Corporate social responsibility (CSR) gained popularity in 1970s as a policy function to encourage corporations run their operations responsibly. Since then, it has continued to gain popularity in different regions, especially as governments embrace it as a way of obligating businesses to help in dealing with different social and development challenges that arise in different communities. This is achieved through laws and regulations, as well as training on CSR.
In the construction industry, CSR plays a significant role in ensuring that projects create employment for the locals, the environment is protected, energy is conserved, land is utilized in economically sound manner, construction projects are sustainable, and safety is observed, among many other areas where CSR is applicable. In Jordan, the construction industry is experiencing a vibrant growth, especially from the government’s support for less-energy intensive sectors.
This paper analyzes the role of CSR in the construction industry, using Jordan as a case study. Data and information is collected through interviews and study of past academic resources. The findings support the dissertation’s hypothesis, which states that CSR programs play a significant role and can contribute to responsible business practices and sustainable development in communities where organizations operate. The paper however concludes that this is only possible if CSR programs and initiatives are implemented in the right way. Recommendations are focused on how corporations can achieve this.
Corporate social responsibility
Different authors have presented different definitions for CSR. Among them is Banerjee (2007) who defines it as a “built-in, self-regulating mechanism, whereby business monitors and ensures its active compliance with the spirit of the law, ethical standards, and international norms”. CSR activities affect investors, management, employees, consumers, communities, the environment, and other stakeholders. All these stakeholders play different roles to ensure CSR initiatives benefit each of them equally.
The right CSR initiatives in different regions are ensured through laws and regulations, awareness and training corporations on how they can benefit from CSR. Benefits are spread across all stakeholders and include supported development in communities, allowing employees a chance to participate in beneficial activities to the communities, building a reputation for a business and its brands, as well as support for government initiated development activities and plans. Major challenges for corporations in their efforts to implement CSR include lack of finances, resistance by communities, lack of support by governments, and legal challenges that arise as a result of being involved in different community activities.
CSR in Jordanian construction industry
“Construction contractors are beginning to include aspects of corporate social responsibility into their construction projects, but it is arguable that the role of CSR is still not clear” (n.a., 2010). Every stakeholder has a role to play to enable the industry mature in its implementation of CSR. Investors have to be willing to input more finances to support CSR initiatives. Communities play a significant role in helping construction companies identify social needs that need to be addressed. Clients play a role by putting pressure on construction companies to do business responsibly. “Construction clients are now asking contractors to embrace and deliver CSR as an integral component of construction activities” (Santorella, 2011).
“Real estate sector flourished in the middle east region till the recent global recession and the associated setbacks that affect the sector at varying degrees in different parts of the world” (Kokash, George and Salem, 2011). In Jordan, the construction industry is considered among the most successful in the region, mainly due the level of support accorded by the government on less-energy intensive sectors, where construction falls. Nonetheless, several issues remain contentious and the role of the industry in promoting sustainable development in the surrounding communities remain a topic of heated debate among stakeholders.
Purpose of research
The research which forms the basis of the dissertation was inspired by the continuous debates that keep arising on the role of CSR in different industries. It was also inspired by the recent wave of pressure from governments in different regions on businesses to address the issue of CSR seriously. As a researcher, I believe that corporations should be responsible for the negative environmental and social impacts resulting from their day-to-day operations. Therefore, my recommendations will support implementation of CSR initiatives in corporations, as well as laws that hold businesses accountable of any social and environmental irresponsibility.
“The concept of corporate social responsibility has been adopted by a number of companies in a variety of industries” (Hill, Alan and Wendy, 2006). As Whellams (2007) continues to explain, “CSR programs address a wide array of social and environmental issues, from human rights and working conditions to climate change and greenhouse gas emissions”. For this dissertation, it would not have been possible to investigate CSR programs and implementation in all the industries. Instead, the dissertation focuses on the Jordanian construction industry as a case study.
As explained by Whellams (2007),” there are two types of case studies, the intrinsic case study in which the case is the focus of research due to its uniqueness, and the instrumental case study where the focus of research is specific issues that the case serves to illustrate”. This dissertation’s case study serves the purpose of an instrumental case study, shedding light on the role of CSR in Jordanian construction industry. The case is then used as a reference point for other industries in different regions.
Discuss the role of CSR in the construction industry, using Jordan as a case study
- Define CSR
- Understand the role of CSR in different business environments
- Discuss the role of CSR in the construction industry
- Discuss the role of CSR in the Jordanian construction industry
CSR programs play a significant role and can contribute to responsible business practices and sustainable development in communities where organizations operate. However, this is only possible if CSR programs are implemented properly. This paper suggests that the success of CSR and its purposes are dependent on the chosen initiatives, how they are designed, their implementation, as well as the support of the beneficiary communities.
As Hill, Alan and Wendy (2006), “many aspects of local sustainable development cannot be quantified, and those which can, often only paint a partial picture of what is happening in a particular community”. To test my hypothesis, a variety of research methods were adopted for this dissertation. Primary data was gathered from three semi-structured interviews with people at a management level in the Jordanian construction industry. Secondary data was gathered through observation and studying academic resources such as books, online articles, journals and past research projects by different individuals and organizations. Conclusion and recommendations were formed from the compilation and analysis of the gathered data and information.
The first chapter of the dissertation is the introduction, which briefly summarizes the rest of the dissertation, as well as highlighting the purpose, aim and objectives to be met by the rest of the work. Chapter two is the literature review, which presents the theoretical aspects of the paper. These include definitions, various discussions by different authors and researchers, application of CSR in different industries, the role of CSR in the construction industry, background of the Jordanian construction industry, CSR obligations, and obstacles in the country. The third chapter presents the methodology, which is an explanation of how primary and secondary data is collected. The data analysis chapter presents the data and information collected in chapter three. Finally, chapter five and six are conclusions and recommendations chapters respectively. The last two chapters are formed from data and information collected and analyzed in chapter 3 and 4.
This paper analyzes the role of CSR in the Jordanian construction industry. The case study is designed to meet the objectives of the paper through studying the background of the topic, collecting data, and forming a conclusion and recommendations based on the results. The introduction chapter defines CSR and briefly highlights several factors that influence its implementation in the construction industry. It further outlines the purpose of the research, the research design, dissertation’s aim, objectives and the hypothesis. The methodology and data analysis will all be designed to prove or disapprove the hypothesis of the paper, which states that CSR programs play a significant role and can contribute to responsible business practices and sustainable development in communities where organizations operate.
“Corporate social responsibility (CSR) is a form of corporate self-regulation integrated into a business model” (Wood, 1991). As Banerjee (2007) further explains, “CSR policy functions as a built-in, self-regulating mechanism whereby business monitors and ensures its active compliance with the spirit of the law, ethical standards, and international norms”. It has been in existence since the 1960s, but became popular in the 1970s as more international corporations came into being.
CSR benefits include building a company’s reputation, improving a company’s human resource team by involving employees in CSR activities, and stakeholder engagement by allowing them to air out their views and opinion before a business embarks on any activities in their communities. In the construction industry, CSR allows business to establish safety measures, achieve brand differentiation, and have access to funds by operating responsibly.
In Jordan, CSR is ensured through laws and regulations obligating businesses to work in a socially responsible manner. This is through set standards such as ISO, enacted laws, and monitoring business’ level of responsibility towards employees, customers, communities near them, and other stakeholders. This literature review covers CSR and its role in the construction industry, using Jordan as a case study.
CSR approaches and phases
CSR in different industries is aimed at promoting responsibility and encouraging positive impact through their business activities. CSR activities include those on consumers, communities, the environment, and stakeholders, among others. As Booth (2009) explains, “the discussion about CSR has been very heterogeneous”. This is so as many experts continue to argue the difference between different approaches to CSR. “The most common and acceptable approach for CSR is the community-based development approach” (Ararat, 2006). This approach involves companies working with local communities to implement projects and initiatives that make communities better. A good example is corporations that have set up learning centers to educate the community on different issues, as well as improving the literacy levels of children in that community. Other community development programs include building trade networks between the corporations and the communities (Ararat, 2006).
Another common approach taken by corporations today is philanthropy. Corporations use donations and aid to communities around them and local organizations involved in development programs. This approach has been criticized for discouraging skill development. They further argue that it does not support sustainable development.
“Another significant approach CSR is garnering increasing corporate responsibility interest, also known as creating shared value or CSV” (Crane et al., 2008). This approach is based on the argument that social welfare and corporate success are dependent on each other. For businesses to compete effectively, they need a sustainable workforce and healthy resources. On the other hand, societies need profitable and sustainable developments. These two present the relationship between corporations and communities.
The three phases of CSR can be demonstrated as follows;
|Phase 1: Legal compliance ||Phase 2a: Ethical practices |
|Phase 2b: Ethical practices ||Phase 3: Social contribution |
Fig.1: Phases of CSR. Source: Developed from Asian Productivity Organization, 2006. Top management forum: Corporate social responsibility. Asian Productivity Organization: Hirakawacho, Japan.
