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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. Lebanon Area : 10,400 sq km

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slide1

Corporate Social Responsibility (CSR)Implementation In Lebanon: A Causal Recursive SystemAbdulrazzak Charbaji, Ph.DProfessor of Applied Statistics and Research Methodswww.charbaji.com

slide2

Lebanon

Area : 10,400 sq km

about 0.7 times the size of Connecticutland: 10,230 sq km water: 170 sq km

border countries: Israel 79 km, Syria 375 km

Population 3,727,703 (July 2003 est.)

http www heritage org research features index downloads html

http://www.heritage.org/research/features/index/downloads.htmlhttp://www.heritage.org/research/features/index/downloads.html

slide4

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.

slide5

http://www.ciesin.columbia.edu/indicators/ESI/rank.htmlEnvironmental Sustainability Index2002 Rankings

Rank Country ESI

1  Finland  73

 106  Lebanon  43.8 

142  Kuwait  23.9 

slide6

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

slide7

DEFINING CORPORATE

SOCIAL RESPONSIBILITY

A review of related literature reveals

that the definition of CSR

remains a problematic issue

slide8

At one extreme

Frankental believes  that CSR

is ambiguous

and indefinable term.,

which can mean any thing

to anybody (Frankental, 2001).

slide9

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)

the legitimacy of csr relates to fundamental and crucial questions as to why do corporations exist
The legitimacy of CSR relates to fundamental and crucial questions as to why do corporations exist?
slide11

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 company’s resources?
slide12

Carroll (1979) suggested that corporations

  • have four responsibilities to fulfill:
  • Economic,
  • Legal,
  • Ethical, and
  • Philanthropic
slide13

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)

slide14

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.
slide15

The Effect of CSR

on Firm's Performance

previous empirical research has produced varied results
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)

the property rights theory rule
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.

the social institution theory
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

the contractual theory of the firm
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

slide21

Company’s 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

slide22

Corporate Social Responsibility

in Lebanon

CSR is in its infancy stage

in Lebanon

&

There is a scarcity

of applied  research into CSR  in Lebanon

slide23

Lebanon’s Prime Minister

Rafik Hariri

wrote an article in which

henotes that taking

environmental issues seriously

means that people are striving

for a better quality of life

slide24

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.
slide25

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

slide26

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

slide27

HSBC is funding

teacher – training

seminars

slide28

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

slide30

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

action research
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.

partnership promotion and building
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.
slide34

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

schtroumpf a local restaurant chain
Schtroumpfa 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

ftml cellis a subsidiary of france telecom worldwide group orange
FTML- Cellisa 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.
coca cola
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).
tetra pak east med
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

to sum up even though csr is becoming a corporate goal in lebanon
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

slide41

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?
slide42

The present study involved

  a sample of 406

including managers,

assistant managers,

directors, assistant directors

slide58

Findings of the Study

Factor Analysis

was ran on 217

valid cases without

missing values

out of 406 cases

kmo and bartlett s test
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

factor extraction using oblique rotation
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
factor 1 accounts for 30 5 of the variance
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”

factor 2 accounts for 25 28 of the variance
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”

factor 3 accounts for 15 2 of the variance
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”

factor 4 accounts for 10 89 of the variance
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”.

slide66

Using factor scores and the dependent variable

“Indicate the percentage of your

company’s total shares held by ethical,

sustainable, or socially responsible investors.” ,

multiple regression analysis is conducted

slide67

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

slide71

Decomposing

the Correlation Coefficients

slide73

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

slide75

The true direct effect

of Corporate Governance

& Organizational Policy

on the percentage of company’s 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

slide76

Suggested methodology

to construct “CSR” Index that aids in ranking countries

on “CSR” scale

slide77

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