individual. This behavior is not part of formal job and not linked with any kind of reward, and collectively it helps in functional effectiveness of any organization (Organ, 1988). OCB positively impacts organization and its members. OCB help organizational managers in creating supportive work environment that may increase subordinate efficiency. Daniels et al. (2006) states that OCB is not formally required for job performance but it is based on employee consent due to organizational environment provided to the employee. Fair treatment to employee by the organization results in citizenship behavior of employees (Shapiro et al. 2004). OCB as a discretionary behavior is associated to OC. Two dimension of OCB (Williams & Anderson, 1991) and five dimensions (Organ, 1988) have been described. The five dimensional models consist of altruism, courtesy, conscientiousness, civic virtue and sportsmanship. There are two employee-related behaviors which are self-sacrificing and courteousness. These behaviors deal with coworkers’ relationship and care for them.  The former helps the organizations to support their members solve problems and the latter indicate to keep away work issues or minimum they should let others know about these problems so that they may avoid these problems.

Todd (2003) describe altruism as the helping behavior of an employee, it is willingness of an employee to support coworkers and his selflessness toward his organization. Helping others beyond the job requirements is termed as altruism (Redman & Snape, 2005). Altruism is considered as one of the important antecedents of the OCB as is explained by Pare' & Tremblay (2000) that helping of those colleagues who have been absent from their duty as well as with heavy workload, having an awareness of helping others and guiding new employees in their job roles and this shows clear signal of employees’ interest in their organizations. Neihoff & Yen (2004) stated that altruism affects employees’ efficiency due to his support to his fellow employees in his permitted time on important tasks. It encourages teamwork and collaboration by allowing employee to develop and extend knowledge. Redman & Snape (2005) confirms that altruism is helping individuals related to organizations. Wu (2001) argues that altruism helps people in exchanging the benefits with exchange in utility with selflessness view of their personality. Conscientiousness is obeying the rules and following the procedures in the absence of supervisor. Lepine et al.,(2000) discusses that conscientiousness and openness are the antecedents of decision making in adaptability requirements.  Dedication and responsibility are emphasized by conscientiousness with interpersonal help as basic motive by engaging in those positive behaviors which are beneficial for organizational health. Conscientiousness impacts important job outcomes (Goldberg et al. 2005). It can be expressed in many ways in the organizational settings, specifically in the context of job-related performance (King, 2005).

Civic Virtue refers to behaviors concerning to organizational wellbeing and image (Redman & Snape, 2005). According to Borman et al. (2001), Civic virtue is a self-responsibility of a person being concerned toward the organizational life. Todd (2003) defines civic virtue as a behavior which reflects employee’s level of responsibility toward organization is concerned about the company life. This behavior is revealed through employees’ voluntary participation in meeting and other activities and it is stated by Baker (2005). Civic Virtue as a responsible and productive contribution in the political process of the organization. It is determined by Coole (2003) that organizational effects cause this behavior to raise. Care and sportsmanship belong to attitudes and reactions of employees to useful circumstances. The former tells us to go without going into smallest amount of obligations and completing of task with organizational system with hard work and commitment while the latter discusses with the context of following the enterprise rules and SOPs and to tolerate the imperfect circumstances without grievances. Public good quality is related to remaining caring and practical for contributing in organizational actions. Keeping in view cultural differences between western and eastern societies, socialist culture like Chinese has been recognized that there are five more dimensions which are unique with the context of socialist culture (Farh et al., 1997). It is further persuaded that prosocial behavior should be the part of social context in China, which may be called as social welfare (Farh et al., 2004). In comparison with different practicalities of the term OCB, it is obvious two models of Organ (1988), and William and Anderson (1991) are mainly used in educational research studies (Podsakoff et al., 2009). OCB plays a very important role in improvement of the effectiveness, efficiency, and creativity of organizations (Claudia, 2018). OCB plays mediating role between the effects of organizational support and psychological empowerment and performance of job (Chiang & Hsieh, 2012).

 

CSR and Organizational Citizenship Behavior

Freeman (1984) proposes that stakeholders are very vital for corporations, and the corporate should take care of them. CSR is considered as an organization’s commitment for economic development along with well-being of employees and community at large while behaving ethically (WBCSD, 2000). Employees perceive the actions taken by the organization for the stakeholders as CSR. Employee CSR perception is an understanding of organizational responsibility toward their welfare and care (De Roek et al., 2013).  Employees honor workplace environment through their perceptions and is vital to consider employee perceptions as it has impact on their attitudes and behaviors (Esineberger at al., 1986; Cable & Judge, 1996). Internal CSR has its own importance and it specifically focuses on organizational activities for taking care of employees (Mehta et al., 2014). Internal organizational operations toward employees are linked with the internal CSR (Bauman et al., 2007). It is revealed in the survey (Egeberg,, 2010) that CSR activities have increased in a number of organizations.

Those organizations which make CSR as part of their strategies such as health and safety initiatives, employees’ learning and development  and better working conditions receives the positive employee behavior. Employees are important factor in getting competitive advantage and more important to retain the skilled employees. Turker (2009) and  Shen & Zhu (2011) proposed that internal CSR initiatives validate fair practices as equal opportunity, training and development, human rights and health & safety etc. There is positive relation between CSR and employee’s attitudes and behaviors. The study results of Duante & Neves (2010) reveal positive association between CSR and OCB. Furthermore, Noor (2009) proposed that employee’s performance is correlated with work life balance in a positive way, so the management should focus the internal component of CSR carefully. Those organizations which create work life balance for employees as a result reduce negative attitudes and its consequences and receive positive attitudes and behaviors like organizational citizenship behavior. Training and development play prominent role in organizational development. Training provision for developing employees’ skills and making them ready for future growth may feel employee’s obligation (Shahzad et al., 2013). Respect and recognition culture is vital for organizational transformation so the organization which create an environment of respect, reduce the turnover and absenteeism rate.  In this perspective it is evident from the study of Rupp et al., (2006) and Choi & Yu,(2014) that CSR and OCB are positive related. When the organizations work for the well-being of all the stakeholders’ in the form of CSR, it develops a positive image in stakeholders and societies. Hence, the employees feel satisfaction and their psychological needs are fulfilled. They feel secure, enhanced self-esteem and pride with the organizational identity. According to social exchange theory (Blau, 1964), employees will give in return and   as a norms of reciprocity (Konovsky and Pugh, 1994), employees will reciprocate positive behavior toward their organization which are organizational citizenship behavior.

 

CSR and Employee Innovation Behavior

EIB is defined as “individuals' behaviors directed toward the initiation and intentional introduction of new and useful ideas, processes, products, services or procedure within a work role, group, or organization (De Jong, 2006, p. 19).”  As the employee exhibit innovative ideas by generating ideas, promoting these ideas and then implementing them.  Therefore, it is focus of businesses to bring improvement in employees’ working in a hectic and complicated situation (Yidong & Xinxin, 2013).  Perceived CSR affects employee citizenship behaviors, OC, and other positive behaviors (Cropanzano et al., 2001). When CSR activities by the organization are perceived by the employee are toward caring society and environment, employee feelings for working with the organization (Chaudhary & Akhouri, 2018). In other words, CSR performance nurture the risk taking culture by employees’ and any initiative irrespective of outcome results or feeling any fear (Glavas & Piderit, 2009). Extra-role behavior is not a part of formal job description while it is discretionary and exhibited voluntarily so EIB is also an extra role behavior as the generation of new and innovative ideas is not part of routine job of an employee other than research and development department employees, for smooth functioning of the organization (Afsar et al., 2014). There is ample proof of positive relationship between CSR perception, creativity and innovation of employees such as Glavas & Piderit (2009) found direct impact of CSR on employee creativity while Brammer, He & Mellahi (2015) proved impact of CSR on employee creative involvement indirectly via organizational identification. Environmental and community related CSR greatly impacts employees’ feeling of meaningfulness while working with such organizations which as a result brings creativity and productivity (Brammer et al., 2015).

Organizations with CSR flagship provide employees a very flexible, free and open working environment so that employee may work on innovation their products and services for the company and the community (Brammer et al., 2015). Similarly, Hur et al. (2018) found that employees become intrinsically motivated due to perceived organizational CSR for taking new innovative ideas and go further to implement these ideas. Strong interpersonal relations trust and support environment encourages employees in taking initiatives. CSR activities help employees’ in promoting their values as the value of organization match their own values (Evans et al., 2011). Similarly, Jones et al. (2014) fond that CSR related activities are the source of attraction for employees because CSR signals important values for them. Personally meaningfulness of work also motivates employees to do the job innovatively (Kahn, 1990). Because, CSR serves a greater cause so this contribution is perceived as meaningful by employees (Glavas & Kelley, 2014). Employee’s perception about his organization’s real and true contribution for the welfare of the society, improvement of natural environment, taking initiatives for overcoming pollution and serving community's larger interests encourages him to offer his best in her/his job. So, likely CSR positively affect EIB and improves service innovation.

 

Literature Based Findings and Discussion

The current study can be explained within the perspective of social exchange theory (Blau, 1964). Core concept of this theory explains that there is reward for every exchange relationship between two parties (Blau, 1968). When there is action from one party, there is reward from other party as a result of reaction (Blau, 1964), and these exchanges are two way and are conditional(Emerson, 1976). The literature studied reveals and can be explained in light of social exchange theory as CSR fulfills the employees’ psychological needs and they feel pride while working with a socially responsible organization. In result of such actions from the organization employees’ feel obliged and as a norm of reciprocity they want to give something to the organization in return. They give their affective commitment and positive behaviors in return to the organization. Affectively committed employees will exhibit citizenship and innovative behaviors, which help the organizations in improving their performance and gaining competitive advantage. The present study sheds light on the importance of employee-related CSR and its importance in employee’s positive attitudes and behaviors. CSR as an important area of research needs more attention from the academician and researchers. CSR is considered for showing good image among the external stakeholders and building a good reputation and relationships with these stakeholders. Internal stakeholders’ perspective of CSR is of vital importance for bringing efficiency and improvement in the organizational system. The increasing importance of CSR for business organizations has open an avenue for exploring the importance of CSR on employee attitudes and behaviors and this will be very helpful for organizations to devise their strategies while focusing on internal stakeholders.

 

Theoretical Implications

The study has theoretical implications as well. Employees’ attitudes and behaviors have focused on CSR perspectives. From extensive literature review and with the help of social exchange theory (Emerson, 1976), It is found that CSR affects employees’ feelings toward the organization. These feelings positively influence employees’ perception about organizational care and responsibility toward them. Due to this feeling employees get an emotional attachment with their organization, and this attachment results in citizenship and innovative behaviors, which leads to improve service innovation performance. In spite of plenty of research work on CSR and employee’s related outcome but there is less literature available on the psychological attachment phenomenon of employees with their organization. The current research study has started and explored new dimension for researchers.

 

Limitations and Future Research Agenda

The current study is only literature-based, and it has not been verified empirically. Current literature considers only the micro perspective of CSR, which mean that attitudinal and behavioral changes in employees. Most of the CSR literature available is from a macro perspective, and its influences from external stakeholders are being considered. In future studies, CSR should be considered separately as internal and external, and both type of CSR should be explored from employees’ perspective. Furthermore, the theoretical model should be empirically tested in different organizational settings.


 


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