The criteria for corporate sustainability and the triple bottom sustainable development can be represented as follows:
Sustainable development and the triple bottom line
Historical development of CSR as a strategy in business
Corporate social responsibility became popular in the late 1960s due to the formation of many multinational corporations (Asongu, 2007). This trend continued to the early 1970s as more corporations came into being. Freeman’s book on strategic management in 1984, which has been published again in 2010, influenced the common use of the word stakeholder, and defined as “those on whom an organization’s activities have an impact” (Freeman, 2010).
CSR has developed over time to become one of the most significant programs in any organization. Its advantages and disadvantages have also been the source of vibrant debates among stakeholders and experts. Proponents of CSR argue that doing business with a perspective helps corporations increase their long-term profits. Critics argue that it is a distraction as business work towards performing the economic roles. They also argue that CSR is merely used to emphasize the role of governments in watching and regulating big local and multinational organizations.
“CSR principles have long been part of enlightened business practice, but the concept has witnessed an astounding ascendancy and resurgence in recent years” (Jamali,Yusuf and Khalil, 2008). Even with such developments, the concept is yet to be fully embraced as the topic continues to attract many diverging views. Proponents argue that CSR is an opportunity for businesses to look beyond the financial and profitability element of a business and consider other concerns of its stakeholders. To critics, CSR dilutes a business main focus which is to make wealth (Barthorpe, 2009).
CSR has been long classified based on classical and modern paradigms. The classical perspective of CSR suggests that a business’ main focus is to provide goods and services to its clients and maximize profits, as long as a business is within the set legal frameworks of the country where it operates. The focus of this perspective is the legal and economic elements of a business. A business’ responsibility should therefore be to meet the expectations of the law in the area of operation, as well as those of the clients it is serving (Coen, 2010). These expectations can be further categorized into environmental, quality, and development responsibilities.
The modern perspective of CSR is based on the argument that “corporations should serve a wide array of stakeholders needs” (Jamali,Yusuf and Khalil, 2008). It is also based on the argument that in modern times, the state is not able to address all the social needs and issues resulting from an increasingly complex environment. Corporations are obligated to partner with the state to help them manage the dynamics of modern societies (Drucker, 2000).
Benefits of CSR
Depending on the nature of a business or industry, the nature and scale of CSR may vary (Visser, Dirk, Manfred and Nick, 2010). There a large body of literature and arguments urging businesses to adopt measures that allow them move away from financial corporate social responsibilities and activities. Orlitzky, Schmidt, and Rynes (2003) in their work “found a correlation between social/environmental performance and financial performance and explain that businesses may not be looking at short-run financial returns when developing their CSR strategy”. Different theories attempt to explain the benefits of CSRS in different ways.
Stakeholder-agency theory argues that the implicit and explicit negotiation and contracting processes entailed by reciprocal, bilateral stakeholder-management relationships serve as monitoring and enforcement mechanisms that prevent managers from diverting attention from broad organizational financial goals (Orlitzky, Schmidt, and Rynes, 2003).
This theory relates CSR with an organization’s performance by arguing that “addressing and balancing the claims of multiple stakeholders, managers can increase the efficiency of their organization’s adaptation to external demands” (Orlitzky, Schmidt, and Rynes, 2003). Another theory explaining the benefits of CSR is the instrumental stakeholder theory by suggesting a positive relationship between corporate social practices (CSP) and corporate financial performance (CFP). The theory argues that “the satisfaction of various stakeholder groups is instrumental for organizational financial performance” (Orlitzky, Schmidt, and Rynes, 2003).
According to Crowther and Lez (2004), “CSR within an organization can vary from the strict “stakeholders impacts” and many be based within the human resources, business development or public relations departments of an organization, or may be given a separate unit reporting to the CEO”. In some organizations, CSR may include volunteering and charitable efforts, while in some, it may include partnership with development organizations in communities. CSR benefits in an industry may be materialized in human resources, risk management, brand differentiation and license to operate, among others.
A company’s human resource can benefit from CSR through policies that involve employees in community development programs initiated by a corporation (Visser, 2011). Businesses involve employees through payroll contribution, allowing them to design and initiate projects in the communities, and have employees work in CSR programs supported by the company. Another significant benefit of CSR is stakeholder engagement. This is through allowing stakeholders to air out their views and has their opinion considered before policies are implemented. Stakeholder engagement is also through working with communities where suppliers, employees and clients come from.
CSR in the construction industry
Deringer defines corporate social responsibility as “the voluntary integration of environmental, social and human rights considerations into business operations, over and above legal requirements and contractual obligations” (Deringer, 2006). The author further quotes the former UK’s minister of energy who says that the only successful companies are those that will seek to be as responsible as possible in their operations and business models. CSR is not only concerned with how companies make money, but also how they spend and invest their profits (Organization for Economic Co-operation and development, 2001).
In explaining the trend of CSR a few years back, Deringer (2006) explains that “recently, there has been a proliferation of initiatives at national and regional levels as CSR becomes increasingly widespread, creating pressure on companies to not only disclose their CSR record, but also to improve it”. As a result, businesses have been forced to include CSR in their annual budgets and invest on research on how they can benefit from CSR. Those that have been able to establish it as it should are able to benefit from reputational, financial and other practical benefits of CSR.
The main concerns for the construction industry are more likely to be centered on sustainable development, climate changes, community progress, among other things that affect the progress and future of the industry. In the UK, figures released in 2002 revealed that housing and construction account for almost 30% of the carbon emissions. Newly housing developments can play a critical role in reducing emissions if companies invest in research and development of environmentally friendly technologies.
CSR in the construction industry is applicable through cost saving, energy saving and environmentally friendly measures (Murray and Andrew, 2007). Lighting, heating, cooling and transportation are areas that consume the most energy and money. CSR in the industry therefore tends to focus on them by initiating research and adhering to government recommended and benchmarked procedures. CSR in the industry can have application in the following areas;
Reporting on performance
Transparent reporting is a significant aspect of business ethics. The industry has long been accused for operating under very secretive financial systems (Petrovic-Lazarevic, 2004). Financial information, especially for the small corporations is not easily accessible. Construction companies owe stakeholders a right to access information about the company and its financial operations (The World Bank, nd.). CSR policies are used in companies to accord stakeholders’ rights to access information that directly affects them.
Environmental concerns continue to rise in every part of the globe. The construction industry is one of the most significant contributors of carbon gases. Production of construction materials and their transportation have negative effects to the environment if not managed well. CSR promotes environmental responsibility by obligating construction companies to fund and support projects that protect the environment, as well as adhering to Standard Assessment Procedures such as calculating carbon index (Schreck, 2009).
CSR policies in different countries address the issue of transparent procurement for government and public projects. The law in many regions provides for open tendering processes, fair and equal procurement processes, and equal access to the relevant information for contractors that want to be involved in public projects (Saleh, 2009). It is by involving the communities in a corporation’s activities that they are aware of available opportunities that can benefit them.
Clients and supplier relationships
CSR plays a significant role in building healthy relationships in a corporation. Designing and implementing projects where different stakeholders can work together allows them to identify the roles that each of them plays in the corporation. Clients and suppliers in a construction business influence how well the corporation can meet the expectations of each one of them. CSR policies offer platforms where both the parties can recognize each other, and work towards ensuring the each of their expectations are met (Rawlinson, 2010). These include partnering to develop projects, conducting educational programs for them, and making information available to them, just to mention a few.
CSR in construction companies in Jordan
“The Jordanian real estate market is divided into; residential, raw land, tourism-oriented and commercial segments” (Kokash, George and Salem, 2011). The industry has experienced an accelerated growth especially in the tourism and the residential areas. Recent economic reforms introduced in the country have boosted investors’ confidence and brought about increased activity in the markets.
The industry in Jordan ensures companies are socially responsible through measures such as having them publish annual CSR reports. This allows the government to access the level of commitment and responsibility among the companies. Companies in Jordan meet their social responsibilities through working with local employment agencies to provide employment and support to the locals. It is also through providing financial, professional and technical support for community projects.
To protect employees, communities and other stakeholders, CSR in Jordan companies involve ensuring improved health and safety standards in construction companies. This is through standards such ISO and OSHA, among others. Financial institutions consider a corporations performance in CSR before funding projects, a factor that encourages those that do not take it seriously to do so. Projects that support communities are more likely to be supported by financial institutions and the government.
ISO 26000 (guidance on social responsibility) has received a lot of support in many regions. It was written with the aim of ensuring businesses and organizations respect business ethics. A
The International Standard ISO 26000:2010, guidance on social responsibility, provides harmonized, globally relevant guidance for private and public sector organizations of all types based on international consensus among expert representatives of the main stakeholder groups, and so encourage the implementation of best practice in social responsibility worldwide (International Organization for Standardization, 2010).
Among the countries ISO 26000 has been implemented in Jordan (Hanks, 2010). It is applicable in both private and public organizations to assist them to do all their operations in a socially responsible manner. Unlike ISO 9001: 2008 and other ISO standards, it does not contain requirements but rather has voluntary guidelines. ISO 26000 has helped organizations in Jordan to be socially responsible in their organizations through offering advice and practical guidance on:
- Background and relevant trends in CSR
- Social responsibility practices and principles
- Critical subjects on CSR
- Benefits of CSR
- How to involve stakeholders in implementing CRS initiatives
According to International Organization for Standardization, (2010), “ISO 26000 will be a powerful tool to assist organizations to move from good intentions to good actions”
The (International Standard) ISO guidelines provide corporations with guidelines on how to implement CSR policies and strategies. CSR performance can influence many operations in a business including its reputation, its ability to establish business networks with the communities around them. It also influences the relationship between corporations, the media, the communities, as well as the government.
