The Effect Of Csr On Contextual Performance: Medıatıng Role Of Corporate Reputatıon

Abstract

Corporate social responsibility (CSR) is comprised of activities carried out by organizations in order to provide social and environmental benefits beyond economic, technical and legal requirements. Perceptions of CSR will encourage employees’ in-role and extra-role behaviors and thus enable the achievement of organizational goals. Also, the CSR activities performed by the organizations positively affect the perceptions of the stakeholders (especially the employees) regarding corporate reputation. This study aims to examine the mediating role of corporate reputation in explaining the effect of the employees’ perceptions of corporate social responsibility practices on contextual performance. Research data are collected via questionnaire surveys from the administrative staff, and white-collar employees of the industrial businesses operating in Kayseri Organized Industrial Zone (Kayseri, Turkey). As the results of analyses performed through various statistical methods, it was found that corporate reputation assumes a full mediating role over the impact of corporate social responsibility on contextual performance. The obtained findings were discussed in the context of the literature.

Keywords: Corporate social responsibilitycontextual performancecorporate reputation

Introduction

Taking not only the financial but also the social performance into account, whenever various stakeholder groups evaluate organizational performance along with their increased demands and the pressure exerted on organizations, has rendered the concept of corporate social responsibility as one of the most crucial issues in the business literature (Davis, 1973; Carroll, 1979; Sethi, 1979; Carroll, 1983; Carroll, 1991; Wood, 1991; Pinkston & Carroll, 1994; Maignan & Ferrell, 2000; Windsor, 2001; Schnietz & Epstein, 2005; Aguilera, Rupp, Williams, & Ganapathivd, 2007; Yamak, 2007). In general, corporate social responsibility involves voluntary participation of an organization in the resolution of social and societal issues (Brammer & Pavelin, 2006). Also, corporate social responsibility can be defined as the sum of activities carried out by organizations in order to provide social and environmental benefits beyond organizational, economic, and legal requirements (Davis, 1973). The basic idea that lies beneath the conception of corporate social responsibility is not only about the economic and legal responsibilities of organizations towards the society, but also certain responsibilities that go beyond these obligations (Wartick & Cochran, 1985).

Corporate social responsibility practices provide the organizations with various advantages. Besides affecting financial performance positively, CSR also plays an instrumental role in reducing costs, anticipating risks and uncertainties about new markets to be ventured into, gaining competitive advantage and increasing stakeholder satisfaction (Griffin & Mahon, 1997; Orlitzky, 2005; Grigore, 2009; Cingöz & Akdoğan, 2012a). At the same time, corporate social responsibility practices are known to be influential on the employees’ perceptions, attitudes, and behaviors within the organization. CSR has an affirmative impact on the employees’ contextual performance within the context of extra role behaviors that they perform within the organization and creates a sense of positive corporate reputation perception for the employees towards their organizations (Branco & Rodrigues, 2006; Brammer, Millington, & Rayton, 2007; Akdoğan & Cingöz, 2010; Hansen et al., 2011; Newman, Nielsen, & Miao, 2015). Contextual performance includes a set of non-mandatory and beneficial behaviors that contribute to all social and psychological environments of the organization without being included in job descriptions (Motowildo, Borman & Schmit, 1997; Jawahar, & Carr, 2007). Corporate reputation, however, is the stakeholders’ perception of their organization regarding its former actions and future prospects (Wartick, 2002). Due to CSR activities carried out by the organization, since the organization is perceived by the employees as a good corporate citizen, the employees’ perception that the organization also has a good corporate reputation would increase. Thus, employees would contribute more to the organization with the activities they perform within the context of extra-role behaviors. Organizational success would be affected positively, as long as the organization is a good corporate citizen and the employees are a good organizational citizen. In this context, the study aims to examine the role of corporate reputation in explaining the impacts of the employees’ perceptions of corporate social responsibility practices on contextual performance.

Literature Review and Theoretical Framework

Corporate social responsibility, also known as social performance, is comprised of activities carried out by organizations in order to provide social and environmental benefits beyond economic, technical and legal requirements (Davis, 1973). Wartick and Cochran (1985) defined corporate social responsibility as “a business organization’s configuration of social responsibilities, processes, social responsibilities, policies, programs, and observable outcomes as they relate to the firm’s societal relationships.” In a broader sense, CSR is the fulfillment of the organization’s obligations toward its social environment (Quevedo-Puente, Fuente-Sabate, & Delgado-Garcia, 2007) and voluntary participation in solving social problems (Brammer & Pavelin, 2006). Therefore, corporate social responsibility is perceived by organizations as their relationship with the society and collective contributions beyond legal obligations (McWilliams & Siegel, 2001).

