CORPORATE SOCIAL RESPONSIBILITY (CSR) ACTIVITIES IN MOBILE

CORPORATE SOCIAL RESPONSIBILITY (CSR) ACTIVITIES IN MOBILE
TELECOMMUNICATION INDUSTRY: CASE STUDY OF MALAYSIA
Mudzamir Bin Mohamed
Faculty of Accountancy
Universiti Utara Malaysia
06010 Sintok,Kedah, Malaysia
[email protected]
Norfaiezah Binti Sawandi
Faculty of Accountancy
Universiti Utara Malaysia
06010 Sintok,Kedah, Malaysia
[email protected]
Abstract
In a very competitive global market, mobile telecommunication companies must
strive to portray a picture of themselves as highly socially responsible companies.
Active involvement in socially beneficial programs provides extra advantages to the
company. This study examines the concentration of CSR activities of mobile
telecommunication companies in Malaysia. Furthermore, this study also determines
the motives and the most influencing factors in their concentration of involvement in
CSR. Generally, involvements in CSR activities are inspired by several construct
motivational factors and follow the agency theory assumption. One of the primary
motivating factors is the belief that CSR can increase long term profitability and
sustainability of the company as well as enhance the reputation of the organization.
Companies A, B and C show satisfactory level of involvement in five (5) main
categories; environmental concerns, welfare or charity, community involvement,
products or services improvement and natural disasters awareness programs.
Malaysian Communication and Multimedia Commission (MCMC) as the regulatory
body has determined that the mobile telecommunication companies will actively be
involved in CSR as the customer-oriented factors in their business operation is of
utmost importance. Overall, it can be concluded that all of the three mobile
telecommunication companies in Malaysia have high initiative in CSR activities with
several constructive motives.
Keyword: CSR, Mobile Company, Management Accountability
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CORPORATE SOCIAL RESPONSIBILITY (CSR) ACTIVITIES IN MOBILE
TELECOMMUNICATION INDUSTRY: CASE STUDY OF MALAYSIA
Introduction
Any corporation’s business goal is to provide value and incentive to its shareholders.
Therefore, profit-oriented corporations or organizations are not a charitable organization
although sometimes it is in their direct interest to support charitable activities.
Furthermore, sometimes corporations or organizations carry out certain activities that
governments should undertake, although they are not government agencies. It is
beneficial for the corporations to carry out such socially responsible activities. Corporate
social responsibility (CSR) is defined as categories of economic, legal, ethical and
discretionary activities of a business entity as adapted to contribute to the values and
expectations of society (Joyner, Payne & Raiborn, 2002; Coldwell, 2000; Grunig, 1979).
CSR is also the continuing commitments by any business organization whereby they
emphasize the ethical elements in their management and overall organizational structure
(Richardson et. al, 1999). At the same time, companies are responsible for national
economic development by improving the quality of life of the whole workforce and their
families as well (Abbott & Monsen, 1979).
In Malaysia, a rapidly developing country, the business environment is typically
characterized by powerful business enterprises, a legal environment aimed at ethical
behaviors on the part of businesses, and societal expectations that businesses should be
more ethical and socially responsible*. Along with that, in developing countries the
organizations need to be more competitive, therefore, issues of customer service and
satisfaction is of great importance. Thus, in decision making processes, companies try to
avoid actions that may breach any regulation or negatively impact their reputation in
order to avoid consumer dissatisfaction.
Research Question
Why are profit-oriented companies interested in corporate social responsibility? Only
providing for the needs of a customer is not sufficient. Some truly enlightened
companies always ensure that their interest is in line with societal needs and they will
take this into consideration in their business planning. This study mainly focuses on the
involvement of mobile telecommunication companies in CSR activities. Moreover it is
vital to highlight the several unique features of this industry, such as stiff competition
between the companies for a strong customer base, various new issues that arise from
customer services and satisfaction and the fact that the companies operation is largely
based on customers’ needs and technological demands (Wilson, 2000; Kissel &
Beauvais, 1994).
________________________________________________________________________
* Utusan Malaysia, (14 February 2003) from Dato’ Seri Dr Mahathir Mohamed’s speech at the Malaysian
International Trade Sseminar
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Objectives of the Study
In order to study the extent of telecommunication companies’ involvement in CSR
activities, the objectives that guided us to get the valuable information to implement this
study are:
i.
To determine the concentration of CSR activities for the mobile operators in
Malaysia based on contribution or cost allocation towards such activities.
ii.
To identify the factors that influence telecommunication companies'
involvement in CSR activities.
Motivation of the Study
CSR involves various aspects such as economic factors, legal requirements, ethical orders
and discretionary demands. In this high-tech era, business environments are susceptible
to changes in these factors. In order to be a leading mobile telecommunication provider,
each firm must be fully aware and sensitive to the impact of these factors. The effect of
these factors may add to the firm’s corporate image and financial performance.
CSR actually portrays the image of the firm itself. It shows what the company has done
to fulfill its corporate duty to ensure the firm is not only good in providing the service but
also plays its roles by contributing something to the community (Tilt, 1994). In order to
have a good relationship with the community, the firm should do something beneficial for
the community. Within the company itself, there is also a platform for social contribution
especially to the employees. For example, in Maxis Communication Berhad, there are a
lot of privileges that have been provided to the staff such as medical treatment,
advantages in communication services, increment of salary and etc.
This telecommunication industry has its own unique features compared to other
industries. The distinctiveness of this industry is mainly due to the restriction imposed by
Malaysian Communication and Multimedia Commission (MCMC). MCMC has
restricted the number of players allowed to operate in this industry. Another interesting
aspect of this industry is its contribution, when in 2003 the industry contributed more
than one hundred million to the Malaysian Industry (Annual Economic Report Bank
Negara, 2003).
Another industry feature is the stiff competition amongst each other to attract as many
customers as possible.
As the customer is their main target, welfare
of the customer is of great importance. Thus, all the players in this industry compete on
gaining a strong customer basis. They work very hard to attract as many customers by
adapting a comprehensive marketing strategy, offering valuable packages or schemes as
well as high quality service. As any other service oriented provider, all players need to
maintain a high customer satisfaction level in order to ensure their survival in the industry
(Dennis et. al, 1998). Thus it is no wonder that Digi.Com for example in 2001 spent
more than 15% of its operating expenses on CSR activity.
In addition, all of the providers offered places to students in public universities to
undergo practical training at their firms. All these activities actually help the companies
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to enhance their corporate image and at the same time fulfill their corporate social
responsibility. Thus considering all these factors, we intend to determine the
comprehensiveness of mobile telecommunication companies’ involvement in CSR
activities.
Literature Review
The Concept of Corporate Social Responsibility
The concept of corporate social responsibility (CSR), calls for a lengthy discussion due to
its varied history. In the past, there have been traces of evidence in the business
community that showed their concerns for society in general. Although there are many
definitions of CSR available, we center our attention on more recent concepts of CSR.
