Ethical Contribution: Social Responsibility and Saudi Arabia

Ethical Contribution: Social Responsibility and Saudi Arabia

Introduction

In today's business environment, one of the most important issues is corporate social responsibility or CSR. According to Bueble (2009), CSR can be defined by looking at what the organization is responsible for and what are the things that motivate them to do it. For Vogel as qtd in Bueble, 2009) defined CSR as the "policies and programs of private firms that go beyond legal requirements as a response to public pressures and social expectations (4)." This definition illustrates CSR as the commitment of the organization to do what is not required of them, but what they are expected of them. The government sets forth the guideline and regulation for the basic concerns that should be done by the organization, but CSR is more than the guideline of the government, it is all about the expectation of the society.

While on the other hand, Cramer & Bergmans (2003) define CSR as "the conscious focusing of the company's activities on long-term value creation in three dimensions: profit, people, and planet (114)." Instead of devaluing CSR as a separate division of the company or organization, CSR is attached and embedded to the operations of the business for the achievement of goals and objectives affecting the three dimensions. Of course, the primary concern of the organization is to generate profit or economic return. But along with this goal, it is necessary to ensure that activities or operations of the business provide safety to the people inside and outside the organization. And of course, the environment is another area of concern. Business operations must comply with the basic requirement for environmental sustainability – and organizations should take more than just what are expected of them for environmental protection.

Nonetheless, United Nations Institute for Training and Research or UNITAR (2013) further defined CSR as the incorporation of social and environmental purposes and objectives into the day-to-day operations of the business. It is impossible to separate the business operation from the impact of CSR. By keeping the operations of the business in alignment with the CSR, it is easy for the organization to meet demands and purposes of stakeholders. Simply, CSR in today's context is more than just corporate philanthropy, but it is the coordination of ethical values and respect for people, and the high regard to the environment and society. This broader definition of CSR sets forth the scope of CSR for organizations to look for and ensure that their responsibility is equated with their power.

In this paper, I will be reviewing the corporate social responsibility of Saudi Arabia, using five Saudi Arabia-based companies as the primary references. This analysis will look at the commitment of the organization to improve life of the people, ensure sustainability of the environment, and promote the best welfare of all stakeholders. It is necessary to note that when western corporations look for ways with the role in the society, Middle Eastern companies are way far behind with regards to the proper perception on CSR (Ronnegard, 2013).

Construction Products Holding Company; CPC

According to the Arabian News (2013), the Construction Products Holding Company (CPC) had been recognized for its "role a national company is to ensure that their CSR program enhances the development of the society that they are part of." In the same manner, the company also receive the Corporate Social Responsibility award from the ITP Group of the Arabian Business for the year 2011. These awards and recognitions given to CPC are statements of how the company regards their role and responsibility in the society.

Part of the CSR initiatives of CPC is the youth training programs for individuals who want to learn about the construction industry and all materials, specifications, and manuals that are necessary in this industry (CPC, 2012). Youths are allowed to work in factories of CPC as a commitment of the company's policy to ensure that Saudi Arabian youths know the industry that has an important place to the development of the nation. Simply, CPC works within the education setting for their CSR initiatives. With this initiative, demand for manpower is always met to ensure that the industry gets the necessary support for its growth.

The explanation of the social and ethical contribution of CPC can be traced to the political theories of CSR. Political theories of CSR works on the principle that the power of the organization has a certain level of responsibility. This cements the idea of correlation "between business and society and on the power and position of business and its inherent responsibility (Garriga & Mele, 2004, p. 5)." Following the axiom of this theory, it is to say that CSR becomes an accomplished objective. It simply says that because the company or business is part of the society and that actions of any entity of the society affects each other, it is necessary for business to use power responsibly, either for its own benefit or the benefit of consumers.

Saudi Basic Industries Corporation (SABIC)

According to the CSR Middle East (2013), Saudi Basic Industries Corporation (SABIC) sponsored a training course for the Charity Committee for Orphans Care (ENSAN). The goal of the training is to help personnel of the company to handle or provide multidimensional services to orphans. This will include a training on how to support orphans, on how to build support for them, and how to ensure that they live in a world that will foster their growth and development.

