Journal of Management Information and Decision Sciences (Print ISSN: 1524-7252; Online ISSN: 1532-5806)

Research Article: 2021 Vol: 24 Issue: 1S

The Mediating Effect of Employee Motivation on the Relationship and Impact of Corporate Social Responsibility to Employee Relations

Patrick R. Hariramani, De La Salle University

Abstract

 This research will study about what are the effects of CSR on Employee Relations while being Mediated by Employee Motivation. Aguilera, et al., (2007) use a definition of CSR which refers to “the firm’s considerations of, and response to, issues beyond the narrow economic, technical, and legal requirements of the firm to accomplish social [and environmental] benefits along with the traditional economic gains which the firm seeks (Ferreira & de Oliveira, 2014). Motivated employees feel a closer relationship with the organization they work for and hence perform (Chaudhary et al., 2015). The study has 5 Hypotheses this research is a quantitative study that is Casual, Correlational, and Descriptive and will be conducted in a company in Bulacan, a province in the Philippines with a sample population size of 80. This research will look at, effects and relationship of Employee Motivation, Corporate Social Responsibility, and Employee Relation. Data will be analyzed using Descriptive Analytics, Multiple Linear Regression Analysis, and Correlational Analysis. Based on the data CSR is positively and significantly impacts Employee Motivation. If CSR is broken down into its sub constructs of Internal and External CSR only External CSR (Local Community) significantly impacts Employee Motivation. Data analysis also shows that Employee Motivation significantly impacts Employee Retention. While the highlight of the study is the mediation, it was found out that CSR was not a significant predictor of Employee Relation when Employee Motivation was included in the model.

Keywords

Corporate Social Responsibility, Internal CSR, External CSR, Employee Motivation, Employee Relation

Introduction

Corporate Social Responsibility (CSR) has been in the spotlight in the last decades. The challenges, derived from new technology and fast-paced market changes posed by different organizations, and a new, more informed consumer, raised the bar regarding how companies should behave towards their stakeholders which includes social, economic, and environmental concerns (Ferreira & de Oliveira, 2014). Recent research on Corporate Social Responsibility (CSR) has stressed corporations to assign substantial resources for the welfare of the community. Researchers are advising different business entities to consider the amount spent in CSR as an investment rather than as an expense (Ali, Rehman, Ali, Yousaf & Zia, 2010). Nowadays corporations are realizing the multifaced benefits of CSR and are paying great attention to incorporate it in all spheres of business strategies (Davies & Crane 2010). On the other hand, employees are increasingly questioning the meaning of their work, existence, and the role which companies fail to realize that can become a problem in attracting, retaining, and engaging best employees (Bhattacharya, Sen & Korschun, 2008). CSR has been viewed and treated within different disciplines, such as business ethics, marketing, and business and management studies (Cooke & He, 2010). However, this has been focused on issues such as performance, strategy, marketing, consumer behavior, and environmental impact (Cooke & He, 2010; Ferreira & de Oliveira, 2014) neglecting the impact and importance of the human resource. Nevertheless, employees have been proven a key factor in ensuring the success of CSR (Davies & Crane, 2010).

A top pillow manufacturer in the Philippines was used to examine the framework for this study. It supplies to different hotels, hospitals, religious congregations, malls, and public markets. The company can be considered as a family business according to Craig (2008) based on the 5 criteria they cited in their paper. The company is run by the children of the 2nd generation and all company shares are distributed in the family. Currently, the company has a total of 84 employees but continually adds employees depending on the demand for its products. Just in Time Inventory System is being utilized by the company for its inventory management and to ensure the safety of its employees and minimize the risk of a fire. Due to the inventory management system that the company uses, it must coordinate closely with its distributors, suppliers, and customer to deliver the goods promptly. On the production side, the business employs a different method of manufacturing. A mixture of machinery and human labor is used for producing, packaging, and quality checking pillows. Employees are given 2 paid leaves per month, government-mandated contributions are shouldered by the company (SSS, PhilHealth, and Pag-ibig), 13th-month pay (14th month pay for employees who has been working for the company for more than 10 years), birthday leaves, birthday gift, performance bonuses, Purchase Order Bonus, clothing allowance, rice allowance, insurance, milk allowance per month for those with infant children, notebook allowance, groceries on December and perfect attendance award per month. The management ensures to give what is due to their employees because they treat each employee as a family member. The company never forgets about its stakeholders. The founder of the business was charitable and was known to help at any time of the day and will give even her last penny. The spirit of helping and giving back to society was passed on to the current management and is being expanded thru a partnership with different orphanages, charities, activities, and events. In every CSR activity, the company organizes and implements it makes sure the involvement and participation of its employees.

Researchers on employee behavior and corporate social responsibility have suggested the use of CSR to build strong employee bonds with corporations and to achieve better employee and organizational performance. In addition, studies have also confirmed the positive effects of employee commitment on organizational performance. Committed employees are considered a critical success factor for any organization. To develop sound relationships with employees, organizations are using Corporate Social Responsibility (CSR) as a strategic tool. Corporate social responsibility is being utilized by leading organizations to establish good association not only with external stakeholders but also internal stakeholders as well for example employees (Ali et al., 2010).In this paper, the researcher wants to know if the different CSR activities affect Employee Relations and Motivation. The main problem statement of this paper is “What is the effect of CSR on Employee Relation mediated by Employee Motivation?”

Corporate Social Responsibility

The inception point of corporate social responsibility can be traced to 1953 when New Jersey Supreme Court allowed Standard Oil Company to donate money to Princeton University as a philanthropic action. This decision was given against the suit filed by one of the shareholders of Standard Oil, believing that it would reduce shareholder’s wealth. Literature provides diverse definitions of CSR; this study follows the definition of Mohr, et al., (2001) which describes CSR as a company’s commitment to minimizing or eliminating any harmful influence and maximizing its long-run beneficial impact on society (Ali et al., 2010). Even though there are many CSR definitions, and this concept has been studied in various scientific fields. Aguilera, et al., (2005) use a definition of CSR which refers to “the firm’s considerations of, and response to, issues beyond the narrow economic, technical, and legal requirements of the firm to accomplish social and environmental benefits along with the traditional economic gains which the firm seeks (Ferreira & de Oliveira, 2014).

