Perceptions and drivers of CSR in developing countries : the role of institutional and organizational factors : a focus on Egypt

• Wahrnehmungen und Treiber von CSR in Entwicklungsländern : die Rolle der institutionellen und organisatorischen Faktoren : ein Schwerpunkt auf Ägypten

El-Bassiouny, Dina; Letmathe, Peter (Thesis advisor); Lorz, Oliver (Thesis advisor)

Aachen (2016, 2017)
Dissertation / PhD Thesis

Dissertation, Rheinisch-Westfälische Technische Hochschule Aachen, 2016

Abstract

The enormous boost of technological advancements has unfortunately caused remarkable environmental damage. This is when “sustainable development” was brought on top of contemporary world list. Advances in sustainability knowledge and concepts have increased as well as research on the social and environmental activities of corporations. Along the same line, recent corporate scandals have awakened public awareness and increased corporate social responsibility (CSR) practices. Yet, the diversity in CSR application in different societies and the reason for their existence are not adequately reflected in mainstream CSR research. A considerable body of CSR literature is Western-driven and research studies that explore the perceptions and practices of CSR in developing nations, which have different social, political and economic conditions compared to Western societies, are still limited. Based on that, the main aim of this dissertation is to study the CSR phenomenon in a developing country context to contribute to a more holistic understanding of the CSR concept and help in comprehending how CSR is applied in diverse settings. Accordingly, this dissertation examines different macro-institutional and micro-organizational level forces that drive CSR practices in a developing country context; namely Egypt.Overall the dissertation examines two main research questions on which the individual studies are based; (1) what is the influence of macro-institutional & micro-organizational level factors on CSR practices in developing countries? Do macro-level factors affect the interplay between micro-level factors and CSR? And (2) how can the CSR practices of corporations operating in developing countries with complex and unique institutional environments be stimulated & enhanced? The dissertation thus contributes to the CSR research field by addressing CSR predictors in developing countries on the institutional and organizational levels of analysis and by illustrating how institutional-level factors can influence the dynamics of interaction between organizational-level factors and CSR. In addition, the dissertation highlights the context dependence of CSR and clarifies the context-specific factors that trigger CSR in developing countries, specifically Egypt.The results of the dissertation indicate that CSR as a practice in Egypt is not embedded in corporate business strategy where material CSR issues to the business and its stakeholders are identified and dealt with. The results also show that institutional theory provides helpful theoretical insights regarding the social practices of companies in Egypt. Although stakeholder theory represents one prominent CSR theory that has received strong empirical support from Western-driven CSR studies, the inactive participation of stakeholders in the Egyptian corporate life questions its relevance in Egypt. The weak legal and regulatory systems and the strong presence of informal institutions tend to diminish the operationalization of the stakeholder approach to CSR in Egypt.On the institutional level, the business operating environment does not play a role in fostering CSR in Egypt, specifically legal regulations and stakeholder pressure. This implies that CSR practices are detached from government regulations and policies and left to management discretion. A degree of government involvement is thus recommended. This includes, for example, enforcing legal regulations that hold companies accountable for socially irresponsible practices such as environmental damage caused by corporate economic operations. Yet, organizational-level factors play an important role in enhancing CSR practices in Egypt. More specifically, internal norms and governance structures embedded in corporate environments highly affect the degree by which corporations effectively adopt social practices. This is particularly the case for developing countries. Given the well-established institutional environment in developed countries, the influence of firm-level factors on CSR becomes much less obvious. The results indicate that CSR practices in Egypt can be enhanced through the activation of micro-organizational-level forces, specifically internal corporate governance and corporate diversity.Employing effective governance mechanisms and instilling some degree of diversity in Egyptian companies seem salient for boosting CSR in Egypt. In addition, the role of the government and stakeholders needs to be more effective and visible in the Egyptian business environment. Having an appropriate combination of external governmental influence and internal corporate practices that tend to enhance CSR may move Egyptian companies toward more socially responsible behavior.