“ISO is not intended to replace, alter or in any way change the obligations of the state” (n.a. 2010). This argument is further supported by Horrigan (2010) who explains how standards such as ISO are used to guide business on what is expected of them. Organizations are encouraged to use ISO standards as to be more socially responsible by implementing the set guidelines. ISO allows businesses at different stages of understanding and operations to integrate CSR into their different levels of business.
|Core subjects and issues||Addressed in sub-clause|
|Core subject: Organizational governance||6.2|
|Core subject: Human rights||6.3|
|Issue 1: Due diligence||6.3.3|
|Issue 2: Human rights risk situations||6.3.4|
|Issue 3: Avoidance of complicity||6.3.5|
|Issue 4: Resolving grievance||6.3.6|
|Issue 5: Discrimination and vulnerable groups||6.3.7|
|Issue 6: Civil and political rights||6.3.8|
|1ssue 7: Economic, social and cultural rights||6.3.9|
|Issue 8: Fundamental principles and rights at work||6.3.10|
|Core subject: Labor practices||6.4|
|Issue 1: Employment and employment relationships||6.4.3|
|Issue 2: Conditions of work and social protection||6.4.4|
|Issue 3: Social dialogue||6.4.5|
|Issue 4: Health and safety at work||6.4.6|
|Issue 5: Human development and training in the workplace||6.4.7|
|Core subject : The environment||6.5|
|Issue 1: Prevention of pollution||6.5.3|
|Issue 2: Sustainable resource use||6.5.4|
|Issue 3: Climate change mitigation and adaption||6.5.5|
|Issue 4: Protection of the environment, biodiversity and restoration of natural habitats||6.5.6|
|Core subject: Fair operating practices||6.6|
|Issue1 : Anti-corruption||6.6.3|
|Issue 2: Responsible political involvement||6.6.4|
|Issue 3: Fair competition||6.6.5|
|Issue 4: Promoting social responsibility in the value chain||6.6.6|
|Issue 5: Respect for property rights||6.6.7|
|Core subject: Consumer issues||6.7|
|Issue 1: Fair marketing, factual and unbiased information and fair contractual practices||6.7.3|
|Issue 2: Protection consumer’s health and safety||6.7.4|
|Issue 3: Sustainable consumption||6.7.5|
|Issue 4: Consumer service, support, and complaint and dispute resolution||6.7.6|
|Issue 5: Consumer data protection and privacy||6.7.7|
|Issue 6: Access to essential services||6.7.8|
|Issue 7: Education and awareness||6.7.9|
|Core subject: Community involvement and development||6.8|
|Issue 1: Community involvement||6.8.3|
|Issue 2: Education and culture||6.8.4|
|Issue 3: Employment creation and skills development||6.8.5|
|Issue 4: Technology development and access||6.8.6|
|Issue 5: Wealth and income creation||6.8.7|
|Issue 6: Health||6.8.8|
|Issue 7: Social investment||6.8.9|
Table 1: Core subjects and issues of social responsibility (ISO 26000).
Even though ISO certification in highly applauded for encouraging CSR initiatives, many regions are yet to integrate it in their laws regarding CSR. In 2004, a report released by Christini et al, quoted by Petrovic-Lazarec (2004), ranked the ten countries that have embraced ISO in their construction industry, and Jordan was not among them. The comparison of ISO 14001 certifications in BCI by country can be summarized in the graph below:
How can CSR be used to improve the industry in Jordan
CSR can be used to improve business ethics in the construction industry in Jordan. “Business ethics or corporate ethics can be defined as ethical principles and moral challenges in a business environment” (Panagiotakopoulos, 2005). As explained by Maon, Adam and Valerie (2009), it is equally relevant to individuals just as it is to an organization. It is also applicable to all aspects of business conduct and to all professions. One of the areas addressed by corporate social responsibility is studying and understanding the fundamental purposes of a construction company. Just like business ethics, CSR addresses business ethics, moral rights of a company and its duties towards its stake holders (Maon, Adam and Valerie, 2009). It further addresses leadership issues, law reforms, political involvement of a company, and use or misuse of different corporate ethical policies. Every area of a construction business has its own ethics, which are expressed and illustrated in a company’s CSR. Addressing ethics in a business ensures that several elements of businesses such as finance, sales and marketing, property and property rights, technology, human resource, international business and production are taken care of (Nicolau, 2008).
Corporate social responsibility means more than being in line with law and regulations, and impressing stakeholders with generous deeds (Mallin, 2009). Unfortunately many businesses in different industry address CSR as though it is just about not breaking the law, being generous to different stakeholders, avoiding any actions which may result in a law suit or ensuring one does not engage in any action which might taint the image of a business. It is also notable that many organizations only involve themselves in CSR activities that offer most benefits to them (Lindgreen and Valerie, 2010). These are however not the only concerns for corporate social responsibility. CSR activities are concerned with ensuring that negative outcomes are avoided, and making sure there is openness and genuineness in the way corporate activities are done (Lindgreen, Valerie and Francois, 2009).
CSR will further help the construction industry improve its relationship with people directly involved in it. These include suppliers, customers, employees, investors, and other stakeholders. An industry’s ability to stay vibrant and progressive is greatly influenced by its inability to address immediate needs in a society, as well as how it relates with the people. Furthermore, several factors hinder the success of CSR and its influence to a business. Tendencies such as regular misconducts such as abusive behaviors towards employees, lying to customers and the public, withholding important information to employees and other stakeholders, discriminating on the basis of age, race, gender and other factors, theft, sexual harassment, falsified financial records and corruption, and inappropriate political involvement will hinder the success of an industry. CSR policies addresses such issues by having a provision for activities that allow them to air their views and have them addressed.
Successful CSR policies are based on their ability to address issues in different categories. These categories include conflict of interest, fairness and honesty, communications and business relationships. “Conflict of interest arises when an individual decides to consider their own personal interests rather than considering the good of the business” (Lazarevic, 2004). Another reason for conflict of interest is businesses choosing to consider their own interest without any regard to the interests of employees and other stakeholders. Corporate social responsibility policies call for relations that are ethical towards suppliers, customers and other stakeholders (Kotler and Nancy, 2005). Communication, which is considered the heart of every industry, determines the general values of decision makers in the business. Fairness and honesty on the other hand addresses how informing or misleading advertisements and other sources of information are.
Application of CSR in construction companies in Jordan
CSR policies allow the businesses to place a high importance on its nationals and recognize that they are an important element of their workforce. It also allows them to put in place well planned initiatives and career advancement programs to ensure that their employees quest for excellence and growth are taken care of. “Companies that have implemented effective CSR policies have well established employee policies which ensure that its employees are heard and treated as assets” (Mullerat, 2005). They will go further and provide for its associates a nurturing and caring environment to solicit the best performance from them. Employees in such organizations realize that they are a business’ biggest asset. As Hond, Frank and Peter (2007) explain, the companies will many times put a lot of emphasis on attracting, recruiting, retaining and motivating highly talented employees.
Business’ code of ethics regarding employment in CSR conscious businesses ensure that communities are not disconnected from they are not involved in community activities, it will not be done without being provided with a good reason. The company also provides in their rules that stakeholders have a right to be protected from arbitrary power held by the management (Kokash, George and Salem, 2011). They also ensure that employees, suppliers, and clients’ rights will be protected equally. Because respect, trust and loyalty is expected from stakeholders, the business has to ensure that it has entailed reciprocal obligations. It is due to such companies’ employment ethics and high level of professionalism in the way they treat people that such companies will receive numerous awards from different organizations. This goes far in developing their reputation.
CSR policies also provide guidelines on how employees should be treated. Discrimination and harassment is completely prohibited at the work place and this is done by eliminating the vestiges of discrimination from a business. Hiring and promotion is done strictly on the basis of qualifications and performance. Lending, housing and other benefits are done based on very professional standards and is not based on personality or other individual factors. In the past, companies in Jordan have been accused of exercising discrimination on the basis of religion and race (n.a., 2009). It is clear that religion plays a big role in Jordan business’ decisions, something which many critics would not agree with. CSR policies will go a long way on helping these businesses eliminate any actions that could be damaging to their reputation.
Marketing and Disclosure of Information
There has been a major transition in the way construction institutions do their marketing. The new mode of construction is now acceptable in many regions around the world and competition seems to be very high in the construction industry in Jordan. Business ethics in marketing has raised a lot of controversy over how much information sales and marketing people should ethically disclose to customers and stakeholders (Jensen, 2000). Selling properties and assets has for a long time been surrounded by secrecy and hidden information. CSR provides guidelines which require that a policy in marketing holds that the buyer is solely responsible for the decisions they make. A business should disclose as much information as possible to the buyers. It also states that stakeholders should only be allowed to modify as little information as possible to avoid the risk of injury (Ghaemi, 2007).
