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Chapter Two

 Theoretical Framework and Literature Review

2.1 Introduction

In the research introduction the researcher demonstrated why and how in this study it was investigated about “the impact of corporate social responsibility practices on Jordanian pharmaceutical companies performance”. With the purpose of formulating a more thorough understanding of the “companies performance” the research relied upon previous researches conducted in the field of study. Going through a wide range as much as possible in literature to have a holistic view of researches topics that finally narrowed researcher choices to related literature only then modeling and formulating research hypotheses surveyed and inspected.

Chapter reviewed literature that were required to develop research model and hypotheses. The extended literature associated with this research is about topics of corporate social responsibility as a concept and corporate social responsibility relation with employee, supplier, customer, community and environment. While emerging direct literature is about corporate social responsibility relation with companies performance in specifically the relation with pharmaceutical companies in Jordan; which at the end will indicate the impact of CSR practices in pharmaceutical companies performance.

2.2 CORPORATE SOCIAL RESPONSIBILITY (CSR)

The evolution of CSR concepts and terms has been developed through decades from the contributions of one researcher to another in order to enhance the concepts and turn them to applicable practices in real corporate entity. Therefore the researcher highlighted the turning points in the history of CSR through a closer view of literature. It can be noticed that the first significant efforts in hypothesizing the concepts of CSR was made by Bowen's (1953) in his published landmark book “Social Responsibilities of the Businessman” started by  asking his distinguished question “What responsibilities to society may businessmen reasonably be expected to assume?” and trying to verify it by stating an initial definition of CSR that states “The obligations of businessmen to pursue those policies, to make those decisions or to follow those lines of action which are desirable in terms of the objectives and values of our society” (Bowen, 1953). He conceptualizes CSR as a social obligation and argued that businessmen are responsible for their actions toward society other than their responsibilities for corporation financial performance. Carroll (1999) called Bowen “Father of Corporate Social Responsibility” in her book “Corporate Social Responsibility, Evolution of a Definitional Construct” because of his early and influential work in this field.

Davis (1960) set his starting point in exploring CSR field by supporting Bowen's theory. Davis formulated his own definition about CSR stating that “social responsibility refers to the businessmen's decision and action taken for reasons, at least, partially beyond the firm's direct economic and technical interest” (Davis, 1960). His “Iron law of responsibility” articulates: “social responsibilities of businessmen need to be commensurate with their social power” in combination with his theory: “In the long run, those who do not use power in a manner that society considers responsible will tend to lose it” (Davis, 1960).

In 1970's, CSR concepts and terms enhanced and thrived as more researchers became interested in this field. Johnson (1971) is considered from the early researchers at this period of time with his book “Business in contemporary society: Framework and issues” as he had four views for CSR that in sum they all indicate that the firm must not focus only on profit maximization.

The most prominent contribution in the improvement of CSR definition was made by Committee for Economic Development (CED) in its publication (1971) “Social Responsibilities of Business Corporations”. The committee shaped a three concentric circles definition of social responsibility: “The inner circle includes the clear-cut basic responsibilities for the efficient execution of the economic function products, jobs and economic growth. The intermediate circle encompasses responsibility to exercise this economic function with a sensitive awareness of changing social values and priorities: for example, with respect to environmental conservation; hiring and relations with employees; and more rigorous expectations of customers for information, fair treatment, and protection from injury. The outer circle outlines newly emerging and still amorphous responsibilities that business should assume to become more broadly involved in actively improving the social environment”. (1971)

Carroll (1979) noted that previous definitions of CSR needed more interpretation concerning CSR components that go further than making a profit and obeying the law, so her amended definition stated that “The social responsibility of business encompasses the economic, legal, ethical, and discretionary expectations that society has of organizations at a given point in time” (Carroll, 1979). Derived from her definition and based on her notation that business starts with emphasis on economic and then legal aspects and later a concerns about ethical and discriminatory aspects a four-part components of corporate social performance model well known as "CSR Pyramid” was formed which consists of economic and legal (Carroll, 1979) later ethical and discretionary responsibilities (Carroll, 1981, 1991) were added.

