Corporate Social Responsibility in the Emirates

Introduction

The United Arab Emirates is a young country that was set up in the year 1971 at the time when six states merged. These states that came together include Al Fujairah, Dubai, Arabian Gulf-Abu Dhabi, Sharjah, and Ummal Qaywayn. The Gross national income for this country is not much when compared to the standards of those countries that are developed. The country’s high earnings from oil exports together with fair foreign policy stand make this country play a big role in the undertakings within this region. The economy is open and its stability often depends on the changes in the prices of oil and gas (Katsioloudes & Brodtkorb 11).

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Over time, from the 1970s to date, the country has been going through gradual developments from a poverty stricken region to a state with modern standards in which its people experience a commendable standard of living. Much of the expenditure by the government has been on creating jobs, setting up and improving on infrastructure and is currently working out on measures to expand the private sector.

This country just like most of the countries in this region has a very high population of youths in relation to the rest of the age groups within its population. Interestingly, 45 percent of the total population of this country is aged below fifteen years. 25 percent of women in this country are unemployed and the figure for men stands at 9 percent and it was projected that in the next ten years, the country’s labor market will get a large number of young people in this country seeking some reasonable work and may be they will not be absorbed based on the projected rates (Katsioloudes & Brodtkorb 11).

In this country, there is incorporation of Western Modernity into the intensely entrenched religious values and cultures that come together to form a distinctive business environment. The famous characteristic of this business environment is the well-built influence of Islam, the formal religion in the United Arab Emirates. Charitable activities in this country are not something new. According to the Muslim religion, any person in the society, be it male or female, who is financially stable or generally well off should seek to support those people in the society who are in need in a procedure that has deep roots in the Muslim religion called Zakat. This refers to distributing alms to the people who are in need.

The distinguishing element between these practices is that, unlike in corporate social responsibility, in the practice of Zakat there is no follow up to ensure transparency. In this country, business practices are influenced by Zakat under the Muslim religion that strongly advocates for support to the poor people such as the orphans, the physically & mentally disabled, and the widows. Therefore, Zakat turns out to be a common characteristic of the corporations all over the Middle East and the United Arabs Emirates being among them with her big business organizations making contributions every year to various charity projects. Even if Corporate Social Responsibility involves giving out to society on the basis of a show of love and care to the human race, it as well puts much concern on the management of the resources and distribution of interests among the stakeholders and this is not found in the Zakat. But on the other hand this practice of Zakat in question plays a major role in the success of companies in this country (Katsioloudes & Brodtkorb 12).

Corporate Social Responsibility in the United Arab Emirates

The United Arab Emirates is a country located in a region characterized with wars and political instability but it turns out to be that this country enjoys both political and economic stability. As a result of this stability the country has been able to secure a position in the most important business centers in the world with remarkable corporations that are multinational like Shell, DHL, Intel, and many more that are seeking to establish themselves within the country. If such a trend persists, more multinational corporations will come up (Katsioloudes & Brodtkorb 9).

With companies the al companies working closely together within an economy that is growing at a remarkable pace the contributing factor to the success of these companies in the years that have just passed is corporate social responsibility. In this paper the issue of corporate social responsibility in the United Arab Emirates is closely looked at. This is a country in which there exist several cultures and the country that experiences western presence through multinational corporations. In this paper, attempts are made to give a clear discussion about this important issue. The main issues concerning corporate social responsibility include protecting the consumer, community affairs, and the environment. According to the BI-ME staff (14), social responsibility has a very wide coverage. It covers the management of the business according to the moral principles together with the rules. It also covers resource conservation and protection. The resources that need to be conserved and protected include soil, forests, and wildlife. Social responsibility also involves preventing corruption and protecting the rights of people in the society which can be realized through such activities as assisting the workers get benefits like family care, insurance and also helping them to build up savings.

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According to Katsioloudes & Brodtkorb (10), the UAE’s business society is very much alert about corporate social responsibility. This is indicated in the study they carried out in this country and established that over 90 percent of the companies in the country showed a lot of commitment to social responsibility and attached so much significance to this particular concept. In this study, it was also established that there was a very strong connection between corporate social responsibility and the business performance (Katsioloudes & Brodtkorb 10). Among the companies researched, over eighty percent contended that overlooking the issue of social responsibility would actually do much damage to the firms involved in this ignorance. The research pointed out that social responsibility by the firms in this country is driven by business performance as well as the requirements by the law of the country. This view is also reflected in the BI-MI Staff report (10) in which the consultant of the ‘Arab Administrative Development Organization’ by the name Othman Al Zubair emphasized that making of profits by a company and a company showing potential of growing are not the only tools to be used to measure how successful the company is or has been but other important factors have come in that are considered in measuring the success of the company. Such factors may include protecting people in the society, protecting the environment and also participating in preserving the natural resources as well as ensuring sustainable development.

