Practising corporate social responsibility in malaysia a case study in an emerging economy

ADAB Australian Development Assistance Bureau BDA Bintulu Development Authority CSR Corporate Social Responsibility EC European Commission FDI Foreign Direct Investment GDP Gross Domesti

CORPORATE SOCIAL RESPONSIBILITY

IN MALAYSIA

Loi Teck Hui

A Case Study in an Emerging Economy

in Malaysia

Practising Corporate Social Responsibility

in Malaysia

A Case Study in an Emerging

Economy

& Loi & Mokhtar Consulting

Bintulu, Malaysia

ISBN 978-3-319-62475-4 ISBN 978-3-319-62476-1 (eBook)

DOI 10.1007/978-3-319-62476-1

Library of Congress Control Number: 2017948254

© The Editor(s) (if applicable) and the Author(s) 2018

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I felt deeply honored in 2012 when Bintulu Development Authority permitted me to research into the practicing corporate social respon-sibility aspects of the organization since its establishment in 1978 for advancing knowledge in the areas Under the leadership of Bintulu Development Authority’s top management, the recent industrializa-tion process, and township modernization in Bintulu have moved to a whole new level Therefore, this study is timely and compelling in an era calling for greater public accountability and sustainable develop-ment As the premier industrial town in Malaysia, it seems that Bintulu

is well positioned to attain the friendly industrial city status by the year

2020 as articulated in the vision statement of Bintulu Development Authority

Outside my immediate environment, I am thankful to all the dedicated staffs of Bintulu Development Authority who provided the required information in making this corporate social responsi-bility intellectual discourse a success In particular, I am indebted

to Mr Shukarmin Chasemon, the deputy general manager of Bintulu Development Authority and the chief internal coordina-tor of this research project, on his diligent liaison efforts on all the

aspects concerning this research I am also grateful to Department of Environment, Department of Statistics, Malaysian Palm Oil Board, State Health Department, the related private and public agencies, inter-national reviewers, and family members for their efforts in providing some crucial datasets, comments, and encouragements Photo cred-its are also given to some online sources Some portions of this book are based on and adapted from some related research works previously presented and published in several premier academic outlets such as

the Strategic Management Society’s special conference, Emerald Group Publishing, and Routledge The administrative and editorial work by the

Palgrave Macmillan team on this book project has been excellent

4 Integrating Corporate Social Responsibility

5 Integrating Corporate Social Responsibility

6 Integrating Corporate Social Responsibility

8 Implications on Corporate Social Responsibility

9 Concluding Remarks 173

ADAB Australian Development Assistance Bureau

BDA Bintulu Development Authority

CSR Corporate Social Responsibility

EC European Commission

FDI Foreign Direct Investment

GDP Gross Domestic Product

GLGs Government-linked companies

ISO International Organization for Standardization

PLCs Public Listed Companies

RECODA Renewable Corridor Development Authority

RM Ringgit Malaysia

SCMD Sarawak Chief Minister’s Department

SCORE Sarawak Corridor of Renewable Energy

TGRI The Global Reporting Initiative

The ASEAN The Southeast Asian Nations

TQM Total Quality Management

WEF World Economic Forum

Fig 3.1 Bintulu Development Authority’s headquarters in Bintulu 53 Fig 3.2 Bintulu Development Authority’s municipal services center 53 Fig 3.3 Organization chart of Bintulu Development Authority 55 Fig 4.1 Bintulu development plan completed 66 Fig 6.1 Trends in municipal income and expenditure 2009–2012 90 Fig 7.1 Trends in financial performance and position 2009–2012 131 Fig 7.2 Air quality status in Sarawak in 2012 138 Fig 8.1 Bintulu Development Authority’s practicing corporate

Table 7.3 Three stakeholder management cases—background

Table 7.4 Balance sheet for financial years 2009–2012 128 Table 7.5 Profit and loss accounts for financial years 2009–2012 130 Table 7.6 Revenue of municipal councils in Sarawak 132 Table 7.7 Expenses of municipal councils in Sarawak 133 Table 7.8 Principal exports value and percentage distribution

Abstract This chapter presents the introductory contexts, purpose statements, research aim, and research objectives of this CSR research The organization is tightly embedded in the society and the natural environment Managing diverse interests of its stakeholders can be an uphill task Lacking of qualitative narratives on a holistic CSR process coupled with diverse CSR definitions in the field might have eroded the actual values of CSR in contributing to an organization’s sustained value creation capability That said, whether practicing CSR can gen-erate resilient socioeconomical performances simultaneously requires further academic investigations This research takes CSR in a holistic approach, i.e., examining its adoption in a firm’s strategic planning pro-cesses from multiple perspectives It also accesses valuable governmental datasets, covering the core functions of public sectors such as develop-ment agency and city council which receive little attention in the cur-rent literatures.

The world and its natural laws interact with human societies to affect the health, activity, life, and well-being of all living things Different natural components of the earth interrelate to determine how the human can make choices to support sustainable development Scientific principles are applied to create inventions to support human progress and to establish a sense of community that supports human endeav-ors On the other hand, organizations are also established to address the needs of communities via viable use of finite resources through eco-nomic exchanges Mobilization of economic activities relies on systems

of production, distribution, and consumption of goods and services Satisfying the diverse interests of living things is dependent on a com-plex balance of interconnected factors The organizations set corporate missions, establish code of ethics, and develop crucial resource capabili-ties in order to deploy and share better the finite resources with other living things

Economic growth, social progress, and ecological balance are the damental components of sustainable development An organization,

fun-be it public or private, is not detached from the society and the ral environment Given the tight interconnectedness of human-made systems, communities, and environments, it is an uphill task for the organizations to balance the diverse interests of their stakeholders in a fast-changing world Living up ethically to the sound corporate respon-sibilities whether can be something that actually has a bottom-line pay-off for the organizations remains an enigma Hence, there is an urgency

natu-to look innatu-to the roles and manners of modern organizations in building

a better future without forsaking universal principles

People cling on to or thrust aside social artifacts Exploration and exploitation with local and international mindedness can lead to new understandings, opportunities, and changes The object of management

is a human community held together by the work bond for a common purpose Management always deals with the nature of man, and with good and evil (Drucker and Maciariello 2004) Its process in essence

is a system of interdependency (Miller and Whitney 1999) Pragmatic management upholds the output, often justifying the inputs in terms

of the results Corporate mishaps imperil modern enterprises’ influence

on others through morality practices Accounting irregularities, insider

trading, and misuse of entrusted power for personal gains, as reflected

in the corporate failures around the world, still pervasive in the ioral inputs to the modern management processes (Atkinson and Field

behav-1995; Hui 2008, 2010) The pervasiveness of such phenomena in all kinds of human-run organization can become an evolving organiza-tional disease that impairs a firm’s long-term corporate sustainability