According to Richardson, Welker and Hutchinson (1999), CSR behaviors can be defined
as discretionary actions undertaken by companies that are intended to advance their social
issues. Joyner, Payne & Raiborn (2002) noted that CSR are categories of economic,
legal, ethical and discretionary activities of a business entity as adapted to the values and
expectations from society. They also added that, CSR are the basic expectations of the
company regarding initiatives that take the form of protection to public health, public
safety, and the environment. In this concept, they explained that values and ethics
influence the extent of a corporation's perceived social responsibility that is influenced by
societal activities, norms or standard.
In today’s world, CSR can be defined as regards to all aspects of business behavior so
that the impacts of these activities are incorporated in every corporate agenda (Orgrizek,
2001; Coldwell, 2001). So, with the literatures definition of CSR, it can be concluded that
CSR is the continuing commitment taken by business organizations to strengthen their
ethical concepts and social involvement in society, contribute to economic development,
sponsor charitable programs, and improve the quality of the workforce and also the
increment of services provided. However on the other hand, Freeman & Liedtka (1991)
argue that CSR can promote incompetence by leading the managers to get themselves
involved in areas beyond their expertise, that is, trying to repair society’s ill.
Factors Influencing Involvement in Corporate Social Responsibility
The primary role of business is to produce goods and services that society wants and
needs. According to Coldwell (2001), a business only contributes fully to a society if it is
highly efficient, highly profitable and has socially responsible agendas. Based on the
literatures definition of CSR, CSR behaviors are not constant over time or space. Social
expectations and pressure for specific types of CSR have varied over time and are
contingent on the nature of the company (Richardson, Welker & Hutchinson, 1999). A
study by Windsor (2001) showed that social responsibility is achieved when the
corporation conforms to the prevailing norms and expectations of social performance in a
given society.
Since CSR behaviors are charitable and discretionary, the likelihood that a specific
company will engage in CSR will also depend on the characteristics of the business and
management. According to J. Richardson, Welker and R. Hutchinson (1999), a company
may decide to take a proactive attitude on an ethical issue in the absence of specific
pressures for that company to act, more specifically it is voluntary. On the other hand, it
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is possible for businesses with publicly known CSR related problems to take no action
with regard to these problems.
A firm or organizations size might be associated with the level of social involvement. A
study by Smith (1991) found that heavy manufacturing companies involved in smelting
and chemical production are more closely monitored for environmental performance than
companies in other industries. This is due to the fact that heavy manufacturing
companies are perceived to be more harmful to the environment and natural habitats.
Furthermore, a causal effect exists between business size and industry on the amount of
social disclosure (Tilt, 1994). This interaction indicates that the size effect is most
obvious in sensitive industries. For example, large firms in the oil and gas industry are
more likely to undertake CSR behaviors than small firms in that industry. However, no
size effects are apparent in low impact industries such as retailing or financial services.
Joyner, Payne and Raiborn (2002) also compared small and larger organizations and the
results showed that smaller business seemed to better understand the issues of corporate
social responsibility than larger companies. They also identified the different internal
and external factors that would cause inconsistency in the ethical behavior of small and
large businesses. On the contrary, a study by Thompson and Smith (1991) revealed that
small businesses have not been encouraged to overlook social activism and to concentrate
instead on avoiding irresponsible behavior.
CSR is also influenced by the ethics of the firm or organizations. Ethical motivation can
guide the business or organization to do the right thing without any external pressure or
governmental constrain. Joyner, Payne & Raiborn (2002) contended that people believe
businesses are amoral, when in fact they generally embrace the values of ethics in doing
business. They cited several factors that serve to legitimize their position and one of the
factors is society, which expects moral behavior of the business when it cries out against
immoral labor practices or environmental policies.
According to Ogrizek (2001), business leaders are starting to acknowledge some of the
market benefits and competitive advantages for companies who put into place a
comprehensive CSR policy. This means that a business with a strong stance in corporate
responsibility will attract top talent and reputation. However, most of the respondents in
a study by Zabid and Saadiatul, (2002), did not agree that business leaders who have too
much social power should not engage in social activities that might increase their social
power. It shows that the political power that they possess might have a direct relationship
with the companies’ social agendas.
Profitability or financial performance also has an influence on CSR. A study by Cochran
& Wood (1984), found that within industry groups, the financial variable that most
strongly correlated with CSR is asset age and that omission of this variable results in a
spurious correlation of CSR and financial performance. In other words, firms with older
assets have lower CSR ratings. Aupperle, Can-oil and Hatfield (1985), tested the
association between social involvement and profitability and reported it as a positive
correlation. Meanwhile Abbott and Monsen (1979) stated that there is no conclusive
evidence that there is a clear linkage in any direction between corporate social activities
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and profitability which in their research, for example, appears convincing that CSR is
inversely linked with profitability in the short run.
According to Mcguire, Sundgren and Shneeweis (1988), CSR is a core corporate duty
which consists of corporate decision making, the relationship of the firm’s social and
ethical concerns with financial performance. The issue that emerges here is the
relationship between the firm's social responsibility and their financial performance. A
theoretical framework was used in the research based on the stock market results and it
did not show any relationship between financial performance and the firm’s social
involvement. On the contrary, using the accounting based performance the relationship
was established. In order to overcome the weakness of this method, the authors used
performance in controlling pollution as a proxy measure. Corporate social responsibility
can be achieved if the firm considers the influence prior to its performance and should be
stressed theoretically and empirically.
Activities in CSR Agendas
Abbott and Monsen, (1979) developed a corporate social involvement disclosure scale
based on a content analysis of the Annual Reports of the Fortune 500 companies. The
purpose of the study was to pursue the use of self-reported disclosures as a means of
constructing a quantitative scale, identified as the Social Involvement Disclosure (SID)
scale and to obtain it from a content analysis of the Annual Report. In this research, they
used a content analysis as a technique for gathering data. However, it is not easy to
measure corporate social involvement. There are two basic difficulties in measuring
corporate social involvement. The first is the unavailability of detailed information in
quantitative terms of the social activities (merely to qualitative). The second is that the
methodology used must be devised by researchers to measure the full impact of known
corporate activities on society. Based on this research, the CSR activities that are always
reported are environmental issues, equal opportunity for employees, personnel welfare,
community involvements and product care. These activities reflect the criticisms that
companies currently encounter by the set up of the modern corporation and the need to
meet the governmental regulations.
According to Orgizek (2001), the scope of CSR is much broader than charitable
activities, philanthropy and community involvement. It embraces business practices,
including environmental management systems, human resource policy and strategic
investment for a sustainable future. He also states that CSR is all about competing
beyond technology, quality improvement, service reliability and competitive pricing.