Katsioloudes & Brodtkorb (10) further reports that most of the business firms in the country are committed in complying with the laws concerning the environment. But the major problem here is that as much as many firms try to comply with the environmental law, very few take measures to carry out the assessment of the environmental impact or come with measures from within the company to avoid those activities that turn out to be very much destructive on the environment. Therefore, this brings in a gap that needs to be filled in terms of seeking for ways by the companies in this country to protect the environment alongside observing the environmental laws.

Generally, the companies in the country are very much responsible about societal affairs and are sensitive to the needs of the community. Many of them have involved themselves in projects that are very beneficial to the local communities. Some of these companies have also assigned resources for the goals that concern society and these goals are those that are beneficial to both the company and the society. This can be illustrated well in the case where we consider the Dubai Holding company. The Executive Chairman is reported to say that the company considers the services the company offers to society as a very vital component of the success of this company. The chairman insists that it is the responsibility of his company to play a significant role in improving the welfare of the society in which the company carries out all its operations. This goal is regarded as one among the company’s core values (JiWin, 1).

According to JiWin (2), Dubai Holding, being one of the rapidly expanding companies in UAE and the surrounding region, has a belief that it has to set a pace that the rest of the companies will have to follow suit. The programmes that relate to social responsibility that this company has put in place are of great advantage not only to the local society but to the Dubai Holding company employees and stakeholders as well.

Social responsibility has also been indicated by the Abu Dhabi Commercial Bank (ABDC), a bank that operates in the United Arab Emirates. During the Eighth Forum of the Gulf Association for Handicapped, the CEO’s statement indicated that there is much commitment by the bank (Abu Dhabi Commercial Bank) to realize social responsibility (Eighth Forum of the Gulf Association For Handicapped 2). The CEO points out that the bank is striving to contribute to the community, the environment, and even to the shareholders. According to the CEO, the bank regards highly the significance of working together with those organizations whose responsibility is to ensure there is community welfare and aware of those programs concerning the environment, the economy, education, and those dealing with social issues. The CEO further makes an emphasis that every coming year improvements are made on the Corporate Social responsibility moves and put the bank’s preferences in line with the strategy of the bank, its culture together with its central ideals. In the course of that particular year, efforts were underway in undertaking to go on progressing to improve and put in place the programs that concern social responsibility.

More so, a commitment by the companies to corporate social responsibility is also indicated where the United Nations Makes comments about the companies in the United Arab Emirates. According to UN Commends UAE Firms for Philanthropy (1), the United Nations highly praised the firms in the United Arabs Emirates for making the possible efforts in order to provide funds for aid. It was stated that the Middle East firms have largely started getting involved in showing much concern to humanity (UN Commends UAE Firms for Philanthropy 1). The example of corporations given here was the Abu Dhabi Company that made its first contribution of $150000 and HSBC giving out $100,000. According to the UN, such donations come to the same level as those made by the international donors like Western Union and Pricewaterhousecoopers. The United Nations commended the leaders of the private sector in this region for coming up to assist the United Nations. The United Nations director of the UN Global Compact described the participation of the firms in the United Arab Emirates in corporate social responsibility internationally as some sought of revolution since numbers of firms were becoming part of the Global program from the United Arab Emirates and the Middle East in general were increasing by each coming day. This comment followed the joining of twenty firms that are located in the United Arab Emirates in this program that is not a compulsory scheme but firms join it at their own free will (UN Commends UAE Firms for Philanthropy, 3).

The United Nations is not the only one commending about how the firms in the United Arabs Emirates are committed in ensuring that they are socially responsible. The consumers in the country have also positive comments about the firms in relation to corporate social responsibility. According to the survey carried by YouGovSiraj and Globescan, seeking the opinions of the consumers in this country on the issue concerning corporate social responsibility, about sixty percent of those involved had a plan to reward a particular company or company and had already rewarded a company or companies for showing her or their commitment in the field of corporate social responsibility (YouGovSiraj & Globescan 1). The United Arabs Emirates was placed at position 11 out of a total of twenty four countries for having the majority consumers who are motivated by Corporate Social responsibility. The United Arab Emirates were placed at the same rating with the populations of Germany and Britain together with France in terms of the importance ratings (YouGovSiraj & Globescan 3). According to this report, it is believed that the consumers in the United Arabs Emirate would no longer want to feel contented or show no care on seeing companies behave in the wrong way or in a way that can be deemed to be wrong. It is also believed that these consumers are not anymore ready to care about a company not taking appropriate action in a situation that affects the society. They are very much willing to see companies giving something in return to society in terms of assistance to ensure that people in the society stay in a relatively stable state. These consumers want to have enjoyment as they make their purchases from the companies and make positive comments (YouGovSiraj & Globescan 4).

