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CHAPTER ONE

INTRODUCTION
1.1 Background
Corporate Social Responsibility increases in importance, especially in
the case of Supply-Chain Management. This is proving in the rising
competitiveness between entire supply-chains, as a competitive shift
from individual companies to supply-chains as existence is taking
place. Hence, the entire supply-chain becomes more crucial in the
creation of a competitive advantage.
Corporate Social Responsibility (CSR) attuned one chance to work
towards sustainable development in business. It has increased in
significant, both in academia and business (Campbell, 2007) and has
been debt extensively by many authors from a variety of perspectives.
Today, a shift is taking place from inter-firm to inter-supply-chain
competition (Hult et al., 2007). This shift is receiving increasing
attention from corporate management (Christopher, 2005).
Supply chain management is an region of increasing strategic
importance due to global competition, outsourcing of nonessential
activities to developing countries, short product life cycle, and time
sequences in all features of the supply chain (Skjtt-Larsen et al.,

2007). Management interest has moved from competition between


firms to competition between supply chains (Christopher, 2005).
Concepts

of

supply

chain

sustainability

and

corporate

social

responsibility (CSR) in supply chains (Maloni and Brown, 2006) are


drawing growing attention in the media, academia and the corporate
world.
Accorging to what mention above, there is an academic and business
interest of investigation the relationship between CSR and SCM and
there is a need to answer how an improvement in CSR can cause an
improvement on SCM? What is the process that led to enhance the
both terms in order to enhance competitive advantage and improve
the profit?
Hence, this study aims to investigate the relation between CSR ON
SCM and describe this relationship and how this type of relation effect
on organization performance.

1.2 Research objectives


The objectives of this study represented by the following points:
1. Identify corporate social responsibility term and its dimensions.
2. Identify supply chain management term and its dimensions.
3. Investigate the relationship between CSR and SCM.

1.3 Research questions

In order to achieve the research objective the following questions


should be answered:
1.
2.
3.
4.

What is the relationship between CSR and SCM?


What is the impact of internal CSR on SCM?
What is the impact of external CSR on SCM?
Why there is a relation between CSR and SCM

1.4 Operational definition


Whereas the questionnaire will be conducted to obtain the data of this
study, each of the indented CSR and SCM variables should be
operational in order to fit the questionnaire context.

In this section

each variable will be defined and each dimention will be illustrated as


follow:
1. CSR: CSR is a set of organization's actions that go behined the
concept of profit-making or compliance with the law. It entails
promoting good causes, instituting good practices, and carrying
out mankind, all of which highlight a organization's ethical
position. These elements are necessary to building a more
productive relationship with the organization's stakeholders
(Carroll and Buchholtz, 2000).
To achieve the objectives of this study tow dimensions of CSR
were investigated which are:
Internal CSR: internal CSR reflect to those business practices
that have a social impact on internal stakeholders, namely,
employees. Thus, as internal CSR we may consider high

commitment human resources practices such as training,


labor stability, employee participation, high wages, etc. We
assume such internal CSR is not observed by consumers, and
has no direct impact on consumers utility function. We also
assume that such internal CSR has a positive impact on
employee productivity which we model through a reduction of

the investment costs of the firm (Ciliberti et al, 2008).


External CSR: External CSR As external CSR reflect to those
business pursit that have a public good component and
assume that they can be observed by consumers (external
stakeholders),

hence

might

be

used

as

signal

to

unobservable product quality by these consumers. Examples


range from no child labor policies to sound environmental (no
pollution) business practices. Such external CSR may also be
considered as an additional dimension of product quality (and,
accordingly included in the consumer utility function) (Ciliberti
et al, 2008).
2. SCM: the management of the flow of goods and services,
involves the movement and storage of raw materials, of work-inprocess inventory, and of finished goods from point of origin to
point of consumption (Heikkila, 2002)

CHAPTER TWO
LITERATURE REVIEW
2.1

Introduction

In this chapter, a review of literature on the general concept of CSR


and the concept of SCM will be presented. Furthermore, a review of
the previous research that related the relationship between CSR and
SCM will be presented.

2.2 Corporate social responsibility (CSR)


Corporate social responsibility (CSR) is a wide concept and not limited
to supply chains, but to the companies overall handling of human
beings and the environment.