As such, morality is still an issue of general concern especially where the orthodox world of organizing is increasingly subjected to disorder-ing The existence of such trends provides another new opportunity to understand organizations and to build more encompassing theories and practices on corporate responsibility

There is nothing inherently wrong with the fruits of affluent The current troubled world economies, corporate failures, and geopolitical environments suggest that the perspective needs to be recalibrated As the steward of the earth, the human ought to safeguard the continuous fruitfulness of the finite resources by developing all potentialities built into the natural world (Atkinson and Field 1995; Hui 2008, 2010)

1.1 Purpose Statement, Aim, and Objectives1.1.1 Purpose Statement

Milton Friedman (1970), a recipient of the 1976 Nobel Memorial Prize

in Economic Sciences, argues that the primary social responsibility of business is to increase its profit without deception There have been sev-eral works written to point out the limitations of his works especially in

a more agile kind of economy (Denning 2013; Grant 1991; Husted and Salazar 2006; Mulligan 1986) A firm develops, acquires, and utilizes resources to create the capability to endure An unspoken key tenet of corporate social responsibility (CSR) is that the society, within which the firm operates, grants it the license to operate Unfortunately, the unyield-ing need to maximize shareholder wealth has triggered corporate failures (Chatterjee 2003; Jackson et al 2013) In real world, any practice with

a negative externality that causes other to take a significant loss without consent or compensation, can be seen as unethical (Cosans 2009) The

firms ought to attain sustainability through balancing the complex tionship between current economic, environmental, and social needs, also known as triple bottom line, in a manner that does not compromise future needs (The Global Reporting Initiative [TGRI] 2002) Also, pre-senting business as a combative pursuit may not be practical in the social era that would reward fluid organizations and transient competitive advantage (McGrath 2013; Merchant 2012) A responsible competitive advantage does not monopolize, but create healthy competition in the long run that motivates other firms to provide even better goods and ser-vices (Hui 2008) Separately and together, the above developments raise

rela-a relrela-atively noble set of issues in CSR reserela-arch to rela-address the question of what is the role of a firm in society

A firm essentially is a strategic management system, concerned with deciding on an actionable strategy for organizational effectiveness and environment adaptation Confirming and disconfirming in a stand-alone context is incomplete to explain the strategic value of CSR There have been concerns associated with some prominent yet futuristic CSR paradigms with: (a) limited empirical testing; (b) confinement largely to specific projects and products rather than the entire firm; (c) incomplete CSR definition constructs used in explaining what constitutes multi-dimensional aspects of CSR; and (e) the tension between maximizing profit for shareholders and optimizing returns for stakeholders (Crane

et al 2014) In the current lackluster global economic and geopolitical environments, it is critical therefore to consider the consequences of the aforesaid concerns, and to re-examine the adequacy of the existing CSR models that may not bode well for societies, ecologies, and firms

That said, it is compelling to explore the current state of CSR being practiced in major firms, in particular seeing the CSR intent, planning, implementation, and evaluation processes, and how the CSR initiative changes as the process of implementing and thinking about it changes over time To date, there has been little known about the areas as an integrated, holistic process for sustained value creation The actual posi-tion and the interactive process of a typical CSR planning cycle within the firms’ larger corporate strategic planning process, and the firms’ strategic actions on their CSR performance also require further exami-nation and clarification Taken together, exploration in the areas can

provide a more complete comprehension on the existing CSR enon and the sustained value creation capability of CSR initiatives.

phenom-1.1.2 Research Aim and Objectives

Against the above backdrops, the author conceives that CSR is much more than an effective strategy or auxiliary social practice Rather, it is how the firm and its stakeholders interact and determine each other’s future by sustaining the continuous fruitfulness of finite resources

Thus, a central CSR question that this research aims to address is: does

a firm’s CSR and ethical practices really matter for it to fulfill economic interests and societal expectations?

self-Using qualitative research methods, the research has the following research objectives that seek to examine and understand holistically:(a) the strategic intent and mission of a major corporatized govern-mental development agency and municipal services provider in Malaysia, Bintulu Development Authority (BDA), in engaging CSR practices;

(b) the main features of stakeholder management mechanisms, CSR planning and implementation processes, as well as major stakeholder problem-solving incidences in order to ascertain how the organization incorporates CSR strategies and programs into its core routines for value creation;

(c) the management of CSR performance outcomes resulting from the CSR initiatives and routines; and

(d) the value of CSR initiatives and sustained value creation bility of such initiatives to the organization in fulfilling its cor-porate goals and the expectations of its stakeholders

capa-Sections 2.2, 2.4, 2.5, 2.6, and 2.7 in Chap 2 provide the theoretical cores for the above four research objectives

Emerging markets constitutes over two-thirds of the world’s lation The annual growth rates in gross domestic product (GDP) for China and India have even sustained over the past few years at 7–10%

popu-The emerging countries are gaining more economic and political clouts Country leaders, international managers, civil servants, and researchers are in need of some guidance on how to respond to increased challenges

of practicing and maintaining corporate responsibility under the state

of uncertainty and value disparity The emerging markets and emerging firms can, therefore, be the important testing grounds for existing busi-ness models and theoretical concepts Malaysia was ranked among top

20 most competitive economies 2014–2015 by the World Economic Forum (World Economic Forum [WEF] 2014) Among its 13 states, Sarawak has one of the strongest economies and is the only state to receive an A-rating from Standard & Poor’s (Renewable Corridor Development Authority [RECODA] 2014) Located in Bintulu of the Sarawak state, the premier energy town of Malaysia, BDA is a represent-ative local government, a prevalent form of governmental institution, which can reflect the state of practicing CSR in the areas in Malaysia