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It is further reported that for sometimes donations from business firms have always been part and parcel of the business undertakings in this country for sometime (YouGovSiraj and Globescan, 6). It is believed that the United Arab Emirates’ consumers are not far much unconcerned about corporate social responsibility as it may be assumed by some people. This report goes ahead to steer up the business organizations in this country to consider on a very serious note the idea of improving on the issue of corporate social responsibility given the fact that this is what the consumers are looking for and have high expectation of getting from the companies operating in the country. YouGovSiraj & Globescan (6) goes ahead and gives some examples of corporate social responsibility. These examples are such issues as getting involved in giving training to the citizens of the United Arabs Emirates and in turn giving them employment, giving out computers to the learning institutions, engaging in giving out entrepreneurship skills to the society, constructing roads, schools as well as hospitals, coming up with scholarships that are closely associated with industry, and engaging in the protection of the rights of the weak in the society.

Katsioloudes & Brodtkorb (11) also reports that the business organizations in the United Arab Emirates keep a record of the complaints of the consumers and make a follow up and use these records and the results of the follow ups as a measure of performance in order for them to bring about improvements in their business operations. More than seventy percent of the companies carry out tests on the products that are to be released in to the market for the first time in order to ensure that these products are safe and secure to be used by the customers before actually releasing them into the market. This is mostly practiced by manufacturing companies.

Conclusion

After considering all the outcomes of their research, Katsioloudes and Brodtkorb came to conclude that possibly there might be an awareness that is not direct though very strong, of the importance of the corporate social responsibility in this country under consideration (Katsioloudes & Brodtkorb 11). This can be traced in the show of responsibility by the business organizations in the country about caring of the environment, providing services to the society, and trying to offer protection to the consumers of the products they supply to these consumers. All these activities are realized through the influence brought about by the Islam religion which makes such kind of responsibility a very essential portion of the life of people as well as being an important component of the make-up of successful businesses.

However, according to this survey, despite the fact that firms and individuals in the United Arab Emirates society are aware of the importance of Corporate social responsibility, the survey established that there is a very well seen indication that the firms in this country do not actually have a very strong understanding of the corporate social responsibility concept the way those firms found in countries in Europe and America do. The corporate responsibility policies that are designed in a clear manner are not easy to come by in this country. In most cases where clear policies are set by companies is where the company is striving to comply with the requirements by the law in areas that are specified.

According to the findings, there was a tendency to suggest that firms in the United Arab Emirates are not able to know where actually the starting point is in the process of making up policies and establishing the practices to adopt in order to meet the international standards in regard to the issue of corporate social responsibility (Katsioloudes & Brodtkorb 19). During the survey, in most cases responses that could be understood clearly were not given when a question concerning the challenges associated with the bringing of improvements on the practices that involve corporate social responsibility was posed. In addition to this, there were also answers that were not even related to the question. This clearly suggested that even if the business organizations in this country are well versed with how important social responsibility given out by them is, they do not have adequate comprehension of the policies governing the corporate social responsibility practices and how these policies should be put in to practice.

The biggest challenge that the firms in the United Arab Emirates and those firms that are international and carry out operations in this country is how to set up well designed policies to govern the corporate social responsibility and these policies set up to be in line with those set up and implemented by the business organizations operating in Europe and even in America and these polices to still be those that give a representation of this country’s culture and norms.

Katsioloudes & Brodtkorb (19), at this point suggests that the greatest opportunity of showing how important the corporate social responsibility is in the case of the United Arabs Emirates is to demonstrate those practices it stands for in business, at the same time not of necessity mandated by the religion, are however in line with and harmonizing to the ethical and societal teachings of the religious conviction. Putting such policies in to real practice can be made possible through giving out constant training and educating all the people in the business organization, that is, all workers with the Chief Executive Officer included. These activities combined with regular support from the government will go a long way in giving these organizations encouragement to practice the policies concerning corporate social responsibility as well as be able to get an accurate analysis of these policies in order to carry out developments on them so that they can work out in an even more effective way.

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This move will give out two major benefits. The first benefit is that, there will be coming out of more firms from the United Arab Emirates on to the global market. Another benefit that will come about as a result is that there will be an enhancement in the money-making associations with the existing foreign business organizations. As a consequence, more foreign firms will take an interest of this situation and eventually make a move of coming to do business in this country. It can be seen very well that if corporate social responsibility can be set up and put in practice by the business organizations in the United Arab Emirates and other countries that practice the Islam faith with much success, then this will translate into rapid business development in the country and even within this region but if not, this could bring in adverse effects.

References

Anonymous. Eighth Forum of the Gulf Association For Handicapped. 2008. Web.

Anonymous. UN Commends UAE Firms for Philanthropy. 2009. Web.

BI-ME staff, First Arab Forum on Corporate Social Responsibility begins talks on UAE’s experiences in partnerships, 2009. Web.

JiWin, Dubai Holding reiterates commitment to corporate social responsibility initiatives (UAE). 2007. Web.

Katsioloudes I. Marios & Brodtkorb Tor, Corporate social responsibility: an exploratory study in the United Arab Emirates. Sam Advanced Management Journal, Pg 9 – 20. 2007.

YouGovSiraj & Globescan, UAE consumers reward companies for social responsibility. 2007. Web.

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