Corporate Social Responsibility (CSR) can be defined as the voluntary


integration, by companies, of social and environmental concerns in
their commercial operations and in their relationships with interested
parties (Ciliberti et al, 2008).
Broadly speaking, the construct of CSR as we know it today has two
main characteristics. Firstly, it describes the relationship between
business and the larger society. Secondly, it refers to a companys
voluntary activities in the area of environmental and social issues
(Carroll and Buchholtz, 2000).
CSR refer to the idea that a organization may be grasbed socially and
ethically responsible by an expanded array of stakeholders such as
customers, employees, governments, communities, NGOs, investors,
supply chain members, unions, regulators, and media (Maloin and
brown, 2006).
Based on corporate values, some business leaders have a the concept
and demand to provide leadership in the area (Maignan et al., 2002).
Additionally, Spar and Mure (2003) found that corporations may
respond from threats to deal costs, brand, and competitive positioning.
CSR motivations may also contain marketing, publicity, and innovation
(Maignan et al., 2002). The author indicate that firms may consider
CSR as cost of doing business though other firms may find CSR selfbeneficial. Panapanaan et al. (2003) raveled that globalization,
regulation, and sustainable development have fueled expansion of

CSR, and there have also been examples of investment companies


exerting power to drive social responsibility among corporations
(Spector, 2003).

2.3 Supply chain management (SCM)


SCM is a management discipline which concerns the set of practices
aimed at managing and coordinating the supply chain from raw
material suppliers to the ultimate customer (Heikkila, 2002). It is a
way of thinking that is devoted to discovering tools and techniques
that provide for increased operational effectiveness and efficiency in
the supply chain (Cox, 1999).
SCM achieves improved performance through better use of internal
and external capabilities and technology, thus creating a seamlessly
coordinated chain between raw material supplier and final consumer
(Chen and Paulraj, 2004).
SCM focus has evolved over the past 20 years from integrating
logistics and reducing costs to providing better products and customer
service, faster and more cheaply (Chen and Paulraj, 2004), and as
such, emphasis has moved from pure cost efficiency to a combination
of cost efficiency and customer-focused effectiveness.
SCM has gained much prominence in recent years due to recognition of
its potential as a major new area of profit and growth. Hence, it has
rapidly become a strategic priority in many firms (Jttner et al., 2007).

A supply chain is a group or network of legally independent


companies which have agreed to work together to achieve some
common objective in the supply of a given product (Jones, 2006,
p.55). SCM essentially refers to the integration of activities, actors and
resources associated with the flow and transformation of goods from
raw material to end user (Svensson, 2007) that is achieved through
improved supply chain relationships for the shared goal of sustainable
competitive

advantage.

The

concept

includes

the

associated

information flows. Hong and Jeong (2006) summarized existing


literature to define SCM as a set of approaches utilized to effectively
integrate

suppliers,

manufacturers,

logistics

and

customers

for

improving the long-term performance of the individual companies and


the supply chain as a whole. The goal of SCM is to integrate and
manage the sourcing, flow and control of materials using a total
systems perspective across multiple functions and multiple tiers of
suppliers (Mentzer et al., 2001).

2.4CSR and SCM


Despite the history of CSR, applications of CSR to the supply chain
have only emerged in the last 15 years. Poist (1989) provided early
consideration of social responsibility in the supply chain, suggesting a
total responsibility approach that adds societal issues to traditional
economic drivers of the supply chain. Murphy and Poist (2002)
contended that although supply chain practitioners have been slow to

adopt CSR considerations, social responsibility concepts in the supply


chain are increasing in importance. Carter and Jennings (2004)
established the importance of CSR in supply chain decision-making
with case study and survey research.
Companies can use two CSR management strategies along the SC, i.e.,
compliance with requirements and capacity building (ciliberti et al,
2008). The first approach sets standards for suppliers and tries to
prevent noncompliances by a strict monitoring program. If a noncompliance is detected, companies terminate the contract with the
supplier or stop the business until the corrective changes are
implemented.
On the other hand, capacity building aims at building up the suppliers
own capacity of handling CSR issues. Companies thus promote a
socially

responsible

culture

among

suppliers.

When

suppliers

understand the logic and the business case for CSR they can in turn
start promoting CSR. The continuous improvement philosophy is part of
this approach. A prerequisite is building long term close relationships
with suppliers [30].

CHAPTER THREE
Methodology
3.1 Introduction
This chapter presents an overview of the research methods conducted
to get the information. It will involve: the presentation of the
theoretical framework, selection of the population and sample design,
presentation of data collection methods, and data analysis method
3.2Theoretical Framework
It is important to discuss and clarify the theoretical framework of the
research because it can help in developing hypotheses and in
determining the testing needed to approve the concerned relationship
of the study (Sekaran, 2003).
For this research, corporate social responsibility is treated as the
independent variable. Supply chain, on the other hand, is treated as
the dependent variable (which will be measured in this study; and it
will be affected during the study). The following figure shows the

theoretical

frame

work

of

research;

illustrate

dependent

and

independent variables and theirs dimension and the relationship


between them.