To strengthen the analytic generalization of this research and to lessen the critical of disadvantages in limiting the research sample, the author also conducted online information and secondary data analyses

on five representative city councils in the world to find out the monalities of their CSR and social practices with BDA The city coun-cils are, namely Hong Kong District Councils, Vancouver City Council, London Councils, Sydney City Council, and New York City Council The author believes that the findings of this CSR research can be repli-cated in other local governments

com-What constitutes wealth creation remains an enigma when a firm is deeply intertwined with the social milieu It seems that the current chal-lenging global economy can sound difficult for the firms to implement CSR programs, not linked to their overall business strategies and profit creation goals This exploratory CSR study shows that by adhering to good corporate citizen practices, the commitment to practice CSR as an organizational core routine can be of value to the firms for demonstrat-ing uniqueness that generates a form of corporate sustainability with broader societal acceptance It also informs the ongoing debate on the strategic role of CSR, and highlights how governmental agencies adopt CSR by providing novel descriptive data in the areas This can be an important first step for the subsequent large-scale quantitative research

1.2 Chapter Outline

This CSR intellectual discourse consists of nine chapters with the lowing organizations and brief contents From Chaps 1 to 3, the author reviews the related theoretical foundations and analyzes the contextual backgrounds of the study In what follows, the author analyzes and pre-sents the research datasets, discusses the research findings (Chaps 4 to 7), and highlights the strategic implications of this research (Chap 8), before making the concluding remarks (Chap 9) Appendices present the research methodological issues and CSR budgetary figures

fol-Chapter 1 This chapter presents the introductory contexts, purpose

statements, research aim, and research objectives of this CSR research

An organization is tightly embedded in the society and the natural environment Managing diverse interests of its stakeholders can be an uphill task Lacking of qualitative narratives on a holistic CSR process coupled with diverse CSR definitions in the field might have eroded the actual values of CSR in contributing to an organization’s sustained value creation capability That said, whether practicing CSR can gen-erate resilient socioeconomical performances simultaneously requires further academic investigations This research takes CSR in a holistic approach, i.e., examining its adoption in a firm’s strategic planning pro-cesses from multiple perspectives It also accesses valuable governmental datasets, covering the core functions of public sectors such as develop-ment agency and city council which receive little attention in the cur-rent literatures

Chapter 2 This chapter surveys the related literatures in CSR and

strategy to establish the theoretical framework, in line with the research aim and objectives Section 2.1 reviews the trends of CSR concepts and definition A comprehensive CSR definition is, then, adopted The state of CSR trends and developments in Malaysia are also reviewed Section 2.2 deals with the related stakeholder literatures that form the theoretical core to understand the state of BDA’s stakeholder manage-ment in addressing multiple stakeholder interests Section 2.3 discusses the dimensions of CSR and ethical business practices with specific examples given in each of the dimensions Section 2.4 contends with the literature on strategic intent and strategic mission, Sect 2.5 deals

with the dimensions of CSR planning and implementation processes, and Sect 2.6 reviews CSR performance issues The author examines two major theories of the firm, the characteristics of a good strategy, and the salient features of a transformative CSR in Sect 2.7.

Chapter 3 The contextual information of BDA is examined in

this chapter Malaysia was placed in the world top 20 in the Global Competitiveness Index 2014–2015 compiled by the WEF Bintulu, where BDA is situated, is located in Sarawak, Malaysian Borneo

It is known as a town of resource-based industry, oil and gas, as well

as renewable energy in Malaysia Sarawak, on the other hand, is the only state in Malaysia rated A by the Standard & Poor The discovery

of large reserves of natural gas offshore in 1968 saw the turning point for Bintulu from a coastal settlement to a major industrial town in Malaysia BDA was formed in 1978 to act as the central governmental body that can both coordinate and implement development projects on its own in the Bintulu region

Chapter 4 This chapter examines the strategic intent and mission of

BDA in engaging CSR The corresponding structured and action plans that attempt to translate them into reality are also highlighted The vision and mission statements suggest that BDA has a future point of view on CSR Two master development plans, prepared by the estab-lished international consultants, have guided the orderly and integrated socioeconomic developments of the Bintulu region since 1979 Also, BDA is endowed with the authority of collecting land premium from the sales of governmental state lands The ability to generate its own income increases the organization’s strategic flexibility to embed deeper and broader CSR elements in all its corporate agendas for the better-ments of its stakeholders

Chapter 5 Whenever a firm organizes and strategizes its

organiza-tional routines, it triggers somehow the elements of the triple bottom line Chapters 5 and 6 analyze the core businesses of BDA as a gov-ernmental development agency and municipal services provider, and the embeddedness of CSR perspectives in the two statutory functions Chapter 5 analyzes the role of BDA as a governmental development agency, which entails it to embark on residential, industrial, and com-mercial development activities Besides, BDA also undertakes business

ventures in collaboration with private firms through incorporating companies; an additional authority not enjoyed by other local authori-ties The organization’s major contributions, with CSR added on, in the development of public infrastructures, industrial estates, housing estates, and commercial centers over the past 35 years are presented.

Chapter 6 The major contributions of BDA, with CSR added on,

over the past 35 years in performing its municipal services provider role are presented in this chapter Municipal functions include provision

of sufficient public amenities and quality municipal services, ing in community services, conducting valuation on ratable properties, and charging rates on buildings Both municipal income and expendi-ture have been on the rising trends, in line with the economic growth

engag-in Bengag-intulu In 2012, the revenue and expenditure figures of BDA were more or less the same as the combined figures of the North City and the South City of the administrative capital of Sarawak, Kuching

Chapter 7 Apart from integrating the triple bottom line elements in

the value statements and core routines of the organization, this chapter analyzes the regular CSR and social programs carried out by BDA, three major stakeholder management cases with international orientations, CSR planning and control processes, and the corporate and social per-formance associated with the core organizational routines as well as the CSR programs BDA possesses strategic flexibility to select the projects that will yield maximized financial returns At the same time, it also has the required financial strengths to enter, at the command of its major stakeholders, those projects whereby the social and/or environmental impacts outweigh the financial returns The shared values created by BDA, reflected as better population growth, industrialization, invest-ment growth, standard of living, and urbanization in Bintulu, have broader and longer term of transformative impacts on its stakehold-ers The organization is able to fulfill its economic self-interests while addressing fullest possible the expectations of stakeholders

Chapter 8 This chapter presents a practicing CSR model of BDA and

the implications, contributions, and limitations of this research A CSR routine can be a valuable resource capability if a firm is capable of using

it to create competitive advantages that further its corporate agendas The holistic approach to researching and analyzing, used in this study,

advances the knowledge in the areas To lessen the critical of disadvantages

in limiting the research sample, this chapter presents also the CSR and ethical practice commonalities between BDA and five other major city councils It seems that the resulting CSR and social practices do not differ much from one council to another The findings in this CSR research are capable of making an analytic generalization to other major firms