Meanwhile Joyner, Payne and Raiborn (2002) associate corporate leadership with CSR,
citing leadership and support of publicly important issues such as education, resource
conservation, community services, improvement of industry and business practice and the
sharing of nonproprietary quality-related information. They mentioned that majority of
the entrepreneurs felt responsible to their communities, employees, customers, and other
stakeholders. These firms may undertake many things such as supporting the arts,
helping local schools find funding, contributing to local festivals and providing food and
supplies in order to fulfill their CSR.
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Also, to ensure CSR has been fulfilled by a firm, a lot of programs that has been
organized by a firm were related to environmental quality and pollution control
(Mahapatra, 1984). It was also an opportunity to investigate the ethical issue of investor
and rational economic investor. The theoretical framework is organized to details up the
effect of pollution control but it seems that it has not contributed anything to the CSR of
the firm.
The conceptualization of CSR activities offered by Hay and Gray (1974) were
characterized into three periods or phases of social responsibility which are profit
maximizing, the emergence of trustee management and a shift towards quality of life
management. Profit maximizing management emphasizes profits, wealth accumulation,
productivity, and stockholder interest, and is less concerned about product quality, job
security and social values. While the trustee manager attempts to offer quality products
at fair prices but is less tending to support environmental conservation, cultural values, or
employee rights. In conclusion, they noted that a high quality of manager should have
many of the ethical values ranked high and be concerned with employee rights, social
justice and the quality of the environment.
Consumer Reaction to CSR
Sen, Sankar & Bhattacharya (2001) examined when, how, and for whom specific
Corporate Social Responsibility (CSR) initiatives work. These researchers studied
consumers' CSR responses and the means underlying these responses. There were two
studies in this research. The first focuses on an evaluation of the relationship between
CSR and the company. Meanwhile the second study focuses on CSR's direct influence
on consumers' product evaluations which depends on CSR domain, CSR and company
ability, beliefs and CSR support. The results showed that reactions from customers to
CSR initiative for each company was positive when there was a similarity between the
company's character and their own CSR activities carried out. The finding of this
research can be divided into two, the primary finding is the effect of CSR on company
evaluations and the secondary finding is the effect of CSR on product purchase
intentions. Using real CSR and product information about a company, the researchers
found that the positive effect of CSR initiatives on a consumer's company evaluations
were mediated by their perceptions of self company congruence and moderated by their
support of the CSR domain.
Furthermore, the researchers found that consumers' were more sensitive to negative CSR
information than positive CSR information when evaluating the company. More
specifically, all consumers reacted negatively to negative CSR information, whereas only
those most supportive of the CSR issues reacted positively to positive CSR information.
For the effect of CSR on product purchase intentions, the researchers found that CSR
influenced consumer's product purchase intentions in a more complex manner than its
straightforward positive effect on their company evaluations. Specifically, this suggested
that a company’s CSR effort can affect consumers' intentions to purchase its product both
directly and indirectly. The researchers stated that people often identify with a company
they belong to for their self-consistency and self-enhancement. They also suggest that
customers did believe about the trade-offs. A company in such a situation would benefit
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from informing customers that CSR actions do not detract from its ability to produce
quality products or improving its product offering. It also can help the company to dodge
the wrong perception from the customers about the CSR.
Another study by Grunig (1979) used the situational theory to evaluate the public in his
study. He assumed that behaviors of different people will be more consistent in the same
situation compared to the behavior of a single person in different situations. The answers
to his research questions could help corporations determine the areas of social
responsibility in which they should be more concerned. Furthermore, this can also be
evaluated in a corporate social audit in suggesting strategies for communicating with the
public. This study used both the situational perception concepts and the cognitive strategy
concepts. Both of these theories can measure only a limited number of variables with a
single measurement instrument. So, this study is designed to use the concepts in a survey
to identify the public and opinions of the public on an important social aspect of
management. The results suggest that corporate managers should be most concerned
with social responsibility in carrying out business activities. Respondents in this study
generally did not believe businesses should be involved in social problems, such as
education, support of charities, or decay of the cities not directly related to the business.
The results also suggest a communication strategy for each public. The public want
businesses to perform responsibly when its actions have consequences on the public and
would be likely to seek information about these business actions from corporate social
reports, audits and similar publications.
Smith and Alcom (1991) mentioned that the most creative and cost-effective product
marketing strategy, if it is implemented through one of the three forms of corporate
sponsorship. They stated the purpose of research is to investigate consumer incentives to
respond to dual incentive causes marketing programs. Many companies believe that the
direct and measurable benefits accrue to the corporation, although they also discuss about
the "enlightened self-interest" since the legality of unrestricted corporate giving is
resolved. Results suggest CSR is the most effective and attractive mediation of marketing
strategies.
Research Design
Sample Selection
MCMC Industry Report 2002 stated the restructuring process among all mobile
telecommunication as instructed by the ministry and it created only three main players in
the industry, named Company A (with prefix 012 & 017), Company B (with prefix 013 &
019) and Company C (with prefix 016). This research concentrates more on the strategic
decision making part of the company after engaging in a conversation with the officers in
the companies that were able to give a broad perspective on the companies normal
operation.
The manager for Corporate Communication Division in Company C and B welcomed us
for their interview. They also provided us with the relevant and restricted supporting
documents. While for Company A, we only obtained cooperation from the senior
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communication officer and the sponsorship department. Nevertheless, they still were
able to provide some information and constructive comments, as they assumed the
interview session was only to retrieve some opinions regarding certain issues.
Our targeted respondents were Managers of Corporate Communication Division for each
company because they could demonstrate the intensiveness of the activity and motivation
factor for each CSR activity. Besides, if the interviewee was not part of the management
team, the interview session would not provide sufficient information because some
questions are on the strategic level of management. This was a concern with Company A
when we were unable to get cooperation from the Department Manager. However he
already alleged the authority to his officer to represent the company. For the other two
companies, interviews were conducted in a very limited time period with the Corporate
Communication Manager regarding the management perspective.
The detailed
information was also supported by the senior officers.
Methodology
As this study was exploratory in nature, this research was conducted based on the
interview session with the targeted respondents. The questionnaire was structured prior
to the interview for the Corporate Communication Manager for each of the mobile
telecommunication companies.
The structured interview was divided into three main parts. Part A was on demographic
information of the respondents company. Part B determined the factors that influenced
corporate social responsibility (CSR). Lastly, Part C demonstrated the concentration of
their involvement in CSR activities.
For Part B, a total of 12 statements regarding factors influencing CSR were asked on a
five-point scale, which ranged from most agree (5) to least agree (1). But after discussion
with the companies, it was concluded that the data could not be analyzed by the mean test
because only one person was representing the whole company. Then, they agreed to
accept a three-point scale; which was B for strong influence, M for moderate influence
and S for small influences on their CSR involvement decision.
B was for when the respondents fully agreed that the factors were highly relevant and had
a direct influence on their decision in involvement at an early stage and continuously
affected the company’s mission in the long term. Then, M was for when the interviewee
partly agreed with the factors. They assumed the factors were less important and had
partial effects as factors for involvement in CSR activities. These factors did not have a
cumulative effect on the company’s mission in the long term. While, S was for when the
interviewee did not agree with the factors or it had a very minimal impact on the
company’s decision of involvement in CSR activities.
Part C determined the intensity of the companies’ efforts in CSR activities, ranked on a
five-point scale from null involvement (1) to full involvement (5). All companies only
provided the detailed data that was going to be used in the analysis part and they agreed it
would be tabulated in ranges. The data provided was the amount of contribution (in
Malaysian Ringgit) for each specific activity listed for 5 main categories in the company.
Based on the interview session, all company did suggest the relevant range for the
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contribution amount that can be used as a guideline in the research. Besides all of them
did agreed on suggested rate. Supporting documents such as the company’s internal
budget and funding schemes and any relevant documents on sponsorship also were
analyzed to understand the sponsorship allocation cost. All the documents, records and
schedules of allocation budget for their CSR activity, were acquired based on an
agreement that the information would be treated as confidential.
In conclusion, the level of CSR intensiveness of contribution for each activity was as
follows: H for high contribution to CSR activity that amounted to more that RM100,000,
M for the amount of contribution of between RM10,000 to RM100,000, and L for
contribution to CSR activity of amount less than RM10,000. The exact figure analysis
was taken into consideration for the CSR intensiveness because the amount was very
small compared to the company’s total assets, company operating income and net profit.
The opinions from the MCMC were also taken into consideration when determining the
relevant range for the company contribution. The research officers at MCMC suggested
using the same range as what was determined. On average it showed that all companies
used almost the same amount as the cutting point for their intensiveness in the amount of
contribution to CSR activities.
The analysis was based on the range determined and also the qualitative factor obtained
during the interview session. Observation analysis was carried out with the details on the
amount of contribution from the companies supporting documents but it could only be
represented in a range due to the confidential agreement with the companies.
Results and Discussion
CSR Concentration of Mobile Operators
Overall, from the interviews conducted and several support materials provided by the
companies, the concentration on CSR activities can be classified into five main categories
as Environmental concerns (E), Welfare (W), Community Involvement (C), Product or
Services (G) and Natural Disasters (N). The list of the relevant activities that the
companies were involved in for each type of the main category of CSR are listed in Table
1.
Table 1: CSR Activities by Category
Category of CSR
involvement
1. Environmental Concerns
(E)
2. Welfare or charity (W)
Activities involved by the telecommunication company
1. Pollution control activity over product
2. Product complies with the environmental condition and the radiation tariff set up
by MCMC.
3. Ensures the level of the telecommunication telecast frequency is at the acceptable
level.
4. Recycles the unused components of telephone sets that would impact the
environment.
5. Collaborates with other government agencies in organizing the ‘green’ campaign.
6. Develops environmental policy in their organization to be used at multiple levels
of the operation.
1. Directly contributes some amount of money for the personal welfare, community
welfare and also the welfare of the organization.
2. Involves in developing infrastructure such as buildings, schools, libraries or houses
for donation to certain families.
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3. Community Involvement
(C)
4. Products or services (G)
5. Natural Disasters (N)
3. Sponsors the treatment for certain types of chronic diseases.
4. Contributes to selected individuals for personnel development in certain areas that
could contribute to the development of the industry.
5. Provides counseling and material support to increase motivation amongst the
employees.
6. Provides a special bonus plan and reward system to the employees to encourage a
positive competition amongst employees.
7. Provides a comprehensive insurance coverage for employees to ensure they are
covered in the event of an accident.
8. Establishes a sound placement system for the employee who volunteers to move to
another company with valid reasons.
1. Contributes certain portions of annually allowable donation for R& D in public
health concerning radiation exposure.
2. Contributes to the educational institutions in form of scholarships and research
programs in the field of market reaction and customer satisfaction.
3. Supports MCMC with the relevant information on the user coverage and the
penetration rate to ensure the country’s communication growth policy is well
planned.
4. Donates some amount of money to build infrastructure for public use such as bus
stops, shades, public toilets and so forth.
5. Jointly sponsors any continual community programs with other institutions.
6. Takes part in exhibitions that promote Malaysia to other countries and encourages
the tourism industry.
7. Contributes to games and sports events that are organized by the ministry.
8. Cooperates with police department to organize anti crime campaigns.
9. Visits some of the private institutions to promote a healthy and good life style to
the students.
1. Has arrangements to ensure services provided in certain areas would have no
unknown reaction to human health.
2. Ensures the facility used has no effect on the communities’ health and tries to
minimize the possibility of distraction to the users in long term.
3. Prepares and provides a hotline, control procedure and responsive system to make
sure all the registered complaints would be treated as important.
4. Conducts all necessary tests on the radiation frequency interference to reduce
disturbance and increase compatibility with technology advancement.
5. Adopts a reasonable, healthiest, technology with the latest innovation set to
increase user compatibility.
6. Guarantees that the services in every territory, minutes and destination would be at
a 95% satisfactory level.
7. Forms a special team for product or packages offered to respond to any feedback
from the market e.g. subscribers’ complaint, rivals promotion strategy and so on.
1. Provides services that enable the users to donate to a public fund. Company has
arrangement with other private companies to provide the relevant services.
2. Takes action effectively in certain situations by immediately contributing in the
form of cash to support the victims.
3. Jointly organizes charitable programs to collect funds for victims of natural
disasters directly after determining the amount of funds required.
4. Company’s employees also have their own program to make personal contribution
for charitable purposes.
5. Keeps on supporting the victims although the charitable program has stopped.
For every CSR activity listed, the level of concentration of a company’s involvement in
CRS was rated based on the contribution made. There were three rating levels used; H
for high initiative and complete and successful involvement, M for moderate level of
involvement and regularly conducts joint effort programs with other organizations or
government agencies, and L for minimal involvement and occasionally does not involve
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itself directly. Thus, Table 2 to Table 6 indicates the concentration level of company’s
involvement in CRS by category and activity.
Table 2: The Concentration Level of Involvement in CSR for Category of
Environmental Concerns
CSR Activity
E1
Pollution control activity over product.
E2
Product complies with the environmental
conditions and the radiation tariff set up by
MCMC.
Company A
2002
2003
H
H
2002
Company B
2003
H
M
Company C
2002
2003
M
M
H
H
H
H
H
H
E3
Ensures the level of the telecommunication
telecast frequency would be at an
acceptable level.
H
H
H
H
H
H
E4
Recycles the unused components of
telephone sets that would impact the
environment.
E5
Company
collaborates
with
other
government agencies in organizing the
‘green campaign’.