The CSR of SABIC can be considered as truism of ethical theory of CSR. Ethical theories on CSR become the focal point of today's business environment. This is anchored on doing the right thing for the best purpose, rather than allowing businesses to do what they want to achieve their goals. These theories center on the idea of check and balance, respect, and adherence to the norms of the time. It should be that the interest of the organization reflect the legitimate and right interest of stakeholders without hindering the achievement or accomplishment of the interest of the common good. This becomes the fundamental framework most organizations follow in their definition of CSR to ensure that all stakeholders and interests are given attention and are properly addressed.

Looking at SABIC, we can see a wide gap between the nature of the company and that of their CSR. There is a small fraction, or not at all, of benefit that can be derived by a company that works with chemicals, industrial polymers, and other industrial products from an initiative that involve orphans. Therefore, the initiative can be defined as being of “policies and programs of private firms that go beyond legal requirements as a response to public pressures and social expectations (Bueble, 2009).”

Saudi Aramco

On the other hand, we can trace the value of integrative theory of social responsibility with the way Saudi Aramco responds to the demand of the society. Integrative theories follow the order that business depends on society for its growth, continuity, and development, as such business has inherent responsibility toward society (Gond, et.al., 2010). This means that the society defines the roles of the business, rather than the business defining the society. In this regard, the public opinion becomes an important part to the direction that the business should take. Looking closely, this becomes a truism of the practice today. CSR is more defined on what the society needs at the moment and not on what the business sees the society needs.

Due to the fact that Saudi Aramco is a national company with stakes on important industries such as gas and oil and with a gigantic worth of $10 trillion according to the Financial Times, the organization has great influence in the society (Oxford Business Group, 2009). It must be noted that with a company that has a great influence in the society, the responsibility is also very broad. At the moment, the company has initiatives in the economic growth of Kingdom of Saudi Arabia, in local communities, in educational setting, and in innovation for the protection of the environment (Saudi Arabian Oil Co., 2012).

Looking closely at the integrative theory of social responsibility, we can see that Saudi Aramco has great dependency on the value of the society as the primary factor in its growth. For companies that are involved in activities that involve people, the welfare of the people is central to them. On the other hand, Saudi Aramco understands its environmental responsibility for its continuity and growth and they translated this responsibility into the CSR initiative. It must be noted that although Saudi Aramco started the CSR move for the future direction of the Kingdom, there are several things that should be considered [as discussed in next companies].

National Commercial Bank

As much as the goal of CSR is to promote the common good or “policies and programs of private firms that go beyond legal requirements as a response to public pressures and social expectations (Bueble, 2009),” it is important to note that CSR policy may not really hit the tune of ethical contributions. As per consideration, the National Commercial Bank (NCB) won 'Saudi CSR in the category of Supporting Entrepreneurs and Small Enterprises' from the Chamber of Commerce and Industry. Of course, we need to note that NCB works its best to achieve such recognition from the Chamber of Commerce and Industry; however, there are questions as to the ethical contribution or CSR of the initiative.

Looking back at the definition of CSR, we find the initiative not going “beyond legal requirements as a response to public pressures and social expectations.” The company is just working within the limits and bounds as it is expected. Of course, NCB is expected to promote and support small enterprises as part of its strategy to expand operations, but we can't find it going beyond what is expected of it.

In this standpoint, CSR becomes instrumental only in the creation of wealth and generation of the same. As such, even the philanthropic activities or investments of the company should be in accordance to the value of return of investments or profits in the future. In this theory of instrumental CSR, the organization does not have any obligation or responsibility in a sense, but the organization has interest on the society only when self-enlightened (Esposito, 2009). This means that the organization should not drag the entire stakeholder of the organization to provide CSR, but it should be that the organization maximizes profit for stakeholders to provide the necessary CSR. As much as NCB works on its CSR initiatives, these initiatives are geared toward the direct support of activities and operations that will yield profits to the organization in the future.