Chapter 9 This chapter concludes that by fulfilling an obligation

to make core organizational decisions with CSR added on, a firm can demonstrate social responsibility values that benefit its stakeholders apart from fulfilling its economic self-interests for achieving corpo-rate sustainability The large oil and gas reserves and richly resource-based industries might have fueled the first 30 years of development

in Bintulu In 2008, the region is embarking on the next 30 years of growth with the launching of a renewable energy industrial park, Samalaju Industrial Park, which has attracted confirmed investments worth over Ringgit Malaysia (RM) 30 billion This is a strategic indus-trial diversification which brings additional sources of revenue to the economy of Bintulu region

Appendices The appendices explain the rationales for choosing the

qualitative research methods, different data collection techniques, tional field works done, sample selection, and data collection process for this CSR study This research has the access to valuable governmental datasets of a major governmental development agency cum city council, BDA which plays multifaceted governmental, societal, and business roles

addi-It has interfaced extensively with both notable local and international actors in fulfilling its statutory obligations Along the line, the organiza-tion’s years of budgetary figures with CSR added on are also presented

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Abstract This chapter surveys the related literatures in CSR and egy to establish the theoretical framework, in line with the research aim and objectives Section 2.1 reviews the trends of CSR concepts and definition A comprehensive CSR definition is, then, adopted The state of CSR trends and developments in Malaysia are also reviewed Section 2.2 deals with the related stakeholder literatures that form the theoretical core to understand the state of BDA’s stakeholder manage-ment in addressing multiple stakeholder interests Section 2.3 discusses the dimensions of CSR and ethical business practices with specific examples given in each of the dimensions Section 2.4 contends with the literature on strategic intent and strategic mission, Sect 2.5 deals with the dimensions of CSR planning and implementation processes, and Sect 2.6 reviews CSR performance issues The author examines two major theories of the firm, the characteristics of a good strategy, and the salient features of a transformative CSR in Sect 2.7.

Stakeholder management · Ethical business practice · Implementation

The concept of CSR has already existed in different names, forms, and practices before the beginning of its growing popularity in the late 1990s, the aftermath of major economic crises and corporate debacles The CSR ranks high on corporate practice and academic research agen-das Regulators even introduced the Sarbanes-Oxley Act and the Higgs Report for corporate reforms The classic view holds that the fundamen-tal goal of a manager is to maximize a firm’s profit Conversely, the hap-pening of corporate failures informs the importance of aligning a firm’s strategy process with appropriate morality values and management prac-tices in order to create, deliver, and share value.

This chapter has the following organization Section 2.1 reviews in brief the origins and evolution aspects of CSR concepts A well-encompassing CSR definition is, then, searched and adopted The state of CSR develop-ments in Malaysia, informed by the existing literature, is also presented Section 2.2 presents the core stakeholder literatures, seeking to investigate the state of BDA’s stakeholder management mechanism in addressing and balancing multiple stakeholder interests Section 2.3 provides some specific examples in each dimension of CSR and ethical business prac-tices identified with reference to the CSR definition adopted in Sect 2.1 The categorizations of CSR and ethical business practices that form the framework for analyzing the commonality of the practices between BDA and five other major city councils in the world are presented in Sect 8.2, Chap 8 In what follows, Sect 2.4 deals with the literature on strategic intent and strategic mission, Sect 2.5 copes with the dimensions of CSR planning and implementation processes, and Sect 2.6 reviews CSR per-formance issues Before wrapping up Sect 2.7, the author examines two major theories of the firm, the characteristics of a good strategy, and the salient features of a transformative CSR

2.1 Corporate Social Responsibility Concept

and Trend in Malaysia

The antecedents of CSR concepts, definition constructs, and trends ering the period between the 1950s and 2010s have been reviewed exten-sively in several works (Carroll 1999, 2008; Carroll and Shabana 2010;

cov-Moura-Leite and Padgett 2011) The main idea of Bowen’s work (1953) perhaps marked the beginning of the modern era of social responsibility

in the 1950s (Carroll 1999) Core areas of the CSR development ing the era included management as a public trustee, balanced claims to corporate resources by the sum of interests, and relating Christian ethi-cal principles of conduct to solve business problems (Frederick 1960), although there was scant CSR definition in the literature (Carroll

dur-1999) The 1960s marked a significant growth in the CSR literature in attempting to more accurately state what CSR meant and its impor-tance to business and society (Carroll 1999; Moura-Leite and Padgett

2011) At a macro-social level, many CSR issues, for example, the tionship between corporate social performance and financial returns were superficially discussed (Lee 2008) The definitions of CSR contin-ued to proliferate in the 1970s Perhaps Carroll’s (1979) definition on

rela-a theoreticrela-al four-prela-art of CSR, nrela-amely economic, legrela-al, ethicrela-al, rela-and philanthropic, embedded in a conceptual model of corporate social performance was the earliest, more established framework of CSR (Carroll 1999)

Carroll’s (1979) CSR framework was refined during the 1980s (Jones

1980; Wartick and Cochran 1985), the 1990s (Wood 1991), and the 2000s (Schwartz and Carroll 2003) During the 1980s and 1990s, there were more empirical studies, fewer original but refined CSR definitions The CSR concept served as the building block for alterna-tive or complementary themes (Carroll 1979, 2008) From the 1990s onward, the concept of CSR has become almost universally sanctioned and promoted by all constituents, including the international organi-zations such as the United Nations and the World Bank (Moura-Leite and Padgett 2011) There were more and continuous attentions given

to CSR measurement initiatives, diverse themes, and empirical studies that sought to reconcile CSR theory with practice The scenarios seem

to continue to the 2000s, as the field has evolved into a highly neous literature

heteroge-Following the major corporate debacles and economic crises, ing in the first decade of the new millennium, there were tighter institu-tional reforms to make sustainable development in an important source

happen-of institutional legitimacy happen-of firms CSR becomes an important strategic

issue for major firms in the 2000s It attracts a large number of research attention in numerous themes and settings (Carroll and Shabana 2010; Moura-Leite and Padgett 2011) At the same time, it also evolves into

a highly heterogeneous literature with some areas relatively unexplored and lacking empirical research (Aguinis and Glavas 2012) The quests to revise, adapt, and find business relevance of the existing CSR literatures still continue New perspectives will almost be sure coming up in com-ing years

In summary, an organization exists for legitimate causes To be able perhaps is the starting point for many firms The firms make prof-its when society places demand on their goods and services Through the continuous cycle of wealth creation, distribution, and regeneration, they can afford to offer more jobs to uplift the living standard of the society Hence, the long-term financial viability to justify for a going concern status will be the goal of all the firms In 2011, the European Commission (European Commission [EC], 2011, p 6) makes an account of the CSR definition as:

profit-The responsibility of enterprises for their impacts on society […] To fully meet their CSR, enterprises should have in place a process to integrate social, environmental, ethical, human rights, and consumer concerns into their business operations and core strategy in close collaboration with their stakeholders, with the aim of: maximizing the creation of shared value for their shareholders and stakeholders at large; and identifying, preventing, and mitigating their possible adverse impacts.