E6
Develops environmental policy in their
organization to be used at multiple levels
of the operation.
M
M
M
M
M
M
M
H
M
H
H
H
M
M
M
M
M
M
Table 2 indicates the level of CSR involvement based on contribution made by each
company for activities related to the category of environmental concerns. There are six
activities under this category. In 2002, Company A and Company B were very actively
involved in pollution control activity over their products. They were rated as having high
initiative and successful involvement. Meanwhile, Company C was ranked as having
moderate level of involvement as its contribution for this activity was less than
RM10,000. In 2003, while the rest rated a moderate level of involvement, Company A
was still ranked as having high involvement as the amount contributed was more than
RM100,000.
For the second activity, all of the three companies rated as having high initiative for both
years in producing products that were environmentally friendly and complied with the
radiation tariff as required by MCMC in order to ensure customer safety is well
protected. Again, with no compromise to customer safety, Company A, Company B and
Company C were rated as having high initiative and successful involvement as they
contributed more than RM100,000 to ensure the level of the telecommunication telecast
frequency would be at the acceptable level.
The fourth activity was recycling the unused components of telephone sets that would
impact the environment. In recycling the unused components of telephone sets that
would adversely affect the environment, all of the three companies spent around
12
RM10,000 to RM100,000 thus they were rated as being moderately involved. With
respect to the ‘green campaign’ Company C was the only company that rated as having
high involvement in 2002 as its contribution to organize the ‘green campaign’ by
collaborating with government agencies was more than RM100,000. However in the
subsequent year, all of the companies were rated as having high initiative and
involvement with regards to the same activity. Finally, every company rated as having
moderate level of involvement in developing an environmental policy for their
organizations as the money spent for this purpose was around RM10,000 to RM100,000.
Table 3: The Concentration Level of Involvement in CSR for Welfare/ Charity
Category
CSR Activity
Company A
2002
H
2003
H
Company B
2002
2003
H
M
Company C
2002
2003
H
H
W2
Involves in developing infrastructure
such as building schools, library or
houses for donation to certain
families.
M
M
M
L
M
H
W3
Sponsors the treatment for certain
types of chronic diseases.
W4
Contributes to selected individuals for
personnel development in certain
areas that can contribute to the
development of the industry.
M
M
M
M
M
M
L
L
L
L
M
L
W5
Provides counseling and material
support to increase motivation
amongst the employees.
M
M
M
M
M
M
W6
Provides a special bonus plan and
rewarding system to the employees to
encourage a positive competition
amongst them.
H
H
H
H
H
H
W7
Provides a comprehensive insurance
coverage for the employees to ensure
they are covered in the event of
accidents.
W8
Establishes a sound placement system
for the employee who volunteers to
move to another company with valid
reasons.
H
H
H
H
H
H
L
L
M
L
L
L
W1
Directly contributes some amount of
money for the personal welfare,
community welfare, and also the
welfare of the organization.
13
There are eight activities identified under welfare or charity category as shown in Table
3. In general, all the companies were really concerned and sensitive to the needy parties
as they rated as having high initiative and successful involvement with the exception of
Company B in 2003. Besides contributing in the form of cash directly to the needy
parties, all of the companies also took part and contributed in developing a number of
infrastructures such as schools, and libraries. In 2003, the level of involvement differed
between the companies as compared to 2002 when all of the companies rated as having
moderate level of involvement. For example Company C was the only company that
rated as having high initiative and successful involvement. In contrast, Company B rated
as having a minimal level of involvement as its contribution for this activity was less than
RM10,000.
In general for the third type of contribution, which was the contribution to support
treatment costs of certain chronic diseases, all companies rated as having moderate levels
of involvement for both years as the amount of contribution was around RM10,000 to
RM100,000. Meanwhile the contribution to sponsor selected individuals or persons for
personnel development in certain areas received less attention from all three companies
as they rated as having minimal levels of involvement except for Company C in 2002.
Activity five to activity eight pertained to employees’ welfare. In terms of providing
counseling and material support to their employees, all of the companies rated as having
moderate level of involvement for both years. However for the next two activities, all of
the companies rated as having high initiative and successful involvement for both years
as the money spent for these activities were more than RM100,000. These two activities
were designing special bonus plans and reward systems to encourage positive
competition among employees and providing comprehensive insurance coverage for
employees in the event of an accident. Finally, on the whole, all of the companies rated
as having minimal involvement for establishing a sound placement system for their
employees who volunteer to move to another company except for Company B in 2002.
Table 4: The Concentration Level of Involvement in CSR for the Category of
Community Involvement
CSR Activity
C1
Contributes certain portions of annually
allowable donations for R&D in public
health concerning radiation exposure.
C2
Contributes to the educational institutions
in the form of scholarships and research
programs in the field of market reaction
and customer satisfaction.
C3
Supports MCMC with the relevant
information on the user coverage and the
penetration rate to ensure the country’s
communication growth policy is well
planned.
C4
Donates some amount of money to build
Company A
2002
2003
H
H
Company B
2002
H
2003
M
Company C
2002
2003
H
H
H
H
H
H
H
H
H
H
H
H
H
H
M
H
M
M
M
M
14
infrastructure for public use such as bus
stop, shades, public toilet and so forth.
C5
Jointly sponsors any continual community
programs with other institutions.
C6
Takes part in exhibitions that would
promote Malaysia to other countries and
encourages the tourism industry.
C7
Contributes on games and sports events
that are organized by the ministry.
C8
Cooperates with police department to
organize anti crime campaigns.
C9
Visits some of the private institutions to
promote a healthy and good life style to the
students.
M
H
M
M
L
H
H
H
M
M
L
L
H
H
M
H
H
M
L
M
M
H
L
L
L
L
L
M
L
L
Table 4 shows the list of activities and the level of involvement for the category of
community involvement. As indicated in the table, for the first activity, all of the
companies rated as having high initiative and successful involvement for both years
except Company B in 2003, as the amount contributed for R&D activity which focused
on radiation exposure to the public health was more than RM100,000. For both years,
with regards to the second and third activities, all of the companies rated as having high
initiative and successful involvement. These activities are the contribution made to an
educational institution in the form of scholarship or research funding and providing
relevant information about the user coverage and the penetration rate to MCMC.
For the fourth activity, all of the companies except for Company A in 2003 rated as
having moderate levels of involvement with respect to contribution made to developing
some infrastructure for public use such as bus stops, shades and public toilets.
Meanwhile, for the fifth activity, in 2002 with the exception of Company C, the rest rated
as having moderate levels of involvement as the contribution made for certain community
programs that were jointly organized with other institutions was around RM10,000 to
RM100,000. However in 2003, Company C was the only company that rated as having
high initiative and successful involvement compared to a minimal level of involvement in
the previous year.
