Is CSR a hygiene factor for prospective employees? An Indian exploration.

AuthorMaheshwari, Sunil
PositionCorporate social responsibility

Introduction

The importance of Corporate Social Responsibility (CSR) is growing since the last two decades (Aguinis & Glavas, 2012; Lu & Liu, 2014). Prior studies suggest the positive impact of CSR on the firm's financial performance (Margolis & Walsh, 2003; Bihari & Pradhan, 2011), firm value (Harjoto & Jo, 2011). Besides financial performance, it has positive linkages with several othermetrics such as buying behavior (Becker-Olsen, Cudmore & Hill, 2006), loyalty (Marin, Ruiz, & Rubio, 2009)and trustamong the customers and other stakeholders (Sagar & Singla, 2004;Castaldo et al. 2009). The enhancement in competitive advantage by virtue of CSR activities has also been suggested not only for large firms but for SMEs as well (Nair & Sodhi, 2012; Torugsa, O'Donohue,& Hecker 2012).

Western literature also studied the impact of CSR and its attractiveness to the prospective employees while making a job choice decision (Turban & Greening, 1997; Albinger & Freeman 2000). On the other hand there remains a dearth of literature studying prospective employees in the ambit of CSR in the Indian context (Sharma, Sharma & Devi, 2009). Further, Aguinis & Glavas (2012) have also suggested the need for future research linking CSR and prospective employees in various contexts.

The absence of literature in the Indian context on prospective employees and CSR generates a need to assess the impact of CSR on the prospective employees. The Company Act 2013, which mandated 2% compulsory CSR spending for business houses (The Companies Act, 2013:135), has led to an increased discussion on CSR in India's media. Hence, it becomes relevant to study the perception of prospective employees on CSR.

Furthering the scope of our study we also felt a need to assess the perception of prospective employees on gauging the impact of CSR on the brand of the organization and explore certain other attractive features of an organization while making a job choice. In this study, we tried to answer these questions through 15 interviews with the graduating students of Master of Business Administration (MBA) from Indian Institute of Management, Ahmedabad (India). We now proceed to the conceptual framework section of the article.

Conceptual Framework

CSR, also known as Corporate Citizenship, is defined by Maignan & Ferrell (2000:284) as "The extent to which businesses meet the economic, legal, ethical and discretionary responsibilities imposed on them by their stakeholders". European Commission's (2001:8) has defined CSR as "A concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis". Nair & Sodhi (2012) has defined CSR as a corporate self-regulation which is integrated into the business model of a firm.

Western literature has explored the positive linkage between CSR and prospective employees while making a job choice (Turban & Greening, 1997; Albinger & Freeman, 2000; Jones et al., 2010). These studies claim that prospective employees are attracted towards organizations which are high on CSR front. The underlying theory of this attraction towards CSR is attributed to signaling theory and social identification theory. Organizations through their socially responsible actions give a signal to the prospective employees about the possible treatment towards them by the organizations in the future.

Studies on CSR and prospective employees are present in the Western context, but the studies are almost non-existent in the Asian context. There are few studies on current employees highlighting the importance of CSR for employees in Chinese context (Ramasamy, Yeung & Yuan, 2008; Zhu, Hang, Liu & Lai, 2014), leaving scope to study the importance of CSR for prospective employees in the Asian context. Based on prior literature of West, we propose that prospective employees will be attracted by the CSR activities of a firm while making a job choice in the Indian context as well.

Proposition 1: CSR is perceived as an attractive feature while making a job choice by the prospective employees in India.

Past literature from the West reveals that job, career opportunities, culture, and pay are important attractive features of an organization (Dubin, Champoux & Porter, 1975). Harpaz (1990) found that good pay and interesting work are two prime attractive features for employees across the world, independent of age, gender, and organizational level. Provision of challenging role, good pay and career incentives have been linked negatively to intent to leave (Hsu, Jiang, Klein & Tang, 2003) and positively related to organizational commitment (Lineberry & Trumble, 2000). Thus, we propose that role, career opportunities and compensation will be some of the other attractive features for prospective employees while making a job choice in the Indian context as well.

Proposition 2a: Role offered in the organization is an attractive feature for prospective employees.

Proposition 2b: Career opportunities offered in the organizations are an attractive feature for prospective employees.

Proposition 2c: Compensation offered in the organization is an attractive feature for prospective employees.

The advantage of CSR has also been addressed on the brand of the firm as well. Brand is "A name, term, sign, symbol or design, or combination of them which is intended to identify the goods and services of one seller or group of sellers and to differentiate them from those of competitors" (Kotler, 1991:442).Thus, we can infer that brand is something unique which distinguishes a firm from the others and promises to deliver the goods or services of certain qualities with certainty. Prior literature suggests that CSR has direct positive effects on brand value (Middlemiss, 2003; He & Li, 2011). CSR not only enhances the brand value but also serves the purpose of brand insurance (Werther Jr. & Chandler, 2005). Bihari & Pradhan (2011) have also reported a positive image creation and goodwill generation by virtue of the CSR activities. Thus, we propose that CSR activities will create a positive impact on the brand of the firm.

Proposition 3: CSR activities of a firm will generate a positive impact on the brand of the firm.

Methodology

To explore the informants' responses on CSR and its attractiveness for the prospective employees, we conducted 15 interviews of graduating students of Master of Business Administration (MBA) from Indian Institute of Management, Ahmedabad (IIMA). This institute was chosen for the study because it is considered as the incubation center for preparing top class prospective management employees in the country. Almost...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT