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Towards greater CSR by Jordanian firms

May 17,2017 - Last updated at May 17,2017

Corporate social responsibility has become an important business element that aims at increasing the social contribution of businesses, regardless of their type, size or location.

It has become one of the most important factors that determine how different stakeholders judge, react and interact with firms.

In its most commonly used definition, CSR is defined as “situations where the firm goes beyond compliance and engages in actions that appear to further some social good, beyond the interests of the firm and that which is required by law”. (McWilliams et al., 2006)

Many scholars suggest that CSR can play a significant role in improving the society’s welfare under disequilibrium circumstances that are caused by both government and private sector failure to properly address persistent economic gaps due to unemployment, inflation, decrease in the purchasing power of the currency and tough measures imposed by the IMF to boost the national economy. Moreover, the average Jordanian’s inability to engage in any entrepreneurial activity of any sort is another indicator of how institutional, social and economic gaps have worsened recently.

If the private sector gets fully involved in CSR activities, it would at the very least soften the negative overall economic situation.

Creating an entrepreneurial atmosphere, apparently very difficult due to the lack of necessary means, would enable Jordanians who have entrepreneurial spirit to translate their ideas into actions, eliminating persistent barriers like lack of encouragement, of support, of financial resources, or the monopolistic behaviour in many emerging and existing business fields, such as information technology, which seems to be the exclusive realm of some business elites in Amman.

CSR helps build a strong and harmonious society. It can help resolve social disparities that have increased significantly in recent years, which caused the public to lose trust in many government entities, as well as in businesses, because it sees firms as major entities that fell short on social obligations, and governments as ineffective and having failed to achieve longstanding slogans like “enabling the youth” so they can be effective part of rebuilding the country’s economy in efficient and creative ways.

In many Western and Asian countries, CSR has helped attain social unity and promoted collective responsibility for the advancement of society through business practices.

Meaningful engagement in CSR activities by Jordanian firms is a necessity, especially under the current circumstances when the country is facing economic adversities. 

Companies should not focus only on obtaining maximum profits for their shareholders. 

CSR activities would improve a company’s profitability in the long run. It also improves their reputation, and that can give them a competitive advantage, from a stakeholder’s perspective.

In times of economic crisis, patriotic companies rise up to their social responsibilities and join the efforts that aim at serving and helping the society.

In so doing, they also increase their attractiveness to talented employees, good suppliers and customers, and increase their institutional reputation among competitors, suppliers and other institutions with whom they might do business or from whom they might need assistance in the future, and benefit from government incentives for companies engaged in CSR activities.

The government and civil society organisations need to pressure Jordanian firms that are not already showing social commitment, but to do so, they need to have sound information on what is needed the most, where, and how firms can help address societal needs.

Companies on the other hand can perform vigilant analysis of such information and then launch CSR projects that cater to the most urgent needs in the society with a just and fair geographical distribution of their projects.

Greater cooperation among government, NGOs and private sector can significantly assist the country these days.

Such cooperation would ensure a positive and constructive tie is being built between the poor/middle class, to be found mostly in the forgotten governorates, and the central government and businesses in Jordan.

Such ties would restore trust in government and businesses and would reflect on the collective efforts to boost the overall economy through initiatives that focus on a greater role for the youth by engaging outstanding individuals in schools and universities and supporting their creative thinking, rebuilding the outdated infrastructure in deprived areas, supporting youth-focused initiatives in areas outside the capital, and creating jobs for the unemployed.

We need a national agenda that prioritises CSR as a top-needed strategy of all businesses. 

The CSR agenda must be well voiced and explained by government, scholars and civil society organisations so that companies can understand what is at stake, what their duties are, and what engaging in CSR activities would be mean to them and their shareholders.

Establishing a national CSR agenda is not an easy task, but it is one worth undertaking. 

Academics and NGOs should work together to develop a CSR index that assesses and ranks Jordanian companies according to their CSR performance.

Such index would familiarise the CSR concept among concerned parties and will encourage companies to take CSR more seriously.

 

 

The writer is a Ph.D. holder in strategic management, international business scholar at the University of Texas at Arlington and faculty member at the Hashemite University. He contributed this article to The Jordan Times.

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