In this research, the author adopts the definition as the passing explanation on the meaning of CSR CSR can be seen as an obligation of the firms to act in accordance with moral, legal, environ-mental, and social concerns, while finding solutions to address the over-lap where their economic self-interests and stakeholders’ expectations intersects

well-encom-To date, CSR studies focusing on the Malaysian contexts have received scant international attention Some of the published studies cover the areas on the CSR disclosure process (Andrew et al 1989; Teoh and Thong 1984), the increased level of CSR awareness in Malaysia (Ahmad

Table 2.1 Corporate social responsibility trend and development in Malaysia

CSR research Finding, trend, and development

At the country level

- The rate of corporate social reporting in the est 4100 companies in 41 countries was 71% on average in 2012 (2011: 64%), with the highest rate found in Denmark (99%) and France (99%) The rate for Malaysia was 98%

larg-KPMG International

( 2013 )

United Nations

Children’s Fund ( 2011 ) - The Malaysian government has contributed to a positive CSR environment especially under its

economic development plans, namely the Ninth and Tenth Malaysia Plans The GLGs transforma- tion manual guides the CSR adoption by the GLGs Increased investment in CSR from palm oil industry has also been recorded

Adams ( 2010 ) - In Malaysia, the adoptions of voluntary CSR

report-ing and standards, though still nonmandatory, are strongly supported by the Malaysian government The Stock Exchange of Malaysia, Bursa Malaysia,

in September 2006, asked that all the listed issuers and their subsidiaries to provide a description of their CSR activities or practices It also launched a CSR framework as a guide for public listed compa- nies in implementing and reporting on CSR

Lu and Castka ( 2009 ) - The paper investigates the status of CSR,

differ-ent CSR practices, and future diffusion of CSR in Malaysia Several Malaysian legislations, namely the Environment Quality Act (1974), the Anti- corruption Act (1977), and the Human Rights Commission of Malaysia Act (1999), incorporate CSR elements But, the confusion over the meaning

of CSR, the prevalent use of CSR as a public tion tool, and mandatory versus voluntary CSR are among the issues that impede wider adoption of CSR in the country

rela-At the industry and firm levels

Anas et al ( 2015 ) - This research analyzes the extent and quality of CSR

information disclosures in the 2008 annual reports

of the Malaysian public listed companies (PLCs), after Bursa Malaysia launched its CSR Framework (effective in 2007) that guides the PLCs’ CSR disclo- sure The CSR framework seems to have an impact

on the level and systematic CSR reporting practices, but the quality of CSR disclosure is considered minimal

(continued)

and Rahim 2003; Rashid and Ibrahim 2002), the corporate social ing (Thompson and Zakaria 2004), the level of awareness and the per-ceptions of accounting professionals of the meaning of CSR (Zulkifli and Amran 2006), and the CSR practices and disclosure by government-linked companies (GLGs) as a result of the introduction of the GLGs transformation manual or the Silver Book (Atan and Razali 2013;

report-Table 2.1 (continued)

CSR research Finding, trend, and development

Hamid et al ( 2014 ) - A case study on a large GLC’s initiatives in

support-ing the governmental information and cations technology agendas, in line with the GLGs transformation manual’s CSR guide

communi-Hazlina and Ramayah

( 2012 ) - The paper finds that while entrepreneurial ventures in Malaysia become quickly aware of the more

seri-ous consequences of not adopting CSR practices, the concern for social issues may still be lacking Yam ( 2013 ) - The research finds that the majority of the

Malaysian property developers have their corporate CSR initiatives in place, and there are variations in their approaches and reporting processes

Ting et al ( 2010 ) - Using a scorecard devised to TGRI framework, this

study provides an insight into the positive ence of management systems on CSR performance among firms in Malaysia

influ-Nejati and Amran ( 2009 ) - The findings of this research show that Malaysian

small and medium-sized enterprises were mostly practicing CSR because of their own beliefs and val- ues, religious thoughts, and pressure and encour- agement from stakeholders

Amran and Siti-Nabiha

( 2009 ) - This study uncovers some of the motives for the corporate social reporting by companies in

Malaysia through the institutional theory tive It seems that the rising trend in the number of reporters can only find its explanation in Western mimicry

perspec-Janggu et al ( 2007 ) - Analyzing the corporate annual reports of the

companies from 1998 to 2003, the research finds that CSR level of industrial companies in Malaysia is increasing both in terms of amount of the disclo- sure and the number of participating companies

Esa and Ghazali 2012; Ghazali 2007; Rahman et al 2011) Besides, other studies focus more widely on the CSR disclosure issues such

as levels of disclosure, types of disclosure, and quantity of tion disclosed (Ahmad and Sulaiman 2004; Jamil et al 2002; Janggu

informa-et al. 2007)

Malaysia was ranked among top 20 most competitive economies 2014–2015 by the World Economic Forum, ahead of Australia (no 22) (WEF 2014) Paradoxically, it had also unsatisfactory ranking, i.e.,

no 53 (Australia no 9) in the Corruption Perceptions Index 2013 by

the Transparency International (Transparency International, 2013) The state of CSR trends and developments in the country remains an enigma Table 2.1 below presents some further research works, which show mixed pictures on the trends, written in the areas

A local government like BDA is the level of government at the tom of a pyramid of governmental institutions, with the national gov-ernment at the top and the state government at the middle Being the closest to the people, its public policies will have direct impact on the local communities as well as economic and environmental infrastruc-tures Thus, this CSR research is reflective of a mainstream perspective

bot-in the areas on the state of practicbot-ing CSR bot-in Malaysia that has not received enough attention in the current literature