Company A was the most active company to take part in exhibitions to promote Malaysia
to other countries and to encourage tourists to come to Malaysia as it rated as having high
initiative and successful involvement for both years. In contrast, Company C rated a
minimal level of involvement for this activity. Furthermore, for the next activity, once
again for both years, Company A was the most active company contributing to
tournament or sports organized by the ministry. Thus it rated as having high initiative
and successful involvement. Meanwhile, Company B was the most active company that
cooperated with the police department to organize anti crime campaigns as it rated a
moderate level of involvement in 2002 and high initiative and successful involvement in
2003. Finally, for the last activity under this category, except for Company B in 2003, all
companies rated a minimal level of involvement for both years as they contributed or
15
spent less than RM10,000 to visit the private institutions to promote a healthy and good
lifestyle to the students.
Table 5: The Concentration Level of Involvement in CSR for Product or Services
Category
CSR Activity
G1
Having an arrangement to ensure
services provided in certain areas would
have no unknown reaction to human
health.
G2
Ensures the facility used has no effect
on the communities’ health and tries to
minimize the possibility of distraction to
the users in the long term.
G3
Prepares and provides a hotline, control
procedure and responsive system to
make sure all the registered complaints
would be treated as important.
G4
Conducts all necessary tests on the
radiation frequency interference to
reduce disturbance and increase
compatibility
with
technology
advancement.
G5
Adopts the reasonable healthiest
technology with the latest innovation set
to increase user compatibility.
G6
Guarantees that the services in every
territory, minutes and destination would
be at a 95% satisfactory level.
G7
Forms a special team for products or
packages offered to respond to any
feedback from the market e.g.
subscribers’
complaints,
rivals
promotion strategy and etc.
Company A
2002
H
2003
H
Company B
2002
2003
M
H
Company C
2002
2003
H
H
M
H
M
M
L
H
H
H
H
H
H
H
H
H
H
H
H
H
H
H
M
M
M
H
H
H
H
H
H
H
H
H
M
M
M
M
There are seven activities all together for products and services category as indicated in
Table 5. For the first activity, for both years every company, except for Company B in
2002 rated as having high initiative and successful involvement, as the amount
contributed to ensure the services provided by them had no adverse effect on human
health was more than RM100,000. For the second activity, Company C was the only
company that rated a minimal involvement in 2002 as the amount contributed to ensure
the facility in use had no effect on public health and minimizing the possibility of
distraction to the users was less than RM10,000. However in 2003, Company C together
with Company A rated as having high initiative and successful involvement.
In 2002 and 2003, all of the companies rated as having high initiative and successful
involvement as the amount contributed to provide a hotline, control procedures and
16
responsive systems to ensure effective response to all complaints made by customers was
more than RM100,000. For the fourth activity, all companies rated the same level of
involvement as the third activity. In 2002, Company A was the only company that rated
as having high initiative and successful involvement as it spent more than RM100,000 in
order to adopt the most healthiest technology with the latest innovation set to increase
user compatibility. Meanwhile in 2003, besides Company A, Company C also rated as
having high initiative and successful involvement.
All the companies did not compromise to ensure they provided a high quality service
with 95% satisfactory level since all of them spent more than RM100,000 for the sixth
activity. Finally, for the last activity under this category, in 2002 and 2003, Company A
was the only company that rated as having high initiative and successful involvement as
it spent more than RM100,000 for this activity. Meanwhile the rest of the companies
rated moderate levels of involvement.
Table 6: The Concentration Level of Involvement in CSR for Natural Disaster
Category
CSR Activity
N1
Provides services that enable the users to
donate to public funds. Company has
arrangement
with
other
private
companies to provide the relevant
services.
N2
Takes action effectively in certain
situations by immediately contributing
in the form of cash to support the
victims.
N3
Jointly organizes a charitable program to
collect funds for victims of natural
disasters directly after determining the
amount of funds required.
N4
Company’s employees have their own
program behind the organization to
make personal contributions towards the
charity. Company’s employees also
have their own program to make
personal contribution for charitable
purposes.
N5
Keeps on supporting the victims
although the charitable program has
stopped.
Company A
2002
H
2003
H
Company B
2002
2003
H
H
Company C
2002
2003
H
H
H
H
H
H
M
H
M
M
H
M
H
H
L
M
L
L
M
M
L
L
L
L
L
M
Table 6 shows the list of activities and the levels of involvement for the category of
natural disasters. For the first activity, in 2002 and 2003, all of the companies rated as
having high initiative and successful involvement as they spent more than RM100,000 to
provide services that could help the public or the users give donation via their services.
The same result was demonstrated as the previous activity, except for Company C in
17
2002, when all the companies rated as having high initiative and successful involvement
as they spent more than RM100,000 for this activity.
In 2002, Company C and Company B rated as having high initiative and successful
involvement as they contributed more than RM100,000 to organize charitable programs
to collect funds for the victims of natural disasters. Meanwhile in 2003 only Company C
was still consistent with the previous year’s level of involvement. For the fourth activity,
in 2002, only Company C was involved in a moderate level as the others were only
involved minimally. In 2003, Company B continued its minimal level of involvement
while the rest of the companies rated moderate levels of involvement. Finally, all of the
three companies except for Company C in 2003, rated minimal levels of involvement as
the amount contributed to the victims of natural disasters from the charitable programs
organized was less than RM10,000.
Factors that Influence Mobile Operators Involvement in CSR
There were several factors that were discussed during the interviews that motivated each
company to get involved in CSR activities and to also continue their involvement from
year to year. There are 12 factors in the form of structured question that had been asked
during the interview that suggested as having influence on the company’s decision to get
involved in CSR. In addition, some of the company’s representatives also mentioned
other appropriate factors. Factors were rated as; B- strong influence, M- moderate
influence and S- minimal influence.
Table 7: Factors that Influence the Mobile Telecommunications’ Involvement in CSR
Influencing factors
1. The main objective of the company’s involvement in corporate
social responsibility is to improve the quality of life of the
community.
2. Organizations believe that involvement in corporate social
responsibility will increase long term profitability and sustainability
of the company.
3. Organizations participation in corporate social responsibility can
give good economic return to the company’s shareholders.
4. Involvement in social activities can encourage the company to be
more responsible and become a consumer-focused company.
5. In order to have a good reputation with the public, an
organization has to show that it is a highly socially responsible
organization.
6. Quality of goods and services is no longer the main
consideration.
7. Organizations that are more socially responsible will have fewer
requirements of additional regulations enforced by the government
on them.
8. A company that implements CSR will have additional
competitive advantages compared to a company that does not get
involved.
9. Involvement in CSR activity is limited due to limited funding and
time because CSR deviates from the company’s ordinary activity.
10. A company that already monopolizes the industry does no
longer need to be involved in CSR activity intensively because it is
already strong.
11. Consumers and the public will bear any additional cost if the
company is involved intensively in CSR activity.