Heading to the 1980's, Carroll (1999) described this era as “the core concerns of CSR began to be “recast” into alternative concepts, theories, models or themes”. Beginning with Jones (1980) definition about CSR, “It is the notion that corporations have an obligation to constituent groups in society other than stockholders and beyond that prescribed by law and union contract”. From his definition two points can be obtained, the first one: is that obligation to society must be taken voluntarily and the second one: is the obligation must extended to all groups in interest to the corporation such as shareholders, employees, customers, suppliers and community.

Wartick and Cochran (1985) presented their “evolution of the corporate social performance model” that was formulated based on Carroll (1979) “three-dimensional integration corporate social responsibilities, corporate social responsiveness and social issues” they reformed it “into a framework of principles, processes, and policies. They argued that may CSR definition embraced the ethical component of social responsibility and should be thought of as principles, social responsiveness should be thought of as processes, and social issues management should be thought of as policies”  (Wartick and Cochran, 1985)

At the end of the 1980's Epstein (1987) stated that “corporate social responsibility relates primarily to achieving outcomes from organizational decisions concerning specific issues or problems, which (by some normative standard) have beneficial rather than adverse effects on pertinent corporate stakeholders. The normative correctness of the products of corporate action have been the main focus of corporate social responsibility”

Approaching the 1990's Carroll (1999) labeled these decades' themes as “CSP, stakeholder theory, business ethics theory, and corporate citizenship were the major themes that took center stage in the 1990s”

Wood (1991) revisited Carroll (1978) CSP model. The results was “a reformulation of CSP principles into, first the principle of CSR that took Carroll's four domains (economic, legal, ethical, and discretionary) and identified how they related to the CSR principles of social legitimacy (institutional level), public responsibility (organizational level), and managerial discretion (individual level) ”. Also Wood (1991) claimed that “Moral responsibilities of individual managers to make ethical decisions are the most basic of CSR components, followed by the organization's obligation to obey social and legal norms”.

The 21st century encountered many challenges for businesses such as globalization, new markets, customer satisfaction, supply chain management, tough competition and many more. The odds to a successful business turn into very hard achievement, as well as the traditional standards have been changed dramatically so the need for new approaches became a must. Many contemporary definitions for CSR that could cope with previously mentioned challenges in this century have been set by commissions, organizations and researchers.  

The Commission of the European Communities (2001) defined CSR as “a concept whereby companies integrate European social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis” this definition is the most used definition for CSR in worldwide and as mentioned at introduction section (1.1) in chapter one this definition was adopted in this research.

Marsden (2001) stated that “CSR is about the core behavior of companies and the responsibility for their total impact on the societies in which they operate. CSR is not an optional add-on nor is it an act of philanthropy. A socially responsible corporation is one that runs a profitable business that takes account of all the positive and negative environmental, social and economic effects it has on society”.

Hopkins (2003) said that “CSR is concerned with treating the stakeholders of the firm ethically or in a socially responsible manner which. Stakeholders exist both within a firm and outside. The wider aim of social responsibility is to create higher and higher standards of living, while preserving the profitability of the corporation, for peoples both within and outside the corporation”.

Business for Social Responsibility (2003) set a definition for CSR as “it is achieving commercial success in ways that honor ethical values and respect people, communities and the natural environment”.

2.3 CSR AND EMPLOYEE

Today work environment is demanding for more than conventional concepts. The classical notion about employees that their only concern is paycheck has been extended to more claims. They want a sense of appreciation, respect and gratitude from their employer and work place, furthermore the need for a consistent values and principles between them and the corporation they are working in.

Mohammad et al. (2014) shed the lights on the relationship between CSR and company performance through examining the impact of CSR on employees. The study found a significant relationship between CSR and company performance. In conclusion, the researcher reviewed variety of studies that showed the relation between CSR, employee and corporation performance. All of the studies confirmed that practicing CSR in workplace positively impact corporation performance.