2.2 Stakeholder Theory

A stakeholder is any group or individual who can affect or is affected

by the achievement of a firm’s objectives (Emshoff and Freeman 1978; Freeman 1984) A central claim of the stakeholder theory is the pur-pose of business is creating value for various stakeholders (Freeman et al

2010) The work of Freeman (1984) is widely regarded as the tual discourse that popularizes the modern stakeholder management concept Rather than being an agent of shareholders only, the stake-holder management concept conjures up new roles for management in managing and balancing interests of all stakeholders This represents a stakeholder democracy as the stakes of multiple stakeholders are repre-sented fairly in the governance of modern corporations (Bendell 2007; Matten and Crane 2005)

intellec-Freeman (1984, Chap 3) advocates a whole stakeholder approach

to strategic management He argues that a firm possesses a stakeholder management capability when it is able to put these three levels of analy-sis together: first, it understands its stakeholder map and the stakes of each group; second, it has standard organizational processes to take these groups and their stakes in account routinely; and, third, it imple-ments a set of transactions to balance the interests of these stakeholders

to achieve the organization’s purposes Donaldson and Preston (1995) synthesize the evolving stakeholder literature after a decade of Freeman’s book (1984) They find four different types of stakeholder theory in the literature, mutually supportive and found in the said work of Freeman: first, descriptive stakeholder theory which describes the firm as a collec-tion of cooperative and competitive interests possessing intrinsic value; second, instrumental stakeholder theory which establishes a framework for examining how the management of stakeholders connects with tra-ditional corporate objectives (for examples, profitability and growth); third, normative stakeholder theory which assumes that all interests of stakeholders are legitimate, and of intrinsic value; and fourth, mana-gerial stakeholder theory which recommends attitudes, structures, and practices that, taken together, constitute stakeholder management

The work of Laplume et al (2008) seeks to address a gap in the stakeholder literature after the work of Donaldson and Preston (1995) published Reviewing the key stakeholder theory literature developed between 1984 and 2007, they find five major themes as stakeholder def-inition and salience, stakeholder actions and responses, firm actions and responses, firm performance, and theory debates In what follows, four out of the five themes are encapsulated They are also used as the guid-ing framework in this CSR research for designing a related interview questionnaire and for analyzing three stakeholder management cases later

Stakeholder definition and salience Stakeholders are those with

material interests in the firm (Cragg and Greenbaum 2002) and have resources to influence its survival (Pajunen 2006) The three most important attributes that determine the stakeholder salience to man-agers are power, legitimacy, and urgency of stakeholders Their rela-tive importance determines the level of stakeholder salience to which

managers give priority to competing stakeholder claims (Agle et al

1999; Mitchell et al 1997) Besides, stakeholder culture (Jones et al

2007, p 153) and industry’s politicized framing (Fineman and Clarke

1996) could also vary the stakeholder salience

Stakeholder actions and responses Forming coalitions (Neville and

Menguc 2006), influencing strategies (Frooman 1999), altering power and legitimacy (Welcomer 2002), and configuring relationship structure (Friedman and Miles 2002) are the means stakeholders can influence the firms Desirability to protect interests (Rowley and Moldoveanu

2003), possessing the capability (Rowley and Berman 2000), or ceptions on the target organization that it is responsive to their needs (Butterfield et al 2004) are some attributable factors that will mobi-lize the stakeholder groups The groups will support the firms when the firms are not a source of significant environmental impact (Hendry

per-2006), the firms are reliable, legitimate, accountable, and lished (Choi and Shepard 2005), or the firms have treated them fairly (Hosmer and Kiewitz 2005)

estab-Firm actions and responses The firms can take some of the following

measures to gain supports from their stakeholders: building stakeholder trust (Heugens et al 2002); making charitable contribution (Adams and Hardwick 1998; Haley 1991); managing organizational iden-tity (Scott and Lane 2000) and reputation (Carter 2006); and having stakeholder representation on corporate boards (Luoma and Goodstein

1999) By maximizing the long-run value of the firms (Jensen 2002), taking the perspective of multiple stakeholders (Schwarzkopf 2006), and the use of mediation (Lampe 2001), the firms can gain balanced stakeholder interests

Firm performance Stakeholder management connects the social and

the financial performances of the firm (Barnett 2007; Berrone et al

2007; Bouckaert and Vandenhove 1998) On the other tional outcomes, it increases societal legitimacy (Heugens et al 2002), improves organizational learning (Roome and Wijen 2006) and inno-vation (Harting et al 2006), and reduces hostile takeover frequency (Schneper and Guillen 2004) It may also jeopardize chief executive office’s personal wealth (Coombs and Gilley 2005)

organiza-The stakeholder approach ought to identify the multiple holders, internal and external to the firms (Andrew 1971; Hofer and Schendel 1978) Integrating the stakeholder and CSR perspec-tives within strategic management mechanisms and day-to-day opera-tions can increase organizational responsiveness to stakeholders’ needs (Minoja 2012; Werther and Chandler 2011) But, it may also increase unnecessarily managerial opportunities (Cennamo et al 2009) Hence,

stake-a convergence between strstake-ategy stake-and ststake-akeholder mstake-anstake-agement stake-approstake-ach,

in tandem with broader organizational strategic missions, core routines, CSR values, and performance goals, reflected through major stake-holder problem-solving initiatives that balance the economic and social interests of the firms must be searched and examined (see the research objective stated in Sect 1.1.2b, Chap 1)

2.3 CSR and Ethical Business Practices

This section discusses the dimensions of CSR and ethical practices with specific examples given, in line with the CSR definition (EC 2011) pre-sented in Sect 2.1 (see also Carroll 1979; Freeman 1984; Friedman

1970; Porter and Kramer 2011), as per Table 2.2

The presentation of actual CSR and ethical practices, used in the real world by the firms, would make the field of CSR theory and research more approachable and valid to managers and practitioners As the field

of CSR is evolving to a highly heterogeneous literature, managers and scholars in all forms of organizations would like to embrace a more encompassing and coherent set of CSR practices in order to prepare them better to respond to complex ethical issues encountered

2.4 Strategic Intent and Strategic Mission

Firms develop strategic intent and strategic mission, resulting from

an understanding on their internal organizations and external forces,

to form the basis of communication to their stakeholders (Hitt et al

2001) Situated at the topmost of the hierarchy of objectives, the

Table 2.2 Corporate social responsibility and ethical practices

Taxonomy of responsibility Example of practice

(a) Economic /customer

concern - Provide extra services to people/customers, give customers value for their money, and demonstrate

the willingness to add value to customer well-being (Hazlina and Ramayah 2012 );