CSR can also be considered as fulfilling economic, legal, moral and voluntary social responsibilities set/imposed by stakeholders of an organization (Maignan & Ferrell, 2000). The “Corporate Social Responsibility Model” developed by Carroll mentions four types of corporate responsibilities: (1) economic responsibility, (2) legal responsibility, (3) ethical/moral responsibility, (4) philanthropic responsibility (Matten & Crane, 2005). According to Carroll, the economic component represents the responsibility of organizations to produce goods and services that the community needs and to earn economic gains in return. The legal component involves the social expectations regarding the organizations’ compliance with legal regulations while in pursuit of their economic objectives. The ethical component involves some additional responsibilities that are expected to be undertaken by the organizations, although not written by the law. Voluntary social responsibility component is defined as non-mandatory charitable activities that the community expects from the organizations (Carroll, 1979; Maignan & Ferrell, 2001).

Waddock and Graves (1997) reported a positive relationship between corporate social performance and financial performance. Researchers argued that CSR can be both the consequence and the determinant of financial performance. Nonetheless, they stated that strong financial performance would affect social performance positively since it would provide the needed financial power and freedom for performing social responsibility activities. Furthermore, CSR helps the organizations to decrease costs and to anticipate the risk and uncertainty about newly ventured markets. These advantages, in general terms, support the organizations in gaining competitive advantages (Griffin & Mahon, 1997; Grigore, 2009). Besides its positive impacts of financial performance and competitive advantage, corporate social responsibility can play a significant role in improving a favorable relationship with primary stakeholder groups and affect corporate reputation positively (Riordan, Gatewood, & Bill, 1997; Brammer & Pavelin, 2006; Quevedo-Puente et al, 2007). In this context, the employees of the organizations are among their main stakeholders. Positive perceptions of the CSR work carried out by the organization which is considered as structure fulfilling its social responsibilities would increase the employees’ motivation, commitment, organizational identification, trust, loyalty and tendency to exhibit organizational citizenship behavior (Branco & Rodrigues, 2006; Glavas & Godwin, 2013; Hansen, Dunford, Alge, & Jackson, 2015).

Perceptions of CSR will encourage employees’ in-role and extra-role behaviors and thus enable the achievement of organizational goals (Newman et al., 2015; Ong, Mayer, Tost, & Wellman, 2018). In-role behaviors are those behaviors that enable the employees to maintain membership while extra-role behaviors are those that go beyond general expectations to promote the effective operation of the organization or to benefit others in the organization (Lin, Lyau, Tsai, Chen, & Chiu, 2010).

Extra-role behaviors can also be expressed as contextual performance; Contextual performance includes a variety of employee activities such as having information about organizational rules and procedures and abiding by them even if they contradict with one’s personal views, helping others within the organization, contributing to organizational objectives, and making extra effort to complete the task (Motowildo et al., 1997; Befort & Hattrup, 2003). Contextual performance or extra-role behaviors are defined as contributing to the improvement of the organizational, social, and psychological environment that is not directly affecting the actual task, however, are also necessary for the effective performance of the task. Examples of contextual performance include helping others, cooperating with them, making efforts beyond what is required to complete the task, abiding by organizational norms and rules, upholding organizational objectives and ensuring that they are realized (Öcel, 2013). If the employees believe that their organization acts a way that fulfills its social responsibilities and that they are good corporate citizens, the activities they undertake within the context of extra role behavior are likely to increase as they tend to exhibit less negative attitudes towards the organization (Hansen, Dunford, Boss, Boss, & Angermeie, 2011). According to Lin et al. (2010), it is very likely that the good examples of corporate citizenship set up by an organization will result in a positive influence on individuals’ extra-role behaviors toward the organization. In this context, we suggest our first hypothesis as follows:

Hypothesis 1: CSR is positively related to contextual performance.