Skritsovali (2013) investigated the ways CSR actions impact on employee engagement at organization which later affect organizational performance. In his study the researcher developed a framework of CSR practices to be used at work to establish a systematic way to increase employee engagement.

Insyirani (2013) examined employee internal motivation when practicing CSR at work. The outcomes resulting from this study showed that CSR positively impacts employee motivation.

Bauman & Skitka, (2012) from corporation's point of view and according to their assumptions indicated that“ employees are  primary stakeholders who directly contribute to the success of the company, understanding employee reactions to corporate social responsibility may help answer lingering questions about the potential effects of corporate social responsibility on firms as well as illuminate some of the processes responsible for them”.

Bashir et al. (2012) identified the internal impacts of CSR practices on both corporation and employees by exploring the changing in feelings, employees' retention, performance and motivation to a more positive attitude. The research concluded that CSR activities positively affect organization level and led to improved organization productivity.

Iqbal et al. (2012) searched in the practices of CSR on employees. The results of this research showed that CSR has significant consequence on the behaviors, performances and actions of employees and a win-win situation will emerge from this relation between CSR, employee and organization.

Stancu et al. (2011) worked to obtain the best practices of how employees perceive CSR activities and their implementation in work place. The findings of the research showed that respecting the employees' rights, fair wages and safety at work are most important and first priorities in what employees searching for in CSR practices yet much less employees are really involved in these activities although most of employees actually know about CSR in their corporations. Another interesting result has been found in this research showing that gender differ in practicing CSR as women tend to be more active in this field than men.

Gross (2011) mainly explored employee engagement through practicing CSR in work and ways to maintain their engagement to gain more positive business outcomes and continue to grow in market. Results of this research showed that activities of CSR deeply increase employee engagement and led to a more prosper relationship between employer and employee.  

Gond et al. (2010) reached their results through analyzing CSR influence on employees in corporate environment; they found that practicing and adopting CSR in workplace would motivate employees to embrace behaviors and attitudes that eventually enhance corporate performance and support it.

Ali et al. (2010) analyzed the complicated relationship between CSR and employees organizational commitment which finally influenced company performance. Taking into consideration of how a win-win situation could be created for both employees and company. The study found a significantly positive relationship between CSR and organizational performance and employee organizational commitment and organizational performance.

Zheng (2010) concentrated on work attitudes and behaviors of employees after being involved in CSR activities at workplace. Findings of research pointed that corporation success is more and more affected by employees' attitudes, behaviors and methodologies used when practicing CSR activities than not practicing them.

2.4 CSR AND CUSTOMER

Building good customer relations is a priority for any business as customers are the key player for corporate profit, durability over years and stability in the market. It is crucial for any corporation to focus on customer satisfaction, engagement and trust if it is looking for long term success. In searching for a means to fulfil this, CSR has surfaced proving that it can do what is takes. Under this assumption the next sections discussed the impact of CSR practices on customer.

Chung et al. (2014) explored factors of CSR that influence customer satisfaction and loyalty. Moreover through discovering if the moderating effects of corporate image would actually impact the relationship between CSR, customer satisfaction and loyalty. Results indicated that CSR positively affects customer satisfaction and customer loyalty with the priority of CSR factors as follows: consumer protection, philanthropic responsibility, legal responsibility, ethical responsibility, economic responsibility, and environmental contribution. The moderating influence of corporate image in the relationship between CSR and customer satisfaction and loyalty is identified.

Hassan et al. (2013) examined influence of customer perception of CSR activities on customer satisfaction and intention to maintain in the business. Research outcomes showed that there is a significant impact of CSR dimensions of ethical, and philanthropy on both customer satisfaction and retention combined with legal dimension of CSR that also has positive and significant impact on customer intention to retain with the business. On the contrary, the rest of the results showed that economic dimension of CSR do not have a significant impact on both customer satisfaction and retention.

Berg (2012) examined CSR activities influence on customer loyalty. The relationship was found positive between CSR activities influence on customer loyalty and it has been confirmed that it enhances companies performance.