- Provide full product disclosure, give truthful tion, give rapid and respectful responses to customer comments/concerns, and sell products safe to use (Lamberti and Lettieri 2009 ; Spiller 2000 ); and

promo Contribute to governmental tax revenue growth, crepromo ate job opportunities, achieve sound financial posi- tions, and contribute to personal income per capita and economic growth (Slaper and Hall 2011 ) (b) Social - Engage in community activities, create job opportuni-

cre-ties for local communicre-ties, concern for social welfare, and share knowledge and resources with others (Hazlina and Ramayah 2012 );

- Involve directly in community projects and affairs and support for education and job training programs (Lamberti and Lettieri 2009 ; Spiller 2000 ); and

- Reduce violent crimes per capita, relative poverty, and average commute time, and increase percentage of population with a post-secondary degree or certifi- cate (Slaper and Hall 2011 )

(c) Environment - Adopt environmental policies, conduct

environmen-tal audit, establish effective emergency response, waste management, and energy consumption, and introduce environmental requirements for suppliers (Lamberti and Lettieri 2009 ; Spiller 2000 ); and

- Improve air and water quality, waste management, land use, energy consumption, and pollutants control (Slaper and Hall 2011 )

(d) Legal/human rights - Endorse equal employment opportunities (Lamberti

and Lettieri 2009 ; Spiller 2000 );

- Promote equity and access to social resources, health, and well-being, and increase female labor force par- ticipation rate (Slaper and Hall 2011 ); and

- Adhere to laws and regulations and adopt code of ethics (Kaptein 2004 )

(e) Discretionary - Generous and innovative giving, carry out an

employee-led approach to philanthropy, and paign for environmental and social change (Lamberti and Lettieri 2009 ; Spiller 2000 );

cam Do charitable contributions and collaborate with other organizations to promote social causes (Slaper and Hall 2011 ); and

- Perform more strategic philanthropies (Saiia et al 2003 )

(continued)

Table 2.2 (continued)

Taxonomy of responsibility Example of practice

(f) Ethical business

practices - Handle business based on ethical standard and con-sideration, engage in fair, open, and honest

market-ing practices, be honest and transparent in business dealings, take responsibility and be accountable for own actions, and admit mistakes and inform the affected party that they have occurred (Hazlina and Ramayah 2012 );

- Give fair remuneration and job security to employees, provide a healthy and safe work environment, and provide learning and personal work development opportunities (Lamberti and Lettieri 2009 ; Spiller

2000 );

- Formalize corporate ethics activity, for instances, ethics-oriented policy statements, formalization of management responsibilities for ethics, top man- agement and departmental involvement in ethics activities, and evaluation of ethics program activities (Weaver et al 1999 );

- Engage in fair trade activities (Audebrand and Pauchant 2009 );

- Invest capital in socially responsible funds (Gond and Piani 2012 ); and

- Establish formal organizational structures to deal with CSR and ethical issues (Treviño and Nelson 2010 ) (g) Stakeholder engage-

ment - Organize open communication with financial com-munity, customer dialogue, and public dialogue

(Lamberti and Lettieri 2009 ; Spiller 2000 );

- Set up a dedicated hotline or helpdesk to take quate measures against improper conducts (Kaptein

ade-2002 );

- Develop principles governing stakeholder relations (Kaptein 2004 ); and

- Hold discussions with stakeholders and employees

on the subject of ethics (Freeman 1984 ; Trinkaus and Giacalone 2005 )

(h) Shared value - Generate good rate of long-term return to

sharehold-ers, encourage staff ownership of shares, signal clear dividend policy and payment of appropriate divi- dends, ensure corporate governance issues are well managed, and formulate credible long-term business strategy (Lamberti and Lettieri 2009 ; Spiller 2000 ); and

- Re-conceive products and markets, redefine tivity in the value chain, and strengthen local industry clusters (Porter and Kramer 2011 )

produc-externally focused vision and mission statements describe the firms’ central purpose and, scope of operations, and guide the direction of the firms’ strategy formulation and implementation (Ireland and Hitt

1992; Leuthesser and Kohli 1997) A vision informs what the firms seek

to do and become By relating to the firms’ stakeholders and business domains in which they will operate, a mission statement identifies what the firms are going to do in order to attain their vision (Drucker 1973; Johnson and Scholes 1993)

Strategic intent is the leveraging of the firms’ internal resource bilities and core competences in attaining their goals Three essential attributes of strategic intent are: first, it conveys a sense of direction which implies a competitively unique viewpoint on the long-term mar-ket that the firms want to build; second, it conveys a sense of discov-ery to employees that the firms have a differentiated viewpoint about future; and third, it implies a sense of destiny that it is a goal that the firms’ employees perceive as inherently worthwhile In short, strate-gic intent ties intimately the firms’ self-interests to their stakeholders, which reflects the unique ways the firms can use to exploit competitive advantage (Hamel and Prahalad 1989, 1994; Sherman 1995) Bartkus and Glassman (2008) argue that all stakeholders are interested to understand how the firms’ CSR position affects their well-being They expect the firms’ actions are consistent with their publicized statements Therefore, what are the strategic intents and missions of the firms in engaging CSR practices and translating the visionary CSR value state-ments into concrete business and operational plans require further investigation (see the research objective stated in Sect 1.1.2a, Chap 1)

capa-2.5 Corporate Social Responsibility

and Strategic Planning

Strategic mission and strategic intent are not the end goals of CSR For any CSR plan to be meaningful, the firms will need to translate them into action for value creation via their strategic planning process.1 This section looks into the integration of CSR in the strategic planning pro-cess of a firm