ACWA Power

Going to the same direction with the National Commercial Bank, ACWA Power's CSR initiatives is deeply embedded in the educational development of the people. The organization works to hire Saudi Arabians over others. This means that the organization looks forward to the welfare of the people because it believes that the people support the company. There are also graduate programs given to employees for them to grow and there are also new initiatives to create youth programs (ACWA Power, 2013).

Although the organization works to promote a CSR for educational development, we also have a problem with the intent of this initiative. While Construction Products Holding Company (CPC) works with training programs for youths, but they they still get impact, the ACWA Power initiative is purely internal. The CSR works for the benefit of the people within so that they can work well for the benefit of the organization.

The CSR initiative can be reviewed within the range of instrumental theory because it seeks only to work best for its direction. But we can also say that this is under the political theory of CSR because its seeks to deliver the best people for job within an industry that affects the entire Kingdom if a single failure is made.

Suggestions to Promote Social Responsibility

As much as the following issues have been analyzed, it is necessary for the Kingdom of Saudi Arabia to push for the following for improvement of its ethical and social contributions:

• Government. Of course, King Abdullah has called for a proper CSR, and not just making CSR a rhetoric within the business environment (Baker, 2013). However, it is necessary for the government to formulate the base of CSR. As much as CSR is going beyond the requirement, the government should set the requirements. By setting regulations on CSR, the government can enforce awareness and involvement.
• Translate the Change to Smaller Companies. With the five companies cited, we find that the CSR of KSA is purely among big companies. It is the time for the CSR to be translated among small companies. It is impossible to create bigger impacts without the aid of all those within the business environment. It must be noted that not only big companies have the responsibility toward the society. Rather, the entire business environment, including all small companies, have the responsibility toward the people, to the society, and to the environment. It is very important that members of the business environment and all stakeholders have a say on CSR. This is not just an isolated initiative, but it is an initiative that encompasses size of companies, nature of industry, and even preference of management.
• Investigate CSR of Companies. Another problem that has caused tremendous drawback and pitfalls to CSR is the lack of legal framework for requirement (first suggestion) and the lack of effort to investigate companies, regardless of size, with regards to CSR. Of course, CSR is a choice of organizations by going beyond the requirement, but it is still necessary to properly investigate them, whether they join forums or not. The inclusive nature of CSR is a ground for the investigation of the initiatives being made by organizations.
• Foster Associative Initiatives. Organizations are always free to choose what CSR policy they want to adopt. However, due to this, the CSR may not work for best of the society. For instance, there is always a need to respond to wrongful violence against women, but companies do not act on it. By fostering relationship with other organizations, companies in KSA can work on CSR initiatives that will promote the biggest impact on the society. Rather than focusing on self-centered CSR policies, an integrated CSR framework can target what the society really needs, as discussed above on integrative theory of CSR.

Conclusion

The goal of most CSR policies is not actually to promote the common good of mankind or the society. Rather, the main purpose of CSR is to project a strong corporate image of good behavior and character. Instead of providing for the needs of the millions, organizations are looking for ways on how to come up with a good image that increase their value in the market. This is a backward perception of corporate social responsibility, and not really on its way to the truism of the principle of ethical contribution.

In reality, CSR is only but a theory and policy. Perhaps, instrumental theory and social capital theory are more proper to be used to explain CSR. CSR policies are focused on the maximization of profits and on how organizations can benefit from their CSR. In the implementation and application of real CSR commitment, the government should be the first motivator and mover. In fact, in water democracy, the government is expected to act for the welfare of the people. Rather than wait for private organizations to adopt a CSR policy that really translates the welfare of the people, it is time for the government to do its part by imposing the rules on how CSR should be implemented.

Second, it must be clear that the goal of business which is to make money should not come in priority against the need of promoting the common good of the people. Rather, it is necessary for organizations to create CSR that would empower the society's populace so that they can become members of the market. Lastly, CSR should not be about how the business can get something in the future, but how they can improve society itself. When CSR becomes more focused on the people, the society receives the best reward and results, and this generates a ripple on other components of the society to benefit all.

References:

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