Asatryan (2012) studied customer knowledge and opinions of CSR initiatives and examined the relationship between CSR and customer loyalty. The study found that, although they perceive CSR initiatives to be less satisfactory they certainly concerned about them being in business. Furthermore the study concluded that CSR initiatives have a marginally significant and positive association with behavioral and attitudinal loyalty on customers. Another finding showed that safety, consumer rights, environmental protection and social participation respectively unveiled high importance status in business CSR performance assessment.

Smissen (2012) asked the question “what kind of value can consumers derive from CSR?” As many companies tried to analyze the benefits they can have from practicing CSR on their businesses and its impact on consumers behavior. Findings exhibited that consumers mindset often linked CSR with environment. The study also found that the level of CSR awareness between consumers is rather low than it is expected to be as consumers didn't recognized CSR activities in the company business.

Guchait et al. (2011) investigated the influence of CSR practices on customer attitudes such as trust, commitment, loyalty and behavioral intentions like patronage intentions, switching intentions and word of mouth. The results proved that customer perceptions of CSR significantly influenced customer attitudes and behavioral intentions.

Abu Bashar (2010) investigated the question of “How consumers are considering corporation's CSR initiatives at the time of deciding on their purchase decision of products and services?” by the use of Carroll's CSR pyramid which consist of economic, legal, ethical and philanthropic variables, the researcher concluded that a positive and confirmed relationship between perceived CSR activities and consumer buying behavior has been found.

Farooque et al. (2009) investigated customer loyalty and purchase intention and how CSR activities affected them. After deep view of related literature and analysis of data, it was found that CSR activities positively affect customer loyalty and purchase intention on businesses.

Classon and Dahlström (2006) focused on how CSR initiatives can influence customer perceptions and company performance and eventually affect company performance. After going through CSR theories, models and the analysis of data collected the researcher found that CSR can impact customer perceptions on the offered products or services and this led to affect company performance through the links in the “CSR-Performance Chain”. Another finding proved that customers claim CSR to be at least on their level of expectations or above to avoid company boycotts that negatively impact performance and cause losses to company in financial and non-financial level of performance.

2.5 CSR AND COMMUNITY

Building strong communications and mutually beneficial relationships with local community is a key success for any corporation. Community is considered the main partner with any business established within its zone beside it may enhance corporation performance and leverages its success. On the other hand, corporates could help improving society and community by contributing in many activities and local projects for specific purposes like hiring employees form the same community, education scholarships, giving training in special needed fields for this particular community, health care participation, volunteering in doing good deeds, donate money to charity and many more. In the following sections the researcher demonstrated literature about CSR and community.

Kariuki (2012) concentrated on theories of CSR as an instrument that being used by companies to accomplish their intended goals and from there to examine if those goals have positive or negative effect on society and local community. Findings support the suggested assumptions that the practice of CSR based on instrumental theories had a positive impact on the company and the community.

Marais (2010) focused on finding the definition of sustainable community development and defining its relation with CSR by examining CSR programs and measuring their effects on sustainable community development. The study concluded that CSR is able under certain conditions to contribute positively to community sustainability.

Ismail (2009) discussed CSR role in community development as the purpose of CSR concepts is concerning its impact in community socially, environmentally and economically. Results reviled that CSR should benefits community and contributes to the overall prosper of society.

2.6 CSR AND SUPPLIERS

Building relationships with suppliers occupies a dynamic part in CSR approaches used at work environment. Suppliers also well-known these days as supply chain is a valuable concept in corporate business strategy as relations to suppliers organized through supply chain management. Adding CSR values and concepts to those supply chains are believed to have a positive impact on the relation between CSR and supplier as the next researches and studies are showing.

Mushanyuri (2013) critically analyzed CSR actions on sustainable supply chains. By examining a specific concept called “sustainable supply chains” through the literature from textbooks and journals. The analysis showed that it is extremely important for corporations to shift from profit chasers to society developers and environment protectors.