According to CSR policies, fairness should rule in a construction company’s information disclosure policy where the business must ensure its protection when disclosing information and should ensure it protects its customers in the process by ensuring they have enough information required to make decisions. They should observe the mutual benefit rule which requires that there should be enough information to interested parties to make reasonable judgments. This rule also allows sales people to meet their ethical obligations by provi ding enough information for customers to make a decision and ensuring that they uphold the companies’ privacy (International Labour Office, 2006).
It is also a company’s responsibility to ensure that it upholds market competency rules by ensuring that its marketing skills are not intentionally supposed to create an unfair environment in the market. Its customers should have the freedom to shop around for other service providers; they have knowledge of the products the company offers, and have legal rights against the institutions (Gray, Owen and Maunders, 1987). Companies should not deny its customers the ability to protect their interests and should ensure they are not put at vulnerable levels which might expose them to harm. It is not morally unacceptable for any business to take advantage of the customers’ vulnerability of lack of information regarding a certain product.
Finance and Accounting
“For a business to take responsibility for its actions, that business must be fully accountable. Social accounting, the communication of social and environmental effects of a company’s economic actions to interest groups, is thus an important element of CSR” (Hawkins, 2006).The construction industry can be considered a very secretive business when it comes to information regarding finances and accounting. Information regarding accounting and finance is only accessible to the partners and shareholders. However, by examining some of the construction companies’ financial books of records, it is clear that the companies’ financial reports are prepared professionally in accordance with the generally acceptable accounting principles. Corporate social responsibility calls for well defined and designed roles and responsibilities for the auditors, which need to be included in any company’s codes of ethics regarding its financial data. Businesses are required to ensure that stakeholders have a sufficient understanding of the industries internal control structure. As required by CSR policies, companies should take auditing very seriously to ensure that its shareholders are well informed of all financial activities and decisions in the business (Ihlen, Jennifer and Steve, 2011).
Part of a business measures to observe discipline and responsibility towards its shareholders in this area is auditor’s independence. Auditors of a company are free from pressure and any other factors which may influence the outcome of their findings (Idowu and Walter, 2009). A company should have an established course of action in an event where someone is reasonably suspected of compromising the auditor’s ability to give unbiased results. The auditors have the responsibility of establishing whether the level of independence in any construction company is acceptable, or if employees are coerced to make unethical financial decisions. Resolving financial conflicts in any construction company should also be in a way that protects stakeholders, employees and the communities around. Available guidelines for business willing to adopt social accounting, reporting and auditing include the global reporting initiative’s sustainability reporting guidelines, Accountability’s AA1000 standard, and the Standard Ethics Aei guidelines, just to mention a few (HM Government, 2009).
CSR addresses a business’ responsibility towards all the stakeholders when investing and implementing emerging technologies. Businesses are expected to use new technology in a way that it does not put a consumer or any stakeholder in a disadvantaged position. Technology should not be used to scale down the amount of information available to customers and should not change the type of information available to either of them (Harrison and Edward, 2007). The scale of exchange of information should only be changed to a level that is acceptable between the business, customers and all stakeholders whose interests would be influenced by change of technology.
Ethical Issues Regarding the Environment
One of the most popular CSR approach in most businesses today is financing and supporting environmentally friendly projects and ideas in the communities where they operate (Hopkins, 2006). CSR obligates businesses to protect the environment and minimize negative effects to it. Businesses are required to adhere to environmental legislation and not oppress or oppose them. Every business has the responsibility of protecting the environment as well as educating its customers about environmentally responsible choices. Like many other companies in Jordan, the construction industry in the region has been under attack for paying little attention to environmental projects and not partnering with any environmental organizations in the region (Jamali, Yusuf and Khalil, 2009). Through one of their research papers, the authors have accused the banking and construction industry in the region for showing very little interest in projects that benefit the environment and instead focusing and giving too much attention to projects which have potential to improve their profitability such as educating people on real estate which is picking up well in the region.
Potential benefits of CSR in construction
Industries in Jordan
Benefits of CSR in a corporation differ with the nature of business, the industry and the stakeholders. The scale of benefits is determined by a business’ ability to implement CSR policies in a manner that benefits both the stakeholders and the business. Several arguments arise when the benefits of CSR are discussed. Proponents of CSR argue that it enables investors and developers to do business in a responsible manner. Critics argue that companies easily use CSR to market themselves, when it should be intended at helping the society working with a business. Some of the benefits of CSR are in the areas discussed below:
CSR programs can be used by construction companies as a recruitment opportunity. In the current competitive labor markets, potential employees will want to know what a company’s CSR policy is like. It can also aid in retention, especially when a business involves its employees in its CSR activities. Employees can be involved through payroll giving, being assigned to community activities, and being able to join and participate in a business’ volunteering programs, among others. Instead of using economic and governmental factors to drive a company’s CSR, a business can use its employees’ personal values to make them feel as part of the initiatives.
In today’s crowded markets, getting noticed is a significant challenge for businesses. Getting a unique selling proposition is even a bigger challenge, especially in the construction industry where market activity easily fluctuates. Construction industries in Jordan can use CSR activities to build brand loyalty through distinguishing their ethical values, and letting the customers know their values. Construction companies in the region can learn a lot from, business that have built strong brand names through ethical values. Examples of business that have been able to build a customer loyalty globally through ethical values include American Apparel and the Body Shop.
In recent years, a lot of attention has been focused on projects risk management. Research has revealed that the success of any project is very dependent on the management’s support for risk management processes. “Construction projects are characterized as very complex projects, where uncertainties come from various sources” (Christ, 2011). Since they gather too many stakeholders, it becomes a more difficult to study the whole network. Jordan’s housing construction industry has experienced an accelerated growth in the last five years and is expected to remain vibrant, especially now as the global economy continues to stabilize. It is estimated that the industry will have an annual growth rate of about 20% from 2011 to 2013. As a result, risk management is becoming an increasingly important topic of research in the region.
Risk management is a central part and a critical element of any business. The construction industry is faced with major risks, key among them being financial, environmental and safety risks. Such risks and incidents arising from them can destroy a hard built company’s reputation in a very short period of time. CSR allows businesses to build a reputation of always doing the right thing, thus stakeholder’s confidence. Taking voluntary steps to register with the government for all the requirements further reduces the risks of being penalized in Jordan, or having licenses revoked.
Managing key processes in CSR
Identifying the key processes in any project is the first and most critical step for any developers planning to execute their strategy. “The best avenues for driving a business’ performance gains is managing the implementation of its processes” (Winser and Keah, 2008). Key processes can be easily identified by how much they impact the success of a project or initiative. They are those processes whose success or failure has serious implications and influence on a project’s goals and revenues. “Management of key processes is only productive if the results will be aligned with the project’s strategic objectives” (Segerlund, 2010). Jordan’s success in its big projects is very dependent on the implementation and management of CSR, which has to be given priority and be done right. They should also be custom designed and specific to the country’s unique policies, goals and approach (Wells, 2000)
For key processes to be successful, they should not be many or overlap in a project. As Wells (2000) explains, “typical projects will have ten to fifteen key processes”. Stakeholders have an influence over what they achieve and how they turn out, since most of them are internal. A critical step towards managing key processes is determining the project’s baseline in regards to its current environment. Information and management determine how successful they will be, hence the management must have sufficient knowledge on how to execute them. Another significant step is identifying the most fundamental success factors for the process. These are factors that influence the processes’ outcomes and effect. They include things such as technology requirements and availability, tools for measuring performance and the how the process will be aligned.
Organization and location of the processes play a significant role in determining the success of key processes in CSR. As Keong (2000) explains, they need to be located in a way that makes interaction possible, since they are many times in constant interaction with each other. Constant changes happening in project management and business models demand for very flexible locations of key processes. The trend is explained by Winser and Keah (2008), who argue that “the need for instant process execution in the current fast pace business environments calls for consolidation, standardization and management of cross-functional processes”. Furthermore, there is need for standardization to ensure high efficiency rate of execution, since a construction company may have many similar processes being implemented at the same time.
In recent times, technology has made easy for construction companies to implement key processes in CSR. One way through which this happens is automation and new information management techniques. At an age where consistency is critical, automating key processes will allow CSR in construction companies to keep stakeholders constantly and accurately updated, have consistent quality, and develop proper communication channels. Automation reduces chances of human error and will save the country a lot of time. The fear of cost makes many project managers to avoid automation, without a realization that the investment will save them much more in future.
Key processes in technical projects such as construction may be a new idea that requires high levels of expertise. The construction industry has new trends and ideas coming into the market every day. As a result, key processes may be new to a business making it hard to implement them. Training employees is therefore very critical in ensuring a successful implementation and management of key processes. The implementing team needs to understand what any key processes in CSR project’s goals are and what role their functions play in realizing them. It is also important for employees to understand how as an individual they impact the success of failure of a key process in the project. This way, every employee in the project feels appreciated and puts their all in ensuring successful implementation. Successful organizations have mastered the art of appreciating employees’ ideas by ensuring that every idea, whether small or big, should be respected in a project. Recognizing employees’ efforts by implementing their ideas motivates them to be more creative. It also saves a business a lot of money on research, as it is amazing how many good ideas employees can come up with when given a chance.
In today’s constantly changing business environment, flexibility and ability to embrace change play a critical role in the management of key CSR processes. Jordan must be able to identify those CSR key processes that are not working and easily replace or redesign them. Inefficient processes will cost the construction companies and the industry at large a lot of money and even drag the other processes. Identifying those strategies that are either not working or are taking too long and costing too much is only possible after a company or industry has baselined its processes.
