Islamic Corporate Social Responsibility, Corporate Reputation and Performance

Authors: Roshayani Arshad, Suaini Othman, Rohana Othman

Abstract:

This study examines the effect of Islamic Corporate Social Responsibility disclosure and on corporate reputation as well as performance. These relationships are examined based on content analysis of of annual reports of 17 Islamic banks in Malaysia for 2008, 2009 and 2010. Results of this study provide evidence that CSR activities communicated in corporate annual reports are significantly positively related with corporate reputation as well as firm performance. These results indicate that CSR activities and disclosure from Islamic perspectives are equally important business strategies in creating continuous superior performance for organisations. In addition, it also highlights that organisations need to develop a stakeholder orientation particularly in an environment of increasing pressure from jurisdictions dominated by Islamic stakeholders on organisations engaging in Islamic products to increase their social responsibilities from the Islamic perspectives.

Keywords: Islamic Corporate Social Responsibility, Corporate Reputation, Firm Performance, Islamic Banks

Digital Object Identifier (DOI): doi.org/10.5281/zenodo.1074857

References:

[1] C. Adams, and A. Zutshi, "Corporate Social Responsibility: Why Businesses Should Act Responsibly and be Accountable (Part II)," Accountants Today, 2006, 24-27.
[2] R. E. Freeman, "Strategic management: A stakeholder approach. Boston: Pitman Publishing," 1984.
[3] C. Fombrun, and M. Shanley, "What's In A Name? Reputation Building and Corporate Strategy," Academy of Management Journal, 2(.2), 1990, 233-258.
[4] J. Galbreath, "The impact of strategic orientation on corporate social responsibility," International Journal of Organizational Analysis, 18(1), 2010, 23-40.
[5] J. Galbreath, "Building corporate social responsibility into strategy" European Business Review 21(2), 2008, 109-127.
[6] R. Gray, R. Kouhy, and S. Lavers, "Corporate social and environmental reporting: A review of the literature and a longitudinal study of UK disclosure accounting," Auditing and Accountability Journal, 8(2), 1995, 47-77.
[7] J. J. Griffin, and J. F. Mahon, "The corporate social performance and corporate financial performance debate," Business and Society, 36(1), 1997, 5-31.
[8] J. Guthrie, and L. Parker, "Corporate social reporting: rebuttal of legitimacy theory," Accounting and Business Research, 19(76), 1989, 343-352.
[9] D. Hackston, and D. M. Milne, "Some determinant of social and environmental disclosures in the New Zealand companies," Accounting, Auditing and Accountability Journal 9 (1), 1996, 77-108.
[10] R. M. Haniffa, and T. E. Cooke, "The impact of culture and governance on corporate social reporting," Journal of Accounting and Public Policy, 24, 2005, 391-430.
[11] A. Hasan, and S. Syafri Harahap, "Exploring Corporate Social Responsibility Disclosure: The case of Islamic banks", International Journal of Islamic and Middle Eastern Finance and Management, vol. 3, no.3, 2010, pp.203-227.
[12] N. Baydoun, and R. Willet, "Islam and accounting: ethical issues in the presentation of financial information", Accounting, commerce and Finance: The Islamic perspective Journal, vol.1, no.1, 1997, pp. 1-25.
[13] S. Hassan, and T. Christopher, "Corporate governance statement disclosure of Malaysian banks and the role of Islam", Asian Review of Accounting, vol. 13, no.2, 2005, pp.36-50.
[14] KPMG, KPMG International Survey of Corporate Responsibility Reporting 2005 (KPMG Global Sustainability Services: Amsterdam), http://www.kpmg.org
[15] D. Laufer, and W. T. Coombs, "How should a company respond to a product harm crisis? The role of corporate reputation and consumerbased cues," Business Horizons, 49, 2006, 379-385.
[16] I. Maignan, O. C. Ferrell, and L. Farrell, "A stakeholder model for implementing social responsibility in marketing," European Journal of Marketing, 39(9/10), 2005, 956-77.
[17] J. D. Margolis, and J. P. Walsh, "Misery loves companies: Rethinking social initiatives by business," Administrative Science Quarterly, 48, 2003, 655-689.
[18] J. D. Pratten, and A. H. Mashat, "Corporate social disclosure in Libya", Social Responsibility Journal, vol. 5 no. 3, 2009, pp. 311-327.
[19] Porter, M. E. (1996). What is Strategy?. Harvard Business Review, 74 (6), 54-61.
[20] P. Thompson, and Z. Zakaria, "Corporate Social Responsibility Reporting In Malaysia: Progress and Prospects," Journal of Corporate Citizenship, 13, 2004, 125-136.
[21] R. Qu, R. "The impact of market orientation and corporate social responsibility on firm performance: Evidence from China," Asia Pacific Journal of Marketing and Logistics, 21(4), 2009, 570-582.
[22] C.B. Tse, Y. M. Sin, H. M. Yau, and S. Y. Lee, "Relationship between market orientation and business performance: an empirical study in a Chinese business environment," Journal of Business Research, 2001.
[23] J. Bebbington, C. Larrinaga-Gonzalez, and J. M. Moneva-Abadia, "Legitimating Reputation/the Reputation of Legitimacy Theory" Accounting, Auditing & Accountability Journal, 21(3), 2008, 371-374.
[24] L. Tucker, and T. C. Melewar, "Corporate Reputation and Crisis Management," The Threat and Manageability of Anti-corporatism. Corporate Reputation Review, 7(4), 2005, 377-387.
[25] J. Unerman, "Methodological Issues: Reflections On Quantification In Corporate Social Reporting Content Analysis," Accounting, Auditing & Accountability Journal, 13(5), 2000, 667-690.
[26] M. C. Branco, and L. L. Rodrigues, "Factors Influencing Social Responsibility Disclosure by Portuguese Companies," Journal of Business Ethics, 83, 2008, 683-701.
[27] S. Brammer, and S. Pavelin, "Building a Good Reputation", European Management Journal, 22(6), 2004, 704-713.
[28] S. Brammer, and A. Millington, "Corporate Reputation and Philantropy: An Empirical Analysis," Journal of Business Ethics, 61, 2005, 29-44.
[29] C. W. Chow, and A. Wong-Boren, "Voluntary Financial Disclosure by Mexican Corporations," The accounting review, 62(3 (July)), 1987, 533- 541.
[30] J. Clarke, and M. Gibson-Sweet, "The Use of Corporate Social Disclosure in the Management of Reputation and Legitimacy: A Cross Sectorial Analysis of UK Top 100 Companies," Business Ethics: A European Review, 8(1), 1999, 5-13.
[31] C. Deegan, M. Rankin, and J. Tobin, "An examination of the corporate social and environmental disclosures of BHP from 1983-1997: a test of legitimacy theory," Accounting, Auditing and Accountability Journal, 15(3), 2002, 312-343.
[32] C. Deegan, and M. Rankin, "Do Australian companies report environmental news objectively? An analysis of environmental disclosures by firms prosecuted successfully by the Environmental Protection Authority," Accounting, Auditing & Accountability Journal, 9(2), 1996, 50-67.