Cruz (2009) developed a framework for modeling and analysis of supply chain networks that practices CSR in their businesses. In this research all of decision maker's behaviors in the supply chain were considered such as manufacturers, retailers, and consumers. The resulting that came out from the study showed that CSR activities can potentially reduce transaction costs; risk and environmental impact thus enhance corporate performance.

Andersen and Skjoett-Larsen (2009) intended to set a conceptual framework for analyzing CSR practices in global supply chains including implementation and management phases. The research results showed that CSR practices in supply chains must involve the entire company including suppliers for local divisions or abroad branches as the research focused on factors that may help in flourishing this relation between CSR practices in the company and suppliers  like employee training and sharing of experience, training of key personnel at the supplier level, positive incentives for suppliers in the form of long-term contracts and enlarged purchasing orders, and regular auditing of suppliers' performance.

Amaeshi et al. (2008) tried to clarify the firm-supplier relationship as the use of power is considered a critical factor in defining responsibility to each party. Also examined the use of code of conducts corporate culture, anti-pressure group campaigns, personnel training and value reorientation as a motivation toward much more positive ethical and moral acts through supply chains.

Spekman and Werhane (2004) suggested a CSR framework from managerial and theoretical point of view that could be applied in supply chains where the powerful member in the chain exert governance on other members in the same chain from one hand and how to impose ethical programs and code of conducts in the relationship between company and its supply chains that would help to minimize hard work conditions which labor and workers suffer from in order to reduce cost and delivery time.

2.7 CSR AND ENVIRONMENT

Governments have depended on legislations and regulations to protect the environment from corporations' exploitations and misuses of natural resources. But the challenge to enforce corporations to bend to rules had been a big concern to governments. So the need to a have an approach whereby corporate can implant environmental issues in its business conduct, it seemed that CSR appeared to be the most suitable solution for this issue, also many studies confirmed that CSR initiatives to environment improved corporate performance and enhance its businesses practices. The following sections are viewing the related literature.

Sotamenou (2014) evaluated practices of CSR by top management with the aim of analyzing ecological behavior of employees that showed to what point they have been adopting the environmental dimension of CSR activities at their corporations. Evidence demonstrated that top management still didn't consider environmental issues a priority in work plans.

Flammer (2013) examined the assumption that “whether shareholders are sensitive to corporations' environmental footprint”, In reference to the view that environmental dimension of CSR creates new and competitive resources for firms, the firms that stated to behave responsibly toward the environment witnessed a significant stock price increase, while firms that behave irresponsibly face a significant decrease. In conclusion it was found that the positive or negative stock market response to eco-friendly actions is less for firms with higher levels of environmental CSR practicing.

2.8 CSR AND PERFORMANCE

Setting targets for a specific mission and trying to accomplish those targets to the extent of corporation's potentials is known as corporate performance. The relationship between CSR and corporate performance (CP) is still not fully covered by researchers due to the difficulty of measuring the impact of CSR on business performance therefore an indirect approach must be chosen. Kaufmann (2012) pointed out that “although it is virtually impossible to subtract out the influence of CSR on business performance directly, it is possible to determine the influence of CSR on different stakeholders of the corporate”. Cochran's (1985) defined corporate social performance “A business organization's configuration of principles of social responsibility, processes of social responsiveness, and policies, programs, and observable outcomes as they relate to the firm's societal relationships”. The following sections presented literature conducted about CSR and CP.

Rajesh & Meena (2013) assessed the influence of CSR practices on performance of medium scale enterprises (MSEs). Through using a multi-dimensional dimensions consist of local community, employees, suppliers, environment and customers to find their relations with CSR. Discoveries of testing previously mentioned five dimensions confirmed that CSR to be composite of all of them and they influence enterprise in affirmative and positive way.

Rasoulzadeh et al. (2013) evaluated the effects of CSR dimensions on corporate performance through reviewing CSR literature to extract definitions and dimensions of CSR to demonstrate their influence on organization performance. Findings indicated that CSR is a form of corporate self-regulation integrated into a business model and its dimension that consisted of environment, social, economic, stakeholder, and voluntariness that affect organization strategic design to achieve specific goals as a consequence strategic CSR design impact organizational performance.