2.5.1 Strategic Planning

A firm’s strategic planning has three core components, namely strategic analysis, strategic choice, and strategic implementation (Johnson and Scholes 1993) Conventional systematic strategic planning, apt to affect the long-term corporate direction of a firm, has been a major formal-ized organizational routine to strategy formulation and implementation that assumes the future will be more or less like present (Hamel 1996) The improvised mode of strategic planning, more adaptive to changes,

at times, would be more appropriate in the increased volatile business environments (Falshaw et al 2006; Song et al 2011) As the financial return of major firms grows with sophistication in their strategic man-agement (Pekar and Abraham 1995), a proper strategic planning process

is still important to explain the performance of major firms

2.5.2 Integrating Corporate Social Responsibility

into Strategic Planning

A firm’s corporate social responsiveness processes depend on its mental assessment, stakeholder management, and issues management (Wood 1991) Explicit conversation with stakeholders in the CSR strat-egy-making process will be necessary to increase the success probability

environ-of CSR strategies (Miles et al 2006) Hence, a broad adoption of CSR plans would require the integration of such plans into the firm’s stra-tegic planning process Crane et al (2008, p 417) identify three typi-cal phases in integrating CSR into strategic planning would be, namely planning, implementation, and evaluation Setting goals for CSR and defining mission statements is the first step in implementing CSR (see Sect 2.4) Then, the firms must design CSR strategies that will get them from their current position to a desired future state Section 2.7

will examine in greater detail what are the characteristics of a good egy Implementing actions must with CSR added on, for instances, introducing codes of conduct, building strategic management based on the principles of stakeholder management (Freeman 1984, pp 52–192; Freeman et al 2010, pp 83–120), and assessing the results of CSR implementation (see Sect 2.6)

strat-CSR can be a mean to evaluate the firms’ external environment in term of its stakeholder groups, and a core competence of the firms that draws resource capabilities throughout the organization (Werther and Chandler 2011, p 39) It creates shared value2 between the strategy of the firms and the social dimensions of competitive context (Porter and Kramer 2006, 2011) A CSR is strategic when it demonstrates the com-bination of four elements, namely embedded within the firms’ strategic planning process, related to mainstream operations of the firms, incor-porated a stakeholder perspective for effective influencing, and shifted from a short-term perspective to managing the firms’ resource capabili-ties and relations with key stakeholders over the medium to long term (Porter and Kramer 2002) In other words, a strategic CSR occurs when there is a direct effect of the firms’ operations on society and environ-ment and vice versa It is crucial, therefore, to proactively integrate CSR into the strategic planning of the firms for it to be strategic.

Organizations are increasingly expected to address the needs of their internal and external stakeholders A CSR policy is concerned with both the economic and the social viabilities Actionable implementation plans make real the firms’ strategic intent and mission Hence, for any CSR initiatives to rise above more than public relation tools, how they are translated into action for value creation and attract regular resources allocation in the firms’ strategic planning process deserve research atten-tion (see the research objective stated in Sect 1.1.2b, Chap 1)

2.6 Corporate Social Responsibility and Triple

Bottom-Line Performance

Confining corporate performance measurements to traditional financial bottom line is an inadequate expression of the total value equation as firms nowadays create value in multiple dimensions Elkington (1994,

p 90, 1998, 2007) coins the triple bottom-line concept which considers the interdependencies of environmental, social, and economic aspects

in achieving business sustainability and common good This also echoes with another perspective that the corporate social performance-relevant outcomes include the triple bottom-line categories of economic, social,

and natural environment impact (Wood 2007, 1991) The triple tom-line firms provide the democratic freedom for stakeholders to col-laboratively define value (Glavas and Mish 2014).

bot-By contrast, Carroll (1979, 1991) hints that fulfilling economic obligations is the primary concern of a business organization The four-part CSR definition might be presented as a CSR pyramid with economic responsibility depicted at the base of the pyramid, and then built upward through legal, ethical, and philanthropic responsibilities Existing research findings show mixed results on the impacts of CSR have on the firms’ financial performance: first, a positive relationship in the contexts of, for examples, stakeholder theory perspectives (Ruf et al

2001), corporate charitable giving (Brammer and Millington 2008), responsible business practices toward primary stakeholders (Mishra and Suar 2010), corporate commitment to business ethics and finan-cial reporting quality (Choi and Pae 2011), and ISO 14001 certification (Jong et al 2014); second, a negative relationship in the contexts of, for examples, managerial entrenchment practices (Surroca and Tribó 2008) and socially responsible investments (Makni et al 2009); and third, a neutral or mixed relationship in the contexts of, for examples, the role

of intangible resources (Surroca et al 2009, neutral), the impact of ronmental certification (Bouslah et al 2010, mixed), and the periods of uncertainty during the Euro-zone crisis (Ducassy 2013, mixed)

envi-Being socially responsible does not mean the firms have to treat themselves as less important than their competitors Incorporating CSR, only in the after-profit decision-makings may create hidden long-run costs for the firms By focusing as well on the socially respon-sible sources from the inputs to the management processes, the firms could be compensated in the longer run by broader acceptance of their goods and services (Ambec and Lanoie 2007; Hui 2008, 2010) Strategic intent and mission statements can indicate the firms’ intended CSR trajectories It is vital that the firms’ organizational actions and results management match with their CSR plans Often, it is what get measured, get done In tandem with the research objective stated in Sect 1.1.2c, Chap 1), a regular and systematic review of organizational performances that upholds the right corporate and social performances, and contributes to better CSR adoptions in the mainstream business processes merits attention

2.7 Corporate Sustainability

The intersection of organizational internal factors and external ronments is a dynamic and complex roadmap of interdependency Maximizing financial return for shareholders while balancing the inter-ests of other stakeholders represent huge challenges for managers who need to develop unique resource capabilities in order to meet such chal-lenges This section focuses, first, two overriding theories of the firm, the industrial organization, and the resource-based view theory The theories dominate the paradigms on how the firms should develop, connect, lev-erage, defend, and maintain organizational resource capabilities through strategic planning process in order to create and sustain competitive advantages Then, the author examines the salient characteristics of a strategic asset before presenting what constitutes a transformative CSR

envi-2.7.1 Theories of the Firm

The industrial organization or structure-conduct-performance paradigm

is built upon several seminal contributions (for examples, Bain 1951,

1956), culminated in the celebrated works of competitive strategy by Porter (Porter 1980, 1985) The paradigm purports that a firm would generate the above-the-average economic return if it can effectively con-trol the reciprocal relationship between the environment and its strat-egy (Henderson and Mitchell 1997; Hofer and Schendel 1978) Porter (1980) argues that the collective strength of five competitive forces, namely threat of new entrants, bargaining power of suppliers, bargain-ing power of buyers, rivalry among competitors, and threat of substi-tute products, determines an industry’s attractiveness In a further work, Porter (1985) argues that firms can choose to apply either of the three generic strategies, namely cost leadership, differentiation, and focus to a broad market or to a narrowly focused market to protect them against the five competitive forces Attempting to pursue all the generic strate-gies at the same time would lead to a mediocre performance

There are limitations associated with the industrial organization spective It presents business as a combative pursuit that takes a narrow