The Commission of the European Communities (2001) defined CSR as “a concept whereby companies integrate social and environmental concerns in their business operations and their interaction with their stakeholders voluntarily”. Kotler & Lee (2005) defined CSR as “the commitment to improve community well-being through discretionary business practices and contributions of corporate resources”. In other words, we can state that CSR can be defined as policies and practices that organizations engage regarding creating positive social, including environmental, changes aimed at different stakeholders. It is important to note that this is a voluntary approach (Ferreira & de Oliveira, 2014).

The notion of CSR was initially advocated by Beyer (1972); Drucker (1974) while stating that corporations should do social activities for the welfare of the community and feel a sense of self-ombudsman ship. It was argued that corporations are earning huge amounts of profits from the community and deteriorating the natural resources, therefore they should contribute to the sustainability of the environment and other natural resources and work for the uplifting of the society (Ali et al., 2010).

Freeman (1970) opposed the idea of CSR by stating that corporations are neither meant for social activities nor have expertise in this regime, therefore they should produce quality products for consumers to obey legal rules and regulations, and contribute to the economic development of the country. Many researchers including (Sturdivant & Ginter, 1977; Ajzen, 2013; Bromley, 2002; Fombrun; Gardberg & Sever, 2000; Maignan & Ferrell, n.d; Stanwick & Stanwick, n.d; Kashyap, Mir & Iyer, 2006) supported the concept of CSR by the corporation and endorsed that such actions of corporations should also be reported for the information of consumer, community, competitors and the government.

For CSR to be accepted by a conscientious business person, it should be framed in such a way that the entire range of business responsibilities is embraced. It is suggested that there are four kinds of social responsibilities that constitute CSR (Archie Carroll, 1991a). The paper published by (Carroll, 1991), has stated four kinds of social responsibilities which include Economic, Legal, Ethical, and Philanthropic. The framework Pyramid of Corporate Social Responsibility was the product of the study of Carroll which can also be seen in Figure 1. However, in the paper of (Bin Hossain et al., 2014). They have added one more responsibility that helps in mitigating risk for Islamic Banks. This new framework showcases five kinds of responsibilities which are: Economic, Legal, Ethical, Environmental, and Philanthropic (Bin Hossain, Siwar & bin Haji Omar, 2014). In Figure 2, there is CSR1 and CSR2;. To behave responsibly organization would have to conduct CSR1 and CSR2;. CSR1 consists of four pillars of Carroll; economic responsibility, legal responsibility, ethical responsibility, and philanthropy responsibility whereas, CSR2; refers to environmental responsibility of corporate (Bin Hossain et al., 2014).

Figure 1: E The Pyramid Of Corporate Social Responsibility (Archie Carroll, 1991a)

Figure 2:Social Contract Theory, Mitigating Risk for Islamic Banks (bin hossain et al., 2014)

Internal and External CSR

CSR and its impact have been considered to be multidimensional and therefore we look at CSR both from an internal and external dimension (Agarwal, Singh & Acharya, 2015). Internal CSR practices refer to CSR practices that are directly related to the physical and psychological working environment of employees (Turker, 2009). It is expressed in concern for the health and well-being of employees (Wojtaszczyk, 2008), their training and participation in the business (Brammer et al., 2007), equality of opportunities (Newman, de Vries, d’Arc Kanakuze & Ngendahimana, 2011) and work-family relationship (Marchese, Bassham & Ryan, 2002). While External CSR refers to corporate socially responsible actions directed outside its boundaries, such as actions directed to the local community, business partners and suppliers, customers, public authorities, and NGOs (Al-Bdour, Nasruddin & Lin, 2010). In the study conducted by Mandl, et al., (2007) they have made a case study and it resulted in 35 Good Practice case studies of CSR activities of European SMEs, the effects of Corporate Social Responsibility on enterprises’ competitiveness can be illustrated as follows. Thereby (and depending on the kind of CSR initiative set), the better company image, the higher customer loyalty as well as the improved employer-employee relationship seem to be the most important intermediate effects contributing to increased competitiveness. This schematic deals with different CSR attributes and how Internal CSR and External CSR affect the competitiveness of the firm.

Figure 3: Schematic Illustration Of The Effects Of Csr Activities On Smes’ Competitiveness (Mandl, Irene; Dorr, 2007

Internal CSR

CSR has certainly brought about many improvements to the Business world, especially in various practices related to the environment and issues about discrimination and abuse in the workplace. The reason for CSR in gaining much importance is because it is related to the well-being of all stakeholders in the organization since it has gained a foothold within the company itself, specifically in the area of human resources (Al-Bdour et al., 2010)

The Green Paper endeavored to encourage companies to adopt the "triple-bottom-line" approach and pay attention to social and environmental issues in addition to economic goals. It also highlights the materializations of CSR in the form of responsible and nondiscriminatory practices as well as the transparency of information in a company with life-long training for the employees (Al-Bdour et al., 2010). Throughout the globe, the use of CSR for the internal purpose has spread. This can be seen in different policies and strategies of different organizations. Incidentally, the ISO Technical Committee (“ISO - ISO 26000:2010 - Guidance on social responsibility,” n.d.) has decided to launch the development of an International Standard named ISO 2600. This standard on social responsibility aims to provide practical guidance related to fulfilling Social Responsibility (SR), identifying and engaging with stakeholders, and enhancing the credibility of reports and statements on social responsibility for the benefit of all organizations (Al-Bdour et al., 2010). In the context of internal CSR, ISO 26000 provides a useful guideline for companies to respect and recognize human rights, employment, and employment relationships, conditions of work and social protection, social dialogue, health and safety at work as well as human development.