Tilakasiri (2012) explored the relation between CSR and CP. The outcomes of the study exhibited the relationship between CSR and CP as it's a significant and constructive.

Munasinghe & Malkumari (2012) focused on exploring outcomes of the application of CSR concepts in small and medium enterprises. Using stakeholder's theory that consists of four dimensions: environment protection, employee care, community care and employee concern. Findings indicated that the common believes and attitudes of firms that they should pay attention to their social and environmental responsibilities.

Mishra & Suar (2010) assessed the influence of CSR initiatives on corporate financial and non-financial performance with a multi-dimensional measures consist of local community, employees, suppliers, environment and customers. Conclusions clarified that implementing CSR practices on primary stakeholders can be profitable and constructive to businesses and firms.

Rettab et al. (2008) examined relation between CSR actions and organizational performance. Results illustrated that CSR has a positive relationship with the three measures of organizational performance: financial performance, employee commitment, and corporate reputation. Study results showed positive indications of CSR actions towards organizational performance in the contrary of the common conception that CSR drain organization resources and exposed weakness points in organization strategy.

2.9 CSR AND PHARMACEUTICAL INDUSTRY

The pharmaceutical industry is considered qualified environment for integration CSR strategies in their internal systems. It will be a risk for any pharmaceutical firm not practicing CSR to its businesses. Jeopardy could range from refusing to prescribe drugs by the medicine community to current and potential investors rethinking of dealing with these firms which lead to a big loss in profits and damage in firm's reputation. Berete (2012) defined “CSR of pharmaceutical companies as their voluntary efforts to improve the access to medicine”.

Min et al. (2013) asked the question “Does Corporate Social Responsibility (CSR) really add value to Corporate Performance in the Pharmaceutical Industry?” as there are no conclusive studies to give a formative answer though the relation between CSR and corporate performance in pharmaceutical industry and still need more investigations. Findings indicted that CSR could be treated as an investment on the long term of corporation's life. Also indicated that corporation size does not matter in implementing CSR programs and does not have an effect of how successful they are.

Berete (2012) discussed factors that have a massive impact on pharmaceutical companies practicing CSR: stakeholders' pressure, the economic health, the regulations, the threats, and the market competitiveness and management must take those factors in consideration when defining company strategy as thy affect performance and company success.

Khan (2008) tried to understand CSR practices from emerging economy perspectives using pharmaceutical industry as case study. Results indicated that developing countries have different conceptualizing for CSR from developed countries, whereas in developing countries the focus on stakeholder pressure, environmental concerns and integration into core business are not important as much as employees and their families' welfare followed by community prosper and enhancement with activities ranging from healthcare, education, human resources training to infrastructure development.

Nussbaum (2008) reviewed and summarized features and approaches of CSR practices used in successful case studies in pharmaceutical industry. The study identified future trends and continuous challenges in CSR practices in the industry. Focusing on CSR actions that empowering firms in pharmaceutical industry leading to more success and flourish. So here the main hypothesis aroused:-

Main Hypothesis (H01): There is no statistically significant impact of corporate social responsibility practices toward on Jordanian pharmaceutical companies performance at α ≤ 0.05 level.

The gap in literature for addressing relationship between impact of CSR practices on pharmaceutical companies performance has led researchers to put more efforts in this field.

O'Riordan and Fairbrass (2014) in their study which aimed to revise and refine previously established and used explanatory CSR framework to recognize administration procedures concerning CSR stakeholder engagement strategies by using results collected from CSR practices of major pharmaceutical companies and applying them on this framework to have more comprehensive and practical mode for managing stakeholders' engagement activities. The researchers also gave recommendations to CSR practitioners to transfer CSR practicing from traditional approach to a brand new innovative one.