Company A
B
Company B
M
Company C
B
B
B
B
M
M
S
M
M
B
B
B
B
S
S
S
M
B
M
S
S
S
S
S
M
S
M
M
M
M
S
18
12. Company is publicly owned, so they must live up to social
expectations.
B
M
M
Among all of the factors, Company A and Company C disclosed that their intention on
improving the quality of life of the community was one of the major factors that
encouraged them to get involved in CSR activity and rated the factor as highly
influential. Meanwhile for the government-owned company, Company B, this factor was
just of moderate influence. The belief that CSR would improve the profitability and
sustainability of the company was demonstrated as being highly influential to all three
companies.
Furthermore Company A and Company B agreed moderately that CSR can provide a
good economic return to the company’s shareholders. In contrast, Company C a Swiss
based company justified this factor had only a small influence on them to get involved in
CSR activity. However this company did agree that CSR involvement highly influenced
them as it encouraged them to be more responsive and consumer-focused. Meanwhile
Company A and Company B claimed this factor only had a moderate influence upon
them.
All the companies gave a high rating to the statement that the company would portray a
good reputation to the public as a socially responsible organization when they were
involved in CSR. On the contrary, all three companies gave a low rating on the next
factor which stated that the quality of their services would be no longer the main concern
if they were involved in CSR activity.
As a company becomes more involved in CSR activity, at the same time they attract the
attention of the government. Only Company B agreed that this was highly influential
when the company that had greater CSR activity especially with government agencies
would have fewer additional regulations enforced on them by the government. While,
Company A and Company C stated that this matter was of moderate influence.
In terms of company’s competitive advantages, all three companies agreed that CSR only
had minimal influences. This was because CSR was not the main component of
competition in this industry as they competed on pricing, product and strategy. Company
C claimed moderate influence to the statement that most companies have a constraint in
funding and timing to get involved in CSR. While, the other two companies stated that
the factor just had a small influence on their involvement.
Company C and Company B moderately agreed with the statement that by the time a
company becomes a monopoly, most of them will no longer be intensively involved in
CSR activity. Whilst, Company A believed that this factor just had a small influence as it
purports that the public limited companies need to be consistently involved in CSR
activity.
Funds that would be used by the company to get involved in CSR activities mainly comes
from the company’s operational expenses and funds that have been estimated in
preparing the yearly budget. Company A and Company B moderately agreed with the
19
statement that if they were involved in CSR activity the consumers and the public would
bear the cost. This is because sometimes the company just organizes the donation system
for their customers and the company only provides a small portion of the contribution.
While, Company C professed that this factor just had a minimal influence on its
involvement in CSR.
Again most of the companies agreed that if the publicly owned status is applicable, most
of them would try to increase the initiatives to add more value to society. Company A
highly agreed with this statement. Meanwhile, for this factor, Company B and Company
C moderately supported the statement.
Other than the listed influences and motivation here, there were other possible reasons
that encourage these three companies involvement. One of the reasons was the ideology
of humanism for the organization. The concept of the CSR itself means the responsibility
to the country citizens and also for the company. The contribution made to the public
trough CSR activities is the rewards for the society who support their business directly or
indirectly.
Continuous Effort in CSR of the Company based on MCMC Opinions
The Communication and Multimedia Act 1998 (CMA) has passed into its fifth year since
its implementation on 1st April, 1999 and the changes during this period have been
significant. At the same time, 2003 spelled the mid way point for the Framework for
Industry Development (FID) 2002-2006, the rolling five year plan of changes,
deliverables and tasks for the development of the industry produced by MCMC .
In respect of one major challenge, upgrading the country’s network capabilities, the
industry was generally on track to reach its key performance targets as enunciated in FID.
Mobile penetration reached 43.9 percent as of the end of 2003 thereby giving no doubt
that the prediction of 60 percent penetration rate for 2007 could be achieved. Year 2003
also signified a new era when there were some consolidations that took place in the
industry. Convergence was preached and painstakingly practiced for five years leading
into a more resilient industry where only the fittest survived. The mobile
telecommunication sector saw reduction in terms of number of major players from five to
three. In terms of interconnection charges, costing studies by MCMC culminated in a
significant reduction in interconnection pricing. Affordable and high quality services of
mobile operators resulted in a positive reaction in consumer demands as shown by
Customer Satisfaction Index (CSI). From the total RM 9.49 billion mobile phone
revenue shares in the market in 2003, Company C’s share was only 15 percent; Company
A had the largest share of 47 percent while Company B’s share was 38 percent. Overall,
the mobile revenue was 48 percent of the communication and multimedia sector’s
revenue. (MCMC, 2004)
One of the indicators to measure the result of a company’s CSR activity is the market
penetration rate. The demand growth for the mobile phones in terms of number of
subscribers surpassed fixed line connection demand growth in 2000 and since then, the
growth has been spectacular as claimed by MCMC. Malaysian mobile penetration rates
or simply put, the number of people out of 100 that subscribe to the services was 43.9
20
percent at the end of 2003. In contrast, the rate was about half of this at 21.8 percent in
2000. As far as prepaid and post paid customers for mobile phone are concerned, the
former has gained popularity over the last two years. Out of 11 million mobile phone
subscribers in year 2003, 77 percent were prepaid subscribers (8.5 million) and the rest,
23 percent were post paid subscribers (2.5 million). Over the last two years, post paid
subscribers growth rate was negative as more users preferred the prepaid scheme due to
the attractive packages.
MCMC considers the expansion commitment in the companies’ principles strategy as the
main CSR for the benefit of this industry. In December 2003, Telekom raised a total of
RM2.983 billion redeemable unsecured bonds to finance part of its acquisition over
Company B. In 2002, Company C and Company A were accepted to get listed on the
Main Board of the Bursa Malaysia (previously KLSE). Funds raised in Company A were
equivalent to RM 3 billion and for Company C RM 1 billion. On 17th October, 2003 the
Consumer Code was introduced by the MCMC, marking the beginning of a selfregulation regime for the communication and multimedia industry in Malaysia. With this
it was expected that social concerns shown by the companies would become mandatory.
The Consumer Code deals with the protection and promotion of consumer interests and is
not only limited to the matters related to the Communication and Multimedia Act. This
code caters to the provision of the protection of consumers’ right. The Consumer Code
covers the following areas:
1. Rules of the Code-comprising of Information and Protection of Personal
Information
2. Complaints Handling
3. Code Compliance by Service Providers
4. Reporting
5. Monitoring, Review and Amendments
In the early stage (end of 2003), the three mobile players did not comply with the code.
However by the end of 2004, the three companies complied with the code. Majority of
the unresolved cases reported are due to the fixed line services and Telekom Malaysia
explained that most of the billing complaints were fraud cases.