The growing importance of internal CSR is also evident in many academic researches (Brammer et al., 2007; Longo, Mura & Bonoli, 2005; Papasolomou-Doukakis, Krambia-Kapardis, & Katsioloudes, 2005; Spiller, 2000; Vives, 2014; Welford, 2014) where many related studies have been made in the interest of the business concern. Vives (2014) defines internal corporate responsibility as socially and environmentally responsible behavior.

The main concern of Internal CSR involves the health and Well-being of workers, their training and participation in the business, equality of opportunities, work-family relationship, and some corporate governance practices (independent audits, CSR in suppliers, internal control of corruption practices) (Al-Bdour et al., 2010).

The present study adopted (Turker, 2009) definition of internal CSR. Turker (2009) defined internal CSR as CSR activities that are directly related to the physical and psychological working environment of employees. In different studies, there are a lot of ways how Internal CSR was measured. The study of (Spiller, 2000) used ten dimensions, while others employed different quantities such as nine dimensions (Papasolomou-Doukakis et al., 2005), eight dimensions (Turker 2009), six dimensions (Brammer et al., 2007; Welford, 2014), four dimensions (Longo et al., 2005; Vives, 2014), and even two dimensions. The following figures show different measurements of Internal CSR from different authors.

Figure 4: Internal Csr Measurement From The European Commission (European Commission, 2007)

Figure 5: Effects Of Csr On Employee Engagement (Ferreira & De Oliveira, 2014)

Figure 6: Internal CSR Measurement (Longo et al., 2005)

External CSR

Early studies and traditional corporate practice categorized CSR efforts as discretionary activates (Carroll, 1979). Currently, companies have started putting their concern in issues that are beyond discretionary activates such as philanthropy, volunteerism, and protection of the environment (Peterson, 2004).

Corporate Philanthropy

With the advent of CSR, corporate philanthropy is gaining much recognition and is often included within the aims and objectives of corporations. Corporate philanthropy is synonymous with monetary and non-monetary contributions, corporate sponsorship of community and nonprofits events, and donation of material or services in kind. Carroll (1979) designed a conceptual hierarchy of corporate social responsibilities in her studies. She has affirmed that since firms are economic institutions where most of the important corporate social responsibilities are economically driven, managers must seek a reasonable return for owners. Apart from legal responsibilities and ethical responsibilities, the last in the hierarchy are philanthropic responsibilities (Archie & Carroll, 1991b). Carroll (1991) states that “philanthropic responsibilities encompass those actions that are in response to society’s expectation that businesses be good corporate citizens”. Corporate philanthropy may occur in many forms, for example, direct contributions to non-profit institutions, development of partnership with selected non-profit institutions or non-governmental entities strategic to their business and social goals, cause-related marketing, employee matching gift programs, scholarship programs, the contribution of employee management or technical expertise, and the provision of in-kind services (Genest, 2005).

Companies may be involved in corporate philanthropy for their reasons. For instance, some firms which practice corporate philanthropy believe that philanthropy can benefit top managers themselves by enhancing their reputations within their social circles or furthering their political and career agendas (Werbel & Carter, 2002). Consequently, Smith (1994) concludes that giving programs can be planned to improve brand-name recognition, activate the productivity of critical employees, enhance corporate reputation among investors, moderate regulatory scrutiny, and ensure community cooperation. In addition, (Haley, 1991) discovered that corporate involvement with philanthropic actions led to a positive image and an improved reputation for the corporations concerned. It was also proven that such a positive social image and reputation lead to enhanced morale among employees and greater loyalty among suppliers and customers; and they may also influence regulators and government officials in ways that benefit corporations financially (Choi & Wang, 2007). In short, corporate philanthropy is a catalyst for positive development for both the company and the community concerned (Al-Bdour et al., 2010).

Corporate Volunteerism

The contribution of human resources, time, and skills to benefit the community and non-profit organizations or events is known as corporate volunteerism. Corporate volunteerism may involve the corporations directly volunteering to participate in community initiatives or even where the employees themselves volunteer out of their own accord. Because corporate volunteerism can offer many benefits, many companies today have established programs to encourage employees to volunteer in the communities in which they operate. The objectives are to build goodwill for the company in the community, provide employee training and skill-building experience, and strengthen employee recruitment, morale, and loyalty (Stukas, Snyder & Clary, 1999). Companies may encourage their employees to get involved in voluntary work by providing a range of incentives for volunteering including paid time off companywide volunteer days or weeks, recognition programs, and matching contributions to non-profit organizations where volunteers contribute. The effects of volunteerism are positive and can lead to higher employee morale, which in turn leads to higher productivity. In addition, “giving back” to the local community might make it easier to attract desirable employees. Companies strive to become good corporate citizens and encourage employee volunteerism because it makes good business sense and shows current and would-be employees the value of the organization (Walker & Kent, 2009).

Environmental Protection

The current situation of the environment is room for concern. More and more people are pushing for efforts to protect the environment. The same concern is gradually being realized at the organizational level. Here, environmental protection is a practice of protecting the environment on an organizational level, for the benefit of the natural environment and (or) humans (Al-Bdour et al., 2010). Society today is increasingly aware of companies’ CSR performance. Therefore, environment protection becomes one of the core elements of CSR where within the pyramid of corporate social performance (Archie Carroll, 1991a) environment protection can be placed within the layer of legal protection is a practice of protecting the environment on an organizational level, for the benefit of the natural environment and (or) humans (Al-Bdour et al., 2010). Society today is increasingly aware of companies’ CSR performance. Therefore, environment protection becomes one of the core elements of CSR where within the pyramid of corporate social performance (Archie Carroll, 1991b) environment protection can be placed within the layer of legal responsibilities. Legal responsibility is required of business by society to obey all laws, adhere to all regulations, environmental and consumer laws, and laws protecting employees (Carroll & Buchholtz, 1996).