Cost is a significant determinant of how efficient key processes will be. To manage cost, key processes should be implemented systematically and in numbers that are manageable. For small projects, a company can afford to implement one process at a time. For the mega and costly projects, or for processes that require a lot of professional investments, businesses can implement one key process at a time. This way, an organization will be able to bear the costs and management becomes easier.
Another significant factor in the implementation of key processes is technology. Winser and Keah (2008) argue that “technology influences management and workforce in organizations by analyzing production, resource impact, routine to non-routine operations, structure impact, industry impact and work impact as well”. The authors further explain that it allows the managers together with the work force match the resources available with technology through different approaches. By changing techniques and processes to modern and more relevant ones, the management is able to run operations more efficiently and conveniently.
Finally, performance measures complete the management of key processes. They enable businesses to identify what are working and what is not. Identifying what is not working early enough allows businesses to cut cost by eliminating outdated processes and ideas. These measures should be a continuous process to help the Jordanian construction companies establish what is working and what is not at an early stage. They will help the country identify where to make improvements or put more investment. Performance measurements include scheduling operations and setting targets to ensure implementation of key processes is done on time.
Barriers and obstacles
Lack of time and budget allocations can hamper efficient and a successful implementation of CSR policies in a business. CSR can be costly for a business, depending with the approach a business decides to take. If a business uses philanthropy as its main CSR approach, it will many times involve donating a lot of money. When a corporation’s profitability is not healthy enough, then it will not be possible to have CSR programs implemented as effectively as possible.
Implementing CSR requires effective levels of expertise. A corporation that lacks the professional knowledge and skills may not benefit as much from CSR. Lack of professionalism and capabilities pose a significant challenge, especially for the small businesses. Furthermore, CSR requires creativity and thoughtfulness, something that a company may lack in its team.
Government laws, regulations and policies play a significant role in a business’ ability to implement CSR. Lack of proper support from the government is a major reason for companies’ inability to maximize returns from CSR programs. This is especially so for those companies in developing and third world countries. Laws and regulations should be flexible and friendly enough to allow corporations choose CSR activities that fit into their business operations and budgets.
Lack of clear regulations has been identified as a major reason why corporations have not been able to implement CSR in their businesses. In some countries, the law exposes corporations to legal conflicts as a result of the CSR programs they choose to engage in. Furthermore, corporations have to be cautious enough when they engage in community development projects to ensure they do not bring about any controversy between the state and the people.
Corporate social responsibility has been in existence for over 50 years now. It became popular in the late 1960s due to the formation of many multinational corporations and this trend continued to the early 1970s as more corporations came into being. It has developed over time to become one of the most significant programs in any organization. It has also been the source of continued debates between its proponents and opponents. Proponents of CSR argue that doing business with a perspective helps corporations increase their long-term profits. Critics argue that it is a distraction as business work towards performing the economic roles. They also argue that CSR is merely used to emphasize the role of governments in watching and regulating big local and multinational organizations.
“In CSR implementation, good management is not enough. Strategic CSR demands that the companies must take stock of the real fundamentals-what it is in business to achieve” (Wether and David, 2011). CSR in different industries is aimed at promoting responsibility and encouraging positive impact through their business activities. CSR activities include those on consumers, communities, the environment, and stakeholders, among others. As Booth (2009) explains, “the discussion about CSR has been very heterogeneous”. This is so as many experts continue to argue the difference between different approaches to CSR. The foundation of CSR is built on encouraging corporations to work with local communities and stakeholders to implement projects and initiatives that leave them better. A good example is corporations that have set up learning centers to educate the community on different issues, as well as improving the literacy levels of children in that community.
Benefits of CSR in a corporation differ with the nature of business, the industry and the stakeholders. The scale of benefits is determined by a business’ ability to implement CSR policies in a manner that benefits both the stakeholders and the business. Several arguments arise when the benefits of CSR are discussed. Proponents of CSR argue that it enables investors and developers to do business in a responsible manner. Critics argue that companies easily use CSR to market themselves, when it should be intended at helping the society working with a business.
The construction industry can benefit a lot from implementing the right CSR initiatives. Construction businesses’ human resource departments can benefit from CSR through policies that involve employees in community development programs initiated by a corporation. Another significant benefit of CSR is stakeholder engagement. This is through allowing stakeholders to air out their views and has their opinion considered before policies are implemented. Stakeholder engagement is also through working with communities where their suppliers, employees and clients come from. CSR further allows the businesses to build a good reputation and earn the market’s confidence as a company that is concerned about its stakeholder’s welfare.
Achieve the objectives of this paper, several resources were used. The methodology included study of books, analysis of academic journals, online articles and past projects by different authors. It also involves a study and analysis of government statistics and data and information from non-governmental organizations on CSR in different industries. It also included a study of various works on CSR management in the construction industry, using Jordan as a case study. Study of books and different articles reveals that the construction industry is among those suffering average levels of CSR implementation. To improve on this, many multinational and local organizations in Jordan have realized that CSR not only benefits the stakeholders, it also does improve business performance. As a result, a lot of attention is being focused on corporate social responsibility, and how it can be used improve financial performance in a business.
“It is also clear that many businesses are spending a lot of money to ensure satisfaction, safety and motivation of their stakeholders” (Vella and Karen, 2005). Communication has proved paramount in many organizations in an effort to have stakeholders air out their dissatisfaction before making a decision to shift loyalty. This information was gathered from various resources including reports by governmental and non-governmental offices. These reports served very resourceful and relevant in trying to understand this paper’s background. Recent and past books and research papers by different authors were also helpful in understanding the construction industry, as well as CSR management.
As, Vella and Karen (2005) argue, “the best avenue for driving an organization’s performance gains is managing the implementation of its processes”. Identifying the key processes management steps is very fundamental if an organization is expecting to successfully implement its CSR strategies. Key CSR management processes are easily identifiable by their level of impact on an organization’s success. They are those processes whose success or failure determines how well an organization’s goals and revenues are realized. “For a business to succeed in CSR management, its implementation and management has to be given priority and has to be right’ (Barthorpe, 2009). Its objectives should also be specific to an organization’s unique policies, goals and approach. The study was aimed at establishing the truth in these arguments, and establishing areas of improvement.
To ensure comprehensive data collection, triangulation method was adopted for this paper. This means that multiple methods of quantitative and qualitative methods were utilized. While the research was interested in measuring the different policies and their effectiveness, it also attempted to qualify their impact on the performance of the companies. These factors justified the choice of the method. Triangulation further allowed this project to get better results and manage any challenges that may arise from one research method. This was possible through balancing between the weaknesses of one research method against the strengths of the other. Data gathered in this paper was categorized into primary and secondary data.
Primary data was collected through a semi-structured face to face interviews with 3 senior management staff in construction companies. The three were from the engineering, service and management positions. The surveys aided in exploring the views of the CSR policy promoters in the raison d’etre of formulating these policies and their views on the relationship between the policies and the increased attention placed on CSR by construction. This method of data collection was necessary for the study to be able to collect detailed information about specific questions. “Using semi-structured interviews allows a broad scope of answers and sufficient latitude for further questioning on specific responses” (Singh and Naurang, 1996, p. 1). Questions were closed at the initial stage and opened later to allow more in-depth discussions with the interviewees.
Research on and discuss corporate social responsibilities in the construction industry in Jordan
- Define CSR in different industries and its role in a business environment
- Study and analyze CSR in the construction industry
- To analyze CSR in the construction industry in Jordan
- Collect primary and secondary data to support arguments in the paper
- Use collected data to come up with a conclusion and recommendations
Quantitative and quantitative research
“Quantitative research involves analysis of numerical data while qualitative research involves analysis of data such as words from interviews, pictures and videos, or objects” (Neil, 2007). The difference between the two can be summarized in the table below:
|Qualitative research||Quantitative research|
|Purpose/objective|| || |
|Sample||Made up of non-representative cases||Usually, a large number of randomly selected participants|
|Data collection||Semi-structured and sometimes unstructured techniques. It may also involve group discussions||Techniques are well structured|
|Data analysis||Non-statistical||Data collected is analyzed in form of tabulations and is usually conclusive|
|Outcome||Investigative and sometimes may be exploratory. “Non-conclusive findings that cannot be used to make general conclusions supporting the general population” (Neil, 2007)||“Results are conclusive enough to help make a conclusion and recommendations” (Neil, 2007)|
Table 1: Qualitative and quantitative research methods.
Qualitative research method of choice used in this paper was interviews. Qualitative methods include study of books, reports, online articles, and statistics from government and non-government sources.
Structure of the survey
Interviews were conducted on three senior management staff. The first interview was with TOU’s operations manager in their Ammam offices. The second interview was with the General Manager of Gathering Construction Company. The last interview was with Abu-Higleh Engineers’ service department manager. The participants were drawn from three different construction companies in Jordan to ensure that views were not from one company. The population was distributed among different age groups, responsibilities at their level, and the number of years the employee had worked in the industry. Two of the participants had more than 10 years experience in the construction industry. One of the participants had been working in a construction company for more than 5 years. These participants proved very resourceful in understanding the companies’ CSR strategies and policies.