Volodina et al. (2009) studied the knowledge, awareness, attitudes and practices of senior medical and pharmacy students to CSR activities in the pharmaceutical industry in both developed and developing countries. Findings showed that CSR as a concept was well known but still companies practices of CSR is not. Also showed that when looking for employer, socially responsible ones comes at first as irresponsible ones gave negative impact and bad reputation in employment field.

Those researches and more directed researcher to formulate the first sub-hypotheses:-

First Hypothesis (H01-1): There is no statistically significant impact of CSR practices toward employee on Jordanian pharmaceutical companies performance at α ≤ 0.05 level.

Second Hypothesis (H01-2): There is no statistically significant impact of CSR practices toward supplier on Jordanian pharmaceutical companies performance at α ≤ 0.05 level.

It has been hardly seen a dedicated papers about impact of CSR practices on customers in pharmaceutical industry. Few researches have been conducted as:-

Van de Pol and de Bakker (2009) research which reviewed direct-to-consumer advertising (DTCA) of pharmaceuticals that is defined by Toop et al. (2003) as “The practice of advertising medicines to lay populations in order to increase sales brand awareness and establish loyalty”. But little studies have researched this concept from CSR point of view with concentration on consumer autonomy and safety as main goals in applying CSR practices. The study concluded that using CSR perspective could introduce new approaches in DTCA of pharmaceuticals for better. This directed to the third sub-hypothesis:-

Third Hypothesis (H01-3): There is no statistically significant impact of CSR practices toward customer on Jordanian pharmaceutical companies performance at α ≤ 0.05 level.

Fourth Hypothesis (H01-4): There is no statistically significant impact of CSR practices toward community on Jordanian pharmaceutical companies performance at α ≤ 0.05 level.

Giving environment such a special place in CSR field as a major factor has directed researchers to do more studies about the effects of applying CSR practices on pharmaceutical companies performance.

Vitezić (2010) analyzed pharmaceutical industry to investigate the CSR measurement system. The researcher illustrated economic, environmental and social issues in each pharmaceutical company then reached a unified and a standardized approach to CSR in pharmaceutical industry. Data analyzed led to a new model of socially responsible pharmaceutical enterprises which stresses humanitarian, social, ecological and economic facets of company activities to be used in this area.

Esteban (2007) indicated in his study that pharmaceutical firms in their CSR strategies need to focus on three key areas “First of all, pharma must be more transparent and better at communicating their policies and procedures for testing and marketing products. Second, is that the industry is likely to face a more challenging people management in the future. Finally, the industry will need to manage ongoing environmental challenges relating to procurement, waste management and the efficient use of key resources”.

Küskü (2005) focused on CSR activities that help in preserving the surrounding environment in developing countries and to determine whether their commitment to these activities comes from legal obligations or their own social awareness. Findings showed that legal obligations are the major incentive that encourages these companies to apply environmental citizenship activities.

Reviewing and revising all of the above studies about effects CSR practicing of pharmaceutical companies on environment led to the fifth sub-hypothesis:-

Fifth Hypothesis (H01-5): There is no statistically significant impact of CSR practices toward environment on Jordanian pharmaceutical companies performance at α ≤ 0.05 level.

2.10 SUMMARY OF RESEARCH HYPOTHESES

Table 2.1: Summary of research hypotheses

Research Hypothesis No. Research Hypothesis

H01 There is no statistically significant impact of corporate social responsibility practices toward 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 Customer on Jordanian pharmaceutical companies performance at α ≤ 0.05 level

H01-3 There is no statistically significant impact of CSR practices toward Community on Jordanian pharmaceutical companies performance at α ≤ 0.05 level

H01-4 There is no statistically significant impact of CSR practices toward Supplier 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

2.11 CONCLUSION

Chapter two demonstrated a thorough analysis of literature review to justify the chosen subject of the study and the dimensions adopted. Also in this chapter the groundwork of the research has been established through taking a holistic view of the related literature to minimize the circle to most related literature to be used in formulating and supporting hypotheses and theories investigated. The next chapter presented the research methodology has been chosen and selected to complete this research.

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