Today stakeholders’ pressure plays an important role in influencing corporate preference and motivating corporate decision-makers to pay more attention to environmental issues. These issues are related to environmental protection such as enhanced regulatory compliance to reduce the corporations’ negative environmental impacts of hazardous emissions in the communities where they are located, adoption of pollution prevention and clean manufacturing practices to prevent pollution from occurring, redesign of products and process to achieve more beneficial environmental impacts for customers and communities materials reduction, and recycling and re-use; and resource conservation (Al-Bdour et al., 2010). Previous studies revealed that environment protection led to many favorable outcomes such as enhanced organization reputation, reduced costs, managed risks associated with environmental problems, and improved financial performance. Previous studies revealed that environment protection led to many favorable outcomes such as enhanced organization reputation, reduced costs, managed risks associated with environmental problems, and improved financial performance (Al-Bdour et al., 2010).

Employee Motivation

Employees want to earn reasonable salaries, as money represents the most important incentive when speaking of its influential value (Stanwick & Stanwick, n.d.). The term motivation is derived from the Latin word movere, which means to move. According to (Mitchell, 1983) motivation represents “those psychological processes that cause the arousal, direction, and persistence of voluntary actions that are goal-oriented.” (Robbins & Judge 2018) defines motivations as the “willingness to exert a high level of effort toward organizational goals, conditioned by the effort’s ability to satisfy some individual need.” Motivation has been divided into internal and external motivation. External motivation includes an incentive that provides materialistic benefits whereas internal motivation relates to all behavior which leads to satisfaction, enjoyment, and pleasure in doing your tasks (Chaudhary et al., 2015). Internal motivation is the driving force within us which enables us to perform better than others and do a good job. According to the Motivator-Hygiene theory of Herzberg (1966) suggest that employees describe the satisfying experience as those that involved factors that are intrinsic to the job content. These factors were termed as “motivators” and included variables like achievement, recognition, enjoyment, gratification, job satisfaction. The literature on motivation suggests that employees high on internal motivation, or high performers take pride in doing their jobs and are always wanted by the organization as their workforce (Chaudhary et al., 2015).

Internally motivated employees feel a closer relationship with the organization they work for and hence perform. Rewards are secondary when performing jobs. Thus, companies try to incentivize employees through activities like CSR activities which generate intrinsic motivation among employees. In addition, employees also prefer working for companies, which are high on social responsibility parameters as it leads to internal satisfaction (Al-Bdour et al., 2010; Bhattacharya et al., 2008; Brammer et al., 2007; Chaudhary et al., 2015).

Financial rewards can maintain and motivate individuals towards higher performance, especially workers from production companies, as individuals may use the money to satisfy their needs. Therefore, pay or salary has a significant impact in establishing employees’ diligence and commitment, being a key motivator for employees. Nevertheless, studies have shown that pay does not boost productivity in the long term and money does not improve performance significantly (Whitley, 2002). Moreover, focusing only on this aspect might deteriorate employees’ attitude, as they might pursue only financial gains (Ferreira & de Oliveira 2014; Parkin, Sommer & Uren, 2003; Zulfiqar et al., 2019). Fortunately, other non-financial factors have a positive influence on motivation, such as rewards, social recognition, and performance feedbacks (Dobre, 2013).

Numerous research has also pointed out that rewards lead to job satisfaction, which in turn influence directive and positively the performance of the employees. Moreover, rewards are one of the most efficient tools of management when trying to influence individual or group behavior, as to improve an organization’s effectiveness (Al-Bdour et al., 2010; Brammer et al., 2007; Sperling & Hicks, 1998). Most companies use to pay, promotion, bonuses, and other types of rewards to motivate employees and to increase their performance. To use salary as a motivator, managers must develop salary structures, according to the importance of each job, individual performance, and special allowances. Employees can also be motivated through proper leadership, as leadership is all about getting things done the right way. To achieve these goals, the leader should gain the employees’ trust and make them follow him or her. Nevertheless, to make them trust him or her and complete their tasks properly. The leaders and the employees help one another to attain high levels of morality and motivation. Trust represents the perception of one individual about others and his willingness to act based on a speech or to comply with a decision. Therefore, trust is an important factor for an organization that wants to be successful, as it can enhance employees’ motivation and foster interpersonal communication. Irrespective of the degree of technical automation, attaining high levels of productivity is influenced by the level of motivation and effectiveness of the staff. Therefore, developing and implementing employee training programs is a necessary strategy to motivate workers. In addition, good communication between the managers and the workforce can instigate motivation, as the degree of ambiguity decreases (Dobre, 2013).

Employee Relations

Industrial relations which have been rechristened as employee relations in the twenty-first century is a multidisciplinary lens that examines the relationship between employers and employees (Lincoln, Travers, Ackers & Wilkinson, 2002). Ratnam (1995) defines employment relations to be an overarching term for relations between employers and employees in all aspects of work. With the changing character and composition of the workforce, employee relations are being viewed as a further broadening of the HRM itself (Banfield & Kay, 2008). The industrial/employee relations policy of organizations is influenced by a variety of factors including the external and internal environment, organizational culture, technology, and legislation, and together determine the presence of industrial peace. Organizations must devise and execute their employee relations strategy by considering their contextual specificities. Harmonious employee relations assume a critical stature in organizational priorities in a milieu where workplace indiscipline and incivility may range from rudeness to even physical altercations (Agarwal et al., 2015). That inadvertently would affect the employees’ presence within the internal business environment of the organization and ideally must be avoided to maintain the decorum. An employee can be looked upon as a major stakeholder in the co-creation and implementation of innovative business systems and may thus drive him/her to become more involved and establish increased coordination amongst all organizational members. As CSR has developed more into a dynamic and evolutionary process, it currently relies on enhanced employee participation (Agarwal et al., 2015).