Overall, based on the data provided by the MCMC, it can be concluded that the activity
of continuous CSR was just at a moderately satisfactory level since some constructive
comments were included inside the ESAT test comments. Since then, there have been
some improvements in the service coverage until recently in 2005.
Conclusion
In terms of CSR since 2004 there are many challenges that lie ahead for the Malaysian
mobile telecommunication companies to develop greater resilience and financial stability
in preparing for globalization. In terms of coverage and connectivity, 2002 and 2003
brought greater penetration rates for cellular mobile phones. Cellular mobile businesses
also began to see other sources of revenue making a significant impact which included
SMS, GPRS, 3G as well as other non-voice related revenue sharing (MCMC, 2003).
Overall, the companies strived to portray themselves as highly socially responsible
companies to compete with rivals. The image of always supporting social constructive
21
programs has proved that it would be beneficial to the company’s competitive
advantages. Like most global, reputable mobile operators, DIGI used this kind of
strategy by giving more pages of disclosure on their CSR activity in their Annual Report
for four consecutive years from 2000 to 2004.
In general, involvement in CSR activities had several construct motives and was inline
with the agency theory assumptions. All mobile companies showed satisfactory
involvement in five main categories of CSR, namely environmental concerns, welfare or
charity, community involvement, products or services improvement and also natural
disasters awareness.
Specifically, the level of CSR concentration activity was highly rated for all categories.
For the category of environmental concerns, high efforts were placed by each company in
activity E2 and E3, which was to ensure that the product complied with the
environmental conditions and the radiation tariffs setup by MCMC, and to also ensure the
level of telecommunication telecast frequency was at the acceptable level respectively.
For the categories of charity and welfare, full CSR concentration was placed on W6 and
W7. While, almost full concentration of CSR was on activity W1. The W6 and W7
activity were, providing a special bonus plan and rewarding system to the employees to
encourage positive competition among employees; and providing a comprehensive
insurance coverage for the employees to ensure they are covered in the event of an
accident. This showed that the companies were highly concerned about their employees’
welfare. W1 was the amount of money the company directly contributed to personal
welfare, community welfare and also the welfare of the organization.
For categories of community involvement, the companies are more concentrated in C2
and C3 activities. These activities was contribution to the educational institutions in form
of scholarships or research grant to finance study on market reaction and customer
satisfaction issues; and provide MCMC with relevant information about user coverage
and penetration rate to ensure the country growth policy is well planned respectively.
This indicated that all of the company has well planned to contribute towards any
programs of regulatory or education institutions. All companies also gave almost full
concentration in activity C1; that is contributing some portions of yearly allowable
donations for research and development in the public health towards radiation exposure.
In terms of products and services improvement category, all companies concentrated
more in G3, G4 and G6. Namely the concentration was on the activity of preparing and
providing a hotline, control procedures and responsive systems to make sure all the
registered complaints would be treated as important; making necessary radiation
frequency tests to reduce the disturbance and increasing compatibility with the
technology advancement; and also guaranteeing that the services in every territory,
minutes and destination would be at a 95% satisfactory level. Most concentration
activities in this category followed the guidance of Consumer Code by MCMC, which
became mandatory in the year 2004 for all mobile telecommunication companies (Sarah
Aziz, 2004).
22
While for the category of natural disasters, CSR concentration was more on activity N1
and N2. These activities were, providing the services that enable the users to be involved
in public donation and making arrangements with other private companies to provide that
service; and also reacting effectively in certain situations by giving instant money to
support the victims. It indicated that the companies are concern and sensitive to the need
of victims of unpredictable disaster tragedy.
Analyzing the factors that influence each company’s involvement depends on their
motivational factors in each of these activities. But all the listed factors had some
influence on their CSR activity. The most highly influential factors were F2 and F5
which were that the organizations believed that involvement in corporate social
responsibility would increase long term profitability and sustainability of the company;
and also an organization that wished to have a good reputation in the eyes of the public
had to show that they are highly socially responsible. These two factors illustrated that
the factors most influential in contributions are those that are for the benefit of the
organization rather than for societal benefits. F1, which almost fully influenced the
organizations involvement in CSR was the main objective to improve the quality of life
of the community, which benefits the society more. However Company B did not fully
agree that this was an influential factor. This may be due to the fact that this company is
a government linked company and they already serve society in some way.
Less influential factors were F8 and F9 respectively that were; company which
implemented CSR would have more competitive advantages compared to the company
that did not get involved; and involvement in CSR activity was limited due to limited
funding and time because it deviated from the company’s ordinary activities. Both these
statements are contradictory in nature and goes to show that at the end of the day the
companies are more interested in what is beneficial to them.
MCMC, the regulatory body for telecommunication companies, determined that the
companies’ involvement in CSR was when companies productively considered the
relevant CSR factors in their normal current operations. After reviewing the MCMC
Industry Performance Report 2003, all mobile cellular telecommunication companies in
Malaysia rated a satisfactory level of continuous sustainable development. However, the
MCMC highlighted the fact that the companies had to take action in facing the wave of
globalization in the telecommunication industry.
Overall it can be concluded that, all mobile telecommunication companies have a high
initiative in their CSR activity for all five listed categories since in each categories
activities they had minimal levels of involvement. In the year 2002 and 2003, when this
survey was conducted, the CSR activity was still considered voluntary and these
respondent companies proved that they had their own initiatives for their involvement
since then. Most of the companies at this time were making big capital reorganizations
where Company B and TmTouch merged to form a new brand under the group of
Telekom Malaysia (government linked company). Meanwhile, Company A took over
TimeCel, and concurrently Company A and Company C became a publicly-listed
23
company. These circumstances have had an effect on the companies CSR activity during
this time. Yet, all these companies played an active role in portraying a positive image of
their companies.
Limitation And Future Reseach
The limitation was not very significant to affect the reliability of the study because the
research was descriptive in nature. Financial data that was provided in order to determine
the scale of CSR intensiveness was not constructive because the companies just provided
an estimate taken from the internal budget schemes even though the period had already
ended. Most of the companies’ officers could not provide the exact amount of
contribution because some of the programs is annual agenda in which the lump sum
provision have been made at the early period and cannot be broken down easily to
specific period. To overcome this problem, the companies gave estimated figures. Beside
that, the information from the interview also has been amended accordingly to meet the
research objectives. Moreover, some companies refused to disclose certain information
due to company policies. So, we could only determine the scale based on the interview
that was conducted and other publicly known information from sources like Annual
Reports.
Further research needs to integrate the detailed CSR definition by the MCMC that
includes innovations of the product and services, extraordinary promotion packages and
rewarding systems. The future research findings may help MCMC to formulate better
policies especially for Consumer Code and Governance Guidelines in the
telecommunication industry. The time period covered in this research was before the
CSR reporting became mandatory. It would provide valuable insight and an interesting
study to compare this present study with the period after CSR became mandatory in the
year 2004.
24
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