Introduction to the Study
Corporate social responsibility (CSR) had gained an enormous importance over years; after more attention had been given on its practices once the impact of CSR on society, employees, community, environment and stakeholders were acknowledged such as the abuse use of resources, the neglect of society through social and environmental factors and the increase of profits at the expense of everything. The concept of CSR has a long and diverse history in literature. The real starting point of modern CSR began with Bowen's book (1953) "Social Responsibilities of the Businessman" (Carroll, 1999). In the 1960s, the literature on CSR developed noticeably and many definitions were placed by academics like Davis, Frederick, McGuire, and Walton. Nowadays the concept had flourished and branched into many areas aimed to achieve higher goal of business responsibility towards the community in which it operates along with environment, employees, stakeholders and more.
As most of social sciences, there is no one particular definition used for CSR. Nevertheless the most frequently used definition for CSR according to Dahlsrud (2006) research is the European Commission that stated “Corporate social responsibility is a concept whereby companies integrate social and environmental concerns in their business operations and in their interactions with their stakeholders on a voluntary basis” (Commission of the European Communities, 2001).
Jahmani (1996) and Abu-Baker et al. (1998) indicated that CSR in developing countries still in primary stages. Suwaidan, et al. (2004) confirmed that few studies have attempted to study and assess CSR status in Jordan. Along with Campbell (2006), Glavas et al. (2009) and Al-shbiel & Al-Awawdeh (2011) who reported that there is a great need to lead researches in CSR field in developing countries to clarify and examine the relationship between CSR and organizational performance.
On the other hand, recent study conducted in Jordan (2013) showed interesting results concerning the annual expenditure on CSR by Jordanian companies and banks which exceeds 60 million as indicated by The Information and Communications Technology Association of Jordan and The Association of Banks in Jordan (INTAJ, 2014).
Therefore this research tries to identify and define “The impact of corporate social responsibility practices on Jordanian pharmaceutical companies performance”.
1.2 Research Problem and Question
Nussbaum (2008) clarified that the pharmaceutical industry is counted on both sides, the most admired and most criticized one as it provides cure for diseases and sicknesses but still not everyone could afford buying cure and medication.
As the industry keeps growing, criticism for companies performance increased such in the case when corporate watch news and research center (2008) announced pharmaceutical corporate crimes to include: 1) overpricing drugs, 2) immoral marketing, 3) luring doctors, kicking the poor, 4) no-money-no-cure attitude, 5) clinical trials in poor countries citizens and 6) industry-government alliance which strengthen the industry stature as key player in politics and so the need to control and decrease the side effects of this criticisms had pushed the industry leaders to follow CSR path. Tilley et al. (2003) found that the impact of CSR on corporate performance is complicated and unconvincing as it still questionable in many parts. Citing from Min et al. (2013) they assured that “while numerous studies have been conducted to find the impact of CSR on company's performance across industries, definitive studies have not been conducted to determine the link within the pharmaceutical industry”. Based on this and many more extant literatures this study tried to answer the following question:
“What is the impact of corporate social responsibility practices on pharmaceutical companies performance?”
1.3 Research Objectives
The ongoing research is expected to enrich the understanding of linkages between CSR and companies performance due to lack of studies in Jordan to hopefully support new researchers in this field. Moreover, trying to accomplish these particular objectives:-
1. Explore the extent of adoption of CSR by pharmaceutical companies in Jordan.
2. Finds out the factors which influence the practice of CSR in Jordanian pharmaceutical companies.
3. Investigates the impact of corporate social responsibility practices on pharmaceutical companies performance in Jordan.
1.4 Importance of the Research
The importance of this research stems from the increasing impact that had been noticed from practicing corporate social responsibility in companies businesses which influence their relationships with their stakeholders like employees, customers, suppliers and community not forgetting the surrounding environment that deeply attached with company business.
In order to reach results and conclusions that support or reject hypotheses developed for this research and consequently explaining the impact of CSR on Jordanian pharmaceutical companies performance, a thorough and comprehensive exploration of previously conducted researches had shown that opinions had been divided into two parties. The first one believed that CSR leads to superior business performance such as Bowen (1653), Frederick (1960), Eells and Walton (1974), Carroll (1979) and Wood (1991), and the other party primarily represented by Friedman (1962) believed that every businessman primarily looking for profit and ways to enlarge this profit as much as he could and as for social and community activities they should be done out of work time and must not cost the business anything extra.
1.5 Research Model
To find out how CSR practices can affect Jordanian pharmaceutical companies performance, the researcher has studied literature concerning this field all over the past years and in particular the researches of Rajesh and Meena (2013) and Mishra and Suar (2010) taking in considerations their theoretical model to help reaching and forming a certain model for this study as showed in figure (1.1) of how CSR impact pharmaceutical companies performance.
Figure 1.1: The Study Model
1.6 Research Hypothesis
Grounded by literature review in previously selected field of study and the defined research problem, main hypotheses and five sub-hypotheses were developed and tested in this research.
H01: There is no statistically significant impact of corporate social responsibility practices on Jordanian pharmaceutical companies performance at α ≤ 0.05 level.
H01-1: There is no statistically significant impact of CSR practices toward Employee on Jordanian pharmaceutical companies performance at α ≤ 0.05 level.
H01-2: There is no statistically significant impact of CSR practices toward Supplier on Jordanian pharmaceutical companies performance at α ≤ 0.05 level.
H01-3: There is no statistically significant impact of CSR practices toward Customer on Jordanian pharmaceutical companies performance at α ≤ 0.05 level.
H01-4: There is no statistically significant impact of CSR practices toward Community on Jordanian pharmaceutical companies performance at α ≤ 0.05 level.
H01-5: There is no statistically significant impact of CSR practices toward Environment on Jordanian pharmaceutical companies performance at α ≤ 0.05 level.
1.7 Operational Definitions
Definitions used in this research have been defined in different ways by several researchers depending on their point of view. The most suitable operational definitions used in this research were listed below:
Corporate Social Responsibility
Is the integration of non-profitable and voluntary activities within the entity original work for the benefit of stakeholders on continues and constant basis.
A person who works in a favor of another person or entity in accordance with a contract of hire, which within the employer have the right to impose his rules to keep work going.
Also known as client, buyer or purchaser, who receives his needs from goods or services from specific vendor or service providers.
A group of people who live in the surrounding land of the working entity and care about the well-being of the area.
Also known as vendor, distributor and wholesalers who provide services or goods as needed by the customer.
All natural things on land and air that surrounds the working entity.
1.8 Structure of the Thesis
The structure used in presenting this research is based on Perry (2000) postgraduate research structure. The research consists of five sections as outlined below in Figure 1.2.
Figure1.2 : The Study Structure
Chapter one presented a brief introduction to the subject under investigation “the impact of corporate social responsibility on pharmaceutical companies performance”. Out of grounding the bases for the research in this chapter a background to the research was introduced followed by the research problem and hypotheses then justification of the research was added. Methodology was mentioned in short to be explained latter. The key and major terms used in this research were defined in definitions of terms section to eliminate any ambiguity that reader may experience. Based on the sections above in the introduction chapter, researcher preceded subject investigations in the next chapters which discussed the theoretical framework and literature review of this research.
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