According to Samwel (2018), the relationship between employees and management is a framework of organizational justice consisting of organizational culture and management styles as well as rules and procedural sequence for grievance and conflict management. Gennard & Judge (2002) stated that employee relations are a study of the rules, regulations, and agreements by which employees are managed both as individuals and as a collective group. Lewis, Thornhill & Saunders, (2003) explained that employee relations suggest a wider employment canvas being covered with equal importance attached to non-union employment arrangements and white-collar jobs.

Armstrong (2005) observed that employee relations are to manage the relationship between employer and employees with the ultimate objectivity of achieving the optimum level of productivity in terms of goods and services, employee motivation taking preventive measures to resolve problems that adversely affect the working environment. Clarke (2001) commented that effective employee relationship management requires cooperation between managers representatives and employees, that good relationship between employer and employee do not just happen but they are the result of a strategy and activities that employee relations managers design to improve communication between employees and management (Samwel, 2018).

Employee Relations (ER) as a discipline initially emerged to address workplace problems such as unemployment and power imbalances between employees and employers by focusing on the practices of workplace institutions and organizational behaviors (Kaufman, 2008). ER encompasses ‘the processes of regulation and control over workplace relations, the organization of tasks, and the relations between employers and their representatives, and employees and their representatives, and is the sum of economic, social and political interactions in workplaces where employees provide manual and mental labor in exchange for employability, compensation as well as the institutions established to govern workplace relations (Muthoka, 2016).

A positive relationship was found between sound employee relation practices and productivity at the workplace where unions are actively voicing for workers and organizations have recognized (Wooden, 2000). Employee compensation practices were associated with higher levels of self-claimed productivity (Fry, Jarvis & Loundes, 2002). Another study from the 1990s showed that the intensity of collaboration between management and workers (through unions) had a positive effect on workplace performance (Muthoka, 2016; Samwel, 2018). In the figure below is the operational framework used by Muthoka in her paper studying the impact of the influence of Employee Relations Practices on Organizational Performance wherein she found out that employee relations have a significantly positive correlation and impact on organizational performance in her research locale.

Research Gap

The competition in the market is increasing year by year (Jr 2015). Companies are gearing towards sustainability for them to increase market share and market presence (Rode, Le Menestrel, Van Wassenhove & Simon, 2015). Different companies have a different approaches on how to expand their reach and market but no organization can expand without its partners (Bin Hossain et al., 2014). This partner can be their employees, suppliers, customers, government, or society. That is why organizations, companies, and individuals must think sustainably for them to utilize their assets. One way for an organization, company, or individual to become sustainable is thinking about the good of their stakeholders (Chaudhary et al., 2015). One way of doing so is having a Corporate Social Responsibility Program. CSR’s have a wide variety of programs and activities that organizations, companies, and individuals can use for their Internal and External stakeholders. The study conducted by Agarwal, et al., (2015) has conducted a study on how Internal and External CSR affects Employee Motivation that ultimately leads to Harmonious Employee Relations, in which they have found that all variables are significantly positive in terms of relationship and impact. This remains true in their locale and culture. This presents an opportunity to test the same framework in a different culture, location, age group, and educational background.

Research Methodology

Operational Framework

According to the World Business Council for Sustainable Development, 2001, CSR is ‘the commitment of business to contribute to sustainable economic development, working with employees, their families, and the local communities. The Commission 25 Impact of CSR-Driven Internal Employee Motivation on Cordiality of Employee… 317 of the European Communities 2001 cites in their green paper one of the most popular definitions of CSR as a concept whereby companies integrate social and environmental concerns in their business operations and their interaction with their stakeholders voluntarily’ (Agarwal et al., 2015); (Mandl, Irene & Dorr 2007). In the research conducted by Agarwal, et al., (2015) they correlated CSR to Mediate Employee Motivation to Employee Relation. They have 186 participants in their survey. They have found that all variables are highly significantly correlated based on their data. Agarwal, et al., (2015) also indicated in their paper that their model should be further tested to have better implications.

Figure 7: Adopted Framework From The Research Impact Of Csr-Driven Internal Employee Motivation On Cordiality Of Employee Relations (Agarwal et al., 2015)

The framework used by Agarwal, et al., (2015) looks at the dynamics of Internal and External Corporate Social Responsibility on what are its effects and relationship to employees Motivation and Relations. Based on the Review of Related Literature, Motivation and Employee Relations are important in a company for them to work properly, effectively, and efficiently (Cornelius et al., 2008; Kaufman 2008; Stanwick & Stanwick, n.d.).

The main concern of Internal CSR involves the health and Well-being of workers, their training and participation in the business, equality of opportunities, work-family relationship, and some corporate governance practices (independent audits, CSR in suppliers, internal control of corruption practices) (Al-Bdour et al., 2010). In the research of Agarwal, et al., they said that Internal CSR is important because it is attributed to the employee's lives and families. This has great implications for their everyday lives, and they can see that their company values them. There is a social contract between employees, stakeholders, and companies (Bin Hossain et al., 2014), companies are given the ability to run because they should be responsible and in turn, society let them conduct business because they can give value and help (Bin Hossain et al., 2014).

Companies have started putting their concern in issues that are beyond discretionary activates such as philanthropy, volunteerism, and protection of the environment (Peterson, 2004), which is related to external CSR because its beneficiaries are mostly stakeholders outside the company. External CSR has activities for the environment, the welfare of the community, donation drives, support to other philanthropic organizations, and many more (Miszczak, 2015). Agarwal et al., in their paper, stressed that having external CSR affects employees. After all, they can see that their company is helping, and knowing this employees tend to work harder because they know, their work has implications and one of the beneficiaries of economic gains of the company is its external stakeholders.