Recruitment was done by using social network and online forums to reach out to targeted participants. The snowball technique was used to reach the targeted number of participants required for the study. In this technique, people familiar with the study were used to reach out to more people who were then be directed to the research’s weblink. To narrow down the number, the participants were contacted on the phone by fetching their numbers from the companies’ human resource management departments. All interviewees were presented with adequate explanations and guidelines for the study. All interviewees were also required to fill and sign a consent form agreeing to voluntary participation.
The research methodology applied in this research project was designed to achieve the set objectives of the paper. It included study of books, academic journals, online articles, past projects by different authors, government statistics and interviews with people at a managerial level in the construction industry. The interviewees are people who have interacted with CSR policies and activities in the industry. To understand the background of the problem, literature relating CSR management, its policies, procedures and benefits was reviewed.
Types of data employed
To accomplish the objectives of this study, several types of data was employed. Data collected is classified into exploratory, descriptive and confirmatory. By so doing, it was possible to confirm or falsify already established hypothesis in the research. Data in this research paper was also classified into primary and secondary data. Secondary data was gathered from past academic materials by different authors. Primary data was collected through interviews. Primary data was used to understand what employees, who were also managers, had to say about CSR. It is also aimed at helping establish how far the multi-national organizations have gone in appreciating the concept of CSR. Secondary data in this paper was very crucial when understanding the scope of the topic and collecting views from different people and professionals.
The case design was comprehensive and complete enough, to allow the government and construction companies in Jordan understand and utilize the information in decision-making easily. Beneficiaries of the study include the government of Jordan, construction companies, employees, suppliers, clients, and communities around construction companies, among other stakeholders. Reviewing the case design was critical to ensure its validity and applicability. This was ensured in this research project. Cross-comparing the case design and its outcome, with similar research projects conducted in the past, helped this research to highlight commonalities and identify areas where the results need to be strengthened. Data analysis tools and software were beneficial when sorting out data and identifying patterns.
Jones (2000) defines data analysis as “the process of inspecting, cleaning, transforming, and modeling data with the goal of highlighting useful information, suggesting conclusions, and supporting decision-making”. Data analysis comprises of diverse techniques depending with the type of data, and expected outcomes. When conducting a CSR study, data mining is an indispensable technique since it involves discovering knowledge, as opposed to describing it.
“In any study focusing on attitudes and perception, the importance of primary data cannot be over-emphasized” (Jones, 2000). In such a project, it is expected interviews will be scheduled early to guarantee enough time for preparation by participants, a factor that was considered and implemented. Secondary data was extremely valuable and was collected to augment the research. Before any data was collected, permission was sought from different authorities such as the relevant ministries. An initial visit to these institutions was important for introductory purpose, familiarization as well as seeking consent for the research project.
Primary data collection was done doing interviews. Secondary data was collected from past research projects, government and non-governmental institutions and other relevant sources. The interviews were divided into different categories, two having three questions and the last category with four questions. The first category of questionnaires was used to establish the importance of CSR in corporations from different industries, the second section was aimed at understanding the role of CSR in the construction industry. The third category was used to establish how construction companies in Jordan can benefit from CSR.
Data analysis was comprised of diverse techniques since the study had different types of data and expected outcomes. When conducting CSR policies study, data mining is an indispensable technique since it involves discovering knowledge, as opposed to describing it. Interviews were scheduled early to guarantee enough time for preparation by participants. Secondary data was extremely valuable in augmenting the research. Before any data was collected, permission was sought from different authorities such as the companies where the participants work. Data analysis tools and software were also beneficial when sorting out data and identifying patterns.
Data analysis tools and software were beneficial when sorting out data and identifying patterns. As Punch (2006, p. 13) argues, “data analysis techniques can help virtually any business gain greater insight into organizational, industry and customer trends”. Available data analysis tools today include business intelligence platforms, the online analytical processing, excel power, among many others. Answers to close-ended questions were analyzed in percentages while others were individually analyzed and discussed.
There are many applicable business research methods for such a project. For primary data, questionnaires, interviews and surveys were the most applicable. Interviews were the preferred method of data collection because of the ability to get first-hand information from participants. The participants were all employees in senior positions in multinational construction organizations. As Jones (2000) advices, “to ensure satisfactory results, the survey type adopted for any research project must ensure sampling is done from the target population”.
Furthermore, interviews are an excellent way of collecting information about rules, regulations and the working environment of CSR in an organization.
More information and data were collected through;
- Reviewing available literature on CSR and its role in improving the construction industry.
- Critically reviewing international organizations and their CSR policies. This included interviewing 5 managers in major construction industries in Jordan.
- Studying the business models of construction industries in Jordan and where CSR is placed
- Comparing CSR in the construction in Jordan and other regions such as Europe
Overall project plan
This research paper is expected to be complete in a duration of 2 months
Ethical issues and limitations
Several ethical issues were expected to arise in the course of completing this research project. One of the most fundamental principles that I followed to collect data is voluntarism participation. The principle requires that no participant should be coerced to participate in a research or give false information. A participant must also give consent before their identity is revealed if there is a need to do so, although for such a project, anonymity was applied.
During a research project, ethics also demand that the process must not subject the respondents to any danger or harm, a factor I took very seriously. A researcher is supposed to apply the principle of anonymity to protect them from consequences of revealing the information they do. It is also the respondent’s right to be treated with respect and dignity during the study. These ethical issues are expected to be adhered to when any organization or individual is conducting its research.
Limitations faced in the exercise included language barriers since the industry employs a considerable number of foreigners. Lack of cooperation from some respondents also stood as a challenge and there were fears that they may not give accurate answers or they may take too long to respond. Conducting a research project is an expensive activity and finances posed as a challenge. These challenges were addressed by conducting research in the most common language, which was Arabic, and using translators. There were also comprehensive explanations about the scope of the research to respondents to ensure they understood the objectives and minimize resistance. I also ensured a proper costing and allocation of funds was done before the task commenced.
- Lack of sufficient time to carry out a comprehensive survey that represents the views of everyone
- Jordan’s official language is Arabic, a factor that slowed down the speed of data collection due to the need for translation
- Government and non-government organizations lack sufficient documented information about the industry in Jordan
- There was limited information about CSR in the construction industry in Jordan
Methods used to gather information for the project were designed to achieve the set objectives of the paper. This was done through study of books, academic journals, online articles, past projects by different authors, government statistics and interviews with people at a managerial level in the construction industry. The interviews were four general managers and a director in construction companies in Jordan. Ethical considerations during the research included applying the anonymity principle, having participants sign consent forms and ensuring they are protected from any consequences that may arise from revealing the information they provided. Limitations included finances, language barriers and having to work with the interviewees schedules, some of which delayed the data collection process.
The Jordanian construction industry is subdivided into sub-sectors as follows;
From the literature review, it was established that “construction contractors are beginning to include aspects of corporate social responsibility into their construction projects, but it is arguable that the role of CSR is still not clear” (Bhagwati, 2010). If order for construction companies to implement mature and effective CSR policies, every stakeholder must take responsibility. They should also play their roles comprehensively. Investors need to be more willing to invest in CSR initiatives, while businesses must be creative enough and explore different ways through which they can support their stakeholders.
It is also evident that communities determine how far businesses can go as far as CSR is concerned. They play a significant role in helping construction companies identify social needs that need to be addressed. In Jordan, embracing change has been difficult for communities, making it hard for investors to fully involve themselves in solving social problems facing the people. According to Santorella (2011), communities are among the most significant drivers of CSR. Furthermore, clients, who also come from the communities, play a role by putting pressure on construction companies to do business responsibly. In Santorella’s (2011) argument, supported by Oxford Business Group (2008) “Construction clients are now asking contractors to embrace and deliver CSR as an integral component of construction activities”.
CSR is a significant part of the Jordanian construction industry, especially due to the high growth rate experienced in the industry in the recent past. According to Kokash, George and Salem (2011) “the real estate sector flourished in the middle east region till the recent global recession and the associated setbacks that affect the sector at varying degrees in different parts of the world”. The governments’ efforts to support the less-energy intensive sector has significantly benefited the industry and supported a flourishing environment. Nonetheless, the Oxford Business Group (2008) points out that “several issues remain contentious and the role of the industry in promoting sustainable development in the surrounding communities remains a topic of heated debate among stakeholders”.
Industry data and information
Trends in CSR are constantly changing to suit the needs of society today. In explaining the trend of CSR a few years back, Deringer (2006) explains that “recently, there has been a proliferation of initiatives at national and regional levels as CSR becomes increasingly widespread, creating pressure on companies to not only disclose their CSR record, but also to improve it”. Furthermore, businesses realize that CSR plays a significant role in building brand loyalty. As a result, businesses have been forced to include CSR in their annual budgets. Research and development today covers CSR to ensure that businesses invest in those initiatives that ensure returns. In such a competitive business environment, understanding customers, their needs and market trends, is important for businesses. It is important that businesses get feedback through continuous interaction with their clients.
As was evident from the literature review, the main concerns for the construction industry in Jordan are more likely to be centered on sustainable development, climate changes, community progress, among other things that affect the progress and future of the industry. Therefore, CSR initiatives have to be designed to meet these needs. The industry also needs CSR to save energy and costs that would have been used to mitigate consequences that arise from responsible business operations.