In previously conducted research studies, it has been pointed out that not only various attitudes and behaviors of the employees but also the activities carried out within the scope of corporate social responsibility would affect the corporate reputation perceptions positively (Brammer & Pavelin, 2006; Gümüş & Öksüz, 2009). Corporate reputation is a clear perception of the stakeholders regarding the organization’s ability to fulfill its stakeholders’ expectations. Within the framework of this definition, it can be stated that the organization is likely to make an affirmative impression on its satisfied stakeholders whose expectations are met, that is to say, the organization would attain a favorable reputation among its employees (Fombrun & Gardberg, 2000; Akdoğan & Cingöz, 2014). Being an attribution made to the organization, positive corporate reputation is subject to the stakeholders’ perception. At this point, some researchers stressed two basic characteristics of the concept as follows (Quevedo-Puente et al., 2007):

  • Perceptual Dimension: The perceptual nature involves gathering and processing of information by some individuals or groups of people pertaining to the firm’s past activities in order to make judgments on its future situations.

  • Aggregate Perception Dimension: Reputation is not attributed to the organization by the perceptions of merely one or several of the stakeholders. An organization would be regarded as reputable or not contingent upon the sum of the stakeholders’ perceptions.

While corporate social responsibility conduces toward the fulfillment of both managers’ and other stakeholders’ expectations from the organization, it also ensures the public to develop positive opinions about the organization (Brammer & Pavelin, 2006). Therefore, the CSR activities performed by the organizations positively affect the perceptions of the stakeholders (especially the employees) regarding corporate reputation. Affirmative corporate reputation also affects the employees’ contextual performance positively. Variables such as person-organization fit, organizational identity strength, and organizational perceived external prestige are expected to result in contextual performance (Öcel, 2013). In this framework, the second hypothesis of the research study is as follows:

Hypothesis 2: Corporate reputation mediates the relationship between CSR and contextual performance.

Methods

Participants

The sampling of the study consists of the white-collar employees of the enterprises operating in the Organized Industrial Zone of Kayseri. The majority (72.7%) of 165 white-collar employees selected by simple random sampling method is of the male gender. In accordance with their educational status, the percentages of the employees having an associate, undergraduate and graduate level education are 41.8%, 55.2%, and 3%, respectively. The average age of the employees is 34.52 years of age (st. dev.= 7.16), and the average tenure is 7.26 years (st. dev.= 6.23).

Measures

The questionnaire is the basic data collection method used in this research study. An 18-item scale developed by Maignan and Ferrell (2000) is used in the measurement of employees’ corporate social responsibility perceptions, based on the corporate social responsibility dimensions proposed by Carroll (1979) (sample item: Our firm follows all laws regulated on recruitment and employee rights). This scale has been used in various studies in the national literature (Küskü & Bay, 2012; Cingöz & Akdoğan, 2012a). The participant employees indicated their levels of choice according to the 5-point Likert-type scale. In this study, Cronbach’s Alpha reliability coefficient (α) for the corporate social responsibility scale is calculated as .90.

An 8-item scale developed by Carmeli and Tishler (2005) is utilized to measure employees’ corporate reputation perceptions (sample item: Our firm has a very good reputation regarding management quality). This scale has been used in various studies in the national literature (Akdoğan & Cingöz, 2010; Cingöz & Akdoğan, 2012b). The corporate reputation scale designed according to the 5-point Likert-type scale is found to have Cronbach’s Alpha reliability coefficient (α) of .89.

In measuring contextual performance, a 16-item scale developed by Goodman and Svyantek (1999) is utilized (sample item: When my colleagues do not come to work, I help them with their tasks). This scale has also been used in various studies conducted on domestic organizations (Polatcı, 2014). The items related to the measurement of contextual performance are responded by the employees according to the 5-point Likert-type scale. In this study, Cronbach’s Alpha reliability coefficient (α) for the contextual performance scale is calculated as .87.

Analyses and Results

Table 1 indicates the results of correlation analysis revealing the relationships among research variables and other demographic variables.

Table 1 -
See Full Size >

Upon examining the findings in Table 1 , it was found that both corporate social responsibility (r= .47, p<.01) and corporate reputation (r= .52, p<.01) were positively related to contextual performance. A positive relationship (r= .76, p<.01) between corporate social responsibility and corporate reputation was also found.