The term motivation is derived from the Latin word movere, which means to move. According to Mitchell (1982) motivation represents “those psychological processes that cause the arousal, direction, and persistence of voluntary actions that are goal-oriented.” Robbins (1993) defines motivations as the “willingness to exert a high level of effort toward organizational goals, conditioned by the effort’s ability to satisfy some individual need”. Motivated employees feel a closer relationship with the organization they work for and hence perform. Rewards are secondary when performing jobs. Thus, companies try to incentivize employees through activities like CSR activities which generate intrinsic motivation among employees. In addition, employees also prefer working for companies, which are high on social responsibility parameters as it leads to internal satisfaction (Al-Bdour et al., 2010; Bhattacharya et al., 2008; Brammer et al., 2007; Chaudhary et al., 2015).

Samwel (2018), the relationship between employees and management is a framework of organizational justice consisting of organizational culture and management styles as well as rules and procedural sequence for grievance and conflict management. Employee Relations (ER) as a discipline initially emerged to address workplace problems such as unemployment and power imbalances between employees and employers by focusing on the practices of workplace institutions and organizational behaviors (Kaufman, 2008). ER encompasses ‘the processes of regulation and control over workplace relations, the organization of tasks, and the relations between employers and their representatives, and employees and their representatives, and is the sum of economic, social and political interactions in workplaces where employees provide manual and mental labor in exchange for employability, compensation as well as the institutions established to govern workplace relations (Muthoka, 2016). Employee Relations Practices on Organizational Performance have a significantly positive correlation and impact on organizational performance, in which companies have significant growth in terms of operations and sales year on year (Muthoka, 2016).

H1: There is no significant relationship and impact between CSR to Employee Motivation.

H2a: There is no significant relationship and impact between Internal CSR to Employee Motivation.

H2b: There is no significant relationship and impact between External CSR (Customer) to Employee Motivation.

H2c: There is no significant relationship and impact between External CSR (Local Community) to Employee Motivation.

H2d: There is no significant relationship and impact between External CSR (Business Partners to Employee Motivation.

H3: There is no significant relationship and impact between Employee Motivation to Employee Relations.

H4: There is no significant relationship and impact between CSR to Employee Relations.

H5: There is no significant relationship and impact between CSR while being mediated by Internal Employee Motivation to Harmonious Employee Relations.

Research Design

The research undertaking can be described as descriptive, correlational, and causal explanatory. The research is descriptive because it identifies the frequency, mean, standard deviation of the demographics being studied in this paper. It is also correlational because it looks at the relationship between the different variables in the study. These variables are; Internal CSR (Employees), External CSR (Customers), External CSR (Local Community), External CSR (Business Partners), Employee Motivation, and Employee Relations.

The respondents of the research questionnaire are the employees of one of the top manufacturers of pillows in the Philippines. Because of the size of the company, all the employees know how the business operates especially its Corporate Social Responsibility Activities. Currently, at the time of writing this paper, the company has a total of 96 employees due to the influx of orders. Only those employees that have more than 6 months of experience in the company will be surveyed which is 80 employees.

The questions used in the questionnaire were adapted from the study of (Agarwal et al., 2015; Samwel, 2018) A pilot survey was conducted to test the effectiveness of the survey questionnaire and to gauge whether the terminologies used were clear and understandable to the respondents. The pretest was done thru pen and paper a company also located in Bulacan, Philippines. This demographic was chosen as a similar proxy to the target research respondents because they also manufacture pillows. In total, the survey received 20 respondents and a Cronbach’s Alpha test was used to determine the reliability of the survey questionnaire and to measure the internal consistency. Computing the Cronbach Alpha’s was done using Microsoft excel.

Table 1 Table On The Cronbach's Alpha Per Variable
Variable No. of Items Cronbach’s Alpha
Internal CSR (Employees) 8 0.903
External CSR (Customers) 3 0.616
External CSR (Local Community) 3 0.926
External CSR (Business Partners) 3 0.897
Employee Motivation 8 0.814
Employee Relation 6 0.864
,/ </
Table 2 Total Cronbach's Alpha For The Whole Questionnaire
No. of Items Cronbach’s Alpha
Total Cronbach’s Alpha Test 31 0.856

According to the result of the pilot study conducted, Cronbach’s alpha value is more than 0.7 (Taber, 2018) for each variable which means that there is a high internal consistency based on the inter-item correlation.

Results and Discussion

With the data collected from the company with a sample population size of 80, it was analyzed using correlation, mediation, and linear regression. Based on the data the most frequently observed categories of Age were 44 and 46. When it comes to the gender classification, 34 out of the 80 employees were female, 30 were male, 10 prefer not to say and 6 belong to the LGBT category.25% responded that their highest educational attainment was High school, 20% have finished Vocational courses, 19% have not finished schooling, 19% have finished Elementary and 18% have said finished College.

Correlation

A Pearson correlation analysis was conducted between the different variables in the operational framework. Cohen's standard was used to evaluate the strength of the relationship, where coefficients between 0.10 and 0.29 represent a small effect size, coefficients between 0.30 and 0.49 represent a moderate effect size, and coefficients above 0.50 indicate a large effect size (Cohen, 1988).

CSR to Employee Motivation Correlation

The correlations were examined based on an alpha value of 0.05. A significant positive correlation was observed between CSR and EMT (rp=0.26, p=0.019). The correlation coefficient between CSR and EMT was 0.26, indicating a small effect size. This correlation indicates that as CSR increases, EMT tends to increase.

CSR to Employee Relations Correlation

The correlations were examined based on an alpha value of 0.05. There were no significant correlations between any pairs of variables.