According to Luck (2011), “corporate social responsibility (CSR) in Jordan will be revitalized under a national body recently formed to coordinate the sector, the National Forum for Social Responsibility”. The forum has over 50 founding members. It consists of individuals, public and private businesses, organizations and civil societies, all coming together with the aim of having more organized CSR in the country.
The first part of the interview was aimed at understanding the concept of corporate social responsibility. The first question sought to understand the interviewees understanding of CSR and its role in different business environments and industries. TUO’ mechanical engineer argues that CSR is a cost saving tool in the long run, and is a solution to different challenges, especially those which have social and environmental effects.
CSR is not fully implemented in Jordanian construction companies. In fact, the general manager for the Gathering Construction Company points out that only 5% of CSR policies are fully implemented in the companies. He points out that companies have only focused on CSR in the area of safety. The government plays a role by enforcing different policies and laws. An example is the tax law, which exempts businesses from paying tax for any amount contributed to community development. From the interviews, CSR in the Jordanian construction industry is applicable in the following areas;
From the study it is clear that construction companies in Jordan can benefit from CSR as a marketing tool. One of the participants pointed out that today CSR has been widely embraced as a marketing tool. Bueble (2009) defines cause-related marketing as “a commercial activity by which businesses and charities or good cause form a partnership with each other to market an image, product or service for mutual benefit”. Construction companies can interlink their marketing initiatives with the needs of the communities they serve. Today, the new trend in company’s marketing strategies is tending towards actively supporting their cause of corporate social responsibilities.
Corporate social responsibility further advocates and supports green marketing. This in turn ensures that construction companies address ecological issues related to their business operations, support physical sustainability and promote a positive relationship between business, society and the environment. The concept of green marketing also keeps consumers aware of the environmental consequences of purchasing and using different brands. It plays a significant role by putting pressure on investors and constructors to provide green products in the market.
Corporate social responsibility can be used to promote its public relations. Paetzold (2009) argues that “public relations are about reputation, which CSR helps to build”. Just like CSR, a healthy public relation is beneficial for both a business and the public. It acts as a bridge between the two, allowing both parties to consult on social and economic issues that affect both. Furthermore, it helps the business to involve all stakeholders on decision that could affect them.
In the course of implementing CSR projects and initiatives, construction companies are able to identify the needs of the communities as consumers. This then serves as a channel for feedback and enables them to improve their products and services. Furthermore, CSR projects help a business improve perception and communication (Matei and Teodora, 2010). Decision making becomes a two-way process and all stakeholders feel appreciated and relevant.
From the interviews, it is evident that CSR is embraced very differently in modern times. Whereas CSR in the past has focused on philanthropy, today there are different approaches to CSR. It is implemented in any available channel that promotes responsible business initiatives. CSR is today aimed at encouraging positive impact through a company’s business operations. They include those activities that positively impact communities, suppliers, consumers and investors. As was established in the literature review and supported by Booth (2009), “the discussion about CSR has been very heterogeneous”. This has been as a result of the many ways and approaches different businesses chose to follow in implementing their CSR initiatives.
In an attempt to minimize costs of doing business, giving money to communities and projects is becoming a less popular CSR approach. Businesses today choose to embrace CSR through partnering with communities and local authorities to address social problems, being involved in community activities by donating services rather than money, and employing more locals, just to mention a few. The General Manager for Gathering Construction Company echoed the views of Ararat (2009) by pointing out that “the most common and acceptable approach for CSR is the community-based development approach”.
All the interviewees pointed out that this is a common approach in their companies. Abu-Higleh Engineer’s service department manager further explained that in his company, this approach involves the business working with local communities to implement projects and initiatives that make communities better. In his company, he explains that community development activities include setting up learning centers to educate the community on different issues, as well as improving the literacy levels of children in that community. Other community development programs include building trade networks between the corporations and the communities.
Philanthropy as a CSR approach seems to be losing popularity. This is was evident from the fact that none of the interviewees mentioned it in the interviews. Businesses today involve themselves in initiatives that are sustainable and will leave a long-lasting image. The approach has also been criticized for discouraging skill development. As a result, construction companies only engage in CSR activities that support long-term social welfare. These include employing locals, providing technical and professional help for projects, educating locals on health matters, and protecting the environment (Joffe, 2002).
Safety is of great significance in the construction industry. A survey conducted by El-Masheleh, et al. (2010) in Jordan reveals that companies in the construction industry still have a long way to go in embracing training as a safety initiative. From the study, only 13% of the companies had more than 76% of its workers trained.
Corporate social responsibility demands that workers, customers, communities and other stakeholders should be protected from dangers that arise from a company’s business operations (American Society of Civil Engineers, 2009). The same study by El-Masheleh, et al.(2010) revealed that workers and the neighboring communities at the construction site were not always taken care of. The results are as follows:
|Availability of protection measures for the outside community||1%||7%||44%||32%||16%|
|Availability of personal protective equipment to workers||1%||51%||32%||10%||6%|
|Frequency of installing safety signs at construction sites||21%||27%||23%||29%||0%|
Table 1: Availability of safety measures for workers and the public at construction sites.
Corporate social responsibility can be used as a tool to promote safety. Training programs should be designed to educate employees how to minimize risks in the course of their work. They should also be aimed at educating employees on what to do in the face of accidents and disasters. Employees can then be used to reach out to other stakeholders such as suppliers and neighboring communities by passing the knowledge to them.
Furthermore, CSR promotes safety by having business operations conducted in a responsible manner. Performing audits and adhering to safety laws and regulations minimizes chances of accidents and hazardous incidents at work. CSR standards such as ISO 26000 have outlined procedures for managing safety at every level of a project. They also give guidelines on how workers should be treated to minimize chances of getting hurt. All the three interviewees point out that CSR as a safety tool has been well embraced in Jordanian construction companies.
Environment management systems
Like every other part of the globe, environmental concerns attract a lot of debate. As established in the literature review, the construction industry is one of the most significant contributors of carbon gases. The industry has been under heavy criticism for the amount of carbon gasses it emits into the atmosphere in the course of its operations. Production of raw materials such as quarry grounds and mines result in a lot of dust and gas emissions. The industry also involves heavy transportation activity, which heavily contributes to emissions. The interviewees all agree that CSR promotes environmental responsibility by obligating construction companies to fund and support projects that protect the environment, as well as adhering to Standard Assessment Procedures such as calculating carbon index.
The general manager for Gathering Construction Company illustrated this through an example. The manger pointed out that the Jordanian government, through the environment ministry, cut sales and import taxes for companies that use environment friendly chillers and boilers in constructing new buildings. His views were shared with those of TUO’s mechanical engineer, who adds that CSR can be used as an environment management tool through proper waste management techniques and keeping the environment clean.
According to Ararat (2006), “business ethics or corporate ethics can be defined as ethical principles and moral challenges in a business environment”. Business ethics directly affects corporate social responsibilities, moral rights of a company and its duties towards its stakeholders. It ethics address a wide range of concerns that affect both the business and individuals. These include a company’s, political involvement of businesses, leadership strategies, law reforms and use or misuse of different corporate ethical policies. Its applicability is significant to all aspects of business conduct and to all professions. It is also applicable and equally relevant to individuals as they practice professionalism at work.
Corporate social responsibility can be used to promote these aspects of work ethics. This can be done by ensuring that construction companies consciously and willingly engage in responsible business activities. Corporate social responsibility should be used to ensure that business do much more than adhering to laws and regulations. In Jordan, it is unfortunate that most construction companies interpret CSR to mean adhering to the law, creating and maintaining a good reputation, and having satisfied consumers. Many construction companies and investors in the region as pointed out by TUO’s operations manager are most concerned about the three factors since they cost the business company money if they happened. This are however not the only concerns for business ethics. Business ethics are concerned with ensuring that the three outcomes are avoided, and are also concerned in making sure there is openness and genuineness in the way it is done. This can be achieved if businesses fully embrace and implement CSR.
Most CSR initiatives and programs are aimed at appreciating consumers and a company’s surrounding communities. Even though CSR in Jordan has not been fully appreciated in most industries, especially among the small companies, major construction companies are investing in empowering the communities. From one of the interviews, in Jordan, CSR in the construction industry has been manifested in various ways. Some of them include;
- Training engineer through their professional association
- Training and employing technicians via the Center of Vocational Training
- Reserving the environment and developing parks
- Constructing mosques, churches, schools, and health centers at no cost as the government deduct such costs out of taxes
- Providing aids to institutions of civil society
Other ways through which CSR is implemented is ensuring that businesses do not take advantage of their positions to exploit consumers. Fairness rules in the major companies’ information disclosure policy where the businesses must ensure their protection when disclosing information. Fairness further ensures that they protect its customers in the process by ensuring they have enough information required to make decisions. They observe the mutual benefit rule which requires that there should be enough information to interested parties to make reasonable judgments.