Table 2 -
See Full Size >

Along with the main objective of the study, Baron and Kenny’s (1986) four-step regression analysis and Hayes’ (2013) PROCESS Procedure for SPSS software Release 2.16.3 were used to examine the mediating effect of corporate reputation in the effect of corporate social responsibility on contextual performance. The findings regarding hierarchical regression analysis were shown in Table 2 . Upon examining Table 2 , it was found that corporate social responsibility had positive and significant effect on corporate reputation (b= .90, p<.001) and contextual performance (b= .42, p<.001). These findings supported the first hypothesis of the study. Moreover, corporate reputation had a positive and significant effect on contextual performance (b= .38, p<.001). Finally, when corporate social responsibility and corporate reputation were included in the model simultaneously, the effect of corporate social responsibility on contextual performance completely disappeared (from b= .42, p<.001 to b= .15). The statistical significance of the mediation model was checked by the Sobel test (Sobel, 1982); As a result of the calculations made, the mediating effect was found to be statistically significant (z= 3.592, p<.001). These findings indicated that corporate reputation assumeed a full mediating role in the effect of corporate social responsibility on contextual performance. The findings of Hayes’ (2013) PROCESS 2.16.3 based on bootstrap approach (5000 samples) confirmed the significant full mediating effect of corporate reputation in the relationship between corporate social responsibility and contextual performance. Accordingly, the indirect effect of corporate social responsibility on contextual performance through corporate reputation was found as follows; b= .283, sd= .102, bias-corrected 95% confidence interval CI = [.1031 - .5089]). These findings were in favor of the second hypothesis of the study.

Conclusion and Discussion

The aim of this study is to examine the mediating role of corporate reputation in the effect of employees’ perceptions of corporate social responsibility practices on contextual performance. According to findings obtained from the research study, corporate social responsibility has a positive and significant effect on both corporate reputation and contextual performance. Moreover, it is found that corporate reputation has a positive and significant effect on contextual performance. On the other hand, it is concluded that corporate reputation has a full mediating role in the relationship between corporate social responsibility and contextual performance. This finding suggests that the effect of corporate social responsibility on contextual performance may emerge through corporate reputation. These findings are consistent with of various research studies present in the literature which examined the relationship between corporate social responsibility, corporate reputation, and contextual performance (Bear et al., 2010; Lai et al., 2010; Lin et al., 2010).

The theoretical and practical contributions of the study can be considered. Considering that the studies examining the mediating role of corporate reputation between CSR and contextual performance in the national literature are quite a few in number, this original study examining the mediating effect is thought to make a significant contribution to the national literature. Corporate social responsibility is a strategy that positively effects many outcomes both at organizational and individual levels. One of the main tasks that can be undertaken to increase the impact of the CSR on the outputs of the individual level is to include the employees in CSR activities and various social responsibility projects. Another course that can be pursued in this context is to create an efficient announcement system within the organization in order to give out the contents of CSR projects, the tasks carried out in this context and the results of these activities to the employees. Thus, employees who believe that the organization they work for is a good corporate citizen may be willing to make extra effort to become a good organizational citizen. A significant responsibility is devolved on the human resources management about increasing employees’ participation and support in CSR activities (Sharma et al., 2011). Given that CSR activities-projects are made the part of various HR activities such as performance appraisal, rewarding, and career planning, the participation levels of employees in these activities may be further increased. In terms of performance appraisal processes and career management, especially those employees who are influenced by their participation in such activities for promotion; the effect of CSR on outputs such as contextual performance may be significant.

This research study contains two basic limitations. The first one pertains to data collection method. In this research study conducted using the questionnaire method, data collection from same source (the individual per se) can result in biased, and therefore, subjective measurements. This situation may lead to an increase in the magnitude of the linear relationships that arise as a result of the analysis (Podsakoff et al., 2003). Collecting data from various sources in future research studies may prevent the relevant limitation. The second limitation requires the conduct of a cross-sectional research study. It is not always possible to draw conclusions from the causal relationships among the variables since cross-sectional research involves a field study conducted within a certain time frame. Therefore, this limitation may be eliminated by a longitudinal research design rather than data collection within a specific period so that the causal relationships among the variables become more reliable in future research studies.

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Publisher

Future Academy

First Online

18.12.2019

Doi

10.15405/epsbs.2019.01.02.52

Online ISSN

2357-1330