Employee Motivation to Employee Relations Correlation

The correlations were examined based on an alpha value of 0.05. A significant positive correlation was observed between EMT and ERT (rp=0.60, p<0.001). The correlation coefficient between EMT and ERT was 0.60, indicating a large effect size. This correlation indicates that as EMT increases, ERT tends to increase.

Linear Regression for CSR to Employee Motivation (H1)

A linear regression analysis was conducted to assess whether CSR_total significantly predicted EMT. The 'Enter' variable selection method was chosen for the linear regression model, which includes all the selected predictors.

The results of the linear regression model were significant, F(1,78)=5.71, p=0.019, R²=0.07, indicating that approximately 7% of the variance in EMT is explainable by CSR_total. CSR_total significantly predicted EMT, B=0.35, t(78)=2.39, p=.019. This indicates that on average, a one-unit increase of CSR_total will increase the value of EMT by 0.35 units.

Linear Regression for ICSR, ECSRc, ECSRlc, ECSRbp to Employee Motivation (H2)

A linear regression analysis was conducted to assess whether ICSRT, ECSRctT, ECSRlcT, and ECSRbpT significantly predicted EMT. The 'Enter' variable selection method was chosen for the linear regression model, which includes all the selected predictors.

The results of the linear regression model were significant, F(4,75)=5.89, p<.001, R²=0.24, indicating that approximately 24% of the variance in EMT is explainable by ICSRT, ECSRctT, ECSRlcT, and ECSRbpT. ICSRT did not significantly predict EMT, B=0.03, t(75)=0.30, p=.761. Based on this sample, a one-unit increase in ICSRT does not have a significant effect on EMT. ECSRctT did not significantly predict EMT, B=0.17, t(75)=1.55, p=.126. Based on this sample, a one-unit increase in ECSRctT does not have a significant effect on EMT. ECSRlcT significantly predicted EMT, B=0.30, t(75)=3.85, p<.001. This indicates that on average, a one-unit increase of ECSRlcT will increase the value of EMT by 0.30 units. ECSRbpT significantly predicted EMT, B=-0.19, t(75)=-2.20, p=.031. This indicates that on average, a one-unit increase of ECSRbpT will decrease the value of EMT by 0.19 units.

Linear Regression for Employee Motivation to Employee Relations (H3)

A linear regression analysis was conducted to assess whether EMT significantly predicted ERT. The 'Enter' variable selection method was chosen for the linear regression model, which includes all the selected predictors.

The results of the linear regression model were significant, F(1,78)=43.70, p<.001, R²=0.36, indicating that approximately 36% of the variance in ERT is explainable by EMT. EMT significantly predicted ERT, B=0.70, t(78)=6.61, p<.001. This indicates that on average, a one-unit increase of EMT will increase the value of ERT by 0.70 units.

Linear Regression for CST to Employee Relations (H4)

A linear regression analysis was conducted to assess whether CSR_total significantly predicted ERT. The 'Enter' variable selection method was chosen for the linear regression model, which includes all the selected predictors.

The results of the linear regression model were not significant, F(1,78)=0.45, p=.505, R²=0.01, indicating CSR total did not explain a significant proportion of variation in ERT. Since the overall model was not significant, the individual predictors were not examined further.

CSR to Employee Relations Mediated by Employee Motivation (H5)

A Baron and Kenny mediation analysis was conducted to assess if EMT mediated the relationship between CSR total and ERT. To determine whether a mediating relationship was supported by the data, three regressions were conducted. For mediation to be supported, four items must be met: 1) the independent variable must be related to the dependent variable, 2) the independent variable must be related to the mediator variable, 3) the mediator must be related to the dependent variable while in the presence of the independent variable, and 4) the independent variable should no longer be a significant predictor of the dependent variable in the presence of the mediator variable (Baron & Kenny 1986). In this analysis, the independent variable was CSR_total, the mediator was EMT and the dependent variable was ERT. The following regressions will be examined based on an alpha of 0.05. First, the regression with CSR_total predicting ERT was conducted. The regression of ERT on CSR_total was not significant, F(2, 78)=0.45, p=.505. The results showed that CSR_total was not a significant predictor of ERT, B=0.12, indicating that the first criterion for mediation was not satisfied. Second, the regression with CSR_total predicting EMT was conducted. The regression of EMT on CSR_total was significant, F(2, 78)=5.71, p=.019. The results showed that CSR_total was a significant predictor of EMT, B=0.35, indicating that the second criterion for mediation was satisfied. Next, the regression with CSR_total and EMT predicting ERT was conducted. The regression of ERT on CSR_total and EMT was significant, F(3, 77)=22.24, p<.001, suggesting that CSR_total and EMT accounted for a significant amount of variance in ERT. The individual predictors were examined further. The results showed that EMT was a significant predictor of ERT when CSR_total was included in the model, B=0.73, indicating that the third criterion for mediation was satisfied. The results showed that CSR_total was not a significant predictor of ERT when EMT was included in the model, B=-0.14, indicating that the fourth criterion for mediation was satisfied. Since item 1 was not met, mediation cannot be supported.