Independent Variable CSR

Dependent Variable
SCM

Internal CSR
External CSR

SCM

Figure 3.1: theoretical framework


3.3Research Design
This research was conducted to indicate the impact of a CSR on SCM.
According to Sekaran, (2003) there are two ways to draw a conclusion
of the research: induction and deduction.
Induction is a way to arrive at a conclusion by observing a
phenomenon

(Sekaran,

2003).

And,

deduction

is

process

implemented by logical generalization of known facts to arrive at a


reasonable conclusion (Sekaran, 2003). Deductive approach was
adopted for this study.

Furthermore, quantitative (descriptive, comparative) approach was


adopted as a research method for this study. Quantitative approach
can be defined as: a formal and systematic procedure to get
quantifiable information about something. Furthermore, it can be
described as: a participating of numerical data which can be analyzed
by using statistics. Quantitative approach used to describe, compare
and test the relationship (Motgonomery, 2008). For this study, the data
were collected mainly by using a questionnaire. The quantitative
approach is a suitable option because it provides a strong base for the
generalization of questionnaire results to the study population
(Motgonomery, 2008). Hence, this research has adopted the deductive
approach and quantitative (descriptive, comparative) approach to
obtain the results needed for verifying the study hypotheses.
3.4Research Hypotheses
According to Sekaran (2003), a hypothesis can be defined as an
educated about logically developed relationship between two or more
variables, expressed in the form of testable statements." Therefore, in
order to test the impact of TQM implementation on employees
performance in hospitals, the following hypotheses are developed for
this study:
First main hypothesis:
H01: There is no statistically significant impact (at the level 0.05) of
internal CSR on SCM.

Second main hypothesis:


H02: There is no statistically significant impact (at the level 0.05) of
external CSR on SCM.
3.5Populations and Sample
Successful research depends on the way that researchers select the
study sample (Bartlett et al, 2001). Determination of population and
sample is an essential factor for any survey research (Bartlett et al,
2001). Inadequate or inappropriate sample size will affect the quality
and the accuracy of the research (Bartlett et al, 2001). Population can
be determined by the purpose of the study (Bartlett et al, 2001).

3.6Data Collection Method


Data collection is simply the process of gathering information. There
are two ways of data collection: secondary and primary data collection.
Secondary data are collected from existing published or unpublished
documents related to the subject of research, while primary data is
information obtained directly from the researcher (Sekaran, 2003).
For the purpose of this study, secondary data have been collected
from: text books, articles, journals and websites, this data were mainly
used to establish the literature review part of this study. Primary data
have been obtained from respondents by means of a questionnaire.

Data were collected through questionnaire which was split into three
parts:
3.7

Reliability and Validity

It is important to make sure that the instrument used to measure


particular concept is accurately measuring the variable and is actually
measuring the concept that it is supposed to measure (Sekaran, 2003).
In this section data will be tested through developing the reliability and
validity of measures.
Reliability helps in assessing the goodness of a measure and indicates
the stability and consistency with which the instrument developed for a
particular study measures the concept (Sekaran, 2003). Reliability has
to do with the accuracy and precision of a measurement procedure
(Cronbach, 2004). For this research Cronbachs Alpha Coefficient is
used to assess the reliability. The measure is considered to be reliable
if the value of Cronbachs Alpha Coefficient equals or exceeds 70%
(Cronbach, 2004).
Validity represents the extent to which an instrument measures what it
supposed to measure (Sekaran, 2003). There are two types of validity;
internal validity and external validity. Internal validity: refers to the
extent that no other variables except the one being examined caused
the result. The external validity: refers to the extent that the result of
research can generalize. For this research, Kaiser-Meyer-Olkin (K-M-O)

has been used to assess the validity. K-M-O used to measure sampling
adequacy and the correlation between variables. To consider that
measure valid, K-M-O value is wanted to be over 60% (Nkosi, 2015). In
addition, to ensure content validity, the items selected to measure the
study variables were primarily derived and adapted from a similar
questionnaire used in existing literature.
3.8

Statistical Methods Used in the Analysis

This section will discuss the methods used to analyze the data that
have been collected to test the study hypotheses.
Statistical package for social science (SPSS) was used to analyze the
data. For descriptive analysis, percentages and frequencies were used
demographic description. Mean and standard deviation were used to
describe respondent's attitude toward the variables, dimensions and
items of the study. Then, regression analysis was used to test study
hypotheses.

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