In the recent past, construction companies also ensure that they uphold market competency rules by ensuring that their marketing skills are not intentionally supposed to create an unfair environment in the market, some of which may disadvantage the consumer. The customers have the freedom to shop around for other service providers; they have knowledge of the products the industry offers, and have legal rights against the companies (Oxford Business Group, 2007). This way, the communities can decide who they want to work with. CSR further promotes morally upright decisions among businesses, to ensure that they do not take advantage of the communities’ vulnerability due to lack of information regarding their business operations.
Another significant way through which CSR promotes community empowerment is employing locals. This, combined with training the communities on income earning initiatives, supports sustainable development. Businesses also empower the locals through developing the proper infrastructure such as roads to promote economic activities. Access to power, water, telephone services and other utilities is easier for locals when big developers have interest in their area.
Challenges facing CSR implementation in Jordanian construction industry
Culture was identified as a major challenge in business’ efforts to implement CSR effectively. One of the interviewees pointed out that in Jordan, culture acts as major setback in implementing CSR. The interviewee explained that you would find laborers even engineers that wouldn’t wear safety gear during construction, and this is directly related to culture. Men and women dress in loosely fitting clothes, a factor that can easily trigger accidents. In places where Islamic cultures are strictly observed, women are not allowed wear aprons and other personal protective equipment. The level of literacy among women makes it hard for them to benefit from a majority of the training programs. In some instances, religious views stand in the way of businesses trying to introduce new solutions to social problems.
From the interviews, lack of support from communities is among the biggest challenges construction companies are facing in Jordan. Communities may not easily embrace new investors in their region. They are also likely to oppose any settings and social changes that a new investor might try to introduce. For example, decisions on where to build a school may take long to make as communities may not agree on where it should be built. If there is any doubt on the influence of the school on the morals and cultural practices of a community, there will be a high level of opposition, which may make it hard for it to be initiated.
Non-actual implementation of CSR was mentioned as a significant challenge for CSR implementation in Jordan. One of the interviewees pointed out that there is a lot of publicity on CSR ideas and plans without actual implementation. Businesses over-publicize the little effort they put in for the purpose of marketing their businesses. The result is a lot of literature and publicity on companies’ CSR initiatives, but very little action and benefits on the ground. The interviewee points out that construction companies need to focus on the needs of the communities as they embrace CSR, and stop paying too much attention to what it will do for the business.
Limitations of the study
Interview questions for this study were framed in a language and structure that is easy to understand. As a result, the three participants responded to the interview questions well without any difficulties. Due to lack of awareness on CSR programs and initiatives, some respondents did not answer the questions comprehensively. Most questions were open-ended, making it hard for some respondents to give a yes or no answer for the purpose of statistics. Having more close-ended questions would have made it easier to collect answers in the form of statistics. Considering the large number of employees in the industry, a sample size of three people was not enough to have everyone’s views well represented in the study.
CSR approaches differ with the industry and desired outcomes. One common approach of CSR in many industries and businesses is money donations and philanthropy. These donations and are aimed at aiding communities around them and local organizations involved in development programs. Although it makes a business’ work easy by being less involving, the approach has been criticized for discouraging skill development. Opponents argue that that it does not support sustainable development.
Depending on the nature of a business or industry, the nature and scale of CSR may vary. In some organizations, CSR may include volunteering and charitable efforts, while in others, it may include partnership with development organizations in communities. CSR benefits in an industry may be materialized in human resources, risk management, brand differentiation and license to operate, among others. A business that takes CSR seriously is bound to benefit from CSR through policies that involve employees in community development programs initiated by a corporation. Businesses involve employees through payroll contribution, allowing them to design and initiate projects in the communities, and have employees work in CSR programs supported by the company.
From the study, it is also clear that CSR enable a business to increase stakeholder engagement by allowing them to air out their views and has their opinion considered before policies are implemented. Stakeholder engagement is also through working with communities where suppliers, employees and clients come from. These benefits support the need for the Jordanian construction industry to support and encourage CSR.
A common CSR today is “garnering increasing corporate responsibility interest, also known as creating shared value or CSV” (Crane et al., 2008). Proponents of this approach base their support on the argument that social welfare and corporate success are dependent on each other. It is also from a realization by many businesses that a sustainable workforce, healthy resources and a good relationship with stakeholders is important for a successful business. Today, high levels of competition in the market calls for a strategy that keeps stakeholders close enough to understand their needs and serve them before they switch brand loyalty.
It is evident from the study that newly housing developments can play a critical role in reducing emissions if companies invest in research and development of environmentally friendly technologies. As established in the study, the main concerns for the construction industry in Jordan are more likely to be centered on sustainable development, climate changes, community progress, among other things that affect the progress and future of the industry. Therefore, CSR initiatives have to be designed to meet these needs. The industry also needs CSR to save energy and costs that would have been used to cater for consequences that arise when businesses do not carry out their operations responsibly.
The Jordanian real estate market provides a vibrant environment for business. According to (Kokash, George and Salem, 2011), “it is divided into; residential, raw land, tourism-oriented and commercial segments”. The industry has experienced an accelerated growth especially in the tourism and the residential areas. This is attributed to the recent economic reforms introduced in the country, which have boosted investors’ confidence and brought about increased activity in the markets. The industry’s diversity makes it suitable for such a study.
The industry in Jordan ensures companies are socially responsible through measures such as having the companies’ efforts published on annual CSR reports. This keeps the businesses alert, since reputation is important for a company’s success in business. It also allows the government to assess the level of commitment and responsibility among the companies. Companies in Jordan have many avenues through which to meet their social responsibilities. Key among them is working with local employment agencies to provide employment and support to the locals. Other available avenues include providing financial, professional and technical support for community projects.
The government uses laws, regulations and standards to support CSR implementation in the country. As evident from the literature review, ISO 26000 is among the standards that have received a lot of support in the region. In Jordan, it was embraced with the aim of ensuring businesses and organizations respect business ethics. These strategies have been applicable in both private and public organizations to assist them to do all their operations in a socially responsible manner.
CSR today has developed over time to become one of the most significant programs in any organization. Its advantages and disadvantages have also been the source of vibrant debates among stakeholders and experts. Those who support CSR argue that doing business with a perspective helps corporations increase their long-term profits. Those against it argue that it is a distraction as business work towards performing the economic roles. Critics further argue that CSR is merely used to emphasize the role of governments in watching and regulating big local and multinational organizations. From the arguments, it is evident that it is a significant part of businesses today, and requires a lot of attention.
Trends in CSR are constantly changing to suit the needs of society today. In explaining the trend of CSR a few years back, Deringer (2006) explains that “recently, there has been a proliferation of initiatives at national and regional levels as CSR becomes increasingly widespread, creating pressure on companies to not only disclose their CSR record, but also to improve it”. Furthermore, businesses realize that CSR plays a significant role in building brand loyalty. As a result, businesses have been forced to include CSR in their annual budgets. Research and development today covers CSR to ensure that businesses invest in those initiatives that ensure returns. In such a competitive business environment, understanding customers, their needs and market trends, it is important for businesses to get feedback through continuous interaction with them.
By working together, businesses can help each other develop better corporate social responsibility programs and initiatives. Businesses in the private and public sector are learning to do this in Jordan. According to Luck (2011), “corporate social responsibility (CSR) in Jordan will be revitalized under a national body recently formed to coordinate the sector, the National Forum for Social Responsibility”. Such relationships should be encouraged by the government by organizing more forums that bring together all the stakeholders in different economic sectors. By so doing, it will be easier to identify different social problems that can be addressed through CSR.
To protect employees, communities and other stakeholders, CSR in Jordan companies should involve measures that ensure improved health and safety standards in construction companies. This can be done through standards such as OSHA, laws, awards for companies that pay keen attention to CSR, among others. Other measures such as having financial institutions consider a corporation’s performance in CSR before funding projects will encourage those that do not take CSR seriously to do so. Projects that support communities should get more support by financial institutions and the government.
The government should pay more attention to standards and motivate businesses to embrace them. Like ISO standards, many quality and CSR standards will provide corporations with more guidelines on how to implement CSR policies and strategies. They will further influence many operations in the construction industry including its reputation and its ability to establish business networks and good relationships with the communities around them. Standards will further influence the relationship between corporations, the media, the communities, as well as the government.
From the study, culture is a significant challenge for businesses willing to embrace CSR in their operations. To overcome this, businesses in the construction industry must work together towards investing in educating locals on new cultural, social and economic trends that support business in the industry. Companies must also make effort to involve communities on decisions that affect them to minimize resistance. For foreign investors, working with local communities and groups will be instrumental in earning the trust of the local communities.
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Corporate social responsibility
- What is CSR and what role does CSR play in different corporations?
- In your own opinion, do CSR programs and initiatives offer any financial benefits to a business?
- How has CSR been embraced in businesses in the modern times?
The role of CSR in the construction industry
- What role does CSR play in the construction industry?
- What is the relationship between a company’s success in CSR and its financial performance?
- What are the challenges and obstacles that construction face in their efforts to implement CSR initiatives?
CSR in Jordanian construction industry
- How is CSR implemented in Jordanian construction industry and what role does it play in the industry?
- Is the government supportive enough to construction corporations in the country in their efforts to partner with communities and stakeholders and promote development?
- What role does the law in Jordan play in promoting successful CSR initiatives in construction companies?
- Can the industry in Jordan benefit from improved CSR policies and programs? If yes, what are the possible benefits?