Table 3 Summary Of Hypotheses
Hypotheses P-Value Results
Ho1: There is no significant relationship and impact between CSR to Employee Motivation. p=0.019,R²=0.07 Reject Null Linear regression model was significant
Ho2a: There is no significant relationship and impact between Internal CSR to Employee Motivation. p=0.239,R2=0.02 Accept Null Linear regression model was not significant
Ho2b: There is no significant relationship and impact between External CSR (Customer) to Employee Motivation. p=0.050,R2=0.05 Accept Null Linear regression model was not significant
Ho2c: There is no significant relationship and impact between External CSR (Local Community) to Employee Motivation. p<0.001,R2=0.17 Reject Null Linear regression model was significant
Ho2d: There is no significant relationship and impact between External CSR (Business Partners to Employee Motivation. p=.271,R2=0.02 Accept Null Linear regression model was not significant
Ho3: There is no significant relationship and impact between Employee Motivation to Employee Relations. p<0.001,R²=0.36 Reject Null Linear regression model was significant
Ho4: There is no significant relationship and impact between CSR to Employee Relations. p=0.505,R²=0.01 Accept Null Linear regression model was not significant
Ho5: There is no significant relationship and impact between CSR while being mediated by Internal Employee Motivation to Harmonious Employee Relations. Accept Null Linear regression model was not significant. CSR total was not a significant predictor of ERT when EMT was included in the model

Based on the related literature we can say that Corporate Social Responsibility helps every business ful fill its Social Contract to Society (Bin Hossain et al., 2014). The company used in the study is a company that has been manufacturing pillows for more than 25 years and is supplying to various hospitals, hotels, and malls in the Philippines. They care for their stakeholders and the management believes that for a business to grow it needs to invest in its employees. Based on the framework adopted from Agarwal, et al., (2015) they have said that and found that CSR is correlated with Employee Motivation.

With the data collected from the company with a sample population size of 80, it was analyzed using correlation, mediation, and linear regression. Based on the data CSR is positively and significantly impacts Employee Motivation. If CSR is broken down into its sub constructs of Internal and External CSR only External CSR (Local Community) significantly impacts Employee Motivation. Data analysis also shows that Employee Motivation significantly impacts Employee Retention. While the highlight of the study is the mediation, it was found out that CSR was not a significant predictor of Employee Relations when Employee Motivation was included in the model.

Looking at the mean scores of each variable, employees mostly agree with the statements. For the Internal CSR, it has a mean score of 4.08 which can be interpreted that employees agree with all the statements and such activities are performed by the company. External CSR which is divided into Customers, Local Community, and Business Partners has the following means score respectively; 4.35, 4.20, and 4.20. All these mean score shows that employees agree that the company practices such activities. Employee Motivation has a mean score of 4.24 that shows that the employees of company are highly motivated. The mean score of Employee Relation is 4.21 which depicts that employees and management have a good working environment.

What’s interesting with the data and result in this study is that when you run the model using correlation, mediation, and regression some of its results are not the same as the results of Agarwal et al., (2015); Ahmed & Nathan (2017). This can be the result of a small population. Given a lot of thought and based on the Related Literature, Employee Motivation has a lot of factors that can be seen in the Two-Factor Theory. CSR can be one factor of employee motivation, but it is not the lone variable that affects it. In addition to this observation, External CSR (Business Suppliers) pertains to how the business handles its activities with suppliers and doesn’t have anything to do with employees that is why it doesn’t have that much correlation to it and impact. It can be also noted that Internal CSR has an insignificant impact on Employee Motivation because Motivation has a lot of factors and for Internal CSR to have an impact it should be combined with other variables.

With the mediation factor in the framework, it was found out that Employee Motivation given with the sample size has no mediation effect. To further test it, Employee Motivation and CSR were used as Independent Variable and Employee Relation as Dependent Variable it was found that it was a significant model with p<0.001, R²=0.37, indicating that approximately 37% of the variance in Employee Relation is explainable by CSR and EM.

Employee Motivation is significant to Employee Relation based on the results of the survey and data analysis which is consistent with the different researches of (Chaudhary et al., 2015; Dobre, 2013; Ferreira & de Oliveira, 2014; Lewis et al., 2003; Samwel, 2018).

Conclusion

CSR is vital in any business. No business can operate if not for the permit given by society. Businesses thrive because consumers buy their products. Consumers can buy because they work for other businesses that may supply the manufacturer of the products they use or a service provider that supports other businesses. It is all about a cycle, it all goes round and round and a responsible business should acknowledge that they have a social contract. If the business acknowledges this contract and upholds it, they flourish. This can be seen in this business, for more than 25 years it is operating because it makes sure that it takes care of its shareholders and stakeholders. The motivation of any employee is a key to the success of any business. Motivated employees tend to work hard, doubles their effort, and becomes a true asset in the business. In accounting, wages are treated as expenses but if we look deeper, these wages go to the most important asset of the business, its employees. They make the product or service, oversee, execute strategy, delivers and manage the business. Without motivated employees’ businesses would fall and would not be able to perform their first social responsibility. This paper goes only to show that we must increase our activities and focus on Corporate Social Responsibility because it benefits us one way or the another. Being Socially Responsible Business makes employees motivated because they know the employer, they have is not all about money but also sharing and helping. One more thing to look is that having CSR activities benefits society because as long technology is innovating new problem arises and businesses should help because, in the long run, it may affect them as well.

Businesses must be conscious that they need to take care of their employees, pay them the right wages, give them the proper work environment and tools, ability to participate in decision making, career development, justifiable number of leaves, work hours, and incentives because caring for employees will help increase their motivation. Using the pyramid created by Carroll (1991) helps us know what the responsibility of businesses to their stakeholders is. It should take care of the environment, instead of destroying it, companies should rehabilitate forests, watersheds, commit to community development and practice fair trading.

Organizations should innovate their CSR and look at developing or transforming their business to have a solid social mission that is geared towards addressing societal problems. If this is not possible, it may create a new department that would specialize in creating CSR activities that address social problems like, poverty, access to equal opportunity, work-life balance, commuting stress, etc. This new department can also craft the CSR plan of the company towards its employees, business partners, and other stakeholders.

Future researchers are encouraged to further test the framework of Agarwal et al., (2015) as there is still another industry to look at and compare the results of their study. Future research should consider a bigger population, funding, and longer time to conduct the study so that they can use qualitative data to enhance the findings and have a better understanding of how culture, locale, and technology affect the variables. Researchers are also welcomed to add more variables or change the framework because the study conducted showed that Employee Motivation is much suited as an Independent Variable.

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